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TOPPS TILES PLC
ANNUAL REPORT AND ACCOUNTS
FOR THE 52 WEEK PERIOD ENDED 29 SEPTEMBER 2018
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Welcome . . .
. . . to the 2018 Annual Report and Accounts. This has been an important year of
strategic progress for the Topps Tiles Group, in which our expansion into commercial has
seen us double our addressable market while remaining firmly within our tile specialism,
where our buying scale and expertise gives us a significant competitive advantage.
Read more information on Business Model 2018
on pages 10 to 11
PICTURED
Front cover: Parkside: The Brass, Dubai – design by Harrison
© 2018 Rogier van Zeventer
Top: Monogeo
Back cover: Ruzzini
Inside back cover: Parkside: St George West London Collection,
Royal Exchange Kingston
INVESTOR WEBSITE
We maintain an
investors' website
containing a wide range
of information to investors
toppstilesplc.com
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notes-heading-level-one
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• notes-list-bullet
• notes-list-bespoke
− notes-list-dash
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vi) notes-list-roman
Inspiring customers
through our love of tiles
Table plain text
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1
1
1
2
2
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3
3
3
OUR STORES
OUR STRATEGY
Topps Tiles has 368 retail stores across
the UK with a broad geographic reach
which means most customers require
less than a 20-minute drive time to
reach their local store.
Profitable Sales Growth
RETAIL
OUTSPECIALISING THE SPECIALISTS
COMMERCIAL
DISRUPT AND CONSTRUCT
LEADING RANGE
GREAT PEOPLE, GREAT COMPANY
17
2
55
49
16
77
152
Our overarching goal for the Group is to drive
profitable sales growth through our retail and
commercial businesses. This goal is supported by
our “leading range” initiative which encapsulates
our leading specialism in tiles and our “Great
People, Great Company” initiative which includes
all of our Group support functions and our industry
leading levels of customer service. The Board is
confident that this is the right overall strategy for
the Group.
Read more information on Strategy
on pages 12 to 17
Read more information on Marketplace
on pages 08 to 09
01
CONTENTS
2018 Highlights
Chairman’s Statement
STRATEGIC REPORT
Marketplace
Business Model 2018
Our Strategy
Leading Range
Great People, Great Company
Retail
Commercial
Key Performance Indicators
Financial Review
Risks and Uncertainties
Corporate Social Responsibility
OUR GOVERNANCE
Board of Directors
Executive Team
Corporate Governance
Statement
Directors’ Report
Directors’ Remuneration Report
OUR FINANCIALS
Independent Auditor's Report
Consolidated Statement
of Financial Performance
Consolidated Statement
of Comprehensive Income
Consolidated Statement
of Financial Position
Consolidated Statement
of Changes in Equity
Consolidated Cash
Flow Statement
Notes to the Financial
Statements
Company Balance Sheet
Company Statement of
Changes in Equity
Notes to the Company
Financial Statements
ADDITIONAL INFORMATION
Five Year Record
Notice of Annual
General Meeting
Explanatory Notes to the
Notice of Annual General
Meeting
The Team
Store Locations
02
04
08
10
12
13
14
15
16
18
19
24
30
42
43
44
50
54
72
80
80
81
82
83
84
114
115
116
124
125
130
133
145
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STRATEGIC REPORTOUR GOVERNANCEOUR FINANCIALSADDITIONAL INFORMATIONTOPPS TILES PLC ANNUAL REPORT AND ACCOUNTS FOR THE 52 WEEK PERIOD ENDED 29 SEPTEMBER 2018 02
2018 Highlights
Delivering a robust performance
Statutory Measures
Adjusted Measures
GROUP
REVENUE (£m)
YoY: +2.4%
9
.
6
1
2
0
.
5
1
2
2
.
2
1
2
8
.
1
1
2
GROSS
MARGIN (%)
YoY: nil
2
.
1
6
9
.
1
6
1
.
1
6
1
.
1
6
15
16
17
18
15
16
17
18
ADJUSTED GROUP
REVENUE1
£214.8m
2017: £211.7m
YoY: +1.5%
ADJUSTED GROSS
MARGIN2
61.3%
2017: 61.1%
YoY: +20bps
Read more information
in the Financial Review
on pages 19 to 23
FREE CASH FLOW5
£17.9m
2017: £4.2m
YoY: £13.7m
FINAL
DIVIDEND (p)
YoY: nil
TOTAL
DIVIDEND (p)
YoY: nil
LIKE-FOR-LIKE REVENUE
GROWTH YEAR-ON-YEAR3 (%)
YoY: n/a
ADJUSTED PROFIT
BEFORE TAX6 (£m)
YoY: (14.0)%
0
5
.
2
5
2
.
2
0
3
.
2
0
3
.
2
0
5
.
3
0
4
.
3
0
4
.
3
0
0
.
3
4
.
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.
4
0
.
2
2
4
.
0
2
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.
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6
1
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)
9
.
2
(
15
16
17
18
15
16
17
18
15
16
17
18
15
16
17
18
PROFIT
BEFORE TAX (£m)
YoY: (25.3)%
0
.
0
2
0
.
7
1
0
.
7
1
7
.
2
1
BASIC EARNINGS
PER SHARE (p)
YoY: (28.4)%
5
0
.
8
8
9
.
6
5
7
.
6
0
0
.
5
ADJUSTED EARNINGS
PER SHARE4 (p)
YoY: (13.0)%
NET
DEBT7 (£m)
YoY: (£11.3m)
6
8
.
8
7
1
.
8
3
6
.
47
6
.
6
4
.
8
2
5
.
7
2
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.
4
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.
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1
15
16
17
18
15
16
17
18
15
16
17
18
15
16
17
18
Adjusting items are detailed in the notes opposite and in the adjusted measures section of the financial review. These include trading losses
from the Parkside business while we go through an initial two-year phase of investing in growth plus other items which are either one off in
nature or can fluctuate significantly from year to year (such as some property-related items).
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TOPPS TILES PLC ANNUAL REPORT AND ACCOUNTS FOR THE 52 WEEK PERIOD ENDED 29 SEPTEMBER 2018 Read more information
in the Financial Review
on pages 19 to 23
03
FINANCIAL SUMMARY
STRATEGIC & OPERATIONAL SUMMARY
• Strong free cash flow of £17.9 million (2017: £4.2 million)
Group
due to improved operational cash flow, and more targeted
investments;
• Net debt reduced by £11.3 million year-on-year to £16.2
million with a £35.0 million loan facility now in place to June
2021;
• Final dividend maintained at 2.3 pence per share (2017:
2.3 pence per share), making a total for the year of 3.4
pence per share (2017: 3.4 pence per share);
• Like-for-like sales were flat for the year;
• The Group has continued to deliver industry-leading adjusted
gross margins of 61.3% (2017: 61.1%) primarily as a result
of sourcing gains;
• Adjusted profit before tax of £16.0 million (2017: £18.6
million), the profit reduction being due to additional costs
as a result of new stores and inflationary pressures;
• The Parkside commercial business generated £2.1 million of
sales and, as expected, a £1.1 million trading loss;
• Statutory profit before tax of £12.7 million (2017: £17.0
million), reflecting a £2.6 million fall in adjusted pre tax profit,
£1.1 million investment in growth of the Parkside commercial
business and a net increase in property-based provisions.
NOTES
1. Adjusted revenues are defined as total Group revenues excluding Parkside.
2. Adjusted gross margin is defined as Group gross margin excluding Parkside.
3.
Like-for-like sales revenues are defined as sales from online and stores that have
been trading for more than 52 weeks. In 2018 sales in like-for-like stores were
£208.9 million (2017: £208.9 million), with an average of 354 stores included
in the weekly calculation.
4. Adjusted earnings per share is adjusted for the items highlighted above plus the
impacts of corporation tax.
5.
Free cash flow is defined as net cash from operating activities less net cash used
in investing activities.
6. Adjusted profit before tax excludes several items which are either one off in nature
or fluctuate significantly from year to year (such as some property related items).
These are set out as follows:
Adjusted pre-tax profit
Vacant property costs
Costs related to acquisition during the period
Impairment of plant, property and equipment
and movement in onerous lease provision
Gains on disposal of freehold or
long leasehold properties
Historic adjustment to refunds provision
Parkside trading loss
Statutory pre-tax profit
2018
£m
2017
£m
16.0 18.6
(0.2)
(0.4)
nil
(0.2)
(2.2)
(1.2)
0.7
0.2
(0.5)
nil
(1.1)
nil
12.7 17.0
7. Net debt is defined as bank loans, before amortised issue costs (note 18) and
less cash and cash equivalents.
• The UK’s leading tile specialist with a core purpose to inspire
customers through our love of tiles;
• Competitive advantage as a result of specialist focus, buying scale
and expertise across both retail and commercial businesses:
− 25 new ranges launched and further 10 ranges relaunched
over the year;
− 90% of range is own brand or exclusive to the Group in the UK;
• Further investment in Group Learning and Development to
enhance colleague capability and engagement;
• Focus on programme of simplifying business processes to
improve colleague and customer experience.
Retail
• Strategy of “Out-specialising the Specialists” remains our key focus
in the retail tile market, where consumer behaviour is changing;
• Digital experience continues to grow in importance as part of
our multi-channel offering;
• Almost all of our customers come to store and experience the
world class specialist service provided by colleagues in our
368 retail stores;
• We can also refer customers to a professional fitter and now
have more than 85,000 active members (2017: 55,000) on
our Trade Rewards+ loyalty programme;
• While a nationwide store presence remains critical we continue
to review the efficiency of our portfolio and have a high degree
of flexibility (average unexpired lease term of 3.4 years excluding
strategically important stores) to respond to changing consumer
needs over time.
Commercial
• Entry into commercial market through the Parkside acquisition
has approximately doubled the size of the Group’s addressable
UK market whilst maintaining our specialism in tiles;
• Development of commercial infrastructure on track - good
progress being made with recruitment of talented sales teams
with over 275 years of combined experience and establishing
central capability;
• Commercial customer response to Group’s tile specialism has
been very positive;
• Commercial showrooms opened in Chelsea and Leicester during
the year, with a plan to open two more in the year ahead;
• Strategy is to disrupt the commercial tile market and construct
a new market leader over the medium term.
Current Trading and Outlook
•
In the first eight weeks of the new financial period, Group
revenues, stated on a like-for-like basis, decreased by 1.9%
(2017: increase of 3.2%)
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STRATEGIC REPORTOUR GOVERNANCEOUR FINANCIALSADDITIONAL INFORMATIONTOPPS TILES PLC ANNUAL REPORT AND ACCOUNTS FOR THE 52 WEEK PERIOD ENDED 29 SEPTEMBER 2018 04
Chairman’s Statement
Our overarching goal
for the Group is to drive profitable sales growth
Trading and Financial Performance
The market has continued to be challenging this year and, whilst we
have ultimately seen some impact on our financial performance I am
pleased with how the business has responded. The challenging market
has been driven primarily by weakened consumer demand which is
linked predominantly to lower levels of consumer confidence. This has
resulted in a modest level of sales growth but this was not sufficient to
offset the external pressures on our cost base over the period (which
are detailed in the financial section of this report). Our adjusted profit
before tax was £16.0 million (2017: £18.6 million), with statutory
profit before tax of £12.7 million (2017: £17.0 million).
Dividend
Our dividend cover has been reducing over the last three years
with a broad target of achieving two times cover such that
approximately 50% of our annual post tax adjusted earnings
are remitted back to shareholders. We have achieved this in the
current financial year and now intend to continue at this level of
dividend cover moving forwards.
As a result, the Board is recommending a final dividend for the year
of 2.3 pence per share (2017: 2.3 pence per share). This will bring
the total dividend for the year to 3.4 pence per share (2017: 3.4
pence per share). As a consequence, dividend cover for the year
on an adjusted earnings per share basis is 1.955 (2017: 2.255).
The Board and Corporate Governance
The Board of Topps is focused on good governance and we have
further improved our disciplines on several fronts over the year. We
have continued to make further progress on our control environment
and evaluating risks and opportunities to the business. In particular,
we have spent more time on forward-looking items such as the
commercial market, changes to the property market, opportunities
in our digital proposition and the possible implications of Brexit. In
line with last year I am pleased to confirm that all Non-Executive
Directors are independent and the Board is fully compliant with the
Corporate Governance code. We have benefited from very good
stability on the Board with all Directors having completed at least
three years of service and the combined Board having nearly 50
years of experience with the Group in total.
We have continued to assess the performance of the Board and
the committees, including my own performance as Chairman.
These reviews concluded that, overall, the Board is operating
effectively and there are some further minor improvements that
we will implement in the year ahead.
DARREN SHAPLAND | CHAIRMAN
Introduction
A very warm welcome to the Topps Tiles 2018 Annual Report.
This year has again delivered some challenging trading conditions
but I am pleased to report that we have responded well and
continued to make good progress with both our Retail and
Commercial strategies whilst also strengthening the financial
position of the business.
Purpose, Goal and Strategy
The core purpose for the Group is to inspire customers through
our love of tiles. This purpose also helps to give the Group great
strategic clarity in that any opportunities we pursue should seek
to leverage our core specialism.
Our overarching goal for the Group is to drive profitable sales
growth. Within our retail business, Topps Tiles, we are focused
on the UK retail tile market where our strategy of “Out-specialising
the Specialists” continues to serve us well and remains key
for driving long-term profitable growth. At the end of the prior
year we expanded into the UK commercial tile market through
our acquisition of Parkside and this year has been one of both
developing a deeper understanding of the commercial market
and also investing for longer term growth. This exciting expansion
approximately doubles the size of our addressable market in the
UK whilst maintaining the Group’s core specialism within tiles and
staying true to our core purpose.
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TOPPS TILES PLC ANNUAL REPORT AND ACCOUNTS FOR THE 52 WEEK PERIOD ENDED 29 SEPTEMBER 2018 05
PICTURED
1: Parkside: Nando’s, Stevenage – design by Harrison
2: Mora Herringbone Oak Mosaic Cameo
3: Abrasio Steel and Basalt
2
3
© 2018 Rocco Photography
1
This year has again delivered some challenging
trading conditions but I am pleased to report
that we have responded well and continued to
make good progress with both our Retail and
Commercial strategies whilst also strengthening
the financial position of the business.
Our People
As a customer service-based business, our people are at the
heart of our organisation and this is a key aspect of the Group’s
success. We provide a major focus on our training and
development programmes for all colleagues and clear and
open communication across the business. On behalf of the
Board I would like to extend my sincere thanks to all colleagues
for their hard work, commitment and dedication.
The Future for Topps Tiles
In the retail UK tile market, Topps Tiles’ retail strategy of
“Out-specialising the Specialists” remains very much at the heart
of what we do and the management team will continue to evolve
the key strands of this strategy to maximise the opportunities to drive
performance. Our expansion into the UK commercial tile market
provides an excellent opportunity to leverage the Group specialism
in tiles and represents an important source of future growth for the
Group. The Board is confident that this focus on UK expansion,
whilst maintaining our core specialism, is the right strategy for
the Group.
DARREN SHAPLAND | CHAIRMAN
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STRATEGIC REPORTOUR GOVERNANCEOUR FINANCIALSADDITIONAL INFORMATIONTOPPS TILES PLC ANNUAL REPORT AND ACCOUNTS FOR THE 52 WEEK PERIOD ENDED 29 SEPTEMBER 2018
1
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Strategic
Report
CONTENTS
Marketplace
Business Model 2018
Our Strategy
Leading Range
Great People, Great Company
Retail
Commercial
Key Performance Indicators
Financial Review
Risks and Uncertainties
Corporate Social Responsibility
08
10
12
13
14
15
16
18
19
24
30
The content of this Strategic Report
meets the content requirements of the
Strategic Report as set out in s414a of
the Companies Act 2006. This Strategic
Report and Chairman’s Statement contains
certain forward-looking statements. These
statements are made by the Directors
in good faith based on the information
available to them up to the time of their
approval of this report and such statements
should be treated with caution due to
the inherent uncertainties, including both
economic and business risk factors,
underlying any such forward-looking
information.
2
3
4
5
© 2018 Rocco Photography
PICTURED
1: Astrea Fern Green and Mora Walnut
2: Apini and Speculo Lagoon
3: Parkside: Nando’s, Craigavon – design by Harrison
4: Elura Beige and Matrix Fern Green
5: Parkside: Radisson Blu, Stansted – design by Trevillion Interiors
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08
Strategic Report:
Marketplace
The UK tile market
has an approximate value of £700 million at retail selling prices. The market splits into two broad sectors –
retail, accounting for around 55% of the market and commercial, accounting for the remaining 45%.
A further key driver of the customer decision to take on a home
improvement project is buying a new home. Housing transactions
are therefore a very useful indicator of likely future demand. During
this financial year housing transactions have remained broadly flat
at around 1.2 million (Source: HMRC).
We also consider UK house price data to be a useful indicator of
the relative health of our market. House prices are both a good
reflection of the housing market itself and also tend to reflect
consumer confidence, as home owners tend to feel more affluent
in a rising market. During the year we saw an increase in house
prices, with the average price of a house in the UK rising to
£214,922, an increase of 2.0% on the previous year (Source:
Nationwide).
Read more information on Retail
on page 15
Commercial Tile Market
The UK commercial tile market is quite fragmented with only a
very small number of scale competitors. The smaller competitors
tend to specialise in certain areas of the market – examples being
casual dining, automotive, leisure, offices or high end residential.
Customers in this market can be categorised into two general
groups - those that require specialist advice and design input and
those that require more commoditised products, generally in large
quantities but also at low prices. The focus for our business is
on commercial customers in the former category, where we can
leverage our tile specialism and design credentials.
Read more information on Commercial
on page 16
The UK Tile Market and
Performance of the Business
The UK tile market has an approximate value of £700 million
at retail selling prices. The market splits into two broad sectors –
retail, accounting for around 55% of the market and commercial,
accounting for the remaining 45%. The retail market includes
the renovation, maintenance and improvement of residential
properties and the commercial market includes commercial building
projects in their many and varied forms, as well as new build
residential property.
The annual tile industry report published by MBD covers the
whole of the UK tile market (retail & commercial) and is based
on manufacturer and supplier data. Growth of the entire market
in 2017 was 1.3% on a value basis and -1.9% on a volume
basis. MBD has estimated that volume growth in 2018 will be
1.1% and our view is that this growth will have been driven by
the commercial side of the UK tile market, in particular new build
residential housing (note – MBD does not provide a value forecast
growth estimate).
The Board recognises that Brexit could have a number of
implications for the Group – these would include disruption to
the flow of imported goods resulting in supply issues, a reduction
in consumer confidence resulting in lower sales and a reduced
labour pool resulting in staffing issues. Our response to these
concerns is detailed in the risks section of the Annual Report but
will primarily focus on increasing stock levels of our key selling
lines ahead of March 2019.
Retail Tile Market
Due to the discretionary nature of retail market spending, consumer
confidence remains a key driver of its performance. During 2018
the average level of consumer confidence was -9.3, which
compares to -7.3 in 2017. Whilst the index was negative across
the year, there was a modest improvement from -10.2 in the
first half to -8.5 in the second half (source: GFK). The consumer
confidence index has remained negative since the EU referendum
result in June 2016 and we will continue to monitor this measure
closely, in particular as we progress through the UK’s planned exit
from the EU during 2019.
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TOPPS TILES PLC ANNUAL REPORT AND ACCOUNTS FOR THE 52 WEEK PERIOD ENDED 29 SEPTEMBER 2018 09
UK HOUSE PRICES AND CONSUMER CONFIDENCE
UK 12-MONTH HOUSING TRANSACTIONS – HMRC
Consumer confidence
House price (Nationwide)
20
10
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-20
-30
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Source: Consumer confidence = GFK, UK house price = Nationwide
Source: Housing transactions = HMRC
UK CONSTRUCTION COMMERCIAL OUTPUT*
1
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r
p
A
6
1
n
u
J
6
1
g
u
A
6
1
t
c
O
6
1
c
e
D
7
1
b
e
F
7
1
r
p
A
7
1
n
u
J
7
1
g
u
A
7
1
t
c
O
7
1
c
e
D
8
1
b
e
F
8
1
r
p
A
8
1
n
u
J
8
1
g
u
A
8
1
t
c
O
* UK construction output is based on ONS data for new private housing,
other new work private, other new work public sector & non housing
repair & mtce
UK TILE MARKET – RETAIL VS COMMERCIAL
UK Tile Market estimated at c. £700m @ RSP
Commercial
Retail
c20 smaller
specialists
including
Parkside
Porcelanosa
1
CTD
Solus
Domus
2
3
5
4
Source: MBD and Company estimates
Commercial c.45%
1 Commercial 45%
Retail c.55%
2 Topps Tiles 18%
3 DIY Sheds 17%
4 Other specialists 16%
5 Other 4%
2
PICTURED
1. Parkside: Chelsea Showroom
2. Mora Walnut and Catania Green
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10
Strategic Report:
Business Model 2018
We are a specialist
in the field of tiles, with a competitive advantage in sourcing differentiated products
from around the world which we can access on an exclusive basis.
Topps Tiles is the leading specialist supplier of tiles in the UK
market. Historically the business has focused on the retail tile market
for the supply of tiles into the refurbishment of residential housing,
which it has served through the retail channel. Over the last year
the business has diversified and expanded into the commercial tile
market. The commercial market includes tiles supplied for both new
build and refurbishment of commercial premises across all sectors
such as education, leisure, transport, retail and office buildings,
plus new build residential housing. This expansion for the Group
does not, however, change the fundamentals of our business
model. We are a specialist in the field of tiles, with a competitive
advantage in sourcing differentiated products from around the
world which we can access on an exclusive basis.
Supply Chain
We source our products directly from manufacturers on a global
basis, with a focus on building long-term strategic relationships
with our manufacturing partners. Owning as much of the post-
manufacture supply chain as possible is a key aspect of our
business model and an important source of competitive advantage.
Our buying scale and customer reach allow us to develop product
ranges with leading tile manufacturers that are genuinely innovative
and to source them on an exclusive basis. Our investment in
our supply chain also includes our 150,000 sq ft warehouse in
Leicester and a fleet of 28 commercial vehicles. This gives us an
unrivalled control over our inventory and delivery capability.
Topps Tiles and Parkside websites
Product Innovation
We inspire all of our customers with a market-leading product
range, 90% of which is exclusive to us. We achieve both of
these aspects by working collaboratively with our key suppliers
to develop new ranges; with Topps Tiles providing the customer
insight into emerging style trends and the manufacturer providing
the technical knowledge and production capability. Technology
is an important aspect of modern tile production with innovations
such as digital printing and new glaze technologies allowing a
much greater variety of patterns and finishes. We have made full
use of these new technologies in recent years to further enhance the
breadth and quality of our market-leading tile range.
People
At our heart we are a service-based business and as a result our
people are one of our most important assets. We aim to provide
our customers with high quality advice on their tiling projects and
to do this successfully we need highly engaged specialist teams
in-store and in our direct sales force that can engage with our
customers and truly inspire them. Technical knowledge and
a strong service ethic are paramount and we invest significant
amounts of time and money in training our people every year.
Channels
We operate multiple channels to market to provide all our
customers with access to our market-leading product range
and service in the most convenient format for them.
For our retail business, stores remain our primary channel to
market and almost all of our customers will visit a store at some
point during their purchase. We operate in excess of 365 stores
across the UK with an average footprint of 5,000 sq ft; however,
the inherent flexibility in our operating model enables us to trade
successfully from 1,000 sq ft up to 10,000 sq ft. This flexibility
means Topps Tiles stores can be found in a wide variety of
locations including high streets, retail parks, trade parks and on
main arterial roads on routes to larger shopping destinations. Our
store portfolio operates predominantly on a leased basis with an
average unexpired lease term of just under five years.
Retail customers also very often choose to use our online presence to
conduct initial research into their projects or to maximise convenience
by using this as a payment channel. We estimate that around 70%
of our customers will use our website at some stage in their purchase
journey with us.
Trade customers – independent tile fitters contracted by customers
to complete their domestic tiling projects – are a vital sales channel
for our retail business. Our trade customers now account for 56% of
our retail sales. In some cases we may not have a direct relationship
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1
2
3
with the homeowner which is why our relationship with our trade
customers is very important to us. These relationships are built on
the basis of our specialist credentials; our ability to provide excellent
technical knowledge; and a range of specialist products which
ensures we cater for all of our traders’ needs.
In the commercial market we serve the customer through our team
of high-quality sales people. These colleagues will often have
historic relationships with architects and designers based on high
levels of mutual trust, established over a sustained period through
successful delivery of projects together.
Brand
The tile market has very few recognised product brands and in
the absence of these pointers for customers, the business brand
becomes very important.
In retail, Topps Tiles is the UK’s leading specialist tile retailer with
85% prompted awareness with consumers who have recently
purchased or who are about to purchase tiles. Topps Tiles’ focus is
on driving consideration with the tile decision maker and building
this metric successfully results in increased sales from both home-
improvers and traders. Our customers tell us they want inspirational
service at all points of contact and quality “on-trend” products at
a range of price levels they can buy conveniently.
In Commercial, we are building the Parkside brand, which, over
time, we believe could ultimately become the market leader.
Value for Customers
We deliver value to our customers by combining differentiated products
with excellence in customer service. This is combined with competitive
pricing to ensure that all of our customers receive great value.
The Topps Tiles Group model continues to evolve and our strategy
seeks to capitalise on the aspects where we consider we can
maximise the potential to deliver our goal.
PICTURED
1: Syren (all colours) and Dartrey Black
2: Amberley
3: Galaxy Granite and Diamante Pastel Mist
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Strategic Report:
Our Strategy
The business has an overarching goal to profitably
grow sales. In 2017 we identified an opportunity
to expand into the commercial tile market and as
a result of this new focus, 2018 has been a year
of transition for the Group. We have made great
progress with both developing our understanding
of the commercial market, growing our Parkside
business and also continued to strengthen our
Topps Tiles retail business. Both divisions are
supported by our Group “Leading Range” initiative
and by other Group functions through our “Great
People, Great Company” strategy.
MATTHEW WILLIAMS | CHIEF EXECUTIVE OFFICER
Profitable Sales Growth
RETAIL
OUTSPECIALISING THE SPECIALISTS
COMMERCIAL
DISRUPT AND CONSTRUCT
LEADING RANGE
GREAT PEOPLE, GREAT COMPANY
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LEADING RANGE
The Group’s core purpose is to inspire customers through our love of
tiles and this objective is reflected in our “Leading Range” initiative.
Our specialism in tiles is our key source of competitive advantage.
We are experts in the ranging, sourcing and procurement of tiles
on a global basis and we work with carefully selected partners
around the world to develop and produce differentiated products
that are innovative, high quality and exclusive. We robustly protect
the intellectual property and design assets we create through
partner exclusivity and design registration and, if necessary, legal
enforcement. Ultimately, it is this Group specialism that we leverage
through our business divisions into the retail and commercial markets.
Progress and Outlook
Our pace and iterative cycle of product introduction continues to set
us apart from our competitors. In the period we launched over 35
tile ranges, 80% of which were developed in-house. We have also
more than doubled our portfolio of high impact branded exclusive
accessories to meet the needs of our trade customers. Several
resourcing initiatives have been completed, optimising cost, quality
and lead times that will provide material gross profit improvements
in 2019. Ninety per cent of the products we sell are now either
own brand or exclusive and are sourced directly by our team of
expert tile and accessory buyers from more than 20 countries
around the world.
1
We have a relentless focus on product differentiation and it is our
mission to lead on product design, quality and innovation. We
are committed to investing in unique partner relationships with
key influencers of tile design and technology that are increasingly
upstream in the product development cycle. This enables us to
utilise our deep manufacturer collaborations to maximum effect
and this sets us apart from our competitors.
What our customers are saying
“ I shopped around A LOT for wood effect tiles
and out of all the retailers I could find I kept
coming back to the Mora Oak tiles. Now they’ve
been laid in my kitchen I am so pleased I chose
them – everyone thinks they are real wood.
Also need to mention that Topps Tiles service
in my local store was fantastic they are all so
knowledgeable, helpful and very efficient.
Honestly can’t rate them and their product
highly enough.”
GRACE
PICTURED
1: Catania Violet
2: Stadia Storm and Andira Smokey Brown
2
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Strategic Report:
Our Strategy
GREAT PEOPLE, GREAT COMPANY
This element of our strategy encompasses all of our Group support
functions, including finance, property, logistics, HR, IT and legal.
The Group’s success is underpinned by industry-leading levels of
customer service and this applies equally to both our Retail and
Commercial businesses. This means that we are very focused on
our colleagues who deliver this service, with their capability and
engagement levels being absolutely key. We believe our people
represent a major source of competitive advantage and through our
great people we strive to continue to build a great company.
Progress and Outlook
In October 2018, our annual survey recorded our best all
colleague engagement score from the last four years which we
consider to be a real endorsement of the success of our people
strategy. Of particular note was the highest score we have received
in terms of colleague wellbeing which has also been a key area
of focus over the last 18 months.
In the prior period we launched a new online Learning Management
System, “theHub”. This continues to be a very popular method of
learning for colleagues and we have prioritised investment and
resource into developing materials for theHub and less into face-to-
face training in order to drive efficiencies in this area.
When we recruit at a store management level 60% of these
roles are filled internally which presents an excellent opportunity
for internal progression and also allows us to retain strong technical
skill sets.
We continue to invest in a programme of simplifying business
processes to either improve the customer experience or the colleague
experience, but ideally both. This is delivering significant results
which we believe are helping to improve colleague engagement
and customer satisfaction.
What our customers are saying
“ Love these tiles. We used the same dark grout
and matching tile trim as in the catalogue
and they look stunning. Have had loads of
compliments on them. Really pleased. Nick
and all the other staff at the Halifax store
were a great help, from choosing the tiles
to loading them in our car for us.”
JULIE | HALIFAX
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RETAIL OUT-SPECIALISING THE SPECIALISTS
Our retail strategy for the retail market of “Out-specialising the
Specialists” continues to be very effective. This strategy is focused
on providing both our retail and trade customers a truly inspirational
experience – both online and in store.
Progress and Outlook
Our digital platforms continue to go from strength to strength. Our
website is industry-leading and was ranked in the top 25 for retail
websites in the UK (source: Internet Retailing). The majority of our
customers will utilise our website as the first step of their shopping
journey with us – often as part of the research phase. We have
continued to grow our understanding of the relationship between
web and store visits and as a result we have continued to increase
our investment into digital marketing, resulting in a sustained
increase in online traffic. Our visualiser continues to be a major
source of inspiration for customers and a key tool for colleagues
to use in stores.
Our colleagues offer our customers a world-class experience within
store. We are continuing the roll-out of our all-store improvement
programme which includes new initiatives such as a design advice
area. This provides a space in store for colleagues to interact with
customers in a more consultative way, really understanding their
needs and providing bespoke design solutions. The majority of our
customers shop infrequently for tiles which means that when they do
they need lots of advice and expertise. Our customer satisfaction
scores are very important to us and in the year ahead we will
launch a new “voice of the customer” feedback program that will
enable us to listen to our retail and trade customers’ feedback in
real time, allowing us to learn and adapt to their needs.
The size of our store portfolio is also a key source of competitive
advantage as this makes us very convenient for the majority of the
UK population. At the period end we had 368 stores (2017: 372
stores) and we expect to see continued movement in the portfolio
through active portfolio management based on openings, closures
and relocations. The optimum size of the portfolio for the UK will
continue to be reviewed based on changing customer needs over
time. Critically, the average unexpired lease term to the next break
opportunity is 4.1 years (2017: 4.3 years) and if we remove stores
which are strategically important (where we have proactively taken
longer terms to secure our tenure) the average unexpired lease term
to break falls to 3.4 years (2017: 3.8 years) – the flexibility this
provides is a key strength of the business.
Our trade customer base represents more than half of our sales.
This provides a vital link to those homeowners who prefer to
transact through their fitter rather than with us direct. In the UK there
is a sustained trend away from “Do It Yourself” towards “Do It For
Me” which means that this channel is increasingly important for
us, is an area of the business we focus on very hard and is one
which we believe provides us with a further source of competitive
advantage. Sales through our trade channel account for 56%
of total sales (2017: 55%). Our trade loyalty scheme leads our
market place – with 85,000 traders registered and earning points
(2017: 55,000). During the year we have refined this scheme to
make it more relevant across our entire trade base, which has been
very positively received, with double the number of traders now
collecting points.
What our customers are saying
“ I wanted to create a wooden floor effect in part
of my conservatory and ordered a sample of
this tile as I liked the look and colour. I was
delighted when I saw how robust it was and
how good the effect looked. I ordered the tiles
and have now laid them. They look fabulous
and have enhanced the area significantly.
Highly recommended.”
HEIDI | HAMPSHIRE
PICTURED
Batik Beige
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Strategic Report:
Our Strategy
COMMERCIAL Disrupt and Construct
What our customers are saying
“ I would just like to personally thank yourself
and the team for helping me out with the recent
material I required. Please extend my regards
to the Parkside office who were extremely
helpful. Your combined assistance has put
Parkside in great stead for our next hotel
upcoming at Gatwick.”
CHRIS | LONDON
1
2
© 2018 Mark Cocksedge
As described in the market section of this report, the commercial tile
market represents approximately 45% of the overall UK tile market.
Historically, the Group had a very small representation in this part
of the market through commercial sales made in its retail stores, but
in 2017 we identified commercial as an opportunity for expansion
and profitable growth and acquired the Parkside business.
Progress and Outlook
2018 has been a year of consolidation, learning and investment
for Parkside. We have streamlined the business down from a
mixed retail, distribution and commercial operation into a purely
commercial player. We have been developing our strategic
insight into this new market and have been pleased by how well
the Group’s entry into commercial has been received by clients,
with our access to exclusive and differentiated ranges seen as a
particular strength. Our strategy of “disrupt and construct” means
that we plan to disrupt the existing competitive landscape and,
over time, construct a new market leader. Our size and scale as
a Group is central to this plan – giving us the resources to recruit
a talented sales team and invest in market-leading pricing. During
the period we expanded the commercial sales team and improved
the infrastructure to give a base for future growth. Our current team
of sales people has a combined 275 years of experience in the
commercial tile market.
The commercial market works on lead times that can often extend
to 12–24 months and building a pipeline of project leads is a
vital first step. During 2018 we have been busy establishing our
presence and growing our potential order book. As expected,
trading losses for the period have been £1.1 million and we
envisage this continuing into the following financial year at a similar
level as we invest in future growth. These losses have been treated
as a longer term investment and as such have been excluded from
the adjusted financial position of the Group for this year; they will
also be excluded next year. We remain open to further growth
through acquisition and will continue to review such opportunities
as they arise.
PICTURED
1. Parkside: Clerkenwell Design Week
2. Parkside: Informal meeting space in Leicester Showroom
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TOPPS TILES PLC ANNUAL REPORT AND ACCOUNTS FOR THE 52 WEEK PERIOD ENDED 29 SEPTEMBER 2018 17
PICTURED
Berkeley Essence Sky, Spaces Hamble Nimbus
and Black Split Face
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Strategic Report:
Key Performance Indicators
The Board monitors a number of financial and non-financial metrics and KPIs both for the Group
and by individual store. This information is reviewed and updated as the Directors feel appropriate.
Specific measures include:
Financial KPIs
ADJUSTED GROUP REVENUE
GROWTH YEAR-ON-YEAR*
▲
LIKE-FOR-LIKE SALES GROWTH
YEAR-ON-YEAR*
▲
ADJUSTED GROSS
MARGIN*
▲
1.5%
2017: (1.5)%
0.0%
2017: (2.9)%
61.3%
2017: 61.1%
YoY: +20bps
ADJUSTED PROFIT
BEFORE TAX*
▼
ADJUSTED EARNINGS
PER SHARE*
▼
NET
DEBT*
▼
£16.0m
2017: £18.6m
YoY: (14.0)%
6.64p
2017: 7.63p
YoY: (13.0)%
£16.2m
2017: £27.5m
YoY: £11.3m
INVENTORY
DAYS
130
2017: 132
Non-financial KPIs
▼
Notes
• Net Promoter Score is calculated based on customer feedback to the question of how likely they are to
recommend Topps Tiles to friends or colleagues. The scores are based on a numerical scale from 0 to 10 which
allows customers to be split into promoters (9-10), passives (7-8) and detractors (0-6). The final score is based
on the percentage of promoters minus the percentage of detractors.
• Customer service score is calculated based on the results of our mystery shopper programme. This programme
sees a panel of independent shoppers visit each of our stores every month and scores them across six service
lead categories, each category holds a varying weighting towards the overall score percentage.
• Energy carbon emissions have been compiled in conjunction with our electricity and gas suppliers. This is based
on the actual energy consumed multiplied by Environment Agency approved emissions factors. Vehicle emissions
have been calculated by our in-house transport team based on mileage covered multiplied by manufacturer
quoted emission statistics.
YoY: (2)
NET PROMOTER
SCORE %
▼
CUSTOMER
SERVICE SCORE
▲
COLLEAGUE
TURNOVER
▲
66.8%
80.6%
37.2%
2017: 68.6%
YoY: (1.8)%
2017: 80.2%
YoY: +0.4%
2017: 35.0%
YoY: +2.2%
CARBON EMISSIONS PER STORE
(TONNES PER ANNUM)
▼
NUMBER OF RETAIL STORES
AT YEAR END
▼
31.1
2017: 34.3
YoY: (9.3)%
368
2017: 372
YoY: (4)
* As defined on page 3.
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TOPPS TILES PLC ANNUAL REPORT AND ACCOUNTS FOR THE 52 WEEK PERIOD ENDED 29 SEPTEMBER 2018 Strategic Report:
Financial Review
19
ROB PARKER | CHIEF FINANCIAL OFFICER
Financial Objectives
In addition to the key strategic objectives highlighted in the Strategy
section the business maintains a strict financial discipline, including:
• Primary focus on increasing revenues and cash generation,
maintaining cost disciplines and optimising gross margins;
• Capital structure and net debt – the Board is focused on having
a strong balance sheet that can also provide the business
with financial flexibility; the business remains strongly cash
generative and the Board expects net debt to continue to fall;
and
• Maximising earnings per share and shareholder returns, including
biannual review of our dividend policy. The Board has previously
communicated its intention to target a dividend policy of
approximately two times cover which we have achieved during
this financial period and plan to maintain moving forwards.
Against a challenging market
backdrop, the Group delivered
a robust trading performance for
the year with flat like-for-like sales
and market-leading gross margins
in retail, and the foundations laid
for significant sales growth in
commercial in the year ahead.
Adjusted Measures
The Group’s management uses adjusted performance measures,
to plan for, control and assess the performance of the Group. Adjusted
Group Revenue and Gross Margin differ from statutory by the
exclusion of the Parkside business to allow the Group to understand
Topps Tiles’ retail performance on a more comparative basis.
Adjusted profit before tax differs from the statutory profit before
tax as it excludes the effect of one-off or fluctuating items, allowing
the Group to understand results across years in a more consistent
manner. For the current year the following items have been
excluded:
• Losses relating to the Parkside business of £1.1 million (2017:
£nil million) – recognising that 2018 and 2019 will be two
years of investment in longer term growth;
• Losses related to movement in property-related provisions
(including onerous lease movements and provision against
fixed assets in loss-making stores) of £2.2 million (2017:
£1.2 million);
• Gain from disposal of four freehold properties of £0.7 million
(2017: £0.2 million);
• Losses from a one-off increase to the accrual for refunds
following a review of provisions in advance of IFRS 15
implementation of £0.5 million (2017: £nil);
• Vacant property costs of £0.2 million (2017: £0.4 million)
for buildings closed as part of Parkside reorganisation and
the historic closure of Tile Clearing House business; and
•
In the prior year the Group also excluded costs relating to the
acquisition of Parkside of £0.2 million.
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Strategic Report:
Financial Review
Profit and Loss Account
Revenue
Total revenue for the period ended 29 September 2018 increased
by 2.4% to £216.9 million (2017: £211.8 million).
Adjusted revenue increased by 1.5% to £214.8 million (2017:
£211.7 million). Like-for-like store sales were flat when compared to
the prior year, which consisted of a 0.6% increase in the first half of
the financial period and a 0.6% decrease in the second half. We
believe that the sales performance represents an outperformance of
our market and is an endorsement of our strategy.
Gross Margin
Total gross margin held flat at 61.1%, with the addition of Parkside
providing a 20 bps dilution in overall margin.
Adjusted gross margin increased to 61.3% compared with 61.1%
in the previous financial period. Over the first half of the period
adjusted gross margin was 60.5%, and we delivered a gross
margin of 62.1% in the second half of the period. Gross margin
has benefited from sourcing gains and new ranges with improved
margins. For the year ahead we anticipate delivering a small gross
margin improvement which will be derived from similar activities to
this year, assuming broadly stable sterling exchange rates.
Operating Expenses
Total operating costs increased from £111.5 million to £118.7
million, an increase of 6.5%. Costs as a percentage of sales were
54.7% compared to 52.6% in the prior period. When adjusting
items (detailed on page 3) are excluded, operating costs were
£114.6 million (2017: £109.9 million), an increase of 4.3%.
Adjusted costs as a percentage of adjusted sales were 53.4%
compared to 51.9% in the previous period.
ADJUSTED GROUP
REVENUE1
£214.8m
2017: £211.7m
YoY: +1.5%
ADJUSTED GROSS
MARGIN2
61.3%
2017: 61.1%
YoY: +20bps
GROUP REVENUE £m
YoY: +2.4%
GROSS MARGIN %
YoY: nil
0
.
5
1
2
2
.
2
1
2
8
.
1
1
2
9
.
6
1
2
2
.
5
9
1
2
.
1
6
9
.
1
6
1
.
1
6
1
.
1
6
9
.
0
6
The movement in adjusted operating costs is explained by the
following key items:
• The average number of UK stores trading during the financial
period was 372 (2017: 361), which generated an increase
in costs of approximately £2.6 million;
•
Inflation at an average of approximately 1.7% increased our
cost base by around £1.8 million;
• Regulatory costs impacts, including the National Living Wage,
accounted for £0.5 million of additional costs;
• Depreciation increased by £0.3 million due to higher levels of
investment in the store estate over recent years;
• Employee profit share costs increased by £1.3 million, with the
prior year seeing a reversal of a number of long-term incentive
charges due to previous lower level of financial performance
compared to plan; and
• Other savings across the business accounted for £1.8 million;
these were primarily generated from store labour following a
series of simplification initiatives.
For the year ahead we expect the adjusted operating costs for the
business to be between £116 million and £117 million.
Other Gains and Losses
During the period we disposed of four properties and recognised
a gain of £0.7 million.
During the year we purchased the freehold on a previously leased
office building and have recognised a loss of £0.4 million. This
purchase has allowed the group to exit an onerous lease, the
freehold has been reported as an investment property, the purchase
price of £2.9 million has been written down to £1.2 million (see
note 13b on page 101), which results in a £0.4 million loss after
transferring previously held onerous lease provision.
In the prior period we disposed of one long leasehold property
and recognised a gain of £0.2 million.
Financing
The interest charge for the year was £1.0 million (2017: £0.9
million). There has been a small increase in the interest charge
due to the write-down of the remaining loan arrangement fee from
2014 which occurred as a result of commencing a new loan
facility.
Net interest cover was 23.0 times (2017: 29.0 times) based
on adjusted profit before interest and tax, depreciation and
amortisation of £7.1 million (2017: £6.5 million) and adjusting
items of £3.3 million (2017: £2.0 million).
14
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NOTES
1. Adjusted revenues are defined as total Group revenues excluding Parkside.
2. Adjusted gross margin is defined as Group gross margin excluding Parkside.
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TOPPS TILES PLC ANNUAL REPORT AND ACCOUNTS FOR THE 52 WEEK PERIOD ENDED 29 SEPTEMBER 2018 21
1
2
3
4
5
PICTURED
1: Staunton Graphite and Putty Mosaic
2: Variato Blonde
3: Lampas Cloud and Abrasio Steel
4: Busca Bronze Flat and Abrasio Basalt
5: Bistro Black
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OUR GOVERNANCEOUR FINANCIALSADDITIONAL INFORMATIONTOPPS TILES PLC ANNUAL REPORT AND ACCOUNTS FOR THE 52 WEEK PERIOD ENDED 29 SEPTEMBER 2018STRATEGIC REPORT 22
Strategic Report:
Financial Review
Profit Before Tax
Profit Before Tax (PBT) was £12.7 million (2017: £17.0 million).
The Group PBT margin was 5.9% (2017: 8.0%).
Excluding the adjusting items detailed on page 3, PBT was £16.0
million (2017: £18.6 million). The Group adjusted PBT margin
was 7.4% (2017: 8.8%).
Tax
The effective rate of Corporation Tax for the period was 23.9%
(2017: 21.0%).
The Group tax rate is higher than the prevailing UK corporation tax
rate due to non-deductible expenditure and depreciation on assets
not qualifying for capital allowances.
Earnings Per Share
Basic earnings per share were 5.00 pence (2017: 6.98 pence).
Diluted earnings per share were 4.93 pence (2017: 6.86 pence).
Excluding the adjusting items detailed on page 3, adjusted
earnings per share were 6.64 pence (2017: 7.63 pence).
Dividend and Dividend Policy
The Board has previously indicated that it intended to pursue a
dividend cover policy and that it would target approximately two
times as a sustainable level. This has been achieved in the period
with a cover of 1.955 the Adjusted Earnings Per Share.
The Board is recommending to shareholders a final dividend
of 2.3 pence per share (2017: 2.3 pence per share). This will
cost £4.4 million (2017: £4.4 million). The shares will trade
ex-dividend on 20 December 2018 and, subject to approval
at the Annual General Meeting, the dividend will be payable
on 4 February 2019.
This will maintain the total dividend for the year at 3.4 pence
per share (2017: 3.4 pence per share).
Moving forwards, the policy for the interim dividend will be
to pay one third of the prior full year dividend.
PICTURED
Botella Indian Peacock
ADJUSTED PROFIT
BEFORE TAX* £m
YoY: (14.0)%
ADJUSTED EPS* p
YoY: (13.0)%
TOTAL DIVIDEND p
YoY: nil
0
.
2
2
4
.
0
2
1
.
7
1
6
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8
1
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6
6
8
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8
7
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3
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3
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2
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* As defined on page 3
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TOPPS TILES PLC ANNUAL REPORT AND ACCOUNTS FOR THE 52 WEEK PERIOD ENDED 29 SEPTEMBER 2018 23
Balance Sheet
Capital Expenditure
Capital expenditure on tangible fixed assets and investment
properties in the period amounted to £7.9 million (2017:
£10.2 million), a decrease of 22.5%.
Key investments are as follows:
• New stores £1.5 million — nine new openings (2017:
£4.9 million);
Inventory
Inventory at the period end was £30.2 million (2017: £29.5
million) representing 130 days turnover (2017: 132 days turnover).
The increase in the absolute level of inventory is driven by extended
levels of overseas sourcing and a longer supply chain as a result,
the majority of which is offset by increased creditor terms. Days
cover has reduced as we have consolidated in the Parkside
commercial business which typically holds less stock; days cover
in the retail business has been maintained year on year.
• All store improvement programme £1.8 million (2017:
Capital Structure and Treasury
£0.3 million);
• Freehold and leasehold investments £0.2 million (2017:
£0.8 million);
Cash and cash equivalents at the period end were £13.8 million
(2017: £7.5 million) with borrowings of £30.0 million (2017:
£35.0 million).
•
Investment Property purchase £2.9 million (2017: £nil);
• Other expenditure of £1.5 million (2017: £1.7 million); and
This gives the Group a net debt position of £16.2 million (2017:
£27.5 million).
•
In the prior period we also spent £2.5 million on store refits.
Cash Flow
The Board expects capital expenditure in the year ahead to
be between £6 million and £7 million. This is based on a
continuation of current levels of activity and does not include
any strategic acquisitions that the Group may consider as
part of its growth plans in the commercial tile market.
At the period end the Group held six freehold or long leasehold
sites, including two warehouse and distribution facilities and an
office building, with a total carrying value of £14.2 million (2017:
nine freehold or long leasehold sites valued at £16.5 million). The
carrying value is based on the historic purchase cost and capital
expenditure less accumulated depreciation and, in the case of the
investment property, a fair value adjustment.
Acquisitions and Disposals
During the period we acquired one freehold property for a
consideration of £2.9 million (see above and see note 13b
on page 101) and disposed of four freehold properties for a
consideration of £3.9 million. In the prior year we acquired one
freehold for a consideration of £0.8 million and disposed of one
long leasehold property for a consideration of £0.3 million.
Intangible Assets and Goodwill
During the year, and within the hindsight period, we noted
additional provisions required of £0.4 million relating to the
acquisition balance sheet of Parkside, increasing the previously
recognised value of goodwill of the Parkside business to £1.2
million (2017: £0.8 million). In addition to Parkside we hold
goodwill relating to historic acquisitions of £0.2 million (2017:
£0.2 million). Intangible assets, relating to the Parkside business,
were amortised by £0.1 million to a new holding value of £0.3
million (2017: £0.4 million).
Operational cash flow was £21.9 million, compared to £15.2
million in the prior year period, an increase of £6.7 million.
The improvement in operational cash flow was due to improved
working capital flows, reduced tax and interest (due to one-off
payments in FY17), which were partially offset by lower profits.
Free cash flow was £17.9 million (2017: £4.2 million), an
increase of £13.7 million year on year. This increase was driven
by the improved operational cash flow highlighted above plus
reduced capital expenditure and the changes in freehold and
investment properties.
Current Trading and Market Conditions for the Year Ahead
In the first eight weeks of the new financial year, the challenging
trading conditions seen in the prior financial year are still in
evidence and like-for-like sales in this initial period decreased by
1.9% against a strong prior year comparator. Whilst being watchful
of market conditions in the year ahead, we remain confident that
our expansion into the commercial tile market, coupled with the
continued strength of our market-leading retail operations, gives us
a solid platform for future growth.
FREE CASH FLOW £m
YoY: +326%
NET DEBT £m
YoY: (£11.3m)
9
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7
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* As defined on page 3
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OUR GOVERNANCEOUR FINANCIALSADDITIONAL INFORMATIONTOPPS TILES PLC ANNUAL REPORT AND ACCOUNTS FOR THE 52 WEEK PERIOD ENDED 29 SEPTEMBER 2018STRATEGIC REPORT 24
PICTURED
Cini White and Black Honed Slate
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TOPPS TILES PLC ANNUAL REPORT AND ACCOUNTS FOR THE 52 WEEK PERIOD ENDED 29 SEPTEMBER 2018 25
Strategic Report:
Risks and Uncertainties
The Board has assessed its process for reviewing strategic risk and uncertainties during the year. As a result of this we have developed
a new framework, as follows:
• An annual strategic risk workshop which is attended by the Audit Committee Chairman, Head of Internal Audit and key senior
members of the management team including the Executive committee;
• The production of a key risks register which is prepared based on a combination of likelihood and impact; and
• A quarterly update in the Board pack which includes a summary of the key risks identified, combined with mitigants and
agreed actions
Impact
Risk
Brexit – General Economic and Consumer Confidence
The general economic
climate and specifically
consumer confidence are
important to Topps Tiles and
events that may affect these
factors present a financial
risk to the business. In the
period post the UK voting
to leave the European
Union consumer confidence
has been weaker and this
has impacted our market.
Consumers need to feel confident to
invest money into their homes. In the event
of a significant reduction in house prices,
housing transactions or consumer confidence
we would expect this to adversely impact
on business performance. The full impact
of the decision of the UK to leave the EU
remains unclear and this is likely to continue
to create some uncertainty in the outlook
over the short term.
Brexit – Foreign Exchange Rate Fluctuation
A significant devaluation
of sterling will result in
increased costs of sourcing
for the Group, and
subsequent reduction
in profits.
We source around 50% of our cost of
goods from outside the UK which gives
us an exposure to movements in foreign
currency exchange rates. Every 1 cent
change in Euro and US$ (combined) has
a £0.22 million impact on cost of goods
over a full year of purchases, (excluding
the impact of Topps Tiles’ policy of hedging
forward for six months).
Brexit – Supply Chain Disruption
In the event of a “Hard
Brexit” there is a possibility
that we could see disruption
at ports which would
slow the importation of
goods into the UK and this
could adversely affect our
business.
We source around 50% of our cost of
goods from outside the UK. Any material
slow down in our supply chain could
materially impact our stock availability
and hence our sales performance.
Status
Mitigation
We believe that through a combination of
a robust level of profitability and financial
flexibility the business is able to withstand
short-term trading pressures. This has been
proven in recent years over the period of
the financial crisis. During the year we have
again kept a tight control on costs and have
increased focus on taking market share from
competitors along with our diversification
into the commercial tile market. Longer term
we consider that the UK housing market
remains attractive and we believe there
remains significant upside from a sustained
economic recovery.
We are proactive in managing this risk and
we have proven historically that we are able
to mitigate material amounts of the impact
of adverse foreign exchange rates through
activities such as supplier negotiation or
sourcing management with a number of lines
being re-sourced.
The key mitigation is to ensure we have
sufficient stock to provide stability through
a period of disruption. Over the first half of
our new financial year we plan to increase
stockholding of our key selling lines in order
to provide customers with greater continuity
through any period of disruption.
N
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Strategic Report:
Risks and Uncertainties
Risk
Impact
Mitigation
Appropriate Business Strategy
Our business strategy will
not be successfully delivered.
The expansion of the
Group into the commercial
tile market has increased
strategic risk slightly.
Without a clear company goal and a
well understood strategy to deliver, the risk
is that the business loses focus and fails to
deliver its objectives.
Our refreshed strategy includes
diversification into the commercial tile
market which will include some risk around
successful delivery of acquisitions (where
relevant) and management distraction away
from our core business.
The strategy is reviewed annually, updated
as required and approved by the Board.
Biannual communication events and regular
updates are provided to all colleagues on
our progress towards our goals.
Status
Loss of market share leading to reduced
sales and profitability.
Threat from Competitors
Competitors eroding our
market share. A greater
competitive threat could
come from a new or existing
competitor introducing a
new point of differentiation
to our market such as
operational standards,
range, service, use of
technology, etc.
Attracting and retaining talent
The failure to attract and/
or retain key individuals
could impact on the ability
of the business to deliver its
objectives.
Reduced levels of customer service or lack
of key individuals to deliver the business
objectives would result in lower levels of
sales and profits for the Group.
The loss of technical
knowledge in stores through
high levels of colleague
turnover could have a
negative impact on our
customer service levels.
We regularly review our competitor set
but at the same time we are clear on our
primary source of competitive advantage
and how we strengthen this over time –
namely our specialist focus and leading
range.
During the financial year approximately 150
stores have been subject to a programme of
improvements which will further differentiate
us from our competitors. This programme will
continue into the new financial year.
We continue to invest in digital marketing
and actively monitor social media platforms.
We also work closely with tile manufacturers
to ensure we are driving innovation in our
market.
We are very focused on colleague
engagement and colleague turnover is
closely monitored. Pay and benefits are
benchmarked to ensure we are rewarding
our people in line with the market and
reflective of their contribution to the business.
We have a detailed succession plan for
each key executive and non-compete clauses
for senior colleagues.
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TOPPS TILES PLC ANNUAL REPORT AND ACCOUNTS FOR THE 52 WEEK PERIOD ENDED 29 SEPTEMBER 2018 27
Status
Risk
Impact
Mitigation
Store portfolio
Optimum property strategy
for the UK market along
with the risk of losing key
performing stores which
contribute a material
amount of Group earnings.
A larger store presence across the UK than
is required to maximise the profitability
of the Group.
Loss of a multiple number of top performing
stores or stores in the wrong areas could
cause a material impact on the company’s
profitability.
During the year analysis was completed
by a third party with regards to the optimum
store network for the UK and new store
locational opportunities. We will continue
to review customer trends to ensure our
estate remains optimised to best serve
their needs.
We conduct regular reviews of all stores’
profitability and for our most profitable units
security of tenure is key. We review lease
terms where appropriate and will pro-
actively re-gear leases on high value stores
to ensure we always have at least several
years of security.
Loss of a Key Supplier
The loss of a key supplier
could impact on our ability
to trade in some areas of
or range.
We consider that the risk
has probably reduced when
compared to the prior year
due to the diverse nature
of our supply chain and
successful resourcing of
product we have done
in recent years.
Financing
The Group has a £35
million revolving credit
facility in place which was
refinanced in July 2018 and
expires in July 2021 (with an
opportunity to extend at the
end of the first and second
years for a further year, so
a potential full term of five
years ending July 2023).
The loan facility contains
financial covenants which
are tested on a biannual
basis. The key risks would
be either not negotiating
new facilities in advance of
expiry or breaching a loan
covenant which would have
an adverse impact on the
Group’s financing position.
The loss of a key supplier could lead to
disruption in supply of key selling products
leading to loss of sales and profits.
Our supply chain is diverse and due to
our scale we can source products directly
from manufacturers anywhere in the world.
Resourcing ranges from one manufacturer
to another is something to which we are
accustomed.
The most likely impact of not being able
to renew the loan facility would be the
requirement to raise additional funding from
shareholders.
The impact of breaching a loan covenant
would likely be financial in terms of
additional charges and fees. At its worst
it would also mean the loan would be
repayable which would be likely to result
in an equity fundraising.
Loan renewal discussions are conducted
well in advance in order to allow sufficient
time to cater for different scenarios and
would include both existing and new banks
to gauge interest.
Having completed refinancing negotiations
in 2018, we have seen the financing risk
level fall, aided by strong cash inflow in the
financial year just completed.
Loan covenants are measured monthly
and reported to the Board. The company
planning model is updated several times a
year and gives good forward visibility. Any
potential issues would be dealt with well
in advance by proactive discussions with
lenders.
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Strategic Report:
Risks and Uncertainties
Risk
Impact
Mitigation
Cyber Security
The business suffers a
breach of its IT systems
security leading to either
a loss of capability or a
loss of customer and/or
commercial data.
A temporary loss of systems would be likely
to result in an operational impact which
would adversely affect sales and
ultimately profits.
The Company uses modern systems and
the latest network and security protocols
to protect against attack or breaches of
security.
The loss of commercial or customer data
would potentially result in reputational
damage to the company.
Status
Whilst impacts from reputational damage
could be wide ranging the most likely
impact would be financial, resulting from
damage to our brand and consequent
loss of sales.
Major Reputational Damage
The Topps Tiles brand is a
very important part of our
competitive advantage.
Possible areas of impact
could be due to a failure
in our core processes
around our products, our
stores, our supply chain
(including ethical sourcing)
or our people.
A disaster recovery server provision is
in place and the majority of our servers
now operate on virtualised technology.
The Company has partnered with the
National Computer Centre (NCC) as cyber
security specialists to ensure the appropriate
technology and controls are in place to
protect data assets. Customer data sources
are catalogued and the Company has
undertaken a process of data minimisation
to remove unnecessary instances of high
value customer data.
Governance and internal controls are the
key mitigants against reputational damage.
The Company operates a wide range of
processes and procedures designed to
ensure that we are fully compliant with all
legal requirements and operate industry
and governance best practice across the
entire business.
We have developed during the year
a critical incident response process
which would be invoked in the event
of a business crisis.
Supply chain is of particular significance
and we believe in long-term strategic
relationships with our key suppliers. We
have in place a sourcing policy which
includes the relevant provisions from the
Modern Slavery Act and are working with
suppliers to ensure agreement with our terms
of trade and compliance.
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TOPPS TILES PLC ANNUAL REPORT AND ACCOUNTS FOR THE 52 WEEK PERIOD ENDED 29 SEPTEMBER 2018 29
Status
N
Risk
Impact
Mitigation
A reduction in available qualified tilers
could have a negative impact on sales
across the tile retail market.
Fitter availability
The housebuilders association
are predicting a significant
shortfall in available tilers by
2021. This may be further
influenced by the uncertainty
of EU economic migrants
and the shortfall in people
training in tiles.
We have developed the trader champion
programme to both retain our existing trader
base and to encourage new traders to shop
with Topps Tiles. The programme focuses on:
• Offering the best loyalty programme in
the sector
• Added value trader services
• Better pricing
• Trader referral scheme known as TNP
• Supplier-supported trader training
• Trader profiles online via the Topps store
micro site
Key:
Risk has increased
Risk has decreased
No change
N
New risk
The Directors will continue to monitor all of the key
risks and uncertainties and the Board will take
appropriate actions to mitigate these risks and their
potential outcomes.
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OUR GOVERNANCEOUR FINANCIALSADDITIONAL INFORMATIONTOPPS TILES PLC ANNUAL REPORT AND ACCOUNTS FOR THE 52 WEEK PERIOD ENDED 29 SEPTEMBER 2018STRATEGIC REPORT 30
Strategic Report:
Corporate Social Responsibility
Our Community and Charity Work
Colleagues across the Topps Tiles Group are both proactive and
enthusiastic supporters of our charity partnerships.
At a national level we are at the start of the final year of a five-
year partnership with Macmillan Cancer Support, which has
been widely embraced by colleagues in our nationwide network
of stores, our Leicester support office and our commercial arm
Parkside.
During 2019 we will hold a company vote to either continue our
existing charity partnership or select a new charity with which to
partner.
Our support office has also agreed to continue our relationship
with Leicestershire Cares, which seeks to work with local businesses
to support charity initiatives.
Macmillan Cancer Support
Since the 2015 start of Topps Tiles’ partnership with Macmillan
Cancer Support, the Company has raised in excess of £530,000
– beating the company five-year target of £500,000 a year early.
Around two thirds of this has come via the Pennies digital charity
box scheme, where customers in stores can donate small change to
Macmillan by rounding up their purchase to the nearest pound (the
average donation is 38p). Our Chief Executive Officer Matthew
Williams also sits on the Pennies advisory board.
The total raised through Pennies in 2018 was nearly £200,000,
up nearly 60% on the previous year’s donations, with the one
millionth donation made in August 2018.
Colleagues have also taken part in a variety of traditional
fundraising events including bake sales, a summer barbecue,
Christmas raffle and dress-up events, raising almost £56,000 in the
past financial year. This included three cycling events: the marketing
team cycled the equivalent miles from our most northern to most
southerly store – Inverness to Penzance – in one day at a local
gym. Members of our property team took on a charity ride around
the picturesque Rutland Water, while the inaugural “Tour de Topps”
saw 11 colleagues cycle together from our Enderby store to our
Skegness store – 100 miles – in fewer than eight hours.
PICTURED
Colleagues from Topps Tiles and Parkside setting off on their 100-
mile cycle ride from the Enderby store to the Skegness store.
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TOPPS TILES PLC ANNUAL REPORT AND ACCOUNTS FOR THE 52 WEEK PERIOD ENDED 29 SEPTEMBER 2018 31
1
3
2
4
5
PICTURED
1: Colleagues at Topps Tiles Bishops Stortford fundraising for the
World’s Biggest Coffee Morning.
2: The marketing department cycling the equivalent miles from
Inverness to Penzance.
3: Julie Cox from the finance team at a fundraising car boot sale.
4: Store fundraising on “go green for Macmillan” day.
5: The winning entry in the Winter Tile challenge completed by
stores to raise funds for Macmillan.
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Strategic Report:
Corporate Social Responsibility
Leicestershire Cares
We continue to work alongside Leicestershire Cares, a charity
organisation local to our Leicester support office, offering staff
time out to take part in a range of initiatives to support local
good causes.
Last year we achieved many successes including:
• A Christmas party for disadvantaged and homeless people,
providing a festive buffet, gifts and fun quiz as well as a visit
from former X Factor finalist Anton Stephans;
• Support office colleagues collected more than 250 Easter eggs
for children at hostels for families who were either homeless or
escaping domestic abuse;
• Area and regional managers from Regions 1 and 3 cleared
and renovated an overgrown garden area at a centre which
supports young adults and their families;
• Fourteen finance colleagues undertook an environmental
challenge at Bradgate Park, protecting new saplings from local
deer by removing, repairing and building wooden tree frames;
• Six logistics colleagues took on weeding and harvesting crops
with Saffron Acres Allotments, which works with community
groups, including to build life skills; and
• Eight colleagues from the IT team cleared out communal
gardens and laid a gravel area at a sheltered housing scheme.
These challenges give everyone at Topps Tiles the opportunity
to give something back to the local community as part of their
working day and their own personal development, and enable
the Company to showcase its brand as a proactive part of the
community in Leicestershire and Rutland.
1
2
3
PICTURED
1: Guests from Leicestershire
Cares at a festive lunch.
2: More than 250 Easter Eggs
collected and donated to
Leicestershire Cares by support
office colleagues.
3: X Factor finalist Anton Stephans
entertained guests at the charity
festive lunch.
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TOPPS TILES PLC ANNUAL REPORT AND ACCOUNTS FOR THE 52 WEEK PERIOD ENDED 29 SEPTEMBER 2018 33
1
2
3
PICTURED
1: Area and regional managers undertaking a garden renovation
project in Leicestershire.
2: Members of the IT team clearing communal gardens at a
sheltered housing project.
3: Some of the logistics team at an environmental team challenge,
including weeding and harvesting crops.
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Strategic Report:
Corporate Social Responsibility
Tiles4Smiles
The Tiles4Smiles scheme offers community groups and charities
the opportunity to request donations of tiles – either for premises
renovations, improvements to their kitchen or bathroom areas,
or for art projects.
In the past financial year more than 18,000 tiles at a retail value
of almost £55,000 have been donated to nearly 40 community
and charity projects. These have included an ongoing scheme
to renovate the historic Byrne Avenue baths in Birkenhead, the
redecoration of a Watford café to provide work experience for
people with learning disabilities, tile-based artworks at several
schools and various projects to improve home facilities for children
with life-changing conditions.
We have also donated tiles to projects highlighted by television
programmes, taking part in two Love Your Garden shows, hosted
by Alan Titchmarsh, and three episodes of Nick Knowles’ DIY SOS
for families and projects based in Arundel, Hull and Torquay.
2
3
PICTURED
1: Pilgrims Way School 50th year celebrations.
2 and 3: Kingsley Hall Community Centre memorial mosaic.
1
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TOPPS TILES PLC ANNUAL REPORT AND ACCOUNTS FOR THE 52 WEEK PERIOD ENDED 29 SEPTEMBER 2018 1
3
4
35
2
Youth Sport
At Topps Tiles, we have always recognised the benefits that
participation in sport can bring to the communities in which we
trade. We are proud to be involved in helping children become
more active through our youth sport sponsorship.
We donated funds to 176 teams throughout the UK during 2018.
The majority of teams were football teams (89%), followed by rugby
(10%) and the remainder netball and hockey.
PICTURED
1 to 3: Tresco School,
Penzance.
4 and 5: Pilgrims Way School.
6: Mosaic bench in progress
for the Chessington Community
Sensory Garden for SEN
Pupils.
7: Arfon Celts Netball Club,
sponsored by Topps Tiles.
5
6
7
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OUR GOVERNANCEOUR FINANCIALSADDITIONAL INFORMATIONTOPPS TILES PLC ANNUAL REPORT AND ACCOUNTS FOR THE 52 WEEK PERIOD ENDED 29 SEPTEMBER 2018STRATEGIC REPORT 36
Strategic Report:
Corporate Social Responsibility
Transport
This year has seen a focus on improvements within the transport
facility in both people and fleet.
We have completed a full change programme in two areas of our
fleet, resulting in the upgrade of 23 MAN tractor units and five
MAN rigid body vehicles to newer, more modern engines, which
should bring in further fuel efficiencies in future years.
All trucks have now been fitted with 360-degree cameras which
will not only help ensure the integrity of our drivers in the unfortunate
event of an accident, but also gives us greater transparency and
accuracy in monitoring our safety standards.
We continue to use Microlise on-board fleet technology to drive
higher standards throughout the driver team, with an aim to
produce better fuel consumption and minimise our accident rate.
Our Warehouse to Wheels programme has also seen a successful
year, with three warehouse colleagues undertaking training for
and obtaining their HGV licences, becoming full-time drivers for
the business. This is fast becoming an important source of trained
drivers in what is an increasingly competitive market.
Supply Chain
We source products across the globe to bring the latest trends,
cutting edge designs and advanced technologies to the UK to
retain our position as market leader.
As a trusted retailer our customers expect our products to be
ethically sourced and therefore we look beyond our internal
operation and ask for complete transparency across our supply
base. Our supply chain can be complex but we are committed to
ensuring all our suppliers adhere to the highest standards of ethics,
able to demonstrate safe working conditions, and are treating
workers with dignity and respect.
All our suppliers are required to comply with the Topps Responsible
Sourcing code. This code has been designed to be ethical,
auditable, achievable and is in place to promote good working
practices with our suppliers. The Code represents the Company’s
fundamental expectations of its supply partners in relation to
responsible sourcing. Topps Tiles will not knowingly work with
any supplier who does not comply and requires all suppliers
to acknowledge this Code and confirm their acceptance of its
provisions. Compliance is underpinned by way of contractual
obligation and audit process. Suppliers applying this code
are expected as a minimum to comply with national and other
applicable laws.
PICTURED
Topps Tiles marking Remembrance Day on its fleet.
As part of our auditing process, all of our suppliers this year have
had to complete a Social and Ethical Self-assessment document
to identify if there are any product or geographical risks. To
address any possible concerns, our buyers, buying agents and
technical manager conduct regular surveillance visits and factory
tours to ensure that our products are sourced ethically. As part
of our due-diligence, we are rolling out a third-party auditing
programme across our supply base over the next 18 months with
specific emphasis on factories where any specific risks have been
identified.
In 2015, the Modern Day Slavery Act came into force and Topps
Tiles is committed to this act ensuring that no forms of Modern Day
Slavery enter the business and its supply chains. The Company will
ensure transparency within the organisation and with its service
providers and supplier of goods.
Our Responsible Sourcing Code of Conduct and Modern
Day Slavery Statement can be found on our website at
toppstilesplc.com under Corporate Responsibility.
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TOPPS TILES PLC ANNUAL REPORT AND ACCOUNTS FOR THE 52 WEEK PERIOD ENDED 29 SEPTEMBER 2018 37
Carbon emissions per store have reduced from 34.3 to 31.1
tonnes per annum (-9.3%), compiled in conjunction with our
electricity and gas suppliers and our in-house transport team. This
is based on the actual energy consumed multiplied by Environment
Agency-approved emissions factors. Vehicle emissions have been
calculated by our in-house transport team based on mileage
covered multiplied by manufacturer-quoted emission statistics.
The Tile Association
For the past two years we have been working with The Tile
Association (TTA), a trade association whose mission it is to
promote professionalism and technical standards in the tiling
industry across tiling contractors, fixers, distributors, retailers and
manufacturers.
The TTA is the leading body contributing to the formation of British
Standards in Tiles and a member of Build UK. Our commercial
managing director Brian Linnington also sits on the board of
directors of the TTA.
We aim to work with the association on improving industry
standards, training and offering support in encouraging best
practises throughout the industry.
In 2018 we were also honoured by TTA with the Excellence in
Multiple Retailing award in recognition of excellent customer
service, outstanding product offering and innovation within
a store setting.
PICTURED
Berkeley Essence Sky, Diamante Blue and Mora Oak Mosaic
Environment
Reducing the amount of waste sent to landfill continues to be a
focus across the business.
In our Distribution Centre, we continue to recover and, in most
cases, recycle several streams of waste from our operations. These
include cardboard, shrink-wrap, polythene, polypropylene banding,
wooden packaging, scrap metal and repairable wooden pallets.
Not content with just recycling more in our distribution centre, we
are now also collecting waste from some 368 stores and sorting
into different waste categories.
This year has seen the introduction of our third mill-sized cardboard
baler, capable of compacting one tonne bales to allow us to
increase the revenue earned from this waste stream. Fifty-eight
tonnes of cardboard is currently being recycled through our
operation. We are also recycling 61 tonnes of polythene,
15 tonnes of nylon strapping and 12 tonnes of paper.
Our Distribution Centres now also centrally recovers cementitious
waste product (such as adhesive and grout) from all stores where
it is sent on for specialised end-of-life processing.
We collect broken tiles from our entire estate and in partnership
with Green4life and Lafarge we are now recycling 82% of our tile
waste at a local quarry, where the tiles are crushed and converted
into a composite of aggregate. This is a market-leading initiative
based on our principle of reducing waste to landfill.
At our Leicester support office we have set up recycling points and
adopted a “no bin policy” at desks which has saved c.25,000
polythene bags per annum.
The Company is a member of the On-pack Recycling Label
scheme which delivers a simple, consistent and UK-wide recycling
message. As members of the scheme, all our suppliers will place
these specific clear recycling symbols on all of our own-brand
products. This enables our customers to recycle more packaging
correctly. It also enables local authorities to recycle more and in turn
will minimise our environmental footprint.
The UK Waste Electrical and Electronic Equipment (WEEE)
Regulations were introduced in 2007 with the aim of reducing the
amount of electrical and electronic equipment ending up in landfill.
Our stores offer a like-for-like take-back service, whereby customers
can return their old product to any store, when purchasing a new
one. These electrical products are then collated at our distribution
centre and sent for recycling.
At the very least we expect our suppliers will comply with local
environmental laws and legislation. Our suppliers will take into
consideration the principles of sustainable development, in
particular the optimum use of raw materials, water, the efficient
use of energy and also minimising the amount of waste as a result
of the supply chain and manufacturing process.
All new, relocated and refitted stores are installed with LED lighting
and we are currently undertaking a project to investigate and trial
the case for roll installation of LEDs to all remaining stores. We also
monitor our water chargers closely in order to be able to identify,
investigate and manage any leaks.
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OUR GOVERNANCEOUR FINANCIALSADDITIONAL INFORMATIONTOPPS TILES PLC ANNUAL REPORT AND ACCOUNTS FOR THE 52 WEEK PERIOD ENDED 29 SEPTEMBER 2018STRATEGIC REPORT 38
Strategic Report
Non-Financial Information Statement
Companies within the scope of s414CB must include a non-
financial information statement in their strategic report. This
requirement should be met through a title and a series of cross-
references, so as to maintain the coherence of the strategic report,
rather than replicating information located elsewhere in the strategic
report within this statement.
Group plc has complied with the requirements of s414CB of the
Companies Act 2006 by including certain non-financial information
within the Strategic Report. This can be found as follows:
• Group plc’s business model is on page 10.
•
Information regarding the following matters, including policies,
the due diligence process implemented in pursuance of the
policies and outcomes of those policies, can be found on the
following pages:
− Environmental matters on page 37;
− Employees on page 14;
− Social matters on page 30;
− Respect for human rights on page 36; and
− Anti-corruption and anti-bribery matters on pages 30 to 35.
• Where principal risks have been identified in relation to any
of the matters listed above, these can be found on pages 24
to 29, including a description of the business relationships,
products and services which are likely to cause adverse impacts
in those areas of risk, and a description of how the principal
risks are managed.
• All key performance indicators of the Group, including those
non-financial indicators, are on page 18.
• The Business Performance section on pages 19 to 23 includes,
where appropriate, references to, and additional explanations
of, amounts included in the entity’s annual accounts.
Going Concern
When considering the going concern assertion the Board
review several factors including a detailed review of risks
and uncertainties, the Group’s forecast covenant and cash
headroom against lending facilities and management’s
current expectations. As a result of this review the Board
believes that the Group will continue to meet all of its
financial commitments as they fall due and will be able to
continue as a going concern. Therefore, the Board considers
it appropriate to prepare the financial statements on the
going concern basis.
Long Term Viability
In addition to the going concern statement, the Directors
have also assessed the prospects of the Group over a longer
period. This assessment has been done over a period of
three years for the following reasons:
• This is the basis on which the current strategic financial
plans have been prepared; and
• The business is largely dependent on UK consumer
confidence and discretionary spending which is difficult
to project beyond this period
The Directors assessment of the Group’s prospects has been
made with reference to the Group’s current position, which
has been strengthened by the refinance of loan facilities
concluded in the period and the principal risks facing the
Group, as detailed in the Strategic Report.
In assessing the viability of the Group, the Board considers
that the key risks to the delivery of its financial plans relate
to Brexit-driven reduction in consumer confidence and major
reputational damage from cyber security attacks, both of which
would be expected to lead to a reduction in sales. In addition,
there are key risks such as currency fluctuations and supply
chain disruption driven by the uncertainty related to Brexit
which could lead to a weakening in the Group’s gross margin.
As a result, the Board has reviewed a number of sensitivities
based on a reduction in sales and gross margin over the
viability period of three years. It should also be noted that the
Group is operationally geared which means that there is a
relatively high level of impact from any increases or decreases
in levels of turnover. A sustained decrease in levels of turnover
would be managed by a reduction in operational expenditure,
reductions in capital expenditure, tighter working capital
controls and possible restriction of Company dividends.
The conclusion of these sensitivities is that the Group has
a good level of financial flexibility and is well positioned
to withstand a number of risks occurring and the sustained
reduction in levels of consumer spending and rising margin
costs through the next three years.
The Board has also considered the Group’s current banking
facilities which include a non-amortising revolving credit
facility that expires in June 2021(with the opportunity to
extend by a further year in June 2019 and June 2020).
Based on this review the Directors confirm that they have
a reasonable expectation that the Group will continue to
operate and meet its liabilities, as they fall due, for the next
three years.
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TOPPS TILES PLC ANNUAL REPORT AND ACCOUNTS FOR THE 52 WEEK PERIOD ENDED 29 SEPTEMBER 2018 39
Cautionary Statement
This Strategic and Operational Review and Chairman’s statement
have been prepared solely to provide additional information to
shareholders to assess the Group’s strategies and the potential
for those strategies to succeed. These reports should not be
relied on by any other party or for any other purpose.
The Strategic and Operational Review and Chairman’s
statement contains certain forward-looking statements. These
statements are made by the Directors in good faith based on the
information available to them up to the time of their approval of
this report and such statements should be treated with caution
due to the inherent uncertainties, including both economic and
business risk factors, underlying any such forward-looking
information.
The Directors, in preparing this Strategic and Operational
Review, have complied with s414a of the Companies Act 2006.
This Business Review has been prepared for the Group as a
whole and therefore gives greater emphasis to those matters
which are significant to Topps Tiles Plc and to its subsidiary
undertakings when viewed as a whole.
Directors’ Responsibility Statement
We confirm that, to the best of our knowledge:
•
•
the Financial Statements, prepared in accordance with the
relevant financial reporting framework, give a true and fair
view of the assets, liabilities, financial position and profit or
loss of the Company and the undertakings included in the
consolidation taken as a whole; and
the Strategic Report, which is incorporated into the Directors’
Report, includes a fair review of the development and
performance of the business and the position of the Company
and the undertakings included in the consolidation taken
as a whole, together with a description of the principal
risks and uncertainties they face and a fair, balanced and
understandable view of the business.
Annual General Meeting
The Annual General Meeting for the period to 29 September 2018
will be held on 30 January 2019 at 10.00 a.m. at the Marriott
Hotel, Smith Way, Grove Park, Enderby, Leicestershire, LE19 1SW.
The Strategic Report was approved by the Board of Directors and
signed on its behalf by:
MATTHEW WILLIAMS | CHIEF EXECUTIVE OFFICER
ROB PARKER | CHIEF FINANCIAL OFFICER
27 November 2018
PICTURED
Mora Walnut Mosaic
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OUR GOVERNANCEOUR FINANCIALSADDITIONAL INFORMATIONTOPPS TILES PLC ANNUAL REPORT AND ACCOUNTS FOR THE 52 WEEK PERIOD ENDED 29 SEPTEMBER 2018STRATEGIC REPORT 1
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Our
Governance
CONTENTS
Board of Directors
Executive Team
Corporate Governance Statement
Directors’ Report
Directors’ Remuneration Report
42
43
44
50
54
2
3
4
5
© 2018 Rocco Photography
PICTURED
1. Astrea White and Regal Reflections Cottesmore Bathroom Cameo
2. Parkside: Leicester showroom
3. Parkside: Nando’s, Sheffield – design by Harrison
4. Hartley White and Minton Hollins Country Rustic White
5. Oparo Onyx and White Arabesque
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42
Board of Directors
DARREN SHAPLAND | D
NON-EXECUTIVE CHAIRMAN
MATTHEW WILLIAMS |
CHIEF EXECUTIVE OFFICER
ROB PARKER |
CHIEF FINANCIAL OFFICER
Darren joined the Board in March 2015 and has over
30 years of retail and consumer experience, having
held senior financial and operational positions within
the Burton Group, Arcadia and Kingfisher. Darren was
Chief Financial Officer at J Sainsbury plc between 2005
and 2010 before being appointed Group Development
Director, a position he held between 2010 and 2011.
He was also Non-Executive Chairman of Sainsbury’s
Bank from 2006 to 2013 and Chief Executive Officer
of Carpetright plc from 2012 to 2013.
Darren is currently Non-Executive Director and Chairman
of the Audit Committee at Ferguson plc.
Matt joined Topps Tiles in 1998 as Property Director
soon after its IPO. He spent the next six years expanding
the Company’s store base, acquiring more than 200
new sites, which still make up a large part of the store
portfolio today. Promoted to the role of Chief Operating
Officer in 2004 and joining the Board in 2006, he was
a key member of the team that established Topps Tiles as
the leading specialist tile retailer in the UK. In 2007, he
was promoted to Chief Executive Officer. Matt is also a
non-executive director of The Original Factory Shop and
sits on the Pennies Retail Hospitality Advisory Board.
Rob joined the Board 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, ultimately as Director of Finance for Boots
Retail International. He is accountable for all aspects of
finance, human resources, logistics, property, IT, and
company legal matters.
KEITH DOWN | C D E
NON-EXECUTIVE DIRECTOR
CLAIRE TINEY | B D F H
NON-EXECUTIVE DIRECTOR
ANDY KING | E G H
NON-EXECUTIVE DIRECTOR
Keith joined the Board in February 2015. Keith is a
chartered accountant and is currently the Group Finance
Director of Selfridges Group, having held this post
since July 2018. He was previously the Chief Financial
Officer of Dunelm Group plc, Go-Ahead Group plc and
JD Wetherspoons plc.
Claire joined the Board in November 2011. She is also
a Non-Executive Director of Volution plc and Hollywood
Bowl Group plc. Additionally she runs her own business
as an HR Consultant, Executive Coach and facilitator,
having spent 15 years as an Executive Director in a
number of retail businesses including Mothercare and
W H Smith. Most recently, she was HR Director at
McArthurGlen.
Andy joined the Board in January 2012. Formerly
Chief Executive Officer of Evans Cycles, prior to that
Managing Director of Dobbies Garden Centres and
prior to that Chief Executive of Notcutts Garden Centres.
Andy has also held director roles at The Body Shop,
Mothercare, W H Smith and Boots The Chemists.
Secretary of the Audit, Nomination and Governance
A
and Remuneration Committees
D Member of Nomination and Governance Committee
B Senior Independent Director
C Chairman of Audit Committee
E Member of Remuneration Committee
F Chairman of Remuneration Committee
G Chairman of Nomination and
Governance Committee
H Member of Audit Committee
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TOPPS TILES PLC ANNUAL REPORT AND ACCOUNTS FOR THE 52 WEEK PERIOD ENDED 29 SEPTEMBER 2018 Executive Team
43
MATTHEW WILLIAMS* |
CHIEF EXECUTIVE OFFICER
ROB PARKER* |
CHIEF FINANCIAL OFFICER
TIM TATLOCK |
BUYING DIRECTOR
* Matthew Williams and Rob Parker also serve on
the Board of Directors
Tim is responsible for all our product assets and leads
Creative, Sourcing, Technical and Inventory. He has over
20 years of tile industry experience and prior to joining
Topps Tiles held senior leadership positions with UK tile
distributors and multinational tile manufacturers and has an
exceptional track record for leading product development
and sales strategies that significantly improve results. His
expert knowledge, innovative approach to product and
global sourcing experience have seen him ascend though
the Topps organisation since first joining as Buyer in 2005.
Tim was appointed as Group Buying Director in April 2018.
BRIAN LINNINGTON |
MANAGING DIRECTOR OF COMMERCIAL
RICHARD CARTER |
MANAGING DIRECTOR OF RETAIL
A chemistry graduate and MBA, Brian has many years
of retail business experience, starting his career at Boots
where his roles included Category General Manager
Toiletries, International Country Manager for Holland and
then Taiwan and finally Multichannel Director for Boots UK,
before being appointed Product and Marketing Director
at Vision Express. Brian joined Topps Tiles in 2012 to take
responsibility for buying, marketing and online, before
being appointed Managing Director of Commercial in
April 2018.
Richard is an experienced retailer who has worked for
both blue chip retailers and smaller, more entrepreneurial
businesses. Richard has previously held senior operations
roles with the Spirit Group (Punch Taverns), Virgin Retail,
Dixons, Office World (Staples) and started his career
with Asda on their retail operations graduate recruitment
programme. Richard joined Topps Tiles in 2010 to take
responsibility for retail operations, supply chain and the
trade customer division, before being appointed Managing
Director of Retail in April 2018.
The Company
Topps Tiles plc
Registration Number
3213782
Registered Office
Thorpe Way, Grove Park
Enderby, Leicestershire
LE19 1SU
Secretary
Alistair Hodder
London Stock Exchange Symbol
TPT
The Group
Comprises Topps Tiles plc and all
subsidiary companies.
Our Advisers
Auditor
Deloitte LLP
2 Hardman Street
Manchester, M3 3HT
Bankers
Barclays Bank PLC
3 Hardman Street, Spinningfields
Manchester, M3 3HF
Registrars
Link Asset Services
Bourne House
34 Beckenham Road
Beckenham, Kent
BR3 4TU
Solicitors
Osborne Clark LLP
One London Wall
London, EC2Y 5EB
Financial PR Advisers
Citigate Dewe Rogerson
3 London Wall Buildings
London, EC2M 5SY
Brokers
Peel Hunt LLP
Moor House, 120 London Wall
London, EC2Y 5ET
Liberum Capital Limited
Ropemaker Place
25 Ropemaker Street
London, EC2Y 9LY
ALISTAIR HODDER | A
COMPANY SECRETARY AND SECRETARY
OF BOARD OF COMMITTEES
Alistair joined Topps Tiles as Head of Legal & Company
Secretary in June 2018. A solicitor, with in-house and
in private practice experience, formerly Head of Legal
at NHBC.
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STRATEGIC REPORTOUR FINANCIALSADDITIONAL INFORMATIONTOPPS TILES PLC ANNUAL REPORT AND ACCOUNTS FOR THE 52 WEEK PERIOD ENDED 29 SEPTEMBER 2018OUR GOVERNANCE
44
Corporate Governance Statement
The Board has reviewed the contents of this
Annual Report and considers it fair, balanced,
understandable and an accurate representation
of the Company’s current position, performance,
business model and strategy.
DARREN SHAPLAND | CHAIRMAN
Dear Shareholder
The Company is committed to complying with the principles of
corporate governance contained in the UK Corporate Governance
Code issued by the Financial Reporting Council (the “Code”) for
which the Board is accountable. The 2016 edition of the Code is
applicable to the period covered by this Annual Report (the “Period”).
The Board is mindful of the new UK Corporate Governance Code,
which was published earlier this year, and has started to consider the
implications of the new Code for the Company.
The Board has reviewed the contents of this Annual Report and
considers it fair, balanced, understandable and an accurate
representation of the Company’s current position, performance,
business model and strategy. The basis for this view is that the
Directors are furnished with the requisite information to perform
their duties and have access to members of management, as they
require. The Board meets regularly and is given adequate time to
probe, debate and challenge business performance as and when
it considers it necessary to do so. The Board has received a report
from the Audit Committee in relation to the financial results and
based on that, has approved the final accounts for the period.
Having gained a thorough understanding of the business, each
member of the Board has also had the opportunity to review and
influence this report and as such have concluded in line with the
statement above.
Statement of Compliance with the
2016 UK Corporate Governance Code
Throughout the period, the Company has complied with the
principles set out in the 2016 Code, including both the Main
Principles and the supporting principles, as reported.
More on how the Main Principles have been applied are set out
below and in the Strategic Report, Directors’ Remuneration Report
and Audit Committee Report.
The Board conducts an annual internal evaluation of its own
performance and that of the Audit, Remuneration and Nomination
and Governance Committees and as a result, minor adjustments
will be made to the Board’s timetable and tabling of business.
In addition, an annual internal evaluation of the Chairman’s
performance was carried out.
Matthew Williams, as Chief Executive Officer (“CEO”), does not sit
on any of the Audit, Remuneration or Nomination and Governance
Committees, although he may attend by invitation of the relevant
Chairperson. There is a clear division of responsibilities between
his role as the CEO and that of the Chairman.
The Board currently comprises six members, of which four are
considered independent, in line with the 2016 Code. The Senior
Independent Non-Executive Director is Claire Tiney, who also
chairs the Remuneration Committee. Brief biographical details of all
Directors are given on page 42. The Board meets twelve times a
year. Certain defined matters are reserved for the Board including:
•
investor relations;
• approval of Financial Statements and circulars;
• approval of operating and capital expenditure budgets;
• approval of the strategy and business plan;
• approval of corporate transactions and changes to capital
structure, core activities or listing status;
• key polices including Ethical Trading, Anti-Bribery and Health
and Safety;
• directors’ appointments;
• corporate governance;
• key external and internal appointments; and
• pensions and employee incentives.
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TOPPS TILES PLC ANNUAL REPORT AND ACCOUNTS FOR THE 52 WEEK PERIOD ENDED 29 SEPTEMBER 2018 45
During the Period, the Board reviewed the matters reserved for the
Board and those delegated to Committees and is satisfied that they
are appropriate.
Board members are responsible for their own development but are
provided access to the Company’s advisers and regularly attend
external presentations and workshops on areas considered relevant
and appropriate, including environmental, social and governance
issues. In particular, all members of the Board have access to
various technical seminars and professional updates on a range
of relevant topics useful to enhancing the Board’s knowledge and
understanding of corporate governance. Provision has also been
made within the Board’s timetable for regular updates in relation
to areas including the economy, the market and development in
remuneration practice.
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 address issues to the Senior
Independent Non-Executive Director.
All Directors are subject to annual re-election. Directors are elected
at the first AGM after appointment. All Non-Executive Directors
have written letters of appointment.
The Board considers that Darren Shapland, Claire Tiney, Andy King
and Keith Down are independent for the purposes of the 2016
Code. The terms and conditions for the appointment of Non-
Executive Directors are available for inspection on request.
The Board reviews the independence of Non-Executive Directors on
an ongoing basis.
In advance of Board meetings, Directors are supplied with up-to-
date information about trading performance, the Group’s overall
financial position and its achievement against prior year budgets
and forecasts. The Board also has regular contact with individual
Heads of Departments by way of Board presentations in relation
to specific departmental initiatives and areas of responsibility.
The Board operates three committees. These are the Nomination
and Governance Committee, the Remuneration Committee and the
Audit Committee. All committees meet regularly and have formal
written terms of reference, which are available for inspection on
request.
Attendance at Board and Committee meetings
The following table shows the number of Board and Committee meetings held during the Period and the attendance record of the
individual Directors. Directors who are not committee members are invited to attend meetings where the respective Chair considers it
appropriate given the nature of the business being considered by the Committee.
Board of Directors
Audit Committee
Remuneration Committee
Nomination and Governance Committee
D. Shapland
M. Williams
R. Parker
12 12
12 12
12 12
*
*
2
2
*
*
*
*
*
*
C. Tiney
12 12
3
3
2
3
3
2
A. King
K. Down
12 12
11 12 †
3
3
2
3
3
2
3
2
2
3
3 †
2
Meetings attended
Possible meetings
* May attend by invitation of the Chair of the committee.
† Unable to attend one meeting due to an unavoidable prior commitment.
The Role of the Board of Directors
The Board of Directors has overall responsibility for determining
the Company’s purpose, values and strategy and for ensuring
high standards of governance. The primary aim of the Board is
to promote the long-term sustainable success of the Company,
generating value for shareholders and contributing to wider
society. Stakeholders include employees, shareholders,
suppliers, customers and creditors of the business.
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Corporate Governance Statement
Board Committee Areas of Responsibility
AUDIT
COMMITTEE
NOMINATION AND
GOVERNANCE COMMITTEE
REMUNERATION
COMMITTEE
• Financial reporting
• Board structure
• Chairman and Executive Director’s
• Narrative reporting (fair, balanced
• Board evaluation
and understandable)
•
Internal controls and risk
management systems
• Compliance, whistleblowing and
• Board, committee and senior
executive appointments
• Board committee and senior
executive succession plans
remuneration
• Senior management remuneration
• Share incentive plans
• Employee benefits structures
fraud
•
Internal audit
• External audit
Read more below
Read more on page 47
Read more on page 54
BOARD COMPOSITION
EXECUTIVE 33.3%
BOARD TENURE
0–3 YEARS 0
3–6 YEARS 2
GENDER DIVERSITY
MALE 83.3%
NON-EXECUTIVE 66.6%
6 YEARS+ 4
FEMALE 16.6%
Applying the Principles of the 2016 Code
The Company has applied the principles of the 2016 Code
as reported above. How the 2016 Code has been applied
in connection with Directors’ remuneration is set out in the
Remuneration Report.
Audit Committee
The Audit Committee comprises independent Non-Executive
Directors, Keith Down (Chairman), Claire Tiney and Andy King.
Their qualifications are detailed on page 42. The Chairman has
relevant experience, being a qualified Chartered Accountant, a
former Chief Financial Officer of a listed company and a serving
Chief Financial Officer of a non-listed company. The Chief
Executive Officer, Chief Financial Officer and the Chairman of the
Board may attend meetings by invitation.
The Audit Committee considers the nature and scope of the audit
process (both internal and external to ensure that the programme is
aligned to key risks and where necessary any particular risk areas)
and its effectiveness. It also monitors, reviews and approves the
internal audit programme, and receives reports from the internal
audit team on a regular basis to review the effectiveness of its
work. The Committee meets with the external auditor and considers
the Annual and Interim Financial Statements before making its
recommendations to the Board. The Committee reviews and
monitors the external auditor’s independence and objectivity and
the effectiveness of the audit process.
The Committee is responsible for ensuring that arrangements are in
place to enable staff, in confidence, to raise any concerns about
possible improprieties in matters of financial reporting or other
matters. No issues have been identified during the Period.
The Committee is responsible for the robust assessment of the
Company’s principal strategic risks, which include those to its
business model, future performance, solvency and liquidity. This
process is performed by the Committee in conjunction with a
number of senior operational managers. The Committee reviews
the strategic risk schedule on a quarterly basis to ensure that any
actions that have been identified are being progressed. It also
reviews the Group’s system of internal control by reference to an
Internal Controls Framework assessment and reports its findings
quarterly to the Board.
During the Period, the Committee has considered and updated
the Topps Tiles Group Tax Strategy, which is published on the
Company’s website.
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TOPPS TILES PLC ANNUAL REPORT AND ACCOUNTS FOR THE 52 WEEK PERIOD ENDED 29 SEPTEMBER 2018
47
The Audit Committee also reviews the independence of the
Company’s external auditor, Deloitte LLP.
Deloitte has been the external auditor for the Group since
September 2003. Audit partner Damian Sanders’ first period of
signing was the financial period ended 27 September 2014. In
line with independence requirements, the financial period ended
29 September 2018 will be his last period as Senior Statutory
Auditor. Given the requirement for a new audit partner, and with the
aim of appointing a locally based partner, the Company conducted
a competitive audit tender process. PricewaterhouseCoopers LLP
were selected and a resolution will be proposed at the Annual
General Meeting to appoint PricewaterhouseCoopers LLP as the
Auditor from the conclusion of the meeting.
The Company has a policy for the provision of non-audit services,
which is published on the Company’s website. In accordance with
the policy, the external auditor has not provided non-audit services
to the Company during the Period, with the exception of the
performance of an interim review.
The audit fee for the statutory audit of the Company’s consolidated
financial statements and audit related services for the Period is
£160,000 (2017: £142,500).
Nomination and Governance Committee
The Nomination and Governance Committee comprises
independent Non-Executive Directors Andy King (Chairman),
Darren Shapland, Keith Down and Claire Tiney. The Committee
is responsible for making recommendations to the Board for
appointments of Directors and other senior management and for
diversity, on which our policy is included in the Strategic Report.
The Committee, in conjunction with the Chief Executive, has
reviewed succession planning in relation to senior management
within the Company and development plans for senior management
development and diversity.
The Audit Committee Chairman in conjunction with the Company
Secretary conducts an annual internal evaluation of the Committee’s
processes during the Period. The conclusion was that the Committee
is functioning well, in accordance with its Terms of Reference and
corporate governance practice providing appropriate assurance to
the Board.
The Audit Committee provides advice to the Board on whether the
Annual Report is fair, balanced and understandable and provides
the necessary information shareholders require to assess the
Company’s performance, business model and strategy. In doing so,
the following risks have been addressed specifically:
• Review of principal strategic risks – the Committee conducts
an annual review of principal strategic risks and invites a
cross section of Company’s management to present in order to
ensure that the review includes a detailed understanding of the
business. The review highlights the principal risks based on a
combination of likelihood and impact and then considers what
appropriate mitigating effects should be implemented.
Read more information in the Strategic Report
on pages 08 to 39
• Review of poor performing stores – as part of both the interim
and full year-end review process poor performing stores are
considered and any related impairments and/or property
provisions are provided for. Management will then follow up
with detailed action plans to either improve store performance
or seek an exit solution. The Audit Committee also reviews
progress towards these plans at the following review. The
Audit Committee also reviews and approves the discount rate
calculations used to discount these provisions. Provisions are
made to the extent that the poor performing store leases are
considered onerous.
• Dilapidations are provided for across the entire store portfolio.
Management provides an estimate of the required provision
based on an assessment of the expected exit period for
the current portfolio and average dilapidation cost incurred
historically. The Audit committee reviews the inputs in the
provision at each reporting period and approves the inputs and
provision included within the Annual Report.
• Review of inventory – ensuring that inventory is correctly valued
is a key area of focus for the Audit Committee. The finance
function performs ongoing detailed checks of supplier invoices
by comparing to system prices and management conducts a
regular review of any products being sold, or likely to be sold,
below the original cost price. Inventory provisions are prepared
in accordance with these reviews. The Audit Committee
reviews the output of these reviews and approves the provisions
included in the Annual Report.
• Going concern & long-term viability statement – the Chief
Financial Officer provides an assessment of the Company’s
ability to continue to trade on both a 12-month look-forward test
basis and a 3-year look-forward basis. The conclusion of those
reviews is included in the Strategic Report.
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48
Corporate Governance Statement
Remuneration Committee
See pages 54 to 69
All Committee Terms of Reference can be found within the Investors
section of the Company’s website Toppstilesplc.com.
Dialogue with Institutional Shareholders
The Directors build on a mutual understanding of objectives
between the Company and its institutional shareholders, with
annual presentations and regular communications over the year.
In addition, I write to major shareholders each year and meet
with many of them to discuss the Company and its governance.
Financial information is published on the Company’s website
Toppstilesplc.com. The chairs of the Audit, Remuneration and
Nomination and Governance Committees make themselves
available at the AGM to answer shareholders’ questions.
Modern Slavery
The Board is committed to ensuring that acts of modern day slavery
and human trafficking do not occur in relation to the Company, or
its supply chain. To meet this commitment, the Company introduced
The Topps Tiles Code of Conduct for Suppliers, which is explained
in our Modern Slavery Statement on the Company’s website. This is
reinforced by commercial agreements that require our suppliers to
be fully compliant with local laws and we pay particular attention
to labour standards and factory conditions.
Maintenance of a Sound System
of Internal Control
The Board has established a continuous process for identifying,
evaluating and managing the significant risks the Group faces
and regularly reviews this process. The Board is responsible
for the Group’s system of internal control and for reviewing its
effectiveness. This 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.
As previously stated, the Company is committed to complying with
Corporate Governance guidelines and currently complies with the
2016 Code. The Audit Committee assists the Board in discharging
its responsibilities in this regard. The outcomes from the recent key
risks and uncertainties review are detailed in the Strategic Report
section of this report and the Board has considered all significant
aspects of internal control in conjunction with the review of the work
of Internal Audit.
During the course of its review of the system of internal control,
the Board has not identified nor been advised of any failings or
weaknesses which it has determined to be significant. Therefore,
a confirmation in respect of necessary actions has not been
considered necessary.
DARREN SHAPLAND | CHAIRMAN OF THE BOARD
27 November 2018
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TOPPS TILES PLC ANNUAL REPORT AND ACCOUNTS FOR THE 52 WEEK PERIOD ENDED 29 SEPTEMBER 2018 49
PICTURED
Tile of the Year for 2019 Lampas Peacock (wall) with Stadia Storm (floor)
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STRATEGIC REPORTOUR FINANCIALSADDITIONAL INFORMATIONTOPPS TILES PLC ANNUAL REPORT AND ACCOUNTS FOR THE 52 WEEK PERIOD ENDED 29 SEPTEMBER 2018OUR GOVERNANCE 50
Directors’ Report
The Directors of Topps Tiles plc (the “Directors” or the “Board”)
present their Annual Report on the affairs of the Group (comprising
Topps Tiles plc and its subsidiary companies) together with the
Financial Statements and Auditor’s Report, for the 52-week period
ended 29 September 2018. The Corporate Governance Statement
set out on pages 44 to 48 forms part of this report.
Principal Activity
The principal activity of the Group is the retail distribution of
ceramic and porcelain tiles, natural stone, and related products.
Strategic Review
The Company is required by the Companies Act 2006 to set out
in this report a fair review of the business of the Group during the
financial period ended 29 September 2018 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 is in the Chairman’s
Statement on page 04, the Strategic Report on pages 08 to 39,
and the Corporate and Social Responsibility (“CSR”) statement on
pages 30 to 37, which form part of the Directors’ Report.
The future prospects of the Group are highlighted in both the
Chairman’s Statement and the Strategic Report.
The Directors monitor a number of financial and non-financial key
performance indicators (KPIs) for the Group and its stores. The most
significant of these are detailed on page 18.
The Company conducts an annual strategic risk discussion with
the Chairman of the Audit Committee and senior managers, which
includes a wide range of risks including commercial, continuity,
environmental, social and governance risks.
Results and Dividends
The audited Financial Statements for the 52-week period ended
29 September 2018 are set out on pages 80 to 121. The Group’s
profit for the period from continuing operations, after taxation, was
£9,659,000 (2017: £13,431,000).
During the interim period, a dividend of 1.1 pence per share
was declared and paid (2017: interim dividend of 1.1 pence
per share was paid).
Following careful consideration, and for the reasons given in the
Chairman’s Statement of this report, the Board is recommending
the payment of a final dividend of 2.3 pence per share, totalling
£4,447,000 (2017: 2.3 pence per share, totalling £4,425,000).
Directors
The Directors, who served throughout the year and thereafter, were
as follows:
D. Shapland
Non-Executive Chairman
M. Williams
Chief Executive Officer
R. Parker
Chief Financial Officer
C. Tiney
Senior Independent Non-Executive Director
A. King
Non-Executive Director
K. Down
Non-Executive Director
In line with the 2016 UK Corporate Governance Code, all
Directors are subject to annual re-election at the next Annual
General Meeting.
The internal regulation of the Company is set out in its Articles of
Association, which cover such matters as the rights of shareholders,
the appointment or removal of Directors and the conduct of board
and general meetings. Copies are available upon request and
are displayed on the Company’s website. In accordance with the
Articles of Association, Directors can be appointed or removed by
the Board or shareholders in general meeting. Subject to company
law and the Articles of Association, the Directors may exercise
all the powers of the Company and may delegate authorities to
committees. Details of the principal Board committees can be found
in the Corporate Governance Statement on pages 44 to 48. The
Articles of Association can be amended by a special resolution of
the Company’s shareholders.
Voting on resolutions at the Annual General Meeting is by show of
hands for members present taken together with proxy votes, in line
with the Company’s Articles of Association. The results of the proxy
votes cast in advance are disclosed to the members present. In the
event that the votes did not support the resolution the Chairman
would formally call for a poll, thereby ensuring that all members’
interests are represented.
The Company provides insurance against Directors’ and Officers’
liabilities to a maximum value of £15,000,000.
The Directors’ interests in the shares of the Company are set out
on page 66.
Details of Directors’ share options are provided in the Directors’
Remuneration Report on pages 54 to 69.
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TOPPS TILES PLC ANNUAL REPORT AND ACCOUNTS FOR THE 52 WEEK PERIOD ENDED 29 SEPTEMBER 2018 51
Share Capital
Details of the Company’s issued share capital, together with details
of the movements in the Company’s issued share capital during the
period, are shown in note 21 to the Financial Statements.
The Company has one class of ordinary shares in issue, which
carries no right to fixed income. Each share carries the right to one
vote at general meetings of the Company.
The Company imposes no restrictions on the size of a holding nor
on the transfer of shares, which are both governed by the general
provisions of the Articles of Association and company law. The
Directors are not aware of any agreements between holders of the
Company’s shares that may result in restrictions on the transfer of
securities or on voting rights.
No person has any special rights of control over the Company’s
share capital and all issued shares are fully paid.
Change of Control – Significant Agreements
The Group is party to significant agreements, including commercial
contracts, financial and property agreements and employees’ share
plans, which contain certain termination and other rights for the
counterparties in the event of a change of control of the Company.
Should any counterparties choose to exercise their rights under such
agreements on a change of control, these arrangements may have
to be renegotiated or replacement suppliers, or premises, be found.
None of these is considered significant in terms of the likely impact
on the business of the Group as a whole. There are no agreements
between any Group company and any of its employees or a Director
that provides for compensation to be paid to the employee or Director
for termination of employment or for loss of office as a consequence of
a takeover of the Company, other than provisions that would apply on
any termination of employment.
Carbon Reporting
As detailed in the Corporate Social Responsibility statement of this report on page 37, our primary energy consumption is electricity used
across our store estate. Energy for in-store lighting is a significant source of carbon emissions. We continue to invest in new technology,
including low energy lighting, to minimise carbon emissions.
Electricity
Gas and oil
Commercial fleet
Company cars
Total
2018
2017
CO2 (Tonnes)
CO2 (Tonnes)/Store
CO2 (Tonnes)
CO2 (Tonnes)/Store
5,486
2,520
3,204
348
11,558
14.8
6.8
8.6
0.9
31.1
6,424
2,554
3,074
340
12,392
17.8
7.1
8.5
0.9
34.3
The above carbon emissions data covers the Period of this Annual Report. It has been compiled from data from our energy suppliers
(based on the energy consumed multiplied by Environment Agency approved emissions factors) and for vehicle emissions, from our in-
house transport team (based on mileage covered multiplied by manufacturer’s published emissions data).
Charitable and Political Contributions
The Group has designated charitable partners, the Macmillan
Trust and Leicestershire Cares. Across the Group’s business,
colleagues engage in numerous fundraising activities, which are
documented in the CSR statement of this report. During the period,
the Group made no monetary charitable donations and no political
contributions.
Substantial Shareholdings
In addition to the Directors’ shareholdings noted on page 66,
as at 29 September 2018, the Company had been notified,
in accordance with Chapter 5 of the Disclosure Guidance and
Transparency Rules, of the following disclosable interests in its
issued share capital.
Number
% held
Williams S K M Esq
Aberforth Partners LLP
AXA Investment Managers SA
BlackRock Investment Mgt (UK)
Clients of Woodford
Invesco Asset Management
FMR plc
Schroder Investment Mgt
Miton Group
Standard Life
20,593,950
19,367,054
19,213,670
11,256,019
9,810,000
9,790,934
9,702,900
9,300,541
8,920,893
7,783,246
10.5
10.0
9.9
5.8
5.1
5.1
5.0
4.8
4.7
4.0
In addition to the above shareholdings, between 29 September
2018 and 27 November 2018 we have not been notified of any
changes in shareholdings.
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Directors’ Report
Corporate Social Responsibility
The Company has a long-standing Corporate Social Responsibility
(CSR) agenda covering Community, Charity, the Environment and
Our People. Details of our current CSR activities are on pages 30
to 39. We take the impact of our business on our environment
extremely seriously and have included a range of environmental
metrics above and we pay particular attention to labour standards
and factory conditions.
Human Rights
All directly employed colleagues are based in the UK and covered
by UK employment law. The Modern Slavery Act 2015 came into
effect in 2015 and the Board is committed to ensuring that acts of
modern day slavery and human trafficking do not occur in relation
to the Company, or its supply chain. For more on this see page 36.
Diversity
The Nomination and Governance Committee reviews the balance of skills, knowledge and experience on the Board regularly. The Board
recognises the importance and benefits of diversity across all levels in our organisation. We appoint on merit, against objective criteria
and with due regard for the benefits of diversity. During the year, we have seen a small improvement in overall gender diversity but also
recognise that our senior manager population currently lacks diversity.
Our workforce at the period end date comprises:
Directors
Senior managers
Other employees
Total employees
% of total
Male
5
11
1,479
1,495
75%
2018
Female
1
2
489
492
25%
Total
6
13
1,968
1,987
Male
5
11
1,506
1,522
76%
2017
Female
1
2
473
476
24%
Total
6
13
1,979
1,998
Equal Opportunities
The Board is committed to promoting equal opportunities and
ensuring that we hire on potential, promote on talent and
reward on success. We aim to promote equality of opportunity
in employment and welcome applications from people of all
backgrounds, regardless of age, disability, gender reassignment,
marriage or civil partnership status, pregnancy, maternity, race,
religion or belief and sex.
Colleague Consultation
The Board values the views of employees and recognises the
importance of keeping employees informed of matters affecting
them and the Group. This is achieved through formal and informal
meetings, electronic announcements, the Company magazine
and ‘TEAM Talk’, a company-wide forum for colleagues to discuss
matters that affect them and the Company. Regular forums are held
at local and national levels to ensure that employee representatives
are consulted quarterly on matters affecting them.
Financial Risk Management,
Objectives and Policies
The Group is exposed to interest rate risk, currency risk and credit
risk. Information regarding our approach to managing these risks
is contained in note 19 to the Financial Statements. The Group’s
approach to risk management is explained in the Strategic Report
on pages 24 to 29.
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 number of options held by employees, including Directors,
is 14,506,987 (2017: 13,027,913).
As described in note 29, employee share purchase plans are open
to almost all employees and provide for employees to purchase
Ordinary Shares at a purchase price equal to the daily average
market price over the three days preceding the start of the offer
period, less 20%. The offer period fell between 5 January 2018
and 20 January 2018 and the offer price to employees was 0.70
pence.
Details of Directors’ share options are provided in the Directors’
Remuneration Report on page 66.
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TOPPS TILES PLC ANNUAL REPORT AND ACCOUNTS FOR THE 52 WEEK PERIOD ENDED 29 SEPTEMBER 2018 53
Information Given to the Auditor
Each of the Directors at the date of approval of this Annual Report
confirms that:
In preparing the Group financial statements, International
Accounting Standard 1 requires that Directors:
• properly select and apply accounting policies;
• so far as they are aware, there is no relevant audit information
• present information, including accounting policies, in a
of which the Company’s auditor is unaware; and
•
they have taken all the steps that he/she ought to have taken
as a director in order to make himself/herself aware of any
relevant audit information and to establish that the Company’s
auditor is aware of that information.
This confirmation is given and should be interpreted in accordance
with the provisions of s418 of the Companies Act 2006.
Auditor
A resolution to appoint PricewaterhouseCoopers LLP as the
Company’s auditor will be proposed at the forthcoming Annual
General Meeting. This follows the planned retirement of the Deloitte
audit partner and an audit tender process to select new auditors for
the Group.
Directors’ Responsibilities Statement
The Directors are responsible for preparing the Annual Report,
the 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. Under that law, the Directors are required
to prepare the Group financial statements in accordance with
International Financial Reporting Standards (IFRSs) as adopted by
the European Union and Article 4 of the IAS Regulation. They 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) including FRS 101 Reduced Disclosure Framework. Under
company law, the Directors must not approve the accounts unless
they are satisfied that they give a true and fair view of the state of
affairs of the Company and of the profit or loss of the Company for
that period.
In preparing the parent Company financial statements, the Directors
are required to:
• select suitable accounting policies and then apply them
consistently;
• make judgments and accounting estimates that are reasonable
and prudent;
• state whether applicable UK Accounting Standards have been
followed, subject to any material departures disclosed and
explained in the financial statements; and
manner that provides relevant, reliable, comparable and
understandable information;
• 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; and
• assess the Company’s ability to continue as a going concern.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Company’s
transactions. They must also disclose with reasonable accuracy,
at any time, the financial position of the Company and enable
themselves to ensure that the financial statements comply with the
Companies Act 2006. 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.
Responsibility Statement
We confirm that to the best of our knowledge:
•
•
•
the Annual Report and financial statements, taken as a whole,
are fair, balanced and understandable and provide the
information necessary for shareholders to assess the
Company’s performance, business model and strategy;
the financial statements, prepared in accordance with the
relevant financial reporting framework, give a true and fair
view of the assets, liabilities, financial position and profit or
loss of the Company and the undertakings included in the
consolidation taken as a whole; and
the management report, which is incorporated into this
Directors’ Report, includes a fair review of the development
and performance of the business, the position of the Company
and the undertakings included in the consolidation taken as
a whole, together with a description of the principal risks and
uncertainties that they face.
By order of the Board
• prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the company will
continue in business.
ROB PARKER | DIRECTOR
27 November 2018
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Directors’ Remuneration Report
The objective of the Remuneration Committee is
to ensure that the Executive Directors are fairly
and appropriately rewarded for their contribution
towards the delivery of the business strategy
and the company’s financial results. In doing
so we also aim to make the various elements
of the remuneration package, transparent, easy
to communicate and simple to operate.
CLAIRE TINEY | CHAIRMAN OF THE REMUNERATION COMMITTEE
Statement from the Chairman of the
Remuneration Committee
Dear Shareholder
On behalf of the Remuneration Committee, I am pleased to
present the Directors’ Remuneration Report for the 52 weeks
ended 29 September 2018.
This report has been prepared in accordance with The Large and
Medium-sized Companies and Groups (Accounts and Reports)
(Amendment) Regulations 2013, the UKLA Listing Rules and the UK
Corporate Governance Code. The report is divided into three parts:
1. The annual statement by the Chair of the Remuneration
Committee.
2. A summary of the Directors’ remuneration policy, which was
subject to a binding vote at the AGM in January 2017 and will
apply for three years from the date of approval. A summary of
the policy can be found on pages 55 to 62.
3. The annual report on remuneration which sets out payments
made to the Directors and details the link between Company
performance and remuneration for the 52 weeks ended
29 September 2018. The annual report on remuneration is
subject to an advisory shareholder vote at the 2019 AGM.
Performance in 2018/19 and
Remuneration Outcomes
The year under review presented some challenging market
conditions; despite this, the business continued to make strategic
investments in line with the business plan and retains its market
leading position in the retail tile market. Additionally, the
development of the commercial business has progressed at pace
since the acquisition of Parkside in September 2017.
Reflecting the financial performance of the Group, the annual bonus
payment was 14% of the maximum. This was based on achieving
stage one of the financial targets which were linked to delivery
of Adjusted PBT of £16 million. The remainder of the bonus was
linked to delivery of the strategic targets and performance against
these was partially met as outlined on page 64.
The long-term plan awards granted in December 2015 were
based upon performance over the three financial years to
September 2018. The awards required cumulative adjusted
earnings per share (EPS) over the period to be at least 27.29p for
25% vesting, increasing to 29.42p for full vesting of the awards.
Actual cumulative EPS was 23.13p; therefore, no payments will be
made in respect of the LTIP.
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TOPPS TILES PLC ANNUAL REPORT AND ACCOUNTS FOR THE 52 WEEK PERIOD ENDED 29 SEPTEMBER 2018 55
Remuneration Decisions for 2018/19
During the period, the Committee reviewed the base salary levels
for the Executive Directors. It was decided to leave the salary
level for the CEO and Non-Executive Directors unchanged, but to
award an increase of £10,000 to the CFO to reflect expanded
responsibilities, effective from 1 October 2018.
We continue to monitor executive remuneration to take account
of evolving market practice and remain committed to taking a
responsible approach. Accordingly, the fundamental structure
of the package remains largely unchanged.
New UK Corporate Governance Code
The Committee is mindful of the new UK Corporate Governance
Code, which was published earlier this year, and is considering
the implications of the new Code for the Company’s Remuneration
Report for the next year.
Annual General Meeting
On behalf of the Board, I would like to thank shareholders for their
continued support and I look forward to meeting you at the Annual
General Meeting on 30 January 2019.
In the meantime, I am always happy to hear from the Company’s
shareholders. You can contact me via the Company Secretary if
you have any questions on this report or more generally in relation
to the Company’s remuneration.
CLAIRE TINEY | CHAIRMAN OF THE
REMUNERATION COMMITTEE
27 November 2018
Directors’ Remuneration Policy
This part of the report sets out the Company’s Directors’ Remuneration Policy which was subject to a binding shareholder vote at the
Annual General Meeting in January 2017 and remains in force for a 3-year period from that date.
Executive Directors
Component
Base
salary
Purpose and link
to strategy
Core element of
fixed remuneration
set at a market
competitive level
with the aim to
attract and retain
Executive Directors
of the calibre
required.
Operation
Maximum opportunity
Performance measures
Salaries are usually reviewed
annually taking into account:
• underlying Group
performance;
•
role, experience and
individual performance;
• competitive salary levels
and market forces; and
• pay and conditions
elsewhere in the Group.
Not applicable.
While there is no maximum
salary, increases will normally
be in line with the typical level
of salary increase awarded (in
percentage of salary terms) to
other employees in the Group.
Salary increases above this
level may be awarded in
certain circumstances, such as,
but not limited to:
• where an Executive Director
has been promoted or has
had a change in scope or
responsibility;
• an individual’s development
or performance in role (e.g.
to align a newly appointed
Executive Director’s salary
with the market over time);
• where there has been a
change in market practice;
or
• where there has been a
change in the size and/or
complexity of the business.
Such increases may be
implemented over such time
period as the Committee deems
appropriate.
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Directors’ Remuneration Report
Executive Directors
Component
Benefits
Purpose and link
to strategy
Fixed element of
remuneration set
at a market
competitive level
with the aim to
attract and retain
Executive Directors
of the calibre
required.
Operation
Maximum opportunity
Performance measures
Not applicable.
While the Committee has not
set an absolute maximum on
the level of benefits Executive
Directors may receive, the
value of benefits is set at a level
which the Committee considers
to be appropriately positioned
taking into account relevant
market levels based on the
nature and location of the role
and individual circumstances.
Executive Directors receive
benefits in line with market
practice, and these include
principally life insurance,
income protection, private
medical insurance, company
car or car allowance and fuel
allowance and, where relevant,
relocation expenses. Other
benefits may be provided based
on individual circumstances.
These may include other benefits
which are introduced for the
wider workforce on broadly
similar terms.
Any reasonable business related
expenses (including the tax
thereon) can be reimbursed.
Not applicable.
Set at a level which the
Committee considers to be
appropriately positioned taking
into account relevant market
levels based on the nature
and location of the role and
individual circumstances.
Contributions of up to 20% of
salary may be made to take
account of a change in the
scope of the role, increase in
responsibility and/or a change
in the size and/or complexity
of the business.
Participation limits are those set
by the UK tax authorities from
time to time.
Not subject to performance
measures in line with HMRC
practice.
Pensions
Provides market
competitive post-
employment benefits
(or cash equivalent)
with the aim to
attract and retain
Executive Directors
of the calibre
required.
Executive Directors are eligible
to participate in the defined
contribution pension scheme.
In appropriate circumstances,
such as where contributions
exceed the annual or lifetime
allowance, Executive Directors
may be permitted to take a
cash supplement instead of
contributions to a pension plan.
All employee
share schemes
To create alignment
with the Group and
promote a sense of
ownership.
Executive Directors are entitled
to participate in a tax qualifying
all employee SAYE scheme
under which they may make
monthly savings contributions
over a period of three or five
years linked to the grant of an
option over the Company’s
shares with an option price
which can be at a discount of
up to 20% to the market value
of shares at grant.
Executive Directors are also
entitled to participate in an
HMRC tax-qualifying Share
Incentive Plan (“SIP”).
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TOPPS TILES PLC ANNUAL REPORT AND ACCOUNTS FOR THE 52 WEEK PERIOD ENDED 29 SEPTEMBER 2018 57
Executive Directors
Purpose and link
to strategy
Component
Annual bonus Rewards performance
against annual targets
which support the
strategic direction
of the Group.
Long Term
Incentive Plan
(“LTIP”)
To incentivise
Executive Directors,
and to deliver
genuine performance
-related pay, with
a clear line of sight
for Executives and
direct alignment
with shareholders’
interests.
Operation
Maximum opportunity
Performance measures
Awards are based on annual
performance against key
financial targets and/or the
delivery of personal/strategic
objectives.
Pay-out levels are determined
by the Committee after the year
end based on performance
against those targets.
The Committee has discretion
to amend the pay-out should
any formulaic output not reflect
the Committee’s assessment of
overall business performance.
For up to two years following
the payment of an annual bonus
award, the Committee may
require the repayment of some
or all of the award if an act or
omission or a failure to apply
reasonable skill and judgement
leads to a material loss to the
Group or serious reputational
damage to the Group or a
material misstatement of the
Group’s financial statements.
Long-term incentive awards
are granted under the LTIP,
approved by shareholders
on 23 January 2013.
Under the LTIP, awards
of nil cost share options
or conditional shares may
be made.
Awards may be settled in
cash at the election of the
Committee.
The vesting of awards will
be subject to the achievement
of specified performance
conditions, over a period
of at least three years.
The maximum bonus opportunity
for an Executive Director will not
exceed 100% of salary.
The normal maximum award is
100% of salary in respect of a
financial year. Under the share
plan rules the overall maximum
opportunity that may be granted
in respect of a financial year
is 200% of salary. The normal
maximum award limit will only
be exceeded in exceptional
circumstances involving the
recruitment or retention of an
Executive Director.
The market value of the shares
subject to an award is based
on the three day average
share price immediately after
the Company’s Qtr 4 trading
statement, unless the Committee
determines otherwise.
Targets are set annually
reflecting the Company’s
strategy and are aligned with
key performance indicators.
Up to 20% of the bonus
may be based on strategic
measures and/or individual
performance. The balance
will be assessed against key
financial performance metrics
of the business.
Financial metrics
There is no minimum payment
at threshold performance and
all of the maximum potential
will be paid out for maximum
performance, with scaled
vesting in between.
Non-financial or individual
metrics
Vesting of the strategic
awards will apply based on
the Committee’s assessment of
the extent to which a strategic
metric has been met.
Relevant performance
measures are set that
reflect underlying business
performance.
Performance measures and
their weighting where there
is more than one measure
are reviewed annually to
maintain appropriateness and
relevance.
For achievement of threshold
performance 25% of the
maximum opportunity will vest.
There will usually be straight-
line vesting between threshold
and maximum performance.
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Directors’ Remuneration Report
Shareholding Guideline
The Executive Directors are subject to a shareholding requirement
to build and maintain a shareholding in Topps Tiles equivalent to
200% of salary for the Chief Executive and 150% of salary for
the Chief Financial Officer.
LTIP and 2020 Awards Additional Information
The Committee has the right to reduce, cancel or impose further
conditions on unvested or unexercised awards if there has been
a material misstatement of the Company’s financial results, a
material failure of risk management by the Company or if there
has been serious reputational damage to the Company as
a result of the participant’s misconduct or otherwise.
For up to two years following the payment of a long-term incentive
award, the Committee may require the repayment of some or all
of the award if an act or omission or a failure to apply reasonable
skill and judgement leads to a material loss to the Group or serious
reputational damage to the Group or a material misstatement
of the Group’s financial statements.
Explanation of Performance Measures Chosen
for the Incentive Schemes
Performance measures are selected that are aligned with the
performance of the Group and the interests of shareholders.
Stretching performance targets are set each year for the annual
bonus and long-term incentive awards. When setting these
performance targets, the Committee will take into account
a number of different reference points, which may include the
Company’s business plans and strategy and the economic
environment. Full vesting will only occur for what the Committee
considers to be a stretching performance.
The annual bonus can be assessed against financial and
individual/strategic measures as determined by the Committee.
The Committee considers that adjusted profit before tax is a key
performance metric for the annual bonus and specific strategic
objectives for each Director, which are aligned to delivering the
overall business strategy, encourage behaviours which facilitate
profitable growth and the future development of the business.
Long-term performance measures are chosen by the Committee
to provide a robust and transparent basis on which to measure
the Company’s performance over the longer term and to provide
alignment with the business strategy. They are selected to be
aligned with the interests of shareholders and to drive business
performance while not encouraging excessive risk-taking.
The Committee retains the ability to adjust or set different
performance measures for the annual bonus and share awards if
events occur (such as a change in strategy, a material acquisition
and/or a divestment of a Group business or a change in prevailing
market conditions) which cause the Committee to determine that
the measures are no longer appropriate and that amendment is
required so that they achieve their original purpose.
Awards and options may be adjusted in the event of a variation of
share capital in accordance with the rules of the LTIP.
Illustrations of Application of Remuneration Policy for 2018/19
M T M WILLIAMS
£1,287k
R PARKER
£885k
%
3
2
%
3
2
%
4
5
£483k
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0
0
1
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3
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1
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t
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e
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e
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£591k
%
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8
3
Minimum
performance
Performance
in line with
expectations
Maximum
performance
Maximum
performance
Perormance
in-line with
expectations
Minimum
performance
Base salary, benefits and pensions
Base salary, benefits and pensions
Annual bonus
LTIP
Annual bonus
LTIP
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59
In illustrating the potential reward, the following assumptions have been made:
Minimum performance
Performance in line with
expectations
Maximum performance
Fixed pay
Annual bonus
LTIP*
Fixed elements of remuneration
only – base salary (being the
salary as at 1 October 2018),
benefits as disclosed in the single
figure table on page 63 for the
year 2017/18 and pension of
12.5% of salary.
No bonus.
50% of salary awarded for
achieving target performance.
100% of salary awarded for
achieving maximum performance.
No LTIP vesting.
50% of maximum award vesting
(equivalent to 50% of salary) for
achieving target performance.
100% of maximum award vesting
(equivalent to 100% of salary) for
achieving maximum performance.
* LTIP awards are included in the scenarios above at face value with no share price movement included.
Non-Executive Directors
Purpose and
link to strategy
Approach of the Company
Sole element of Non-
Executive Director
remuneration, set at a
level that reflects market
conditions and is sufficient
to attract individuals with
appropriate knowledge
and experience.
Fees are normally reviewed annually.
Fees paid to Non-Executive Directors for their services are approved by the Board. Fees may include
a basic fee and additional fees for further responsibilities (for example, chairmanship of Board committees
or holding the office of senior independent director). Fees are based on the level of fees paid to Non-
Executive Directors serving on the boards of similar-sized UK listed companies and the time commitment
and contribution expected for the role. Typically, any fee increase will be in line with the wider workforce.
Fee increases may be awarded above this level in certain circumstances such as (but not limited to):
• where there has been a change in market practice;
• where there has been a change in the size and complexity of the Company; or
• where there has been an increase in the Non-Executive Director’s time commitment to the role.
Overall fees paid to Non-Executive Directors will remain within the limits set by the Company’s Articles
of Association.
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. Non-Executive Directors may be eligible to receive benefits
such as the use of secretarial support, travel costs (including any tax incurred thereon) or other benefits that
may be appropriate.
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Directors’ Remuneration Report
Approach to Recruitment Remuneration
The policy aims to facilitate the appointment of individuals of
sufficient calibre to lead the business and execute the strategy
effectively for the benefit of shareholders. When appointing a new
Executive Director, the Committee seeks to ensure that arrangements
are in the best interests of the Company and not to pay more than
is appropriate.
The Committee will take into consideration a number of relevant
factors, which may include the calibre of the individual, the
candidate’s existing remuneration package, and the specific
circumstances of the individual including the jurisdiction from
which the candidate was recruited.
When hiring a new Executive Director, the Committee will typically
align the remuneration package with the above Policy for existing
Directors. The Committee may include other elements of pay which
it considers are appropriate; however, this discretion is capped
and is subject to the principles and the limits referred to below.
• Base salary will be set at a level appropriate to the role and the
experience of the Executive Director being appointed. This may
include agreement on future increases up to a market rate, in
line with increased experience and/or responsibilities, subject
to good performance, where it is considered appropriate.
• Pension and benefits will be provided in line with the above
Policy.
• The Committee will not offer non-performance related incentive
payments (for example a “guaranteed sign-on bonus”).
• Others elements may be included in the following
circumstances:
− an interim appointment being made to fill an Executive
Director role on a short-term basis;
− if exceptional circumstances require that the Chairman
or a Non-Executive Director takes on an executive function
on a short-term basis;
− if an Executive Director is recruited at a time in the year
when it would be inappropriate to provide a bonus or long-
term incentive award for that year as there would not be
sufficient time to assess performance. Subject to the limit on
variable remuneration set out below, the quantum in respect
of the months employed during the year may be transferred
to the subsequent year so that reward is provided on a fair
and appropriate basis;
− if the Executive Director will be required to relocate in
order to take up the position, it is the Company’s policy
to allow reasonable relocation, travel and subsistence
payments. Any such payments will be at the discretion of
the Committee.
• The Committee may also alter the performance measures,
performance period and vesting period of the annual bonus or
LTIP, subject to the rules of the LTIP, if the Committee determines
that the circumstances of the recruitment merit such alteration.
The rationale will be clearly explained in the following
Directors’ Remuneration Report.
• The maximum level of variable remuneration which may be
granted (excluding “buyout” awards as referred to below) is
300% of salary.
Any share awards referred to in this section will be granted as far as
possible under the Company’s existing share plans. If necessary, and
subject to the limits referred to above, recruitment awards may be
granted outside of these plans as permitted under section 9.4.2 (2)
of the Listing Rules which allows for the grant of awards to facilitate,
in unusual circumstances, the recruitment of an Executive Director.
The Committee may make payments or awards in respect of hiring
an employee to “buy out” remuneration arrangements forfeited on
leaving a previous employer. In doing so the Committee will take
account of relevant factors including any performance conditions
attached to the forfeited arrangements and the time over which
they would have vested. The Committee will generally seek to
structure buyout awards or payments on a like-for-like basis to the
remuneration arrangements forfeited. Any such payments or awards
are limited to the expected value of the forfeited awards. Where
considered appropriate, such special recruitment awards will be
liable to forfeiture or “malus” and/or “clawback” on early departure.
Where a position is filled internally, any ongoing remuneration
obligations or outstanding variable pay elements shall be allowed
to continue according to the original terms.
Fees payable to a newly appointed Chairman or Non-Executive
Director will be in line with the fee policy in place at the time of
appointment.
Service Contracts
It is the Company’s policy that Executive Directors are offered
permanent contracts of employment with a twelve month notice
period. Under an event of contract termination any severance
payment would be subject to negotiation but would be with regard
to length of service and prevailing notice period.
Company policy also states that Non-Executive Directors should
have contracts of services with an indefinite term providing for
a maximum of six months’ notice. The role of Chairman is also
Non-Executive, with an indefinite term contract and a maximum six
months’ notice.
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TOPPS TILES PLC ANNUAL REPORT AND ACCOUNTS FOR THE 52 WEEK PERIOD ENDED 29 SEPTEMBER 2018 61
Payments for Loss of Office
The principles on which the determination of payments for loss of office will be approached are set out below:
Payment in
lieu of notice
Annual Bonus
Policy
The Company has discretion to make a payment in lieu of notice. Such a payment would be calculated
by reference to basic salary and shall include compensation for any employer pension contributions for the
unexpired period of notice. The payment may also include compensation for benefits for the period.
This will be at the discretion of the Committee on an individual basis and the decision as to whether or not to award
a bonus in full or in part will be dependent on a number of factors, including the circumstances of the individual’s
departure and their contribution to the business during the bonus period in question. Any bonus amounts paid will
typically be prorated for time in service during the bonus period and will, subject to performance, be paid at the usual
time (although the Committee retains discretion to pay the bonus earlier in appropriate circumstances).
LTIP
The extent to which any unvested award will vest will be determined in accordance with the rules of the LTIP.
Unvested awards will normally lapse on cessation of employment. However, if the participant leaves due to death,
illness, injury, disability, sale of his employer or any other reason at the discretion of the Committee, the Committee shall
determine whether the award will vest at cessation or at the normal vesting date. In either case, the extent of vesting
will be determined by the Committee taking into account the extent to which the performance condition is satisfied and,
unless the Committee determines otherwise, the period of time elapsed from the date of grant to the date of cessation
relative to the performance period. Awards may then be exercised during such period as the Committee determines.
Awards which have already vested at the date of cessation may be exercised for such period as the Committee
determines.
Change of control
The extent to which unvested awards will vest will be determined in accordance with the rules of the LTIP.
Mitigation
All employee
share plans
Awards under the LTIP will vest early on a takeover, merger or other relevant corporate event. The Committee will
determine the level of vesting taking into account the extent to which the performance condition is satisfied and,
unless the Committee determines otherwise, the period of time elapsed from the date of grant to the date of the
relevant corporate event relative to the performance period. The Committee has discretion under the rules of the
LTIP to vest awards on a different basis.
The Committee’s practice is that if an Executive Director’s employment is terminated any compensation payment
will be calculated in accordance with normal legal principles including the application of mitigation to the extent
appropriate to the circumstances of the termination.
Payments may be made either in the event of a loss of office or a change of control under the all employee
share plans, which are governed by the rules and the legislation relating to such tax qualifying plans. There
is no discretionary treatment for leavers or on a change of control under these schemes.
In appropriate circumstances, payments may also be made in respect of accrued holiday, outplacement and legal fees.
Where a buyout award is made under section 9.4.2 (2) of the
Listing Rules then the leaver provisions would be determined at the
time of the award.
The Committee reserves the right to make additional exit payments
where such payments are made in good faith in discharge of an
existing legal obligation (or by way of damages for breach of such
an obligation) or by way of settlement or compromise of any claim
arising in connection with the termination of a Director’s office or
employment.
Where the Committee retains discretion it will be used to provide
flexibility in certain situations, taking into account the particular
circumstances of the Director’s departure and performance.
There is no entitlement to any compensation in the event of a
Non-Executive Director’s appointment being terminated.
Existing Contractual Arrangements
The Committee retains discretion to make any remuneration
payment or payment for loss of office outside the policy in
this report:
• where the terms of the payment were agreed before the policy
came into effect;
• where the terms of the payment were agreed at a time when
the relevant individual was not a Director of the Company
and, in the opinion of the Committee, the payment was not
in consideration of the individual becoming a Director of the
Company; and
•
to satisfy contractual commitments under legacy remuneration
arrangements.
For these purposes, “payments” includes the satisfaction of awards of
variable remuneration and, in relation to an award over shares, the
terms of the payment are agreed at the time the award is granted.
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Directors’ Remuneration Report
Policy for the Remuneration of Employees
More Generally
Remuneration arrangements are determined throughout the Group
based on the same principle that reward should be achieved for
delivery of the business strategy and should be sufficient to attract,
retain and motivate high-calibre employees.
When determining the remuneration arrangements for Executive
Directors, the Committee takes into consideration, as a matter of
course, the pay and conditions of employees throughout the Group.
In particular, the Committee is kept informed on:
• salary increase for the general employee population;
• overall spend on annual bonus; and
• participation levels in the annual bonus and share plans.
Although no consultation with employees takes place in relation to
determining the remuneration policy for Directors, the Group has
various ways of engaging employees collectively, as teams and
one-to-one which provide a forum for employees to express their
views on the Company’s executive and wider employee reward
policies. The Chair of the Remuneration Committee is available to
meet with the employee consultation group if requested.
Statement of Consideration of
Shareholder Views
The Committee is committed to an ongoing dialogue with
shareholders and welcomes feedback on Directors’ remuneration.
Prior to this Remuneration Policy being formally put to shareholders,
the Committee engaged with major shareholders and institutional
bodies setting out the proposals and rationale for the changes on
variable pay arrangements for Executive Directors.
Annual Report on Remuneration
Single Figure Table (Audited Information)
The tables below detail the total remuneration receivable by each Director for the 52 week period ended 29 September 2018 and the
52 week period ended 30 September 2017.
2017/18
Executive Directors
M T M Williams
R Parker
Non-Executive Directors
D Shapland
A King
K Down
C Tiney
2016/17
Executive Directors
M T M Williams
R Parker
Non-Executive Directors
D Shapland
A King
K Down
C Tiney
Salary
and fees
£’000
Benefits
£’000
Annual
bonus
£’000
LTIP
£’000
Pension
£’000
Total
remuneration
£’000
402
256
126
44
44
45
31
27
3
1
–
1
56
36
–
–
–
–
–
–
–
–
–
–
49
28
–
–
–
–
538
347
129
45
44
46
Salary
and fees
£’000
Benefits
£’000
Annual
bonus
£’000
LTIP
£’000
Pension
£’000
Total
remuneration
£’000
394
250
124
43
43
44
31
26
2
–
–
–
35
23
–
–
–
–
256
158
–
–
–
–
49
27
–
–
–
–
765
484
126
43
43
44
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The figures in the single figure tables above are derived from the following:
Salary
and fees
Benefits
Pension
The amount of salary/fees received in the period.
The taxable value of benefits received in the period. These are principally life insurance, income protection, private
medical insurance, company car or car allowance, fuel allowance and the value of SAYE scheme options granted
during the period. The value attributable to Sharesave scheme options is calculated on the following basis: Monthly
contribution 5 12 5 20% (being the discount applied to market value in determining the exercise price). In the case
of the Non-Executive Directors, taxable expenses are shown as being paid by way of benefits.
The pension figure represents the cash value of Company pension contributions paid to the Executive Directors as
part of the Company’s defined contribution scheme or as a cash supplement taken in lieu of contributions to the
pension plan (paid as cash in lieu in respect of Rob Parker).
Annual bonus
The annual bonus is the cash value of the bonus earned in respect of the period. A description of performance
against the objectives which applied for the period is provided on page 64.
LTIP
The LTIP figure for the period 2017/18 represents the awards granted on 16 December 2015. The awards were
based on cumulative EPS performance over three financial years to 29 September 2018 and will not vest.
The LTIP figure stated for the period 2016/17 represents the value of awards granted under the Topps Tiles
plc 2013 Long Term Incentive Plan on the 12 December 2014. The awards were based on cumulative EPS
performance over three financial years to 30 September 2017 and vested at 86.7% on 28 November 2016.
The estimated value of the vested shares is based on a share price of 82.17 pence being the market value of the
Company’s shares for the last quarter of the 52 week period ended 1 October 2017.
Individual Elements of Remuneration
(Audited Information)
Base Salary and Fees
Base salaries for individual Directors are reviewed annually by the Committee and are set with reference to the Remuneration Policy.
During the period the following changes to base salary were made with effect from 1 October 2018:
M T M Williams
R Parker
Base salary
1 October
2017
£402,030
£255,616
Base salary
1 October
2018
£402,030
£265,616
% increase
0%
4%
The base salary increase for Matthew Williams awarded in 2018 was in line with the range of salary increases across the Group; and
the base salary increase for Rob Parker was in line with expanded responsibilities.
The Non-Executive Directors’ fees are reviewed annually with any changes effective from 1 October. Details of the current fee policy for
the Non-Executive Directors are set out in the table below. No change to the fee policy is currently anticipated for 2018/19.
Chairman’s fee
Non-Executive Directors’ Basic fee
Additional fees
Senior Independent Director/Chair of Remuneration Committee
Chair of the Nomination and Governance Committee
Chair of the Audit Committee
Fees
1 October
2017
£126,720
£38,561
Fees
1 October
2018
£126,720
£38,561
£6,462
£5,385
£5,385
£6,462
£5,385
£5,385
% increase
0%
0%
0%
0%
0%
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Directors’ Remuneration Report
Total Pension Entitlements
During the year the Company pension benefit represented 12.5% of salary for the Executive Directors (paid as cash in lieu in respect of
Rob Parker) and is in line with the Remuneration Policy.
Annual Bonus
For the 52 week period ended 29 September 2018, the maximum annual bonus opportunity was 100% of salary. To encourage behaviours
which facilitate profitable growth and future development of business, up to 80% of salary could be earned based on adjusted PBT performance
and up to 20% of salary could be earned for the achievement of individual objectives specifically delivering the strategic plan.
The following table sets out the bonus pay-out to the Executive Directors for 2017/2018 and how this reflects performance for the period:
Adjusted PBT1
Strategic objectives2:
Improving Average Transaction Value
Improving Customer Service
Reducing Working Capital
Improving Colleague Engagement
Other strategic initiatives3
Total bonus earned
Weighting
Threshold
Stretch
Executive Director
bonus earned as
a percentage of
salary
Actual
performance
80%
£16.0 million
£21.0 million
£16.0 million
4%
4%
4%
4%
4%
£70.80
69.1%
>£1m
+2pts
n/a
£72.30
70.6%
>£4m
+8pts
n/a
£70.86
66.8%
£2.5m
21.6pts
3%
1%
0%
2%
4%
4%
14%
1. Adjusted PBT as defined in the Financial Review section of this report.
2. Adjusted PBT of £16.0 million or higher for 2017/18 must be achieved for any bonus to be payable under the strategic objectives. This requirement was achieved.
3.
The other strategic initiatives related to delivery of a trade credit solution (achieved), refitting at least 115 stores as part of the “All Store Improvement Programme” of store
improvements (achieved), completing our “faster systems” programme (achieved), and generating theoretical store hours savings of at least 3,000 hours as part of our
simplification initiative (achieved). Each initiative accounted for 1% of the overall bonus.
The bonuses were paid in cash in November 2018.
Annual Bonus for 2018/19
The maximum annual bonus opportunity for the 2018/19 financial year remains 100% of salary. Up to 20% of salary will continue to
be focused upon achievement of individual objectives specifically delivering the strategic plan and 80% will be based on challenging
adjusted PBT targets. The strategic objectives for 2018/19 are based on improvements in customer service, a shared buying initiative,
working capital reductions, delivery of a simplification programme and a range of people based measures including the delivery of a new
HR and payroll system.
The Committee considers that the actual annual bonus targets are commercially sensitive and should therefore remain confidential to the
Company at this stage. However, the Committee will continue to disclose how the bonus pay-out delivered relates to performance against
the targets on a retrospective basis.
Long-Term Incentives
(Audited Information)
Awards Vesting in Respect of the Financial Year
The LTIP awards granted in December 2015 were based on cumulative adjusted EPS targets over the three financial years to
29 September 2018. The performance targets for the awards were as follows:
Cumulative Adjusted EPS for the period 2015/16 to 2017/18
Percentage of the award that will vest
27.29 pence
Greater than 27.29 pence but less than 29.42 pence
29.42 pence
25%
Determined on a straight-line basis between 25% and 100%
100%
Adjusted EPS is defined as stated in the Company’s accounts for the relevant financial period excluding exceptional items. Cumulative EPS
over the three year period was 23.13p pence. This resulted in 0% of the award vesting.
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TOPPS TILES PLC ANNUAL REPORT AND ACCOUNTS FOR THE 52 WEEK PERIOD ENDED 29 SEPTEMBER 2018 65
Awards Granted During the Financial Year
(Audited Information)
For the 52 week period ended 29 September 2018 the following awards were granted to Executive Directors on 14 December 2017:
M T M Williams
R Parker
Type of award
Nil-cost option
Nil-cost option
Percentage of
salary
100%
100%
Number of
shares
556,443
353,794
Face value
at grant1
402,030
255,616
% of award
vesting at
threshold
Performance
period
25%
25%
3 years
3 years
1. Valued using a share price of 72.25 pence based on the average three-day share price ending on 6 October 2017.
The awards will vest based on the following Cumulative Adjusted EPS targets:
Cumulative Adjusted EPS for the period 2017/18 to 2019/20
Percentage of the award that will vest
23.52 pence
Greater than 23.52 pence but less than 25.37 pence
25.37 pence
25%
Determined on a straight-line basis between 25% and 100%
100%
Adjusted EPS is defined as stated in the Company’s accounts for the relevant financial period excluding exceptional items and subject to
such adjustments as the Board in its discretion determines are fair and reasonable.
These targets equate to adjusted EPS growth of c.7% growth from the 2016/17 out-turn for 25% vesting and c.11% for 100% vesting.
Notwithstanding the Cumulative Adjusted EPS targets calculated above, the extent to which the awards will vest will be subject to the
Committee’s assessment of the quality of earnings over the performance period. The Committee may reduce the extent to which the
award would otherwise vest if the Committee determines that the Cumulative Adjusted EPS achieved is not consistent with the achievement
of commensurate underlying financial performance taking into account such factors as the Committee considers appropriate, including
market share, margin performance, net debt, overall returns to shareholders and shareholder value creation.
Long-Term Incentives for 2018/19
LTIP Awards
No changes to the quantum or performance conditions are proposed. The maximum LTIP opportunity will remain at 100% of salary and
the proportion of the award vesting for threshold performance remains at 25% of salary.
The awards will vest based on the following Cumulative Adjusted EPS targets that equate to straight-line adjusted EPS growth of c.7%
growth from the 2018/19 out-turn for 25% vesting and c.11% for 100% vesting. The Remuneration Committee considers that both the
threshold and stretch targets are challenging in the light of the growth environment and current business expectation.
Cumulative Adjusted EPS for the period 2018/19 to 2020/21
Percentage of the award that will vest
22.04 pence
Greater than 22.04 pence but less than 23.76 pence
23.76 pence
25%
Determined on a straight-line basis between 25% and 100%
100%
Adjusted EPS is defined as stated in the Company’s accounts for the relevant financial period excluding exceptional items and subject to
such adjustments as the Board, in its discretion, determines are fair and reasonable.
All Employee Share Plans
The Executive Directors may participate in the Company’s all employee share plans, the Topps Tiles plc SAYE Scheme (SAYE Scheme) and
the Topps Tiles plc Share Incentive Plan (SIP), on the same basis as other employees.
The SAYE Scheme provides an opportunity to save a set monthly amount (currently up to £500) over three years towards the exercise of a
discounted share option, which is granted at the start of the three years.
The SIP provides an opportunity for employees to buy shares from their pre-tax remuneration up to the limit permitted by the relevant tax
legislation (currently £1,800 per year). No matching shares are awarded.
Options and awards under these plans are not subject to performance conditions.
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Directors’ Remuneration Report
The following SAYE options were granted to the Executive Directors during the financial year ended 29 September 2018:
M T M Williams
R Parker
Type of award1
Number of
shares
Face value
at grant2
3yr Discounted share option
3yr Discounted share option
5,625
5,625
5,063
5,063
1.
2.
In accordance with the scheme rules, the options are granted with an exercise price set at a discount of up to 20% to the market value of a share when the invitations to
acquire the option are issued. For the awards granted in 2017/18 the share price at the date of invitation was 90 pence and the exercise price is 64 pence per share.
In accordance with the scheme rules, the exercise of the options is not subject to any performance condition.
The face value of the award is calculated by multiplying the number of shares under option by the market value of a share on the date of grant (being 90 pence for these
options granted on 29 January 2018).
Statement of Directors’ Shareholding and Share Interests
(Audited Information)
In order to further align the Executive Directors’ long-term interests with those of shareholders and in accordance with the Remuneration
Policy, the Committee introduced new shareholding guidelines, effective from the 2017 AGM, which required that Executive Directors
build up a shareholding or two times salary for the CEO and 1.5 times salary for the CFO. The table below sets out the number of shares
held or potentially held by Directors (including their connected persons where relevant) as at 29 September 2018:
M T M Williams
R Parker
The interests of each Executive Director of the Company as at 29 September 2018 were as follows:
Current
shareholding
(as % of
salary)
448
227
Shareholding
guidelines
200%
150%
Director
Executive Directors
M T M Williams
R Parker
Non-Executive Directors
D Shapland
K Down
C Tiney
A King
Type
Owned
Shares
LTIP shares
SAYE options
2,023,231
n/a
Shares
LTIP shares
SAYE options
417,893
n/a
n/a
Shares
Shares
Shares
Shares
80,000
n/a
15,480
n/a
Exercised
during
the year
Unvested and
subject to
performance
conditions
Unvested and
not subject to
performance
conditions
Total as at
29 September
2018
Vested
1,517,613
n/a
1,471,680
n/a
18,325
2,023,231
2,989,293
18,325
n/a
616,063
n/a
n/a
935,714
n/a
n/a
n/a
23,049
417,893
1,551,777
23,049
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
80,000
n/a
15,480
n/a
0
n/a
n/a
0
n/a
n/a
n/a
n/a
n/a
Note: Directors’ shareholdings include shares held by their closely associated persons where relevant.
There have been no changes in the Directors’ shareholdings between 29 September 2018 and the date of this report; except as follows:
• R Parker, purchase of 35,000 shares on 3 October 2018
• M Williams, 483 shares through SAYE
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TOPPS TILES PLC ANNUAL REPORT AND ACCOUNTS FOR THE 52 WEEK PERIOD ENDED 29 SEPTEMBER 2018 67
Payments Made to Former Directors During the Period
(Audited Information)
There have been no payments to former Directors during the period.
Payments for Loss of Office Made During the Period
(Audited Information)
No payments for loss of office were made in the period to any Director of the Company.
Performance Graph
The graph below shows the TSR performance for the Company’s shares in comparison to the FTSE Small Cap Index for the nine years
to 29 September 2018. For the purposes of the graph, TSR has been calculated as the percentage change during the nine-year period
in the market price of the shares, assuming that dividends are reinvested. The graph shows the value, by the end of the 2017/2018
financial year, of £100 invested in the Group over the last nine financial years compared with £100 invested in the FTSE Small Cap
Index, which the Directors believe is the most appropriate comparative index.
£300
£250
£200
£150
£100
£50
£0
2010
2011
2012
2013
2014
2015
2016
2017
2018
Topps Tiles
FTSE Small Cap Index
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Directors’ Remuneration Report
Historical Chief Executive Remuneration Outcomes
The table below shows details of the total remuneration and annual bonus and LTIP vesting (as a percentage of the maximum opportunity)
for the Chief Executive over the last nine financial years.
52 week period ended 29 September 2018
52 week period ended 30 September 2017
52 week period ended 2 October 2016
53 week period ended 3 October 2015
52 week period ended 27 September 2014
52 week period ended 28 September 2013
52 week period ended 29 September 2012
52 week period ended 1 October 2011
52 week period ended 1 October 2010
Total
remuneration
£’000
Annual bonus
as a % of
maximum
opportunity
LTIP as a %
of maximum
opportunity
538
765
1,180
2,027
849
564
579
384
515
14%
9%
67%
83%
99%
46.3%
35.2%
0%
40%
0%
86.7%
100%
100%
n/a
n/a
n/a
n/a
n/a
CEO Pay Increase in Relation to All Employees
The table below sets out in relation to salary, taxable benefits and annual bonus the percentage change in remuneration for Matthew
Williams compared to the wider workforce. For these purposes, the wider workforce includes all employees.
Percentage change
Salary
Taxable benefits
Annual bonus
CEO
0%
0%
60%
Wider
workforce
1.5%
6.8%
20%
Executive Director’s remuneration from non-executive roles
Matthew Williams is a non-executive director of The Original Factory Shop. Remuneration of approximately £35,000 was retained during
the period ending 29 September 2018.
Spend on Pay
The following table sets out the percentage change in dividends and the overall expenditure on pay (as a whole across the organisation):
Dividends and share buybacks
Overall expenditure on pay
52 week
period ended
29 September 2018
52 week
period ended
1 October 2017
3.4 pence per share
£54,909,000
3.4 pence per share
£50,548,000
Percentage
change
0%
8.6%
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TOPPS TILES PLC ANNUAL REPORT AND ACCOUNTS FOR THE 52 WEEK PERIOD ENDED 29 SEPTEMBER 2018 69
Consideration by the Directors of Matters Relating to Directors’ Remuneration
The Committee is composed of the Company’s independent Non-Executive Directors, Claire Tiney (Chair), Andy King and Keith Down.
The Company Secretary attends the meetings as secretary to the Committee.
The role of the Committee is to:
• Set and keep under review the remuneration policy for the Executive Directors and Chairman;
• Determine the remuneration of the Executive Directors and Chairman, including short-term and long-term incentives, in line with the
Remuneration Policy;
• Recommend and monitor the level and structure of remuneration for senior management;
• Approve the design of and determine targets for performance-related pay schemes and approve the payments made under them;
• Review the design of all share incentive plans and for those in place and determine what awards will be made; and
• Oversee any major changes in employee benefits structures throughout the company or group.
Advisers
The Committee is assisted in its work by the Chief Executive Officer and Chief Financial Officer. The Chief Executive Officer is consulted
on the remuneration of those who report directly to him and also of other senior management. No Executive Director or employee is
present or takes part in discussions in respect of matters relating directly to their own remuneration.
New Bridge Street has been appointed as its independent adviser. New Bridge Street is a trading name of Aon Hewitt Limited.
Adviser
Details of appointment
New Bridge Street
Appointed by the Committee
in March 2016
Fees paid by the Company for advice to the
Committee and basis of charge
Other services provided to the
Company in the 52 week period
ended 29 September 2018
£18,153 (excluding VAT)
None
Charged on a time/cost basis or fixed fee
dependent on the nature of the project.
New Bridge Street is a member of the Remuneration Consultants Group and adheres to its Code of Conduct. The Remuneration
Committee is satisfied that the advice received from New Bridge Street during the year has been objective and independent.
Statement of Voting at Last AGM
The following table sets out actual voting in respect of the resolution to approve the Directors’ Remuneration Report at the Company’s
Annual General Meeting on 31 January 2018:
Resolution
Votes for
% of vote
Votes against
% of vote
Discretion
% of vote Votes withheld
Approve Remuneration Report 127,523,612
96.58%
4,507,286
3.41%
8,099
0.01%
1,254,655
The following table sets out the actual voting in respect of the resolution to approve the Directors’ Remuneration Policy at the Company’s
Annual General Meeting on 26 January 2017:
Resolution
Approve Directors’
Remuneration Policy
Votes for
% of vote
Votes against
% of vote
Discretion
% of vote Votes withheld
117,880,410
94.81%
6,434,637
5.18%
6,889
0.01%
5,913,837
Approval
This report was approved by the Board on 27 November 2018 and signed on its behalf by:
CLAIRE TINEY | CHAIRMAN OF THE REMUNERATION COMMITTEE
27 November 2018
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STRATEGIC REPORTOUR FINANCIALSADDITIONAL INFORMATIONTOPPS TILES PLC ANNUAL REPORT AND ACCOUNTS FOR THE 52 WEEK PERIOD ENDED 29 SEPTEMBER 2018OUR GOVERNANCE 1
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Our
Financials
CONTENTS
Independent Auditor’s Report
Consolidated Statement of
Financial Performance
Consolidated Statement of
Comprehensive Income
Consolidated Statement of
Financial Position
Consolidated Statement of
Changes in Equity
Consolidated Cash Flow Statement
Notes to the Financial Statements
Company Balance Sheet
Company Statement of
Changes in Equity
Notes to the Company
Financial Statements
72
80
80
81
82
83
84
114
115
116
2
© 2018 Rogier van Zeventer
3
4
5
PICTURED
1. Syren Nordic Blue and Arabescato
2. Parkside: The Brass, Dubai – design by Harrison
3. Parkside: Clerkenwell
4. Standard Travertine and Parkway
5. Matrix Rainforest Green, Penteli and Hexmix Carrara
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72
Independent Auditor’s Report
to the Members of Topps Tiles Plc
Report on the audit of the financial statements
Opinion
In our opinion:
•
•
•
•
the financial statements of Topps Tiles plc (the “parent company”) and its subsidiaries (the ‘Group’) give a true and fair view of the state
of the Group’s and of the parent company’s affairs as at 29 September 2018 and of the Group’s profit for the 52 weeks then ended;
the Group financial statements have been properly prepared in accordance with International Financial Reporting Standards (IFRSs) as
adopted by the European Union;
the parent company financial statements have been properly prepared in accordance with United Kingdom Generally Accepted
Accounting Practice, including Financial Reporting Standard 101 “Reduced Disclosure Framework”; and
the financial statements have been prepared in accordance with the requirements of the Companies Act 2006 and, as regards the
Group financial statements, Article 4 of the IAS Regulation.
We have audited the financial statements which comprise:
•
•
•
•
•
•
•
the Consolidated Statement of Financial Performance;
the Consolidated Statement of Comprehensive Income;
the Consolidated Statement of Financial Position;
the Consolidated and Parent Company Statements of Changes in Equity;
the Consolidated Cash Flow Statement;
the Parent Company Balance Sheet; and
the related notes 1 to 30 of the Consolidated Financial Statements and the related notes 1 to 7 of the Parent Company Financial
Statements.
The financial reporting framework that has been applied in the preparation of the Group financial statements is applicable law and IFRSs
as adopted by the European Union. The financial reporting framework that has been applied in the preparation of the parent company
financial statements is applicable law and United Kingdom Accounting Standards, including FRS 101 “Reduced Disclosure Framework”
(United Kingdom Generally Accepted Accounting Practice).
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities
under those standards are further described in the auditor’s responsibilities for the audit of the financial statements section of our report.
We are independent of the Group and the parent company in accordance with the ethical requirements that are relevant to our audit of
the financial statements in the UK, including the Financial Reporting Council’s (the “FRC’s”) Ethical Standard as applied to listed public
interest entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We confirm that the non-audit
services prohibited by the FRC’s Ethical Standard were not provided to the Group or the parent company.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Summary of our audit approach
Key audit matters
The key audit matters that we identified in the current year were:
•
Inventory valuation;
• Onerous leases and store impairment; and
• Dilapidation provisions
Materiality
Scoping
Within this report, any new key audit matters are identified with
same as the prior period identified with
.
and any key audit matters which are the
The materiality that we used for the Group financial statements was £700,000 which was determined on
the basis of 5% of profit before tax adjusted for the loss in relation to Parkside.
Our full scope audit procedures covered 99.0% of revenue, 108.2% of profit before tax, offset by losses on
consolidation elsewhere in the Group and 102.6% of net assets, offset by net liabilities elsewhere in the Group.
Significant changes in our
approach
In the prior period we determined our materiality as 5% of statutory profit before tax. In the current period
we have adjusted this benchmark for the loss in relation to Parkside given it is in year 1 of a start-up phase.
In the current year we have separated within this report key audit matters in relation to onerous leases and store
impairment and dilapidations provisions, which were previously shown under the heading “property provisions”.
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TOPPS TILES PLC ANNUAL REPORT AND ACCOUNTS FOR THE 52 WEEK PERIOD ENDED 29 SEPTEMBER 2018 73
Conclusions relating to going concern, principal risks and viability statement
Going concern
We have reviewed the directors’ statement in note 2B to the financial statements about whether they
considered it appropriate to adopt the going concern basis of accounting in preparing them and their
identification of any material uncertainties to the Group’s and company’s ability to continue to do so over
a period of at least twelve months from the date of approval of the financial statements.
We are required to state whether we have anything material to add or draw attention to in relation to that
statement required by Listing Rule 9.8.6R(3) and report if the statement is materially inconsistent with our
knowledge obtained in the audit.
We confirm that we have
nothing material to report,
add or draw attention to in
respect of these matters.
Principal risks and viability statement
Based solely on reading the directors’ statements and considering whether they were consistent with the
knowledge we obtained in the course of the audit, including the knowledge obtained in the evaluation of
the directors’ assessment of the Group’s and the company’s ability to continue as a going concern, we are
required to state whether we have anything material to add or draw attention to in relation to:
We confirm that we have
nothing material to report,
add or draw attention to in
respect of these matters.
•
•
•
the disclosures on pages 25 to 29 that describe the principal risks and explain how they are being
managed or mitigated;
the directors’ confirmation on page 29 that they have carried out a robust assessment of the principal
risks facing the Group, including those that would threaten its business model, future performance,
solvency or liquidity; or
the directors’ explanation on page 38 as to how they have assessed the prospects of the Group,
over what period they have done so and why they consider that period to be appropriate, and their
statement as to whether they have a reasonable expectation that the Group will be able to continue
in operation and meet its liabilities as they fall due over the period of their assessment, including any
related disclosures drawing attention to any necessary qualifications or assumptions.
We are also required to report whether the directors’ statement relating to the prospects of the Group
required by Listing Rule 9.8.6R(3) is materially inconsistent with our knowledge obtained in the audit.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of
the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) that we identified.
These matters included those which had the greatest effect on: the overall audit strategy, the allocation of resources in the audit; and
directing the efforts of the engagement team.
These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and
we do not provide a separate opinion on these matters.
In the current year we have separated within this report key audit matters in relation to onerous leases and store impairment and
dilapidations provisions, which were previously shown under the heading “property provisions” as such these key audit matters are
considered consistent with the prior period.
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Independent Auditor’s Report
to the Members of Topps Tiles Plc
Report on the audit of the financial statements
Inventory valuation
Key audit matter
description
There is significant management judgement involved in assessing the inventory provisions relating to the
decisions of discontinued product lines and the requirement for provisions based on forecast consumer trends
and sales. There are also judgements involved in determining the provisions required for inventory loss from
retail stores based on the average value of inventory loss and time from most recent full inventory count. In
addition, judgement exists in relation to the type and percentage of overhead costs to be capitalised into
inventory.
Given the size of the inventory balance, with inventory of £30.2 million (2017: £29.5 million) and the
judgements noted above, we identified this as a key audit matter.
How the scope of our
audit responded to the
key audit matter
Inventory valuation policy is included with note 2 to the accounts and reviewed by the Audit Committee as
disclosed on page 47.
We challenged management’s assumptions in relation to the future sales prices of discontinued lines, as well as
the calculation methodology, involved in calculating the inventory provisions for obsolete and aged stock. We
have also reviewed historical levels of write-offs and compared this to provision levels at period end.
We also performed analytical procedures over the overheads absorption method and tested a sample of
overheads absorbed to determine whether the types of costs and value of overheads capitalised in inventory is
appropriate. Substantive testing was performed on the accuracy and completeness of the information used in
calculating the provisions, as well as in assessing the accuracy and level of overheads absorbed into inventory.
Based on the work performed we have concluded that the inventory provisions related to obsolete and aged
stock are appropriate and that the level of overheads absorbed in inventory is reasonable.
Key observations
Onerous leases and store impairment
Key audit matter
description
The onerous leases and potential store impairment relate to the Group’s retail store portfolio. The appropriateness
and completeness of onerous lease provisions of £1.8m (2017: £1.7m) and the potential impairment of the fixed
assets in relation to those stores is judgemental as they include an assessment of the likely future profitability of the
retail stores, and an assessment of the impact of the current economic retail environment. There is also judgement
in the assessment of the periods for which leasehold properties may be vacant.
Due to the size of the Group’s property portfolio and the sensitivity of the assumptions, onerous leases and store
impairment were considered one area for potential fraud and one which had the most significant impact on the
audit; we therefore identified it as a key audit matter.
How the scope of our
audit responded to the
key audit matter
Onerous leases and retail store impairment are included within the key sources of estimation uncertainty within note
2, the balance sheet provisions are disclosed in note 20, and reviewed by the Audit Committee on page 47.
We assessed the appropriateness and completeness of onerous lease provisions by challenging management’s
principal assumptions in identifying and providing for the onerous lease and related fixed assets of the Group’s
at-risk stores, as well as the overall policy applied to the provisions.
Our audit team included property specialists who assisted us in evaluating management’s estimates, for
example, those relating to the length of time anticipated to exit onerous lease arrangements on vacant or loss-
making stores as well recalculating provisions required on a sample basis.
We also challenged management’s assumptions in relation to the calculation of onerous leases at loss-making
retail stores by reviewing management’s track record of returning such stores to profit and the period of time
management assume will take to exit the property where relevant.
Based on the work performed we have concluded that the provisions held at year end and accelerated
depreciation charged in relation to onerous leases and retail store impairment are reasonable.
Key observations
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TOPPS TILES PLC ANNUAL REPORT AND ACCOUNTS FOR THE 52 WEEK PERIOD ENDED 29 SEPTEMBER 2018 75
Dilapidations
Key audit matter
description
The dilapidations provisions arise from the Group’s portfolio of 368 retail stores (2017: 371 retail stores). The
appropriateness of dilapidation provisions of £2.7 million (2017:£2.2 million) in relation to those retail stores
is judgemental as they include an assessment of the likely future periods of which leasehold properties may be
vacant and estimates of future costs of making good dilapidations.
Due to the size of the Group’s property portfolio and the sensitivity of the assumptions, dilapidations provisions
were considered to be another area for potential fraud and one which had the most significant impact on the
audit; we therefore identified it as a key audit matter.
How the scope of our
audit responded to the
key audit matter
Dilapidations provisions are included within the key sources of estimation uncertainty within note 2, the balance
sheet provisions are disclosed in note 20 and reviewed by the Audit Committee on page 47.
We assessed the appropriateness and completeness of dilapidations provisions by challenging management’s
principal assumptions in identifying and providing for the Group’s properties, as well as the overall policy
applied to the provision.
Furthermore, we challenged management’s assumptions regarding the calculation of the dilapidations
provision, including validating property information back to the original lease documentation and agreeing
dilapidation charges historically incurred to third party source.
We also independently recalculated the potential provision based on recent dilapidation charges incurred
based on square footage of the property portfolio.
Based on the work performed we have concluded that the provisions held at year end in relation to
dilapidations are reasonable.
Key observations
Our application of materiality
We define materiality as the magnitude of misstatement in the financial statements that makes it probable that the economic decisions of a
reasonably knowledgeable person would be changed or influenced. We use materiality both in planning the scope of our audit work and
in evaluating the results of our work.
Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:
Group financial statements
Parent company financial statements
Materiality
Basis for determining
materiality
£700,000 (2017: £867,000)
5% of adjusted pre-tax profit. Pre-tax profit has been
adjusted to exclude the loss made by the Parkside
subsidiary as disclosed on page 19.
£690,000 (2017: £858,000)
Parent company materiality equates to 1.3% of net
assets, which is capped at 99% of Group materiality.
Rationale for the
benchmark applied
Pre-tax profit is a key performance measure of the
business for users of the financial statements. The
Parkside loss has been excluded given it is in the first
year of start-up trading, and will be excluded from the
Directors’ adjusted profit before tax measure in the
current period and next period.
As a holding company, net assets is the key performance
measure of the business for users of the financial
statements.
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STRATEGIC REPORTOUR GOVERNANCEADDITIONAL INFORMATIONTOPPS TILES PLC ANNUAL REPORT AND ACCOUNTS FOR THE 52 WEEK PERIOD ENDED 29 SEPTEMBER 2018OUR FINANCIALS
76
Independent Auditor’s Report
to the Members of Topps Tiles Plc
Report on the audit of the financial statements
Our application of materiality
PBT £12,688k
PBT
Group materiality
Group materiality
£700k
Component materiality
range up to
£690k
Audit Committee
reporting threshold
£35k
We agreed with the Audit Committee that we would report to the Committee all audit differences in excess of £35,000 (2017: £43,000), as
well as differences below that threshold that, in our view, warranted reporting on qualitative grounds. We also report to the Audit Committee on
disclosure matters that we identified when assessing the overall presentation of the financial statements.
An overview of the scope of our audit
Our Group audit was scoped by obtaining an understanding of the Group and its environment, including Group-wide controls, and by
assessing the risks of material misstatement at the Group level.
We performed a full scope audit over the Group’s principal trading entity, treating it as a single component. We also performed full scope
audits over other subsidiaries that conduct intra-group trading activities and performed specified audit procedures over Parkside Ceramics
Limited, which was acquired on 31 August 2017. All work was carried out by the group audit team.
Our full scope audit procedures covered 99.0% of revenue (2017: 99.9%), 108.2% of pre-tax profit, offset by losses on consolidation
elsewhere in the Group (2017: 100.2%) and 102.6% of net assets offset by net liabilities elsewhere in the Group (2017: 97.7%).
Our audit work was executed at levels of materiality applicable to each individual entity which were lower than Group materiality and
went up to £690,000 (2017: up to £858,000).
At the parent entity level we also tested the consolidation process and carried out analytical procedures to confirm our conclusion that there
were no significant risks of material misstatement of the aggregated financial information of the remaining components not subject to audit
or audit of specified account balances.
As part of the inventory count programme, alongside attendance at the Group’s main warehouse, members of the audit team attended
17 (2017: 16) of the Group’s stores as part of their consideration of the controls around revenue, inventory, inventory count procedures
and physical asset verification. This programme of visits was designed so that the audit team visited different store locations compared to
previous years depending upon risks identified in conjunction with the work performed by Internal Audit.
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TOPPS TILES PLC ANNUAL REPORT AND ACCOUNTS FOR THE 52 WEEK PERIOD ENDED 29 SEPTEMBER 2018 77
Other information
The directors are responsible for the other information. The other information comprises the information
included in the annual report, other than the financial statements and our auditor’s report thereon.
We have nothing to report in
respect of these matters.
Our opinion on the financial statements does not cover the other information and, except to the extent
otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
statements or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If we identify such material inconsistencies or apparent material misstatements, we are required to determine
whether there is a material misstatement in the financial statements or a material misstatement of the other
information. If, based on the work we have performed, we conclude that there is a material misstatement of
this other information, we are required to report that fact.
In this context, matters that we are specifically required to report to you as uncorrected material
misstatements of the other information include where we conclude that:
• Fair, balanced and understandable – the statement given by the directors that they consider the annual
report and financial statements taken as a whole is fair, balanced and understandable and provides the
information necessary for shareholders to assess the Group’s position and performance, business model
and strategy, is materially inconsistent with our knowledge obtained in the audit; or
• Audit committee reporting – the section describing the work of the audit committee does not
appropriately address matters communicated by us to the audit committee; or
• Directors’ statement of compliance with the UK Corporate Governance Code – the parts of the directors’
statement required under the Listing Rules relating to the company’s compliance with the UK Corporate
Governance Code containing provisions specified for review by the auditor in accordance with Listing
Rule 9.8.10R(2) do not properly disclose a departure from a relevant provision of the UK Corporate
Governance Code.
Responsibilities of directors
As explained more fully in the directors’ responsibilities statement, the directors are responsible for the preparation of the financial
statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to
enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the Group’s and the parent company’s ability to continue as
a going concern, disclosing as applicable, matters related to going concern and using the going concern basis of accounting unless the
directors either intend to liquidate the Group or the parent company or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement,
whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance,
but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be
expected to influence the economic decisions of users taken on the basis of these financial statements.
Details of the extent to which the audit was considered capable of detecting irregularities, including fraud are set out below.
A further description of our responsibilities for the audit of the financial statements is located on the FRC’s website at: www.frc.org.uk/
auditorsresponsibilities. This description forms part of our auditor’s report.
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STRATEGIC REPORTOUR GOVERNANCEADDITIONAL INFORMATIONTOPPS TILES PLC ANNUAL REPORT AND ACCOUNTS FOR THE 52 WEEK PERIOD ENDED 29 SEPTEMBER 2018OUR FINANCIALS 78
Independent Auditor’s Report
to the Members of Topps Tiles Plc
Report on the audit of the financial statements
Extent to which the audit was considered capable of detecting irregularities, including fraud
We identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and then design and
perform audit procedures responsive to those risks, including obtaining audit evidence that is sufficient and appropriate to provide a basis
for our opinion.
Identifying and assessing potential risks related to irregularities
•
In identifying and assessing risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and
regulations, our procedures included the following:
• enquiring of management , internal audit, and the audit committee, including obtaining and reviewing supporting documentation,
concerning the Group’s policies and procedures relating to:
− identifying, evaluating and complying with laws and regulations and whether they were aware of any instances of non-
compliance;
− detecting and responding to the risks of fraud and whether they have knowledge of any actual, suspected or alleged fraud;
− the internal controls established to mitigate risks related to fraud or non-compliance with laws and regulations;
• discussing among the engagement team and involving relevant internal specialists, including tax, IT and industry specialists regarding
how and where fraud might occur in the financial statements and any potential indicators of fraud. As part of this discussion, we
identified potential for fraud in the following areas: onerous lease provisions and store impairment, dilapidations provisions, and the
potential for management override of controls; and
• obtaining an understanding of the legal and regulatory frameworks that the Group operates in, focusing on those laws and regulations
that had a direct effect on the financial statements or that had a fundamental effect on the operations of the Group. The key laws
and regulations we considered in this context included the UK Companies Act, Listing Rules and The National Minimum Wage
(Amendment) Regulations 2018.
Audit response to risks identified
As a result of performing the above, we identified onerous leases and store impairment and dilapidations as key audit matters. The key
audit matters section of our report explains the matters in more detail and also describes the specific procedures we performed in response
to those key audit matters.
In addition to the above, our procedures to respond to risks identified included the following:
•
reviewing the financial statement disclosures and testing to supporting documentation to assess compliance with relevant laws and
regulations discussed above;
• enquiring of management, the audit committee and external legal counsel concerning actual and potential litigation and claims;
• performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks of material misstatement
due to fraud;
•
•
reading minutes of meetings of those charged with governance, reviewing internal audit reports and reviewing correspondence with
HMRC; and
in addressing the risk of fraud through management override of controls, testing the appropriateness of journal entries and other
adjustments; assessing whether the judgements made in making accounting estimates are indicative of a potential bias; and evaluating
the business rationale of any significant transactions that are unusual or outside the normal course of business.
We also communicated relevant identified laws and regulations and potential fraud risks to all engagement team members including
internal specialists, and remained alert to any indications of fraud or non-compliance with laws and regulations throughout the audit.
Report on other legal and regulatory requirements
Opinions on other matters prescribed by the Companies Act 2006
In our opinion the part of the directors’ remuneration report to be audited has been properly prepared in accordance with the Companies
Act 2006.
In our opinion, based on the work undertaken in the course of the audit:
•
the information given in the strategic report and the directors’ report for the financial year for which the financial statements are
prepared is consistent with the financial statements; and
•
the strategic report and the directors’ report have been prepared in accordance with applicable legal requirements.
In the light of the knowledge and understanding of the Group and of the parent company and their environment obtained in the course
of the audit, we have not identified any material misstatements in the strategic report or the directors’ report.
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TOPPS TILES PLC ANNUAL REPORT AND ACCOUNTS FOR THE 52 WEEK PERIOD ENDED 29 SEPTEMBER 2018 79
Matters on which we are required to report by exception
Adequacy of explanations received and accounting records
Under the Companies Act 2006 we are required to report to you if, in our opinion:
• we have not received all the information and explanations we require for our audit; or
• adequate accounting records have not been kept by the parent company, or returns adequate for our
audit have not been received from branches not visited by us; or
•
the parent company financial statements are not in agreement with the accounting records and returns.
We have nothing to report in
respect of these matters.
Directors’ remuneration
Under the Companies Act 2006 we are also required to report if in our opinion certain disclosures of
directors’ remuneration have not been made or the part of the directors’ remuneration report to be audited
is not in agreement with the accounting records and returns.
We have nothing to report in
respect of these matters.
Other matters
Auditor tenure
Following the recommendation of the audit committee, we were appointed by the Board on 1 August 2003 to audit the financial statements
for the period ending 27 September 2003 and subsequent financial periods. The period of total uninterrupted engagement including previous
renewals and reappointments of the firm is 16 years, covering the periods ending 27 September 2003 to 29 September 2018.
Consistency of the audit report with the additional report to the audit committee
Our audit opinion is consistent with the additional report to the audit committee we are required to provide in accordance with ISAs (UK).
Use of our report
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006.
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
auditor’s 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.
DAMIAN SANDERS BA FCA | SENIOR STATUTORY AUDITOR
For and on behalf of Deloitte LLP
Statutory Auditor
Manchester, UK
27 November 2018
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STRATEGIC REPORTOUR GOVERNANCEADDITIONAL INFORMATIONTOPPS TILES PLC ANNUAL REPORT AND ACCOUNTS FOR THE 52 WEEK PERIOD ENDED 29 SEPTEMBER 2018OUR FINANCIALS 80
Consolidated Statement of Financial Performance
For the 52 weeks ended 29 September 2018
Group revenue – continuing operations
Cost of sales
Gross profit
Employee profit sharing
Distribution and selling costs
Other operating expenses
Administrative costs
Sales and marketing costs
Group operating profit
Investment revenue
Finance costs
Profit before taxation
Taxation
Profit for the period attributable to equity holders of the Company
Earnings per ordinary share from continuing operations
– Basic
– Diluted
Consolidated Statement of
Comprehensive Income
For the 52 weeks ended 29 September 2018
Profit for the period and total comprehensive income
Total comprehensive income for the period attributable to equity holders of the Parent Company
52 weeks
ended
29 September
2018
£’000
52 weeks
ended
30 September
2017
£’000
216,887
(84,464)
132,423
(6,268)
(82,572)
(9,480)
(15,575)
(4,793)
13,735
25
(1,072)
12,688
(3,029)
9,659
211,848
(82,473)
129,375
(4,972)
(80,006)
(7,724)
(14,254)
(4,530)
17,889
24
(914)
16,999
(3,568)
13,431
5.00p
4.93p
6.98p
6.86p
Notes
3
7
7
5
8
27
10
52 weeks
ended
29 September
2018
£’000
52 weeks
ended
30 September
2017
£’000
9,659
9,659
13,431
13,431
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TOPPS TILES PLC ANNUAL REPORT AND ACCOUNTS FOR THE 52 WEEK PERIOD ENDED 29 SEPTEMBER 2018 Consolidated Statement of Financial Position
As at 29 September 2018
81
Non-current assets
Goodwill
Intangible assets
Property, plant and equipment
Investment properties
Current assets
Inventories
Trade and other receivables
Cash and cash equivalents
Total assets
Current liabilities
Trade and other payables
Current tax liabilities
Provisions
Net current assets
Non-current liabilities
Bank loans
Deferred tax liabilities
Provisions
Total liabilities
Net assets
Equity
Share capital
Share premium
Own shares
Merger reserve
Share-based payment reserve
Capital redemption reserve
Accumulated losses
Total equity
Restated
(see note 4)
2017
£’000
1,461
429
54,342
–
56,232
29,502
6,502
7,501
43,505
99,737
(32,500)
(2,375)
(1,535)
(36,410)
7,095
(34,923)
(1,071)
(3,780)
(76,184)
23,553
6,548
2,487
(4,411)
(399)
3,921
20,359
(4,952)
23,553
2018
£’000
1,461
339
47,953
1,233
50,986
30,154
8,712
13,842
52,708
103,694
(38,648)
(2,923)
(1,197)
(42,768)
9,940
(29,851)
(1,017)
(3,395)
(77,031)
26,663
6,548
2,490
(3,750)
(399)
3,945
20,359
(2,530)
26,663
Notes
11
12
13a
13b
15
16
17
20
18
20
20
21
22
23
24
25
26
27
The accompanying notes are an integral part of these financial statements.
The financial statements of Topps Tiles Plc, registered number 3213782, on pages 80 to 83 were approved by the Board of Directors
and authorised for issue on 27 November 2018. They were signed on its behalf by:
MATTHEW WILLIAMS | DIRECTOR
ROB PARKER | DIRECTOR
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STRATEGIC REPORTOUR GOVERNANCEADDITIONAL INFORMATIONTOPPS TILES PLC ANNUAL REPORT AND ACCOUNTS FOR THE 52 WEEK PERIOD ENDED 29 SEPTEMBER 2018OUR FINANCIALS 82
Consolidated Statement of Changes in Equity
For the 52 weeks ended 29 September 2018
Balance at 2 October 2016
Profit and total comprehensive income
for the period
Issue of share capital
Dividends
Own shares purchased in the period
Own shares issued in the period
Debit to equity for equity-settled
share-based payments
Deferred tax on share-based
payment transactions
Balance at 30 September 2017
Profit and total comprehensive income
for the period
Issue of share capital
Dividends
Own shares issued in the period
Credit to equity for equity-settled
share-based payments
Deferred tax on share-based
payment transactions
Balance at 29 September 2018
Share
capital
£’000
Share
premium
£’000
Own
shares
£’000
Merger
reserve
£’000
Share-
based
payment
reserve
£’000
Capital
redemption
reserve
£’000
Accumu-
lated
losses
£’000
Total
equity
£’000
6,539
2,473
(4,411)
(399)
4,280
20,359
(11,296)
17,545
–
9
–
–
–
–
–
14
–
–
–
–
–
–
–
(8)
8
–
–
–
–
–
–
–
–
–-
–
–
–
(359)
–
–
–
–-
–
–
13,431
–
(6,924)
–
(8)
13,431
23
(6,924)
(8)
–
3
(356)
–
6,548
–
2,487
–
(4,411)
–
(399)
–
3,921
–
20,359
(158)
(4,952)
(158)
23,553
–
–
–
–
–
–
3
–
–
–
–
–
–
661
–
–
–
–
–
–
–
–
–
–
24
–
–
–
–
–
9,659
–
(6,566)
(661)
9,659
3
(6,566)
–
12
36
–
6,548
–
2,490
–
(3,750)
–
(399)
–-
3,945
–
20,359
(21)
(2,529)
(21)
26,663
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TOPPS TILES PLC ANNUAL REPORT AND ACCOUNTS FOR THE 52 WEEK PERIOD ENDED 29 SEPTEMBER 2018 Consolidated Cash Flow Statement
For the 52 weeks ended 29 September 2018
Cash flow from operating activities
Profit for the period
Taxation
Finance costs
Investment revenue
Group operating profit
Adjustments for:
Depreciation of property, plant and equipment
Amortisation of intangible assets
(Gain)/loss on disposal of property, plant and equipment
Impairment of property, plant and equipment
Decrease in fair value of investment properties
Share option charge/(credit)
(Increase)/decrease in trade and other receivables
Increase in inventories
Increase in payables
Cash generated by operations
Interest paid
Taxation paid
Net cash from operating activities
Investing activities
Interest received
Purchase of property, plant and equipment
Purchase of investment property
Proceeds on disposal of property, plant and equipment
Acquisition of subsidiary, net of cash acquired
Net cash used in investment activities
Financing activities
Dividends paid
Proceeds from issue of share capital
Drawdown of bank loans
Repayment of bank loans
Net cash used in financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
83
52 weeks
ended
29 September
2018
£’000
52 weeks
ended
30 September
2017
£’000
9,659
3,029
1,072
(25)
13,735
6,983
90
(421)
958
1,651
24
(2,241)
(652)
5,419
25,546
(1,109)
(2,543)
21,894
25
(5,052)
(2,884)
3,921
–
(3,990)
(6,566)
3
–
(5,000)
(11,563)
6,341
7,501
13,842
13,431
3,568
914
(24)
17,889
6,544
–
151
438
–
(359)
324
(3,587)
752
22,152
(1,985)
(5,015)
15,152
24
(10,160)
–
303
(1,137)
(10,970)
(6,924)
15
5,000
(5,000)
(6,909)
(2,727)
10,228
7,501
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STRATEGIC REPORTOUR GOVERNANCEADDITIONAL INFORMATIONTOPPS TILES PLC ANNUAL REPORT AND ACCOUNTS FOR THE 52 WEEK PERIOD ENDED 29 SEPTEMBER 2018OUR FINANCIALS 84
Notes to the Financial Statements
For the 52 weeks ended 29 September 2018
1 General Information
Topps Tiles Plc is a public company, limited by shares, incorporated in the United Kingdom under the Companies Act 2006. The address
of the registered office is given on page 45. The nature of the Group’s operations and its principal activity are set out in the Directors’
Report on page 50.
These financial statements are presented in pounds sterling because that is the currency of the primary economic environment in which the
Group operates.
Adoption of New and Revised Standards
In the current period, there were no new or revised standards and interpretations adopted that have a material impact on the financial
statements.
Standards Not Affecting the Reported Results nor the Financial Position
The following new and revised Standards and Interpretations have been adopted in the current year. Their adoption has not had any
significant impact on the amounts reported in these financial statements that may impact the accounting for future transactions and
arrangements.
Amendments to IAS 7 Statement of Cash Flows: Disclosure Initiative
Amendments to IAS 12 Income Taxes: Recognition of Deferred Tax Assets for Unrealised Losses
Amendments to IFRS 12 Disclosure of Interests in Other Entities: Clarification of the scope of disclosure requirements in IFRS 12 (Annual
Improvements to IFRSs: 2014–16 Cycles)
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 (and in some cases had not yet been adopted by the EU):
IFRS 9 Financial Instruments
IFRS 15 Revenue from Contracts with Customers
Clarifications to IFRS 15 (Apr 2016) – Clarifications to IFRS 15 Revenue from Contracts with Customers
IFRS 16 Leases
IFRIC 22 Foreign Currency Transactions and Advance Consideration
Amendments to IFRS 2 (Jun 2016) Classification and Measurement of Share-based Payment Transactions
Amendments to IFRS 4 (Sept 2016) Applying IFRS 9 Financial Instruments with IFRS 4 Insurance Contracts
Amendments to IAS 40 (Dec 2016) Transfers of Investment Property
Annual Improvements to IFRSs: 2014–16 Cycle (Dec 2016) – Annual Improvements to IFRSs: 2014–16 Cycle – IFRS 1 and IAS 28
Amendments
Annual Improvements to IFRSs: 2015–17 Cycle (Dec 2017) – Annual Improvements to IFRSs: 2015–17 Cycle – IFRS 3, IFRS 11, IAS 12
and IAS 23 Amendments
Amendments to IFRS 10 and IAS 28 (Sept 2014) Sale or Contribution of Assets between an Investor and its Associate or Joint Venture
IFRIC 23 Uncertainty over Income Tax Treatments
Amendments to IFRS 9 (Oct 2017) Prepayment Features with Negative Compensation
Amendments to IAS 28 (Oct 2017) Long-term Interests in Associates and Joint Ventures
IFRS 17 Insurance Contracts
Amendments to IAS 19 Plan Amendment, Curtailment or Settlement
Amendments to IFRS 3 – Clarification of definition of a business
Amendments to IAS 1 – Amendments regarding the definition of material
Amendments to IAS 8 – Amendments regarding the definition of material
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1 General Information continued
IFRS 9 “Financial Instruments” was issued in July 2014 to replace IAS 39 “Financial Instruments: Recognition and Measurement” and has
been endorsed by the EU. The standard is effective for accounting periods beginning on or after 1 January 2018 and will be adopted
by the Group in the period ended 28 September 2019. The standard is applicable to financial assets and financial liabilities, and covers
the classification, measurement, impairment and de-recognition of financial assets and financial liabilities. The standard also revises the
requirements for when hedge accounting can be applied and introduces a new impairment model for financial assets.
The Group has reviewed its financial assets and liabilities and does not expect the new guidance to affect their classification and measurement.
In addition, the Group does not account for derivatives under hedge accounting and therefore, the IFRS 9 requirements for hedge accounting
are not applicable. IFRS 9 introduces an expected credit loss model when calculating impairment losses on its trade and other receivables. This
will result in greater judgement due to the need to factor in forward looking information when estimating the appropriate amount of provisions.
In applying IFRS 9 the Group must consider the probability of a default occurring over the life of its trade receivables on initial recognition of
those assets.
The Group has completed an assessment of the impact of IFRS 9 and it is expected that adoption will not have a material impact on the
Consolidated Statement of Financial Performance or Consolidated Statement of Financial Position.
IFRS 15 “Revenue from Contracts with Customers” was issued in May 2014 and subsequent amendments, “Clarifications to IFRS 15”
were issued in April 2016; both have been endorsed by the EU. IFRS 15, as amended, is effective for accounting periods beginning
on or after 1 January 2018 and will be adopted by the Group in the period ended 28 September 2019. The standard establishes a
principles-based approach for revenue recognition and is based on the concept of recognising revenue for performance obligations only
when they are satisfied and the control of goods or services is transferred. In doing so, the standard applies a five-step approach to the
timing of revenue recognition and applies to all contracts with customers, except those in the scope of other standards.
The Group has completed its assessment of the impact of IFRS 15 and based on the nature of the Group’s revenue streams with the
recognition of revenue at the point of sale and the absence of significant judgement required in determining the timing of transfer of
control, the adoption of IFRS 15 will not have a material impact on the timing or nature of the Group’s revenue recognition.
Under IFRS 15, the Group should recognise revenue net of estimated returns, whereby it recognises revenue for the sold products, reduced
for estimated returns (with a corresponding refund liability) and an asset initially measured at the carrying amount of the inventory less costs
of recovery (with a corresponding adjustment to cost of sales). Estimates are already made of anticipated returns, however the adoption
of IFRS 15 will mean this amount is split into the amount relating to the sale of the returns and the associated cost of the goods being
returned. The impact of this will not impact the Group’s profit or net assets.
IFRS 16 “Leases” was issued in January 2016 to replace IAS 17 “Leases” and has been endorsed by the EU. The standard is effective for
accounting periods beginning on or after 1 January 2019 and will be adopted by the Group in the period ending 3 October 2020.
All of the Group’s operating leases, apart from those leases captured under the low value and short-term lease exemptions (note 28), will
be recognised on the Statement of Financial Position, which will give rise to the recognition of an asset representing the right to use the
leased item and an obligation for future lease payables. Lease costs will be recognised in the form of depreciation of the right to use asset
and interest on the lease liability, resulting in a higher interest expense in the earlier years of the lease term. The total expense recognised
in the Consolidated Statement of Financial Performance over the life of the lease will be unaffected by the new standard. However, IFRS
16 will result in the timing of lease expense recognition being accelerated for leases which would be currently accounted for as operating
leases. Rental costs, currently included in distribution and selling costs in the Consolidated Statement of Financial Performance, will be
replaced by interest and depreciation charges and therefore, IFRS 16 will impact the Group’s profit each period.
From the work performed to date it is anticipated that implementation of the new standard will have a significant impact on the reported
assets and liabilities of the Group. In addition, the implementation of the standard will impact the Consolidated Statement of Financial
Performance and classification of cash flows. Management have concluded that the most significant items that are currently classified as
operating leases that will be recognised in the financial statements in accordance with the new standard are the Group’s property leases.
Material judgements are required in identifying and accounting for leases. The most significant judgement areas are expected to be
around the determination of the lease term and discount rate. The lease term includes extension periods where it is reasonably certain that
a lease extension option will be exercised or that a lease termination option will not be exercised. The discount rate should best represent
the rate implicit in the lease or the incremental borrowing rate in order to determine the present value of future lease commitments.
The Group is continuing to assess the impact of the accounting changes on its existing lease portfolio of approximately 370 property
leases and other contracts and cannot yet reasonably quantify the impact.
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Notes to the Financial Statements
For the 52 weeks ended 29 September 2018
1 General Information continued
Work performed to date includes consideration of the transition approaches available under the accounting standard and collection of
relevant data from different areas of the business. The Group has invested in a new property management system to prepare for the adoption
of the new standard. The Group intends to apply the modified retrospective approach on transition and will not restate the comparative
information. Under this transition route, any difference between asset and liability is recognised in opening retained earnings at the transition
date. The lease liability is calculated using a discount rate at the date of transition, rather than at the lease commencement date.
Given the complexities of IFRS 16 and the material sensitivity to key assumptions, such as discount rates, it is not yet practicable to fully
quantify the effect of IFRS 16 on the financial statements of the Group. The Group will continue to monitor the practical interpretation
of the new leasing standard within the retail sector prior to full implementation.
The Directors anticipate that the adoption of the remaining standards and interpretations in future periods will have no material impact on
the financial statements of the Group.
2 Accounting Policies
The principal accounting policies adopted are set out below.
A) Basis of Accounting
The financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRSs”). The financial
statements have also been prepared in accordance with IFRSs 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 derivative financial instruments and investment property. Historical cost is generally based on the fair
value of the consideration given in exchange for goods and services.
B) Going Concern
When considering the going concern assertion, the Board reviews several factors including a detailed review of the above risks and
uncertainties, the Group’s forecast covenant and cash headroom against lending facilities, and management’s current expectations. Further
details of the assumptions, sensitivities and procedures performed are given in the Strategic Report. As a result of this review, the Board
believes that the Group will continue to meet all of its financial commitments as they fall due and will be able to continue as a going
concern. Therefore, the Board considers it appropriate to prepare the financial statements on the going concern basis.
C) Business Combinations
Acquisition of subsidiaries and businesses are accounted for using the acquisition method. The consideration transferred in a business
combination is measured at fair value, which is calculated as the sum of the acquisition-on date fair values of assets transferred by the
Group, liabilities incurred by the Group to the former owners of the acquisition and the equity interest issued by the Group in exchange
for control of the acquisition. Acquisition-related costs are recognised in the profit or loss as incurred.
At the acquisition date, the identifiable assets acquired and the liabilities assumed are recognised at their fair value, except that:
• deferred tax assets or liabilities and assets or liabilities related to employee benefit arrangements are recognised and measured in
accordance with IAS 12 Income Taxes and IAS 19 Employee Benefits respectively; and
• assets that are classified as held for sale in accordance with IFRS 5 Non-current Assets Held for Sale and Discontinued Operations
are measured in accordance with that Standard.
Contingent consideration is recognised at fair value at the date of acquisition. Subsequent changes in contingent consideration which has
been classified as an asset or liability which does not result from a measurement period adjustment is accounted for in accordance with
IAS 39 where the asset or liability is a financial instrument, and in accordance with IAS 37 in all other cases.
D) Basis of Consolidation
The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company (its
subsidiaries). Control is achieved where the Company has the power to govern the financial and operating policies of an investee entity
so as to obtain benefits from its activities.
The results of subsidiaries acquired or disposed of during the period are included in the Consolidated Statement of Financial Performance
from the effective date of acquisition or up to the effective date of disposal, as appropriate. Where necessary, adjustments are made
to the financial statements of subsidiaries to bring the accounting policies used into line with those used by the Group. All intra-group
transactions, balances, income and expenses are eliminated on consolidation.
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2 Accounting Policies continued
E) 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 Business Review, references to 2018 mean “at 29 September 2018” or the
52 weeks then ended; references to 2017 mean “at 30 September 2017” or the 52 weeks then ended.
F) Goodwill
Goodwill arising in a business combination is recognised as an asset at the date that control is acquired (the acquisition date). Goodwill
is measured as the excess of the sum of the consideration transferred, the amount of any non-controlling interest in the acquiree and the
fair value of the acquirer’s previously held equity interest (if any) in the entity over the net of the acquisition-date amounts of the identifiable
assets acquired and the liabilities assumed.
If, after reassessment, the Group’s interest in the fair value of the acquiree’s identifiable net assets exceeds the sum of the consideration
transferred, the amount of any non-controlling interest in the acquiree and the fair value of the acquirer’s previously held equity interest in
the acquiree (if any), the excess is recognised immediately in profit or loss as a bargain purchase gain.
Goodwill is not amortised but is reviewed for impairment at least annually. For the purpose of impairment testing, goodwill is allocated
to each of the Group’s cash-generating units expected to benefit from the synergies of the combination. Cash-generating units to which
goodwill has been allocated are tested for impairment annually, or more frequently when there is an indication that the unit may be
impaired. If the recoverable amount of the cash-generating unit is less than the carrying amount of the unit, the impairment loss is allocated
first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro rata on the basis of the
carrying amount of each asset in the unit. An impairment loss recognised for goodwill is not reversed in a subsequent period.
On disposal of a subsidiary, the attributable amount of goodwill is included in the determination of the profit or loss on disposal.
Goodwill arising on acquisitions before the date of transition to IFRSs has been retained at the previous UK GAAP amounts subject to
being tested for impairment at that date. Goodwill of £15,080,000 written off to reserves under UK GAAP prior to 1998 has not
been reinstated and will not be included in determining any subsequent profit or loss on disposal.
G) Revenue Recognition
Revenue is measured at the fair value of the consideration received or receivable and represents amounts receivable for goods in the
normal course of business, net of discounts, VAT and other sales-related taxes.
Revenue from the sale of goods is recognised on the collection or delivery of goods, when all the following conditions are satisfied:
•
•
•
•
•
the Group has transferred to the buyer the significant risks and rewards of ownership of the goods, being the date goods are collected
from store or received by the customers;
the Group retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over
the goods sold;
the amount of revenue can be measured reliably;
it is probable that the economic benefits associated with the transaction will flow to the entity; and
the costs incurred or to be incurred in respect of the transaction can be measured reliably.
The level of sales returns is closely monitored by management and management’s best estimate is provided for.
Sales of goods that result in award credits for customers, under the Company’s Trader Loyalty Scheme, are accounted for as multiple element
revenue transactions and the fair value of the consideration received or receivable is allocated between the goods supplied and the award
credits granted. The consideration allocated to the award credits is measured by reference to their fair value being the amount for which the
award credits should be sold separately. Such consideration is not recognised as revenue at the time of the initial sale transaction, but
is deferred and recognised as revenue when the award credits are redeemed and the Company’s obligations have been fulfilled.
Interest income is recognised when it is probable that the economic benefits will flow to the Group and the amount of income can be
measured reliably. 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 on initial recognition.
H) Intangible Assets Acquired in a Business Combination
Intangible assets acquired in a business combination and recognised separately from goodwill are initially recognised at the fair value
at the acquisition date (which is regarded as their cost).
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STRATEGIC REPORTOUR GOVERNANCEADDITIONAL INFORMATIONTOPPS TILES PLC ANNUAL REPORT AND ACCOUNTS FOR THE 52 WEEK PERIOD ENDED 29 SEPTEMBER 2018OUR FINANCIALS 88
Notes to the Financial Statements
For the 52 weeks ended 29 September 2018
2 Accounting Policies continued
Subsequent to initial recognition, intangible assets acquired in a business combination are reported at costs less accumulated amortisation.
Separately identifiable intangible assets are amortised over their useful economic lives which are disclosed in note 12.
I) Property, Plant and Equipment
Property, plant and equipment is 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 over the period of the lease, up to 50 years on a straight-line basis
Fixtures and fittings
2% per annum on cost on a straight-line basis
over ten years, except for the following: four years for computer equipment or five years for
display stands, as appropriate
25% per annum on a reducing balance basis
Motor vehicles
Freehold land is not depreciated.
Residual value is calculated on prices prevailing at the date of acquisition.
The gain or loss arising on the disposal or retirement of an asset is determined as the difference between the sales proceeds and the
carrying amount of the asset and is recognised in the statement of financial performance.
J) Impairment of Tangible and Intangible Assets
At each period end, the Group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any
indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated
in order to determine the extent of the impairment loss (if any). Where the asset does not generate cash flows that are independent from
other assets, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future post-tax
cash flows are discounted to their present value using a post-tax discount rate that reflects current market assessments of the time value of
money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the
asset (cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised as an expense immediately, unless the
relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.
Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating unit) is increased to the revised
estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been
determined had no impairment loss been recognised for the asset (cash-generating unit) in prior years. A reversal of an impairment loss is
recognised as income immediately, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment
loss is treated as a revaluation increase.
K) Inventories
Inventories are stated at the lower of cost and net realisable value and relate solely to finished goods for resale, net of supplier rebates. Cost
comprises the average 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 represents the estimated selling price, less costs to be incurred in marketing, selling
and distribution. Provision is made for those items of inventory where the net realisable value is estimated to be lower than cost. The net
replacement value of inventories is not considered materially different from that stated in the Consolidated Statement of Financial Position.
L) 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 period. Taxable profit differs from net profit as reported in the statement
of financial performance because it excludes items of income or expense that are taxable or deductible in other periods 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.
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2 Accounting Policies continued
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, 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 based
on tax laws and rates that have been enacted at the balance sheet date. Deferred tax is charged or credited in the statement of financial
performance, 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.
M) Foreign Currency
The individual financial statements of each Group company are presented in pounds sterling (its functional currency). For the purpose of the
consolidated financial statements, the results and financial position of each Group company are expressed in pounds sterling, which is the
functional currency of the Company, and the presentational currency for the consolidated financial statements.
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 statement
of financial performance for the period.
Exchange differences arising on the retranslation of non-monetary items carried at fair value are included in the statement of financial
performance for the period.
Exchange differences are recognised in profit or loss in the period in which they arise except for exchange differences on transactions
entered into to hedge certain foreign currency risks (see below under financial instruments).
N) Leases
Rentals payable under operating leases are charged to income on a straight-line basis over the term of the relevant lease even where
payments are not made on such a basis, except where another more systematic basis is more representative of the time pattern in which
economic benefits from the lease asset are consumed or a provision has been made for an onerous lease. Contingent rentals arising under
operating leases are recognised as an expense in the period in which they are incurred.
In the event that lease incentives are received to enter into operating leases, such incentives are recognised as a liability. The aggregate
benefit of incentives is recognised as a reduction of rental expense on a straight-line basis, except where another systematic basis is more
representative of the time pattern in which economic benefits from the leased asset are consumed.
The Group provides for the unavoidable costs prior to lease termination or sub-lease relating to onerous leases. Dilapidation costs are
provided for against all leasehold properties across the entire estate.
O) Retirement Benefit Costs
For defined contribution schemes, the amount charged to the statement of financial performance in respect of pension costs is the
contributions payable in the period. Differences between contributions payable in the period and contributions actually paid are shown
as either accruals or prepayments in the statement of financial position.
P) Finance Costs
Finance costs of debt are recognised in the statement of financial performance over the term of the debt at a constant rate on the
carrying amount.
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STRATEGIC REPORTOUR GOVERNANCEADDITIONAL INFORMATIONTOPPS TILES PLC ANNUAL REPORT AND ACCOUNTS FOR THE 52 WEEK PERIOD ENDED 29 SEPTEMBER 2018OUR FINANCIALS 90
Notes to the Financial Statements
For the 52 weeks ended 29 September 2018
2 Accounting Policies continued
Q) Financial Instruments
Financial assets and financial liabilities are recognised in the Group’s statement of financial position when the Group becomes a party to
the contractual provisions of the instrument.
All financial assets are recognised and derecognised on a trade date where the purchase or sale of a financial asset is under a contract
whose terms require delivery of the financial asset within the timeframe established by the market concerned, and are initially measured
at fair value plus transaction costs, except for those financial assets classified as at fair value through profit or loss, which are initially
measured at fair value.
Financial assets are classified into the following specified categories: financial assets “at fair value through profit or loss” (FVTPL), “held-to-
maturity” investments, “available-for-sale” (AFS) financial assets and “loans and receivables”. The classification depends on the nature and
purpose of the financial assets and is determined at the time of initial recognition.
Financial Assets at FVTPL
Financial assets are classified as at FVTPL where the financial asset is either held for trading or is designated as at FVTPL. A financial asset
is classified as held for trading if:
•
•
it has been acquired principally for the purpose of selling in the near future; or
it is a part of an identified portfolio of financial instruments that the Group manages together and has a recent actual pattern of short-
term profit-taking; or
•
it is a derivative that is not designated and effective as a hedging instrument.
Financial assets at FVTPL are stated at fair value, with any resultant gain or loss recognised in profit or loss. The Directors use their
judgement in selecting an appropriate valuation technique for financial instruments not quoted in an active market. Valuation techniques
commonly used by market practitioners are applied, such as discounted cash flows and assumptions regarding market volatility.
Loans and Receivables
Trade receivables, loans, and other receivables that have fixed or determinable payments that are not quoted in an active market are
classified as loans and receivables. Loans and receivables are measured at amortised cost using the effective interest method, less any
impairment. Interest income is recognised by applying the effective interest rate, except for short-term receivables when the recognition
of interest would be immaterial.
Effective Interest Method
The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating interest income over the
relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees on points paid
or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected
life of the debt instrument, or, where appropriate, a shorter period, to the net carrying amount on initial recognition.
Income is recognised on an effective interest basis for debt instruments other than those financial assets and liabilities classified as at FVTPL.
Impairment of Financial Assets
Financial assets, other than those at FVTPL, are assessed for indicators of impairment at each statement of financial position date. Financial
assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the
financial asset, the estimated future cash flows of the investment have been impacted.
For certain categories of financial asset, such as trade receivables, assets that are assessed not to be impaired individually are
subsequently assessed for impairment on a collective basis. Objective evidence of impairment for a portfolio of receivables could include
the Group’s past experience of collecting payments, an increase in the number of delayed payments in the portfolio past the average
credit period, as well as observable changes in national or local economic conditions that correlate with default on receivables.
For financial assets carried at amortised cost, the amount of the impairment is the difference between the asset’s carrying amount and the
present value of estimated future cash flows, discounted at the financial asset’s original effective interest rate.
The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade
receivables, where the carrying amount is reduced through the use of an allowance account. When a trade receivable is considered
uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against
the allowance account. Changes in the carrying amount of the allowance account are recognised in profit or loss.
If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring
after the impairment was recognised, the previously recognised impairment loss is reversed through profit or loss to the extent that the
carrying amount of the investment at the date the impairment is reversed does not exceed what the amortised cost would have been had
the impairment not been recognised.
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2 Accounting Policies continued
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 within three months and are subject to an insignificant risk of changes in value.
Derecognition of Financial Assets
The Group derecognises a financial asset only when the contractual rights to the cash flows from the asset expire; or it transfers the
financial asset and substantially all the risks and rewards of ownership of the asset to another entity. If the Group neither transfers nor
retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Group recognises its retained
interest in the asset and an associated liability for amounts it may have to pay. If the Group retains substantially all the risks and rewards
of ownership of a transferred financial asset, the Group continues to recognise the financial asset and also recognises a collateralised
borrowing for the proceeds received.
Financial Liabilities and Equity Instruments
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 its liabilities. Equity instruments
issued by the Group are recorded at the proceeds received, net of direct issue costs.
Financial liabilities are classified as at FVTPL where the financial liability is either held for trading or is designated as at FVTPL. The Group
does not have any designated FVTPL liabilities.
A financial liability is classified as held for trading if:
•
•
it has been incurred principally for the purpose of disposal in the near future; or
it is a part of an identified portfolio of financial instruments that the Group manages together and has a recent actual pattern of short-
term profit-taking; or
•
it is a derivative that is not designated and effective as a hedging instrument.
Financial liabilities at FVTPL are stated at fair value, with any resultant gain or loss recognised in profit or loss.
Other Financial Liabilities
Other financial liabilities, including borrowings, are initially measured at fair value, net of transaction costs. Other financial liabilities are
subsequently measured at amortised cost using the effective interest method, with interest expense recognised on an effective yield basis.
The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the
relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the
financial liability, or, where appropriate, a shorter period, to the net carrying amount on initial recognition.
Derecognition of Financial Liabilities
The Group derecognises financial liabilities when, and only when, the Group’s obligations are discharged, cancelled or they expire.
Derivative Financial Instruments
The Group’s activities expose it to the financial risks of changes in foreign currency exchange rates.
The Group uses foreign exchange forward contracts to manage its foreign currency risk. 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.
Derivatives are initially recognised at fair value at the date a derivative contract is entered into and are subsequently remeasured to their
fair value at each period end date. The resulting gain or loss is recognised in profit or loss immediately.
A derivative is presented as a non-current asset or a non-current liability if the remaining maturity of the instrument is more than 12 months
and it is not expected to be realised or settled within 12 months. Other derivatives are presented as current assets or current liabilities.
R) Share-based Payments
The Group has applied the requirements of IFRS 2 Share-based Payments. In accordance with the transitional provisions, IFRS 2 has been
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 (excluding the effect of non-market-based vesting conditions) 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.
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STRATEGIC REPORTOUR GOVERNANCEADDITIONAL INFORMATIONTOPPS TILES PLC ANNUAL REPORT AND ACCOUNTS FOR THE 52 WEEK PERIOD ENDED 29 SEPTEMBER 2018OUR FINANCIALS 92
Notes to the Financial Statements
For the 52 weeks ended 29 September 2018
2 Accounting Policies continued
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 its Sharesave 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) Trade Payables
Trade payables are initially measured at fair value and are subsequently measured at amortised cost, using the effective interest rate
method.
T) Operating Profit
Operating profit is stated after charging/(crediting) restructuring costs but before investment income and finance costs.
U) Provisions
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, and it is probable
that the Group will be required to settle that obligation and a reliable estimate can be made of the amount of 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.
V) Supplier Income
Amounts receivable from suppliers are initially held on the balance sheet within the cost of inventory and recognised within the income
statement once the contractual terms of the supplier agreements are met and the corresponding inventory has been sold.
Volume rebates and price discounts are recognised in the income statement as a reduction in cost of sales, in line with the recognition
of the sale of a product.
W) Investment Properties
Investment properties are measured initially at cost, including transaction costs. Subsequent to initial recognition, investment properties
are stated at fair value, which reflects market conditions at the reporting date. Gains or losses arising from changes in the fair values of
investment properties are included in profit or loss in the period in which they arise, including the corresponding tax effect. Investment
properties are not depreciated.
The Group obtains independent valuations for its investment properties, and at the end of the reporting period, the fair value of each
property is updated, taking into account the most recent independent valuation. The best evidence of fair value is current prices in an
active market for similar properties. Where such information is not available, the Directors consider information for properties of a different
nature or recent prices of similar properties in less active markets, adjusted to reflect those differences.
Investment properties are derecognised either when they have been disposed of or when they are permanently withdrawn from use and
no future economic benefit is expected from their disposal. The difference between the net disposal proceeds and the carrying amount
of the asset is recognised in profit or loss in the period of de-recognition.
Transfers are made to (or from) investment property only when there is a change in use. For a transfer from investment property to owner-
occupied property, the deemed cost for subsequent accounting is the fair value at the date of change in use. If owner-occupied property
becomes an investment property, the Group accounts for such property in accordance with the policy stated under property, plant and
equipment up to the date of change in use.
The Group has no restrictions on the realisability of its investment properties and no contractual obligations to purchase, construct or
develop investment properties or for repairs, maintenance and enhancements.
X) Critical Accounting Judgements and Key Sources of Estimation Uncertainty
In the application of the Group’s accounting policies, which are described above, the Directors are required to make judgements,
estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The
estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual
results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the
period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the
revision affects both current and future periods.
The Directors have concluded that there are no critical areas of accounting judgement in the application of the Group’s accounting policies
in the current period.
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TOPPS TILES PLC ANNUAL REPORT AND ACCOUNTS FOR THE 52 WEEK PERIOD ENDED 29 SEPTEMBER 2018 93
2 Accounting Policies continued
Key Sources of Estimation Uncertainty
The key assumptions concerning the future, and other key sources of estimation uncertainty at the period end date, that have a significant
risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial period, are discussed below:
Onerous Lease Provision and Loss-making Stores/Store Impairment
During the period, the Group has continued to review the performance of its store portfolio, which has resulted in six further stores being
exited before its lease terms had expired (2017: one store). In respect of the leases in relation to stores exited before lease end dates
in prior periods that are still vacant, the Group has provided for what it considers to be the unavoidable costs prior to lease termination
or sub-lease. The Group has further reviewed any trading loss-making stores and provided for those leases considered to be onerous,
and have considered whether the net book value of the assets in relation to those stores are impaired. The key estimates involved relate
to the forecast future cash flows of the stores identified as potentially loss-making. These estimates are based upon available information
and knowledge of the property market and retail market. Given the commercial sensitivity in relation to potentially loss-making stores a
sensitivity of this estimation has not been provided. However, it is reasonably possible, based on existing knowledge, that outcomes within
the next financial year that are different from assumptions could require a material adjustment to the carrying amount of the related tangible
fixed assets (note 13a) or the onerous lease provision (note 20).
Dilapidations Provision
The Group has estimated its likely dilapidation charges for its store portfolio and provided accordingly. The key estimate involves an
assessment of the expected exit period for the current portfolio, and is based on management’s best estimate, taking into account
knowledge of the property market and historical trends. The ultimate costs to be incurred may vary from the estimates. A decrease or
increase in the average expected exit period of three years would have a material impact on the provision.
3 Revenue
An analysis of Group revenue is as follows:
Revenue from the sale of goods
Total revenue
52 weeks
ended
29 September
2018
£’000
52 weeks
ended
30 September
2017
£’000
216,887
216,887
211,848
211,848
Investment revenue represents bank interest receivable. There are no other gains recognised in respect of loans and receivables.
The Group has one reportable segment in accordance with IFRS 8 Operating Segments, which is the Topps Tiles stores and online
business segment. The Group’s Board is considered the chief operating decision-maker. The Board receives monthly financial information
at this level and uses this information to monitor the performance of the Topps Tiles stores and online business segment, allocate resources
and make operational decisions. Internal reporting focuses on the Group as a whole and does not identify any further individual segments.
All revenue is derived from sales in the UK and is from one class of business.
4 Acquisition of Subsidiaries
The Group acquired 100% of the issued share capital of Parkside Ceramics Limited on 31 August 2017. The acquisition of Parkside
Ceramics Limited gives the Group greater coverage in the commercial tile market and allows the Group to utilise economies of scale to
create additional value and further synergies.
The Group performed a purchase price allocation exercise on Parkside Ceramics Limited to restate assets and liabilities at their fair value.
Intangible assets were recognised in relation to the Parkside Ceramics brand and customer relationships.
In line with IFRS 3, the Group made hindsight adjustments of £365,000 in the current period, in relation to onerous lease and
dilapidation provisions (see note 20), with a corresponding increase in the value of goodwill (see note 11).
The contingent consideration was estimated based on performance conditions in place for Parkside Ceramics Limited over the 12 months
post acquisition. During the year, Parkside Ceramics Limited did not meet the performance conditions and therefore, the contingent
consideration was not paid. The release of this contingent consideration is included within administrative expenses and the Parkside
loss within adjusted items. The amount is shown within the movements in payables within the reconciliation of operating profit to cash
generated from operations within the cash flow statement.
The Group incurred £169,000 of costs in relation to acquisition activity during the year of acquisition.
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STRATEGIC REPORTOUR GOVERNANCEADDITIONAL INFORMATIONTOPPS TILES PLC ANNUAL REPORT AND ACCOUNTS FOR THE 52 WEEK PERIOD ENDED 29 SEPTEMBER 2018OUR FINANCIALS 94
Notes to the Financial Statements
For the 52 weeks ended 29 September 2018
4 Acquisition of Subsidiaries continued
The fair value of the net assets acquired and liabilities assumed at the acquisition date were:
Property, plant and equipment
Inventories
Trade and other receivables
Trade and other payables
Other financial liabilities
Corporation tax
Deferred tax
Cash and cash equivalents
Brand valuation
Customer relationships valuation
Provisions
Fair value of assets acquired
Cash consideration
Contingent consideration*
Total consideration
Goodwill
Restated
Fair value
of net assets
required
£’000
45
248
117
(347)
(12)
11
(35)
128
229
200
(365)
219
1,265
170
1,435
1,216
* Contingent consideration was valued at fair value based on forecast attainment of performance conditions associated with the payment of the contingent consideration.
The above table has been restated to reflect the IFRS 3 hindsight adjustments.
The net cash outflow in the cash flow statement in the year of acquisition was as follows:
Cash consideration
Cash acquired
Net cash outflow in the cash flow statement
Since the date of control, the following amounts have been included within the Group’s financial statements for the prior period:
Revenue
Loss before tax
£’000
1,265
(128)
1,137
£’000
124
38
Had the acquisition been included from the start of the prior period, £2,238,000 of revenue and £172,000 of loss before tax would
have been included in the Group’s financial statements in the prior period.
There were no contingent liabilities acquired as a result of the above transaction.
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TOPPS TILES PLC ANNUAL REPORT AND ACCOUNTS FOR THE 52 WEEK PERIOD ENDED 29 SEPTEMBER 2018 95
52 weeks
ended
29 September
2018
£’000
52 weeks
ended
30 September
2017
£’000
6,983
958
(421)
1,651
(723)
54,909
25,489
3,031
81,433
6,544
438
151
–
349
50,548
24,762
3,177
79,296
52 weeks
ended
29 September
2018
£’000
Restated
52 weeks
ended
30 September
2017
£’000
40
90
130
30
30
160
46
67
113
30
30
143
5 Profit Before Taxation
Profit before taxation for the period has been arrived at after charging/(crediting):
Depreciation of property, plant and equipment
Impairment of property, plant and equipment
(Gain)/loss on disposal of property, plant and equipment
Decrease in fair value of investment properties recognised as an expense
Property-related provisions (credited)/charged
Staff costs (see note 6)
Operating lease rentals
Write-down of inventories recognised as an expense
Cost of inventories recognised as an expense
During the year the business disposed of four freehold properties (2017: one freehold property disposal).
Analysis of the auditor’s remuneration is provided below:
Fees payable to the Company’s auditor with respect to the Company’s annual accounts
Fees payable to the Company’s auditor and their associates for other audit services to the Group:
Audit of the Company’s subsidiaries pursuant to legislation
Total audit fees
Audit-related assurance services
Total non-audit fees
Total fees payable to the Company’s auditor
Audit-related assurance services relate to the fee payable for the interim review performed.
The 2017 fee split has been restated to reflect the correct allocation of fee for the interim review performed. The total fees payable to the
Company’s auditor has not changed.
A description of the work of the Audit Committee is set out on page 48 and includes an explanation of how auditor objectivity and
independence is safeguarded when non-audit services are provided by the auditor.
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STRATEGIC REPORTOUR GOVERNANCEADDITIONAL INFORMATIONTOPPS TILES PLC ANNUAL REPORT AND ACCOUNTS FOR THE 52 WEEK PERIOD ENDED 29 SEPTEMBER 2018OUR FINANCIALS 96
Notes to the Financial Statements
For the 52 weeks ended 29 September 2018
6 Staff Costs
The average monthly number of persons employed by the Group in the UK during the accounting period (including Executive Directors) was:
Selling
Administration
52 weeks
ended
29 September
2018
Number
employed
Restated
52 weeks
ended
30 September
2017
Number
employed
1,900
214
2,114
1,837
201
2,038
The 2017 average monthly number of persons employed by the Group has been restated to reflect the correct comparative position.
The average monthly number of persons (full-time equivalents) employed by the Group in the UK during the accounting period (including
Executive Directors) was:
Selling
Administration
Their aggregate remuneration comprised:
Wages and salaries (including LTIP, see note 29)
Social security costs
Other pension costs (see note 28b)
52 weeks
ended
29 September
2018
Number
employed
52 weeks
ended
30 September
2017
Number
employed
1,792
208
2,000
2018
£’000
49,782
4,209
918
54,909
1,734
195
1,929
2017
£’000
45,967
3,719
862
50,548
Details of Directors’ emoluments are disclosed on pages 63 to 71. The Group considers key management to be the Directors only.
Employee profit sharing of £6.3 million (2017: £5.0 million) is included in the above and comprises sales commission and bonuses.
7 Investment Revenue and Finance Costs
Investment revenue
Bank interest receivable
Finance costs
Interest on bank loans and overdrafts
Other interest
52 weeks
ended
29 September
2018
£’000
52 weeks
ended
30 September
2017
£’000
25
25
(1,028)
(44)
(1,072)
24
24
(868)
(46)
(914)
No finance costs have been capitalised in the period, or the prior period.
Interest on bank loans and overdrafts represents gains and losses on financial liabilities measured at amortised cost. There are no other
gains or losses recognised in respect of financial liabilities measured at amortised cost.
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TOPPS TILES PLC ANNUAL REPORT AND ACCOUNTS FOR THE 52 WEEK PERIOD ENDED 29 SEPTEMBER 2018 8 Taxation
Current tax – charge for the period
Current tax – adjustment in respect of previous periods
Deferred tax – (credit)/charge for the period (note 20)
Deferred tax – adjustment in respect of previous periods (note 20)
97
52 weeks
ended
29 September
2018
£’000
52 weeks
ended
30 September
2017
£’000
3,115
(11)
(94)
19
3,029
3,504
(104)
125
43
3,568
The charge for the period can be reconciled to the profit per the statement of financial performance as follows:
Continuing operations:
Profit before taxation
Tax at the UK corporation tax rate of 19.0% (2017: 19.5%)
Expenses that are not deductible in determining taxable profit
Chargeable gains
Difference between IFRS 2 and corporation tax relief
Reduction in UK corporation tax rate
Non-taxable income relating to goodwill revaluation
Tangible fixed assets which do not qualify for capital allowances
Adjustment in respect of prior periods
Tax expense for the period
52 weeks
ended
29 September
2018
£’000
52 weeks
ended
30 September
2017
£’000
12,688
2,411
55
77
48
21
(22)
431
8
3,029
16,999
3,315
57
–
67
8
–
182
(61)
3,568
In the period, the Group has recognised a corporation tax credit directly to equity of £11,899 (2017: £3,254) and a deferred tax debit
to equity of £21,184 (2017: £157,921) in relation to the Group’s share option schemes.
9 Dividends
Amounts recognised as distributions to equity holders in the period:
Final dividend for the period ended 30 September 2017 of £0.023 (2016: £0.023) per share
Interim dividend for the period ended 29 September 2018 of £0.011 (2017: £0.011) per share
Proposed final dividend for the period ended 29 September 2018 of £0.023 (2017: £0.023) per share
52 weeks
ended
29 September
2018
£’000
4,439
2,127
6,566
4,447
52 weeks
ended
30 September
2017
£’000
4,808
2,116
6,924
4,425
The proposed final dividend for the period ended 29 September 2018 is subject to approval by shareholders at the Annual General
Meeting and has not been included as a liability in these financial statements.
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STRATEGIC REPORTOUR GOVERNANCEADDITIONAL INFORMATIONTOPPS TILES PLC ANNUAL REPORT AND ACCOUNTS FOR THE 52 WEEK PERIOD ENDED 29 SEPTEMBER 2018OUR FINANCIALS 98
Notes to the Financial Statements
For the 52 weeks ended 29 September 2018
10 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.
Weighted average number of issued shares for basic earnings per share
Weighted average impact of treasury shares for basic earnings per share
Total weighted average number of shares for basic earnings per share
Weighted average number of shares under option
For diluted earnings per share
52 weeks
ended
29 September
2018
52 weeks
ended
30 September
2017
196,439,403 196,367,310
(4,038,495)
193,147,087 192,328,815
3,487,211
195,893,384 195,816,026
(3,292,316)
2,746,297
The calculation of the basic and diluted earnings per share used the denominators as shown above for both basic and diluted earnings
per share.
11 Goodwill
Cost
At 2 October 2016
Acquisition of Parkside Ceramics Limited (note 4)
IFRS 3 hindsight adjustment (note 4)
At 30 September 2017 (restated)
At 29 September 2018
Accumulated impairment losses
At 2 October 2016
Impairment losses in the period
At 30 September 2017
Impairment losses in the period
At 29 September 2018
Carrying amount
At 29 September 2018
At 30 September 2017 (restated)
Restated
£’000
245
851
365
1,461
1,461
–
–
–
–
–
1,461
1,461
The balance of goodwill remaining is the carrying value that arose on the acquisition of Surface Coatings Limited in 1998 and Parkside
Ceramics Limited in 2017. The balance relates to two (2017: two) Cash Generating Units (CGUs). Goodwill of £245,000 (Surface
Coatings Limited) relates to one CGU, with the balance of £1,216,000 (Parkside Ceramics Limited) relating to another CGU.
In line with IFRS 3, the Group made hindsight adjustments of £365,000 in the current period, in relation to onerous lease and
dilapidation provisions, with a corresponding increase in the value of goodwill, and as such prior year goodwill has been restated.
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 Group’s 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. Discounted cash
flows are calculated using a pre-tax rate of 14.3% (2017: 13.2%).
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 years. The growth rate applied does not exceed the average long-term growth rate for the relevant
markets. There are no reasonable changes that would result in the carrying value of goodwill being reduced to its recoverable amount.
No impairment has been identified in the current period as a result of the annual test for impairment.
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TOPPS TILES PLC ANNUAL REPORT AND ACCOUNTS FOR THE 52 WEEK PERIOD ENDED 29 SEPTEMBER 2018 99
Brand
£’000
Customer
relationships
£’000
–
229
229
–
229
–
–
–
23
23
206
229
–
200
200
–
200
–
–
–
67
67
133
200
Total
£’000
–
429
429
–
429
–
–
–
90
90
339
429
12 Intangible Assets
Cost
At 2 October 2016
Additions
At 30 September 2017
Additions
At 29 September 2018
Accumulated amortisation and impairment
At 2 October 2016
Amortisation charge for the period
At 30 September 2017
Amortisation charge for the period
At 29 September 2018
Carrying amount
At 29 September 2018
At 30 September 2017
The intangible assets additions occurred on the acquisition of Parkside Ceramics Limited on 31 August 2017.
The brand is amortised over its estimated useful life of 10 years, and customer relationships are amortised over their estimated useful lives
of three years. Amortisation is included within administrative costs within the Consolidated Statement of Financial Performance.
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STRATEGIC REPORTOUR GOVERNANCEADDITIONAL INFORMATIONTOPPS TILES PLC ANNUAL REPORT AND ACCOUNTS FOR THE 52 WEEK PERIOD ENDED 29 SEPTEMBER 2018OUR FINANCIALS 100
Notes to the Financial Statements
For the 52 weeks ended 29 September 2018
13a Property, Plant and Equipment
Land and buildings
Cost
At 2 October 2016
Additions
Disposals
Reclassification of assets*
Acquisition of subsidiary undertakings
At 30 September 2017
Additions
Disposals
At 29 September 2018
Accumulated depreciation
At 2 October 2016
Charge for the period
Provision for impairment
Eliminated on disposals
Reclassification of assets*
At 30 September 2017
Charge for the period
Provision for impairment
Eliminated on disposals
At 29 September 2018
Carrying amount
At 29 September 2018
At 30 September 2017
Short
leasehold
£’000
Fixtures and
fittings
£’000
Motor
vehicles
£’000
Freehold
£’000
18,560
801
(231)
(142)
–
18,988
–
(3,481)
15,507
2,335
293
–
(86)
(6)
2,536
267
–
(251)
2,552
2,047
88
–-
(686)
–
1,449
160
(5)
1,604
1,697
53
–
–
(680)
1,070
62
–
(2)
1,130
82,029
9,225
(413)
779
31
91,651
4,892
(1,416)
95,127
46,989
6,188
438
(104)
671
54,182
6,644
958
(1,165)
60,619
12,955
16,452
474
379
34,508
37,469
Total
£’000
102,699
10,114
(644)
–
45
112,214
5,052
(4,953)
112,313
51,080
6,544
438
(190)
–
57,872
6,983
958
(1,453)
64,360
47,953
54,342
63
–
–
49
14
126
–
(51)
75
59
10
–
–
15
84
10
–
(35)
59
16
42
* During the prior period the Group undertook an asset reclassification exercise to reclassify some assets between asset categories.
Freehold land and buildings includes £4,104,000 of freehold land (2017: £4,104,000) on which no depreciation has been charged
in the current period. There is no material difference between the carrying and market values.
Cumulative finance costs capitalised in the cost of tangible fixed assets amount to £nil (2017: £nil). Contractual commitments for the
acquisition of property, plant and equipment are detailed in note 28.
During the period, the Group has continued to review the performance of its store portfolio and as the fixtures and fittings within these
stores cannot be reused in other locations, the Group has provided for the net book value of the assets in relation to the 11 stores
(2017: six) that are impaired. The carrying value of these assets has been fully provided for in the period, with the associated
impairment of £958,000 (2017: £438,000) included within other operating expenses.
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TOPPS TILES PLC ANNUAL REPORT AND ACCOUNTS FOR THE 52 WEEK PERIOD ENDED 29 SEPTEMBER 2018 13b Investment Properties
At fair value
At 2 October 2016
Additions
At 30 September 2017
Additions
Fair value adjustment
At 29 September 2018
101
£’000
–
–
–
2,884
(1,651)
1,233
Investment properties relate to one freehold office building that is not occupied by the Group. The property was purchased to allow
the Group to exit an onerous lease. The investment property is carried at fair value, and a fair value loss of £1,651,000 (2017: £nil)
was recognised in the Consolidated Statement of Financial Performance in the period.
Since acquisition, the investment property has remained vacant, and as such there are no other amounts recognised in the Consolidated
Statement of Financial Performance in relation to rental income or other direct operating expenses.
The Group has no restrictions on the realisability of its investment properties and no contractual obligations to purchase, construct or
develop investment properties or for repairs, maintenance and enhancements.
The Group obtains independent valuations for its investment properties, and at the end of the reporting period, the fair value of each
property is updated, taking into account the most recent independent valuation. The best evidence of fair value is current prices in an
active market for similar properties. Where such information is not available, the Directors consider information for properties of a different
nature or recent prices of similar properties in less active markets, adjusted to reflect those differences.
14 Subsidiaries
A list of all subsidiaries, including the name, country of incorporation and proportion of ownership interest is given in note 4 to the
Company financial statements on page 101.
15 Trade and Other Receivables
Amounts falling due within one year:
Amounts receivable for the sale of goods
Allowance for doubtful debts
Other debtors and prepayments
– Rent and rates
– Other
2018
£’000
899
(24)
4,530
3,307
8,712
2017
£’000
493
(37)
4,192
1,854
6,502
The Directors consider that the carrying amount of trade and other receivables at 29 September 2018 and 30 September 2017
approximates to their fair value on the basis of discounted cash flow analysis.
Credit Risk
The Group’s principal financial assets are bank balances and cash and trade receivables.
The Group considers that it has no significant concentration of credit risk. The majority of sales in the business are cash-based sales
in the stores.
Total trade receivables (net of allowances) held by the Group at 29 September 2018 amounted to £0.9 million (2017: £0.5 million).
These amounts mainly relate to sundry trade account generated sales. In relation to these sales, the average credit period taken is
48 days (2017: 49 days) and no interest is charged on the receivables.
Before accepting any new customer, the Group uses an external credit scoring system to assess the potential customer’s credit quality
and defines credit limits by customer. Limits and scoring attributed to customers are reviewed periodically.
Included in the Group’s trade receivable balance are debtors with a carrying amount of £nil (2017: £70,000) which are past due
at the reporting date for which the Group has not provided as there has not been a significant change in credit quality and the amounts
are still considered recoverable. The Group does not hold any collateral over these balances.
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STRATEGIC REPORTOUR GOVERNANCEADDITIONAL INFORMATIONTOPPS TILES PLC ANNUAL REPORT AND ACCOUNTS FOR THE 52 WEEK PERIOD ENDED 29 SEPTEMBER 2018OUR FINANCIALS 102
Notes to the Financial Statements
For the 52 weeks ended 29 September 2018
15 Trade and Other Receivables continued
Ageing of past due but not impaired receivables:
Greater than 60 days
2018
£’000
–
2017
£’000
70
The allowance for doubtful debts was £24,000 by the end of the period (2017: £37,000). Given the minimal receivable balance,
the Directors believe that there is no further credit provision required in excess of the allowance for doubtful debts.
The allowance for doubtful debts includes £10,000 relating to individually impaired trade receivables (2017: £24,000) which are
due from companies that have been placed into liquidation.
The Directors consider that the carrying amount of trade and other receivables is approximately equal to their fair value.
16 Cash and Cash Equivalents
Cash and cash equivalents comprise cash held by the Group and short-term bank deposits (with associated right of set-off) net of
bank overdrafts, with an original maturity of three months or less. 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 cash and cash equivalents
17 Other Financial Liabilities
Trade and Other Payables
Amounts falling due within one year
Trade payables
Other payables
Accruals
Deferred income
2018
£’000
11,349
1,819
674
13,842
2017
£’000
5,232
919
1,350
7,501
2018
£’000
2017
£’000
20,791
4,172
12,449
1,236
38,648
18,330
3,641
9,636
893
32,500
Trade payables and accruals principally comprise amounts outstanding for trade purchases and ongoing costs. The average credit period
taken for trade purchases is 59 days (2017: 53 days). No interest is charged on these payables.
The Directors consider that the carrying amount of trade payables at 29 September 2018 and 30 September 2017 approximates to their
fair value on the basis of discounted cash flow analysis.
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TOPPS TILES PLC ANNUAL REPORT AND ACCOUNTS FOR THE 52 WEEK PERIOD ENDED 29 SEPTEMBER 2018 103
2018
£’000
2017
£’000
29,766
34,807
2018
£’000
2017
£’000
–
–
30,000
30,000
(234)
29,766
85
29,851
–
35,000
–
35,000
(193)
34,807
116
34,923
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
Issue costs to be amortised within 12 months
Amount due for settlement after 12 months
The Directors consider that the carrying amount of the bank loan at 29 September 2018 and 30 September 2017 approximates to its
fair value since the amounts relate to floating rate debt.
The average interest rates paid on the loan were as follows:
Loans
The Group borrowings are arranged at floating rates, thus exposing the Group to cash flow interest rate risk.
The following is a reconciliation of changes in financial liabilities to movement in cash from financing activities:
As at 2 October 2016
Drawdown of bank loan
Repayment of bank loan
Amortisation of issue costs
As at 30 September 2017
Repayment of bank loan
Issue costs incurred in the year
Amortisation of issue costs
As at 29 September 2018
2018
%
2.27
2017
%
1.78
Long term
borrowings
£’000
Unamortised
issue costs
£’000
35,000
5,000
(5,000)
–
35,000
(5,000)
–
–
30,000
(309)
–
–
116
(193)
–
(255)
214
(234)
During the year the Group renewed its revolving credit facility for £35.0 million expiring in 29 June 2021. The Group also negotiated an
Accordion Option for £15.0 million. As at the financial period end, £30.0 million of this was drawn (2017: £35.0 million). The loan
facility contains financial covenants which are tested on a biannual basis. The Group did not breach any covenants in the period.
At 29 September 2018, the Group had available £5.0 million (2017: £15.0 million) of undrawn committed banking facilities.
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STRATEGIC REPORTOUR GOVERNANCEADDITIONAL INFORMATIONTOPPS TILES PLC ANNUAL REPORT AND ACCOUNTS FOR THE 52 WEEK PERIOD ENDED 29 SEPTEMBER 2018OUR FINANCIALS 104
Notes to the Financial Statements
For the 52 weeks ended 29 September 2018
19 Financial Instruments
Capital Risk Management
The Group manages its capital to ensure that entities in the Group will be able to continue as a going concern while maximising the return
to stakeholders through the optimisation of the debt and equity balance. The Group’s overall strategy remains unchanged from 2017. The
capital structure of the Group consists of debt, which includes the borrowings disclosed in note 18, cash and cash equivalents disclosed
in note 16 and equity attributable to equity holders of the parent, comprising issued capital, reserves and accumulated losses as disclosed
in notes 21 to 27.
The Group is not subject to any externally imposed capital requirements.
Significant Accounting Policies
Details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis of measurement and
the basis on which income and expenses are recognised, in respect of each class of financial asset, financial liability and equity
instrument, are disclosed in note 2Q to the financial statements.
Categories of Financial Instruments
Financial assets
Loans and receivables (including cash and cash equivalents)
Fair value through profit and loss
Financial liabilities
Fair value through profit and loss
Amortised cost
Carrying value and
fair value
2018
£’000
14,717
168
–
50,642
2017
£’000
7,957
–
124
53,377
The Group considers itself to be exposed to risks on financial instruments, including market risk (including currency risk), credit risk, liquidity
risk and cash flow interest rate risk.
The Group seeks to mitigate the effects of these risks by using derivative financial instruments to hedge these risk exposures economically.
The use of financial derivatives is governed by the Group’s policies approved by the Board of Directors, which provide written principles
on foreign exchange risk, interest rate risk, credit risk, the use of financial derivatives and non-derivative financial instruments, and the
investment of excess liquidity. The Group does not enter into or trade financial instruments, including derivative financial instruments, for
speculative purposes.
Market Risk
The Group’s activities expose it primarily to the financial risks of changes in foreign currency exchange rates and interest rates. The Group
enters into forward foreign exchange contracts to hedge the exchange rate risk arising on the import of goods.
Foreign Currency Risk Management
The Group undertakes certain transactions denominated in foreign currencies. Hence, exposures to exchange rate fluctuations arise.
Exchange rate exposures are managed within approved policy parameters utilising forward foreign exchange contracts.
The carrying amounts of the Group’s foreign currency denominated monetary assets and monetary liabilities at the reporting date are
as follows:
Euro
US dollar
Assets
Liabilities
2018
£’000
686
1,822
2017
£’000
1,357
927
2018
£’000
3,891
1,453
2017
£’000
3,139
866
Foreign Currency Sensitivity Analysis
The Group is mainly exposed to the currency of China and Brazil (US dollar currency) and to various European countries (euro) as a result
of inventory purchases. The following table details the Group’s sensitivity to a 10% increase and decrease in sterling against the relevant
foreign currencies. Ten per cent represents management’s assessment of the reasonably possible change in foreign exchange rates, based
on historic volatility. The sensitivity analysis includes only outstanding foreign currency denominated monetary items and adjusts their
translation at the period end for a 10% change in foreign currency rates. A positive number below indicates an increase in profit and
other equity where sterling strengthens 10% against the relevant currency.
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TOPPS TILES PLC ANNUAL REPORT AND ACCOUNTS FOR THE 52 WEEK PERIOD ENDED 29 SEPTEMBER 2018
105
19 Financial Instruments continued
Profit or loss movement on a 10% strengthening in sterling against the euro
Profit or loss movement on a 10% strengthening in sterling against the US dollar
Profit or loss movement on a 10% weakening in sterling against the euro
Profit or loss movement on a 10% weakening in sterling against the US dollar
2018
£’000
291
34
(356)
(41)
2017
£’000
162
6
(198)
(7)
2016
£’000
205
45
(250)
(55)
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 amounts of outstanding forward foreign exchange contracts that the Group has committed
to are as below:
Forward foreign exchange contracts
2018
£’000
2017
£’000
10,582
10,142
These arrangements are designed to address significant exchange exposures for the first half of 2019 and are renewed on a revolving
basis as required.
At 29 September 2018, the fair value of the Group’s currency derivatives is a gain of £167,699 within other debtors and prepayments
(note 15) (2017: loss of £124,417 within accruals (note 17)). These amounts are based on the market value of equivalent instruments
at the balance sheet date.
Gains of £291,845 are included in cost of sales (2017: £466,064 loss).
Interest Rate Risk Management
The Group is exposed to interest rate risk as entities in the Group borrow funds at floating interest rates. Due to the reduced level of
floating rate borrowings and the current low level of interest rates, management have not deemed it necessary to implement measures
that would mitigate this risk. The Group’s exposures to interest rates on financial assets and financial liabilities are detailed in the liquidity
risk management section of this note.
Interest Rate Sensitivity Analysis
The sensitivity analysis below has been determined based on the exposure to interest rates for both derivatives and non-derivative
instruments at the balance sheet date. For floating rate liabilities, the analysis is prepared assuming the amount of liability outstanding
at the balance sheet date was outstanding for the whole year. A 50 basis points increase or decrease is used when reporting interest
rate risk internally to key management personnel and represents management’s assessment of the possible change in interest rates.
If interest rates had been 50 basis points higher/lower and all other variables were held constant, the Group’s profit would be impacted
as follows:
(Loss) or profit
50 basis points increase
in interest rates
50 basis points decrease
in interest rates
2018
£’000
(164)
2017
£’000
(181)
2018
£’000
164
2017
£’000
181
The Group’s sensitivity to interest rates mainly relates to the revolving credit facility.
Credit Risk Management
Credit risk refers to the risk that a counterparty will default on its contractual obligations, resulting in financial loss to the Group.
Management have considered the counterparty risk associated with the cash and derivative balances and do not consider there to
be a material risk. The Group has a policy of only dealing with creditworthy counterparties. The Group’s exposure to its counterparties
is reviewed periodically. Trade receivables are minimal, consisting of a number of sundry trade accounts; further information is provided
in note 15.
The carrying amount of financial assets recorded in the financial statements, which is net of impairment losses, represents the Group’s
maximum exposure to credit risk without taking account of the value of any collateral obtained.
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STRATEGIC REPORTOUR GOVERNANCEADDITIONAL INFORMATIONTOPPS TILES PLC ANNUAL REPORT AND ACCOUNTS FOR THE 52 WEEK PERIOD ENDED 29 SEPTEMBER 2018OUR FINANCIALS 106
Notes to the Financial Statements
For the 52 weeks ended 29 September 2018
19 Financial Instruments continued
Liquidity Risk Management
Ultimate responsibility for liquidity risk management rests with the Board of Directors. The Group manages liquidity risk by maintaining
adequate reserves, banking facilities and borrowing facilities by continuously monitoring forecast and actual cash flows and matching
the maturity profiles of financial assets and liabilities.
Liquidity and Interest Risk Tables
The following tables detail the Group’s remaining contractual maturity for its non-derivative financial liabilities. The tables have been drawn
up based on the undiscounted cash flows (and on the assumption that the variable interest rate remains constant at the latest fixing level of
2.266031% (2017: 1.73681%) of financial liabilities based on the earliest date on which the Group can be required to pay. The table
includes both interest and principal cash flows.
2018
Non-interest bearing
Variable interest rate instruments
2017
Non-interest bearing
Variable interest rate instruments
Less than
1 month
£’000
24,963
74
Less than
1 month
£’000
21,971
58
1–3
months
£’000
–
151
1–3
months
£’000
–
114
3 months
to 1 year
£’000
–
30,377
3 months
to 1 year
£’000
–
512
1–5
years
£’000
–
–
1–5
years
£’000
–
35,454
Total
£’000
24,963
30,602
Total
£’000
21,971
36,138
The Group is financed through a £35 million (2017: £50 million) revolving credit facility, of which £30 million (2017: £35 million) was
utilised. At the balance sheet date the total unused amount of financing facilities was £5 million (2017: £15 million). The Group expects
to meet its other obligations from operating cash flows and proceeds of maturing financial assets.
The following table details the Group’s liquidity analysis for its derivative financial instruments. The table has been drawn up based on
the undiscounted net cash inflows/(outflows) on the derivative instruments that settle on a net basis and the undiscounted gross inflows
and (outflows) on those derivatives that require gross settlement. When the amount payable or receivable is not fixed, the amount
disclosed has been determined by reference to the projected interest and foreign currency rates as illustrated by the yield curves
existing at the reporting date.
2018
Foreign exchange forward contracts payments
Foreign exchange forward contracts receipts
2017
Foreign exchange forward contracts payments
Foreign exchange forward contracts receipts
Less than
1 month
£’000
(1,885)
1,969
Less than
1 month
£’000
(2,128)
2,141
1–3
months
£’000
(3,945)
4,016
1–3
months
£’000
(3,884)
3,837
3 months
to 1 year
£’000
(4,753)
4,764
3 months
to 1 year
£’000
(4,130)
4,040
1–5
years
£’000
–
–
1–5
years
£’000
–
–
5+
years
£’000
–
–
5+
years
£’000
–
–
Total
£’000
(10,582)
10,749
Total
£’000
(10,142)
10,018
Fair Value of Financial Instruments
The fair values of financial assets and financial liabilities are determined as follows:
Foreign currency forward contracts are measured using quoted forward exchange rates and yield curves derived from quoted interest rates
matching maturities of the contracts.
The fair values are therefore categorised as Level 2 (2017: Level 2), based on the degree to which the fair value is observable. Level 2
fair value measurements are those derived from inputs other than unadjusted quoted prices in active markets (Level 1 categorisation) that
are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
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TOPPS TILES PLC ANNUAL REPORT AND ACCOUNTS FOR THE 52 WEEK PERIOD ENDED 29 SEPTEMBER 2018 107
Restated
2017
£’000
1,812
1,078
2,425
5,315
1,535
3,780
5,315
Total
£’000
5,315
1,671
(714)
(1,680)
4,592
2018
£’000
1,777
128
2,687
4,592
1,197
3,395
4,592
Business
simplification
provision
£’000
Onerous lease
provision
£’000
Dilapidations
provision
£’000
1,078
9
(279)
(680)
128
1,812
1,367
(402)
(1,000)
1,777
2,425
295
(33)
–
2,687
20 Provisions
Onerous lease provision
Business simplification provision
Dilapidations provision
Current
Non-current
At 1 October 2017 (restated)
Created in the year
Utilisation of provision
Release of provision in the period
At 29 September 2018
In line with IFRS 3, the Group made hindsight adjustments of £365,000 in the current period, in relation to onerous lease provision
(£115,000) and dilapidation provisions (£250,000), with a corresponding increase in the value of goodwill, and as such prior year
provisions numbers have been restated.
The onerous lease provision relates to estimated future unavoidable lease costs in respect of closed, non-trading and loss-making stores.
The provision is expected to be utilised over the lease term of the various properties. The dilapidations provision represents management’s
best estimate of the Group’s liability under its property lease arrangements based on past experience and is expected to be utilised over
the lease term of the various properties. The business simplification provision relates to the decision to exit the Topps Clearance format and
relocation of the finance function to Leicester, resulting in redundancies and the subsequent closure of nine store locations and one support
office. The provision is expected to be utilised over the lease term of the remaining property. The discount rate used to calculate the present
value of property provisions is 5% (2017: 7%). A 10% reduction in discount rate would lead to an increase in property provisions of
£60,000 (2017: £75,000).
The movements in the business simplification provision and onerous lease provision are shown within “Impairment of property, plant and
equipment and movement in onerous lease provision” in the Highlights section of these financial statements.
The following are the deferred tax liabilities/(assets) recognised by the Group and movements thereon during the current and prior
reporting period:
As at 2 October 2016
(Credit)/charge to income
Charge in respect of previous periods
Charge to equity
Recognised on acquisition of subsidiary
As at 30 September 2017
(Credit)/charge to income
Charge in respect of previous periods
Charge to equity
As at 29 September 2018
Accelerated
tax
depreciation
£’000
Share-based
payments
£’000
Stock
provisions
£’000
Intangible
assets
£’000
1,493
(55)
43
–
–
1,481
(242)
19
–
1,258
(784)
181
–
158
–
(445)
155
–
21
(269)
–
–
–
–
(38)
(38)
–
–
–
(38)
–
–
–
–
73
73
(7)
–
–
66
Total
£’000
709
126
43
158
35
1,071
(94)
19
21
1,017
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STRATEGIC REPORTOUR GOVERNANCEADDITIONAL INFORMATIONTOPPS TILES PLC ANNUAL REPORT AND ACCOUNTS FOR THE 52 WEEK PERIOD ENDED 29 SEPTEMBER 2018OUR FINANCIALS 108
Notes to the Financial Statements
For the 52 weeks ended 29 September 2018
20 Provisions continued
A reduction in the UK corporation tax rate from 21% to 20% (effective from 1 April 2015) was substantively enacted on 2 July 2013.
Further reductions to 19% (effective from 1 April 2017) and to 18% (effective 1 April 2020) were substantively enacted on 26 October
2015, and an additional reduction to 17% (effective 1 April 2020) was substantively enacted on 6 September 2016. This will reduce
the Company’s future current tax charge accordingly. The deferred tax liability at 29 September 2018 has been calculated based on
these rates.
21 Called-Up Share Capital
Issued and fully paid ordinary shares of 3.33p (2017: 3.33p)
At the start of the period
Issued in the period
At the end of the period
2018
Shares
2017
Shares
196,437,298 196,153,770
283,528
196,440,971 196,437,298
3,673
2018
£’000
6,548
–
6,548
2017
£’000
6,539
9
6,548
During the period the Group issued 3,673 (2017: 283,528) ordinary shares with a nominal value of £122 (2017: £9,441) under
share option schemes for an aggregate cash consideration of £3,560 (2017: £15,631).
During the period £nil (2017: £8,468) of shares were purchased by Topps Tiles Employee Benefit Trust on behalf of the Group.
22 Share Premium
At start of the period
Premium on issue of new shares
At end of the period
23 Own Shares
At start of the period
Acquired in the period
Disposed of on issue in the period
At end of the period
2018
£’000
2,487
3
2,490
2018
£’000
(4,411)
–
661
(3,750)
2017
£’000
2,473
14
2,487
2017
£’000
(4,411)
(8)
8
(4,411)
A subsidiary of the Group holds 3,090,030 (2017: 4,038,495) shares with a nominal value of £3,749,570 acquired for an average
price of £1.21 per share (2017: £4,410,840 acquired for an average price of £1.09 per share) and therefore these have been classed
as own shares.
24 Merger Reserve
At start and end of the period
2018
£’000
(399)
2017
£’000
(399)
The merger reserve arose on pre-2006 acquisitions. The Directors do not consider this to be distributable as at 29 September 2018
(2017: same).
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TOPPS TILES PLC ANNUAL REPORT AND ACCOUNTS FOR THE 52 WEEK PERIOD ENDED 29 SEPTEMBER 2018 109
25 Share-based Payment Reserve
At start of the period
Credit/(debit) to equity for equity-settled share-based payments
At end of the period
2018
£’000
3,921
24
3,945
2017
£’000
4,280
(359)
3,921
The share-based payment reserve has arisen on the fair valuation of save-as-you-earn schemes and long-term incentive plans. The Directors
consider this to be distributable as at 29 September 2018 (2017: same).
26 Capital Redemption Reserve
At start and end of the period
2018
£’000
2017
£’000
20,359
20,359
The capital redemption reserve arose on the cancellation of treasury shares and as a result of a share reorganisation in 2006. The
Directors do not consider this to be distributable as at 29 September 2018 (2017: same).
27 Accumulated Losses
At 2 October 2016
Dividends
Deferred and current tax on Sharesave scheme taken directly to equity
Own shares issued in the period
Net profit for the period
At 30 September 2017
Dividends
Deferred and current tax on Sharesave scheme taken directly to equity
Own shares issued in the period
Net profit for the period
At 29 September 2018
£’000
(11,296)
(6,924)
(155)
(8)
13,431
(4,952)
(6,566)
(9)
(661)
9,659
(2,529)
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STRATEGIC REPORTOUR GOVERNANCEADDITIONAL INFORMATIONTOPPS TILES PLC ANNUAL REPORT AND ACCOUNTS FOR THE 52 WEEK PERIOD ENDED 29 SEPTEMBER 2018OUR FINANCIALS 110
Notes to the Financial Statements
For the 52 weeks ended 29 September 2018
28 Financial Commitments
A) Capital Commitments
At the end of the period there were capital commitments contracted of £nil (2017: £nil).
B) Pension Arrangements
The Group operates a defined contribution pension scheme for employees. 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 £918,000 (2017: £862,000). At the period end, the Group holds outstanding contributions of £143,485 (2017:
£142,669).
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 as an expense for the period were £25,489,488 (2017: £24,762,316)
which includes property service charges of £911,000 (2017: £852,000).
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:
– Within 1 year
– Within 2–5 years
– After 5 years
2018
2017
Land and
buildings
£’000
23,116
75,500
44,756
143,372
Other
£’000
1,572
2,775
15
4,362
Land and
buildings
£’000
22,793
76,434
49,189
148,416
Other
£’000
1,319
2,093
194
3,606
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 ten years (2017: ten) and rentals are fixed for an average of five years (2017: five).
Minimum future sub-lease payments expected to be received under non-cancellable sub-leases amount to £2,187,000 (2017:
£2,509,000).
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TOPPS TILES PLC ANNUAL REPORT AND ACCOUNTS FOR THE 52 WEEK PERIOD ENDED 29 SEPTEMBER 2018 111
29 Share-based Payments
The Group operates six (2017: seven) share option schemes in relation to Group employees.
Employee Share Purchase Plans
Employee share purchase plans are open to almost all employees and provide for a purchase price equal to the average market price
over the three days prior to the date of grant, less 20%. The shares can be purchased during a two-week period each financial period.
The shares so purchased are generally placed in the employee share savings plan for a three or five-year period.
Movements in share-based payment plan options are summarised as follows:
Outstanding at beginning of the period
Issued during the period
Expired during the period
Exercised during the period
Outstanding at end of the period
Exercisable at end of the period
2018
2017
Weighted
average
exercise price
Number of
£
share options
0.91
3,080,615
0.64
2,105,117
1.16 (1,623,808)
0.98
(28,530)
0.78
3,533,394
0.92
378,847
Weighted
average
exercise price
£
1.14
0.70
1.07
0.54
0.91
0.98
Number of
share options
3,533,394
2,130,588
(1,784,001)
(3,673)
3,876,308
353,507
The inputs to the Black–Scholes Model for the employee three-year Employee Share Purchase Plans issued in the year are as follows:
Three-year plan
Weighted average share price
Weighted average exercise price
Expected volatility
Expected life
Risk-free rate of interest
Dividend yield
— pence
— pence
— %
— years
— %
— %
90.00
64.00
31.10
3.00
0.81
3.78
Expected volatility was determined by calculating the historical volatility of the Group’s share price over the previous three years (2017:
three 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.
Long Term Incentive Plan
Long Term Incentive Plans have been granted to senior management and have a vesting period of three years. Vesting is subject to
achievement of certain performance conditions.
Movements in Long Term Incentive Plan options are summarised as follows:
Outstanding at beginning of the period
Issued during the period
Expired during the period
Exercised during the period
Outstanding at end of the period
Exercisable at end of the period
2018
2017
Weighted
average
exercise price
£
–
–
–
–
–
–
Number of
share options
6,433,257
3,099,142
(610,085)
(948,465)
7,973,849
2,526,034
Weighted
average
exercise price
£
–
–
–
–
–
–
Number of
share options
5,064,089
1,752,568
(128,402)
(254,998)
6,433,257
2,228,385
During the financial period, the Group granted 36,762 share options under the existing share option scheme due to vest in December
2018. The Group granted 11,659 of these shares in December 2017 with a fair value of £8,902.
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STRATEGIC REPORTOUR GOVERNANCEADDITIONAL INFORMATIONTOPPS TILES PLC ANNUAL REPORT AND ACCOUNTS FOR THE 52 WEEK PERIOD ENDED 29 SEPTEMBER 2018OUR FINANCIALS 112
Notes to the Financial Statements
For the 52 weeks ended 29 September 2018
29 Share-based Payments continued
The inputs to the Black–Scholes model are as follows:
Weighted average share price
Weighted average exercise price
Expected volatility
Expected life
Risk-free rate of interest
Dividend yield
— pence
— pence
— %
— years
— %
— %
The Group granted 25,103 share options in July 2018 with a fair value of £16,858.
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
— %
— %
79.95
nil
34.62
1.00
0.36
4.51
68.50
nil
33.74
0.4
0.52
4.96
During the financial period, the Group granted 181,141 share options under the existing share option scheme due to vest in December
2019. 34,055 of these shares were granted in December 2017 with a fair value of £24,814.
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
— %
— %
The Group granted 147,086 share options in July 2018 with a fair value of £93,995.
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
— %
— %
79.75
nil
32.22
2.00
0.43
4.51
68.50
nil
33.71
1.40
0.62
4.96
During the financial period, the Group granted 2,881,329 share options under the existing share option scheme due to vest in December
2020.
The Group granted 224,839 of these shares in June 2018 with a fair value of £136,053.
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
— %
— %
68.50
nil
32.27
2.50
0.72
4.96
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TOPPS TILES PLC ANNUAL REPORT AND ACCOUNTS FOR THE 52 WEEK PERIOD ENDED 29 SEPTEMBER 2018 29 Share-based Payments continued
The Group granted 2,656,402 share options in December 2017 with a fair value of £1,850,167.
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
— %
— %
113
79.75
nil
30.19
3.00
0.52
4.51
Expected volatility for the additional share options was determined by calculating the historical volatility of the Group’s share price over
the previous one, two and three years (2017: three and five 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.
2020 Long Term Incentive Plan
Under the plan a number of share options were granted to management level employees across the Group. These options will vest
in December 2020 subject to the achievement of certain performance criteria.
Movements in 2020 Long Term Incentive Plan options are summarised as follows:
Outstanding at beginning of the period
Issued during the period
Expired during the period
Exercised during the period
Outstanding at end of the period
Exercisable at end of the period
2018
2017
Weighted
average
exercise price
£
–
–
–
–
–
–
Number of
share options
3,061,262
(404,432)
–
2,656,830
–
Weighted
average
exercise price
£
–
–
–
–
–
–
Number of
share options
2,603,747
955,217
(497,702)
–
3,061,262
–
In total, the Group recognised a total expense of £23,531 (2017: £358,502 revenue) relating to share-based payments.
30 Related Party Transactions
S.K.M. Williams is a related party by virtue of his 10.5% shareholding (20,593,950 ordinary shares) in the Group’s issued share capital
(2017: 10.5% shareholding of 20,593,950 ordinary shares).
At 29 September 2018, S.K.M. Williams was the landlord of two properties leased to Multi Tile Limited, a trading subsidiary of Topps
Tiles Plc, for £119,000 (2017: two properties for £114,000) per annum.
No amounts were outstanding with S.K.M. Williams at 29 September 2018 (2017: £nil). The lease agreements on all properties are
operated on commercial arm’s length terms.
Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and are not
disclosed in this note, in accordance with the exemption available under IAS 24.
The remuneration of the Board of Directors, who are considered key management personnel of the Group, was £1.1 million (2017: £1.5
million) including share-based payments of £nil (2017: £0.4 million). Further information about the remuneration of the individual Directors
is provided in the Remuneration Report on pages 54 to 69.
The Group’s defined contribution pension scheme is administered by Legal and General. During the year the Group made contributions
of £918,000 (2017: £862,000) and at year end the Group has outstanding contributions of £143,485 (2017: £142,669).
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STRATEGIC REPORTOUR GOVERNANCEADDITIONAL INFORMATIONTOPPS TILES PLC ANNUAL REPORT AND ACCOUNTS FOR THE 52 WEEK PERIOD ENDED 29 SEPTEMBER 2018OUR FINANCIALS 114
Company Balance Sheet
As at 29 September 2018
Fixed assets
Investments
Current assets
Debtors due within 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
Capital redemption reserve
Other reserve
Profit and loss account
Equity shareholders’ funds
52 weeks
ended
29 September
2018
£’000
52 weeks
ended
30 September
2017
£’000
Notes
4
5
6
7
3,420
3,396
75,954
–
51,106
1,083
(15,804)
60,150
63,570
6,548
2,490
4,479
20,359
6,200
23,494
63,570
(1,268)
50,921
54,317
6,548
2,487
4,455
20,359
6,200
14,268
54,317
The Company made a profit after tax for the financial period ended 29 September 2018 of £15,792,000 (2017: £15,447,000).
The financial statements of Topps Tiles Plc, Companies House number 3213782, were approved by the Board of Directors on
27 November 2018 and signed on its behalf by:
MATTHEW WILLIAMS | DIRECTOR
ROB PARKER | DIRECTOR
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TOPPS TILES PLC ANNUAL REPORT AND ACCOUNTS FOR THE 52 WEEK PERIOD ENDED 29 SEPTEMBER 2018 Company Statement of Changes in Equity
For the 52 weeks ended 29 September 2018
115
Company
Balance at 2 October 2016
Profit for the period
Dividend paid to equity
shareholders
Issue of new shares
Debit to equity for equity-settled
share-based payments
Balance at 30 September
2017
Profit for the period
Dividend paid to equity
shareholders
Issue of new shares
Credit to equity for equity-settled
share-based payments
Balance at 29 September
2018
Share
capital
£’000
6,539
–
–
9
–
–
14
–
6,548
–
2,487
–
–
–
–
–
3
–
Share
premium
£’000
2,473
–
Share-based
payment
reserve
£’000
4,814
–
Capital
redemption
reserve
£’000
20,359
–
Other
reserves
£’000
6,200
–
Profit
and loss
account
£’000
5,745
15,447
Total
£’000
46,130
15,447
–
–
(359)
4,455
–
–
–
24
–
–
–
–
–
–
(6,924)
–
(6,924)
23
–
(359)
20,359
–
6,200
–
14,268
15,792
54,317
15,792
–
–
–
–
–
–
(6,566)
–
(6,566)
3
–
24
6,548
2,490
4,479
20,359
6,200
23,494
63,570
At 29 September 2018, the Directors consider the other reserve of £6,200,000 to remain non-distributable.
The Directors consider £nil (2017: £nil) of profit and loss account reserves to be not distributable at 29 September 2018.
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STRATEGIC REPORTOUR GOVERNANCEADDITIONAL INFORMATIONTOPPS TILES PLC ANNUAL REPORT AND ACCOUNTS FOR THE 52 WEEK PERIOD ENDED 29 SEPTEMBER 2018OUR FINANCIALS 116
Notes to the Company Financial Statements
For the 52 weeks ended 29 September 2018
1 Basis of Accounting
The Company meets the definition of a qualifying entity under FRS 100 Application of Financial Reporting Requirements issued by
the FRC. Accordingly, in the period ended 3 October 2015, the Company has changed its accounting framework from the previous
UK GAAP to Financial Reporting Standard 101 Reduced Disclosure Framework (FRS 101) issued by the Financial Reporting Council
(FRC) and has, in doing so, applied the requirements of IFRS 1.6-33 and related appendices. These financial statements have therefore
been prepared in accordance with FRS 101.
As permitted by FRS 101, the Company has taken advantage of the following disclosure exemptions available under that Standard:
i) The requirements of IFRS 7 Financial Instruments: Disclosures
ii) The requirement in paragraph 38 of IAS 1 Presentation of Financial Statements to present comparative information in respect of:
a) Paragraph 79(a)(iv) of IAS 1
b) Paragraph 73(e) of IAS 16 Property, Plant and Equipment
c) Paragraph 118(e) of IAS 38 Intangible Assets
iii) The requirements of IAS 7 Statement of Cash Flows
iv) The requirements of IAS 24 Related Party Disclosures to disclose related party transactions entered into between two or more members
of a group, provided that any subsidiary which is a party to the transaction is wholly owned by such a member
v) The requirements of paragraphs 10(d), 10(f), and 134 to 136 of IAS 1 Presentation of Financial Statements
vi) The requirements of paragraphs 30 and 31 of IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors
Where relevant, equivalent disclosures have been given in the Group accounts of which the Company’s results are included.
The financial statements have been prepared under the historical cost convention. Comparative data is for the period ended
30 September 2017.
2 Accounting Policies
The principal accounting policies adopted are set out below.
A) Going Concern
When considering the going concern assertion, the Board reviews several factors including a detailed review of the above risks and
uncertainties, and management’s current expectations. Further details of the assumptions, sensitivities and procedures performed are given
in the Strategic Report. As a result of this review, the Board believes that the Company will continue to meet all of its financial commitments
as they fall due and will be able to continue as a going concern. Therefore, the Board considers it appropriate to prepare the financial
statements on the going concern basis.
B) 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 Business Review, references to 2018 mean “at 29 September 2018” or the
52 weeks then ended; references to 2017 mean “at 30 September 2017” or the 52 weeks then ended.
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TOPPS TILES PLC ANNUAL REPORT AND ACCOUNTS FOR THE 52 WEEK PERIOD ENDED 29 SEPTEMBER 2018 117
2 Accounting Policies continued
C) 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 period. Taxable profit differs from net profit as reported in the statement
of financial performance because it excludes items of income or expense that are taxable or deductible in other periods and it further
excludes items that are never taxable or deductible. The Company’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, except where the Company 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 based
on tax laws and rates that have been enacted at the balance sheet date. Deferred tax is charged or credited in the statement of financial
performance, 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 Company intends to settle its current tax
assets and liabilities on a net basis.
D) Foreign Currency
The financial statements are presented in pounds sterling (its functional currency). For the purpose of the financial statements, the results
and financial position are expressed in pounds sterling, which is the functional currency of the Company, and the presentational currency
for the financial statements.
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 statement
of financial performance for the period.
Exchange differences arising on the retranslation of non-monetary items carried at fair value are included in the statement of financial
performance for the period.
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STRATEGIC REPORTOUR GOVERNANCEADDITIONAL INFORMATIONTOPPS TILES PLC ANNUAL REPORT AND ACCOUNTS FOR THE 52 WEEK PERIOD ENDED 29 SEPTEMBER 2018OUR FINANCIALS 118
Notes to the Company Financial Statements
For the 52 weeks ended 29 September 2018
2 Accounting Policies continued
E) Investments
Fixed asset investments are shown at cost less provision for impairment.
F) Financial Instruments
Financial assets and financial liabilities are recognised in the Company’s statement of financial position when the Company becomes
a party to the contractual provisions of the instrument.
All financial assets are recognised and derecognised on a trade date where the purchase or sale of a financial asset is under a contract
whose terms require delivery of the financial asset within the timeframe established by the market concerned, and are initially measured
at fair value plus transaction costs, except for those financial assets classified as at fair value through profit or loss, which are initially
measured at fair value.
Financial assets are classified into the following specified categories: financial assets “at fair value through profit or loss” (FVTPL), “held-to-
maturity” investments, “available-for-sale” (AFS) financial assets and “loans and receivables”. The classification depends on the nature and
purpose of the financial assets and is determined at the time of initial recognition.
Loans and Receivables
Loans and other receivables that have fixed or determinable payments that are not quoted in an active market are classified as loans and
receivables. Loans and receivables are measured at amortised cost using the effective interest method, less any impairment. Interest income
is recognised by applying the effective interest rate, except for short-term receivables when the recognition of interest would be immaterial.
Effective Interest Method
The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating interest income over the
relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees on points paid
or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected
life of the debt instrument, or, where appropriate, a shorter period, to the net carrying amount on initial recognition.
Income is recognised on an effective interest basis for debt instruments other than those financial assets and liabilities classified as at FVTPL.
Impairment of Financial Assets
Financial assets, other than those at FVTPL, are assessed for indicators of impairment at each statement of financial position date. Financial
assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the
financial asset, the estimated future cash flows of the investment have been impacted.
For financial assets carried at amortised cost, the amount of the impairment is the difference between the asset’s carrying amount and the
present value of estimated future cash flows, discounted at the financial asset’s original effective interest rate.
The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets.
If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring
after the impairment was recognised, the previously recognised impairment loss is reversed through profit or loss to the extent that the
carrying amount of the investment at the date the impairment is reversed does not exceed what the amortised cost would have been had
the impairment not been recognised.
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TOPPS TILES PLC ANNUAL REPORT AND ACCOUNTS FOR THE 52 WEEK PERIOD ENDED 29 SEPTEMBER 2018 119
2 Accounting Policies continued
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 within three months and are subject to an insignificant risk of changes in value.
Derecognition of Financial Assets
The Company derecognises a financial asset only when the contractual rights to the cash flows from the asset expire; or it transfers the
financial asset and substantially all the risks and rewards of ownership of the asset to another entity. If the Company neither transfers nor
retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Company recognises its
retained interest in the asset and an associated liability for amounts it may have to pay. If the Company retains substantially all the risks
and rewards of ownership of a transferred financial asset, the Company continues to recognise the financial asset and also recognises
a collateralised borrowing for the proceeds received.
Financial Liabilities and Equity Instruments
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 Company after deducting all of its liabilities. Equity
instruments issued by the Company are recorded at the proceeds received, net of direct issue costs.
Financial liabilities are classified as at FVTPL where the financial liability is either held for trading or is designated as at FVTPL. The
Company does not have any designated FVTPL liabilities.
A financial liability is classified as held for trading if:
•
•
it has been incurred principally for the purpose of disposal in the near future; or
it is a part of an identified portfolio of financial instruments that the Group manages together and has a recent actual pattern of
short-term profit-taking; or
•
it is a derivative that is not designated and effective as a hedging instrument.
Financial liabilities at FVTPL are stated at fair value, with any resultant gain or loss recognised in profit or loss.
Other Financial Liabilities
Other financial liabilities, including borrowings, are initially measured at fair value, net of transaction costs. Other financial liabilities
are subsequently measured at amortised cost using the effective interest method, with interest expense recognised on an effective yield
basis. The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense
over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected
life of the financial liability, or, where appropriate, a shorter period, to the net carrying amount on initial recognition.
Derecognition of Financial Liabilities
The Company derecognises financial liabilities when, and only when, the Company’s obligations are discharged, cancelled or they expire.
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STRATEGIC REPORTOUR GOVERNANCEADDITIONAL INFORMATIONTOPPS TILES PLC ANNUAL REPORT AND ACCOUNTS FOR THE 52 WEEK PERIOD ENDED 29 SEPTEMBER 2018OUR FINANCIALS 120
Notes to the Company Financial Statements
For the 52 weeks ended 29 September 2018
2 Accounting Policies continued
G) Critical Accounting Judgements and Key Sources of Estimation Uncertainty
In the application of the Company’s accounting policies, which are described above, the Directors are required to make judgements,
estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The
estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual
results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the
period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the
revision affects both current and future periods.
The Directors have concluded that there are no critical areas of accounting judgement or key sources of estimation uncertainty in the
application of the Company’s accounting policies in the current period.
3 Profit for the Period
As permitted by section 408 of the Companies Act 2006, the Company has elected not to present its own profit and loss account for the
period. Topps Tiles Plc reported a profit for the financial period ended 29 September 2018 of £15,792,000 (2017: £15,447,000).
The auditor’s remuneration for services to the Company was £46,000 for audit-related work (2017: £46,000 for audit-related work).
Fees relating to non-audit work totalled £nil (2017: £nil); see note 5 to the Group financial statements for further details.
The Company had no employees other than the Directors (2017: same), whose remuneration is detailed on page 63.
4 Fixed Asset Investments
Cost and carrying amount at 1 October 2017
Movement in share options granted to employees
Cost and carrying amount at 29 September 2018
£’000
3,396
24
3,420
The following were subsidiaries that the Company has investments in, both as at 29 September 2018 and 30 September 2017:
Subsidiary undertaking
Topalpha Limited*
Topalpha (Warehouse) Limited
Topalpha (Stoke) Limited
Tiles4less Limited*
Topps Tiles (UK) Limited
Topps Tiles Holdings Limited*
Topps Tile Kingdom Limited
Multi Tile Limited
Topps Tiles Distribution Ltd
Multi-Tile Distribution Limited
Topps Tiles I.P Company Limited
Topps Tiles Employee Benefit Trust*
Parkside Ceramics Limited*
* Held directly by Topps Tiles Plc.
% of issued
shares held
Principal activity
Property management and investment
100%
Property management and investment and provision of warehousing services
100%
Property management and investment
100%
Intermediate holding company
100%
Retail and wholesale of ceramic tiles, wood flooring and related products
100%
Intermediate holding company
100%
Intermediate holding company
100%
100%
Retail and wholesale of ceramic tiles, wood flooring and related products
100% Wholesale and distribution of ceramic tiles, wood flooring and related products
Intermediate holding company
100%
Ownership and management of Group intellectual property
100%
100%
Employee benefit trust
Retail and wholesale of ceramic tiles, wood flooring and related products
100%
The investments are represented by ordinary shares.
All undertakings are incorporated in Great Britain and are registered and operate in England and Wales.
The registered address of all of the above entities (excluding Parkside Ceramics Limited) is Thorpe Way, Grove Park, Enderby,
Leicestershire, LE19 1SU, United Kingdom.
The registered address of Parkside Ceramics Limited is 51 Highmeres Road, Thurmaston, Leicester, LE4 9LZ.
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TOPPS TILES PLC ANNUAL REPORT AND ACCOUNTS FOR THE 52 WEEK PERIOD ENDED 29 SEPTEMBER 2018 5 Debtors
Amounts falling due within one year:
Amounts owed by subsidiary undertakings
Prepayments and accrued income
6 Creditors: Amounts falling due within one year
Bank loans and overdrafts
Trade and other creditors
Amounts owed to subsidiary undertakings
Accruals and deferred income
7 Called-up share capital
121
2018
£’000
2017
£’000
75,677
277
75,954
2018
£’000
14,706
–
64
1,034
15,804
2018
£’000
51,080
26
51,106
2017
£’000
–
106
65
1,097
1,268
2017
£’000
Issued and fully paid 196,440,971 (2017: 196,437,298) ordinary shares of 3.33p each
(2017: 3.33p)
6,548
6,548
During the period nil shares were purchased by Topps Tiles Employee Benefit Trust on behalf of the Group (2017: 254,998 shares –
£8,491).
During the period the Group issued and allotted 3,673 (2017: 283,528) ordinary shares with a nominal value of £122 (2017:
£9,441) under share option schemes for an aggregate cash consideration of £3,560 (2017: £15,631).
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STRATEGIC REPORTOUR GOVERNANCEADDITIONAL INFORMATIONTOPPS TILES PLC ANNUAL REPORT AND ACCOUNTS FOR THE 52 WEEK PERIOD ENDED 29 SEPTEMBER 2018OUR FINANCIALS 1
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2
Additional
Information
CONTENTS
Five Year Record
Notice of Annual General Meeting
Explanatory Notes to the
Notice of Annual General Meeting
The Team
Store Locations
124
125
128
133
145
3
4
5
PICTURED
1. Flat White and Abrasio Basalt
2. Parkside, Chelsea
3. Lampas Peacock
4. Simply Whites Geometric Decor and Inara Concrete
5. Diamante Blue
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124
Five Year Record
Unaudited
Group revenue
Group operating profit
Profit before taxation
Shareholders’ funds
Basic earnings per share
Dividend per share
Dividend cover
Average number of employees
Share price (period end)
52 weeks
ended
27 September
2014
£’000
195,237
18,186
16,691
843
6.49p
1.65p
3.935
1,794
105.0p
53 weeks
ended
3 October
2015
£’000
212,221
18,883
17,019
10,798
6.75p
2.34p
2.885
1,915
148.75p
52 weeks
ended
1 October
2016
£’000
52 weeks
ended
30 September
2017
£’000
52 weeks
ended
29 September
2018
£’000
214,994
21,073
19,982
17,545
8.05p
3.50p
2.305
1,977
112.25p
211,848
17,889
16,999
23,553
6.98p
3.40p
2.055
2,030
75.50p
216,887
13,735
12,688
26,663
5.00p
3.40p
1.475
2,114
62.90p
All figures quoted are inclusive of continued and discontinued operations.
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TOPPS TILES PLC ANNUAL REPORT AND ACCOUNTS FOR THE 52 WEEK PERIOD ENDED 29 SEPTEMBER 2018 Notice of Annual General Meeting
125
This notice of meeting is important and requires your immediate attention. If you are in any doubt as to the contents of this document
and/or the action you should take, you are recommended to seek personal financial advice from your bank manager, stockbroker,
solicitor, accountant or other independent financial adviser authorised under the Financial Services and Markets Act 2000.
If you have sold or otherwise transferred all of your shares in the Company, please pass this document and all accompanying
documents to the purchaser or transferee, or to the stockbroker, bank or other agent through whom the sale or transfer was effected
so that they can pass these documents to the person who now holds the shares.
NOTICE IS HEREBY GIVEN that the Annual General Meeting (the “Annual General Meeting”, the “AGM” or the “meeting”) of Topps Tiles
plc (the “Company”) will be held at the Marriott Hotel, Smith Way, Grove Park, Enderby, Leicestershire LE19 1SW on 30 January 2019
at 10.00 a.m. for the following purposes:
Ordinary Business
To consider and, if thought fit, pass the following resolutions 1–11 (inclusive) which will be proposed as Ordinary Resolutions:
1. To receive the Company’s Annual Report and Financial Statements for the financial period ended 29 September 2018 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 2.3 pence per ordinary share for the financial period ended 29 September 2018 payable on Monday
4 February 2019 to shareholders who are on the register of members of the Company on 21 December 2018.
3. To approve the Directors’ Remuneration Report for the financial period ended 29 September 2018 as set out on pages 54 to 69 of
the Company’s Annual Report and Financial Statements for that period (excluding the Directors’ Remuneration Policy set out on pages
55 to 62).
4. To re-elect Matthew Williams as a Director of the Company.
5. To re-elect Robert Parker as a Director of the Company.
6. To re-elect Darren Shapland as a Director of the Company.
7. To re-elect Claire Tiney as a Director of the Company.
8. To re-elect Andrew King as a Director of the Company.
9. To re-elect Keith Down as a Director of the Company.
10. To appoint PricewaterhouseCoopers LLP as the auditor of the Company to hold office from the conclusion of this Annual General
Meeting until the conclusion of the next general meeting at which the Annual Report and Financial Statements are laid before the
Company.
11. To authorise the Directors to determine the remuneration of the auditor.
Special Business
To consider and, if thought fit, to pass the resolutions set out below which, in the case of resolution 12 will be proposed as an Ordinary
Resolution and, in the case of resolutions 13, 14, 15 and 16, will be proposed as Special Resolutions:
12. THAT, in substitution for any equivalent authorities and powers granted to the Directors prior to the passing of this resolution, the
Directors be and they are generally and unconditionally authorised pursuant to section 551 of the Companies Act 2006 (the “Act”):
a. to exercise all powers of the Company to allot shares in the Company, and grant rights to subscribe for or to convert any security
into shares of the Company (such shares, and rights to subscribe for or to convert any security into shares of the Company being
“relevant securities”) up to an aggregate nominal amount of £2,160,851 (such amount to be reduced by the nominal amount
of any allotments or grants made under paragraph (b) below in excess of £2,160,851; and further:
b. to allot equity securities (as defined in section 560 of the Act) up to an aggregate nominal amount of £4,321,701 (such amount
to be reduced by the nominal amount of any allotments or grants made under paragraph (a) above) in connection with an offer by
way of rights issue:
i.
in favour of holders of ordinary shares in the capital of the Company, where the equity securities respectively attributable to
the interests of all such holders are proportionate (as nearly as practicable) to the respective number of ordinary shares in the
capital of the Company held by them; and
ii. to holders of any other equity securities as required by the rights of those securities or as the Directors otherwise consider
necessary,
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Notice of Annual General Meeting
but subject to such exclusions or other arrangements as the Directors may deem necessary or expedient to deal with treasury
shares, fractional entitlements or legal, regulatory or practical problems arising under the laws or requirements of any overseas
territory or by virtue of shares being represented by depository receipts or the requirements of any regulatory body or stock
exchange or any other matter whatsoever,
provided that, unless previously revoked, varied or extended, this authority shall expire on the earlier of the date falling 15 months
after the date of the passing of this resolution and the conclusion of the next Annual General Meeting of the Company, except that
the Company may at any time before such expiry make an offer or agreement which would or might require relevant securities to be
allotted after such expiry and the Directors may allot relevant securities in pursuance of such an offer or agreement as if this authority
had not expired.
13. THAT, in substitution for any equivalent authorities and powers granted to the Directors prior to the passing of this resolution, the
Directors be and they are empowered to allot equity securities (as defined in section 560 of the Act) of the Company wholly for cash
pursuant to the authority of the Directors under section 551 of the Act conferred by resolution 12 above (in accordance with section
570(1) of the Act) and/or by way of a sale of treasury shares (in accordance with section 573 of the Act), in each case as if section
561(1) of the Act did not apply to such allotment provided that the power conferred by this resolution shall be limited to:
a. the allotment of equity securities in connection with an offer of, or invitation to apply for, equity securities (but in the case of the
authority granted under paragraph (b) of resolution 12, by way of a rights issue only):
i.
in favour of holders of ordinary shares in the capital of the Company, where the equity securities respectively attributable to
the interests of all such holders are proportionate (as nearly as practicable) to the respective number of ordinary shares in the
capital of the Company held by them; and
ii. to holders of any other equity securities as required by the rights of those securities or as the Directors otherwise consider
necessary,
but subject to such exclusions or other arrangements as the Directors may deem necessary or expedient to deal with treasury
shares, fractional entitlements or legal, regulatory or practical problems arising under the laws or requirements of any overseas
territory or by virtue of shares being represented by depository receipts or the requirements of any regulatory body or stock
exchange or any other matter whatsoever; and
b. the allotment, otherwise than pursuant to sub-paragraph (a) above, of equity securities up to an aggregate nominal value equal
to £324,128; and
unless previously revoked, varied or extended, this power shall expire on the earlier of the date falling 15 months after the date
of the passing of this resolution and the conclusion of the next Annual General Meeting of the Company except that the Company
may before the expiry of this power make an offer or agreement which would or might require equity securities to be allotted
after such expiry and the Directors may allot equity securities in pursuance of such an offer or agreement as if this power had
not expired.
14. THAT, in substitution for any equivalent authorities and powers granted to the Directors prior to the passing of this resolution, in addition
to the authorities and powers granted to the Directors pursuant to resolution 13, the Directors be and they are empowered to allot
equity securities (as defined in section 560 of the Act) of the Company wholly for cash pursuant to the authority of the Directors under
section 551 of the Act conferred by resolution 12 above (in accordance with section 570(1) of the Act) and/or by way of a sale
of treasury shares (in accordance with section 573 of the Act), in each case as if section 561(1) of the Act did not apply to such
allotment provided that the power conferred by this resolution shall be:
a. limited to the allotment of equity securities up to an aggregate nominal value equal to £324,128; and
b. used only for the purposes of financing (or refinancing, if the authority is to be used within six months after the original transaction)
a transaction which the Board of the Company determines to be an acquisition or other capital investment of a kind contemplated
by the Statement of Principles on Disapplying Pre-Emption Rights most recently published by the Pre-Emption Group prior to the date
of this notice; and
unless previously revoked, varied or extended, this power shall expire on the earlier of the date falling 15 months after the date of
the passing of this resolution and the conclusion of the next Annual General Meeting of the Company except that the Company may
before the expiry of this power make an offer or agreement which would or might require equity securities to be allotted or sold after
such expiry and the Directors may allot equity securities in pursuance of such an offer or agreement as if this power had not expired.
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15. THAT, the Company be generally and unconditionally authorised for the purposes of section 701 of the Act to make market purchases
(within the meaning of section 693(4) of the Act) of ordinary shares of 3.33p each in the capital of the Company (“Ordinary Shares”)
provided that:
a. the maximum number of Ordinary Shares hereby authorised to be purchased is 19,644,097 (representing 10% 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 shall be an amount equal to 105% of
the average of the middle market quotations for an Ordinary Share as 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; and
this authority shall, unless previously renewed, revoked or varied, expire on the earlier of the date falling 15 months after the date of the
passing of this resolution and the conclusion of the next Annual General Meeting, but the Company may enter into a contract for the
purchase of Ordinary Shares before the expiry of this authority which would or might be completed (wholly or partly) after its expiry.
16. THAT, a general meeting other than an annual general meeting may be called on not less than 14 clear days’ notice.
Dated: 19 December 2018
Registered Office:
Thorpe Way
Grove Park
Enderby
Leicestershire
LE19 1SU
Registered Number: 3213782
By order of the Board
ALISTAIR HODDER
Company Secretary
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Notice of Annual General Meeting
Notes
1. The right to vote at the meeting is determined by reference to the register of members. Only those members registered in the register of
members of the Company as at close of business on 28 January 2019 or, in the event that the meeting is adjourned, close of business
on such date being not more than two days prior to the date fixed for the adjourned meeting, shall be entitled to attend and vote at
the meeting in respect of the number of shares registered in their name at that time. Changes to entries in the register of members after
close of business on 28 January 2019 or, in the event that the meeting is adjourned, after two working days before the time of any
adjourned meeting, shall be disregarded in determining the rights of any person to attend or vote at the meeting.
2. If you propose to attend the AGM in person, please detach and bring with you the attendance slip attached to the Form of Proxy.
You will be asked to show this at the entrance and not having it available could delay your admission. Shareholders and participants
may also be required to provide proof of identity.
3. A member is entitled to appoint one or more persons as proxies to exercise all or any of his rights to attend, speak and vote at the
meeting. A proxy need not be a member of the Company. A form of proxy is enclosed and notes for completion can be found on the
form and should be read carefully before it is completed. To be valid, the form of proxy must be completed, signed and sent to the
offices of the Company’s registrars, Link Asset Services, PXS, The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU together
with the power of attorney or other authority (if any) under which it is signed or a notarially certified or office copy of the same, so as
to arrive no later than 10.00 a.m. on 28 January 2019 (or, in the event that the meeting is adjourned, no later than two working days
before the time of any adjourned meeting).
4. A member may appoint more than one proxy in relation to the meeting provided that each proxy is appointed to exercise the rights
attached to a different share or shares held by him. To appoint more than one proxy, you will need to complete a separate proxy form
in relation to each appointment. You may photocopy the enclosed proxy form, indicating clearly on each proxy form the name of the
proxy you wish to appoint and the number of shares in relation to which the proxy is appointed. All forms must be signed and should
be returned together in the same envelope. You can only appoint a proxy using the procedures set out in these notes and the notes to
the proxy form. The right of a member under section 324 of the Companies Act 2006 (the “Act”) to appoint a proxy does not apply to
a person nominated to enjoy information rights under section 146 of the Act.
5. The appointment of a proxy will not preclude a member from attending and voting in person at the meeting if he or she so wishes.
6. As an alternative to completing the hard copy proxy form, a shareholder may appoint a proxy or proxies electronically by logging
onto www.signalshares.com. Full details of the procedures are given on that website. For an electronic proxy appointment to be
valid, the appointment must be received by Link Asset Services no later than 10.00 a.m. on 28 January 2019 (or, if the meeting is
adjourned, no later than 48 hours before the time of any adjourned meeting). Any electronic communication sent by a shareholder to
the Company or Link Asset Services which is found to contain a virus will not be accepted by the Company but every effort will be
made by the Company to inform the shareholder of the rejected communication.
7. If you submit your proxy form via the internet it should reach the registrar by 10.00 a.m. on 28 January 2019. Should you complete
your proxy form electronically and then post a hard copy, the form that arrives last will be counted to the exclusion of instructions
received earlier, whether electronic or posted. Please refer to the terms and conditions of the service on the website.
8. The notes to the proxy form include instructions on how to appoint a proxy by using the CREST proxy appointment service.
9. You may not use any electronic address provided either in this Notice of AGM or in any related documents (including the proxy form)
to communicate with the Company for any purposes other than those expressly stated.
10. As at the close of business on 5 December 2018, the Company’s issued share capital comprised 196,440,971 ordinary shares
of 3.33p each. Each ordinary share carries the right to one vote at a general meeting of the Company. No ordinary shares were
held in treasury but the Company’s employee benefit trust holds 1,518,694 ordinary shares to which it has waived its voting rights.
Accordingly, the total number of voting rights in the Company as at the close of business on 5 December 2018 is 194,922,277.
11. 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 to vote on each resolution or withhold their vote.
12. In the case of joint holders, where more than one 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).
13. CREST members who wish to appoint a proxy or proxies through the CREST electronic proxy appointment service may do so by using
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 or instruction made using the CREST service to be valid, the appropriate CREST message (a “CREST
Proxy Instruction”) must be properly authenticated in accordance with Euroclear UK & Ireland Limited specifications and must contain
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TOPPS TILES PLC ANNUAL REPORT AND ACCOUNTS FOR THE 52 WEEK PERIOD ENDED 29 SEPTEMBER 2018 129
the information required for such instructions, as described in the CREST Manual. The message, regardless of whether it constitutes the
appointment of a proxy or an amendment to the instruction given to a previously appointed proxy, must, in order to be valid, be transmitted
so as to be received by the issuers’ agent (ID RA10) by the latest time for receipt of proxy appointments specified in this notice. 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 registrars are 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 provider(s) should note that Euroclear UK & Ireland
Limited 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 (as amended).
14. Where a copy of this notice is being received by a person who has been nominated to enjoy information rights under section 146
of the Act (“nominee”):
a. the nominee may have a right under an agreement between the nominee and the member by whom he was appointed, to be
appointed, or to have someone else appointed, as a proxy for the meeting; or
b. if the nominee does not have any such right or does not wish to exercise such right, the nominee may have a right under any such
agreement to give instructions to the member as to the exercise of voting rights.
15. A member that is a company or other organisation not having a physical presence cannot attend in person but can appoint someone
to represent it. This can be done in one of two ways: either by the appointment of a proxy (described in notes 2 to 8 above); or by a
corporate representative. Members considering the appointment of a corporate representative should check their own legal position,
the Company’s Articles of Association and the relevant provision of the Companies Act 2006.
16. Link Asset Services maintain the Company’s share register. They also provide a telephone helpline service on 0871 664 0300 (calls
cost 12p a minute plus network extras). Lines are open from 8.30 a.m. to 5.30 p.m., Monday to Friday. If you have any queries
about voting or about your shareholding, please contact Link Asset Services.
17. Members have the right to ask questions at the meeting in accordance with section 319A of the Act.
18. It is possible that, pursuant to requests made by members of the Company under section 527 of the Act, the Company may be
required to publish on a website a statement setting out any matter relating to: (a) the audit of the Company’s accounts (including the
Auditor’s Report and the conduct of the audit) that are to be laid before the meeting; or (b) any circumstance connected with an auditor
of the Company ceasing to hold office since the previous meeting at which annual accounts and reports were laid in accordance
with section 437 of the Act. The Company may not require the members requesting any such website publication to pay its expenses
in complying with sections 527 or 528 of the Act. Where the Company is required to place a statement on a website under section
527 of the Act, it must forward the statement to the Company’s auditor not later than the time when it makes the statement available on
the website. The business which may be dealt with at the meeting includes any statement that the Company has been required under
section 527 of the Act to publish on a website.
19. 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 Act;
b. copies of the Directors’ service contracts and letters of appointment of the Non-Executive Directors; and
c. a copy of the Company’s Articles of Association.
20. Information regarding the meeting, including the information required by section 311A of the Act, is available from the Company’s
website – toppstilesplc.com.
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Explanatory Notes to the
Notice of Annual General Meeting
THE ANNUAL GENERAL MEETING of the Company will be held at the Marriott Hotel, Smith Way, Grove Park, Enderby, Leicestershire,
LE19 1SW on 30 January 2019 at 10.00 a.m.
Four of the resolutions are to be taken at this year’s Annual General Meeting as special business. By way of explanation of these and the
other resolutions:
Ordinary Business
Resolution 1
Receiving the Accounts and Reports
All quoted companies are required by law to lay their annual accounts before a general meeting of the company, together with the
directors’ reports and auditors’ report on the accounts. At the Annual General Meeting, the Directors will present these documents to the
shareholders for the financial period ended 29 September 2018 (the “Annual Report and Financial Statements”).
Resolution 2
Declaration of Final Dividend
A final dividend of 2.3 pence per Ordinary Share is recommended by the Directors for payment to shareholders on the register of
members of the Company at 6.00 p.m. on 21 December 2018. Subject to approval by the Ordinary Shareholders at the Annual
General Meeting, the dividend will be paid on 4 February 2019. An interim dividend of 1.1 pence was declared which means the
total dividend level will be 3.4 pence per Ordinary Share for the 52 weeks prior to 29 September 2018.
Resolution 3
Directors’ Remuneration Report
All quoted companies are required by law to produce for each financial year a directors’ remuneration report which sets out the
Remuneration Committee’s policy in relation to directors’ remuneration, together with the remuneration and benefits paid to directors
during the year. The Company is also required to put an ordinary resolution to shareholders approving the report at the meeting at which
the Company’s report and accounts for that year are laid. Accordingly, resolution 3 seeks the approval of the Directors’ Remuneration
Report which is set out on pages 54 to 69 of the Annual Report and Financial Statements (excluding the Directors’ Remuneration Policy).
Resolutions 4 to 9
Re-election of Directors
The Company’s Articles of Association require that at every annual general meeting one-third of the Directors for the time being shall retire
and submit themselves for re-election. Although not required by the Company’s Articles, the Directors will, in the interests of good corporate
governance under the UK Corporate Governance Code, retire voluntarily and offer themselves for re-election. Brief biographical details
about all the Directors appear on pages 42 and 43 of the Annual Report and Financial Statements.
Resolution 10
Appointment of Auditor
This resolution concerns the appointment of PricewaterhouseCoopers LLP (to succeed Deloitte LLP) as auditor until the conclusion of the next
general meeting at which accounts are laid, that is, the next Annual General Meeting.
Resolution 11
Auditor’s Remuneration
This resolution authorises the Directors to fix the auditor’s remuneration.
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Special Business
Resolution 12
Directors’ Power to Allot Shares
This resolution complies with guidance issued by the Investment Association and will, if passed, authorise the Directors to allot:
•
•
relevant securities up to a maximum nominal amount of £2,160,851 which represents approximately one-third of the Company’s
issued ordinary shares (excluding treasury shares) as at the date of this notice. This maximum is reduced by the nominal amount of any
equity securities allotted under the authority set out in paragraph (b) of resolution 12 in excess of 2,160,851; and
in relation to a pre-emptive rights issue only, equity securities (as defined by section 560 of the Act) up to a maximum nominal amount
of £4,321,701 which represents approximately two-thirds of the Company’s issued ordinary shares (excluding treasury shares) as at
the date of this notice. This maximum is reduced by the nominal amount of any relevant securities allotted under the authority set out in
paragraph (a) of resolution 12.
Therefore, the maximum nominal amount of relevant securities (including equity securities) which may be allotted under this resolution is
£4,321,701.
As at the date of this notice, the Company does not have any treasury shares.
The Directors do not have any present intention of exercising the authorities conferred by this resolution but they consider it desirable
that the specified amount of authorised but unissued share capital is available for issue so that they can more readily take advantage
of possible opportunities.
Resolutions 13 and 14
Directors’ Power to Issue Shares for Cash
Resolution 13 authorises the Directors in certain circumstances to allot equity securities for cash other than in accordance with the statutory
pre-emption rights (which require a company to offer all allotments for cash first to existing shareholders in proportion to their holdings).
The relevant circumstances are where the allotment:
•
•
takes place in connection with a rights issue or other pre-emptive issue;
is limited to a maximum nominal amount of £324,128 representing approximately 5% of the nominal value of the issued ordinary
share capital of the Company as at 5 December 2018, being the latest practicable date before publication of this notice.
Resolution 14 authorises the Directors to allot further equity securities for cash in connection with acquisitions or other specified capital
investments which are announced contemporaneously with the allotment, or which has taken place in the preceding six-month period and
is disclosed in the announcement of the allotment. This authority, which is in addition to the authority granted to the Directors pursuant to
resolution 13 and is being sought in accordance with the Pre-Emption Group’s Statement of Principles, is limited to a maximum nominal
amount of £324,128 which represents approximately 5% of the nominal value of the issued ordinary share capital of the Company
as at 5 December 2018, being the latest practicable date before publication of this notice.
The Board confirms its intention to follow the provisions of the Pre-Emption Group’s Statement of Principles regarding cumulative usage of
authorities within a rolling three-year period where the Principles provide that usage in excess of 7.5% of issued ordinary share capital of
the Company (excluding treasury shares) should not take place without prior consultation with shareholders, except in connection with an
acquisition or specified capital investment as referred to above.
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Explanatory Notes to the
Notice of Annual General Meeting
Treasury Shares
The Company may hold any shares it buys back “in treasury” and then sell them at a later date for cash rather than simply cancelling
them. Any such sales are required to be made on a pre-emptive, pro rata basis to existing shareholders unless shareholders agree by
special resolution to disapply such pre-emption rights. Accordingly, in addition to giving the Directors power to allot unissued ordinary
shares on a non pre-emptive basis, resolutions 13 and 14 will also give Directors power to sell ordinary shares held in treasury on a
non pre-emptive basis, subject always to the limitations noted above. As at the date of this notice, the Company does not have any
treasury shares.
The Directors consider that the power proposed to be granted by resolutions 13 and 14 is necessary to retain flexibility, although they
do not have any intention at the present time of exercising such power.
Unless revoked, varied or extended, the authorities conferred by resolutions 13 and 14 will expire at the conclusion of the next annual
general meeting of the Company or 15 months after the passing of the resolution, whichever is the earlier.
Resolution 15
Authority to Purchase Shares (Market Purchases)
This resolution authorises the Board to make market purchases of up to 19,644,097 ordinary shares (representing approximately 10% of
the Company’s issued ordinary shares as at 5 December 2018, being the latest practicable date before publication of this notice). Shares
so purchased may be cancelled or held as treasury shares. The authority will expire at the end of the next annual general meeting of the
Company or 15 months from the passing of the resolution, whichever is the earlier. The Directors intend to seek renewal of this authority at
subsequent annual general meetings.
The minimum price that can be paid for an ordinary share is 3.33p, being the nominal value of an ordinary share. The maximum price
that can be paid is 5% over the average of the middle market prices for an ordinary share, derived from the Daily Official List of the
London Stock Exchange, for the five business days immediately before the day on which the share is contracted to be purchased.
The Directors intend to exercise this right only when, in light of the market conditions prevailing at the time and taking into account all
relevant factors (for example, the effect on earnings per share), they believe that such purchases are in the best interests of the Company
and shareholders generally. The overall position of the Company will be taken into account before deciding upon this course of action.
The decision as to whether any such shares bought back will be cancelled or held in treasury will be made by the Directors on the same
basis at the time of the purchase.
As at 5 December 2018, being the latest practicable date before publication of this notice, there were outstanding awards under the
Company’s various share option schemes in respect of 14,506,987 ordinary shares in the capital of the Company, representing 7.4% of
the Company’s issued ordinary share capital. If the authority to purchase the Company’s ordinary shares were exercised in full, the number
of outstanding options would represent 8.2% of the Company’s issued ordinary share capital following the repurchase of shares.
Resolution 16
Notice Period for General Meetings
The Companies (Shareholders’ Rights) Regulations 2009 require the Company to call general meetings (other than annual general
meetings) on at least 21 clear days’ notice unless shareholders approve a shorter notice period of not less than 14 clear days. Such
approval was granted at last year’s annual general meeting and this resolution therefore seeks to renew this approval. The approval will
be effective until the Company’s next annual general meeting, at which it is intended a similar resolution will be proposed. The Directors’
intention is to only call general meetings on less than 21 days’ notice where such shorter notice period would be in the interests of
shareholders as a whole.
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TOPPS TILES PLC ANNUAL REPORT AND ACCOUNTS FOR THE 52 WEEK PERIOD ENDED 29 SEPTEMBER 2018 133
The Team
A
Aaron Barber
Aaron Clarkson
Aaron Lonie
Aaron Turner
Abby Tween
Abigail Cole
Abigail Harris
Abigail Routley
Abigayle Shipley
Adam Chapman
Adam Cherryman
Adam Clarke
Adam Crowe
Adam Devine
Adam Din
Adam Ettienne
Adam Gaymer
Adam Gilkes
Adam Godfrey
Adam Groves
Adam Hogg
Adam Hunt
Adam Jolly
Adam Nuttall
Adam Payne
Adam Phillips
Adam Rous
Adam Shearsmith
Adam Simpson
Adam Ward
Adam Woollam
Addam Marsh
Adel Benyoucef
Adel Tazi
Adele McMahon
Adrian Gower
Afrim Mensah
Aidan Monahan
Akash Bisht
Akinyemi Orekoya
Akshey Vadgama
Alan Clague
Alan Haji
Alan Lamb
Alan Saunders
Alan Sinclair
Alan Smalley
Alan Sproston
Aleksandrs Gulenkovs
Alex Bell
Alex Bennet
Alex Fleet
Alex Jones
Alex Moore
Alex Spencer
Alex Whitmore
Alexander Bennett
Alexander Drew
Alexander Findley
Alexander Ford
Alexander Gaffney
Alexander Hall
Alexander Marks
Alexander Miles
Alexander Walton
Alexander Williams
Alexandra Tuckley
Alfie Hogan
Ali Rizvi
Alice Cairns
Alice Mullen
Alicia George
Alicija Romanovska-Stefanovic
Alisha Millward
Alison Hunt
Alison Mazzei-Foster
Alistair Hodder
Allan Busby
Allan Harper
Allysha Byrne
Alnavaz Nuralah
Amanda Brogan
Amanda Green
Amanda Hullett
Amanda Lyon
Amanda Plumb
Amanda Samuel
Amardeep Sanghera
Amelia Foster
Amin Ali
Amy Buttle
Amy Mitchell
Amy Partridge
Amy Smith
Amy Swanson
Amy Wirtz
Ananthan Sivanesan
Andre Osei
Andrea Moon
Andrew Baldock
Andrew Bond
Andrew Collins
Andrew Costen
Andrew Cox
Andrew Davis
Andrew Gilmour
Andrew Habbick
Andrew Hawker
Andrew Haynes
Andrew Holbourne
Andrew King
Andrew Lerwill
Andrew Loudon
Andrew Middleton
Andrew Oliver
Andrew Riley
Andrew Roseby
Andrew Ross
Andrew Sansum
Andrew Scorgie
Andrew Sharkey
Andrew Shaw
Andrew Taylor
Andrew Tibbetts
Andrew Warne
Andrew Waterfield
Andrew Wathan
Andrew Wilkinson
Andrew Woodier
Andrew Young
Andrius Matusevicius
Aneta Kleczek
Angela Capp
Angela George
Anna Hibberd
Anna Martin
Anna-Marie Putt
Anna-Marie Wells
Annie Dickson
Annmarie Malone
Anthony Christopher
Anthony Connor
Anthony Daly
Anthony Davies
Anthony Dedman
Anthony Dolan
Anthony Dunsmore
Anthony Gibby
Anthony Gilbert
Anthony Hollick
Anthony Lyth
Anthony Molyneux
Anthony Saunders
Anthony Tarr
Anthony Taylor
Anthony White
Antony Belham
Antony Miles
Anub Varghese
Anwar Marshall
Arjun Bisht
Aron Hoff
Arthur Ebbs
Aruna Mistry
Ashley Cutler
Ashley Hegarty
Ashley Humphreys
Ashley Kiffin
Ashley Murray
Ashley Rivett
Ashley Somerville
Asteraya Engdayehu
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STRATEGIC REPORTOUR GOVERNANCEOUR FINANCIALSTOPPS TILES PLC ANNUAL REPORT AND ACCOUNTS FOR THE 52 WEEK PERIOD ENDED 29 SEPTEMBER 2018ADDITIONAL INFORMATION 134
The Team
Astone Davids
Atul Patel
Audrius Kolojanskas
Augustine Chinenye
Augustus Hagan
Aurimas Lenkauskas
Azim Ahmed
B
Barbara Connor
Barbara Smith
Barend Fourie
Barri Barnes
Barry Beaver
Barry Hanlon
Barry Jones
Barry Stratford
Barry Theobald
Bartosz Pawelczyk
Ben Bain
Ben Barraclough
Ben Bright
Ben Holloway
Ben Howard
Ben Richmond
Benjamin Gillings
Benjamin Goodey
Benjamin Hale
Benjamin Matthews
Benjamin Rich
Benjamin Wood
Berek K-Caeser
Bethany Brame
Bethany Richardson
Beverley Begley
Beverley Head
Beverley Orton
Bianca Gradinaru
Bill Vincent
Billie Stringer
Billy Stout
Billy Taylor
Bolaji Adeyanju
Bonita Flinthill
Bradley Favre
Bradley Gomes
Bradley Riches
Bradley Webster
Brandon Abels
Brendan Farrell
Brendan Flynn
Brett Goulden
Brett Hookway
Brett O’Harrow
Brian Cook
Brian Edwards
Brian Linnington
Brian Morris
Bruce Fielding
Bruce Garrod
Bruno Bernasconi
Bryan Taylor
Bryony Benson
Byron Tree
C
Cain Walsh
Caitlin Pipes
Callum Evans
Callum Phillips
Callum Shield
Calum Nevitt
Calvin Christopher
Campbell Marr
Carl Ainsworth
Carl Courtney
Carl Cumberbatch
Carl Fraser
Carl Hermitt
Carl Whatley
Carl Willshee
Carley Brown
Carlos Alford Maestre
Carlos Chowdhury
Carol Beattie
Carol Hawkes
Carole Hawken
Caroline Bailey
Caroline Bray
Caroline Macro
Caroline May
Caroline Vernon-Sutton
Carolynn Remington-Hobbs
Carrie Peckston
Catherine Britton
Catherine Doulton
Catriona Bennell-Cook
Catriona Green
Chanel Sanganoo
Chantal Searle
Chantelle Lord
Charjuan Knight
Charlene Smith
Charlene Walpole
Charles Branson
Charles Davis-Alexis
Charles Robbins
Charles Rollins
Charles Snell
Charles Taylor
Charley Leat
Charlie Truscott
Charlotte Fitzgerald
Charlotte Lammin
Chelsea Battle
Chelsea Cragg
Chelsey Robson
Cherie Ahmet
Cheryl Vearncombe
Cheyanne Brown
Chloe Andrews
Chloe Jackson
Chloe Kemp
Chloe Singleton
Chris Darley
Chris Foster
Chris Mcquade
Christelle Armstrong
Christian Banham
Christine Berry
Christine Hickling
Christine Taylor
Christine Thistlethwaite
Christopher Bailey
Christopher Beeson
Christopher Bentley
Christopher Bowden
Christopher Butler
Christopher Carey
Christopher Collins
Christopher Cooper
Christopher Curtis
Christopher D’Arts
Christopher Edwards
Christopher Goodacre
Christopher Harbutt
Christopher Harrison
Christopher Heyes
Christopher Holland
Christopher Howe
Christopher Johnson
Christopher Leach
Christopher Markham
Christopher Miskelly
Christopher Moore
Christopher Nicholls
Christopher Nottle
Christopher Potter
Christopher Robertshaw
Christopher Samuel
Christopher Sansby
Christopher Senior
Christopher Simpson
Christopher Turley
Christopher Wells
Cieran Armstrong
Clair Jeffries
Claire Chaffe
Claire Harris
Claire Herridge
Claire Lees
Claire Ralphs
Claire Stanley
Claire Steele
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TOPPS TILES PLC ANNUAL REPORT AND ACCOUNTS FOR THE 52 WEEK PERIOD ENDED 29 SEPTEMBER 2018 135
Claire Tiney
Clare Barden
Clare Long
Clare Miles
Clare Shepherd
Clifford Tomlinson
Clive Harlow
Clive Lehmann
Colin Clarke
Colin Griffiths
Colin Harvey
Colin Markham
Colin Petch
Colin Rymer
Colin Skinner
Colin Taylor
Connell Smyth
Conner Ockenden
Connor Armstrong
Conrad Cassidy
Conrad Harrup
Constantin Pavelescu
Cora Morrison
Cory Handford
Cosmin Zaharia
Craig Dolling
Craig Johnson
Craig Jones
Craig Matthews
Craig Murphy
Craig Reed
Cristian Olaru
Cristina Cole
Curtis Lee
Curtis McCabe
Czeslaw Majorek
D
Damian Mentel
Damian Merritt
Damiano Seresini
Damiean Godfrey
Dan Bevan
Danial Holloway
Daniel Angel
Daniel Baker
Daniel Brain
Daniel Calderwood
Daniel Chambers
Daniel Cheyne
Daniel Colk
Daniel Cox
Daniel Cross
Daniel Danks
Daniel Fairless
Daniel Fallows
Daniel Fordham
Daniel Geoghegan
Daniel Gillett
Daniel Hawkins
Daniel Hubble
Daniel Jenkins
Daniel Jibb
Daniel Jones
Daniel Lawrie
Daniel Little
Daniel McLean
Daniel Milner
Daniel Moyse
Daniel Musguin
Daniel O’Callaghan
Daniel Poile
Daniel Pratt
Daniel Reynolds
Daniel Saltmarsh
Daniel Sheppard-Brown
Daniel Thornley
Daniel Watts
Daniel Whitehead
Daniel Willows
Daniel Wright
Daniella Winstone
Danielle Kirby
Danielle Noyes
Danielle O’Mara
Dannielle Carlton
Dannique Prince
Danny McInnes
Danny Ostler
Danny Wilson
Darius Bright
Darnelle Riley
Darran Wood
Darren Allcock
Darren Barker
Darren Black
Darren Doughty
Darren Harper
Darren Jones
Darren Mencarini
Darren Mitchell
Darren Morgan
Darren Rose
Darren Shapland
Darren Square
Darren Wagg
Darren Young
Darroll Watts
Darron Kerr
Darron Soos
Darryl Ferry
Dave Elliott
David Augustus
David Beasley
David Bowler
David Carpenter
David Clare
David Clark
David Coupland
David Cressey
David Fisher
David Fletcher
David Green
David Hamer
David Hatton
David Henderson
David Hicks
David Hill
David Hillier-Reynolds
David Hirst
David Hope
David Houston
David Hussey
David Jackson
David Jobling
David Kershaw
David Kettlewell
David Knight
David Lane
David Macartney
David Matthews
David Medlam
David Meers
David Miller
David Murray
David Oliver
David Rendall
David Sheehy
David Shewan
David Simms
David Sinclair
David Stott
David Thomas
David Thomasson
David Thompson
David Townsley
David Webb
David Wilson
David Yallop
Davina Vitles
Dawn Gale Curtis
Dean Kay
Dean Marshall
Dean Newell
Dean Titchen
Dean Woolley
Deane Rhone
Deborah Fitzpatrick
Debra Bandghiree
Declan Baker
Decland Speede
Deena Mistry
Deesha Bhatt
Deividas Jonkaitis
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STRATEGIC REPORTOUR GOVERNANCEOUR FINANCIALSTOPPS TILES PLC ANNUAL REPORT AND ACCOUNTS FOR THE 52 WEEK PERIOD ENDED 29 SEPTEMBER 2018ADDITIONAL INFORMATION 136
The Team
Deividas Korsakas
Denis O’Brien
Denise Chalmers
Dennis Jovellanos
Denzil Johns
Derek Sim
Dermott Reilly
Deryn Shipley
Devias Gudka
Devindren Govender
Dilawar Ali
Dipak Chauhan
Dipal Parikh
Dmitrijs Nahodkins
Dolton Gordon
Dominic D’Souza
Dominic Gray
Dominic Hall
Dominic Reilly
Dominick Mccann
Donald Magullian
Donna Douglas
Donna Murphy
Donovan Robinson
Douglas Bingham
Douglas Gracia
Douglas Nicol
Dwain Mensah
Dylan Bradley
Dylan Roberts
E
Eamonn Clancy
Elaina Waterhouse
Elaine Peacock
Elizabeth Lee
Elizabeth Sutton
Ellen Colchester
Elliot Musk-Cooper
Elliott Brown
Elliott Davis
Elliott Sully
Elsie Bird
Emely Bjorkman-loney
Emily Connelly
Emily Gardiner
Emily Hunter
Emily Lenton
Emily Mansell
Emily Sneller
Emily Tuttlebury
Emma Anderson
Emma Bray
Emma Dudley
Emma Gotch
Emma Hilton
Emma Jordan
Emma Macfarlane
Emma Spellacey-Perry
Emmanuel Melford-Rowe
Emran Mannan
Enam Ali
Eren Ucman
Erikas Mazeikis
Ermiyas Girma
Erwan Vauconsant
Esme Sparrow
Euhuan Lumsden
Ezra Deans
F
Faizar Ali
Fardowsa Mohamed
Fatima Pereira
Faye Henderson
Fayzur Rahman
Felipe West
Fiona Oakes
Fitz Martin
Fouche Lubbe
Frances Aylward
Francesca Wright
Frank Hibbert
Frank Smith
Fraser Lockley
Fred Therme
G
Gabriel Iacob
Gabriela Olszowska
Gabriella Carvalho
Gail Kitson
Gail Knight
Gareth Camplin
Gareth Davies
Gareth Fogden
Garry Crichton
Garry Hardy
Gary Bloomfield
Gary Curtis
Gary Davies
Gary Fellows
Gary Gear
Gary Gee
Gary Gledhill
Gary Heath
Gary Marshall
Gary Mayo
Gary Nash
Gary Roberts
Gary Tipler
Gary West
Gary Woolmore
Gavin Bennett
Gavin Collins
Gavin Magwood
Gavin Winter
Geeta Makwana
Gemma Davies
Gemma Farnan
Gemma Kirk
Gemma Stephens
Gemma Wademan
Genya Hutchins
Geoffrey Greenwood
Geoffrey Thomas
Geordie Stock
George Allen
George Astill
George Birkley
George Dewis
George Hopper
Georgia Miles
Geraint Griffiths
Geraint Thorne
German Ramirez Marin
Gillian Grace
Glendale Canoville
Glenn Cottrell
Glenn Elgy
Glenn Smith
Gokhan Karadogan
Gordon Shennan
Graham Cooper
Graham Foster
Graham Hancock
Graham Hitchin
Graham Jones
Graham Livingstone
Graham Mansfield
Graham Vance
Gregory Jeffs
Gregory McHugh
Gregory Smith
Grenville Davies
Gurinder Chana
H
Halima Awad
Hannah Kings
Hannah Lee
Hannah Pritchard
Hannah Sayers
Hannah White
Hanz Nelson
Haroon Younus
Harriet Goodacre
Harry Biggs
Harry Kay
Hayden Inman
Hayden Mason
Hayley Hopwood
Hazel Millington
Helen Gosling
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TOPPS TILES PLC ANNUAL REPORT AND ACCOUNTS FOR THE 52 WEEK PERIOD ENDED 29 SEPTEMBER 2018 137
Helen Hughes
Helen Walker
Helen Washington
Henry Povey
Hitesh Chanana
Holly Bishop
Holly Dawson
Holly Vincent
I
Iain Arnott
Ian Aikman
Ian Bloomfield
Ian Croton
Ian Fraser
Ian Hughes
Ian Marshall
Ian Mattacola
Ian McNeish
Ian Noon
Ian Paterson
Ian Smithson
Ian Sykes
Ian Tivendale
Ibrahim Ali
Iftekhar Parvez
Igors Koselevs
Ilars Skabeikis
Inzamam Akram
Ismail Spence
Ivan Paitoo
J
Jaasir Wazir
Jacek Skubisz
Jacek Zebrowski
Jack Allardyce
Jack Bennett
Jack Bogg
Jack Coker
Jack Ellis
Jack Finlay
Jack Flannigan
Jack Hill-Jones
Jack Jorden
Jack Maddison
Jack Millman
Jack Ockenden
Jack O’Neill
Jack Relfe
Jack Swain
Jack Thompson
Jack Wheeler
Jacob Allan
Jacob Powell
Jacob Stuart
Jacqueline Dadge
Jacqueline Desborough-Morehead
Jacqueline Farnan
Jade Girgensons
Jagraj Dhother
Jahtal Nisa Roberts-Joseph
Jailuene Witterick Peake
Jake Carter
Jake Shopland
Jake Woods
Jamal Khanum-Muhammad
Jamarion King
James Beasley
James Beaumont
James Biesty
James Brophy
James Cameron
James Carpenter
James Cheung
James Clifford
James Comber
James Fox
James Hawker
James Heard
James Henshaw
James Hollis
James Howard
James Kew
James Lobb
James MacCallum
James McGuigan
James Morgan
James O’Driscoll
James Pannett
James Patston
James Pilfold
James Robertson
James Rolfe
James Saunders
James Snuggs
James Taylor
James Tuvey
James Walker
James White
James Williams
James Worden
Jamie Broadhurst
Jamie Calow
Jamie Evans
Jamie Kelly
Jamie Mears
Jamie Ormrod
Jamie Rose
Jamie Sia
Jamie Wenborn
Jamie Wilson
Jamie Lee McCann
Jamye Walker
Jan Reddi
Janaka Alahapperuma
Janet Lee
Jarmila Weller
Jasbir Singh
Jasmine Dogertz
Jason Barker
Jason Bloxham
Jason Coupland
Jason Darcy
Jason Ealden
Jason Knox
Jason Pratt
Jason Rose
Jaspreet Sandhu
Jasvinder Rehal
Javeed Parkar
Jawan Pantin
Jay Billings
Jay Franklin
Jay Gale
Jay King
Jay Strawford
Jayaprakash Paragjee
Jayne Young
Jeannette Hastie
Jedrzej Politowski
Jeffrey Armstrong
Jennie Kane
Jennifer Gregory
Jennifer Seabrook
Jennifer Thompson
Jennifer Wall
Jenny Inkson
Jeremy Long
Jeremy Napthine
Jessica Gurski
Jessica Ling
Jessica McCarthy
Jessica Rowlands
Jessica Thiari
Joanne Cox
Joanne Elton
Joanne White
Jodie Jones
Joe Dwyer
Joe Mathews
Joe Raynsford
Joe Smith
Joel Barker
Joel Bray
Joel Fothergill
Jogendra Kalicharan
John Bourke
John Bryant
John Conley
John Cook
John Crawshaw
John Ellis
John Fawkes
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STRATEGIC REPORTOUR GOVERNANCEOUR FINANCIALSTOPPS TILES PLC ANNUAL REPORT AND ACCOUNTS FOR THE 52 WEEK PERIOD ENDED 29 SEPTEMBER 2018ADDITIONAL INFORMATION 138
The Team
John Field
John Gardner
John Harris
John Harrison
John Hesp
John Hughes
John McLaren
John Moat
John Murphy
John Page
John Scatchard
John Shaw
John Smith
John Thompson
Johnathan McCallum
Jon Cottrell
Jon Davis
Jon Reynolds
Jon Thatcher
Jonathan Boxall
Jonathan Coombs
Jonathan East
Jonathan Hall
Jonathan Hargreaves
Jonathan Impey
Jonathan Kirk
Jonathan Morgan
Jonathan Stearman
Jonathan Stone
Jonathan Wallace
Jonathan Williams
Jonathan Woodroff
Jonathon Turner
Jon-Paul Hughes
Jordan Abraham
Jordan Bannister
Jordan Edghill
Jordan Fox
Jordan Huston
Jordan Lindsay
Jordan Lowes
Jordan Macdonald
Jordan Scarbrow
Jordan Stephens
Jordan Vinluan
Josef Kinski
Joseph Cox
Joseph Daly
Joseph De Matos
Joseph Gregorace
Joseph Haynes
Joseph Heath
Joseph Lewis
Joseph Morton
Joseph Walsh
Joseph Whittaker
Josephina Lane
Josh Wood
Joshua Anderson
Joshua Bradley
Joshua Brown
Joshua Burgess
Joshua Darby
Joshua Dunford
Joshua Elliott
Joshua Hastings
Joshua Higgs
Joshua Hubbard
Joshua Hughes
Joshua Lambert
Joshua Paton-Rolls
Joshua Rapley
Joshua Stenhouse
Joshua Wright
Josiah Everitt
Josie Colehan
Jude McGuigan
Judith Duncan
Juginder Gill
Julia Kerr
Julian Myles
Julie Bird
Julie Brachtvogel
Julie Cox
Julie Fewings
Julie Mitchell
Jullah Jabbi
Juris Kalnins
Justin Coyle
Justin Marlow
Justin Morgan
Justinas Pelakauskas
Justine Bowman
Juttinder Digpal
Jyoti Kaur
K
Kacper Dadel
Kajetan Marcinek
Kamaljit Atkar
Kamaljit Thandi
Kamil Janas
Kamlesh Shah
Karen Dodds
Karis Hall
Karl Aran
Karl English
Karl Lippiatt
Karl Mullaney
Karl Reeves
Karl Stephens
Karl Turner-Talmage
Karl White
Kashan Riley
Kashif Zaman
Kastriot Kelani
Katarzyna Roberts
Kate Burden
Kate Flitton
Katherine Blitz
Katherine Jackson
Kathryn Finch
Kathryn Pell
Kathryn Van-Kleef
Katie Brindley-Hughes
Katie Johnson
Katie Lunn
Katy Todd
Kayla Thomas
Kayleigh Barnes
Kayleigh Clemson
Kayley Coldham
Kazi Miah
Keaton Bayliss
Keely Powell
Keiran Williams
Keith Alexander
Keith Ambrose
Keith Bearman
Keith Down
Keith Fitzpatrick
Keith Murphy
Keith Rudkin
Kelly Dalby
Kelly Goodacre
Kelly Savile
Kelly Weyman
Kelly-Anne O’Connor
Kelvin Sam Junior Lansdowne
Kenneth Ostler
Kenneth Owen
Kenneth Westley
Kerri Atkinson
Kerrie Burcham
Kerry Hurst
Kerry-Ann Smith
Kevan Richardson
Kevin Atherton
Kevin Baker
Kevin Bingham
Kevin Bowtle
Kevin Da Silva
Kevin Fox
Kevin Frampton
Kevin Gunn
Kevin Hailes
Kevin Hardy
Kevin Hartley
Kevin Nicol
Kevin Rowe
Kevin Smart
Kevin Smith
Kevin Thorne
Keziah Bryant
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TOPPS TILES PLC ANNUAL REPORT AND ACCOUNTS FOR THE 52 WEEK PERIOD ENDED 29 SEPTEMBER 2018 139
Khai Shaw
Khan Khan
Khawar Mahmood
Kiaran Wingham
Kie Mitchell
Kieran Barnes-Warden
Kieran Corben
Kieran Fleet
Kieran Gardiner
Kieran Hansard
Kieran Hudson
Kieran Reeves
Kieron Clarke
Kim Liddle
Kim Moriarty
Kirandeep Kaur
Kirk Irvine
Kirk Taylor
Kirsten Cummings
Kirstie Leonard
Kirstie Mcdowell
Kirsty De-Rose
Kirsty Graham
Kirsty Jones
Kirsty Rice
Kirti Patel
Kranthi Billakanti
Krishna Patel
Kristal Dickinson
Kristian Catterall
Kristian Prosser
Kristopher Allatson
Krystle Milan
Krzysztof Burdajewicz
Kurt Folkes
Kurt Hamilton
Kye Harman
Kyle Batley
Kyle Crichton
Kyle Hardie
Kyle Manns-Kennedy
Kyle Markland
Kyle Welford
L
Lance Cale
Laura Henry
Laura Horton
Laura James
Laura Madigan
Laura Racey
Laura Sansom
Laura Wilson
Lauren Holmes
Lauren Munro
Lauren Richmond
Lauren Stanhope
Laurence Jones
Laurence Pendrill
Layla Pring
Leah Humphries
Leah Westwood
Leanne Clarke
Leanne Curry
Leanne Palmer
Lee Armstrong
Lee Butcher
Lee Carlos
Lee Clarke
Lee Cornford
Lee Dering
Lee Eagling
Lee Gadney
Lee Galloway
Lee Gibson
Lee Gladman
Lee Gleeson
Lee Harris
Lee Hutchinson
Lee Jacovou
Lee James
Lee Kent
Lee McDonnell
Lee Read
Lee Wilkinson
Lee Windram
Lee Worrad
Leendert Van Den Berg-Slowey
Leighton Davies
Leon Das
Leon Dyer
Leon Pryce
Leona Parker
Lesley Willcox
Lewis Adkins
Lewis Allan
Lewis Buckley
Lewis Crossley
Lewis Elkin
Lewis Hill
Lewis Kennedy
Lewis Rockett
Lewis Walter
Lewis Williams
Leyton Bellamy
Liam Bantin
Liam Childs
Liam Corbett
Liam Ellis
Liam Flynn
Liam Harris
Liam Hogan
Liam Hounsell
Liam Hunt
Liam Jiggins
Liam Piper
Lianne Harrison
Libby Field
Lindsay Bond
Lindsey Flint
Lisa Algar
Lisa Callan
Lisa Cullen
Lisa France
Lisa Holmes
Lisa Johnson
Lisa-Marie Slater
Lloyd Jackson
Lois Short
Lola Halligan
Loucas Louca
Louise Bunting
Louise Groves
Louise Henbest
Louise Jeffery
Louise Marsden
Louise McComiskey
Louise Reddell
Lucy Harper-Thompson
Lucy Jenner
Lucy McGennity-Bane
Lucy Swain
Lukaszi Pirga
Luke Barefield
Luke Carson
Luke Day
Luke Kerr
Luke Livermore
Luke McNally
Luke O’Connor
Luke Potiphar-Trigwell
Luke Saunders
Luke Watson
Luke Woodward
Luke Wright
Lyndsey Kell
Lynne Foster
Lynne Meldrum
Lynsey Smart
M
Madeline Pipes
Maeghan Taylor
Mahdi Hafezpol
Mahesh Wara
Mahomad Zubair Saiyed
Mandy Aidney
Marc Law
Marcin Kupczyk
Marek Kloda
Margaret Lawrie
Maria Drozdova
Maria Thompson
Maria Williams
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Proof 8
07/12/2018 16:46:02
STRATEGIC REPORTOUR GOVERNANCEOUR FINANCIALSTOPPS TILES PLC ANNUAL REPORT AND ACCOUNTS FOR THE 52 WEEK PERIOD ENDED 29 SEPTEMBER 2018ADDITIONAL INFORMATION 140
The Team
Marie Hayward
Mariya Hanif
Mark Alexa
Mark Allman
Mark Bianchi
Mark Braithwaite
Mark Brown
Mark Burgess
Mark Coe
Mark Davies
Mark Frisby
Mark Fuller
Mark Gasson
Mark Heath
Mark Hewitt
Mark Hunter
Mark Keymer
Mark Lever
Mark Maciver
Mark Matthews
Mark Owen
Mark Palmer
Mark Pancott
Mark Penfold
Mark Percival
Mark Richardson
Mark Ridley
Mark Rogers
Mark Sloan
Mark Stephens
Mark Tennant
Mark Tilley
Mark Vaughan
Mark Waldock
Mark West
Mark Whitaker
Mark Williams
Mark Winder
Mark Woodyatt
Mark Wordley
Mark Wright
Marley Wingrove
Martha Karczewska
Martin Brown
Martin Oliver
Martin Osborne
Martin Pickard
Martin Turner
Martin Williams
Martin Winterburn
Martina Way
Martyn Somerville
Martyn Spring
Mateusz Kosior
Mathew Buckett
Mathew Lampard
Mathew Mitchell
Mathew Tapp
Matt Attwood
Matt Garwood
Matthew Barcas
Matthew Bartholomew
Matthew Bennett
Matthew Birchall
Matthew Clarke
Matthew Dunne
Matthew Ellis
Matthew Fisher
Matthew Foster-Smith
Matthew Foulger
Matthew Gearing
Matthew Hawley
Matthew Haynes
Matthew Illing
Matthew Ingram
Matthew Jones
Matthew Lindsay
Matthew Martin
Matthew McManus
Matthew Miller
Matthew Moore
Matthew Nash
Matthew Robinson
Matthew Rowson
Matthew Sinclair
Matthew Stevenson
Matthew Way
Matthew Wesson
Matthew Whitlock
Matthew Williams
Matthew Woodhouse
Matthew Wright
Mattia Galassi
Mattia Tosi
Max Evans
Megan Broadway
Megan Lyons
Megan May
Megan Wiley
Mehmet Asdoyuran
Melanie Abbott
Melanie Rogers
Melanie Toole
Melissa Wadman
Melton Thompson
Melvin Metzger
Melvyn Chamberlain
Mervyn Thorne
Mhairi Wade
Mica Gray
Michael Boughton
Michael Buckley
Michael Darroch
Michael Dinter
Michael Earls
Michael Edwards
Michael Evans
Michael Fannon
Michael Finn
Michael Foley
Michael Gee
Michael Goodfield
Michael Hall
Michael Hopper
Michael Humphrey
Michael Kessler
Michael Lay
Michael Litster
Michael Lovelock
Michael McGarry
Michael Moss
Michael Ohare
Michael Quinn
Michael Rosewall
Michael Sear
Michael Swanston
Michael Upton
Michael Van Sittert
Michael Way
Michael Wright
Michaela Thomas
Michele Trickett
Michelle Astman
Michelle Coote
Michelle le Monnier
Michelle Lisle
Michelle Moore
Mick Wells
Mihaela Duta
Mike Booth
Miles Burden
Miles Turner
Millie Gregory
Minai Kanabar
Miroslaw Hebda
Mkhonto Gumede
Mo Alhamwi
Mohamed Patel
Mohamed Weheliye
Mohammad Mukhtar
Mohammed Ali
Mohammed Amin
Mohammed Hoque
Mohammed Jamil
Mohammed Jimale
Mohammed Khalid
Mohammed Ibad Khan
Molly Throup
Mr Topps (retired)
Mubashir Uddin
Murdo Martin
Topps Tiles AR2018.indd 140
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Proof 8
07/12/2018 16:46:02
TOPPS TILES PLC ANNUAL REPORT AND ACCOUNTS FOR THE 52 WEEK PERIOD ENDED 29 SEPTEMBER 2018 141
Murrin Kennedy
Murshed Ali
Myles Byfield
N
Nancy Jacques
Naomi McKenzie
Narinder Chatha
Nasir Hussain
Natalie McCuaig-Finlay
Natalie Paine
Natalie Ratsavong
Natasha McLeod
Nathan Austin
Nathan Bulleyment
Nathan Coulthard
Nathan George
Nathan Goodhew
Nathan Harry
Nathan Winterton
Nauris Vinkelis
Navdeep Reehal
Nayim Ahmed
Neely Stuart
Neha Shah
Neil Anderson
Neil Brownley
Neil Cato
Neil Homan
Neil Jeremy
Neil Jones
Neil Muckle
Neil Southgate
Neil Topping
Neil Wardlaw
Neil Williams
Nichola Humble
Nicholas Culley
Nicholas Gadd
Nicholas Hargreaves
Nicholas Kent
Nicholas King
Nicholas Lawrence
Nicholas Lodge
Nicholas Peedell
Nicholas Stone
Nicholas Taylor
Nicholaus Buchanan
Nick Meese
Nick Walch
Nick Wardman
Nickola Young
Nicky Glenister
Nicola Brownley
Nicola Fletcher
Nicola Hellett
Nicola Howlett
Nicola McWatt
Nicole Andrews
Nicole Colvin
Nicole Hutchison
Nigel Fleming
Nigel Slaughter
Nikolay Georgiev
Nishit Shah
Noeleen Ryan
Noor Abed
Norman Schwab
Numan Usman
Nuno Pinto Da Costa
O
Oliver Wallis
Olivia Dettmer
Olyvia Offley
Onder Madencioglu
Oscar Cork
Otis Kiananua
Ovidijus Dirzys
Owais Kaleem
Owen Tudor
Oz Masaya
P
Paige Makepeace
Paige Morgan
Pankaj Bhardwaj
Paolo Segagni
Paresh Nagar
Parminder Garcha
Patrick Howlett
Patrick Stoner
Paul Ace
Paul Baxter
Paul Brooks
Paul Burkett
Paul Burrow
Paul Cartledge
Paul Chapman
Paul Cheetham
Paul Clark
Paul Cowen
Paul Cox
Paul Dalby
Paul Fisk
Paul Galvin
Paul Gee
Paul Godefroy
Paul Gooch
Paul Haythorne
Paul Hubbard
Paul Irving
Paul Jenkinson-Finn
Paul Kelling
Paul Kelly
Paul Keymer
Paul Lee
Paul Lester
Paul Logue
Paul Miller
Paul Mills
Paul Nicholls
Paul Noyes
Paul Semple
Paul Smith
Paul Starkey
Paul Sumner
Paul Third
Paul Thomas
Paul Tregaskis
Paul West
Paul Whittington
Paul Whitworth
Paul Wilson
Paul Winter
Pauline Garrow
Pauline Harrison
Pauline Whitaker
Paulo Jorge Freitas Marques
Pawel Pudelko
Pawel Warych
Penny Davis
Perran Kelly
Peter Ambrose
Peter Callan
Peter Carr
Peter Charles
Peter Charters
Peter Clements
Peter Eagles
Peter Goulding
Peter Hanley
Peter Hunt
Peter Ijere
Peter Jackson
Peter Knights
Peter Lees
Peter Little
Peter Sincock
Peter Turtle
Peter West
Peter Wiles
Peter Young
Phil Weaver
Philip Botting
Philip Cranston
Philip Dunn
Philip Gallop
Philip James
Philip Speed
Philip Stocks
Philip Underhill
Philippa Hill
Topps Tiles AR2018.indd 141
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Proof 8
07/12/2018 16:46:02
STRATEGIC REPORTOUR GOVERNANCEOUR FINANCIALSTOPPS TILES PLC ANNUAL REPORT AND ACCOUNTS FOR THE 52 WEEK PERIOD ENDED 29 SEPTEMBER 2018ADDITIONAL INFORMATION 142
The Team
Phillip Walters
Phillipa Hewitt
Phoebe Webb
Polly McMahon
Poonam Patel
Poppy Branch-Tarry
Poppy Turner
Portia Boehmer
Preline Martha
Przemyslaw Drabinski
Q
Quang Pham
R
Rabinder Gill
Rachel Fellows
Radoslaw Doktorski
Rain Paterson
Raj Surani
Rajan Toora
Rajesh Thanki
Rajiv Vadgama
Rajneet Sahota
Rajnish Gaur
Ratip Hassan
Ravi Kalyan
Rebeca Wallis
Rebecca Ball
Rebecca Carne
Rebecca Cole
Rebecca Godfrey
Rebecca Hackett
Rebecca Love
Rebecca Mills
Rebecca Moore
Rebecca Oblein
Rebecca Robson
Reece Brewin
Reece Brown
Reece Moss-Matthews
Reece Thorpe
Rhiannon Holland
Rhys Hedges
Ricardo Paine
Richard Bickers
Richard Bleach
Richard Bourne
Richard Carter
Richard Clark
Richard Davies
Richard France
Richard Geare
Richard Greenwood
Richard Keane
Richard Mann
Richard Oates
Richard Oldale
Richard Palfrey
Richard Prescott
Richard Senior
Richard Small
Richie Stephen
Rickie Byrne
Ricky Freeman-Roach
Riley Hayward
Rob Grassham
Robbie Perry
Robel Ghebrewold
Robert Adams
Robert Ballantyne
Robert Beard
Robert Black
Robert Brown
Robert Buckley
Robert Chawner
Robert Collins
Robert Dennis
Robert Dunn
Robert George
Robert Hardie
Robert Howker
Robert Keohone
Robert Knight
Robert Kweli
Robert Mitchell
Robert Moss
Robert Myers
Robert Parker
Robert Prince
Robert Spencer
Robert Tsui
Robert Twiner
Robert Wyatt
Roberta De Benedictis
Robin Perrin
Robin Stagg
Robin Williams
Rocky Bryan
Rodrigo Bermeo-Rojas
Rodrigo Branco
Rodyvik Chineah
Roger Gridley
Roger Lazenby
Roisin Smith
Romal Williams
Romans Petuhovs
Romualdas Maciulevicius
Ron Woolgar
Ronnie-Leigh Pews
Rory Reeves
Rory Warwick
Ross Ashbrook
Ross Farrell
Ross Langford
Ross Matthews
Ross McGhee
Roxanne Daly
Roxanne Evans
Russell Cox
Russell Sell
Ryah Webster
Ryan Apark
Ryan Buston
Ryan Coleman
Ryan Dunn
Ryan Farquhar
Ryan French
Ryan Harris
Ryan Hicks
Ryan Izard
Ryan Randall
Ryan Rowles
Ryan White
Ryhan Weekes
Rytis Martinkenas
S
Sahibjit Samra
Sam Attfield
Sam Davis
Samantha Davies
Samantha Gray
Samantha Leavis
Samantha Makrygiannis
Samantha Peters
Samantha Stewart
Sameer Jamdar
Samir Maifi
Samuel Egerton
Samuel Gibson
Samuel Hughes
Samuel Kirk
Samuel Knowles
Samuel Murley
Samuel Taylor
Samuel Wheatley
Samuel White
Sandra Ramsay
Sanjeev Pal
Sara Lloyd
Sarah Burnard
Sarah Cassam
Sarah Cunningham
Sarah Darby
Sarah Dobson Da Silva
Sarah Holey
Sarah Jordan
Sarah Kite
Sarah Mclure
Sarah Phipps
Sarah Rose
Sarah Sullivan
Topps Tiles AR2018.indd 142
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Proof 8
07/12/2018 16:46:02
TOPPS TILES PLC ANNUAL REPORT AND ACCOUNTS FOR THE 52 WEEK PERIOD ENDED 29 SEPTEMBER 2018 143
Sasha Kataria
Satvinder Sandhu
Savio Coutinho
Saxon Owen
Sayed Kazmi
Scott Ahmad
Scott Birdseye
Scott Bond
Scott Cameron
Scott Carter
Scott Hopwood
Scott Johnston
Scott Mccartney
Scott Ottaway
Scott Thirlaway
Scott Vickers
Sean Brandist
Sean Cahill
Sean Dare
Sean Gee
Sean Hull
Sean McClafferty
Sean McLean
Sean Speckman
Sean Taylor
Seku Brobbey
Senervirathna Erandika
Shafeek Mohamed
Shahid Mahmood
Shamara Mckenzie-Rochester
Shana Esworthy
Shane Bryan
Shane Lindsay
Shane Malone
Shane Mason
Shane Till
Shannon Calf
Shannon Dewdney
Shannon Oliver
Sharif Islam
Shariq Modak
Sharon Buckley
Sharon Odum
Sharon Papantoniou-Barrett
Shaun Bryan
Shaun Dodson
Shaun Gordon
Shaun Harwood
Shaun Marshall
Shaun Owens
Shaun Pawsey
Shaun Sargeant
Sheena Smith
Shelley Burton
Shelley Carey
Shelley Francis
Shelley Rutter
Sheralyn Tidball
Shrina Shah
Shylo Brookes
Sian Austen
Sian Hart
Sian Horrigan
Silvi Atanasova
Silvonne McLean
Simon Beare
Simon Bodell
Simon Brookfield
Simon Chapman
Simon Chappell
Simon Farley
Simon Felix
Simon Green
Simon Grimmett
Simon Jackson
Simon Lasham
Simon Leslie
Simon Lewis
Simon Marks
Simon Morgan
Simon Neal
Simon Pitt
Simon Roberts
Simon Webb
Simon Witham
Sinan Demir
Sinead Fisher
Siobhan Ashman
Siobhan King
Sion Ellis
Slavka Georgieva
Sophie Bishop
Sophie Doggart
Sophie Fallon
Sophie Swann
Sophie-Anne Farnworth
Stacey Webb
Staney Prabhakumar
Stefan Clark-Carter
Stefan Haworth
Stefano Tedeschi
Stefany Wiso
Stephanie Bannister
Stephanie Dinnis
Stephanie Hogben
Stephanie Kilner Roberts
Stephanie Nevett
Stephanie Shaw
Stephanie Taylor
Stephanie Thompson
Stephen Adams
Stephen Amos
Stephen Anthony
Stephen Boyd
Stephen Brand
Stephen Carr
Stephen Clayton
Stephen Collins
Stephen Corkett
Stephen Edmonds
Stephen Edwards
Stephen Foote
Stephen Freeman
Stephen Gaylor
Stephen Hall
Stephen Harrington
Stephen Johnson
Stephen Kelly
Stephen Lacey
Stephen Lopes
Stephen Machin
Stephen Maidment
Stephen Marshall
Stephen Nicol
Stephen Riley
Stephen Sanders
Stephen Seymour
Stephen Smith
Stephen Stubbs
Stephen Watson
Steven Barrowcliffe
Steven Birch
Steven Brown
Steven Dooley
Steven Dyer
Steven Gillham
Steven Higgins
Steven Howells
Steven Ives
Steven Karkari
Steven Kernot
Steven Murray
Steven Presley
Steven Souter
Steven West
Steven Whitehead
Steven Wood
Stuart Barrett
Stuart Clarke
Stuart Corlett
Stuart Fletcher
Stuart Harris
Stuart Haywood
Stuart Munton
Stuart Rees
Stuart Ross
Stuart Smith
Stuart Stevenson
Stuart Tannock
Stuart Whitby
Stuart Williams
Topps Tiles AR2018.indd 143
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Proof 8
07/12/2018 16:46:02
STRATEGIC REPORTOUR GOVERNANCEOUR FINANCIALSTOPPS TILES PLC ANNUAL REPORT AND ACCOUNTS FOR THE 52 WEEK PERIOD ENDED 29 SEPTEMBER 2018ADDITIONAL INFORMATION Z
Zachary Sutton
Zainab Idris
Zoe Atkinson
Zoe Cardoo
Zoe Gilbert
Zoe Lees Walters
Zoe Payne
Zoe Stevens
Zoe-Louise Speller
144
The Team
Sukhdev Bains
Summer Ellison
Sunil Patel
Susan Law
Susan Shields
Susanna Horwood
T
Tabitha Shipton
Tahmid Islam
Talia Blackwell
Tammie O’Lone
Tammie Spencer
Tanya Roberts
Tara Smith
Tarik Bensadik
Tauseef Usman
Taylor Smith
Terence Dooley
Terry Manto
Terry Prince
Terry Salisbury
Thomas Ashmore
Thomas Caldicott
Thomas Cunningham
Thomas Darlaston
Thomas Evans
Thomas Johnson
Thomas Langston
Thomas Lee
Thomas Mcgeown
Thomas Miller
Thomas Moran
Thomas Murray
Thomas Otley
Thomas Quinn
Thomas Reilly
Thomas Ross
Thomas Ryan
Thomas Swain
Thomas Utting
Thomas Wade
Thomas Wilkinson
Tiffany Lambert
Tim Chatfield
Tim Hodges
Tim Richards
Timea Szabo
Timothy Bentley
Timothy Boardman
Timothy Morgan
Timothy Stanhope
Timothy Tatlock
Timothy Tuff
Tiyana Duberry
Toby Vennard
Todd Routledge
Tom Newman
Tom Wilson
Toni Gormley
Toni Skutela
Tony Dumbleton
Tracey Waterman
Tracy Clewes
Tracy Wearmouth
Troy Fearon
Troy Miller
Tully Lennon
Tyler King
Tyler Lindsay
Tyler Nossent
Tyler Osborne
Tyler Spridgeon
Tyrone Horne
U
Udo Jungbecker
Umut Ortac
Uwais Ghumra
V
Valentin Ivan
Vania Catanho
Vaughan Batchelor
Veronica Evett
Veronica Zudaire
Vicky Hall
Victoria Atkinson
Victoria Carrington
Victoria Pearn
Vi-Dung Luong
Vilius Meilus
Vinod Joshi
Viorica Grapa
Vishal Handa
W
Waqar Raja
Warren Bester
Warren Pettersen
Wayne Randall
Wesley Appadoo
William Bailey
William Barreda
William Buxton
William Foxley
William Short
WIlliam Stephens
William Wylie
Wyn Dunn-Davies
Y
Yaser Yakobi
Yohannes Getachew
Yousouf Cadinouche
Youssef Djeraoui
Yvonne Burgess
Yvonne Hardingham
Topps Tiles AR2018.indd 144
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Proof 8
07/12/2018 16:46:03
TOPPS TILES PLC ANNUAL REPORT AND ACCOUNTS FOR THE 52 WEEK PERIOD ENDED 29 SEPTEMBER 2018 145
Store Locations
London
Acton
Balham Boutique
Barking
Battersea
Bayswater Boutique
Beckenham Topps
Beckton
Blackheath Boutique
Bow
Brentford
Brixton
Bromley Common
Catford Bromley Rd
Charlton
Cheam
Chingford
Clapham Boutique
Colindale
Croydon
Croydon Purley
Dartford
Denham
Dorking
Dulwich Boutique
East Sheen
Eltham
Enfield
Feltham
Forest Hill
Fulham Boutique
Golders Green
Hampstead Heath Boutique
Harrow
Hayes Topps
Hemel Hempstead
Highgate
Hounslow
Ilford
Ilford Seven Kings
Islington Boutique
Kingston
Kings Cross
Leyton
Muswell Hill Boutique
New Southgate
North Finchley
Old Kent Road
Orpington
Park Royal Topps
Penge
Raynes Park
Redhill
Romford
Ruislip
Sevenoaks
Seven Sisters
Shoreditch
South Bermondsey
Southall
St Albans
St Johns Wood Boutique
Staples Corner Topps
Streatham
Surbiton
Sydenham
Tooting
Twickenham
Uxbridge
Vauxhall
Waltham Cross
Walton on Thames Boutique
Wandsworth
Wembley
West Drayton
Willesden
Wimbledon
Wood Green
Midlands
Barnsley
Binley
Boston
Burton upon Trent
Cannock
Chesterfield
Congleton
Derby
Derby Osmaston
Doncaster
Doncaster Sprotbrough
Erdington
Fenton
Grantham
Great Barr
Grimsby
Grove Park
Kettering Baron
Kidderminster
Kings Heath
Kings Norton
Leicester
Lichfield
Lincoln Outer Circle
Long Eaton
Loughborough
Mansfield
Nantwich
Newark
Newcastle-under-Lyme
Northwich
Nottingham Poulton
Nuneaton
Redditch
Rotherham
Sheffield Hillsborough
Sheffield Meadowhall
Sheldon
Shrewsbury
Solihull
Spalding
Stoke
Stourbridge
Stratford upon Avon
Tamworth
Telford
West Bromwich
Wolverhampton
Worksop
North
Aintree
Alnwick
Anfield
Barrow
Beverley
Birkenhead
Blackburn
Blackpool
Bolton
Bradford
Bury
Carlisle
Cheadle
Cheetham Hill
Chester
Chorley
Cleveleys
Darlington
Durham Dragonville
Failsworth
Gateshead
Halifax
Harrogate
Huddersfield
Hull
Hyde
Knutsford Boutique
Leeds
Leeds Sheepscar
Macclesfield
Morecambe
Northallerton
Oldham
Ormskirk
Pontefract
Preston
Sale
Salford
Scarborough
Scunthorpe
Shipley
Skegness
Snipe (Audenshaw)
Southport
St Helens
Stockport
Stockton
Sunderland
Tyneside
Wakefield Ings Road
Warrington
Widnes
Wigan
Workington
York Clifton Moor
Scotland and
Northern Ireland
Aberdeen Bridge of Don
Aberdeen Wellington
Ayr
Belfast Boucher Road
Belfast Newtownabbey
Dundee
Edinburgh
Fort Kinnaird
Glasgow
Govan Topps
Greenock
Hillington
Inverness
Irvine
Kirkcaldy
Perth
Shawfield
Sighthill
Wishaw
South
Abingdon
Andover
Amersham
Ashford
Aylesbury
Banbury
Barnstaple
Basildon
Basingstoke
Bath
Bedford Elms
Bexhill
Bicester
Bishops Stortford
Bodmin
Bognor Regis
Borehamwood
Bounds Green
Bournemouth
Bracknell
Braintree
Topps Tiles AR2018.indd 145
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STRATEGIC REPORTOUR GOVERNANCEOUR FINANCIALSTOPPS TILES PLC ANNUAL REPORT AND ACCOUNTS FOR THE 52 WEEK PERIOD ENDED 29 SEPTEMBER 2018ADDITIONAL INFORMATION 146
Store Locations
Brentwood
Bridgwater
Brighton
Bristol
Broadstairs
Buckingham
Burgess Hill
Bury St Edmunds
Byfleet
Camberley
Cambridge
Canterbury
Chelmsford
Chelmsford Springfield
Cheltenham
Chichester
Chippenham
Christchurch
Cirencester
Clacton on Sea
Clevedon
Colchester
Crayford
Cribbs Causeway
Cromer
Dorchester
Dover
East Molesey
Eastbourne
Egham
Erith
Evesham
Exeter Trusham Rd
Exmouth
Fareham Topps
Farnborough
Farnham
Folkestone
Frome
Gatwick
Glastonbury
Gloucester
Gravesend
Grays
Great Yarmouth
Guildford
Hailsham
Harlow
Harlow Ascent Park
Havant
Hedgend
Hengrove
Hereford
High Wycombe
Horsham
Huntingdon
Ipswich
Isle of Wight
Isleworth
Kings Lynn
Launceston
Letchworth
Lewes
Loughton
Lowestoft
Luton
Maidstone
Maidstone Langley
Market Harborough
Martlesham
Millbrook (Southampton)
Milton Keynes
Moreton in Marsh
Newbury
Newhaven
Newton Abbot
Northampton
Northampton Brackmills
Norwich
Norwich Hall Road
Norwich Heigham
Oxford
Oxford Botley
Penzance
Peterborough (Rex Centre)
Peterborough Boongate
Plymouth
Poole
Portsmouth
Rayleigh
Reading
Reading Rose Kiln Lane
Ringwood
Rugby
Rustington
Salisbury
Saltash
Sittingbourne
Slough
Southend
St Neots
Stamford
Stevenage
Strood
Stroud
Sudbury
Sutton
Swindon
Swindon Stratton
Taunton
Thetford
Thurrock
Tonbridge
Torquay
Truro
Tunbridge Wells
Uckfield
Waterlooville
Watford Imperial
Wellingborough
Welwyn Garden City
Weston Super Mare
Weymouth
Winchester
Windsor
Wisbech
Witney
Woking
Wokingham
Worcester
Yeovil
Wales
Bangor
Barry
Bridgend
Cardiff
Cardiff Newport Road
Carmarthen
Cross Hands
Haverfordwest
Llanelli
Merthyr Tydfil
Neath
Newport
Rhyl
Swansea Cwmdu
Swansea Llansamlet
Wrexham
Parkside Showrooms
Chelsea
Leicester
Topps Tiles AR2018.indd 146
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Proof 8
07/12/2018 16:46:03
TOPPS TILES PLC ANNUAL REPORT AND ACCOUNTS FOR THE 52 WEEK PERIOD ENDED 29 SEPTEMBER 2018 Topps Tiles AR2018.indd 6
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7 December 2018 4:41 PM
Proof 8
07/12/2018 16:42:52
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TOPPS TILES PLC
Thorpe Way, Grove Park
Enderby, Leicestershire
LE19 1SU
www.toppstiles.co.uk
TOPPS TILES PLC
ANNUAL REPORT AND ACCOUNTS
FOR THE 52 WEEK PERIOD ENDED 29 SEPTEMBER 2018
Topps Tiles AR2018.indd 1
26286
7 December 2018 4:41 PM
Proof 8
07/12/2018 16:42:29