Topps Tiles
Annual Report 2007

Plain-text annual report

TOPPS TILES PLC Annual Report and Financial Statements 2007 TOPPS TILES THIS YEAR MARKED THE TENTH ANNIVERSARY OF THE FLOTATION OF THE COMPANY. OUR FINANCIAL PERFORMANCE OVER THIS PERIOD, EPS GROWTH OF NEARLY 800% AND OVERALL SHAREHOLDER RETURN IN EXCESS OF £200M, IS ONE IN WHICH WE TAKE GREAT PRIDE IN HAVING DELIVERED. THE COMPANY HAS, OVER MANY YEARS, SUCCESSFULLY MET THE CHALLENGES OF CHANGING MARKET CONDITIONS & COMPETITION. I AM CONFIDENT THAT IT WILL DO SO IN THE FUTURE AS IT CONTINUES WITH ITS EXPANSION IN A GROWING MARKET. Stuart Williams Group President and Co-Founder CONTENTS 01 Highlights 02 Chairman’s statement 05 Chief executive’s statement 08 Business review 15 Corporate and social responsibility 18 Directors 19 Non-executive directors 20 Directors and advisors 22 Directors’ report 25 Corporate governance statements 27 Remuneration report 30 Independent auditors’ report - consolidated financial statements 32 Consolidated group income statement 32 Consolidated statement of recognised income and expense 33 Consolidated balance sheet 34 Consolidated cash flow statement 35 Notes to the consolidated financial statements 55 Independent auditors’ report - company financial statements 56 Company balance sheet 57 Notes to the company financial statements 61 Five year record 62 Notice of annual general meeting 65 Explanatory notes to the notice of annual general meeting 67 Shareholder information 68 The team 72 Store locations Cautionary statement This Annual Report has been prepared for the shareholders of Topps Tiles Plc, as a body, and no other persons. Its purpose is to assist shareholders of the Company to assess the strategies adopted by the Group and the potential for those strategies to succeed and for no other purpose. The Company, its directors, employees, agents or advisers do not accept or assume responsibility to any other person to whom this document is shown or into whose hands it may come and any such responsibility or liability is expressly disclaimed. This Annual Report contains certain forward-looking statements that are subject to risk factors associated with, amongst other things, the economic and business circumstances occurring from time to time in the countries, sectors and markets in which the Group operates. It is believed that the expectations reflected in these statements are reasonable but they may be affected by a wide range of variables which could cause actual results to differ materially from those currently anticipated. No assurances can be given that the forward-looking statements in this Annual Report will be realised. The forward-looking statements reflect the knowledge and information available at the date of preparation of this Annual Report and the Company undertakes no obligation to update these forward-looking statements. Nothing in this Annual Report should be construed as a profit forecast. HIGHLIGHTS 52 week period results to 29 September 2007 (2006: 52 weeks) + Group like-for-like revenue increased by 4.7% + Group gross margin increased to 62.8% (2006: 62.6%) + Operating profit increased to £44.3m (2006: £38.9m) + Profit before tax £37.8m (2006: £39.1m) + Adjusted Basic Earnings per share of 14.94 pence (2006: 13.19 pence)* + Basic Earnings per share of 15.09 pence (2006: 12.80 pence) 15.4% Group revenue increased by 15.4% to £207.9 million (2006: £180.2 million) 14.1% Group operating profit increased by 14.1% to £44.3 million (2006: £38.9 million) + Dividend policy maintained at 1.41 times cover + A final net dividend of 6.95 pence per share to be paid on 31 January 2008 + Net debt position of £95.2m (2006: £99.5m) + A net 30 new stores opened in the UK in this financial period + Now trading from 301 stores in the UK (2006: 271 stores) + 20 stores now trading in Holland (2006: 15 stores) *Adjusted for non recurring items: 2006: Property disposal gains of £0.3 million and share buy back costs of £1.1 million 2007: Property disposal gains of £0.3 million TOPPS TILES PLC Annual Report & Financial Statements 2007 01 CHAIRMAN’S STATEMENT THIS YEAR MARKED THE 10TH ANNIVERSARY OF OUR LISTING ON THE LONDON STOCK EXCHANGE. I AM DELIGHTED TO REPORT THAT ONCE AGAIN WE HAVE DELIVERED ANOTHER STRONG SET OF RESULTS PROVING THE SUCCESS OF OUR STRATEGY AND THE STRENGTH OF OUR BRAND. MILESTONES Merger of Topps Tiles and Tile Kingdom Topps Tiles floated on Stock Exchange, achieves PLC status Acquired 20 Tile City stores Topps becomes a dedicated tile specialist > 1995 1996 > > 1997 > 1998 > 1999 2000 > > Total number of stores 50 Total number of stores 54 Total number of stores 100 The past decade has been an exciting time in the Company’s history. We have transformed the business from a modest 54 store outfit with 301 staff to a European operation with over 321 stores and 1,722 employees in the UK and Holland. Total Shareholder return since listing has been excellent, £100 invested in 1997 would have grown to £2,822, outperforming the FTSE250 by over 800%. In the past 10 years we have returned over £200 million to shareholders by way of dividends and share buybacks. Financial Results Total Group revenue increased 15.4% to £207.9 million (2006: £180.2 million) with like-for-like revenue for the period up 4.7% on last year, which we have achieved despite the continuing challenging retail market. Operating profit for the period was £44.3 million (2006: £38.9 million) giving a profit before tax of £37.8 million (2006: £39.1 million), impacted by a higher interest charge as a result of the refinancing for the share buy back. Basic earnings per share increased to 15.09 pence (2006: 12.80 pence). Dividend In line with our progressive dividend policy, the Board is recommending a final dividend of 6.95 pence per share. This, once approved by shareholders at the Annual General Meeting, is payable on 31 January 2008 to all shareholders on the register as at 4 January 2008. This brings the total dividend to 10.70 pence per share an increase of 2.9% on 2006. Board Changes In March this year we announced the appointment of Robert Parker as Finance Director, succeeding Andrew Liggett who left the Company in April. On behalf of the entire Board, I extend a warm welcome to Rob. TOPPS TILES PLC Annual Report & Financial Statements 2007 02 First Dutch store opened in Sliedrecht, near Rotterdam Dutch joint venture formed Winner of PLC Company of the Year award 2003 & 2004 £100m turnover Grove Park Distribution Centre opened Remaining 50% of Dutch joint venture acquired £200m turnover > 2001 2002 2003 2004 2005 2006 2007 > > > > > > Total number of stores 150 Total number of stores 200 £150m turnover Total number of stores 250 Total number of stores 300 We also announced in September that Nick Ounstead, who has been Chief Executive Officer for the last five years, would be taking on a new executive Board role of Business Development Director with responsibility for buying, Holland and Group business development. I would like to thank Nick for his leadership and contribution to Topps throughout his tenure as Chief Executive. Matt Williams succeeded Nick as Chief Executive Officer from 1st November 2007. Matt joined Topps in 1998 in the property department. He was promoted to Chief Operating Officer in 2004 and joined the Board in 2006. Matt is already demonstrating his ability and drive and I am confident that with this first class executive team we have the best management in place to take the business forward. People Exceptional customer service is the core of our business and critical to our continued success. It is our people and not our products that achieve this. I would like to extend the Board’s thanks and gratitude to everyone in the Company for their constant efforts in helping us to realise value for our shareholders. Outlook As the business continues to grow in size, revenue and market share we maintain our investment in the future of the business and our people. The business is in excellent shape and in very capable hands and I am confident that we will continue to achieve sustainable growth and deliver value for our shareholders in 2008 and beyond. Barry Bester Chairman TOPPS TILES PLC Annual Report & Financial Statements 2007 03 OUR CORE BRANDS THE GROUP TRADES UNDER THREE CORE BRAND NAMES: TOPPS TILES Operating from 246 stores nationwide, Topps Tiles still maintain their No. 1 position as the UK’s largest supplier of Ceramic Wall & Floor tiles – Natural Stone – Laminate & Real Wood for Domestic and commercial use. Since 1963 it’s been at the forefront of the Company’s policy to offer the very best customer service that is honest, helpful and knowledgeable but NEVER pushy, this is backed up by offering value for money with a host of unique consumer benefits like the Topps free ‘How to’ DVD, a 45 day return & buy back service, a lifetime guarantee on all BAL adhesives & grouts, and many more. With the Company’s continuous drive and focus on customer service, we are confident that the business will maintain its competitive position. TILE CLEARING HOUSE Tile Clearing house has become a brand of its own operating from 55 stores in the UK, which to date makes it the second largest tile Group in the UK behind Topps Tiles. This brand is aimed at a slightly different consumer sector which in the main are jobbing builders, small contractors and bulk purchases, with the addition of end of line and discontinued products, but offering greater stock levels of these products. The Tile Clearing house brand is in prominent positions in towns where Topps Tiles are sited. TOPPS HOLLAND Trading since 2002 Topps Floorstore with its 20 stores across Holland is the leading specialist of wood flooring in Holland. We continue to develop the business and with an increasing focus on the ceramic tile offer we believe the brand will go from strength to strength. We believe that there is an opportunity for in excess of 60 stores. TOPPS TILES PLC Annual Report & Financial Statements 2007 04 CHIEF EXECUTIVE’S STATEMENT WE HAVE AGAIN THIS YEAR DEMONSTRATED THE STRENGTH OF OUR STRATEGY AND OUR ORGANIC GROWTH. OUR MARKET LEADING POSITION, EXCELLENT CUSTOMER SERVICE AND COMMITTED STAFF HAVE ALL CONTRIBUTED TO ANOTHER SOLID YEAR DESPITE A TOUGH HOME IMPROVEMENT MARKET. 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. UK Store Development and Expansion We are pleased to have again achieved our store opening target of 30 net new stores in the period, giving us an overall total of 301 trading outlets throughout the UK. We have modified the target going forward to a minimum of 20 net new stores reflecting a wider focus on improving and renewing the estate. Tile Clearing House (“TCH”) Tile Clearing House, our “cash and carry” offering has had a strong trading period. We have opened a net 9 new TCH outlets and the format continues to prove popular with both trade customers and jobbing builders. We now have a total of 55 stores in the UK. New locations include Dartford, Southend, Plymouth and Lincoln. Topps Tiles We have opened 25 stores in new locations, rebranded 2 from the TCH format, refitted 10 outlets and closed or relocated a further 6 giving us a total of 246 Topps stores. New locations include Crewe, Sheffield, Gloucester, Aylesbury, Scarborough, Brixton and Byfleet. We continue to develop our store portfolio and have now rolled out our new format across a total of 65 stores. The new enhanced display formats are proving popular with both customers and staff. We introduced a number of new ranges with a particular focus on natural products due to their increasing popularity. Holland Against the backdrop of a stable market, we have seen good growth in sales and profits in our Dutch business. We opened a further five stores taking the total to 20. Our marketing activity has been at a local level to date. However, as we experienced with the UK market, as we begin to reach a size that brings scalable benefits we anticipate increasing our advertising and marketing to a national audience. We continue to improve the mix of sales with 25% now coming from tiles and the remainder from wood flooring, accessories and adhesives. Plans for the current year include the opening of a minimum of a further five new stores. TOPPS TILES PLC Annual Report & Financial Statements 2007 05 CHIEF EXECUTIVE’S STATEMENT continued Marketing, advertising and sponsorship Over the last year we have maintained our national and regional marketing and advertising campaigns with Carlton Weather and our sponsorship of the UK Style channel. This year we also signed a sponsorship deal with Leicester City Football Club to coincide with the kick-off of the new football season in August. Although a commercial deal we very much see this as an extension to our community youth football initiative. Topps Tiles is Britain’s biggest supporter of community youth football and we currently sponsor around 300 local teams nationwide. Staff development and customer service Recruiting and retaining ambitious people at Topps is a core part of our strategy. We place significant emphasis on the training and development of our employees. We have continued to develop our e-learning training system in store with a number of new courses. We differentiate our business from the competition in a number of ways. All of our stores carry a wide range and supply of stock, we offer a loan-a-tile service, a free “How to” DVD, a tile cutting service and a buy-back service allowing customers to “sell back” undamaged tiles within 45 days of purchase. These services coupled with friendly and knowledgeable staff offering technical advice led to 97.6% of customers surveyed expressing levels of satisfaction as ‘good to excellent’ (2006: 99.1%). Corporate responsibility Topps believes in conducting its business in a manner which achieves sustainable growth whilst incorporating and demonstrating social responsibility. Our policy is published on our website at www.toppstiles.co.uk and more detail on our achievements can be found later in this report. The Board takes regular account of social, environmental and ethical matters in the business of the Group and believes in being responsible in the way that it conducts its operations. Group revenue was £207.9m, an increase of 15.4% on last year with like-for-like revenue for the period up 4.7%. Group operating profit was £44.3 million, an increase of 14.1% compared with last year. TOPPS TILES PLC Annual Report & Financial Statements 2007 06 Topps is pleased to be a constituent member of the FTSE4Good UK Index. The Market We are the leading tile retailer in the UK with an estimated market share of in excess of 22% and we have continued to grow market share over the last financial year. The Home Improvement retail sector continues to see overall expansion and the UK tile market is forecast to grow by volume by over 15% between 2007 and 2011 (source: MBD). There is significant potential for growth in our marketplace with the UK still having one of the lowest usages per head of ceramic tiles in Europe, at a level around one third of that of other Northern European countries (source: MBD). Consumers are becoming more demanding and buying trends are showing the desire to tile rooms beyond the traditional kitchen and bathroom, 4.7% Like-for-like sales growth. 62.8% Overall Group gross margin (2006: 62.6%). a requirement for a broader product offering and also a trend towards refurbishing traditional rooms more regularly. Alongside these consumer trends 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, 3 million of these are expected to be built by 2020. (source: Government forecasts). We therefore believe Topps is well placed to benefit from these consumer and housing trends driving the growth in the tile market. Current Trading and Outlook In the first 7 weeks of the new financial period Group overall revenue increased by 8.4% and like for like sales by 1.1%. In the UK revenue increased 8.1% and like for like sales by 1.0%. In Holland overall sales increased 18.1% with like for like sales up 2.5%. We have had a challenging but positive start to the new financial period and there remains an underlying growth trend in the retail tile market. Whilst we believe the prospects for the future growth of Topps Tiles remain broadly positive we must not underestimate the potential impact that this year’s turmoil in financial markets will ultimately have on consumers. Matthew Williams Chief Executive Officer TOPPS TILES PLC Annual Report & Financial Statements 2007 07 BUSINESS REVIEW IN THE UK, WE ARE THE COUNTRY’S LARGEST RETAILER OF OUR KIND WITH 301 STORES AND A 22% MARKET SHARE. 301 Stores trading across the UK. 22%+ Group share of the UK tile market. Nature, Objectives and Strategies of the Business Topps Tiles is a specialist tile & wood flooring retailer with operations in the UK and Holland. We have a growing European operation in Holland with 20 stores trading with a similar style customer offer to the Topps UK stores. In the UK, we are the country’s largest retailer of our kind with 301 stores and a 22% market share. We operate two retail brands, Topps Tiles and Tile Clearing House. Topps is the UK’s leading branded tile retailer with 246 stores offering wall and floor tiles, natural stone, laminate, solid wood flooring and a comprehensive range of associated products such as underfloor heating, adhesives and grouts. Tile Clearing House is the biggest clearance tile retailer in the UK with 55 stores nationwide focussing on a mini warehouse type format and a “when it’s gone it’s gone” style customer offer. The Topps’ strategy, which has been in place for a number of years, has served the business extremely well - to be a specialist tile retailer operating from prominent, low rental locations offering customers a wide range of quality products with fantastic service at attractive prices. From this comes the four cornerstones of our competitive advantage – customer service, store locations, store layout and stock availability. This has enabled us to deliver 10 years of successful financial results, build an economically attractive and resilient business and become the market leading brand in the UK. TOPPS TILES PLC Annual Report & Financial Statements 2007 08 Key Operational objectives for the UK and Holland: + Continue our expansion of stores in the UK towards our stated objective of over 400 stores across both brands. + Consolidate our position as the national brand for tiles and wood flooring. + Improve the economic returns in our Dutch operation towards the levels we generate in the UK – principally by improving sales density and product mix to improve gross margins and continue our expansion to a minimum of 60 stores. + Continue to develop our in store customer offer to ensure that we are always ahead of our competitors. + To continuously review our store estate ensuring the appropriate number of new openings, refits and closures are commensurate with availability and economic environment. Financial objectives: + Financial reporting is a cornerstone of any successful business and it is imperative that we deliver the right information to the right people at the right time. We include management, employees, investors and other stakeholders in this process and strive to be as transparent and honest in our reporting as possible. + We plan to grow dividends for shareholders broadly in line with earnings, subject to the investment needs of the business and an acceptable level of dividend cover. + We will seek to maintain an appropriate capital structure, financing our operations through a combination of retained profits and bank borrowings. + Treasury management is now a key part of our financial objectives and we will continue to manage our day to day cash reserves as effectively as possible and minimise the overall Group interest charge. The Topps strategy which has been in place for a number of years, has served the business extremely well - to be a specialist tile retailer operating from prominent, low rental, locations offering customers a wide range of quality products with fantastic service at attractive prices. + Reviewing all of our suppliers and ensuring that we are receiving good value for money is an important aspect of any financial agenda. We will continue with this process and will commence a three year rolling review of all non stock suppliers where benchmarking and tendering processes will be actively employed. Key Performance Indicators (KPIs) The Directors monitor a number of financial metrics and KPIs for the Company and by individual store, including: (cid:1) Like for like & total sales growth (page 10) (cid:1) Sales value per transaction (page 11) (cid:1) Gross Margin (page 10) The Directors receive regular information on these and other metrics and KPIs for the Group as a whole. TOPPS TILES PLC Annual Report & Financial Statements 2007 09 BUSINESS REVIEW continued FINANCIAL PERFORMANCE AT A GLANCE 2005, 2006 AND 2007 FIGURES ARE STATED IN ACCORDANCE WITH IFRS. 2003 AND 2004 ARE STATED IN ACCORDANCE WITH UK GAAP. GROUP REVENUE (£m) OPERATING PROFIT (£m) BASIC EARNINGS PER SHARE (pence) DIVIDEND LEVEL (pence) DIVIDEND COVER (times) 250 200 150 100 50 0 50 40 30 20 10 0 15 10 5 0 12 10 8 6 4 2 0 2.5 2.0 1.5 1.0 0.5 0 GROSS MARGIN (%) 207.9 173.3 180.2 157.6 118.9 2004 2005 2006 2007 2003 Source : see page 61 44.34 38.87 36.82 32.55 PROFIT BEFORE TAX (£m) 18.57 2003 2004 2005 2006 2007 15.1 13.3 12.8 11.3 5.8 AVERAGE NUMBER OF EMPLOYEES (THE TEAM) DURING THE FINANCIAL PERIODS 2,000 1,500 1,000 500 70 60 50 40 30 20 10 0 40 35 30 25 20 15 10 5 0 60.5 61.3 57.5 62.6 62.8 2003 2004 2005 2006 2007 39.2 39.1 37.8 33.8 18.9 2003 2004 2005 2006 2007 Source : see page 61 1,722 1,513 1,582 1,327 1,176 2004 2005 2006 2007 2003 Source : see page 61 0 2003 2004 2005 2006 2007 Source : see page 61 9.50 10.40 10.70 8.00 3.48 2.5 1.67 1.41 1.41 1.41 2004 2005 2006 2007 2003 Source : see page 61 OVERALL REVENUE AND LIKE- FOR-LIKE REVENUE GROWTH (%) 35 30 25 20 15 10 5 0 -5 32.5 21.5 24.2 15.2 10.0 3.4 15.4 4.7 3.9 -1.8 2003 2004 2005 2006 2007 TOPPS TILES PLC Annual Report & Financial Statements 2007 10 Key Performance Indicators (KPIs) continued In addition, the Directors receive information on non financial metrics including: (cid:1) Customer satisfaction (page 6) (cid:1) Utilisation of own fleet (page 17) 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 the development of substitute products. Gross margin Overall gross margin was 62.8% compared with 62.6% last year. At the interim stage of this period gross margin was 62.6%. In the second half of the period we have generated a gross margin of 63.0%. Operating expenses Total operating costs have increased from £73.9 million to £86.2 million, an increase of 16.7%. Costs as a percentage of sales were 41.4% compared to 41.0% last year. Operating Profit Operating profit for the period was £44.3 million compared to £38.9m in the same period last year, an increase of 14.1%. This represented a 21.3% return on sales (2006: 21.6%). 10.7p Full year dividend (2006: 10.4p). 13.3% Adjusted Earnings per share increase.* *Adjusted for non recurring items: 2006: Property disposal gains of £0.3 million and share buy back costs of £1.1 million 2007: Property disposal gains of £0.3 million The Directors routinely monitor all these risks and uncertainties and appropriate actions are taken to mitigate the risks and/or their potential outcomes. During the coming year a series of detailed reviews will be performed across the business which will ensure we have up to date and robust contingency plans in place for all areas. Financial Review PROFIT AND LOSS ACCOUNT Revenue Revenue for the period ended 29 September 2007 increased by 15.4% to £207.9 million (2006: £180.2 million). Like for like stores increased sales by 4.7%. On a comparable basis (adding Holland into the prior year) overall revenue increased by 12.1%. Average transaction per customer has increased to £64 compared to £62 in the same period last year. Other gains and losses Other gains & losses include the impact of property disposals. Property disposals accounted for £0.3m (2006: £0.3m) driven by a sale of a long leasehold on our Aberdeen store. Financing The net interest charge for the year was £6.8m (2006: £0.1m). This charge has increased as a result of the £116m loan that was obtained in 2006 to finance the share buyback programme. The charge for the year also includes a fair value adjustment of £0.5m relating to the interst rate hedging we have in place. The interest rate derivatives have been re-valued per the requirements of IAS39 “Financial Instruments; Recognition and Measurement”. TOPPS TILES PLC Annual Report & Financial Statements 2007 11 BUSINESS REVIEW continued Profit before tax Reported profit before tax decreased by 3.2% to £37.8 million (2006: £39.1 million). This reduction is driven by the additional interest charge described above. The net result of the share buyback has generated a significant increase in the EPS return (see below). Group profit before tax margin was 18.2% down from 21.7% last year. Interest and tax The effective rate of Corporation Tax was 32.0% compared with 28.8% last year. The underlying tax rate, excluding adjustments in respect of previous periods is 30.8%. Net interest cover was 7.7 times based on earnings before interest, tax and depreciation, excluding the impact of IAS39 in finance charges. Balance Sheet Capital Expenditure Capital expenditure in the period amounted to £9.7 million. This includes the cost of acquiring 2 freehold sites for £1.7 million and development of a store site for £0.3 million, short leasehold additions totalled £0.1 million. We have fitted out 50 stores and undertaken preparatory work on a further 4 stores and refits at a cost of £6.8 million. We continue to update and expand our IT systems within the business and this coupled with some motor vehicle renewals accounted for £0.7 million. At the period end the Group owned 12 freehold sites including 2 warehouse and distribution facilities with a total net book value of £17.7 million. £49.8m Net cash generated by operations. (2006: £37.9m). Whilst interest rates have increased through the year which has increased the interest charge in the P&L, in January we put in place interest rate derivatives, this has provided us with helpful economic protection during the year, however, the requirements of IAS39 have led to an additional charge this year resulting from a high degree of volatility in the financial markets over the final quarter of the year. Earnings per Share Basic and diluted earnings per share grew by 17.9% to 15.09p and 15.02p respectively. Dividend and dividend policy The Board is recommending a final dividend of 6.95 pence per share, which will give a total dividend for the period of 10.70 pence compared to 10.40 pence last year, an increase of 2.9%. We have a maintained a progressive dividend policy. TOPPS TILES PLC Annual Report & Financial Statements 2007 12 Stock Stock at the period end represents 146 days turnover compared with 146 days for the same period last year. Capital Structure and Treasury Cash reserves at the period end were £15.8 million (2006: £16.5 million) with borrowings at £111.0 million (2006: £116 million). This gives the Group a net debt position of £95.2 million compared to £99.5 million as at 1 October 2006. In August 2006 the Company borrowed £116m to fund a 3 for 4 share buyback programme. Through the financial year we have been able to maintain an appropriate level of cash reserves in the business. £37.8m Profit before tax (2006: £39.1m). £95.2m Net debt (2006: £99.5m). 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 we expect this to continue. Annual General Meeting The Annual General Meeting for the period to 29 September 2007 will be held on 8th January 2008 at 10.30am at Topps Tiles Plc, Thorpe Way, Grove Park, Enderby, Leicestershire LE19 1SU. Cashflow Net cash generated by operating activities was £49.8 million, £11.9million higher than last year reflecting the higher trading profit and improved working capital management. Rob Parker Finance Director Matthew Williams Chief Executive Officer TOPPS TILES PLC Annual Report & Financial Statements 2007 13 Our commitment to making a positive contribution to the communities where we do business extends from our youth football sponsorship up to our sponsorship of Leicester City FC. TOPPS TILES PLC Annual Report & Financial Statements 2007 14 CORPORATE AND SOCIAL RESPONSIBILITY (CSR) THE TEAM AT TOPPS TILES IS VERY PROUD OF THE WORK THAT WE HAVE BEEN INVOLVED IN ON CORPORATE SOCIAL RESPONSIBILITY. THIS IS NOT A NEW AREA FOR THE BUSINESS AS WE HAVE ENDEAVOURED TO WORK RESPONSIBLY WITH ALL OF OUR STAKEHOLDERS FOR A NUMBER OF YEARS. 300 the number of football teams that we sponsor in the UK. Our responsibilities cover many areas, and in 2004 we established a working party chaired by a main Board Director to review our policies and look for opportunities for improvement. The areas we have given most focus to are: (cid:1) Community Relations (cid:1) Environment (cid:1) Workplace & Employees (cid:1) Supply Chain The Group is currently a constituent of the FTSE4 Good Index of socially responsible UK quoted companies. The FTSE4 Good Index is designed to measure the performance of companies that meet globally recognised corporate responsibility standards and to facilitate investment in those companies where CSR issues are an influencing factor in the investors decision making process. We aim to comply with the criteria set by the operators of this Index and are actively engaged in further developments of CSR policies to ensure ongoing compliance. Community Relations Community Relations is an area the business has supported over a long period of time. 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. Whenever we open a new store we make a point of selecting a local team to support. This is a simple and effective way of reaching out to the local community wherever we decide to trade. This makes us one of the biggest supporters of youth football in the UK and we currently support over 300 teams. We are very proud of this association. In addition, this year, we have extended this policy by becoming the shirt sponsors of Leicester City Football Club. Whilst this is a commercial deal, it is a valuable piece of community relations and re-affirms our commitment to our head office and distribution centre, based on the outskirts of Leicester. TOPPS TILES PLC Annual Report & Financial Statements 2007 15 CORPORATE SOCIAL RESPONSIBILITY CONTINUED Community Relations continued In addition, we are also a long term supporter of the charity Asthma UK and have been raising money for seven years. Asthma UK is dedicated to improving the health and wellbeing of 5.2 million people in the UK whose lives are affected by this condition. 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. 2007 has been another successful year of charity fundraising at Topps. During the year we have raised over £100,000, £60,000 coming from our annual charity auction which we host with our key suppliers. This now brings the total raised to date to over £600,000. Environment There are three primary areas where our business potentially impacts the environment. These are property, waste & transport. We regularly review our progress in these areas and introduce more environmentally responsible practices where possible. Property – energy is a major driver of cost for the business and also forms a significant part of our environmental impact. Energy efficient lighting helps to reduce the impact. We also plan to implement automated meter reading in a portion of our stores in the coming year. This data will enable us to become even more efficient in our stores by helping us to identify where savings could be made. Waste – waste management is an important area for our business and we recycle as much as possible. Stores return paper, plastic & cardboard to the central warehouse for recycling. £100,000 Raised during the year for Asthma UK. Passionate Leicester City supporter Christopher McMullen (10) saw his dream come true when Topps arranged for him to meet his heroes. Chris, who suffers from chronic asthma, is a striker for Braunstone Acorns U11s, sponsored by Topps. His visit to Leicester’s training ground was a special "thank you" for raising nearly £2,000 for Asthma UK. He is pictured with DJ Campbell (left) and Ian Hume. TOPPS TILES PLC Annual Report & Financial Statements 2007 16 Our offices recycle all used paper and we continue to move our reporting away from being paper based and issue increasing numbers of reports in electronic format. Transport – the group uses a combination of owned and third party transport for delivering product to stores. We operate a modern and efficient fleet of vehicles. All new lorries comply with the Euro 4 emissions regulations and come ready equipped with driver efficiency monitoring systems. This technology enables us to plan the most efficient routes and also monitor our drivers’ performance. We utilise out own fleet for 83% of our products distributed (2006: 70%). We have an active policy of internal promotion, where possible, and encourage our staff to apply for internal vacancies and promotions. To support this we conduct regular dialogues with employees on job and career development. We are committed to being an equal opportunities employer and have policies in place which are clearly communicated to all of our staff. Supply Chain We source our goods for resale from around the world including tiles, natural stone, wooden flooring and adhesives. "Asthma UK is delighted to be supported by Topps Tiles employees and customers. This year our fundraising target reached £600,000 which was a great achievement and will go a long way to helping the 5.2 million people with asthma in the UK today. The money Topps Tiles has raised has supported a number of projects over the years including information packs for schools, providing asthma training resources at various Primary Care Trusts and setting up children’s asthma clinics. We look forward to working with Topps Tiles for many more years and launching more innovative and exciting fundraising ideas to help us reach £1million!" Kate Pollard, Corporate Team Manager, Asthma UK. Workplace & Employees We have a duty to our employees to provide them with a safe and comfortable working environment. We operate a Health & Safety Committee which meets on a regular basis and is chaired by a Board Director and we maintain regular dialogues with staff and our in house Health & Safety Team. This team carries out regular assessments of the workplace and employee sentiment to ensure that we provide an optimal working environment. Communication with our employees is vital and to ensure that we communicate as effectively as possible we produce an in-house magazine six times a year which updates all employees on what is happening across the business. Our employee suggestion scheme which is overseen by our Business Development Director, Nick Ounstead, is also an important part of communication with our employees. This helps to improve the business across a number of areas. Labour standards, factory conditions and human rights are issues we take seriously. To address any possible concerns our buyers conduct regular supplier visits and factory tours and also include a clause in all contracts with suppliers which stipulate our requirements. We work closely with all our suppliers to source products and distribution routes which will have a positive impact on environmental performance and sustainability. We have also developed a policy on timber products and have adopted the principles and criteria of the Forest Stewardship Council as our benchmark. Our full CSR policy and targets can be found on our website at www.toppstiles.co.uk in the investor section under corporate responsibility. TOPPS TILES PLC Annual Report & Financial Statements 2007 17 DIRECTORS NON-EXECUTIVE CHAIRMAN BARRY BESTER Non-Executive Chairman (aged 50) 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. EXECUTIVE DIRECTORS MATTHEW WILLIAMS Chief Executive Officer (aged 33) 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. In November 2007 he was promoted to Chief Executive Officer. NICHOLAS OUNSTEAD Business Development Director (aged 47) Health and Safety Committee Chairman Nick joined Topps Tiles in April 1997. Prior to this he was Marketing Director at Bellegrove Ceramics Plc which was a major supplier to DIY chains and independent retailers. In November 2007 he moved to the role of Business Development Director responsible for sourcing, logistics and Holland. Nick is also the Chairman of the Health and Safety Committee and is responsible for the employee suggestion scheme. ROBERT PARKER Finance Director (aged 35) Company Secretary Social and Environmental Responsibility Chairman Rob Joined Topps Tiles in 2007 as Finance Director. Rob’s previous role before joining the Group was Director of Finance & IT for Savers Health & Beauty Ltd. Prior to that Rob was with the Boots Group Plc for 10 years, including 5 years with the international side of the business, ultimately as Director of Finance for Boots Retail International. He is responsible for the accounting, financial control, treasury, administration and Group secretarial matters. TOPPS TILES PLC Annual Report & Financial Statements 2007 18 NON-EXECUTIVE DIRECTORS ALAN MCINTOSH CA Senior Non-Executive Director (aged 39) 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 79) 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 61) 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. TOPPS TILES PLC Annual Report & Financial Statements 2007 19 DIRECTORS AND ADVISORS PRESIDENT S.K.M. WILLIAMS FCA DIRECTORS B.F.J. BESTER Non-Executive Chairman M. WILLIAMS Chief Executive Officer N.D. OUNSTEAD Business Development Director R. PARKER ACMA Finance Director 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 R. Parker ACMA REGISTERED NUMBER 3213782 REGISTERED OFFICE Thorpe Way Grove Park Enderby Leicestershire LE19 1SU AUDITORS Deloitte & Touche LLP 2 Hardman Street 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 & Financial Statements 2007 20 FINANCIAL STATEMENTS For the 52 week period ended 29 September 2007 22 Directors’ report 25 Corporate governance statements 27 Remuneration report 30 Independent auditors’ report - consolidated financial statements 32 Consolidated group income statement 32 Consolidated statement of recognised income and expense 33 Consolidated balance sheet 34 Consolidated cash flow statement 35 Notes to the consolidated financial statements 55 Independent auditors’ report - company financial statements 56 Company balance sheet 57 Notes to the company financial statements 61 Five year record 62 Notice of annual general meeting 65 Explanatory notes to the notice of annual general meeting 67 Shareholder information 68 The team 72 Store locations TOPPS TILES PLC Annual Report & Financial Statements 2007 21 DIRECTORS’ REPORT For the 52 week period ended 29 September 2007 The Directors present their report on the affairs of the Group, together with the financial statements and auditors’ report, for the 52 week period ended 29 September 2007. Princial 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 29 September 2007 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 8 to 13 and the Corporate and Social Responsibility statement on pages 15 to 17, 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 pages 9 and 11. Results and dividends The audited financial statements for the 52 week period ended 29 September 2007 are set out on pages 32 to 54. The Group’s profit for the period, after taxation, was £25,740,000 (2006: £27,804,000). An interim dividend of 3.75 pence per share, £6,396,000, was paid on 29 June 2007. The Directors recommend a final dividend of 6.95 pence per share, £11,860,000, making a total of 10.70 pence per share, £18,256,000 (2006 – total dividend 10.40p per share, £19,667,000). Subject to approval by the shareholders at the Annual General Meeting, to be held on 8 January 2008, the final dividend will be paid on 31 January 2008, to shareholders on the register at the close of business on 4 January 2008. Directors The Directors of the Company are as follows: Non-Executive Chairman B.F.J. Bester M.T.M. Williams Chief Executive Officer N.D. Ounstead R. Parker W.A. McIntosh V.H. Watson J.M. Jack Business Development Director Finance Director (Appointed 10th April) Senior Non-Executive Director Non-Executive Director Non-Executive Director The Directors’ interests in the shares of the Company are set out on page 29. 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 50 days purchases (2006 - 41 days). TOPPS TILES PLC Annual Report & Financial Statements 2007 22 Charitable and political contributions During the period the Group made charitable donations of £10,000 to Asthma UK (2006: £10,000). The Group made no political contributions. Substantial shareholdings In addition to the Directors’ shareholdings noted on page 29, on 31 October 2007 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. Williams S K M Esq AXA Framlington Investment Management New Star Asset Management Scottish Widows Investment Partnership Liontrust Asset Management Baille Gifford & Co Threadneedle Asset Management M&G Investment Management Legal & General Investment Management Number 15,718,950 1 1,808,193 10,967,524 8,501,248 7,738,004 7,401,586 6,71 5,25 1 6,322,660 5,845,955 % held 9.2% 6.9% 6.4% 5.0% 4.5% 4.3% 3.9% 3.7% 3.4% 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, 17 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 1,306,491. The Directors will continue to incentivise employees through additional employee share option schemes in the forthcoming financial period. TOPPS TILES PLC Annual Report & Financial Statements 2007 23 DIRECTORS’ REPORT CONTINUED For the 52 week period ended 29 September 2007 Information given to auditors Each of the Directors at the date of approval of this report confirms that: (cid:1) So far as the Director is aware, there is no relevant audit information of which the Company’s auditors are unaware; and (cid:1) 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 The Directors are responsible for preparing the Annual Report, Directors’ Remuneration Report and the financial statements in accordance with applicable law and regulations. Company law requires the Directors to prepare financial statements for each financial year. The Directors are required by the IAS Regulation to prepare the Group financial statements under IFRSs as adopted by the European Union. The Group financial statements are also required by law to be properly prepared in accordance with the Companies Act 1985 and Article 4 of the IAS Regulation. International Accounting Standard 1 requires that IFRS financial statements present fairly for each financial year the Company’s financial position, financial performance and cash flows. This requires the faithful representation of the effects of transactions, other events and conditions in accordance with the definitions and recognition criteria for assets, liabilities, income and expenses set out in the International Accounting Standards Board’s ‘Framework for the preparation and presentation of financial statements’. In virtually all circumstances, a fair presentation will be achieved by compliance with all applicable IFRSs. However, Directors are also required to: (cid:1) properly select and apply accounting policies; (cid:1) present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information; and (cid:1) provide additional disclosures when compliance with the specific requirements in IFRSs are insufficient to enable users to understand the impact of particular transactions, other events and conditions on the entity’s financial position and financial performance. The Directors have elected to prepare the parent Company financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). The parent Company financial statements are required by law to give a true and fair view of the state of affairs of the Company. In preparing these financial statements, the Directors are required to: (cid:1) select suitable accounting policies and then apply them consistently; (cid:1) make judgments and estimates that are reasonable and prudent; and (cid:1) state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements. The Directors are responsible for keeping proper accounting records that disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the parent Company financial statements comply with the Companies Act 1985. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company’s website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions. On behalf of the Board R Parker Director and Company Secretary TOPPS TILES PLC Annual Report & Financial Statements 2007 24 CORPORATE GOVERNANCE STATEMENTS 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 three are Executive Directors, led by the Company’s Non-Executive Chairman, Mr B. J. F. Bester. The Senior Independent Non- Executive Director is Mr W.A. McIntosh, who also chairs the Audit Committee. Brief biographical details of all Directors are given on pages 18 and 19. 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. Directors are elected at the first AGM after appointment, therefore, Rob Parker 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 week period ended 29 September 2007 and the attendance record of the individual Directors. Number of meetings B.F.J. Bester M. Williams N.D. Ounstead A. Liggett (Retired 27th April 2007) R. Parker(Appointed 10th April 2007) W.A. McIntosh V.H. Watson J.M. Jack Board Of Directors Audit Committee Remuneration Committee Nomination Committee 12 12 12 12 9 3 8 10 11 2 2 2 2 1 1 2 2 2 5 5 N/A N/A N/A N/A 5 5 5 7 7 N/A N/A N/A N/A 7 7 7 TOPPS TILES PLC Annual Report & Financial Statements 2007 25 CORPORATE GOVERNANCE STATEMENTS continued 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 who is regarded as having recent and relevant financial experience, the other members are Victor Watson and Michael Jack. 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 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. 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 and Barry Bester. 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. TOPPS TILES PLC Annual Report & Financial Statements 2007 26 REMUNERATION REPORT 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 three main elements of the remuneration package for executive Directors: (cid:1) basic annual salary (including Directors’ fees) and benefits; (cid:1) annual bonus payments; (cid:1) 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 2007 with increases taking effect from 1 November 2007. 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. Annual bonus payments A discretionary annual cash bonus scheme represents the short term incentive element of the overall remuneration package for Mr Bester, Mr Williams, Mr. Parker 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 operating profit. For the period ending 29 September 2007 there will be a total of £776,000 (excluding NI) paid at the end of November 2007. The annual bonus scheme for the period to September 2008 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 as disclosed in the table on page 29. TOPPS TILES PLC Annual Report & Financial Statements 2007 27 REMUNERATION REPORT continued 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. Parker and Mr Ounstead’s contracts are in the process of being renewed, there is no material change expected to their notice periods. 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 £25,000. 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 B. Bester W.A. McIntosh V.H. Watson J.M. Jack Date of contract or letter of appointment 1 October 2007 27 May 1997 27 May 1997 26 January 1999 Unexpired term N/A N/A N/A N/A Notice period 6 months 6 months 6 months 6 months 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 mid 250 companies. Graph showing TSR performance of Topps Tiles plc measured against FTSE Mid 250 Index (Excluding Investment Trusts) for the period 30 September 2002 to 30 September 2007 ) 0 0 1 o t d e s a b e r ( R S T 700 600 500 400 300 200 100 0 30 9 02 Topps Tiles FTSE Mid 250 Exc Investment Trusts 30 9 03 30 9 04 30 9 05 30 9 06 30 9 07 Date Source: Datastream TOPPS TILES PLC Annual Report & Financial Statements 2007 28 Audited information Aggregate Directors’ remuneration The total amounts for Directors’ remuneration were as follows: Emoluments Money purchase pension contributions Directors’ emoluments B.F.J. Bester M.T.M. Williams N.D. Ounstead R. Parker (Appointed 10th April 2007) A.Liggett (Retired 27th April 2007) Non-Executive Directors W.A. McIntosh V.H. Watson J.M. Jack Fees £’000 – – – – – 25 8 – 33 Vehicle allowance £’000 Benefits in kind £’000 Money purchase pension contributions £’000 17 3 24 7 – – – – 51 1 16 5 2 18 – – – 42 6 – 14 – 6 – – – 26 Basic salary £’000 150 250 300 76 156 – 17 25 974 2007 £’000 1,876 26 1,902 2007 £’000 324 519 643 161 180 25 25 25 2006 £’000 3,178 30 3,208 2006 £’000 148 399 1,300 – 1,301 20 20 20 Bonus £’000 150 250 300 76 – – – – 776 1,902 3,208 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 29 September 2007 was 196.75 pence and the range during the year was 309.75 pence to 188.25 pence. Directors interests The Directors had the following interest in the shares of the Company (all interests relate solely to Ordinary Shares). B.F.J. Bester N.D. Ounstead R. Parker M. Williams W.A. McIntosh V.H. Watson J.M. Jack 2007 ordinary shares of 3.33p each 13,906,200 370,125 10,000 380,205 1,188,750 132,000 15,250 2006 ordinary shares of 3.33p each 13,906,200 370,125 – 350,205 1,188,750 132,000 11,250 Approval This report was approved by the Board of Directors on 26 November 2007 and signed on its behalf by: Alan McIntosh Chairman of Remuneration Committee TOPPS TILES PLC Annual Report & Financial Statements 2007 29 INDEPENDENT AUDITORS' REPORT - CONSOLIDATED FINANCIAL STATEMENTS To the members of Topps Tiles Plc We have audited the Group financial statements of Topps Tiles plc for the 52 week period ended 29 September 2007 which comprise the consolidated income statement, the consolidated statement of recognised income and expense, the consolidated balance sheet, the consolidated cash flow statement, and the related notes 1 to 29. These Group financial statements have been prepared under the accounting policies set out therein. We have also audited the information in the Directors’ Remuneration Report that is described as having been audited. We have reported separately on the parent Company financial statements of Topps Tiles plc for the 52 week period ended 29 September 2007. 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 Directors’ Remuneration Report and the Group financial statements in accordance with applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union are set out in the Statement of Directors’ Responsibilities. Our responsibility is to audit the Group financial statements in accordance with relevant 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, whether the Group financial statements have been properly prepared in accordance with the Companies Act 1985 and Article 4 of the IAS Regulation and whether the part of the Directors’ remuneration report described as having been audited has been properly prepared in accordance with the Companies Act 1985. We also report to you whether in our opinion the information given in the Directors’ Report is consistent with the Group financial statements. The information given in the Directors’ Report includes that specific information presented in the Business Review that is cross referred from the Enhanced Business Review section of the Directors’ Report. In addition we report to you if, in our opinion, we have not received all the information and explanations we require for our audit, or if information specified by law regarding Director’s remuneration and other transactions is not disclosed. We review whether the Corporate Governance Statement reflects the Company’s compliance with the nine provisions of the 2003 Combined Code specified for our review by the Listing Rules of the Financial Services Authority, and we report if it does not. We are not required to consider whether the board’s statements on internal control cover all risks and controls, or form an opinion on the effectiveness of the Group’s corporate governance procedures or its risk and control procedures. We read the other information contained in the Annual Report as described in the contents section and consider whether it is consistent with the audited Group financial statements. The other information comprises only the Directors’ Report, the Chairman’s Statement, the Chief Executive’s statement, the unaudited part of the Directors’ Remuneration Report, the Business Review and the Corporate Governance Statement. We consider the implications for our report if we become aware of any apparent misstatements or material inconsistencies with the Group financial statements. Our responsibilities do not extend to any further information outside the Annual Report. 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 Directors’ Remuneration Report to be audited. It also includes an assessment of the significant estimates and judgments made by the Directors in the preparation of the Group financial statements, and of whether the accounting policies are appropriate to the Group’s circumstances, consistently applied and adequately disclosed. TOPPS TILES PLC Annual Report & Financial Statements 2007 30 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 Directors’ Remuneration Report to be 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 infor- mation in the Group financial statements and the part of the Directors’ Remuneration Report to be audited. Opinion In our opinion: (cid:1) the Group financial statements give a true and fair view, in accordance with IFRSs as adopted by the European Union, of the state of the Group’s affairs as at 29 September 2007 and of its profit for the 52 week period then ended; (cid:1) the Group financial statements have been properly prepared in accordance with the Companies Act 1985 and Article 4 of the IAS Regulation; (cid:1) the part of the Directors’ remuneration report described as having been audited has been properly prepared in accordance with the Companies Act 1985; and (cid:1) 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 to the Group financial statements, the Group in addition to complying with its legal obligation to comply with IFRSs as adopted by the European Union, has also complied with the IFRSs as issued by the International Accounting Standards Board. In our opinion the Group financial statements give a true and fair view, in accordance with IFRSs, of the state of the Group’s affairs as at 29 September 2007 and of its profit for the 52 week period then ended. Deloitte & Touche LLP Chartered Accountants and Registered Auditors Manchester, United Kingdom 26 November 2007 TOPPS TILES PLC Annual Report & Financial Statements 2007 31 CONSOLIDATED GROUP INCOME STATEMENT For the 52 week period ended 29 September 2007 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 venture 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 Investment revenue Finance costs Profit before taxation Taxation Profit for the period attributable to equity holders of the Company Earnings per ordinary share -basic -diluted All of the above results relate to continuing operations. Notes 3 2007 £’000 207,898 (77,344) 2006 £’000 180,180 (67,470) 130,554 112,710 (7,943) (61,504) (16,765) – – 44,342 – 44,342 270 1,012 (7,791) 37,833 (12,093) (5,907) (50,901) (15,981) (1,110) 58 39,979 (1,110) 38,869 258 1,276 (1,339) 39,064 (11,260) 25,740 27,804 15.09p 15.02p 12.80p 12.74p 15 4 7 8 8 9 11 CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSE For the 52 week period ended 29 September 2007 Exchange rate loss on retranslation of overseas operation Tax effect of share options exercised 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 2007 £’000 – 195 (157) 25,740 2006 £’000 (2) – 304 27,804 25,778 28,106 TOPPS TILES PLC Annual Report & Financial Statements 2007 32 CONSOLIDATED BALANCE SHEET As at 29 September 2007 Non-current assets Goodwill Property plant & equipment Joint venture undertaking 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 Non current liabilities Bank loans Deferred tax liabilities Total liabilities Net liabilities Equity Share capital Share premium Merger reserve Share based payment reserve Capital redemption reserve Retained earnings Total deficit Notes 2007 £’000 2006 £’000 12 13 15 16 16 17 18 1,430 41,851 – 551 36,857 281 43,281 37,689 31,067 7,002 15,781 27,031 5,528 16,533 53,850 49,092 97,131 86,781 (31,497) (4,907) (8,752) (25,837) (4,900) (7,507) (45,156) (38,244) 8,694 10,848 18 20 (105,737) (1,062) (110,600) (1,233) (151,955) (150,077) (54,824) (63,296) 21 22 23 24 25 26 5,686 681 240 222 20,359 (82,012) 5,773 531 (399) 166 20,254 (89,621) (54,824) (63,296) The accompanying notes are an integral part of these financial statements. The financial statements on pages 32 to 54 were approved by the Board of Directors on 26 November 2007 and signed on its behalf by: M Williams R Parker Directors TOPPS TILES PLC Annual Report & Financial Statements 2007 33 2007 £’000 2006 £’000 44,342 38,869 4,424 – 56 772 (1,144) (2,624) 4,000 3,718 (58) 66 258 (1,342) (1,693) (1,949) 49,826 37,869 (7,805) (10,980) (683) (7,655) 31,041 29,531 (1,286) 1,012 (9,674) 1,166 – 1,276 (8,668) 573 (8,782) (6,819) 158 (5,000) – – (18,169) 222 (6,000) 115,500 (122,216) (21,514) (23,011) (34,008) (752) 16,533 (11,296) 27,829 15,781 16,533 CONSOLIDATED CASH FLOW STATEMENT For the 52 week period ended 29 September 2007 Group and share of joint venture profit from operations Adjustments for: Depreciation Share of results of joint venture Share option charge Loss on sales of fixed assets Increase in receivables Increase in inventories Increase/(decrease) in payables Cash generated by operations Interest paid Taxation paid Net cash from operating activities Cashflows from investing activities Acquisition of Joint Venture Interest received Purchase of property, plant and equipment Proceeds of sale of 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 TOPPS TILES PLC Annual Report & Financial Statements 2007 34 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the 52 week period ended 29 September 2007 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 20. The nature of the Group’s operations and its principal activities are set out in the business review on pages 8 to 13. 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 2j. 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: Standards and interpretations in issue but not yet effective IFRS 7 Financial instruments: Disclosures; and the related amendment to IAS 1 on capital disclosures IFRS 8 Operating Segments IAS 1 Amendment ‘Capital Disclosures’ IAS 23 Amendment ‘Borrowing Costs’ IFRIC 4 Determining whether an Arrangement contains a Lease IFRIC 7 Applying the Restatement Approach under IAS 29 Financial Reporting in Hyperinflationary Economies IFRIC 8 Scope of IFRS 2 IFRIC 9 Reassessment of Embedded Derivatives IFRIC 10 Interim Financial Reporting and Impairment IFRIC 11 Group and Treasury Share Transactions IFRIC 12 Service Concession Arrangements 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 also been prepared in accordance with IFRS’s adopted by the European Union and therefore the Group financial statements comply with Article 4 of the EU IAS regulation. The financial statements have been prepared on the historical cost basis, except for the revaluation of financial instruments. The principal accounting policies adopted are set out below. b) Basis of consolidation The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company (its subsidiaries) made up to the Saturday nearest to the 30 September each year. Control is achieved where the Company has the power to govern the financial and operating policies of an investee so as to obtain benefits from its activities. The results of subsidiaries acquired or sold are consolidated for the periods from or to the date on which control passed. TOPPS TILES PLC Annual Report & Financial Statements 2007 35 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued For the 52 week period ended 29 September 2007 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 2007 mean at 29 September 2007 or the 52 weeks then ended; references to 2006 mean at 30 September 2006 or the 52 weeks then ended. d) Business Combinations The acquisition of subsidiaries is accounted for using the purchase method. The cost of the acquisition is measured at the aggregate of the fair values, at the date of exchange, of assets given, liabilities incurred or assumed, and equity instruments issued by the Group in exchange for control of the acquiree, plus any costs directly attributable to the business combination. The acquiree’s identifiable assets, liabilities and contingent liabilities that meet the conditions for recognition under IFRS 3 are recognised at their fair value at the acquisition date. Goodwill arising on acquisition is recognised as an asset and initially measured at cost, being the excess of the cost of the business combination over the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities recognised. e) 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 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 good will is not reversed in a subsequent period. 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. f) 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. Sales returns are provided for based on past experience. 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. TOPPS TILES PLC Annual Report & Financial Statements 2007 36 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued For the 52 week period ended 29 September 2007 2 Accounting policies continued g) 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. h) 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. i) 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. TOPPS TILES PLC Annual Report & Financial Statements 2007 37 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued For the 52 week period ended 29 September 2007 2 Accounting policies continued j) Foreign currency 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. 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 foreign 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. k) 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. l) Investments Fixed asset investments are shown at cost less provision for impairment. m)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. 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. o) Derivative financial instruments The Group’s activities expose it primarily to the financial risks of changes in foreign currency exchange rates and interest rates. The Group uses foreign exchange forward contracts and interest rate swap contracts to manage these exposures. The Group does not hold or issue derivative financial instruments for speculative purposes. The use of financial derivatives is governed by the Group’s policies approved by the Board of Directors, on the use of financial derivatives. TOPPS TILES PLC Annual Report & Financial Statements 2007 38 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued For the 52 week period ended 29 September 2007 2 Accounting policies continued o) Derivative financial instruments continued 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. Changes in the fair value of derivative financial instruments are recognised in the income statement as they arise. p) 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. q) 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. r) 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 October 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. s) 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. t) Trade Payables Trade payables are initially measured at fair value and are subsequently measured at amortised cost, using the effective interest rate method. u) 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. TOPPS TILES PLC Annual Report & Financial Statements 2007 39 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued For the 52 week period ended 29 September 2007 3 Revenue An analysis of revenue is as follows: Non-trade customers Trade customers Investment income Total revenue 4 Business Segments 2007 £’000 182,830 25,068 207,898 1,012 2006 £’000 159,482 20,698 180,180 1,276 208,910 181,456 The Group is currently organised into three retail operating divisions, Topps Tiles (Topps) and Tile Clearing House (TCH) and Topps Floorstore (Holland). 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: Revenue 175,380 25,068 7,450 207,898 Segmental information for the 52 weeks to 29 September 2007 Topps £’000 TCH £’000 Holland £’000 Consolidated £’000 Operating profit before central costs Head office/distribution costs Operating profit Other gains Finance costs less finance income Profit before taxation Other information Capital additions Depreciation Balance Sheet Segment assets Unallocated corporate assets 40,448 5,273 314 46,035 (1,693) 44,342 270 (6,779) 37,833 Topps £’000 4,733 2,683 TCH £’000 1,087 451 Holland £’000 881 271 72,626 10,063 5,044 Head office/ distribution centre £’000 Consolidated £’000 2,973 1,019 9,674 4,424 9,398 9,398 87,733 9,398 97,131 (129,393) (22,562) (129,393) Consolidated total assets 72,626 10,063 5,044 Segment liabilities Unallocated corporate liabilities (17,272) (1,578) (3,712) Consolidated total liabilities (17,272) (1,578) (3,712) (129,393) (151,955) TOPPS TILES PLC Annual Report & Financial Statements 2007 40 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued For the 52 week period ended 29 September 2007 4 Business Segments continued Revenue Operating profit before central costs Head office/distribution centre costs Operating profit Other gains Finance costs less finance income Profit before taxation Other information Capital additions Depreciation Balance sheet Segment assets Unallocated corporate assets Consolidated total assets Segment liabilities Unallocated corporate liabilities Segmental information for the 52 weeks to 30 September 2006 Topps £’000 TCH £’000 Consolidated £’000 159,482 20,698 180,180 35,887 4,685 40,572 (1,703) 38,869 258 (63) 39,064 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) Consolidated total liabilities (29,247) (4,387) (116,443) (150,077) TOPPS TILES PLC Annual Report & Financial Statements 2007 41 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued For the 52 week period ended 29 September 2007 5 Profit before taxation Profit before taxation for the period has been arrived at after charging/(crediting): Depreciation of property, plant and equipment Staff costs (see note 6) Cost of inventories recognised as expense Net foreign exchange gains Analysis of auditors’ remuneration is provided below: Audit services: Statutory audit of the Company’s annual accounts Audit of Company’s Subsidiaries pursuant to legislation Audit-related regulatory reporting Total audit fees Further assurance services Tax services: compliance services advisory services Total non audit fees 2007 £’000 4,424 40,156 75,331 (270) 2006 £’000 3,718 33,733 65,640 (113) 2007 2006 £’000 % £’000 % 15 110 – 125 – 57 73 130 255 6% 43% – 49% – 22% 29% 51% 100% 10 85 10 105 50 65 58 173 278 4% 31% 4% 38% 18% 23% 21% 62% 100% A description of the work of the audit committee is set out on page 26 and includes an explanation of how auditor objectivity and independence is safeguarded when non-audit services are provided by the auditors. Further assurance services in 2006 included work performed in respect of the share buy back. TOPPS TILES PLC Annual Report & Financial Statements 2007 42 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued For the 52 week period ended 29 September 2007 6 Staff costs The average monthly number of employees (including Executive Directors) was: Selling Administration The aggregate remuneration comprised: Wages and salaries (including LTIP) Social security costs Other pension costs (note 27b) 2007 Number employed 2006 Number employed 1,487 235 1,722 2007 £’000 36,524 3,397 235 40,156 1,412 170 1,582 2006 £’000 30,193 3,281 259 33,733 Details of Director’s emoluments are disclosed on page 29. Employee profit sharing of £7.9m (2006: £5.9m) is included in the above and comprises sales commission and bonuses. 7 Other gains and losses Other gains and losses in 2007 relate to the sale of a long leasehold property and in 2006 relate to the sale and leaseback of certain freehold properties. 8 Investment revenue and finance costs Bank interest receivable and similar income Finance costs Interest on bank loans and overdrafts Fair value loss on interest rate swaps Interest costs capitalised Net finance costs 2007 £’000 1,012 (7,325) (480) 14 (7,791) 2006 £’000 1,276 (1,377) – 38 (1,339) Finance costs have been capitalised based on a capitalisation rate of 5.1%, 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 - (credit)/charge for year (note 20) Deferred tax - adjustment in respect of previous periods (note 20) 2007 £’000 11,975 446 (334) 6 12,093 2006 £’000 11,179 343 1,082 (1,344) 11,260 Corporation tax in the UK is calculated at 30% (2006: 30%) of the estimated assessable profit for the year. Taxation for other jurisdictions is calculated at the rates prevailing in the respective jurisdictions. TOPPS TILES PLC Annual Report & Financial Statements 2007 43 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued For the 52 week period ended 29 September 2007 9. Tax continued The charge for the year can be reconciled to the profit per the income statement as follows: Profit before tax: Tax at the UK corporation tax rate of 30% (2006: 30%) Tax effect of expenses that are not deductible in determining taxable profit Tax effect of change in tax rate 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 adjustment in respect of prior periods Tax effect of tangible fixed assets which do not qualify for capital allowances Tax expense for the period 10 Dividends Amounts recognised as distributions to equity holders in the period: Final dividend paid for the 52 week period ended 30 September 2006 of 6.90p (2005 – 6.00p) per ordinary share Interim dividend paid for the 26 weeks ended 31 March 2007 of 3.75p (2006: 3.50p) Over/(under) provision in respect of the prior period final dividend Proposed final dividend for the 52 week period ended 29 September 2007 of 6.95p (2006: 6.90p) per share 2007 £’000 2006 £’000 37,833 39,064 11,350 90 (119) (6) – 452 326 12,093 11,719 281 – (25) 13 (1,001) 273 11,260 2007 £’000 2006 £’000 11,767 13,596 6,396 6 18,169 7,933 (15) 21,514 11,860 11,734 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: Weighted average number of shares for basic earnings per share Weighted average number of shares under option For diluted earnings per share 2007 Number of shares 2006 Number of Shares 170,536,121 823,079 217,252,872 954,715 171,359,200 218,207,587 The reduction in the weighted average number of shares relates to the 3 for 4 reverse share split completed during August 2006. TOPPS TILES PLC Annual Report & Financial Statements 2007 44 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued For the 52 week period ended 29 September 2007 12. Goodwill Cost at 2 October 2005 Movement in the year Cost at 1 October 2006 Acquisition of joint venture Cost and carrying value at 29 September 2007 £’000 551 – 551 879 1,430 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 based on the groups weighted average cost of capital. 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. a) Acquisition of Subsidiary On 1 October 2006 the Group acquired the remaining 50% shareholding in Topps Tiles Holdings BV for total consideration of £1.17 million made up of cash of £522,000 and 250,000 Topps Tiles Plc shares with a value of £647,500 based on the market value on 1st October 2006. Book and fair value £’000 50% acquired £’000 Net assets acquired Property, plant & equipment Inventories Trade and other receivables Cash and cash equivalents Trade and other payables Current Tax liabilities Bank loans Goodwill Total Consideration Satisfied by: Cash Shares Net cash outflow arising on acquisition Cash consideration Net overdraft acquired 1,356 1,412 188 4 (1,480) (130) (768) 582 678 706 94 2 (740) (65) (384) 291 879 1,170 522 648 1,170 522 764 1,286 Topps Tiles Holdings BV contributed £7.5million revenue and £0.3million to the Group’s profit before tax between the date of acquisition (on the first day of the financial period) and the Balance Sheet date. The Directors have concluded that no intangible assets arose on this acquisition. TOPPS TILES PLC Annual Report & Financial Statements 2007 45 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued For the 52 week period ended 29 September 2007 13 Property, plant and equipment Cost At 2 October 2005 Additions Disposals At 30 September 2006 Additions Acquisition of joint venture Disposals Land and buildings Freehold £’000 Short leasehold £’000 Fixtures and fittings £’000 Motor vehicles £’000 12,410 4,333 (261) 16,482 2,040 – – 1,381 1,016 – 2,397 115 – (746) 30,498 3,705 (1,321) 32,882 7,288 1,879 (2,390) 249 22 (160) 111 221 156 (146) total £’000 44,538 9,076 (1,742) 51,872 9,664 2,035 (3,282) At 29 September 2007 18,522 1,766 39,659 342 60,289 Accumulated depreciation and impairment At 2 October 2005 Charge for the year Eliminated on disposals At 30 September 2006 Acquisition of joint venture Charge for the year Eliminated on disposals 424 213 (49) 588 – 268 – 781 121 – 902 – 130 (28) 11,174 3,355 (1,047) 13,482 649 3,954 (1,591) At 29 September 2007 856 1,004 16,494 87 29 (73) 43 30 72 (61) 84 12,466 3,718 (1,169) 15,015 679 4,424 (1,680) 18,438 Carrying amount At 29 September 2007 At 1 October 2006 17,666 15,894 762 1,495 23,165 19,400 258 68 41,851 36,857 Freehold land and buildings include £nil (2006 - £437,310) of assets under construction and £4,104,000 of land (2006 - £4,104,000) 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 £422,000 (2006 - £408,000) 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 TOPPS TILES PLC Annual Report & Financial Statements 2007 46 2007 £’000 2006 £’000 – – – – 2,952 (2,390) 562 112 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued For the 52 week period ended 29 September 2007 15 Joint venture undertaking continued 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 16 Other financial assets Trade and other receivables Amounts falling due within one year: Trade debtors Loan to joint venture Other debtors and prepayments 2007 £’000 – – – – – – – 2006 £’000 124 (35) (31) 58 (2) 56 281 2007 £’000 2006 £’000 357 – 6,645 7,002 417 107 5,004 5,528 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 2007 £’000 18,386 (462) (2,143) 2006 £’000 14,186 (73) 2,420 15,781 16,533 TOPPS TILES PLC Annual Report & Financial Statements 2007 47 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued For the 52 week period ended 29 September 2007 17 Other financial liabilities Trade and other payables Amounts falling due within one year Trade payables Other payables Accruals and deferred income 2007 £’000 2006 £’000 19,702 4,743 7,052 13,814 5,261 6,762 31,497 25,837 Trade payables and accruals principally comprise amounts outstanding for trade purchases and ongoing costs. The average credit period taken for trade purchases is 50 days (2006: 41 days). The Directors consider that the carrying amount of trade payables approximates to their fair value. 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 Less: Total unamortised 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 Total weighted average interest rates paid were as follows: Loans 2007 £’000 2006 £’000 110,644 115,500 5,000 5,000 101,000 111,000 (356) 5,000 5,000 106,000 116,000 (500) 110,644 115,500 (5,000) 93 (5,000) 100 105,737 110,600 2007 % 2006 % 6.1286 5.4879 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 commenced 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 29 September 2007, the Group had available £5 million (2006 - £6.5 million) of undrawn committed banking facilities. TOPPS TILES PLC Annual Report & Financial Statements 2007 48 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued For the 52 week period ended 29 September 2007 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 2007 £’000 2006 £’000 7,800 6,050 These arrangements are designed to address significant exchange exposures for the first half of 2008 and are renewed on a revolving basis as required. At 29 September 2007 the fair value liability of the Group’s currency derivatives is £251,000 (2006 - £47,000). These amounts are based on market value of equivalent instruments at the balance sheet date. Amounts of £204,000 have been charged to operating profit in the year (2006: £29,000). Interest Rate Derivatives The Group uses interest rate derivatives to manage its exposure to interest rate movements on its bank borrowings. The Group’s interest rate derivatives comprise; - 5 year interest rate cap with a notional value of £20m with interest capped at 6%. - 5 year interest rate swap with a notional value of £20m paying interest at a fixed rate of 5.63% - 10 year cancellable collar with a notional value of £60m with a cap of 5.6% and a floor of 4.49%, the interest rate within this range is LIBOR less 0.4%. Where LIBOR falls below the floor the interest rate resets to a fixed level of 5.55%. The fair value liability of the derivatives entered into at 29th September 2007 is estimated at £480,000. These amounts are based on market values of equivalent instruments at the balance sheet date. Amounts of £480,000 have been charged to finance costs in the year. TOPPS TILES PLC Annual Report & Financial Statements 2007 49 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued For the 52 week period ended 29 September 2007 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. Accelerated tax depreciation £’000 Share based payments £’000 Exchange rate differences £’000 Interest rate hedging £’000 Rent free £’000 At 2 October 2005 Credit to income/(charge) Credit to equity At 30 September 2006 Credit to income/(charge) Charge to equity At 29 September 2007 2,345 (257) – 2,088 (143) – 1,945 (372) (20) (304) (696) (18) 157 (557) (8) (9) – (17) (53) – (70) – – – – (135) – (135) 21 Called-up share capital Authorised 240,000,000(2006: 240,00,000)ordinary shares of 3.33p each (2006: 3.33p) Authorised 37,000,000 (2006: 37,000,000) redeemable B shares of £0.54 each Authorised 124,890,948 (2006: 124,890,948) irredeemable C shares of £0.001 each Authorised nil (2006: 105,109,052) deferred shares of £0.001 each Issued and fully-paid 170,579,936 (2006: 170,057,840) ordinary shares of 3.33p each (2006: 3.33p) Issued and fully paid nil (2006: 353,343) irredeemable C shares of £0.001 each Issued and fully paid nil (2006: 105,109,052) deferred shares of £0.001 each Total (166) 24 – (142) 21 – (121) 2007 £’000 8,000 19,980 125 – 28,105 5,686 – – 5,686 Total £’000 1,799 (262) (304) 1,233 (328) 157 1,062 2006 £’000 8,000 19,980 125 105 28,210 5,668 – 105 5,773 During the period the Group allotted 272,096 (2006: 489,370) ordinary shares with a nominal value of £8,000 (2006: £13,000) under share option schemes for an aggregate cash consideration of £158,000 (2006: £222,000). Additionally 250,000 Ordinary Shares with a nominal value of £9,000 and a market value of £647,500 were issued as consideration for the acquisition of Topps Tiles Holdings BV. Shareholders representing 353,343 irredeemable C shares were subject to compulsory buy back in March 2007 for £0.54 per share and total consideration of £190,805. During the period the Group cancelled 353,343 irredeemable C shares of £0.001 each and 105,109,052 deferred shares of £0.001 each, with a corresponding transfer of £105,000 to the Capital Redemption Reserve. 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 2007 £’000 531 150 – 681 2006 £’000 5,575 209 (5,253) 531 During the period 272,096 Ordinary Shares were issued for an aggregate cash consideration of £158,000 leading to an increase in share premium of £150,000. TOPPS TILES PLC Annual Report & Financial Statements 2007 50 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued For the 52 week period ended 29 September 2007 23 Merger reserve Balance at start and end of period Premium on issue of new shares Balance at end of period 2007 £’000 (399) 639 240 2006 £’000 (399) _ (399) 250,000 Ordinary Shares with a market value of £647,500 were issued as consideration for the acquisition of Topps tiles Holdings BV leading to an increase in the merger reserve of £639,000. 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 Cancellation of shares At end of period 26 Retained earnings At 2 October 2005 Dividends paid Share buy back Exchange rate loss Deferred tax on sharesave scheme taken directly to equity Net profit for period At 30 September 2006 Dividends paid Deferred tax on sharesave scheme taken directly to equity Tax effect of share options exercised Net profit for the period At 29 September 2007 2007 £’000 166 56 222 2007 £’000 20,254 – – 105 2006 £’000 100 66 166 2006 £’000 190 19,980 84 – 20,359 20,254 £’000 41,109 (21,514) (137,322) (2) 304 27,804 (89,621) (18,169) (157) 195 25,740 (82,012) TOPPS TILES PLC Annual Report & Financial Statements 2007 51 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued For the 52 week period ended 29 September 2007 27 Financial commitments a) Capital commitments At the end of the period there were no capital commitments contracted (2006 - £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 £235,000 (2006 - £259,000). c) Lease commitments The Group has entered into non-cancellable operating leases in respect of motor vehicles, equipment and land and buildings. Minimum lease payments under operating leases recognised in income for the period were £18,134,000 (2006: £14,998,000). 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 to 5 years - after 5 years 2007 2006 Land and buildings £’000 16,642 56,421 64,131 137,194 Other £’000 858 1,435 168 2,461 Land and buildings £’000 14,605 50,120 64,749 129,474 Other £’000 725 1,226 194 2,145 Operating lease payments primarily represent rentals payable by the Group for certain of its 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 The group operates 2 share option schemes in relation to group employees. Equity Settled share option scheme 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 Option price (p) Exercisable period No. of options outstanding 2007 2006 0.545p 0.54p 3 Years 3 Years 345,345 47,445 370,990 51,145 392,790 422,135 TOPPS TILES PLC Annual Report & Financial Statements 2007 52 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued For the 52 week period ended 29 September 2007 28 Share based payments continued Movements in share options are summarised as follows: Outstanding at beginning of period Exercised during the period Expired during the period Outstanding at end of period Exercisable end of period 2007 2006 Number of share options 422,135 (28,345) (1,000) 392,790 392,790 Weighted average exercise price 0.54 0.54 0.54 0.54 0.54 Number of share options 541,665 (119,530) – 422,135 422,135 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 2.51 pence The options outstanding at 29 September 2007 had a weighted averaged exercise price of 54 pence, and a weighted average remaining contractual life of 4 years. 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. Movements in share based payment plan options are summarised as follows: Outstanding at beginning of period Issued during the period Expired during the period Exercised during the period Outstanding at end of period Exercisable at end of period 2007 2006 Number of share options 1,009,538 198,211 (72,768) (221,280) 913,701 913,701 Weighted average exercise price 96p 217p 96p 60p 129p 129p Number of share options 1,200,865 193,324 (152,431) (232,220) 1,009,538 1,009,538 The Group recognised total expenses of £56,000 (2006: £66,000) relating to share based payments. 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 2007 144.8 115.8 27.8 3 or 5 4.3 4.4 Weighted average exercise price 74p 158p 74p 41p 96p 96p 2006 124.8 99.8 32.3 3 or 5 4.3 4.5 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. TOPPS TILES PLC Annual Report & Financial Statements 2007 53 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued For the 52 week period ended 29 September 2007 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% shareholding (15,719,000 ordinary shares) in the Group’s issued share capital. At 29 September 2007 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 (2006 - £66,000). No amounts were outstanding at 29 September 2007 (2006 - £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 (2006: £96,000). Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed in this note. TOPPS TILES PLC Annual Report & Financial Statements 2007 54 INDEPENDENT AUDITORS’ REPORT - COMPANY FINANCIAL STATEMENTS We have audited the parent Company financial statements of Topps Tiles plc for the year ended 29 September 2007 which comprise the Balance Sheet and the related notes 1 to 7. These parent Company 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 year ended 29 September 2007 and on the information in the Directors’ remuneration report that is described as having been audited. This report is made solely to the Company’s members, as a body, in accordance with section 235 of the Companies Act 1985. Our audit work has been undertaken so that we might state to the Company’s members those matters we are required to state to them in an auditors’ report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company’s members as a body, for our audit work, for this report, or for the opinions we have formed. Respective responsibilities of Directors and auditors The Directors’ responsibilities for preparing the Annual Report, the Directors’ Remuneration Report and the parent Company financial statements in accordance with applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice) are set out in the Statement of Directors’ Responsibilities. Our responsibility is to audit the parent Company financial statements and the part of the Directors’ Remuneration Report to be audited in accordance with relevant legal and regulatory requirements and International Standards on Auditing (UK and Ireland). We report to you our opinion as to whether the parent Company financial statements give a true and fair view and whether the parent Company financial statements have been properly prepared in accordance with the Companies Act 1985. We also report to you whether in our opinion the Directors’ Report is consistent with the parent Company financial statements. The information given in the Directors’ Report includes that specific information presented in the Business Review that is cross referred from the Enhanced Business Review section of the Directors’ Report. In addition we report to you if, in our opinion, 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 other information contained in the Annual Report as described in the contents section and consider whether it is consistent with the audited parent Company financial statements. The other information comprises only the Directors’ Report, the Chairman’s Statement, the Chief Executive’s Statement and the Business Review. We consider the implications for our report if we become aware of any apparent misstatements or material inconsistencies with the parent Company financial statements. Our responsibilities do not extend to any further information outside the Annual Report. 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 parent Company financial statements. It also includes an assessment of the significant estimates and judgments made by the Directors in the preparation of the parent Company 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 parent Company 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 parent Company financial statements. Opinion In our opinion: (cid:1) the parent 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 29 September 2007; (cid:1) the parent Company financial statements have been properly prepared in accordance with the Companies Act 1985; and (cid:1) the information given in the Directors’ Report is consistent with the parent Company financial statements. Deloitte & Touche LLP Chartered Accountants and Registered Auditors Manchester, United Kingdom 26 November 2007 TOPPS TILES PLC Annual Report & Financial Statements 2007 55 COMPANY BALANCE SHEET As at 29 September 2007 Notes 2007 £’000 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 Net assets Capital and reserves Called-up share capital Share premium Share based payment reserve Merger reserve Capital redemption reserve Other reserves Profit and loss account Equity shareholders’ funds 3 4 5 6 7 7 7 7 7 7 2006 £’000 3,227 3,227 4,397 4,397 – 221,740 25,101 246,841 (1,023) 13 221,200 28,094 249,307 (4,540) 245,818 244,767 250,215 247,994 5,686 681 222 639 20,359 6,200 216,428 5,773 531 166 – 20,254 6,200 215,070 250,215 247,994 The financial statements were approved by the Board of Directors on 26 November 2007 and signed on its behalf by: M Williams Director R Parker Director TOPPS TILES PLC Annual Report & Financial Statements 2007 56 NOTES TO THE COMPANY FINANCIAL STATEMENTS For the 52 week period ending 29 September 2007 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. 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 profit after tax for the financial year ended 29 September 2007 of £1,358,000 (2006: £306,402,000). The auditor’s remuneration for services to the Company was £150,000 (2006: £10,000). The Company had no other employees other than the Directors (2006: same), their remuneration is detailed on page 28. 3 Fixed Asset Investments At 30 September 2006 Additions Acquisition of Joint Venture At 29 September 2007 Joint venture £’000 482 – (482) Shares £’000 2,745 1,170 482 Total £’000 3,227 1,170 – – 4,397 4,397 On 1st October 2006 the Group acquired the remaining 50% of the Share Capital of Topps Tiles Holdings BV as explained in note 12a. TOPPS TILES PLC Annual Report & Financial Statements 2007 57 NOTES TO THE COMPANY FINANCIAL STATEMENTS continued For the 52 week period ending 29 September 2007 3 Fixed Asset Investments continued 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. % of issued shares held Principal activity Subsidiary undertaking Topalpha Limited* Multi Tile Limited Topps Tiles Holdings Topps Tiles (UK) Limited 100% 100% 100% 100% Topps Tiles Distribution Ltd 100% Topps Tiles Holdings BV* 100% *held directly by Topps Tiles Plc The investments are represented by ordinary shares. 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. Retail and wholesale of ceramic tiles, wood flooring and related products 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. 4 Debtors Amounts falling due within one year: Prepayments and accrued income Amounts falling due after one year Amounts owed by subsidiary undertaking 2007 £’000 2006 £’000 – 13 221,740 221,200 TOPPS TILES PLC Annual Report & Financial Statements 2007 58 5 Creditors: Amounts falling due within one year Trade and other creditors Amounts owed to Group companies Accruals and deferred income 6 Called-up share capital Authorised 240,000,000 (2006: 240,00,000) ordinary shares of 3.33p each (2006: 3.33p) Authorised 37,000,000 (2006: 37,000,000) redeemable B shares of £0.54 each Authorised 124,890,948 (2006: 124,890,948) irredeemable C shares of £0.001 each Authorised nil (2006: 105,109,052) deferred shares of £0.001 each Issued and fully-paid 170,579,936 (2006: 170,056,840) ordinary shares of 3.33p each (2006: 3.33p) Issued and fully paid nil (2006: 353,343) irredeemable C shares of £0.001 each Issued and fully paid nil (2006: 105,109,052) deferred shares of £0.001 each Total 2007 £’000 17 673 333 2006 £’000 137 3,772 631 1,023 4,540 2007 £’000 2006 £’000 8,000 19,980 125 – 28,105 5,686 – – 5,686 8,000 19,980 125 105 28,210 5,668 – 105 5,773 During the period the Group allotted 272,096 (2006: 489,370) ordinary shares with a nominal value of £8,000 (2006: £13,000) under share option schemes for an aggregate cash consideration of £158,000 (2006: £222,000). Additionally 250,000 Ordinary Shares with a nominal value of £9,000 and a market value of £647,500 were issued as consideration for the acquisition of Topps Tiles Holdings BV. Shareholders representing 353,343 irredeemable C shares were subject to compulsory buy back in March 2007 for £0.54 per share and total consideration of £190,805. During the period the Group cancelled 353,343 irredeemable C shares of £0.001 each and 105,109,052 deferred shares of £0.001 each, with a corresponding transfer of £105,000 to the Capital Redemption Reserve. TOPPS TILES PLC Annual Report & Financial Statements 2007 59 NOTES TO THE COMPANY FINANCIAL STATEMENTS continued For the 52 week period ending 29 September 2007 7 Reserves At 1 October 2006 Premium on issue of new shares Cancellation of Shares Share based payment reserve movement Retained profit for the period Share premium £’000 531 150 – – – Capital redemption reserve £’000 20,254 – 105 – – Other reserves £’000 6,200 – – – – Merger reserve £’000 – 639 – – – Share based payment reserve £’000 166 – – 56 – Profit and loss account £’000 215,070 – – – 1,358 At 29 September 2007 681 20,359 6,200 639 222 216,428 At 29 September 2007, the Directors consider the other reserve of £6,200,000 to remain non distributable. The Directors consider £203,106,000 of the profit and loss account reserves not to be distributable at 29 September 2007 due to them arising on an unrealised gain on the disposal of subsidiary companies. TOPPS TILES PLC Annual Report & Financial Statements 2007 60 FIVE YEAR RECORD Under UK GAAP Under IFRS Proforma 52 weeks ended 27 September 2003 Unaudited £’000 118,897 18,569 18,888 30,822 5.82p 3.48p 1.67 1,176 85.4p 52 weeks ended 2 October 2004 52 weeks ended 1 October 2005 52 weeks ended 30 September 2006 52 week period ended 29 September 2007 £’000 £’000 £’000 £’000 157,612 32,548 33,794 47,062 11.30p 8.00p 1.41 1,327 178.9p 173,326 36,822 39,191 52,230 13.33p 9.50p 1.41 1,513 172.0p 180,180 38,869 39,064 207,898 44,342 37,833 (63,296) (54,824) 12.80p 10.40p 1.41 1,582 259.0p 15.09p 10.70p 1.41 1,722 196.8p Group Revenue Operating profit Profit before taxation Shareholders’ funds/(deficit) 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. TOPPS TILES PLC Annual Report & Financial Statements 2007 61 NOTICE OF ANNUAL GENERAL MEETING NOTICE IS HEREBY GIVEN that the Annual General Meeting of Topps Tiles Plc (the “Company”) will be held at Topps Tiles Plc, Thorpe Way, Grove Park, Enderby, Leicestershire, LE19 1SU on Tuesday 8 January 2008 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 29 September 2007 together with the last Directors’ Report, the last Directors’ Remuneration Report and the Auditors’ Report on those accounts and the auditable part of the Directors’ Remuneration Report. 2 To declare a final dividend of 6.95 pence per Ordinary Share on the Ordinary Shares for the period. 3 To re-elect Robert Parker (who has been appointed since the last AGM) as a Director of the Company. 4 To re-elect Alan McIntosh as a Director of the Company. 5 To re-elect Victor Watson as a Director of the Company. 6 To re-elect Barry Bester as a Director of the Company. 7 To re-appoint Deloitte & Touche LLP as Auditors to hold office from the conclusion of the meeting to the conclusion of the next meeting at which the Annual Report and Financial Statements are laid before the Company at a remuneration to be determined by the Directors. 8 To approve the Directors’ Remuneration Report for the financial period ended 29 September 2007 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, 11 and 12 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(1) of the Companies Act 1985 (the “Act”) to exercise all the powers of the Company to allot relevant securities (as defined in Section 80 (2) of the Act) up to an aggregate nominal amount of £1,708,181 (in substitution for/to any existing authorities under the Act) to such persons at such times and upon such terms and conditions as they may determine (subject always to the articles of association of the Company) provided that this authority shall (unless previously revoked, varied or extended by the Company in general meeting) expire at the conclusion of the next Annual General Meeting or 15 months from the date of the passing of this resolution, if earlier save that the Company may, before such expiry, make an offer, agreement or arrangement which would or might require relevant securities to be allotted after the expiry of such period and the Directors may then allot relevant securities pursuant to any such offer, agreement or arrangement as if the authority or power conferred hereby had not expired. 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) 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 unless renewed, varied or revoked, expire at the conclusion of the next Annual General Meeting of the Company or 15 months from the date of the passing of this resolution, if earlier and provided further that this authority and power shall be limited to: (a)the allotment of equity securities pursuant to a rights issue or similar offer to Ordinary Shareholders where the equity securities respectively attributable to the interests of all Ordinary Shareholders are proportionate or as nearly as practical (and taking into account any prohibitions against or difficulties concerning the making of an offer 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 £256,227 or 5% of the issued share capital of the Company. TOPPS TILES PLC Annual Report & Financial Statements 2007 62 11 THAT the Company be and is generally and unconditionally authorised for the purposes of Section 166 of the Act to make market Purchases (within the meaning of Section 163(3) of the Act) of Ordinary Shares of 3.33p each in the capital of the Company (“Ordinary Shares”) provided that: (a) the maximum aggregate number of Ordinary Shares hereby authorised to be purchased is 25,416,410 (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 3.33p; (c) the maximum price, exclusive of any expenses, which may be paid for an Ordinary Share is an amount equal to 105% of the average of the middle market quotations for an Ordinary Share derived from the London Stock Exchange Daily Official List for the five business days immediately preceding the date on which such Ordinary Share is Contracted to be purchased; (d) unless previously renewed, varied or revoked, the authority conferred shall expire at the close of the next Annual General Meeting of the Company or twelve months from the date of this resolution, if earlier; and (e) the Company may make a contract for the purchase of Ordinary Shares under this authority before the expiry of this authority which would or might require to be executed wholly or partly after the expiry of such authority, and may make purchases of Ordinary Shares in pursuance of such a contract as if such authority had not expired. 12 THAT the draft Articles of Association signed by the Chairman for identification be adopted as the Articles of Association of the Company in substitution for and to the exclusion of all the existing Articles of Association. NOTES 1 This notice has been sent to all Ordinary Shareholders who are entitled to attend or be represented at the meeting. As at the close of business on the date of this notice, the Company’s issued share capital comprised 170,818,106 ordinary shares of 3.33 pence each. Each ordinary share carries the right to one vote at a general meeting of the Company. 2 2. Members are entitled to appoint a proxy to exercise all or any of their rights to attend and to speak and vote on their behalf at the meeting. Members may appoint more than one proxy in relation to the Annual General Meeting provided that each proxy is appointed to exercise the rights attached to a different share or shares held by that shareholder. 3 A proxy need not be a shareholder of the Company but must attend the meeting to represent you. A Form of Proxy is enclosed and instructions for use are shown on the form. You can only appoint a proxy using the procedures set out in these notes and the notes to the proxy 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. Details of how to appoint the Chairman of the meeting or another person as your proxy using the proxy form are set out in the notes to the proxy form. If you wish your proxy to speak on your behalf at the meeting you will need to appoint your own choice of proxy (not the Chairman) and give your instructions directly to them. 4 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. 5 You may appoint more than one proxy provided each proxy is appointed to exercise rights attached to different shares. You may not appoint more than one proxy to exercise rights attached to any one share. 6 A vote withheld is not a vote in law, which means that the vote will not be counted in the calculation of votes for or against the resolution. If no voting indication is given, your proxy will vote or abstain from voting at his or her discretion. Your proxy will vote (or abstain from voting) as he or she thinks fit in relation to any other matter which is put before the meeting. The notes to the proxy form explain how to direct your proxy how to vote on each resolution or withhold their vote. TOPPS TILES PLC Annual Report & Financial Statements 2007 63 NOTICE OF ANNUAL GENERAL MEETING continued 7 In the case of joint holders, where more than one of the joint holders purports to appoint a proxy, only the appointment submitted by the most senior holder will be accepted. Seniority is determined by the order in which the names of the joint holders appear in the Company's register of members in respect of the joint holding (the first- named being the most senior). 8 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 Euroclear’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 Euroclear 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. 9 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 809 of the Companies Act 2006; (b) copies of the Directors’ service contracts; and (c) the proposed articles of association of the Company. R. Parker Company Secretary 26 November 2006 Registered Office: Thorpe Way Grove Park Enderby Leicestershire LE19 1SU Registered No: 3213782 TOPPS TILES PLC Annual Report & Financial Statements 2007 64 EXPLANATORY NOTES TO THE NOTICE OF ANNUAL GENERAL MEETING THE ANNUAL GENERAL MEETING of the Company will be held at the Company’s premises at Thorpe Way, Grove Park, Enderby, Leicestershire LE19 1SU on 8 January 2008 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 6.95 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 4 January 2008. Subject to approval by the Ordinary Shareholders at the Annual General Meeting, the dividend will be paid on 31 January 2008. An interim dividend of 3.75 pence per Ordinary Share was paid on 30 June 2007. This gives a total dividend level of 10.70 pence per Ordinary Share for the 52 week period to 29 September 2007. Resolutions 3, 4, 5 and 6 Re-election of Directors B. Bester, A. McIntosh and V.H. Watson are the Directors retiring by rotation this year and they offer themselves for re- election and R. Parker 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 and A. McIntosh, who because of their length of service are retiring and offering themselves for re-election annually. Brief biographical details about the Directors standing for re-election appear on pages 18 and 19 of the Annual Report and Financial Statements. 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 Ordinary Shares with a nominal value of £1,708,180 out of the Company’s unissued share capital representing approximately 33.3% of the Company’s current issued share capital (excluding shares held in treasury). The Company currently holds Nil 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 This proposed resolution 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 £256,227 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 2009 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 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. As at 27 November 2007, there were options to subscribe for 1,306,491 equity shares outstanding under various schemes representing approximately 0.77% of the current issued share capital of the Company. If the authority sought by Resolution 9 was exercised in full, the number of outstanding options would represent approximately 0.79% of the issued share capital following the repurchase of shares. TOPPS TILES PLC Annual Report & Financial Statements 2007 65 EXPLANATORY NOTES TO THE NOTICE OF ANNUAL GENERAL MEETING continued Resolution 12 Amendments to articles of association It is proposed that the Company adopts an amended set of articles of association, which take account of initial changes brought about as at the date of this meeting as a result of the partial implementation of the Companies Act 2006 (the "2006 Act"). The proposed articles of association are available on the Company's website (http://www.toppstiles.co.uk/3/frame-0financial.html) and at the Company's registered office and will be available at the AGM venue on the day of the AGM. It is expected that subsequent amendments will be required at subsequent AGMs to deal with the further changes which will be brought about at a later date by the implementation of the remainder of the 2006 Act, which is expected to take place over the next 2 years. The new set of articles of association contains certain differences from the current articles of association of the Company. The paragraphs below explain the key changes: Article 63 - Notice of general meetings The provisions in the Articles dealing with the convening of general meetings and the length of notice required to convene general meetings are being brought into line with the provisions of the 2006 Act. An extraordinary general meeting to consider a special resolution can now be convened on 14 days notice. Previously, 21 days notice was required. This will give the Company a greater degree of flexibility in relation to taking decisions. Article 86 - Proxies Under the 2006 Act proxies are entitled to vote on a show of hands whereas under the current Articles proxies are only entitled to vote on a poll. Multiple proxies may be appointed provided that each proxy is appointed to exercise the rights attached to a different share held by the shareholder. Article 84 – Corporate representatives The 2006 Act also allows for the appointment of multiple corporate representatives, rather than a single representative which was provided for under the Companies Act 1985. However, these multiple representatives must exercise their power in the same way failing which they are treated as not having exercised the power at all. Article 159 – Publication of audit concerns The 2006 Act provides a new right for members of a quoted company to raise questions about the work of the auditors. Shareholders are now permitted to require the company to publish on a website a statement setting out any matter relating to the audit of the company's accounts or the circumstances connected with the auditor ceasing to hold office that they propose to bring up at the next meeting where the report and accounts are being laid before shareholders. The company is required to publish the statement if it receives requests from shareholders who hold either 5% of the voting rights or are at least 100 in number and hold shares on which there has been paid up an average sum per shareholder of at least £100. Articles 174 to 175 - Electronic and web communications Provisions of the 2006 Act which came into force in January 2007 enable companies to communicate with members by electronic and/or website communications. The proposed amendments to the Articles allow communications to members in electronic form and, in addition, they also permit the Company to take advantage of the provisions relating to website communications. Before the Company can communicate with a member by means of website communication, the relevant member must be asked individually by the Company to agree that the Company may send or supply documents or information to him by means of a website, and the Company must either have received a positive response or have received no response within the period of 28 days beginning with the date on which the request was sent. The Company will notify the member (either in writing, or by other permitted means) when a relevant document or information is placed on the website and a member can always request a hard copy version of the document or information. Article 189 - Directors’ indemnities The 2006 Act has in some areas widened the scope of the powers of a company to indemnify Directors and to fund expenditure incurred in connection with certain actions against Directors. In particular, a company that is a trustee of an occupational pension scheme can now indemnify a Director against liability incurred in connection with the company’s activities as trustee of the scheme. In addition, the existing exemption allowing a company to provide money for the purpose of funding a Director’s defence in court proceedings now expressly covers regulatory proceedings and applies to associated companies. The Article itself does not grant any indemnity to the Directors. It merely sets out a framework within which the Company may operate to indemnify its Directors. Article 190 – Authorisation of loans to Directors The Companies Act 1985 contained restrictions on loans and related dealings between a company and its directors (and their connected persons) subject to the specified exceptions. Under the 2006 Act the general prohibitions on loans to directors have been abolished and replaced with a requirement of shareholder approval for all companies. Provisions have also been introduced to ensure that public companies, and any private company associated with a public company, may only make quasi-loans to directors, loans or quasi-loans to connected persons or enter into credit transactions with Directors or connected persons, if shareholder approval is obtained. The Directors believe that the adoption of all the resolutions set out in the Notice of Meeting is in the best interests of the Company and its shareholders as a whole. Accordingly, the Directors unanimously recommend that you vote in favour of the resolutions, as each Director intends to do, in respect of his own beneficial holdings. TOPPS TILES PLC Annual Report & Financial Statements 2007 66 SHAREHOLDER INFORMATION FINANCIAL CALENDAR Annual General Meeting and first Interim Management Statement Final dividend payable 2007/08 interim results announcement 2007/08 interim dividend payable 2nd Interim Management Statement 2007/08 full year results announcement + + + + + + 8 January 2008 31 January 2008 May 2008 June 2008 July/August 2008 November 2008 GUIDENCE RELATING TO BENEFICIAL OWNERS OF SHARES WITH ‘INFORMATION RIGHTS’: Please note that beneficial owners of shares who have been nominated by the registered holder of those shares to receive information rights under section 146 of the Companies Act 2006 are required to direct all communications to the registered holder of their shares rather than to the Company’s registrar, Capita Registrars, or to the Company directly. TOPPS TILES PLC Annual Report & Financial Statements 2007 67 THE TEAM A Aaran Spence Aaron Callaghan Aaron Ferguson-Barker Aaron Hibbert Abul Khashad Adam Boshir Adam Campion Adam Devlin Adam Eustace Adam Gale Adam Haseldine Adam Hughes Adam Ireland Adam Kilty Adam Lawrence Adam Lovatt Adam Nuttall Adam Robson Adam Southall Adam Stopford Adam Towner Adam Ward Adam Whittaker Adam Wolniewicz Adiel Davis Adil Rajah Adrian Clarke Adrian Earley Adrian Garratt Adrian Mccourt Adrian Rimmington Adwoa Dufie Ahmad Malik Aidan Ward Aileen Crossley Akommil Ali Akushu Mulenga Alan Abbott Alan Benson Alan Cordery Alan Harding Alan Logan Alan Mcdonald Alan McIntosh Alan Monk Alan Parker Alan Rolf Alan Saunders Alan Smalley Alan Sproston Alan Watton Alan Wrighting Alasdair Higgins Alastair Lawson Aldwin Ridderstap Alec Dakin Alex Bott Alex Padgham Alex Paterson Alexander Mcaleese Alexander Onions Alexandria Murphy Ali Rizvi Ali Sadique Alice Ashton Alicia Mcgill Alison Hunt Alison Saunders Alistair Payne Alistair Rennie Allan Chigariro Allan Duffy Allan Garland Allan Harper Allan Tucker Alvin Chinyanga Amanda Green Amanda Hullett Amin Ladhu Amy Cartey Andre Van Schalkwyk Andrew Baillie Andrew Barker Andrew Barrett Andrew Bowden Andrew Burns Andrew Carlo Andrew Chapman Andrew Clay Andrew Collins Andrew Cox Andrew Curr Andrew Curtis Andrew Davis Andrew Davis Andrew Duffey Andrew Green Andrew Hainge Andrew Hanson Andrew Harrison Andrew Hastings Andrew Heads Andrew Hill Andrew Jeffery Andrew Jones Andrew Jones Andrew Keattch Andrew Leigh Andrew Mcguire Andrew Middleton Andrew Moore Andrew Page Andrew Parnell Andrew Phillips Andrew Salkeld Andrew Scorgie Andrew Warne Andrew Warwick Andrew Waterfield Andrew Wathan Andrew Weir Andrew Wheat Andrew Whiteley Andrew Williams Andrew Wood Andrew Woolley Andrew Young Angela Tremelling Anna Timney Anne-Marie Carpenter Annette Harris Annmarie Malone Ansar Ahmed Anthony Bland Anthony Bradford Anthony Butts Anthony Chapman Anthony Christopher Anthony Cox Anthony Davies Anthony Day Anthony Gibby Anthony Gilbert Anthony Gregory Anthony Holt Anthony Humphrey Anthony Linsell Anthony Marshall Anthony Molyneux Anthony Oleru Anthony Ralph Anthony Townsend Anthony Winton Antony Alveranga Antony Beazer Antony Belham Antony Parker Antony Plant Anub Varghese Anwar Marshall TOPPS TILES PLC Annual Report & Financial Statements 2007 68 Arnold Harrison Arran Oldham Arreon Turner Ashleigh Mackinnon Ashley Jordan Ashley Wale Astone Davids Augustine Cairney B Bally Summan Barbara Edge Barnaby Chambers Barrie Palmer Barry Bester Barry Blackmore Barry Edwards Barry Hodges Barry Shane Barry Stevens Barry Taylor Barry Webber Barry Younger Bas Snellenburg Ben Armitage Ben Brik Jammel Ait Ben Brink Ben Brooker Ben Davis Ben Hoey Ben Holloway Ben Lee Ben Murphy Ben Myers Ben Williams Ben Wood Ben Woollins Benjamin Clarke Benjamin Ganson Benjamin Marland Benjamin Rich Benoni Akuetteh Bernadette Crawford-King Bernard Cope Bertil Boyles Bharat Patel Bilal Mukhtar Bill Wylie Billy Decaille Blodwyn Hopkins Bob Barlow Bob Snellenburg Bobby Hatch Brad Potts Bradley Maple Bradley Wheeler Brandon Abels Brant Wells Brett Carey Brett Case Brett Cooper Brett Goulden Brett Harris Brian Cariello Brian Crews Brian Crowe Brian Dicks Brian Fisher Brian Flatters Brian King Brian Kirwin Bruce Fielding Bruce Smith Bruno Alves Bryan Hartley Bryan O’Neill C Cade Somerville Calbert Hall Campbell Marr Carl Bradbury Carl Cook Carl Cumberbatch Carl Dyke Carl Edlundh-Rose Carl Higgins Carl Johnson Carl Johnson Carl Paternoster Carl Roberts Carl Whatley Carol Lakin Carol Livingstone Carolina Buendia Caroline Beckett Caroline Bennett Caroline Crofts Caroline Head Caroline May Cassandra Huitson Catherine Mcculloch Catherine Platt Catherine Waldron Chan Gokani Charles Grindlay Charles Nicol Charles Tetley Charlotte Heaton Charlotte Highley Charlotte Payn Cherine Wilson Chessdeep Singh Chike Ramsey-Moore Chioma Onyeakazi Choudre Grobler Chris Bland Chris Cartey Chris Curtis Chris Davies Chris Gough Chris Herring Chris Heyes Chris Howe Chris Kantelberg Chris Lambert Chris Lyle Chris Markham Chris Semple Chris Thompson Christer Leth Christian Stokes Christina Langridge Christine Earl Christine Hendry Christine Rea Christine Whiteman Christoper Mcwatt Christopher Bowles Christopher Bray Christopher Burgess Christopher Collins Christopher Collins Christopher Cooper Christopher Critchley Christopher Fleming Christopher Harbutt Christopher Haslam Christopher Holland Christopher Holt Christopher Hughes Christopher Hunter Christopher Iley Christopher Lamb Christopher Lewis Christopher May Christopher Moorhouse Christopher Roberts Christopher Senior Christopher Smyth Christopher Sturdy Christopher Turley Christopher Tyler Claire Chaffe Claire Hand Claire Rayton Clare Barden Clare Hogg Clyde West Colin Cooke Colin Griffiths Colin Hoban Colin Joy Colin Markham Colin Rymer Colin Taylor Conrad Harrup Corrina Bowers Corrine Clark Craig Conway Craig Cooper Craig Dickson Craig Dolling Craig Gardener Craig Hawkes Craig Hill Craig Murphy Craig Nammontri Craig Ollard Craig Reed Craig Rogers Craig Tetlow Craig White Crescent Baron Cyriel Struijk D Daan Rubens Dale Fish Dale Hoy Dale Mccormack Dale Stone Damon Short Dan Hall Dan Harris Dan Matthews Dan Radford Daniel Britt Daniel Fallows Daniel Findlay Daniel France Daniel Gibbs Daniel Gray Daniel Gray Daniel Greenley Daniel Hall Daniel Jones Daniel Lawton Daniel Lewis Daniel Little Daniel Mclean Daniel Musguin Daniel Nicholson Daniel O.Reilly Daniel Scott Francis Daniel Spencer Daniel Stamford Daniel Stiven Daniel Wren Daniël Moree Danielle Mckinnon-Mcguire Danielle ten Hoven Danielle Whittaker Danni Fry Danny Costen Danny Hill Danny Kok Danny Schallenbergh Darone Dubois-Gayere Darran Wood Darren Banks Darren Beatty Darren Bebbington Darren Connor Darren Crick Darren Doughty Darren Fletcher Darren Giles Darren Goode Darren Harper Darren Mitchell Darren Morgan Darren Pickering Darren Rawlings Darren Square Darren Swaffield Darron Kerr Dave Jobling Dave Marsh Dave Taylor David Atherton David Atkins David Augustus David Bailey David Blades David Burnikell David Campbell David Carpenter David Cocozza David Critchlow David Dorney David Dyason David Evans David Fisher David Fitzpatrick David Gibson David Grenfell David Hamilton David Harper David Hatton David Hayers David Henderson David Hill David Hirst David Hook David Hulse David Kershaw David Kettlewell David Lane David Macartney David Mallyon David Martin David Matthews David Mayers David Murray David Nadin David Ogbechi David Oliver David Parr David Prime David Quarshie David Savage David Smith David Steel David Stott David Sutcliffe David Thomasson David Townsley David Turner David Whitelaw David Williams David Wilson Dawn Beeston Dawn Gale Dean Bull Dean Clarke Dean Holder Dean Hyde Dean Johnson Dean Macmillan Dean Marshall Dean Mcdonnell Dean Miller Dean Sladen Dean Titchen Dean Woolley Deborah Hunt Deborah White Delia Muwalo Denise Byford Denise Pierce Dennis Bödeker Dennis Cragen Dennis Jepson Dennis Solen Denzil Johns Derek Lambourn Derek Sim Derek Smith Derrick Hart Devindren Govender Diane Shatford - Butcher Dilawar Ali Dipak Pindoria Dishon Meade Dominic Reilly Donna Beccan Donna Boulton Donna Shirley Donna Whall Doreen Hyatt Douglas Hartness Duncan Winspur Dwayne Howard E Eamonn Clancy Edmund Smith Edward Derbyshire Edward Gardiner Edward Moore Edward Murphy Edward Noblett Elizabeth Greenwood Elizabeth Kelly Elizabeth Selfridge Elliott Cullum Elliott Cullum Elyson Bache Emdadur Rahman Emily Lenton Emma Brookes Emma Kenney Emma Lane Emma Whatson Emmanuel Ewing Emran Mannan Enid Lamb Eric Stork Eric Watson Erik Rubens Ernest Johnson Esther ten Hoven F Fabian Koopen Farid Haddad Farida Dawood Felipe Da Rocha West Ferdy Klinckenberg Fern Marshall Finbarr Mcquaid Fiona Cadd Fiona Finnigan Fiona Mckeracher Fitz Martin Folkert Hildama Fran Graysmark Frances Aylward Francesca Wright Francis Tully Frank Hibbert Frans Levoleger Fred Cope G CG Style Gareth Carnegie Gareth Jones Gareth Marsden Gareth Roberts Gareth Veck Gareth Ward Garrett Woods Garry Hardy Garry Padgett Gary Ashdown Gary Asher Gary Austin Gary Blair Gary Bloomfield Gary Clarkson Gary Curtis Gary Gardner Gary Gear Gary Homes Gary Knight Gary Marshall Gary Paris-Munn Gary Prentice Gary Thorn Gary Walmsley Gary Wilcox Gavin Bennett Gavin Collins Gavin Meek Gavin Thomas Gavin Towers Gediminas Merkys Geerish Ramsaha Gemma Stephens Geoffrey Wilson George Lathan George Laurent George Mallyon George Skinner George Tuplin George Wilson Georgina Burgess Gerald Mclean Geraldine Plumtree Gerard Mallon Gianfranco Zanolini Gillian Grace Gillian Gray Glen Holloway Glen Maddix Glendale Canoville Glenn Asher Glenn Claridge Glyn Nunn Glyn Rogers Gökhan Tarim Gordon Davies Gordon Irvine Graham Bain Graham Bosdet Graham Brophy Graham Davies Graham Jones Graham Jones Graham Lawrence Graham Livingstone Graham Tremlett Graham Vance Gregory Barwick Gregory Carolina Gurdeep Panesar Gursharn Ladhar Guy Barrow Guy Ferguson H Haim Cohen Hannah Shepherd Hans Ebbelink Hans Ebbelink Harpreet Hansra Harry Biggs Harry Mills Harshani Mahalekamge Hayley Bover Hayley Calder Hazel Millington Heather Hanney Helen Bosworth Helen Goldfarb Helen Gosling Helen Richardson Hemal Vidanagamage Herbert Henry Herman Kreikamp Hillary Bell Holly Bradbury Holly Unwin Howard Farmer Hubert Pierzynski Hugh Selley I Ian Bloomfield Ian Dodds Ian Fairfield Ian Hobson Ian Hughes Ian Jones Ian Marshall Ian Marshall Ian Mcalinden Ian Mcinteer Ian Mcloughlin Ian Muir Ian Noon Ian Paterson Ian Pennington Ian Segrave Ian Stevens Ian Sykes Ian Tebbutt Ian Winterburn Ijaz Ahmad Imran Ashraf Inderjeet Jutlay Irene Dickinson Isaac Anaman Ishmael Amos Ivo Zwanenburg Iwan Jones Izabela Krzyszkowska J Jacob Bos Jacqueline Byrne Jacqueline Raiya Jailuene Peake Jaime Smith Jajwinder Harar Jake Print James Balfour James Beresford James Biesty James Bott James Butler James Callaghan James Cameron James Collins James Copestick James Eastham James Edge James Fell James Gentleman James Heard James Hollingshead James Howard James Hudson James Judkins James Kelly James Koroma James Marriott James Mcguigan James Metcalf James Morgan James Paterson James Patston James Pearson James Pilfold James Reilly James Robertson James Rolfe James Stark James Stevens James Taylor James Thorning Jamie Axten Jamie Evans Jamie Farmer Jamie Keeling Jamie Parkes Jamie Prowse Jamie Sia Jamie Tissington-Knight Jamie Wenborn Jamie Whitehouse Jan Reddi Jan Sloterwijk Jane Heaton Jane Horsford Janet Burgess Janet Lockyer Janet Riley Janice Millett Jaroslaw Wanat Jason Clarke Jason Ealden Jason Field Jason Harris Jason Leviton Jason Meadows Jason Pratt Jason Rose Jason Turnbull Jason Tyler Jaspal Bansal Jasvinder Bagh Jaun Lombard Jayandrie Chetty Jayantilal Kerai Jayaprakash Paragjee Jaymal Arjan Jayne Sewell Jean Smith Jeannette Hastie Jed Sanderson Jeff Long Jeffrey Armstrong Jemma Roberts Jennifer Donlan Jennifer Myers Jennifer Royce Jenny Seabrook Jeremy Byrne Jeremy Edwards Jeremy Harris Jeremy Nicholls Jermaine Cyprien Jeroen Ligtelijn Jeroen van Loveren Jessica Inman Jessica Mackenzie Jessica Thiari Jill Cox Jim Carpenter Jim Tuvey Jimmy Vander Plank Joan Hicks Joanna Barnes-Warden Joanna Martin Joanne Elton Joanne Lee Joanne Mepham Jodie Baigrie Jodie Busby Joe Cox Joe Purkis Joe Smith John Bourke John Chinn John Davidson John Davies John Ellis John Fawkes John Forden John Foster John Gardner John Goatly John Graham John Grover John Harris John Hickey John Johnston John Jones John Keouski John Lamb John Mangan John Mason John Mckie John Moat John Nelson John Noon John Page John Shaw John Smith John Smith John Stephenson John Summers John Sutton John Tait John Thompson John Thompson John Vaughan John Wade John Whelan John Williams John Wright Jon Potts Jon White Jonathan Bainbridge- Coombs Jonathan Bean Jonathan Beckerman Jonathan Benn Jonathan Fitzgerald Jonathan Hargreaves Jonathan Morgan Jonathan Page Jonathan Smith Jonathan Thornhill Jonathan Whitehead Jonathan Williams Jonathan Withers Jonathan Woodroff Jonathon Cockerill Jonathon Hall Jonathon Perkins Jonathon Sheerin Jon-Paul Hughes Jorris Maätita Jos Kantelberg Jos Verlaat Josephine Hilldrup Josh Dempster Josh Wyatt Joshua Gallocker Joshua Groener Joshua Lumley Joyce Davies Juginder Gill Julian Digbo Julie Ayrton Julie Blake Julie Brachtvogel Julie Clough Julie Cox Julie Fewings Julie Horsford Julie Jordan Juliet Wilford Justin Bradley Justin Pugh Justine Baraud K Kamlesh Shah Kara Robinson Karen Brook Karen Forber Karen Sutcliffe Karim Tiller Karina-Jade Tubb Karl Bezemer Karl Jackson Karl Jones Karl Madge Karl Stephens Kasturi Muruvan Katarzyna Boardman Katarzyna Wszola Katherine Rudkin Kathryn Robinson Katrina Crawford Kawaljit Gulati Kawsor Ahmed Kees van Wijk Keira Bassett Keith Ambrose Keith Carr Keith Hughes Keith Pugh Keith Rudkin Keith Storrier Keith Wyse Kelly Bell Kelly Ellison Kelly Savile Kelly Stephens Kelly Whyte Kelly-Anne O Connor Ken Saunders Kenneth Frankland Kenneth Mattinson Kenneth Mckay Kenneth Owen Kenneth Pettengale Kenneth Turner Kenny Mcracken Kerina Joseph Keron Lee Kerri Atkinson Kerri Talbot Kerry Hume Kerry Millington Kerry Saunders Kevan Richardson Kevin Atkin Kevin Baker TOPPS TILES PLC Annual Report & Financial Statements 2007 69 THE TEAM continued Kevin Bowtle Kevin Fox Kevin Gallagher Kevin Getliff Kevin Haigh Kevin Hailes Kevin Hartley Kevin Jeans Kevin Jones Kevin May Kevin Peacock Kevin Reading Kevin Rowe Kevin Thorne Kevin Tully Kieran Barnes-Warden Kieron Clarke Kieron Ile Kim Liddle Kimberley Lynch Kimberly Cooper Kirk Johnson Kirsti Altass Kirsty Bover Kirst Deeprose Kirsty Green Kishore Naker Klaas Dijkstra Kris Bailey Kris Maple L Lance Cale Laura Edwards Laura Gunter Laura Hammond Laura Johnson Laura Kershaw Laura Price Lauren Dennis Laurence Loxam Laurie Jones Lea Schweika Lea Schweika Leah Norris Leanne Foweather Leanne Langran Leanne Murphy Lee Arrowsmith Lee Baxter Lee Dover Lee Durrant Lee Fisher Lee Ford Lee Futcher ‘ Smith Lee Galloway Lee Goodwin Lee Harris Lee Hodgson Lee Jacovou Lee James Lee Maxey Lee Morris Lee Read Lee Riches Lee Shillibeer Lee West Lee Wilkinson Leena Joory Leigh Collins Leigh Holden Leigh Hyam Leigh Russell Leigh Taylor Leigh Williams Leighton Williams Leon Kerr Leon O’Neill Leonard Denton Leonard Finch Leonard Wilson Léonie van der Valk Leroy Smith Lesley Kerr Leslie John Leslie Maher Lester Marshall Levi Simpson Lewis Axford Lewis Edwards Lewis Haighton Liam Allan Liam Fields Liam Hunt Liam Knight Liam Tanner Lianne Harrison-Allcock Liezl Lombard Linda Reader Lindsay Melton Lisa Algar Lisa Easton Lisa Holmes Lisa Norwood Lisa Sheppard Lisa Smith Lisa Walker Llew Gordon Loretta Daley Lorna Ballantyne Louie Jago Louis Raadman Louise Stevens Lucy Henshall Luisa Sawyer Luke Abbs Luke Azzopardi Luke Fair Luke Francis Luke Halford Luke Jacobs Luke Stephens Luuc Zuur Lyndon Beale Lyndsey Wheeler Lynette Grimes Lynn Pearson M Mabs Alam Majid Shafiq Maku Modzaku Malcolm Ferguson - Thomas Mandlenkosi Msimanga Mandy Aidney Mandy Panners Marc Andrisani Marc Breeze Marc Middleton Marc Stevens Marcel Gray Marcin Sakowicz Marco Knip Marcus Birch Marcus Wares Margaret Lawrie Margaret Potter Mario van der Valk Mark Aveling Mark Bianchi Mark Bober Mark Bradbury Mark Bridges Mark Brown Mark Brownsey-Joyce Mark Collyer Mark Cowley Mark Dennis Mark Discombe Mark Fisk Mark Frisby Mark Gasson Mark Geary Mark Greenwood Mark Hilton Mark Hirst Mark Hunter Mark Johnson Mark Johnston Mark Jones Mark Lever Mark Maciver Mark Palmer Mark Rigley Mark Sheldon Mark Stone Mark Strong Mark Tennant Mark Thompson Mark Vaughan Mark Waldock Mark Waller Mark Wright Marlon Barnes Marlon Bright Martin Baker Martin Brophy Martin deBruijn Martin Derricott Martin Gore Martin Horton Martin Iezzi Martin Morris Martin Mudde Martin Peters Martin Russell Martin Siggers Martin Sinnott Martin Sloan Martin Smyth Martin Watt Martin Winterburn Martin Wys Martyn Gilbert Mary Smith Mathew Jackaman Matthew Bond Matthew Chase Matthew Clamp Matthew Dunn Matthew Dunne Matthew Fisher Matthew Foster Matthew Foulger Matthew Hawley Matthew Hill Matthew Jones Matthew King Matthew King Matthew King Matthew Meigh Matthew Moore Matthew Perrott Matthew Pickering Matthew Prentice Matthew Rayner Matthew Robinson Matthew Sigley Matthew Williams Matthew Woodhouse Matthew Wright Mehmet Asdoyuran Melanie Gray Melanie Hall Melissa Isaac Melton Thompson Melvin Conjamalay Melvin Stubbs Melvyn Chamberlain Merlin Hassoldt TOPPS TILES PLC Annual Report & Financial Statements 2007 70 Michael Bishop Michael Blackman Michael Blinkhorne Michael Bolden Michael Boughton Michael Bowden Michael Cosgrove Michael Coward Michael Crowley Michael Darroch Michael Earls Michael Fannon Michael Finn Michael Foley Michael Haggett Michael Hall Michael Harvey Michael Hopper Michael Jack Michael Jenks Michael Kilmurray Michael Litster Michael Lovelock Michael Pearson Michael Simcoe Michael Townsend Michael Wentworth Michele Poxon Michelle Hill Michelle Kay Michelle Kempson Michelle Lawson Michelle Mannion Michelle Pennington Michelle Ward Michelle Wright Mike Butler Mike King Mike Potter Mike Skinner Milly van der Linden Mohamed Patel Mohammad Tayyab-Ul-Habib Mohammed Amin Mohammed Azhar Mohammed Jamil Mohammed Parvaz Monique Boerma Mubashir Uddin Mumtaz Khamisa N Narinder Chatha Natasha Davey Nathan Austin Nathan Coulthard Navesh Naidoo Neil Bartholomeusz Neil Brownley Neil Crozier Neil Hendy Neil Homan Neil Hyne Neil Ketnor Neil Moss Neil Southgate Neil Topping Neil Williams Neil Williams Ngadhnjim Spahiu Nichola Fowler Nicholas Clifford Nicholas Culhane Nicholas Donkin Nicholas Griffiths Nicholas Jones Nicholas Lawrence Nicholas Lewis Nicholas Ounstead Nicholas Payne Nicholas Snook Nicholas Thornton Nicholas Walch Nicholas Withers Nick Burrows Nick Gussow Nick Hielckert Nick Lodge Nick Smethurst Nick Wardman Nicky Dalley Nicola Acres Nicola Dearden Nicolas Wassell Nigel Brooks Nigel Fleming Nigel Houston Nigel Slaughter Nikki Green Nikola Sutton Niroshan Araliyakankanamge Numan Usman O Oliver Jones Oliver Ringwood Osemar Masaya P Pamela Cuffin Pasquale Santaniello Patricia Campbell Patrick Burke Patrick Devlin Patrick Mcgee Patrique Janssen Paul Artes Paul Bainbridge Paul Beckett Paul Burkett Paul Burrow Paul Carr Paul Carter Paul Cartledge Paul Cassidy Paul Chalmers Paul Chapman Paul Clark Paul Cleaver Paul Cull Paul Dalby Paul Davey Paul Davies Paul Davis- Chaffey Paul Day Paul Galvin Paul Hendrey Paul Hill Paul Horne Paul Hutchinson Paul Huxtable Paul Irving Paul Jones Paul Kelly Paul Kemp Paul Lathrope Paul Laverty Paul Locke Paul Mackin Paul Miller Paul Mills Paul Noyes Paul Pirie Paul Rockett Paul Ruddle Paul Sayers Paul Shek Paul Silvester Paul Sluiter Paul Smith Paul Smith Paul Smith Paul Smitheringale Paul Spratley Paul Starkey Paul Swift Paul Tomlin Paul van der Zee Paula Budsworth Pauline Grenfell Pawel Warych Peter Amanfi Peter Anderson Peter Charters Peter Cort Peter Davey Peter Davidson Peter Downing Peter Gallagher Peter Hogg Peter Hughes Peter Lea Peter Lynn Peter Mack Peter Mcgowan Peter Robertson Peter Simmonds Peter Smith Peter Tassenaar Peter Walmsley Peter Watts Peter Woods Phil Kelly Phil Shelton Philip Cranston Philip Dunn Philip English Philip Gallop Philip Lonsdale Philip Mccarney Philip Rix Phillip Goodeve Phillip Hawkeswood Phillip Hillier Phillip Hunt Phillip Murphy Phillip Walters Phillipa Hewitt Pim van Zuidam Piotr Bienkowski Pooven Muruvan Prakash Mistry Pravesh Ramsaha Premyslaw Swisloki Pritesh Bhatt Q Quadeer Ahmed R Rachel Beaven Rachel Chitty Rachel Dykes Rachid Bouras Raj Surani Raja Sohall Rajan Mehta Rajbinder Dhanoya Rajiv Vadgama Ravendra Bishun Ray Jeakins Raymond Baptiste Rebecca Derricott Rebecca Ellis Will Bailey Willemijn Wallet William Barreda William Brownsell William Gunshon William Lewinton William Mcphee William Ryves Willy Silupya Wim Strik Wim vanStaden Y Yohan Ferdinando Yusuf Ali Yusuf Mursal Yvonne Archer Yvonne Burgess Z Zahid Sharif Butt Zoe Derry Zoe Maeer Zoe Mills Zubair Ishaq Rebecca Halliday Rebecca Heather Rebecca Oblein Recep Tarim Reg Anderton Remco Beunis René de Wit René Ossendrijver Rhys Hedges Rhys Kelland Ria Croft Ricardo Malcolm Rich Hoyle Richard Amoah Richard Banton Richard Bickers Richard Brookfield Richard Carter Richard Chiverton Richard Clark Richard Davies Richard Deavall Richard Edwards Richard Forrester Richard Harris Richard Homan Richard Hopkin Richard Hutcheson Richard Lee Richard Lewington Richard Norman Richard Oates Richard Oldale Richard Slack Richard Small Richard Thompson Richard Young Rickey Singleton Ricky Holloway Riki Spadone Rob Mcguinness Rob Owen Robbie Hawthorn Robert Adams Robert Adkins Robert Avery Robert Bellamy Robert Bosman Robert Brewin Robert Bristow Robert Cairns Robert Chawner Robert Clarke Robert Clarke Robert Cole Robert Curd Robert Edgar Robert England Robert Exley Robert Gilbert Robert Hodgson Robert Hollis Robert Howker Robert Jay Robert Johnson Robert King Robert Lynch Robert Marcellin Robert Morse Robert Moss Robert Myers Robert Parker Robert Reynolds Robert Sawford Robert Scheggetman Robert Stewart Robert Taylor Robert Trigg Roberto Russo Roberto Xavier Robin Beil Robin Campbell Robin Parry Rodney Meyer Rodney Sanders Roger Bailey Roger Buckley Roger Gridley Ronald Evers Ronald van Veenen Ronnie Francis Ronnie Webster Rose Barnard Rosina Taylor Roslyn Naylor Ross Ashbrook Ross Godfrey Ross Mcnair Ross Usher Roxanne Evans Roxanne Martin - Gault Roy Haddon Roy Peasland Roy Redgate Russell Adgey Russell Barclay Russell Shafer Russell Thornton Ryan Curd Ryan Haddon Ryan Hine Ryan Josephs Ryan Randall S Sagren Naidoo Sahid Kamara Sajid Ahmad Sajid Aibani Sally Hallsworth Salman Bawani Salvatore Andreozzi Sam Nortey Sam Shepherd Samantha Barrett Samantha Eames Samantha Pickering Samantha Sayer Sameer Jamdar Samson Okolosi Samuel Carey Samuel Major Sander Faber Sander Smit Sandra Ramsay Sanjeepan Balasubramaiam Sara Bremner Sarah Adshead Sarah Churcher Sarah Dobson Sarah Drake Sarah Earthey Sarah Ellis Sarah Kite Sarah Mcgee Sarah Shirley Sarah Whitehead Scott Ahmad Scott Ambrose Scott Davis Scott Frankland Scott Laughland Scott Mccluskey Scott Meadows Scott Nicol Scott Taylor Scott Williams Sean Cahill Sean Mcvey Sean Sands Sean Scard Sean Weatherby Shane Baker Shane Malone Shane Mason Shannon Woods Sharlene Hamilton Sharmake Abdullahi Sharon Beckett Sharon Henderson Shaun Curtis Shaun Douglas Shaun Hutchins Shaun Mayes Shaun Scott Shaun White Shawanna Hafiz Shawn Smith Sheila Robertson Sheldon Briscoe Shilpa Champaneri Shirley Moore Shohale Ali Sian Griffiths Silvonne Mclean Simon Brookfield Simon Brookfield Simon Casey Simon Chappell Simon Collishaw Simon Docherty Simon Eldridge Simon Frew Simon Green Simon Ingamells Simon Jones Simon Langridge Simon Lasham Simon Morgan Simon Neal Simon Partridge Simon Pitt Simon Ricketts Simon Roberts Simon Taylor Simon Tuckley Simon Witham Sinclair Macleod Siobhan Waters Sjoerd Cobussen Sophie Walker Stacey Shirley Stacey Terry Stefan Pryce Stepahanie Ailwood Stephan Lombard Stephanie Nevett Stephen Adams Stephen Ainsworth Stephen Bloomfield Stephen Brooks Stephen Collins Stephen Crane Stephen Creasey Stephen Day Stephen Fulford Stephen Getty Stephen Green Stephen Hunter Stephen Lewis Stephen Machin Stephen Marshall Stephen Mclaughlan Stephen Pike Stephen Porter Stephen Seymour Stephen Siddell Stephen Spurgeon Stephen Timmis Stephen Unsworth Stephen West Stephen Williams Steve Boardman Steve Dyson Steve Freeman Steve Gaylor Steve Pratt Steve Shackleton Steve Smith Steve Smith Steve Wood Steve Wormald Steven Atkinson Steven Badger Steven Buxton Steven Clark Steven Edge Steven Godwin Steven Goldsmith Steven Hepton Steven Jenkins Steven Macarthur Steven Morries Steven Pressley Steven Saunders Steven Walker Steven Whitehead Steven Whittle Steven Wyness Stuart Anderton Stuart Baigent Stuart Booker Stuart Cooper Stuart Corlett Stuart Davey Stuart Day Stuart Graham Stuart Hill Stuart Hitch Stuart Munton Stuart Pemberton Stuart Rees Stuart Roscoe Stuart Ross Stuart Taylor Stuart Whitby Stuart Williams Sue Bill Sumade De Silva Suresh Mistry Surmukh Jandu Susan Attwell Susan Groombridge Susan Henshall Susan Hepple Susan Hulme Susan Hunt T Tanya Sharpe Terance Langford Terence Dooley Terri Yates Terry Bridger Terry Olivo Terry Timmins Terry Webb Terry White Theekshana De Silva Theo Buijs Theresa Scrase Thomas Agate Thomas Cunningham Thomas Fry Thomas Newman Thomas Otley Thomas Pressley Thomas Ryan Thomas Steel Thomas Wade Thomas Woollard Tim Tatlock Timothy Beale Timothy Boardman Timothy Lowe Timothy Olsen Timothy Tuff Tina Munkley Tjeerd Labordus Toby Bateson Toby Collins Todd Routledge Tolga Dolen Tom Evans Tom Lewis Tom Mcdowell Tom Scott Tom Siddell Tom Wood Tony Alliband Tony Dedman Tony Keeling Tony Martin Tony Nunn Tony Simoes Tony Watson Tracey Gallagher Tracy Powell Tracy Ryan Tracy Stevens Tracy Wickenden Trevor Barden Trevor Thomas Tyler Atheis Tyrone Cooper Tyrone Madden U Umar Ullah Upali Herath Urmila Bhudia V Vickie Callan Vicky Dickinson Victor Watson Victoria Harding Victoria Shaughnassy Viktoriya Maneva Vilius Meilus Vinod Joshi Vinsen Velvindron Vipesh Kerai Visvanathapillai Mahendrakumar Vivienne Johns W Walkey Hilarie Warnakulasuriya Fernando Warren Bester Warren Daly Warren Russell Warren Smith Warren Wise Wayne Campbell Wayne Coleman Wayne Farini Wayne Gillan Wayne Jannotti Wayne Lockhart Wayne Quaintance Wayne Randall Wayne Wheeler Wendy Altimas Wendy Bruce Wesley Harrop Wesley West TOPPS TILES PLC Annual Report & Financial Statements 2007 71 STORE LOCATIONS TOPPS TILES TILE CLEARING HOUSE Central Region 1 Abingdon 2 Aston 3 Aylesbury (cid:1) 4 Banbury 5 Bedford 2 (cid:1) 6 Binley 7 Boston 8 Burton 9 Bury St Edmunds 10 Cambridge 11 Cannock 12 Clacton-on-Sea 13 Colchester 14 Coventry 15 Cromer (cid:1) 16 Derby 17 Derby 2 18 Erdington 19 Grantham 20 Great Yarmouth 21 Grove Park 22 Hereford 23 Huntingdon 24 Ipswich 25 Kettering (cid:1) 26 Kidderminster 27 Kings Heath 28 Kings Lynn 29 Leicester 30 Long Eaton (cid:1) 31 Lincoln 32 Luton 33 Mansfield 34 Martlesham 35 Milton Keynes 36 Newcastle-U-Lyme 37 Newark 38 Northampton 39 Norwich 40 Nottingham 41 Oldbury 42 Oxford 43 Peterborough 44 Redditch 45 Sheldon 46 Shrewsbury 47 Solihull 48 Spalding (cid:1) 49 Stafford 50 Stamford 51 Stoke on Trent 52 St Neots (cid:1) 53 Stratford-upon-Avon 54 Tamworth 55 Telford 56 Thetford (cid:1) 57 Wellingborough 58 West Bromwich 59 Wisbech (cid:1) 60 Wolverhampton 61 Worcester 62 Worksop London and Thames South 63 Ashford 64 Basildon 65 Battersea 66 Beckton 67 Bexhill 68 Bognor Regis 69 Braintree 70 Brentwood 71 Brighton 72 Brixton (cid:1) 73 Broadstairs 74 Byfleet (cid:1) 75 Camberley 76 Canterbury 77 Catford 78 Charlton 79 Cheam 80 Chelmsford 81 Chelmsford 2 82 Chichester 83 Chesham (cid:1) 84 Chingford 85 Colindale 86 Crayford 87 Croydon 88 Dagenham 89 Eastbourne 90 Edmonton 91 Eltham 92 Enfield 93 Erith 94 Farnborough 95 Farnham 96 Feltham 97 Folkestone 98 Fulham 99 Gatwick 100 Grays 101 Gunnersbury 102 Guildford 103 Harlow 104 Highgate 105 Horsham 106 Ilford 107 Isle of Wight 108 Lewes 109 Letchworth (cid:1) 110 Maidstone 111 Mitcham 112 New Southgate 113 Newbury 114 Newhaven 115 Old Kent Road 116 Orpington 117 Penge 118 Portsmouth 119 Raynes Park 120 Rayleigh 121 Reading 122 Richmond 123 Romford 124 Sittingbourne 125 Slough 126 Southall 127 Southampton TOPPS TILES PLC Annual Report & Financial Statements 2007 72 128 Southend 129 Stamford Hill 130 Sudbury 131 Swindon 132 Tonbridge 133 Tunbridge Wells 134 Twickenham 135 Uckfield 136 Uxbridge 137 Vauxhall 138 Waltham Cross 139 Wandsworth 140 Watford 141 Welwyn Garden City (cid:1) 142 Wembley 143 West Wickham North West 144 Aintree 145 Birkenhead 146 Blackburn 147 Blackpool 148 Bolton 149 Cheadle 150 Chester 151 Chorley 152 Cleveleys 153 Congleton 154 Crewe 155 Failsworth 156 Flint 157 Holyhead (cid:1) 158 Leek (cid:1) 159 Liverpool 160 Macclesfield 161 Morecambe 162 Nantwich 163 Northwich 164 Oldham 165 Ormskirk 166 Preston 167 Rhyl 168 Sale 169 Salford 170 Snipe (Audenshaw) 171 St Helens 172 Stockport 2 173 Warrington 174 Widnes 175 Wigan 176 Wrexham North 177 Barnsley 178 Barrow-in-Furness 179 Birstall 180 Carlisle 181 Chesterfield 182 Darlington (cid:1) 183 Dewsbury 184 Doncaster 185 Durham 186 Grimsby 187 Harrogate 188 Huddersfield 189 Leeds 190 Hull 191 Meadowhall (cid:1) 192 Penrith (cid:1) 193 Pontefract (cid:1) 194 Rotherham (cid:1) 195 Scarborough (cid:1) 196 Sheffield 197 Stockton 198 Sunderland 199 Tyneside 200 Wakefield 201 York Scotland 202 Aberdeen 203 Dundee 204 Edinburgh 205 Falkirk 206 Glasgow 207 Greenock 208 Hillington 209 Inverness 210 Linwood 211 Perth 212 Shawfield 213 Sighthill 214 Wishaw South West 215 Barnstaple 216 Barry (cid:1) 217 Basingstoke 218 Bodmin (cid:1) 219 Bournemouth 220 Bridgend 221 Bridgewater 222 Bristol 223 Cardiff 224 Cardiff 2 (cid:1) 225 Cheltenham 226 Christchurch 227 Clevedon 228 Cribbs Causeway 229 Cross Hands 230 Exeter 231 Exmouth (cid:1) 232 Frome 233 Gloucester 234 Hengrove 235 Launceston 236 Merthyr Tydfil 237 Neath (cid:1) 238 Plymouth 239 Poole 240 Salisbury 241 Swansea 242 Taunton 243 Torquay 244 Weston-Super-Mare 245 Winchester 246 Yeovil Central Region 1 Cheltenham 2 Fenton 3 Great Barr 4 Kettering 5 Kidderminster (cid:1) 6 Leicester 7 Lowestoft 8 Merry Hill (cid:1) 9 Northampton 10 Norwich 11 Nottingham 12 Nuneaton 13 Peterborough 14 Shrewsbury 15 Stoke-on-Trent 16 Wolverhampton London and Thames South 17 Barking 18 Basildon (cid:1) 19 Beckenham 20 Charlton 21 Croydon 22 Dartford (cid:1) 23 Eastbourne 24 Harlow 25 Hayes 26 Merton (cid:1) 27 New Southgate 28 Orpington 29 Southampton 30 Southend (cid:1) 31 Swindon 32 Wembley North West 33 Bolton 34 Cheadle 35 Crewe (cid:1) 36 Crosby 37 Maghull 38 Oldham 39 Preston 40 Stockport 41 Warrington 42 Wigan North 43 Bradford 44 Doncaster 45 Hull 46 Lincoln (cid:1) Scotland 47 Aberdeen 48 Edinburgh 49 Govan (cid:1) 50 Rutherglen (cid:1) South West 51 Bournemouth 52 Exeter 53 Plymouth (cid:1) 54 Salisbury 55 Swansea (cid:1) HOLLAND STORES 1 Almere 2 Amersfoort 3 Amsterdam 4 Amsterdam 2 5 Beuningen 6 Den Bosch (cid:1) 7 Deventer (cid:1) 8 Duivern 9 Eindhoven (cid:1) 10 Enschede 11 Groningen 12 Heerhugowaard (cid:1) 13 Klaprozenweg 14 Rotterdam 15 Sliedrecht 16 Tiel (cid:1) 17 Utrecht 18 Veenendaal 19 Waalwjk 20 Zwolle TOTAL 321 STORES (cid:1) New store 2006/07 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 CGI Squared/www.cgisquared.com 209 47 202 203 211 207 49 210 205 206 208 214 212 48 213 204 50 157 167 180 192 178 161 152 147 166 39 36 144 159 165 37 168 174 38 148 171 169 42 173 163 41 154 35 150 145 156 176 162 46 14 55 199 198 185 197 182 187 201 195 190 45 186 31 46 37 189 200 177 194 196 181 193 184 44 62 33 33 175 146 151 179 183 191 43 188 164 170 172 149 40 15 158 2 51 155 34 153 160 36 40 11 19 7 16 17 30 8 54 3 14 18 45 47 21 12 6 4 29 6 38 4 9 35 50 43 25 57 5 49 54 2 27 11 60 41 8 44 53 16 26 61 5 22 225 1 233 31 131 229 241 55 237 236 223 224 220 223 224 216 222 228 234 227 244 232 215 221 242 246 235 218 238 53 52 231 230 243 3 42 1 121 113 217 95 83 125 75 94 102 118 82 68 54 240 127 29 239 51 226 219 245 97 107 HOLLAND STORES 8 15 7 10 12 3 16 20 19 9 14 1 4 6 13 2 18 17 16 5 11 LONDON STORES 140 136 31 112 27 85 104 142 126 101 122 119 96 134 123 88 93 24 92 84 138 90 106 66 129 19 22 115 78 20 71 91 77 143 28 21 25 116 111 130 137 98 65 26 117 139 72 111 79 87 17 74 56 9 15 39 10 34 24 20 7 69 80 18 100 81 120 13 12 64 128 30 124 110 73 76 63 97 28 59 48 13 23 10 109 32 141 103 70 86 132 133 67 23 89 99 105 71 135 108 107 TOPPS TILES - STORE NUMBERS Stores at beginning of period New stores opened Sub-Total Closures Total 225 27 252 (6) 246 TILE CLEARING HOUSE - STORE NUMBERS Stores at beginning of period New stores opened Sub-Total Closures Total 46 12 58 (3) 55 HOLLAND - STORE NUMBERS Stores at beginning of period New stores opened Sub-Total Closures Total 15 5 20 – 20 Topps Tiles Plc Thorpe Way Grove Park Enderby Leicestershire LE19 1SU T 0116 282 8000 F 0116 282 8115 www.toppstiles.co.uk 

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