REG - Topps Tiles - Acquisition of Pro Tiler Ltd & Q2 Trading Update

Topps TilesAnnouncement

10/03/2022 07:00

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RNS Number : 2725E  Topps Tiles PLC  10 March 2022

10 March 2022

Topps Tiles Plc (the "Group")

Acquisition of Pro Tiler Ltd & Q2 Trading Update

Topps Tiles, the UK's leading tile specialist, announces the acquisition of
60% of the issued share capital of Pro Tiler Ltd ("Pro Tiler"), an online
specialist supplier of tiling-related consumables and equipment to trade
customers, and a trading update for the second quarter of the financial year
ending 1 October 2022.

Acquisition of Pro Tiler

The Group has acquired 60% of the issued share capital of Pro Tiler, an online
specialist supplier of tiling-related consumables and equipment to trade
customers (the "Initial Acquisition").  The Group and Pro Tiler have also
agreed put and call options relating to the purchase by the Group of the
remaining 40% of the issued share capital of Pro Tiler, which are exercisable
from March 2024 (the "Subsequent Acquisition", and together with the Initial
Acquisition, the "Acquisition").

Pro Tiler is a recognised and respected brand within the tiling market which
operates three online businesses: protilertools.co.uk, northantstools.co.uk
and premiumtiletrim.co.uk.  Pro Tiler was established in 2010 by Andy
Bucknall, his wife Wendy, and their two sons Sam and Todd.  Andy, Sam and
Todd all previously worked as professional tilers and are well respected
within the industry.  As part of this transaction, Andy and Wendy will retire
from the business while Sam and Todd will continue to run the day-to-day
operations of Pro Tiler.

Pro Tiler has delivered rapid growth in recent years through an expansion of
its product range and a focus on high quality service, which has enabled it to
serve an increasingly wide customer base.  In the financial year ended 31
March 2021, Pro Tiler reported turnover of £9.3 million and profit before tax
of £1.1 million(1).  In the current year, the business has continued to grow
and the turnover in the twelve months to 31 January 2022 was £11.9 million.
 Pro Tiler is expected to benefit from the Group's buying scale, flexible
supply chain and financial resources to support its further growth.

Consideration of £5.3 million (plus a £0.3 million closing adjustment) was
paid in cash on completion of the Initial Acquisition for 60% of the issued
share capital of the business.  The Group intends to acquire the remaining
40% of the issued share capital from March 2024, based on an agreed multiple
of profits for the 12 month period to March 2024.  Consideration for the
Initial Acquisition was financed from the Group's existing cash balances.

The acquisition of Pro Tiler is a significant development in the Group's
growth strategy and an important first step into operating a specialist online
business alongside its award winning omni-channel Retail business and
Commercial brands.  The Board expects the Acquisition of Pro Tiler to be
accretive to adjusted earnings in the current financial year and beyond(2).

Q2 Trading update

Retail trading in the second quarter to date has progressed well, with sales
for the first nine weeks growing by 18.2% on a two year like-for-like basis
and 45.6% on a one year like-for-like basis (against a period of trading
restrictions last year).

                                      Q1 FY21  Q2 FY21  Q3 FY21  Q4 FY21  Q1 FY22  Q2 FY22

                                                                                   first 9 weeks
 Two-year Retail                      +13.0%   -23.1%   +12.9%   +21.7%   +21.0%   +18.2%

 like-for-like sales
 One-year Retail like-for-like sales  +19.9%   -17.3%   +131.0%  +3.0%    +1.0%    +45.6%

 

Retail gross margins have also improved following management actions on
pricing, our costs remain well controlled despite significant inflation and
operating cash flows are in line with expectations.  The Group is confident
of delivering adjusted profit before tax in line with its expectations for the
year as a whole.

Our Commercial business has continued to deliver encouraging sales growth, the
order book is strong and we remain confident that we will deliver an improved
performance in the Commercial business this year.

Rob Parker, Chief Executive, said: "Pro Tiler is a well-respected brand with
a strong customer service ethic, which fits closely with our core values.
The acquisition of an online specialist supplier to trade customers
complements our omni-channel Retail business and Commercial brands.  It also
moves us closer to our 20% market share goal of '1 in 5 by 2025' while
maintaining our specialism of tiling and related products.  I look forward to
working with Sam and Todd Bucknall and helping them to take this successful
business forward into the next stage of its growth.  The development of our
digital offer remains an important area of focus for the Group and we have
plans in place to expand this further in 2022.

"Trading for the year to date is in line with our plan and we are confident of
delivering performance in line with our expectations."

The Group will announce its interim results for the 26 weeks to 2 April 2022
on 24 May 2022.

(1) Unaudited financial information: For the year to 31 March 2021, Pro Tiler
delivered revenue of £9.3 million (FY20: £4.4 million) and a profit before
tax of £1.1 million (FY20: £0.4 million).  Pro Tiler's gross assets as at
31 March 2021 were £3.2 million (31 March 2020: £1.0 million).

(2) The accounting for the Acquisition will be under IFRS 3.  As required
under this Standard, the consideration for the Subsequent Acquisition will be
expensed as employee remuneration over a two-year period as opposed to being
part of the acquisition accounting due to certain requirements placed on Sam
and Todd Bucknall to remain employed by the Group during this period.  This
income statement expense and any fair value adjustments will be excluded from
adjusted profits over this time period.

For further information please contact:

  Topps Tiles Plc
 Rob Parker, CEO         0116 282 8000

 Stephen Hopson, CFO
 Citigate Dewe Rogerson
 Kevin Smith             020 7638 9571

 Ellen Wilton

Notes to editors

Topps Tiles Plc is the UK's largest specialist supplier of tiles and
associated products, targeting the UK domestic refurbishment and commercial
market and serving a retail and trade customer base from 314 nationwide Retail
stores, 5 Commercial showrooms and three trading websites:
www.toppstiles.co.uk (http://www.toppstiles.co.uk) , www.parkside.co.uk
(http://www.parkside.co.uk) and www.stratatiles.co.uk
(http://www.stratatiles.co.uk) .

Since opening its first store in 1963, Topps has maintained a simple operating
philosophy ‐ inspiring customers with unrivalled product choice and
providing exceptional levels of customer service.  For further information on
the Group, please visit http://www.toppstilesplc.com/
(http://www.toppstilesplc.com/)

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