_cover.qxd 24/11/2004 17:04 Page 1 controlled... consistent... continued... The Topps Tiles Group is Britain’s biggest ceramic tile and wood flooring specialist with 220 stores throughout the UK, and with a controlled opening programme of 24 new stores per annum, the UK store target of 350 stores is well within reach. Topps’ record since flotation in 1997 is consistently excellent with earnings per share showing over 42% average annual compound growth over the past seven years and with our dominant market position, more new stores and a growing market, the Board expects a continued build in shareholder value. ...growth! Topps Tiles Plc Annual Report and Financial Statements 2004 COMPANY OF THE YEAR _cover.qxd 24/11/2004 17:04 Page 2 Store Locations Central Region Aston Banbury Bedford * Binley Boston Burton Bury St Edmunds Cambridge Cannock Colchester Coventry Derby Derby 2 Erdington Great Yarmouth Grove Park Hereford Ipswich Kidderminster Kings Heath Kings Lynn Leicester Lincoln Luton Mansfield ■ Martlesham * Milton Keynes Newcastle-U-Lyme Newark Northampton Norwich Nottingham Oldbury Peterborough Sheldon Shrewsbury Solihull Stafford Stoke on Trent Stratford-upon-Avon ■ Tamworth Telford Wellingborough ■ West Bromwich Wolverhampton * Worcester London and Thames South Basildon Beckton Bexhill Braintree ■ Brentwood ■ Brighton Broadstairs Canterbury Catford Charlton Cheam ■ Chelmsford Chingford Colindale Crayford Croydon Dagenham Eastbourne Edmonton Eltham Farnborough Farnham ■ Fulham Gatwick Gunnersbury Guildford Harlow Hedgend ■ Ilford Isle of Wight Maidstone Mitcham New Southgate Newbury Old Kent Road Orpington Penge Portsmouth Raynes Park Rayleigh Reading Richmond ■ Romford Sittingbourne Slough Southall Southampton Southend Stamford Hill Sudbury ■ Swindon Tonbridge Tunbridge Wells Twickenham Uxbridge Vauxhall Waltham Cross Watford Wembley West Wickham ■ North West Aintree Blackburn ■ Blackpool Bolton Cheadle Chester Chester 2 Chorley Cleveleys Crewe Failsworth Flint Liverpool Macclesfield Morecambe Northwich ■ Oldham Ormskirk Preston Rhyl ■ Sale Salford Snipe (Audenshaw) St Helens Stockport Warrington Widnes Wigan Wrexham ■ North Barrow-in-Furness Carlisle Chesterfield Durham Harrogate Huddersfield Dewsbury ■ Leeds Hull Sheffield ■ Stockton Sunderland Tyneside Wakefield York ■ Scotland Aberdeen Dundee ■ Edinburgh Falkirk Glasgow Greenock Hillington Inverness Linwood Perth Rutherglen Wishaw South West Barnstaple Basingstoke Bournemouth ■ * Bridgend Bridgewater ■ Bristol Cardiff Cheltenham Christchurch Cribbs Causeway Exeter Gloucester Hengrove ■ Launceston ■ Merthyr Tydfil ■ Newport Plymouth Poole Salisbury Swansea Taunton Torquay Weston-Super-Mare Winchester Yeovil ■ New store 2003/04 Total 187 Stores Total 33 Stores London Stores Stores at beginning of period New stores opened *Transfer from TCH Sub-total Closures Total * TCH – Tile Clearing House 160 24 4 188 (1) 187 Stores at beginning of period New stores opened Transfer to Topps Sub-total Closures Total 36 3 (4) 35 (2) 33 Central Region Aylesbury ■ Cambridge Fenton Great Barr Leicester Northampton ■ Nottingham Peterborough Stoke-on-Trent London and Thames South Barking Beckenham Charlton Harlow New Southgate Orpington ■ Swindon Wembley North West Bolton Cheadle Crosby Maghull Oldham Preston Stockport Wigan North Bradford Darlington Doncaster Hull Sheffield Scotland Aberdeen South West Bournemouth Exeter ■ New store 2003/04 _0_TOP_arf04.qxd 25/11/2004 11:41 Page 01 Financial Highlights The Group has continued to deliver excellent results across all areas. 53 weeks results to 2 October 2004 ■ Group turnover increased by 32.5%* to £157.6 million ■ Group gross margin increased to 60.5% (2003: 57.5%*) ■ Operating costs decreased as a percentage of Group turnover to 39.9% (2003: 41.9%*) ■ Profit before tax increased by 78.9%* to £33.8 million ■ Profit before tax margin increased to 21.4% (2003: 15.9%*) ■ Basic earnings per share increased by over 94% to 11.30 pence (2003: 5.82*¥ pence) ■ Dividend policy changed to 1.41 times cover from 1.67 times cover at 27 September 2003 ■ A final net dividend of 6.00 pence per share to be paid on 31 January 2005 ■ The full period dividend of 8.00 pence per share is an increase of over 130%* ■ Net cash position of £23.1 million ■ Net 24 new stores opened ■ 11 stores now trading in Holland (2003: 8 stores) * comparatives are made to the unaudited information for the 52 weeks ended 27 September 2003 (See Profit and Loss Account). ¥ adjusted for share sub-division of 5:1 in May 2004. Topps Tiles Plc Annual Report and Financial Statements 2004 01 IFC STORE LOCATIONS 01 FINANCIAL HIGHLIGHTS 02 CHAIRMENS’ STATEMENT 04 STRATEGY STATEMENT 06 OPERATING AND FINANCIAL REVIEW 14 CORPORATE AND SOCIAL RESPONSIBILITY 18 EXECUTIVE DIRECTORS 19 NON-EXECUTIVE DIRECTORS 20 OPERATIONAL DIRECTORS 22 DIRECTORS AND ADVISORS 23 DIRECTORS’ REPORT 25 CORPORATE GOVERNANCE STATEMENT 27 DIRECTORS’ REMUNERATION REPORT 32 INDEPENDENT AUDITORS’ REPORT 34 CONSOLIDATED PROFIT AND LOSS ACCOUNT 35 BALANCE SHEETS 36 CONSOLIDATED CASH FLOW STATEMENT 37 NOTES TO THE FINANCIAL STATEMENTS 55 FIVE YEAR RECORD 56 NOTICE OF ANNUAL GENERAL MEETING 59 EXPLANATORY NOTES TO THE NOTICE OF ANNUAL GENERAL MEETING 61 FINANCIAL CALENDAR – KEY DATES 62 THE TEAM Turnover (£m) ??? 567.8 157.6 118.9 456.7 95.7 345.6 234.5 74.6 62.6 123.4 00 01 02 03 04 00 01 02 03 04 Source: see page 9. (cid:87)(cid:82)(cid:83)(cid:83)(cid:86)(cid:66)(cid:68)(cid:85)(cid:21)(cid:19)(cid:19)(cid:23)(cid:66)(cid:75)(cid:76)(cid:85)(cid:72)(cid:86)(cid:17)(cid:83)(cid:71)(cid:73)(cid:3)(cid:20) (cid:21)(cid:28)(cid:18)(cid:20)(cid:20)(cid:18)(cid:21)(cid:19)(cid:19)(cid:23)(cid:3)(cid:19)(cid:28)(cid:29)(cid:22)(cid:26)(cid:29)(cid:19)(cid:26) _0_TOP_arf04.qxd 25/11/2004 11:41 Page 02 Chairmens’ Statement We enjoy the market leading position as a specialist for ceramic tiles in the UK and have emerged this year as a truly recognised brand. We are pleased to report another record performance for the Group underpinned by a strong financial position. Since flotation in 1997 we have achieved consistent double digit growth in both turnover and profits whilst keeping tight controls over costs. The key to our continued success is our commitment to the highest levels of customer service and both the range and quality of products that we offer. This period saw the completion and opening of our new purpose built distribution and marketing centre at Grove Park in Leicestershire. The new facility was officially opened on 28 May 2004 by the Right Honourable Patricia Hewitt, Secretary of State for Trade and Industry. This now gives us the capacity to achieve our target of over 350 stores on the UK mainland and also to distribute more product ourselves thereby cutting down on the number of third party distributors that we use. Stuart Williams Barry Bester Financial results* Group turnover has increased by 32.5% over the period to £157.6 million with profit before tax increasing by over 78% to £33.8 million. We again experienced strong growth in like-for-like sales for the period of 21.5% demonstrating the strength of our brand and the underlying continued growth in the ceramic tile and laminate and wood flooring markets. This is particularly encouraging given that prior period like-for-like sales growth was challenging at over 15%. Our business is highly cash generative and at the period end we had net cash balances of £23.1 million. * Comparatives are made up of the unaudited proforma information for the 52 weeks ended 27 September 2003 (See Profit and Loss Account). The new distribution and marketing centre at Grove Park, Leicestershire Topps Tiles Plc Annual Report and Financial Statements 2004 02 (cid:87)(cid:82)(cid:83)(cid:83)(cid:86)(cid:66)(cid:68)(cid:85)(cid:21)(cid:19)(cid:19)(cid:23)(cid:66)(cid:75)(cid:76)(cid:85)(cid:72)(cid:86)(cid:17)(cid:83)(cid:71)(cid:73)(cid:3)(cid:21) (cid:21)(cid:28)(cid:18)(cid:20)(cid:20)(cid:18)(cid:21)(cid:19)(cid:19)(cid:23)(cid:3)(cid:19)(cid:28)(cid:29)(cid:22)(cid:26)(cid:29)(cid:19)(cid:27) _0_TOP_arf04.qxd 25/11/2004 11:41 Page 03 The key to our continued success is our commitment to the highest levels of customer service and both the range and quality of products that we offer. Outlook We enjoy the market leading position as a specialist for ceramic tiles in the UK and we have emerged this year as a truly recognised national brand. We are confident that we have the right strategies, management and people to deliver another period of growth and progress for Topps Tiles Plc. Dividend The Board is committed to a progressive dividend policy and is recommending a final dividend of 6.00 pence per share, which together with the interim dividend of 2.00 pence per share, brings the total dividend for the period to 8.00 pence per share, an increase of over 130% compared to the unaudited proforma dividend for the 52 week period to 27 September 2003. The dividend will be paid on 31 January 2005 to all shareholders on the register as at 14 January 2005. People During the period we created a further 161 new jobs through our expansion programme and we are delighted to have this opportunity to welcome those who have joined our team as well as to thank all our people for their individual contribution to another record set of results. * comparatives are made to the unaudited information for the 52 weeks ended 27 September 2003 (See Profit and Loss Account). Barry Bester Executive Co-Chairman Topps Tiles Plc Annual Report and Financial Statements 2004 03 Summary ■ We now trade from 220 stores throughout the UK and eleven stores in Holland ■ Group turnover increased by 32.5%* to £157.6 million ■ Profit before tax increased by over 78%* to £33.8 million ■ We remain confident that we can continue to grow the business 32.5 28.3 24.2 21.5 15.2 19.2 13.0 11.3 5.3 00 01 02 03 04 overall sales like-for-like sales Source: see page 9. Stuart Williams Executive Co-Chairman Overall sales and like-for-like sales growth (%) 45.6 (cid:87)(cid:82)(cid:83)(cid:83)(cid:86)(cid:66)(cid:68)(cid:85)(cid:21)(cid:19)(cid:19)(cid:23)(cid:66)(cid:75)(cid:76)(cid:85)(cid:72)(cid:86)(cid:17)(cid:83)(cid:71)(cid:73)(cid:3)(cid:22) (cid:21)(cid:28)(cid:18)(cid:20)(cid:20)(cid:18)(cid:21)(cid:19)(cid:19)(cid:23)(cid:3)(cid:19)(cid:28)(cid:29)(cid:22)(cid:26)(cid:29)(cid:19)(cid:27) _0_TOP_arf04.qxd 25/11/2004 11:41 Page 04 Strategy Statement Our success is built on four key cornerstones: Customer service Store locations 1. Customer service We always aim to provide high levels of customer service across both our brands and train all our staff at our own national and regional training centres and through our e-learning tile training college. Customer satisfaction is our number one priority and it is our policy to be honest, helpful and knowledgeable but never, never pushy. In store we provide a range of services offering practical support at every stage of the job which includes Loan-a-Tile, free “How to” video or DVD, tile cutting service and our buy-back service which allows undamaged stock tiles to be returned within 28 days for a full refund. 2. Store locations Our stores in the main are not located on high streets or large retail parks but can be found on highly visible destination sites on or close to busy roads with parking facilities outside. Our controlled expansion is taking us across the UK and a full list of stores can be found at the beginning of this report or on our website at www.toppstiles.co.uk. Our stores trade seven days a week on Monday to Saturday opening from 8.00am to 6.00pm and on Sundays either 10.00am to 4.00pm or 11.00am to 5.00pm, with a number of larger stores opening until 8.00pm during the week. Topps Tiles Plc Annual Report and Financial Statements 2004 04 (cid:87)(cid:82)(cid:83)(cid:83)(cid:86)(cid:66)(cid:68)(cid:85)(cid:21)(cid:19)(cid:19)(cid:23)(cid:66)(cid:75)(cid:76)(cid:85)(cid:72)(cid:86)(cid:17)(cid:83)(cid:71)(cid:73)(cid:3)(cid:23) (cid:21)(cid:28)(cid:18)(cid:20)(cid:20)(cid:18)(cid:21)(cid:19)(cid:19)(cid:23)(cid:3)(cid:19)(cid:28)(cid:29)(cid:22)(cid:26)(cid:29)(cid:19)(cid:27) _0_TOP_arf04.qxd 25/11/2004 11:41 Page 05 Summary ■ New e-learning college ■ New central warehouse up and running ■ Over 350 stores planned ■ Importing product from around the world ■ Mini warehouse style store layout ■ Huge choice of product Number of stores at the financial period end 220 196 171 147 127 00 01 02 03 04 Stock availability Store layout 3. Stock availability Stock is absolutely key to our success and across both Tile Clearing House and Topps Tiles you will find the best the world has to offer in wall and floor tiles, natural stone, laminate and real wood flooring. Every store carries a huge number of lines in stock with replenishments arriving twice a week from our new distribution and marketing centre in Leicestershire. Over 80% of our tiles are imported from around the world to bring customers the very best choice, quality and value. 4. Store layout Our average size store is just over 6,400 square feet. They are laid out in an easy to navigate mini warehouse style with wide aisles to accommodate prams and pushchairs. The stores are well lit and customer friendly with a huge choice of products merchandised with colourful displays and informative point-of-sale and with pricing information clearly displayed. Topps Tiles Plc Annual Report and Financial Statements 2004 05 (cid:87)(cid:82)(cid:83)(cid:83)(cid:86)(cid:66)(cid:68)(cid:85)(cid:21)(cid:19)(cid:19)(cid:23)(cid:66)(cid:75)(cid:76)(cid:85)(cid:72)(cid:86)(cid:17)(cid:83)(cid:71)(cid:73)(cid:3)(cid:26) (cid:21)(cid:28)(cid:18)(cid:20)(cid:20)(cid:18)(cid:21)(cid:19)(cid:19)(cid:23)(cid:3)(cid:19)(cid:28)(cid:29)(cid:22)(cid:26)(cid:29)(cid:19)(cid:28) _0_TOP_arf04.qxd 25/11/2004 11:41 Page 06 Operating and Financial Review Topps has had another excellent period of strong sales and profit growth. Operating review Store openings Our controlled store opening programme continues with 27 new stores (24 Topps and 3 Tile Clearing House) opened in this financial year. This now gives us an overall total of 220 trading stores (187 Topps and 33 Tile Clearing House) with three stores being closed or relocated giving us a net 24 new stores opened in the period. We have re-fitted 14 outlets in line with our policy of continuous review to ensure we achieve the maximum potential from our sites. We now have 69 stores with our tile studio concept of extra choice of up-market tiles available on a special order basis and 16 floorstores with an enhanced stock range of laminate and real wood flooring. The rollout of the Stoneworks concept within the stores continues as consumers’ appetite for natural product grows. This area of the market is growing rapidly and we are well placed to take advantage of this trend with 17 stores now open. New distribution and marketing centre We successfully completed the move to our new central distribution and marketing centre in April this year, without any disruption to trading. The tripling of capacity will be sufficient to take us from our current store number of 220 through to our stated target of over 350 stores in the UK. Nicholas Ounstead Andrew Liggett Holland We now have a total of eleven stores trading in Holland under our 50/50 joint venture including three new stores opened in the period. It is our intention to open a further two stores in the next financial period. Marketing and advertising We operate two brands in the market, Topps Tiles and Tile Clearing House. Topps is Britain’s biggest tile and wood flooring specialist group with the largest choice in the UK to suit all tastes and budgets. Tile Clearing House is a true “cash and carry” tile store selling end of lines, job lots and seconds, appealing to small builders, local contractors and bulk purchasers. Over the past 18 months, Topps has undertaken a significant programme of sponsorships across various broadcast channels including GMTV National Weather, UK Style and Carlton Weather. Customer service Across both our brands, we differentiate ourselves from the competition not only by the range and availability of our stock but also, most importantly, by the standard of customer service provided by our high quality, well trained staff. Topps Tiles Plc Annual Report and Financial Statements 2004 06 (cid:87)(cid:82)(cid:83)(cid:83)(cid:86)(cid:66)(cid:68)(cid:85)(cid:21)(cid:19)(cid:19)(cid:23)(cid:66)(cid:75)(cid:76)(cid:85)(cid:72)(cid:86)(cid:17)(cid:83)(cid:71)(cid:73)(cid:3)(cid:27) (cid:21)(cid:28)(cid:18)(cid:20)(cid:20)(cid:18)(cid:21)(cid:19)(cid:19)(cid:23)(cid:3)(cid:19)(cid:28)(cid:29)(cid:22)(cid:26)(cid:29)(cid:19)(cid:28) _0_TOP_arf04.qxd 25/11/2004 11:41 Page 07 Summary ■ Net 24 new stores opened ■ Current trading like-for-like sales growth of over 16% for the first seven weeks ■ Current overall sales growth of over 25% for the first seven weeks ■ Continued TV sponsorships ■ Market to grow 26% over next four years Gross margin (%) 60.5 57.5 56.0 55.0 54.6 00 01 02 03 04 Source: see page 9. Customer service (continued) We have a teamwork policy at Topps of which training is a key feature. We train all staff on both existing and new product and procedure developments within the business thus equipping them with the necessary tool kit to serve our customers. We have our own training department and training centres along with in-store training via our e-learning software and our radio station Tiles FM. The market The tile market continues to grow with the non-contract sector estimated at 43.1 million square metres (source MSI*) for 2004. Growth is forecast to reach 54.5 million square metres by 2008, an increase of 26%. The UK has traditionally had a very low usage per capita of ceramic tiles compared with our European neighbours but this is now changing with tiles becoming increasingly more popular. The continued growth in the market is driven by a number of factors, in particular the increase in second bathrooms and shower areas, conservatories and utility rooms and the trend for larger kitchens at the expense of formal dining rooms. Consumers today are increasingly aware of health and hygiene issues in the home and are replacing traditional soft flooring products with easy to clean ceramic floor tiles or wood and *MSI – Marketing Strategies for Industry Topps Tiles Plc Annual Report and Financial Statements 2004 laminate flooring. There is also an increase in the use of under floor heating systems in family rooms where hard flooring is now becoming more popular. The Alliance & Leicester’s Moving Improving Index revealed that Britons were forecast to spend a record £17 billion on their homes during summer 2004. A record number of people are getting into DIY, more are planning serious projects and the average expenditure on DIY will rise by 23% during summer 2004. Current trading In the first seven weeks of the new financial period we have recorded a like-for-like sales increase of over 16% and overall sales have increased by over 25%. This period’s target expansion is for another net 24 new stores and we have already opened stores in Barnsley, Edinburgh, Clacton and Camberley. Topps has had another excellent period of strong sales and profit growth. The first few weeks of the new financial period have begun well and we are confident of delivering continued growth to our shareholders. 07 (cid:87)(cid:82)(cid:83)(cid:83)(cid:86)(cid:66)(cid:68)(cid:85)(cid:21)(cid:19)(cid:19)(cid:23)(cid:66)(cid:75)(cid:76)(cid:85)(cid:72)(cid:86)(cid:17)(cid:83)(cid:71)(cid:73)(cid:3)(cid:28) (cid:21)(cid:28)(cid:18)(cid:20)(cid:20)(cid:18)(cid:21)(cid:19)(cid:19)(cid:23)(cid:3)(cid:19)(cid:28)(cid:29)(cid:22)(cid:26)(cid:29)(cid:19)(cid:28) _0_TOP_arf04.qxd 25/11/2004 11:42 Page 08 27 stores opened this year... our controlled expansion continues with 220 stores now trading throughout the UK. Topps Tiles Plc Annual Report and Financial Statements 2004 08 (cid:87)(cid:82)(cid:83)(cid:83)(cid:86)(cid:66)(cid:68)(cid:85)(cid:21)(cid:19)(cid:19)(cid:23)(cid:66)(cid:75)(cid:76)(cid:85)(cid:72)(cid:86)(cid:17)(cid:83)(cid:71)(cid:73)(cid:3)(cid:20)(cid:19) (cid:21)(cid:28)(cid:18)(cid:20)(cid:20)(cid:18)(cid:21)(cid:19)(cid:19)(cid:23)(cid:3)(cid:19)(cid:28)(cid:29)(cid:22)(cid:26)(cid:29)(cid:20)(cid:22) _0_TOP_arf04.qxd 25/11/2004 11:42 Page 09 Operating and Financial Review (continued) Summary* ■ Like-for-like sales growth of 21.5% ■ Gross margin 60.5% ■ Profit before tax up 78.9% ■ Basic earnings per share up 94.2% ■ Dividend cover reduced to 1.41 times ■ Dividend payout up 130% Financial review* Profit and Loss Account Turnover During the period Group turnover increased by 32.5% to £157.6 million from £118.9 million last year. Like-for-like sales increased by 21.5%, with new store openings contributing a further 8.2% increase, with the remaining 2.8% increase due to the 53rd week in this period. Profit before tax margin Group profit before tax margin has increased to 21.4% from 15.9% last year. This increase of 5.5 percentage points has been achieved primarily by an increase in gross margin of 3.0 percentage points and a reduction in operating costs of 2.0 percentage points with the remainder being reflected in the profit on disposal of fixed assets and interest receivable. Gross margin Overall gross margin was 60.5% compared to 57.5% last year. At the interim point of this period gross margin was 59.4%. The second half has shown a gross margin of 61.5%. Taxation The effective rate of Corporation Tax was 24.1% (69 weeks ended 27 September 2003: 30.4%) and we continued to fully provide for deferred taxation in line with FRS19. Operating expenses Costs as a percentage of sales were 39.9% compared to 41.9% last year. The effective rate of tax for this financial period has been favourably affected by a statutory deduction for share options exercised of 4.2%. Profit before tax (£m) 33.8 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 78.9% to £33.8 million compared to a profit before tax of £18.9 million last year. Charts Financial information in the charts displayed on pages 1,3,7,9,11 and 13 is based on the Annual Report and Financial Statements for the 53 week periods ended 3 June 2000 and 2 October 2004, and the 52 week periods ended 2 June 2001 and 1 June 2002 and the proforma unaudited statements for the 52 week period ended 27 September 2003. * Comparatives are made up of the unaudited proforma information for the 52 weeks ended 27 September 2003 (See Profit and Loss Account). Topps Tiles Plc Annual Report and Financial Statements 2004 09 18.9 13.2 9.4 8.0 00 01 02 03 04 Source: see page 9. (cid:87)(cid:82)(cid:83)(cid:83)(cid:86)(cid:66)(cid:68)(cid:85)(cid:21)(cid:19)(cid:19)(cid:23)(cid:66)(cid:75)(cid:76)(cid:85)(cid:72)(cid:86)(cid:17)(cid:83)(cid:71)(cid:73)(cid:3)(cid:20)(cid:21) (cid:21)(cid:28)(cid:18)(cid:20)(cid:20)(cid:18)(cid:21)(cid:19)(cid:19)(cid:23)(cid:3)(cid:19)(cid:28)(cid:29)(cid:22)(cid:26)(cid:29)(cid:20)(cid:22) _0_TOP_arf04.qxd 25/11/2004 11:42 Page 10 Consistent growth in sales requires consistent delivery of product. Our new central distribution and marketing centre comprises 105,000 square feet. 10 Topps Tiles Plc Annual Report and Financial Statements 2004 (cid:87)(cid:82)(cid:83)(cid:83)(cid:86)(cid:66)(cid:68)(cid:85)(cid:21)(cid:19)(cid:19)(cid:23)(cid:66)(cid:75)(cid:76)(cid:85)(cid:72)(cid:86)(cid:17)(cid:83)(cid:71)(cid:73)(cid:3)(cid:20)(cid:22) (cid:21)(cid:28)(cid:18)(cid:20)(cid:20)(cid:18)(cid:21)(cid:19)(cid:19)(cid:23)(cid:3)(cid:19)(cid:28)(cid:29)(cid:22)(cid:26)(cid:29)(cid:20)(cid:24) _0_TOP_arf04.qxd 25/11/2004 11:43 Page 11 Operating and Financial Review (continued) Summary ■ Total capital expenditure £11.7 million ■ The business is highly cash generative Basic earnings per share (pence) 11.3 5.8¥ 3.6¥ 2.6¥ 3.0¥ 00 01 02 03 04 ¥adjusted for share sub-division Source: see page 9. Financial review (continued) Earnings and dividends Our earnings per share has grown to 11.30 pence compared to 5.82 pence last year, an increase of 94.2%. The Board is recommending a final dividend of 6.00 pence per share, which will give a total dividend for the period of 8.00 pence compared to 3.48 pence last year, an increase of 130%. This gives a dividend cover of 1.41 times compared to 1.67 times for the 69 week period ended 27 September 2003. The Board is confident in this further reduction in cover as the business continues to demonstrate its ability to generate free cash and considers this reduction to be a sustainable level. Balance Sheet Fixed assets Capital expenditure in the period amounted to £11.7 million. This reflects the cost of acquiring two freehold sites for £0.8 million, further development costs on four sites of £1.1 million and the completion costs of the new distribution and marketing centre of £5.1 million. We have also opened 27 new stores at a cost of £2.3 million and undertaken major refurbishment of a further 14 stores at a cost of £0.5 million and other minor re-fit costs of £0.9 million. We continue to update and expand our IT systems within the business and this Topps Tiles Plc Annual Report and Financial Statements 2004 coupled with some motor vehicle renewals accounted for £1.0 million. At the period end the Group owned nine freehold sites, two development sites and the new distribution and marketing centre which have a total net book value of £10.9m. Stock Stock at the period end represents 143 days turnover compared to 147 days for the same period last year. Cash reserves Cash reserves at the period end were £29.6 million and borrowings were £6.5 million, the latter being primarily for the new distribution and marketing centre. This gives the Group a net funds position of £23.1 million compared to £15.2 million as at 27 September 2003. The highly cash generative nature of our business means that the Group has always been able to fund its entire new store expansion programme from its own resources and to purchase freehold sites as suitable opportunities arise. Share buy-backs In the financial period the Group has bought back 5,878,920 Ordinary Shares at a cost of £8.64 million. This primarily is to stop any dilution occurring as employee share options are exercised and sold. However the Group 11 (cid:87)(cid:82)(cid:83)(cid:83)(cid:86)(cid:66)(cid:68)(cid:85)(cid:21)(cid:19)(cid:19)(cid:23)(cid:66)(cid:75)(cid:76)(cid:85)(cid:72)(cid:86)(cid:17)(cid:83)(cid:71)(cid:73)(cid:3)(cid:20)(cid:24) (cid:21)(cid:28)(cid:18)(cid:20)(cid:20)(cid:18)(cid:21)(cid:19)(cid:19)(cid:23)(cid:3)(cid:19)(cid:28)(cid:29)(cid:22)(cid:26)(cid:29)(cid:20)(cid:25) _0_TOP_arf04.qxd 25/11/2004 11:43 Page 12 Continued sales growth from existing stores is driven by friendly, helpful expert in-store advice. 12 Topps Tiles Plc Annual Report and Financial Statements 2004 (cid:87)(cid:82)(cid:83)(cid:83)(cid:86)(cid:66)(cid:68)(cid:85)(cid:21)(cid:19)(cid:19)(cid:23)(cid:66)(cid:75)(cid:76)(cid:85)(cid:72)(cid:86)(cid:17)(cid:83)(cid:71)(cid:73)(cid:3)(cid:20)(cid:25) (cid:21)(cid:28)(cid:18)(cid:20)(cid:20)(cid:18)(cid:21)(cid:19)(cid:19)(cid:23)(cid:3)(cid:19)(cid:28)(cid:29)(cid:22)(cid:26)(cid:29)(cid:20)(cid:27) _0_TOP_arf04.qxd 25/11/2004 11:43 Page 13 Operating and Financial Review (continued) Summary ■ Eleven stores trading in Holland ■ IFRS being implemented ■ AGM set for 11 January 2005 Dividend level (pence) and cover (times) 8.00 3.48 0.87 1.00 1.43 3.0 2.9 2.5 1.67 1.41 dividend level 00 01 02 03 04 cover Source: see page 9. Financial review (continued) Balance Sheet (continued) has also, on occasion, acquired shares when the Board considers there is an opportunity to do so in the market. To date 5,471,120 of the shares acquired have been cancelled leaving 407,800 held as Treasury Shares. Share split In May 2004 the Company completed a share sub-division whereby each Ordinary Share of 12.5 pence was sub-divided into five Ordinary Shares of 2.5 pence each. The Board believes the share split will increase the marketability and liquidity of the shares by accommodating investors who could be deterred by the pre share split price level. The Board considered this particularly important, since the Company had recently become a FTSE 250 quoted company. Joint venture in Holland The joint venture in Holland continues to develop with three new stores opened in the period to bring the total to eleven stores. The Group owns 50% in the joint venture with the other 50% owned by the Dutch management team. The Group’s Profit and Loss Account shows turnover of £1.8 million and the operating profit before tax of £39,000 from the venture which reflects the Group’s 50% holding. Topps Tiles Plc Annual Report and Financial Statements 2004 International Financial Reporting Standards (IFRS) The Group is working closely with its auditors to implement these proposed changes. The Group is required to adopt IFRS for the financial period commencing 2 October 2005. Annual General Meeting The Annual General Meeting for the period to 2 October 2004 will be held on 11 January 2005 at 10.30am at Topps Tiles Plc, Thorpe Way, Grove Park, Enderby, Leicestershire LE19 1SU, which is our new distribution and marketing centre. Nicholas Ounstead Chief Executive Officer Andrew Liggett Finance Director 13 (cid:87)(cid:82)(cid:83)(cid:83)(cid:86)(cid:66)(cid:68)(cid:85)(cid:21)(cid:19)(cid:19)(cid:23)(cid:66)(cid:75)(cid:76)(cid:85)(cid:72)(cid:86)(cid:17)(cid:83)(cid:71)(cid:73)(cid:3)(cid:20)(cid:27) (cid:21)(cid:28)(cid:18)(cid:20)(cid:20)(cid:18)(cid:21)(cid:19)(cid:19)(cid:23)(cid:3)(cid:19)(cid:28)(cid:29)(cid:22)(cid:26)(cid:29)(cid:20)(cid:28) _0_TOP_arf04.qxd 25/11/2004 11:44 Page 14 Corporate and Social Responsibility (CSR) The Board is developing an integrated CSR policy that targets and measures the performance of the Group. Community relations Topps is one of the biggest supporters of youth football in the UK, providing new kits and equipment to junior teams local to our stores. 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 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 Asthma UK. This is our fourth year of support for the charity which aims to conquer this respiratory disorder which affects over one million children in the UK. Asthma UK 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 £10,000 we raised over £75,000 for this worthy cause. As well as sport there is also education, where via our product catalogue schools can win valuable computer equipment. Since the scheme started, over 20 schools have benefited nationwide. Market place 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 as its benchmark. Workplace 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. Above – one of the many local youth football teams that Topps sponsors. Below – Nick Ounstead presenting a cheque to Asthma UK, the chosen charity for Topps. Topps Tiles Plc Annual Report and Financial Statements 2004 14 (cid:87)(cid:82)(cid:83)(cid:83)(cid:86)(cid:66)(cid:68)(cid:85)(cid:21)(cid:19)(cid:19)(cid:23)(cid:66)(cid:75)(cid:76)(cid:85)(cid:72)(cid:86)(cid:17)(cid:83)(cid:71)(cid:73)(cid:3)(cid:20)(cid:28) (cid:21)(cid:28)(cid:18)(cid:20)(cid:20)(cid:18)(cid:21)(cid:19)(cid:19)(cid:23)(cid:3)(cid:19)(cid:28)(cid:29)(cid:22)(cid:26)(cid:29)(cid:21)(cid:19) _0_TOP_arf04.qxd 25/11/2004 11:44 Page 15 Summary Summary ■ One of the biggest ■ ... supporters of youth football in the UK ■ Clear policy of building local brand awareness ■ Our fourth year of support for Asthma UK ■ Commitment of support for local schools, hospitals and community centres ■ Strong culture of internal promotion Average number of employees (The Team) during the financial periods 1,327 1,176 1,070 941 779 00 01 02 03 04 Workplace (continued) There is a strong culture of internal promotion and regular dialogue on job and career development. Topps is committed to promoting equal opportunities for all, and we believe that we have the right policies in place to meet this objective. The Group also operates an employee suggestion scheme which is overseen by the Co-Chairman, Barry Bester, which allows all employees to give suggestions which can help improve the business whether it be operational, environmental or social. An in-house magazine is produced six times a year and sent to all employees as a further way of keeping everybody informed of the developments within the business. Health and safety The Group has a well documented and clear policy that is implemented rigorously throughout the business. We operate a Health and Safety Committee which meets on a regular basis and its members are representative of all areas of the business and is chaired by our Chief Executive. Environment The Group is currently a constituent of the FTSE 4 Good Index of socially responsible UK quoted companies. The Directors aim to comply with the criteria set by the operators of this Index and are actively engaged in further developments of CSR policies to achieve ongoing compliance. 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. Topps Tiles Plc Annual Report and Financial Statements 2004 15 (cid:87)(cid:82)(cid:83)(cid:83)(cid:86)(cid:66)(cid:68)(cid:85)(cid:21)(cid:19)(cid:19)(cid:23)(cid:66)(cid:75)(cid:76)(cid:85)(cid:72)(cid:86)(cid:17)(cid:83)(cid:71)(cid:73)(cid:3)(cid:21)(cid:19) (cid:21)(cid:28)(cid:18)(cid:20)(cid:20)(cid:18)(cid:21)(cid:19)(cid:19)(cid:23)(cid:3)(cid:19)(cid:28)(cid:29)(cid:22)(cid:26)(cid:29)(cid:21)(cid:19) _0_TOP_arf04.qxd 25/11/2004 11:44 Page 16 Our sponsorship activities support our controlled growth... consistently reinforcing the brand values. Topps Tiles Plc Annual Report and Financial Statements 2004 16 (cid:87)(cid:82)(cid:83)(cid:83)(cid:86)(cid:66)(cid:68)(cid:85)(cid:21)(cid:19)(cid:19)(cid:23)(cid:66)(cid:75)(cid:76)(cid:85)(cid:72)(cid:86)(cid:17)(cid:83)(cid:71)(cid:73)(cid:3)(cid:21)(cid:20) (cid:21)(cid:28)(cid:18)(cid:20)(cid:20)(cid:18)(cid:21)(cid:19)(cid:19)(cid:23)(cid:3)(cid:19)(cid:28)(cid:29)(cid:22)(cid:26)(cid:29)(cid:21)(cid:21) _0_TOP_arf04.qxd 25/11/2004 11:44 Page 17 Corporate and Social Responsibility (CSR) (continued) The Board is developing an integrated CSR policy which will include an environmental policy that highlights any major impacts such as waste, energy efficiencies and paper and timber procurement focusing on the use of post consumer recycled waste and Forest Stewardship Council Certification. Environment (continued) Within the offices of the business we actively promote the recycling of all paper products through the use of recycling bins placed throughout the building. 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. 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. Summary ■ A very successful employee staff suggestion scheme in operation ■ In-house magazine, distributed to all staff nationwide ■ Targets for recycled and recyclable packaging ■ Member of Valpak ■ CSR policy in operation and further development work taking place Net cash/(debt) (£m) at the financial period end 23.1 15.2 4.6 0.0 (0.5) (2.6) 00 01 02 03 04 Topps Tiles Plc Annual Report and Financial Statements 2004 17 (cid:87)(cid:82)(cid:83)(cid:83)(cid:86)(cid:66)(cid:68)(cid:85)(cid:21)(cid:19)(cid:19)(cid:23)(cid:66)(cid:75)(cid:76)(cid:85)(cid:72)(cid:86)(cid:17)(cid:83)(cid:71)(cid:73)(cid:3)(cid:21)(cid:22) (cid:21)(cid:28)(cid:18)(cid:20)(cid:20)(cid:18)(cid:21)(cid:19)(cid:19)(cid:23)(cid:3)(cid:19)(cid:28)(cid:29)(cid:22)(cid:26)(cid:29)(cid:21)(cid:21) _0_TOP_arf04.qxd 25/11/2004 11:44 Page 18 Executive Directors Stuart Williams FCA Executive Co-Chairman (aged 60) Member of Nomination Committee Barry Bester Executive Co-Chairman (aged 47) Member of Nomination Committee Stuart was a founder shareholder and Director of Topps Tiles in 1984. His principal responsibilities include Group Strategy and overseeing property and legal matters. He is also editor of the in-house magazine. Barry was a founder shareholder and Director of Topps Tiles in 1984. His principal responsibilities are those of Group Strategy along with overseeing development of the joint venture in Holland. He is also responsible for the Company’s employee suggestion scheme. Nicholas Ounstead Chief Executive Officer (aged 44) Nicholas 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 and has overall responsibility for the day-to-day operations of the business. Andrew Liggett FCMA Finance Director (aged 43) Company Secretary Secretary of Nomination Committee Andrew 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 ten years, initially as Management Accountant and then as Finance Director. He is responsible for the accounting, financial control, treasury, administration and Group secretarial matters. Topps Tiles Plc Annual Report and Financial Statements 2004 18 (cid:87)(cid:82)(cid:83)(cid:83)(cid:86)(cid:66)(cid:68)(cid:85)(cid:21)(cid:19)(cid:19)(cid:23)(cid:66)(cid:75)(cid:76)(cid:85)(cid:72)(cid:86)(cid:17)(cid:83)(cid:71)(cid:73)(cid:3)(cid:21)(cid:23) (cid:21)(cid:28)(cid:18)(cid:20)(cid:20)(cid:18)(cid:21)(cid:19)(cid:19)(cid:23)(cid:3)(cid:19)(cid:28)(cid:29)(cid:22)(cid:26)(cid:29)(cid:21)(cid:22) _0_TOP_arf04.qxd 25/11/2004 11:44 Page 19 Non-Executive Directors Alan Mclntosh CA Senior Non-Executive Director (aged 36) Chairman of Audit Committee Member of Nomination Committee Alan qualified as a Chartered Accountant with Deloitte. He was one of the founders and the former Group Finance Director of Punch Group Ltd. He joined the Board of Topps Tiles in 1997. Victor Watson CBE Non-Executive Director (aged 76) Member of Audit Committee Chairman of Nomination Committee Victor is also a Director of Thorpe Park (Leeds) Limited and Chairman of Leeds Chamber of Commerce Limited. He was formerly Chairman of Waddington Plc. He joined the Board of Topps Tiles in 1997. Rt. Hon Michael Jack Privy Councillor MP Non-Executive Director (aged 58) Member of Audit Committee Member of Nomination Committee Michael’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. He joined the Board of Topps Tiles in 1999. Topps Tiles Plc Annual Report and Financial Statements 2004 19 (cid:87)(cid:82)(cid:83)(cid:83)(cid:86)(cid:66)(cid:68)(cid:85)(cid:21)(cid:19)(cid:19)(cid:23)(cid:66)(cid:75)(cid:76)(cid:85)(cid:72)(cid:86)(cid:17)(cid:83)(cid:71)(cid:73)(cid:3)(cid:21)(cid:24) (cid:21)(cid:28)(cid:18)(cid:20)(cid:20)(cid:18)(cid:21)(cid:19)(cid:19)(cid:23)(cid:3)(cid:19)(cid:28)(cid:29)(cid:22)(cid:26)(cid:29)(cid:21)(cid:22) _0_TOP_arf04.qxd 25/11/2004 11:45 Page 20 Operational Directors Ray Tricker Northern Operations Director (aged 48) Adrian McCourt Southern Operations Director (aged 46) Ray joined the Company in 2002 and has over 30 years worth of sales experience including eight years with Wickes. Adrian joined the business six years ago having spent his entire working life in sales, including time in the USA with JC Penney. Martin Shenton Midlands and South West Operations Director (aged 49) Martin joined the Company in 1978 and has worked in many different positions in his time with the business. Alan Saunders Marketing Director (aged 41) Alan joined the Company in 1984 as Store Manager and progressed to Area Manager before taking up his current role in 2002. Topps Tiles Plc Annual Report and Financial Statements 2004 20 (cid:87)(cid:82)(cid:83)(cid:83)(cid:86)(cid:66)(cid:68)(cid:85)(cid:21)(cid:19)(cid:19)(cid:23)(cid:66)(cid:75)(cid:76)(cid:85)(cid:72)(cid:86)(cid:17)(cid:83)(cid:71)(cid:73)(cid:3)(cid:21)(cid:25) (cid:21)(cid:28)(cid:18)(cid:20)(cid:20)(cid:18)(cid:21)(cid:19)(cid:19)(cid:23)(cid:3)(cid:19)(cid:28)(cid:29)(cid:22)(cid:26)(cid:29)(cid:21)(cid:22) _0_TOP_arf04.qxd 25/11/2004 11:45 Page 21 Matt Williams Property Director (aged 30) Colin Hampson IT Director (aged 32) John Reilly Buying Director (aged 43) Matt joined the Company in 1998 after completing his Chartered Surveyors exams and took up his current position in 2003. Colin joined the business in 1995 and has played a key role in implementing and developing our Epos systems. John joined the Company in 1998 after twelve years in the tile business, including three years with Great Mills DIY. Topps Tiles Plc Annual Report and Financial Statements 2004 21 (cid:87)(cid:82)(cid:83)(cid:83)(cid:86)(cid:66)(cid:68)(cid:85)(cid:21)(cid:19)(cid:19)(cid:23)(cid:66)(cid:75)(cid:76)(cid:85)(cid:72)(cid:86)(cid:17)(cid:83)(cid:71)(cid:73)(cid:3)(cid:21)(cid:26) (cid:21)(cid:28)(cid:18)(cid:20)(cid:20)(cid:18)(cid:21)(cid:19)(cid:19)(cid:23)(cid:3)(cid:19)(cid:28)(cid:29)(cid:22)(cid:26)(cid:29)(cid:21)(cid:22) _0_TOP_arf04.qxd 25/11/2004 11:45 Page 22 Directors and Advisors Directors BFJ Bester Executive Co-Chairman SKM Williams FCA Executive Co-Chairman ND Ounstead Chief Executive Officer A Liggett FCMA Finance Director WA McIntosh CA Senior Non-Executive Director VH Watson CBE Non-Executive Director The RT Hon JM Jack, Privy Counsellor MP Non-Executive Director Company Secretary A Liggett FCMA Registered number 3213782 Registered office Rushworth House Wilmslow Road Handforth Wilmslow Cheshire SK9 3HJ Auditors Deloitte & Touche LLP Manchester Bankers HSBC Bank Plc 56 Queen Street Cardiff CF10 2PX Registrars Capita Registrars Plc The Registry 34 Beckenham Road Beckenham Kent BR3 4TU Solicitors TLT Solicitors 1 Redcliff Street Bristol BS99 7JZ Sinclair Abson Smith Lawyers 30 Greek Street Stockport SK3 8AD 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 Topps Tiles Plc Annual Report and Financial Statements 2004 22 (cid:87)(cid:82)(cid:83)(cid:83)(cid:86)(cid:66)(cid:68)(cid:85)(cid:21)(cid:19)(cid:19)(cid:23)(cid:66)(cid:75)(cid:76)(cid:85)(cid:72)(cid:86)(cid:17)(cid:83)(cid:71)(cid:73)(cid:3)(cid:21)(cid:27) (cid:21)(cid:28)(cid:18)(cid:20)(cid:20)(cid:18)(cid:21)(cid:19)(cid:19)(cid:23)(cid:3)(cid:19)(cid:28)(cid:29)(cid:22)(cid:26)(cid:29)(cid:21)(cid:23) _0_TOP_arb04.qxd 24/11/2004 18:11 Page 23 Directors’ Report The Directors present their report on the affairs of the Group, together with the Financial Statements and Auditors’ Report, for the 53 week period ended 2 October 2004. 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. Details of the Group’s performance during the period and expected future developments are contained in the Chairmens’ Statement and the Operating and Financial Review on pages 2 to 13 of the Annual Report and Financial Statements. Results and dividends The audited Financial Statements for the 53 week period ended 2 October 2004 are set out on pages 34 to 54. The Group’s profit for the period, after taxation was £25,648,000 (69 weeks ended 27 September 2003: £16,386,000). An interim dividend of 2.00 pence per share, £4,602,000 was paid on 30 June 2004. The Directors recommend a final dividend of 6.00 pence per share, £13,593,000 making a total of 8.00 pence per share, £18,195,000 (69 weeks ended 27 September 2003: total dividend 4.35p per share, £9,832,000). Subject to approval by the shareholders at the Annual General Meeting to be held on 11 January 2005, the final dividend will be paid on 31 January 2005 to shareholders on the register at the close of business on 14 January 2005. Directors The Directors of the Company are as follows: SKM Williams BFJ Bester ND Ounstead A Liggett WA McIntosh VH Watson JM 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 31. Share capital Details of the Company’s authorised and issued share capital are shown in Note 19 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 49 days’ purchases (69 weeks ended 27 September 2003: 55 days). Topps Tiles Plc Annual Report and Financial Statements 2004 23 (cid:87)(cid:82)(cid:83)(cid:83)(cid:86)(cid:66)(cid:68)(cid:85)(cid:21)(cid:19)(cid:19)(cid:23)(cid:66)(cid:75)(cid:76)(cid:85)(cid:72)(cid:86)(cid:17)(cid:83)(cid:71)(cid:73)(cid:3)(cid:21)(cid:28) (cid:21)(cid:28)(cid:18)(cid:20)(cid:20)(cid:18)(cid:21)(cid:19)(cid:19)(cid:23)(cid:3)(cid:19)(cid:28)(cid:29)(cid:22)(cid:26)(cid:29)(cid:21)(cid:23) _0_TOP_arb04.qxd 24/11/2004 18:11 Page 24 Directors’ Report (continued) Charitable and political contributions During the period the Group made charitable donations of £10,000 (69 weeks ended 27 September 2003: £10,000) to Asthma UK. The Group made no political contributions. Substantial shareholdings In addition to the Directors’ shareholdings noted on page 31, on 2 November 2004 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. Chase Nominees Limited HSBC Global Custody Nominee (UK) Limited Litttledown Nominees Limited State Street Nominees Limited Vidacos Nominees Limited BNY (OCS) Nominees Limited Nortrust Nominees Limited Morstan Nominees Limited Number 28,674,000 26,362,000 18,538,000 15,836,000 12,965,000 8,518,000 7,191,000 6,939,000 % held 12.6% 11.6% 8.2% 6.9% 5.7% 3.7% 3.2% 3.1% 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 386,842 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 3,629,047. The Directors will continue to incentivise employees through additional employee share option schemes in the forthcoming financial period. During the period, the Company purchased 5,878,920 Ordinary Shares for a consideration of £8,640,000. The shares were initially held as Treasury Shares but subsequently it was decided that 5,471,120 of the shares should be cancelled. Topps Tiles Plc Annual Report and Financial Statements 2004 24 (cid:87)(cid:82)(cid:83)(cid:83)(cid:86)(cid:66)(cid:68)(cid:85)(cid:21)(cid:19)(cid:19)(cid:23)(cid:66)(cid:75)(cid:76)(cid:85)(cid:72)(cid:86)(cid:17)(cid:83)(cid:71)(cid:73)(cid:3)(cid:22)(cid:19) (cid:21)(cid:28)(cid:18)(cid:20)(cid:20)(cid:18)(cid:21)(cid:19)(cid:19)(cid:23)(cid:3)(cid:19)(cid:28)(cid:29)(cid:22)(cid:26)(cid:29)(cid:21)(cid:23) _0_TOP_arb04.qxd 24/11/2004 18:11 Page 25 Auditors A resolution to re-appoint Deloitte & Touche LLP as the Company’s Auditors 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; and ■ state whether applicable accounting standards have been followed, subject to any material departures disclosed and explained in the Financial Statements; Going concern After making appropriate enquiries, the Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. For this reason, they continue to adopt the going concern basis in preparing the Group accounts. The Directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the Financial Statements comply with the Companies Act 1985. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. On behalf of the Board A Liggett Director and Company Secretary 30 November 2004 Corporate Governance Statement 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 Provisions A1.3 and A6.1. In regard to A1.3, the Chairmen met with the Non-Executive Directors on an informal basis during the period. Separate formal meetings between the Chairmen and the Non-Executives will be held at least annually. In regard to A6.1, the Board does not currently undertake a formal appraisal of its own performance and that of its committees, but it is committed to putting in place and conducting such a process in the forthcoming year. The Company complies with all other provisions of the Code. Code Provision D.3.1 requires the members of the Audit Committee to be named in the Annual Report and Financial Statements. WA McIntosh (Chairman), VH Watson and The Rt Hon JM Jack have served on the Committee throughout the period. Topps Tiles Plc Annual Report and Financial Statements 2004 25 (cid:87)(cid:82)(cid:83)(cid:83)(cid:86)(cid:66)(cid:68)(cid:85)(cid:21)(cid:19)(cid:19)(cid:23)(cid:66)(cid:75)(cid:76)(cid:85)(cid:72)(cid:86)(cid:17)(cid:83)(cid:71)(cid:73)(cid:3)(cid:22)(cid:20) (cid:21)(cid:28)(cid:18)(cid:20)(cid:20)(cid:18)(cid:21)(cid:19)(cid:19)(cid:23)(cid:3)(cid:19)(cid:28)(cid:29)(cid:22)(cid:26)(cid:29)(cid:21)(cid:23) _0_TOP_arb04.qxd 24/11/2004 18:11 Page 26 Corporate Governance Statement (continued) Attendance at Board/Committee meetings The following table shows the number of Board and Committee meetings held during the 53 week period ended 2 October 2004 and the attendance record of the individual Directors. Number of meetings SKM Williams BFJ Bester ND Ounstead A Liggett WA McIntosh VH Watson JM Jack Board of Directors Audit Committee Remuneration Committee Nomination Committee 10 10 10 9 10 8 10 10 2 2 2 2 2 1 2 2 1 — — — — 1 1 1 — — — — — — — — 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 Directors’ Remuneration Report. Dialogue with 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. The Company also posts financial information on its website www.toppstiles.co.uk. 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 Annual Report and Financial Statements. 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. Topps Tiles Plc Annual Report and Financial Statements 2004 26 (cid:87)(cid:82)(cid:83)(cid:83)(cid:86)(cid:66)(cid:68)(cid:85)(cid:21)(cid:19)(cid:19)(cid:23)(cid:66)(cid:75)(cid:76)(cid:85)(cid:72)(cid:86)(cid:17)(cid:83)(cid:71)(cid:73)(cid:3)(cid:22)(cid:21) (cid:21)(cid:28)(cid:18)(cid:20)(cid:20)(cid:18)(cid:21)(cid:19)(cid:19)(cid:23)(cid:3)(cid:19)(cid:28)(cid:29)(cid:22)(cid:26)(cid:29)(cid:21)(cid:23) _0_TOP_arb04.qxd 24/11/2004 18:11 Page 27 Directors’ Remuneration Report Introduction This report has been prepared in accordance with the Directors’ Remuneration Report Regulations 2002 (The Regulations) 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 WA McIntosh (Chairman), VH Watson and The RT Hon JM Jack who are all independent Non-Executive Directors. 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 own remuneration. 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; ■ long-term incentive plan; ■ 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 2004 with increases taking effect from 1 October 2004. 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 and pension contributions, the Executive Directors receive certain benefits-in-kind, principally a car and private medical insurance. Topps Tiles Plc Annual Report and Financial Statements 2004 27 (cid:87)(cid:82)(cid:83)(cid:83)(cid:86)(cid:66)(cid:68)(cid:85)(cid:21)(cid:19)(cid:19)(cid:23)(cid:66)(cid:75)(cid:76)(cid:85)(cid:72)(cid:86)(cid:17)(cid:83)(cid:71)(cid:73)(cid:3)(cid:22)(cid:22) (cid:21)(cid:28)(cid:18)(cid:20)(cid:20)(cid:18)(cid:21)(cid:19)(cid:19)(cid:23)(cid:3)(cid:19)(cid:28)(cid:29)(cid:22)(cid:26)(cid:29)(cid:21)(cid:23) T t f p t t w R a p _0_TOP_arb04.qxd 24/11/2004 18:11 Page 28 Directors’ Remuneration Report (continued) Unaudited information (continued) Long-term Incentive Plan (L-TIP) The Topps Tiles Plc 2003 Executive L-TIP is a three year plan, set up in the period, which is due to mature at the financial period ending 30 September 2006. The L-TIP is a cash based plan with performance targets based on the Group profitability over the three year period. It is discretionary and will be operated by the Board acting through the Remuneration Committee. The maximum total amount potentially payable under the plan if performance criteria are met is £4,000,000. ND Ounstead and A Liggett each have been granted a 25% interest in the L-TIP. The payment of the individual awards under the scheme is dependent on the participant remaining in employment with the Group and the Group achieving a cumulative total of at least £80,000,000 pre-tax profits (before any accrual for the L-TIP) over the three year period and the diluted earnings per share as shown in the Group’s annual accounts must increase by an average of 15% per annum (compounded annually) over the same period. In the event of a take-over, reconstruction or winding up of the Group, a proportion of awards will vest having regard to the number of months of the performance period that have elapsed and any other relevant factors. Share options The share option scheme comprises two parts, the Topps Tiles Plc Approved Executive Share Options Scheme and the Topps Tiles Plc Unapproved Executive Share Options 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 options 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 the terms and conditions of any entitlement of a Director to share options. Pension arrangements BFJ Bester, ND Ounstead and A Liggett received contributions into their own personal pension schemes. Directors’ contracts Executive Directors It is the Company’s policy that Executive Directors enter into a contract with a twelve month term providing for a maximum of six months’ notice. SKM Williams, BFJ Bester, A Liggett and ND Ounstead have entered into new service contracts on 1 October 2004 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 £20,000. 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. Topps Tiles Plc Annual Report and Financial Statements 2004 28 (cid:87)(cid:82)(cid:83)(cid:83)(cid:86)(cid:66)(cid:68)(cid:85)(cid:21)(cid:19)(cid:19)(cid:23)(cid:66)(cid:75)(cid:76)(cid:85)(cid:72)(cid:86)(cid:17)(cid:83)(cid:71)(cid:73)(cid:3)(cid:22)(cid:23) (cid:21)(cid:28)(cid:18)(cid:20)(cid:20)(cid:18)(cid:21)(cid:19)(cid:19)(cid:23)(cid:3)(cid:19)(cid:28)(cid:29)(cid:22)(cid:26)(cid:29)(cid:21)(cid:23) _0_TOP_arb04.qxd 24/11/2004 18:11 Page 29 Date of contract or letter of appointment 27 May 1997 27 May 1997 26 January 1999 Unexpired term N/A N/A N/A Notice period 6 months 6 months 6 months Directors’ contracts (continued) Non-Executive Directors (continued) The details of the Non-Executive Directors’ contracts are summarised in the table below: Name of Director WA McIntosh VH Watson JM Jack Performance graph The following graph shows the Company’s performance, measured by Total Shareholder Return (TSR), compared with the performance of the FTSE Index also measured by TSR. The index chosen for the comparison demonstrates the Group’s TSR in comparison to the average for FTSE 250 companies. The Company has previously been compared to the average for small companies but entered the FTSE 250 in June 2004. TOPPS Tiles FTSE Mid 250 Ex Investment Trust (cid:1)(cid:2)(cid:3) (cid:1)(cid:3)(cid:3) (cid:4)(cid:2)(cid:3) (cid:4)(cid:3)(cid:3) (cid:5)(cid:2)(cid:3) (cid:5)(cid:3)(cid:3) (cid:6)(cid:2)(cid:3) (cid:6)(cid:3)(cid:3) (cid:2)(cid:3) (cid:3) (cid:5)(cid:7)(cid:8)(cid:3)(cid:2)(cid:8)(cid:7)(cid:7) (cid:3)(cid:4)(cid:8)(cid:3)(cid:9)(cid:8)(cid:3)(cid:3) (cid:3)(cid:5)(cid:8)(cid:3)(cid:9)(cid:8)(cid:3)(cid:6) (cid:3)(cid:6)(cid:8)(cid:3)(cid:9)(cid:8)(cid:3)(cid:5) (cid:5)(cid:10)(cid:8)(cid:3)(cid:7)(cid:8)(cid:3)(cid:4) (cid:3)(cid:5)(cid:8)(cid:6)(cid:3)(cid:8)(cid:3)(cid:1) Audited information Aggregate Directors’ remuneration The total amounts for Directors’ remuneration were as follows: Emoluments Money purchase pension contributions 53 weeks ended 2 October 2004 £’000 69 weeks ended 27 September 2003 £’000 959 24 983 1,171 20 1,191 Topps Tiles Plc Annual Report and Financial Statements 2004 29 (cid:87)(cid:82)(cid:83)(cid:83)(cid:86)(cid:66)(cid:68)(cid:85)(cid:21)(cid:19)(cid:19)(cid:23)(cid:66)(cid:75)(cid:76)(cid:85)(cid:72)(cid:86)(cid:17)(cid:83)(cid:71)(cid:73)(cid:3)(cid:22)(cid:24) (cid:21)(cid:28)(cid:18)(cid:20)(cid:20)(cid:18)(cid:21)(cid:19)(cid:19)(cid:23)(cid:3)(cid:19)(cid:28)(cid:29)(cid:22)(cid:26)(cid:29)(cid:21)(cid:23) _0_TOP_arb04.qxd 24/11/2004 18:11 Page 30 Directors’ Remuneration Report (continued) Audited information (continued) Directors’ emoluments Name of Director Executive Directors SKM Williams BFJ Bester ND Ounstead A Liggett Non-Executive Directors WA McIntosh VH Watson JM Jack Basic Fees £’000 salary £’000 Benefits in kind £’000 Money purchase pension contributions £’000 53 weeks ended 2 October 2004 Total £’000 69 weeks ended 27 September 2003 Total £’000 — — — — 20 20 — 40 178 178 229 229 — — 20 834 20 20 24 21 — — — 85 — 6 9 9 — — — 24 198 204 262 259 20 20 20 983 257 266 292 295 27 27 27 1,191 Aggregate emoluments disclosed above do not include the amounts of £499,000 accrued at the period end, under the L-TIP, as owing to each of ND Ounstead and A Liggett. 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 exercised by the Directors. Details of options which relate to the unapproved scheme, for Directors who served during the period and exercised or granted since the prior period, are set out below: Name of Director A Liggett ND Ounstead ND Ounstead 27 September 2003 Exercised during period 2 October 2004 1,500,000 500,000 625,000 1,500,000 500,000 625,000 — — — Exercise price £ 0.602 0.602 0.602 Date from which exercisable 06.09.03 06.09.03 06.09.03 Gain on Gain on exercise in exercise in Market price 53 weeks ended 69 weeks ended 27 September 2 October 2003 2004 £’000 £’000 at exercise date £ 1.62 1.12 1.62 1,527 259 636 2,422 — — — — There have been no variations to the terms and conditions or performance criteria for share options during the financial period. No further options can be granted under this scheme. No options were granted during the period and at the period end none of the Directors had any outstanding options. The other Executive and Non-Executive Directors held no options during the period, no options were granted during the period. The market price of the Ordinary Shares at 2 October 2004 was 178.9 pence and the range during the year was 86 pence to 190 pence. Topps Tiles Plc Annual Report and Financial Statements 2004 30 (cid:87)(cid:82)(cid:83)(cid:83)(cid:86)(cid:66)(cid:68)(cid:85)(cid:21)(cid:19)(cid:19)(cid:23)(cid:66)(cid:75)(cid:76)(cid:85)(cid:72)(cid:86)(cid:17)(cid:83)(cid:71)(cid:73)(cid:3)(cid:22)(cid:25) (cid:21)(cid:28)(cid:18)(cid:20)(cid:20)(cid:18)(cid:21)(cid:19)(cid:19)(cid:23)(cid:3)(cid:19)(cid:28)(cid:29)(cid:22)(cid:26)(cid:29)(cid:21)(cid:23) _0_TOP_arb04.qxd 24/11/2004 18:11 Page 31 Audited information (continued) 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: BFJ Bester ND Ounstead A Liggett 53 weeks ended 2 October 2004 £’000 69 weeks ended 27 September 2003 £’000 6 9 9 24 8 5 7 20 Directors’ interests The Directors had the following interest in the shares of the Company (all interests relate solely to Ordinary Shares). SKM Williams BFJ Bester ND Ounstead A Liggett WA McIntosh VH Watson JM Jack *adjusted for share sub-division 2 October 2004 ordinary shares of 2.5p each 24,698,600 18,541,600 493,500 2,001,500 1,585,000 185,000 15,000 27 September 2003 ordinary shares of 2.5p each* 24,998,600 24,998,600 493,500 2,001,500 1,585,000 186,000 15,000 Share options shares of 2.5p each end of period* — — — — — — — Approval This report was approved by the Board of Directors on 30 November 2004 and signed on its behalf by: WA McIntosh Chairman of Remuneration Committee 30 November 2004 Topps Tiles Plc Annual Report and Financial Statements 2004 31 (cid:87)(cid:82)(cid:83)(cid:83)(cid:86)(cid:66)(cid:68)(cid:85)(cid:21)(cid:19)(cid:19)(cid:23)(cid:66)(cid:75)(cid:76)(cid:85)(cid:72)(cid:86)(cid:17)(cid:83)(cid:71)(cid:73)(cid:3)(cid:22)(cid:26) (cid:21)(cid:28)(cid:18)(cid:20)(cid:20)(cid:18)(cid:21)(cid:19)(cid:19)(cid:23)(cid:3)(cid:19)(cid:28)(cid:29)(cid:22)(cid:26)(cid:29)(cid:21)(cid:23) _0_TOP_arb04.qxd 24/11/2004 18:11 Page 32 Independent Auditors’ Report To the members of Topps Tiles Plc We have audited the Financial Statements, excluding the proforma information, of Topps Tiles Plc for the 53 week period ended 2 October 2004 which comprise the Consolidated Profit and Loss Account, the Balance Sheets, the Consolidated Cash Flow Statement, the Statement of Total Recognised Gains and Losses and the related Notes 1 to 24. 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 Annual Report and Financial Statements 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 Annual Report and Financial Statements for the above year 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. 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. Topps Tiles Plc Annual Report and Financial Statements 2004 32 (cid:87)(cid:82)(cid:83)(cid:83)(cid:86)(cid:66)(cid:68)(cid:85)(cid:21)(cid:19)(cid:19)(cid:23)(cid:66)(cid:75)(cid:76)(cid:85)(cid:72)(cid:86)(cid:17)(cid:83)(cid:71)(cid:73)(cid:3)(cid:22)(cid:27) (cid:21)(cid:28)(cid:18)(cid:20)(cid:20)(cid:18)(cid:21)(cid:19)(cid:19)(cid:23)(cid:3)(cid:19)(cid:28)(cid:29)(cid:22)(cid:26)(cid:29)(cid:21)(cid:23) _0_TOP_arb04.qxd 24/11/2004 18:11 Page 33 Basis of audit opinion (continued) 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 2 October 2004 and of the profit of the Group for the 53 week 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 30 November 2004 Topps Tiles Plc Annual Report and Financial Statements 2004 33 (cid:87)(cid:82)(cid:83)(cid:83)(cid:86)(cid:66)(cid:68)(cid:85)(cid:21)(cid:19)(cid:19)(cid:23)(cid:66)(cid:75)(cid:76)(cid:85)(cid:72)(cid:86)(cid:17)(cid:83)(cid:71)(cid:73)(cid:3)(cid:22)(cid:28) (cid:21)(cid:28)(cid:18)(cid:20)(cid:20)(cid:18)(cid:21)(cid:19)(cid:19)(cid:23)(cid:3)(cid:19)(cid:28)(cid:29)(cid:22)(cid:26)(cid:29)(cid:21)(cid:24) _0_TOP_arb04.qxd 24/11/2004 18:11 Page 34 Consolidated Profit and Loss Account For the 53 week period ended 2 October 2004 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 Group and share of joint venture operating profit Exceptional profit on disposal of fixed assets Profit on ordinary activities before net finance income Net finance income Profit on ordinary activities before taxation Tax on profit on ordinary activities Profit on ordinary activities after taxation Dividends Transfer to reserves Earnings per Ordinary Share* – basic – diluted *adjusted for share sub-division of 5:1 in May 2004. Proforma information Note 1 (d) 52 weeks ended 27 September 2003 Unaudited £’000 69 weeks ended 27 September 2003 Audited £’000 154,297 (2,087) 152,210 (64,737) 87,473 (5,450) (58,881) 23,142 64 23,206 — 23,206 348 23,554 (7,168) 16,386 (9,832) 6,554 120,032 (1,135) 118,897 (50,587) 68,310 (4,271) (45,534) 18,505 64 18,569 — 18,569 319 18,888 (5,769) 13,119 (7,871) 5,248 7.28p 7.20p 5.82p 5.76p 53 weeks ended 2 October 2004 Audited £’000 159,430 (1,818) 157,612 (62,282) 95,330 (7,853) (54,968) 32,509 39 32,548 542 33,090 704 33,794 (8,146) 25,648 (18,155) 7,493 11.30p 11.12p Notes 2 3 5 6 7 8 9 20 10 10 The accompanying Notes are an integral part of this Consolidated Profit and Loss Account. There are no recognised gains or losses in either period other than the profit for the financial period and a foreign exchange gain of £9,000 (69 weeks ended 27 September 2003: £15,564). Accordingly, no separate Statement of Total Recognised Gains and Losses is presented. All activity arose from continuing operations. Topps Tiles Plc Annual Report and Financial Statements 2004 34 (cid:87)(cid:82)(cid:83)(cid:83)(cid:86)(cid:66)(cid:68)(cid:85)(cid:21)(cid:19)(cid:19)(cid:23)(cid:66)(cid:75)(cid:76)(cid:85)(cid:72)(cid:86)(cid:17)(cid:83)(cid:71)(cid:73)(cid:3)(cid:23)(cid:19) (cid:21)(cid:28)(cid:18)(cid:20)(cid:20)(cid:18)(cid:21)(cid:19)(cid:19)(cid:23)(cid:3)(cid:19)(cid:28)(cid:29)(cid:22)(cid:26)(cid:29)(cid:21)(cid:24) _0_TOP_arb04.qxd 24/11/2004 18:11 Page 35 Balance Sheets As at 2 October 2004 Fixed assets Goodwill Tangible assets Investments Joint venture undertaking – share of assets – share of liabilities Current assets Stocks Debtors due within one year Debtors after one year 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 Merger reserve Special reserve Treasury Shares Capital redemption reserve Other reserve Profit and Loss Account Equity shareholders’ funds The accompanying Notes are an integral part of these Balance Sheets. Group 2 October 2004 £’000 Group 27 September 2003 £’000 Company 2 October 2004 £’000 Company 27 September 2003 £’000 551 29,236 — 1,059 (866) 29,980 24,373 3,809 110 29,624 57,916 (45,452) 12,464 42,444 (7,571) (1,864) 33,009 5,673 4,889 (399) — (733) 137 — 23,442 33,009 586 23,252 — 946 (773) 24,011 19,713 4,712 — 18,580 43,005 (31,920) 11,085 35,096 (2,925) (1,349) 30,822 5,659 1,715 (399) — — — — 23,847 30,822 — — 15,122 — — 15,122 — 40,103 6,200 — 46,303 (19,195) 27,108 42,230 — — 42,230 5,673 4,889 — 14,917 (733) 137 6,200 11,147 42,230 — — 15,126 — — 15,126 — 17,238 — — 17,238 (8,898) 8,340 23,466 — — 23,466 5,659 1,715 — 14,917 — — — 1,175 23,466 Notes 11 12 13 13(c) 14 14 17 15 16 18 19 20 20 20 20 20 20 20 21 The Financial Statements on pages 34 to 54 were approved by the Board of Directors on 30 November 2004 and signed on its behalf by: ND Ounstead A Liggett Directors Topps Tiles Plc Annual Report and Financial Statements 2004 35 (cid:87)(cid:82)(cid:83)(cid:83)(cid:86)(cid:66)(cid:68)(cid:85)(cid:21)(cid:19)(cid:19)(cid:23)(cid:66)(cid:75)(cid:76)(cid:85)(cid:72)(cid:86)(cid:17)(cid:83)(cid:71)(cid:73)(cid:3)(cid:23)(cid:20) (cid:21)(cid:28)(cid:18)(cid:20)(cid:20)(cid:18)(cid:21)(cid:19)(cid:19)(cid:23)(cid:3)(cid:19)(cid:28)(cid:29)(cid:22)(cid:26)(cid:29)(cid:21)(cid:24) _0_TOP_arb04.qxd 24/11/2004 18:11 Page 36 Consolidated Cash Flow Statement For the 53 week period ended 2 October 2004 30 November 2004 Net cash inflow from operating activities Returns on investments and servicing of finance Taxation Capital expenditure and financial investment Acquisitions and disposals Equity dividends paid Cash inflow before financing Financing Increase in cash in the period The accompanying Notes are an integral part of this Consolidated Cash Flow Statement. 53 weeks ended 2 October 2004 £’000 37,770 530 (5,236) (8,266) — (11,534) 13,264 (2,220) 11,044 69 weeks ended 27 September 2003 £’000 33,723 312 (7,104) (10,653) (486) (5,469) 10,323 3,115 13,438 Notes 22(a) 22(b) 22(c) 22(d) 22(e) 22(f) Topps Tiles Plc Annual Report and Financial Statements 2004 36 (cid:87)(cid:82)(cid:83)(cid:83)(cid:86)(cid:66)(cid:68)(cid:85)(cid:21)(cid:19)(cid:19)(cid:23)(cid:66)(cid:75)(cid:76)(cid:85)(cid:72)(cid:86)(cid:17)(cid:83)(cid:71)(cid:73)(cid:3)(cid:23)(cid:21) (cid:21)(cid:28)(cid:18)(cid:20)(cid:20)(cid:18)(cid:21)(cid:19)(cid:19)(cid:23)(cid:3)(cid:19)(cid:28)(cid:29)(cid:22)(cid:26)(cid:29)(cid:21)(cid:24) _0_TOP_arb04.qxd 24/11/2004 18:11 Page 37 Notes to the Financial Statements For the 53 week period ended 2 October 2004 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 United Kingdom accounting standards. b) Basis of preparation of unaudited proforma information The unaudited profit and loss accounts are based on management accounts information and has been presented for the benefit of the principal users of the Financial Statements as in the opinion of the Directors it forms a more appropriate basis for making comparisons of profit and loss performance. The audit opinion does not extend to the proforma information. 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 2 October 2004. The Financial Statements of Topalpha Limited have been consolidated using merger accounting principles. 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 Section 230 of the Companies Act 1985. The Company’s profit after tax for the period, determined in accordance with the Act, was £36,035,000 (69 weeks ended 27 September 2003: £9,727,000). An unrealised gain of £6,200,000 was generated (69 weeks ended 27 September 2003: £Nil). d) Financial period The accounting period ends on the Saturday which falls closest to 30 September, resulting in financial periods of either 52 or 53 weeks. The prior year financial period was 69 weeks due to the change in accounting reference date. Unaudited proforma information represents a profit and loss account for the non-statutory period of the 52 weeks ended 27 September 2003. 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 useful economic life, which is 20 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 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. Turnover f) Turnover comprises the net amount receivable in respect of sales during the period to third parties and excludes value added tax. Topps Tiles Plc Annual Report and Financial Statements 2004 37 (cid:87)(cid:82)(cid:83)(cid:83)(cid:86)(cid:66)(cid:68)(cid:85)(cid:21)(cid:19)(cid:19)(cid:23)(cid:66)(cid:75)(cid:76)(cid:85)(cid:72)(cid:86)(cid:17)(cid:83)(cid:71)(cid:73)(cid:3)(cid:23)(cid:22) (cid:21)(cid:28)(cid:18)(cid:20)(cid:20)(cid:18)(cid:21)(cid:19)(cid:19)(cid:23)(cid:3)(cid:19)(cid:28)(cid:29)(cid:22)(cid:26)(cid:29)(cid:21)(cid:24) _0_TOP_arb04.qxd 24/11/2004 18:11 Page 38 Notes to the Financial Statements (continued) For the 53 week period ended 2 October 2004 1 Accounting policies (continued) 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 – over the period of the lease, up to 25 years Fixtures and fittings Motor vehicles 25% per annum on reducing balance 2% per annum on cost on a straight-line basis – over ten years or at 25% per annum on reducing balance basis as appropriate – – Freehold land is not depreciated. Residual value is calculated on prices prevailing at the date of acquisition. h) Stocks Stocks, which comprise goods for re-sale, 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. Taxation i) UK Corporation Tax is provided at amounts expected to be paid (or recovered) using the tax rates and laws that have been enacted or substantively 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. Foreign currency j) 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. The results of overseas operations are translated at the average rates of exchange during the period and their balance sheets at rates ruling at the balance sheet date. Exchange differences arising on translation of the opening net assets and results of overseas operations are reported in the statement of total recognised gains and losses. All other exchange differences are included in the profit and loss account. Topps Tiles Plc Annual Report and Financial Statements 2004 38 (cid:87)(cid:82)(cid:83)(cid:83)(cid:86)(cid:66)(cid:68)(cid:85)(cid:21)(cid:19)(cid:19)(cid:23)(cid:66)(cid:75)(cid:76)(cid:85)(cid:72)(cid:86)(cid:17)(cid:83)(cid:71)(cid:73)(cid:3)(cid:23)(cid:23) (cid:21)(cid:28)(cid:18)(cid:20)(cid:20)(cid:18)(cid:21)(cid:19)(cid:19)(cid:23)(cid:3)(cid:19)(cid:28)(cid:29)(cid:22)(cid:26)(cid:29)(cid:21)(cid:24) _0_TOP_arb04.qxd 24/11/2004 18:11 Page 39 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. Investments l) 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. Topps Tiles Plc Annual Report and Financial Statements 2004 39 (cid:87)(cid:82)(cid:83)(cid:83)(cid:86)(cid:66)(cid:68)(cid:85)(cid:21)(cid:19)(cid:19)(cid:23)(cid:66)(cid:75)(cid:76)(cid:85)(cid:72)(cid:86)(cid:17)(cid:83)(cid:71)(cid:73)(cid:3)(cid:23)(cid:24) (cid:21)(cid:28)(cid:18)(cid:20)(cid:20)(cid:18)(cid:21)(cid:19)(cid:19)(cid:23)(cid:3)(cid:19)(cid:28)(cid:29)(cid:22)(cid:26)(cid:29)(cid:21)(cid:24) _0_TOP_arb04.qxd 24/11/2004 18:11 Page 40 Notes to the Financial Statements (continued) For the 53 week period ended 2 October 2004 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 United Kingdom and Mainland Europe. Turnover Profit before tax 69 weeks 53 weeks ended ended 27 September 2 October 2003 2004 £’000 £’000 Profit before tax 69 weeks ended 27 September 2003 £’000 152,210 2,087 154,297 33,051 39 33,090 — 704 — 33,794 23,142 64 23,206 — 348 — 23,554 By geographical origin: United Kingdom Mainland Europe Turnover 53 weeks ended 2 October 2004 £’000 157,612 1,818 159,430 Bank loans and overdraft Net finance income Total net assets Profit on ordinary activities before taxation Turnover by destination is not materially different to that by geographical origin. 3 Operating expenses Distribution costs Administrative expenses Other Employee profit sharing Net assets at 2 October 2004 £’000 Net assets at 27 September 2003 £’000 39,333 193 39,526 (6,517) — 33,009 — 34,071 173 34,244 (3,422) — 30,822 — 53 weeks ended 2 October 2004 £’000 41,176 69 weeks ended 27 September 2003 £’000 44,849 13,792 7,853 62,821 14,032 5,450 64,331 Topps Tiles Plc Annual Report and Financial Statements 2004 40 (cid:87)(cid:82)(cid:83)(cid:83)(cid:86)(cid:66)(cid:68)(cid:85)(cid:21)(cid:19)(cid:19)(cid:23)(cid:66)(cid:75)(cid:76)(cid:85)(cid:72)(cid:86)(cid:17)(cid:83)(cid:71)(cid:73)(cid:3)(cid:23)(cid:25) (cid:21)(cid:28)(cid:18)(cid:20)(cid:20)(cid:18)(cid:21)(cid:19)(cid:19)(cid:23)(cid:3)(cid:19)(cid:28)(cid:29)(cid:22)(cid:26)(cid:29)(cid:21)(cid:24) _0_TOP_arb04.qxd 24/11/2004 18:11 Page 41 4 Staff costs a) Staff numbers The average monthly number of employees (including Executive Directors) was: Selling Administration b) Staff costs Their aggregate remuneration comprised: Wages and salaries Social security costs Other pension costs (Note 23(b)) Details of Directors’ emoluments are disclosed on page 29. 5 Exceptional profit on disposal of fixed assets The profit on disposal of fixed assets increased the tax charge by £130,622. 53 weeks ended 2 October 2004 Number employed 1,181 146 1,327 53 weeks ended 2 October 2004 £’000 25,354 2,936 175 28,465 69 weeks ended 27 September 2003 Number employed 1,036 140 1,176 16 months ended 27 September 2003 £’000 27,157 2,384 194 29,735 Topps Tiles Plc Annual Report and Financial Statements 2004 41 (cid:87)(cid:82)(cid:83)(cid:83)(cid:86)(cid:66)(cid:68)(cid:85)(cid:21)(cid:19)(cid:19)(cid:23)(cid:66)(cid:75)(cid:76)(cid:85)(cid:72)(cid:86)(cid:17)(cid:83)(cid:71)(cid:73)(cid:3)(cid:23)(cid:26) (cid:21)(cid:28)(cid:18)(cid:20)(cid:20)(cid:18)(cid:21)(cid:19)(cid:19)(cid:23)(cid:3)(cid:19)(cid:28)(cid:29)(cid:22)(cid:26)(cid:29)(cid:21)(cid:24) _0_TOP_arb04.qxd 24/11/2004 18:11 Page 42 Notes to the Financial Statements (continued) For the 53 week period ended 2 October 2004 6 Finance income (net) 53 weeks ended 2 October 2004 £’000 69 weeks ended 27 September 2003 £’000 Investment income Interest receivable and similar income Interest payable and similar charges Bank loans and overdrafts Joint venture interest Interest costs capitalised Net finance charges Net finance income Finance costs have been capitalised based on a capitalisation rate of 4.5%, which is the weighted average of rates applicable to the Group’s general borrowings outstanding during the period. (373) (27) 174 (226) 704 930 358 (73) — 63 (10) 348 7 Profit on ordinary activities before taxation Profit on ordinary activities before tax is stated after charging/(crediting): Depreciation and amounts written off tangible fixed assets – owned Amortisation of goodwill Joint venture goodwill Exceptional operating expenses, impairment of display stands Loss on disposal of fixed assets charged within operating profit Exceptional profit on disposal of fixed assets Operating lease rentals – plant and machinery – other Remuneration to Auditors – audit – other 53 weeks ended 2 October 2004 £’000 69 weeks ended 27 September 2003 £’000 2,729 17 18 344 269 (542) 3,045 54 24 — 217 — 563 11,652 535 13,153 54 181 55 38 Topps Tiles Plc Annual Report and Financial Statements 2004 42 (cid:87)(cid:82)(cid:83)(cid:83)(cid:86)(cid:66)(cid:68)(cid:85)(cid:21)(cid:19)(cid:19)(cid:23)(cid:66)(cid:75)(cid:76)(cid:85)(cid:72)(cid:86)(cid:17)(cid:83)(cid:71)(cid:73)(cid:3)(cid:23)(cid:27) (cid:21)(cid:28)(cid:18)(cid:20)(cid:20)(cid:18)(cid:21)(cid:19)(cid:19)(cid:23)(cid:3)(cid:19)(cid:28)(cid:29)(cid:22)(cid:26)(cid:29)(cid:21)(cid:24) _0_TOP_arb04.qxd 24/11/2004 18:11 Page 43 8 Tax on profit on ordinary activities The tax charge comprises: 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 18) Total tax on profit on ordinary activities 53 weeks ended 2 October 2004 £’000 69 weeks ended 27 September 2003 £’000 7,573 19 39 7,631 515 8,146 6,734 22 70 6,826 342 7,168 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: 53 weeks ended 2 October 2004 £’000 69 weeks ended 27 September 2003 £’000 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 Savings from Share Symmetry on options exercised Higher tax rate on overseas earnings Adjustments to tax charge in respect of prior periods Current tax charge for period Factors that may affect the Group’s future tax charge include anticipated restructuring benefits, differences between the market value and option price of share options exercised and future planning opportunities. (869) (475) 196 (1,408) 9 39 7,631 33,794 10,139 (458) (64) 207 — 5 70 6,826 23,554 7,066 Topps Tiles Plc Annual Report and Financial Statements 2004 43 (cid:87)(cid:82)(cid:83)(cid:83)(cid:86)(cid:66)(cid:68)(cid:85)(cid:21)(cid:19)(cid:19)(cid:23)(cid:66)(cid:75)(cid:76)(cid:85)(cid:72)(cid:86)(cid:17)(cid:83)(cid:71)(cid:73)(cid:3)(cid:23)(cid:28) (cid:21)(cid:28)(cid:18)(cid:20)(cid:20)(cid:18)(cid:21)(cid:19)(cid:19)(cid:23)(cid:3)(cid:19)(cid:28)(cid:29)(cid:22)(cid:26)(cid:29)(cid:21)(cid:25) _0_TOP_arb04.qxd 24/11/2004 18:11 Page 44 Notes to the Financial Statements (continued) For the 53 week period ended 2 October 2004 9 Dividends 53 weeks ended 69 weeks ended 27 September 2003 £’000 2 October 2004 £’000 Interim paid 2.00p per Ordinary Share Interim paid 6 months ended November 2002 (0.67p) Interim paid 4 months ended March 2003 (0.60p) Final proposed 6.00p (69 weeks ended 27 September 2003: 3.08p) per Ordinary Share Over provision in respect of the prior period final dividend Total 8.00p (69 weeks ended 27 September 2003: 4.35p) per Ordinary Share The unaudited proforma dividend figure for the 52 weeks ended 27 September 2003 of £7,871,000 represents a proforma dividend of 3.48 pence per Ordinary Share using the dividend cover of 1.67 which was applicable to the 69 week period, of which it formed part. 4,602 — — 13,593 (40) 18,155 — 1,509 1,352 6,972 (1) 9,832 10 Earnings per share The calculation of earnings per share is based on the profit of ordinary activities after taxation for the financial period attributable to equity shareholders and the weighted average number of Ordinary Shares as follows: Weighted average number of shares For basic earnings per share Weighted average of shares under option For diluted earnings per share *adjusted for share sub-division 11 Goodwill Cost At 27 September 2003 and 2 October 2004 Amortisation At 27 September 2003 Charge for the period At 2 October 2004 Net book value At 2 October 2004 At 27 September 2003 At 2 October At 27 September 2003* Number of shares 2004 Number of shares 226,881,069 225,287,980 2,173,000 230,749,884 227,460,980 3,868,815 Total £’000 693 107 35 142 551 586 Topps Tiles Plc Annual Report and Financial Statements 2004 44 (cid:87)(cid:82)(cid:83)(cid:83)(cid:86)(cid:66)(cid:68)(cid:85)(cid:21)(cid:19)(cid:19)(cid:23)(cid:66)(cid:75)(cid:76)(cid:85)(cid:72)(cid:86)(cid:17)(cid:83)(cid:71)(cid:73)(cid:3)(cid:24)(cid:19) (cid:21)(cid:28)(cid:18)(cid:20)(cid:20)(cid:18)(cid:21)(cid:19)(cid:19)(cid:23)(cid:3)(cid:19)(cid:28)(cid:29)(cid:22)(cid:26)(cid:29)(cid:21)(cid:25) _0_TOP_arb04.qxd 24/11/2004 18:11 Page 45 12 Tangible fixed assets Group Land and buildings Freehold £’000 Land and buildings Short leasehold £’000 Fixtures and fittings £’000 Motor vehicles £’000 1,173 120 — 1,293 8,258 5,421 (2,475) 11,204 Cost At 27 September 2003 Additions Disposals At 2 October 2004 Depreciation At 27 September 2003 Charge Disposals At 2 October 2004 Net book value At 2 October 2004 At 27 September 2003 Freehold land and buildings includes £406,535 (2003: £3,637,872) of assets under construction, including £2,160,000 of land (27 September 2003: £1,860,000) on which no depreciation has been charged in the current period. 20,874 5,986 (1,312) 25,548 6,646 2,433 (952) 8,127 467 138 (259) 346 192 131 (45) 278 53 94 (97) 50 629 71 — 700 10,926 8,066 17,421 14,228 296 414 593 544 Total £’000 30,772 11,665 (4,046) 38,391 7,520 2,729 (1,094) 9,155 29,236 23,252 Cumulative finance costs capitalised included in the cost of tangible fixed assets amount to £341,000 (27 September 2003: £167,000) for the Group. 13 Fixed asset investments Subsidiary undertakings (Note 13a) Joint venture (Note 13b) Company 2 October 2004 £’000 14,640 482 15,122 Company 27 September 2003 £’000 14,640 486 15,126 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. Topps Tiles Plc Annual Report and Financial Statements 2004 45 (cid:87)(cid:82)(cid:83)(cid:83)(cid:86)(cid:66)(cid:68)(cid:85)(cid:21)(cid:19)(cid:19)(cid:23)(cid:66)(cid:75)(cid:76)(cid:85)(cid:72)(cid:86)(cid:17)(cid:83)(cid:71)(cid:73)(cid:3)(cid:24)(cid:20) (cid:21)(cid:28)(cid:18)(cid:20)(cid:20)(cid:18)(cid:21)(cid:19)(cid:19)(cid:23)(cid:3)(cid:19)(cid:28)(cid:29)(cid:22)(cid:26)(cid:29)(cid:21)(cid:25) _0_TOP_arb04.qxd 24/11/2004 18:11 Page 46 Notes to the Financial Statements (continued) For the 53 week period ended 2 October 2004 13 Fixed asset investments (continued) % of issued shares held Principal activity Subsidiary undertaking Topalpha Limited* Multi Tile Limited Topps Tiles (UK) Limited Topps Tiles Distribution Limited Multi Tile Distribution Limited Joint ventures Topps Tiles Holdings BV* *held directly by Topps Tiles Plc 100% 100% 100% 100% 100% 50% Property management and investment Sale of ceramic tiles, wood flooring and related products Sale of ceramic tiles, wood flooring and related products Wholesale and distribution of ceramic tiles, wood flooring and related products Wholesale and distribution of ceramic tiles, wood flooring and related products Sale of ceramic tiles, wood flooring and related products 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 (Holland) BV which is registered and incorporated in the Netherlands. (a) Subsidiary undertakings Cost and net book value Beginning and end of period (b) Joint venture Cost and net book value At 27 September 2003 Amounts written off At 2 October 2004 (c) Joint venture Group Share of gross assets Share of gross liabilities Share of net assets Company £’000 14,640 Company £’000 486 (4) 482 2 October 2004 £’000 27 September 2003 £’000 1,059 (866) 193 946 (773) 173 Topps Tiles Plc Annual Report and Financial Statements 2004 46 (cid:87)(cid:82)(cid:83)(cid:83)(cid:86)(cid:66)(cid:68)(cid:85)(cid:21)(cid:19)(cid:19)(cid:23)(cid:66)(cid:75)(cid:76)(cid:85)(cid:72)(cid:86)(cid:17)(cid:83)(cid:71)(cid:73)(cid:3)(cid:24)(cid:21) (cid:21)(cid:28)(cid:18)(cid:20)(cid:20)(cid:18)(cid:21)(cid:19)(cid:19)(cid:23)(cid:3)(cid:19)(cid:28)(cid:29)(cid:22)(cid:26)(cid:29)(cid:21)(cid:25) _0_TOP_arb04.qxd 24/11/2004 18:11 Page 47 14 Debtors Amounts falling due within one year: Trade debtors Loan to joint venture Amounts owed by subsidiary undertaking Other debtors Prepayments and accrued income Debtors falling due after one year: Loan to joint venture Amounts owed by subsidiary undertaking Total debtors 15 Creditors: amounts falling due within one year Bank loans and overdrafts (Note 17) Trade creditors Other creditors Corporation Tax Proposed dividend Accruals and deferred income 16 Creditors: amounts falling due after more than one year Bank loan (Note 17) Accruals and deferred income Group 2 October 2004 £’000 Group 27 September 2003 £’000 Company 2 October 2004 £’000 Company 27 September 2003 £’000 635 — — 651 2,523 3,809 110 — 3,919 775 106 — 811 3,020 4,712 — — 4,712 — — 40,103 — — 40,103 — 6,200 46,303 — — 17,223 — 15 17,238 — — 17,238 Group 2 October 2004 £’000 Group 27 September 2003 £’000 Company 2 October 2004 £’000 Company 27 September 2003 £’000 517 14,649 4,109 3,942 13,593 8,642 45,452 497 13,101 6,204 1,547 6,972 3,599 31,920 2,615 3 215 15 13,593 2,754 19,195 1,553 108 54 4 6,972 207 8,898 Group 2 October 2004 £’000 Group 27 September 2003 £’000 Company 2 October 2004 £’000 Company 27 September 2003 £’000 6,000 1,571 7,571 2,925 — 2,925 — — — — — — Topps Tiles Plc Annual Report and Financial Statements 2004 47 (cid:87)(cid:82)(cid:83)(cid:83)(cid:86)(cid:66)(cid:68)(cid:85)(cid:21)(cid:19)(cid:19)(cid:23)(cid:66)(cid:75)(cid:76)(cid:85)(cid:72)(cid:86)(cid:17)(cid:83)(cid:71)(cid:73)(cid:3)(cid:24)(cid:22) (cid:21)(cid:28)(cid:18)(cid:20)(cid:20)(cid:18)(cid:21)(cid:19)(cid:19)(cid:23)(cid:3)(cid:19)(cid:28)(cid:29)(cid:22)(cid:26)(cid:29)(cid:21)(cid:25) _0_TOP_arb04.qxd 24/11/2004 18:11 Page 48 Notes to the Financial Statements (continued) For the 53 week period ended 2 October 2004 17 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. Interest rate profile a) The currency profile of the Group’s financial assets is as follows: Sterling Euro Dollar Group 2 October 2004 £’000 Group 27 September 2003 £’000 29,719 (33) (62) 29,624 19,069 (280) (209) 18,580 Financial assets comprise short term cash deposits, accessible within 24 hours, with major United Kingdom clearing banks (with associated right of offset) and deposits placed on money markets at call. The financial assets earn floating rates of interest based upon bank base rates. The interest rate profile of the Group’s financial liabilities is as follows: Sterling – borrowings Loan one Loan two Total The interest rate noted on sterling borrowings is the excess over bank base rate. Floating rate 2 October 2004 £’000 2 October 2004 % 27 September 2003 £’000 27 September 2003 % 517 6,000 6,517 1.00 0.75 497 2,925 3,422 1.00 0.75 Loan two has an offset facility whereby if the cash deposit is equivalent to the loan value the Group only pays 0.75% on the loan value. Topps Tiles Plc Annual Report and Financial Statements 2004 48 (cid:87)(cid:82)(cid:83)(cid:83)(cid:86)(cid:66)(cid:68)(cid:85)(cid:21)(cid:19)(cid:19)(cid:23)(cid:66)(cid:75)(cid:76)(cid:85)(cid:72)(cid:86)(cid:17)(cid:83)(cid:71)(cid:73)(cid:3)(cid:24)(cid:23) (cid:21)(cid:28)(cid:18)(cid:20)(cid:20)(cid:18)(cid:21)(cid:19)(cid:19)(cid:23)(cid:3)(cid:19)(cid:28)(cid:29)(cid:22)(cid:26)(cid:29)(cid:21)(cid:25) _0_TOP_arb04.qxd 24/11/2004 18:11 Page 49 17 Derivatives and other financial instruments (continued) Currency risk (continued) b) Currency exposures The amounts shown in the table below show the effect of forward contracts entered into to manage foreign currency exposure as at 27 September 2003 and 2 October 2004. Contract one Contract two Contract three Contract four 2 October 2004 Contract delivery — — 1 Nov 2004 1 Dec 2004 Initial contract value £’000 — — 500 500 1,000 Currency — — Euro Euro 27 September 2003 Contract delivery 1 Oct 2003 1 Nov 2003 — — Initial contract value £’000 400 400 — — 800 Currency Euro Euro — — 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 two years but not more than five years Total 2 October 2004 £’000 27 September 2003 £’000 517 6,000 6,517 497 2,925 3,422 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 two years Total 2 October 2004 £’000 27 September 2003 £’000 2,000 1,983 3,983 2,000 5,078 7,078 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. Topps Tiles Plc Annual Report and Financial Statements 2004 49 (cid:87)(cid:82)(cid:83)(cid:83)(cid:86)(cid:66)(cid:68)(cid:85)(cid:21)(cid:19)(cid:19)(cid:23)(cid:66)(cid:75)(cid:76)(cid:85)(cid:72)(cid:86)(cid:17)(cid:83)(cid:71)(cid:73)(cid:3)(cid:24)(cid:24) (cid:21)(cid:28)(cid:18)(cid:20)(cid:20)(cid:18)(cid:21)(cid:19)(cid:19)(cid:23)(cid:3)(cid:19)(cid:28)(cid:29)(cid:22)(cid:26)(cid:29)(cid:21)(cid:25) _0_TOP_arb04.qxd 24/11/2004 18:11 Page 50 Notes to the Financial Statements (continued) For the 53 week period ended 2 October 2004 18 Provisions for liabilities and charges At 27 September 2003 Charged to Profit and Loss Account At 2 October 2004 Deferred tax is provided as follows: Accelerated capital allowances 19 Called-up share capital Ordinary Shares of 12.5p each Deferred taxation £’000 1,349 515 1,864 2 October 2004 £’000 1,864 27 September 2003 £’000 1,349 Number of shares 2004 £’000 Authorised At 27 September 2003 and 2 October 2004 Allotted, called-up and fully-paid At 27 September 2003 Issued in period Treasury Shares cancellation At 2 October 2004 During the period the Company allotted 6,055,380 Ordinary Shares with a nominal value of £151,000 under share option schemes for an aggregate cash consideration of £3,325,000. 226,368,545 6,055,380 (5,471,120) 226,952,805 320,000,000 8,000 5,659 151 (137) 5,673 20 Reserves Group At 27 September 2003 Premium on issue of new shares Exchange differences Treasury Shares purchased Treasury Shares cancellation Retained profit for the period At 2 October 2004 Share premium £’000 1,715 3,174 — — — — 4,889 Merger reserve £’000 Treasury shares £’000 Redemption reserve £’000 Profit and loss account £’000 (399) — — — — — (399) — — — (8,640) 7,907 — (733) — — — — 137 — 137 23,847 — 9 — (7,907) 7,493 23,442 Topps Tiles Plc Annual Report and Financial Statements 2004 50 (cid:87)(cid:82)(cid:83)(cid:83)(cid:86)(cid:66)(cid:68)(cid:85)(cid:21)(cid:19)(cid:19)(cid:23)(cid:66)(cid:75)(cid:76)(cid:85)(cid:72)(cid:86)(cid:17)(cid:83)(cid:71)(cid:73)(cid:3)(cid:24)(cid:25) (cid:21)(cid:28)(cid:18)(cid:20)(cid:20)(cid:18)(cid:21)(cid:19)(cid:19)(cid:23)(cid:3)(cid:19)(cid:28)(cid:29)(cid:22)(cid:26)(cid:29)(cid:21)(cid:25) _0_TOP_arb04.qxd 24/11/2004 18:11 Page 51 20 Reserves (continued) Share premium £’000 Special reserve £’000 Treasury shares £’000 Capital redemption reserve £’000 Company At 27 September 2003 Premium on issue of new shares Treasury Shares purchased Treasury Shares cancellation Retained profit for the period Other reserve movement At 2 October 2004 The Directors consider the balances on the profit and loss account and special reserves to be distributable. — — (8,640) 7,907 — — (733) 14,917 — — — — — 14,917 1,715 3,174 — — — — 4,889 — — — 137 — — 137 Other reserve £’000 — — — — — 6,200 6,200 Profit and loss account £’000 1,175 — — (7,907) 17,879 — 11,147 The other reserve comprises an unrealised gain arising on the disposal of certain trademarks to a subsidiary company. 21 Reconciliation of movements in Group equity shareholders’ funds Profit for the period Dividends paid and proposed Consideration for purchase of Treasury Shares Exchange differences Issue of shares (net of expenses) Net additions to shareholders’ funds Opening equity shareholders’ funds Closing equity shareholders’ funds 53 weeks ended 2 October 2004 £’000 25,648 (18,155) (8,640) 9 3,325 2,187 30,822 33,009 69 weeks ended 27 September 2003 £’000 16,386 (9,832) — — 444 6,998 23,824 30,822 Topps Tiles Plc Annual Report and Financial Statements 2004 51 (cid:87)(cid:82)(cid:83)(cid:83)(cid:86)(cid:66)(cid:68)(cid:85)(cid:21)(cid:19)(cid:19)(cid:23)(cid:66)(cid:75)(cid:76)(cid:85)(cid:72)(cid:86)(cid:17)(cid:83)(cid:71)(cid:73)(cid:3)(cid:24)(cid:26) (cid:21)(cid:28)(cid:18)(cid:20)(cid:20)(cid:18)(cid:21)(cid:19)(cid:19)(cid:23)(cid:3)(cid:19)(cid:28)(cid:29)(cid:22)(cid:26)(cid:29)(cid:21)(cid:25) _0_TOP_arb04.qxd 24/11/2004 18:11 Page 52 Notes to the Financial Statements (continued) For the 53 week period ended 2 October 2004 22 Consolidated cash flow a) Reconciliation of operating profit to operating cash flows Operating profit Depreciation Loss on disposal of fixed assets Goodwill amortisation Increase in stocks Decrease/(increase) in debtors Increase in creditors Net cash inflow from operating activities b) Returns on investments and servicing of finance Interest received Interest paid Net cash inflow from returns on investments and servicing of finance c) 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 d) Acquisitions and disposals Acquisition of joint venture Topps Tiles Plc Annual Report and Financial Statements 2004 52 53 weeks ended 2 October 2004 £’000 69 weeks ended 27 September 2003 £’000 32,509 2,729 269 35 (4,660) 793 6,095 37,770 23,184 3,045 217 54 (694) (1,728) 9,645 33,723 53 weeks ended 2 October 2004 £’000 69 weeks ended 27 September 2003 £’000 930 (400) 530 363 (51) 312 53 weeks ended 2 October 2004 £’000 (11,491) 3,225 (8,266) 69 weeks ended 27 September 2003 £’000 (11,655) 1,002 (10,653) 53 weeks ended 2 October 2004 £’000 — 69 weeks ended 27 September 2003 £’000 (486) (cid:87)(cid:82)(cid:83)(cid:83)(cid:86)(cid:66)(cid:68)(cid:85)(cid:21)(cid:19)(cid:19)(cid:23)(cid:66)(cid:75)(cid:76)(cid:85)(cid:72)(cid:86)(cid:17)(cid:83)(cid:71)(cid:73)(cid:3)(cid:24)(cid:27) (cid:21)(cid:28)(cid:18)(cid:20)(cid:20)(cid:18)(cid:21)(cid:19)(cid:19)(cid:23)(cid:3)(cid:19)(cid:28)(cid:29)(cid:22)(cid:26)(cid:29)(cid:21)(cid:25) _0_TOP_arb04.qxd 24/11/2004 18:11 Page 53 22 Consolidated cash flow (continued) e) Financing Proceeds from issue of Ordinary Share capital New loans Purchase of Treasury Shares Repayment of loans Capital element of hire purchase rentals Net cash (outflow)/inflow from financing f) 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 outflow from increase in debt and finance leasing Movements in net funds in the period Net funds at start of period Net funds at end of period At 27 September 2003 £’000 18,580 (497) (2,925) 15,158 53 weeks ended 2 October 2004 £’000 69 weeks ended 27 September 2003 £’000 3,325 3,095 (8,640) — — (2,220) Cash flow £’000 11,044 (20) (3,075) 7,949 53 weeks ended 2 October 2004 £’000 11,044 (3,095) 7,949 15,158 23,107 444 3,422 — (746) (5) 3,115 At 2 October 2004 £’000 29,624 (517) (6,000) 23,107 69 weeks ended 27 September 2003 £’000 13,438 (2,676) 10,762 4,396 15,158 Topps Tiles Plc Annual Report and Financial Statements 2004 53 (cid:87)(cid:82)(cid:83)(cid:83)(cid:86)(cid:66)(cid:68)(cid:85)(cid:21)(cid:19)(cid:19)(cid:23)(cid:66)(cid:75)(cid:76)(cid:85)(cid:72)(cid:86)(cid:17)(cid:83)(cid:71)(cid:73)(cid:3)(cid:24)(cid:28) (cid:21)(cid:28)(cid:18)(cid:20)(cid:20)(cid:18)(cid:21)(cid:19)(cid:19)(cid:23)(cid:3)(cid:19)(cid:28)(cid:29)(cid:22)(cid:26)(cid:29)(cid:21)(cid:26) _0_TOP_arb04.qxd 24/11/2004 18:11 Page 54 Notes to the Financial Statements (continued) For the 53 week period ended 2 October 2004 23 Financial commitments a) Capital commitments At the end of the period there were no capital commitments contracted (27 September 2003: £4.6 million). 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 £175,000 (16 months ended 27 September 2003: £194,000). 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 to five years – after five years 2 October 2004 Land and buildings £’000 1,255 2,052 8,777 12,084 2 October 2004 Other £’000 27 September 2003 Land and buildings £’000 27 September 2003 Other £’000 56 516 11 583 761 2,089 6,800 9,650 164 200 20 384 24 Related parties At 2 October 2004 SKM Williams was the landlord of two properties leased to Multi Tile Limited, a trading subsidiary of Topps Tiles Plc, for £66,000 (69 weeks ended 27 September 2003: £88,000). No amounts were outstanding at 2 October 2004 (27 September 2003: £Nil). The lease agreements on both properties are operated on commercial arms length terms. Topps Tiles Plc Annual Report and Financial Statements 2004 54 (cid:87)(cid:82)(cid:83)(cid:83)(cid:86)(cid:66)(cid:68)(cid:85)(cid:21)(cid:19)(cid:19)(cid:23)(cid:66)(cid:75)(cid:76)(cid:85)(cid:72)(cid:86)(cid:17)(cid:83)(cid:71)(cid:73)(cid:3)(cid:25)(cid:19) (cid:21)(cid:28)(cid:18)(cid:20)(cid:20)(cid:18)(cid:21)(cid:19)(cid:19)(cid:23)(cid:3)(cid:19)(cid:28)(cid:29)(cid:22)(cid:26)(cid:29)(cid:21)(cid:26) _0_TOP_arb04.qxd 24/11/2004 18:11 Page 55 Five Year Record Turnover, including joint venture Operating profit, including Group share of joint venture Profit before taxation Shareholders’ funds Basic earnings per share* Dividend per share* Dividend cover Average number of employees Share price (period end)* 54.2p 66.0p *adjusted for share sub-division of 5:1 in May 2004. Proforma Note 1(d) information 52 weeks ended 27 September 2003 Unaudited £’000 69 weeks ended 27 September 2003 £’000 154,297 120,032 53 weeks ended 2 October 2004 £’000 159,430 52 weeks ended 2 June 2001 £’000 74,642 52 weeks ended 1 June 2002 £’000 91,026 9,637 11,660 23,206 18,569 32,548 9,414 11,516 23,554 18,888 33,794 53 weeks ended 3 June 2000 £’000 62,614 8,249 8,018 13,182 18,669 23,824 30,822 30,822 33,009 2.62p 0.86p 3.00 779 2.96p 1.00p 2.90 941 3.58p 1.43p 2.50 1,070 54.8p 7.28p 4.35p 1.67 1,176 85.4p 5.82p 11.30p 3.48p 8.00p 1.67 1.41 1,176 1,327 85.4p 178.9p Topps Tiles Plc Annual Report and Financial Statements 2004 55 (cid:87)(cid:82)(cid:83)(cid:83)(cid:86)(cid:66)(cid:68)(cid:85)(cid:21)(cid:19)(cid:19)(cid:23)(cid:66)(cid:75)(cid:76)(cid:85)(cid:72)(cid:86)(cid:17)(cid:83)(cid:71)(cid:73)(cid:3)(cid:25)(cid:20) (cid:21)(cid:28)(cid:18)(cid:20)(cid:20)(cid:18)(cid:21)(cid:19)(cid:19)(cid:23)(cid:3)(cid:19)(cid:28)(cid:29)(cid:22)(cid:26)(cid:29)(cid:21)(cid:26) _0_TOP_arb04.qxd 24/11/2004 18:11 Page 56 Notice of Annual General Meeting NOTICE IS HEREBY GIVEN that the Annual General Meeting of Topps Tiles Plc (the “Company”) will be held at Topps Tiles Plc, Thorpe Way, Grove Park, Enderby, Leicestershire LE19 1SU on Tuesday 11 January 2005 at 10.30am for the following purposes: Ordinary business 1. To receive and adopt the Company’s Annual Report and Financial Statements for the financial period ended 2 October 2004 together with the last Directors’ Report, the last Directors’ Remuneration Report and the Auditors’ Report on those accounts and the auditable part of the Directors’ Remuneration Report. 2. To declare a final dividend of 6.00 pence per Ordinary Share on the Ordinary Shares for the period. 3. To re-elect WA McIntosh as a Director of the Company. 4. To re-elect VH Watson as a Director of the Company. 5. To re-appoint Deloitte & Touche LLP as Auditors to hold office from the conclusion of the meeting to the conclusion of the next meeting at which the Annual Report and Financial Statements are laid before the Company at a remuneration to be determined by the Directors. 6. To approve the Directors’ Remuneration Report for the financial period ended 2 October 2004. Special business To consider and, if thought fit, pass the resolutions set out below which, in the case of Resolution 7 will be proposed as an Ordinary Resolution and, in the case of Resolutions 8 and 9 will be proposed as Special Resolutions: 7. THAT the Directors of the Company 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 £1,885,987 (in substitution for/to any existing authorities under the Act) to such persons at such times and upon such terms and conditions as they may determine (subject always to the articles of association of the Company) provided that this authority shall (unless previously revoked, varied or extended by the Company in general meeting) expire at the conclusion of the next Annual General Meeting or 15 months from the date of the passing of this resolution, if earlier save that the Company may, before such expiry, make an offer, agreement or arrangement which would or might require relevant securities to be allotted after the expiry of such period and the Directors may then allot relevant securities pursuant to any such offer, agreement or arrangement as if the authority or power conferred hereby had not expired. 8. THAT subject to and conditional on the passing of Resolution 7 set out above, the Directors of the Company be and they are authorised and 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 general authority and power conferred by Resolution 7 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 authority and power shall unless renewed, varied or revoked, expire at the conclusion of the next Annual General Meeting of the Company or 15 months from the date of the passing of this resolution, if earlier and provided further that this authority and power shall be limited to: (a) the allotment of equity securities pursuant to a rights issue or similar offer to Ordinary Shareholders where the equity securities respectively attributable to the interests of all Ordinary Shareholders are proportionate or as nearly as practical (and taking into account any prohibitions against or difficulties concerning the making of an offer or allotment to shareholders whose registered address or place of residence is overseas and subject to such exclusions as the Directors of the Company may deem necessary or expedient to deal with fractional entitlement or record dates) to the respective numbers of Ordinary Shares held by them; and Topps Tiles Plc Annual Report and Financial Statements 2004 56 (cid:87)(cid:82)(cid:83)(cid:83)(cid:86)(cid:66)(cid:68)(cid:85)(cid:21)(cid:19)(cid:19)(cid:23)(cid:66)(cid:75)(cid:76)(cid:85)(cid:72)(cid:86)(cid:17)(cid:83)(cid:71)(cid:73)(cid:3)(cid:25)(cid:21) (cid:21)(cid:28)(cid:18)(cid:20)(cid:20)(cid:18)(cid:21)(cid:19)(cid:19)(cid:23)(cid:3)(cid:19)(cid:28)(cid:29)(cid:22)(cid:26)(cid:29)(cid:21)(cid:26) _0_TOP_arb04.qxd 24/11/2004 18:11 Page 57 Special business (continued) (b) the allotment (otherwise than pursuant to paragraph (a) above) of equity securities up to an aggregate nominal amount of the greater of £283,181 or 5% of the issued share capital of the Company. 9. THAT the Company be generally and unconditionally authorised for the purposes of Section 166 of the Act to make market purchases (within the meaning of Section 163(3) of the Act) of Ordinary Shares of 2.5p each in the capital of the Company (“Ordinary Shares”) provided that: (a) the maximum number of Ordinary Shares hereby authorised to be purchased is 33,815,000 (representing 14.9% of the Company’s issued Ordinary Share capital); (b) the minimum price, exclusive of any expenses, which may be paid for an Ordinary Share is 2.5p; (c) the maximum price, exclusive of any expenses, which may be paid for an Ordinary Share is an amount equal to 105% 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) unless previously renewed, varied or revoked, the authority conferred shall expire at the close of the next Annual General Meeting of the Company or twelve months from the date of this resolution, if earlier; and (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. Notes 1. This notice has been sent to all Ordinary Shareholders who are entitled to attend or be represented at the meeting. 2. A member entitled to attend and vote at the Annual General Meeting 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 appointed for the holding of the Annual General Meeting. 3. A proxy is not entitled to speak at the meeting except to demand a poll, and may vote only when a poll is taken. 4. 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. 5. 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 10 January 2005 (or if the meeting is adjourned, shareholders entered on the Company’s register of members not later than 48 hours before the time fixed for the adjourned meeting) shall be entitled to attend the Annual General Meeting 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 10 January 2005 (or, if the meeting is adjourned after 48 hours before the time fixed for the adjourned meeting) shall be disregarded in determining the rights of any person to attend and/or vote at the Annual General Meeting. Topps Tiles Plc Annual Report and Financial Statements 2004 57 (cid:87)(cid:82)(cid:83)(cid:83)(cid:86)(cid:66)(cid:68)(cid:85)(cid:21)(cid:19)(cid:19)(cid:23)(cid:66)(cid:75)(cid:76)(cid:85)(cid:72)(cid:86)(cid:17)(cid:83)(cid:71)(cid:73)(cid:3)(cid:25)(cid:22) (cid:21)(cid:28)(cid:18)(cid:20)(cid:20)(cid:18)(cid:21)(cid:19)(cid:19)(cid:23)(cid:3)(cid:19)(cid:28)(cid:29)(cid:22)(cid:26)(cid:29)(cid:21)(cid:26) _0_TOP_arb04.qxd 24/11/2004 18:11 Page 58 Notice of Annual General Meeting (continued) Notes (continued) 6. 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. A Liggett Company Secretary 30 November 2004 Registered Office: Rushworth House Wilmslow Road Handforth, Wilmslow Cheshire SK9 3HJ Registered No: 3213782 Topps Tiles Plc Annual Report and Financial Statements 2004 58 (cid:87)(cid:82)(cid:83)(cid:83)(cid:86)(cid:66)(cid:68)(cid:85)(cid:21)(cid:19)(cid:19)(cid:23)(cid:66)(cid:75)(cid:76)(cid:85)(cid:72)(cid:86)(cid:17)(cid:83)(cid:71)(cid:73)(cid:3)(cid:25)(cid:23) (cid:21)(cid:28)(cid:18)(cid:20)(cid:20)(cid:18)(cid:21)(cid:19)(cid:19)(cid:23)(cid:3)(cid:19)(cid:28)(cid:29)(cid:22)(cid:26)(cid:29)(cid:21)(cid:26) _0_TOP_arb04.qxd 24/11/2004 18:11 Page 59 Explanatory Notes to the Notice of Annual General Meeting THE ANNUAL GENERAL MEETING of the Company will be held at the Company’s premises at Thorpe Way, Grove Park, Enderby, Leicestershire LE19 1SU on 11 January 2005 at 10.30am. Three of the resolutions are to be taken at this year’s Annual General Meeting as special business. By way of explanation of these and certain of the other resolutions: Ordinary business Resolution 2 Final dividend A final dividend of 6.00 pence 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 14 January 2005. Subject to approval by the Ordinary Shareholders at the Annual General Meeting, the dividend will be paid on 31 January 2005. An interim dividend of 2.00 pence per Ordinary Share was paid on 30 June 2004. This gives a total dividend level of 8.00 pence per Ordinary Share for the 53 week period to 2 October 2004. Resolutions 3 and 4 Re-election of Directors WA McIntosh and VH 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 three years with the exception of VH Watson who at the age of 76 retires and offers himself for re-election annually. Brief biographical details about the Directors standing for re-election appear on page 19 of the Annual Report and Financial Statements. Special business Resolutions 7 and 8 Appointment of authority to issue shares and the disapplication of statutory rights of pre-emption Resolution 7: 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 7 will be put to members as special business to authorise the Directors to allot Ordinary Shares with a nominal value of £1,885,987 out of the Company’s unissued share capital representing approximately 33.3% of the Company’s current issued share capital (excluding shares held in treasury). The Company holds 407,800 Ordinary Shares in treasury representing approximately 0.18% of the Company’s current issued share capital (excluding shares held in treasury). The Directors have no current intention of exercising the authority to allot further shares. The authority shall expire immediately following the Annual General Meeting next following the resolution or, if earlier, 15 months following the resolution being passed. Resolution 8: 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 £283,181 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 Annual General Meeting next following the resolution or, if earlier, 15 months following the resolution being passed. Topps Tiles Plc Annual Report and Financial Statements 2004 59 (cid:87)(cid:82)(cid:83)(cid:83)(cid:86)(cid:66)(cid:68)(cid:85)(cid:21)(cid:19)(cid:19)(cid:23)(cid:66)(cid:75)(cid:76)(cid:85)(cid:72)(cid:86)(cid:17)(cid:83)(cid:71)(cid:73)(cid:3)(cid:25)(cid:24) (cid:21)(cid:28)(cid:18)(cid:20)(cid:20)(cid:18)(cid:21)(cid:19)(cid:19)(cid:23)(cid:3)(cid:19)(cid:28)(cid:29)(cid:22)(cid:26)(cid:29)(cid:21)(cid:26) _0_TOP_arb04.qxd 24/11/2004 18:11 Page 60 Explanatory Notes to the Notice of Annual General Meeting (continued) Special business (continued) Resolution 9 Authority to purchase Ordinary Shares At the Annual General Meeting, Ordinary Shareholders are being invited under Resolution 9 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 Annual General Meeting to be held in 2006 or twelve months from the date of this resolution, if earlier. This authority will be limited to the purchase of not more than 14.9% of the Ordinary Shares currently in issue. This represents the maximum amount of Ordinary Share capital in issue which is permitted before 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 2.5p per Ordinary Share. 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. The Directors’ current intention is that the authority sought by Resolution 9 shall be utilised in respect of the shares under these options. As at 30 November 2004, there were options to subscribe for 3,629,047 equity shares outstanding under various schemes representing approximately 1.60% of the current issued share capital of the Company. If the authority sought by Resolution 9 was exercised in full, the number of outstanding options would represent approximately 1.88% of the issued share capital following the repurchase of shares. Topps Tiles Plc Annual Report and Financial Statements 2004 60 (cid:87)(cid:82)(cid:83)(cid:83)(cid:86)(cid:66)(cid:68)(cid:85)(cid:21)(cid:19)(cid:19)(cid:23)(cid:66)(cid:75)(cid:76)(cid:85)(cid:72)(cid:86)(cid:17)(cid:83)(cid:71)(cid:73)(cid:3)(cid:25)(cid:25) (cid:21)(cid:28)(cid:18)(cid:20)(cid:20)(cid:18)(cid:21)(cid:19)(cid:19)(cid:23)(cid:3)(cid:19)(cid:28)(cid:29)(cid:22)(cid:26)(cid:29)(cid:21)(cid:26) _0_TOP_arb04.qxd 24/11/2004 18:11 Page 61 Financial Calender Key dates Annual General Meeting Final dividend payable 2004/05 interim results announcement 2004/05 interim dividend payable 11 January 2005 31 January 2005 May 2005 June 2005 2004/05 full year results announcement November 2005 Topps Tiles Plc Annual Report and Financial Statements 2004 61 (cid:87)(cid:82)(cid:83)(cid:83)(cid:86)(cid:66)(cid:68)(cid:85)(cid:21)(cid:19)(cid:19)(cid:23)(cid:66)(cid:75)(cid:76)(cid:85)(cid:72)(cid:86)(cid:17)(cid:83)(cid:71)(cid:73)(cid:3)(cid:25)(cid:26) (cid:21)(cid:28)(cid:18)(cid:20)(cid:20)(cid:18)(cid:21)(cid:19)(cid:19)(cid:23)(cid:3)(cid:19)(cid:28)(cid:29)(cid:22)(cid:26)(cid:29)(cid:21)(cid:26) _0_TOP_arb04.qxd 24/11/2004 18:11 Page 62 The Team a Aaron Cook Aaron Ephson Aaron Frogley Aaron Hodgkinson Aaron Larner Aarron Palmer Abdulkadir Kulmie Adam Boshir Adam Brownley Adam Butterworth Adam Coates Adam Elden Adam Harris Adam Hughes Adam Hughes Adam Ireland Adam Kirkham Adam Laidlaw Adam Lucas Adam Mills Adam Mundy Adam Osborn Adam Robinson Adam Stopford Adam Strain Adam Wilson Adrian McCourt Adrian Partridge Adrian Pickup Adrian Wild Afzaal Anjum Aidan Morgan Aidan Ward Aileen Crossley Akushu Mulenga Alan Allsopp Alan Boland Alan Cooper Alan Cordery Alan Faulkner Alan Feighan Alan Harding Alan Hartley Alan Jones Alan Mcdonald Alan McIntosh Alan Monk Alan Parker Alan Saunders Alan Seall Alan Smalley Alan Sproston Alan Turner Alasdair Higgins Alex Bott Alex Padgham Alex Paterson Alimahomed Kasmani Alistair Fleming Alistair Rennie Alister Mackay Allan Chigariro Allan Duffy Allan Harper Alvin Chinyanga Amanda Green Amanda Hullett Amanda Smith Amanda Tucker Amin Ladhu Andrew Armstrong Andrew Carlisle Andrew Clay Andrew Collins Andrew Curr Andrew Curtis Andrew French Andrew Futter Andrew Green Andrew Hanson Andrew Henderson Andrew Hill Andrew Jones Andrew Kettle Andrew Liggett Andrew Matin Andrew Mccabe Andrew Merz Andrew Middleton Andrew Monks Andrew Moore Andrew Murphy Andrew Parnell Andrew Shaw Andrew Snary Andrew Thomas Andrew Ward Andrew Warwick Andrew Waterfield Andrew Wathan Andrew Wilkes Andrew Williams Andrew Woodman Andrew Woolley Andy Barwell Andy Bird Andy Stables Angela Harrison Angela Tremelling Anita Colquhoun Anna Timney Anne Keelor Anne Lloyd Anne Mccabe Anne-Marie Carpenter Annette Harris Anthony Bradford Anthony Christopher Anthony Cottrell Anthony Cox Anthony Dightam Anthony Fleming Anthony Gilbert Anthony Kerr Anthony Linsell Anthony Molyneux Anthony Parker Antonio Festa Antony Beazer Antony Benn Antony Plant Arnold Harrison Asaff Ali Ashley Jordan Astone Davids Augustus Slater Aweys Abdi Aydin Cam b Baljit Kaur Barbara Edge Barbara Scales Barrie Palmer Barry Bester Barry Shane Barry Squires Barry Stentiford Barry Webber Ben Armitage Ben Brink Ben Clark Ben Colliss Ben Garrett Ben Lee Ben Woollins Benjamin Marland Benjamin Rich Benoni Akuetteh Bernadette Crawford-King Bernard Cope Bertil Boyles Bertus Ueckermann Blodwyn Hopkins Bob Heuerman Brad Crosthwaite Bradley Cromwell Brandon Abels Brant Wells Brenda Bowles Brendan Munsamy Brendon Roberts Brett Gilbert Brett Goulden Brian Adams Brian Allchin Brian Davies Brian Dicks Brian Fisher Brian Grover Brian Kerwin Brian Richards Brian Young Bridget Anderson Brittany Ainscow Bruce Fielding Bryan Hartley Bryan Pulham Topps Tiles Plc Annual Report and Financial Statements 2004 c Cade Somerville Campbell Donaldson Campbell Marr Carina Lowe Carl Bradbury Carl Dyke Carl Fraser Carl Johnson Carl Sheppard Carl Whatley Carol Lakin Carol Milne Carol Sudlow Caroline Bennett Caroline Crofts Caroline May Cassandra Huitson Catherine Hinde Catherine Platt Catherine Waldron Chan Gokani Chantelle Fallows Charlene Beard Charles Williams Charley Antoniou Charlotte Highley Chetan Patel Chris Atkinson Chris Bain Chris Cartey Chris Dixon Chris Edwards Chris Evans Chris Gough Chris Green Chris Heyes Chris Ireland Chris Jelley Chris Johnson Chris Kantelberg Chris Michael Chris Mullen Chris Newell Chris Riddick Chris Rogers Chris Widdowson Chris Willshaw Chris Winger Christen Clark Christian Stokes Christina Langridge Christine Brown Christine Earl Christine Hendry Christine Jones Christine Rea Christine Wadsworth Christine Whiteman Christopher Ankers Christopher Baker Christopher Bowles 62 Christopher Brown Christopher Carey Christopher Cooper Christopher Cowap Christopher Cowdray Christopher Haslam Christopher Hunter Christopher Jones Christopher Newman Christopher Potter Christopher Smith Christopher Tonking Christopher Turley Christopher Weston Claire Loney Claire Walker Clare Barden Clare Riley Clare Webster Colin Butler Colin Hall Colin Hampson Colin Hoban Colin Markham Colin Morgan Colin Paterson Colin Probert Colin Rymer Colin Taylor Colin Vowles Colin Winterburn Conrad Harrup Cornelius Fru Ndi Craig Brewer Craig Conway Craig Cooper Craig Le Roux Craig Lucas Craig Ollard Craig Tetlow Craig Thornton Craig White Crescent Baron d Dale Pugh Damian Porter Dan Lyle Dan Radford Daniel Barton Daniel Britt Daniel Davey Daniel Fallows Daniel Findlay Daniel France Daniel Gibbs Daniel Grant Daniel Johnson Daniel Jones Daniel Lagerwaard Daniel Little Daniel Mills Daniel Musguin Daniel Nield Daniel Rosenthall Daniel Scott Francis Daniel Skinner Daniel Stiven Danielle Smythe Danny Manning Danny Weatherley Darran Wood Darren Bebbington Darren Connor Darren Doherty Darren Goode Darren Harper Darren Palmer Darren Rivers Darren Ryn Darren Square Darren Taylor Darryl Ashbolt Darryl Hunter Dave Hampson Dave Leason Dave Taylor David Asquith David Atherton David Bailey David Blades David Bond David Burnikell David Carey David Carpenter David Carr David Chinnery David Colwell David Critchlow David Daulton David Dorney David Farrer David Finnie David Fitzgerald David Fitzpatrick David Fletcher David Fruen David Goldring David Gridley David Harper David Hatton David Hayers David Henderson David Hirst David Houghton David Hulme David Jenkins David Kershaw David Lalley David Linsdell David Lott David Macartney David Madera David Mallyon David Marsh David Marshall David Nelson (cid:87)(cid:82)(cid:83)(cid:83)(cid:86)(cid:66)(cid:68)(cid:85)(cid:21)(cid:19)(cid:19)(cid:23)(cid:66)(cid:75)(cid:76)(cid:85)(cid:72)(cid:86)(cid:17)(cid:83)(cid:71)(cid:73)(cid:3)(cid:25)(cid:27) (cid:21)(cid:28)(cid:18)(cid:20)(cid:20)(cid:18)(cid:21)(cid:19)(cid:19)(cid:23)(cid:3)(cid:19)(cid:28)(cid:29)(cid:22)(cid:26)(cid:29)(cid:21)(cid:26) _0_TOP_arb04.qxd 24/11/2004 18:11 Page 63 David Nelson David Oliver David Palmer David Parr David Phillips David Reid David Richardson David Savage David Sinclair David Spink David Steel David Stone David Stott David Stoughton David Strain David Sykes David Thomasson David Wareham David Whitelaw David Williams Davina Colville Dawn Marsh Dean Brown Dean Bull Dean Hyde Dean Marshall Dean Monarch Dean Sheldon Dean Smith Dean Tricker Dean Woolley Deborah White Debra Davies Dennis Cragen Dennis Giles Dennis Jepson Denzil Johns Derek Lambourn Derek Parsons Derek Sim Derek Smith Devias Gudka Devindren Govender Devon Goodrich Diane Shatford–Butcher Dilawar Ali Dinesh Hirani Dinkar Ratna Dominnika Shennan Donal Higgins Donna Paterson Donna Shirley Donna Whittaker Doreen Hyatt Duncan Bull Dwayne Howard Dylan Roberts e Edmund Rowland-Smith Edmund Smith Edward Baker Edward Collop Edward Derbyshire Edward Dove Edward Gardiner Edward Murphy Edwin Ter Veldhuis Elaine Walker Elizabeth Bellwood Elizabeth Kelly Elizabeth Smith Emily Lenton Emma Brookes Emma Casey Emma Jarram Emma Whatson Emma-Louise Rowlands Emroy Elliott Enid Lamb Erik Rubens Esther Ten Hoven f Fabio Escandon Felipe Langley Ferhad Yousaf Fern Marshall Finbarr Mcquaid Flora Tuitt Folkert Hildama Fran Graysmark Frances Aylward Francis Dalba Francis Donnelly Francis Shyngle Francis Tully Frank Hibbert Frans Levoleger Frans Merkx g Gareth Ward Garry Hardy Gary Ashdown Gary Asher Gary Bloomfield Gary Curtis Gary Firth Gary Kirby Gary Marshall Gary Martin Gavin Bennett Gavin Carter Gavin Dwyer Gavin Mitchell Gavin Ramsey Gayle Anderson Geerish Ramsaha Gemma Ainsworth Geoff Sutters Geoffrey Dodd Geoffrey Fazackarley George Wilson Geraldine Plumtree Gerard Mallon Gianfranco Zanolini Gillian Archer Gillian Grace Gillian Gray Glen Claridge Glen Holloway Glenn Fordyce Glyn Rogers Gordon Irvine Graham Brophy Graham Buckley Graham Chapman Graham Jones Graham White Gregg Wall Gregory Chetty Gursharn Ladhar h Hans Ebbelink Harlukbir Sangha Harpreet Hansra Harry Biggs Harvinder Bunger Hayley Gill Hayley Lunn Helen Mcdermott Herman Kreikamp Hitesh Hirani Howard Farmer Hugo Matcham i Iain Jackson Ian Arbuckle Ian Bloomfield Ian Bott Ian Fairfield Ian Hobson Ian King Ian Lightowlers Ian Mcalinden Ian Mcinteer Ian Mcnamara Ian Noon Ian Pennington Ian Picken Ian Playle Ian Reavey Ian Shepherd Ian Stevens Ian Sykes Ian. Marshall Ilker Camur Imran Ashraf Imran Yousaf Ivan Frampton Topps Tiles Plc Annual Report and Financial Statements 2004 j Jack Carslake Jack Pickering Jacob Bos Jacqueline Byrne Jacqueline Macgillivrah Jacqueline Twidle Jajwinder Harar Jake Body James Allington James Baker James Biggs James Bott James Cameron James Cernuschi James Coles James Dabbs James Dennett James Devlin James Eastham James Edge James Gentleman James Hardy James Holland James Hudson James Kent James Koroma James Mcguigan James Mcmillan James Mercer James Metcalf James Metcalfe James Morgan James Myatt James O’Shea James Paterson James Patston James Robertson James Sinnott James Taylor James White Jamie Bannister Jamie Brewer Jamie Coomber Jamie Evans Jamie Gaynor Jamie Gorham Jamie Parkes Jamie Wenborn Jamie White Jan Nijhof Jan Piwowar Jan Reddi Jane Graham Jane Horsford Janet Burgess Janet Lockyer Janet Riley Janice Millett Jasbinder Pal Jason Di Leva Jason Doe 63 Jason Ealden Jason Evans Jason Leckie Jason Meadows Jason Morgan Jason Pratt Jaswant Singh Javeed Parkar Jayantilal Patel Jayawthe Weerasinge Jayesh Kalidas Jean Graham Jean Smith Jeannette Hastie Jeffrey Armstrong Jemma Roberts Jenna Faulkner Jennifer Andrews Jennifer Donlan Jennifer Rogers Jenny Seabrook Jeremy Apelgren Jeremy Harris Jermaine Beckford Jermayne Stanley Jeroen Van Loveren Jessica Cooper Jill Cox Jill Wansaoeboen Jim Boyd Jim Carpenter Jim Tuvey Jimmy Vander Plank Jiten Jugath Jo Waddington Joanna Barnes Warden Joanna Downing Joanna Kidner Joanne Ditch Joanne Mepham Joanne Smith Joe Brown Joe Cox Joe Lucas Joe Parsons Johanna Asher John Adjepong John Bonadies John Bowers John Burns John Chinn John Coles John Davidson John Davies John Davies John Douglas John Ellis John Ellul John Forden John Foster John Gardner John Harcus John Harris John Hickey John Humphrey John Hunter John Johnston John Jones John Kelleher John Keouski John Lamb John Mcbride John Moat John Rayner John Reilly John Smith John Smith John Summers John Sutton John Thompson John Wade John Whelan John Wright Jon Oliver Jon Potts Jon Utah Jon Wilson Jonathan Bean Jonathan Coombs Jonathan England Jonathan Goddard Jonathan Hargreaves Jonathan Morgan Jonathan Riggs Jonathan Whitehead Jonathon Perkins Jonathon Sheerin Jon-Paul Hughes Jorris Maätita Jos Kantelberg Jos Verlaat Joseph Bentley Josephine Hilldrup Josh Wyatt Joshua Groener Joyce Davies Juginder Gill Julian Lloyd Julie Cox Julie Fewings Julie Hammerton Julie Horsford Julie Morgan Julie Roebuck Julios Billones Justin Bradley Justin Roberts k Kalpesh Patel Kandasamypillai Sureskumar Kareem Abubakari Karen Brook Karen Casey Karen Lakin Karen Lowe Karen Sutcliffe (cid:87)(cid:82)(cid:83)(cid:83)(cid:86)(cid:66)(cid:68)(cid:85)(cid:21)(cid:19)(cid:19)(cid:23)(cid:66)(cid:75)(cid:76)(cid:85)(cid:72)(cid:86)(cid:17)(cid:83)(cid:71)(cid:73)(cid:3)(cid:25)(cid:28) (cid:21)(cid:28)(cid:18)(cid:20)(cid:20)(cid:18)(cid:21)(cid:19)(cid:19)(cid:23)(cid:3)(cid:19)(cid:28)(cid:29)(cid:22)(cid:26)(cid:29)(cid:21)(cid:27) _0_TOP_arb04.qxd 24/11/2004 18:11 Page 64 The Team (continued) Karim Tiller Karl Brooks Karl Cumberbatch Karl Jackson Karl Madge Karl Robbins-Sones Kathryn Robinson Keiron Birch Keith Ambrose Keith Carr Keith Earl Keith Hughes Keith Rudkin Kelly Ellison Kelly King Kelly Whyte Kelly Woodberry Kelly Wrenn Kelvin Hughes Ken Saunders Kenneth Frankland Kenneth Mckay Kenneth Oldham Kenneth Owen Kenneth Turner Keri Stevenson Kerri Wood Kerry Atkinson Kerry Blatch Kerry Hume Kevan Richardson Kevin Ashworth Kevin Avins Kevin Baker Kevin Bowtle Kevin Brophy Kevin Crompton Kevin Dean Kevin Etten Kevin Gallagher Kevin Getliff Kevin Hayes Kevin Nelson Kevin Reading Kevin Robinson Kevin Rockett Kevin Smith Kevin Taylor Kevin Thorne Kevin Tulley Kieran Barnes Warden Kieron Clarke Kimberley Box Kirk Starling Kris Bailey Kris Kingsley Kriss Hutcheon l Lance Cale Larissa Gurney Laura Cowper Laura Edwards Laura Johnson Laura Kershaw Laura Price Laurence Clark Laurence Davies Laurence Loxam Leah Potter Leanne Foweather Leanne Miles Leanne Reid Lee Chapman Lee Culley Lee Dover Lee Durrant Lee Fisher Lee Galloway Lee Hodgson Lee Jacovou Lee Johnston Lee Kennie Lee Kilcoyne Lee Langmaid Lee Marron Lee Maxey Lee Morris Lee Payne Lee Pinder Lee Pyke Lee Reyland Lee Ryn Lee Shillibeer Lee Street Lee Whittaker Lee Wilkinson Lee Williams Lee Winter Leigh Holden Leon Mckenna Leon Tracey Leonard Denton Leonard Sheldrick Leonard Wilson Les Mcleman Leslie Maher Leszek Dabkowski Lewis Smith Lianne Harrison-Allcock Linda Green Lisa Barrow Lisa Bell Lisa Heys Lisa Kousourou Lisa Norwood Lisa Raye Lisa Sheppard Lisa Walker Lisa Wright Loren Taylor Loretta Daley Lorna Ballantyne Lorna Roach Louisa Seigneur Louise Mcgough Lucy Dacosta Lyndsey Martin Lynette Grimes Lynsey Machmer m Malcolm Baker Mandeep Flora Mandy Aidney Manjeet Thathal Marc Middleton Marc Milner Marc Why Marco Knip Marek Hejda Margaret Lawrie Mario Kind Mario Van Der Valk Mark Allen Mark Arthur Mark Bell Mark Bianchi Mark Blann Mark Bober Mark Bone Mark Bourner Mark Bradbury Mark Briers Mark Bromfield Mark Cowley Mark Curwen Mark Dennis Mark Discombe Mark Garrity Mark Gasson Mark Hadfield Mark Hilton Mark Hirst Mark Hodgkinson Mark Horswell Mark Hunter Mark Jepson Mark Johnson Mark Jones Mark Lever Mark Meakin Mark Moore Mark Mottershead Mark Naylor Mark Samuels Mark Stephenson Mark Strong Mark Thompson Mark Traynor Mark Waldock Mark Waller Mark Williams Mark Woodcock Martin Baker Martin Bennett Martin Brophy Martin De Bruijn Martin Derricott Martin Halcrow Topps Tiles Plc Annual Report and Financial Statements 2004 Martin Horton Martin Pye Martin Ridgway Martin Shenton Martin Siggers Martin Sinnott Martin Steele Martin Watt Martin Winterburn Marvin Daniels Mary Stonard Mathew Seed Matt Stone Matthew Bond Matthew Cohen Matthew Contardi Matthew Dunne Matthew Foster Matthew Foulger Matthew Hawley Matthew Jenner Matthew Johnson Matthew Mckune Matthew Meigh Matthew Nye Matthew Pickley Matthew Rayner Matthew Robinson Matthew Sigley Matthew Walker Matthew Webb Matthew Williams Matthew Winstone Matthew Wright Maureen Wood Mehmet Asdoyuran Melanie Hall Melton Thompson Michael Bateman Michael Boughton Michael Collins Michael Cosgrove Michael Coward Michael Crank Michael Dorman Michael Dunn Michael Earls Michael Finn Michael Gay Michael Gill Michael Godding Michael Griffiths Michael Harrison Michael Holland Michael Hughes Michael Ingham Michael Jack Michael Jenks Michael Laverty Michael Lemaitre Michael Litster Michael Mcglade Michael O’Gorman Michael Rothengatter 64 Michael Rout Michael Skinner Michael Smillie Michael Swaine Michael Thacker Michael Whatley Michele Bloomfield Michelle Kempson Michelle Williams Mike Butler Mike Easton Mike Lock Mitul Amin Mohamed Patel Mohammad Ullah Mohammed Azhar Mohammed Jamil Mohammed Parvaz Mumtaz Khamisa Musawer Shah n Nancy Beaver Narinder Chatha Nasser Mpoza Natalie Exon Natalie Talbot Nathan Austin Nathan Broughton Nathan Collins Nathan Coulthard Nathan Seigneur Neil Brownley Neil Carr Neil Critchlow Neil Curtis Neil Davies Neil Hendy Neil Homan Neil Ketnor Neil Shephard Neil Thakore Neil Worthington Nic Lewis Nicholas Bradshaw Nicholas Clifford Nicholas Davies Nicholas Kyriacou Nicholas Lawrence Nicholas Leach Nicholas Ounstead Nicholas Salisbury-Jones Nicholas Stones Nicholas Thornton Nicholas Withers Nick Hielckert Nick Wardman Nicola Acres Nicola Dearden Nicola Eggleton Nicola Haynes Nicola Slater Nicola West Nicolas Wassell Nigel Brooks Nigel Fleming Nigel Sankey Nigel Slaughter Nigel Wood Nikita Groener Nikolai Nikoloff Nilesh Dahya Nina Abbotts Nital Chhana Noel Hackett Norman Heathwaite o Olaoye Ogunloye Oliver Comfort Oliver Sawyer Owen Rawlinson p Parvesh Ramsaha Pasquale Santaniello Patricia Campbell Patricia Squires Patricia Walker Patrick Mclaughlin Patrick Mclean Patrique Janssen Patrycja Kallas Paul Bainbridge Paul Barnard Paul Burkett Paul Burkett Paul Burrow Paul Calderone Paul Carter Paul Castleton Paul Chalmers Paul Chapman Paul Clark Paul Coffey Paul French Paul Galvin Paul Glynn Paul Halliwell Paul Hankin Paul Honour Paul Irving Paul Kelly Paul Kemp Paul Lathrope Paul Laverty Paul Leaford Paul Liggett Paul Mackin Paul Martindale Paul Mayfield Paul Mcculloch Paul Miller Paul Mills Paul Moore (cid:87)(cid:82)(cid:83)(cid:83)(cid:86)(cid:66)(cid:68)(cid:85)(cid:21)(cid:19)(cid:19)(cid:23)(cid:66)(cid:75)(cid:76)(cid:85)(cid:72)(cid:86)(cid:17)(cid:83)(cid:71)(cid:73)(cid:3)(cid:26)(cid:19) (cid:21)(cid:28)(cid:18)(cid:20)(cid:20)(cid:18)(cid:21)(cid:19)(cid:19)(cid:23)(cid:3)(cid:19)(cid:28)(cid:29)(cid:22)(cid:26)(cid:29)(cid:21)(cid:27) _0_TOP_arb04.qxd 24/11/2004 18:11 Page 65 Paul Oldroyd Paul Peacock Paul Revell Paul Rockett Paul Ruddle Paul Semple Paul Sluiter Paul Smith Paul Smith Paul Starkey Paul Stuart Paul Sutton Paul Thorneycroft Paul Weston Paul Williams Paula Budsworth Pauline Grenfell Pauline Robinson Perry Simpson Peter Charters Peter Davey Peter Davidson Peter Deegan Peter Hogg Peter Johnson Peter Lea Peter Lynn Peter Robinson Peter Smith Peter Suthers Peter Tassenaar Peter Tilling Phil Bennett Phil Peacock Philip Dunn Philip English Philip Hawkeswood Philip Kelly Philip Kelly Philip Mccarney Philip Mcchrystal Philip Meakin Philip Tomlin Phillip Downing Phillip Fitzgibbons Phillip Godden Phillip Hillier Phillip Hunt Phillipa Hewitt Puneet Bindra q Quasim Bashir r Rachael Tait Rachel Flaherty Rahul Goel Raj Surani Rajan Mehta Rajbinder Dhanoya Rajiv Vadgama Ranjeet Jassal Ranjit Grewal Ravi Sudera Raymond Tricker Rebecca Bailey Rebecca Crawshaw Rebecca Derricott Rebecca Ellis Rebecca Heather Rebecca Oblein Rebecca Tarry Reedwan Desai Rhiannan Harrison Rhonda Partridge Rhys Kelland Ria Croft Richard Beckham Richard Bickers Richard Brookfield Richard Carter Richard Clark Richard Davies Richard Deavall Richard Dempsey Richard Farrington Richard Harris Richard Homan Richard Hopkin Richard Hutcheson Richard Oldale Richard Scott Richard Smallman Richard Spencer Smith Richard Whitmore Richard Willan Rishantha Kankanamge Robert Adams Robert Avery Robert Bellamy Robert Brewin Robert Bumstead Robert Cairns Robert Exley Robert Green Robert Hadley Robert Hodgson Robert Howker Robert Huckridge Robert Maples Robert Marcellin Robert Moss Robert Myers Robert Rayner Robert Reynolds Robert Smirthwaite Robert Stevens Robert Trigg Robert Waldon Robert Wright Roberto Di-Leva Robin Pinhorn Rocky Stocking Rodney Sanders Roger Bailey Ronald Emmanuel Ronald Perrott Ronald Van Veenen Ronnie Webster Rosina Taylor Roslyn Naylor Ross Ashbrook Ross Mcnair-Waddington Roy Haddon Roy Peasland Russell Adgey Russell Thornton Ryan Barfield s Sagren Naidoo Sally Casburn Sally Green Sam Bachell Sam Nortey Sam Shepherd Samantha Cato Samantha Geall Samantha Perry Samantha Sayer Samantha Williams Sandra Harrison Sarah Crawford Sarah Dallow Sarah Dobson Sarah Earthey Sarah Pimm Sarah Whitehead Satyan Meisuria Scott Allaway Scott Ambrose Scott Davis Scott Frankland Scott Macdonald Scott Mccluskey Scott Meadows Scott Picken Scott Williams Sean Coleman Sean Howard Sean Kerry Sean Wixen Shahril Choolun Shane Malone Shanoor Ali Sharon Homer Sharon Muir Sharron Bruce Shaun Bebbington Shaun Bryan Shaun Hayes Shaun O’ Connor Sheikh Yasmin Sheila Robertson Sheila Whetton Sheralyn Hopkins Sherief Madkour Aly Sherry Bell Sherry Conlay Silvonne Mclean Simon Brookfield Simon Brookfield Simon Brown Simon Farr Simon Green Simon Henderson Simon Jones Simon Knowles Simon Morgan Simon Nicholson Simon Rayner Simon Roberts Simon Tuckley Simon Tunnicliffe Simon Witham Simon Worth Siobhan Waters Sion Jackson Sophia Mcdonald Sophie Macdonald Stanley Crowther Stephan Linay Stephan Whitby Stephanie Jarvis Stephanie Nevett Stephen Appleby Stephen Bloomfield Stephen Clark Stephen Collins Stephen Crane Stephen Davey Stephen Dempster Stephen 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