THINK BIG TOPPS TILES PLC Annual Report and Financial Statements 2006 Topps Tiles Plc Annual Report and Financial Statements 2006 Stuart Williams Group President and Co-Founder THINK IT THROUGH THE TOPPS TILES GROUP IS BRITAIN’S BIGGEST TILE AND WOOD FLOORING SPECIALIST WITH 271 STORES THROUGHOUT THE UK, AND WITH A CONTROLLED OPENING PROGRAMME OF A NET 30 NEW STORES EACH FINANCIAL YEAR, THE UK STORE TARGET OF A MINIMUM 400 STORES IS WELL WITHIN REACH. TOPPS’ RECORD SINCE FLOTATION IN 1997 IS EXCELLENT WITH BASIC EARNINGS PER SHARE SHOWING OVER 35% AVERAGE ANNUAL COMPOUND GROWTH OVER THE PAST NINE YEARS AND WITH OUR DOMINANT MARKET POSITION, MORE NEW STORES AND A GROWING MARKET, THE BOARD EXPECTS A CONTINUED BUILD IN SHAREHOLDER VALUE. CONTENTS 01 FINANCIAL HIGHLIGHTS > 03 CHAIRMAN’S STATEMENT > 05 STRATEGY STATEMENT > 07 CHIEF EXECUTIVE’S STATEMENT > 11 BUSINESS REVIEW > 17 CORPORATE AND SOCIAL RESPONSIBILITY > 20 EXECUTIVE DIRECTORS > 21 NON-EXECUTIVE DIRECTORS > 22 OPERATIONAL DIRECTORS > 24 DIRECTORS AND ADVISORS > 26 DIRECTORS’ REPORT > 28 CORPORATE GOVERNANCE STATEMENT > 30 REMUNERATION REPORT > 34 INDEPENDENT AUDITORS’ REPORT - GROUP ACCOUNTS > 36 CONSOLIDATED GROUP INCOME STATEMENT > 37 CONSOLIDATED BALANCE SHEET > 38 CONSOLIDATED CASH FLOW STATEMENT > 39 NOTES TO THE GROUP ACCOUNTS > 62 INDEPENDENT AUDITORS’ REPORT - COMPANY ACCOUNTS > 63 COMPANY BALANCE SHEET > 64 NOTES TO THE COMPANY ACCOUNTS > 67 FIVE YEAR RECORD > 68 NOTICE OF ANNUAL GENERAL MEETING > 70 EXPLANATORY NOTES TO THE NOTICE OF ANNUAL GENERAL MEETING > 71 FINANCIAL CALENDAR > 72 THE TEAM > 76 STORE LOCATIONS Topps Tiles Plc Annual Report and Financial Statements 2006 THINK PERFORMANCE FINANCIAL HIGHLIGHTS 52 WEEKS RESULTS TO 30 SEPTEMBER 2006 +3.9% Group revenue increased by 3.9% to £180.2 million (2005: £173.3 million) +5.6% Group operating profit increased by 5.6% to £38.9 million (2005: £36.8 million) +2.0% *Adjusted basic earnings per share increased to 13.07p (2005: 12.81p) +9.5% Dividend per share increased to 10.40p (2005: 9.50p) > Group like-for-like revenue decreased by 1.8% > Net debt position of £99.47m > Group gross margin increased to 62.6% > A net 27 new stores opened in the UK in this (2005: 61.3%) financial period > Operating costs increased to 40.4% of revenue excluding share buy back costs of £1.1million (2005: 40.0%) > Now trading from 271 stores in the UK (2005: 244 stores) > 15 stores now trading in Holland > Profit before tax margin excluding non (2005: 13 stores) recurring items increased to 22.2% (2005: 21.6%)* > Dividend policy maintained at 1.41 times cover > A final net dividend of 6.90 pence per share to be paid on 31 January 2007 > Basic Earnings per share 12.80 pence (2005: 13.33 pence) *Adjusted for non recurring items: 2005: Property disposal gains of £1.7 million 2006: Property disposal gains of 0.3 million and share buy back costs of £1.1 million 01 Topps Tiles Plc Annual Report and Financial Statements 2006 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. 02 Topps Tiles Plc Annual Report and Financial Statements 2006 THINK QUALITY CHAIRMAN’S STATEMENT This has been a challenging year for the home improvement market but I am pleased to report that in the face of tough trading the Group has once again grown both its revenues and operating profits. FINANCIAL RESULTS Group revenue was £180.2m an increase of 3.9% on last year with like-for-like revenue for the period down 1.8%. Group operating profit before share buy back costs of £1.1million was £40.0million , an increase of 8.5% compared with last year. Gross margins improved to 62.6% compared with 61.3% in 2005. After 11 years, Andrew Liggett, Finance Director has decided to step down and will be leaving the Company with effect from 30 April 2007. Andy has been an important part of Topps growth as a quoted Company and I, along with the other members of the Board, wish to thank him for his significant contribution over the last 11 years. All of us wish him well for the future. PEOPLE These results are testimony to the commitment of all our staff, those in the front line in-store and all our operational support team. On behalf of the Board, I would like to thank them all for their continued enthusiasm and energy. I would also like to extend a warm welcome to the staff who joined the Group in the period. SHARE CAPITAL CONSOLIDATION AND RETURN OF CASH Following a review of the Company’s financing requirements and given our robust balance sheet and strong record of cash conversion we announced in July a return of £122.4 million in cash to shareholders in conjunction with a share capital consolidation of 3 for 4 ordinary shares. OUTLOOK We are confident that our strategy for organic growth is sound. We strive to offer the best in range, quality and accessibility of our products coupled with outstanding customer service and we continually monitor our performance to ensure we are always one step ahead of the competition. The return of cash, equating to 54 pence per ordinary share, was approved by our shareholders on 31 July 2006. DIVIDEND In line with our stated dividend policy, the Board proposes an increase of 0.9p (9.5%) in the total dividend for the year to 10.40p. This is covered 1.41 times by earnings. Looking ahead, we believe that we are in a strong position to continue to expand our market share and we now have the potential to trade from over 400 stores UK wide. We are confident that the strength of the management team, our people and our strategy will enable further growth of the business and deliver sustainable returns for shareholders. The proposed final dividend of 6.9p (2005: 6.00 pence) will be paid on 31 January 2007 to all shareholders on the register as at 5 January 2007. Barry Bester Chairman BOARD CHANGES As announced in April we strengthened our Executive Board by the appointment of Matthew Williams, our Chief Operating Officer, as a main Board Director. I am delighted to welcome Matthew to the Board. 03 Topps Tiles Plc Annual Report and Financial Statements 2006 Store locations Customer service ; ; ; ; OUR SUCCESS IS BUILT ON FOUR KEY CORNERSTONES: Stock availability Store layout 04 Topps Tiles Plc Annual Report and Financial Statements 2006 THINK STRATEGY A PROVEN AND RESILIENT BUSINESS MODEL > 1.CUSTOMER SERVICE > 3. STORE LAYOUT We continually strive to provide and maintain high levels of customer service and regard it as fundamental to the ongoing success of Topps. The quality and performance of our staff at every level is key and we train all our staff at our own national and regional training centres and through our e-learning tile training college. Customer service remains our number one priority and it is our policy to be honest, helpful and knowledgeable but never pushy. We complement the advice that our staff can give in store with a range of services offering practical support to customers which include Loan-a-Tile, free “How to” DVD, tile cutting service and our buy-back service which allows undamaged stock tiles to be returned within 45 days for a full refund. Our average store size is just over 6,250 square feet and can accommodate our in-house formats including wood flooring and natural stone, which usually have their own individually branded section of the store. All our stores have a similar layout, are clearly branded and designed to be customer-friendly with product and pricing clearly displayed on colourful and informative point-of-sale displays. The stores are mini-warehouse style, which is ideal to display our extensive product ranges as well as ensuring they are easy to navigate with trolleys, prams and pushchairs. > 2. STORE LOCATIONS > 4. STOCK AVAILABILITY Topps stores are purposely located in highly visible destinations, on or close to busy roads and always with parking facilities. Our stores in the main are not located on high streets or large retail parks. Our controlled expansion programme is taking us across the UK and a full list of stores can be found at the end 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 and Tile Clearing House offer a huge choice of product, with the best the world has to offer in wall and floor tiles, natural stone, laminate and real wood flooring. Our extensive in-store product offering is supported by on-site stock facilities. The combination of choice of product with the availability of inventory is unrivalled in the UK. Our new marketing and distribution centre ensures that all our stores receive at least two deliveries a week to ensure stock levels are maintained at every store. 05 Topps Tiles Plc Annual Report and Financial Statements 2006 WE BELIEVE WE HAVE THE RIGHT BUSINESS MODEL AND THE RIGHT PEOPLE TO CONTINUE TO GAIN MARKET SHARE IN THE CURRENT TRADING ENVIRONMENT. 06 Topps Tiles Plc Annual Report and Financial Statements 2006 THINK CLEARLY CHIEF EXECUTIVE’S STATEMENT Our aim is simple – to deliver sustainable growth and returns to shareholders and central to that aim are our customers. We strive to enhance our customers’ buying experience by constantly improving stores and ranges and offering the best in customer service. During the year we delivered another solid performance in difficult trading conditions and we continue to extend our market share. STORE DEVELOPMENT AND EXPANSION In April 2006 we opened our 250th store in Ashford, Kent – a landmark event in Topp’s history and another step in our UK expansion programme. Whilst we have a stated minimum store target of 350 stores UK wide, we now believe there is scope for over 400 stores. Against a target of a net 24 new stores in the period we have actually achieved a net total of 27 new store openings. This has in part been due to the appointment in our property department in Grove Park of an in-house property lawyer which has expedited our property transactions. This also means that in the new financial period we are able to step up our store opening programme with a target in 2007 of a net total of 30 new UK outlets. Topps Tiles In the period under review we have refitted 2 stores and closed or relocated a further 3. We ended the period with a total of 225 stores trading, a net increase of 18 stores. The consumer trend towards natural products continues and we have extended the range in a number of stores . Tile Clearing House (“TCH”) TCH has its own store format and brand which is targeted at tradesmen and jobbing builders and the lower end of the tile market. In this financial period we opened a net 9 new TCH outlets and refitted 1. We now have a total of 46 stores in the UK. HOLLAND In October 2006 we acquired the remaining 50% of our Dutch operation. The Company currently trades from 15 stores in Holland and we intend to increase the new store opening programme to a minimum of 5 new stores each financial year. The acquisition of the remaining 50% of this business gives us the flexibility to step up the expansion programme. We have a minimum store target of 60 stores in Holland. MARKETING, ADVERTISING AND SPONSORSHIP Our marketing strategy comprises high profile national campaigns underpinned by regional activity. We continue to use national television advertising, both digital and terrestrial along with print and radio advertising on a regional basis and this year we continued advertising on UK style channels and sponsored “improve don’t move” on ITV. Additionally we have just launched a national TV campaign, for the first time. This is to expand our reach and consolidate our national brand as we now have over 225 Topps stores and 46 TCH stores nationwide. Like most of our customers, we love our football. It's a major part of our community relations programme and we now sponsor over 260 local football teams through our youth football initiative. 07 Topps Tiles Plc Annual Report and Financial Statements 2006 PERFORMANCE IS ABOUT PEOPLE AND THAT IS WHY WE ARE COMMITTED TO MOTIVATING, DEVELOPING AND REWARDING OUR PEOPLE. 1,053 Number of employees completing in-house training schemes (2005: 842). 08 Topps Tiles Plc Annual Report and Financial Statements 2006 CHIEF EXECUTIVE’S STATEMENT continued STAFF DEVELOPMENT AND CUSTOMER SERVICE We believe that a considerable contribution to our business success is due to the quality of our customer service delivered by our highly trained and friendly staff. Our recruitment programme is targeted at ambitious individuals of all ages and our rigorous training programme focuses on product knowledge and customer service. A development in our training programme this year has been the introduction of a Group intranet enabling staff to be trained on-site, in-store. The system is self- administered and more efficient and effective than our previous systems. CORPORATE RESPONSIBILITY We are committed to behaving as a responsible corporate citizen and we have continued to make progress in the area of social responsibility. More detail is set out later in this report. THE MARKET We are the leading tile retailer in the UK with a market share of circa 21% and continued to grow market share over the last financial year in a market that has showed continual growth. Despite the challenging market conditions, the UK tile market is forecast to grow by volume by over 15% between 2007 and 2011 (source: MBD), reflecting the overall expansion of the DIY retail sector. The UK still has one of the lowest useages per head of ceramic tiles in Europe, at a level around one third of that of other Northern European countries (source: MBD) and has significant potential for growth. Factors expected to drive growth include the growing trend to tile rooms beyond the more traditional kitchen and bathroom applications (e.g. conservatories), a preference for second bathrooms and a widening product offering. Additionally, household numbers continue to grow faster than the UK population, which is anticipated to rise by 12% over the next 25 years (source: ONS). This is in contrast to the increasing number of households, which is expected to grow by almost 23% in the next 20 years, from 20.9m in 2003 to 25.7m in 2026 (source: Government forecasts). We therefore believe Topps is well placed to capitalise on the continued growth in the tile market and to increase market share. CURRENT TRADING We have embarked on a high profile, mainstream terrestrial television advertising programme which began on 23 October 2006. Whilst it is early days we are encouraged by the response so far. In the first 7 weeks of the new financial period Group overall revenue increased by 10.3% and like-for-like revenue increased by 3.3%. This includes a strong performance from our Dutch business, now contributing 100% to Group numbers. Overall revenue in the UK increased 9.5% and like-for-like revenue increased by 2.7% for the first 7 weeks of the new financial period. Our business in Holland is performing well and is trading strongly. Overall revenue has increased by 38.1% and like-for-like revenue has increased by 25.8% over the past 7 weeks. Of the planned 30 new UK stores in the new financial period we have already opened 5 new stores in St. Neots, Brixton, Exmouth, Merton and Merry Hill. In Holland we have opened one new store in Eindhoven. We are confident in our business model which despite a difficult market has remained resilient and this gives us confidence for the future. Nicholas Ounstead Chief Executive Officer 09 Topps Tiles Plc Annual Report and Financial Statements 2006 ALL OUR STORES RECEIVE AT LEAST 2 DELIVERIES A WEEK TO ENSURE THAT STOCK LEVELS ARE MAINTAINED AT EVERY STORE. 146 Stock days 17,000 Number of product lines carried by Topps stores. 6,253 sq.ft. is the average size of our mini-warehouse style stores. 99.1% (2005: 98.7) of customers surveyed expressed levels of satisfaction as ‘good to excellent’. 10 Topps Tiles Plc Annual Report and Financial Statements 2006 THINK DELIVERY BUSINESS REVIEW NICHOLAS OUNSTEAD Chief Executive Officer ANDREW LIGGETT Finance Director NATURE, OBJECTIVES AND STRATEGIES OF THE BUSINESS Topps Tiles Plc is Britain's biggest tile and wood flooring specialist Group with over 271 stores throughout the UK. We have an opening programme of a net 30 new stores each financial year and a long term target of a minimum of 400 stores UK wide. Our founders, Stuart Williams and Barry Bester, whose vision and enterprise built up the business from just a few shops, are still major shareholders. Topps first specialist tile centre opened in Manchester in 1963. It was a pioneering concept offering customers quality tiles at bargain prices, sold by friendly, helpful people. This policy has never changed. We operate two brands in the market, Topps Tiles and Tile Clearing House. Topps is Britain’s biggest tile and wood flooring specialist 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. Today at Topps you will find the best the world can offer in wall and floor tiles, natural stone, laminate and solid wood flooring. Underfloor heating, tools, adhesives, grouts, accessories and cleaning products are also on hand for the perfect finish to any job. Most of the tiles commissioned for Topps go straight to our central warehouse and distribution centre near Leicester. From here, all Topps stores receive at least two bulk deliveries a week, so stock is constantly flowing to keep pace with demand. The business is built on four cornerstones that underpin our success: customer service, store locations, store layout and stock availability. Our aim is to increase shareholder value through the delivery of sustainable earnings growth. OPERATING ENVIRONMENT Historically, the Group’s business has proven to be resilient in the face of economic downturn. The business has traded through a number of recessions and whilst revenues continued to grow we did experience some pressure on margins. However, the business has changed over the years and we are confident that our current business model places us well to continue to deliver future shareholder value. Topps is the market leading brand in the UK, enjoying an estimated 21% market share by value. Estimated market shares are based on external research by MBD. In terms of competitive positioning Topps sits between the DIY chains and the independent tile retailers. KEY PERFORMANCE INDICATORS The Directors monitor a number of financial metrics and key performance indicators (KPIs) for the Group and by store, including: ■ Like for like Sales (page 12) ■ Sales value per transaction (page 13) ■ Gross Margin (page 12) The Directors receive daily information on these and other metrics and KPIs for the Group as a whole. In addition, the Directors receive information on non financial metrics including: ■ Customer satisfaction (page 10) ■ Utilisation of own fleet (page 18) 11 Topps Tiles Plc Annual Report and Financial Statements 2006 FINANCIAL PERFORMANCE AT A GLANCE 2005 AND 2006 FIGURES ARE STATED IN ACCORDANCE WITH IFRS. 2002, 2003 AND 2004 ARE STATED IN ACCORDANCE WITH UK GAAP. GROUP REVENUE (£m) 200 150 100 50 0 180.2 173.3 157.6 118.9 91.0 2002 2004 2003 Source : see page 67 2005 2006 GROSS MARGIN (%) PROFIT BEFORE TAX (£m) BASIC EARNINGS PER SHARE (pence) 70 60 50 40 30 20 10 0 60.5 61.3 62.6 56.0 57.5 39.2 39.1 33.8 40 30 20 10 18.9 13.2 2002 2003 2004 2005 2006 0 2002 2003 2004 2005 2006 Source : see page 67 AVERAGE NUMBER OF EMPLOYEES (THE TEAM) DURING THE FINANCIAL PERIODS 2,000 1,500 1,327 1,176 1,000 1,070 500 1,582 1,513 0 2002 2003 2004 2005 2006 Source : see page 67 12 DIVIDEND LEVEL (pence) 10.40 9.50 8.00 12 10 8 6 4 2 0 3.48 1.43 DIVIDEND COVER (times) 2.5 2.0 1.5 1.0 0.5 0 2.5 1.67 1.41 1.41 1.41 2004 2003 2002 Source : see page 67 2005 2006 15 12 9 6 3 0 13.3 12.8 11.3 5.8 3.6 2002 2004 2003 Source : see page 67 2005 2006 OVERALL REVENUE AND LIKE-FOR-LIKE REVENUE GROWTH (%) 35 30 25 20 15 10 5 0 32.5 21.5 28.3 11.3 24.2 15.2 10.0 3.4 2002 2003 2004 2005 3.9 -1.8 2006 Topps Tiles Plc Annual Report and Financial Statements 2006 BUSINESS REVIEW continued KEY STRENGTHS AND RESOURCES Customer satisfaction is Topps No.1 priority. We are committed to the highest levels of customer service, it is our policy to be honest, helpful and knowledgeable but never, never pushy. In addition, we provide a range of services offering practical support at every stage of the job including Loan-a-Tile, free 'How to' DVD, tile cutting and Topps buy-back service for unused tiles. The quality and range of products offered is the widest in the market with over 17,000 separate product lines. RISKS AND UNCERTAINTIES Risks to the business include its relationship with key suppliers, the potential threat of competitors, the risk that key information technology or EPOS systems could fail; the loss of key personnel; the risk of a prolonged economic recession and development of substitute products. The Directors routinely monitor all these risks and uncertainties and appropriate actions are taken to mitigate the risks or their potential outcomes. FINANCIAL REVIEW Profit and Loss Account Revenue During the period Group revenue increased by 3.9% to £180.2 million from £173.3 million last year. Like-for-like sales decreased by 1.8%, with new store openings contributing a 5.7% increase. Average transaction per customer has slightly increased to £62 compared with £61 in the same period last year. Gross margin Overall gross margin was 62.6% compared to 61.3% last year. At the interim point of this period gross margin was 62.4%. The second half of the period has shown a gross margin of 62.7%. Operating expenses Total operating costs have increased from £69.4 million to £73.9 million which is an increase of 6.5%, although this includes non recurring share buy back costs of £1.1 million. However costs, excluding the employee profit sharing and non recurring share buy back costs have increased by 8.1% with new stores accounting for 5.1% and like for like increases of 3.0% Costs as a percentage of sales excluding the non recurring share buy back costs were 40.4% compared to 40.0% last year. Other Gains and losses In the period there is a net profit on the sale and leaseback of one freehold property of £258,000. This compares to the £1.7 million profit in 2005 which relates to the sale and leaseback of four freehold properties. Profit before tax We have achieved an overall profit before tax of £39.1 million compared to a profit before tax of £39.2 million last year. This period’s profit before tax includes £0.3 million of property disposal gains and £1.1 million of non recurring share buy back costs, compared to £1.7million of property disposal gains last year, excluding these items profit before tax has increased by 6.5%. Profit before tax margin Group profit before tax margin was 21.7% from 22.6% last year. However the profit before tax margin has been affected by the property disposal gains and the non recurring share buy back costs and pre these items was 22.1% (2005:21.6%). Taxation The effective rate of Corporation Tax was 28.8% (2005: 23.0%) and we have continued to fully provide for deferred taxation in line with IAS12. The effective rates of tax for both financial periods have been favourably affected by intra-Group restructuring benefits. Charts Financial information in the charts displayed on page 12 is based on the Annual Report and Financial Statements for the 52 week periods ending 1 June 2002, and 1 October 2005, the proforma unaudited statements for the 52 weeks ended 27 September 2003, and the 53 weeks ended 2 October 2004. Earnings per share Basic earnings per share is 12.80 pence compared to 13.33 pence last year, a decrease of 4.00%. Diluted earnings per share is 12.74 pence compared to 13.24 pence last year, a decrease of 3.78%. Both years were affected by property gains and non recurring share buy back costs (as above) and excluding these items the Earnings per share for this year would be 13.07 pence compared to 12.81 pence last year, an increase of 2%. 13 Topps Tiles Plc Annual Report and Financial Statements 2006 TRADING HAS CONTINUED TO BE ROBUST, DESPITE THE CONSISTENTLY TOUGH TRADING ENVIRONMENT. £16.53m £99.47m Cash reserves position at 30 September 2006 Net debt position at 30 September 2006 14 Topps Tiles Plc Annual Report and Financial Statements 2006 BUSINESS REVIEW continued Dividend and dividend policy The Board is recommending a final dividend of 6.90 pence per share, which will give a total dividend for the period of 10.40 pence compared to 9.50 pence last year an increase of 9.5%. This maintains our dividend cover policy at 1.41 times. BALANCE SHEET Capital expenditure Capital expenditure in the period amounted to £9.1 million. This includes the cost of acquiring three freehold sites for £3.8 million and one long leasehold site for £0.8 million and one development store site costs of £0.5 million. We also acquired three leasehold sites from the administrators of Tile and Bath World Limited at a cost of £0.3 million. We have also opened a gross 28 new stores and undertaken preparatory work on a further two stores at a cost of £2.5 million and undertaken major refurbishment of a further 2 stores and other minor re-fits at a cost of £0.7 million. We continue to update and expand our IT systems within the business and this coupled with some motor vehicle renewals accounted for £0.5 million. At the period end the Group owned nine freehold sites, one development site, one long leasehold site and both the Topps and Tile Clearing House distribution and marketing centres. These sites have a total net book value of £16.7 million. Stock Stock at the period end represents 146 days turnover compared to 137 days for the same period last year. This level is within our target of 140 -150 days going forward. Capital structure Cash reserves at the period end were £16.5 million and borrowings were £116.0 million, £110.0 million of the latter being to help fund the £122.4 million cash return and share capital consolidation transaction in August 2006 with the remaining £6 million repaying the existing loan on the Topps distribution and marketing centre.This gives the Group a net debt position of £99.5 million compared to a net funds position of £21.8 million as at 1 October 2005. The highly cash generative nature of our business means that the Group has always been able to fund its new store expansion programme from its own resources and to purchase freehold sites as suitable opportunities arise and this is expected to continue. Cash flow Net cash generated by operations was £37.9 million, £2.1 million higher than last year which reflects the higher trading profit for the Group. The movement in working capital is shown as an outflow of £5.0 million however this is after the payment of the long term incentive plan in September 2006 of £3.6m. Share Capital Consolidation and Cash Return In August 2006 the Group completed the announced Share Capital Consolidation of 3 new ordinary shares for every 4 existing ordinary shares and also the share reorganisation providing for a return of cash to shareholders equivalent to 54 pence per ordinary share. Holland The joint venture in Holland continues to develop with two new stores opened in the period to bring the total to 15 stores. The Group owned 50% in the joint venture during the financial period with the other 50% owned by the Dutch management team. The Group’s Income Statement shows net profit of £58,000 (2005: £13,000) from the venture which reflects the Group’s 50% holding. However on 2 October 2006 the Group purchased the remaining 50% share capital of the business for a total cost of £1.16 million being a combination of cash £512,500 (E762,500) and 250,000 Topps Tiles Plc shares with a value of £647,500. These shares are subject to a 3 year lock in agreement. The Dutch management team headed by Hans Ebbelink remains in place with Hans initially having a two year service contract and then reducing to a one year contract. INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRS) This is the first financial period for adopting IFRS and comparative figures for the previous year have been adjusted accordingly. POST BALANCE SHEET EVENTS On 2 October 2006 the Group purchased the remaining 50% of the share capital in the Holland business, to give the Group a 100% holding, at a cost of £1.16 million. ANNUAL GENERAL MEETING The Annual General Meeting for the period to 30 September 2006 will be held on 10 January 2007 at 10.30am at Topps Tiles Plc, Thorpe Way, Grove Park, Enderby, Leicestershire LE19 1SU, which is our Topps distribution and marketing centre. Nicholas Ounstead Chief Executive Officer Andrew Liggett Finance Director 15 Topps Tiles Plc Annual Report and Financial Statements 2006 WE PRIDE OURSELVES ON OUR COMMITMENT TO GOOD ENVIRONMENTAL MANAGEMENT AND TO MAKING A POSITIVE CONTRIBUTION TO THE COMMUNITIES WHERE WE DO BUSINESS. £500k is the amount we plan to raise for Asthma UK by the end of 2006. 260 youth teams wear kit and play with equipment provided by our sports sponsorship scheme. 16 Topps Tiles Plc Annual Report and Financial Statements 2006 THINK OF OTHERS CORPORATE AND SOCIAL RESPONSIBILITY (CSR) INTRODUCTION Corporate Social Responsibility is not new to Topps Tiles. We know that a reputation for acting responsibly helps build our business through customer recommendation. This is why we pride ourselves on our commitment to product quality, customer service excellence, good environmental management and to making a positive contribution to the communities where we do business. In 2004, we set up a social and environmental responsibility working group chaired by a Board Director. The purpose of this group was to review how we were doing and to look for opportunities for improvement. Much has been achieved. For example, we have set up a new way of including corporate social responsibility as part of our risk assessment. Our Website demonstrates the progress we have made on Corporate Social Responsibility an extension of the way we have done and will continue to do our business. In it we describe our approach towards: ■ Community relations ■ Environment ■ Workplace ■ Supply Chain OUR APPROACH Andrew Liggett, the Finance Director for Topps Tiles Plc is the Chairman and the Board Director responsible for the Social and Environmental policy. Topps has established a social and environmental responsibility working group to further our consideration of corporate responsibility issues generally, but with a specific focus on environmental management. The members of the working group are the Group Finance Director, the Head of Human Resources, the Buying Director and the Internal Audit Manager. Together, the members of the working group are accountable for developing and improving our environmental management practice. Each member of the working group is responsible for implementing those elements of the environmental policy relevant to their functions. Topps Tiles believes that environmental responsibility should be an integral part of how we manage our business. This is why we have established such a senior working group to oversee our progress in this area. 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 260 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 sixth 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 during the year to the fundraising by holding sponsored events and in total with our Company donation of £10,000 we raised over £65,000 for this worthy cause. This now brings the total raised to date to £500,000. As well as sport there is also education, where via our product catalogue schools can win valuable computer equipment. Since the scheme started, over 25 schools have benefited nationwide. 17 Topps Tiles Plc Annual Report and Financial Statements 2006 15% is the target rate for recycling of plastic waste. 70% (2005: 55%)of our product is distributed using our own fleet of modern vehicles, minimising unnecessary mileage. WE RECOGNISE THAT OUR DAY-TO-DAY ACTIVITIES IMPACT ON THE ENVIRONMENT AND AIM TO MINIMISE THE HARMFUL EFFECTS WHENEVER WE CAN. 18 Topps Tiles Plc Annual Report and Financial Statements 2006 CORPORATE AND SOCIAL RESPONSIBILITY (CSR) continued ENVIRONMENT Respect for the environment is an accepted part of modern day business management. At Topps, we recognise that our day-to-day activities impact on the environment and aim to minimise the harmful effects whenever we can. Last year, we began a Company-wide programme to improve our environmental performance, to review our policies, to put in place management systems to monitor and measure our performance and to set targets for improvement. This year we have identified our main areas of environmental impact as being ■ Property particularly energy usage. The Group constantly looks at ways of reducing energy usage and also the use of energy efficient lighting in our stores. ■ Waste management at our stores, offices and warehouses. All our offices have now adopted paper recycling procedures and there is also a procedure now for stores to return their paper, cardboard and plastic waste to the distribution centre to be baled via the newly installed compactor unit. ■ Transport Company vehicles and third party distributors. The Group continues to review its distribution cycles and and those of its third party carriers as well as continuing to encourage staff to use other modes of transport, in particular we have introduced a salary sacrifice scheme whereby staff can purchase bicycles at reduced prices and support a car sharing policy, where practical. 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. 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 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. The Group has a well documented and clear Health and Safety policy that is implemented rigorously throughout the business. We operate a Health and Safety Committee which meets on a regular basis. It’s members are representative of all areas of the business and it is chaired by our Chief Executive, Nick Ounstead. SUPPLY CHAIN Topps Tiles purchases around £70m of goods each year. The majority of our purchases are ceramic tiles and we also purchase stone, wood and laminate and adhesives. We source our products from around the World. Labour Standards and Environmental Responsibility are issues of growing importance. Topps Tiles has reviewed how it considers these issues with regard to its supplier relationships and has adopted: ■ A policy on Labour Standards and Human Rights ■ A standard clause on environmental protection which is being introduced into all new contracts and existing contacts on renewal. Our buyers also have a regular programme to visit our suppliers, to discuss these issues. Our full policy and established targets can be viewed on our website at www.toppstiles.co.uk and can be found in the Investors section under Corporate Responsibility. 19 Topps Tiles Plc Annual Report and Financial Statements 2006 EXECUTIVE DIRECTORS BARRY BESTER Executive Chairman (aged 49) Member of Nomination Committee Barry was a founder shareholder and Director of Topps Tiles in 1984. His principal responsibilities are those of Group Strategy along with overseeing the development of Holland. He is also responsible for the Company’s employee suggestion scheme. NICHOLAS OUNSTEAD Chief Executive Officer (aged 46) Health and Safety Committee Chairman 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 Finance Director (aged 45) Company Secretary Secretary of Nomination Committee Social and Environmental Responsibility Chairman 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. MATTHEW WILLIAMS Chief Operating Officer (aged 32) Matt joined the Company in 1998 after completing his Chartered Surveyors exams and took up a role in the property department. In 2004 he was promoted to Chief Operating Officer and on 1 April 2006 joined the Plc Board. 20 Topps Tiles Plc Annual Report and Financial Statements 2006 NON-EXECUTIVE DIRECTORS ALAN MCINTOSH CA Senior Non-Executive Director (aged 38) Chairman of Audit Committee Member of Nomination Committee Chairman of Remuneration 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 78) Member of Audit Committee Chairman of Nomination Committee Member of Remuneration Committee Victor 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 60) Member of Audit Committee Member of Nomination Committee Member of Remuneration 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. 21 Topps Tiles Plc Annual Report and Financial Statements 2006 OPERATIONAL DIRECTORS RAYMOND TRICKER Northern Operations Director (aged 50) Ray joined the Company in 2002 and has over 30 years of sales experience including eight years with Wickes. ADRIAN MCCOURT Southern Operations Director (aged 48) Adrian joined the business in 1998 having spent his entire working life in sales, including time in the USA with JC Penney. ALAN SAUNDERS Marketing Director (aged 43) Alan joined the Company in 1984 as Store Manager and progressed to Area Manager before taking up his current role in 2002. 22 Topps Tiles Plc Annual Report and Financial Statements 2006 COLIN HAMPSON IT Director (aged 34) Colin joined the business in 1995 and has played a key role in implementing and developing our store Epos systems. JOHN REILLY Buying Director (aged 45) John joined the Company in 1998 after twelve years in the tile business, including three years with Great Mills DIY. 23 Topps Tiles Plc Annual Report and Financial Statements 2006 DIRECTORS AND ADVISORS PRESIDENT S.K.M. WILLIAMS FCA DIRECTORS B.F.J. BESTER Executive Chairman N.D. OUNSTEAD Chief Executive Officer A. LIGGETT FCMA Finance Director M. WILLIAMS Chief Operating Officer W.A. MCINTOSH CA Senior Non-Executive Director V.H. WATSON CBE Non-Executive Director The RT. Hon. J.M. JACK, Privy Counsellor, MP Non-Executive Director SECRETARY A. Liggett FCMA REGISTERED NUMBER 3213782 REGISTERED OFFICE Thorpe Way Grove Park Enderby Leicestershire LE19 1SU 24 AUDITORS Deloitte & Touche LLP 201 Deansgate Manchester M60 2AT BANKERS HSBC Bank Plc 56 Queen Street Cardiff CF10 2PX REGISTRARS Capita IRG Plc Bourne House 34 Beckenham Road Beckenham Kent BR3 4TU SOLICITORS TLT Solicitors 1 Redcliff Street Bristol BS99 7JZ Sinclair Abson Smith Lawyers 19 Market Place Stockport SK1 1HA Beachcroft LLP 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 2006 THINK RESULTS FINANCIAL STATEMENTS 52 WEEKS RESULTS TO 30 SEPTEMBER 2006 CONTENTS 26 DIRECTORS’ REPORT > 28 CORPORATE GOVERNANCE STATEMENT > 30 REMUNERATION REPORT > 34 INDEPENDENT AUDITORS’ REPORT - GROUP ACCOUNTS > 36 CONSOLIDATED GROUP INCOME STATEMENT > 37 CONSOLIDATED BALANCE SHEET > 38 CONSOLIDATED CASH FLOW STATEMENT > 39 NOTES TO THE GROUP ACCOUNTS > 62 INDEPENDENT AUDITORS’ REPORT - COMPANY ACCOUNTS > 63 COMPANY BALANCE SHEET > 64 NOTES TO THE COMPANY ACCOUNTS > 67 FIVE YEAR RECORD > 68 NOTICE OF ANNUAL GENERAL MEETING > 70 EXPLANATORY NOTES TO THE NOTICE OF ANNUAL GENERAL MEETING > 71 FINANCIAL CALENDAR > 72 THE TEAM > 76 STORE LOCATIONS 25 Topps Tiles Plc Annual Report and Financial Statements 2006 DIRECTORS’ REPORT For the 52 weeks ended 30 September 2006 The Directors present their report on the affairs of the Group, together with the financial statements and auditors’ report, for the 52 weeks ended 30 September 2006. 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. ENHANCED BUSINESS REVIEW The Company is required to set out in this report a fair review of the business of the Group during the financial period ended 30 September 2006 and of the position of the Group at the end of that financial period. The Company is also required to set out a description of the principal risks and uncertainties facing the Group. The information that fulfils the requirements of the enhanced business review can be found within the business review on pages 11 to 15 and the Corporate and Social Responsibility statement on pages 17 to 19, which are incorporated in this report by reference. The Directors monitor a number of financial and non financial KPI’s for the Group and by store and these are detailed on page 11. RESULTS AND DIVIDENDS The audited financial statements for the 52 weeks ended 30 September 2006 are set out on pages 36 to 61.The Group’s profit for the period, after taxation, was £27,804,000 (2005 - £30,182,000). An interim dividend of 3.50 pence per share, £7,933,000, was paid on 30 June 2006. . The Directors recommend a final dividend of 6.90 pence per share, £11,734,000, making a total of 10.40 pence per share, £19,667,000 (2005 – total dividend 9.50p per share, £21,559,000). Subject to approval by the shareholders at the Annual General Meeting, to be held on 10 January 2007, the final dividend will be paid on 31 January 2007, to shareholders on the register at the close of business on 5 January 2007. DIRECTORS The Directors of the Company are as follows: B.F.J. Bester N.D. Ounstead A. Liggett M.T.M. Williams W.A. McIntosh V.H. Watson J.M. Jack Executive Chairman Chief Executive Officer Finance Director Chief Operating Officer (Joined the Board on 1 April 2006) Senior Non-Executive Director Non-Executive Director Non-Executive Director The Directors’ interests in the shares of the Company are set out on page 33. SHARE CAPITAL Details of the Company’s authorised and issued share capital are shown in note 21 to the financial statements. SUPPLIER PAYMENT POLICY The Group’s policy is to negotiate 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 payables at the period end represented 41 days purchases (2005 - 44 days). CHARITABLE AND POLITICAL CONTRIBUTIONS During the period the Group made charitable donations of £10,000 to Asthma UK (2005: £10,000). The Group made no political contributions. SUBSTANTIAL SHAREHOLDINGS In addition to the Directors’ shareholdings noted on page 33, on 2 November 2006 the Company had been notified, in accordance with Sections 198 to 208 of the Companies Act 1985, of the following interests in 3% or more of its issued share capital. HSBC Global Custody Nominee (UK) Limited S.K.M. Williams Chase Nominees Limited Vidacoss Nominees Limited State Street Nominees Limited BNY (OCS) Nominees Limited Bank of New York (Nominees) Limited Littledown Nominees BBHISL Nominees Limited 26 Number 37,803,000 15,718,950 15,054,000 11,289,000 11,031,000 9,520,000 7,155,000 6,679,000 5,846,000 % held 23.3% 9.2% 8.9% 6.6% 6.5% 5.6% 4.2% 3.9% 3.4% Topps Tiles Plc Annual Report and Financial Statements 2006 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. FINANCIAL RISK MANAGEMENT, OBJECTIVES AND POLICIES The group is exposed to certain financial risks, namely interest rate risk, currency risk and credit risk. Information regarding such financial risk is detailed in notes 16, 18 and 19. The Group’s risk management policies and procedures are also discussed in the Business Review. 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. The total of options held by employees, excluding Directors, is 1,450,158. The Directors will continue to incentivise employees through additional employee share option schemes in the forthcoming financial period. INFORMATION GIVEN TO AUDITORS Each of the Directors at the date of approval of this report confirms that: ■ So far as the Director is aware, there is no relevant audit information of which the Company’s auditors are unaware; and ■ The Directors have taken all the steps that they ought to have taken as a Director to make themselves aware of any relevant audit information and to establish that the Company’s auditors are aware of that information. This confirmation is given and should be interpreted in accordance with the provisions of s234ZA of the Companies Act. AUDITORS A resolution to re-appoint Deloitte & Touche LLP as the Company’s auditor will be proposed at the forthcoming Annual General Meeting. STATEMENT OF 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 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. 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 the system of internal control, for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. 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. On behalf of the Board A Liggett Director and Company Secretary 28 November 2006 27 CORPORATE GOVERNANCE STATEMENT Topps Tiles Plc Annual Report and Financial Statements 2006 In June 1998 the Hampel Committee and the London Stock Exchange published the Combined Code on corporate governance. This combines the Cadbury Code on corporate governance, the Greenbury Code on directors’ remuneration and new requirements arising from the findings of the Hampel Committee. STATEMENT OF COMPLIANCE WITH THE CODE OF BEST PRACTICE The Company has complied throughout the period with the Provisions of the Code of Best Practice set out in section 1 of the Combined Code except for provision A6.1, as the Board does not currently undertake formal appraisal of it’s own performance and that of it’s committees, but is currently in the process of implementing such a procedure. The Company complies with all other provisions of the code. Code Provision C.3.1 requires the members of the audit committee to be named in the report and financial statements. Mr. W.A. McIntosh (Chairman), Mr. V.H. Watson and Mr. J.M. Jack have served on the committee throughout the period. The Board of Directors comprises seven members, of whom three are independent Non-Executive Directors and four are Executive Directors led by the Company’s Executive Chairman, Mr. B J F Bester. The Senior Independent Non-Executive Director is Mr. A McIntosh, who also chairs the Audit Committee. Brief biographical details of all Directors are given on pages 20 and 21. The Board meets at least twelve times a year. Certain defined issues are reserved for the Board including approval of financial statements and circulars, Annual budgets, Strategy, Directors’ appointments, service agreements and remuneration, internal control and risk management, Corporate governance, key external and internal appointments and pensions and employee incentives. In advance of board meetings Directors are supplied with up-to-date information about the trading performance of each operating location, the Group’s overall financial position and its achievement against prior year, budgets and forecasts. Where required, a Director may seek independent professional advice at the expense of the Company, all Directors have access to the Company Secretary and they may also address specific issues to the Senior Independent Non-Executive Director. In accordance with the articles of association, all directors are subject to re-election every third year thereafter. As such, Nicholas Ounstead will be subject to re-election at the forthcoming AGM. Directors are elected at the first AGM after appointment, therefore, Matthew Williams will be subject to election at the forthcoming AGM. All non executive directors have written letters of appointment. These letters of appointment stipulate three-year renewable terms of office. In line with the Code all non executive directors who have served for nine years will be subject to annual re-election. As such, Victor Watson and Alan McIntosh will be subject to re-election at the forthcoming AGM. Although their length of service exceeds nine years the Board regards them to be independent and considers their broad based commercial experience and extensive business specific knowledge to be extremely beneficial. However the Board is continually reviewing this situation. The Board considers that Messrs W A McIntosh, V H Watson and The Rt Hon J M Jack are all independent for the purposes of the 2003 Code. The terms and conditions for the appointment of non executive directors are available for inspection on request. The Board also operates three committees. These are the Nomination Committee, the Remuneration Committee and the Audit Committee. All of these committees meet regularly and have formal written terms of reference which are available for inspection on request. ATTENDANCE AT BOARD/COMMITTEE MEETINGS The following table shows the number of Board and Committee meetings held during the 52 weeks ended 30 September 2006 and the attendance record of the individual Directors. Number of meetings B.F.J. Bester N.D. Ounstead A. Liggett M.T.M. Williams (Appointed 1 April 2006) W.A. McIntosh V.H. Watson J.M. Jack 28 Board of Directors Audit Committee Remuneration Committee Nomination Committee 12 12 12 12 5 8 11 11 2 2 2 2 1 2 2 2 2 2 N/A 2 N/A 2 2 2 1 1 N/A 1 N/A 1 1 1 Topps Tiles Plc Annual Report and Financial Statements 2006 STATEMENT ABOUT APPLYING THE PRINCIPLES OF GOOD GOVERNANCE The Company has applied the Principles of Good Governance set out in section 1 of the Combined Code by complying with the Code of Best Practice as reported above. Further explanation of how the Principles have been applied in connection with Directors’ remuneration is set out in the Remuneration Report. AUDIT COMMITTEE The audit committee consists entirely of independent non executive directors. The current chairman is Alan McIntosh. The other members are Victor Watson and Michael Jack. All members of the audit committee are regarded as having recent and relevant financial experience. The audit committee considers the nature and scope of the audit process (both internal and external) and its effectiveness. The committee reviews and approves the internal audit programme, meets with the external auditors and considers the annual and interim financial statements before submission to the board. The committee reviews the arrangements by which staff may, in confidence, raise concerns about possible improprieties in matters of financial reporting or other matters. The committee also reviews the group’s system of internal control and reports its findings twice yearly to the board. The committee meets with the external auditors, in the absence of the executive directors, at least twice a year. As stated above, part of the role of the audit committee is to review the independence of the company’s auditors. The company’s external auditors, Deloitte & Touche LLP have provided non-audit services to the company in the form of tax advice and other advisory work. The audit committee is aware that providing audit and non-audit advice could give rise to a potential conflict of interest. The audit committee has concluded that the auditors, Deloitte & Touche LLP, are independent. NOMINATION COMMITTEE The nominations committee is chaired by Victor Watson. The other members are currently Alan McIntosh, Michael Jack, Barry Bester and Andrew Liggett. The formal terms of reference for this committee require it to make recommendations to the board for appointments of directors and other senior executive staff. Appointments to the board are made on merit, against objective criteria, taking into account the skills and experience required. Where appropriate, external search consultants are enlisted. DIALOGUE WITH INSTITUTIONAL SHAREHOLDERS The Directors seek to build on a mutual understanding of objectives between the Company and its institutional shareholders by making annual presentations and communicating regularly throughout the year. 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 C.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 C.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. 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. 29 REMUNERATION REPORT Topps Tiles Plc Annual Report and Financial Statements 2006 INTRODUCTION This report has been prepared in accordance with the Directors’ Remuneration Report Regulations 2002 which introduced new statutory requirements for the disclosure of Directors’ remuneration in respect of periods ending on or after 31 December 2002. The report also meets the relevant requirements of the Listing Rules of the Financial Services Authority and describes how the Board has applied the Principles of Good Governance relating to Directors’ remuneration. As required by the Regulations, a resolution to approve the report will be proposed at the Annual General Meeting of the Company at which the financial statements will be approved. The Regulations require the auditors to report to the Company’s members on the “auditable part” of the Directors’ remuneration report and to state whether in their opinion that part of the report has been properly prepared in accordance with the Companies Act 1985 (as amended by the Regulations). The report has therefore been divided into separate sections for audited and unaudited information. UNAUDITED INFORMATION Remuneration committee The Company has established a Remuneration Committee, which is constituted in accordance with the recommendations of the Combined Code. The members of the committee are Mr. McIntosh, Mr. Watson and The RT. Hon. Mr. Jack who are all independent non-executive Directors, with the committee chaired by Mr. McIntosh. None of the Committee has any personal financial interest (other than as shareholders), conflicts of interests arising from cross-directorships or day-to-day involvement in running the business. The Committee makes recommendations to the Board. No Director plays a part in any discussion about his 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; ■ annual bonus payments; 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 2005 with increases taking effect from 30 September 2006. Executive Director’s contracts of service which include details of remuneration will be available for inspection at the Annual General Meeting. In addition to basic salary, the executive Directors receive certain benefits-in-kind, principally a car and private medical insurance. Long-term incentive Plan (L-TIP) The Topps Tiles Plc 2003 Executive L-TIP was a three year plan which matured at the end of the financial period ending 30 September 2006 with the maximum amount of £1,000,000 paid to each of ND Ounstead and A Liggett in the period and £300,000 was paid to M.T.M. Williams. The L-TIP was a cash based plan with performance targets based on the Group profitability over the three year period. 30 Topps Tiles Plc Annual Report and Financial Statements 2006 The payment of the individual awards under the scheme was 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. Annual bonus payments A discretionary annual cash bonus scheme represents the short term incentive element of the overall remuneration package for Mr Williams, Mr. Liggett and Mr. Ounstead. The remuneration committee establishes the objectives that must be met in the financial period if a cash bonus is to be paid. The maximum bonus achievable in the period was 100% of basic salary based on Group performance against budgeted profit before tax. For the period ending 30 September 2006 there was a total of £nil paid. The annual bonus scheme for the period to September 2007 is also 100% of basic salary based upon the achievement of budgeted Group operating profit. Pension arrangements Mr. Bester, Mr. Ounstead and Mr. Liggett received contributions into their own personal pension schemes (2005: same). Directors’ contracts Executive Directors It is the Company’s policy that executive Directors enter into a contract with a 12 month term providing for a maximum of six months notice. Mr. Williams, Mr. Bester and Mr. Ounstead have entered into new service contracts on 1st October 2006 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. The details of the non-executive Directors’ contracts are summarised in the table below: Name of Director W.A. McIntosh V.H. Watson J.M. Jack Date of contract or letter of appointment Unexpired term Notice period 27 May 1997 27 May 1997 26 January 1999 N/A N/A N/A 6 months 6 months 6 months 31 REMUNERATION REPORT continued Topps Tiles Plc Annual Report and Financial Statements 2006 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. Graph showing TSR performance of Topps Tiles Plc measured against FTSE Mid 250 Index (Excluding Investment Trusts) for the period 2 June 2001 to 30 September 2006 ) 0 0 1 o t d e s a b e r ( R S T 600 500 400 300 200 100 0 Topps Tiles FTSE Mid 250 Exc Investment Trusts 02 06 01 01 06 02 27 09 03 02 10 04 01 10 05 30 09 06 Date Source: Datastream AUDITED INFORMATION Aggregate Directors’ remuneration The total amounts for Directors’ remuneration were as follows: 2006 £’000 3,178 30 3,208 2005 £’000 888 26 914 Fees £’000 Basic salary £’000 Vehicle allowance £’000 Benefits in kind £’000 Money purchase pension contributions £’000 Long term incentive plan £’000 Period ended 30 September 2006 £’000 Period ended 1 October 2005 £’000 - - - - - 20 20 - 40 125 - 260 260 90 - - 20 - - 24 - 8 - - - 17 - 4 29 1 - - - 6 - 12 12 - - - - - - 1,000 1,000 300 - - - 148 – 1,300 1,301 399 20 20 20 210 104 273 267 - 20 20 20 755 32 51 30 2,300 3,208 914 Emoluments Money purchase pension contributions Directors’ emoluments Name of Director Executive Directors B.F.J. Bester S.K.M. Williams (stepped down 31 March 2005) N.D. Ounstead A. Liggett M.T.M Williams (appointed 1 April 2006) Non executive Directors W.A. McIntosh V.H. Watson J.M. Jack 32 Topps Tiles Plc Annual Report and Financial Statements 2006 Directors’ share options There were no options outstanding, granted to or exercised by Directors during the period and therefore no gains were made by the Directors. The market price of the ordinary shares at 30 September 2006 was 259 pence and the range during the year was 268.25 pence to 156.5 pence. Directors interests The Directors had the following interest in the shares of the Company (all interests relate solely to Ordinary Shares). 30 September 2006 ordinary shares of 3.33p each 1 October 2005 ordinary shares of 2.5 p each 13,906,200 370,125 1,501,125 385,980 1,188,750 120,000 11,250 18,541,600 493,500 2,001,500 482,540 1,585,000 180,000 15,000 B.F.J. Bester N.D. Ounstead A. Liggett M.T.M. Williams W.A. McIntosh V.H. Watson J.M. Jack Approval This report was approved by the Board of Directors on 28 November 2006 and signed on its behalf by: Alan McIntosh Chairman of Remuneration Committee 28 November 2006 33 INDEPENDENT AUDITORS’ REPORT - GROUP ACCOUNTS Topps Tiles Plc Annual Report and Financial Statements 2006 TO THE MEMBERS OF TOPPS TILES PLC We have audited the Group financial statements of Topps Tiles Plc for the 52 weeks ended 30 September 2006, which comprise the consolidated income statement, the consolidated balance sheet, the consolidated cash flow statement, the consolidated statement of recognised income and expense and the related notes 1 to 31. These Group financial statements have been prepared under the accounting policies set out therein. We have also audited the information in the Remuneration Report that is described as having been audited. We have reported separately on the individual Company financial statements of Topps Tiles plc for the 52 weeks ended 30 September 2006. 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 The Directors’ responsibilities for preparing the annual report, the Remuneration Report and the Group financial statements in accordance with applicable United Kingdom law and International Financial Reporting Standards (IFRS) as adopted for use in the European Union are set out in the directors’ report. Our responsibility is to audit the Group financial statements and the part of the Remuneration Report described as having been audited in accordance with relevant United Kingdom legal and regulatory requirements and International Standards on Auditing (UK and Ireland). We report to you our opinion as to whether the Group financial statements give a true and fair view in accordance with the relevant financial reporting framework and whether the Group financial statements and the part of the Remuneration Report described as having been audited have been properly prepared in accordance with the Companies Act 1985 and Article 4 of the IAS regulation. We report to you if, in our opinion, the information given in the directors’ report is consistent with the Group financial statements. We also report to you 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 nine provisions of the 2003 FRC 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 statement on internal control covers 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 also report to you if, in our opinion, the Company has not complied with any of the four Directors’ remuneration disclosure requirements specified for our review by the Listing Rules of the Financial Services Authority. These comprise the amount of each element in the remuneration package and information on share options, details of long term incentive schemes, and money purchase and defined benefit schemes. We give a statement, to the extent possible, of details of any non-compliance. We read the directors’ report and the other information contained in the annual report for the above year as described in the contents section, including the unaudited part of the Remuneration Report, and consider the implications for our report if we become aware of any apparent misstatements or material inconsistencies with the Group financial statements. BASIS OF AUDIT OPINION We conducted our audit in accordance with International Standards on Auditing (UK and Ireland) issued by the Auditing Practices Board. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the Group financial statements and the part of the 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 Group financial statements, and of whether the accounting policies are appropriate to the Company’s circumstances, consistently applied and adequately disclosed. We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the Group financial statements and the part of the 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 Group financial statements and the part of the Remuneration Report described as having been audited. 34 Topps Tiles Plc Annual Report and Financial Statements 2006 OPINION In our opinion: ■ the Group financial statements give a true and fair view, in accordance with IFRS’s as adopted for use in the European Union, of the state of the Group's affairs as at 30 September 2006 and of its profit for the 52 weeks then ended; ■ the Group financial statements and the part of the Remuneration Report described as having been audited have been properly prepared in accordance with the Companies Act 1985 and Article 4 of the IAS regulation; and ■ the information given in the directors’ report is consistent with the Group financial statements. Separate opinion in relation to IFRS As explained in note 2, the Group in addition to complying with its legal obligation to comply with IFRS’s as adopted for use in the European Union, has also complied with IFRS’s as issued by the International Accounting Standards Board. Accordingly, in our opinion the financial statements give a true and fair view, in accordance with IFRS’s, of the state of the Group’s affairs at 30 September 2006 and of its profit for the 52 weeks then ended. Deloitte & Touche LLP Chartered Accountants and Registered Auditors Manchester 28 November 2006 35 CONSOLIDATED GROUP INCOME STATEMENT For the 52 weeks ended 30 September 2006 Topps Tiles Plc Annual Report and Financial Statements 2006 Notes 3 15 4 7 8 8 9 26 11 2006 £’000 180,180 (67,470) 112,710 (5,907) (50,901) (15,981) (1,110) 58 39,979 (1,110) 38,869 258 1,276 (1,339) 39,064 (11,260) 27,804 2005 Restated £’000 173,326 (67,146) 106,180 (7,502) (46,348) (15,521) – 13 36,822 – 36,822 1,700 1,076 (407) 39,191 (9,009) 30,182 12.80p 12.74p 13.33p 13.24p 2006 £’000 (2) – 304 27,804 28,106 2005 £’000 – (17) (500) 30,182 29,665 Group revenue Cost of sales Gross profit Operating expenses employee profit sharing distribution costs other operating expenses share buy back costs Share of results of joint ventures Group and share of joint venture profit from operations before share buy back costs Share buy back costs Group and share of joint venture profit from operations Other gains and losses Investment revenue Finance costs Profit before taxation Taxation Profit after taxation for the period attributable to equity holders of the parent company Earnings per ordinary share - basic - diluted All of the above results relate to continuing operations. CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSE For the 52 weeks ended 30 September 2006 Exchange rate loss on retranslation of joint venture First time adoption of IAS 32 and 39 Deferred tax on sharesave scheme taken directly to equity Profit for the period attributable to equity holders of the company Recognised income and expense for the period 36 Topps Tiles Plc Annual Report and Financial Statements 2006 CONSOLIDATED BALANCE SHEET As at 30 September 2006 Non-current assets Goodwill Tangible assets Joint venture undertaking Trade and other receivables Current assets Inventories Trade and other receivables within one year Cash and cash equivalents Total assets Current liabilities Trade and other payables Bank loans Current tax liabilities Net current assets Bank loans Other payables Deferred tax liabilities Total liabilities Net (liabilities)/assets Equity Share capital Share premium Merger reserve Share based payment reserve Capital redemption reserve Retained earnings Total equity Notes 12 13 15 16 16 16 17 18 18 17 20 21 22 23 24 25 26 2006 £’000 551 36,857 281 – 37,689 27,031 5,528 16,533 49,092 86,781 (25,837) (4,900) (7,507) (38,244) 10,848 (110,600) – (1,233) (150,077) 2005 Restated £’000 551 32,072 225 115 32,963 25,338 4,071 27,829 57,238 90,201 (23,138) – (3,640) (26,778) 30,460 (6,000) (3,394) (1,799) (37,971) (63,296) 52,230 5,773 531 (399) 166 20,254 (89,621) (63,296) 5,655 5,575 (399) 100 190 41,109 52,230 The accompanying notes are an integral part of these financial statements. The financial statements on pages 36 to 61 were approved by the Board of Directors on 28 November 2006 and signed on its behalf by: ND Ounstead A Liggett Directors 37 CONSOLIDATED CASHFLOW STATEMENT For the 52 weeks ended 30 September 2006 Topps Tiles Plc Annual Report and Financial Statements 2006 2006 £’000 2005 £’000 38,869 36,822 3,718 (58) 66 258 (1,342) (1,693) (1,949) 37,869 (683) (7,655) 29,531 – 1,276 (8,668) 573 (6,819) 222 (6,000) 115,500 (122,216) (21,514) 3,363 (13) 65 – (267) (965) (3,239) 35,766 (308) (8,864) 26,594 (3,774) 942 (8,564) 4,292 (7,104) 721 (517) – – (21,489) (34,008) (21,285) (11,296) 27,829 16,533 (1,795) 29,624 27,829 Cashflow from Operating Activities Group and share of joint venture operating profit before taxation Adjustments for: Depreciation of property, plant and equipment Share of results in joint venture Share option charge Loss on sale of fixed assets Increase in receivables Increase in inventories Decrease in payables Cash generated by operations Interest paid Taxation paid Net cash from operating activities Cashflows from investing activities Purchase of treasury shares Interest received Purchase of property, plant and equipment Proceeds on sale of property, plant and equipment Net cash used in investment activities Cashflows from financing activities Proceeds from issue of share capital Repayment of loans New loans Share buy back Dividends paid Net cash used in financing activities Net decrease in cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period 38 Topps Tiles Plc Annual Report and Financial Statements 2006 NOTES TO THE GROUP ACCOUNTS For the 52 weeks ended 30 September 2006 1 GENERAL INFORMATION Topps Tiles Plc is a company incorporated in the United Kingdom under the Companies Act 1985. The address of the registered office is given on page 24. The nature of the Group’s operations and its principal activities are set out in the business review on pages 11 to 15. These financial statements are presented in pounds sterling because that is the currency of the primary economic environment in which the Group operates. Foreign operations are included in accordance with the policies set out in note 2. At the date of authorisation of these financial statements, the following Standards and Interpretations which have not been applied in these financial statements were in issue but not yet effective: IFRS 7 IFRIC 4 IFRIC 8 IFRIC 9 Financial instruments: Disclosures; and the related amendment to IAS 1 on capital disclosures Determining whether an Arrangement contains a Lease Scope of IFRS2 Re-Assessment of Embedded Derivatives IFRIC 10 Interim Financial Reporting and Impairment. The Directors anticipate that the adoption of these Standards and Interpretations in future periods will have no material impact on the financial statements of the Group except for additional disclosures on capital and financial instruments when the relevant standards come into effect for periods commencing on or after 1 January 2007. 2 ACCOUNTING POLICIES a) Basis of accounting The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS). The financial statements have been prepared on the historical cost basis, except for the revaluation of certain properties and financial instruments. The principal accounting policies adopted are set out below. Topps Tiles Plc’s consolidated financial statements were prepared in accordance with United Kingdom Generally Accepted Accounting Principles (UK GAAP) until 1st October 2005. A transitional document was published in January 2006 detailing impact of IFRS in accordance with IFRS 1 and the comparative figures in respect of 2005 are restated to reflect these adjustments. The disclosures required by IFRS 1 concerning the transition from UK GAAP to IFRS are given in note 31. The financial statements have also been prepared in accordance with IFRS adopted for use in the European Union and therefore comply with Article 4 of the EU IAS regulations. The rules for first time adoption of IFRS are set out in IFRS 1. In general a company is required to define it’s IFRS accounting policies and apply these retrospectively to determine it’s opening balance sheet under IFRS. The standard allows a number of optional exemptions to this general principle. The Group has made the following elections under IFRS 1; ■ Not to account under IFRS 3 for Business Combinations prior to 24 February 2004 ■ Not to measure items of property, plant and equipment at fair value at the date of transition to IFRS, but to use UK GAAP values at that date ■ To take up the exemption related to financial instruments (IAS 32 & 39) that allows it not to present comparative information in compliance with those standards, but will continue to comply with UK GAAP in this respect ■ To only apply the provisions of IFRS 2 to equity instruments issued after 7 November 2002 b) Basis of consolidation The statutory Group income statement and balance sheet consolidate the financial statements of Topps Tiles Plc and its subsidiary undertakings made up to 30 September 2006. 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. 39 Topps Tiles Plc Annual Report and Financial Statements 2006 NOTES TO THE GROUP ACCOUNTS continued For the 52 weeks ended 30 September 2006 2 ACCOUNTING POLICIES continued c) 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. Throughout the financial statements, directors’ report and financial review, references to 2006 mean at 30 September 2006 or the 52 weeks then ended; references to 2005 mean at 1 October 2005 or the 52 weeks then ended. d) Goodwill Goodwill arising on consolidation represents the excess of the cost of acquisition over the Group’s interest in the fair value of the identifiable assets and liabilities of a subsidiary, associate or jointly controlled entity at the date of acquisition. Goodwill is initially recognised as an asset at cost and is subsequently measured at cost less any accumulated impairment losses. Goodwill which is recognised as an asset is reviewed for impairment at least annually. Any impairment is recognised immediately in the income statement and is not subsequently reversed. For the purpose of impairment testing, goodwill is allocated to each of the Group’s cash-generating units expected to benefit from the synergies of the combination. Cash-generating units to which goodwill has been allocated are tested for impairment annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit. An impairment loss recognised for goodwill is not reversed in a subsequent period. On disposal of a subsidiary, associate or jointly controlled entity, the attributable amount of goodwill is included in the determination of the profit or loss on disposal. Goodwill arising on acquisitions before the date of transition to IFRSs has been retained at the previous UK GAAP amounts subject to being tested for impairment at that date. Goodwill of £15,080,000 written off to reserves under UK GAAP prior to 1998 has not been reinstated and is not included in determining any subsequent profit or loss on disposal. e) Revenue Recognition Revenue is measured at the fair value of the consideration received or receivable and represents amounts receivable for goods and services provided in the normal course of business, net of discounts, VAT and other sales-related taxes. Sales of goods are recognised when title has passed. Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset’s net carrying amount. Dividend income from investments is recognised when the shareholders’ rights to receive payment have been established. f) Property, plant & equipment Property, plant and equipment are stated at cost less accumulated depreciation and any recognised impairment loss. Depreciation is charged so as to write off the cost of assets, less estimated residual value, over their estimated useful lives, on the following bases: Freehold buildings Short leasehold land and buildings Fixtures and fittings Motor vehicles - - - - Freehold land is not depreciated. 2% per annum on cost on a straight-line basis over the period of the lease, up to 25 years over 10 years or at 25% per annum on reducing balance basis as appropriate 25% per annum on reducing balance Residual value is calculated on prices prevailing at the date of acquisition. 40 Topps Tiles Plc Annual Report and Financial Statements 2006 2 ACCOUNTING POLICIES continued g) Inventories Inventories are stated at the lower of cost and net realisable value and relates solely to finished goods for resale. Cost comprises purchase price of materials and an attributable proportion of distribution overheads based on normal levels of activity and is valued at standard cost. Net realisable value is based on estimated selling price, less further costs expected to be incurred to completion and costs to be incurred – marketing, selling and distribution. Provision is made for those items of inventory where the net realisable value is estimated to be lower than cost. Net realisable value is based on both historic experience and assumptions regarding future selling values, and is consequently a source of estimation uncertainty. h) Taxation The tax expense represents the sum of the tax currently payable and deferred tax. The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date. Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from the initial recognition of goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit. Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries, and interests in jointly controlled entities, except where the group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the income statement, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax assets and liabilities on a net basis. i) Foreign currency In preparing the financial statements of individual companies, transactions in currencies other than the entity’s functional currency (foreign currencies) are recorded at the rates of exchange prevailing on the dates of transactions. At each period end, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on that date. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing at the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated. 41 Topps Tiles Plc Annual Report and Financial Statements 2006 NOTES TO THE GROUP ACCOUNTS continued For the 52 weeks ended 30 September 2006 2 ACCOUNTING POLICIES continued i) Foreign currency continued Exchange differences arising on the settlement of monetary items, and on the retranslation of monetary items, are included in the income statement for the period. Exchange differences arising on the retranslation of non-monetary items carried at fair value are included in profit or loss for the period except for differences arising on the retranslation of non-monetary items in respect of which gains and losses are recognised directly in equity. For such non-monetary items, any exchange component of that gain or loss is also recognised directly in equity. For the purpose of presenting consolidated financial statements, the assets and liabilities of the Group’s joint venture operation are translated at exchange rates prevailing at period end dates. Income and expense items are translated at the average exchange rates for the period, unless exchange rates fluctuate significantly during the period, in which case the exchange rates at the dates of transactions are used. Exchange differences arising are classified as equity and transferred to the Group’s translation reserve. Such differences are recognised as income or expense in the period in which the operation is disposed of. In order to hedge its exposure to certain foreign exchange risks, the Group enters into forward contracts (see below for details of the Group’s accounting policies in respect of such derivative financial instruments). j) Leases 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. k) Investments Fixed asset investments are shown at cost less provision for impairment. l) Retirement benefit costs For defined contribution schemes, the amount charged to the income statement 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. m) Operating profit Operating profit is stated after charging share buy back costs and after share of results of joint ventures but before investment income and finance costs. n) Finance costs Finance costs of debt are recognised in the income statement 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. 42 Topps Tiles Plc Annual Report and Financial Statements 2006 2 ACCOUNTING POLICIES continued o) Investments in Jointly Controlled Entities A jointly controlled entity is an entity over which the Group is in a position to exercise joint control, through participation in the financial and operating policy decisions of the investee. The results and assets and liabilities of jointly controlled entities are incorporated in these financial statements using the equity method of accounting. Investments are carried in the balance sheet at cost adjusted by post-acquisition changes in the Group’s share of the net assets of the jointly controlled entity, less any impairment in the value of individual investments. Any excess of the cost of acquisition over the Group’s share of the fair values of the identifiable net assets of the jointly controlled entity at the date of acquisition is recognised as goodwill. Where a Group company transacts with a jointly controlled entity of the Group, profits and losses are eliminated to the extent of the Group’s interest in the relevant jointly controlled entity. Losses may provide evidence of an impairment of the asset transferred in which case appropriate provision is made for impairment. p) 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. The Group’s activities expose it primarily to the financial risks of changes in foreign currency exchange rates and interest rates. The use of financial derivatives is governed by the Group’s policies approved by the Board of Directors, on the use of financial derivatives. Derivatives embedded in other financial instruments or other host contracts are treated as separate derivatives when their risks and characteristics are not closely related to those of host contracts and the host contracts are not carried at fair value, with gains or losses reported in the income statement. q) Bank Borrowings Interest-bearing bank loans and overdrafts are recorded at the proceeds received, net of direct issue costs. Finance charges are accounted for on an accrual basis in the Income Statement using the effective interest rate method and are added to the carrying amount of the instrument to the extent that they are not settled in the period in which they arise. r) Provisions Provisions are recognised when the Group has a present obligation as a result of a past event, and it is probable that the Group will be required to settle that obligation. Provisions are measured at the Directors’ best estimate of the expenditure required to settle the obligation at the balance sheet date, and are discounted to present value where the effect is material. s) Share-based payments The Group has applied the requirements of IFRS 2 Share-based Payments. In accordance with the transitional provisions, IFRS 2 will be applied to all grants of equity instruments after 7 November 2002 that were unvested as of 1 January 2005. The Group issues equity settled share based payments to certain employees. Equity settled share based payments are measured at fair value at the date of grant. The fair value determined at the grant date of the share based payment is expensed on a straight line basis over the vesting period, based on the Group’s estimate of shares that will eventually vest.Fair value is measured by use of the Black Scholes model. The Group provides employees with the ability to purchase the Group’s ordinary shares at 80% of the current market value through the operation of it’s share save scheme. The Group records an expense, based on its estimate of the 20% discount related to shares expected to vest on a straight line basis over the vesting period. 43 Topps Tiles Plc Annual Report and Financial Statements 2006 NOTES TO THE GROUP ACCOUNTS continued For the 52 weeks ended 30 September 2006 2 ACCOUNTING POLICIES continued t) Cash and cash equivalents Cash and cash equivalents comprise cash on hand and demand deposits and other short-term highly liquid investments that are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value. u) Trade payables Trade payables are initially measured at fair value and are subsequently measured at amortised cost, using the effective interest rate method. v) Financial Liabilities and Equity Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of it’s liabilities. 3 REVENUE An analysis of revenue is as follows: Non-Trade customers Trade customers Investment income Total revenue 2006 £’000 159,482 20,698 180,180 1,276 181,456 2005 £’000 153,489 19,837 173,326 1,076 174,402 4 BUSINESS SEGMENTS The Group is currently organised into two retail operating divisions, Topps Tiles (Topps) and Tile Clearing House (TCH). These divisions are the basis on which the group reports it’s primary segment information. Segmental revenue and profit before taxation by business activity were as follows: Segmental information for the 52 weeks to 30 September 2006 Topps £’000 159,482 35,887 TCH £’000 Consolidated £’000 20,698 4,685 180,180 40,572 (1,703) 38,869 258 (63) 39,064 Revenue Operating profit before central costs Head office /distribution centre costs Operating profit Other gains Finance costs less finance income Profit before taxation 44 Topps Tiles Plc Annual Report and Financial Statements 2006 4 BUSINESS SEGMENTS continued Other information Capital additions Depreciation Balance sheet Segment assets Unallocated corporate assets Consolidated total assets Segment liabilities Unallocated corporate liabilities Consolidated total liabilities Revenue Operating profit before central costs Head office /distribution centre costs Operating profit Finance costs less finance income Other gains Profit before taxation Other information Capital additions Depreciation and amortisation Balance sheet Segment assets Unallocated corporate assets Consolidated total assets Segment liabilities Unallocated corporate liabilities Consolidated corporate liabilities Topps £’000 2,240 2,204 TCH £’000 860 432 52,708 7,906 52,708 7,906 (29,247) (4,387) Head office/ distribution centre £’000 5,976 1,082 26,167 26,167 Consolidated £’000 9,076 3,718 60,614 26,167 86,781 (116,443) (33,634) (116,443) (29,247) (4,387) (116,443) (150,077) Segmental information for the 52 weeks to 1 October 2005 TCH £’000 Consolidated £’000 Topps £’000 153,489 34,119 19,837 4,575 Topps £’000 3,832 1,930 Head office/ distribution centre £’000 4,328 1,031 TCH £’000 631 402 49,209 7,381 49,209 7,381 (18,495) (2,774) (18,495) (2,774) 33,611 33,611 (16,702) (16,702) 173,326 38,694 (1,872) 36,822 669 1,700 39,191 Consolidated £’000 8,791 3,363 56,590 33,611 90,201 (21,269) (16,702) (37,971) 45 NOTES TO THE GROUP ACCOUNTS continued For the 52 weeks ended 30 September 2006 5 PROFIT BEFORE TAXATION Profit for the period has been arrived at after charging: Depreciation of property, plant and equipment Staff costs (see note 6) Auditors’ remuneration for audit services (see below) Auditors’ remuneration for non-audit services A more detailed analysis of auditors’ remuneration is provided below: Audit services: statutory audit audit-related regulatory reporting Further assurance services Tax services: compliance services advisory services Topps Tiles Plc Annual Report and Financial Statements 2006 2006 £’000 3,718 33,733 105 173 2006 £’000 % £’000 2005 95 10 105 50 65 58 123 278 34% 4% 38% 18% 23% 21% 44% 100% 70 – 70 – 25 31 56 126 2005 £’000 3,363 29,677 70 56 % 56% – 56% – 20% 24% 44% 100% A description of the work of the audit committee is set out on page 29 and includes an explanation of how auditor objectivity and independence is safeguarded when non-audit services are provided by the auditors. Further assurance services includes work performed in respect of the share buy back. 6 STAFF COSTS The average monthly number of employees (including executive Directors) was: Selling Administration Their aggregate remuneration comprised: Wages and salaries (including LTIP) Social security costs Other pension costs (note 28b) Details of Director’s emoluments are disclosed on page 32. 46 2006 Number employed 2005 Number employed 1,412 170 1,582 2006 £’000 30,193 3,281 259 33,733 1,356 157 1,513 2005 £’000 26,477 2,984 216 29,677 Topps Tiles Plc Annual Report and Financial Statements 2006 7 OTHER GAINS AND LOSSES Other gains and losses relate to the sale and leaseback of certain freehold properties. 8 INVESTMENT REVENUE Bank interest receivable and similar income Finance costs Interest on bank loans and overdrafts Interest on VAT payments Interest costs capitalised Net finance costs 2006 £’000 1,276 (1,377) – 38 (1,339) 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. 9 TAX Current tax – charge for the period Current tax – adjustment in respect of previous periods Deferred tax – charge for period Deferred tax - adjustment in respect of previous periods (note 20) Corporation tax is calculated at 30% (2005: 30%) of the estimated assessable profit for the period. The charge for the period can be reconciled to the profit per the income statement as follows: 2006 £’000 11,179 343 1,082 (1,344) 11,260 2005 £’000 1,076 (372) (64) 29 (407) 2005 £’000 8,670 (116) 455 – 9,009 Profit before taxation Continuing operations Tax at the UK corporation tax rate of 30% (2005: 30%) Tax effect of Intra-Group restructuring Tax effect of expenses that are not deductible in determining taxable profit Tax effect of utilisation of tax losses not previously recognised Tax effect of savings from Share Symmetry on options exercised Tax effect of profit in excess of chargeable gains on sale of freehold property Tax effect of different tax rates on overseas earnings Tax effect of tangible fixed assets which do not qualify for capital allowances Tax effect of adjustment in respect of prior periods Tax expense for the period 2006 £’000 2005 £’000 39,064 39,191 11,719 – 281 – – (25) 13 273 (1,001) 11,260 11,757 (540) (1,406) (47) (729) (38) – 128 (116) 9,009 47 Topps Tiles Plc Annual Report and Financial Statements 2006 NOTES TO THE GROUP ACCOUNTS continued For the 52 weeks ended 30 September 2006 10 DIVIDENDS Amounts recognised as distributions to equity holders in the period: Final dividend paid for the 52 weeks ended 1 October 2005 of 6.00p (2004: 6.00p) per ordinary share Interim dividend paid for the 26 weeks ended 1 April 2006 of 3.50p (2005: 3.50p) Over provision in respect of the prior period final dividend 2006 £’000 13,596 7,933 (15) 21,514 2005 £’000 13,593 7,983 (67) 21,509 Proposed final dividend for the 52 weeks ended 30 September 2006 of 6.90p (2005: 6.00p) per share 11,734 13,596 The proposed final dividend is subject to approval by shareholders at the annual general meeting and has not yet been included as a liability in these financial statements. 11 EARNINGS PER SHARE The calculation of earnings per share is based on the earnings for the financial period attributable to equity shareholders and the weighted average number of ordinary shares as follows: 2006 Number of shares 2005 Number of shares Weighted average number of shares For basic earnings per share Weighted average of shares under option For diluted earnings per share 217,252,872 954,715 226,351,825 1,678,222 218,207,587 228,030,047 The reduction in the weighted average number of shares relates to the 3 for 4 reverse share split during August 2007. 12 GOODWILL Cost and carrying amount 2006 £’000 551 2005 £’000 551 The cost and carrying amount of Goodwill at 2 October 2004 was £551,000. The Group tests goodwill annually for impairment, or more frequently if there are indications that goodwill might be impaired. The recoverable amounts are determined from value in use calculations. The key assumptions for the value in use calculations are those regarding the discount rates, growth rates and expected changes to selling prices and direct costs during the period. Management estimates discount rates using pre-tax rates that reflect current market assessments of the time value of money. The growth rates are based on industry growth forecasts. Changes in selling prices and direct costs are based on past practices and expectations of future changes in the market. The Group prepares cash flow forecasts derived from the most recent financial budgets approved by management for the next five years and extrapolates cash flows for the following five years based on an estimated growth rate of 2 per cent. This rate does not exceed the average long-term growth rate for the relevant markets. 48 Topps Tiles Plc Annual Report and Financial Statements 2006 13 PROPERTY, PLANT AND EQUIPMENT Land and buildings Cost At 3 October 2004 Additions Disposals At 2 October 2005 Additions Disposals At 30 September 2006 Accumulated depreciation and impairment At 3 October 2004 Charge for the year Eliminated on disposals At 2 October 2005 Charge for the year Eliminated on disposals At 30 September 2006 Freehold £’000 11,204 3,548 (2,342) 12,410 4,333 (261) 16,482 278 203 (57) 424 213 (49) 588 Short leasehold £’000 Fixtures and fittings £’000 Motor vehicles £’000 1,293 88 – 1,381 1,016 – 2,397 700 81 - 781 121 - 902 25,548 5,067 (117) 30,498 3,705 (1,321) 32,882 8,127 3,015 32 11,174 3,355 (1,047) 13,482 19,400 19,324 346 88 (185) 249 22 (160) 111 50 64 (27) 87 29 (73) 43 68 162 Total £’000 38,391 8,791 (2,644) 44,538 9,076 (1,742) 51,872 9,155 3,363 (52) 12,466 3,718 (1,169) 15,015 36,857 32,072 Carrying amount at 30 September 2006 At 2 October 2005 15,894 11,986 1,495 600 Freehold land and buildings include £437,310 (2005: £372,466) of assets under construction and £4,104,100 of land (2005 - £2,160,000) on which no depreciation has been charged in the current period. Cumulative finance costs capitalised included in the cost of tangible fixed assets amount to £408,000 (2005: £370,000) for the Group. 14 SUBSIDIARIES A list of the significant subsidiaries, including the name, country of incorporation and proportion of ownership interest is given in note 3 to the Company’s separate financial statements. 15 JOINT VENTURE UNDERTAKING Aggregated amounts relating to Joint Venture. Total assets Total liabilities Net assets Profit Amounts recognised in the income statement and in the balance sheet are as follows: Operating profit Less: interest Less: tax Share of results of joint venture Exchange rate difference taken to reserves Movement in Joint Venture interest Interest in joint venture 2006 £’000 2,952 (2,390) 562 112 124 (35) (31) 58 (2) 56 281 2005 £’000 2,392 (1,942) 450 26 56 (27) (16) 13 – 13 225 49 NOTES TO THE GROUP ACCOUNTS continued For the 52 weeks ended 30 September 2006 16 OTHER FINANCIAL ASSETS Trade and other receivables Amounts falling due within one year: Amounts receivable for the sale of goods Loan to joint venture Other debtors and prepayments Amounts falling due after more than one year: Loan to joint venture Topps Tiles Plc Annual Report and Financial Statements 2006 2006 £’000 417 107 5,004 5,528 2005 £’000 238 – 3,833 4,071 – 115 The directors consider that the carrying amount of trade and other receivables approximates to their fair value. Credit risk The Group’s principal financial assets are bank balances and cash and trade receivables. The Group has no significant concentration of credit risk. Bank and cash balances Bank and cash balances comprise cash held by the Group and short term bank deposits (with associated right of set off). The carrying amount of these assets approximates their fair value. A breakdown of significant bank and cash balances by currency is as follows: Sterling US Dollar Euro Total bank balances and cash 17 OTHER FINANCIAL LIABILITIES Trade and other payables Amounts falling due within one year: Trade payables Other payables Accruals and deferred income Amounts falling due after more than one year Other payables 2006 £’000 14,186 (73) 2,420 16,533 2006 £’000 13,814 5,261 6,762 25,837 2005 £’000 27,940 164 (275) 27,829 2005 £’000 14,389 4,114 4,635 23,138 – 3,394 Trade payables and accruals principally comprise amounts outstanding for trade purchases and ongoing costs. The average credit period taken for trade purchases is 41 days (2005: 44 days). The Directors consider that the carrying amount of trade payables approximates to their fair value. 50 Topps Tiles Plc Annual Report and Financial Statements 2006 18 BANK LOANS Bank loans (all sterling) The borrowings are repayable as follows: On demand or within one year In the second year In the third to fifth year After five years Less: total issue costs Less: amount due for settlement within 12 months (shown under current liabilities) Issue costs to be amortised within 12 months Amount due for settlement after 12 months The weighted average interest rates paid were as follows: Loans 2006 £’000 115,500 5,000 5,000 106,000 – 116,000 (500) 115,500 (5,000) 100 110,600 2006 % 5.4879 2005 £’000 6,000 – 6,000 – – 6,000 – 6,000 – – 6,000 2005 % 5.2885 The Group borrowings are arranged at floating rates, thus exposing the Group to cash flow interest rate risk. The Group has one principal bank loan of £116 million taken out on 1 August 2006. Repayments commence on 28 July 2007 and will continue until 28 July 2011. The loan is secured by upstream guarantees provided by certain subsidiaries. The LIBOR margin shall be adjusted between 0.5% and 0.7% dependent on the Group’s level of compliance with a net debt to EBITDA covenant. At 30 September 2006, the Group had available £6.5 million (2005: £4.5 million) of undrawn committed banking facilities. Disclosures in respect of financial instruments are given under the requirements of IAS 32. The Group has taken advantage of the exemption from applying IAS 32 in respect of the comparative period, the year ended 1 October 2005, although disclosures have been given under that standard for information purposes. Accordingly, disclosures in respect of that year are given below under the relevant UK GAAP standard; FRS 13. The directors’ report on pages 26 and 27 summarises the objectives and policies for holding or issuing financial instruments and similar contracts, and the strategies for achieving those objectives have been followed during the period. The numerical disclosures in this note deal with financial assets and financial liabilities as defined in FRS 13 Derivatives and Other Financial Instruments: Disclosures. Certain financial assets such as investments in subsidiaries and joint ventures are excluded from the scope of these disclosures As permitted by FRS 13, short term debtors and creditors have also been excluded from the disclosures, other than the currency disclosures. 51 NOTES TO THE GROUP ACCOUNTS continued For the 52 weeks ended 30 September 2006 18 BANK LOANS continued a) Interest rate profile The currency profile of the Group’s financial assets is as follows: Sterling Euro Dollar Topps Tiles Plc Annual Report and Financial Statements 2006 1 October 2005 £’000 27,940 164 (275) 27,829 Financial assets comprise short term cash deposits with major United Kingdom clearing banks (with associated right of off-set) and deposits placed on money markets at call. The financial assets earn floating rates of interest based upon bank base rates. The interest rate profile of the Group’s financial liabilities is as follows: Sterling – Borrowings Loan 1 Floating rate 1 October 2005 £’000 % 6,000 0.75 The interest rate on floating rate financial liabilities indicates the excess over bank base rate. 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 1 October 2005. 1 October 2005 Contract delivery 3 Oct 2005 3 Oct 2005 1 Nov 2005 1 Nov 2005 1 Dec 2005 1 Dec 2005 3 Jan 2006 1 Feb 2006 1 Mar 2006 4 Apr 2006 2 May 2006 Initial contract value £’000 650 250 650 650 650 650 650 650 650 650 650 6,750 Currency Euro USD Euro Euro Euro Euro Euro Euro Euro Euro Euro 2005 £’000 6,000 6,000 Contract 1 Contract 2 Contract 3 Contract 4 Contract 5 Contract 6 Contract 7 Contract 8 Contract 9 Contract 10 Contract 11 c) Maturity of financial liabilities The maturity profile of the Group’s financial liabilities was as follows: In more than two years but not more than five years Total 52 Topps Tiles Plc Annual Report and Financial Statements 2006 18 BANK LOANS continued d) Borrowing facilities The Group had undrawn committed borrowing facilities, in respect of which all conditions precedent had been met, as follows: Expiring in one year or less Expiring in more than one year but not more than two years Expiring in more than two years End of period 2005 £’000 2,000 – 2,500 4,500 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 the period. 19 DERIVATIVE FINANCIAL INSTRUMENTS Currency derivatives The Group utilises currency derivatives to hedge significant future transactions and cash flows. The Group uses foreign currency forward contracts in the management of its exchange rate exposures. The contracts are denominated in US dollars and Euros. At the balance sheet date, the total notional amount of outstanding forward foreign exchange contracts that the Group has committed to are as below: Forward foreign exchange contracts 2006 £’000 6,050 2005 £’000 6,750 These arrangements are designed to address significant exchange exposures for the first half of 2007 and are renewed on a revolving basis as required. At 30 September 2006 the fair value liability of the group’s currency derivatives is £47,000 (2005: £18,000). These amounts are based on market value of equivalent instruments at the balance sheet date. Amounts of £29,000 have been charged to income in the year (2005: £18,000). 20 DEFERRED TAX The following are the major deferred tax liabilities/(assets) recognised by the Group and movements thereon during the current and prior reporting period. At 3 October 2004 Charged to income Charge to Equity At 2 October 2005 Credit to income Charge to equity At 30 September 2006 Accelerated tax depreciation £’000 Share based payments £’000 Exchange Rate differences £’000 1,864 481 – 2,345 (257) – 2,088 (852) (20) 500 (372) (20) (304) (696) – (8) – (8) (9) – (17) Rent free £’000 (168) 2 – (166) 24 – (142) Temporary differences arising in connection with the interest in joint ventures are insignificant. Total £’000 844 455 500 1,799 (262) (304) 1,233 53 Topps Tiles Plc Annual Report and Financial Statements 2006 NOTES TO THE GROUP ACCOUNTS continued For the 52 weeks ended 30 September 2006 21 CALLED-UP SHARE CAPITAL Authorised 240,00,000 (2005: 320,000,000) ordinary shares of 3.33p each (2005: 2.5p) Authorised 37,000,000 (2005 – nil) redeemable B shares of £0.54 each Authorised 124,890,948 (2005 – nil) irredeemable C shares of £0.001 each Authorised 105,109,052 (2005 – nil) deferred shares of £0.001 each Issued and fully-paid 170,056,840 (2005: 226,236,475) ordinary shares of 3.33p each (2005: 2.5p) Issued and fully paid 353,343 (2005: nil) irredeemable C shares of £0.001 each Issued and fully paid 105,109,052 (2005: nil) deferred shares of £0.001 each Total 2006 £’000 8,000 19,980 125 105 28,210 5,668 – 105 5,773 2005 £’000 8,000 – – – 8,000 5,655 – – 5,655 During the period the group announced a share reorganisation with shareholders given the option of receiving 1 redeemable B share of £0.54 or 1 irredeemable C share of £0.001 for every existing ordinary share held. The redeemable B shares were redeemable 2 weeks from issue at par. Those shareholders electing to receive C shares qualified for a special dividend of £0.54 1 week following the date of issue. Shareholders were able to opt out of the special dividend and retain the shares, which will be subject to compulsory purchase by the group between 1 January and 31 March 2007 for £0.54 per share. The C shares issued in place of B shares were subject to compulsory purchase by the group on 14 August 2006 for £0.54 per share. C shares on which special dividends were paid converted into deferred shares following the payment of the special dividend. The deferred shares carry no dividend, voting or other participation rights. On 1 August 2006 the group issued 37,000,000 redeemable B shares, which were subject to redemption for £0.54 per share and total consideration of £19,980,000 on 14 August 2006. On 1 August 2006 the group issued 189,676,020 irredeemable C shares. Shareholders representing 105,109,052 irredeemable C shares received a special dividend of £0.54 per share on 14 August 2006, for total consideration of £56,758,888. Shareholders representing 84,213,625 irredeemable C shares received these shares in place of B shares and these were subject to compulsory purchase by the company on 14 August 2006 for £0.54 per share and total consideration of £45,475,358. Shareholders representing 353,343 irredeemable C shares selected to opt out of the special dividend and these shares will be subject to compulsory buy back between 1 January and 31 March 2007 for £0.54 per share and total consideration of £190,805. On 31 July 2006 the group approved a 3 for 4 share consolidation in respect of the outstanding issued ordinary share capital of the group. Under the requirements of IAS 32 ‘Financial Instruments: Presentation’, the outstanding irredeemable C shares have been classified as a liability, as the compulsory buy back represents a contractual obligation for the group as issuer to deliver cash to the holders of the shares. 22 SHARE PREMIUM Balance at start of period Premium on issue of new shares Reverse share split of 3 for 4 Balance at end of period 2006 £’000 5,575 209 (5,253) 531 2005 £’000 4,889 686 – 5,575 During the period the issue of 9,375,926 redeemable B shares of 0.54p and 189,676,021 irredeemable C shares of 0.001p were capitalised against share premium. 54 Topps Tiles Plc Annual Report and Financial Statements 2006 23 MERGER RESERVE Balance at start and end of period 24 SHARE BASED PAYMENT RESERVE At start of period Share option charge At end of period 25 CAPITAL REDEMPTION RESERVE At start of period Buy back of 37,000,000 B shares at 0.54p Buy back of 84,213,625 C shares at 0.001p Treasury shares cancellation At end of period 26 RETAINED EARNINGS At 3 October 2004 Dividends paid Treasury Shares cancellation First time adoption of IAS 32 and 39 Deferred tax on sharesave scheme taken directly to equity Net profit for the period At 2 October 2005 Dividends paid Share buy back Exchange rate loss Deferred tax on sharesave scheme taken directly to equity Net profit for the period At 30 September 2006 2006 £’000 399 2006 £’000 100 66 166 2006 £’000 190 19,980 84 – 20,254 2005 £’000 399 2005 £’000 35 65 100 2005 £’000 137 – – 53 190 £’000 37,460 (21,509) (4,507) (17) (500) 30,182 41,109 (21,514) (137,322) (2) 304 27,804 (89,621) 55 Topps Tiles Plc Annual Report and Financial Statements 2006 NOTES TO THE GROUP ACCOUNTS continued For the 52 weeks ended 30 September 2006 27 FINANCIAL COMMITMENTS a) Capital commitments At the end of the period there were no capital commitments contracted (2005: £nil). b) Pension arrangements The Group operates separate defined contribution pension schemes for employees and Directors. The assets of the schemes 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 £259,000 (2005: £216,000). c) Lease commitments Minimum lease payments under operating leases recognised in income for the period were £14,998,000 (2005: £13,793,000). At the balance sheet date, the Group had outstanding commitments for future minimum lease payments under non-cancellable operating leases which fall due as follows: Operating leases which expire: - within 1 year - within 2 - 5 years - after 5 years 2006 2005 Land and buildings £’000 14,605 50,120 64,749 129,474 Other £’000 725 1,226 194 2,145 Land and buildings £’000 12,806 45,389 71,294 129,489 Other £’000 744 1,414 222 2,380 Operating lease payments primarily represent rentals payable by the Group for certain of it’s office and store properties. Leases are negotiated for an average term of 15 years and rentals are fixed for an average of 5 years. 28 SHARE BASED PAYMENTS Equity Settled share option scheme The Group operates 2 share option schemes in relation to Group employees. Options are exercisable at the middle market closing price for the working day prior to the date of grant and are exercisable 3 years from the date of grant if stated performance criteria have been met. Details of the share options outstanding during the period are as follows: Date of grant 26th January 2001 12th February 2002 Movements in share options are summarised as follows: Outstanding at beginning of period Exercised during the period Outstanding at end of period Exercisable at end of period Option price (p) Exercisable period No. of options outstanding 2006 2005 0.545p 0.54p 3 Years 3 Years 2006 Number of share options 541,665 119,530 422,135 422,135 2006 Weighted average exercise price 0.54 0.54 0.54 0.54 370,990 51,145 422,135 2005 Number of share options 1,601,980 1,060,315 541,665 541,665 460,020 81,645 541,665 2005 Weighted average exercise price 0.54 0.54 0.54 0.54 The weighted average share price at the date of exercise for options exercised in the period was 191 pence. The options outstanding at 30 September 2006 had a weighted averaged exercise price of 54 pence, and a weighted average remaining contractual life of 5 years. 56 Topps Tiles Plc Annual Report and Financial Statements 2006 28 SHARE BASED PAYMENTS continued The inputs to the Black-Scholes Model are as follows: Weighted average share price Weighted average exercise price Expected volatility Expected life Risk – free rate of interest Dividend yield - pence - pence - % - years - % - pence 2006 124.8 99.8 32.3 3 or 5 4.3 4.5 2005 108.7 87.0 35.9 3 or 5 4.2 4.0 Expected volatility was determined by calculating the historical volatility of the Group’s share price over the previous 3 years. The expected risk used in the model has been adjusted, based on management’s best estimate, for the effects of non-transferability, exercise restrictions and behavioural forces. The Group recognised total expenses of £66,000 (2005: £65,000) relating to equity deferred share based payment transactions. Other Share Based Payment Plans The employee share purchase plans are open to almost all employees and provide for a purchase price equal to the daily average market price on the date of grant, less 20%. The shares can be purchased during a two-week period each year. The shares so purchased are generally placed in the employee share savings plan for a 3 or 5 year period. 29 RELATED PARTIES S.K.M. Williams has the non-statutory role of President, advising on property matters and is a related party by virtue of his 9.2% share holding (15,718,950 ordinary shares) in the Group’s issued share capital. At 30 September 2006 S.K.M. Williams was the landlord of two properties leased to Multi Tile Limited, a trading subsidiary of Topps Tiles Plc, for £66,000 (2005 - £66,000). No amounts were outstanding at 30 September 2006 (2005: £nil). The lease agreements on both properties are operated on commercial arms length terms. His salary for the year in his role as President was £96,000 (2005: £48,000). Transactions between the company and it’s subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed in this note. There were no transactions between the Group and it’s joint venture in the period (2005: nil) and the loan receivable balance was £107,000 (2005: £115,000). 30 EVENTS AFTER THE BALANCE SHEET DATE On 2 October 2006 the Group acquired the remaining 50% shareholding in Topps Tiles Holdings BV for total consideration of £1.16 million made up of cash of £512,500 and 250,000 Topps Tiles Plc shares with a value of £647,500. The remaining 50% net assets acquired had an initial fair value of £281,000 and therefore goodwill of £879,000 will be recognised subject to any fair value or intangible asset adjustments. 57 Topps Tiles Plc Annual Report and Financial Statements 2006 NOTES TO THE GROUP ACCOUNTS continued For the 52 weeks ended 30 September 2006 31 EXPLANATION OF TRANSITION TO IFRS This is the first year that the Group has presented its financial statements under IFRS. The following disclosures are required in the year of transition. The last financial statements under UK GAAP were for the year ended 1 October 2005 and the date of transition was therefore 2 October 2004. Reconciliation of net assets at 2 October 2004 (date of transition to IFRS) UK GAAP 2 October 2004 £’000 Effect of transition to IFRS £’000 Restated under IFRS 2 October 2004 £’000 Non-current assets Goodwill Property Plant & Equipment Joint venture undertaking Current assets Inventories Trade and other receivables within one year Trade and other receivables after one year Cash and cash equivalents Total assets Current liabilities Trade and other payables Current tax liabilities Proposed dividend Other current liabilities Net current assets Non-current liabilities Deferred tax liabilities Total liabilities Net assets Equity Share capital Share premium Merger reserve Share Based Payment Reserve Treasury Shares Capital Redemption Reserve Retained Earnings Total Equity 58 551 29,236 193 29,980 24,373 3,809 110 29,624 57,916 87,896 (18,758) (3,942) (13,593) (9,159) – 551 – 29,236 – 193 – – – – – – – 29,980 24,373 3,809 110 29,624 57,916 87,896 – – (18,758) (3,942) 13,593 – (9,719) (560) (45,452) 13,033 (32,419) 12,464 13,033 25,497 (7,571) (1,864) 1,020 – (7,571) (844) (54,887) 33,009 5,673 4,889 (399) – (733) 137 23,442 33,009 14,053 14,053 – – – 35 – – 14,018 14,053 (40,834) 47,062 5,673 4,889 (399) 35 (733) 137 37,460 47,062 Topps Tiles Plc Annual Report and Financial Statements 2006 31 EXPLANATION OF TRANSITION TO IFRS continued Reconciliation of Group income statement for the 52 weeks ended 1 October 2005 Revenue Profit from operations Share of joint venture profit from operations Group and share of joint venture profit from operations Other gains and losses Investment income Profit before taxation Before profit on disposal of property, plant and equipment Profit on disposal of property, plant and equipments Taxation Profit for the period UK GAAP £’000 173,326 36,834 56 36,890 1,700 642 37,532 1,700 39,232 (9,043) 30,189 Effect of transition to IFRS £’000 – (25) (43) (68) – 27 (41) - (41) 34 (7) Restated under IFRS £’000 173,326 36,809 13 36,822 1,700 669 37,491 1,700 39,191 (9,009) 30,182 59 Topps Tiles Plc Annual Report and Financial Statements 2006 NOTES TO THE GROUP ACCOUNTS continued For the 52 weeks ended 30 September 2006 31 EXPLANATION OF TRANSITION TO IFRS continued Reconciliation of net assets at 1 October 2005 UK GAAP £’000 517 32,072 225 115 32,929 25,338 4,071 27,829 57,238 Effect of transition to IFRS £’000 Restated under IFRS £’000 34 – – – 34 – – – – 551 32,072 225 115 32,963 25,338 4,071 27,829 57,238 90,167 34 90,201 (18,503) (3,640) (13,576) (4,056) (39,775) 17,463 (9,394) (2,345) (51,514) 38,653 5,655 5,575 (399) – – 190 27,632 38,653 – – 13,576 (579) (18,503) (3,640) – (4,635) 12,997 (26,778) 12,997 30,460 – 546 (9,394) (1,799) 13,543 13,577 – – – 100 – – 13,477 13,577 (37,971) 52,230 5,655 5,575 (399) 100 – 190 41,109 52,230 Non-current assets Goodwill Property Plant & Equipment Joint venture undertaking Trade and other receivables Current assets Inventories Trade and other receivables within one year Cash and cash equivalents Total assets Current liabilities Trade and other payables Current tax liabilities Proposed dividend Other current liabilities Net current assets Non-current liabilities Deferred tax liabilities Total liabilities Net assets Equity Share capital Share premium Merger reserve Share Based Payment Reserve Treasury Shares Capital Redemption Reserve Retained Earnings Total Equity 60 Topps Tiles Plc Annual Report and Financial Statements 2006 31 EXPLANATION OF TRANSITION TO IFRS continued a) IFRS 2 Share Based Payment IFRS 2 requires a charge to be recognised in the income statement for share based payments, based on the fair value of the option or award at the date of grant, which is expensed over the vesting period of the option or award. Topps has applied this only to options or schemes awarded after 7 November 2002 and therefore this only includes employee share save schemes as no executive share options were granted after this date. The cumulative effect to 1 October 2005 is a charge of £100,000 to the Retained Earnings. b) IFRS 3 Goodwill and Business Combinations Topps has elected to take the exemption available under IFRS 1 not to apply IFRS 3 retrospectively to Goodwill; accordingly the value of Goodwill has been frozen at the carrying value at 2 October 2004. Under IFRS Goodwill should not be amortised but is subject to an impairment review annually or more frequently if events or changes occur which may significantly affect the value. The effect of the change to IFRS was to reverse the charge of £34,000 to the income statement for the year ended 1 October 2005 thereby increasing income for the year and retained earnings by this amount. c) IAS 10 Events after the Balance Sheet date IAS 10 requires that dividends should now be recognised only when they are declared and approved rather than being accrued for in the period to which they relate as the liability does not represent a present obligation as defined by IAS 37 Provisions, Contingent Liabilities and Contingent Assets. On transition to IFRS £13,593,000 at 2 October 2004 was credited to retained earnings. In addition, dividends are to be shown as a movement directly in equity instead of through the Income Statement. d) IAS 17 Leases Under UK GAAP operating lease incentives in respect of rent free periods were recognised in the profit and loss account over the period to the date of the first rent review. IAS 17 states that the incentives must be recognised over the length of the lease. The effect of this is that Topps is carrying an increased amount of £554,000 for deferred lease incentives as at 1 October 2005 and a charge of £6,000 for the 52 weeks ended 1 October 2005. e) IAS 31 Jointly Controlled Entities IAS 31 requires that Topps should recognise in the financial statements it’s share of the joint assets, any liabilities that it has incurred directly and its share of any liabilities incurred jointly with the other entities. Income from the sale or use of it’s share of the output of it’s jointly controlled entity, the share of its expenses and expenses incurred directly in respect of its interest in the joint venture are presented after tax in one single line in the income statement. f) IAS 32 & 39 Financial Instruments: Disclosure and Presentation & Recognition and Measurement Profits and losses on financial instruments are recognised in the Income Statement as they arise. In accordance with IFRS 1, comparative information has not been restated for the impact of IAS 32 and IAS 39, but the Group has only adopted these standards to apply from 1 October 2005. 61 INDEPENDENT AUDITORS’ REPORT - COMPANY ACCOUNTS Topps Tiles Plc Annual Report and Financial Statements 2006 TO THE MEMBERS OF TOPPS TILES PLC We have audited the individual Company financial statements of Topps Tiles Plc for the 52 weeks ended 30 September 2006 which comprise the balance sheet and the related notes numbered 1 to 9. These financial statements have been prepared under the accounting policies set out therein. We have reported separately on the Group financial statements of Topps Tiles Plc for the 52 weeks ended 30 September 2006. 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 law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice). Our responsibility is to audit the individual Company financial statements in accordance with relevant United Kingdom legal and regulatory requirements and International Standards on Auditing (UK and Ireland). We report to you our opinion as to whether the financial statements give a true and fair view in accordance with the relevant financial reporting framework and are properly prepared in accordance with the Companies Act 1985. We also report to you if, in our opinion, the information given in the directors’ report is consistent with the financial statements. We also report to you 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 other transactions is not disclosed. We read the directors’ report and the other information contained in the annual report for the above period 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 International Standards on Auditing (UK and Ireland) 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.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 Company's circumstances, consistently applied and adequately disclosed. We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the financial statements 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. OPINION In our opinion: ■ the individual Company financial statements give a true and fair view, in accordance with United Kingdom Generally Accepted Accounting Practice, of the state of the Company's affairs as at 30 September 2006; ■ the financial statements have been properly prepared in accordance with the Companies Act 1985; and ■ the information given in the directors’ report is consistent with the individual Company financial statements. Deloitte & Touche LLP Chartered Accountants and Registered Auditors Manchester 28 November 2006 62 Topps Tiles Plc Annual Report and Financial Statements 2006 COMPANY BALANCE SHEET As at 30 September 2006 Fixed assets Investments Current assets Debtors 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 Net assets Capital and reserves Called-up share capital Share premium Share based payment reserve Special reserves Capital redemption reserve Other reserve Profit and loss account Equity shareholders’ funds Notes 3 4 4 5 6 7 8 8 8 8 8 8 2006 £’000 3,227 3,227 13 221,200 28,094 249,307 Restated 2005 £’000 15,122 15,122 76,209 6,200 – 82,409 (4,540) (30,618) 244,767 51,791 247,994 – 247,994 5,773 531 166 – 20,254 6,200 215,070 247,994 66,913 (3,394) 63,519 5,655 5,575 100 14,917 190 6,200 30,882 63,519 The financial statements were approved by the Board of Directors on 28 November 2006 and signed on its behalf by: ND Ounstead Director A Liggett Director 63 Topps Tiles Plc Annual Report and Financial Statements 2006 NOTES TO THE COMPANY ACCOUNTS For the 52 weeks ended 30 September 2006 1 BASIS OF ACCOUNTING The separate financial statements of the Company are presented as required by the Companies Act 1985. They have been prepared under the historical cost convention and in accordance with United Kingdom Accounting Standards and law. The principal accounting policies are summarised below. They have all been applied consistently throughout the year and the preceding year with the exception of FRS 20 and FRS 21 which have been applied for the first time in this reporting period and prior period balances have been restated accordingly. The company issues equity settled share based payments to certain employees. Equity settled share based payments are measured at fair value at the date of grant. The fair value determined at the grant date of the share based payment is expensed on a straight line basis over the vesting period, based on the company’s estimate of shares that will eventually vest. Fixed asset investments are shown at cost less provision for impairment. The company has taken advantage of the exemption in FRS 8 from disclosing transactions with other members of the Group. 2 PROFIT FOR THE YEAR As permitted by section 230 of the Companies Act 1985 the company has elected not to present its own profit and loss account for the year. Topps Tiles Plc reported a loss after tax for the financial year ended 30 September 2006 of £306,402,000 (2005: £6,239,000 profit). The auditor’s remuneration for services to the company was £5,000. (2005: £5,000). The company had no other employees other than the directors (2005: same), their remuneration is detailed on page 32. 3 FIXED ASSET INVESTMENTS At 2 October 2005 Additions Disposal At 30 September 2006 Joint venture £’000 482 - - 482 Shares £’000 14,640 2,745 (14,640) 2,745 Total £’000 15,122 2,745 (14,640) 3,227 The additions in the period relate to the company’s investment in Topps Tiles Holdings Limited, a subsidiary entity. The disposal in the period relates to the sale of the company’s investment in subsidiary undertakings to Topps Tiles Holdings Limited for total consideration of £327,745,000 made up of cash of £110,000,000, inter company debt of £215,000,000 and issued share capital of £2,745,000. The profit on disposal was £313,105,000. The Company has investments in the following subsidiaries and joint ventures which principally affected the profits or net assets of the Group. To avoid a statement of excessive length, details of investments which are not significant have been omitted. Subsidiary undertaking Topalpha Limited* Multi Tile Limited Topps Tiles Holdings Topps Tiles (UK) Limited Topps Tiles Distribution Ltd Joint venture undertaking % of issued shares held Principal activity 100% 100% 100% 100% 100% Property management and investment Retail and wholesale of ceramic tiles, wood flooring and related products Intermediate holding company. Retail and wholesale of ceramic tiles, wood flooring and related products Wholesale and distribution of ceramic tiles, wood flooring and related products. Topps Tiles Holdings BV* 50% Retail and wholesale of ceramic tiles, wood flooring and related products *held directly by Topps Tiles Plc The investments are represented by ordinary shares. All 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. 64 Topps Tiles Plc Annual Report and Financial Statements 2006 4 DEBTORS Amounts falling due within one year: Prepayments and accrued income Amounts owed by subsidiary undertaking Amounts falling due after one year: Amounts owed by subsidiary undertaking 5 CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR Bank loans and overdrafts Trade creditors Amounts owed to Group companies Accruals and deferred income 6 CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR Accruals and deferred income 7 CALLED UP SHARE CAPITAL Authorised 240,00,000 (2005: 320,000,000) ordinary shares of 3.33p each (2005: 2.5p) Authorised 37,000,000 (2005 – nil) redeemable B shares of £0.54 each Authorised 124,890,948 (2005 – nil) irredeemable C shares of £0.001 each Authorised 105,109,052 (2005 – nil) deferred shares of £0.001 each Issued and fully-paid 170,056,840 (2005: 226,236,475) ordinary shares of 3.33p each (2005: 2.5p) Issued and fully paid 353,343 (2005: nil) irredeemable C shares of £0.001 each Issued and fully paid 105,109,052 (2005: nil) deferred shares of £0.001 each Total 2006 £’000 13 – 13 221,200 221,200 2006 £’000 – 137 3,772 631 4,540 2006 £’000 – 2006 £’000 8,000 19,980 125 105 28,210 5,668 – 105 5,773 2005 £’000 – 76,209 76,209 6,200 6,200 2005 £’000 30,097 160 – 361 30,618 2005 £’000 3,394 2005 £’000 8,000 – – – 8,000 5,655 – – 5,655 During the period the Group allotted 489,370 (2005: 1,413,585) ordinary shares with a nominal value of £13,000 (2005: £35,000) under share option schemes for an aggregate cash consideration of £222,000 (2005: £721,000). The Company has one class of ordinary shares which carry no rights to fixed income. During the period the group announced a share reorganisation with shareholders given the option of receiving 1 redeemable B share of £0.54 or 1 irredeemable C share of £0.001 for every existing ordinary share held. The redeemable B shares were redeemable 2 weeks from issue at par. 65 Topps Tiles Plc Annual Report and Financial Statements 2006 NOTES TO THE COMPANY ACCOUNTS continued For the 52 weeks ended 30 September 2006 7 CALLED UP SHARE CAPITAL continued Those shareholders electing to receive C shares qualified for a special dividend of £0.54 1 week following the date of issue. Shareholders were able to opt out of the special dividend and retain the shares, which will be subject to compulsory purchase by the group between 1 January and 31 March 2007 for £0.54 per share. The C shares issued in place of B shares were subject to compulsory purchase by the group on 14 August 2006 for £0.54 per share. C shares on which special dividends were paid converted into deferred shares following the payment of the special dividend. Deferred shares carry no dividend, voting or other participation rights. On 1 August 2006 the group issued 37,000,000 redeemable B shares, which were subject to redemption for £0.54 per share and total consideration of £19,980,000 on 14 August 2006. On 1 August 2006 the group issued 189,676,020 irredeemable C shares. Shareholders representing 105,109,052 irredeemable C shares received a special dividend of £0.54 per share on 14 August 2006, for total consideration of £56,758,888. Shareholders representing 84,213,625 irredeemable C shares received these shares in place of B shares and these were subject to compulsory purchase by the company on 14 August 2006 for £0.54 per share and total consideration of £45,475,358. Shareholders representing 353,343 irredeemable C shares selected to opt out of the special dividend and these shares will be subject to compulsory buy back between 1 January and 31 March 2007 for £0.54 per share and total consideration of £190,805. On 31 July 2006 the group approved a 3 for 4 share consolidation in respect of the outstanding issued ordinary share capital of the group. Under the requirements of IAS 32 ‘Financial Instruments: Presentation’, the outstanding irredeemable C shares have been classified as a liability, as the compulsory buy back represents a contractual obligation for the Group as issuer to deliver cash to the holders of the shares. 8 RESERVES At 2 October 2005 Premium on issue of new shares Share Buy Back Share based payment reserve movement Retained profit for the period At 30 September 2006 Share premium £’000 5,575 209 (5,253) – – 531 Special reserve £’000 14,917 – (14,917) – – – Capital redemption reserve £’000 190 – 20,064 – – 20,254 Other reserves £’000 6,200 – – – – 6,200 Share based payment reserve £’000 100 – – 66 – 166 Profit and loss account £’000 30,882 – (122,214) – 306,402 215,070 During the period the issue of 9,375,926 redeemable B shares of 0.54p and 189,676,021 irredeemable C shares of 0.001p were capitalised against share premium. During the period the issue of 27,624,074 redeemable B shares of 0.54p were capitalised against the special reserve. During the period the buyback of 37,000,000 redeemable B shares of 0.54p and 84,213,625 irredeemable C shares of 0.001p were credited to the Capital Redemption Reserve. The Directors consider £203,106,000 of the profit and loss account reserves not to be distributable at 30 September 2006 due to them arising on an unrealised gain on the disposal of subsidiary companies. At 30 September 2006, the Directors consider the other reserve of £6,200,000 to remain non distributable. 66 Topps Tiles Plc Annual Report and Financial Statements 2006 9 PRIOR YEAR ADJUSTMENT The Company’s accounting policies for share based payments and dividends were changed during the period in order to implement FRS 20 – Share Based Payments and FRS 21 – Events after the Balance Sheet date. The comparative figures in the primary statements and notes have been restated to reflect the new policies. The effect of the changes in policies are summarised below. Profit and loss account Share Based Payments Dividends (Decrease) / increase in profit for the period Balance Sheet Dividend payable Share Based Payment reserves P&L Reserve (Decrease) / increase in Net Assets FIVE YEAR RECORD Group revenue Operating profit Profit before taxation Shareholders’ funds Basic earnings per share1 Dividend per share1 Dividend cover Average number of employees Share price (period end)1 1 adjusted for share sub-division of 5:1 in May 2004. 2006 £’000 (66) (1,862) (1,928) (1,862) 166 (166) (1,862) 2005 £’000 (100) 13,596 13,496 13,596 100 13,496 13,596 UK GAAP Proforma 52 weeks ended 27 September 2003 Unaudited £’000 IFRS 53 weeks ended 2 October 2004 £’000 52 weeks ended 1 October 2005 £’000 52 weeks ended 30 September 2006 £’000 118,897 157,612 173,326 18,569 18,888 30,822 5.82p 3.48p 1.67 1,176 85.4p 32,548 33,794 47,062 11.30p 8.00p 1.41 1,327 178.9p 36,822 39,191 52,230 13.33p 9.50p 1.41 1,513 172.0p 180,180 38,869 39,064 (63,296) 12.80p 10.40p 1.41 1,582 259.0p 52 weeks ended 1 June 2002 £’000 91,026 11,660 11,516 23,824 3.58p 1.43p 2.5 1,070 54.8p 67 NOTICE OF ANNUAL GENERAL MEETING Topps Tiles Plc Annual Report and Financial Statements 2006 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 Wednesday 10 January 2007 at 10.30 a.m. for the following purposes: Ordinary business 1 To receive and adopt the Company’s Annual Report and Financial Statements for the financial period ended 30 September 2006 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 3 4 5 6 7 8 To declare a final dividend of 6.90 pence per Ordinary Share for the financial period ended 30 September 2006. To re-appoint Nicholas Ounstead as a Director of the Company. To re-appoint Matthew Williams (who has been appointed since the last AGM) as a Director of the Company. To re-appoint Alan McIntosh as a Director of the Company. To re-appoint Victor Watson who reached the age of 78 years on 26 September 2006, as a Director of the Company. 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 the Annual Report and Financial Statements are laid before the Company at a remuneration to be determined by the Directors. To approve the Directors’ Remuneration Report for the financial period ended 30 September 2006 as set out in the Annual Report and Financial Statements for that period. Special business To consider and, if thought fit, to pass the resolutions set out below which, in the case of Resolution 9 will be proposed as an Ordinary Resolution and, in the case of Resolutions 10 and 11 will be proposed as Special Resolutions. 9 THAT the Directors of the Company be and they are generally and unconditionally authorised for the purposes of and pursuant to Section 80 of the Companies Act 1985 (the “Act”) to exercise all the powers of the Company to allot relevant securities (within the meaning of that section) up to an aggregate nominal amount of £1,889,510 (in substitution for 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, if earlier, 15 months from the date of the passing of this resolution, 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. 10 THAT subject to and conditional on the passing of Resolution 9 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) wholly for cash pursuant to the general authority and power conferred by Resolution 9 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 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 of 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 (b) the allotment (otherwise than pursuant to paragraph (a) above) of equity securities up to an aggregate nominal amount of the greater of £283,429 or 5% of the issued ordinary share capital of the Company, and shall expire (unless previously revoked or extended by the Company in general meeting) at the conclusion of the next Annual General Meeting of the Company after the passing of this resolution or, if earlier, 15 months from the date of the passing of this resolution, save that the Company may before such expiry make an offer or agreement which would or might require equity securities to be allotted after such expiry and the Directors may allot equity securities in pursuant of any such offer of agreement notwithstanding that the power conferred by this resolution has expired. 11 THAT the Company be generally and unconditionally authorised for the purposes of Section 166 of the Act to make one or more market purchases (within the meaning of Section 163(3) of the Act) of Ordinary Shares of 31⁄3p each in the capital of the Company (“Ordinary Shares”) provided that: (a) the maximum number of Ordinary Shares hereby authorised to be purchased is 25,338,618 (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 31⁄3p; (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; 68 Topps Tiles Plc Annual Report and Financial Statements 2006 (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 or contracts for the purchase of Ordinary Shares under this authority before the expiry of such 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 3 4 5 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, Proxy Department, PO Box 25, Beckenham, Kent BR3 4BR, no later than 48 hours before the time appointed for the holding of the Annual General Meeting. A proxy is not entitled to speak at the meeting except to demand a poll, and may vote only when a poll is taken. 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. 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 9 January 2007 (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 9 January 2007 (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. 6 CREST members who wish to appoint a proxy or proxies by utilising the CREST electronic proxy appointment service may do so for the Annual General Meeting and any adjournment(s) thereof by utilising the procedures described in the CREST Manual. CREST Personal Members or other CREST sponsored members, and those CREST members who have appointed a voting service provider(s), should refer to their CREST sponsor or voting service provider(s), who will be able to take the appropriate action on their behalf. In order for a proxy appointment made by means of CREST to be valid, the appropriate CREST message (a “CREST” Proxy Instruction”) must be properly authenticated in accordance with CRESTCo’s specifications and must contain the information required for such instructions, as described in the CREST Manual. The message must be transmitted so as to be received by the issuer’s agent (ID : RA10) by the latest time(s) for receipt of proxy appointments specified in the notice of meeting. For this purpose, the time of receipt will be taken to be the time (as determined by the timestamp applied to the message by the CREST Applications Host) from which the issuer’s agent is able to retrieve the message by enquiry to CREST in the manner prescribed by CREST. After this time, any change of instructions to proxies appointed through CREST should be communicated to the appointee through other means. CREST members and, where applicable, their CREST sponsors or voting service providers should note that CRESTCo does not make available special procedures in CREST for any particular messages. Normal system timings and limitations will therefore apply in relation to the input of CREST Proxy Instructions. It is the responsibility of the CREST member concerned to take (or, if the CREST member is a CREST personal member or sponsored member or has appointed a voting service provider(s), to procure that his CREST sponsor or voting service provider(s) take(s)) such action as shall be necessary to ensure that a message is transmitted by means of the CREST system by any particular time. In this connection, CREST members and, where applicable, their CREST sponsors or voting service providers are referred, in particular, to those sections of the CREST Manual concerning practical limitations of the CREST system and timings. The Company may treat as invalid a CREST Proxy Instruction in the circumstances set out in Regulation 35(5)(a) of the Uncertificated Securities Regulations 2001. 7 The following documents are available for inspection by members at the registered office of the Company (except Bank Holidays) during the normal business hours and at the place of the meeting 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 including the terms and conditions of appointment of the non-executive directors. A. Liggett Company Secretary 28 November 2006 Registered Office: Thorpe Way Grove Park Enderby Leicestershire LE19 1SU Registered No: 3213782 69 Topps Tiles Plc Annual Report and Financial Statements 2006 EXPLANATORY NOTES TO THE NOTICE OF ANNUAL GENERAL MEETING Notes 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 10 January 2007 at 10.30a.m. 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 other resolutions: Ordinary Business Resolution 2 Final dividend A final dividend of 6.90 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 5 January 2007. Subject to approval by the Ordinary Shareholders at the Annual General Meeting, the dividend will be paid on 31 January 2007. An interim dividend of 3.50 pence per Ordinary Share was paid on 30 June 2006. This gives a total dividend level of 10.40 pence per Ordinary Share for the 52 week period to 30 September 2006. Resolutions 3, 4, 5 and 6 Re-election of Directors N. D. Ounstead, A. McIntosh and V.H. Watson are the Directors retiring by rotation this year and they offer themselves for re-election and M.T.M. Williams offers himself for re-election as a new appointment to the Board. 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 78 retires and offers himself for re-election annually. Brief biographical details about the Directors standing for re-election appear on pages 20 and 21 of the Annual Report and Financial Statements. Special notice of the Intention to propose the resolution to re-elect Victor Watson has been duly given as required by sections 379 and 293(5) of the Companies Act 1985. Special Business Resolutions 9 and 10 Appointment of authority to issue shares and the disapplication of statutory rights of pre-emption Resolution 9: 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 9 will be put to members as special business to authorise the Directors to allot 56,685,356 Ordinary Shares with an aggregate value of £1,889,510 out of the Company’s unissued share capital representing approximately but no more than 33.3% of the Company’s current issued share capital (excluding shares held in treasury). The Company currently holds no Ordinary Shares 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 10: seeks to obtain power under Section 95 of the Act to enable the Directors to allot, for cash, shares with an aggregate nominal value of £283,429 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. Resolution 11 Authority to purchase Ordinary Shares At the Annual General Meeting, Ordinary Shareholders are being invited under Resolution 11 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 2008 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 require 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 31⁄3p 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 11 shall be utilised in respect of employee share options as they are exercised. As at 28 November 2006, there were options to subscribe for 1,255,378 equity shares outstanding under various schemes representing approximately 0.74% of the current issued share capital of the Company. If the authority sought by Resolution 11 was exercised in full, the number of outstanding options would represent approximately 0.87% of the issued share capital following the repurchase of shares. 70 Topps Tiles Plc Annual Report and Financial Statements 2006 FINANCIAL CALENDAR KEY DATES Annual General Meeting and first quarter trading update > 10 January 2007 Final dividend payable > 31 January 2007 2006/07 interim results announcement 2006/07 interim dividend payable Third quarter trading update > May 2007 > June 2007 > July 2007 2006/07 full year results announcement > November 2007 71 Topps Tiles Plc Annual Report and Financial Statements 2006 THINK AS ONE THE TEAM Alvin Chinyanga Alvin Lapao Amadou Janneh Amanda Gordon Amanda Green Amanda Hullett Amar Mohammed Ameen Iqbal Amin Ladhu Amy Cook Andre Van Schalkwyk Andrea Speed Andres Van Dijk Andrew Baillie Andrew Barker Andrew Carlo Andrew Clay Andrew Clottey Andrew Collins Andrew Cox Andrew Curr Andrew Curtis Andrew Davis Andrew Govan Andrew Green Andrew Hanson Andrew Hastings Andrew Higham Andrew Hill Andrew Jones Andrew Keattch Andrew Kerr Andrew Liggett Andrew Lindley Andrew Middleton Andrew Moore Andrew Parnell Andrew Phillips Andrew Scorgie Andrew Ward Andrew Warwick Andrew Waterfield Andrew Wathan Andrew Wheat Andrew Whiteley Andrew Williams Andrew Wood Andrew Woolley Andrew Young Andy Bird Andy Playfoot Andy Shaw Angela Doolan Angela Harrison Angela Tremelling Anil Tandon Anna Timney Anne Lloyd Anne-Marie Carpenter Annette Harris Annmarie Malone Anson Jailal Anthony Bland Anthony Bradford Anthony Christopher Anthony Cox Anthony Gilbert Anthony Gregory Anthony Harris Anthony Humphrey Anthony Linsell Anthony Molyneux Anthony Routh Anthony Winton Antony Beazer Antony Belham Antony Gilpin Antony Parker Antony Plant Anub Varghese Anwar Marshall Arnold Harrison Arnold Willaims Arshad Syed Ashleigh Mackinnon Ashley Dube Ashley Jordan Ashley Wale Astone Davids Audley Hall Augustine Cairney B Bally Summan Barbara Edge Barbara Horn Barnaby Chambers Barrie Palmer Barry Bester Barry Blackmore Barry Gales Barry Hodges Barry Hodges Barry Shane Barry Taylor Barry Van Horsen Barry Webber Bas Snellenburg Ben Armitage Ben Brink Ben Davis Ben Garrett Ben Hoey Ben Holder Ben Lee Ben Murphy Ben Myers Ben Smee Ben Wood Ben Woodall Ben Woollins Benjamin Ganson Benjamin Marland Benjamin Parkman Benjamin Rich Benoni Akuetteh Bernadette Crawford King Bernard Cope Bert Van Houten Bertil Boyles Bilal Mukhtar Bill Wylie Billy Clarke Billy Decaille Blodwyn Hopkins Bob Barlow Bob Heuerman Bob Snellenburg Bradley Maple Bradley Morrison Brady Lindsay Brandon Abels Brant Wells Brendon Roberts Brett Cooper Brett Goulden Brett Rourke Brian Allchin Brian Crossley Brian Crowe Brian Dicks Brian Fisher Brian Fraser Brian King Brian Kirwin Brian Macdichian Brian Simpson Brian Styles Bridget Anderson Bruce Fielding Bruce Smith Bruno Alves Bryan Hartley C Cade Somerville Calbert Hall Calvin Alleyne Campbell Marr Carl Bradbury Carl Cook Carl Cumberbatch Carl Dyke Carl Edlundh Rose Carl Griffiths Carl Higgins Carl Johnson Carl Paternoster Carl Roberts Carl Taylor Carl Whatley Carol Lakin Carol Livingstone Caroline Bennett Caroline Crofts Caroline Head Caroline May Cassandra Huitson Catherine Platt Catherine Waldron Chan Gokani Chantelle Fallows Charles Joyce Charles Tetley Charlie Marriage Charlotte Highley Charlotte Podkanski Chessdeep Singh Chetan Devraj Chioma Onyeakazi Chirag Patel Choudre Grobler Chris Cartey Chris Davies Chris Gough Chris Heyes Chris Howe Chris Kantelberg Chris Lyle Chris Semple Chris Senior Chris Thornton Chris Van Uden Christian Scannell Christina Langridge Christine Earl Christine Hendry Christine Rea Christine Wadsworth Christine Whiteman Christopher Bowles Christopher Bray Christopher Brown Christopher Cooper Christopher Critchley Christopher Fleming Christopher Harbutt Christopher Haslam Christopher Holland Christopher Holt Christopher Hunter Christopher Roberts Christopher Smith Christopher Smyth Christopher Turley Christopher Tyler Christy Fletcher Claire Chaffe Claire Rayton Clare Barden Clare Hogg Claude Naidoo Colin Hampson Colin Hoban Colin Markham Colin Rymer Colin Taylor Conrad Harrup Corrine Clark Craig Conway Craig Cooper Craig Dolling Craig Gardener Craig Hill Craig Hoskin Craig Nammontri Craig Ollard Craig Pike Craig Reed Craig Rogers Craig Solkhon Craig Tetlow Craig White Crescent Baron Crister Leth Cyriel Struijk D Daan Rubens Dale Fish Dale Hoy Damien Bott Damien Cramp Dan Hall Dan Radford Daniel Britt Daniel Brown Daniel Childs Daniel Fallows Daniel Fennings Daniel Findlay Daniel France Daniel Gibbs Daniel Gray Daniel Greenley Daniel Johnson Daniel Jones Daniel Lawrie Daniel Lewis Daniel Little Daniel Musguin Daniel Nicholson Daniel Roberts Daniel Rosenthall Daniel Scott Francis Daniel Skinner Daniel Spencer Daniel Stamford Daniel Stiven Daniel Wren Danielle Keeley Danielle Ten Hoven Danielle Whittaker Danny Costen Danny Hughes Danny Kok Danny Manning Darone Dubois Gayere Darran Wood Darren Banks Darren Bebbington Darren Connor Darren Crick Darren Goode Darren Harper Darren Jones Darren Kemp Darren Mcaleese Darren Mcmahon Darren Mitchell Darren Morgan Darren Pickering Darren Rawlings Darren Square Darren Walker Dave Lalley Dave Marsh Dave Taylor David Asquith David Atherton David Atkins David Augustus David Bailey David Bailey David Blades David Brooks David Burnikell David Carpenter David Cocozza David Critchlow David Daulton David Dorney David Dyason David Evans David Finnie David Fisher David Fitzgerald David Fitzpatrick David Gardner David Gibson David Grant David Gridley David Harper David Hatton David Hayers David Henderson David Hirst David Hulme David Hulse David Jobling David Kershaw David Kettlewell A Aaron Callaghan Aaron Hibbert Aaron Hodgkinson Abdulkadir Kulmie Adam Boshir Adam Campion Adam Devlin Adam Eustace Adam Gale Adam Howie Adam Hughes Adam Ireland Adam Kilty Adam Lucas Adam Mortimer Adam Nuttall Adam Slater Adam Southall Adam Stopford Adam Towner Adam Walker Adekunle Fakoya Adiel Davis Adrian Earley Adrian Mccourt Adrian Rimmington Adwoa Dufie Aidan Ward Aileen Crossley Akommil Ali Akushu Mulenga Alan Abbott Alan Cordery Alan Harding Alan Jones Alan Logan Alan Mcdonald Alan McIntosh Alan Monk Alan Parker Alan Rogers Alan Rolf Alan Saunders Alan Sinclair Alan Smalley Alan Sproston Alan Sproule Alan Watton Alan Wrighting Alasdair Higgins Aldwin Ridderstap Alec Dakin Alex Bott Alex Bowen Alex Dodge Alex Evangelou Alex Hendrick Alex Padgham Alex Paterson Alexander Mcaleese Alexander Onions Alexandria Murphy Ali Syed Alicia Mcgill Alison Hunt Alistair Fleming Alistair Johnstone Alistair Payne Allan Chigariro Allan Duffy Allan Harper 72 Topps Tiles Plc Annual Report and Financial Statements 2006 David Lane David Leake David Long David Macartney David Mallyon David Matthews David Mayers David Milne David O'Leary David Oliver David Parr David Powell David Prime David Reed David Reid David Savage David Smith David Steel David Stott David Thomasson David Townsley David Whitelaw David Williams David Wilson Davina Bedrikovs Dawn Allan Dawn Hughes Dean Brown Dean Bull Dean Hyde Dean Johnson Dean Marshall Dean Robertson Dean Titchen Dean Tricker Dean Witham Dean Woolley Deborah Belford Deborah Hunt Deborah White Delia Muwalo Denise Pierce Dennis Cragen Dennis Jepson Dennis Rawding Denzil Johns Derek Lambourn Derek Sim Derek Smith Desley De Klerk Dev Mitra Devashin Manikam Govender Devindren Govender Diane Shatford Butcher Dilawar Ali Dinkar Ratna Dishon Meade Dominic Reilly Dominic Toon Don West Donna Beccan Donna Paterson Donna Shirley Donna Whall Donovan Swart Doreen Hyatt Duncan Stern Duncan Winspur Dwayne Howard Dwayne Munroe Dylan Roberts E Eamonn Clancy Edmund Smith Eduardo Gouveia Edward Derbyshire Edward Gardiner Edward Moore Edward Murphy Ejaz Malik Elizabeth Kelly Elizabeth Smith Emdadur Rahman Emeka Egbezor Emiel Crowder Emily Lenton Emin Demirkaya Emma Brookes Emma Dane Emma Kenney Emma Lane Emma Whatson Enid Lamb Eric Byarugaba Eric Watson Erik Rubens Ernest Johnson Esther Ten Hoven Ezekiel Ojo F Farahnaz Janjua Farid Haddad Farida Dawood Farzana Latif Faustina Ansah Felipe Da Rocha West Fern Marshall Finbarr Mcquaid Fiona Cadd Fiona Davey Flora Tuitt Folkert Hildama Fran Graysmark Frances Aylward Francesca Case Francesca Wright Francis Lastey Francis Slater Francis Tully Frank Hibbert Frank Vizard Frans Levoleger G Gareth Edwards Gareth Marsden Gareth Veck Gareth Ward Garry Hardy Gary Ashdown Gary Asher Gary Austin Gary Bibby Gary Bloomfield Gary Cerrone Gary Chapman Gary Curtis Gary Jennings Gary Marshall Gary Neale Gary Roberts Gary Vale Gary Walmsley Gavin Bennett Gavin Daubney Gavin Dwyer Gavin Mitchell Gavin Robertson Gavin Smith Gayle Anderson Geerish Ramsaha Gemma Chilton Gemma Stephens Geoffrey Wilson George Lathan George Mallyon George Martinesz George Tuplin George Wilson Georgina Burgess Geraint Thomas Gerald Mclean Geraldine Plumtree Gerard Mallon Gillian Grace Gillian Gray Gina Regan Glen Holloway Glendale Canoville Glenn Claridge Glenn Fordyce Glyn Rogers Gordon Davies Gordon Irvine Graeme Brown Graham Bosdet Graham Brophy Graham Buckley Graham Davies Graham Hughes Graham Jones Graham Jones Graham Lawrence Graham Livingstone Graham Tremlett Gregory Barwick Gregory Carolina Gregory Soghmanian Gursharn Ladhar Guy Ferguson Guy Wakefield H Hannah Shepherd Hannah Worsley Hans Ebbelink Hardeesh Phull Harpreet Hansra Harry Biggs Harvinder Bunger Hayley Bover Helen Bosworth Helen Goldfarb Helen Gosling Helen Richardson Herbert Henry Herman Kreikamp Hillary Bell Holly Bradbury Howard Farmer Hubert Pierzynski Hugh Selley I Iain Jackson Iain Philip Ian Bloomfield Ian Dodds Ian Fairfield Ian Hobson Ian Jones Ian Lightowlers Ian Marshall Ian Mcalinden Ian Mcinteer Ian Mcloughlin Ian Mcnamara Ian Noon Ian Paterson Ian Pennington Ian Plant Ian Sykes Ian Tebbutt Ilker Camur Imran Ashraf Imran Khan Imran Yousaf Irene Dickinson Ismail Patel Ismeazam Pahala Isreal Regha Itesh Mitter Ivan Frampton Iwan Jones J Jack Curran Jacob Bos Jacqueline Byrne Jacqueline Raiya Jacqueline Twidle Jacques Lodewyk Jailuene Peake Jajwinder Harar James Allington James Biesty James Bott James Butler James Callaghan James Cameron James Curthoys James Dennett James Eastham James Edge James Enderson James Fell James Gentleman James Griffiths James Heard James Hollingshead James Hudson James Judkins James Kelly James Koroma James Mackay James Martin James Mcgoldrick James Mcguigan James Metcalf James Morgan James Pateman James Paterson James Patston James Pilfold James Plows John Davies John De Kisshazy John Ellis John Forden John Foster John Gardner John Harris John Hickey John Johnston John Jones John Keouski John Lamb John Mangan John Mason John Moat John Page John Rayner John Reilly John Smith John Smith John Summers John Sutton John Thompson John Thompson John Vaughan John Wade John Whelan John Wright Johnathon Cox Jon Potts Jon Turner Jon White Jonathan Bean Jonathan Benn Jonathan Coombs Jonathan Goddard Jonathan Greenwood Jonathan Hargreaves Jonathan Morgan Jonathan Thornhill Jonathan Whitehead Jonathan Williams Jonathon Cockerill Jonathon Hall Jonathon Parker Jonathon Perkins Jonathon Sheerin Jon-Paul Hughes Jorris Maätita Jos Kantelberg Jos Verlaat Joseph Blakeman Joseph Heath Josephine Hilldrup Josh Wyatt Joshua Groener Joshua Lumley Joyce Davies Joyce Martin Juginder Gill Julie Ayrton Julie Blake Julie Brachtvogel Julie Cox Julie Fewings Julie Horsford Julie Jordan Juliet Wilford Justin Bradley Justin Wilson James Reilly James Robertson James Stark James Stevens James Taylor Jamie Axten Jamie Evans Jamie Farmer Jamie Gorham Jamie Moran Jamie Muir Jamie Paris Jamie Parkes Jamie Sia Jamie Tissington Knight Jamie Wenborn Jan Reddi Jan Sloterwijk Jane Horsford Janet Burgess Janet Lockyer Janet Riley Janice Millett Jason Dowd Jason Ealden Jason Field Jason Leviton Jason Meadows Jason Pratt Jason Rose Jason Stavert Jaun Lombard Javeed Parkar Jay Lough Jayandrie Chetty Jayantilal Patel Jayaprakash Paragjee Jayson Vann Jean Smith Jeannette Hastie Jeffrey Armstrong Jemma Roberts Jennifer Donlan Jennifer Royce Jenny Seabrook Jeremy Apelgren Jeremy Edwards Jeremy Harris Jermaine Hakin Jermaine Trimingham Jeroen Ligtelijn Jeroen Van Loveren Jessica Enisto Jessica Inman Jessica Thiari Jill Cox Jim Barrow Jim Carpenter Jim Tuvey Jimmy Vander Plank Jiten Jugath Joan Hicks Joanna Kidner Joanna Russell Joanne Elton Joanne Mepham Jodie Baigrie Joe Balicki Joe Cox John Barrie John Chinn John Coles John Davidson John Davies 73 Topps Tiles Plc Annual Report and Financial Statements 2006 Luke Halford Luke Nutting Luke Stephens Luke Turner Luuc Zuur Lyndsey Heyes Lynette Grimes Lynn Pearson M Mabs Alam Magnus White Majid Shafiq Maku Modzaku Malcolm Ferguson Thomas Malcolm Long Mandeep Flora Mandy Aidney Marc Andrisani Marc Breeze Marc Burton Marc Middleton Marc Stevens Marc Tibble Marc Why Marcel Gray Marco Knip Margaret Lawrie Mario Van Der Valk Mark Allen Mark Aveling Mark Bianchi Mark Blann Mark Bober Mark Bourner Mark Bradbury Mark Bridges Mark Brownsey Joyce Mark Collyer Mark Curwen Mark Discombe Mark Edwards Mark Frisby Mark Gasson Mark Geary Mark Hilton Mark Hirst Mark Hunter Mark Jackson Mark Johnson Mark Jones Mark Lever Mark Maciver Mark Meakin Mark Moore Mark Mottershead Mark Nicholls Mark Palmer Mark Rigley Mark Robertson Mark Samual Mark Strong Mark Tennant Mark Thompson Mark Waldock Mark Waller Mark Wright Marlon Barnes Martin Baker Martin Brophy Martin Clare Martin De Bruijn Martin Derricott Martin Horton Martin Iezzi Martin Jacks Martin Marsden Martin Mudde Martin Peters Martin Shenton Martin Siggers Martin Sinnott Martin Smyth Martin Watt Martyn Gilbert Marvin Daniels Mary Smith Massimiliano Cereghino Matthew Allson Matthew Bond Matthew Clamp Matthew Dunn Matthew Dunne Matthew Farbrace Matthew Fisher Matthew Foster Matthew Foulger Matthew Hawley Matthew Hill Matthew Johnson Matthew King Matthew King Matthew King Matthew Mckune Matthew Meigh Matthew Moore Matthew Pearson Matthew Perrott Matthew Rayner Matthew Robinson Matthew Sigley Matthew Williams Matthew Woodhouse Matthew Wright Maxine Barry Mehmet Asdoyuran Melanie Gray Melanie Hall Melissa Isaac Melton Thompson Melvin Conjamamay Melvin Stubbs Melvyn Chamberlain Merlin Hassoldt Michael Blinkhorne Michael Bolden Michael Boughton Michael Bowden Michael Cosgrove Michael Coward Michael Crowley Michael Dorman Michael Earls Michael Fannon Michael Finn Michael Foley Michael Gay Michael Haggett Michael Hall Michael Harvey Michael Holland Michael Ingham Michael Jack Michael Jenks Michael Lemaitre Michael Litster Michael Lovelock Michael Pay Michael Pearson Michael Rout Michael Simmons Michael Townsend Michael Whatley Michele Poxon Michelle Hill Michelle Kempson Michelle Lawson Michelle Mannion Michelle Pennington Michelle Wright Mike Butler Mike King Mike Lock Mike Rensburg Ndlovu Mike Vickers Milly Van Der Linden Mitchell Keet Mohamed Patel Mohammed Amin Mohammed Amreaz Mohammed Azhar Mohammed Irfan Mohammed Jamil Mohammed Parvaz Monica Hart Muhammad Bakare Mumtaz Khamisa N Narinder Chatha Natalie Ashworth Natalie Exon Natalie Morgan Natalie Sexby Natasha Davey Nathan Austin Nathan Coulthard Nathan Ford Nathan Gourlay Nathan Seigneur Navesh Naidoo Nayan Shah Neil Bartholomeusz Neil Brownley Neil Crozier Neil Farmer Neil Hendy Neil Homan Neil Ketnor Neil Shephard Neil Simons Neil Southgate Neil Taylor Neil Thakore Neil Williams Neil Worthington Nelson Minj Ngadhnjim Spahiu Nicholas Clifford Nicholas Lawrence Nicholas Ounstead Nicholas Payne Nicholas Snook Nicholas Thornton Nicholas Walls Nicholas Withers Nick Griffiths Nick Hielckert Nick Wardman Nicky Dalley Nicola Acres Nicola Dearden Nicola Lewis Nicolas Wassell Nigel Brooks Nigel Fleming Nigel Houston Nigel Slaughter Nikki Green Nikola Sutton Nikolai Nikoloff Nina Van Dyck Niroshan Araliyakankanamge O Olaoye Ogunloye Orion Wilson Osemar Masaya P Pasquale Santaniello Patricia Campbell Patricia Squires Patrick Coleman Patrick Mcgee Patrick Noble Patrique Janssen Paul Artes Paul Bainbridge Paul Barnard Paul Baxter Paul Burkett Paul Burrow Paul Carr Paul Carter Paul Chalmers Paul Chapman Paul Clark Paul Cull Paul Dalby Paul Davey Paul Davies Paul Day Paul Donovan Paul Edwards Paul Ford Paul Galvin Paul Goodson Paul Hendrey Paul Hill Paul Huxtable Paul Irving Paul Jones Paul Kelly Paul Kemp Paul Lathrope Paul Laverty Paul Liggett Paul Mackin Paul Miller Paul Mills Paul Noyes Paul Oldroyd Paul Peacock Paul Rockett Paul Ruddle Paul Ryan Paul Semple Paul Silvester Paul Sluiter Paul Smith Paul Smith Paul Smith Paul Smitheringale Paul Starkey Paul Stuart Paul Swift Paul Tomlin Paul Van Der Zee Paul Vidamour Paul Wheeler Paul Wixen Paula Budsworth Pauline Grenfell Pauline Harrison Pawel Warych Peter Charters Peter Davey Peter Davidson Peter Deegan Peter Downing Peter French Peter Gallagher Peter Hogg Peter Hughes Peter Johnson Peter Lea Peter Lynn Peter Robertson Peter Robinson Peter Smith Peter Tassenaar Peter Walmsley Peter Watts Phil Challacombe Phil Godden Phil Kelly Phil Shelton Philip Aird Philip Brindley Philip Cranston THE TEAM continued L Lakhbir Kaur Lance Cale Laura Doyle Laura Edwards Laura Johnson Laura Kershaw Laura Olisa Laura Price Laura Shelley Laura Smith Laurence Loxam Leah Norris Leanne Foweather Leanne Kirk Leanne Langran Leanne Marshall Leanne Miles Leanne Murphy Leanne Prince Lee Arrowsmith Lee Baxter Lee Chapman Lee Culley Lee Dover Lee Durrant Lee Fisher Lee Galloway Lee Harris Lee Hodgson Lee Jacovou Lee James Lee Liddle Lee Morris Lee Payne Lee Riches Lee Shillibeer Lee Tricker Lee West Lee Wilkinson Lee Williams Lee Winter Lee Wood Leena Joory Leigh Davies Leigh Holden Leigh Hyam Leigh Nielsen Leigh Russell Leigh Taylor Leighton Williams Leon O'Neill Leonard Denton Leonard Finch Leonard Wilson Leonie Van Der Valk Leslie Maher Lester Marshall Lewis Edwards Lewis Yates Liam Allan Liam Hunt Liam Kemp Lianne Harrison Allcock Liezl Lombard Lindsay Sylvester Linsey Wilson Lisa Barry Lisa Bell Lisa Kousourou Lisa Norwood Lisa Sheppard Lisa Walker Lisa Wright Llew Gordon Loretta Daley Lorna Ballantyne Louie Jago Louis Raadman Louise Stevens Lucy Henshall Luke Abbs Luke Fair K Kallum Moseley Kamaleswaren Maruthaiya Kamlesh Shah Kandasamypillai Sureskumar Karen Brook Karen Sutcliffe Karim Tiller Karina-Jade Tubb Karl Atherton Karl Bezemer Karl Jackson Karl Madge Karl Stephens Karl Walker Kasturi Muruvan Katarzyna Boardman Katarzyna Wszola Kathryn Aylward Kathryn Robinson Kawsor Ahmed Kay Winlow Kees Van Wijk Keiron Birch Keith Ambrose Keith Carr Keith Hughes Keith Pugh Keith Rudkin Keith Smith Keith Storrier Kelly Bell Kelly Ellison Kelly Stephens Kelly Whyte Kelly Wrenn Kelly-Anne O’Connor Kelvin Walley Kelvyn Foster Kemal Akbatu Ken Saunders Kenneth Blair Kenneth Frankland Kenneth Mckay Kenneth Owen Kenneth Pettengale Kenneth Turner Kerry Hume Kerry Saunders Kevan Richardson Kevin Avins Kevin Baker Kevin Bennett Kevin Bowtle Kevin Bradshaw Kevin Brophy Kevin Crompton Kevin Fox Kevin Gallagher Kevin Getliff Kevin Hailes Kevin Hartley Kevin Parkinson Kevin Reading Kevin Rowe Kevin Thorne Kevin Tully Kevin Young Khaleed Hosanee Kieran Barnes Warden Kieron Clarke Kim Liddle Kimberley Box Kimberley Bristow Kimberly Cooper Kingsley Davies Kirk Johnson Kirsty Bover Kris Bailey Kurt Faulmann Kwabena Owusu Ansah Kyle Melhuish 74 Topps Tiles Plc Annual Report and Financial Statements 2006 Philip Dunn Philip English Philip Fisher Philip Gallop Philip Lonsdale Philip Mccarney Philip Tomlin Philip Tovey Phillip Downing Phillip Goodeve Phillip Hawkeswood Phillip Hillier Phillip Hunt Phillip Jones Phillip Lewis Phillip Walters Phillipa Hewitt Pius Chibwe Pooven Muruvan Prakash Mistry Pravesh Ramsaha R Rachel Dykes Rafique Van Rooyen Raj Surani Rajan Mehta Rajbinder Dhanoya Rajiv Vadgama Rakesh Thakore Rasik Bhudia Ray Jeakins Raymond Tricker Rebecca Crawshaw Rebecca Derricott Rebecca Ellis Rebecca Halliday Rebecca Heather Rebecca Jacques Rebecca Oblein Rebecca Plant Recep Tarim Reg Anderton Rhonda Partridge Rhys Kelland Ria Croft Ricardo Malcolm Richard Bickers Richard Brookfield Richard Caney Richard Carter Richard Chiverton Richard Clark Richard Davies Richard Deavall Richard Farrington Richard Gallagher Richard Harris Richard Hatherell Richard Homan Richard Hopkin Richard Hutcheson Richard Hylton Mais Richard Lewington Richard Oldale Richard Paine Richard Philp Richard Simpson Richard Slack Richard Small Richard Spencer Smith Richard Stephenson Richard Whitmore Richard Young Ricky Holloway Ricky Loomes Riki Spadone Rob Hollis Rob Mcguinness Rob Owen Robert Adams Robert Adkins Robert Avery Robert Bellamy Robert Brewin Robert Bristow Robert Chawner Robert Clarke Robert Cole Robert Curd Robert Donnelly Robert England Robert Exley Robert Findlay Robert Gilbert Robert Hodgson Robert Howker Robert Lynch Robert Marcellin Robert Moss Robert Myers Robert Perry Brown Robert Rayner Robert Reynolds Robert Rodrigues Robert Scheggetman Robert Stevens Robert Stewart Robert Taylor Robert Tinsley Roberto Xavier Robin Beil Robin Dury Robin Parry Rodney Meyer Rodney Sanders Roger Bailey Roger Buckley Roger Gridley Romaldo Rodrigues Ronald Emmanuel Ronald Perrott Ronald Van Veenen Ronnie Webster Rose Barnard Rosina Taylor Roslyn Naylor Ross Ashbrook Ross Hepburn Ross Mcnair Ross Usher Roxanne Martin Gault Roy Haddon Roy Peasland Roy Redgate Roy Shaw Rui Do Rosario Sebastiao Russell Adgey Russell Barclay Russell Jennings Russell Shafer Russell Thornton Ryan Curd Ryan Fletcher Ryan Haddon Ryan Jewitt Ryan Mcdonald Ryan Milligan Ryan Randall Ryon Leighton S Sadaqat Basharat Sadia Ahmed Sagren Naidoo Sajid Ahmad Sajid Aibani Saladdin Beqqada Salman Bawani Salvatore Andreozzi Sam Nortey Sam Shepherd Samantha Barrett Samantha Eames Samantha Mallows Samantha Sayer Samantha Williams Sami Aman Samuel Carey Sander Faber Sarah Churcher Sarah Dallow Sarah Dobson Sarah Earthey Sarah Ellis Sarah Ellis Sarah Kite Sarah Mccabe Sarah Pimm Sarah Whitehead Scott Ambrose Scott Davis Scott Frankland Scott Hamilton Scott Heritage Scott Mccluskey Scott Meadows Scott Whitmore Scott Williams Sean Cahill Sean Cox Sean Kerry Sean Sands Sean Scard Shane Grace Shane Malone Shane Mason Shannon Woods Shanoor Ali Sharlene Hamilton Sharon Diffin Sharon Homer Sharon Muir Sharron Bruce Shaun Douglas Shaun Mayes Shaun Perkins Shaun Scott Shaun Watson Shaun White Shawanna Hafiz Sheila Robertson Sheldon Briscoe Shelley Rutter Sherry Bell Sherry Conlay Shilpa Champaneri Shirley Moore Shona Johnstone Silvonne Mclean Simon Brookfield Simon Brookfield Simon Brown Simon Casey Simon Chappell Simon Eldridge Simon Fisher Simon Frew Simon Gill Simon Green Simon Jones Simon Morgan Simon Neal Simon Partridge Simon Pitt Simon Rayner Simon Ricketts Simon Rigby Simon Roberts Simon Taylor Simon Tuckley Simon Witham Siobhan Waters Sion Jackson Solomon Igboayaka Sophie Macdonald Sophie Walker Stephanie Nevett Stephanie Ray Stephen Adams Stephen Ainsworth Stephen Bloomfield Stephen Brighton Stephen Clark Stephen Collins Stephen Crane Stephen Creasey Stephen Davey Stephen Glynn Stephen Green Stephen Hosken Stephen Hunter Stephen Kennerley Stephen Lewis Stephen Machin Stephen Marshall Stephen Nunn Stephen Pike Stephen Powell Stephen Savage Stephen Seymour Stephen Spurgeon Stephen Unsworth Stephen Ward Stephen Whitby Stephen Williams Stephen Yarnell Steve Boardman Steve Claridge Steve Freeman Steve Gaylor Steve Pratt Steve Shackleton Steve Smith Steve Wood Steve Wormald Steven Buxton Steven Clark Steven Edge Steven Godwin Steven Goldsmith Steven Jenkins Steven Lynn Steven Macarthur Steven Morries Steven Muir Steven Nelson Steven Pickup Steven Saunders Steven Tinkler Steven Walker Steven Whitehead Steven Whittle Steven Wyness Stuart Anderton Stuart Baigent Stuart Burdett Stuart Cooper Stuart Davey Stuart Dunning Stuart Graham Stuart Hill Stuart Pemberton Stuart Rees Stuart Ross Stuart Stenning Stuart Taylor Stuart Whitby Stuart Williams Sue Bill Sukhbinder Verdding Sukhdeep Virdi Sukhpal Ghataura Sumade De Silva Susan Attwell Susan Groombridge Susan Henshall Susan Hulme Susan Hunt Susan Wright Suzanne O’Brien T Tahir Nazif Tanya Baker Tanya Sharpe Terance Langford Terence Dooley Terence Marshall Terence White Terry Johnstone Terry Olivo Terry Smith Terry Timmins Terry Wade Terry Webb Theo Buijs Theo Mulder Theresa Murray Thomas Agate Thomas Cunningham Thomas Fry Thomas Girvan Thomas Horsfield Thomas Pressley Thomas Rickman Thomas Ryan Thomas Steel Thomas Wade Thomas Woollard Tim Brunt Tim Tatlock Timothy Boardman Timothy Tuff Tina Munkley Tjeerd Labordus Toby Bateson Toby Collins Tom Evans Tom Jones Tom Scott Tony Alliband Tony Haines Tony Martin Tony Milligan Tony Nunn Tony Simoes Tony Watson Tracey Gallagher Tracy Powell Tracy Ryan Tracy Stevens Tracy Wickenden Trevor Pearce Trevor Thomas Tyrone Paulse U Umar Ullah Upali Herath V Veronica Brownlie Veronis Meade Vickie Callan Vicky Dickinson Victor Kuadey Victor Watson Victoria Edge Vilius Meilus Vinod Joshi Vinsen Velvindron Visvanathapillai Mahendrakumar Vivienne Johns Vladimir Krsteski W Wade Cummings Walkey Hilarie Warren Bester Warren Knight Warren Russell Warren Smith Wayne Bowditch Wayne Campbell Wayne Coleman Wayne Farini Wayne Jannotti Wayne Quaintance Wayne Randall Wayne Smith Wayne Van Der Merwe Wayne Wheeler Wendy Altimas Wendy-Louise Smith Wesley Harrop Wesley West William Bailey William Barreda William Brindley William Brownsell William Gunshon William Hodgkinson William Lewinton William Ryves Wim Strik Wim Van Staden Y Yolandé Knight Yvonne Archer Yvonne Burgess Z Zahid Sharif Butt Zaylin September Zoe Maeer 75 STORE LOCATIONS Topps Tiles Plc Annual Report and Financial Statements 2006 TOPPS TILES TILE CLEARING HOUSE 125 Uckfield 126 Uxbridge 127 Vauxhall 128 Waltham Cross 129 Wandsworth 130 Watford 131 Wembley 132 West Wickham NORTH WEST 133 Aintree 134 Birkenhead ■ 135 Blackburn 136 Blackpool 137 Bolton 138 Cheadle 139 Chester 140 Chorley 141 Cleveleys 142 Congleton ■ 143 Crewe 144 Failsworth 145 Flint 146 Liverpool 147 Macclesfield 148 Morecambe 149 Nantwich 150 Northwich 151 Oldham 152 Ormskirk 153 Preston 154 Rhyl 155 Sale 156 Salford 157 Snipe (Audenshaw) 158 St Helens 159 Stockport 160 Stockport 2 161 Warrington 162 Widnes 163 Wigan 164 Wrexham NORTH 165 Barnsley 166 Barrow-in-Furness 167 Birstall 168 Carlisle 169 Chesterfield 170 Doncaster ■ 171 Durham 172 Grimsby ■ 173 Harrogate 174 Huddersfield 175 Dewsbury 176 Leeds 177 Hull 178 Sheffield 179 Stockton 180 Sunderland 181 Tyneside 181 Wakefield 182 York CENTRAL REGION 1 Abingdon ■ 2 Aston 3 Banbury 4 Bedford 5 Binley 6 Boston 7 Burton 8 Bury St Edmunds 9 Cambridge 10 Cannock 11 Clacton-on-Sea 12 Colchester 13 Coventry 14 Derby 15 Derby 2 16 Erdington 17 Grantham 18 Great Yarmouth 19 Grove Park 20 Hereford 21 Huntingdon ■ 22 Ipswich 23 Kidderminster 24 Kings Heath 25 Kings Lynn 26 Leicester 27 Lincoln 28 Luton 29 Mansfield 30 Martlesham 31 Milton Keynes 32 Newcastle-U-Lyme 33 Newark 34 Northampton 35 Norwich 36 Nottingham 37 Oldbury 38 Oxford ■ 39 Peterborough 40 Redditch ■ 41 Sheldon 42 Shrewsbury 43 Solihull 44 Stafford 45 Stamford 46 Stoke on Trent 47 Stratford-upon-Avon 48 Tamworth 49 Telford 50 Wellingborough 51 West Bromwich 52 Wolverhampton 53 Worcester 54 Worksop LONDON AND THAMES SOUTH 55 Ashford ■ 56 Basildon 57 Battersea ■ 58 Beckton 59 Bexhill 60 Bognor Regis ■ 61 Braintree 62 Brentwood 63 Brighton 64 Broadstairs 65 Camberley 66 Canterbury 67 Catford 68 Charlton 69 Cheam 70 Chelmsford 71 Chelmsford 2 ■ 72 Chichester 73 Chingford 74 Colindale 75 Crayford 76 Croydon 77 Dagenham 78 Eastbourne 79 Edmonton 80 Eltham 81 Enfield ■ 82 Erith 83 Farnborough 84 Farnham 85 Feltham ■ 86 Folkestone 87 Fulham 88 Gatwick 89 Grays 90 Gunnersbury 91 Guildford 92 Harlow 93 Hedgend 94 Highgate 95 Horsham 96 Ilford 97 Isle of Wight 98 Lewes ■ 99 Maidstone 100 Mitcham 101 New Southgate 102 Newbury 103 Newhaven 104 Old Kent Road 105 Orpington 106 Penge 107 Pentonville Road ■ 108 Portsmouth 109 Raynes Park 110 Rayleigh 111 Reading 112 Richmond 113 Romford 114 Sittingbourne 115 Slough 116 Southall 117 Southampton 118 Southend 119 Stamford Hill 120 Sudbury 121 Swindon 122 Tonbridge 123 Tunbridge Wells 124 Twickenham 76 SCOTLAND 184 Aberdeen 185 Dundee 186 Edinburgh 187 Falkirk 188 Glasgow 189 Greenock 190 Hillington 191 Inverness 192 Linwood 193 Perth 194 Rutherglen 195 Shawfield ■ 196 Sighthill 197 Wishaw SOUTH WEST 198 Barnstaple 199 Basingstoke 200 Bournemouth 201 Bridgend 202 Bridgewater 203 Bristol 204 Cardiff 205 Cheltenham 206 Christchurch 207 Clevedon ■ 208 Cribbs Causeway 209 Cross Hands ■ 210 Exeter 211 Frome 212 Gloucester 213 Hengrove 214 Launceston 215 Merthyr Tydfil 216 Newport 217 Plymouth 218 Poole 219 Salisbury 220 Swansea 221 Taunton 222 Torquay 223 Weston-Super-Mare 224 Winchester 225 Yeovil NORTH WEST 28 Bolton 29 Cheadle 30 Crosby 31 Maghull 32 Oldham 33 Preston 34 Stockport 35 Warrington ■ 36 Wigan NORTH 37 Bradford 38 Darlington 39 Doncaster 40 Hull 41 Sheffield SCOTLAND 42 Aberdeen 43 Edinburgh SOUTH WEST 44 Bournemouth 45 Exeter 46 Salisbury CENTRAL REGION 1 Aylesbury 2 Cheltenham ■ 3 Fenton 4 Great Barr 5 Kettering ■ 6 Leicester 7 Lowestoft ■ 8 Northampton 9 Norwich ■ 10 Nottingham 11 Nuneaton ■ 12 Peterborough 13 Shrewsbury 14 Stoke-on-Trent 15 Wolverhampton ■ LONDON AND THAMES SOUTH 16 Barking 17 Beckenham 18 Charlton 19 Croydon ■ 20 Eastbourne 21 Harlow 22 Hayes ■ 23 New Southgate 24 Orpington 25 Southampton 26 Swindon 27 Wembley HOLLAND STORES 1 Almere 2 Amersfoort 3 Amsterdam 4 Amsterdam 2 5 Beuningen 6 Duivern 7 Enschede ■ 8 Groningen 9 Klaprozenweg 10 Rotterdam 11 Sliedrecht 12 Utrecht 13 Veenendaal 14 Waalwjk 15 Zwolle ■ TOTAL 286 STORES ■ New store 2005/06 This report has been printed on paper which is totally chlorine free (TCF), suitable for recycling and is derived from renewable timber produced on a fully sustainable basis. Materials are sourced from paper mills that are ISO 14001 certified. The inks used are vegetable based. Designed and produced by Kinverleigh. 191 42 184 185 193 189 187 192 188 194 197 195 186 196 43 168 166 148 181 180 171 179 38 173 183 141 136 152 30 133 154 134 145 146 139 164 153 135 167 175 160 41 176 37 33 182 174 32 137 28 165 151157 158 163 159 138 36 155 34 150 35 143 149 140 144 29 147 142 32 178 169 46 3 31 161 162 14 15 170 39 54 29 36 10 42 13 49 15 20 52 23 53 212 216 203 208 207 223 213 211 202 225 215 201 204 209 220 198 224 210 45 214 222 217 44 10 51 37 2 24 40 47 7 48 4 13 16 41 43 19 205 2 26 121 26 6 11 5 34 1 3 38 1 111 102 199 84 46 219 116 25 206 44 200 218 224 93 97 177 40 172 27 33 17 6 45 39 12 50 21 4 28 5 8 31 115 65 83 91 88 95 63 108 72 HOLLAND STORES 8 15 7 1 9 2 13 3 4 12 11 14 10 6 5 LONDON STORES 130 126 27 90 120 112 85 124 101 23 74 94 131 116 87 21 81 128 79 73 119 16 113 77 96 82 68 75 58 107 127 57 17 72 100 104 67 22 76 18 80 132 19 69 24 105 25 35 9 18 7 9 92 8 30 22 61 12 11 70 71 89 110 56 118 62 79 114 99 122 123 64 66 55 86 98 103 20 78 59 TOPPS TILES - STORE NUMBERS TILE CLEARING HOUSE - STORE NUMBERS HOLLAND - STORE NUMBERS Stores at beginning of period New stores opened Sub-Total Closures Total 207 19 226 (1) 225 Stores at beginning of period New stores opened Sub-Total Closures Total 37 9 46 – 46 Stores at beginning of period New stores opened Sub-Total Closures Total 13 2 15 – 15 Topps Tiles Plc Thorpe Way Grove Park Enderby Leicestershire LE19 1SU T 0116 282 8000 F 0116 282 8115 www.toppstiles.co.uk