MEASURING UP... T O P P S T I L E S P L C Report and Financial Statements 2003 MEASURING UP... our ability to grow Topps Tiles is by far the UK’s biggest specialist ceramic tile group. We continue to grow strongly and enjoy a dominant position in an expanding market sector. S T N E T N O C INTRODUCTION FINANCIAL HIGHLIGHTS THE GROUP AT A GLANCE CHAIRMAN’S STATEMENT OPERATIONS REVIEW FINANCIAL REVIEW BUSINESS STRATEGY TEAMWORK MARKET & BUSINESS DEVELOPMENTS COMMUNITY RELATIONS CORPORATE SOCIAL RESPONSIBILITIES QUESTION TIME BOARD OF DIRECTORS DIRECTORS AND ADVISORS DIRECTORS’ REPORT CORPORATE GOVERNANCE STATEMENT REMUNERATION REPORT INDEPENDENT AUDITORS’ REPORT CONSOLIDATED PROFIT AND LOSS ACCOUNT BALANCE SHEETS CONSOLIDATED CASH FLOW STATEMENT NOTES TO THE FINANCIAL STATEMENTS FIVE YEAR RECORD NOTICE OF ANNUAL GENERAL MEETING EXPLANATORY NOTES TO THE NOTICE OF ANNUAL GENERAL MEETING THE TEAM STORE LOCATIONS IFC 1 2 4 6 8 10 12 14 16 18 20 22 24 25 28 29 34 36 37 38 39 59 60 63 65 72 MEASURING UP... our ability to produce We are delighted to report excellent results grow strongly, with more stores opened, a growing brand awareness and a strong performance by staff which have growth. The Group continues to another period of significant combined to continue to drive the business forward. S T H G I L H G I H L A I C N A N I F The Group has continued to deliver excellent results across all areas 16 months results to 27 September 2003 “ Group turnover increased by 22.4%* to £152.21m “ Group gross margin increased to 57.5% (2002: 56.4%*) “ Operating costs decreased as a % of Group turnover to 42.3% (2002 : 43.3%*) “ Profit before tax increased by over 45%* to £23.55m “ Net margin 15.5% (2002: 13.0%*) “ Basic earnings per share increased by over 45% to 36.4 pence (2002: 25.1* pence) “ Dividend policy changed to 1.67 times cover from 2.5 times cover at 1 June 2002 “ A final net dividend of 15.40 pence per share to be paid on 2 February 2004 “ The full period dividend of 21.75 pence per share is an increase of over 200% “ Net Cash position of £15.158m “ Net 25 new stores opened “ 8 stores now trading in Holland *Comparatives are made to the unaudited information for 16 months ended 28 September 2002. (See Profit and Loss Account) T O P P S T I L E S P L C 1 MEASURING UP... the Group at a glance TOPPS TILES (TOPPS) Topps Tiles sells ceramic wall and floor tiles and laminate and wood flooring for domestic and business use. Operating from 160 stores nationwide Topps Tiles is by far the UK’s biggest specialist ceramic tile group. 160 Stores With our dedication to offering excellent value for money and customer service we believe we can continue to grow our dominance in the UK market. TILE CLEARING HOUSE (TCH) Tile Clearing House has become a tile brand in its own right, targeted at a different sector of the market to Topps. Its customers in the main are jobbing builders, small contractors and bulk purchasers. It offers a smaller separate product range including end of lines, discontinued and job lots, but with greater stock levels. Tile Clearing House stores operate from less prominent locations than Topps, mainly in trade areas, but where the two brands trade next to each other, both perform well. In 2003, the number of stores increased from 32 to 36. 36 Stores 2 T O P P S T I L E S P L C Service has always been our top priority at Topps Tiles Plc - we’re here to help our customers, our loyal staff who help make us the UK’s largest ceramic tile group, the communities around our many stores, and the shareholders who invest in us. E C N A L G A T A P U O R G E H T SERVING OUR CUSTOMERS Across both brands it is our policy to provide customer service that is honest, helpful, knowledgeable, but never pushy. We pride ourselves on the warm welcome we extend to all customers who enter our many stores. SERVING OUR STAFF We now employ over 1,300 staff across the Group. We encourage participation in the Group’s success through our employee share option schemes. We also incentivise staff through store bonus schemes, which this period has generated over £5.4 million in profit sharing for staff. SERVING OUR SHAREHOLDERS Since the Group was listed on the London Stock Exchange in 1997, basic earnings per share has consistently grown from 4.2p in 1997 to 36.4p in 2003. T O P P S T I L E S P L C 3 MEASURING UP... to our business and financial objectives We now trade from 196 stores throughout Britain and from 8 stores in Holland with our joint venture partner. 4 T O P P S T I L E S P L C T N E M E T A T S S ’ N A M R I A H C We continue to benefit from our proven format of superior customer service, extensive product offering and highly visible locations. 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 in Resolution 7 of the A.G.M. PEOPLE The Board, as always, wishes to thank all staff for their tremendous efforts, enthusiasm and loyalty which has been reflected in the performance of the Group. 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. Barry Bester, Executive Co-Chairman Stuart Williams, Executive Co-Chairman 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. T O P P S T I L E S P L C 5 W E I V E R S N O I T A R E P O MEASURING UP... business objectives 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. *Same period last year figures relate to the 16 months ended 28 September 2002 as disclosed on page 36. A campaign of 30-second commercials promoting Topps has been broadcast on UK Style, UK Food, Discovery Home & Leisure, UK Gold, UK Horizons, UK Bright Ideas and FTN. Topps has also sponsored the weather reports on Carlton in the London area. Our strategy remains simple. To provide excellent value, and service to our customers whilst delivering profitable growth for our shareholders. 6 T O P P S T I L E S P L C Our vast new distribution warehouse (Far left) is being built at Junction 21 of the M1 near Leicester, enabling us to deliver even greater numbers of tiles and laminate flooring products to our ever-increasing number of stores. 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** in 2003. Growth is forecast to continue to reach 48.7 million square metres** 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. Nicholas Ounstead, Chief Executive Officer * Same period last year figures relate to the 16 months ended 28 September 2002 as disclosed on page 36. **Source: Marketing Strategies for Industry (MSI) November 2003 T O P P S T I L E S P L C 7 MEASURING UP... To our shareholders and 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. *Same period last year figures relate to the 16 months ended 28 September 2002 as disclosed on page 36. 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. 8 T O P P S T I L E S P L C 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. 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 £3.2m 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 Meeting 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. Andrew Liggett, Finance Director financial objectives T O P P S T I L E S P L C 9 MEASURING UP... our business strategy Our two brands are distinctly different but fit perfectly to provide a seamless service 10 T O P P S T I L E S P L C Our success has been founded on four crucial cornerstones: CUSTOMER SERVICE 8 STORE LOCATIONS 8 STOCK AVAILABILITY 8 STORE LAYOUT Y G E T A R T S S S E N I S U B 1. CUSTOMER SERVICE Customer service is a subject we take very seriously. All staff attend an induction course at our training centres where they learn our friendly and helpful approach to customer service, along with product range and technical knowledge. We believe that being able to offer correct advice and assistance is crucial to gaining customer confidence. In-store, we have a wide range of services to help customers choose the right product and achieve the best results. For our customers’ convenience, most of our stores trade 7 days-a-week from 8.00am to 6.00pm with a number of larger stores open until 8.00pm. 2. STORE LOCATIONS Our stores in the main are not located on traditional high streets or retail parks, but in less expensive yet highly visible locations on or close to busy roads. Our average store size is around 6,500 square feet and virtually all have on-site parking areas. 4. STORE LAYOUT All stores are clearly identified with bright, eye-catching exterior signage bearing the Topps Tiles or Tile Clearing House branding. Store interiors are laid out in a mini-warehouse style with a huge choice of products merchandised with colourful displays and informative point-of-sale. The stores are customer-friendly with product and pricing information clearly displayed. 3. STOCK AVAILABILITY Each store has a huge number of lines in stock, with replenishments arriving twice a week from our central warehouses. 80% of our products are imported directly from factories in Spain, Italy, Portugal and other countries around the world. An increasing market presence and long- standing relationships ensure we maintain excellent stock availability. T O P P S T I L E S P L C 11 MEASURING UP... Our excellent teamwork Our strategy of providing customer service that is second to none, having the widest range of high-quality products at the best prices and selling them from well-placed, easily accessible locations is a real winner. 12 T O P P S T I L E S P L C We now employ over 1300 staff across the Group and encourage participation in the success of the business through employee share option schemes and a strong culture of rewarding performance. K R O W M A E T Training is a key feature of our teamwork policy and we endeavour to train and support all staff on existing and new product and procedure developments within the business. We achieve this through our own training department and training centres along with in-store training via our e-learning software. We are also a recognised ‘Investor in People’ company. Our strong culture of rewarding performance is reflected in the store bonus schemes which during the period have generated over £5.4m in profit sharing for the staff. We also offer all employees the opportunity to participate in the Group’s success through company share option schemes and Sharesave schemes in association with the Halifax Building Society. Our stated policy of 24 new store openings per year coupled with our policy of promoting from within the business, wherever possible, allows staff to develop a career path and helps nurture an atmosphere of opportunity for all. T O P P S T I L E S P L C 13 MEASURING UP... To the market 14 T O P P S T I L E S P L C THE MARKET The UK has traditionally had a very low usage of ceramic tiles per capita, compared with our European neighbours it is up to six times lower, but this is changing as consumer tastes move away from soft flooring products to hard floor surfaces such as ceramic floor tiles and wood and laminate flooring. The Group continues to grow its market share and is estimated to have 17% of the non-contract market for ceramic tiles. Consumers appetite for ceramic tiles has grown steadily over the past 20 years and is forecast to grow by a further 18% over the next three years*. There are a number of drivers for this growth. There are now far more areas to tile as consumers add second bathrooms, shower rooms, conservatories and kitchen extensions to their homes. Hygiene and health issues are also pushing the market forward as consumers switch to easy-to- clean products in order to create a healthier environment in the home. S T N E M P O L E V E D S S E N I S U B & T E K R A M Consumers appetite for ceramic tiles has grown steadily over the past 20 years and is forecast to grow by a further 15% over the next three years. FLOORSTORE To take advantage of this move we now have opened 10 new Floorstores giving us 14 in total. Trading from existing space in the business these stores sell an enhanced range of laminate and wood flooring products and have a separate entrance giving the feeling of a mini warehouse specialist. TILE STUDIO Tile studio continues to trade well and in the period we have added 34 giving a total of 58. These studios offer a much greater choice of upmarket tiles which can be ordered on a room lot basis with no stock being kept in the store. *Source: Marketing Strategies for Industry (MSI) November 2003 STONEWORKS We are also trialling within six stores a dedicated stone and natural product area called ‘Stoneworks’. This part of the market is growing rapidly and we will be well placed to take advantage of this trend. The consumer awareness of the ‘Topps’ brand continues to increase through our TV sponsorships on Carlton, Tyne Tees and Sky UK Style channel and national radio and press campaigns. TILE CLEARING HOUSE Tile Clearing House has established itself as a tile brand in its own right, and serves a different sector of the market to the ‘Topps’ brand. Its customers in the main are small contractors, local builders and bulk purchasers. It offers a completely different and narrower range of products to Topps and includes end of lines, discontinued and factory specials but stock is held in greater depth. The stores, which operate from less prominent locations continue to benefit from strong local advertising. T O P P S T I L E S P L C 15 MEASURING UP... to the wider community Topps Tiles is one of the biggest supporters of youth football in the UK, providing new kits and equipment to junior teams local to every one of our stores. 16 T O P P S T I L E S P L C We have a policy of building local brand awareness of Topps Tiles and Tile Clearing House through involvement with young people. Probably our most well-known community project is our youth sports sponsorship, providing new kits and equipment to juniors in each town where we have an outlet. This has made Topps Tiles one of the biggest supporters of youth football in Britain and we now have over 180 teams playing regularly in our colours. We also take great pride in our fund raising achievements for our adopted charity the National Asthma Campaign. This our fourth year of support for the charity, which aims to conquer this respiratory disorder which affects over 1 million children in the UK. The NAC was the natural choice of charity for Topps to adopt, as our products help to reduce the levels of house dust mites which are one of the triggers of asthma attacks. Our staff contributed greatly to the fundraising by holding sponsored events and in total with our Company donation of £32,000 we raised over £75,000 for this worthy cause. As well as sport there is also education, via our product catalogue schools can win valuable computer equipment. Since the scheme started, over 30 schools have benefited nationwide. S N O I T A L E R Y T I N U M M O C Topps Tiles is one of the biggest supporters of youth football in the UK, providing new kits and equipment to junior teams local to every one of our stores. Topps Tiles supports the National Asthma Campaign, a natural choice, as our products help to reduce levels of dust mites, one of the triggers of asthma attacks. Area manager Jim Hardy, (left), and Cleveleys store manager Andrew Docherty presenting a new computer to Scott Andrews. T O P P S T I L E S P L C 17 MEASURING UP... Our recognition of our corporate social responsibility Corporate Social Responsibility (CSR) is a core part of our management process and will be integrated into every aspect of both the strategic and the routine management of the business. 18 T O P P S T I L E S P L C Y T I L I B I S N O P S E R L A I C O S E T A R O P R O C The Board is developing an integrated CSR policy that targets and measures the performance of the Group in the following areas: MARKETPLACE WORKPLACE COMMUNITY ENVIRONMENT The Group works closely with key suppliers to source and distribute products that contribute positively to environmental performance. The Group has developed an environmental policy on timber products and has adopted the principles and criteria of the Forest Stewardship Council (FSC) as its benchmark. Topps businesses comply with current employment legislation and work with employees and local management of each branch to create a positive and equitable working environment. There is a strong culture of internal promotion and regular dialogue on job and career development. The Group supports local charities and encourages employees to take an interest in social and community activities outside the workplace. Topps sponsors local junior football teams on a nationwide basis and supplies computer equipment to schools. Topps encourages the use of recycled and recyclable packaging where practicable. We continue to look at ways of reducing waste - both physical and invisible ‘waste’ built into business processes. We are an affiliated member of Valpak, who are the UK’s largest compliance scheme for packaging waste. The Group conducts its business consistent with its long established values. These include product quality and customer service excellence along with a commitment to maintain our equal opportunities workforce and actively encouraging diversity. We are also committed to making a positive contribution to the communities where we do business and to the environment as a whole. FOREST STEWARDSHIP COUNCIL T O P P S T I L E S P L C 19 MEASURING UP... Why not ask us some questions? Nick Ounstead, Chief Executive Officer, concludes our business review by answering some questions frequently put to us by analysts and shareholders regarding the Group’s business, financial position and strategy. How sensitive is the business to currency changes? Over 80% of our tile products are imported, therefore we are exposed to currency fluctuation, although by far the majority of payments are made in Sterling. The Euro is our main currency requirement, with around five million sterling equivalent needed per year. In order to manage this exposure we have adopted a policy of buying currency forward on a rolling 6 to 12 months, monthly contract basis which gives us a known cost base for setting retail prices. Does the business generate cash? Over 99% of our sales are cash or cash equivalents so even with the fast growth of our number of outlets, the business is highly cash generative. This is well demonstrated by our progressive dividend policy which has gone from 3 times cover at flotation to 2.5 times cover in June 2002 and now 1.67 times cover. Will earnings per share continue to grow? We have seen EPS grow from 4.2p per share in 1997 (when the business floated) to 36.4p per share for this 16 month 20 T O P P S T I L E S P L C period; this by any standard is tremendous growth and we believe that the business can continue to grow and develop substantially from its current position. Are sites difficult to find? Our store model is very flexible and our format can fit into anything from 4,000 sq ft to 15,000 sq ft. Our ideal store is on a busy road with parking for around six to eight cars on the way to a retail park or nearby to other tile stores. This flexibility means we are finding plenty of suitable sites at acceptable rent levels. We are planning to open 24 new stores in the new financial period. How many stores can you open? The tile and wood flooring market is forecast to grow steadily over the next few years and we are confident we can meet are target of 350 stores (250 Topps Tiles and 100 Tile Clearing House brand) by keeping to our proven format of offering excellent choice, value and service. Why does the business need such high levels of stock? We believe one of our key strengths and a barrier to entry into our business is stock availability. This differentiates us from our competitors and means that we can offer a “cash and carry” service from the store and if this is not achievable we can normally fulfil the order from our central warehouse within days. What would happen if the housing market slowed down? Our business is more the replacement market and we have always maintained that we are not directly linked to the “ups and downs” of the housing market. If some people decide not to move home they may instead decide to improve their existing home and this is why historically the Company has not seen great increases in sales when the housing market is booming and vice versa. E M I T N O I T S E U Q T O P P S T I L E S P L C 21 EXECUTIVE DIRECTORS Barry Bester (aged 46) Executive Co-Chairman Member of Nomination Committee Stuart Williams F.C.A. (aged 59) Executive Co-Chairman Member of Nomination Committee Barry and Stuart founded the business in 1984 and developed the sales format and employee incentive structure which is the foundation of the business today. Barry and Stuart are responsible for overall Group strategy, new business development and sustaining the core ethos of the business. Nicholas Ounstead Chief Executive Officer (aged 43) Nicholas Ounstead joined Topps Tiles in April 1997. Prior to this he was Marketing Director at Bellegrove Ceramics Plc which is a major supplier to DIY chains and independent retailers. In September 2001 he was appointed Chief Operating Officer and promoted to Chief Executive Officer in October 2002. Nicholas is also Chairman of the Health and Safety Committee. Andrew Liggett F.C.M.A. Finance Director (aged 42) Company Secretary Secretary of Nomination Committee Andrew Liggett joined Topps Tiles in 1995 as Finance Director. Prior to joining the Group, he worked for Gold Crown Group Limited where he was employed for 10 years, initially as management accountant and then as Finance Director. He is responsible for the accounting, financial control, treasury, administration and Group secretarial matters. S R O T C E R I D F O D R A O B 22 T O P P S T I L E S P L C NON-EXECUTIVE DIRECTORS Alan Mclntosh C.A. Senior Non-Executive Director (aged 35) Chairman of Audit Committee Member of Nomination Committee Alan Mclntosh qualified as a Chartered Accountant with Deloitte & Touche and subsequently joined the corporate finance department of Hill Samuel. He was one of the founders and the Group Finance Director of Punch Group Ltd, the largest independent pub company in the UK. He is also a Director of Wellington Pub Company Plc and Chairman of the investment company, Capital Management and Investment Plc. He joined the board of Topps Tiles in 1997. Victor Watson C.B.E. Non-Executive Director (aged 75) Member of Audit Committee Chairman of Nomination Committee Victor Watson is a Director of Thorpe Park (Leeds) Limited, Swivel Technologies Limited and is Chairman of Leeds Business Services Limited. He was formerly Chairman of Waddington Plc. He joined the Board of Topps Tiles in 1997. S R O T C E R I D F O D R A O B Rt. Hon Michael Jack Privy Councillor, MP, Non-Executive Director (aged 57) Member of Audit Committee Member of Nomination Committee Michael Jack’s business career has seen him in management capacities with Proctor & Gamble and Marks & Spencer. In 1987 he became MP for Fylde and by 1990 had begun a ministerial career that saw him serve in the DSS, Home Office, MAFF and finally the Treasury as Financial Secretary. Throughout this time he has maintained strong business links, via both direct contacts and his consultancy work. He joined the board of Topps Tiles in 1999. T O P P S T I L E S P L C 23 S R O S I V D A & S R O T C E R I D DIRECTORS B.F.J. Bester S.K.M. Williams F.C.A. N.D. Ounstead A. Liggett F.C.M.A. W.A. McIntosh C.A. V.H. Watson C.B.E. The RT. Hon. J.M. Jack, Privy Counsellor, MP Executive Co-Chairman Executive Co-Chairman Chief Executive Officer Finance Director Senior Non-Executive Director Non-Executive Director Non-Executive Director SECRETARY A. Liggett F.C.M.A. REGISTERED NUMBER 3213782 REGISTERED OFFICE Rushworth House Wilmslow Road Handforth Wilmslow Cheshire SK9 3HJ AUDITORS Deloitte & Touche LLP 201 Deansgate Manchester M60 2AT BANKERS HSBC Bank Plc 56 Queen Street Cardiff CF10 2PX REGISTRARS Capita IRG Plc Bourne House 34 Beckenham Road Beckenham Kent BR3 4TU SOLICITORS TLT Solicitors 1 Redcliff Street Bristol BS99 7JZ Sinclair Abson Smith Lawyers 19 Market Place Stockport SK1 1HA Beachcroft Wansbroughs Solicitors St Ann’s House St Ann Street Manchester M2 7LP STOCKBROKERS KBC Peel Hunt Limited 111 Old Broad Street London EC2N 1PH 24 T O P P S T I L E S P L C The directors present their report on the affairs of the Group, together with the financial statements and auditors’ report, for the 16 month period ended 27 September 2003. PRINCIPAL ACTIVITY AND BUSINESS REVIEW The principal activity of the Group comprises the retail and wholesale distribution of ceramic tiles, wood flooring and related products. During the period, the Group changed its accounting reference date, from the Saturday which falls closest to 31 May, to the Saturday which falls closest to 30 September. Details of the Group’s performance during the period and expected future developments are contained in the Chairman’s Statement, and Chief Executive’s and Financial reviews on pages 4 to 9 of the report and financial statements. RESULTS AND DIVIDENDS The audited financial statements for the period ended 27 September 2003 are set out on pages 36 to 58. The Group’s profit for the period, after taxation was £16,386,000 (12 months ended 1 June 2002 - £8,039,000). An interim dividend of 3.35p per share (£1,509,000) was paid on 28 February 2003, and a further interim dividend of 3p per share (£1,352,000) was paid on 30 June 2003. The directors recommend a final dividend of 15.4p per share, £6,972,000 making a total of 21.75p per share, £9,833,000 (12 months ended 1 June 2002 – total dividend 7.15p per share, £3,215,000). Subject to approval by the shareholders at the Annual General Meeting, to be held on 6 January 2004, the final dividend will be paid on 2 February 2004 to shareholders on the register at the close of business on 9 January 2004. 3 0 0 2 r e b m e t p e S 7 2 d e d n e d o i r e p e h t r o f T R O P E R ’ S R O T C E R I D DIRECTORS The directors of the Company, who all served during the period, are as follows: B.F.J. Bester S.K.M. Williams N.D. Ounstead A. Liggett W.A. McIntosh V.H. Watson J.M. Jack Executive Co-Chairman Executive Co-Chairman Chief Executive Officer Finance Director Senior Non-Executive Director Non-Executive Director Non-Executive Director Their interests in the shares of the Company are set out on page 33. SHARE CAPITAL Details of the Company’s authorised and issued share capital are shown in note 18 to the financial statements. SUPPLIER PAYMENT POLICY The Group’s policy is to settle terms of payment with suppliers when agreeing the terms of each transaction, ensuring that suppliers are made aware of the terms of payment and that both parties abide by those terms. The effect of the Group’s negotiated payment policy is that trade creditors at the period end represented 55 days purchases (12 months ended 1 June 2002 - 50 days). T O P P S T I L E S P L C 25 d e u n i t n o c 3 0 0 2 r e b m e t p e S 7 2 d e d n e d o i r e p e h t r o f T R O P E R ’ S R O T C E R I D CHARITABLE AND POLITICAL CONTRIBUTIONS During the period the Group made charitable donations of £32,000 to “The National Asthma Campaign”. The Group made no political contributions. SUBSTANTIAL SHAREHOLDINGS In addition to the directors’ shareholdings noted on page 33, on 27 September 2003 the Company had been notified, in accordance with Sections 198 to 208 of the Companies Act 1985, of the following interests in 3% or more of its issued share capital. HSBC Global Custody Nominee (UK) Limited Litttledown Nominees Limited Chase Nominees Limited Stanlife Nominees Limited State Street Nominees Limited BNY (OCS) Nominees Limited Number 5,854,000 4,979,000 4,620,000 3,165,000 2,769,000 2,169,000 % held 12.9% 11.0% 10.2% 7.0% 6.1% 4.8% DISABLED EMPLOYEES Applications for employment by disabled persons are always fully considered, bearing in mind the aptitudes of the applicant concerned. In the event of members of staff becoming disabled every effort is made to ensure that their employment with the Group continues and that appropriate training is arranged. It is the policy of the Group that the training, career development and promotion of disabled persons should, as far as possible, be identical with that of other employees. EMPLOYEE CONSULTATION The Group places considerable value on the involvement of its employees and has continued to keep them informed on matters affecting them as employees and on the various factors affecting the performance of the Group. This is achieved through formal and informal meetings and the Company magazine. Employee representatives are consulted regularly on a wide range of matters affecting their current and future interests. SHARE OPTION SCHEMES The directors recognise the importance of motivating employees and believe that one of the most effective incentives is increased employee participation in the Company through share ownership. This has been achieved through the introduction of a number of employee sharesave, share bonus, approved and unapproved share option schemes, since the flotation in 1997. During the period the Company issued 119,493 options to employees via further sharesave, share bonus, approved and unapproved share option schemes, bringing the total of options held by employees, excluding directors, to 1,336,885. The directors will continue to incentivise employees through additional employee share option schemes in the forthcoming financial period. 26 T O P P S T I L E S P L C AUDITORS On 31 July 2002 Arthur Andersen resigned as auditors of the Company and the directors appointed Deloitte & Touche to fill the casual vacancy. On 1 August 2003, Deloitte & Touche transferred their business to Deloitte & Touche LLP, a limited liability partnership incorporated under the Limited Liability Partnerships Act 2000. 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. A resolution to re-appoint Deloitte & Touche LLP as the Company’s auditor will be proposed at the forthcoming Annual General Meeting. DIRECTORS RESPONSIBILITIES United Kingdom company law requires the Directors to prepare financial statements for each financial period which give a true and fair view of the state of affairs of the Company and the Group as at the end of the financial period and of the profit of the Group for that period. In preparing those financial statements, the Directors are required to: “ select suitable accounting policies and then apply them consistently; “ make judgements and estimates that are reasonable and prudent; “ state whether applicable accounting standards have been followed; and “ prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group will continue in business. The Directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the Group and the Company and enable them to ensure that the financial statements comply with the Companies Act 1985. They also have general responsibility for the systems of internal control for safeguarding the assets of the Group and the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. Rushworth House Wilmslow Road Handforth Cheadle Cheshire SK9 3HJ 25 November 2003 By order of the Board, Secretary A. Liggett T O P P S T I L E S P L C 27 T N E M E T A T S E C N A N R E V O G E T A R O P R O C In June 1998 the Hampel Committee and the London Stock Exchange published the Combined Code on corporate governance. This combines the Cadbury Code on corporate governance, the Greenbury Code on directors’ remuneration and new requirements arising from the findings of the Hampel Committee. STATEMENT OF COMPLIANCE WITH THE CODE OF BEST PRACTICE The Company has complied throughout the period with the Provisions of the Code of Best Practice set out in section 1 of the Combined Code except for provision A6.1. The nature of this breach relates to service contracts for the non-executive directors which are for an indefinite term. The board considers this non-compliance with the Combined Code to be justified in view of the size of the Group and in this respect supports the recommendations of the City Group for smaller companies. The Company complies with all other provisions of the code. STATEMENT ABOUT APPLYING THE PRINCIPLES OF GOOD GOVERNANCE The Company has applied the Principles of Good Governance set out in section 1 of the Combined Code by complying with the Code of Best Practice as reported above. Further explanation of how the Principles have been applied in connection with directors’ remuneration is set out in the Remuneration Report. Code Provision D.3.1 requires the members of the audit committee to be named in the report and financial statements. Mr. W.A. McIntosh (Chairman), Mr. V.H. Watson and Mr. J.M. Jack have served on the committee throughout the period. DIALOGUE WITH INSTITUTIONAL SHAREHOLDERS The directors seek to build on a mutual understanding of objectives between the Company and its institutional shareholders by making annual presentations and communicating regularly throughout the year. MAINTENANCE OF A SOUND SYSTEM OF INTERNAL CONTROL The board has applied Principle D.2 of the Combined Code by establishing a continuous process for identifying, evaluating and managing the significant risks the Group faces. The board regularly reviews the process, which has been put in place from the start of the period to the date of the approval of this report and which is in accordance with Internal Control: Guidance for Directors on the Combined Code published in September 1999. The board is responsible for the Group’s system of internal control and for reviewing its effectiveness. Such a system is designed to manage rather than eliminate the risk of failure to achieve business objectives and can only provide reasonable and not absolute assurance against material misstatement or loss. In compliance with Provision D.2.1 of the Combined code, the board continuously reviews the effectiveness of the Group’s system of internal control. The board’s monitoring covers all controls, including financial, operational and compliance controls and risk management. It is based principally on reviewing reports from management to consider whether significant risks are identified, evaluated, managed and controlled and whether any significant weaknesses are promptly remedied and indicate a need for more extensive monitoring. The board has also performed a specific assessment for the purposes of this report. This assessment considers all significant aspects of internal control arising during the period covered by the report including the work of internal audit. The audit committee assists the board in discharging its review responsibilities. 28 T O P P S T I L E S P L C INTRODUCTION This report has been prepared in accordance with the Directors’ Remuneration Report Regulations 2002 which introduced new statutory requirements for the disclosure of directors’ remuneration in respect of periods ending on or after 31 December 2002. The report also meets the relevant requirements of the Listing Rules of the Financial Services Authority and describes how the board has applied the Principles of Good Governance relating to directors’ remuneration. As required by the Regulations, a resolution to approve the report will be proposed at the Annual General Meeting of the Company at which the financial statements will be approved. The Regulations require the auditors to report to the Company’s members on the “auditable part” of the Directors’ remuneration report and to state whether in their opinion that part of the report has been properly prepared in accordance with the Companies Act 1985 (as amended by the Regulations). The report has therefore been divided into separate sections for audited and unaudited information. UNAUDITED INFORMATION Remuneration committee The Company has established a Remuneration Committee, which is constituted in accordance with the recommendations of the Combined Code. The members of the committee are Mr McIntosh, Mr Watson and The RT. Hon. Mr Jack who are all independent non-executive directors, with the committee being chaired by Mr McIntosh. None of the Committee has any personal financial interest (other than as shareholders), conflicts of interests arising from cross-directorships or day-to-day involvement in running the business. The Committee makes recommendations to the board. No director plays a part in any discussion about his or her own remuneration. 3 0 0 2 r e b m e t p e S 7 2 d e d n e d o i r e p e h t r o f T R O P E R N O I T A R E N U M E R Remuneration policy Executive remuneration packages are prudently designed to attract, motivate and retain directors of the high calibre needed to maintain the Group’s position as a market leader and to reward them for enhancing value to shareholders. The performance measurement of the executive directors and key members of senior management and the determination of their annual remuneration package are undertaken by the Committee. The remuneration of the non-executive directors is determined by the board within limits set out in the Articles of Association. There are four main elements of the remuneration package for executive directors and senior management: “ Basic annual salary (including directors’ fees) and benefits; “ Annual bonus payments “ Share option incentives; and “ Pension arrangements. Basic salary An executive director’s basic salary is determined by the Committee prior to the beginning of each year and when an individual changes position or responsibility. In deciding appropriate levels, the Committee considers the Group as a whole and relies on objective research which gives up-to-date information on a comparator group of companies. Basic salaries were reviewed in September 2003 with increases taking effect from 1 October 2003. Executive directors’ contracts of service which include details of remuneration will be available for inspection at the Annual General Meeting. In addition to basic salary, the executive directors receive certain benefits-in-kind, principally a car and private medical insurance. T O P P S T I L E S P L C 29 d e u n i t n o c 3 0 0 2 r e b m e t p e S 7 2 d e d n e d o i r e p e h t r o f T R O P E R N O I T A R E N U M E R Annual bonus payments A discretionary annual cash bonus scheme represents the short-term incentive element of the overall remuneration package for Mr. Liggett and Mr. Ounstead. The Committee establishes the objectives that must be met in the financial period if a cash bonus is to be paid. The maximum bonus achievable in the current period was £30,000, which is 13% of basic salary. Share options The share option scheme comprises two parts, the Topps Tiles Plc approved Executive Share Option Scheme and the Topps Tiles Plc unapproved Executive Share Option Scheme. The scheme is administered and the grant of options supervised by the Remuneration Committee. The exercise of options will normally be conditional on the achievement of a specified performance target determined by the Remuneration Committee, who will have regard to guidelines on share option schemes issued by institutional investors. Options may normally only be granted within 42 days of the announcement by the Company of its interim or final results each period, with the exercise price being not less than the middle market quotation averaged over the three dealing days immediately preceding the date of the grant. No significant amendments are proposed to be made to the terms and conditions of any entitlement of a director to share options. Pension arrangements Mr. Bester, Mr. Liggett and Mr. Ounstead received contributions into their own personal pension schemes. Performance graph The following graph shows the Company’s performance, measured by total shareholder return, compared with the performance of the FTSE Small Cap Index also measured by total shareholder return. The index chosen for the comparison demonstrates the Group’s TSR in comparison to the average for Small Cap companies. Graph showing 5 year TSR performance measured against the FTSE Small Cap Index ) 0 0 1 o t d e s a b - e r ( R S T 300 250 200 100 100 50 0 May-98 May-99 May-00 May-01 May-02 Sept-03 FTSE Small Cap Topps Tiles Plc 30 T O P P S T I L E S P L C DIRECTORS’ CONTRACTS Executive directors It is the Company’s policy that executive directors enter into a contract with a 12 month term providing for a maximum of six months notice. Mr. Williams, Mr. Bester, Mr. Liggett and Mr. Ounstead have entered into new service contracts on 1 October 2003 in accordance with the above policy. In the event of early termination, the directors’ contracts provide for compensation up to a maximum of six months basic salary for the notice period. Non-executive directors All non-executive directors have specific terms of engagement and their remuneration is determined by the board within the limits set by the Articles of Association and based on independent surveys of fees paid to non-executive directors of similar companies. The basic fee paid to each non-executive director in the period was £26,667. It is the Company’s policy that non-executive directors should have contracts with an indefinite term providing for a maximum of six months notice. Non-executive directors cannot participate in any of the Company’s share option schemes and are not eligible to join the company’s pension scheme. The details of the non-executive directors’ contracts are summarised in the table below: Name of director W.A. McIntosh V.H. Watson J.M. Jack Date of contract or letter of appointment Unexpired term 27 May 1997 27 May 1997 26 January 1999 N/A N/A N/A Notice period 6 months 6 months 6 months AUDITED INFORMATION Aggregate directors’ remuneration The total amounts for directors’ remuneration were as follows: Emoluments Money purchase pension contributions 16 months ended 27 September 2003 £’000 12 months ended 1 June 2002 £’000 1,171 20 1,191 685 15 700 T O P P S T I L E S P L C 31 d e u n i t n o c T R O P E R N O I T A R E N U M E R Directors’ emoluments Name of director B.F.J. Bester S.K.M. Williams N.D. Ounstead A. Liggett Non-executive directors W.A. McIntosh V.H. Watson J.M. Jack Fees £’000 – – – – 27 27 – 54 Basic salary £’000 231 231 231 231 – – 27 951 Bonus £’000 Benefits in kind £’000 _ _ 30 30 – – – 60 27 26 26 27 – – – 106 Money 16 months ended purchase 27 September 2003 Total £’000 pension contributions £’000 8 – 5 7 – – – 20 266 257 292 295 27 27 27 1,191 12 months ended 1 June 2002 Total £’000 165 165 156 169 15 15 15 700 Directors’ share options Aggregate emoluments disclosed above do not include any amounts for the value of options to acquire ordinary shares in the Company granted to or held by the directors. Details of options for directors who served during the period and granted since the date of their appointment, are set out below: Name of director Scheme 2 June 2002 Granted Exercised 27 September 2003 Exercise Price (p) Date from which exercisable Expiry date A. Liggett N. Ounstead Unapproved 300,000 225,000 Unapproved – – – – 300,000 225,000 301.0 301.0 6.09.03 6.09.03 5.09.07 5.09.07 There were no exercises of options by directors during the period and therefore no gains were made by the directors. There have been no variations to the terms and conditions or performance criteria for share options during the financial period and no further options can be granted under this scheme. The other executive and non-executive directors held no options during the period. The market price of the ordinary shares at 27 September 2003 was 426.5 pence and the range during the period was 226.7 pence to 426.5 pence. 32 T O P P S T I L E S P L C Directors’ pension entitlements Three directors are members of money purchase personal pension schemes. Contributions paid by the Company in respect of such directors were as follows: B.F.J. Bester A. Liggett N.D. Ounstead 16 months ended 27 September 2003 £’000 12 months ended 1 June 2002 £’000 8 7 5 20 6 5 4 15 Directors interests The directors had the following interests in the shares of the Company (all interests relate solely to ordinary shares): B.F.J. Bester S.K.M. Williams A. Liggett N.D. Ounstead W.A. McIntosh V.H. Watson J.M. Jack 27 September 2003 ordinary shares of 12.5p each 1 June 2002 ordinary shares of 12.5p each 4,999,720 4,999,720 400,300 98,700 317,000 37,200 3,000 5,757,720 5,775,720 500,300 98,700 467,000 37,200 3,000 Share options ordinary shares of 12.5p each start and end of period – – 300,000 225,000 – – – Approval This report was approved by the board of directors on 25 November 2003 and signed on its behalf by: Alan McIntosh Chairman of Remuneration Committee 25 November 2003 T O P P S T I L E S P L C 33 T R O P E R ’ S R O T I D U A T N E D N E P E D N I TO THE MEMBERS OF TOPPS TILES PLC We have audited the financial statements, excluding the proforma information contained within the profit and loss account, of Topps Tiles Plc for the 16 months period ended 27 September 2003 which comprise the consolidated profit and loss account, the statement of total recognised gains and losses, the balance sheets, the consolidated cash flow statement and the related notes 1 to 23. These financial statements have been prepared under the accounting policies set out therein. We have also audited the information in the part of the directors’ remuneration report that is described as having been audited. This report is made solely to the Company’s members, as a body, in accordance with section 235 of the Companies Act 1985. Our audit work has been undertaken so that we might state to the Company’s members those matters we are required to state to them in an auditors’ report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company’s members as a body, for our audit work, for this report, or for the opinions we have formed. RESPECTIVE RESPONSIBILITIES OF DIRECTORS AND AUDITORS As described in the statement of directors’ responsibilities, the Company’s directors are responsible for the preparation of the financial statements in accordance with applicable United Kingdom law and accounting standards. They are also responsible for the preparation of the other information contained in the report including the directors’ remuneration report. Our responsibility is to audit the financial statements and the part of the directors’ remuneration report described as having been audited in accordance with relevant United Kingdom legal and regulatory requirements and auditing standards. We report to you our opinion as to whether the financial statements give a true and fair view and whether the financial statements and the part of the directors’ remuneration report described as having been audited have been properly prepared in accordance with the Companies Act 1985. We also report to you if, in our opinion, the directors’ report is not consistent with the financial statements, if the Company has not kept proper accounting records, if we have not received all the information and explanations we require for our audit, or if information specified by law regarding directors’ remuneration and transactions with the Company and other members of the Group is not disclosed. We review whether the corporate governance statement reflects the Company's compliance with the seven provisions of the Combined Code specified for our review by the Listing Rules of the Financial Services Authority, and we report if it does not. We are not required to consider whether the board's statements on internal control cover all risks and controls, or form an opinion on the effectiveness of the Group’s corporate governance procedures or its risk and control procedures. We read the directors’ report and the other information contained in the report for the above period as described in the contents section including the unaudited part of the directors’ remuneration report and consider the implications for our report if we become aware of any apparent misstatements or material inconsistencies with the financial statements. 34 T O P P S T I L E S P L C BASIS OF AUDIT OPINION We conducted our audit in accordance with United Kingdom auditing standards issued by the Auditing Practices Board. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements and the part of the directors’ remuneration report described as having been audited. It also includes an assessment of the significant estimates and judgements made by the directors in the preparation of the financial statements and of whether the accounting policies are appropriate to the circumstances of the Company and the Group, consistently applied and adequately disclosed. We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the financial statements and the part of the directors’ remuneration report described as having been audited are free from material misstatement, whether caused by fraud or other irregularity or error. In forming our opinion, we also evaluated the overall adequacy of the presentation of information in the financial statements and the part of the directors’ remuneration report described as having been audited. OPINION In our opinion: “ the financial statements give a true and fair view of the state of affairs of the Company and the Group as at 27 September 2003 and of the profit of the Group for the 16 month period then ended; and “ the financial statements and the part of the directors’ remuneration report described as having been audited have been properly prepared in accordance with the Companies Act 1985. Deloitte & Touche LLP Chartered Accountants and Registered Auditors Manchester 25 November 2003 An audit does not provide assurance on the maintenance and integrity of the website, including controls used to achieve this, and in particular on whether any changes may have occurred to the financial statements since first published. These matters are the responsibility of the directors but no control procedures can provide absolute assurance in the area. Legislation in the United Kingdom governing the preparation and dissemination of financial statements differs from legislation in other jurisdictions. T O P P S T I L E S P L C 35 3 0 0 2 r e b m e t p e S 7 2 d e d n e d o i r e p e h t r o f T N U O C C A S S O L & T I F O R P D E T A D I L O S N O C Proforma information note 1(d) 16 months ended 27 September 2003 Audited £’000 12 months ended 1 June 2002 Audited £’000 16 months ended 28 September 2002 Unaudited £’000 12 months ended 27 September 2003 Unaudited £’000 12 months ended 28 September 2002 Unaudited £’000 154,297 (2,087) 152,210 (64,737) 91,026 – 91,026 (40,029) 124,783 (444) 124,339 (54,179) 120,540 (1,643) 118,897 (50,587) 96,105 (444) 95,661 (41,338) Note 2 87,473 50,997 70,160 68,310 54,323 (5,450) (58,881) (2,859) (36,478) (4,038) (49,826) (4,271) (45,534) (3,111) (38,035) 23,142 64 23,206 348 23,554 (7,168) 16,386 (9,832) 11,660 – 11,660 (144) 11,516 (3,477) 8,039 (3,208) 16,296 – 16,296 (115) 18,505 64 18,569 319 13,177 – 13,177 (12) 16,181 (4,877) 18,888 (5,769) 13,165 (3,972) 11,304 (3,208) 13,119 (8,192) 9,193 (3,208) 3 5 7 8 Turnover, group and share of joint venture Less: share of joint venture turnover Group turnover Cost of sales Gross profit Operating expenses - employee profit sharing - other operating expenses Group operating profit Share of operating profit in joint venture Profit on ordinary activities before finance income (charges) Net finance income (charges) Profit on ordinary activities before taxation Tax on profit on ordinary activities Profit on ordinary activities after taxation Dividends paid and proposed Retained profit for the year transferred to reserves 19 6,554 4,831 8,096 4,927 5,985 Earnings per ordinary share - basic - diluted All activity has arisen from continuing operations. 9 9 36.4p 36.0p 17.9p 17.8p 25.1p 25.0p 29.1p 28.8p 20.4p 20.3p 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. A statement of movements on reserves is given in note 19. The accompanying notes are an integral part of this consolidated profit and loss account. 36 T O P P S T I L E S P L C Fixed assets Goodwill Tangible assets Investments Joint venture undertaking - share of assets - share of liabilities Current assets Stocks - finished goods Debtors Cash at bank and in hand Creditors: Amounts falling due within one year Net current assets Total assets less current liabilities Creditors: Amounts falling due after more than one year Provisions for liabilities and charges Net assets Capital and reserves Called-up share capital Share premium account Merger reserve Special reserve Profit and loss account Equity shareholders’ funds Group Company Notes 27 September 2003 £’000 1 June 2002 £’000 27 September 2003 £’000 10 11 12 12(c) 12(c) 586 23,252 – 946 (773) 285 15,044 – – – – – 15,126 – – 1 June 2002 £’000 – – 14,640 – – 24,011 15,329 15,126 14,640 3 0 0 2 r e b m e t p e S 7 2 S T E E H S E C N A L A B 19,713 4,712 18,580 43,005 (31,920) 19,019 3,802 5,142 27,963 (17,935) – 17,238 – 17,238 (8,898) – 10,801 462 11,263 (2,777) 11,085 10,028 8,340 8,486 35,096 25,357 23,466 23,126 (2,925) (526) (1,349) (1,007) – – – – 30,822 23,824 23,466 23,126 5,659 1,715 (399) – 23,847 5,623 1,307 (399) – 17,293 5,659 1,715 – 14,917 1,175 5,623 1,307 – 14,917 1,279 30,822 23,824 23,466 23,126 13 14 15 17 18 19 19 19 19 20 The financial statements on pages 36-58 were approved by the board of directors on 25 November 2003 and signed on its behalf by: S.K.M. Williams B.F.J. Bester Directors 25 November 2003 The accompanying notes are an integral part of these balance sheets. T O P P S T I L E S P L C 37 Net cash inflow from operating activities Returns on investments and servicing of finance Taxation Capital expenditure and financial investment Acquisitions and disposals Equity dividends Cash inflow before financing Financing Increase in cash in the period The accompanying notes are an integral part of this consolidated cash flow statement. Notes 21(a) 21(b) 21(c) 21(d) 21(e) 2003 £’000 33,723 312 (7,104) (10,653) (486) (5,469) 10,323 3,115 2002 £’000 10,426 (163) (3,005) (163) – (2,323) 4,772 (1,836) 21(f) 13,438 2,936 3 0 0 2 r e b m e t p e S 7 2 d e d n e d o i r e p e h t r o f T N E M E T A T S W O L F H S A C D E T A D I L O S N O C 38 T O P P S T I L E S P L C 3 0 0 2 r e b m e t p e S 7 2 S T N E M E T A T S L A I C N A N I F E H T O T S E T O N 1 Accounting policies The principal accounting policies are summarised below. They have all been applied consistently throughout the period and the preceding period: a) Basis of accounting The financial statements have been prepared under the historical cost convention and in accordance with applicable accounting standards. b) Basis of preparation of unaudited profit and loss accounts The unaudited profit and loss accounts are based on management accounts information and have been presented for the benefit of the principal users of financial statements. The audit opinion does not extend to the unaudited proforma profit and loss accounts. c) Basis of consolidation The statutory Group profit and loss account and balance sheet consolidate the financial statements of Topps Tiles Plc and its subsidiary undertakings made up to 27 September 2003. The financial statements of Topalpha Limited have been consolidated using merger accounting principles in the year ended May 1998. In all other cases, subsidiary undertakings have been accounted for using acquisition accounting principles and incorporate the results of the Group’s joint venture undertaking. The Group accounts for its own share of assets, liabilities and cash flows associated with this joint venture. The results of subsidiaries acquired or sold are consolidated for the periods from or to the date on which control passed. No profit and loss account is presented for Topps Tiles Plc, as permitted by S230 of the Companies Act 1985. The Company’s profit after tax for the period, determined in accordance with the Act, was £9,727,000 (12 months ended 1 June 2002 - £3,221,000). d) Financial period The accounting period end has been changed to the Saturday that falls closest to 30 September resulting in normal financial periods of either 52 or 53 weeks, however the current financial period is 69 weeks due to the change in accounting reference date. Proforma information represents profit and loss accounts for the following non-standard statutory periods; 16 months ended 28 September 2002, 12 months ended 27 September 2003 and 12 months ended 28 September 2002. e) Goodwill Goodwill arising on the acquisition of subsidiary undertakings and businesses, representing any excess of the fair value of the consideration given over the fair value of the identifiable assets and liabilities acquired, is capitalised and written off on a straight line basis over its estimated useful economic life, which is twenty years. Provision is made for any impairment. Goodwill arising on acquisitions in the period ended 30 May 1998 and earlier periods was written off to reserves in accordance with the accounting standard then in force. As permitted by the current accounting standard the £15m goodwill previously written off to reserves has not been reinstated on the balance sheet. On disposal or closure of a previously acquired business, the attributable amount of goodwill previously written off to reserves is included in determining the profit or loss on disposal. T O P P S T I L E S P L C 39 d e u n i t n o c 3 0 0 2 r e b m e t p e S 7 2 S T N E M E T A T S L A I C N A N I F E H T O T S E T O N 1 Accounting policies (continued) f) Turnover Turnover comprises the net amount receivable in respect of sales during the period to third parties and excludes value added tax. g) Tangible fixed assets Tangible fixed assets are stated at cost, net of depreciation and any provision for impairment. Costs, are only those costs, that are directly attributable to bringing the asset into working condition for its intended use. Depreciation is provided to write off the cost of tangible assets, less estimated residual value, over their estimated useful lives as follows: Freehold buildings Short leasehold land and buildings Fixtures and fittings Motor vehicles - - - - 2% per annum on cost on a straight line basis over the period of the lease, up to 25 years over 10 years or at 25% per annum on reducing balance basis as appropriate 25% per annum on reducing balance Freehold land is not depreciated. Residual value is calculated on prices prevailing at the date of acquisition. h) Stocks Stocks are stated at the lower of cost and net realisable value. Cost includes materials and an attributable proportion of distribution overheads based on normal levels of activity. Net realisable value is based on estimated selling price, less further costs expected to be incurred to completion and disposal. Provision is made for obsolete, slow moving or defective items where appropriate. i) Taxation UK corporation tax is provided at amounts expected to be paid (or recovered) using the tax rates and laws that have been enacted or substantially enacted by the balance sheet date. Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date where transactions or events that result in an obligation to pay more tax in the future or a right to pay less tax in the future have occurred at the balance sheet date. Timing differences are differences between the Group's taxable profits and its results as stated in the financial statements that arise from the inclusion of gains and losses in tax assessments in periods different from those in which they are recognised in the financial statements. Deferred tax is measured at the average tax rates that are expected to apply in the periods in which the timing differences are expected to reverse, based on tax rates and laws that have been enacted or substantively enacted by the balance sheet date. Deferred tax is measured on a non-discounted basis. j) Foreign currency Transactions in foreign currencies are recorded at the rate of exchange at the date of the transaction, or if hedged, at the forward contract rate. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are reported at the rates of exchange prevailing at that date, or if appropriate at the forward contract rate. Any gain or loss arising from a change in exchange rates subsequent to the date of the transaction is included as an exchange gain or loss in the profit and loss account. 40 T O P P S T I L E S P L C 1 Accounting policies (continued) k) Leases Assets held under finance leases and hire purchase contracts, which confer rights and obligations similar to those attached to owned assets, are capitalised as tangible fixed assets and are depreciated over the shorter of the lease terms and their useful lives. The capital elements of future obligations are recorded as liabilities, while the interest elements are charged to the profit and loss account over the period of the leases to produce a constant rate of charge on the balance of capital repayments outstanding. Hire purchase transactions are dealt with similarly, except that assets are depreciated over their useful lives. Rentals under operating leases are charged on a straight line basis over the lease term, even if the payments are not made on such a basis. Benefits received and receivable as an incentive to sign an operating lease are similarly spread on a straight-line basis over the lease term, except where the period to the review date on which the rent is first expected to be adjusted to the prevailing market rate is shorter than the full lease term, in which case the shorter period is used. l) Investments Fixed asset investments are shown at cost less provision for impairment. m) Pension costs For defined contribution schemes, the amount charged to the profit and loss account in respect of pension costs is the contributions payable in the year. Differences between contributions payable in the year and contributions actually paid are shown as either accruals or prepayments in the balance sheet. n) Derivative financial instruments The Group uses derivative financial instruments to reduce exposure to foreign exchange risk. The Group does not hold or issue derivative financial instruments for speculative purposes. For a forward foreign exchange contract to be treated as a hedge, the instrument must be related to actual foreign currency assets or liabilities or to a probable commitment. It must involve the same currency or similar currencies as the hedged item and must also reduce the risk of foreign currency exchange movements on the Group’s operations. Gains and losses arising on these contracts are deferred and recognised in the profit and loss account, only when the hedged transaction has itself been reflected in the Group’s financial statements. If an instrument ceases to be accounted for as a hedge, for example, because the underlying hedged position is eliminated, the instrument is marked to market and any resulting profit or loss recognised at that time. o) Finance costs Finance costs of debt are recognised in the profit and loss account over the term of the debt at a constant rate on the carrying amount. Finance costs which are directly attributable to the construction of tangible fixed assets are capitalised as part of the cost of those assets. The commencement of capitalisation begins when both finance costs and expenditures for the asset are being incurred and activities that are necessary to get the asset ready for use are in progress. Capitalisation ceases when substantially all the activities that are necessary to get the asset ready for use are complete. T O P P S T I L E S P L C 41 d e u n i t n o c 3 0 0 2 r e b m e t p e S 7 2 S T N E M E T A T S L A I C N A N I F E H T O T S E T O N 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 arise within the UK and Europe. By Geographical origin: Turnover Profit before tax Net assets 16 months ended 27 September 2003 £’000 12 months ended 1 June 2002 £’000 16 months ended 27 September 2003 £’000 152,210 2,087 154,297 91,026 – 91,026 23,142 64 23,206 United Kingdom Holland Bank loans and overdrafts Finance income/(charges) Total Net Assets Profit on ordinary activities before taxation 12 months ended 1 June 2002 £’000 11,660 – 11,660 At 27 September 2003 £’000 34,071 173 34,244 (3,422) At 1 June 2002 £’000 24,570 – 24,570 (746) 348 (144) 23,554 11,516 30,822 23,824 Turnover by destination is not materially different to that by geographical origin. 3 Operating expenses Distribution costs Administrative expenses: Other Employee profit sharing 16 months ended 27 September 2003 £’000 12 months ended 1 June 2002 £’000 44,849 28,808 14,032 5,450 7,670 2,859 19,482 64,331 10,529 39,337 42 T O P P S T I L E S P L C 4 Staff costs a) Staff costs The average monthly number of employees (including executive directors) was: Selling Administration Their aggregate remuneration comprised: Wages and salaries Social security costs Other pension costs (note 22(b)) Details of directors emoluments are disclosed on page 32. 16 months ended 27 September 2003 Number employed 1,036 140 1,176 12 months ended 1 June 2002 Number employed 936 134 1,070 16 months ended 27 September 2003 £’000 12 months ended 1 June 2002 £’000 27,157 2,384 194 29,735 17,304 1,323 169 18,796 T O P P S T I L E S P L C 43 d e u n i t n o c 3 0 0 2 r e b m e t p e S 7 2 S T N E M E T A T S L A I C N A N I F E H T O T S E T O N 5 Net finance (income)/charges Investment income Interest receivable and similar income Interest payable and similar charges Bank loans and overdrafts Hire purchase contracts Interest costs capitalised Net interest payable and similar charges Net finance (income)/charges 16 months ended 27 September 2003 £’000 12 months ended 1 June 2002 £’000 (358) (57) 73 – (63) 10 (348) 213 7 (19) 201 144 Finance costs have been capitalised based on a capitalisation rate of 3.5%, which is the weighted average of rates applicable to the Group’s general borrowings outstanding during the period. 6 Profit on ordinary activities before taxation Profit on ordinary activities before tax is stated after charging: Depreciation and amounts written off tangible fixed assets - owned - held under finance leases and hire purchase contracts Amortisation of goodwill Loss on disposal of tangible fixed assets Operating lease rentals - plant and machinery - other Remuneration to auditors - audit - other 16 months ended 27 September 2003 £’000 12 months ended 1 June 2002 £’000 3,045 – 54 217 535 13,153 55 38 1,826 86 17 – 366 7,862 40 24 Amounts payable to Deloitte & Touche in respect of non-audit services relate to tax planning advice. 44 T O P P S T I L E S P L C 7 Tax on profit on ordinary activities Current tax UK corporation tax Share of current tax paid by joint venture Adjustments in respect of prior years - UK corporation tax Total current tax Deferred tax - Origination and reversal of timing differences (note 17) Total tax on profit on ordinary activities 16 months ended 27 September 2003 £’000 12 months ended 1 June 2002 £’000 6,734 22 70 6,826 342 7,168 3,396 – (33) 3,363 114 3,477 The differences between the total current tax shown above and the amount calculated by applying the standard rate of UK corporation tax to the profit before tax is as follows: Profit on ordinary activities before tax Tax on profit on ordinary activities at standard UK corporation tax rate of 30% Effects of: Net income not deductible for tax purposes Capital allowances in excess of depreciation Depreciation on tangible fixed assets which do not qualify for capital allowances Accounting profit in excess of chargeable gains on sale of freehold property Higher tax rate on overseas earnings Adjustments to tax charge in respect of prior periods 16 months ended 27 September 2003 £’000 23,554 7,066 12 months ended 1 June 2002 £’000 11,516 3,455 (458) (64) 207 – 5 70 (85) (114) 149 (9) – (33) Current tax charge for period 6,826 3,363 T O P P S T I L E S P L C 45 8 Dividends Over provision in respect of prior period final dividend Interim paid 6.35p (2002 – 1.35p) per ordinary share Final proposed 15.40p (2002 – 5.80p) per ordinary share Written off in period Total 21.75p (2002 – 7.15p) per ordinary share 16 months ended 27 September 2003 £’000 12 months ended 1 June 2002 £’000 – 2,861 6,972 (1) 9,832 (7) 606 2,609 – 3,208 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 as follows: d e u n i t n o c 3 0 0 2 r e b m e t p e S 7 2 S T N E M E T A T S L A I C N A N I F E H T O T S E T O N Weighted average number of shares: For basic earnings per share Weighted average of shares under option Number of shares that would have been issued at fair value For diluted earnings per share 10 Goodwill Group Cost At 2 June 2002 Additions (note 12) At 27 September 2003 Amortisation At 2 June 2002 Charge for the period At 27 September 2003 Net book value At 27 September 2003 At 1 June 2002 46 T O P P S T I L E S P L C At 27 September 2003 Number of shares At 1 June 2002 Number of shares 45,057,596 2,051,333 (1,616,733) 44,865,992 691,761 (466,524) 45,492,196 45,091,229 Total £’000 338 355 693 53 54 107 586 285 11 Tangible fixed assets Group Cost At 2 June 2002 Additions Disposals At 27 September 2003 Depreciation At 2 June 2002 Charge for the period Disposals At 27 September 2003 Net book value At 27 September 2003 At 1 June 2002 Land and buildings Freehold £’000 Short leasehold £’000 2,179 6,079 - 8,258 97 95 - 192 8,066 2,082 1,098 75 - 1,173 479 150 - 629 544 619 Fixtures and fittings £’000 16,123 5,172 (421) 20,874 4,167 2,652 (173) 6,646 14,228 11,956 Motor vehicles £’000 395 329 (257) 467 8 148 (103) 53 414 387 Total £’000 19,795 11,655 (678) 30,772 4,751 3,045 (276) 7,520 23,252 15,044 Freehold land and buildings includes £3,637,872 (including £1,800,000 of land) of assets under construction, on which no depreciation has been charged in the current period. Cumulative finance costs capitalised included in the cost of tangible fixed assets amount to £167,000 (1 June 2002 - £104,000) for the Group. T O P P S T I L E S P L C 47 d e u n i t n o c 3 0 0 2 r e b m e t p e S 7 2 S T N E M E T A T S L A I C N A N I F E H T O T S E T O N 12 Fixed asset investments Subsidiary undertakings Joint venture (Note 12a) (Note 12b) Company 27 September 2003 £’000 14,640 486 15,126 1 June 2002 £’000 14,640 – 14,640 The Company and the Group have investments in the following subsidiary undertakings and joint ventures which principally affected the profit or net assets of the Group. To avoid a statement of excessive length, details of investments which are not significant have been omitted. Subsidiary undertaking Topalpha Limited* Multi Tile Limited Topps Tiles (UK) Limited Joint venture Topps Tiles Holdings BV* % of issued shares held 100% 100% 100% Principal activity Property management and investment Retail and wholesale of ceramic tiles, wood flooring and related products Retail and wholesale of ceramic tiles, wood flooring and related products 50% Retail and wholesale of ceramic tiles, wood flooring and related products * held directly by Topps Tiles Plc The investments are represented by ordinary shares. All subsidiary undertakings are incorporated in Great Britain and are registered and operate in England and Wales except for Topps Tiles Holdings BV which is registered and incorporated in the Netherlands. a) Subsidiary undertaking Cost Beginning and end of period Amounts written off Beginning and end of period Net book value Beginning and end of period 48 T O P P S T I L E S P L C Company £’000 14,652 12 14,640 12 Fixed asset investments (continued) b) Joint venture Cost and net book value At 2 June 2002 Additions At 27 September 2003 Company £’000 – 486 486 On 10 June 2002 the Company acquired 50% of the issued share capital of Topps Tiles Holdings BV. The fair value of the consideration was £486,000. The following table sets out the book and fair values of the identifiable assets and liabilities acquired: Tangible fixed assets Current assets Stocks Debtors Cash Total assets Creditors: due within one year Total liabilities Net assets Goodwill Satisfied by: Cash c) Joint venture Group Share of gross assets Share of gross liabilities Share of net assets Book and fair value £’000 359 417 101 – 877 (746) (746) 131 355 486 27 September 2003 £’000 946 (773) 173 1 June 2002 £’000 – – – T O P P S T I L E S P L C 49 d e u n i t n o c 3 0 0 2 r e b m e t p e S 7 2 S T N E M E T A T S L A I C N A N I F E H T O T S E T O N 13 Debtors Amounts falling due within one year: Trade debtors Loan to joint venture Amounts owed by subsidiary undertakings Other debtors Prepayments and accrued income 14 Creditors: Amounts falling due within one year Bank loans and overdraft (note 16) Trade creditors Other creditors Corporation tax Proposed dividend Accruals and deferred income 15 Creditors: Amounts falling due after more than one year Bank loan (note 16) 50 T O P P S T I L E S P L C Group Company 27 September 2003 £’000 1 June 2002 £’000 27 September 2003 £’000 775 106 – 811 3,020 4,712 773 – – 1,515 1,514 3,802 – – 17,223 – 15 17,238 Group Company 27 September 2003 £’000 497 13,101 6,204 1,547 6,972 3,599 31,920 1 June 2002 £’000 220 9,912 1,555 1,847 2,609 1,792 17,935 27 September 2003 £’000 1,553 108 54 4 6,972 207 8,898 1 June 2002 £’000 – – 10,542 244 15 10,801 1 June 2002 £’000 – 25 6 6 2,609 131 2,777 Group 27 September 2003 £’000 2,925 1 June 2002 £’000 526 16 Derivatives and other financial instruments The Group holds financial instruments to finance its operations, and to manage interest rate and currency risks arising from its operations. Consequently the main risks arising from the Group’s operations are liquidity risk, interest rate risk and currency risk. Liquidity risk The Group’s objective is to maintain continuity of funding through the use of retained profits and medium to long-term borrowings. The maturity profiles of the Group’s borrowings are detailed in section (c) of this note. Interest rate risk The Group’s objective is to manage the exposure to interest rate fluctuations whilst trying to minimise the cost of capital of the Group. Currency risk The Group has transactional currency exposures which arise from purchases by subsidiary undertakings in currencies other than the functional currency of the Group. The Group’s policy is to periodically use forward contracts to hedge those transactions to eliminate any significant currency exposure. The frequency and amount hedged is decided by the board and depends upon the magnitude of the exposure and volatility of the currency involved. The numerical disclosures in this note deal with financial assets and financial liabilities as defined in Financial Reporting Standard 13 “Derivatives and other financial instruments: Disclosures” (FRS 13). Certain financial assets such as investments in subsidiary and associated companies are excluded from the scope of these disclosures. As permitted by FRS 13, short term debtors and creditors have been excluded from the disclosures, other than the currency disclosures. a) Interest rate profile The currency profile of the Group’s financial assets is as follows: Sterling Euro Dollar 27 September 2003 £’000 19,069 (280) (209) 18,580 1 June 2002 £’000 5,142 – – 5,142 Financial assets comprise short term cash deposits with major United Kingdom clearing banks (with associated right of off-set) and deposits placed on money markets at call. The financial assets earn floating rates of interest based upon bank base rates. T O P P S T I L E S P L C 51 d e u n i t n o c 3 0 0 2 r e b m e t p e S 7 2 S T N E M E T A T S L A I C N A N I F E H T O T S E T O N 16 Derivatives and other financial instruments (continued) a) Interest rate profile (continued) The interest rate profile of the Group’s financial liabilities is as follows: Sterling – Borrowings: Loan 1 Loan 2 Loan 3 Loan 4 Total 27 September 2003 £’000 % – – 497 2,925 3,422 – – 1.00 0.75 Floating rate 1 June 2002 £’000 488 258 – – 746 % 1.00 1.00 – – The interest rate on floating rate financial liabilities indicates the excess over bank base rate. Loan 4 has an offset facility whereby if cash deposits are equivalent to the loan value the Company only pays 0.75% on the loan value. b) Currency exposures The amounts shown in the table below shows the effect of forward contracts entered into to manage foreign currency exposure as at 27 September 2003. Contract 1 Contract 2 There were no forward contracts in place at 1 June 2002. Initial contract value £’000 400 400 800 Contract delivery Currency 1 October 2003 3 November 2003 Euro Euro 52 T O P P S T I L E S P L C 16 Derivatives and other financial instruments (continued) c) Maturity of financial liabilities The maturity profile of the Group’s financial liabilities was as follows: In one year or less In more than one year but not more than two years In more than two years but not more than five years Total 27 September 2003 £’000 497 – 2,925 3,422 1 June 2002 £’000 220 220 306 746 d) Borrowing facilities The Group had undrawn committed borrowing facilities, in respect of which all conditions precedent had been met, as follows: Expiring in one year or less Expiring in more than one year but not more than two years Expiring in more than two years Total 27 September 2003 £’000 2,000 – 5,078 7,078 1 June 2002 £’000 2,000 – 7,100 9,100 e) Fair values There is no material difference between the fair value and book value of the Group’s financial assets and liabilities at the end of either period. 17 Provisions for liabilities and charges Group Deferred taxation - accelerated capital allowances At 2 June 2002 Charged to profit and loss account At 27 September 2003 27 September 2003 £’000 1,007 342 1,349 1 June 2002 £’000 893 114 1,007 T O P P S T I L E S P L C 53 d e u n i t n o c 3 0 0 2 r e b m e t p e S 7 2 S T N E M E T A T S L A I C N A N I F E H T O T S E T O N 18 Called-up share capital Ordinary shares of 12.5p each: Authorised Beginning and end of period Allotted, called-up and fully-paid At 2 June 2003 Issued in the period 27 September 2003 1 June 2002 Number of shares £’000 Number of shares £’000 64,000,000 8,000 56,600,000 7,075 44,980,765 292,944 5,623 36 44,805,018 175,747 5,601 22 5,623 At 27 September 2003 45,273,709 5,659 44,980,765 During the period the Company allotted 292,944 (1 June 2002 - 175,747) ordinary shares with a nominal value of £36,000 (1 June 2002 - £22,000) under share option schemes for an aggregate cash consideration of £444,000 (1 June 2002 - £324,000). 19 Reserves Group At 2 June 2002 Premium on issue of new shares Retained profit for the period At 27 September 2003 Company At 2 June 2002 Premium on issue of new shares Retained loss for the period At 27 September 2003 Merger reserve £’000 (399) – – (399) Special reserve £’000 14,917 – – 14,917 Share premium account £’000 1,307 408 – 1,715 Share premium account £’000 1,307 408 – 1,715 Profit and loss account £’000 17,293 – 6,554 23,847 Profit and loss account £’000 1,279 – (104) 1,175 54 T O P P S T I L E S P L C 20 Reconciliation of movements in Group equity shareholders’ funds Profit for the period Dividends paid and proposed Issue of shares (net of expenses) Net additions to shareholders’ funds Opening equity shareholders’ funds Closing equity shareholders’ funds 21a) Reconciliation of operating profit to operating cash flows Operating profit Depreciation Loss on disposal of fixed assets Goodwill amortisation Increase in stocks (Increase)/decrease in debtors Increase/(decrease) in creditors 16 months ended 27 September 2003 £’000 12 months ended 1 June 2002 £’000 16,386 (9,832) 444 6,998 23,824 30,822 8,039 (3,208) 324 5,155 18,669 23,824 16 months ended 27 September 2003 £’000 12 months ended 1 June 2002 £’000 23,184 3,045 217 54 (694) (1,728) 9,645 11,660 1,912 – 17 (1,726) 338 (1,775) Net cash inflow from operating activities 33,723 10,426 T O P P S T I L E S P L C 55 d e u n i t n o c 3 0 0 2 r e b m e t p e S 7 2 S T N E M E T A T S L A I C N A N I F E H T O T S E T O N 21b) Returns on investments and servicing of finance Interest received Interest paid Interest element of hire purchase rentals Net cash inflow/(outflow) from returns on investments and servicing of finance 21c) Capital expenditure and financial investment Purchase of tangible fixed assets Sale proceeds of tangible fixed assets Net cash outflow from capital expenditure and financial investment 21d) Acquisitions and disposals Acquisition of joint venture 21e) Financing Proceeds from issue of ordinary share capital New loans Repayment of loans Capital element of hire purchase rentals 56 T O P P S T I L E S P L C 16 months ended 27 September 2003 £’000 12 months ended 1 June 2002 £’000 363 (51) – 312 57 (213) (7) (163) 16 months ended 27 September 2003 £’000 12 months ended 1 June 2002 £’000 (11,655) 1,002 (10,653) (3,954) 3,791 (163) 16 months ended 27 September 2003 £’000 12 months ended 1 June 2002 £’000 (486) – 16 months ended 27 September 2003 £’000 12 months ended 1 June 2002 £’000 444 3,422 (746) (5) 3,115 324 – (1,976) (184) (1,836) 21f) Analysis and reconciliation of net funds Cash at bank and in hand Debt due within one year Due debt after one year Net funds Increase in cash in the period Cash (inflow)/outflow from (increase)/decrease in debt and finance leasing Movements in net funds in the period Net funds/(debt) at start of period Net funds at end of period At 1 June 2002 £’000 5,142 (220) (526) 4,396 At 27 September 2003 £’000 18,580 (497) (2,925) 15,158 Cashflow £’000 13,438 (277) (2,399) 10,762 16 months ended 27 September 2003 £’000 12 months ended 1 June 2002 £’000 13,438 (2,676) 10,762 4,396 15,158 2,936 2,160 5,096 (700) 4,396 22 Financial commitments a) Capital commitments At the end of the period there were capital commitments contracted but not provided for of £4.6m in relation to the warehouse development (1 June 2002 - £Nil). b) Pension arrangements The Group operates separate defined contribution pension schemes for employees and directors. The assets of the scheme are held separately from those of the Group in independently administered funds. The pension cost charge represents contributions payable by the Group to the funds and amounted to £194,000 (12 months ended 1 June 2002 - £169,000). T O P P S T I L E S P L C 57 22 Financial commitments (continued) c) Lease commitments The Group has entered into non-cancellable operating leases in respect of motor vehicles, equipment and land and buildings. The annual rentals under the foregoing leases are as follows: Operating leases which expire: - within one year - within two and five years - after five years 27 September 2003 1 June 2002 Land and buildings £’000 761 2,089 6,800 9,650 Other £’000 164 200 20 384 Land and buildings £’000 837 1,389 5,913 8,139 Other £’000 103 287 22 412 23 Related Parties At 27 September 2003 S.K.M. Williams was the landlord of two properties leased to Multi Tile Ltd, for £88,000 (1 June 2002 £Nil), a trading subsidiary of Topps Tiles Plc. No amounts were outstanding at 27 September 2003 (1 June 2002 £Nil). The lease agreements on both properties are operated on commercial, arms length terms. d e u n i t n o c 3 0 0 2 r e b m e t p e S 7 2 S T N E M E T A T S L A I C N A N I F E H T O T S E T O N 58 T O P P S T I L E S P L C Turnover, including joint ventures Operating profit Profit before taxation Shareholders’ funds Basic earnings per share1 Dividend per share1 Dividend cover Average number of employees Share price (period end)1 12 months ended 29 May 1999 £’000 42,996 6,091 5,828 9,338 9.9p 3.20p 3.0 585 212p 12 months ended 3 June 2000 £’000 12 months ended 2 June 2001 £’000 12 months ended 1 June 2002 £’000 62,614 8,249 8,018 13,182 13.1p 4.30p 3.0 779 271p 74,642 9,637 9,414 18,669 14.8p 5.00p 2.9 941 330p 91,026 11,660 11,516 23,824 17.9p 7.15p 2.5p 1,070 274p 16 months ended 27 September 2003 £’000 154,297 23,142 23,554 30,822 36.4p 21.75p 1.67p 1,176 427p 3 0 0 2 r e b m e t p e S 7 2 D R O C E R R A E Y E V I F Notes 1 Adjusted for subdivision of share capital (January 1999). T O P P S T I L E S P L C 59 G N I T E E M L A R E N E G L A U N N A F O E C I T O N NOTICE IS HEREBY GIVEN that the Annual General Meeting of Topps Tiles Plc (the ‘Company’) will be held at Unit D, Mortimer Road Industrial Estate, Narborough, Leicester, LE9 5GA on 6 January 2004 at 10.30 a.m. for the following purposes: Ordinary Business 1 to receive and adopt the report of the Directors and the financial statements for the period ended 27 September 2003 and the report of the auditors thereon; 2 3 4 5 6 to declare a final dividend of 15.40 pence per ordinary share on the ordinary shares for the period; to re-elect Stuart Williams as a director of the Company; to re-elect Nicholas Ounstead as a director of the Company; to re-elect Victor Watson as a director of the Company; to re-appoint Deloitte & Touche LLP as auditors and to authorise the directors to fix their remuneration; Special Business To consider and, if thought fit, pass the resolutions set out below which, in the case of Resolutions 7 and 8 will be proposed as Ordinary Resolutions and, in the case of Resolutions 9 and 10 will be proposed as Special Resolutions: 7 8 9 THAT the rules of the Topps Tiles Plc 2003 Executive Long-Term Incentive Plan (the “Plan”) a draft of which is produced to the meeting and initialled by the Chairman for the purposes of identification be and are approved and adopted and the Directors be and are authorised to do all things as may be necessary or expedient to carry the Plan into effect. THAT the Directors be and they are generally and unconditionally authorised for the purposes of and pursuant to section 80(1) of the Companies Act 1985 (the ‘Act’) to exercise all the powers of the Company to allot relevant securities (as defined in section 80(2) of the Act) up to an aggregate nominal amount of £1,884,518 provided that this authority shall expire 5 years from the date of the passing of this resolution (unless previously revoked, varied or extended by the Company in general meeting) save that the Company may, before such expiry, make an offer or agreement which would or might require relevant securities to be allotted after such expiry and the directors may allot relevant securities pursuant to any such offer or agreement as if the authority conferred hereby had not expired and so that this authority shall be in substitution for all previous authorities conferred upon the directors pursuant to section 80 of the Act but without prejudice to the allotment of any relevant securities already made or to be made pursuant to such authorities. THAT subject to and conditional on the passing of Resolution 8 set out above, the directors be and they are empowered, pursuant to Section 95 of the Act, to allot equity securities (as defined in Section 94 of the Act) for cash pursuant to the authority conferred by Resolution 8 above (as varied from time to time by the Company in general meeting) as if Section 89(1) of the Act did not apply to any such allotment provided that this power shall be limited to: a) the allotment of equity securities in connection with a rights issue; and b) the allotment (otherwise pursuant to sub-paragraph (a) above) of equity securities up to an aggregate nominal amount of £282,961. 60 T O P P S T I L E S P L C and shall expire on the earlier of the conclusion of the next Annual General Meeting of the Company and the date falling 15 months after the date of the passing of this resolution (unless previously revoked, varied or extended by the Company in general meeting), except that the Company may before the expiry of any power contained in this resolution make an offer or agreement which would or might require equity securities to be allotted after such expiry and the directors may allot equity securities in pursuance of such offer or agreement as if the power conferred by this Resolution had not expired. In this resolution 9 (a) ‘rights issue’ means an offer of equity securities open for acceptance for a period fixed by the directors to holders of ordinary shares on the register on a fixed record date in proportion to their respective holdings of such shares or in accordance with the rights attached to them (but subject to such exclusions or other arrangements as the directors may deem necessary or expedient in relation to fractional entitlements or in relation to legal or practical problems under the laws of, or the requirements of any regulatory body or any stock exchange in any territory); (b) the nominal amount of any securities should be taken to be, in the case of a right to subscribe for or convert any securities into shares of the Company, the nominal amount of the shares which may be allotted pursuant to such right; and (c) words or expressions defined in or for the purposes of sections 89-96 inclusive of the Act shall bear the same meanings. 10 THAT the Company be generally and unconditionally authorised to make market purchases (within the meaning of section 163(3) of the Act) of its own ordinary shares of 12.5p each in the capital of the Company (‘ordinary shares’) provided that: (a) the maximum number of Ordinary Shares hereby authorised to be purchased is 4,980,108; (b) the minimum price, exclusive of any expenses, which may be paid for an Ordinary Share is 12.5p; (c) the maximum price, exclusive of any expenses, which may be paid for an Ordinary Share is an amount equal to 105 per cent of the average of the middle market quotations for an ordinary share derived from the London Stock Exchange Daily Official List for the five business days immediately preceding the date on which such ordinary share is contracted to be purchased; (d) the authority hereby conferred shall expire at the close of the next Annual General Meeting of the Company; (e) the Company may make a contract for the purchase of ordinary shares under this authority before the expiry of this authority which would or might require to be executed wholly or partly after the expiry of such authority, and may make purchases of ordinary shares in pursuance of such a contract as if such authority had not expired. T O P P S T I L E S P L C 61 G N I T E E M L A R E N E G L A U N N A F O E C I T O N E H T O T S E T O N Y R O T A N A L P X E Notes (i) This notice has been sent to all ordinary shareholders who are entitled to attend or be represented at the meeting. (ii) A member entitled to attend and vote at the AGM may appoint a proxy or proxies to attend on a poll vote and, on a poll, vote on his or her behalf. A proxy need not be a member of the Company. To be valid, a form of proxy and any power or authority under which it is signed, must be lodged with the Company’s Registrars, Capita Registrars (Proxies), PO Box 25, Beckenham, Kent, BR3 4BR, no later than 48 hours before the time of the AGM. (iii) A proxy is not entitled to speak at the meeting except to demand a poll, and may vote only when a poll is taken. (iv) A form of proxy is enclosed and instructions for use are shown on the form. The fact that shareholders may have completed forms of proxy will not prevent them from attending and voting in person should they afterwards decide to do so. (v) As permitted by Regulation 41 of the Uncertified Securities Regulations 2001, only those shareholders who are registered on the Company’s share register at 8.00am on 5 January 2004 shall be entitled to attend the AGM and to vote in respect of the number of shares registered in their names at that time. Changes to entries on the share register after 8.00am on 5 January 2004 shall be disregarded in determining the rights of any person to attend and/or vote at the AGM. (vi) The following documents are available for inspection by members at the registered office of the Company on weekdays (except Bank Holidays) during the normal business hours and at the place of the meeting but not less than 15 minutes prior to and during the meeting: (a) the register of directors’ interests required to be kept under Section 325 of the Act; and (b) copies of the directors’ service contracts. c) a copy of the rules of the proposed Topps Tiles Plc Executive Long-Term Incentive Plan referred to in Resolution 7. Andrew Liggett Secretary 25 November 2003 Registered Office: Rushworth House, Wilmslow Road, Handforth, Cheshire SK9 3HJ Registered No. 3213782 62 T O P P S T I L E S P L C THE ANNUAL GENERAL MEETING of the Company will be held at the Company’s premises at Unit D, Mortimer Road Industrial Estate, Narborough, Leicester, LE9 5GA, on 6 January 2004 at 10.30am. Four of the resolutions are to be taken at this year’s AGM as special business. By way of explanation of these and certain of the other resolutions: RESOLUTION 2 Final Dividend A final dividend of 15.40p per ordinary share is recommended by the directors for payment to shareholders on the register of members of the Company at the close of business on 9 January 2004. Subject to approval by the ordinary shareholders at the AGM, the dividend will be paid on 2 February 2004. Interim dividends of 3.35p and 3.00p per ordinary share were paid on 28 February 2003 and 30 June 2003 respectively. This gives a total dividend level of 21.75p per ordinary share for the 16 month period to 27 September 2003. RESOLUTIONS 3, 4 AND 5 Re-election of Directors Stuart Williams, Nicholas Ounstead, and Victor Watson are the directors retiring by rotation this year and they offer themselves for re-election. All members of the board of directors submit themselves for re-election at least every 3 years with the exception of Victor Watson who at the age of 75 retires and offers himself for re-election annually. Brief biographical details about the directors standing for re-election appear on pages 22 and 23 of the report and financial statements. SPECIAL BUSINESS Resolution 7: 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 in Resolution 7 of the A.G.M. The Plan is a cash based plan with performance targets based on the Group profitability over a three year period ending in September 2006. The principal features of the Plan are outlined below: Operation - The Plan is a discretionary plan and will be operated by the Board (acting where appropriate through the Remuneration Committee). Eligibility - Any employee of the Group, as well as any executive director who is required to devote substantially all of his time to the business of the Group, who is more than 6 months from retirement will be eligible to participate in the Plan at the discretion of the Remuneration Committee. However, it is currently intended to offer participation only to senior employees but the Executive Co- Chairmen will not participate. Awards - Awards may be made at any time following the date on which the Plan is adopted by the Group. However it is currently intended that the awards will be made to those existing employees who are selected to participate as soon as possible after the Plan is adopted. Further awards will only be made during the performance period in exceptional circumstances, such as a new joiner or on promotion and on the basis that such awards are adjusted to take into account the extent to which the performance period has expired and the extent the performance conditions have been already met. No payment will be required for the grant of an award. Awards are not pensionable benefits and are not transferable (other than on death) without the consent of the Board. Limits - The maximum total amount potentially payable under the Plan if performance conditions are met is £4,000,000. The incentive pool will be divided at the discretion of the board, acting with the remuneration committee, but no one individual will be entitled to receive more than twenty five per cent of the incentive pool. Payment of Awards - Subject to the participant discharging any relevant tax liability and all conditions being satisfied, an award will normally be paid out as soon as possible after the end of the performance period. T O P P S T I L E S P L C 63 G N I T E E M L A R E N E G L A U N N A F O E C I T O N E H T O T S E T O N Y R O T A N A L P X E d e u n i t n o c Conditions Applicable to the Awards - The payment of the awards will be dependent on the employee remaining in employment with the Group and the Group achieving at least £80,000,000 audited pre-tax profits over the three year period ending September 2006. (In calculating the level of profit, any accrual for the Plan will be added back and the Remuneration Committee may also, if it deems appropriate, make an adjustment to disregard profit derived from businesses acquired after the commencement of the performance period.) Failure to satisfy the performance condition will result in the employee receiving no payment under the award. Special Situations - If a Participant leaves employment with the Group for any reason before the end of the performance period, his award will lapse. In the event of a take-over, reconstruction or winding up of the Group, the awards will become immediately payable. Alterations to the Plan - The Plan may at any time be altered by the Board in any respect. However, any alterations to the advantage of participants to the rules governing eligibility, limits on participation, the level of the incentive pool available under the Plan, and the circumstance in which the Awards are payable must be approved in advance by shareholders in general meeting unless the alteration or addition is minor in nature and made to benefit the administration of the Plan, to comply with the provisions of any existing or proposed legislation or to obtain or maintain favourable tax, exchange control or regulatory treatment for participants or Group companies. RESOLUTIONS 8 AND 9 Appointment of Authority to Issue Shares and the Dis-application of Statutory Rights of Pre-emption Resolution 8: The right of the directors to allot further shares in the capital of the Company requires in most cases the prior authorisation of the shareholders in general meeting under section 80 of the Companies Act 1985 (‘the Act’). Resolution 8 will be put to members as special business to authorise the directors to allot ordinary shares with a nominal value of £1,884,518 out of the Company’s unissued share capital representing approximately 33.3% of the Company’s current issued share capital. The authority shall expire five years from the date of passing this resolution. Resolution 9 will seek to obtain power under section 95 of the Act to enable the directors to allot, for cash, shares with an aggregate nominal value of £282,961 equal to approximately 5% of the Company’s current issued share capital without being required first to offer such securities to existing shareholders. The Company will thereby be given greater flexibility when considering future opportunities but the interests of existing shareholders will be protected as, except in the case of a rights issue or the allotment of shares under the Company’s share option schemes, the directors have no present intention to allot any part of the unissued share capital of the Company or, without the prior approval of the Company in general meeting, to make any issue which would effectively alter the control of the Company or the nature of its business. This authority will expire immediately following the AGM next following the resolution or, if earlier, 15 months following the resolution being passed. RESOLUTION 10 Authority to Purchase Ordinary Shares At the AGM, ordinary shareholders are being invited under resolution 10 to grant authority to the Company to make market purchases of its ordinary shares. It is proposed such authority shall expire on the conclusion of the AGM to be held in 2005. This authority will be limited to the purchase of not more than 11% of the ordinary shares currently in issue. This is less than the maximum of 14.9% of the ordinary share capital currently in issue which is permitted before a tender or partial offer to all shareholders is required to be made to perform any share buy-back. The maximum price payable under this authority will be 105% of the average of the middle market quotations of an ordinary share for the five business days before the relevant purchase and the minimum price will be 12.5p per ordinary share. The directors have no current intention of exercising the authority to purchase the Company’s own shares. In considering whether or not to purchase ordinary shares under the market purchase authority, the directors will take into account cash resources, the effect on gearing and other investment opportunities before exercising the authority. In addition, the Company will only exercise the authority to make such a purchase in the market when the directors consider it is in the best interests of the shareholders generally to do so and it should result in an increase in earnings per ordinary share. As at 25 November 2003, there were options to subscribe for 1,781,067 equity shares outstanding under various schemes representing approximately 3.93% of the current issued share capital of the Company. If the authority sought by resolution 10 was exercised in full, the number of outstanding options would represent approximately 4.42% of the issued share capital following the repurchase of shares. 64 T O P P S T I L E S P L C People are our business... Our aim is to achieve consistent high levels of customer service and this is reflected by the commitment shown by all our employees. M A E T E H T MEASURING UP... our team a Aileen Crossley Akommil Ali Alan Abbott Alan Allsopp Alan Clark Alan Faulkner Alan Feighan Alan Harding Alan McIntosh Alan Monk Alan Parker Alan Saunders Alan Seall Alan Sproston Alex Bott Alex Paterson Alfred Asare Ali Sadique Alice Unwin Alimahomed Kasmani Alisha Allan Alison Duchart Alistair Fleming Allan Chigariro Allan Harper Alpesh Patel Alvin Chinyanga Alyn Jones Amanda Green Amanda Hardy Amanda Hullett Amanda Smith Amanda Tucker Amerdeep Flora Amin Ladhu Amy Gray Andrew Baugh Andrew Carlisle Andrew Clay Andrew Collins Andrew Curtis Andrew Docherty Andrew French Andrew Green Andrew Hanson Andrew Hill Andrew Illidge Andrew Jones Andrew Liggett Andrew Massey Andrew McNab Andrew Middleton Andrew Monks Andrew Moore Andrew Parnell Andrew Smith Andrew Snary Andrew Thomas Andrew Ward Andrew Waterfield Andrew Wathan Andrew Williams Andrew Woodman Andrew Woolley Andy Barwell Andy Stables Angela Harrison Anil Sehdev Anita Colquhoun Anita Parsfield Anna Jordaan Anna Timney Anne Carpenter Anne Keelor Anne Lloyd Anne Marshall Anne Mccabe Anne Stevens Annette Harris Anthony Atkins Anthony Bradford Anthony Christopher Anthony Cottrell Anthony Cox Anthony Day Anthony Fleming Anthony Gilbert Anthony Houghton Anthony Kerr Anthony Linsell Anthony Molyneux Anthony White Antony Beazer Antony Benn Antony Parker Antony Plant Arnold Harrison Ashley Jordan Atique Arif Augustus Slater 8 b Barbara Edge Barrie Palmer Barry Bester Barry Price Barry Shane Barry Squires Barry Webber Ben Armitage Ben Daley Ben English Ben Fielding Ben Lee Ben Mortimer Ben Rogers Ben Woollins Benjamin Cripps Benjamin Marland Benoni Akuetteh Bernard Cope Bertil Boyles Blodwyn Hopkins Brad Crosthwaite Brandon Abels T O P P S T I L E S P L C 65 Aaron Corney Aaron Ephson Aaron Wilks Abdul Ullah Abdulkadir Kulmie Adam Barber Adam Biskupski Adam Coates Adam Elden Adam Elliott Adam Hughes Adam Ireland Adam Kirkham Adam Laidlaw Adam Lucas Adam Mills Adam Osborn Adam Whalley Adama Fofana Adrian McCourt Adrian McGothigan Adrian Pickup Adrian Wild Adrienne Staines Aidan Morgan Aidan Ward d e u n i t n o c M A E T E H T Brant Wells Brenda Bowles Brenda Palmer Brendon Roberts Brian Adams Brian Dewey Brian Fisher Brian Jamieson Brian Kerwin Brian Richards Brian Young Bryan Hartley Bryan Pulham c Cade Somerville Calvin Douglas Campbell Donaldson Campbell Marr Carina Lowe Carl Bradbury Carl Dicks Carl Dyke Carl Fraser Carl Sheppard Carl Veiger Carl Whatley Carol Lakin Carol Maskell Carol Milne Carol Sudlow Caroline Bennett Caroline Crofts Caroline May Cassandra Huitson Cath Hinde Catherine Platt Catherine Waldron Chan Gokani Chandu Kerai Chantelle Fallows Charlene Brown Charles Williams Charley Antoniou Chetan Patel Chetna Shah Chris Bain Chris Bettison Chris Burrows Chris Cartey Chris Crulkshank Chris Edwards Chris Evans Chris Green Chris Heyes Chris Johnson Chris Riddick Chris Rogers Chris Tupper Christina Langridge Christine Brown Christine Glover Christine Hendry Christine Jones Christine Rea Christine Wadsworth Christine Whiteman Christopher Carey Christopher Cooper Christopher Cowdray Christopher Goodwin Christopher Haslam Christopher Hunter Christopher Metcalf Christopher Newman Christopher Potter Christopher Turley Christopher Wenlock Christopher Weston Christopher Willey Christopher Wilmore Clare Barden Clare Evans Colin Butler Colin Cashin Colin Denson Colin Dixon Colin Green Colin Gwynn Colin Hampson Colin Hoban Colin Markham Colin Morgan Colin Rymer Colin Taylor Colin Vowles Colin Winterburn Craig Conway Craig Le Roux Craig Ollard Craig Tetlow Craig Thornton Craig Wheeler Craig White Crescent Baron 8 d Dale Corfield Dale Hoy Dale Young Damian Porter Dan McLean Daniel Britt Daniel Davey Daniel Dockerty Daniel Fallows Daniel France Daniel Gibbs Daniel Jones Daniel Little Daniel Musguin Daniel Rosenthall Daniel Rothwell Daniel Francis 66 T O P P S T I L E S P L C Daniel Smith Daniel Stubbs Daniel Wilde Danielle Albiston Danielle Smythe Darran Wood Darrel Bester Darrel Driver Darrell Morgan Darren Clarke Darren Connor Darren Doherty Darren Goode Darren Gould Darren Hall Darren Harper Darren Nunez Darren Palmer Darren Rutledge Darren Ryn Darren Saker Darren Simm Darren Square Darren Taylor Darren Williamson Darryl Ashbolt Darryl Roberts Darryn Walker Dave Hampson David Asquith David Atherton David Bailey David Blades David Bourne David Carpenter David Colwell David Critchlow David Daulton David Dewey David Dorney David Downes David Finnie David Fitzgerald David Fletcher David French David Gridley David Harper David Hatton David Hayers David Henderson David Hirst David Hulme David Lalley David Leishman David Lott David Macartney David Maddocks David Madera David Mallyon David Marshall David Nelson David Oliver David Parr David Phillips David Price David Savage David Sinclair David Steel David Stott David Stoughton David Strain David Thomasson David Warrilow David Williams Davina Colville Dawn Marsh Dean Brown Dean Hyde Dean Marshall Dean Moloney Dean Sheldon Dean Smith Dean Tricker Dean Woolley Debbie Hynd Debby Humpage Deborah White Deborah Williams Debra Davies Debra Ruddick Denis O'Brien Dennis Cragen Denzil Johns Derek Lambourn Derek Parsons Derek Sim Derek Smith Devias Gudka Devindren Govender Dhiresh Raghwani Diane Shatford - Butcher Diann Ragunan Dilawar Ali Dinkar Ratna Dolores O'Malley Donal Higgins Donna Paterson Donna Shirley Doreen Hyatt Doreen Murabiwa Duncan Bull Dwayne Howard Dylan Roberts e Emin Demirkaya Emma Barlow Emma Brookes Emma Casey Emma Jarram Emma Lindop Emma Low Emma Parker Emma Rowlands Emma Whatson Emmanuel Woghiren Enid Lamb 8 f Faiz Uteem Farooq Younis Felipe Langley Finbarr McQuaid Flora Tuitt Florence Sholanke Fran Graysmark Frances Aylward Frances Stevens Francis Golden Francis Tully Frank Manu Boafo Edmund Rowland-Smith Edmund Smith Edward Baker Edward Derbyshire Edward Dove Edward Gardiner Edward Murphy Ekaterina Arsenieva Elizabeth Bellwood Elizabeth Kelly Elizabeth Smith Ella Horswell Emily Borderick g Gareth Spring Gareth Ward Garry Hardy Gary Ashdown Gary Asher Gary Curtis Gary Firth Gary Strohmer Gavin Bartram Gavin Bennett Gavin Dwyer Gavin Jepson Gavin King Gavin Mitchell Gavin Ramsey Gayle Anderson Geoff Crook Geoff Sutters Geoffrey Dodd Geoffrey Toms Geoffrey Webster George Mallyon Geraldine Plumtree Gerard Mallon Gerry Lazaro Gianfranco Zanolini Gillian Grace Gillian Gray Gillian Tokley Glen Claridge Glen Holloway Glen Maddix Glenn Fordyce Glenn Jessop Glenn Madgin Glenn Vine Glyn Rogers Gordon Page Graeme Croton Graham Brophy Graham Buckley Graham Chapman Graham Jones Graham Temple Graham White Gregg Wall Gurjinder Rai h Hayley Lunn Heath Maryson Heather Blore Helen Goldfarb Helen Mcdermott Helen Murray Himat Gami Hitesh Ratna Howard Farmer Howard Sanders Hugo Mendonca i Ian Bloomfield Ian Bott Ian Chance Ian Davidson Ian Fairfield Ian Hobson Ian Jones Ian Lightowlers Ian Mcalinden Ian Mcinteer Ian Mcnamara Ian Pennington Ian Reavey Ian Stevens Ian Sykes Ian Woodward Ian Marshall Ilker Camur Imran Ashraf Itzel Alva Ivan Frampton Ivar Jensen j Jack Pearce Jacqueline Byrne Jacqueline Macgillivrah Jagdesh Varsani Jajwinder Harar James Allington James Aspey James Biggs James Bott James Cameron James Carpenter James Coles James Dabbs James Eastham James Edge James Gentleman James Hardy James Holland James Kelly James Koroma James Manders James Mcguigan James Mercer James Metcalf James Metcalfe James Moores James Morgan James Myatt James O'Shea James Paterson James Patston James Richards James Rigg James Robertson James Ryder James Sawyer James Smith James Thompson James White Jamie Bannister Jamie Brewer Jamie Gaynor Jamie Gorham Jamie Parkes T O P P S T I L E S P L C 67 d e u n i t n o c M A E T E H T Jamie Turner Jamie Wenburn Jamie Westwood Jamie White Jane Horsford Jane Stronghill Janet Burgess Janet Lockyer Janet Riley Janice Millett Jasbinder Pal Jasmina Reddick Jason Di Leva Jason Doe Jason Evans Jason Meadows Jason Moore Jason Morgan Jason Pratt Jason Schofeild Javeed Parkar Jayantilal Patel Jayawthe Weerasinge Jayesh Kalidas Jean Smith Jennifer Andrews Jennifer Donlan Jennifer Hart Jenny Seabrook Jeremy Harris Jessica Cooper Jessica Merryweather Jeten Varsani Jim Tuvey Jimmy Vander Plank Joanna Barnes-Warden Joanna Coates Joanna Kidner Joanne Elton Joanne Smith Jody Donald Joe Brown Joe Cox Joe Lucas Johanna Asher John Chinn John Coles John Darcey John Daulton John Davidson John Davies John Doodson John Douglas John Forden John Foster John Goward John Hickey John Johnston John Kelleher John Kent John Killicoat John Mckenna John Moat John Procter John Reilly John Russell John Smith John Smith John Summers John Sutton John Thompson John Tyrrell John Upton Johnathon Cox Jon Oliver Jon Potts Jon Utah Jon Wilson Jonathan Coombs Jonathan Hargreaves Jonathan Whitehead Jonathon Mills Jonathon Parmenter Jonathon Perkins Jonathon Sheerin Jon-Paul Hughes Joseph Bentley Joseph Prempeh Joseph Quinn Joseph Walsh Josephine Hilldrup Joshua Groener Joyce Davies Judy Prescott Juginder Gill Julia Collins Julian Flake Julian Lloyd Julie Fewings Julie Horsford Julie Morgan Julie Roebuck Julie Cox Julieanne Addinall Justin Bradley Justin Roberts k Kalpesh Patel Kamal Aslam Karen Johnston Karen Lakin Karen Lowe Karen March Karen Nicholson Karen Sutcliffe Karen Woodey Karl Brooks Karl Creese Karl Cumberbatch Karl Jackson Karl Madge Karl Robbins-Sones Karl Sweeney Karl Winship Kate Harvey Katherine Shenoy Kathryn Robinson Katryna Jaskulski Kay Greatbatch Keiron Birch Keith Earl Keith Hedley Keith Hughes Keith Pugh Keith Rudkin Keith Whittleston Kelly Ellison Kelly Halliman Kelly Thompson Kelly Trickett Kelly Whyte Kelly Withey Kelly Wrenn Kenneth Frankland Kenneth Oldham Kenneth Owen Kenneth Turner Kerri Wood Kerry Atkinson Kerry Blatch Kerry Croain Kerry Hume Kerry Mcauley Kevan Richardson Kevin Ashworth Kevin Baker Kevin Bowtle Kevin Brophy Kevin Croft Kevin Crompton Kevin Gallagher Kevin Hayes Kevin Nelson Kevin Pendlebury Kevin Thorne Khalil Hussain Kieran Barnes-Warden Kim Horsman Kirk Starling Kobi Anaman Kris Bailey Kris Kingsley Kristopher Kennedy Kwame Gyambibi l Lance Cale Larissa Gurney Laura Edwards Laura Johnson Laura Kershaw Laura Price Laurence Clark Laurence Davies Laurence Loxam Laurent Joulia Leanne Foweather Leanne Miles Lee Bowdery Lee Carroll Lee Croucher Lee Dover Lee Fisher Lee Galloway Lee Goodrick-Meech Lee Harris Lee Jeffreys Lee Johnston Lee Langmaid Lee Markwell Lee Marron Lee Maxey Lee Morris Lee Payne Lee Pinder Lee Reeves Lee Shillibeer Lee Street Lee Wright Leigh Holden Leighton Rees 68 T O P P S T I L E S P L C Leon Brown Leon Tracey Leonard Denton Leonard Sheldrick Leonard Wilson Leslie Baker Leslie Maher Liam Forsyth Liam Taylor Lianne Harrison-Allcock Linda Green Linsey Wilson Lisa Barrow Lisa Raye Lisa Sheppard Lisa Walker Llewellyn Gordon Loretta Daley Lorna Ballantyne Lorna Roach Louisa Seigneur Louise Mcgough Lucy Byles Lucy Dacosta Luke Goldstein Lyndsey Martin Lynette Grimes Lynn Davey m Mallikarjun Rangineni Mandeep Flora Mandy Aidney Manjeet Thathal Marc Simpson Marc Sutton Margaret Lawrie Margaret Rayner Maria Ginnelly Marianne Pettengell Mark Allen Mark Betts Mark Bober Mark Bone Mark Bourner Mark Bradbury Mark Chamberlain Mark Collyer Mark Cowley Mark Curwen Mark Dennis Mark Discombe Mark Farquhar Mark Garrity Mark Gasson Mark Hadfield Mark Hilton Mark Hirst Mark Hodgkinson Mark Hunt Mark Hunter Mark Jepson Mark Johnson Mark Jones Mark Lever Mark Matheson Mark Moore Mark Mottershead Mark Robinson Mark Stephenson Mark Strong Mark Taylor Mark Thompson Mark Tokley Mark Traynor Mark Waller Mark Williams Mark Williams Martin Baker Martin Ball Martin Brophy Martin Derricott Martin Horton Martin Podmore Martin Pye Martin Ridgway Martin Shearsby Martin Shenton Martin Sinnott Martin Steele Martin Winterburn Mary Stonard Mathew Beddow Mathew Seed Matt Stone Matthew Clift Matthew Cohen Matthew Dobson Matthew Foster Matthew Foulger Matthew Hawley Matthew Howell Matthew Jenner Matthew Johnson Matthew Mckune Matthew Pickley Matthew Rayner Matthew Sigley Matthew Williams Matthew Wright Maxine Mukuya Mehmet Asdoyuran Melanie Hall Melton Thompson Michael Bateman Michael Boughton Michael Bridgwater Michael Coward Michael Dunn Michael Earls Michael Finn Michael Gay Michael Gillard Michael Griffiths Michael Harrison Michael Holland Michael Hughes Michael Humphrey Michael Ingham Michael Jack Michael Lemaitre Michael Litster Michael Mcglade Michael O'Gorman Michael Reynolds Michael Skinner Michael Smillie Michael Stephenson Michelle Bovey Michelle Kempson Michelle Williams Mike Lock Milo Thompson Mitul Amin Mo Iqbal Mohamed Patel Mohammad Waheed Mohammed Amreaz Mohammed Parvaz Musawer Shah 8 n Naeem Akram Nancy Clarke Naomi Cullen Narinder Chatha Nasser Mpoza Natalie Exon Nathan Collins Nathan Coulthard Nathan Jander Nathan Seigneur Nazia Bibi Neil Atkinson Neil Brownley Neil Carr Neil Crozier Neil Curtis Neil Davies Neil Greenaway Neil Hendy Neil Homan Neil Kelly Neil Ketnor Neil Potkin Neil Thakore Neil Worthington Nic Lewis Nicholas Bradshaw Nicholas Clifford Nicholas Davies Nicholas Kyriacou Nicholas Lawrence Nicholas Ounstead Nicholas Salisbury-Jones Nicholas Withers Nick Gardner Nick Lyon Nicola Acres Nicola Dearden Nicola Eggleton Nicola West Nicolas Wassell Nigel Fleming Nigel Slaughter Nigel Wood Nikolai Nikoloff Nilesh Bhatt Nilesh Dahya Nina Abbotts Noel Hackett Noel Higgins Norman Heathwaite Nozmul Rahman o Oliver Jones Oliver Sawyer Owen Rawlinson T O P P S T I L E S P L C 69 d e u n i t n o c M A E T E H T p Pamela Brydon Patricia Squires Patricia Walker Patrick McKeogh Patrick McLaughlin Patrick McLean Paul Bainbridge Paul Barnard Paul Bliss Paul Burkett Paul Burrow Paul Calderone Paul Carter Paul Castleton Paul Chapman Paul Coffey Paul Copeland Paul Cunliffe Paul Danbury Paul Edwards Paul Gibbons Paul Glynn Paul Halliwell Paul Hammond Paul Honour Paul Horn Paul Irving Paul Kelly Paul Kemp Paul Lathrope Paul Laverty Paul Leaford Paul Liggett Paul Mayfield Paul McCullock Paul Miller Paul Peacock Paul Revell Paul Riley Paul Robinson Paul Rockett Paul Roden Paul Ruddle Paul Semple Paul Smith Paul Stuart Paul Sutton Paul Thorneycroft Paul Williams Paul Woolnough Paula Budsworth Pauline Grenfell Perry Simpson Peter Byrne Peter Charters Peter Davey Peter Davidson Peter Deegan Peter Fallows Peter Fordham Peter Johnson Peter Lynn Peter Rhodes Peter Simmonds Peter Smith Peter Suthers Phil Peacock Philip Hawkeswood Philip Kelly Philip Kelly Philip McCarney Philip McChrystal Philip Meakin Philip Osborne Philip Pritchard Philip Tomlin Philip Wenn Phillip Dunn Phillip Fitzgibbons Phillip Hunt Phillipa Hewitt Pravesh Ramsaha r Rahman Fofana Raj Surani Rajan Mehta Rajbinder Dhanoya Rajiv Vadgama Ranjeet Jassal Ranjit Grewal Ravi Sudera Ravindra Senaratne Ray Tricker Raymond Distefano Rebecca Bailey Rebecca Jacques Rebecca Oblein Reedwan Desai Rehan Khan Rhonda Partridge Rhys Kelland Richard Ball Richard Barnes Richard Beckham Richard Bickers Richard Brookfield Richard Carter Richard Clark Richard Davies Richard Deavall Richard Hamblen Richard Harris Richard Homan Richard Hurdiss Richard Hutcheson Richard Lee Richard Mauto Richard Scott Richard Smallman Richard Spencer Smith Richard Whitmore Richard Wilson Rizwan Khan Robert Adams Robert Bumstead Robert Cairns Robert Cruickshank Robert Davis Robert Exley Robert Green Robert Hadley Robert Hodgson Robert Howker Robert Humphreys Robert Mackie Robert Maples Robert Marcellin Robert Moss Robert Myers Robert Novis Robert Rayner Robert Reynolds Robert Stevens Robert Trigg Robert Waldon Robert Wright Roberto Di-Leva Robin Holt Robin Pinhorn Rocky Stocking Rodney Sanders Roger Bailey Ron Perrott Ronald Daniels Ronald Emmanuel Ronald Mackenzie Ronnie Webster Rosina Taylor Roslyn Naylor Roy Haddon Roy Lewis Roy Peasland Russell Adgey Russell Thornton Ryan Barfield s Sadie Manning Safeer Yasen Sagren Naidoo Saladdin Beqqada Sally Casburn Sally Green Sam Nortey Sam Osborn Samantha Cato Samantha Gobey Samantha Sayer Samantha Williams Sandra Robinson Sarah Crawford Sarah Earthey Sarah Foster Sarah Jones Sarah Pimm Sarah Webb Sarah Whitehead Satyan Meisuria Scott Arundell Scott Frankland Scott Hickman Scott McCluskey Scott Meadows Scott Smith Scott Williams Sean Fisher Sean Kerry Sean McClafferty Sean Wixen Shafaq Mohammed Shane Malone Shane Sayles Shane Wood Shanoor Ali Sharon Homer Sharon Muir 70 T O P P S T I L E S P L C y Yvonne Archer Yvonne Brown Yvonne Burgess z Zacarie Vital Zaid Tufail Zaveed Choudhury Zedh Foley Zoe Cope Zoe Langridge Zunaid Ismail Sharron Bruce Sharron Ware Shaun Bebbington Shaun Bryan Shaun Hayes Shaun O' Connor Sheila Robertson Sheila Whetton Shelly Rashall Sherief Madkour Aly Shirley Girdler Simeon Stewart Simon Brookfield Simon Farr Simon Green Simon Jones Simon Knowles Simon Lasham Simon Morgan Simon Rayner Simon Tuckley Simon Tunnicliffe Simon Witham Simon Worth Siobhan Waters Sion Jackson Sophia Mcdonald Stanley Crowther Stephan Linay Stephanie Jarvis Stephanie Nevett Stephen Ainsworth Stephen Bloomfield Stephen Clarke Stephen Collins Stephen Davey Stephen Dempster Stephen Lewis Stephen Marshall Stephen May Stephen Mccafferty Stephen Mcleod Stephen Nunn Stephen Reed Stephen Ridout Stephen Smith Stephen Unsworth Stephen Unuth Steve Gaylor Steve Ho Steven Clark Steven Firth Steven Godwin Steven Gregory Steven Long Steven Lynn Steven Nelson Steven Powner Steven Pratt Steven Rimes Steven Tanner Steven Tinkler Steven Walker Steven Wescott Steven Whittle Steven Wood Stewart Hensley Stewart Moody Stewart Trace Stuart Hill Stuart Leatherland Stuart Pemberton Stuart Perrins Stuart Thistleton Stuart Williams Sukhbinder Verdding Susan Attwell Susan Groombridge Susan Henshall Susan Hulme Susan Hunt Susan Wright Suzan Aciro Suzanne Lynch v Valerie Vernon Vanessa Mclean Vicky Cartey Vicky Edge Vicky Evans Vicky Wilkinson Victor Amarteifio Victor Watson Victoria Bachell Vikram Talati Vipesh Kerai Vivienne Johns w Warren Bester Warren Smith Wayne Coleman Wayne Farini Wayne Hardy Wayne Hughes Wayne Pierce Wayne Quaintance Wayne Randell Wayne Sponneck Wendy Altimas Wendy Wilson Wesley Atack William Bailey William Brownsell William Harvey William Lount t Tausif Ghazanfar Tehsin Khan Tellon Bennett Temiloluwa Longe Terence Dooley Terence Melia Terence White Teresa Moppett Tessa Stratford Thamir Abdul Hameed Theresa Baker Thomas Cunningham Thomas Fry Thomas Lewis Thomas Ryan Thomas Taylor Thomas Wade Timothy Boardman Timothy Maysh Toby Bateson Toby Collins Tom Mallion Toni Dowley Tony Alliband Tony Baker Tony Davies Tony Lambert Tony Watson Tracey Gallagher Tracy Fleet Tracy Ryan Tracy Stevens Trevor Griffin u Urvashi Mehta T O P P S T I L E S P L C 71 S N O I T A C O L E R O T S CENTRAL REGION Aston Banbury Bedford Boston (cid:218) Burton Bury St Edmunds Cambridge (cid:218) Cannock Colchester Coventry Derby Derby 2 Erdington (cid:218) Great Yarmouth Hereford Ipswich Kidderminster Kings Heath Kings Lynn Leicester Lincoln Luton Martlesham(cid:218) Narborough Newcastle-U-Lyne Newark (cid:218) Northampton Norwich Nottingham Oldbury Peterborough Sheldon Shrewsbury Solihull Stafford Stoke on Trent Tamworth Telford (cid:218) West Bromwich Wolverhampton LONDON AND THAMES SOUTH Basildon Beckton Bexhill (cid:218) Brighton Broadstairs Canterbury Catford Charlton Chelmsford (cid:218) Chingford Colindale Crayford Croydon Dagenham Eastbourne (cid:218) Edmonton Eltham (cid:218) Farnborough* Fulham Gatwick Gunnersbury Guildford (cid:218) Harlow Ilford Isle of Wight (cid:218) Maidstone Mitcham New Southgate Newbury Old Kent Road Orpington Penge Portsmouth (cid:218) Raynes Park Rayleigh (cid:218) Reading Romford Sittingbourne (cid:218) Slough (cid:218) Southall Southampton Southend Stamford Hill Swindon Tonbridge Tunbridge Wells Twickenham Uxbridge Vauxhall Waltham Cross* Watford Wembley NORTH WEST Aintree Blackpool Bolton Cheadle Chester Chester 2 Chorley (cid:218) Cleveleys Crewe Failsworth Flint (cid:218) Liverpool Macclesfield Morecambe Oldham Ormskirk (cid:218) Preston Sale Salford Snipe (Audenshaw) St Helens Stockport Warrington Widnes Wigan NORTH Barrow in Furness Carlisle Chesterfield Durham Harrogate Huddersfield Leeds Hull (cid:218) Stockton Sunderland Tyneside Wakefield York (cid:218) SCOTLAND Aberdeen Edinburgh Falkirk Glasgow (cid:218) Greenock Hillington Inverness Linwood Perth Rutherglen Wishaw SOUTH WEST Barnstaple Basingstoke Bristol Cardiff Cheltenham Christchurch Cribbs Causeway Exeter Gloucester Newport Plymouth Poole Salisbury (cid:218) Swansea Taunton 72 T O P P S T I L E S P L C TOTAL 160 STORES LONDON STORES Torquay (cid:218) Weston Super Mare Winchester Yeovil (cid:218) New store 2002/03 139 Stores at beginning of period 24 New stores opened 2 Transfer from TCH* 165 Sub-Total Closures (4) Holland Store sold to Joint Venture (1) 160 Total TOTAL 36 STORES NORTH Bradford (cid:218) Darlington Doncaster Hull Sheffield SOUTH WEST Bournemouth Bridgend Exeter SCOTLAND Aberdeen CENTRAL REGION Cambridge (cid:218) Coventry Fenton Great Barr Leicester Harlow (cid:218) Milton Keynes Nottingham Peterborough Stoke on Trent Worcester LONDON AND THAMES SOUTH Barking (cid:218) Beckenham (cid:218) Charlton Haringey (cid:218) New Southgate Orpington Swindon Wembley NORTH WEST Bolton Cheadle (cid:218) Crosby Maghull (cid:218) Oldham (cid:218) Preston Stockport Wigan (cid:218) New store 2002/03 Stores at beginning of period New stores opened Transfer to Topps Sub-Total Closures Total 32 9 (2) 39 (3) 36 9 1 1 1 4 4 4 1 2 1 0 d e t i m L i i s n o i t a c n u m m o C X H B y b d e c u d o r p d n a d e n g i s e D Topps Tiles Plc Rushworth House, Wilmslow Road, Handforth, Wilmslow, Cheshire SK9 3HJ T 01625 446 700 F 01625 446 800 www.ToppsTiles.co.uk