REG - Topps Tiles - Annual Financial Report <Origin Href="QuoteRef">TPT.L</Origin> - Part 2
01/12/2015 07:11
- Part 2: For the preceding part double click ID:nRSA4576Ha
Proceeds from issue of share capital 29 438
Loan issue costs (10) (570)
Repayment of bank loans (5,000) (5,000)
Net cash used in financing activities (9,515) (8,307)
Net (decrease)/ increase in cash and cash equivalents (2,983) 1,104
Cash and cash equivalents at beginning of period 19,547 18,443
Cash and cash equivalents at end of period 16,564 19,547
Notes to the Financial Statements
For the 53 weeks ended 3 October 2015
1 General information
Topps Tiles Plc is a company incorporated in the United Kingdom under the Companies Act 2006. The address of the registered
office is given in the Annual Report. The nature of the Group's operations and its principal activity are set out in the
Directors' Report in the Annual Report.
These financial statements are presented in pounds sterling because that is the currency of the primary economic
environment in which the Group operates.
Adoption of new and revised standards
In the current period, the following new and revised standards and interpretations have been adopted and may affect the
future amounts reported in the financial statements:
IFRS 13 - Fair Value Measurement, this standard defines fair value, sets out in a single IFRS a framework for measuring
fair value and requires disclosures about fair value measurements.
Standards not affecting the reported results nor the financial position
The following new and revised Standards and Interpretations have been adopted in the current year. Their adoption has not
had any significant impact on the amounts reported in these financial statements that may impact the accounting for future
transactions and arrangements.
IAS 1 (amended) - Presentation of Items of Other Comprehensive Income, the amendments improve the consistency and clarity
of the presentation of items of other comprehensive income.
IAS 19 (revised) - Employee Benefits, this revised standard prescribes the accounting and disclosure by employers for
employee benefits.
Improvements to IFRSs 2011-13. Aside from those items already identified above, the amendments made to standards under the
2010 improvements to IFRSs have had no impact and will not have any impact on the group.
At the date of authorisation of these financial statements, the following Standards and Interpretations which have not been
applied in these financial statements were in issue but not yet effective (and in some cases had not yet been adopted by
the EU):
IFRS 9 - Financial Instruments
IFRS 11 - Joint Arrangements
IFRS 15 - Revenue from Contracts with Customers
IAS 16 and IAS 38 (amended): Clarification of Acceptable Methods of Depreciation and Amortisation
IAS 27 (amended): Equity Method in Separate Financial Statements
IAS 1 - Disclosure initiative
The Directors anticipate that the adoption of these standards and interpretations in future periods will have no material
impact on the financial statements of the Group.
2 Accounting policies
The principal accounting policies adopted are set out below.
a) Basis of accounting
The financial statements have been prepared in accordance with International Financial Reporting Standards 'IFRSs'. The
financial statements have also been prepared in accordance with IFRSs adopted by the European Union and therefore the Group
financial statements comply with Article 4 of the EU IAS regulation. The financial statements have been prepared on the
historical cost basis, except for the revaluation of derivative financial instruments. Historical cost is generally based
on the fair value of the consideration given in exchange for the assets.
b) Going concern
When considering the going concern test the Board review 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 (see Strategic Report for further details). 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) 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.
d) Financial period
The accounting period ends on the Saturday which falls closest to 30 September, resulting in financial periods of either 52
or 53 weeks.
Throughout the financial statements, Directors' Report and Business Review, references to 2015 mean at 3 October 2015 or
the 53 weeks then ended; references to 2014 mean at 27 September 2014 or the 52 weeks then ended.
e) 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.
e) Goodwill (continued)
Goodwill is not amortised but is reviewed for impairment at least annually. For the purpose of impairment testing, goodwill
is allocated to each of the Group's cash-generating units expected to benefit from the synergies of the combination.
Cash-generating units to which goodwill has been allocated are tested for impairment annually, or more frequently when
there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than
the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill
allocated to the unit and then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset
in the unit. An impairment loss recognised for goodwill is not reversed in a subsequent period.
On disposal of a subsidiary, the attributable amount of goodwill is included in the determination of the profit or loss on
disposal.
Goodwill arising on acquisitions before the date of transition to IFRSs has been retained at the previous UK GAAP amounts
subject to being tested for impairment at that date. Goodwill of £15,080,000 written off to reserves under UK GAAP prior to
1998 has not been reinstated and will not be included in determining any subsequent profit or loss on disposal.
f) Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable and represents amounts receivable for
goods and services provided in the normal course of business, net of discounts, VAT and other sales-related taxes.
Revenue from the sale of goods is recognised when all the following conditions are satisfied:
· the Group has transferred to the buyer the significant risks and rewards of ownership of the goods;
· the Group retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold;
· the amount of revenue can be measured reliably;
· it is probable that the economic benefits associated with the transaction will flow to the entity; and
· the costs incurred or to be incurred in respect of the transaction can be measured reliably.
The level of sales returns is closely monitored by management and provided for when management considers them to be
significant and deducted from income.
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.
Dividend income from investments is recognised when the shareholders' rights to receive payment have been established
(provided that it is probable that the economic benefit will flow to the Group and the amount of income can be measured
reliably).
g) Exceptional items
Items are classed as exceptional where they relate to one-off costs incurred in the period that the directors do not expect
to be repeated in the same magnitude on an annual basis, or where the directors consider the separate disclosure to be
necessary to understand the Group's performance. The principles applied in identifying exceptional costs are consistent
between periods. See note 4 for details of exceptional items in the current period.
2 Accounting Policies (continued)
h) Property, plant & equipment
Property, plant and equipment are stated at cost less accumulated depreciation and any recognised impairment loss.
Depreciation is charged so as to write off the cost of assets, less estimated residual value, over their estimated useful
lives, on the following bases:
Freehold buildings 2% per annum on cost on a straight-line basis
Short leasehold land and buildings over the period of the lease, up to 25 years on a straight line basis
Fixtures and fittings over 10 years, except for the following; 4 years for computer equipment or 5 years for display stands, per annum as appropriate
Motor vehicles 25% per annum on a reducing balance basis
Freehold land is not depreciated.
Residual value is calculated on prices prevailing at the date of acquisition.
Assets held in the course of construction for production, supply or administrative purposes, or for purposes not yet
determined, are carried at cost, less any recognised impairment loss. Cost includes professional fees and, for qualifying
assets, borrowing costs capitalised in accordance with the Group's accounting policy. Depreciation of these assets, on the
same basis as other property assets, commences when the assets are ready for their intended use.
The gain or loss arising on the disposal or retirement of an asset is determined as the difference between the sales
proceeds and the carrying amount of the asset and is recognised in the statement of financial performance.
i) Impairment of tangible and intangible assets excluding goodwill
At each period end, the Group reviews the carrying amounts of its tangible 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. An intangible asset with an indefinite useful life is tested for impairment at least annually and
whenever there is an indication that the asset may be impaired.
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 re-valued 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.
j) Inventories
Inventories are stated at the lower of cost and net realisable value and relate solely to finished goods for resale, and
net of supplier rebates. Cost comprises the 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.
k) Taxation
The tax expense represents the sum of the tax charge for the period 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, and
interests in jointly controlled entities, except where the Group is able to control the reversal of the temporary
difference and it is probable that the temporary difference will not reverse in the foreseeable future.
Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the
asset is realised 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.
l) 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 statement of
financial performance for the period.
Exchange differences are recognised in profit or loss in the period in which they arise except for:
- exchange differences on transactions entered into to hedge certain foreign currency risks (see below under financial
instruments/ hedge accounting); and
- exchange differences on monetary items receivable from or payable to a foreign operation for which settlement is neither
planned nor likely to occur (therefore forming part of the net investment in the foreign operation), which are recognised
initially in other comprehensive income and reclassified from equity to profit or loss on disposal or partial disposal of
the net investment.
2 Accounting Policies (continued)
m) 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.
n) Investments
Fixed asset investments are shown at cost less provision for impairment.
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 balance sheet.
p) Finance costs
Finance costs which are directly attributable to the construction of tangible fixed assets are capitalised as part of the
cost of those assets. The commencement of capitalisation begins when both finance costs and expenditures for the asset are
being incurred and activities that are necessary to get the asset ready for use are in progress. Capitalisation ceases
when substantially all the activities that are necessary to get the asset ready for use are complete.
All other 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 timeframe established by the market
concerned, and are initially measured at fair value, plus transaction costs, except for those financial assets classified
as at fair value through profit or loss, which are initially measured at fair value.
Financial assets are classified into the following specified categories: financial assets 'at fair value through profit or
loss' (FVTPL), 'held-to-maturity' investments, 'available-for-sale' (AFS) financial assets and 'loans and receivables'.
The classification depends on the nature and purpose of the financial assets and is determined at the time of initial
recognition.
Financial assets at FVTPL
Financial assets are classified as at FVTPL where the financial asset is either held for trading or it is designated as at
FVTPL. The Group has no designated FVTPL financial assets.
A Financial asset is classified as held for trading if:
· it has been acquired principally for the purpose of selling in the near future; or
· it is a part of an identified portfolio of financial instruments that the Group manages together and has a recent
actual pattern of short-term profit-taking; or
· it is a derivative that is not designated and effective as a hedging instrument.
Financial assets at FVTPL are stated at fair value, with any resultant gain or loss recognised in profit or loss. The
Directors use their judgement in selecting an appropriate valuation technique for financial instruments not quoted in an
active market. Valuation techniques commonly used by market practitioners are applied, such as discounted cash flows and
assumptions regarding market volatility.
Loans and receivables
Trade receivables, loans, and other receivables that have fixed or determinable payments that are not quoted in an active
market are classified as loans and receivables. Loans and receivables are measured at amortised cost using the effective
interest method, less any impairment. Interest income is recognised by applying the effective interest rate, except for
short-term receivables when the recognition of interest would be immaterial.
Effective interest method
The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating interest
income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash
receipts (including all fees on points paid or received that form an integral part of the effective interest rate,
transaction costs and other premiums or discounts) through the expected life of the debt instrument, or, where appropriate,
a shorter period, to the net carrying amount on initial recognition.
Income is recognised on an effective interest basis for debt instruments other than those financial assets and liabilities
classified as at FVTPL.
Impairment of financial assets
Financial assets, other than those at FVTPL, are assessed for indicators of impairment at each Statement of Financial
Position date. Financial assets are impaired where there is objective evidence that, as a result of one or more events
that occurred after the initial recognition of the financial asset, the estimated future cash flows of the investment have
been impacted.
For certain categories of financial asset, such as trade receivables, assets that are assessed not to be impaired
individually are subsequently assessed for impairment on a collective basis. Objective evidence of impairment for a
portfolio of receivables could include the Group's past experience of collecting payments, an increase in the number of
delayed payments in the portfolio past the average credit period of 43 days, as well as observable changes in national or
local economic conditions that correlate with default on receivables.
For financial assets carried at amortised cost, the amount of the impairment is the difference between the asset's carrying
amount and the present value of estimated future cash flows, discounted at the financial asset's original effective
interest rate.
The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the
exception of trade receivables, where the carrying amount is reduced through the use of an allowance account. When a trade
receivable is considered uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts
previously written off are credited against the allowance account. Changes in the carrying amount of the allowance account
are recognised in profit or loss.
If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an
event occurring after the impairment was recognised, the previously recognised impairment loss is reversed through profit
or loss to the extent that the carrying amount of the investment at the date the impairment is reversed does not exceed
what the amortised cost would have been had the impairment not been recognised.
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and demand deposits, and other short-term highly liquid investments that
are readily convertible to a known amount of cash within three months and are subject to an insignificant risk of changes
in value.
Derecognition of financial assets
The Group derecognises a financial asset only when the contractual rights to the cash flows from the asset expire; or it
transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. If
the Group neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the
transferred asset, the Group recognises its retained interest in the asset and an associated liability for amounts it may
have to pay. If the Group retains substantially all the risks and rewards of ownership of a transferred financial asset,
the Group continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds
received.
2 Accounting Policies (continued)
Financial liabilities and equity
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements
entered into. An equity instrument is any contract that evidences a residual interest in the assets of the Group after
deducting all of its liabilities. Equity instruments issued by the Group are recorded at the proceeds received, net of
direct issue costs.
Financial liabilities are classified as at FVTPL where the financial liability is either held for trading or it is
designated as at FVTPL. The Group does not have any designated FVTPL liabilities.
A financial liability is classified as held for trading if:
· it has been incurred principally for the purpose of disposal in the near future; or
· it is a part of an identified portfolio of financial instruments that the Group manages together and has a recent
actual pattern of short-term profit taking; or
· it is a derivative that is not designated and effective as a hedging instrument.
Financial liabilities at FVTPL are stated at fair value, with any resultant gain or loss recognised in profit or loss.
Other financial liabilities
Other financial liabilities, including borrowings, are initially measured at fair value, net of transaction costs. Other
financial liabilities are subsequently measured at amortised cost using the effective interest method, with interest
expense recognised on an effective yield basis. The effective interest method is a method of calculating the amortised
cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is
the rate that exactly discounts estimated future cash payments through the expected life of the financial liability, or,
where appropriate, a shorter period, to the net carrying amount on initial recognition.
Derecognition of financial liabilities
The Group derecognises financial liabilities when, and only when, the Group's obligations are discharged, cancelled or they
expire.
Derivative financial instruments
The Group's activities expose it to the financial risks of changes in foreign currency exchange rates and interest 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
re-measured to their fair value at each period end date. The resulting gain or loss is recognised in profit or loss
immediately.
A derivative is presented as a non-current asset or a non-current liability if the remaining maturity of the instrument is
more than 12 months and it is not expected to be realised or settled within 12 months. Other derivatives are presented as
current assets or current liabilities.
Derivatives embedded in other financial instruments or other host contracts are treated as separate derivatives when their
risks and characteristics are not closely related to those of the host contracts and the host contracts are not measured at
fair value with changes in fair value recognised in profit or loss.
An embedded derivative is presented as a non-current asset or a non-current liability if the remaining maturity of the
hybrid instrument to which the embedded derivative relates is more than 12 months and is not expected to be realised or
settled within 12 months. Other derivatives are presented as current assets or current liabilities.
r) Share-based payments
The Group has applied the requirements of IFRS 2 Share-based Payments. In accordance with the transitional provisions, IFRS
2 has been applied to all grants of equity instruments after 7 November 2002 that were unvested as of 1 October 2005.
The Group issues equity settled share based payments to certain employees. Equity settled share based payments are measured
at fair value (excluding the effect of non market-based vesting conditions) at the date of grant. The fair value determined
at the grant date of the share based payment is expensed on a straight line basis over the vesting period, based on the
Group's estimate of shares that will eventually vest. Fair value is measured by use of the Black Scholes model.
r) Share-based payments (continued)
The Group provides employees with the ability to purchase the Group's ordinary shares at 80% of the current market value
through the operation of its share save scheme. The Group records an expense, based on its estimate of the 20% discount
related to shares expected to vest on a straight line basis over the vesting period.
s) Trade payables
Trade payables are initially measured at fair value and are subsequently measured at amortised cost, using the effective
interest rate method.
t) Operating profit
Operating profit is stated after charging restructuring costs but before property disposals, investment income, finance
costs and fair value movement in derivative contracts.
u) Provisions
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, and
it is probable that the Group will be required to settle that obligation and a reliable estimate can be made of the amount
of that obligation. Provisions are measured at the Directors' best estimate of the expenditure required to settle the
obligation at the balance sheet date, and are discounted to present value where the effect is material.
v) Supplier income
Amounts receivable from suppliers are initially held on the balance sheet within the cost of inventory and recognised
within the income statement once the contractual terms of the supplier agreements are met and the corresponding inventory
has been sold.
Volume rebates and price discounts are recognised in the income statement, as a reduction in cost of sales, in line with
the recognition of the sale of a product.
w) 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 critical judgement, apart from those involving estimations (which are dealt with separately below), that the Directors
have made in the process of applying the Group's accounting policies and that has the most significant effect on the
amounts recognised in financial statements is the detailed criteria for the recognition of revenue from the sale of goods
set out in IAS 18 Revenue. In particular the largest judgement is where there are open orders and these goods have not
been delivered to the customer, and in these cases the Directors believe the significant risks and rewards of ownership of
the goods have not been transferred to the buyer and therefore do not recognise revenue on these orders.
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:
Inventory
At the period end there were £1.9 million (2014: £2.2 million) of overheads and £2.0 million (2014: £2.1 million) of
supplier income (rebates) absorbed into the inventory balance. Additionally there were £0.7 million (2014: 0.6 million) of
provisions against the net realisable value of inventories.
2 Accounting Policies (continued)
Property provisions
Onerous lease provision - During the period the Group has continued to review the performance of its store portfolio, which
has resulted in no further stores being exited before their lease terms had expired (2014: two 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 sublease. The Group has further reviewed
any trading loss making stores and provided for those leases considered to be onerous. These estimates are based upon
available information and knowledge of the property market. The ultimate costs to be incurred in this regard may vary from
the estimates.
Dilapidations provision - The Group has estimated its likely dilapidation charges for its store portfolio and provided
accordingly. This estimate involves an assessment of average costs per store and the expected exit period for the current
portfolio, and is based on management's best estimate, taking into account knowledge of the property market and historical
trends. The ultimate costs to be incurred may vary from the estimates.
Supplier income
The Group has arrangements with a number of its suppliers which award rebates on satisfaction of purchase thresholds or
discounts against certain inventory lines. At the period end, the Group has invoiced £1.2 million of rebates (2014: £1.2
million) which are still outstanding in receivables and holds £2.0 million (2014: £2.1 million) of rebates within the
inventory balance (as above) and accrued rebates of £1.4 million (2014: £1.1 million). The Group does not recognise the
amounts received from suppliers within the income statement until the associated inventories are sold to the customers of
the Group.
Business simplification costs
During the period the Group announced its intentions to relocate the finance function to its head office in Leicester,
resulting in the closure of a support office. Additionally a decision has been made to exit the Topps Clearance format in
order to focus on the core Topps Tiles brand. These decisions have led to a review of the onerous lease and related
property provisions and a number of redundancy announcements.
3 Revenue
An analysis of Group revenue is as follows:
53 weeks ended 3 October 2015 52 weeks ended 27 September 2014
£'000 £'000
Revenue from the sale of goods 212,221 195,237
Fair value gain on forward currency contracts 135 110
Investment revenue 107 141
Total revenue 212,463 195,488
Investment revenue represents bank interest receivable. There are no other gains recognised in respect of loans and
receivables.
4 Exceptional items - Business Simplification Costs
During the period the Group announced the decision to relocate the finance function to Leicester and exit the Topps
Clearance format in the first half of 2015-16 financial period. This will result in the exit of one central support office
and nine store locations. Accordingly the Group has provided for the expected exposure to future lease commitments on
these properties, resulting in a charge of £1.7million. Additionally, an impairment review has been conducted of the
property, plant and equipment held by these locations, resulting in a charge of £0.2million. The Group has also provided
for other restructuring costs related to this decision, resulting in a charge of £0.7million.
53 weeks ended 3 October 2015 52 weeks ended 27 September 2014
Included in administrative expenses: £'000 £'000
Impairment of property, plant and equipment 172 -
Restructuring costs 736 -
Property related provisions 1,711 -
2,619 -
5 Profit before taxation
Profit before taxation for the period has been arrived at after charging/(crediting):
53 weeks ended 3 October 2015 52 weeks ended 27 September 2014
£'000 £'000
Depreciation of property, plant and equipment 5,243 4,553
Impairment of property, plant and equipment* 266 399
Disposal of property, plant and equipment loss/ (gain) 23 (401)
Property related provisions charged/ (utilised)* 1,729 (7)
Restructuring costs 736 -
Staff costs (see note 6) 51,530 45,865
Operating lease rentals 23,388 21,168
Write down of inventories recognised as an expense 3,431 2,584
Cost of inventories recognised as expense 78,152 73,783
Net foreign exchange gain (135) (268)
The disposal of property, plant and equipment loss relates to the sale of one freehold property (2014: one freehold
property).
* Included in the amounts above for property related provisions and impairment of property, plant and equipment, are the
business simplification costs in note 4.
Analysis of auditor's remuneration is provided below:
53 weeks ended 3 October 2015 52 weeks ended 27 September 2014
£'000 £'000
Fees payable to the Company's auditor with respect to the Company's annual accounts 30 30
Fees payable to the Company's auditor and their associates for other audit services to the Group:Audit of the Company's subsidiaries pursuant to legislation 85 85
Total audit fees 115 105
Other assurance 10 10
Taxation compliance services 70 70
Remuneration Committee advice 2 13
Share plan advice 11 -
Total non audit fees 93 93
208 208
A description of the work of the Audit Committee is set out on page x and includes an explanation of how auditor
objectivity and independence is safeguarded when non-audit services are provided by the auditor.
6 Staff costs
The average monthly number of persons and their full time equivalents employed by the Group and Company in the UK during
the accounting period (including executive directors) was:
53 weeks ended 3 October 2015 52 weeks ended 27 September 2014
Numberemployed Numberemployed
Selling 1,731 1,619
Administration 184 175
1,915 1,794
2015 2014
£'000 £'000
Their aggregate remuneration comprised:
Wages and salaries (including LTIP, see note 27) 46,844 41,577
Social security costs 3,838 3,636
Other pension costs (see note 26b) 848 652
51,530 45,865
Details of directors' emoluments are disclosed in the Annual Report. The Group considers key management to be the directors
only. Employee profit sharing of £10.4 million (2014: £9.8 million) is included in the above and comprises sales
commission and bonuses.
7 Investment revenue, finance costs and fair value loss on interest rate derivatives
53 weeks ended 3 October 2015 52 weeks ended 27 September 2014
£'000 £'000
Investment revenue
Bank interest receivable and similar income 107 141
Fair value gain on forward currency contracts 135 110
243 251
Finance costs
Interest on bank loans and overdrafts (1,231) (2,042)
Interest on underpaid tax* (852) (105)
(2,083) (2,147)
*The Group has historically provided for tax on open HMRC enquiries, some of which have now been resolved. As a result,
some historic tax payments have been reallocated between periods which, whilst leading to a net reduction in the overall
level of provision required, has required a reallocation of provision from corporation tax payable to cover interest which
may become due on underpaid tax in earlier periods. In the event that additional tax is ultimately due in those earlier
periods, it is estimated that £2.0 million of late payment interest would fall due, of which £1.1 million was provided for
in the prior period. In addition the Group made a payment on account of £0.8 million in the period, in partial settlement
of these open enquires.
7 Investment revenue, finance costs and fair value loss on interest rate derivatives (continued)
Held for trading assets and liabilities
Forward currency contracts gains 135 110
135 110
No finance costs are appropriate to be 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
53 weeks ended 3 October 2015 52 weeks ended 27 September 2014
Continuing operations: £'000 £'000
Current tax - charge for the period 3,946 4,087
Current tax - adjustment in respect of previous periods 103 (57)
Deferred tax - effect of reduction in UK corporation tax rate - (81)
Deferred tax - charge for period (note 18) (158) 133
Deferred tax - adjustment in respect of previous periods (note 18) 63 97
3,954 4,179
Corporation tax in the UK is calculated at 20.5% (2014: 22%) of the estimated assessable profit for the period.
The government has announced that it intends to reduce the rate of corporation tax to 19% with effect from 1 April 2017 and
18% from 1 April 2020. As this legislation was not substantively enacted by 3 October 2015, the impact of the anticipated
rate change is not reflected in the tax provisions reported in these accounts.
The charge for the period can be reconciled to the profit per the statement of financial performance as follows:
Continuing operations 53 weeks ended 3 October 2015 52 weeks ended 27 September 2014
£'000 £'000
Profit before taxation 17,019 16,691
Tax at the UK corporation tax rate of 20.5% (2014: 22%) 3,489 3,672
Tax effect of expenses that are not deductible in determining taxable profit 119 367
Tax effect of reduction in UK corporation tax rate - (81)
Tax effect of chargeable gain lower than profit on sale of freehold property (2) (21)
Tax effect of tangible fixed assets which do not qualify for capital allowances 182 201
Tax effect of adjustment in respect of prior periods 166 41
Tax expense for the period 3,954 4,179
9 Dividends
53 weeks ended 3 October 2015 52 weeks ended 27 September 2014
£'000 £'000
Interim dividend for the period ended 3 October 2015 of £0.0075 (2014: £0.0065) per shareProposed final dividend for the period ended 3 October 2015 of £0.0225 (2014: £0.0160) per share 1,447 4,358 1,257 3,098
The proposed final dividend 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.
2015 2014
Number of Number of
Shares Shares
Weighted average number of shares
For basic earnings per share 193,683,323 192,850,860
Impact of treasury shares (799,088) -
Weighted average number of shares under option 1,234,227 1,690,097
For diluted earnings per share 194,118,462 194,540,957
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
£'000
Cost and carrying amount at 28 September 2013, 27 September 2014 and 3 October 2015 245
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