REG - Topps Tiles - Annual Financial Report <Origin Href="QuoteRef">TPT.L</Origin> - Part 3
29/11/2016 07:07
- Part 3: For the preceding part double click ID:nRSc3543Qb
impaired receivables
2016 2015
£'000 £'000
Greater than 60 days 94 96
The allowance for doubtful debts was £33,000 by the end of the period (2015: £27,000). Given the minimal receivable balance, the Directors believe that there is no further credit provision required in excess of the allowance for doubtful debts.
The allowance for doubtful debts includes £20,000 relating to individually
impaired trade receivables (2015: £27,000) 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.
15 Cash and cash equivalents
Cash and cash equivalents comprise cash held by the Group and short term bank
deposits (with associated right of set off) net of bank overdrafts, with an
original maturity of three months or less. The carrying amount of these
assets approximates their fair value. A breakdown of significant bank and
cash balances by currency is as follows:
2016 2015
£'000 £'000
Sterling 8,738 16,519
US Dollar 715 14
Euro 775 31
Total cash and cash equivalents 10,228 16,564
16 Other financial liabilities
Trade and other payables
2016 2015
£'000 £'000
Amounts falling due within one year
Trade payables 16,598 15,505
Other payables 3,740 4,940
Accruals and deferred income 12,770 13,542
33,108 33,987
Trade payables and accruals principally comprise amounts outstanding for trade
purchases and on-going costs. The average credit period taken for trade
purchases is 49 days (2015: 46 days). No interest is charged on these
payables.
The Directors consider that the carrying amount of trade payables at 1 October
2016 and 3 October 2015 approximates to their fair value on the basis of
discounted cash flow analysis.
17 Bank loans
2016 2015
£'000 £'000
Bank loans (all sterling) 34,691 44,576
The borrowings are repayable as follows:
On demand or within one year - -
In the second year - -
In the third to fifth year 35,000 45,000
35,000 45,000
Less: total unamortised issue costs (309) (424)
34,691 44,576
Issue costs to be amortised within 12 months 116 116
Amount due for settlement after 12 months 34,807 44,692
17 Bank loans (continued)
The Directors consider that the carrying amount of the bank loan at 1 October
2016 and 3 October 2015 approximates to its fair value since the amounts
relate to floating rate debt.
The average interest rates paid on the loan were as follows:
2016 2015
% %
Loans 2.19% 2.36
The Group borrowings are arranged at floating rates, thus exposing the Group
to cash flow interest rate risk.
The Group is part way through a five year revolving credit facility of £50.0
million, expiring 31 May 2019. As at the financial period end £35.0 million of
this facility was drawn (2015: £45.0 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 1 October 2016, the Group had available £15 million (2015: £5.0 million) of
undrawn committed banking facilities.
18 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 2015. The capital structure of
the Group consists of debt, which includes the borrowings disclosed in note
17, cash and cash equivalents disclosed in note 15 and equity attributable to
equity holders of the parent, comprising issued capital, reserves and retained
losses as disclosed in notes 20 to 26.
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
Carrying Value and Fair Value
2016 2015
£'000 £'000
Financial assets
Loans and receivables (including cash and cash equivalents) 10,876 17,249
Fair value through profit and loss 342 117
Financial liabilities
Amortised cost 51,404 60,197
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.
18 Financial instruments (continued)
Market risk
The Group's activities expose it primarily to the financial risks of changes
in foreign currency exchange rates and interest rates. The Group enters into
forward foreign exchange contracts to hedge the exchange rate risk arising on
the import of goods.
Foreign currency risk management
The Group undertakes certain transactions denominated in foreign currencies.
Hence, exposures to exchange rate fluctuations arise. Exchange rate exposures
are managed within approved policy parameters utilising forward foreign
exchange contracts.
The carrying amounts of the Group's foreign currency denominated monetary
assets and monetary liabilities at the reporting date are as follows:
Assets Liabilities
2016 2015 2016 2015
£'000 £'000 £'000 £'000
Euro 781 31 3,032 2,201
US dollar 725 14 1,215 500
Foreign currency sensitivity analysis
The Group is mainly exposed to the currency of China and Brazil (US dollar
currency) and to various European countries (Euro) as a result of inventory
purchases. The following table details the Group's sensitivity to a 10%
increase and decrease in Sterling against the relevant foreign currencies. 10%
represents management's assessment of the reasonably possible change in
foreign exchange rates. 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.
2016 2015 2014
£000 £000 £000
Profit or Loss movement on a 10% strengthening in Sterling against the Euro 205 197 123
Profit or Loss movement on a 10% strengthening in Sterling against the US Dollar 45 44 69
Profit or Loss movement on a 10% weakening in Sterling against the Euro (250) (241) (150)
Profit or Loss movement on a 10% weakening in Sterling against the US Dollar (55) (54) (85)
18 Financial instruments (continued)
Currency derivatives
The Group utilises currency derivatives to hedge significant future
transactions and cash flows. The Group uses foreign currency forward
contracts in the management of its exchange rate exposures. The contracts are
denominated in US dollars and Euros.
At the balance sheet date, the total notional amounts of outstanding forward
foreign exchange contracts that the Group has committed to are as below:
2016 2015
£'000 £'000
Forward foreign exchange contracts 6,125 6,597
These arrangements are designed to address significant exchange exposures for
the first half of 2016 and are renewed on a revolving basis as required.
At 1 October 2016 the fair value of the Group's currency derivatives is a gain
of £341,917 within prepayments (note 14) (2015: £117,000). These amounts are
based on the market value of equivalent instruments at the balance sheet
date.
Gains of £225,260 are included in cost of sales (2015: £135,000 gain included
in investment revenue) (note 7)..
In the prior year, the directors included foreign exchange gains within
investment revenue. In the current year, the directors consider a more
appropriate classification to be within cost of sales given the gains relate
to the Group's inventory purchases. On the grounds of materiality, no changes
have been made to the comparative figures.
Interest rate risk management
The Group is exposed to interest rate risk as entities in the Group borrow
funds at floating interest rates. Due to the reduced level of floating rate
borrowings and the current low level of interest rates, management have not
deemed it necessary to implement measures that would mitigate this risk. The
Group's exposures to interest rates on financial assets and financial
liabilities are detailed in the liquidity risk management section of this
note.
Interest rate sensitivity analysis
The sensitivity analysis below has been determined based on the exposure to
interest rates for both derivatives and non-derivative instruments at the
balance sheet date. For floating rate liabilities, the analysis is prepared
assuming the amount of liability outstanding at the balance sheet date was
outstanding for the whole year. A 50 basis points increase or decrease is used
when reporting interest rate risk internally to key management personnel and
represents management's assessment of the possible change in interest rates.
If interest rates had been 50 basis points higher/lower and all other
variables were held constant, the Group's profit would be impacted as
follows:
50 basis points increase in interest rates 50 basis points decrease in interest rates
2016 2015 2016 2015
£'000 £'000 £'000 £'000
(Loss) or profit (198) (231) 198 231
The Group's sensitivity to interest rates mainly relates to the revolving
credit facility.
18 Financial instruments (continued)
Credit risk management
Credit risk refers to the risk that a counter party 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 do not consider there to be a material risk. The Group has a
policy of only dealing with creditworthy counterparties. The Group's exposure
to its counterparties is reviewed periodically. Trade receivables are minimal
consisting of a number of insurance companies and sundry trade accounts,
further information is provided in note 14.
The carrying amount of financial assets recorded in the financial statements,
which is net of impairment losses, represents the Group's maximum exposure to
credit risk without taking account of the value of any collateral obtained.
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 1.77413% (2015: 2.28688%))
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.
2016 Less than 1 month 1-3 months 3 months - 1 year 1-5 Years Total
£'000 £'000 £'000 £'000 £'000
Non-interest bearing 20,337 - - - 20,337
Variable interest rate instruments 59 117 521 36,157 36,854
2015 Less than 1 month 1-3 months 3 months - 1 year 1-5 Years Total
£'000 £'000 £'000 £'000 £'000
Non-interest bearing 20,444 - - - 20,444
Variable interest rate instruments 78 186 792 47,823 48,879
The Group is financed through a £50 million (2015 £50 million), revolving
credit facility of which £35 million (2015 £45 million) was utilised. At the
balance sheet date the total unused amount of financing facilities was £15
million (2015 £5 million). The Group expects to meet its other obligations
from operating cash flows and proceeds of maturing financial assets.
18 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.
2016 Less than 1 month 1-3 Months 3 months to 1 year 1-5 Years 5+ Years Total
£'000 £'000 £'000 £'000 £'000 £'000
Foreign exchange forward contracts payments (1,179) (2,435) (2,511) - - (6,125)
Foreign exchange forward contracts receipts 1,305 2,611 2,567 - - 6,483
2015 Less than 1 month 1-3 Months 3 months to 1 year 1-5 Years 5+ Years Total
£'000 £'000 £'000 £'000 £'000 £'000
Foreign exchange forward contracts payments - (3,331) (3,267) - - (6,598)
Foreign exchange forward contracts receipts - 3,358 3,362 - - 6,720
Fair value of financial instruments
The fair values of financial assets and financial liabilities are determined
as follows:
· Foreign currency forward contracts are measured using quoted forward
exchange rates and yield curves derived from quoted interest rates matching
maturities of the contracts.
· The fair values are therefore categorised as Level 2 (2015: 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).
19 Provisions
2016 2015
£'000 £'000
Onerous lease provision 1,309 1,368
Business simplification provision 1,181 2,208
Dilapidations provision 1,804 1,569
4,294 5,145
Current 1,448 1,736
Non-current 2,846 3,409
4,294 5,145
Business Simplification provision Onerous Lease provision Dilapidations provision Total
£'000 £'000 £,000 £,000
At 3 October 2015 2,208 1,367 1,570 5,145
Created in the year - 1,284 325 1,609
Utilisation of provision (1,027) (1,342) (91) (2,460)
Release of provision in the period - - -
At 1 October 2016 1,181 1,309 1,804 4,294
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 following four financial periods. 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 following six financial periods. The
business simplification provision relates to the decision to exit the Topps
Clearance format and relocation of the finance function to Leicester,
resulting in redundancies and the subsequent closure of nine store locations
and one support office (see note 4). The remaining business simplification
provision is expected to be utilised over the next 12 months.
The following are the deferred tax liabilities/(assets) recognised by the
Group and movements thereon during the current and prior reporting period.
Accelerated tax depreciation Share-based payments Exchange rate differences Rent free Total
£000 £000 £000 £000 £000
As at 27 September 2014 1,458 (663) (2) (532) 261
Charge to income 2 (205) 24 21 (158)
Charge in respect of previous periods 63 - - - 63
Impact of rate change - - - - -
Credit to equity - (485) - - (485)
As at 3 October 2015 1,523 (1,353) 22 (511) (319)
Charge/ (credit) to income 138 (166) (22) 511 461
Charge in respect of previous periods 95 - - - 95
Impact of rate change (263) 105 - - (158)
Charge to equity - 630 - - 630
As at 1 October 2016 1,493 (784) - - 709
19 Provisions (continued)
A reduction in the UK corporation tax rate from 21% to 20% (effective from 1
April 2015) was substantively enacted on 2 July 2013. Further reductions to
19% (effective from 1 April 2017) and to 18% (effective 1 April 2020) were
substantively enacted on 26 October 2015, and an additional reduction to 17%
(effective 1 April 2020) was substantively enacted on 6 September 2016. This
will reduce the company's future current tax charge accordingly. The deferred
tax liability at 1 October 2016 has been calculated based on these rates.
20 Called-up share capital
2016 2015
£'000 £'000
Issued and fully-paid 196,153,770* (2015: 193,700,459*) ordinary shares of 3.33p each (2014: 3.33p) 6,539 6,457
Total 6,539 6,457
During the period the Group issued 2,453,311 (2015: 64,219) ordinary shares
with a nominal value of £81,712 (2015: £2,141) under share option schemes for
an aggregate cash consideration of £612,500 (2015: £28,733).
* During the period £4,415,000 (2015: £504,000) shares were purchased by Topps
Tiles Employee Benefit Trust on behalf of the Group.
21 Share premium
2016 2015£'000
£'000
At start of period 1,906 1,879
Premium on issue of new shares 567 27
At end of period 2,473 1,906
22 Own shares
2016 2015£'000
£'000
At start of period (630) (656)
Acquired in the period (4,415) (504)
Disposed of on issue in the period 634 530
At end of period (4,411) (630)
A subsidiary of the Group holds 4,038,495 (2015: 799,000) shares with a
nominal value of £4,410,863 acquired for an average price of £1.09 per share
(2015: £27,000 acquired for an average price of £0.79 per share) and therefore
these have been classed as own shares.
23 Merger reserve
2016 2015£'000
£'000
At start and end of period (399) (399)
The merger reserve arose on pre 2006 acquisitions, the Directors do not
consider this to be distributable as at 1 October 2016 (2015: same).
24 Share-based payment reserve
2016 2015
£'000 £'000
At start of period 2,820 1,941
Credit to equity for equity-settled share based payments 1,460 879
At end of period 4,280 2,820
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 1 October 2016 (2015: same).
25 Capital redemption reserve
2016 2015
£'000 £'000
At start and end of period 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 1 October 2016 (2015: same).
26 Retained losses
£'000
At 27 September 2014 (28,736)
Dividends (note 9) (4,534)
Deferred tax on sharesave scheme taken directly to equity 490
Net profit for the period 13,065
At 3 October 2015 (19,715)
Dividends (note 9) (6,296)
Deferred and current tax on sharesave scheme taken directly to equity (182)
Own shares issued in the period (634)
Net profit for the period 15,531
At 1 October 2016 (11,296)
27 Financial commitments
a) Capital commitments
At the end of the period there were capital commitments contracted of £45,000
(2015: £114,000).
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 £863,000
(2015: £848,000). At the period end, the Group holds outstanding contributions
of £136,619 (2015: £152,414).
c) Lease commitments
Minimum future sublease payments expected to be received under non-cancellable
subleases amount to £3,715,000 (2015: £3,093,000).
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 £23,830,000 (2015: £23,388,000) which includes property service
charges of £732,000 (2015: £783,000).
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:
2016 2015
Land and Land and
buildings Other buildings Other
£'000 £'000 £'000 £'000
- within 1 year 22,601 1,037 21,868 847
- within 2 - 5 years 71,957 1,363 69,785 797
- after 5 years 51,083 168 54,619 -
145,641 2,568 146,272 1,644
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 10 years and rentals are fixed for an average of 5 years
(2015: 5).
28 Share-based payments
The Group operates seven share option schemes in relation to Group employees.
Employee Share Purchase Plans
Employee share purchase plans are open to almost all employees and provide for
a purchase price equal to the average market price over the three days prior
to the date of grant, less 20%. The shares can be purchased during a two-week
period each financial period. The shares so purchased are generally placed in
the employee share savings plan for a 3 or 5 year period.
Movements in share based payment plan options are summarised as follows:
2016Number of share options 2016Weighted average exercise price 2015 Number of share options 2015 Weighted average exercise price
£ £
Outstanding at beginning of period 2,969,105 0.63 2,485,176 0.37
Issued during the period 2,098,318 1.27 887,775 0.98
Expired during the period (617,982) 1.05 (339,627) 0.31
Exercised during the period (1,368,826) 0.45 (64,219) 0.29
Outstanding at end of period 3,080,615 1.14 2,969,105 0.63
Exercisable at end of period 8,372 0.43 - -
The inputs to the Black-Scholes Model for the employee 3 and 5 year Employee
Share Purchase Plans issued in the year are as follows:
3 year plan
Weighted average share price - pence 134.00
Weighted average exercise price - pence 127.00
Expected volatility - % 29.01
Expected life - years 3.00
Risk - free rate of interest - % 0.71
Dividend yield - % 2.24
5 year plan
Weighted average share price - pence 134.00
Weighted average exercise price - pence 127.00
Expected volatility - % 43.29
Expected life - years 5.00
Risk - free rate of interest - % 1.10
Dividend yield - % 2.24
Expected volatility was determined by calculating the historical volatility of
the Group's share price over the previous 3 and 5 years (2015: 3 years). The
expected risk used in the model has been adjusted, based on management's best
estimate, for the effects of non-transferability, exercise restrictions and
behavioural forces.
28 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.
Movements in Long Term Incentive Plan options are summarised as follows:
2016Number of share options 2016Weighted average exercise price 2015 Number of share options 2015 Weighted average exercise price
£ £
Outstanding at beginning of period 5,032,515 - 3,606,203 -
Issued during the period 1,229,100 - 1,446,312 -
Expired during the period (113,041) - (20,000) -
Exercised during the period (1,084,485) - - -
Outstanding at end of period 5,064,089 - 5,032,515 -
Exercisable at end of period 988,989 - - -
Under the plan a number of share options were granted to senior management.
These options will vest in December 2018 subject to the achievement of certain
performance criteria.
The total number of share options granted was 1,138,647 (2015: 1,422,348) and
the fair value of these options was £1,674,835 (2015: £1,439,000).
The inputs to the Black-Scholes Model are as follows:
Weighted average share price - pence 154.00
Weighted average exercise price - pence nil
Expected volatility - % 35.48
Expected life - years 3.00
Risk - free rate of interest - % 0.89
Dividend yield - % 1.53
Expected volatility was determined by calculating the historical volatility of
the Group's share price over the previous 3 years. The expected risk used in
the model has been adjusted, based on management's best estimate, for the
effects of non-transferability, exercise restrictions and behavioural forces.
During the financial period, the Group granted 36,665 share options under the
existing share option scheme due to vest in December 2016. The fair value of
these options was £55,606.
The inputs to the Black-Scholes Model are as follows:
Weighted average share price - pence 154.00
Weighted average exercise price - pence nil
Expected volatility - % 25.60
Expected life - years 1.00
Risk - free rate of interest - % 0.40
Dividend yield - % 1.53
During the financial period, the Group granted 53,788 share options under the
existing share option scheme due to vest in November 2017. The fair value of
these options was £80,461.
28 Share-based payments (continued)
The inputs to the Black-Scholes Model are as follows:
Weighted average share price - pence 154.00
Weighted average exercise price - pence nil
Expected volatility - % 29.16
Expected life - years 2.00
Risk - free rate of interest - % 0.65
Dividend yield - % 1.53
2020 Long Term Incentive Plan
During the financial period, a new five year Long Term Incentive plan was
introduced. Under this plan a number of share options were granted to
management level employees across the Group. These options will vest in
December 2020 subject to the achievement of certain performance criteria.
Movements in 2020 Long Term Incentive Plan options are summarised as follows:
2016Number of share options 2016Weighted average exercise price 2015 Number of share options 2015 Weighted average exercise price
£ £
Outstanding at beginning of period - - - -
Issued during the period 2,698,244 - - -
Expired during the period (94,497) - - -
Exercised during the period - - - -
Outstanding at end of period 2,603,747 - - -
Exercisable at end of period - - - -
The total number of share options initially granted was 2,596,994 and the fair
value of these options was £3,704,871.
The inputs to the Black-Scholes Model are as follows:
Weighted average share price - pence 154.00
Weighted average exercise price - pence nil
Expected volatility - % 43.48
Expected life - years 5.00
Risk - free rate of interest - % 1.32
Dividend yield - % 1.53
Expected volatility was determined by calculating the historical volatility of
the Group's share price over the previous 5 years. The expected risk used in
the model has been adjusted, based on management's best estimate, for the
effects of non-transferability, exercise restrictions and behavioural forces.
During the financial period, the Group granted an additional 101,250 share
options under the 2020 Long Term Incentive Plan share option scheme due to
vest in December 2020. The fair value of these options was £136,826.
28 Share-based payments (continued)
The inputs to the Black-Scholes Model are as follows:
Weighted average share price - pence 149.00
Weighted average exercise price - pence nil
Expected volatility - % 35.18
Expected life - years 4.5
Risk - free rate of interest - % 0.79
Dividend yield - % 2.18
In total, the Group recognised a total expense of £1,827,021 (2015:
£1,409,000) relating to share based payments.
29 Related party transactions
S.K.M. Williams is a related party by virtue of his 10.6% shareholding
(20,593,950 ordinary shares) in the Group's issued share capital (2015: 10.6%
shareholding of 20,593,952 ordinary shares).
At 1 October 2016 S.K.M. Williams was the landlord of 3 properties leased to
Multi Tile Limited, a trading subsidiary of Topps Tiles Plc, for £187,000
(2015: Four properties for £240,000) per annum.
No amounts were outstanding with S.K.M. Williams at 1 October 2016 (2015:
£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 IAS24.
The remuneration of the Board of Directors, who are considered key management
personnel of the Group was £2.2 million (2015: £3.6 million restated figure)
including share based payments of £0.7 million (2015: £2.0 million restated
figure). Further information about the remuneration of the individual
Directors is provided in the Remuneration Report within the Annual Report.
The Group's defined contribution pension scheme is administered by Legal and
General. During the year the Group made contributions of £863,000 (2015:
£848.000) and at year end the Group has outstanding contributions of £136,619
(2015: £152,414).
Company balance sheet as at 1 October 2016
52 weeks ended 1 October2016 53 weeksended 3 October 2015
Notes £'000 £'000
Fixed assets
Investments 3 2,320 493
__________ __________
Current assets
Debtors due within one year 4 47,615 31,394
Cash at bank and in hand - 15,179
__________ __________
46,573
Creditors: Amounts falling due within one year 5 (3,805) (3,415)
__________ __________
Net current assets 43,810 43,158
__________ __________
Net assets 46,130 43,651
__________ __________
Capital and reserves
Called-up share capital 6,7 6,539 6,457
Share premium 7 2,473 1,906
Share based payment reserve 7 4,814 3,354
Capital redemption reserve 7 20,359 20,359
Other reserve 7 6,200 6,200
Profit and loss account 7 5,745 5,375
__________ __________
Equity shareholders' funds 46,130 43,651
__________ __________
The financial statements of Topps Tiles Plc, Companies House number 3213782,
were approved by the board of directors on 29 November 2016 and signed on its
behalf by:
M T M Williams R Parker
Director Director
Notes to the Company Financial Statements
For the 52 weeks ended 1 October 2016
1 Basis of accounting
The Company meets the definition of a qualifying entity under FRS 100
'Application of Financial Reporting Requirements' issued by the FRC.
Accordingly, in the period ended 3 October 2015, the Company has changed its
accounting framework from the previous UK GAAP to Financial Reporting Standard
101 'Reduced Disclosure Framework' (FRS101) issued by the Financial Reporting
Council (FRC) and has, in doing so, applied the requirements of IFRS 1.6-33
and related appendices. These financial statements have therefore been
prepared in accordance with FRS 101.
The prior year financial statements have been restated for material
adjustments on adoption of FRS 101 in the current year. For more information,
see Note 23 (Transition to FRS 101).
As permitted by FRS 101, the Company has taken advantage of the following
disclosure exemptions available under that standard:
i) The requirements of IFRS 7 Financial Instruments: Disclosures
ii) The requirement in paragraph 38 of IAS 1 'Presentation of Financial
Statements' to present comparative information in respect of:
a) Paragraph 79(a)(iv) of IAS 1
b) Paragraph 73(e) of IAS 16 Property, Plant and Equipment
c) Paragraph 118(e) of IAS 38 Intangible Assets
iii) The requirements of IAS 7 Statement of Cash Flows
iv) The requirements of IAS 24 Related Party Disclosures to disclose related
party transactions entered into between two or more members of a group,
provided that any subsidiary which is a party to the transaction is wholly
owned by such a member
v) The requirements of paragraphs 10(d), 10(f), and 134 to 136 of IAS 1
Presentation of Financial Statements.
vi) The requirements of paragraphs 30 and 31 of IAS 8 Accounting Policies,
Changes in Accounting Estimates and Errors.
Where relevant, equivalent disclosures have been given in the group accounts
of which the Company's results are included.
Reconciliations to the balance sheet from this transition to FRS 101 are
provided in Note 8.
The financial statements have been prepared under the historical cost
convention. Comparative data is for the period ended 3 October 2015.
2 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 1 October 2016 of
£6,666,000 (2015: £98,309,000 Loss).
The auditor's remuneration for services to the company was £41,000 for audit
related work (2015: £30,000 for audit related work). Fees relating to
non-audit work totalled £nil (2015: £nil), see note 5 to the Group financial
statements for further details.
The Company had no employees other than the Directors (2014: same), whose
remuneration is detailed on in the Annual Report.
3 Fixed asset investments
Shares
£'000
At 3 October 2015 493
Movement in share options granted to employees 1,827
At 1 October 2016 2,320
The Company has investments in the following subsidiaries which affected the
profits or net assets of the Group.
Subsidiary undertaking % of issued shares held Principal activity
Topalpha Limited* 100% Property management and investment
Topalpha (Orpington) Limited 100% Dormant
Topalpha (Warehouse) Limited 100% Property management and investment and provision of warehousing services
Topalpha (Stoke) Limited 100% Property management and investment.
Tiles4Less Limited* 100% Intermediate holding company
Topps Tiles (UK) Limited 100% Retail and wholesale of ceramic tiles, wood flooring and related products
Topps Tiles Holdings Limited* 100% Intermediate holding company
Topps Tile Kingdom Limited 100% Intermediate holding company
Multi Tile Limited 100% Retail and wholesale of ceramic tiles, wood flooring and related products
Topps Tiles Distribution Ltd 100% Wholesale and distribution of ceramic tiles, wood flooring and related products.
Multi-Tile Distribution Limited 100% Intermediate holding company.
Topps Tiles I.P Company Limited 100% Ownership and management of Group intellectual property.
Topps Tiles Employee Benefit Trust* 100% Employee benefit trust
*held directly by Topps Tiles Plc
During the period the Group completed the strike off of six previously dormant
entities.
The investments are represented by ordinary shares.
All undertakings are incorporated in Great Britain and are registered and
operate in England and Wales.
4 Debtors
2016 2015
£'000 £'000
Amounts falling due within one year:
Amounts owed by subsidiary undertakings 47,598 30,875
Other debtors 3 3
Prepayments and accrued income 14 516
47,615 31,394
5 Creditors: Amounts falling due within one year
2016 2015
£'000 £'000
Bank loans and overdrafts 857 -
Trade and other creditors 12 560
Amounts owed to subsidiary undertakings 72 222
Accruals and deferred income 2,864 2,633
3,805 3,415
6 Called-up share capital
2016 2015
£'000 £'000
Issued and fully-paid 196,153,770 (2015: 193,700,459) ordinary shares of 3.33p each (2015: 3.33p) 6,539 6,457
During the period 4,139,000 shares were purchased by Topps Tiles Employee
Benefit Trust for £4,415,000 on behalf of the Group (2015: 431,108 shares -
£504,000).
During the period the Group issued and allotted 2,453,311 (2015: 64,219)
ordinary shares with a nominal value of £81,712 (2015: £2,141) under share
option schemes for an aggregate cash consideration of £612,500 (2015:
£28,733).
7 Reconciliation of reserves
Company Share based Capital Profit
Share Share payment redemption Other and loss
capital premium reserve reserve reserves account Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000
At 3 October 2015 6,457 1,906 3,354 20,359 6,200 5,375 43,651
Profit for the period - - - - - 6,666 6,666
Dividend paid to equity shareholders - - - - - (6,296) (6,296)
Issue of new shares 82 567 (7) - - - 642
Credit to equity for equity-settled share based payments - - 1,467 - - - 1,467
At 1 October 2016 6,539 2,473 4,814 20,359 6,200 5,745 46,130
At 1 October 2016, the Directors consider the other reserve of £6,200,000 to
remain non-distributable.
The Directors consider £nil (2015: £nil) of profit and loss account reserves
not to be distributable at 1 October 2016.
8 Explanation of transition to FRS 101
This is the first year that the Company has presented its financial statements
under Financial Reporting Standard 101 (FRS 101) issued by the Financial
Reporting Council. The following disclosures are required in the year of
transition. The last financial statements under previous UK GAAP were for the
year ended 3 October 2015 and the date of transition to FRS 101
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