26922 6 December 2019 4:51 pm Proof 7a PFPTOPPS TILES PLCANNUAL REPORT AND ACCOUNTS FOR THE 52 WEEK PERIOD ENDED 28 SEPTEMBER 2019Topps Tiles Plc Annual Report and Accounts for the 52 week period ended 28 September 2019Topps Tiles Annual Report 2019.indd 306/12/2019 16:52:16 NOTES-HEADING-LEVEL-
CONTENTS
02 2019 Highlights
04 Chairman’s Statement
STRATEGIC REPORT
01 08 Marketplace
– Leading Product
– Leading People
– Retail – Topps Tiles
– Commercial – Parkside & Strata
10 Business Model 2019
12 Our Strategy
13
14
15
16
18 Key Performance Indicators
20 Financial Review
24 Risks and Uncertainties
28 Corporate Social Responsibility
OUR GOVERNANCE
02 40 Board of Directors
41 Executive Team
42 Corporate Governance Report
50 Directors’ Report
54 Directors’ Remuneration Report
ONE
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OUR FINANCIALS
03 74 Independent Auditors' Report
82 Consolidated Statement of Financial
Performance
WELCOME TO OUR
2019 ANNUAL REPORT
This has been another year of strategic progress
for Topps, with a resilient sales performance in our
retail business and significant development in our
commercial operations.
OUR CORE PURPOSE
Inspiring customers
through our love of tiles
The core purpose of the business is to inspire customers through
our love of tiles. This purpose also helps to give the business
great strategic clarity in that any opportunities we pursue
should seek to leverage our core specialism in tiles.
OUR STORES
Topps Tiles has 362 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.
See the full list of our
stores on page 146
82 Consolidated Statement of
Comprehensive Income
83 Consolidated Statement of Financial
Position
84 Consolidated Statement of Changes
in Equity
85 Consolidated Cash Flow Statement
86 Notes to the Financial Statements
118 Company Balance Sheet
119 Company Statement of Changes in Equity
120 Notes to the Company Financial
Statements
04 ADDITIONAL INFORMATION
128 Five Year Record
129 Notice of Annual General Meeting
Explanatory Notes to the
Notice of Annual General Meeting
134
137 The Team
146 Store Locations
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STRATEGIC REPORT
OUR GOVERNANCE
OUR FINANCIALS
ADDITIONAL INFORMATION
OUR STRATEGY
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
product” initiative which encapsulates
our leading specialism in tiles and
our “leading people” 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.
See more information on
Strategy on page 12
See more information on
Marketplace on page 08
Read more about . . .
PROFITABLE SALES GROWTH
RETAIL
Topps Tiles
Out-specialising the Specialists
COMMERCIAL
Parkside & Strata
Disrupt and Construct
LEADING PRODUCT
LEADING PEOPLE
OUR PURPOSE
See more on page 13
OUR GOALS
See more on page 04
OUR STRATEGY
See more on page 12
OUR CULTURE
See more on page 28
Front cover image: Rhomba Metallic,Torrano and Tekno Grey
Inside front cover image: Arrange by Tom Pigeon (Parkside)
Investor website
We maintain an investor website containing a wide range of information.
www.toppstilesplc.com
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2019 HIGHLIGHTS
STATUTORY MEASURES
Group
Revenue (£m)
Gross
Margin (%)
Final
Dividend (p)
Net Cash from
Operating Activities (£m)
Year-on-Year: +1.1%
Year-on-Year: +50bps
Year-on-Year: nil
Year-on-Year: nil
.
2
9
1
2
.
9
6
1
2
0
.
5
1
2
8
.
1
1
2
9
.
1
6
.
1
1
6
1
.
1
6
.
6
1
6
0
5
.
2
0
3
.
2
0
3
2
.
0
3
.
2
.
2
4
2
.
9
1
2
9
.
1
2
.
2
5
1
16 17 18 19
16 17 18 19
16 17 18 19
16 17 18 19
Total
Dividend (p)
Year-on-Year: nil
0
5
.
3
0
4
.
3
0
4
.
3
0
4
.
3
Profit Before
Tax (£m)
Basic Earnings
Per Share (p)
Year-on-Year: (1.6)
Year-on-Year: +3.6%
0
.
0
2
0
.
7
1
7
.
2
1
5
.
2
1
5
0
.
8
8
9
.
6
0
0
.
5
8
1
.
5
16 17 18 19
16 17 18 19
16 17 18 19
ADJUSTED MEASURES
Like-for-like
Revenue Growth (%)2
Year-on-Year: n/a
2
.
4
6
.
0
0
.
0
)
9
.
2
(
16 17 18 19
Adjusted Earnings
Per Share (p)5
Year-on-Year: (0.5)
.
6
8
38
6
7
.
4
6
.
6
1
6
.
6
Adjusting items are detailed in the notes
opposite and in the adjusted measures
section of the financial review. These
include trading losses from the Commercial
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).
Read more in the Financial Review
on page 20
Adjusted Group
Revenue1
£214.3m
2018: £214.8m
Year-on-Year: (0.2)%
Adjusted Gross
Margin3
62.0%
2018: 61.3%
Year-on-Year: +70bps
Adjusted Profit
Before Tax (£m)4
Year-on-Year: nil
0
.
2
62
.
8
1
0
.
6
1
0
.
6
1
16 17 18 19
Net
Debt (£m)6
Year-on-Year: +£4.9m
.
5
7
2
.
8
4
2
2
.
6
31
.
1
1
16 17 18 19
16 17 18 19
02
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STRATEGIC REPORT
OUR GOVERNANCE
OUR FINANCIALS
ADDITIONAL INFORMATION
FINANCIAL SUMMARY
STRATEGIC & OPERATIONAL SUMMARY
• Adjusted revenues broadly flat at £214.3 million (2018:
£214.8 million) and like-for-like sales growth of 0.6%;
• Adjusted profit before tax of £16.0 million (2018: £16.0 million),
with growth in gross margin offsetting inflationary cost pressures;
• Net debt reduced by £4.9 million year-on-year to £11.3
million due to continued cash generation and year end timing
related working capital benefits;
• Final dividend maintained at 2.3 pence per share (2018: 2.3
pence per share), making a total for the year of 3.4 pence per
share (2018: 3.4 pence per share);
• Statutory profit before tax of £12.5 million (2018: £12.7 million),
details of the adjusting items can be found in the table below.
NOTES
1. Adjusted revenues are defined as total Group revenues excluding Commercial
revenue of £4.9 million (2018 £2.1 million).
2.
Like-for-like sales revenues are defined as sales from online and stores that have
been trading for more than 52 weeks. In 2019 sales in like-for-like stores was
£209.8 million (2018: £208.6 million), with an average of 354 stores included
in the weekly calculation.
3. Adjusted gross margin is defined as Group gross margin excluding Commercial
gross margin of £2.0 million (2018 £0.8 million).
4. 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 Profit before tax
Property
– Impairment of property, plant, equipment and
movement in onerous lease provision
– Vacant property costs
– Gains on disposal of freehold or long
leasehold properties
Commercial
– Costs related to acquisition during the period
– Commercial trading loss
– Commercial amortisation of intangibles &
redemption payments for non-controlling share
Other
– Historical adjustment to refunds provision
– Write-off of goodwill relating to historic
acquisition
– Repayment of historical import duty
Statutory Profit before tax
2019
£m
2018
£m
16.0 16.0
(1.8)
(1.1)
(2.2)
(0.2)
nil
(2.9)
0.7
(1.7)
(0.4)
(2.0)
nil
(1.0)
(0.3)
(2.7)
(0.1)
(1.1)
nil
(0.5)
(0.2)
2.3
2.1
nil
nil
(0.5)
12.5 12.7
5. Adjusted earnings per share is adjusted for all of the items highlighted above,
including the offsetting tax impacts of these items of £0.7 million (2018: £0.3
million), plus the impact of corporation tax of £2.4 million (2018: £3.0 million).
6. Net debt is defined as bank loans, before unamortised issue costs (note 18) and
less cash and cash equivalents.
Group
• The UK’s leading tile specialist with a core purpose to inspire
customers through our love of tiles;
• Leading Product strategy is focused on delivering competitive
advantage through our specialist focus, buying scale and
expertise across both retail and commercial businesses:
− 86% of tile ranges are own brand or exclusive to Topps;
− 40 new ranges launched during the year with over one
third developed in-house;
− 70% of Group purchases now made through our core
supplier group.
• Leading People is about ensuring we have the best people in
each of our respective marketplaces and achieving this through
excellent leadership of our people;
• Colleague engagement is key to our customer service ethic
– development of colleagues and internal succession are key
areas of focus.
Retail
• Strategy of “Out-specialising the Specialists” remains our key
focus;
• Customer overall satisfaction rating of 86% – we estimate
this ranks us #3 within the UK retail sector (source: Institute of
Customer Service and Topps data);
• New omni-channel website launched at the start of October
– digital experience and social media presence continues to
grow in importance; new “Virtual Tiler” tool providing enhanced
inspiration for customers and linking further the in-store and
online experience;
• Almost all of our customers come to store and experience the
world class specialist service provided by colleagues in our
362 retail stores (2018: 368 stores) – continued review of
portfolio and existing lease flexibility is key;
• Continued rapid growth in our Trade Rewards+ loyalty
programme for professional tile fitters – now over 90,000
active members (2018: 72,000).
Commercial
• Strategy of disrupting the commercial tile market and
constructing a new market leader over the medium term;
• Entry into commercial tile market has approximately doubled
the size of the Group’s addressable UK market whilst allowing
us to leverage our tile expertise and scale;
• Sales of £4.9 million (+133% YoY or 81% excluding Strata) and
a trading loss of £2.0 million (2018: £1.0 million), plus a non-
trading loss of £0.3 million (2018: £0.1 million) for amortisation
of intangibles and redemption payments for non-controlling
share, with a target of broadly breakeven for FY20 (excluding
amortisation and redemption payments for non-controlling share).
Current Trading and Outlook
•
In line with our past experience, consumer demand has
weakened further since the UK General Election was called
in late October;
In the first eight weeks of the new financial period, retail like-for-
like revenues decreased by 7.2% (2018: decrease of 1.9%);
• A reduction in political uncertainty will be key to the short-term
•
outlook improving.
TOPPS TILES PLC ANNUAL REPORT AND ACCOUNTS FOR THE 52 WEEK PERIOD ENDED 28 SEPTEMBER 2019
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26922 6 December 2019 4:51 pm Proof 7a PFPCHAIRMAN’S STATEMENTIntroductionWelcome to the Topps Tiles 2019 Annual Report. I feel that the business has performed well against the backdrop of a subdued market and I am particularly pleased with the strategic progress we have made. Our newly created commercial business is currently a small part of the Group but it is strategically important for the longer term. Purpose, Goal and StrategyThe core purpose for the business is to inspire customers through our love of tiles. This purpose also helps to give the business great strategic clarity in that any opportunities we pursue should seek to leverage our core specialism in tiles.Our overarching goal for the business is to drive profitable sales growth. Within our retail business, Topps Tiles, we are focused on the UK domestic tile market where our strategy of “Out-specialising the Specialists” continues to serve us well and remains key for driving long-term profitable growth. Sales from our commercial business accounted for approximately 2% of the Group turnover. Our Commercial strategy of “Disrupt and Construct” has approximately doubled the size of our addressable market in the UK and remains central to our Group growth plans.Trading and Financial PerformanceOur primary market of residential repair, maintenance and improvement is closely linked to consumer confidence which remained at relatively low levels across the year, with the result that our market has been subdued. Against this backdrop I am pleased with how the business has performed, delivering like-for-like sales growth, gross margin growth, tight cost control and strong cash flow, which allows us to provide a return to our shareholders and also ensure the business is well invested. Our adjusted profit before tax was £16.0 million (2018: £16.0 million), with statutory profit before tax of £12.5 million (2018: £12.7 million). A full discussion of our financial performance can be found in the financial review section of this document.DividendOur target for dividend cover is two times, such that approximately 50% of our annual post tax adjusted earnings are remitted back to shareholders. With our adjusted earnings per share being broadly flat when compared to the prior year, we have decided to maintain the level of dividend. As a result, the Board is recommending a final dividend for the year of 2.3 pence per share (2018: 2.3 pence per share). This will bring the total dividend for the year to 3.4 pence per share (2018: 3.4 pence per share). As a consequence, dividend cover for the year on an adjusted earnings per share basis is 1.945 (2018: 1.955). Board ChangesWe announced at the start of November that our CEO for the last 12 years, Matthew Williams, had decided to step down from his role with effect from 29 November 2019; however, Matt is being retained as an adviser until May 2020. Matt has made a tremendous contribution to the business over this time, reshaping the retail business, completing a very successful re-branding and leading the investment into the commercial tile market. On behalf of the Board I wish him every success in the future. Matt will be succeeded by our CFO, Rob Parker. Rob is very well qualified for the role, having served on the Board as CFO for the last 12 years and established himself as a strong strategic thinker and leader of people across the organisation. A search for a new CFO is underway and we will update the market accordingly.1© Dave ParkerTOPPS TILES PLC ANNUAL REPORT AND ACCOUNTS FOR THE 52 WEEK PERIOD ENDED 28 SEPTEMBER 201904Topps Tiles Annual Report 2019.indd 406/12/2019 16:52:55 STRATEGIC REPORT
OUR GOVERNANCE
OUR FINANCIALS
ADDITIONAL INFORMATION
I feel that the business has performed
well against the backdrop of a subdued
market and I am particularly pleased with
the strategic progress we have made.
Darren Shapland
Chairman
2
The Board and Corporate Governance
The Future for Topps
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
UK Corporate Governance code. We have benefited from very
good stability on the Board with all Directors having completed at
least three years of service.
This year we have completed a more detailed Board evaluation
exercise utilising external support to assess both how the Board
operates and its interaction with the Executive and Leadership team.
Overall, the conclusion was that the Board operates well but there
were some recommendations for improvement in a small number of
areas which we are now acting on. Full details of this evaluation
can be found on page 42.
In the UK domestic 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 performance. Our continued
growth into the UK commercial tile market represents an excellent
opportunity to diversify the Group while staying within our core
specialism in tiles. The Board is confident that this focus is the right
strategy for the Group.
Darren Shapland
Non-Executive Chairman
Our People
Topps Tiles is a customer service-based business and, as a result,
our people are at the heart of our organisation. This is a key
aspect of the Group’s success. The business operates a successful
engagement forum, TEAMTalk, and this year Andy King, one of our
Non-Executive Directors, has joined the national forum in order to
ensure colleagues views are represented at Board level, in line with
best practice. We provide training and development programmes
for all colleagues and clear and open communication across
the business is a key aspect of our culture and our success. On
behalf of the Board I would like to extend my sincere thanks to all
colleagues for their hard work, commitment and dedication.
1
2
Radisson Blu, Stansted (Parkside)
Vashi, Selfridges, Manchester (Strata)
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01 STRATEGIC
REPORT
1
Marketplace
Business Model 2019
Our Strategy
– Leading Product
– Leading People
– Retail – Topps Tiles
– Commercial – Parkside & Strata
Key Performance Indicators
Financial Review
Risks and Uncertainties
Corporate Social Responsibility
08
10
12
13
14
15
16
18
20
24
28
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.
1 Amazone Grey and Astrea Sage
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MARKETPLACE
The UK tile market
The UK Tile Market and Performance of the Business
Domestic Tile Market
The UK tile market is valued at £372 million per annum at
manufacturers’ selling prices (source: MBD), or approximately
£700 million at retail selling prices. The market splits into two
broad sectors – domestic, accounting for around 55% of the
market, and commercial, accounting for the remaining 45%.
The domestic 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.
Due to the discretionary nature of domestic market spending,
consumer confidence remains a key driver of its performance.
During 2019, the average level of consumer confidence was
-12.5, which compares to -9.3 in 2018 (source: GFK). The index
has been relatively stable across the year, averaging -12.8 over
the first half and -12.2 over the second. The consumer confidence
index has remained negative since the EU referendum result in June
2016 and we will continue to monitor this measure closely during
the UK’s exit from the EU.
The annual tile industry report published by MBD covers the whole
of the UK tile market (domestic and commercial) and is based on
manufacturer and supplier data. In 2018 the total market was flat
on a value basis, with 2% growth in volume.
The Board has previously recognised that Brexit could have a
number of implications for the Group – we continue to monitor
and plan for any adverse impacts.
1
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 useful indicator of likely future demand. Housing
transactions across the UK have been quite stable since the summer
of 2017 and during 2019 they 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 house prices have been stable,
with the average price of a house in the UK at £215,352 (2018:
£214,922) (source: Nationwide).
Commercial Tile Market
Construction output for the private commercial sector declined by
2.6% across the period (source: ONS). We believe this to be a
good proxy for the commercial tile market, with evidence of overall
price deflation in construction as a whole and general project
delays as investments and purchasing confidence declined.
The UK commercial tile market is quite fragmented and regionalised
with only a very small number of scale competitors. The smaller
competitors tend to specialise in certain sectors of the market –
examples being transport, restaurants, automotive, leisure, offices
or high end residential. Our success in this market results both from
appealing to designers and architects through our differentiated
offer, and to contractors who may require more commoditised
products, in large quantities, but at lower prices. Although the focus
for our commercial business is on customers in the former category,
where we can leverage our tile specialism and design credentials,
the Group’s buying advantage also enables volume sales.
1
Parkside Cotswolds Design Studio
08
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26922 6 December 2019 4:51 pm Proof 7a PFP2Rhomba White Gloss and Torrano3Aviva offices (Strata)UK HOUSE PRICES AND CONSUMER CONFIDENCE240,000230,000220,000210,000200,000190,000180,000170,000160,000150,000140,000105-5-10-15-20UK house prices (Nationwide)Consumer confidenceHouse price (Nationwide)Source: Consumer confidence = GFK, UK house price = NationwideCustomer confidence Oct 13Jan 14Apr 14Jul 14Oct 14Jan 15Apr 15Jul 15Oct 15Jan 16Apr 16Jul 16Oct 16Jan 17Apr 17Jul 17Oct 17Jan 18Apr 18Jul 18Oct 18Jan 19Apr 19Jul 19Oct 19ONS – PRIVATE COMMERCIAL SECTOR CONSTRUCTION OUTPUT Dec 16Feb 17Apr 17Jun 17Aug 17Oct 17Dec 17Apr 17Feb 18Apr 18Jun 18Aug 18Oct 18Jun 19Feb 19Dec 18Aug 19Oct 1912.0%8.0%4.0%-4.0%0.0%-8.0%-12.0%12 months rolling YoY%UK TILE MARKET – RETAIL VS COMMERCIALUK Tile Market estimated at c.£700m @ RSPSource: MBD and Company estimatesRetail c.55% 2 Topps Tiles 18%3 DIY Sheds 17%4 Other specialists 16%5 Other 4%Commercial c.45%1 Commercial 45%DomusSolusCTDCommercialRetailPorcelanosac.20 smaller specialists including Parkside1543223UK 12-MONTH HOUSING TRANSACTIONS – HMRC1600150014001300120011001000900800Source: Housing transactions = HMRC12-month housing transactions (000s)Oct 14Jan 15Apr 15Jul 15Oct 15Jan 16Apr 16Jul 16Oct 16Jan 17Apr 17Jul 17Oct 17Jan 18Apr 18Jul 18Oct 18Jan 19Apr 19Jul 19Oct 19TOPPS TILES PLC ANNUAL REPORT AND ACCOUNTS FOR THE 52 WEEK PERIOD ENDED 28 SEPTEMBER 201909OUR FINANCIALSOUR GOVERNANCEADDITIONAL INFORMATIONSTRATEGIC REPORTTopps Tiles Annual Report 2019.indd 906/12/2019 16:53:12 BUSINESS MODEL 2019
We are a specialist
in the world of tiles, with a competitive advantage in sourcing differentiated products
from around the world which we can access on an exclusive basis.
1
2
3
Topps Tiles is the leading specialist supplier of tiles in the UK
market. Historically the business has focussed on the domestic tile
market for the supply of tiles into the refurbishment of residential
housing, which it has served through the retail channel. Over the
last two years 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.
Product Innovation
We inspire all of our customers with a market leading product
range, 86% 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 providing the customer insight into
emerging style trends and the manufacturer providing the technical
knowledge and production capability. Technology is an important
© Ben Carpenter
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 customer 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 and inspiration 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 the 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 from approximately 360 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 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 less than four years, giving us flexibility to
manage the portfolio.
10
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STRATEGIC REPORT
OUR GOVERNANCE
OUR FINANCIALS
ADDITIONAL INFORMATION
Commercial Customers – We deliver value to our commercial
customers by providing access to a wide range of manufacturers’
products, often on an exclusive basis. We combine this with
friendly, efficient and professional customer service and our Group
scale allows us to offer advantaged pricing and often advantaged
availability.
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.
Read more information on Corporate Social
Responsibility on pages 28 to 35
4
5
Retail customers very often choose to use our website to conduct
initial research into their projects or to maximise convenience by
using this as a payment channel. The vast majority of our customers
will use our website at some stage in their purchase journey with
us. Through greater use of technology we are seeking to provide
customers with an omni-channel experience and our new website,
launched at the start of October 2019, is a significant step
forwards in our ambition. Social media is very important to us as
this provides an opportunity to create a community of influencers
and traders with an interior design focus.
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 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 salespeople. These colleagues will often have
historical 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.
Retail – Topps Tiles is the UK’s leading specialist tile retailer with
79% prompted awareness with consumers who have recently
purchased or who are about to purchase tiles. Topps’ 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 which they can buy conveniently.
Commercial – We are building the Parkside brand and have
increased our presence this year through our acquisition of Strata
Tiles. Over time, our ambition is to become the market leader in
Commercial.
Value for Customers
Retail Customers – We deliver value to our retail customers by
combining differentiated products with excellence in customer
service, the convenience of a nationwide store network and a
world class website. This is combined with competitive pricing to
ensure that all of our customers receive great value.
Visit our websites at:
www.parkside.co.uk
www.toppstiles.co.uk
www.stratatiles.co.uk
1 Hershesons salon (Strata)
3
5
Bob Bob Cite, London (Strata)
Pellier Sand and Penteli
2
4
The Bedford, London (Parkside)
Torrano Marquina
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26922 6 December 2019 4:51 pm Proof 7a PFPOUR STRATEGYThis has been another year of strategic progress for Topps, with a resilient sales performance in our retail business and significant development in our commercial operations. In Retail, our strategy of ‘Out-specialising the Specialists’ enabled us to deliver like-for-like sales growth and further enhance our market-leading gross margins in tough market conditions. In Commercial, we saw significant year-on-year sales growth as we continue to invest in constructing a market-leader over the medium term.Matthew WilliamsChief Executive OfficerThe Group business has an overarching goal to profitably grow sales and we aim to achieve this by putting our customers at the heart of what we do. In 2017, we identified an opportunity to expand into the commercial tile market. As a result, we acquired the Parkside business and have made good progress investing in and growing revenues. During 2019, we further expanded our commercial operations through the acquisition of Strata Tiles. While the commercial business currently only accounts for approximately 2% of our turnover, we consider it to be a key aspect of our future growth plans as it doubles the size of the Group’s addressable market in the UK. Our retail business, Topps Tiles, continues to successfully operate from a position of strength as the market leader and we have continued to refine and hone our customer offer. Both business units are supported by our Group strategies of “Leading Product” and “Leading People”.PROFITABLE SALES GROWTHLEADING PEOPLE LEADING PRODUCTRETAILTopps TilesOut-specialising the SpecialistsCOMMERCIAL Parkside & StrataDisrupt and ConstructTOPPS TILES PLC ANNUAL REPORT AND ACCOUNTS FOR THE 52 WEEK PERIOD ENDED 28 SEPTEMBER 201912Topps Tiles Annual Report 2019.indd 1206/12/2019 16:53:25 STRATEGIC REPORT
OUR GOVERNANCE
OUR FINANCIALS
ADDITIONAL INFORMATION
LEADING
PRODUCT
1
The Group’s core purpose is to inspire customers through our love of
tiles and this objective is reflected in our “Leading Product” 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 protect the
intellectual property and design assets we create through partner
exclusivity and design registration. Ultimately, it is this Group
specialism that we leverage through our business units into both
the retail and commercial markets.
Progress and Outlook
Our pace and iterative cycle of product introduction continues to set us
apart from our competitors. During the year we launched over 40 new
product ranges and we are proud that more than a third of our new tile
ranges were design-led by us in collaboration with selected key supply
partners. Eighty-six per cent of our tile ranges are either own brand or
exclusive to us and this forms an important aspect of our differential.
Importantly, 70% of our purchases are now through our core supplier
group, a key metric of our drive to leverage our buying scale and
advantage and benefit those partners that are aligned to our strategic
ambitions.
Innovation in design and, more recently, in manufacturing
technology, makes it an exciting period for the ceramic industry
and as specialists we are focused on embracing new opportunities
to deliver the best possible products and projects for our customers.
For example, we further extended our outdoor product offer with
the addition of our exclusive 20mm porcelain tile range
EverscapeTM, and more recently launched AquabaseTM, a range
of unique porcelain shower trays, which are designed to co-
ordinate and contrast with many of our other tile ranges in the latest
on-trend looks. In the year ahead, we will increase the level of
in-house developed products across all categories.
In Commercial, we have focused on supporting our sales teams
with an extended product range in order that they can be highly
competitive in this established sector. Both Parkside and Strata
now have access to over 7,000 tile products from a global supply
base. Within the period we were pleased to strengthen our offer by
securing exclusive partnerships with several Italian tile brands which
are highly recognised within the architectural and design community.
Technical authority is increasingly important in our market and we aim to
be leaders in this field. We have invested over recent years to build our
own in-house technical team to meet the demands of our now broader
customer base and to set us apart from our competitors. We are able
to offer key technical information through in-house testing, on-demand
support and ensuring high levels of product quality at all times.
Read more information on Key Performance
Indicators on pages 18 to 19
WHAT OUR CUSTOMERS ARE SAYING
These are quality tiles which will stand the test
of time, not only because they are well made,
but because the designs across this range are classy
classics. The tiles are also very versatile as they can
be used en masse to create a great, rather exotic
effect, or can be used as accent pieces. I have
actually used several tiles from this range set into
concrete on a summer house floor. They look great,
with a few pieces creating a great effect.
Mrs Hadrian – Archivo™ Zahra Tile
1
Tile of the Year Syren & Dartrey Black
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OUR STRATEGY
LEADING
PEOPLE
The Group’s success is underpinned by industry-leading levels
of customer service and this is reflected in our “Leading People”
initiative. This means that we are very focused on our colleagues
that deliver this service, with their capability and engagement
levels being critical.
Progress and Outlook
This year we launched a new colleague initiative called “Leading
People”. This is based around us having the leading people in
each of our respective markets and we believe we will achieve this
by having the very best leadership of our people. Leading People
is about Leading the Thinking, Leading the Pace and Leading
the Team. We are developing a range of materials to help all
colleagues understand our expectations of them and to help them
develop and grow within this framework.
Our online Learning Management System, “theHUB”, continues
to be our primary vehicle for delivery of Learning & Development
activity; it is very well utilised with the majority of colleagues
logging on at least once every month. During the year we launched
a new personal performance review process which encourages
colleagues and managers to have a regular dialogue specifically
tailored to the needs of both the business and our colleagues.
Colleague engagement in the business is high and we have now
launched a new colleague engagement survey. This allows us to
tailor questions to specific topics and build a long-term view of
colleague engagement. The new system also allows a mid-year
“pulse” survey which provides a helpful interim update on progress
against key initiatives.
Internal succession is very important to us. As an example, when
we recruit at a store management level, 58% (2018: 60%) of these
roles are filled internally. This allows for excellent opportunities
for colleague progression and also allows us to retain the strong
technical skill sets that all store colleagues learn.
We are also investing in improvements in our HR and payroll
technology in order to improve efficiency, ways of working, risk
management and colleague engagement, and we expect this
system to go live in the current financial year.
CASE STUDY – COLLEAGUE ENGAGEMENT
Denzil Johns’ career with Topps Tiles
spans 17 years
He joined the Company as Store Manager in 2003, and
spent more than a decade managing various Topps stores, as
well as a period as Area Business Manager.
His passion for interior design played a vital role in the
implementation of small format stores with the launch of Topps
Boutique in January 2014; and Denzil recently embarked on
a new career path by joining the commercial team as a Sales
Manager for Strata Tiles.
Denzil says: “Topps ensured that every opportunity was in
place to help me be the best I could be.
“When I was presented with the opportunity to become a Store
Manager at a Topps Tiles Boutique, a new initiative project that
focused on my passion for design, I grabbed the opportunity
with both hands. The role was much more design-focused and
involved engaging with architects and designers, and it was
exciting because it was new and no-one knew what to expect.
I grew and evolved massively during my time in Boutiques and I
will always have a bit of the Boutique feel in my blood.
“After six successful years in Boutique, I started my new role in
August 2019 and love each day. It is new and is challenging me
daily, I can’t wait to see what I can do and how far I can go within
this role, and that really excites me.
“I am the proof that if you invest in and trust your colleagues
they will stick around. I have been given so many opportunities
and pushed forward, never held back. Topps Tiles has always
looked after me and I am so proud that I am still a part of a
company that has helped me grow”.
14
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STRATEGIC REPORT
OUR GOVERNANCE
OUR FINANCIALS
ADDITIONAL INFORMATION
RETAIL
TOPPS TILES
Our retail strategy for the domestic market of “Out-specialising the
Specialists” continues to be very effective. This strategy is focused
on providing both our retail and trade customers with a truly
inspirational experience – both online and in store.
Progress and Outlook
The majority of home owners will utilise our website as the first step
of their shopping journey with us – often as part of the research
phase. This year we took a significant step forwards with the
launch of our new website, which has been based around an
enhanced user experience, including omni-channel technology
capability which will unlock further functionality over time. While
we know that our website is very important for customers when
they are starting their journey with us, we also know that our stores
represent a vital part of their journey – with 90% of our customers
visiting a store as part of their purchase. As customers’ needs
change so too does the way we invest to attract them.
Our marketing spend is increasingly focused on digital media,
and in particular in driving traffic to our website. We are also
collaborating more than ever with social media influencers –
people who have a natural fit with our customer offer and who can
help us reach out to an ever-larger potential customer base. During
the period we have been focused on social media impressions
and, in particular, building our Instagram presence by creating a
community of influencers and traders with an interior design focus;
as a result we now have 37,000 followers on Instagram (FY18:
16,000). Total social media impressions for the year increased by
96% to 12.7 million (FY18: 6.5 million).
This year we have introduced a new service into stores, “Virtual
Tiler”, which allows colleagues to work with the customer to help
them design a 3D visualisation of their project with their chosen
tiles. Virtual Tiler complements our existing visualiser and the
innovative grout and trim visualiser on the new website, and,
together, they are a major source of inspiration for customers
and a key tool for colleagues to utilise in stores.
Our colleagues offer our customers a world-class experience
within store. Our all-store improvement initiative is now two years
into a three-year programme. This includes a number of new
merchandising initiatives such as implementing design advice areas
in stores. These areas establish a space in store for colleagues
to interact with customers in a more consultative way, allowing
them to really understand their needs and provide 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 during the year we launched our new customer feedback
system, “Tile Talk”. We have achieved an overall satisfaction rating
of 86%, which we estimate places us within the top three of UK
retailers (source: Institute of Customer Service and Topps data).
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 362 stores (2018: 368
stores) and we expect to see continued movement in the portfolio
through active portfolio management based on openings, closures
and relocations. We anticipate that the total number of retail stores will
reduce by approximately 10 in the current year due to a programme
of continued portfolio optimisation. 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 3.8 years (2018: 4.1 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 3.1 years (2018: 3.4 years) –
the flexibility this provides is a key strength of the business.
Our trade customer base represents 56% of our total sales (2018:
56%). Trade provides a vital link to those homeowners who prefer
to transact through their fitter rather than with us direct. The UK
consumer remains very dependent on the “Do It For Me” trend and
hence our trade customer base is key to our continued success.
We focus very hard on ensuring we offer our trade customers a
compelling overall offer and our trade loyalty scheme leads our
market place – with 90,000 traders registered and earning points
over the preceding 12 months (2018: 72,000).
WHAT OUR CUSTOMERS ARE SAYING
Transformed my once drab and dated bathroom!
I wanted a clean, elegant and sophisticated look
and these tiles have really fulfilled this. They make
for a stunning feature. Quality is lovely and a
very good price. Ticked all the boxes!
Sophie88 – Torrano™ Calacatta Tile
(60cm 5 30cm)
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OUR STRATEGY
COMMERCIAL
PARKSIDE AND STRATA
The commercial tile market represents around 45% of the overall UK
tile market, hence our entry into this market approximately doubles
our addressable 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. 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 tile expertise, 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.
Progress and Outlook
2019 was a year of learning, development and growth for Parkside.
We have built a sales team of 19 people with approximately 400
years of combined tile sales experience, delivered a sales increase
of 81% and developed a very encouraging pipeline of potential
future sales. Feedback from customers has been very positive with
both the quality and friendliness of our sales teams and our access
to exclusive and differentiated ranges seen as key strengths. We
have expanded our network of design studios with openings in the
Clerkenwell district of London and the Cotswolds, bringing the total
to four. These meeting and event spaces enable designers, architects
and contractors to directly experience the vast range of product
possibilities we offer.
During the period we further strengthened our position in the
commercial tile market through the acquisition of Strata Tiles.
Strata Tiles is a commercial tile business with a specialist focus in
transport, retail and living spaces and an experienced team of nine
sales people working across the industry.
Overall Commercial sales performance was strong during the
period with total revenues growing by 133% to £4.9 million
and an encouraging future pipeline of prospects which continues
to build. Trading losses for the commercial business have been
£2.0 million (excluding £0.3 million arising on the amortisation
of intangible assets and provision for redemption of non-controlling
interest). In line with previously announced strategy, these losses
have been treated as a longer term investment and as such have
been excluded from the adjusted financial results of the Group for
this year. With effect from the 53 week period ended 3 October
2020 Commercial will no longer be excluded from our adjusted
financial results and our expectation is that we will trade at broadly
breakeven in that period (excluding amortisation of intangibles
and redemption of non-controlling interest). We remain open to
further growth through acquisition and will continue to review such
opportunities as they arise.
Read more information on Key Performance
Indicators on pages 18 to 19
© Craig Howarth
1
WHAT OUR CUSTOMERS ARE SAYING
This is the first project we have carried out using
materials from Parkside. Have to say deliveries
to site have been first class which is crucial
to our fast track programme in retail store.
Thomson Tiling
1
Lyttelton Arms, Stourbridge (Parkside)
2 Arrange by Tom Pigeon (Parkside)
16
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STRATEGIC REPORT
OUR GOVERNANCE
OUR FINANCIALS
ADDITIONAL INFORMATION
2
WHAT OUR CUSTOMERS ARE SAYING
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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
1 Adjusted Group Revenue
Growth Year-on-Year*
(0.2)%
2018: +1.5%
▲
2 Like-for-Like Sales Growth
▲
3 Adjusted Gross
▲
Year-on-Year*
0.6%
Margin*
62.0%
YoY: n/a
2018: 0.0%
YoY: n/a
2018: 61.3%
YoY: +70bps
How we calculate this:
How we calculate this:
How we calculate this:
Total Group revenues, excluding
Commercial revenue
Sales from online and stores that have been
trading for more than 52 weeks
Group gross margin, excluding Commercial
gross margin
4 Adjusted Profit
Before Tax*
£16.0m
2018: £16.0m
▲
5 Adjusted Earnings
Per Share*
6.61p
▲
6 Net
Debt*
£11.3m
▲
YoY: nil
2018: 6.64p
YoY: (0.5)%
2018: £16.2m
YoY: +£4.9m
How we calculate this:
How we calculate this:
How we calculate this:
Group profit before tax, excluding items
which are either one-off in nature or
fluctuate significantly from year to year
Group earnings per share, adjusted for
items which are either one-off in nature or
fluctuate significantly from year to year,
including the offsetting tax impacts of these
items, plus the impact of corporation tax
Bank loans, before unamortised issue costs,
and less cash and cash equivalents
7 Inventory
Days
134
2018: 130
▲
* As defined on page 3.
YoY: (4)
How we calculate this:
Inventory value divided by cost of sales,
multiplied by 365 days
Read more in our Financial Review
on pages 20 to 23
Read more in our Strategy
on pages 12 to 17
18
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FINANCIAL KPIS
STRATEGIC REPORT
OUR GOVERNANCE
OUR FINANCIALS
ADDITIONAL INFORMATION
NON-FINANCIAL KPIS
1 Customer Overall
Service Score
▲
2 Colleague
Turnover
1
▲
86.0%
2018: n/a
36.8%
YoY: n.a
2018: 37.2%
YoY: +0.4%
How we calculate this:
How we calculate this:
Calculated from responses we receive
through our Tile Talk customer feedback
programme, measuring the percentage of
customers who score us 5 in the scale of
1–5, where 1 is highly dissatisfied and 5 is
highly satisfied
Total number of leavers in a period divided
by the average number of employees in a
period, multiplied by 100
3 Carbon Emissions Per Store
▲
4 Number of Retail Stores
▲
(Tonnes Per Annum)
at Year End
31.9
2018: 31.1
362
YoY: (2.6)%
2018: 368
YoY: (6)
How we calculate this:
How we calculate this:
Actual electricity and gas energy consumed
multiplied by Environment Agency-approved
emissions’ factors, plus vehicle emissions
based on mileage covered multiplied by
manufacturer-quoted emission statistics
Number of retail stores open as at
28 September 2019
2
3
1 Underfloor heating demonstration
in store
2 At the Design Advice Area
3
Exploring outdoor tiles, in-store
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26922 6 December 2019 4:51 pm Proof 7a PFPFINANCIAL REVIEWFinancial Objectives In addition to the key strategic objectives highlighted in the Strategy section above, the business maintains a strict financial discipline, including:• Primary focus on increasing revenues and cash generation, maintaining cost disciplines and optimising gross margins;• Maximising earnings per share and shareholder returns, including bi-annual review of our dividend policy. The dividend policy is to remit approximately half of the adjusted earnings per share back to shareholders; and • 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. Adjusted MeasuresThe 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 commercial business, to allow the Group to understand Topps Tiles’ retail performance on a more comparable 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 periods in a more consistent manner. For the current period the following items have been excluded:• Losses relating to the commercial business of £2.3 million (2018: £1.1 million) – recognising that 2018 and 2019 will be two years of investment in longer term growth. The commercial loss comprises £2.0 million from trading and a £0.3 million impairment of intangible assets and provision for redemption payments for non-controlling share; • One-off deal costs related to the purchase of the Strata business of £0.4 million; • Losses related to movement in property related provisions (including onerous lease movements and provision against fixed assets in loss making stores) of £1.8 million (2018: £2.2 million);• Vacant property costs of £1.1 million (2018: £0.2 million) for stores closed as part of a portfolio optimisation programme;• Gain relating to repayment of historical import duty from HMRC of £2.3 million; and• Losses from a write-off of goodwill relating to a historical acquisition (Surface Coatings Ltd) of £0.2 million.In the prior year a gain from the disposal of four freehold properties of £0.7 million and a loss of £0.5 million relating to a historical adjustment to the refunds provision were also excluded.Profit and Loss AccountRevenueTotal revenue for the period ended 28 September 2019 increased by 1.1% to £219.2 million (2018: £216.9 million).Adjusted revenue decreased by 0.2% to £214.3 million (2018: £214.8 million). Like-for-like store sales were 0.6% higher than the prior year, which consisted of a 0.2% increase in the first half of the financial period and a 0.9% increase in the second half. We believe that the sales performance represents an outperformance of our market and is an endorsement of our strategy.1TOPPS TILES PLC ANNUAL REPORT AND ACCOUNTS FOR THE 52 WEEK PERIOD ENDED 28 SEPTEMBER 201920Topps Tiles Annual Report 2019.indd 2006/12/2019 16:53:59 STRATEGIC REPORT
OUR GOVERNANCE
OUR FINANCIALS
ADDITIONAL INFORMATION
Against the context of a challenging backdrop,
the Group has delivered like-for-like sales
growth, improvements in gross margin and a
flat underlying profit. This has allowed us to
maintain a stable dividend, continue to invest in
the business and achieve a further reduction
in net debt.
Rob Parker
Chief Financial Officer
Gross Margin
Total gross margin was 61.6%, an increase from 61.1% in the
prior year.
Adjusted gross margin (for our retail business) increased to 62.0%
compared with 61.3% in the previous financial period. Over the
first half of the period adjusted gross margin was 61.4%, and we
delivered a gross margin of 62.7% in the second half of the period.
Gross margin includes a £0.5 million gain (20 bps) from the
reclassification of other income from operating costs. In addition,
there has been a benefit from sourcing gains and new ranges with
improved margins. Over the year foreign exchange had a modest
impact (10bps adverse movement) with a minor benefit in the first
half offset in the second half. For the year ahead we anticipate
that gross margin in our retail business will be broadly flat, but
continued growth of the commercial business which operates at
a lower level will dilute total gross margin by around 100 bps.
Operating Expenses
Total operating costs increased from £118.7 million to £121.6
million, an increase of 2.4%. Costs as a percentage of sales were
55.5% compared to 54.7% in the prior period. When adjusting
items (detailed above) are excluded, operating costs were £116.1
million (2018: £114.6 million), an increase of 1.3%. Adjusted
costs as a percentage of adjusted sales were 54.2% compared to
53.4% in the previous period.
Adjusted Group
Revenue1
£214.3m
2018: £214.8m
Year-on-Year: (0.2)%
Adjusted Gross
Margin3
62.0%
2018: 61.3%
Year-on-Year: +70bps
Group
Revenue (£m)
Gross
Margin (%)
Year-on-Year: +1.1%
Year-on-Year: +50bps
.
2
9
1
2
.
9
6
1
2
.
0
5
1
2
.
8
1
1
2
.
9
1
6
.
1
1
6
.
1
1
6
.
6
1
6
16 17 18 19
16 17 18 19
1 Hemsworth Beige and Oparo Diamond Plain and Petal
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FINANCIAL REVIEW
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 366 (2018: 372), which generated a reduction
in costs of approximately £1.5 million;
− Inflation at an average of approximately 1.4% increased
our cost base by around £1.7 million (excluding regulatory
impacts);
− Regulatory cost impacts, including the National Living Wage,
accounted for £0.5 million of additional costs;
− Depreciation increased by £0.2 million due to higher levels of
investment in the store estate over recent years;
− Supply chain costs increased by £0.3 million partially due
to additional off-site facilities for stock as a result of Brexit
contingency planning;
− Reclassification of £0.5 million of other income from operating
Financing
Net finance costs for the period were £0.9 million (2018: £1.0
million). The reduction recognises changes to the principal debt
which continued to fall over the year.
Net interest cover was 28.2 times (2018: 23.0 times) based
on profit before interest and tax of £13.3 million (2018: £13.7
million), adjusted for depreciation and amortisation of £7.4 million
(2018: £7.1 million) and adjusting items of £3.5 million (2018:
£3.3 million).
Profit Before Tax
Profit before tax (PBT) was £12.5 million (2018: £12.7 million).
The Group PBT margin was 5.7% (2018: 5.9%).
Excluding the adjusting items detailed above, PBT was £16.0
million (2018: £16.0 million). The Group adjusted PBT margin
was 7.5% (2018: 7.4%).
costs into gross margin;
Tax
− Employee profit share costs decreased by £0.5 million, with
lower level of financial performance compared to plan; and
The effective rate of corporation tax for the period was 19.2%
(2018: 23.9%).
− Other cost increases of £0.3 million across a number of
cost lines.
For the year ahead we expect the adjusted operating costs for
the business to be between £122 million and £123 million. This
includes between £5.5 million and £6.0 million of costs relating to
the inclusion of the commercial business due to this no longer being
treated as an adjusting item.
Adjusted Profit
Before Tax (£m)4
Year-on-Year: nil
0
.
2
62
.
8
1
0
.
6
1
0
.
6
1
Adjusted Earnings
Per Share (p)5
Year-on-Year: (0.5)%
6
8
.
38
6
.
7
4
6
.
6
1
6
.
6
16 17 18 19
16 17 18 19
Total
Dividend (p)
Year-on-Year: nil
0
5
3
.
0
4
3
.
0
4
3
.
0
4
3
.
16 17 18 19
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 5.18 pence (2018: 5.00 pence).
Diluted earnings per share were 5.14 pence (2018: 4.93 pence).
Excluding the adjusting items detailed on page three adjusted
earnings per share were 6.61 pence (2018: 6.64 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 and over the period we are in line with
this at a cover of 1.945 the adjusted earnings per share (2018:
1.955).
The Board is recommending to shareholders a final dividend of 2.3
pence per share (2018: 2.3 pence per share). This will cost £4.4
million (2018: £4.4 million). The shares will trade ex dividend on
19 December 2019 and, subject to approval at the Annual General
Meeting, the dividend will be payable on 31 January 2020.
This will maintain the total dividend for the year at 3.4 pence per
share (2018: 3.4 pence per share).
The policy for the interim dividend is to pay one third of the prior
full year dividend.
Balance Sheet
Capital Expenditure
Capital expenditure on tangible/intangible assets and investment
properties in the period amounted to £7.8 million (2018: £7.9
million), a decrease of 1.3%.
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STRATEGIC REPORT
OUR GOVERNANCE
OUR FINANCIALS
ADDITIONAL INFORMATION
Key investments are as follows:
Capital Structure and Treasury
− New retail stores and store improvements £4.5 million – 12
new openings (including two relocations) (2018: £3.3 million)
− Commercial showrooms £0.6 million (2018: £0.4 million)
− Freehold and investment property purchases £0.2 million
(2018: £3.1 million)
Cash and cash equivalents at the period end were £18.7 million
(2018: £13.8 million) with borrowings of £30.0 million (2018:
£30.0 million) before unamortised issue costs.
This gives the Group a net debt position of £11.3 million (2018:
£16.2 million).
− Central office refurbishment, IT and other expenditure £2.5
Cash Flow
million (2018: £1.1 million)
The Board expects capital expenditure in the year ahead to be
between £6 million and £7 million which will cover our core
investment plans. In addition, we are considering investing in
a programme to retrofit LED lighting into all stores at a cost of
between £2.5 million and £3.0 million which will deliver a
significant saving in energy and carbon emissions. Any strategic
acquisitions that the Group may consider as part of its growth plans
in the commercial tile market would be additional to this guidance.
At the period end the Group held five freehold or long leasehold
sites, including two warehouse and distribution facilities and an
office building, with a total carrying value of £13.8 million (2018:
six freehold or long leasehold sites valued at £14.2 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 & Disposals
During the year we disposed of one freehold property for a
consideration of £0.2 million.
During the prior period we acquired one freehold property for
a consideration of £2.9 million and disposed of four freehold
properties for a consideration of £3.9 million.
Intangible Assets & Goodwill
During the year Topps acquired 80% of the Strata commercial tiles
business, which has resulted in a goodwill value of £1.9 million.
The Strata acquisition also resulted in intangible assets of £1.7
million, which have been amortised by £0.1 million in the period
to a new carrying value of £1.6 million.
At the period end Parkside goodwill was £1.2 million (2018:
£1.2 million). Intangible assets, relating to the Parkside business,
were amortised by £0.1 million to a new holding value of £0.3
million (2018: £0.3 million).
In the previous year the Topps retail business held goodwill relating
to historic acquisitions of £0.2 million, which was written off during
the period.
Inventory
Cash generated from operations was £21.9 million, compared
to £21.9 million in the prior year period, being flat year on year.
Improvements in working capital of £2.0 million were driven by the
financial calendar with year-end falling before payroll payments were
made in FY19, while in FY18 payroll payments had been made.
Working capital gains were offset by reduced cash flow from operating
activities (including interest) (£1.2 million lower than prior year), and
higher tax payments (£0.8 million higher than the prior year).
Free cash flow was £11.5 million (2018: £17.9 million), a reduction of
£6.4 million year on year. This reduction was driven by lower proceeds
from disposals of properties of £3.5 million. FY19 also includes the
£2.7 million cash outflow for acquisition of the Strata business.
IFRS 16 – Leases
IFRS 16 will be adopted by the Group in the period ending 3 October
2020. The standard will have a material impact on the financials
statements of the Group due to the large number of property leases
it holds as well as leases relating to machinery and vehicles.
Based on the lease portfolio at the transition date of 29 September
2019, the Group will recognise a right-of-use asset in the region of
£125 million, with a corresponding lease liability in the region of
£130 million.
For the period ending 3 October 2020, the Group expects a
reduction in Profit before taxation in the region of £1 million,
as a result of the adoption of IFRS 16.
Current Trading and Market Conditions for the Year Ahead
Consumer demand has weakened further since the UK General
Election was called in late October. In the first eight weeks of the
new financial year, retail like-for-like sales have declined by 7.2%.
A reduction in political uncertainty will be key to the short-term outlook
but we remain confident that our market-leading retail offer and
rapidly growing commercial operations gives us a solid platform from
which to deliver sustainable growth over the medium term.
Net
Debt (£m)
Free Cash
Flow (£m)
Year-on-Year: +£4.9m
Year-on-Year: (£6.4m)
Inventory at the period end was £30.9 million (2018: £30.2
million) representing 134 days’ turnover (2018: 130 days’
turnover). The September 2019 year end stock balance includes
£1.1 million of stock built up in advance of the previously proposed
31 October 2019 Brexit deadline, as a precaution against the risk
of potential delays getting stock through ports during November.
.
5
7
2
.
8
4
2
2
.
6
31
.
1
1
.
9
7
1
5
.
1
1
3
.
9
2
.
4
16 17 18 19
16 17 18 19
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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.
▲
Status
Impact
Risk
Brexit – General Economic & Consumer Confidence
The general economic
climate and specifically
consumer confidence are
important to Topps 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 35% of our cost of
goods in foreign currencies which gives
us an exposure to movements in foreign
currency exchange rates. Every 1 cent
change in euro and US$ (combined) has
a £0.23 million impact on cost of goods
over a full year of purchases (excluding the
impact of Topps policy of hedging forward
for 6 months).
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, have
increased focus on taking market share from
competitors and have further expanded
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.
▲
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.
Appropriate Business Strategy
Our business strategy
will not be successfully
delivered.
▲
The expansion of the Group
into the commercial tile
market over the last two
years has increased our
strategic risk slightly.
We source around 50% of our cost of
goods from outside of the UK (some in
foreign currency some in UK sterling). Any
material slowdown in our supply chain
could materially impact our stock availability
and hence our sales performance.
The key mitigation is to ensure we have
sufficient stock to provide stability through
a period of disruption. We have increased
the stockholding of our key selling lines in
order to provide customers with greater
continuity through any period of disruption.
The strategy is reviewed annually, updated
as required and approved by the Board.
Bi-annual communication events and regular
updates are provided to all colleagues on
our progress towards our goals.
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.
24
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STRATEGIC REPORT
OUR GOVERNANCE
OUR FINANCIALS
ADDITIONAL INFORMATION
Risk
Status
Impact
Mitigation
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 on tiles and
our leading range and leading people
agendas.
During the financial year approximately
110 stores have been subject to a
programme of improvements which will
further differentiate us from our competitors.
We now have 243 stores with these
treatments and the programme will be
completed in the new financial year.
We have launched our new website
which greatly enhances the omni-channel
shopping experience for our customers.
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.
We have launched new apprenticeship
programmes for both central colleagues
and store colleagues, which will be an
important addition to our employer brand
credentials.
▲
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.
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.
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.
▲
The loss of technical
knowledge in stores through
high levels of colleague
turnover could have a
negative impact on our
customer service levels.
Key:
▲
▲
▲
Risk has increased
Risk has decreased
No change
N
New risk
TOPPS TILES PLC ANNUAL REPORT AND ACCOUNTS FOR THE 52 WEEK PERIOD ENDED 28 SEPTEMBER 2019
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RISKS AND UNCERTAINTIES
Risk
Status
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.
Financing
The Group has a £39
million revolving credit
facility in place which
was refinanced in July
2018 and expires in July
2022 (with an opportunity
to extend for a further
year (so a potential full
term ending July 2023).
The loan facility contains
financial covenants which
are tested on a bi-annual
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.
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 larger store presence across the UK than
is required to maximise the profitability of
the Group.
We will continue to review customer trends
to ensure our estate remains optimised to
best serve their needs.
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.
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.
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.
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 pro-active discussions with
lenders.
▲
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.
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.
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STRATEGIC REPORT
OUR GOVERNANCE
OUR FINANCIALS
ADDITIONAL INFORMATION
Risk
Status
Impact
Mitigation
▲
Major Reputational Damage
The Topps 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.
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.
Delivery Optimisation
We need compelling
and commercially viable
delivery propositions which
meet the needs of all our
customer groups.
▲
N
Key:
▲
▲
▲
Risk has increased
Risk has decreased
No change
N
New risk
While 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.
A reduction in available qualified tilers
could have a negative impact on sales
across the tile retail market.
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 and tested 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.
We have developed our trader champion
programme to both retain our existing trader
base and to encourage new traders to
shop with Topps. The programme includes
a market leading loyalty programme, bulk
discounts, credit accounts and added value
trader services.
A failure to offer a reliable delivery service
to both retail, trade and commercial
customers could have a negative effect
on both reputation and future sales.
Ongoing reviews with our third party direct
delivery partners to ensure we offer the
optimum service to all customer bases.
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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26922 6 December 2019 4:51 pm Proof 7a PFPCORPORATE SOCIAL RESPONSIBILITYPeople are at the heart of our businessOur Charity PartnershipsTopps Tiles Group colleagues have continued to support our local and national charity partnerships throughout the year, taking part in a variety of community projects and fundraising events.At national level, an all-colleague vote saw the majority choose to extend our five-year partnership with Macmillan Cancer Support for an additional two years; this will now continue until December 2021.Our Leicester support office has also renewed its partnership with Leicestershire Cares, a local organisation that seeks to work with local businesses to support charity initiatives. This gives colleagues the opportunity to get involved in activities which directly benefit community projects, including painting and decorating, gardening, catering and supporting events.Macmillan Cancer SupportWhen Topps Tiles partnered with Macmillan Cancer Support at the start of 2015, the Company set itself a £500,000 target. This was reached during the FY18 financial year, one year ahead of schedule.To date we have now raised more than £775,000, and the Company has doubled its original target to £1 million.Around two thirds of the money raised has come via the Pennies digital charity box scheme, where customers in stores can make modest donations to Macmillan by rounding up their purchase to the nearest pound (the average donation is 31p). Pennies has raised more than £500,000 since its start in August 2015, and this year the total was £185,000. This is due to both the generosity of our customers and the efforts of our store colleagues who promote Pennies with every sale.This year also saw the second Tour de Topps bike ride, in which 24 colleagues took part in a charity bike ride on a circular route starting and ending at our Enderby support office. Colleagues were given the chance to ride either 50 or 100 miles, with the overall event seeing 2,050 miles cycled and more than £8,000 raised for Macmillan.Other events included a “Yellow Rucksack Challenge” which saw a rucksack taken to all 20 stores in the West Yorkshire region via any means barring transport. Colleagues walked, cycled, skipped or walked the dog to get the rucksack from one area to the other, finishing with a climb up Mount Snowdon. The team travelled more than 350 miles and raised more than £500.Support office colleagues held regular samosa sales, two “Bake Off” competitions and a Christmas Raffle which brought in more than £1,500.11Yellow Rucksack Challenge, on tour2Samosa Sale at the Enderby support office2TOPPS TILES PLC ANNUAL REPORT AND ACCOUNTS FOR THE 52 WEEK PERIOD ENDED 28 SEPTEMBER 201928Topps Tiles Annual Report 2019.indd 2806/12/2019 16:54:06 STRATEGIC REPORT
OUR GOVERNANCE
OUR FINANCIALS
ADDITIONAL INFORMATION
1
2
3
1
2
3
The second Tour de Topps raised more than £8,000 for
Macmillan as riders took on a 50-mile or 100-mile bike ride
Buying and Stock teams run the Inflatable 5km Challenge for
Macmillan Cancer Support
Total fundraising after five years
TOPPS TILES PLC ANNUAL REPORT AND ACCOUNTS FOR THE 52 WEEK PERIOD ENDED 28 SEPTEMBER 2019
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26922 6 December 2019 4:51 pm Proof 7a PFP3Topps Tiles and Parkside colleagues provide a Christmas party for homeless people in Leicester2CORPORATE SOCIAL RESPONSIBILITYLeicestershire CaresTeams throughout Topps Tiles and Parkside were invited to undertake a Leicestershire Cares team challenge to aid local good causes.Last year’s successes included more than 700 toiletry items donated to homeless people, tidying and renovations of areas including a school vegetable garden and historic community hall, painting of a family centre, creation of a planter area at a community garden, the making of 1,500 packed lunches for children in need and a Christmas party for homeless people.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 be visible as a proactive, supportive part of the community in Leicestershire and Rutland.1Hundreds of items of toiletries collected for homeless people in Leicester and Leicestershire as part of Collect4Christmas Campaign (Images 1 & 2)321TOPPS TILES PLC ANNUAL REPORT AND ACCOUNTS FOR THE 52 WEEK PERIOD ENDED 28 SEPTEMBER 201930Topps Tiles Annual Report 2019.indd 3006/12/2019 16:54:18 STRATEGIC REPORT
OUR GOVERNANCE
OUR FINANCIALS
ADDITIONAL INFORMATION
4
5
6
7
8
4 Customer Service and Operations teams making
5
6
7
8
1,500 packed lunches over five days for
disadvantaged schoolchildren (Images 4 & 5)
Logistics colleagues clearing allotments at
Saffron Acres in Leicester
Buying and stock teams redecorating the
community hall at Sproxton in Leicestershire
The HR team clearing a garden and fence
painting at a local primary school
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26922 6 December 2019 4:51 pm Proof 7a PFPCORPORATE SOCIAL RESPONSIBILITYWORD FROM OUR PARTNERS:It has been wonderful to see Topps Tiles’ customers donate so generously since the partnership with Pennies was introduced in 2016, making more than 1.5 million individual donations and raising over £500,000 for Macmillan Cancer Support to date.Pennies would like to give a huge thanks to the team at Topps Tiles – for not only using our digital charity box solution to raise funds for charity – but for being such advocates for the digital micro-donation movement. Pennies itself is a charity and we work hard to make charitable giving as easy, affordable and accessible as possible, to protect and grow digital micro-donations as a valuable source of funds for the charity sector. It has never been more important for companies to commit to acts of ‘social good’ as investors, colleagues and customers demand ethical, responsible business. Topps Tiles is a shining example of a business that has shown their commitment to charities like Macmillan and Pennies; working hard to give back to the communities they serve and show customers how their pennies join together to make a difference. We look forward to building on this partnership across more channels in the coming years, to helping create more impact for Macmillan and their beneficiaries, and to offering many more Topps customers the option to make their pennies count for charity.Alison Hutchinson CBEChief Executive, PenniesWe are incredibly grateful to Topps Tiles customers and colleagues for all their amazing support since our partnership began back in 2015. To date they have raised over £775,000 for Macmillan Cancer Support, which is helping us provide physical, financial and emotional support to people affected by cancer in the UK. One in two of us will now receive a cancer diagnosis in our lifetime and we couldn’t provide our vital support to those that need us without the amazing contributions from our partners like Topps Tiles. During 2019, we were delighted when colleagues chose to extend our partnership with Topps Tiles and renew their commitment to Macmillan for years to come. We were also proud to present Topps Tiles with the Macmillan Award for Excellence in Customer Microdonations, thanks to their incredible customer donations via the Pennies scheme. We look forward to seeing what the future holds for our incredible partnership together.Claire SinglehurstDirector of Relationship Fundraising, Macmillan Cancer SupportThe contribution that Topps Tiles has made to various communities across Leicester city and county has been invaluable. Leicestershire Cares and Topps Tiles have shared a successful partnership. Since 2015 Topps Tiles teams have sent over 500 employee volunteers to make a significant impact to local communities, with hours volunteered equating to £75,000 worth of social investment into the local economy. We would like to give a huge thank you and congratulations to the all the staff for the drive and determination they giving during their team and festive challenges. The staff use their corporate social responsibility to help people come together and feel a sense of unity and pride in their community once more.The Topps Tiles staff give lots of festive cheer through Christmas parties and get thoroughly involved in Collect 4 Christmas; the whole Company comes together to collect items for individuals who have been homeless and ready for a fresh start in their new accommodation. We look forward to building on the strong foundations we have with Topps Tiles staff and local communities.Raheema CaratellaCommunity Development Co-ordinator Leicestershire CaresTOPPS TILES PLC ANNUAL REPORT AND ACCOUNTS FOR THE 52 WEEK PERIOD ENDED 28 SEPTEMBER 201932Topps Tiles Annual Report 2019.indd 3206/12/2019 16:54:27 STRATEGIC REPORT
OUR GOVERNANCE
OUR FINANCIALS
ADDITIONAL INFORMATION
Transport
This year has seen a focus on driver performance.
Our fleet covered a total of 3.7 million kilometres using 1.2 million
litres of fuel, an increase of 2.3% and 1.3% respectively YoY.
But our overall levels of kilometres per litre rose from 2.97 to 2.99,
suggesting an overall improvement in driver performance.
In addition, our Warehouse to Wheels programme continues to
flourish, where we support warehouse to become fully qualified HGV
drivers. This year two more drivers have completed the programme
and are now part of our driver team. In an increasingly competitive
market, this has become an important source of trained drivers, to
ensure our driving colleagues reflect our high levels of customer
service as they continue to represent our brand across the UK.
Supply Chain
We source a diverse range of products from 200 factories across
the world to bring the latest trends, creative designs and advanced
technologies to the UK to retain our position as market leader. We
have developed long-term strategic partnerships across our supply
chain where we share the same ethical values.
As a trusted retailer and supplier to Commercial projects 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, and 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. Suppliers are expected to be able to meet our
high standards of behaviour and business ethics.
As part of our auditing process, all of our suppliers have to
complete a Social and Ethical Self-assessment document to be able
to identify if there are any product or geographical risks. As a result
of these assessments, we are rolling out an independent third-party
auditing programme across regions where due diligence mapping
has identified any potential risks. To mitigate any risk there is also
ongoing surveillance visits carried out by our buyers, factory agents
and members of our technical team to ensure that our products
continue to be ethically sourced.
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. We believe that training in
this area is important, and there is heightened awareness across the
organisation on being able to identify the risks of modern day slavery.
* Our Responsible Sourcing Code of Conduct and Modern Day Slavery Statement can
be found on our website at www.toppstilesplc.com under Corporate Responsibility.
1
1
Topps Tiles fleet at Grove Park, Enderby
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CORPORATE SOCIAL RESPONSIBILITY
Environment and Sustainability
Reducing the amount of waste sent to landfill continues to be a
focus across the business and we are pleased to report notable
improvements in this area.
1
At Clerkenwell Design Week, May 2019, our commercial
business Parkside launched Sequel Vibe, a 3-colour, 3 format-tile
collection that is manufactured from 98% recycled materials. By
using unwanted manufacturing materials a new kind of material
is produced, combining glass and porcelain, to create tiles with
unique character and low environmental impact.
As a group, we continue to work with Parkside suppliers to improve
the sustainability of its tile collections.
In terms of recycling, waste is collected from across our store
network to be sorted into different categories, much of which
is recycled, including cardboard, shrink-wrap, polythene,
polypropylene banding, wooden packaging, scrap metal and
repairable wooden pallets.
In the past year we have recycled 98 tonnes of cardboard through
our operation (+69% YoY as cardboard is now sent back to our
distribution centre from stores). We are also recycling 70 tonnes
of polythene (+15%), 16 tonnes of nylon strapping (+7%) and
14 tonnes of paper (+17%).
Our Distribution Centre 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.
2
We collect damaged tiles from our stores and in partnership with
Green4life we have recycled 52% of our tiles. This year saw
37% of our tile waste crushed and used as a composite material
in breeze blocks and a further 15% used as a composite of
aggregate. This is a market-leading initiative based on our principle
of reducing waste to landfill.
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.
1
2
Sequel range, made from recycled glass
(Parkside) (Images 1 & 2)
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STRATEGIC REPORT
OUR GOVERNANCE
OUR FINANCIALS
ADDITIONAL INFORMATION
We work proactively with our suppliers to ensure that they 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.
For the last three years all new, relocated and refitted stores have
been installed with LED lighting and we are now commencing a
six-month programme to retro-fit our remaining store estate with
a new energy efficient LED lighting system. This will cut energy
consumption by over 40%. This year we also upgraded the lighting
in our one remaining non-LED lit distribution warehouse in Leicester
to an energy efficient system.
Carbon emissions per store have increased slightly from 31.1 to
32 tonnes per annum (+2.9%), 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.
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. This enables
our stores to allocate a modest sponsorship budget to a local
youth team.
We donated funds to 60 teams throughout the UK during 2019,
including football, rugby, cricket and netball.
1
The Tile Association
For the past three 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 Buying
Director, Tim Tatlock, also sits on the Board of Directors of The Tile
Association.
We aim to work with the association on improving industry
standards, training and offering support in encouraging best
practises throughout the industry.
1 West Coventry Academy Netball Team, who benefited from
Topps Tiles Youth Sport
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STRATEGIC REPORT
Non-financial Information Statement
Topps Tiles 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’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 34;
− Employees on page 14;
− Gender diversity on page 52;
− Social matters on pages 28 to 35;
− Respect for human rights on page 52; and
− Anti-corruption and anti-bribery matters on page 47.
• Where principal risks have been identified in relation to any
of the matters listed above, these can be found on pages 24
to 27, 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 pages 18 and 19.
• The Financial Review section on pages 20 to 23 includes,
where appropriate, references to, and additional explanations
of, amounts included in the entity’s annual accounts.
Section 172 Companies Act 2006
Details on how Topps Tiles Plc has complied with the
requirements of s172 of the Companies Act 2006 are found
within the Corporate Governance Statement on page 42.
Going Concern
When considering the going concern assertion the Board
reviews 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 accounts on the going concern basis.
Long Term Viability
The Board has also considered the Longer Term Viability
(“LTV”) of the business in light of updated Corporate
Governance requirements. The fuller LTV statement can be
found in our Annual Report.
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 3
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
the key risks to the delivery of its financial plans related 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 3 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 2022 (with the opportunity to
extend by a further year in June 2020).
Based on this review the Directors confirm that they have
a reasonable expectation that the Group will continue to
operate and meets its liabilities, as they fall due, for the
next 3 years.
36
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STRATEGIC REPORT
OUR GOVERNANCE
OUR FINANCIALS
ADDITIONAL INFORMATION
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.
1
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.
ANNUAL GENERAL MEETING
The Annual General Meeting for the period to 28 September 2019
will be held on 22 January 2020 at 10am at the Marriott Hotel,
Leicester.
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
26 November 2019
2
1 Mona Grey and Astrea Ink Blue
2
Regal Vanilla Matt
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02 OUR
GOVERNANCE
1
Board of Directors
Executive Team
Corporate Governance Report
Directors’ Report
Directors’ Remuneration Report
40
41
42
50
54
1 Orbitale Brass, Carrara Honed and Lato Circle
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26922 6 December 2019 4:51 pm Proof 7a PFPBOARD OF DIRECTORSDarren Shapland GNon-Executive ChairmanDarren joined the Board in March 2015. He 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.Matthew WilliamsChief Executive OfficerMatt 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 ParkerChief Financial OfficerRob 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.Matt Williams will step down as CEO and be succeeded by Rob Parker on 29 November 2019.Keith Down C D ENon-Executive DirectorChair of the Audit CommitteeKeith joined the Board in February 2015. A chartered accountant, Keith 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 Tiney B D F HNon-Executive DirectorChair of the Remuneration CommitteeClaire joined the Board in November 2011. She is also a Non-Executive Director of Volution plc and Hollywood Bowl Group plc, having previously spent 15 years as an Executive Director in several retail businesses including Mothercare and WHSmith. Most recently, she was HR Director at McArthurGlen.Andy King D E HNon-Executive DirectorEmployee Engagement DirectorAndy 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, WHSmith and Boots the Chemists. Andy is the Company Engagement Director, with responsibilities for engagement with the workforce on behalf of the Board. ASecretary of the Audit, Nomination and Governance and Remuneration Committees BSenior Independent Director CChairman of Audit Committee DMember of Nomination and Governance Committee EMember of Remuneration Committee FChairman of Remuneration Committee GChairman of Nomination and Governance Committee HMember of Audit CommitteeTOPPS TILES PLC ANNUAL REPORT AND ACCOUNTS FOR THE 52 WEEK PERIOD ENDED 28 SEPTEMBER 201940Topps Tiles Annual Report 2019.indd 4006/12/2019 16:55:13 26922 6 December 2019 4:51 pm Proof 7a PFPMatthew WilliamsChief Executive OfficerMatt Williams will step down as CEO and be succeeded by Rob Parker on 29 November 2019.Rob ParkerChief Financial OfficerRob Parker also serves on the Board of Directors. Brian Linnington Managing Director of CommercialAppointed Managing Director of Commercial in April 2018. 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. Brian was Product and Marketing Director at Vision Express before joining Topps Tiles in 2012 to take responsibility for buying, marketing and online.Richard Carter Managing Director of RetailAppointed Managing Director of Retail in April 2018. 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 and Office World (Staples). Richard started his career with Asda on their retail operations graduate recruitment programme, before joining Topps Tiles in 2010 to take responsibility for retail operations, supply chain and the trade division.Alistair Hodder ACompany SecretaryAppointed Head of Legal & Company Secretary in June 2018. After starting his legal career as a solicitor with national law firm Pinsent & Co, Alistair has held senior in-house and General Counsel/Head of Legal positions, with a focus on technology, construction/building materials, insurance and consumer. Before joining Topps Tiles, Alistair was Head of Legal at NHBC.Tim Tatlock Buying DirectorAppointed Buying Director in April 2018. Responsible for all our product assets and leads in Creative, Sourcing, Technical and Inventory, Tim 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. His expert knowledge and innovative approach have seen progress to the position of Buying Director, after joining Topps Tiles as a Buyer in 2005.EXECUTIVE TEAMThe CompanyTopps Tiles plcRegistration Number3213782Registered OfficeThorpe Way, Grove Park Enderby, Leicestershire LE19 1SUSecretaryAlistair Hodder London Stock Exchange SymbolTPT The GroupComprises Topps Tiles plc and all subsidiary companiesOur AdvisersAuditorsPwC LLPDonington CourtPegasus Business ParkCastle DoningtonDE74 2UZ BankersBarclays Bank PLC 3 Hardman Street, Spinningfields Manchester, M3 3HFRegistrarsLink Asset Services Bourne House 34 Beckenham Road Beckenham, Kent BR3 4TU SolicitorsOsborne Clark LLP One London Wall London, EC2Y 5EBFinancial PR AdvisersCitigate Dewe Rogerson8th Floor, Holborn Gate26 Southampton BuildingsLondon WC2A 1AN, UKBrokersPeel Hunt LLP Moor House, 120 London Wall London, EC2Y 5ETLiberum Capital Limited Ropemaker Place Level 12 25 Ropemaker Street London EC2Y 9LYTOPPS TILES PLC ANNUAL REPORT AND ACCOUNTS FOR THE 52 WEEK PERIOD ENDED 28 SEPTEMBER 201941OUR FINANCIALSSTRATEGIC REPORTADDITIONAL INFORMATIONOUR GOVERNANCETopps Tiles Annual Report 2019.indd 4106/12/2019 16:55:35 26922 6 December 2019 4:51 pm Proof 7a PFPCORPORATE GOVERNANCE REPORTThe 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 ShaplandChairmanDear Shareholder I am pleased to present our Corporate Governance Report for the period ended 28 September 2019. Continuing to Strengthen Our GovernanceGood governance is essential to the successful delivery of our strategy and the Board is committed to meeting the highest standards for all stakeholders. The Financial Reporting Council’s 2016 UK Corporate Governance Code (“2016 Code”) was applicable during the Period. The Board and I welcomed the Financial Reporting Council’s 2018 UK Corporate Governance Code (the “2018 Code”) against which we will be reporting next year. We support its aims and have been progressively implementing its principles and requirements, as follows:• The Company Secretary reviewed compliance with the 2018 Code and regularly briefs the Board on progress against actions to achieve compliance;• We reviewed our corporate purpose, and how strategy is aligned to this;• We discussed our approach to ensuring diversity on the Board and throughout the business;• We launched “MyVoice”, a new employee engagement programme and appointed Andy King as Employee Engagement Director to attend our “Team Talk” employee engagement sessions, to strengthen communication between the Board and colleagues; • We reviewed how we engage with our customers and launched “Tile Talk”, a new customer engagement programme, to help us listen to the voice of our customer, in real time; and• We formally considered “emerging risks” through our risk review process.Fair, Balanced, UnderstandableThe 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 provided with the relevant 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. 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.Being Available to ShareholdersAll members of the Board will be available to answer questions at the Annual General Meeting in January 2020.Statement of Compliance with the 2016 UK Corporate Governance CodeThroughout the Period, the Company has complied fully with the principles of 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.TOPPS TILES PLC ANNUAL REPORT AND ACCOUNTS FOR THE 52 WEEK PERIOD ENDED 28 SEPTEMBER 201942Topps Tiles Annual Report 2019.indd 4206/12/2019 16:55:41 STRATEGIC REPORT
OUR GOVERNANCE
OUR FINANCIALS
ADDITIONAL INFORMATION
Section 172 Companies Act 2006
The Board, both individually and together, consider that they
have acted in the way they consider, in good faith, would be
most likely to promote the success of the Company for the benefit
of its members as a whole (having regard to the stakeholders and
matters set out in s172 (1) (a-f) of the Companies Act 2006) in
the decisions taken during the Period. In particular:
• Our customers and suppliers are also fundamental to the
delivery of our plan and as leading consumer brand, it is
essential that we maintain our reputation for high standards
of business conduct. Read about how we work to strengthen
supplier relationships, and to continually improve our products
and customer service, on pages 10 and 11.
• To ensure the Board takes account of the likely consequences
of decisions in the long term, the Board has a three-year
plan. Progress is reviewed regularly at Board meetings. This
is strengthened through clear reporting lines and sharing
of management information and KPIs with the Board and
regular contact between members of the Board and senior
Executives.
• Our employees are fundamental to the delivery of our plan.
To strengthen our employee engagement, we appointed
Andy King as Employee Engagement Director. The Group has
a range of initiatives and activities aimed at enhancing the
interest of our employees. Read about this on page 14.
• We aim to be a responsible member of our community and
minimise our impact on the environment. Read about what
we do on pages 28 to 35.
• As a Board, our intention is to behave responsibly toward our
shareholders and treat them fairly and equally, so that they all
benefit from the successful delivery of our plan.
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.
The Board
The Board comprises six members, of which four are considered
independent, in line with the 2016 Code. Darren Shapland chairs
the Board and the Nomination and Governance Committee, the
Senior Independent Non-Executive Director is Claire Tiney, who
also chairs the Remuneration Committee, Keith Down chairs the
Audit Committee and Andy King has a remit to oversee Employee
Engagement. Brief biographical details of all Directors are given
on page 40.
As announced on 5 November 2019, Matt Williams, our Chief
Executive Officer, has decided to step down from the Board with
effect from 29 November 2019 and will be succeeded by Rob
Parker, currently Chief Financial Officer. The Company has begun
the search for a new CFO. To ensure a smooth handover Matt will
remain as an adviser to the business until the end of May 2020.
The Board held 12 scheduled meetings during the Period, based
on an annual plan agreed with the Chair, including an annual off-
site strategy review.
Ahead of each meeting, the Directors are given up-to-date
information about trading performance, the Group’s overall
financial position and its achievement against prior year, budget
and forecasts.
Regular items at Board meetings include updates on health and
safety, reports on progress towards strategic objectives, reviews
of the Group’s financial position and performance against KPIs.
Members of the Executive and Leadership teams are invited to
attend to update the Board in relation to their specific departmental
responsibilities and are invited to give feedback to the Board.
At meetings, the Chairman ensures that each Director can make
an effective contribution within an atmosphere of transparency and
constructive debate.
Between Board meetings, financial and other relevant information
is circulated to the Directors as necessary; the Chairman maintains
frequent direct contact with the Executive and Non-Executive
Directors and keeps the Non-Executive Directors informed of
material developments. Directors can meet with Senior Executives
and visit stores.
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 policies including Modern Slavery and Ethical Trading,
Anti-Bribery, Health and Safety and Diversity.
• Directors’ appointments.
• Corporate governance.
• Key external and internal appointments.
• Pensions and employee incentives.
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.
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CORPORATE GOVERNANCE REPORT
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.
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.
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.
Board Composition
Board Composition
Board Tenure
Gender Diversity
Executive
Non-Executive
33.3%
66.6%
6 years+
4
0-3 years
0
Male
83.3%
5
3-6 years
2
Female
16.6%
1
Appointed
Independent
19 March 2015
Darren
Shapland
Matthew
Williams
Rob Parker 10 April 2007
1 April 2006
Non-Executive
Board Chair
Executive
Chief Executive Officer
Executive
Chief Financial Officer
Andy King
23 January 2012
Non-Executive
Claire Tiney 12 December 2011
Non-Executive
Keith Down 2 February 2015
Non-Executive
Employee Engagement
Director
Senior Independent
Director
C
M
I
Chairman
Member
Invitation – May attend at the invitation of the Chair.
Matt Williams will step down as CEO and be succeeded by Rob Parker on 29 November 2019.
Nomination
and
Audit
Governance Remuneration
I
I
I
M
M
C
C
I
I
M
M
M
I
I
I
M
C
M
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STRATEGIC REPORT
OUR GOVERNANCE
OUR FINANCIALS
ADDITIONAL INFORMATION
Attendance at Scheduled Board and Board Committee Meetings
Board of Directors
Audit Committee
Remuneration Committee
D. Shapland M. Williams1
R. Parker
C. Tiney
A. King
K. Down
12 12
12 12
12 12
12 12
12 12
12 12
I
I
I
I
I
I
I
I
4
5
3
4
5
3
4
5
3
4
5
3
4
5
3
4
5
3
Nomination and Governance Committee
3
3
Meetings attended
Possible meetings I Invitation – May attend by invitation of the Chair.
1. Matt Williams will step down as CEO and be succeeded by Rob Parker on 29 November 2019.
100%
100%
100%
100%
100%
100%
Appointment and Re-election of Directors
There were no new appointments during the Period.
1
All Directors are subject to annual re-election at the AGM (any
newly appointed Director would be put forward for election at
the next AGM following their appointment). The Nomination and
Governance Committee considers the role and contribution of
Directors annually as part of their work on succession planning and
Board evaluation and considers that each member of the Board
continues to be important to the Company’s long-term sustainable
success as follows:
• Darren Shapland: an experienced Board Chair, with over 30
years of retail and consumer experience. Darren’s key contribution
will continue to be to provide leadership to the Board.
• Rob Parker: a qualified accountant and experienced CFO,
who has supported Topps Tiles’ long-term sustainable growth.
From 29 November 2019, Rob will succeed Matt Williams
as CEO.
• Keith Down: a qualified accountant and experienced CFO,
with substantial retail and consumer experience. Keith’s key
contribution will continue to be to support the Board and senior
Executives and to chair the Audit Committee.
• Claire Tiney: an experienced HR Director, with substantial
retail and consumer experience. Claire’s key contribution will
continue to be to support the Board and senior Executives and
to chair the Remuneration Committee.
• Andy King: an experienced CEO, with substantial retail and
consumer experience. Andy’s key contribution will continue to
be to support the Board and senior Executives and to act as
Employee Engagement Director.
1 Molinato
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CORPORATE GOVERNANCE REPORT
Focus on Evaluation
Each year there is a formal and rigorous annual evaluation of the performance of the Board, its committees, the Chairman and individual
Directors. This provides an opportunity to highlight areas for further development.
For this period, an external evaluation was undertaken, facilitated by Milena Djurdjevic of Calibro Consult (“Calibro”), as described
below. Neither Milena Djurdjevic nor Calibro has any other connection with the Group.
1. Preparation
2. Observations
3. Interviews
4. Consultation
5. Outcomes
Calibro meet with the Chairman and the Company
Secretary to discuss and agree the programme
objectives and areas of focus.
Calibro hold informal review sessions with the
Chairman, SID and Company Secretary.
Calibro review Board papers.
Calibro attend Board and Board Committee
meetings.
Calibro interview each Board member, structured
around a set agenda.
Calibro interview members of the
Leadership team.
Calibro discuss feedback with the Chairman.
Calibro discuss feedback on the Chairman with the
Senior Independent Director.
Calibro present their report to the Board on the
findings, best practice and proposed actions plan.
This includes feedback to the Chair of each Committee
on the performance of their Committee, the Senior
Independent Director on the performance of the
Chairman and the Chairman on the performance of
individual Directors.
Chair follows up on the Report’s finding, with
appropriate actions.
Please see below for more information.
1
2
3
4
5
The outcome was positive, with key findings being:
• The performance of the Board compares well to boards of other companies of similar size and scale. It is well run, effectively chaired,
with a positive culture.
• Against this backdrop of a Board that is performing well, there were some aspects in terms of focus and processes which could be
strengthened further, and which have been prioritised by the Chairman for action. These included developing a more focused agenda
for future Board meetings.
In addition, for this Period, an internal evaluation was undertaken for the Board and each Committee, facilitated by the Company
Secretary. This confirmed that each Committee continued to function effectively.
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STRATEGIC REPORT
OUR GOVERNANCE
OUR FINANCIALS
ADDITIONAL INFORMATION
Dialogue with Institutional Shareholders
Anti-corruption and Anti-Bribery
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.
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 noted below, the scope of the internal audit
programme has recently increased.
The Group has established internal control and risk management
systems in relation to the process for preparing the consolidated
financial statements. Inter-company transactions, balances and
unrealised gains and losses on transactions between Group
companies are eliminated on consolidation. Accounting policies of
subsidiaries are consistent with the policies adopted by the Group.
Management regularly monitors changes in accounting standards
and financial reporting requirements, and reflects any relevant
changes in the financial statements where appropriate.
The full year financial statements are subject to external audit
and the half year interim financial statements are reviewed by
the external auditors. The Audit Committee receives reports from
management and the external auditors on significant judgements,
changes in accounting policies, changes in accounting estimates
and any other appropriate changes to the financial statements.
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 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.
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 attention to labour
standards and factory conditions.
The Board is committed to ensuring that our business is conducted
in an honest and ethical manner. We take a zero tolerance
approach to bribery and corruption and are committed to acting
professionally, fairly and with integrity in all our business dealings
and relationships wherever we operate. This commitment includes
implementation of an anti-bribery policy which all colleagues are
required to adhere to and enforcing an effective systems of control,
through our dedicated Internal Audit team. The team works to a
plan agreed with the Audit Committee and reports progress to the
Audit Committee on a twice yearly basis.
Annual General Meeting
Shareholders receive more than 20 working days’ notice
of the Annual General Meeting (“AGM”) at which all Directors
are available for questions. Each substantive issue considered
at the AGM is the subject of a separate resolution. The numbers
of proxy votes for and against each resolution are announced
at the meeting and the final votes are subsequently published on
the Company’s website.
1
1 Design advice in-store
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CORPORATE GOVERNANCE REPORT
Board Committee Areas of Responsibility
All Committee Terms of Reference can be found within the Investors section of the Company’s website.
Audit Committee
Nomination and Governance Committee
Remuneration Committee
• Financial reporting
• Board structure
• Chairman and Executive Directors’
• 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 pages 43 to 46
Read more on pages 54 to 71
Audit Committee
The Committee held four scheduled meetings during the Period,
based on an annual plan agreed with the Chair of the Committee.
The Audit Committee comprises independent Non-Executive
Directors Keith Down (Chairman), Claire Tiney and Andy King.
Their qualifications are detailed on page 40. The Chair 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 internal audit reports on a
regular basis to review the effectiveness of its work. The Committee
meets with the external auditors and considers the Annual and
Interim Financial Statements before making its recommendations
to the Board. The Committee reviews and monitors the external
auditors’ independence and objectivity and the effectiveness of the
audit process. The internal audit programme has recently increased
its scope to cover the new commercial division.
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.
The Committee, with support from senior operational managers
performs this process. The Committee reviews the strategic risk
schedule on a half-yearly basis to ensure that any actions that
have been identified are being progressed; additionally the Board
receives quarterly updates. 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.
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.
•
Review of poor performing stores – as part of both the interim
and full year-end review process, poorly 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 poorly performing store leases are
considered onerous.
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STRATEGIC REPORT
OUR GOVERNANCE
OUR FINANCIALS
ADDITIONAL INFORMATION
•
•
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 and 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 three-year look-forward basis. The conclusions of
those reviews is included in the Strategic Report.
• Annual Review of the Group Tax and Treasury Policy, which is
Nomination and Governance Committee
The Committee held three scheduled meetings during the Period,
based on an annual plan agreed with the Chair of the Committee.
The Committee comprises independent Non-Executive Directors
Darren Shapland (Chair), Andy King, Keith Down and Claire Tiney.
The Committee is responsible for making recommendations to the
Board for appointments of Directors and other senior executives.
Darren Shapland was appointed Chair in June 2019 following
Andy King’s appointment as Employee Engagement Director.
The role of the Nomination and Governance Committee is to lead
the process for appointments, ensure plans are in place for orderly
succession to both the Board and senior management positions,
and to oversee the development of a diverse pipeline for succession
and for diversity, on which our policy is included in the Directors’
Report.
The Committee’s principal activities during the Period were:
• Reviewing Executive and senior manager succession plans.
• Planning for the appointment of Andy King as the Employee
Engagement Director and succession of Darren Shapland to
chair the Committee.
published on the Company’s website.
• Executive and Board succession and planning, and reviewing
• Monitors the Group’s compliance with Accounting Standards,
including new accounting standards, such as IFRS 16
(accounting for leases). Reviews all material judgemental
accounting areas such as loyalty accounting and all items
considered to be adjusting to support external understanding
of underlying performance.
The Audit Committee also reviews the independence of the Company’s
external auditors, PricewaterhouseCoopers LLP (“PwC”). PwC were
selected as the Auditors following a tendering exercise carried out
in 2018 and appointed at the AGM in January 2019. A resolution
will be proposed at the Annual General Meeting in January 2020 to
reappoint PricewaterhouseCoopers LLP as the Auditors.
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 auditors have not provided non-
audit services to the Company during the Period, except for 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
£159,000 (2018: £130,000).
the size, diversity, skills and experience of the Board
considering the future needs of the business and the
2018 Code.
• Carrying out an externally facilitated Board evaluation and
internal committee evaluations.
• Planning for the appointment of Rob Parker as Chief Executive
Officer and a smooth transition following Matthew Williams’
decision to step down.
Remuneration Committee
The Committee held five scheduled meetings during the Period,
based on an annual plan agreed with the Chair of the Committee.
The Committee comprises independent Non-Executive Directors
Claire Tiney (Chair), Andy King and Keith Down.
For more information on remuneration, see the Directors’
Remuneration Report on page 54 to 71.
Darren Shapland
Chairman of the Board
26 November 2019
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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 Auditors’ Report, for the 52-week period
ended 28 September 2019. The Corporate Governance Report
set out on pages 42 to 49 forms part of this report.
Principal Activities
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 28 September 2019 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. This information is in the Chairman’s
Statement on page 04, the Strategic Report on pages 08 to 37,
and the Corporate and Social Responsibility (“CSR”) statement on
pages 28 to 35, which form part of the Directors’ Report.
Directors
The Directors, who served throughout the year, 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 2018 UK Corporate Governance Code, all
Directors are subject to annual re-election at the next Annual
General Meeting.
The future prospects of the Group are highlighted in both the
Chairman’s Statement and the Strategic Report.
The Company provides insurance against Directors’ and Officers’
liabilities to a maximum value of £15,000,000.
The Directors monitor a number of financial and non-financial key
performance indicators (“KPIs”) for the Group. 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
28 September 2019 are set out on pages 82 to 123. The Group’s
profit for the period from continuing operations, after taxation, was
£10,078,000 (2018: £9,659,000).
During the interim period, a dividend of 1.1 pence per share was
declared and paid (2018: interim dividend of 1.1 pence per share
was paid).
Following careful consideration, and for the reasons given in the
Chairman’s Statement in this report, the Board is recommending
the payment of a final dividend of 2.3 pence per share,
totalling £4,483,000 (2018: 2.3 pence per share, totalling
£4,447,000).
Articles of Association
The internal regulation of the Company is set out in its Articles
of Association. The Articles of Association can be amended by
a special resolution of the Company’s shareholders. They cover
matters such 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 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. The
principal Board committees are the Audit Committee, Nomination
and Governance Committee and the Remuneration Committee.
Details of the work of these committees can be found in the
Corporate Governance Report on pages 48 and 49.
Voting at the Annual General Meeting
In line with the Company’s Articles of Association, voting on
resolutions at the Annual General Meeting is by show of hands
of the members present taken together with the number of proxy
votes. The number of the proxy votes cast for each proposed
resolution is provided in advance of voting to the members present
at the meeting. In the event that the votes did not support the
resolution, the Chairman would formally call for a poll to ensure
that all members’ interests are represented.
50
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STRATEGIC REPORT
OUR GOVERNANCE
OUR FINANCIALS
ADDITIONAL INFORMATION
Share Capital
Share Option Schemes
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 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.
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 in a General Meeting of the Company.
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 Company imposes no restrictions on the size of a holding or on
the transfer of shares, which are 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. All issued shares are fully paid.
Substantial Shareholdings
In addition to the Directors’ shareholdings noted on page 69,
as at 28 September 2019, 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
Aberforth Partners LLP
Williams S K M Esq
FMR plc
AXA Investment Managers SA
BlackRock Investment Mgt (UK)
Invesco Asset Management
Standard Life
21,469,861
20,593,950
19,644,097
19,213,670
11,256,019
9,790,934
7,783,246
10.9
10.5
10.0
9.8
5.7
5.0
4.0
In addition to the above shareholdings, between 28 September
2019 and 26 November 2019, we have been notified of
changes in shareholdings as follows:
• 21 October 2019 – Prudential plc group of companies,
notified reduced holding to nil. Notification made solely as a
result of the demerger of Prudential plc and M&G plc, resulting
in a change of control from Prudential to M&G.
The total number of options held by employees, including Directors,
is 14,946,189 (2018: 14,499,395 as restated, see note 30 in
“Our Financials”).
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 2019 and
21 January 2019 and the offer price to employees was 51 pence.
The Directors’ interests in the shares of the Company and details of
the Directors’ share options are given in the Directors’ Remuneration
Report on pages 69 to 71.
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.
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DIRECTORS’ REPORT
Carbon Reporting
As detailed in the Corporate Social Responsibility statement of this report on page 28, 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 reduce our carbon emissions.
Electricity
Gas and oil
Commercial fleet
Company cars
Total
2019
2018
CO2 (Tonnes)
CO2 (Tonnes)/
Store
CO2 (Tonnes)
CO2 (Tonnes)/
Store
5,338
2,742
3,248
376
11,704
14.6
7.5
8.9
1.0
32.0
5,486
2,520
3,204
348
11,558
14.8
6.8
8.6
0.9
31.1
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).
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 47.
Charitable and Political Contributions
Diversity
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 Corporate Social Responsibility statement of this report.
During the period, the Group made no monetary charitable
donations and no political contributions.
Corporate Social Responsibility
The Company has a long-standing Corporate Social Responsibility
agenda covering Community, Charity, the Environment and Our
People. Details of our current Corporate Social Responsibility
activities are on pages 28 to 33. 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.
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 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 no change 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
16
1,493
1,514
75%
2019
Female
1
3
508
512
25%
Total
6
19
2,001
2,026
Male
5
11
1,479
1,495
75%
2018
Female
1
2
489
492
25%
Total
6
13
1,968
1,987
Equal Opportunities
Colleague Consultation
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.
We welcome applications for employment from people of all
backgrounds, regardless of age, disability, gender reassignment,
marriage or civil partnership status, pregnancy, maternity, race,
religion or belief and sex. Should a colleague become disabled,
we aim to continue to support their training and career development
where we can do so, making reasonable adjustments.
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.
52
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STRATEGIC REPORT
OUR GOVERNANCE
OUR FINANCIALS
ADDITIONAL INFORMATION
The Directors are also responsible for safeguarding the assets of the
Group and Company and hence for taking reasonable steps for the
prevention and detection of fraud and other irregularities.
The directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Group and
Company’s transactions and disclose with reasonable accuracy
at any time the financial position of the Group and Company
and enable them to ensure that the financial statements and the
Directors’ Remuneration Report comply with the Companies Act
2006 and, as regards the Group financial statements, Article 4
of the IAS Regulation.
The Directors are responsible for the maintenance and integrity
of the Company’s website. Legislation in the United Kingdom
governing the preparation and dissemination of financial statements
may differ from legislation in other jurisdictions.
Confirmation 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 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.
On behalf of the Board
Rob Parker
Director
26 November 2019
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 27.
Information Given to the Auditors
Each of the Directors at the date of approval of this Annual Report
confirms that:
• so far as they are aware, there is no relevant audit information
of which the Company’s auditors are 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
auditors are aware of that information.
This confirmation is given and should be interpreted in accordance
with the provisions of s418 of the Companies Act 2006.
Reappointment of the Company’s Auditors
A resolution to reappoint PricewaterhouseCoopers LLP as the
Company’s auditors will be proposed at the forthcoming Annual
General Meeting.
Directors’ Responsibilities Statement
The Directors are responsible for preparing the Annual Report and
the Financial Statements in accordance with applicable law and
regulation.
Company law requires the Directors to prepare financial statements
for each financial 52-week period. Under that law the Directors
have prepared the Group financial statements in accordance with
International Financial Reporting Standards (“IFRSs”) as adopted
by the European Union and Company financial statements in
accordance with United Kingdom Generally Accepted Accounting
Practice (United Kingdom Accounting Standards, comprising FRS
101 “Reduced Disclosure Framework”, and applicable law).
Under company law the Directors must not approve the financial
statements unless they are satisfied that they give a true and fair
view of the state of affairs of the Group and Company and of
the profit or loss of the Group and Company for that period. In
preparing the financial statements, the Directors are required to:
• select suitable accounting policies and then apply them
consistently;
• state whether applicable IFRSs as adopted by the European
Union have been followed for the Group financial statements,
and United Kingdom Accounting Standards, comprising
FRS 101, have been followed for the Company financial
statements, subject to any material departures disclosed and
explained in the financial statements;
• make judgements and accounting estimates that are reasonable
and prudent; and
• prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Group and
Company will continue in business.
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26922 6 December 2019 4:51 pm Proof 7a PFPDIRECTORS’ REMUNERATION REPORTThe objective of the remuneration committee is to ensure that shareholder and management interests are aligned. In doing this, we aim to make the various elements of the remuneration package transparent, easy to communicate and simple to operate.Claire TineyChairman of the Remuneration CommitteeRole and ResponsibilitiesThe role of the Remuneration Committee is set out in its terms of reference, which are available on the Group’s website. The Committee’s primary purpose is to develop and determine the Group’s remuneration policies for the Executive Directors, Chairman and Senior Management.Specific duties of the Remuneration Committee include:• setting the remuneration policy for Executive Directors, Chairman and senior management;• determining individual pay awards within the terms of the agreed policy; and• ensuring that the remuneration policy operates to align the interests of management with those of shareholders.The Committee also has responsibility for reviewing pay and conditions across the Group and the alignment of incentives and rewards with culture.Statement from the Chairman of the Remuneration CommitteeDear ShareholderOn behalf of the Remuneration Committee, I am pleased to present the Directors’ Remuneration Report for the 52 weeks ended 28 September 2019.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. Our Directors’ Remuneration Policy (the “Policy”). As required, this year we will be taking an updated Policy to a binding shareholder vote at the AGM in January 2020. Subject to approval, the updated Policy will then apply for three years from the date of approval.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 28 September 2019. The Annual Report on Remuneration is subject to an advisory shareholder vote at the AGM in January 2020.Remuneration FrameworkOver the course of 2019, the Committee undertook a detailed review of the current Policy to ensure it supports our remuneration principles, which are to:• attract and retain the best talent;• drive behaviours which support the Group’s strategy and business objectives which are developed in the long-term interests of the Company and its shareholders;• reward senior management appropriately for their personal and collective achievements;• provide incentives that help to maintain commitment over the longer term and align the interests of senior management with those of shareholders; and• ensure that a significant percentage of the overall package for the Executives and senior managers remains at risk dependent upon performance and that their pay and benefits adequately take account of reward versus risk. The Committee is proposing to make a number of small changes to reflect developing market best practice over the last three years since the current policy was approved, as well as to ensure compliance with the new 2018 UK Corporate Governance Code (the “Code”) and emerging investor expectations.I wrote to our major shareholders in August with an outline of our proposed updated Policy and I would like to thank those who provided feedback. TOPPS TILES PLC ANNUAL REPORT AND ACCOUNTS FOR THE 52 WEEK PERIOD ENDED 28 SEPTEMBER 201954Topps Tiles Annual Report 2019.indd 5406/12/2019 16:55:59 STRATEGIC REPORT
OUR GOVERNANCE
OUR FINANCIALS
ADDITIONAL INFORMATION
The Remuneration Committee has agreed to increase Rob’s salary
on promotion to Chief Executive Officer to £400,000 (from
£270,928, effective from 1 December 2019) which will be
£10,071 less than Matt’s current salary. In addition to normal
benefits, Rob will receive an allowance in lieu of pension of 5% of
salary (in line with the majority of the workforce) which is reduced
from the previous rate of 12.5%, a maximum bonus opportunity of
100% of salary and a maximum LTIP award of 100% of salary. Full
details will be included in next year’s remuneration report.
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 22 January 2020.
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
Chair of the Remuneration Committee
26 November 2019
1
This has been considered by the Committee prior to coming to the
final proposal as outlined on page 56.
Performance in 2019 and Remuneration Outcomes
The year under review continued to present some challenging
market conditions; despite this, the business has retained its
market-leading position in the retail tile market. Additionally, the
development of the commercial business has progressed at pace.
Following the acquisition of Parkside in September 2017, during
the past year another commercial tile business, Strata, has also
been acquired and the Group continues to build in this market.
Reflecting the financial performance of the Group, the annual bonus
payment was 16% 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, and delivery of the strategic targets,
which were partially met as outlined on page 66.
The long-term plan awards granted in December 2016 were
based upon performance over the three financial years to
September 2019. The awards required cumulative adjusted
earnings per share (“EPS”) over the period to be at least 29.84p
for 25% vesting, increasing to 32.29p for full vesting of the
awards. Actual cumulative EPS was 20.88p; therefore, no
payments will be made in respect of the LTIP.
Remuneration Decisions for 2019
During the Period, the Committee reviewed the base salary levels
for the Executive Directors and as part of that review considered
the remuneration of the wider workforce. It was concluded that the
Executive Directors and Non-Executive Directors should be awarded
an increase in base salary of 2% in line with the wider workforce.
This increase was effective from 1 October 2019. Except for Rob
Parker, as explained under “Change of Directors” below, no other
changes are being proposed to the remuneration of the Executive
or Non-Executive Directors and the variable incentive opportunity
levels will remain the same as those set previously.
Change of Directors
As announced on 5 November 2019, Matt Williams, our Chief
Executive Officer, has decided to step down from the Board with
effect from 29 November 2019. Rob Parker, currently Chief
Financial Officer, will be appointed as Chief Executive Officer
effective from the same date. To ensure a smooth handover Matt will
remain as an adviser to the business until the end of May 2020.
The full details of Matt’s package on termination, once finalised,
will be set out in next year’s remuneration report. I can confirm
that he will only receive payments in line with his contract; will not
be entitled to any annual bonus in respect of 2019/20; and his
LTIP and SAYE awards will be dealt with in accordance with the
Remuneration Policy and the Plan Rules.
1
Retail experience
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DIRECTORS’ REMUNERATION REPORT
Potential Directors’ Remuneration Policy
This part of the report sets out the Company’s Directors’
Remuneration Policy, which will be subject to a binding shareholder
vote at the Annual General Meeting in January 2020. Subject to
approval by shareholders, it is intended that the policy will be in
force for a three-year period from that date.
The Role of the Committee in Reviewing the Remuneration Policy
The previous remuneration policy was approved by shareholders at
the AGM in January 2017 and was approved with approximately
95% of votes cast in favour. During 2019, the Committee
undertook a detailed review of the remuneration policy and its
operation to ensure that it continues to support the business strategy
and meet the expectations of the Company’s shareholders and
other stakeholders. As part of this review, the Committee also took
into account the principles set out in the new 2018 UK Corporate
Governance Code. In addition to setting the remuneration for the
Executive Directors and other senior executives, the Committee also
maintains oversight of the reward arrangements for all colleagues
within the Group and took this broader context into account
Executive Directors
when reviewing the policy. Further details on the operation of the
Committee and its membership are set on page 49.
Changes from the Previously Approved Policy
The key changes between the previous and proposed policy are:
• A reduction in the potential maximum pension contribution level
from 20% to the level currently available to the majority of the
workforce (currently 5% of salary).
• An increase in the shareholding requirement for the Chief
Financial Officer from 150% to 200% of salary.
• The introduction of a post-vesting holding period for LTIP
awards, applicable to awards granted from the date of the
AGM in January 2020 onwards, which will require executives
to retain the net of tax number of shares vesting until the fifth
anniversary of grant.
• Extended clawback powers in respect of LTIP awards,
applicable to awards granted from the date of the AGM
in January 2020 awards.
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 no higher than 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.
56
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STRATEGIC REPORT
OUR GOVERNANCE
OUR FINANCIALS
ADDITIONAL INFORMATION
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.
Pensions
Provides
appropriate
post-employment
benefits (or cash
equivalent).
All employee
share
schemes
To create
alignment with
the Group and
promote a sense
of ownership.
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.
Contributions of up to the rate
available to the majority of
the workforce (currently 5%
of salary).
Not applicable.
Participation limits are those
set by the UK tax authorities
from time to time.
Not subject to performance
measures in line with HMRC
practice.
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.
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.
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”) and any
other HMRC-approved plans
that may be introduced by the
Company for all employees.
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DIRECTORS’ REMUNERATION REPORT
Component
Annual
bonus
Purpose
and link to strategy
Rewards
performance
against annual
targets which
support the
strategic direction
of the Group.
Operation
Maximum opportunity
Performance measures
The maximum bonus
opportunity for an Executive
Director will not exceed 100%
of salary.
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.
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.
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STRATEGIC REPORT
OUR GOVERNANCE
OUR FINANCIALS
ADDITIONAL INFORMATION
Component
Long Term
Incentive
Plan (“LTIP”)
Purpose
and link to strategy
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
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, such as 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 Quarter
4 trading statement, unless
the Committee determines
otherwise.
Relevant performance
measures are set that reflect
business performance.
Specific disclosures on
the performance measures
that have been set in any
given year are provided
in the relevant Directors’
Remuneration Report for
that year.
The Committee retains
discretion to adjust the
vesting outcome of any
LTIP award to reflect
the underlying financial
performance of the
Company, notwithstanding
the extent to which the
specific performance targets
applicable to the award
have been met.
Performance measures and
their weighting (where there
is more than one measure)
are reviewed annually to
maintain appropriateness
and relevance.
For achievement of
threshold, no more than
25% of the maximum
opportunity will vest.
There will usually be
straight-line vesting between
threshold and maximum
performance.
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.
While there is no current
intention to do so, awards
may (technically) be settled
in full or in part in cash
at the discretion of the
Committee (for example in
respect of shares that would
otherwise be sold to satisfy
tax withholding requirements
or in response to local law
constraints).
The vesting of awards will be
subject to the achievement
of specified performance
conditions, ordinarily measured
over a period of at least three
years.
Dividend equivalents may be
paid on shares that vest in
connection with LTIP awards
by reference to the value of
dividends payable during
the award’s vesting period
(and holding period where
relevant).
For awards granted from
the date of AGM in January
2020 onwards, a post-vesting
holding period will apply
which will require Executives
to ordinarily retain any shares
vesting (net of tax) until the fifth
anniversary of grant.
Shareholding Requirement
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 Officer and the Chief Financial Officer.
Legacy Incentive Plans (2020 Awards)
The Executive Directors retain legacy share awards granted under the previous remuneration policy, the “2020 awards”. The awards are
subject to performance conditions based on the financial reporting period ending 3 October 2020. The awards will be allowed to vest
on the terms on which they were granted, subject to achievement of the applicable performance targets.
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DIRECTORS’ REMUNERATION REPORT
Recovery and Withholding of Annual Bonuses,
LTIP Awards and 2020 Awards
The Committee has the right to reduce, cancel or impose further
conditions on unvested or unexercised LTIP or 2020 awards, or
to clawback amounts from participants within a period of two
years following the vesting of any LTIP or 2020 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. In respect of
LTIP awards granted from the date of the AGM in January 2020
onwards, clawback may also apply in instances of corporate
failure, discovery of serious misconduct and/or error of calculation.
For up to two years following the payment of any annual bonus,
the Committee may require the repayment of some or all of the
annual bonus 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.
Bonuses are currently based on adjusted profit before tax and
strategic targets. The Committee considers that profit before tax is
a key performance metric for the annual bonus and specific
strategic objectives – which are aligned to delivering the overall
business strategy and encourage behaviours, which facilitate
profitable growth and the future development of the business –
are also included.
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. LTIP
awards are currently based on challenging cumulative earnings
per share targets, providing an assessment of the overall financial
performance of the business and rewarding sustainable long-term
performance.
The Committee retains the ability to adjust the targets 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 original measures or targets 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 2019/20
As the current Chief Executive Officer will be standing down from
the Board before the new policy is adopted and we currently
have not identified a new Chief Financial Officer to replace Rob
Parker who is being promoted to Chief Executive Officer, we have
only included a scenario chart for Rob as the new Chief Executive
Officer1.
In illustrating the potential reward, assumptions have been made
as detailed on the next page.
Chief Executive Officer
)
0
0
0
£
’
(
n
o
i
t
a
r
e
n
u
m
e
R
£1,400
£1,200
£1,000
£800
£600
£400
£200
£0
£447
%
0
0
1
Fixed pay
Annual bonus
LTIP
£1,247
%
2
3
%
2
3
%
6
3
£847
%
4
2
%
4
2
%
2
5
Chief Executive Officer
Minimum
Target
Maximum
1. From 29 November 2019.
60
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STRATEGIC REPORT
OUR GOVERNANCE
OUR FINANCIALS
ADDITIONAL INFORMATION
Fixed pay
Annual bonus
LTIP
Minimum performance
Performance in line with
expectations
Maximum performance
Fixed elements of remuneration
only – base salary (being the
salary as at 1 October 2019),
benefits as disclosed in the single
figure table on page 65 for the
year 2018/19 and pension of
5% of salary.
No bonus.
50% of salary awarded for
achieving target performance.
100% of salary awarded for
achieving maximum performance.
Maximum performance plus
share price growth
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*.
100% of maximum award
vesting for achieving maximum
performance plus an assumption
for share price growth (50%
increase).
* LTIP awards are included in these scenarios at face value with no share price movement included.
Non-Executive Directors
Purpose and
link to strategy
Set at a level that reflects
market conditions and is
sufficient to attract individuals
with appropriate knowledge
and experience.
Approach of the Company
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, chairing the Board committees,
holding the office of Senior Independent Director, other additional responsibilities or temporary increase
in time commitment). 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 incentive 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.
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 appointing 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.
• Benefits will be provided in line with the above Policy.
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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, buy-out 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.
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 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 12-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.
The pension contribution (or cash allowance in lieu thereof) will be
set in line with the maximum rate provided to other below Board
employees (which is currently 5%).
• Other 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;
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 and may include sums to cover the tax payable
thereon.
• The Committee may also alter the performance measures,
performance period and vesting period of the annual bonus,
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
200% of salary.
The Committee may make payments or awards in respect of
appointing 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.
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OUR FINANCIALS
ADDITIONAL INFORMATION
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
LTIP
Mitigation
All employee
share plans
Post-cessation shareholding
requirements
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 and pension 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).
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, any unvested awards will continue to be capable of vesting at the normal vesting date (or,
exceptionally and at the Committee’s discretion, at cessation). 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, subject to prorating by reference to the
period of time elapsed from the start of the performance period to the date of cessation relative to the
full performance period (although the Committee may disapply (in full or in part) time prorating if it
considers it appropriate to do so). Where the Committee determines that awards shall vest at the date
of cessation, performance shall be assessed on such basis as the Committee considers appropriate
over the curtailed performance period.
Once vested, awards held by leavers may then be exercised during such period as the Committee
determines.
The post-vesting holding period for LTIP awards granted from the date of the AGM in January
2020 onwards, will continue to apply irrespective of employment status unless the Committee,
in exceptional circumstances, determines otherwise.
Awards which have already vested at the date of cessation may be exercised for such period
as the Committee determines.
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.
Having carefully considered this area, we do not intend to introduce additional post-employment
requirements under this policy. However, under the proposed policy, LTIP awards granted after the
AGM in January 2020 will be subject to their applicable post-vesting holding period and awards
(if any) retained on departure will not ordinarily be accelerated.
Shares purchased by the Executives through their own funds (or which have been acquired through
the vesting of earlier LTIP grants) will not be subject to a post-cessation shareholding requirement.
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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 contractual, statutory or 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. Where
applicable, the Committee may impose additional conditions on
the vesting or exercise of incentive awards as appropriate taking
into account the circumstances of the Executive’s departure.
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.
Treatment on a Change of Control or Other Corporate Events
The extent to which unvested LTIP awards or 2020 awards will vest
on a change of control or other corporate events will be determined
in accordance with the rules of the LTIP or 2020 Incentive Plan (as
applicable).
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.
LTIP awards and 2020 awards will vest early on a takeover,
merger, winding-up or other relevant corporate event. The
Committee will determine the level of vesting taking into account
the extent to which the performance conditions are satisfied over
the curtailed performance period (on such basis as the Committee
determines appropriate) and, unless the Committee determines
otherwise, time prorating to reflect the period of time elapsed
from the start of the performance period to the date of the relevant
corporate event relative to the full performance period.
Alternatively, the Committee may provide that LTIP awards
and 2020 awards shall be automatically exchanged for new
awards over shares in another company (for example, an award
over shares in the new holding company following an internal
reorganisation).
The Committee may adjust the number of shares under any LTIP
award or 2020 award, or the performance conditions applicable
to such awards, in the event of a variation in the share capital of
the Company or on the occurrence of any other events (such as a
demerger or rights issues) that impact the Company’s share price.
A full or pro rata time-based bonus may be awarded on a change
of control, and this may be paid either at the time of the change of
control or on the normal payment date.
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;
• benefit and pension policies;
• overall spend on annual bonus; and
• participation levels in the annual bonus and share plans.
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.
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.
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ADDITIONAL INFORMATION
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 28 September 2019 and the
52-week period ended 29 September 2018.
2018/19
Executive Directors
M T M Williams
R Parker
Non-Executive Directors
D Shapland
A King
K Down
C Tiney
2017/18
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
Subtotal
Aggregate
remuneration
£’000
LTIP
£’000
Pension
£’000
Total
remuneration
£’000
402
266
127
44
44
45
31
27
6
1
1
1
64
42
–
–
–
–
–
–
–
–
–
–
497
335
133
45
45
46
44
31
–
–
–
–
541
366
133
45
45
46
Salary
and fees
£’000
Benefits
£’000
Annual
bonus
£’000
Subtotal
Aggregate
remuneration
£’000
LTIP
£’000
Pension
£’000
Total
remuneration
£’000
402
256
127
44
44
45
31
27
3
1
–
1
56
36
–
–
–
–
–
–
–
–
–
–
489
319
130
45
44
46
49
28
–
–
–
–
538
347
130
45
44
46
The figures in the single figure tables above are derived from the following:
Salary and fees
Benefits
Pension
Annual bonus
LTIP
The amount of salary/fees received in the relevant period.
The taxable value of benefits received in the relevant 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 relevant 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).
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 relevant period is provided on page 66.
The LTIP figure for the period 2018/19 represents the awards granted on 15 December 2016. The awards were
based on cumulative EPS performance over three financial years to 28 September 2019 and did not vest.
The LTIP figure stated for the period 2017/18 represents the value of awards granted under the Topps Tiles plc
2013 Long Term Incentive Plan on 16 December 2015. The awards were based on cumulative EPS performance
over three financial years to 29 September 2018 and did not vest.
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DIRECTORS’ REMUNERATION REPORT
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 2019:
M T M Williams
R Parker
Base salary
1 October
2018
£402,030
£265,616
Base salary
1 October
2019
£410,071
£270,928
% increase
2%
2%
The base salary increase for Matt Williams and Rob Parker awarded in 2019 was in line with the range of salary increases across the wider
workforce. Rob Parker will succeed Matt Williams as CEO with a salary of £400,000 per annum effective from 1 December 2019.
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. They were awarded a 2 % increase in line with the wider workforce. No
change to the fee policy is currently anticipated for 2019/20.
Chairman’s fee
Non-Executive Directors’ basic fee
Additional fees
Senior Independent Director/Chair of Remuneration Committee
Employee Engagement Director1
Chair of the Audit Committee
1. Formerly, the Chair of the Nomination and Governance Committee.
Total Pension Entitlements
Fees
1 October
2018
£126,720
£38,561
Fees
1 October
2019
£129,254
£39,332
£6,462
£5,385
£5,385
£6,591
£5,493
£5,493
% increase
2%
2%
2%
2%
2%
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 Matthew Williams) and is in line with the Remuneration Policy.
Annual Bonus
For the 52-week period ended 28 September 2019, 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 2018/19 and how this reflects performance for the Period:
Adjusted PBT1
Strategic objectives2
Group customer satisfaction, increase in score
Group shared buying, increase in shared volume
Working capital, YOY improvement in key measures
Simplification, targeted reduction in hours
People3
Total bonus earned
1. Adjusted PBT as defined in the Financial Review section of this report.
Weighting
Threshold
Stretch
Executive
Director bonus
earned as a
percentage of
salary
Actual
performance
80% £16.0 million £21.0 million £16.0 million
3%
4%
4%
4%
4%
4%
63.5%
1%
4.0
750
n/a
65.6%
4%
5.5
3,000
n/a
72.8%
6%
2.3
2,940
2%
4.0%
4.0%
0.0%
3.0%
2.0%
16%
2. Adjusted PBT of £16.0 million or higher for 2018/19 must be achieved for any bonus to be payable under the strategic objectives. This requirement was achieved.
3. Four measures, 1% each for number of logons to Learning Management System website, introduction of new colleague survey, delivery of new HR systems and improvements
in staff turnover.
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ADDITIONAL INFORMATION
The bonuses will be paid in cash in November 2019.
Annual Bonus for 2019/20
The maximum annual bonus opportunity for the 2019/20 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 2019/20 are a mix of financial and non-financial measures which act to bind the senior
management together to common objectives, based on improvements in customer satisfaction, buying, stock management and people
based measures.
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 2016 were based on cumulative adjusted EPS targets over the three financial years to 28 September
2019. The performance targets for the awards were as follows:
Cumulative Adjusted EPS for the period 2016/17 to 2018/19
29.84 pence
Greater than 29.84 pence but less than 32.29 pence
32.29 pence
Percentage of the award that will vest
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 20.88 pence. This resulted in 0% of the award vesting.
Awards Granted During the Financial Year
(Audited Information)
For the 52-week period ended 28 September 2019, the following awards were granted to Executive Directors on 17 December 2018:
M T M Williams
R Parker
Type of award
Nil-cost option
Nil-cost option
Percentage of
salary
100%
100%
Number of
shares
598,259
395,262
Face value
at grant1
£402,030
£265,616
% of award
vesting at
threshold
Performance
period
25%
25%
3 years
3 years
1. Valued using a share price of 67.2 pence based on the average three-day share price ending on 5 October 2018.
The awards will vest based on the following Cumulative Adjusted EPS targets:
Cumulative Adjusted EPS for the period 2017/18 to 2019/20
22.04 pence
Greater than 23.52 pence but less than 25.37 pence
23.76 pence
Percentage of the award that will vest
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% from the 2017/18 outturn 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.
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DIRECTORS’ REMUNERATION REPORT
Long-Term Incentives for 2019/20
LTIP Awards
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 vesting of these awards will be based on Cumulative Adjusted EPS targets and will vest three years from grant.
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 2019/20 to 2021/22
19.9 pence
Greater than 19.9 pence but less than 22.3 pence
22.3 pence
Percentage of the award that will vest
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.
The following SAYE options were granted to the Executive Directors during the financial year ended 28 September 2019:
M T M Williams
R Parker
Type of award1
3yr Discounted share option
3yr Discounted share option
Number of
shares
35,294
21,176
Face value
at grant2
£22,765
£13,659
1.
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 2018/19, the share price at the date of invitation was 63.26 pence and the exercise price is 51 pence per share.
In accordance with the scheme rules, the exercise of the options is not subject to any performance condition.
2. 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 64.5 pence for these
options granted on 28 January 2019).
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 shareholding guidelines, effective from the 2017 AGM, which required that Executive Directors build
up a shareholding of 2 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 28 September 2019:
M T M Williams
R Parker
Shareholding
guidelines
Shareholding
(as % of salary)
200%
150%
266
155
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STRATEGIC REPORT
OUR GOVERNANCE
OUR FINANCIALS
ADDITIONAL INFORMATION
The interests of each Executive Director of the Company as at 28 September 2019 were as follows:
Shares
Options
Shares owned
(as at 1
October 2018)
Directors
Executive Directors
M T M Williams 2,023,231
n/a
n/a
417,893
n/a
n/a
R Parker
Non-Executive Directors
D Shapland
K Down
C Tiney
A King
140,000
n/a
15,480
n/a
Total shares
owned (as at
28 September
2019)
2,828,774
n/a
n/a
452,893
n/a
n/a
140,000
n/a
15,480
n/a
Options
exercised
during
Type
the year Vested options
Unvested
options,
subject to
performance
conditions
Unvested
options, not
subject to
performance
conditions
Total options
as at
28 September
2019
LTIP
SAYE
1,517,613
n/a
0
n/a
1,807,115
n/a
n/a
35,294
1,807,115
35,294
LTIP
SAYE
0
n/a
n/a
n/a
n/a
n/a
616,063
n/a
1,163,869
n/a
n/a
31,943
1,779,932
31,943
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
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 28 September 2019 and the date of this report; except as follows:
• M Williams, shares acquired through the SIP scheme: 435.
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 ten years to
28 September 2019. For the purposes of the graph, TSR has been calculated as the percentage change during the ten-year period in the
market price of the shares, assuming that dividends are reinvested. The graph shows the value, by the end of the 2018/19 financial year,
of £100 invested in the Group over the last ten financial years compared with £100 invested in the FTSE Small Cap Index, which the
Directors believe is the most appropriate comparative index.
£350
£300
£250
£200
£150
£100
£50
£0
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
Topps Tiles
FTSE Small Cap Index
TOPPS TILES PLC ANNUAL REPORT AND ACCOUNTS FOR THE 52 WEEK PERIOD ENDED 28 SEPTEMBER 2019
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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 ten financial years.
52-week period ended 28 September 2019
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
CEO Pay Increase in Relation to All Employees
Total
remuneration
£’000
Annual bonus
as a % of
maximum
opportunity
LTIP as a %
of maximum
opportunity
541
538
765
1,180
2,027
849
564
579
384
515
16%
14%
9%
67%
83%
99%
46.3%
35.2%
0%
40%
0%
0%
86.7%
100%
100%
n/a
n/a
n/a
n/a
n/a
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
2%
0%
14.3%
Wider
workforce
2.7%
16%
-3.8%
* This reflects higher costs in connection with car allowances, taxable benefit on company cars due to CO2 emissions and medical insurance for the wider workforce.
** The increase in the CEO’s bonus was accounted for by an improved performance against strategic targets and the decrease for wider workforce is accounted for by lower
payments of bonus to store colleagues based on individual sales performance.
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.
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
28 September 2019
52-week
period ended
29 September 2018
3.4 pence per share 3.4 pence per share
£54,909,000
£55,440,000
Percentage
change
0%
0.97%
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.
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STRATEGIC REPORT
OUR GOVERNANCE
OUR FINANCIALS
ADDITIONAL INFORMATION
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.
The executive compensation business of Aon plc (“Aon”) has been appointed as an independent adviser.
Adviser
Aon
Details of appointment
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 28 September 2019
£33,096 (excluding VAT)
None
Charged on a time/cost basis or fixed fee
dependent on the nature of the project.
Aon 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 Aon 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 30 January 2019:
Resolution
Votes for
% of vote
Votes against
% of vote
Discretion
% of vote Votes withheld
Approve Remuneration Report 122,713,813
95.95%
5,158,928
4.03%
23,909
0.02%
35,9029
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
Approval
Votes for
% of vote
Votes against
% of vote
Discretion
% of vote Votes withheld
117,880,410
94.82%
6,434,637
5.18%
6,889
0.01%
5,913,837
This report was approved by the Board on 11 November 2019 and signed on its behalf by:
Claire Tiney
Chairman of the Remuneration Committee
26 November 2019
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03 OUR
FINANCIALS
1
1
Independent Auditors’ 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
74
82
82
83
84
85
86
118
119
120
1
Torrano Calacatta and Marquina
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INDEPENDENT AUDITORS’ REPORT TO THE
MEMBERS OF TOPPS TILES PLC
Report on the audit of the financial statements
Opinion
In our opinion:
• Topps Tiles Plc’s Group financial statements and Company financial statements (the “financial statements”) give a true and fair view
of the state of the Group’s and of the Company’s affairs as at 28 September 2019 and of the Group’s profit and cash flows for the
52 week period (the “period”) 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 Company financial statements have been properly prepared in accordance with United Kingdom Generally Accepted Accounting
Practice (United Kingdom Accounting Standards, comprising FRS 101 “Reduced Disclosure Framework”, and applicable law); 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, included within the Annual Report and Accounts (the “Annual Report”), which comprise: the
consolidated statement of financial position and the Company balance sheet as at 28 September 2019; the consolidated statement of
financial performance and consolidated statement of comprehensive income, the consolidated cash flow statement, and the consolidated
and Company statements of changes in equity for the 52 week period then ended; and the notes to the financial statements, which
include a description of the significant accounting policies.
Our opinion is consistent with our reporting to the Audit Committee.
Basis for Opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) and applicable law. Our
responsibilities under ISAs (UK) are further described in the Auditors’ responsibilities for the audit of the financial statements section
of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Independence
We remained independent of the Group in accordance with the ethical requirements that are relevant to our audit of the financial
statements in the UK, which includes the FRC’s Ethical Standard, as applicable to listed public interest entities, and we have fulfilled our
other ethical responsibilities in accordance with these requirements.
To the best of our knowledge and belief, we declare that non-audit services prohibited by the FRC’s Ethical Standard were not provided
to the Group or the Company.
Other than those disclosed in note 5 to the financial statements, we have provided no non-audit services to the Group or the Company
in the period from 30 September 2018 to 28 September 2019.
Our Audit Approach
Overview
• Overall Group materiality: £510,000 (2018: £700,000), based on 5% of profit before tax, adjusted for
the repayment of historical import duty.
Materiality
• Overall Company materiality: £480,000 (2018: £690,000), based on 1% of net assets.
• We conducted a full scope audit of the aggregated financial information for the Group (excluding Parkside
Ceramics Limited and Strata Tiles Limited)
Audit scope
Key
audit
matters
• All of the in-scope components were audited by the UK Group Engagement Team;
• Our scoping results in coverage of 98% of revenue, 113% of profit before tax (offset by losses elsewhere in
the Group); and 95% of total assets.
• Valuation of inventory.
• Valuation of provisions for onerous leases and impairment of store assets.
• Valuation of provisions for dilapidations.
• Presentation and disclosure of the impact of IFRS 16 “Leases”.
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STRATEGIC REPORT
OUR GOVERNANCE
OUR FINANCIALS
ADDITIONAL INFORMATION
The Scope of Our Audit
As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the financial statements.
Capability of the Audit in Detecting Irregularities, Including Fraud
Based on our understanding of the Group and industry, we identified that the principal risks of non-compliance with laws and regulations
related to breaches of employee, tax and construction product related laws and regulations, and we considered the extent to which non-
compliance might have a material effect on the financial statements. We also considered those laws and regulations that have a direct
impact on the preparation of the financial statements such as the Companies Act 2006 and Payroll taxes including income tax, and Value
added tax. We evaluated management’s incentives and opportunities for fraudulent manipulation of the financial statements (including the
risk of override of controls), and determined that the principal risks were related to fraudulent transactions to increase the share price that
would result in overstating profits, therefore raising shareholder expectations and senior management bonus payments. Appropriate audit
procedures in response to these risks were carried out at both the Group and component levels. These procedures included:
• Discussions with management and internal audit, including consideration of known or suspected instances of non-compliance with laws
and regulation and fraud;
• Evaluation of management’s controls designed to prevent and detect irregularities;
•
Identifying and testing journal entries, in particular any journal entries posted with unusual account combinations or that were posted
by senior management;
• Challenging assumptions and judgements made by management in their significant accounting estimates, in particular in relation to
inventory provisions, onerous leases and store impairments, and dilapidations (see related key audit matters below).
There are inherent limitations in the audit procedures described above and the further removed non-compliance with laws and regulations
is from the events and transactions reflected in the financial statements, the less likely we would become aware of it. Also, the risk of
not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve
deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion.
TOPPS TILES PLC ANNUAL REPORT AND ACCOUNTS FOR THE 52 WEEK PERIOD ENDED 28 SEPTEMBER 2019
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INDEPENDENT AUDITORS’ REPORT TO THE
MEMBERS OF TOPPS TILES PLC
Report on the audit of the financial statements
Key Audit Matters
Key audit matters are those matters that, in the auditors’ professional judgement, were of most significance in the 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)
identified by the auditors, including 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, and any comments we make on the results of our procedures
thereon, 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. This is not a complete list of all risks identified by our audit.
Key audit matter
How our audit addressed the key audit matter
Valuation of inventory
Refer to matters considered by the Audit Committee within the
Corporate Governance Report on page 49 and the Critical
Accounting Judgements and Key Sources of Estimation Uncertainty
within the Group Accounting Policies.
The valuation of inventory involves judgement in recording
provisions for stock losses or obsolete inventory. The significant
judgements and assumptions as applied when calculating the
provisions are:
•
the forecasted stock losses (including shrinkage) at a store level;
and
• specific provisions recognised for discontinued inventory which
require an estimate of expected inventory losses and realisable
amounts.
Valuation of provisions for onerous leases and impairment of
store assets
Refer to matters considered by the Audit Committee within the
Corporate Governance Report on page 48 and the Critical
Accounting Judgements and Key Sources of Estimation Uncertainty
within the Group Accounting Policies.
The Group has a large, nationwide store portfolio and therefore
there is a risk that provisions for future lease costs and assets held
at underperforming stores may not be adequate, as they may not
reflect the current position as the market evolves and individual
store performance changes.
We tested an ageing report for stock lines not sold in the last 6
and 12 months and performed a reasonableness check of the
aged balance compared to the inventory provision;
We challenged management’s judgements by carrying out
discussions with representatives from the inventory management
team (outside of the finance function) and challenged them
regarding stock not provided for and the impact of future
product range plans on provisions required;
We performed an analysis of average stock write-off per store
and applied this to each store to recalculate the store stock loss
provision compared to average stock count losses;
We reviewed the out-turn of prior period provisions to ensure they
are not inconsistent with the inventory provision at the current year
end; and
We tested the integrity of the provision calculation to ensure
it used underlying data correctly and calculated the provision
accurately, including testing inventory stock count write-offs
in the financial period.
We reviewed performance at an individual store level to
assess completeness of providing for lease commitments for
underperforming stores;
Reviewed methodology for forecasting expected growth for
stores to ensure this is supported by historical data on store
performance;
Reviewed the value of assets held at both underperforming stores
and stores closed in the year to ensure that assets have been
appropriately impaired;
Re-performed certain onerous lease provision calculations for
accuracy; and
Tested the movement in the provision from the prior period.
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STRATEGIC REPORT
OUR GOVERNANCE
OUR FINANCIALS
ADDITIONAL INFORMATION
Key audit matter
How our audit addressed the key audit matter
Valuation of provisions for dilapidations
Refer to matters considered by the Audit Committee within the
Corporate Governance Report on page 49 and the Critical
Accounting Judgements and Key Sources of Estimation Uncertainty
within the Group Accounting Policies.
As the Group has a significant store portfolio, with store openings
and closures expected each period, there is a risk that costs for
returning stores to the required standard may not be adequate,
as they may not reflect the requirements of underlying lease
agreements with landlords or local market conditions as the
property portfolio evolves.
Presentation and disclosure of the impact of IFRS 16 “Leases”
Refer to matters considered by the Audit Committee within the
Corporate Governance Report on page 49 and the Critical
Accounting Judgements and Key Sources of Estimation Uncertainty
within the Group Accounting Policies.
The Group is applying IFRS 16 from 3 October 2020, using the
modified retrospective method, so the expected impact on the
Group financial statements has to be disclosed this period in line
with IAS 8.
The Group has implemented a new IT system to calculate these
numbers. In addition judgements have been taken by the Group,
including the discount rate to be applied on transition to the new
standard.
We recalculated the dilapidation provision calculation to confirm
accuracy;
Tested key assumptions, being level of dilapidation costs incurred
in the period, historical level of stores experiencing costs on exit
and percentage of leases that are extended, to supplier invoices
and lease documentation;
Corroborated the discount rate adopted to external sources; and
Tested the movement in the provision including the out-turn of prior
period provisions.
We have tested a sample of inputs into the IT system and agreed
them back to the underlying lease agreements;
We have recalculated the accounting entries for a sample of
leases and confirmed the IT system is performing this calculation
accurately;
We have reviewed the methodology applied to calculate the
discount rates using incremental borrowing rates specific to
the Group and regard the approach to be consistent with the
requirements of IFRS 16;
We have reviewed the other assumptions applied in calculating
the impact of IFRS 16 and consider them to be appropriate,
including ensuring that the lease term is accurate; and
We have reviewed the disclosures in the Group financial
statements, we are satisfied that they are compliant with IAS 8.
We determined that there were no key audit matters applicable to the Company to communicate in our report.
TOPPS TILES PLC ANNUAL REPORT AND ACCOUNTS FOR THE 52 WEEK PERIOD ENDED 28 SEPTEMBER 2019
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INDEPENDENT AUDITORS’ REPORT TO THE
MEMBERS OF TOPPS TILES PLC
Report on the audit of the financial statements
How We Tailored the Audit Scope
We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the financial statements
as a whole, taking into account the structure of the Group and the Company, the accounting processes and controls, and the industry in
which they operate.
The Group financial statements are a consolidation of a number of reporting units, comprising the Group’s operating businesses, all based
in the UK, with our audit work focussed on the aggregated financial information for the Group (excluding Parkside Ceramics Limited and
Strata Tiles Limited).
In establishing the overall approach to the Group audit, we identified one reporting unit, being the aggregated financial information for
the Group (excluding Parkside Ceramics Limited and Strata Tiles Limited) which in our view, required an audit of its complete financial
information both due to its size and risk characteristics.
The audit work performed at this reporting unit, together with additional procedures performed on centralised functions at the Group
level, including audit procedures over the consolidation and intangible asset impairment testing, gave us the evidence we needed
for our opinion on the Group financial statements as a whole.
All of the in-scope components were audited by the UK Group Engagement Team.
The Parent Company is comprised of one reporting unit which was subject to a full scope audit for the purpose of the Company financial
statements, and formed part of the Group aggregated financial information for the purpose of the Group financial statements.
Materiality
The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for materiality. These,
together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent of our audit
procedures on the individual financial statement line items and disclosures and in evaluating the effect of misstatements, both individually
and in aggregate on the financial statements as a whole.
Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:
Group financial statements
Company financial statements
Overall materiality
£510,000 (2018: £700,000).
£480,000 (2018: £690,000).
How we determined it
5% of profit before tax, adjusted for the
repayment of historical import duty.
1% of net assets.
Rationale for benchmark applied
Based on the benchmarks used in the annual
report, profit before tax is the primary measure
used by the shareholders in assessing the
performance of the Group, and is a generally
accepted auditing benchmark. The repayment
of historical import duty has been excluded as
it relates to a change in accounting estimate
relating to prior periods and is not relevant to
current year trading profit.
As the Company does not trade, with its
main operations being that of a holding
company, we believe that net assets is the
primary measure used by the shareholders in
assessing the performance of the entity, and
is a generally accepted auditing benchmark.
The materiality used has been capped at
component materiality.
For each component in the scope of our Group audit, we allocated a materiality that is less than our overall Group materiality. The range
of materiality allocated across components was £480,000.
We agreed with the Audit Committee that we would report to them misstatements identified during our audit above £26,000 (Group
audit) (2018: £35,000) and £24,000 (Company audit) (2018: £35,000) as well as misstatements below those amounts that, in our
view, warranted reporting for qualitative reasons.
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STRATEGIC REPORT
OUR GOVERNANCE
OUR FINANCIALS
ADDITIONAL INFORMATION
Going Concern
In accordance with ISAs (UK) we report as follows:
Reporting obligation
Outcome
We are required to report if we have anything material to add
or draw attention to in respect of the directors’ statement in the
financial statements about whether the directors considered it
appropriate to adopt the going concern basis of accounting in
preparing the financial statements and the directors’ identification of
any material uncertainties to the Group’s and the Company’s ability
to continue as a going concern over a period of at least twelve
months from the date of approval of the financial statements.
We have nothing material to add or to draw attention to.
However, because not all future events or conditions can be
predicted, this statement is not a guarantee as to the Group’s and
Company’s ability to continue as a going concern. For example,
the terms on which the United Kingdom may withdraw from the
European Union are not clear, and it is difficult to evaluate all
of the potential implications on the Group’s trade, customers,
suppliers and the wider economy.
We are required to report if the directors’ statement relating to
Going Concern in accordance with Listing Rule 9.8.6R(3) is
materially inconsistent with our knowledge obtained in the audit.
We have nothing to report.
Reporting on Other Information
The other information comprises all of the information in the Annual Report other than the financial statements and our auditors’ report
thereon. The directors are responsible for the other information. Our opinion on the financial statements does not cover the other
information and, accordingly, we do not express an audit opinion or, except to the extent otherwise explicitly stated in this report,
any form of assurance 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 an apparent material inconsistency or material misstatement, we are required to perform
procedures to conclude whether there is a material misstatement of 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. We have nothing to report based on these responsibilities.
With respect to the Strategic Report, Directors’ Report and Corporate Governance Statement, we also considered whether the disclosures
required by the UK Companies Act 2006 have been included.
Based on the responsibilities described above and our work undertaken in the course of the audit, the Companies Act 2006 (CA06),
ISAs (UK) and the Listing Rules of the Financial Conduct Authority (FCA) require us also to report certain opinions and matters as described
below (required by ISAs (UK) unless otherwise stated).
Strategic Report and Directors’ Report
In our opinion, based on the work undertaken in the course of the audit, the information given in the Strategic Report and Directors’
Report for the period ended 28 September 2019 is consistent with the financial statements and has been prepared in accordance
with applicable legal requirements. (CA06)
In light of the knowledge and understanding of the Group and Company and their environment obtained in the course of the audit,
we did not identify any material misstatements in the Strategic Report and Directors’ Report. (CA06)
TOPPS TILES PLC ANNUAL REPORT AND ACCOUNTS FOR THE 52 WEEK PERIOD ENDED 28 SEPTEMBER 2019
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INDEPENDENT AUDITORS’ REPORT TO THE
MEMBERS OF TOPPS TILES PLC
Report on the audit of the financial statements
Corporate Governance Statement
In our opinion, based on the work undertaken in the course of the audit, the information given in the Corporate Governance Statement (in
section Our Governance) about internal controls and risk management systems in relation to financial reporting processes and about share
capital structures in compliance with rules 7.2.5 and 7.2.6 of the Disclosure Guidance and Transparency Rules sourcebook of the FCA
(“DTR”) is consistent with the financial statements and has been prepared in accordance with applicable legal requirements. (CA06)
In light of the knowledge and understanding of the Group and Company and their environment obtained in the course of the audit, we did
not identify any material misstatements in this information. (CA06)
In our opinion, based on the work undertaken in the course of the audit, the information given in the Corporate Governance Statement
(in section Our Governance) with respect to the Company’s corporate governance code and practices and about its administrative,
management and supervisory bodies and their committees complies with rules 7.2.2, 7.2.3 and 7.2.7 of the DTR. (CA06)
We have nothing to report arising from our responsibility to report if a corporate governance statement has not been prepared by the
Company. (CA06)
The Directors’ Assessment of the Prospects of the Group and of the Principal Risks that Would Threaten the Solvency or
Liquidity of the Group
We have nothing material to add or draw attention to regarding:
• The directors’ confirmation on page 24 of the Annual Report 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.
• The disclosures in the Annual Report that describe those risks and explain how they are being managed or mitigated.
• The directors’ explanation on page 36 of the Annual Report 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 have nothing to report having performed a review of the directors’ statement that they have carried out a robust assessment of the
principal risks facing the Group and statement in relation to the longer-term viability of the Group. Our review was substantially less in
scope than an audit and only consisted of making enquiries and considering the directors’ process supporting their statements; checking
that the statements are in alignment with the relevant provisions of the UK Corporate Governance Code (the “Code”); and considering
whether the statements are consistent with the knowledge and understanding of the Group and Company and their environment obtained
in the course of the audit. (Listing Rules)
Other Code Provisions
We have nothing to report in respect of our responsibility to report when:
The statement given by the directors, on page 42, that they consider the Annual Report taken as a whole to be fair, balanced and
understandable, and provides the information necessary for the members to assess the Group’s and Company’s position and performance,
business model and strategy is materially inconsistent with our knowledge of the Group and Company obtained in the course of
performing our audit.
The section of the Annual Report on pages 48 to 49 describing the work of the Audit Committee does not appropriately address matters
communicated by us to the Audit Committee.
The directors’ statement relating to the Company’s compliance with the Code does not properly disclose a departure from a relevant
provision of the Code specified, under the Listing Rules, for review by the auditors.
Directors’ Remuneration
In our opinion, the part of the Directors’ Remuneration Report to be audited has been properly prepared in accordance with the
Companies Act 2006. (CA06)
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STRATEGIC REPORT
OUR GOVERNANCE
OUR FINANCIALS
ADDITIONAL INFORMATION
Responsibilities for the Financial Statements and the Audit
Responsibilities of the Directors for the Financial Statements
As explained more fully in the Directors’ Responsibilities Statement, the directors are responsible for the preparation of the financial
statements in accordance with the applicable framework and for being satisfied that they give a true and fair view. The directors are also
responsible for such internal control as they 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 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 Company or to cease operations, or have no realistic alternative but to do so.
Auditors’ 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 auditors’ 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.
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 auditors’ report.
Use of this report
This report, including the opinions, has been prepared for and only for the Company’s members as a body in accordance with Chapter 3
of Part 16 of the Companies Act 2006 and for no other purpose. We do not, in giving these opinions, accept or assume responsibility for
any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by
our prior consent in writing.
Other required reporting
Companies Act 2006 Exception Reporting
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 Company, or returns adequate for our audit have not been received from
branches not visited by us; or
• certain disclosures of directors’ remuneration specified by law are not made; or
•
the Company financial statements and the part of the Directors’ Remuneration Report to be audited are not in agreement with the
accounting records and returns.
We have no exceptions to report arising from this responsibility.
Appointment
Following the recommendation of the audit committee, we were appointed by the members on 30 January 2019 to audit the financial
statements for the year ended 28 September 2019 and subsequent financial periods. This is therefore our first year of uninterrupted
engagement.
Andrew Lyon (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
East Midlands
26 November 2019
TOPPS TILES PLC ANNUAL REPORT AND ACCOUNTS FOR THE 52 WEEK PERIOD ENDED 28 SEPTEMBER 2019
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CONSOLIDATED STATEMENT
OF FINANCIAL PERFORMANCE
For the 52 weeks ended 28 September 2019
Group revenue – continuing operations
Cost of sales
Gross profit
Distribution and selling costs
Repayment of historical import duty
Other operating expenses
Administrative costs
Sales and marketing costs
Group operating profit
Finance income
Finance costs
Profit before taxation
Taxation
Profit for the period
Profit is attributable to:
Owner of Topps Tiles Plc
Non-controlling interests
Earnings per ordinary share from continuing operations:
– Basic
– Diluted
Notes
3
5
7
7
5
8
27
28
52 weeks
ended
28 September
2019
£’000
52 weeks
ended
29 September
2018
£’000
219,197
(84,245)
134,952
(93,138)
2,272
(8,070)
(17,439)
(5,244)
13,333
15
(873)
12,475
(2,397)
10,078
10,119
(41)
10,078
5.18p
5.14p
216,887
(84,464)
132,423
(88,348)*
–
(9,480)
(16,067)*
(4,793)
13,735
25
(1,072)
12,688
(3,029)
9,659
9,659
–
9,659
5.00p
4.93p
* Distribution and selling costs and administrative costs are now inclusive of employee profit sharing costs, which were separately identified in the prior period financial
statements. The prior period has been adjusted to be comparable. The Group has reviewed its accounting policy and has reclassified employee profit sharing costs
of £5,153,000 (2018: £5,776,000) to distribution and selling costs, and £617,000 (2018: £492,000) to administrative costs.
CONSOLIDATED STATEMENT OF
COMPREHENSIVE INCOME
For the 52 weeks ended 28 September 2019
Profit for the period
Total comprehensible income for the period is attributable to:
Owners of Topps Tiles Plc
Non-controlling interests
52 weeks
ended
28 September
2019
£’000
52 weeks
ended
29 September
2018
£’000
10,078
9,659
10,119
(41)
10,078
9,659
–
9,659
82
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STRATEGIC REPORT
OUR GOVERNANCE
OUR FINANCIALS
ADDITIONAL INFORMATION
CONSOLIDATED STATEMENT
OF FINANCIAL POSITION
As at 28 September 2019
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
Capital and reserves attributable to owners of Topps Tiles Plc
Non-controlling interests
Total equity
Notes
11
12
13a
13b
15
16
17
20
18
20
20
21
22
23
24
25
26
27
28
2019
£’000
2018
£’000
3,104
2,663
46,958
1,233
53,958
30,924
8,142
18,747
57,813
111,771
(43,336)
(2,025)
(1,235)
(46,596)
11,217
(29,884)
(1,197)
(3,862)
(81,539)
30,232
6,548
2,490
(1,548)
(399)
3,962
20,359
(1,178)
30,234
(2)
30,232
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
–
26,663
The accompanying notes are an integral part of these financial statements.
The financial statements of Topps Tiles Plc, registered number 3213782, on pages 82 to 85 were approved by the Board of Directors
and authorised for issue on 26 November 2019. They were signed on its behalf by:
Matthew Williams
Director
Rob Parker
Director
26 November 2019
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CONSOLIDATED STATEMENT
OF CHANGES IN EQUITY
For the 52 weeks ended 28 September 2019
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
Non-
controlling
interest
£’000
6,548
2,487
(4,411)
(399)
3,921
20,359
(4,952)
–
–
–
–
–
–
3
–
–
–
–
–
–
661
–
–
–
–
–
–
–
–
–
–
24
–
–
–
–
–
9,659
–
(6,566)
(661)
11
–
6,548
–
2,490
–
(3,750)
–
(399)
–
3,945
–
20,359
(21)
(2,530)
–
–
–
–
–
–
–
–
Total
equity
£’000
23,553
9,659
3
(6,566)
–
35
(21)
26,663
–
–
–
–
–
–
–
–
–
–
–
–
2,202
–
–
–
–
–
–
–
–
–
–
17
–
–
–
–
–
–
10,119
(6,623)
(2,202)
(41) 10,078
(6,623)
–
–
–
64
(6)
–
–
81
(6)
–
6,548
–
2,490
–
(1,548)
–
(399)
–
3,962
–
20,359
–
(1,178)
39
(2)
39
30,232
Balance at 1 October 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
Profit and total comprehensive
income for the period
Dividends
Own shares issued in the period
Credit to equity for equity-settled
share-based payments
Deferred tax on share-based
payment transactions
Non-controlling interest on business
combination
Balance at 28 September 2019
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STRATEGIC REPORT
OUR GOVERNANCE
OUR FINANCIALS
ADDITIONAL INFORMATION
CONSOLIDATED CASH
FLOW STATEMENT
For the 52 weeks ended 28 September 2019
Cash flow from operating activities
Profit for the period
Taxation
Finance costs
Finance income
Group operating profit
Adjustments for:
Depreciation of property, plant and equipment
Amortisation of intangible assets
Loss/(gain) on disposal of property, plant and equipment
Impairment (reversal)/charge of property, plant and equipment
Impairment of goodwill
Decrease in fair value of investment properties
Share option charge
Decrease/(increase) 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
Addition of intangibles
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 in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
52 weeks
ended
28 September
2019
£’000
52 weeks
ended
29 September
2018
£’000
10,078
2,397
873
(15)
13,333
7,117
245
866
(246)
245
21
17
820
(681)
4,412
26,149
(861)
(3,385)
21,903
15
(7,242)
(563)
(21)
185
(2,749)
(10,375)
(6,623)
–
5,000
(5,000)
(6,623)
4,905
13,842
18,747
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
TOPPS TILES PLC ANNUAL REPORT AND ACCOUNTS FOR THE 52 WEEK PERIOD ENDED 28 SEPTEMBER 2019
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NOTES TO THE FINANCIAL STATEMENTS
For the 52 weeks ended 28 September 2019
1 General Information
Topps Tiles Plc is a public company, limited by shares, incorporated and domiciled in the United Kingdom under the Companies Act
2006. The address of the registered office is given on page 41. The nature of the Group’s operations and its principal activity are
set out in the Directors’ Report on pages 50 to 53.
These audited 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, apart from IFRS 9 and IFRS 15 (see below).
Standards Adopted in Current Period
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, apart from IFRS 9 and IFRS 15.
Amendments to IFRS 2 (Jun 2016) – Classification and Measurement of Share-based Payment Transactions
Annual Improvements to IFRSs: 2014–16 Cycle (Dec 2016) – Annual Improvements to IFRSs: 2014–16 Cycle – IFRS 1 and IAS 28
Amendments
Amendments to IAS 40 (Dec 2016) – Transfers of Investment Property
IFRIC 22 – Foreign Currency Transactions and Advance Consideration
IFRS 9 “Financial Instruments”
The Group has adopted IFRS 9 “Financial Instruments” for the first time in the current financial year, with a date of initial application of
30 September 2018. The standard is applicable to financial assets and financial liabilities, and covers the classification and measurement
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 applied IFRS 9 using the modified retrospective method, without adjusting prior periods. The adoption of IFRS 9 had no
material impact on the Group’s retained earnings at 30 September 2018. There were no changes to the carrying amounts of assets
and liabilities on transition to IFRS 9.
(A) Classification and Measurement of Financial Assets
IFRS 9 contains two principal classification categories for financial assets: measured at amortised cost or measured at fair value (through
profit or loss or through other comprehensive income). The classification of financial assets under IFRS 9 is generally based on the business
model in which a financial asset is managed and its contractual cash flow characteristics. Under IFRS 9, investments in equity instruments
that do not have a quoted price in an active market for an identical instrument are now measured at fair value rather than at cost.
On 30 September 2018 the Group reassessed the classification and measurement of financial assets of the business and has classified its
financial instruments into the appropriate IFRS 9 categories:
Financial Assets
Classification (IAS 39)
Classification (IFRS 9)
Derivative financial instruments (not
designated as hedging instruments)
Trade and other receivables
Cash and cash equivalents
Fair value through profit and loss
Fair value through profit and loss
Loans and receivables
Loans and receivables
Amortised cost
Amortised cost
Upon adoption of IFRS 9, gains and losses for assets measured at fair value will continue to be recorded in profit or loss. All of the
classification changes above only impact disclosure in the Notes to the Financial Statements. The accounting policies for financial assets
in Note 2 have been updated for changes arising from IFRS 9.
(B) Classification and Measurement of Financial Liabilities
For financial liabilities, the classification and measurement requirements under IFRS 9 are similar to those under IAS 39, and no changes
were noted on transition.
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STRATEGIC REPORT
OUR GOVERNANCE
OUR FINANCIALS
ADDITIONAL INFORMATION
1 General Information continued
(C) Impairment
IFRS 9 also introduced a forward-looking expected credit loss model for recognising provisions in respect of financial assets and
receivables. This results in greater judgement due to the need to factor in forward looking information when estimating the appropriate
amount of provisions. The Group considers the probability of a default occurring over the life of its trade receivables on initial recognition
of those assets. This, in theory, could result in earlier recognition of credit losses, than the incurred loss model of IAS 39.
The Group has updated its accounting policy for the establishment of provisions against trade receivables to reflect the lifetime expected
credit loss, consistent with the simplified approach under IFRS 9. The impact of using the expected credit loss model on the consolidated
financial statements of the Group is immaterial at the transition date.
(D) Hedge Accounting
The Group does not account for derivatives under hedge accounting and therefore, the updated IFRS 9 requirements in relation to hedge
accounting do not impact the Group.
IFRS 15 “Revenue from Contracts with Customers”
The Group has adopted IFRS 15 “Revenue from Contracts with Customers” for the first time in the current financial year, with a date of
initial application of 30 September 2018. 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.
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 does not have a material impact on the timing
or nature of the Group’s revenue recognition.
The standard has been applied using the modified retrospective method of adoption, without adjusting prior periods. Under this approach
the cumulative effect of applying the new standard is recognised at the date of initial application. The Group has considered the following
in assessing the impact of the new standard:
(A) Sale of Goods
The Group’s contracts with customers for the sale of goods generally include one performance obligation. The Group has concluded that
revenue from the sale of goods should be recognised at the point in time when control of the asset is transferred to the customer. This does
not represent a change to the Group’s accounting policy and therefore, the adoption of IFRS 15 does not have an impact on the timing of
revenue recognition.
(B) Principal Versus Agent Consideration
Management has established that the Group acts as a principal for all types of products and thus should recognise revenue in the gross
amount of consideration to which it expects to be entitled. The Group already recognised revenue on a gross basis; therefore, the Group’s
revenue recognition is unchanged in this regard.
(C) Right of Return
The Group currently estimates the expected level of returns, and as such holds a sales return provision in the Consolidated Statement of
Financial Position to provide for these.
Prior to IFRS 15, provisions for customer returns were presented on a net basis, as part of Accruals within Trade and other payables.
Following the adoption of IFRS 15, they are now shown on a gross basis and liabilities for the full amount expected to be refunded to
customers are included in Accruals within Trade and other payables. Subsequently assets for the value of goods expected to be returned
are included in Inventories. The net adjustment on adoption is a £0.4 million increase in the value of Inventories and Accruals.
None of the adjustments impacted the Group’s profit, retained earnings, net assets or cash flows.
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NOTES TO THE FINANCIAL STATEMENTS
For the 52 weeks ended 28 September 2019
1 General Information continued
A summary of the impact on the Group Statement of Financial Position as at 28 September 2019 is shown below:
Current assets
Inventories
Current liabilities
Trade and other payables
Net assets
Balances
pre IFRS 15
adjustments
£’000
IFRS 15
adjustments
£’000
As reported
£’000
30,526
398
30,924
(42,938)
30,232
(398)
–
(43,336)
30,232
Within trade and other payables, £3,165,000 (2018: £3,963,000) relating to customer deposits has been reclassified from trade
payables to contract liabilities as a result of the adoption of IFRS 15 (see note 17).
(D) Disclosure of Disaggregation of Revenue
IFRS 15 requires the disaggregation of revenue from contracts with customers into categories that depict how the nature, amount, timing
and uncertainty of revenue and cash flows are affected by economic factors. Management has considered how information about the
entity’s revenue has been presented for other purposes such as internal management accounts and investor presentations. Based on this,
revenue has been disaggregated between the Retail and Commercial businesses (please refer to note 3). However, management has
concluded that since customers access the Group’s products across multiple channels and often their journey involves more than one
channel, any further disaggregation of revenue would not be appropriate.
Standards Not Adopted in Current Period
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). Apart from IFRS 16, 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.
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
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
IFRS 16 “Leases”
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.
The standard will have a material impact on the financials statements of the Group due to the large number of property leases it holds as
well as leases relating to machinery and vehicles.
All of the Group’s operating leases, apart from those leases captured under the low value and short-term lease exemptions, will be
recognised on the Consolidated 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 will be replaced by interest and depreciation charges and therefore, IFRS 16 will impact the Group’s
profit each period.
88
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STRATEGIC REPORT
OUR GOVERNANCE
OUR FINANCIALS
ADDITIONAL INFORMATION
1 General Information continued
The implementation of IFRS 16 has no impact on cash flows generated, but will impact the presentation of the Consolidated Cash Flow
Statement, with an increase in net cash from operating activities being offset by an increase in net cash used in financing activities.
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 intends to apply a single discount rate to all leases with similar characteristics, which is an option permitted by the standard. This
rate will be calculated based on the Revolving Credit Facility rate adjusted for a factor based on the lease term.
The Group has invested in a new property management system to prepare for the adoption of the new standard and has a project
team working to determine the effect of this new standard on its existing lease portfolio of 362 property leases and other contracts and
implement the processes and systems necessary to comply with its requirements. 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.
In order to estimate the impact on the Consolidated Statement of Financial Position for the year ending 3 October 2020, the lease
portfolio at transition date, of 29 September 2019, has been used. On transition, the Group will recognise a right-of-use asset in the
region of £125 million, with a corresponding lease liability in the region of £130 million.
For the period ending 3 October 2020, the Group expects a reduction in Profit before taxation in the region of £1.0 million, as a result
of the adoption of IFRS 16. In order to illustrate the likely impact of transitioning to IFRS 16 on the Consolidated Statement of Financial
Performance, we have set out a pro forma unaudited reconciliation using financials from the Consolidated Statement of Financial
Performance for the period ended 28 September 2019.
Pre IFRS 16
for the period
ended
28 September
2019
£m
219.2
135.0
(121.7)
13.3
(0.8)
12.5
Remove
estimated rent
£m
Include
estimated
depreciation
£m
Include
estimated
financing cost
£m
Post IFRS 16
estimated
£m
–
–
25.0
25.0
–
25.0
–
–
(23.4)
(23.4)
–
(23.4)
–
–
–
–
(2.6)
(2.6)
219.2
135.0
(120.1)
14.9
(3.4)
11.5
Pro forma Consolidated Statement of Financial Performance
Group revenue
Gross profit
Operating costs
Group operating profit
Finance costs/Investment revenue
Profit before taxation
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”) and IFRS
Interpretations Committee (“IFRS IC”) interpretations. 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, and as applied in
accordance with the provisions of the Companies Act 2006. 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.
The accounting policies set out below have, unless otherwise stated, been applied consistently to all periods presented in these Group
financial statements.
The Group has applied for the first time IFRS 15 “Revenue from contracts with customers” and IFRS 9 “Financial Instruments”. Refer to Note
1 for details of the impact on transition to these standards.
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2 Accounting Policies continued
(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
IFRS 9 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.
(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 Strategic Report, references to 2019 mean “at 28 September 2019” or the
52 weeks then ended; references to 2018 mean “at 29 September 2018” 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.
90
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ADDITIONAL INFORMATION
2 Accounting Policies continued
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 transaction price 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 satisfied its performance obligations to external customers, being the date goods are collected from store or received
by the customers; and
•
the customer has obtained controls of the goods being transferred.
These conditions are met, predominantly, at the point of sale. The exceptions to this are for: goods ordered in advance of collection,
where revenue is recognised at the point that the goods are collected; sales of goods that result in award credits for customers (see
below); and web sales, where revenue is recognised at the point of delivery.
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 performance
obligations have been satisfied.
The level of sales returns is closely monitored by management, and as such, the Group holds a sales return provision in the Consolidated
Statement of Financial Position to provide for the expected level of returns. The sales value of the expected returns is recognised within
Accruals, with the cost value of the goods expected to be returned recognised as a current asset within Inventories.
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
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). Subsequent to initial recognition, intangible assets acquired in a business
combination are reported at costs less accumulated amortisation.
Costs that are directly associated with identifiable software products controlled by the Group, and that will generate economic benefits
beyond one year are recognised as intangible assets. These intangible assets are stated at cost less accumulated amortisation and
impairment losses, and are amortised over four years.
(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
Fixtures and fittings
Motor vehicles
Freehold land is not depreciated.
2% per annum on cost on a straight-line basis
over the period of the lease, up to 50 years on a straight-line basis
over 10 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
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period.
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 Consolidated Statement of Financial Performance.
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2 Accounting Policies continued
(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.
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.
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OUR FINANCIALS
ADDITIONAL INFORMATION
2 Accounting Policies continued
(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.
(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. See note 2U and 2X for details on how these provisions are
calculated.
(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.
(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 time frame 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), financial
assets “at fair value through other comprehensive income” (FVOCI), and financial assets carried at “amortised cost”. The classification of
financial assets under IFRS 9 is generally based on the business model in which a financial asset is managed and its contractual cash flow
characteristics.
Financial Assets at FVTPL
Financial assets at FVTPL are stated at fair value, with any resultant gain or loss recognised in profit or loss. Transactional costs of financial
assets carried at FVTPL are expensed in the Consolidated Statement of Financial Performance. 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. Financial assets at FVTPL are
subsequently measured at fair value, with net gains and losses, including any interest or dividend income being recognised in profit of loss.
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NOTES TO THE FINANCIAL STATEMENTS
For the 52 weeks ended 28 September 2019
2 Accounting Policies continued
Trade and Other Receivables
Trade and other receivables that have fixed or determinable payments that are not quoted in an active market are initially recognised
at fair value and then carried 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. The Group assesses on a forward-looking basis the
expected credit losses associated with its financial assets carried at amortised cost.
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. The
Group applies the IFRS 9 simplified approach to measuring expected credit losses which uses a lifetime expected loss allowance for
financial assets.
For all other 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. The Group will write off, either
partially or in full, the gross carrying amount of a financial asset when there is no realistic prospect of recovery. This is usually the case
when it is determined that the debtor does not have the assets or sources of income that could generate sufficient cash flows to repay the
amounts subject to the write-off.
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.
Cash and Cash Equivalents
Cash and cash equivalents comprise cash balances including credit card receipts and deposits, less bank overdrafts which are repayable
on demand where there is a right of offset. All cash equivalents have an original maturity of three months or less.
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 that are classified as FVTPL relate to derivatives that are 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.
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ADDITIONAL INFORMATION
2 Accounting Policies continued
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. The fair values are determined by
reference to the market prices available from the market on which the instruments involved are traded.
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.
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.
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 Costs
Restructuring costs relate to Board approved decisions such as business closures or major organisational changes. Operating profit is
stated after charging/(crediting) restructuring costs but before investment income and finance costs.
The accounting policy for employee profit sharing costs has been revised, with costs now reclassified to distribution and selling costs
and administrative costs. There is no impact on earnings per share.
(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.
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For the 52 weeks ended 28 September 2019
2 Accounting Policies continued
(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 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.
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.
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 five further stores being
exited before their lease terms had expired (2018: six stores). 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 is 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. A 10% change in the forecast future cash flows of the stores identified as potentially
loss making would lead to a change in the provision of £27,000.
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 percentage of store leases expected to renew or exit at the end of the current lease contract, and is based on
management’s best estimate, taking into account knowledge of the property market and historical trends. A 10% change in the percentage
of properties expected to exit at the end of the current lease contract would lead to a change in the provision of £62,000.
Inventory Provision
The Group provides against the carrying value of the inventories held where it is anticipated that net realisable value (NRV) will be below
cost. The key estimate involves an assessment of clearance and discontinued lines, with an anticipated 100% mark down. A 10% change
in the volume of lines identified as clearance and discontinued would lead to a change in the provision of £77,000.
96
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STRATEGIC REPORT
OUR GOVERNANCE
OUR FINANCIALS
ADDITIONAL INFORMATION
3 Revenue
An analysis of Group revenue is as follows:
Revenue from the sale of goods
Total revenue
52 weeks
ended
28 September
2019
£’000
52 weeks
ended
29 September
2018
£’000
219,197
219,197
216,887
216,887
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.
IFRS 15 requires the disaggregation of revenue from contracts with customers into categories that depict how the nature, amount, timing and
uncertainty of revenue and cash flows are affected by economic factors. The total Group revenue for the period includes £214,346,000
revenue from the Retail business and £4,851,000 revenue from the Commercial business, being the recent acquisitions of Parkside Ceramics
Limited and Strata Tiles Limited. As noted above, the business is not regarded as having more than one operating segment.
The Group’s revenue is driven by the consolidation of individual small value transactions and as a result, Group revenue is not reliant on a
major customer or group of customers.
4 Acquisition of Subsidiaries
Topps Tiles Plc acquired 80% of the issued share capital of Strata Tiles Limited (“Strata”) on 18 April 2019, a company supplying tiles for
commercial design projects. The acquisition also involves the grant of a put and call option relating to the purchase by the Group of the
remaining 20% of the issued shares in Strata, which is exercisable in 2021.
The acquisition of Strata will add additional scale to the Group’s fast-growing commercial business as it seeks to build a leading position
in the commercial tile market. Strata is expected to benefit from the Group’s competitive advantage as the UK’s leading tile specialist,
particularly its product range and buying scale.
The Group performed a purchase price allocation exercise on Strata Tiles Limited to restate assets and liabilities at their provisional fair
value. Separately identifiable intangible assets were recognised in relation to the Strata Tiles brand and customer relationships.
The Group incurred £432,863 of costs in relation to acquisition activity during the year of acquisition, which were recognised in the
Consolidated Statement of Financial Performance.
The fair value of the net assets acquired and liabilities assumed at the acquisition date, under acquisition method of accounting, were:
Property, plant and equipment
Inventories
Trade and other receivables
Trade and other payables
Corporation tax
Deferred tax
Cash and cash equivalents
Brand
Customer relationships
Provisions
Non-controlling interest
Fair value of assets acquired
Cash consideration
Total consideration
Goodwill
Provisional
Fair value
of net assets
required
£’000
14
90
247
(758)
(49)
(278)
968
835
842
(43)
(39)
1,829
3,717
3,717
1,888
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NOTES TO THE FINANCIAL STATEMENTS
For the 52 weeks ended 28 September 2019
4 Acquisition of Subsidiaries continued
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 period:
Revenue
Loss before tax
£’000
3,717
(968)
2,749
£’000
1,075
(203)
Had the acquisition been included from the start of the period, £3,379,000 of revenue and £142,000 of loss before tax would have
been included in the Group’s financial statements in the period.
There were no contingent liabilities acquired as a result of the above transaction.
5 Profit Before Taxation
Profit before taxation for the period has been arrived at after charging/(crediting):
Depreciation of property, plant and equipment
Impairment (reversal)/charge of property, plant and equipment
Loss/(gain) on disposal of property, plant and equipment
Amortisation of intangibles
Impairment of goodwill
Decrease in fair value of investment properties recognised as an expense
Property related provisions charged/(credited)
Staff costs (see note 6)
Operating lease rentals
Repayment of historical import duty
Exchange losses/(gains) recognised in profit or loss
Write-down of inventories recognised as an expense
Cost of inventories recognised as an expense
52 weeks
ended
28 September
2019
£’000
52 weeks
ended
29 September
2018
£’000
7,117
(246)
866
245
245
21
406
55,440
26,333
(2,272)
80
2,633
81,612
6,983
958
(421)
90
–
1,651
(723)
54,909
25,489
–
(262)
3,031
81,433
During the year the business disposed of one freehold property (2018: four freehold properties).
The gain of £2,272,000 relates to repayment of import duty paid to HMRC, specifically relating to additional duty on products arriving
into the EU from China relating to the period 2015 to 2017. We originally recorded duty paid on a cautious basis, reflecting the
uncertainty of recovering the overpayment. As this settlement has been agreed and confirmed during this financial year, this has been
accounted for as a change in accounting estimate in the current period.
98
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STRATEGIC REPORT
OUR GOVERNANCE
OUR FINANCIALS
ADDITIONAL INFORMATION
5 Profit Before Taxation continued
Analysis of the auditors’ remuneration is provided below:
Fees payable to the Company’s auditors with respect to the Company’s annual accounts
Fees payable to the Company’s auditors 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 auditors
52 weeks
ended
28 September
2019
£’000
52 weeks
ended
29 September
2018
£’000
49
110
159
20
20
179
40
90
130
30
30
160
Audit related assurance services relate to the fee payable for the interim review performed. The 2018 fees relate to the Group’s former
auditors.
A description of the work of the Audit Committee is set out on page 48 and includes an explanation of how auditors’ objectivity and
independence is safeguarded when non-audit services are provided by the auditors.
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
28 September
2019
Number
employed
52 weeks
ended
29 September
2018
Number
employed
1,852
237
2,089
1,900
214
2,114
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 30)
Social security costs
Other pension costs (see note 29b)
52 weeks
ended
29 September
2019
Number
employed
52 weeks
ended
29 September
2018
Number
employed
1,754
231
1,985
2019
£’000
50,153
4,224
1,063
55,440
1,792
208
2,000
2018
£’000
49,782
4,209
918
54,909
Details of Directors’ emoluments are disclosed on pages 66 to 70. The Group considers key management to be the Directors only.
Employee profit sharing of £5.8 million (2018: £6.3 million) is included in the above and comprises sales commission and bonuses.
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NOTES TO THE FINANCIAL STATEMENTS
For the 52 weeks ended 28 September 2019
7 Finance Investment and Finance Costs
Finance income
Bank interest receivable
Finance costs
Interest on bank loans and overdrafts
Other interest
52 weeks
ended
28 September
2019
£’000
52 weeks
ended
29 September
2018
£’000
15
15
(871)
(2)
(873)
25
25
(1,028)
(44)
(1,072)
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.
8 Taxation
Current tax – charge for the period
Current tax – adjustment in respect of previous periods
Deferred tax – credit for the period (note 20)
Deferred tax – adjustment in respect of previous periods (note 20)
52 weeks
ended
28 September
2019
£’000
52 weeks
ended
29 September
2018
£’000
2,602
(101)
(65)
(39)
2,397
3,115
(11)
(94)
19
3,029
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% (2018: 19.0%)
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
Tax effect of adjustment in respect of prior periods
Tax expense for the period
52 weeks
ended
28 September
2019
£’000
52 weeks
ended
29 September
2018
£’000
12,475
2,370
74
1
14
(27)
–
105
(140)
2,397
12,688
2,411
55
77
48
21
(22)
431
8
3,029
In the period, the Group has recognised a corporation tax credit directly to equity of £64,064 (2018: £11,899) and a deferred tax
debit to equity of £5,961 (2018: £21,184) in relation to the Group’s share option schemes.
100
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STRATEGIC REPORT
OUR GOVERNANCE
OUR FINANCIALS
ADDITIONAL INFORMATION
9 Dividends
Amounts recognised as distributions to equity holders in the period:
Final dividend for the period ended 29 September 2018 of £0.023 (2017: £0.023) per share
Interim dividend for the period ended 29 September 2019 of £0.011 (2018: £0.011) per share
Proposed final dividend for the period ended 28 September 2019 of £0.023 (2018: £0.023) per share
52 weeks
ended
28 September
2019
£’000
52 weeks
ended
29 September
2018
£’000
4,483
2,140
6,623
4,483
4,439
2,127
6,566
4,447
The proposed final dividend for the period ended 28 September 2019 is subject to approval by shareholders at the Annual General
Meeting and has not been included as a liability in these financial statements.
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
28 September
2019
52 weeks
ended
29 September
2018
196,441,003 196,439,403
(3,292,316)
194,678,197 193,147,087
2,746,297
196,223,855 195,893,384
(1,762,806)
1,545,658
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 1 October 2017
At 29 September 2018
Acquisition of Strata Tiles Limited (note 4)
At 28 September 2019
Accumulated impairment losses
At 1 October 2017
At 29 September 2018
Impairment losses in the period
At 28 September 2019
Carrying amount
At 28 September 2019
At 29 September 2018
£’000
1,461
1,461
1,888
3,349
–
–
245
245
3,104
1,461
The balance of goodwill remaining is the carrying value that arose on the acquisition of Parkside Ceramics Limited in 2017 and Strata
Tiles Limited in 2019. The balance relates to two (2018: two) Cash-Generating Units (CGUs). Goodwill of £1,216,000 (Parkside
Ceramics Limited) relates to one CGU, with the balance of £1,888,000 (Strata Tiles Limited) relating to another CGU.
The Group tests goodwill annually for impairment or more frequently if there are indications that goodwill might be impaired.
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NOTES TO THE FINANCIAL STATEMENTS
For the 52 weeks ended 28 September 2019
11 Goodwill continued
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 of 1.3% 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 14.8% (2018: 14.3%).
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.
An impairment of £245,000 in relation to Surface Coatings Limited has been identified in the current period as a result of the annual test
for impairment. This reduces the carrying amount to nil.
12 Intangible Assets
Cost
At 1 October 2017
Additions
At 29 September 2018
Additions
Acquired on business combination
Transferred from property, plant and equipment
At 28 September 2019
Accumulated amortisation and impairment
At 1 October 2017
Amortisation charge for the period
At 29 September 2018
Amortisation charge for the period
Transferred from property, plant and equipment
At 28 September 2019
Carrying amount
At 28 September 2019
At 29 September 2018
Brand
£’000
Customer
relationships
£’000
Software
£000
Total
£’000
229
–
229
–
835
–
1,064
–
23
23
64
–
87
977
206
200
–
200
–
842
–
1,042
–
67
67
117
–
184
858
133
–
–
–
563
–
457
1,020
–
–
–
64
128
192
828
–
429
–
429
563
1,677
457
3,126
–
90
90
245
128
463
2,663
339
The brand and customer relationships additions occurred on the acquisition of Parkside Ceramics Limited on 31 August 2017 and the
acquisition of Strata Tiles Limited on 18 April 2019.
The brands are amortised over their estimated useful life of 10 years. Customer relationships are amortised over their estimated useful lives
of 3, 5 and 10 years. Amortisation is included within administrative costs within the Consolidated Statement of Financial Performance.
Of the additions to software, £457,000 was transferred from property, plant and equipment additions and £128,000 of accumulated
depreciation has been transferred to amortisation (Note 13a).
102
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STRATEGIC REPORT
OUR GOVERNANCE
OUR FINANCIALS
ADDITIONAL INFORMATION
13a Property, Plant and Equipment
Cost
At 1 October 2017
Additions
Disposals
At 29 September 2018
Additions
Disposals
Transferred to intangibles
Acquisition of subsidiary undertakings
At 28 September 2019
Accumulated depreciation
At 1 October 2017
Charge for the period
Provision for impairment
Eliminated on disposals
At 29 September 2018
Charge for the period
Reversal of impairment
Eliminated on disposals
Transferred to intangibles
At 28 September 2019
Carrying amount
At 28 September 2019
At 29 September 2018
Land and buildings
Freehold and
long leasehold
£’000
Short
leasehold
£’000
Fixtures and
fittings
£’000
Motor
vehicles
£’000
18,988
–
(3,481)
15,507
–
(155)
–
–
15,352
2,536
267
–
(251)
2,552
230
–
(21)
–
2,761
1,449
160
(5)
1,604
313
(94)
–
–
1,823
1,070
62
–
(2)
1,130
89
–
(91)
–
1,128
91,651
4,892
(1,416)
95,127
6,929
(9,616)
(457)
14
91,997
54,182
6,644
958
(1,165)
60,619
6,792
(246)
(8,702)
(128)
58,335
126
–
(51)
75
–
(1)
–
–
74
84
10
–
(35)
59
6
–
(1)
–
64
Total
£’000
112,214
5,052
(4,953)
112,313
7,242
(9,866)
(457)
14
109,246
57,872
6,983
958
(1,453)
64,360
7,117
(246)
(8,815)
(128)
62,288
12,591
12,955
695
474
33,662
34,508
10
16
46,958
47,953
Freehold land and buildings includes £4,104,000 of freehold land (2018: £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 (2018: £nil). Contractual commitments for the
acquisition of property, plant and equipment are detailed in note 29.
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 have provided for the net book value of the assets in relation to the seven stores
(2018: eleven) that are impaired. The carrying value of these assets has been fully provided for in the period, with a reduction in the
provision of £246,000 in the period (2018: £958,000 increase in provision) included within other operating expenses.
All assets classified as property, plant and equipment are UK based.
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NOTES TO THE FINANCIAL STATEMENTS
For the 52 weeks ended 28 September 2019
13b Investment Properties
At fair value
At 1 October 2017
Additions
Fair value adjustment
At 29 September 2018
Additions
Fair value adjustment
At 28 September 2019
£’000
–
2,884
(1,651)
1,233
21
(21)
1,233
Investment properties relate to one freehold office building that is not occupied by the Group, and is UK based. 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 adjustment
of £21,000 (2018: £1,651,000 loss) 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 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 only financial statements.
15 Trade and Other Receivables
Amounts falling due within one year:
Amounts receivable for the sale of goods
Allowance for expected credit losses (calculated under IFRS 9)
Allowance for doubtful debts (calculated under IAS 39)
Other debtors and prepayments
–- Rent and rates
– Other
2019
£’000
1,310
(26)
–
4,435
2,423
8,142
2018
£’000
899
–
(24)
4,530
3,307
8,712
The Directors consider that the carrying amount of trade and other receivables at 28 September 2019 and 29 September 2018
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 expected credit losses/doubtful debts) held by the Group at 28 September 2019 amounted to £1.3 million
(2018: £0.9 million). These amounts mainly relate to sundry trade account generated sales. In relation to these sales, the average credit
period taken is 58 days (2018: 48 days) and no interest is charged on the receivables.
The Group will write off, either partially or in full, the gross carrying amount of a financial asset when there is no realistic prospect of
recovery. This is usually the case when it is determined that the debtor does not have the assets or sources of income that could generate
sufficient cash flows to repay the amounts subject to the write-off.
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.
104
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OUR FINANCIALS
ADDITIONAL INFORMATION
15 Trade and Other Receivables continued
Included in the Group’s trade receivable balance are debtors with a carrying amount of £nil (2018: £nil) 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.
Ageing of past due but not impaired receivables:
Greater than 60 days
2019
£’000
–
2018
£’000
–
The allowance for expected credit losses/allowance for doubtful debts was £26,000 by the end of the period (2018: £24,000). Given
the minimal receivable balance, the Directors believe that there is no further credit provision required in excess of the allowance
for expected credit losses/allowance for doubtful debts.
The Group applies the IFRS 9 simplified approach to measuring expected credit losses which uses a lifetime expected loss allowance for
all trade and other receivables and accrued income.
The allowance for expected credit losses/allowance for doubtful debts includes £12,000 relating to individually impaired trade
receivables (2018: £10,000) 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 net of bank overdrafts, where there is a right of
offset, 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
2019
£’000
18,049
183
515
18,747
2018
£’000
11,349
1,819
674
13,842
Cash and cash equivalents are in the scope of the expected credit loss model under IFRS 9; however, balances are held with recognised
financial institutions and therefore the expected impairment loss is considered to be minimal.
17 Trade and Other Payables
Amounts falling due within one year
Trade payables
Other payables
Accruals
Deferred income
Contract liabilities
2019
£’000
17,394
7,142
14,622
1,013
3,165
43,336
Restated
2018
£’000
16,828
4,172
12,449
1,236
3,963
38,648
Trade payables and accruals principally comprise amounts outstanding for trade purchases and ongoing costs. The 2018 amounts have
been restated to reclassify customer deposits from trade payables to contract liabilities as a result of the adoption of IFRS 15. The average
credit period taken for trade purchases is 58 days (2018: 59 days). No interest is charged on these payables.
The Directors consider that the carrying amount of trade payables at 28 September 2019 and 29 September 2018 approximates to their
fair value on the basis of discounted cash flow analysis.
Accruals includes provisions for customer returns of £1,078,000 (2018: £679,000). Prior to IFRS 15, provisions for customer returns
were presented on a net basis, including assets for the value of goods expected to be returned. Following the adoption of IFRS 15, they
are now shown on a gross basis, with the asset element included in Inventories. See Note 1 for full impact of the transition to IFRS 15.
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NOTES TO THE FINANCIAL STATEMENTS
For the 52 weeks ended 28 September 2019
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
2019
£’000
2018
£’000
29,762
29,766
2019
£’000
2018
£’000
–
–
30,000
30,000
(238)
29,762
122
29,884
–
–
30,000
30,000
(234)
29,766
85
29,851
The Directors consider that the carrying amount of the bank loan at 28 September 2019 and 29 September 2018 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 1 October 2017
Repayment of bank loan
Issue costs incurred in the year
Amortisation of issue costs
As at 29 September 2018
Repayment of bank loan
Drawdown of bank loan
Issue costs incurred in the year
Amortisation of issue costs
As at 28 September 2019
2019
%
2.36
2018
%
2.27
Long-term
borrowings
£’000
Unamortised
issue costs
£’000
35,000
(5,000)
–
–
30,000
(5,000)
5,000
–
–
30,000
(193)
–
(255)
214
(234)
–
–
(102)
98
(238)
During the year the Group extended its revolving credit facility from 29 June 2021 to 29 June 2022 and increased the facility from £35.0
million to £39.0 million. As at the financial period end, £30.0 million of this was drawn (2018: £30.0 million). The loan facility contains
financial covenants which are tested on a bi-annual basis. The Group did not breach any covenants in the period.
At 28 September 2019, the Group had available £9.0 million (2018: £5.0 million) of undrawn committed banking facilities.
106
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STRATEGIC REPORT
OUR GOVERNANCE
OUR FINANCIALS
ADDITIONAL INFORMATION
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 2018. 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
Amortised cost (including cash and cash equivalents)
Fair value through profit and loss
Financial liabilities
Amortised cost
Financial assets
Loans and receivables (including cash and cash equivalents)
Fair value through profit and loss
Financial liabilities
Amortised cost
Carrying
value and fair
value
2019
£’000
20,031
89
69,042
Carrying
value and fair
value
2018
£’000
14,717
168
63,300
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.
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NOTES TO THE FINANCIAL STATEMENTS
For the 52 weeks ended 28 September 2019
19 Financial Instruments continued
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
Foreign Currency Sensitivity Analysis
Assets
Liabilities
2019
£’000
636
421
2018
£’000
686
1,822
2019
£’000
3,157
360
2018
£’000
3,891
1,453
The Group is mainly exposed to the currency of China, India 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.
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
Currency Derivatives
2019
£’000
229
6
(280)
(7)
2018
£’000
291
34
(356)
(41)
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
2019
£’000
2018
£’000
10,600
10,582
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 2019 the fair value of the Group’s currency derivatives is a gain of £88,514 within other debtors and prepayments
(note 15) (2018: gain of £167,699 within other debtors and prepayments (note 15)).
Gains of £99,957 have been included in cost of sales during the period (2018: £291,845 gain).
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 has 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.
108
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OUR FINANCIALS
ADDITIONAL INFORMATION
19 Financial Instruments continued
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
The Group’s sensitivity to interest rates mainly relates to the revolving credit facility.
Credit Risk Management
50 basis points increase in
interest rates
50 basis points decrease in
interest rates
2019
£’000
(143)
2018
£’000
(164)
2019
£’000
143
2018
£’000
164
Credit risk refers to the risk that a counterparty will default on its contractual obligations, resulting in financial loss to the Group.
Management has considered the counterparty risk associated with the cash and derivative balances and does not consider there to be
a material risk. The Group has a policy of only dealing with creditworthy counterparties. 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. 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 expected credit losses, represents the Group’s
maximum exposure to credit risk without taking account of the value of any collateral obtained.
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
2.36% (2018: 2.27%) 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.
2019
Non-interest bearing
Variable interest rate instruments
2018 Restated
Non-interest bearing
Variable interest rate instruments
Less than
1 month
£’000
39,158
59
Less than
1 month
£’000
33,449
74
1–3
months
£’000
–
119
1–3
months
£’000
–
151
3 months
to 1 year
£’000
–
539
3 months
to 1 year
£’000
–
30,377
1–5
years
£’000
–
31,251
1–5
years
£’000
–
–
Total
£’000
39,158
31,968
Total
£’000
33,449
30,602
The Group is financed through a £39 million (2018: £35 million) revolving credit facility, of which £30 million (2018: £30 million) was
utilised. At the balance sheet date the total unused amount of financing facilities was £9 million (2018: £5 million). The Group expects to
meet its other obligations from operating cash flows and proceeds of maturing financial assets. The 2018 amounts have been restated to
reclass customer deposits from trade payables to contract liabilities as a result of the adoption of IFRS 15 (see note 17).
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NOTES TO THE FINANCIAL STATEMENTS
For the 52 weeks ended 28 September 2019
19 Financial Instruments continued
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.
2019
Foreign exchange forward contracts payments
Foreign exchange forward contracts receipts
2018
Foreign exchange forward contracts payments
Foreign exchange forward contracts receipts
Fair Value of Financial Instruments
Less than
1 month
£’000
(1,397)
1,458
Less than
1 month
£’000
(1,885)
1,969
1–3
months
£’000
(3,161)
3,226
1–3
months
£’000
(3,945)
4,016
3 months
to 1 year
£’000
(6,042)
6,005
3 months
to 1 year
£’000
(4,752)
4,764
1–5
years
£’000
–
–
1–5
years
£’000
–
–
5+
years
£’000
–
–
5+
years
£’000
–
–
Total
£’000
(10,600)
10,689
Total
£’000
(10,582)
10,749
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 (2018: 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).
20 Provisions
Onerous lease provision
Business simplification provision
Dilapidations provision
Redemption liability
Current
Non-current
At 30 September 2018
Created in the year
Utilisation of provision
Release of provision in the period
At 28 September 2019
2019
£’000
2,990
–
2,008
99
5,097
1,235
3,862
5,097
Business
simplification
provision
£’000
Onerous lease
provision
£’000
Dilapidations
provision
£’000
Redemption
liability
£’000
128
–
(128)
–
–
1,777
2,270
(812)
(245)
2,990
2,687
–
(309)
(370)
2,008
–
99
–
–
99
2018
£’000
1,777
128
2,687
–
4,592
1,197
3,395
4,592
Total
£’000
4,592
2,369
(1,249)
(615)
5,097
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 (with the majority being less than 4 years). 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 (average of 12 years which includes an estimation
of renewals). The business simplification provision related 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 discount rate
used to calculate the present value of property provisions is 5% (2018: 5%). A 10% reduction in discount rate would lead to an increase
in property provisions of £80,000 (2018: £60,000).
110
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STRATEGIC REPORT
OUR GOVERNANCE
OUR FINANCIALS
ADDITIONAL INFORMATION
20 Provisions continued
The movements in the onerous lease provision are shown within “Impairment of property, plant and equipment and movement in onerous
lease provision” in the Highlights section of the Annual Report.
Provisions include £99,000 redemption liability in relation to the purchase of Strata Tiles Limited, payable in 2021, and therefore have
been classed as non-current. The liability is valued at fair value based on forecast attainment of performance conditions associated with
the payment of the liability.
The following are the deferred tax liabilities/(assets) recognised by the Group and movements thereon during the current and prior
reporting period:
As at 1 October 2017
(Credit)/charge to income
Charge in respect of previous periods
Charge to equity
As at 29 September 2018
Recognised on acquisition of subsidiary
(Credit)/charge to income
(Credit)/charge in respect of previous periods
Charge to equity
As at 28 September 2019
Accelerated
tax
depreciation
£’000
Share-based
payments
£’000
Stock
provisions
£’000
Intangible
assets
£’000
1,481
(242)
19
–
1,258
–
(182)
(58)
–
1,018
(445)
155
–
21
(269)
–
139
–
6
(124)
(38)
–
–
–
(38)
(7)
11
27
–
(7)
73
(7)
–
–
66
285
(33)
(8)
–
310
Total
£’000
1,071
(94)
19
21
1,017
278
(65)
(39)
6
1,197
Changes to the UK corporation tax rates were substantively enacted as part of Finance Bill 2017 (on 6 September 2016). These include
reductions to the main rate to reduce the rate to 17% from 1 April 2020. Deferred taxes at the balance sheet date have been measured
using these enacted tax rates and reflected in these financial statements.
21 Share Capital
Allotted, issued and fully paid ordinary shares of 3.33p (2018: 3.33p)
At the start of the period
Issued in the period
At the end of the period
196,440,971 196,437,298
–
3,673
196,440,971 196,440,971
2019
Shares
2018
Shares
2019
£’000
6,548
–
6,548
2018
£’000
6,548
–
6,548
During the period the Group issued nil (2018: 3,673) ordinary shares with a nominal value of £nil (2018: £122) under share option
schemes for an aggregate cash consideration of £nil (2018: £3,560).
The authorised share capital of the Group is £8,000,000 (2018: £8,000,000), which consists of 240,000,000 ordinary shares
(2018: 240,000,000).
The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share
at meetings of the Company. All shares rank equally with regard to the Company’s residual assets.
22 Share Premium
At start of the period
Premium on issue of new shares
At end of the period
2019
£’000
2,490
–
2,490
2018
£’000
2,487
3
2,490
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NOTES TO THE FINANCIAL STATEMENTS
For the 52 weeks ended 28 September 2019
23 Own Shares
At start of the period
Disposed of on issue in the period
At end of the period
2019
£’000
(3,750)
2,202
(1,548)
2018
£’000
(4,411)
661
(3,750)
A subsidiary of the Group holds 1,518,694 (2018: 3,090,030) shares with a nominal value of £1,547,603 acquired for an average
price of £1.02 per share (2018: £3,749,570 acquired for an average price of £1.21 per share) and therefore these have been classed
as own shares.
24 Merger Reserve
At start and end of the period
2019
£’000
(399)
2018
£’000
(399)
The merger reserve arose on pre-2006 acquisitions. The Directors do not consider this to be distributable as at 28 September 2019
(2018: same).
25 Share-Based Payment Reserve
At start of the period
Credit to equity for equity-settled share-based payments
At end of the period
2019
£’000
3,945
17
3,962
2018
£’000
3,921
24
3,945
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 28 September 2019 (2018: same).
26 Capital Redemption Reserve
At start and end of the period
2019
£’000
2018
£’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 28 September 2019 (2018: same).
27 Accumulated Losses
At 1 October 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
Dividends
Deferred and current tax on Sharesave scheme taken directly to equity
Own shares issued in the period
Net profit for the period attributable to owners of Topps Tiles Plc
At 28 September 2019
£’000
(4,952)
(6,566)
(10)
(661)
9,659
(2,530)
(6,623)
58
(2,202)
10,119
(1,178)
112
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STRATEGIC REPORT
OUR GOVERNANCE
OUR FINANCIALS
ADDITIONAL INFORMATION
28 Non-Controlling Interest
At start of the period
Non-controlling interest on business combination
Net loss for the period distributable to non-controlling interests
At end of the period
29 Financial Commitments
A) Capital Commitments
2019
£’000
–
39
(41)
(2)
2018
£’000
–
–
–
–
At the end of the period there were capital commitments contracted of £nil (2018: £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 £1,063,000 (2018: £918,000). At the period end, the Group holds outstanding contributions of £221,115 (2018:
£143,485).
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 £26,333,430 (2018: £25,489,488)
which includes property service charges of £954,713 (2018: £911,000).
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
2019
2018
Land and
buildings
£’000
23,037
72,606
38,311
133,954
Other
£’000
1,745
2,563
–
4,308
Land and
buildings
£’000
23,116
75,500
44,756
143,372
Other
£’000
1,572
2,775
15
4,362
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 (2018: ten) and rentals are fixed for an average of five years (2018: five).
Minimum future sub-lease payments
– Within 1 year
– Within 2-5 years
– After 5 years
2019
577
1,919
1,652
4,148
2018
452
1,306
428
2,186
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NOTES TO THE FINANCIAL STATEMENTS
For the 52 weeks ended 28 September 2019
30 Share-based Payments
The Group operates three (2018: three) share option schemes in relation to Group employees, being the SAYE scheme, the 2013 Long
Term Incentive Plan and the 2020 Long Term Incentive Plan.
Employee Share Purchase Plans
Employee share purchase plans are open to almost all employees and there are no specific vesting conditions other than the requirement
for continued employee service. The share plans 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 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
Forfeited during the period
Exercised during the period
Outstanding at end of the period
Exercisable at end of the period
2019
Weighted
average
exercise price
£
2018
Restated
Weighted
average
exercise price
£
Number of
share options
0.78
3,533,394
0.51
2,130,588
0.92
(375,174)
0.73 (1,416,419)
0.51
(3,673)
0.61
3,868,716
1.27
353,507
0.91
0.64
0.98
0.83
0.98
0.78
0.92
Number of
share options
3,868,716
3,195,674
(356,341)
(1,953,543)
(2,352)
4,752,154
169,344
The number of share options outstanding as at the beginning of the period has been restated from 3,876,308 to 3,868,716 to adjust for
7,592 share options which were forfeited in 2018 but were reported as shares under option as at the period ending 29 September 2018.
The 2018 movement in the number of options have been restated so that the number of options which were disclosed as expired
during the previous reporting period have been restated so that the number forfeited during the period is separately disclosed. This more
accurately meets the requirements of IFRS 2.45(b) based on the conditions related to those movements. This has also caused a restatement
to the average weighted price of the expired options.
During the financial period, the Group granted 3,195,674 share options under the existing share option scheme due to vest in April
2022 with a fair value of £446,052.
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
— %
— %
64.70
51.00
30.69
3.20
0.82
5.26
Expected volatility was determined by calculating the historical volatility of the Group’s share price over the previous three years (2018:
three years).
The weighted average remaining contractual life of the share options outstanding at the end of the period is 2.38 years (2018: 2.30
years).
The exercise price for share options under the share save scheme range from 47 pence to 127 pence.
The weighted average share price at the date of exercise of options exercised during the year ended 28 September 2019 is 69 pence
(2018: 88.5 pence).
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OUR FINANCIALS
ADDITIONAL INFORMATION
30 Share-based Payments continued
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 which are detailed in the Remuneration Report.
Movements in the 2013 Long Term Incentive Plan options are summarised as follows:
Outstanding at beginning of the period
Issued during the period
Forfeited during the period
Exercised during the period
Outstanding at end of the period
Exercisable at end of the period
2019
Weighted
average
exercise price
£
–
–
–
–
–
–
Number of
share options
7,973,849
2,885,557
(1,496,684)
(1,571,336)
7,791,386
951,365
Number of
share options
6,433,257
3,099,142
(610,085)
(948,465)
7,973,849
2,526,034
2018
Weighted
average
exercise price
£
–
–
–
–
–
–
During the financial period, the Group granted 14,497 share options under the existing share option scheme due to vest in December
2018 with a fair value of £8,819.
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
— %
— %
64.00
nil
28.35
1.00
0.72
5.31
During the financial period, the Group granted 53,000 share options under the existing share option scheme due to vest in December
2020; 40,599 of these shares were granted in December 2018 with a fair value of £23,415.
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 12,401 in June 2019 with a fair value of £7,618.
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
— %
— %
64.0
nil
31.20
2.00
0.74
5.31
66.20
nil
28.48
1.50
0.62
5.14
During the financial period, the Group granted 2,818,060 share options under the existing share option scheme due to vest in
December 2021.
The Group granted 2,811,140 of these shares in December 2018 with a fair value of £1,537,441.
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NOTES TO THE FINANCIAL STATEMENTS
For the 52 weeks ended 28 September 2019
30 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 6,920 share options in June 2019 with a fair value of £4,038.
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
— %
— %
64.00
nil
30.91
3.00
0.78
5.31
66.20
nil
30.64
2.5
0.59
5.14
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 weighted average remaining contractual life of share options outstanding at the end of the period is 7.96 years (2018: 7.52 years).
The weighted average share price at the date of exercise of options exercised during the year ended 28 September 2019 is 64.78
pence (2018: 76.73 pence).
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 which are detailed in the Remuneration Report.
Movements in 2020 Long Term Incentive Plan options are summarised as follows:
Outstanding at beginning of the period
Forfeited during the period
Outstanding at end of the period
2019
2018
Weighted
average
exercise price
£
–
–
–
Weighted
average
exercise price
£
–
–
–
Number of
share options
3,061,262
(404,432)
2,656,830
Number of
share options
2,656,830
(254,182)
2,402,648
The weighted average remaining contractual life of share options outstanding at the end of the period is 6.68 years (2018: 7.64 years)
In total, the Group recognised a total expense of £17,069 (2018: £23,531 expense) relating to share-based payments.
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STRATEGIC REPORT
OUR GOVERNANCE
OUR FINANCIALS
ADDITIONAL INFORMATION
31 Contingent Liabilities
The Group has an open tax enquiry with HMRC, dating back to 2009 relating to EU loss relief in relation to the closed Dutch retail
business. Historically the Group, supported by external professional advice, had been of the opinion that the prospect of needing to settle
on this matter was remote. HMRC have recently hardened their stance and, given updated professional advice received, the Directors
believe that it is possible, and not probable, that the claim will be settled and therefore has been disclosed as a contingent liability. The
potential undiscounted amount of the total payments that the Group could be required to make if there was an adverse decision related
to this matter is approximately £0.9 million.
32 Related Party Transactions
S.K.M. Williams is a related party by virtue of his close family relationship with key management, with a 10.5% shareholding
(20,593,950 ordinary shares) in the Group’s issued share capital (2018: 10.5% shareholding of 20,593,950 ordinary shares).
At 28 September 2019, S.K.M. Williams was the landlord of two properties leased to Multi Tile Limited, a trading subsidiary of
Topps Tiles Plc, for £122,000 (2018: two properties for £119,000) per annum.
No amounts were outstanding with S.K.M. Williams at 28 September 2019 (2018: £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 £1.2 million (2018:
£1.1 million) including share-based payments of £nil (2018: £nil). Further information about the remuneration of the individual Directors is
provided in the Remuneration Report on pages 54 to 71.
The Group’s defined contribution pension scheme is administered by Legal and General. During the year the Group made contributions
of £1,063,000 (2018: £918,000) and at year end the Group has outstanding contributions of £221,115 (2018: £143,485).
TOPPS TILES PLC ANNUAL REPORT AND ACCOUNTS FOR THE 52 WEEK PERIOD ENDED 28 SEPTEMBER 2019 117
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COMPANY BALANCE SHEET
As at 28 September 2019
Fixed assets
Investments
Current assets
Debtors
Cash at bank and in hand
Creditors: amounts falling due within one year
Net current assets
Non-current liabilities
Provisions
Total liabilities
Net assets
Capital and reserves
Called-up share capital
Share premium account
Share-based payment reserve
Capital redemption reserve
Other reserve
Profit and loss account
Equity shareholders’ funds
Notes
4
5
6
7
8
Restated (see
notes 5 and 6)
2018
£’000
2019
£’000
7,154
3,420
133,332
5,929
112,782
–
(79,343)
59,918
(52,632)
60,150
(99)
(79,442)
66,973
–
(52,632)
63,570
6,548
2,490
4,496
20,359
6,200
26,880
66,973
6,548
2,490
4,479
20,359
6,200
23,494
63,570
The Company made a profit after tax for the financial period ended 28 September 2019 of £10,009,000 (2018: £15,792,000).
The financial statements of Topps Tiles Plc, Companies House number 3213782, were approved by the Board of Directors on
26 November 2019 and signed on its behalf by:
Matthew Williams
Director
Rob Parker
Director
118
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STRATEGIC REPORT
OUR GOVERNANCE
OUR FINANCIALS
ADDITIONAL INFORMATION
COMPANY STATEMENT
OF CHANGES IN EQUITY
For the 52 weeks ended 28 September 2019
Company
Balance at 1 October 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
Profit for the period
Dividend paid to equity shareholders
Credit to equity for equity-settled
share-based payments
Balance at 28 September 2019
Share
capital
£’000
6,548
–
–
–
–
6,548
–
–
–
6,548
Share
premium
£’000
2,487
–
–
3
–
2,490
–
–
–
2,490
Share-based
payment
reserve
£’000
Capital
redemption
reserve
£’000
4,455
–
–
–
24
4,479
–
–
17
4,496
20,359
–
–
–
–
20,359
–
–
–
20,359
Other
reserves
£’000
6,200
–
–
–
–
6,200
–
–
–
6,200
Profit
and loss
account
£’000
14,268
15,792
(6,566)
–
–
23,494
10,009
(6,623)
Total
£’000
54,317
15,792
(6,566)
3
24
63,570
10,009
(6,623)
–
26,880
17
66,973
The other reserves comprise an unrealised gain arising on the disposal of certain trademarks to a subsidiary company. At 28 September
2019, the Directors consider the other reserve of £6,200,000 to remain non-distributable.
The Directors consider £nil (2018: £nil) of profit and loss account reserves to be non-distributable at 28 September 2019.
TOPPS TILES PLC ANNUAL REPORT AND ACCOUNTS FOR THE 52 WEEK PERIOD ENDED 28 SEPTEMBER 2019 119
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NOTES TO THE COMPANY
FINANCIAL STATEMENTS
For the 52 weeks ended 28 September 2019
1 General Information and Basis of Accounting
Topps Tiles Plc is a private limited company, limited by shares, incorporated and domiciled in the United Kingdom under the Companies
Act 2006. The address of the registered office is given on page 41.
The financial statements of Topps Tiles Plc have been prepared in accordance with Financial Reporting Standard 101 Reduced Disclosure
Framework (FRS 101) issued by the Financial Reporting Council (FRC).
During the year, IFRS 9 and IFRS 15 were adopted in line with the requirements of accounting standards. Both standards did not have
a material impact on the financial statements of the Company.
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
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 financial statements 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
29 September 2018.
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 for the foreseeable future. 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 Strategic Report, references to 2019 mean “at 28 September 2019” or the
52 weeks then ended; references to 2018 mean “at 29 September 2018” or the 52 weeks then ended.
(C) Taxation
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) Investments
Fixed asset investments are shown at cost less provision for impairment.
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OUR FINANCIALS
ADDITIONAL INFORMATION
2 Accounting Policies continued
(E) 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), financial
assets “at fair value through other comprehensive income” (FVOCI), and financial assets carried at “amortised cost”. The classification of
financial assets under IFRS 9 is generally based on the business model in which a financial asset is managed and its contractual cash flow
characteristics.
Trade and Other Receivables
Trade and other receivables that have fixed or determinable payments that are not quoted in an active market are initially recognised at
fair value and then carried 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. The Company assesses on a forward-looking basis
the expected credit losses associated with its financial assets carried at amortised cost.
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 Company’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. The
Company applies the IFRS 9 simplified approach to measuring expected credit losses which uses a lifetime expected loss allowance
for financial assets.
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. The Company will write off,
either partially or in full, the gross carrying amount of a financial asset when there is no realistic prospect of recovery. This is usually the
case when it is determined that the debtor does not have the assets or sources of income that could generate sufficient cash flows to repay
the amounts subject to the write-off.
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.
Cash and Cash Equivalents
Cash and cash equivalents comprise cash in 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.
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NOTES TO THE COMPANY
FINANCIAL STATEMENTS
For the 52 weeks ended 28 September 2019
2 Accounting Policies continued
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 that are classified as FVTPL relate to derivatives that are 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.
(F) Dividends
Dividends payable and receivable are only included in the financial statements in the year that they have been formally and irrevocably
agreed, this is usually by reference to the board resolution agreeing the payment on the dividend.
(G) Finance Income and Finance Costs
Interest receivable or payable is recognised on accrual basis.
(H) Share-based Payments
The Group has applied the requirements of IFRS 2 Share-based Payments.
The Company 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 Company’s estimate of shares that will
eventually vest. Fair value is measured by use of the Black–Scholes model.
The Company provides employees with the ability to purchase the Company’s ordinary shares at 80% of the current market value through
the operation of its Sharesave scheme. The Company 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.
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OUR FINANCIALS
ADDITIONAL INFORMATION
2 Accounting Policies continued
(I) 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 Company considers the judgement as to whether investments or balances owed by subsidiary undertakings are impaired. Where
an indication of impairment is identified the estimation of recoverable value requires estimation of the recoverable value of the cash
generating units (CGUs)
The Directors have concluded that there are no other critical areas of accounting judgement or any 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 28 September 2019 of £10,009,000 (2018: £15,792,000).
The auditors’ remuneration for services to the Company was £49,000 for audit-related work (2018: £40,000 for audit-related work).
Fees relating to non-audit work totalled £nil (2018: £nil); see note 5 to the Group financial statements for further details.
The Company had no employees other than the Directors (2018: same), whose remuneration is detailed on page 65.
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NOTES TO THE COMPANY
FINANCIAL STATEMENTS
For the 52 weeks ended 28 September 2019
4 Investments
Cost at 1 October 2017*
Movement in share options granted to employees
Cost at 29 September 2018
Acquisition of subsidiary
Movement in share options granted to employees
Cost at 28 September 2019
Impairment at 1 October 2017*, at 29 September 2018* and at 28 September 2019
Net book value at 28 September 2019
Net book value at 29 September 2018
Restated
£’000
6,113
24
6,137
3,717
17
9,871
(2,717)
7,154
3,420
* The opening figures have been restated to present the gross cost of investment in subsidiaries and provisions for impairment separately. There was no impact on the net
investment value.
The following were subsidiaries that the Company has investments in, both as at 28 September 2019 and 29 September 2018, with the
exception of Strata Tiles Limited as the company was acquired on 18 April 2019:
Subsidiary undertaking
% of issued
shares held Principal activity
100%
Topalpha Limited†
100%
Topalpha (Warehouse) Limited
100%
Topalpha (Stoke) Limited
100%
Tiles4less Limited†
100%
Topps Tiles (UK) Limited
100%
Topps Tiles Holdings Limited†
100%
Topps Tile Kingdom Limited
100%
Multi Tile Limited
100%
Topps Tiles Distribution Limited
100%
Multi-Tile Distribution Limited
Topps Tiles I.P Company Limited
100%
Topps Tiles Employee Benefit Trust† 100%
80%
Strata Tiles Limited†
100%
Parkside Ceramics Limited†
† Held directly by Topps Tiles Plc
Property management and investment
Property management and investment and provision of warehousing services
Property management and investment
Intermediate holding company
Retail and wholesale of ceramic tiles, wood flooring and related products
Intermediate holding company
Intermediate holding company
Retail and wholesale of ceramic tiles, wood flooring and related products
Wholesale and distribution of ceramic tiles, wood flooring and related products
Intermediate holding company
Ownership and management of Group intellectual property
Employee benefit trust
Architectural ceramic sales and distribution
Commercial distribution of ceramic and porcelain tiles, natural stone and related products
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 Parkside Barnsdale Way, Enderby, Leicester, England, LE19 1SN.
124
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OUR FINANCIALS
ADDITIONAL INFORMATION
5 Debtors: Amounts Falling Due Within One Year
Amounts owed by subsidiary undertakings
Prepayments
Other debtors
2019
£’000
133,267
27
38
133,332
Restated
2018
£’000
112,505
277
–
112,782
The 2018 amounts have been restated by £36,828,000 to reflect gross rather than net intercompany balances by counterparty. There is
no overall change in net assets as a result of this restatement.
Amounts owed by subsidiary undertakings are interest free, repayable on demand and not subject to any security.
6 Creditors: Amounts Falling Due Within One Year
Bank loans and overdrafts
Trade and other creditors
Amounts owed to subsidiary undertakings
Accruals
2019
£’000
–
157
78,218
968
79,343
Restated
2018
£’000
14,706
–
36,892
1,034
52,632
The 2018 amounts have been restated by £36,828,000 to reflect gross rather than net intercompany balances by counterparty. There is
no overall change in net assets as a result of this restatement.
Amounts owed to subsidiary undertakings are interest free, repayable on demand and not subject to any security.
7 Called-Up Share Capital
Allotted, issued and fully paid 196,440,971 (2018: 196,440,971) ordinary shares of 3.33p each
(2018: 3.33p)
2019
£’000
2018
£’000
6,548
6,548
During the period nil shares were purchased by Topps Tiles Employee Benefit Trust on behalf of the Group (2018: nil).
During the period the Group issued and allotted nil (2018: 3,673) ordinary shares with a nominal value of £nil (2018: £122) under
share option schemes for an aggregate cash consideration of £nil (2018: £3,560).
8 Other Reserves
The other reserves comprise an unrealised gain arising on the disposal of certain trademarks to a subsidiary company.
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04 ADDITIONAL
INFORMATION
1
Five Year Record
Notice of Annual General Meeting
Explanatory Notes to the Notice of
Annual General Meeting
The Team
Store Locations
128
129
134
137
146
1
Juno Rooms, London (Parkside)
© Leon Hargreaves
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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)
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
52 weeks
ended
28 September
2019
£’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
219,197
13,333
12,475
30,232
5.18p
3.40p
1.525
2,089
66.60p
All figures quoted are inclusive of continued and discontinued operations.
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STRATEGIC REPORT
OUR GOVERNANCE
OUR FINANCIALS
ADDITIONAL INFORMATION
NOTICE OF ANNUAL GENERAL MEETING
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 22 January 2020
at 10.00 a.m. for the following purposes:
Ordinary Business
To consider and, if thought fit, pass the following resolutions 1–12 (inclusive) which will be proposed as Ordinary Resolutions:
1. To receive the Company’s Annual Report and Financial Statements for the financial period ended 28 September 2019 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 28 September 2019 payable on 3 February
2020 to shareholders who are on the register of members of the Company on 20 December 2019.
3. To approve the Directors’ Remuneration Report for the financial period ended 28 September 2019 as set out on pages 54 to 71 of
the Company’s Annual Report and Financial Statements for that period (excluding the Directors’ Remuneration Policy set out on pages
56 to 59).
4. To approve the Directors’ Remuneration Policy as set out in pages 56 to 59 of the Company’s Annual Report and Financial Statements
for the financial period ended 28 September 2019.
5. To approve the proposed change to the rules of the Topps Tiles 2013 Long Term Incentive Plan (the “LTIP”) to extend its current
dividend equivalent provisions in the manner described in the explanatory note for this Resolution.
6. To re-elect Robert Parker as a Director of the Company.
7. To re-elect Darren Shapland as a Director of the Company.
8. To re-elect Claire Tiney as a Director of the Company.
9. To re-elect Andrew King as a Director of the Company.
10. To re-elect Keith Down as a Director of the Company.
11. To reappoint PricewaterhouseCoopers LLP as the auditors 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.
12. To authorise the Directors to determine the remuneration of the auditors.
Special Business
To consider and, if thought fit, to pass the resolutions set out below which, in the case of resolution 13 will be proposed as an Ordinary
Resolution and, in the case of resolutions 14, 15, 16 and 17, will be proposed as Special Resolutions:
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 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 £2,180,521 (such amount to be reduced by the nominal amount of
any allotments or grants made under paragraph (b) below in excess of £2,180,521); and further:
b. to allot equity securities (as defined in section 560 of the Act) up to an aggregate nominal amount of £4,361,042 (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.
14. 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 13 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 13, 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 £327,078; 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.
15. 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, in addition to the authorities and powers granted to the Directors pursuant to resolution 14, 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 13 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 £327,078; 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.
16. 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 19,644,332 (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;
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OUR FINANCIALS
ADDITIONAL INFORMATION
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.
17. THAT a general meeting other than an annual general meeting may be called on not less than 14 clear days’ notice.
Dated: 16 December 2019
Registered Office:
Thorpe Way
Grove Park
Enderby
Leicestershire
LE19 1SU
Registered Number: 3213782
Notes
By order of the Board
Alistair Hodder
Company Secretary
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 20 January 2020 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 20 January 2020 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 20 January 2020 (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 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 20 January 2020 (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 20 January 2020. 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.
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NOTICE OF ANNUAL GENERAL MEETING
10. As at the close of business on 15 December 2019, the Company’s issued share capital comprised 196,443,323 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 1,478,694 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 15 December 2019 is 194,964,629.
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 holder 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 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 3 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 (the “Articles”) and the relevant provision of the Act.
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.
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ADDITIONAL INFORMATION
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
Auditors’ 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 auditors 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;
c. a copy of the Articles; and
d. a copy of the rules of the LTIP marked with the change proposed at Resolution 5 will be available for inspection at the offices of
Aon Hewitt at The Aon Centre, The Leadenhall Building, 122 Leadenhall Street, London, EC3V 4AN during normal business hours
on any weekday (English public holidays excepted) until the close of the Annual General Meeting and at the place of the Annual
General Meeting for at least 15 minutes prior to and during the Annual General Meeting.
20. Information regarding the meeting, including the information required by section 311A of the Act, is available from the Company’s
website – http://www.toppstilesplc.com/21.
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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 22 January 2020 at 10.00 a.m.
By way of explanation of the proposed 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 28 September 2019 (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 20 December 2019. Subject to approval by the Ordinary Shareholders at the Annual General Meeting, the
dividend will be paid on 3 February 2020. 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 28 September 2019.
Resolution 3 (Directors’ Remuneration Report), Resolution 4 (Directors’ Remuneration Policy) and Resolution 5 (LTIP Scheme Rules)
The Remuneration Committee of the Board (the “Committee”) is seeking shareholder approval of the Directors’ Remuneration Report and
the new Directors’ Remuneration Policy under Resolutions 3 and 4 respectively.
The Directors are required to prepare the Directors’ Remuneration Report which is set out on pages 54 to 71 of the Annual Report and
Financial Statements for the financial period ended 28 September 2019. The Directors’ Remuneration Report comprises an annual
report detailing the remuneration of the Directors and a statement by the Chairman of the Committee. The Company is required to seek
shareholder approval in respect of the contents of this report on an annual basis. The vote is an advisory one and the entitlement of a
Director to receive remuneration is not conditional on it.
Shareholders are separately asked to approve the new Directors’ Remuneration Policy which is set out on pages 54 to 71 of the same
Annual Report and Financial Statements. It is intended that this will take effect immediately after the AGM and will replace the existing
policy that was approved by shareholders in January 2017.
It is anticipated that the new Directors’ Remuneration Policy will be in force for three years although we will closely monitor regulatory
changes and market trends and, if necessary, we may present a revised policy within that three-year period.
The new Directors’ Remuneration Policy has been developed taking into account the principles of the 2018 UK Corporate Governance
Code and the views of the Company’s major shareholders.
The Company’s existing long-term incentive arrangement for the Company’s Executive Directors and other selected senior management is
the LTIP.
Since its approval by shareholders in January 2013, the LTIP has provided for annual share-based awards ordinarily vesting following a
three-year performance period, subject to the participant’s continued service and the extent to which objective performance criteria are met
over the performance period.
The Committee has recently undertaken a review of the LTIP and concluded that certain amendments should be made to the rules to align
them to the latest best practice expectations and the long-term incentive aspects of the new Directors’ Remuneration Policy.
The changes proposed and their effect is summarised below.
It is proposed that the LTIP’s existing clawback terms (under which award value can be recovered following payment) are extended to also
cover instances of corporate failure, discovery of serious misconduct and/or error of calculation (in respect of a performance condition
result or otherwise). This change to the rules of the LTIP does not require prior shareholder approval.
Secondly, it is proposed that the terms of the LTIP be amended to include a holding period. This new rule would require executive director
participants (and such others that the Committee requires) to retain any vested shares (on an after-tax basis) acquired under the LTIP until
at least the second anniversary of the vesting of the relevant award. This change to the rules of the LTIP does not require prior shareholder
approval.
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STRATEGIC REPORT
OUR GOVERNANCE
OUR FINANCIALS
ADDITIONAL INFORMATION
The third proposed change will amend the LTIP’s current dividend equivalent provisions to also count dividends arising during an award’s
post vesting holding period (if any). Under this change, the Committee may decide that participants will receive a payment (in cash and/
or shares) of an amount equivalent to the aggregate of (i) the value of the dividends that would have been payable on an award’s vested
shares between the date of grant and the vesting of the award as per the existing terms of the LTIP and (ii) the value of the dividends that
would have been payable on an award’s vested shares between the date of vesting and the end of the award’s holding period (or if
earlier, until the exercise of the award).
The change noted at (ii) immediately above requires prior shareholder approval, which is sought under Resolution 5.
Each of the changes, if adopted, would apply in respect of awards granted on or after the AGM.
Resolutions 6 to 10
Re-election of Directors
The Company’s Articles 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 2016 UK Corporate Governance Code, retire voluntarily and offer themselves for re-election. Brief biographical details of all
Directors are given on page 41 of the Annual Report and Financial Statements. The Board considers that the contribution of each of the
Directors continues to be important to the Company’s long-term sustainable success, for the reasons given on page 45.
Resolution 11
Appointment of Auditors
This resolution concerns the reappointment of PricewaterhouseCoopers LLP as auditors until the conclusion of the next general meeting at
which accounts are laid, that is, the next Annual General Meeting.
Resolution 12
Auditors’ Remuneration
This resolution authorises the Directors to fix the auditors’ remuneration.
Special Business
Resolution 13
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 £2,180,521 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 13 in excess of £2,180,521; 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 £4,361,042 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 13.
Therefore, the maximum nominal amount of relevant securities (including equity securities) which may be allotted under this resolution is
£4,361,042.
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 14 and 15
Directors’ Power to Issue Shares for Cash
Resolution 14 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 £327,078 representing approximately 5% of the nominal value of the issued ordinary
share capital of the Company as at 15 December 2019, being the latest practicable date before publication of this notice.
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EXPLANATORY NOTES TO THE NOTICE
OF ANNUAL GENERAL MEETING
Resolution 15 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 14 and is being sought in accordance with the Pre-Emption Group’s Statement of Principles, is limited to a maximum nominal
amount of £327,078 which represents approximately 5% of the nominal value of the issued ordinary share capital of the Company as
at 15 December 2019, 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.
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 14 and 15 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 14 and 15 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 14 and 15 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 16
Authority to Purchase Shares (Market Purchases)
This resolution authorises the Board to make market purchases of up to 19,644,332 ordinary shares (representing approximately 10%
of the Company’s issued ordinary shares as at 15 December 2019, 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 15 December 2019, 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 14,499,395 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 17
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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OUR FINANCIALS
ADDITIONAL INFORMATION
THE TEAM
A
Aaron Clarkson
Aaron Gauntlett
Aaron Kiddell
Abbie Telford
Abdul Khaem
Abigail Harris
Abigail Routley
Abu Al-Mehrab
Ada Duka
Adam Clarke
Adam Crowe
Adam Devine
Adam Gaymer
Adam Gilkes
Adam Godfrey
Adam Heffer
Adam Holland
Adam Jolly
Adam Layfield
Adam Nuttall
Adam Shearsmith
Adam Simpson
Adam Smolarek
Adam Stevens
Adam Ward
Adam Woollam
Addam Marsh
Adel Tazi
Adele McMahon
Aderemi Adediran
Adrian Gower
Adrian Hoggard
Afrim Mensah
Aidan Dawes
Aidan Monahan
Airon Hurrell
Akinyemi Orekoya
Akshey Vadgama
Alan Clague
Alan Evans
Alan Lamb
Alan Saunders
Alan Sinclair
Alan Smalley
Alan Sproston
Aleksandr Lagowski
Aleksandrs Gulenkovs
Aleksejs Jefremovs
Alessandro Tedeschi
Alex Bell
Alex Bennet
Alex Di Pace
Alex Jones
Alex Watkins
Alex Whitmore
Alexander Bennett
Alexander Findley
Andrew Warne
Andrew Waterfield
Andrew Wathan
Andrew Wilkinson
Andrew Woodier
Andrius Matusevicius
Aneta Kleczek
Angela Capp
Angela Cooke
Angela George
Angela Millington
Angela Trainer
Anna Hibberd
Anna-Marie Putt
Anna-Marie Wells
Annie Dickson
Annmarie Malone
Anthony Connor
Anthony Daly
Anthony Davies
Anthony Dedman
Anthony Dolan
Anthony Gilbert
Anthony Hollick
Anthony Lyth
Anthony Molyneux
Anthony Reynolds
Anthony Saunders
Anthony Tarr
Anthony Taylor
Anthony White
Antony Belham
Antony Miles
Anub Varghese
Anwar Marshall
Aron Hoff
Aruna Mistry
Arvydas Vaistaras
Ashley Burke
Ashley Cutler
Ashley Hegarty
Ashley Humphreys
Ashley Katinas
Ashley Kiffin
Ashley Mansfield
Ashley Murray
Ashley Ryle
Ashley Somerville
Astone Davids
Athina Sesay
Atul Patel
Audrius Kolojanskas
Aurimas Lenkauskas
Azim Ahmed
Alexander Ford
Alexander Gaffney
Alexander Jackson
Alexander Marks
Alexander Miles
Alexander Walton
Alexander Williams
Alexandra Harding
Alice Cairns
Alicija Romanovska-Stefanovic
Alisha Millward
Alison Mazzei-Foster
Alistair Hodder
Allan Busby
Allan Harper
Allysha Byrne
Alnavaz Nuralah
Amanda Brogan
Amanda Green
Amanda Lyon
Amanda Plumb
Amanda Samuel
Amardeep Sanghera
Amelia Foster
Amin Ali
Amina Said
Amy Buttle
Amy McIver
Amy Pass
Amy Wilkins
Amy Wirtz
Anand Lad
Ananthan Sivanesan
Andre Osei
Andrea Moon
Andrew Bond
Andrew Carter-Riley
Andrew Collins
Andrew Cox
Andrew Davis
Andrew Habbick
Andrew Harrison
Andrew Hawker
Andrew Haynes
Andrew Hendry
Andrew King
Andrew Lee
Andrew Loudon
Andrew Oliver
Andrew Playfoot
Andrew Reilly
Andrew Roseby
Andrew Ross
Andrew Sansum
Andrew Scorgie
Andrew Sharkey
Andrew Shaw
Andrew Tibbetts
B
Barbara Connor
Barbara Smith
Barri Barnes
Barry Beaver
Barry Gilbert
Barry Hanlon
Barry Jones
Barry Montaut
Barry Stratford
Barry Theobald
Bartosz Pawelczyk
Bassam Awalli
Ben Adams
Ben Bain
Ben Barraclough
Ben Bright
Ben Howard
Ben Richmond
Benjamin Frost
Benjamin Goodey
Benjamin Hale
Benjamin Hawes
Benjamin Matthews
Benjamin Nosworthy
Benjamin Rich
Berek K-Caeser
Bethany Brame
Beverley Orton
Billy Hardy
Billy Stout
Billy Taylor
Blake Ladeinde
Bolaji Adeyanju
Bonita Flinthill
Bornaventure Takpah
Bradley Mattheou
Bradley Powell
Bradley Riches
Bradley Rockell
Brajan Pyzlowski
Brandon Abels
Brandon Battle
Brendan Flynn
Bret Machon
Brett O’Harrow
Brett Simkiss
Brett Singers
Brian Cook
Brian Linnington
Brian Morris
Bruce Fielding
Bruce Garrod
Bruno Bernasconi
Bryn Lewis
Bryony Benson
Byron Tree
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THE TEAM
C
Caitlin Pipes
Callum Evans
Callum Phillips
Calvin Christopher
Campbell Marr
Carl Ainsworth
Carl Courtney
Carl Cumberbatch
Carl Fraser
Carl Hermitt
Carl Whatley
Carley Brown
Carlos Alford Maestre
Carlos Chowdhury
Carol Beattie
Carol Hawkes
Carol McKillop
Carole Hawken
Caroline Bailey
Caroline Bray
Caroline Hynes-Cheesman
Caroline Macro
Caroline May
Caroline Vernon-Sutton
Carolynn Remington-Hobbs
Carrie Peckston
Catherine Britton
Catherine Doulton
Catriona Bennell-Cook
Cerith Halfpenny
Chanel Sanganoo
Chantelle Gurney
Charjuan Knight
Charlene Smith
Charlene Walpole
Charles Hayes
Charles Johnson
Charles Robbins
Charles Rollins
Charles Taylor
Charles Watson
Charlie Truscott
Charlotte Amos
Charlotte Jackson
Charlotte Lammin
Charlotte Leyden
Chelsea Battle
Chelsea Cragg
Chelsea Long
Cheryl Vearncombe
Cheyanne Brown
Chloe Andrews
Chloe Jackson
Chloe Singleton
Chris Foster
Christelle Armstrong
Christine Berry
Christine Pawlow
Christine Taylor
Christine Thistlethwaite
Christopher Bailey
Christopher Beeson
Christopher Bentley
Christopher Bowden
Christopher Burrows-Simpson
Christopher Butler
Christopher Carey
Christopher Collins
Christopher Cooper
Christopher Curtis
Christopher D’Arts
Christopher Edwards
Christopher Fath
Christopher Goodacre
Christopher Green
Christopher Harbutt
Christopher Heyes
Christopher Holland
Christopher Howe
Christopher MacFarlane Leach
Christopher Merrick
Christopher Miskelly
Christopher Moore
Christopher Nicholls
Christopher Nottle
Christopher Potter
Christopher Proud
Christopher Robertshaw
Christopher Samuel
Christopher Sansby
Christopher Turley
Christopher Wallis
Christopher Wells
Cieran Armstrong
Ciprian Popovici
Clair Jeffries
Claire Chaffe
Claire Harris
Claire Herridge
Claire Lees
Claire Ralphs
Claire Steel
Claire Tiney
Clare Barden
Clare Long
Clare Miles
Clifford Adams
Clifford Tomlinson
Clive Harlow
Colin Clarke
Colin Denson
Colin Griffiths
Colin Harvey
Colin Markham
Colin Petch
Colin Rymer
Colin Skinner
Colin Smith
Colin Trenery
Connell Smyth
Conner Ockenden
Connor Armstrong
Connor Bantin
Connor Garrow
Connor Thompson
Conrad Cassidy
Conrad Harrup
Cora Morrison
Cory Handford
Cosmin Zaharia
Courtney Maglone-Gillies
Craig Dolling
Craig Johnson
Craig Jones
Craig Matthews
Craig Murphy
Craig Reed
Criss Hall
Cristian Olaru
Cristina Cole
Curtis Julien
Curtis Lee
Czeslaw Majorek
D
Dale Sheppard
Damian Merritt
Damiano Seresini
Dan Bevan
Danial Holloway
Daniel Angel
Daniel Brain
Daniel Calderwood
Daniel Chambers
Daniel Cheyne
Daniel Colk
Daniel Cox
Daniel Cross
Daniel Danks
Daniel Fairless
Daniel Fallows
Daniel Geoghegan
Daniel Gillett
Daniel Hubble
Daniel Jenkins
Daniel Jones
Daniel Lawrie
Daniel Little
Daniel McLean
Daniel Milner
Daniel Monaghan
Daniel Moyse
Daniel Musguin
Daniel O’Callaghan
Daniel Pimm
Daniel Poile
Daniel Rowlands
Daniel Settersfield
Daniel Sewell
Daniel Sheppard-Brown
Daniel Thomas
Daniel Thornley
Daniel Willows
Daniella Fusco
Daniella Winstone
Danielle Kirby
Danielle Noyes
Danielle O’Mara
Daniel-Paul Petrut
Dannique Prince
Danny Ostler
Danny Wilson
Darcy Hodges
Darius Bright
Darnelle Riley
Darran Haynes
Darren Allcock
Darren Barker
Darren Doughty
Darren Finnegan
Darren Harper
Darren Jones
Darren Mencarini
Darren Mitchell
Darren Morgan
Darren Muguiyi
Darren Rose
Darren Shapland
Darren Square
Darren Wagg
Darren Young
Darroll Watts
Darron Kerr
Darron Soos
Darryl Ferry
Darryl Lawson Innes
David Augustus
David Bowler
David Carpenter
David Clare
David Clark
David Coupland
David Cressey
David Donaldson
David Fletcher
David Fox-Matthews
David Green
David Halpin
David Hatton
David Henderson
David Hicks
138
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OUR GOVERNANCE
OUR FINANCIALS
ADDITIONAL INFORMATION
David Hill
David Hillier-Reynolds
David Hirst
David Hope
David Houston
David Hussey
David Jackson
David Jones
David Kavanagh
David Kershaw
David Kettlewell
David Knight
David Lane
David Lawson
David Macartney
David Medlam
David Miller
David Mountford
David Murray
David Oliver
David Paget
David Parcell
David Rendall
David Reynolds
David Sheehy
David Simms
David Sinclair
David Spencer
David Thomas
David Thomasson
David Thompson
David Townsley
David Webb
David Whitelaw
David Wilson
David Yallop
Davina Vitles
Davis Kouakou
Dawid Arabski
Dawn Gale Curtis
Dean Evans
Dean Marshall
Dean Rodger
Dean Titchen
Dean Woolley
Deane Rhone
Debbie Marsh
Deborah Edwards
Deborah Fitzpatrick
Debra Bandghiree
Debra Watson
Declan Baker
Decland Speede
Deesha Bhatt
Deividas Korsakas
Denis O’Brien
Denise Chalmers
Dennecia Gordon
Dennis Elford
Dennis Jovellanos
Dennis Winterburn
Denzel Johns
Derek Amoo
Dermott Reilly
Deryn Shipley
Desmond Alleyne
Devindren Govender
Dilawar Ali
Dipak Chauhan
Dipal Parikh
Dolton Gordon
Dominic D’Souza
Dominic Gray
Dominic Hall
Dominic Reilly
Dominick Mccann
Donald Magullian
Donna Douglas
Donovan Robinson
Douglas Bingham
Douglas Nicol
Dwain Mensah
Dylan Bradley
Dylan Middleton
Dylan Roberts
Dylan Rose
E
Eamonn Clancy
Edvinas Katinas
Elaina Waterhouse
Elaine Robinson
Elijah Andrew-Razemba
Elizabeth Lee
Elizabeth Sutton
Ella Jones
Ellen Colchester
Elliot Musk-Cooper
Elliott Brown
Elliott Davis
Elliott Sully
Emily Connelly
Emily Davis
Emily Gardiner
Emily Hall
Emily Lenton
Emily Mansell
Emily Pearson
Emily Tuttlebury
Emma Anderson
Emma Camps
Emma Dudley
Emma Gotch
Emma Greenfield
Emma Hilton
Emma Jordan
Emma Macfarlane
Emma McNaul
Emma Shaw
Emmanuel Melford-Rowe
Emran Mannan
Enam Ali
Erandika Senevirathna
Eren Ucman
Erikas Mazeikis
Ermiyas Girma
Erwan Vauconsant
Esme Sparrow
Eve Ruckwood
Ezra Deans
F
Fabia Ahmed
Faizar Ali
Fatima Pereira
Faye Henderson
Faye Robinson
Fayzur Rahman
Federico Rota
Felipe West
Filipe Albarraque
Fiona Oakes
Fitz Martin
Fouche Lubbe
Frances Aylward
Francesca Harris
Francesco Bruno
Frank Hibbert
Fraser Bisset
Fraser Lockley
G
Gabriel Iacob
Gabriella Carvalho
Gabrielle Moore
Gareth Camplin
Gareth Fogden
Garrat Willsher
Garry Crichton
Garry Hardy
Garry Laird
Gary Bloomfield
Gary Curtis
Gary Davies
Gary Fellows
Gary Gear
Gary Gee
Gary Gledhill
Gary Marshall
Gary Mayo
Gary Nash
Gary Roberts
Gary Tipler
Gary West
Gavin Bennett
Gavin Collins
Gavin MacKay
Gavin Magwood
Gavin Winter
Gemma Davies
Gemma Farnan
Gemma Stephens
Gemma Wademan
Geoffrey Greenwood
Geoffrey Thomas
Geordie Stock
George Allen
George Astill
George Birkley
George Cadden
George Chisnell
George Day
George Dewis
George Hopper
Georgia Miles
Geraint Griffiths
Gerald Manalastas
German Ramirez Marin
Gillian Bayes
Gillian Grace
Glendale Canoville
Glenn Elgy
Glenn Smith
Gokhan Karadogan
Gordon Shennan
Graham Cooper
Graham Foster
Graham Hancock
Graham Hitchin
Graham Ingram
Graham Livingstone
Graham Vance
Grazvydas Garbacenokas
Gregory Jeffs
Gregory Kaufman
Gregory McHugh
Gregory Owen
Grenville Davies
Gurinder Chana
Gurjinder Singh Lehal
Gurninderjit Singh
Guy Gorenski
H
Hannah Bailey
Hannah Booth
Hannah Elliot
Hannah Jones
Hannah Kings
Hannah Lee
Hannah Pritchard
Hannah St John Taylor
Hanz Nelson
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THE TEAM
Harjinder Aujla
Harneet Khaneja
Haroon Younus
Harriet Goodacre
Harrison Cartey
Harry Biggs
Harry Kay
Hayden Inman
Hayden Mason
Hayley Marney
Hayley Whittaker-Lomas
Hazel Millington
Heather Campbell
Helen Gosling
Helen Hughes
Helen Walker
Helen Washington
Helen Waterston
Henry Povey
Holly Bishop
Holly Dawson
Holly Meager
Holly Peck
Holly Skerritt
Holly Vincent
Hope Armstrong
Hugo Lopes
I
Iain Arnott
Ian Aikman
Ian Ashton
Ian Bloomfield
Ian Croton
Ian Fraser
Ian Hughes
Ian Marshall
Ian Mattacola
Ian McNeish
Ian Noon
Ian Paterson
Ian Smithson
Ian Sykes
Ibrahim Akhtar
Ibrahim Conteh
Igors Koselevs
Ilars Skabeikis
Ingrid Obernauer
Isaiah Khaoya
Ivan Paitoo
J
Jacek Skubisz
Jacek Zebrowski
Jack Byrne
Jack Davey
Jack Ellis
Jack Finlay
Jack Flannigan
Jack Gallagher
Jack Hill-Jones
Jack Kelley
Jack Maddison
Jack Millman
Jack Ockenden
Jack O’Neill
Jack Relfe
Jack Swain
Jack Swann
Jack Thompson
Jack Veall
Jack Vickers
Jack Wheeler
Jacob Allan
Jacob Powell
Jacob Stuart
Jacob Tassaker
Jacqueline Dadge
Jacqueline Desborough-
Morehead
Jade Girgensons
Jaden Parry-Baines
Jagpal Sandu
Jailuene Witterick Peake
Jake Bodycot
Jake Carter
Jake Shopland
Jake Woods
Jamal Khanum-Muhammad
James Barnett
James Beaumont
James Biesty
James Brophy
James Cameron
James Carpenter
James Carrington
James Cheung
James Clifford
James Fox
James Fritz
James Hawker
James Heard
James Henshaw
James Hollis
James Howard
James Hyland
James Kew
James King
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 Watton
Jamie Calow
Jamie Kelly
Jamie Martin
Jamie Mears
Jamie Ormrod
Jamie Rose
Jamie Sia
Jamie Thornton
Jamie Wenborn
Jamie Whitear
Jamie Wilson
Jamie Lee McCann
Jamye Walker
Jan Reddi
Janaka Alahapperuma
Janet Lee
Janet Restrepo
Jasbir Singh
Jasmine Dogertz
Jason Barker
Jason Bloxham
Jason Coupland
Jason Darcy
Jason Ealden
Jason Knox
Jason Nelson
Jason Pratt
Jason Rose
Jaspreet Sandhu
Jasveer Singh
Jasvinder Pehal
Javeed Parkar
Jay Billings
Jay King
Jayaprakash Paragjee
Jayesh Tank
Jayne Piper
Jayne Young
Jeannette Hastie
Jedrzej Politowski
Jeffrey Armstrong
Jeffrey Coleman
Jennie Kane
Jennifer Flowers
Jennifer Gregory
Jennifer Opoku
Jennifer Seabrook
Jennifer Wall
Jennifer Young
Jenny Inkson
Jeremy Long
Jeremy Napthine
Jessica Fraser
Jessica Gurski
Jessica Maynard
Jessica McCarthy
Jessica Rowlands
Jessica Sawyer
Jessica Thiari
Jessica Wickham
Jethro Chappell
Jo Adamson
Joanna Britton
Joanne Cox
Joanne Elton
Joanne White
Jodie Jones
Jodie Richardson
Joe Dwyer
Joe Guymer
Joe Lamond
Joe Mathews
Joe Raynsford
Joe Smith
Joe Whalley
Joel Barker
Joel Bray
Jogendra Kalicharan
John Arkle
John Bourke
John Bryant
John Burton-Simm
John Conley
John Cook
John Ellis
John Fawkes
John Gardner
John Harris
John Harrison
John Hennessy
John Hesp
John Hughes
John McLaren
John Moat
John Murphy
John Page
John Scatchard
John Shaw
John Smith
John Stannard
John Thompson
Johnathan McCallum
Johnathon Humphries
Jon Davis
Jon O’Neill
Jon Thatcher
Jonathan Boxall
Jonathan Coombs
Jonathan East
Jonathan Hall
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OUR GOVERNANCE
OUR FINANCIALS
ADDITIONAL INFORMATION
Jonathan Hargreaves
Jonathan Impey
Jonathan Kirk
Jonathan Morgan
Jonathan Stearman
Jonathan Stone
Jonathan Wallace
Jonathan Wiles
Jonathan Williams
Jonathon Turner
Jonathon Underdown
Jon-Paul Hughes
Jordan Bannister
Jordan Byars
Jordan Edwards
Jordan Fox
Jordan Lindsay
Jordan Lowes
Jordan Scarbrow
Jordan Stephens
Jordan Vinluan
Jose Ivory
Josef Kinski
Joseph Cox
Joseph Daly
Joseph Durham
Joseph Gregorace
Joseph Hadley
Joseph Hardman
Joseph Haynes
Joseph Heath
Joseph Lewis
Joseph Rudd
Joseph Whittaker
Josephina Lane
Josh Wood
Joshua Batterham
Joshua Bradley
Joshua Brown
Joshua Burgess
Joshua Crombie
Joshua Dunford
Joshua Elliott
Joshua Higgs
Joshua Hubbard
Joshua Hughes
Joshua Lambert
Joshua Overthrow
Joshua Paton-Rolls
Joshua Rapley
Joshua Wright
Josiah Andrew-Razemba
Josie Colehan
Jude McGuigan
Judith Duncan
Juginder Gill
Julia Kerr
Julian Mitchell
Julian Myles
Julie Bird
Julie Brachtvogel
Julie Mitchell
Julie Wood
Jullah Jabbi
Juris Kalnins
Justas Ramasauskas
Justin Marlow
Justin Morgan
Justine Bowman
Juttinder Digpal
Jyoti Kaur
K
Kacper Dadel
Kai Franklin
Kajetan Marcinek
Kamaljit Atkar
Kamaljit Thandi
Kamil Janas
Kamlesh Shah
Karen Dodds
Karis Hall
Karl Aran
Karl English
Karl Lippiatt
Karl Reeves
Karl Stephens
Karl Turner-Talmage
Karl White
Kastriot Kelani
Katherine Blitz
Katherine Jackson
Kathryn Finch
Kathryn Pell
Katie Brindley-Hughes
Katie Johnson
Katie Lunn
Katy Todd
Kayleigh Clemson
Kayley Coldham
Keaton Bayliss
Keely Powell
Keiran Ling
Keith Ambrose
Keith Down
Keith Fitzpatrick
Keith Maggs
Keith Rudkin
Keith Stanley
Kelly Dalby
Kelly Goodacre
Kelly Miller
Kelly Savile
Kelly-Anne O’Connor
Kelvin Real Polanco
Kelvin Sam Junior Lansdowne
Kenneth Ostler
Kenneth Owen
Kenneth Westley
Kerri Atkinson
Kerrie Burcham
Kerry Hurst
Kerry McAuliffe
Kerry-Ann Smith
Kevan Richardson
Kevin Atherton
Kevin Baker
Kevin Bingham
Kevin Bowtle
Kevin Da Silva
Kevin Fox
Kevin Frampton
Kevin Hailes
Kevin Hardy
Kevin Hartley
Kevin Nicol
Kevin Orusademe
Kevin Smith
Kevin Thorne
Kie Mitchell
Kieran Barnes-Warden
Kieran Beesty
Kieran Clews
Kieran Gardiner
Kieran Reeves
Kim Liddle
Kim Moriarty
Kirk Irvine
Kirk Taylor
Kirsten Cummings
Kirstie Leonard
Kirsty Graham
Kirsty Jones
Kirsty Rice
Kirti Patel
Kranthi Billakanti
Krishna Patel
Kristal Green
Kristian Catterall
Kristian Prosser
Kristopher Allatson
Krystle Milan
Krzysztof Burdajewicz
Kurt Folkes
Kurt Hamilton
Kye Harman
Kyle Batley
Kyle Crichton
Kyle Hardie
Kyle Landy
Kyle Manns-Kennedy
Kyle Markland
Kyle Martin
Kyran Andrews
L
Lakshmi Biswas
Lance Cale
LaTwan Woods
Laura Alder-Rose
Laura Henry
Laura Horton
Laura James
Laura Madigan
Laura Racey
Laura Smith
Laura Wilson
Lauren Holmes
Lauren Mcdade
Lauren Munro
Lauren Richmond
Lauren Stanhope
Laurence Jones
Laurence Pendrill
Layla Pring
Leah Humphries
Leah Westwood
Leanne Curry
Leanne Palmer
Lee Armstrong
Lee Barry
Lee Butcher
Lee Clarke
Lee Cornford
Lee Dering
Lee Eagling
Lee Fish
Lee Galloway
Lee Gibson
Lee Gladman
Lee Harris
Lee Hutchinson
Lee Jamieson
Lee Kent
Lee McConnell
Lee Read
Lee Wilkinson
Leighton Davies
Leon Das
Leon Dunnill
Leon Pryce
Leona Parker
Lesley Willcox
Levar Gardiner
Lewis Adkins
Lewis Allan
Lewis Buckley
Lewis Crossley
Lewis Elkin
Lewis Heskett
Lewis Hill
Lewis Walter
Lewis Williams
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THE TEAM
Liam Bantin
Liam Childs
Liam Corbett
Liam Day
Liam Ellis
Liam Flynn
Liam Hounsell
Liam Hunt
Liam McKenna
Liam Piper
Liam Rushen
Liam Waghorn
Lianne Harrison
Libby Field
Lindsay Bond
Lindsey Flint
Lisa Algar
Lisa Cullen
Lisa France
Lisa Holmes
Lisa Johnson
Lloyd Jackson
Lois Bettinson
Lorna Sullivan
Loucas Louca
Louis Robinson
Louis Spaett
Louise Bunting
Louise Cox
Louise Groves
Louise Henbest
Louise Reddell
Lucy Harper-Thompson
Lucy Jenner
Lucy Swain
Lukasz Pirga
Lukasz Tyrka
Luke Acda
Luke Barefield
Luke Carson
Luke Day
Luke Diston
Luke Gillmore
Luke Livermore
Luke McNally
Luke Morris
Luke O’Connor
Luke Penman
Luke Potiphar-Trigwell
Luke Rohrbasser
Luke Saunders
Luke Stent
Luke Woodward
Luke Wright
Lyndsey Kell
Lynne Meldrum
Lynsey Smart
M
Madeline Pipes
Mahesh Wara
Mahomadzuber Saiyed
Maia Wallace-Loizou
Mandy Antenbring
Manish Karia
Manisha Patel
Manjeet Thathal
Marc Holland
Marc Howl
Marc Law
Marcelo De Castro Amorim
Marcin Kotarba
Marcin Kupczyk
Marcus Ogunlowo
Margaret Lawrie
Margarita Starcea
Maria Thompson
Marie Hayward
Mark Allman
Mark Braithwaite
Mark Brown
Mark Burgess
Mark Coe
Mark Frisby Rudd
Mark Fuller
Mark Gasson
Mark Hawkins
Mark Heath
Mark Hughes
Mark Hunter
Mark Keymer
Mark Lever
Mark Maciver
Mark Matthews
Mark Owen
Mark Palmer
Mark Pancott
Mark Penfold
Mark Richardson
Mark Ridley
Mark Rogers
Mark Sloan
Mark Stephens
Mark Tennant
Mark Vaughan
Mark Waldock
Mark West
Mark Whitaker
Mark Wood
Mark Woodyatt
Mark Wordley
Mark Wright
Mark Williams
Marley Wingrove
Martin Abel
Martin Brown
Martin Ellis
Martin Guest
Martin Oliver
Martin Osborne
Martin Page
Martin Pickard
Martin Turner
Martin Wallis
Martin Williams
Martina Way
Martine Robinson
Martyn Somerville
Martyn Spring
Maryam Nekzad
Mateusz Kosior
Mathew Buckett
Mathew Mitchell
Matt Attwood
Matt Garwood
Matt Malloy
Matthew Bailey
Matthew Barcas
Matthew Clarke
Matthew Fisher
Matthew Foster-Smith
Matthew Gearing
Matthew Grainger
Matthew Hawley
Matthew Illing
Matthew Ingram
Matthew Jones
Matthew Lindsay
Matthew Lynch
Matthew Martin
Matthew McCormack
Matthew McManus
Matthew Miller
Matthew Moore
Matthew Mothersill
Matthew Norris
Matthew Rowson
Matthew Sims
Matthew Sinclair
Matthew Stevenson
Matthew Whitlock
Matthew Williams
Matthew Woodhouse
Matthew Wright
Mattia Galassi
Mattia Tosi
Max Evans
Megan Burrows
Megan Walsh
Megan Wiley
Mehilka Kilic
Mehmet Asdoyuran
Melanie Abbott
Melanie Rogers
Melanie Toole
Melanie-Jane Tosh
Melissa Richmond
Melissa Wadman
Melton Thompson
Mervyn Thorne
Mhairi Wade
Mica Gray
Michael Beatty
Michael Bennett
Michael Boughton
Michael Buckley
Michael Butler
Michael Darroch
Michael Dinter
Michael Earls
Michael Edwards
Michael Evans
Michael Fannon
Michael Finn
Michael Goodfield
Michael Hall
Michael Handcock
Michael Hopper
Michael Humphrey
Michael John
Michael Jones
Michael Kessler
Michael Lay
Michael Lethbridge
Michael Lovelock
Michael McGarry
Michael Moss
Michael Ohare
Michael O’Rourke
Michael Quinn
Michael Sear
Michael Traverso
Michael Upton
Michael Van Sittert
Michael Way
Michael Wright
Michele Trickett
Michelle Astman
Michelle Blackmore
Michelle le Monnier
Michelle Moore
Mike Booth
Mike Cunningham
Miles Turner
Minai Kanabar
Miroslaw Hebda
Mkhonto Gumede
Mo Alhamwi
Mohamed Patel
Mohammed Akthar
Mohammed Amin
Mohammed Hoque
142
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STRATEGIC REPORT
OUR GOVERNANCE
OUR FINANCIALS
ADDITIONAL INFORMATION
Mohammed Jimale
Mohammed Khalid
Montana Mills
Mr Topps (Retired)
Mubashir Uddin
Murdo Martin
Mursalin Hussain
Murshed Ali
N
Nancy Jacques
Naomi Baron
Naomi McHugh
Naomi McKenzie
Narinder Chatha
Naseer Mir
Nasir Hussain
Natalia Zagrodnik
Natalie Howe
Natalie McCuaig-Finlay
Natalie Paine
Natasha McLeod
Nathalie Mpitu
Nathan Austin
Nathan Coulthard
Nathan Harry
Nathan Hughes
Nathan Thorpe
Nathan Winterton
Nauris Vinkelis
Nazim Ali
Neely Stuart
Neha Shah
Neil Ammon
Neil Anderson
Neil Homan
Neil Jeremy
Neil Jones
Neil Lutterloch
Neil Oxenham-lane
Neil Southgate
Neil Topping
Neil Wardlaw
Neil Williams
Niall Haughton
Nichola Humble
Nicholas Culley
Nicholas Gadd
Nicholas Lodge
Nicholas Peedell
Nicholas Stone
Nicholas Stubbs
Nicholas Taylor
Nicholaus Buchanan
Nick Meese
Nick Walch
Nick Wardman
Nicky Glenister
Nicola Brownley
Nicola Fletcher
Nicola Greenaway
Nicola Hellett
Nicola Howlett
Nicola McWatt
Nicole Andrews
Nicole Colvin
Nigel Fleming
Nigel Slaughter
Nikita Sergejevs
Nikolay Georgiev
Nimisha Mistry
Nisha Sodha
Nishit Shah
Nita Rajani
Nixaal Patel
Noeleen Ryan
Norman Schwab
Numan Usman
O
Obeth Aloysius
Oliver Franks
Olivia Dettmer
Olivia Hughes
Omar El-Zeinab
Oscar Cork
Osman Sendur
Oumar Bah
Owen Marchant
Owen Tudor
Oz Masaya
P
Paige Adaway
Paige Makepeace
Paige Morgan
Pankaj Bhardwaj
Paolo Segagni
Paresh Nagar
Parminder Garcha
Patrick Howlett
Patrick Stoner
Patrick Tompsett
Patryk Tralewski
Paul Baker
Paul Baxter
Paul Brooks
Paul Burkett
Paul Burrow
Paul Cartledge
Paul Cheetham
Paul Cowen
Paul Cox
Paul Dalby
Paul Fisk
Paul Galvin
Paul Gee
Paul Godefroy
Paul Haythorne
Paul Hill
Paul Hubbard
Paul Irving
Paul Jenkinson-Finn
Paul Kelling
Paul Kelly
Paul Keymer
Paul Lester
Paul Logue
Paul Miller
Paul Mills
Paul Nicholls
Paul Noyes
Paul Semple
Paul Smith
Paul Starkey
Paul Sumner
Paul Thomas
Paul Tregaskis
Paul Wallis
Paul West
Paul Whittington
Paul Whitworth
Paul Wilson
Paul Winter
Pauline Copp
Pauline Garrow
Pauline Harrison
Pauline Whitaker
Pawel Pudelko
Pawel Warych
Penny Davis
Perran Kelly
Perry Chetty
Perry Hodges
Peter Ambrose
Peter Callan
Peter Carr
Peter Charles
Peter Charters
Peter Clements
Peter Faithfull
Peter Gilmore
Peter Goulding
Peter Hanley
Peter Jackson
Peter Knights
Peter Lees
Peter Little
Peter Turtle
Peter West
Peter White
Peter Wiles
Peter Young
Philip Cranston
Philip Dunn
Philip Gallop
Philip Green
Philip Speed
Philip Stocks
Philip Underhill
Philippa Hill
Phillip Gilbert
Phillipa Hewitt
Polly McMahon
Poonam Patel
Poppy Turner
Portia Boehmer
Preline Martha
Priyanka Juttla
Q
Quang Pham
R
Rachael Roseman
Rachel Caborn
Rachel Fletcher
Rachel Gray
Radoslaw Doktorski
Rahim Benson
Rahmah Boulaghrasse
Rain Paterson
Raj Sodha
Raj Surani
Rajan Toora
Rajesh Thanki
Rajiv Vadgama
Rajneet Sahota
Rajnish Gaur
Ranveer Ryait
Ratip Hassan
Ravi Kalyan
Rebeca Wallis
Rebecca Cole
Rebecca Godfrey
Rebecca Linsley
Rebecca Love
Rebecca Mills
Rebecca Moore
Rebecca Oblein
Rececca Taylor
Reece Brewin
Reece Charlton
Reece Moss-Matthews
Rhiannon Holland
Rhyan Weekes
Rhys Hedges
Ricardo Paine
Richard Adamson
Richard Arciero
Richard Bleach
Richard Bourne
Richard Carter
Richard Clark
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THE TEAM
Richard Davies
Richard Eagland
Richard France
Richard Geare
Richard Greenwood
Richard Joll
Richard Keane
Richard Mann
Richard Oates
Richard Oldale
Richard Palfrey
Richard Piskorz
Richard Prescott
Richard Senior
Richard Small
Richard Sumner
Richie Stephen
Rickie Byrne
Riley Hayward
Rob Moody
Robbie Perry
Robert Adams
Robert Black
Robert Brown
Robert Buckley
Robert Chawner
Robert Collins
Robert Dennis
Robert Dunn
Robert George
Robert Hardie
Robert Howker
Robert Keohone
Robert Kweli
Robert Mitchell
Robert Moss
Robert Myers
Robert Parker
Robert Prince
Robert Spencer
Robert Tillotson
Robert Tsui
Robert Twiner
Roberto Gaspar
Robin Stagg
Robin Williams
Robyn Bell
Rocky Bryan
Roger Gridley
Roger Knowles
Roger Lazenby
Roisin Smith
Rolandson Thomas
Romal Williams
Romans Petuhovs
Romany Andrew
Romualdas Maciulevicius
Ron Woolgar
Ronnie-Leigh Pews
Rory Reeves
Rosario Di Rosa
Rose Atherton
Ross Ashbrook
Ross Farrell
Ross Langford
Ross Leitch
Ross Matthews
Ross Wilkins-Heath
Roxanne Daly
Roxanne Morris
Roxanne Seurre
Russell Sell
Russell Shafer
Ryan Apark
Ryan Buston
Ryan Clark
Ryan Coleman
Ryan Craig
Ryan Dunn
Ryan Farquhar
Ryan French
Ryan Izard
Ryan Lundberg
Ryan Needham
Ryan Patterson
Ryan Randall
Rytis Martinkenas
S
Sabba Akram
Sachin Gokani
Sahibjit Samra
Sally Broome
Sally Cook
Sam Davis
Sam Groves
Sam Randle
Sam Thomas
Samantha Davies
Samantha Gray
Samantha Leavis
Samantha Makrygiannis
Samantha Peters
Samantha Stewart
Sameer Jamdar
Samir Maifi
Samuel Blaylock
Samuel Egerton
Samuel Fisher
Samuel Gibson
Samuel Hughes
Samuel Knowles
Samuel Taylor
Sandra Ramsay
Sandra Van Spronsen
Sanjeev Pal
Sapphire Martin
Sara LLoyd
Sara Watkins
Sarah Bowles
Sarah Cassam
Sarah Darby
Sarah Dobson Da Silva
Sarah Garside
Sarah Holey
Sarah Jordan
Sarah Kite
Sarah Mclure
Sarah Peters
Sarah Phipps
Sarah Rose
Sasha Thornett
Satvinder Sandhu
Satvir Sadra
Savannah Azzopardi
Savio Coutinho
Scott Ahmad
Scott Birdseye
Scott Bond
Scott Carter
Scott Gibson
Scott Hopwood
Scott Johnston
Scott Mccartney
Scott Morrison
Scott Ottaway
Scott Thirlaway
Sean Brandist
Sean Cahill
Sean Campbell
Sean Dare
Sean Gee
Sean Hull
Sean McClafferty
Sean Mclean
Sean Taylor
Seaneen Ahmed
Shabbir Bandali
Shafeek Mohamed
Shah Hussain
Shahid Mahmood
Shamara Mckenzie-Rochester
Shana Esworthy
Shane Bryan
Shane Lindsay
Shane Malone
Shane Mason
Shane Till
Shane Trim
Shanee Gately
Shannon Calf
Shannon Dewdney
Shannon Seymour
Sharif Islam
Sharnah Brady
Sharon Buckley
Sharon Papantoniou-Barrett
Shaun Gordon
Shaun Owens
Shaun Pawsey
Shaun Sargeant
Shazan Syed
Sheena Smith
Sheikh Saidy
Sheldon Smith
Shelley Burton
Shelley Carey
Shelley Francis
Shelley Rutter
Sheralyn Tidball
Shoshana Rogers
Shrina Shah
Shylo Brookes
Sian Austen
Sian Horrigan
Silje Tendenes
Silvi Atanasova
Silviu Oltean
Simon Badhams
Simon Beare
Simon Bodell
Simon Briggs
Simon Brookfield
Simon Chapman
Simon Chappell
Simon Dugdale
Simon Felix
Simon Green
Simon Grimmett
Simon Lasham
Simon Leslie
Simon Marks
Simon Morgan
Simon Neal
Simon Pitt
Simon Roberts
Simon Webb
Simon Witham
Simran Gill
Sinan Demir
Sinead Fisher
Siobhan Ashman
Siobhan King
Skye Antoniou
Slavka Georgieva
Sophie Davies
Sophie Fallon
Sophie McCluskey
Sophie Pavey
Sophie Swann
Sophie-Anne Farnworth
Stacey Webb
144
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STRATEGIC REPORT
OUR GOVERNANCE
OUR FINANCIALS
ADDITIONAL INFORMATION
W
Warren Pettersen
Wayne Joy
Wayne Randall
Wesley Appadoo
Wesley Hales
William Aires
William Bailey
William Barreda
William Buxton
William Foxley
William Settersfield
William Short
William Wylie
Wyn Dunn-Davies
Y
Youssef Djeraoui
Yvonne Burgess
Yvonne Hardingham
Z
Zachary Sutton
Zainab Idris
Zhanna Knight
Zoe Cardoo
Zoe Gilbert
Zoe Harcus
Zoe Payne
Zoe Stevens
Stefan Clark-Carter
Stefano Leveque
Stefany Wiso
Stephanie Bannister
Stephanie Dinnis
Stephanie Hogben
Stephanie Kilner Roberts
Stephanie Nevett
Stephanie Shaw
Stephanie Thompson
Stephen Adams
Stephen Amos
Stephen Anthony
Stephen Carr
Stephen Collins
Stephen Corkett
Stephen Edmonds
Stephen Edwards
Stephen Foote
Stephen Freeman
Stephen Gaylor
Stephen Harrington
Stephen Johnson
Stephen Kelly
Stephen Lacey
Stephen Lopes
Stephen Mabberley
Stephen Machin
Stephen Maidment
Stephen Nicol
Stephen Riley
Stephen Sanders
Stephen Seymour
Stephen Smith
Stephen Stubbs
Stephen Velvick
Stephen Watson
Steven Barrowcliffe
Steven Brown
Steven Dyer
Steven Higgins
Steven Howells
Steven Ives
Steven Kane
Steven Karkari
Steven Kernot
Steven Souter
Steven West
Steven Whitehead
Steven Wood
Stuart Allman
Stuart Barrett
Stuart Clarke
Stuart Corlett
Stuart Fletcher
Stuart Foxon
Stuart Harris
Stuart Hauser
Stuart Haywood
Stuart Munton
Stuart Rees
Stuart Ross
Stuart Smith
Stuart Stevenson
Stuart Tannock
Stuart Whitby
Stuart Williams
Sukhdev Bains
Summer Ellison
Sunil Patel
Susan Law
Susan Shields
Susan Stanford
Susanna Horwood
Syann Watkins
Syed Shah
T
Tahmid Islam
Tam Samad
Tamara Bolger
Tammie O’Lone
Tammie Spencer
Tanya Dix
Tanya Roberts
Tara Smith
Tarik Bensadik
Tauseef Usman
Tejal Sharma
Terence Cooper
Terence Dooley
Terreak Mathurin-Wrightson
Terry Manto
Terry Morris
Terry Salisbury
Thomas Ashmore
Thomas Bedford
Thomas Calder
Thomas Caldicott
Thomas Cartmill
Thomas Colebeck
Thomas Darlaston
Thomas Elliott
Thomas Evans
Thomas Fuller-Winterburn
Thomas Hobbs
Thomas Langston
Thomas Lee
Thomas Mcgeown
Thomas Miller
Thomas Moran
Thomas Murray
Thomas Otley
Thomas Quinn
Thomas Ross
Thomas Ryan
Thomas Surridge
Thomas Utting
Thomas Wade
Tim Chatfield
Tim Hodges
Tim Richards
Timothy Bentley
Timothy Boardman
Timothy Hilton
Timothy Morgan
Timothy Stanhope
Timothy Tatlock
Timothy Tuff
Timothy Wright
Tina Clark
Toby Jermyn
Toby Vennard
Todd Routledge
Tom Bettinson
Tom Newman
Tom Still
Toni Skutela
Tony Dumbleton
Torey Buchanan
Tracey Mangan
Tracey Turner
Tracey Waterman
Tracy Clewes
Tracy Wahome
Tracy Wearmouth
Troy Fearon
Troy Ledgerwood
Troy Miller
Tunc Suleyman
Tyler Graham
Tyler King
Tyler Nossent
Tyler Osborne
Tyler Spridgeon
Tyrone Bower
U
Udo Jungbecker
Unut Ortac
Uwais Ghumra
V
Valentin Ivan
Veronica Evett
Veronica Zudaire
Vicky Hall
Victoria Atkinson
Victoria Carrington
Vi-Dung Luong
Vilius Meilus
Vinod Joshi
Viorica Grapa
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STORE LOCATIONS
London
Acton
Balham Boutique
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
Dagenham
Dartford
Denham
Dorking
Dulwich Boutique
East Sheen
Eltham
Enfield
Feltham
Forest Hill
Fulham Boutique
Fulham Topps
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
Seven Sisters
Sevenoaks
Shoreditch
South Bermondsey
Southall
St Albans
Staples Corner
Streatham
Sunbury upon Thames
Surbiton
Sydenham
Tooting
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
Coventry Tile Hill
Derby
Derby Osmaston
Doncaster
Enderby
Erdington
Fenton
Grantham
Great Barr
Grimsby
Kettering Baron
Kidderminster
Kings Heath
Kings Norton
Leicester
Lichfield
Lincoln Outer Circle
Long Eaton
Loughborough
Mansfield
Nantwich
Newark
Newcastle-under-Lyme
Northwich
Nottingham Arnold
Nottingham Poulton
Nuneaton
Redditch
Rotherham
Sheffield Hillsborough
Sheldon
Shrewsbury
Solihull
Spalding
Stoke
Stourbridge
Stratford upon Avon
Tamworth
Telford
Thurmaston
West Bromwich
Wolverhampton
Worksop
North
Aintree
Alnwick
Anfield
Barrow
Birkenhead
Blackburn
Blackpool
Bolton
Bury
Carlisle
Cheadle
Cheetham Hill
Chester
Chorley
Darlington
Durham Dragonville
Failsworth
Gateshead
Halifax
Harrogate
Huddersfield
Hull
Hyde
Leeds
Leeds Sheepscar
Macclesfield
Morecambe
Northallerton
Oldham
Ormskirk
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
Stirling
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
Brentwood
Bridgwater
Brighton
Bristol
Broadstairs
Buckingham
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STRATEGIC REPORT
OUR GOVERNANCE
OUR FINANCIALS
ADDITIONAL INFORMATION
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
Didcot
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
Havant
Hedgend
Hengrove
Hereford
High Wycombe
Horsham
Huntingdon
Ipswich
Isle of Wight
Isleworth
Kings Lynn
Launceston
Leighton Buzzard
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 Cowley
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
Haverfordwest
Llanelli
Merthyr Tydfil
Neath
Newport
Rhyl
Swansea Cwmdu
Wrexham
Commercial Showrooms
Chelsea
Clerkenwell
Guildford
Leicester
Swerford
Weston Super Mare
Weymouth
Winchester
Wisbech
Witney
Woking
Wokingham
Worcester
Yeovil
Wales
Bangor
Barry
Bridgend
Cardiff
Cardiff Newport Road
Carmarthen
OUR RETAIL STORES
Topps Tiles has 362 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.
18
2
50
49
14
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26922 6 December 2019 4:51 pm Proof 7a PFPTOPPS TILES PLCThorpe Way, Grove Park, Enderby, Leicestershire LE19 1SUwww.toppstiles.co.ukTopps Tiles Plc Annual Report and Accounts for the 52 week period ended 28 September 2019Topps Tiles Annual Report 2019.indd 106/12/2019 16:52:14