REG - Topps Tiles - Annual Financial Report <Origin Href="QuoteRef">TPT.L</Origin> - Part 3
28/11/2017 07:05
- Part 3: For the preceding part double click ID:nRSb6436Xb
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 2r to the financial statements.
Categories of financial instruments
Carrying Value and Fair Value
2017£'000 2016£'000
FINANCIAL ASSETS
LOANS AND RECEIVABLES (INCLUDING CASH AND CASH EQUIVALENTS) 7,957 10,876
FAIR VALUE THROUGH PROFIT AND LOSS - 342
FINANCIAL LIABILITIESFAIR VALUE THROUGH PROFIT AND LOSS
FAIR VALUE THROUGH PROFIT AND LOSS 124 -
AMORTISED COST 53,377 51,404
The Group considers itself to be exposed to risks on financial instruments, including market risk (including currency
risk), credit risk, liquidity risk and cash flow interest rate risk.
The Group seeks to mitigate the effects of these risks by using derivative financial instruments to hedge these risk
exposures economically. The use of financial derivatives is governed by the Group's policies approved by the Board of
Directors, which provide written principles on foreign exchange risk, interest rate risk, credit risk, the use of financial
derivatives and non-derivative financial instruments, and the investment of excess liquidity. The Group does not enter into
or trade financial instruments, including derivative financial instruments, for speculative purposes.
MARKET RISK
The Group's activities expose it primarily to the financial risks of changes in foreign currency exchange rates and
interest rates. The Group enters into forward foreign exchange contracts to hedge the exchange rate risk arising on the
import of goods.
FOREIGN CURRENCY RISK MANAGEMENT
The Group undertakes certain transactions denominated in foreign currencies. Hence, exposures to exchange rate fluctuations
arise. Exchange rate exposures are managed within approved policy parameters utilising forward foreign exchange contracts.
The carrying amounts of the Group's foreign currency denominated monetary assets and monetary liabilities at the reporting
date are as follows:
Assets Liabilities
2017£'000 2016£'000 2017£'000 2016£'000
EUROUS DOLLAR 1,357927 781725 3,139 866 3,0321,215
FOREIGN CURRENCY SENSITIVITY ANALYSIS
The Group is mainly exposed to the currency of China and Brazil (US dollar currency) and to various European countries
(euro) as a result of inventory purchases. The following table details the Group's sensitivity to a 10% increase and
decrease in sterling against the relevant foreign currencies. Ten per cent represents management's assessment of the
reasonably possible change in foreign exchange rates. 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.
2017£'000 2016£'000 2015£'000
PROFIT OR LOSS MOVEMENT ON A 10% STRENGTHENING IN STERLING AGAINST 162 205 197
THE EURO
PROFIT OR LOSS MOVEMENT ON A 10% STRENGTHENING IN STERLING AGAINST
THE US DOLLAR 6 45 44
PROFIT OR LOSS MOVEMENT ON A 10% WEAKENING IN STERLING AGAINST
THE EURO (198) (250) (241)
PROFIT OR LOSS MOVEMENT ON A 10% WEAKENING IN STERLING AGAINST
THE US DOLLAR (7) (55) (54)
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:
2017£'000 2016£'000
FORWARD FOREIGN EXCHANGE CONTRACTS 10,142 6,125
These arrangements are designed to address significant exchange exposures for the first half of 2018 and are renewed on a
revolving basis as required.
At 30 September 2017 the fair value of the Group's currency derivatives is a loss of £124,417 within accruals (note 17)
(2016: Gain
£341,917 in prepayments note 15). These amounts are based on the market value of equivalent instruments at the balance
sheet date.
Losses of £466,064 are included in cost of sales (2016: £225,260 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 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 increasein interest rates 50 basis points decreasein interest rates
2017£'000 2016 £'000 2017£'000 2016£'000
(LOSS) OR PROFIT (181) (198) 181 198
The Group's sensitivity to interest rates mainly relates to the revolving credit facility.
CREDIT RISK MANAGEMENT
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss
to the Group. Management 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 15.
The carrying amount of financial assets recorded in the financial statements, which is net of impairment losses, represents
the Group's maximum exposure to credit risk without taking account of the value of any collateral obtained.
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 1.73681% (2016: 1.77413%) 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.
Less than1 month £'000 1-3 months£'000 3 months to 1 year£'000 1-5 years£'000 Total£'000
NON-INTEREST BEARING 21,97158 - - - 21,971
VARIABLE INTEREST RATE INSTRUMENTS 58 114 512 35,454 36,138
2016 Less than 1 month£'000 1-3 months£'000 3 months to1 year£'000 1-5 years£'000 Total£'000
NON-INTEREST BEARING 20,337 - - - 20,337
VARIABLE INTEREST RATE INSTRUMENTS 59 117 521 36,157 36,854
The Group is financed through a £50 million (2016: £50 million) revolving credit facility, of which £35 million (2016: £35
million) was utilised. At the balance sheet date the total unused amount of financing facilities was £15 million (2016: £15
million). The Group expects to meet its other obligations from operating cash flows and proceeds of maturing financial
assets.
The following table details the Group's liquidity analysis for its derivative financial instruments. The table has been
drawn up based on the undiscounted net cash inflows/(outflows) on the derivative instruments that settle on a net basis and
the undiscounted gross inflows and (outflows) on those derivatives that require gross settlement. When the amount payable
or receivable is not fixed, the amount disclosed has been determined by reference to the projected interest and foreign
currency rates as illustrated by the yield curves existing at the reporting date.
2017 Less than1 month £'000 1-3 months£'000 3 months to 1 year£'000 1-5 years£'000 5+ years£'000 Total£'000
FOREIGN EXCHANGE FORWARD (2,128) (3,884) (4,130) - - (10,142)
CONTRACTS PAYMENTS
FOREIGN EXCHANGE FORWARD
CONTRACTS RECEIPTS 2,141 3,837 4,040 - - 10,018
2016 Less than 1 month£'000 1-3 months£'000 3 months to1 year£'000 1-5 years£'000 5+ years£'000 Total£'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
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 (2016: 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
2017£'000 2016£'000
ONEROUS LEASE PROVISION 1,697 1,309
BUSINESS SIMPLIFICATION PROVISION 1,078 1,181
DILAPIDATIONS PROVISION 2,175 1,804
4,950 4,294
CURRENT 1,170 1,448
NON-CURRENT 3,780 2,846
4,950 4,294
Business Simplificationprovision£'000 Onerouslease provision£'000 Dilapidationsprovision£'000 Total£'000
AT 1 OCTOBER 2016 1,181 1,309 1,804 4,294
CREATED IN THE YEAR 387 786 604 1,777
UTILISATION OF PROVISION (490) (398) (192) (1,080)
RELEASE OF PROVISION IN THE PERIOD - - (41) (41)
AT 30 September 2017 1,078 1,697 2,175 4,950
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.
The discount rate used to calculate the present value of property provisions is 7%. A 10% reduction in discount rate would
lead to an increase in property provisions of £75,000.
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£'000 Share-based payments£'000 Exchange rate differences £'000 Rent free£'000 Stock provisions £'000 Intangible assets £'000 Total£'000
AS AT 3 October 2015 1,523 (1,353) 22 (511) - - (319)
CHARGE TO INCOME 138 (166) (22) 511 - - 461
CHARGE IN RESPECT OF PREVIOUS PERIODS 95 - - - - - 95
IMPACT OF RATE CHANGE (263) 105 - - - - (158)
CREDIT TO EQUITY - 630 - - - - 630
AS AT 1 OCTOBER 2016 1,493 (784) - - - - 709
CHARGE/(CREDIT) TO INCOME (55) 181 - - - - 126
CHARGE IN RESPECT OF PREVIOUS PERIODS 43 - - - - - 43
CHARGE TO EQUITY - 158 - - - - 158
RECOGNISED ON ACQUISITION OF SUBSIDIARY - - - - (38) 73 35
AS AT 30 SEPTEMBER 2017 1,481 (445) - - (38) 73 1,071
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.
21 CALLED-UP SHARE CAPITAL
2017£'000 2016£'000
ISSUED AND FULLY-PAID 196,437,298*(2016: 196,153,770*) ORDINARY SHARES OF 3.33P EACH (2016: 3.33P) 6,548 6,539
TOTAL 6,548 6,539
During the period the Group issued 254,998 (2016: 2,453,311) ordinary shares with a nominal value of £9,441 (2016: £81,712)
under share option schemes for an aggregate cash consideration of £15,631 (2016: £612,500).
* During the period £8,468 (2016: £4,415,000) shares were purchased by Topps Tiles Employee Benefit Trust on behalf of the
Group.
22 SHARE PREMIUM
2017£'000 2016£'000
AT START OF PERIOD 2,473 1,906
PREMIUM ON ISSUE OF NEW SHARES 14 567
AT END OF PERIOD 2,487 2,473
23 OWN SHARES
2017£'000 2016£'000
AT START OF PERIOD (4,411) (630)
ACQUIRED IN THE PERIOD (8) (4,415)
DISPOSED OF ON ISSUE IN THE PERIOD 8 634
AT END OF PERIOD (4,411) (4,411)
A subsidiary of the Group holds 4,038,495 (2016: 4,038,495) shares with a nominal value of £4,410,840 acquired for an
average price of
£1.09 per share (2016: £4,410,863 acquired for an average price of £1.09 per share) and therefore these have been classed
as own shares.
24 MERGER RESERVE
2017£'000 2016£'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 30
September 2017 (2016: same).
25 SHARE-BASED PAYMENT RESERVE
2017£'000 2016£'000
AT START OF PERIOD(DEBIT)/CREDIT TO EQUITY FOR EQUITY-SETTLED SHARE BASED PAYMENTS 4,280(359) 2,8201,460
AT END OF PERIOD 3,921 4,280
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 30 September 2017 (2016: same).
26 CAPITAL REDEMPTION RESERVE
2017£'000 2016£'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 30 September 2017 (2016: same).
27 RETAINED LOSSES
£'000
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)
DIVIDENDS (NOTE 9) (6,924)
DEFERRED AND CURRENT TAX ON SHARESAVE SCHEME TAKEN DIRECTLY TO EQUITY (155)
OWN SHARES ISSUED IN THE PERIOD (8)
NET PROFIT FOR THE PERIOD 13,431
AT 30 SEPTEMBER 2017 (4,952)
28 FINANCIAL COMMITMENTS
A) CAPITAL COMMITMENTS
At the end of the period there were capital commitments contracted of £nil (2016: £45,000).
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 £862,000 (2016: £863,000). At the period end, the Group holds outstanding
contributions of £142,669 (2016: £136,619).
C) LEASE COMMITMENTS
Minimum future sublease payments expected to be received under non-cancellable subleases amount to £2,509,000 (2016:
£3,715,000). 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 £24,762,316 (2016: £23,830,000)
which includes property service charges of £852,000 (2016: £732,000).
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:
2017 2016
Land andBuildings£'000 Other £'000 Land andBuildings£'000 Other£'000
- WITHIN 1 YEAR 22,793 1,319 22,601 1,037
- WITHIN 2-5 YEARS 76,434 2,093 71,957 1,363
- AFTER 5 YEARS 49,189 194 51,083 168
148,416 3,606 145,641 2,568
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 (2016: 5).
29 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:
2017 2016
Number ofshare options Weighted average exercise price £ Number ofshare options Weighted average exercise price £
OUTSTANDING AT BEGINNING OF PERIOD 3,080,615 1.14 2,969,105 0.63
ISSUED DURING THE PERIOD 2,105,117 0.70 2,098,318 1.27
EXPIRED DURING THE PERIOD (1,623,808) 1.07 (617,982) 1.05
EXERCISED DURING THE PERIOD (28,530) 0.54 (1,368,826) 0.45
OUTSTANDING AT END OF PERIOD 3,533,394 0.91 3,080,615 1.14
EXERCISABLE AT END OF PERIOD 378,847 0.98 8,372 0.43
The inputs to the Black-Scholes Model for the employee 3 year Employee Share Purchase Plans issued in the year are as
follows:
3 YEAR PLANWEIGHTED AVERAGE SHARE PRICE - PENCE 83.25
WEIGHTED AVERAGE EXERCISE PRICE - PENCE 70.00
EXPECTED VOLATILITY - % 29.22
EXPECTED LIFE - YEARS 3.00
RISK - FREE RATE OF INTEREST - % 0.41
DIVIDEND YIELD - % 4.20
Expected volatility was determined by calculating the historical volatility of the Group's share price over the previous 3
years (2016: 3 and 5 years). The expected risk used in the model has been adjusted, based on management's best estimate,
for the
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:
2017 2016
Number ofshare options Weighted averageexercise price £ Number ofshare options Weighted average exercise price £
OUTSTANDING AT BEGINNING OF PERIOD 5,064,089 - 5,032,515 -
ISSUED DURING THE PERIOD 1,752,568 - 1,229,100 -
EXPIRED DURING THE PERIOD (128,402) - (113,041) -
EXERCISED DURING THE PERIOD (254,998) - (1,084,485) -
OUTSTANDING AT END OF PERIOD 6,433,257 - 5,064,089 -
EXERCISABLE AT END OF PERIOD 988,989 - 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 13,196 (2016: 1,138,647) and the fair value of these options was £10,786
(2016: £1,674,835).
The inputs to the Black-Scholes Model are as follows:
WEIGHTED AVERAGE SHARE PRICE - PENCE 88.00
WEIGHTED AVERAGE EXERCISE PRICE - PENCE nil
EXPECTED VOLATILITY - % 28.03
EXPECTED LIFE - YEARS 2.00
RISK-FREE RATE OF INTEREST - % 0.13
DIVIDEND YIELD - % 3.69
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 17,931 share options under the existing share option scheme due to vest in
December 2017. The fair value of these options was £15,027.
The inputs to the Black-Scholes Model are as follows:
WEIGHTED AVERAGE SHARE PRICE - PENCE 87.00
WEIGHTED AVERAGE EXERCISE PRICE - PENCE nil
EXPECTED VOLATILITY - % 30.54
EXPECTED LIFE - YEARS 1.00
RISK-FREE RATE OF INTEREST - % 0.00
DIVIDEND YIELD - % 3.74
During the financial period, the Group granted 1,721,441 share options under the existing share option scheme due to vest
in December 2019. The fair value of these options was £1,355,996.
The inputs to the Black-Scholes Model are as follows:
WEIGHTED AVERAGE SHARE PRICE - PENCE 88.00
WEIGHTED AVERAGE EXERCISE PRICE - PENCE nil
EXPECTED VOLATILITY - % 29.73
EXPECTED LIFE - YEARS 3.00
RISK-FREE RATE OF INTEREST - % 0.28
DIVIDEND YIELD - % 3.69
2020 LONG TERM INCENTIVE PLAN
Under the plan a number of share options were granted to management level employees across the Group. These options will
vest in December 2020 subject to the achievement of certain performance criteria.
Movements in 2020 Long Term Incentive Plan options are summarised as follows:
2017 2016
Number ofShare options Weighted average exerciseprice £ Number ofshare options Weightedaverage exerciseprice £
OUTSTANDING AT BEGINNING OF PERIOD 2,603,747 - -
ISSUED DURING THE PERIOD 955,217 - 2,698,244 -
EXPIRED DURING THE PERIOD (497,702) - (94,497) -
EXERCISED DURING THE PERIOD - - - -
OUTSTANDING AT END OF PERIOD 3,061,262 - 2,603,747 -
EXERCISABLE AT END OF PERIOD - - - -
During the financial period, the Group granted an additional 955,217 share options under the 2020 Long Term Incentive Plan
share option scheme due to vest in December 2020.
During the financial period, the Group granted an additional 134,000 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 £101,726.
The inputs to the Black-Scholes Model are as follows:
WEIGHTED AVERAGE SHARE PRICE - PENCE 88.00
WEIGHTED AVERAGE EXERCISE PRICE - PENCE nil
EXPECTED VOLATILITY - % 34.18
EXPECTED LIFE - YEARS 4.00
RISK-FREE RATE OF INTEREST - % 0.45
DIVIDEND YIELD - % 3.69
Expected volatility was determined by calculating the historical volatility of the Group's share price over the previous 3
and 5 years (2016: 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 120,500 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 £85,715.
The inputs to the Black-Scholes Model are as follows:
WEIGHTED AVERAGE SHARE PRICE - PENCE 82.50
WEIGHTED AVERAGE EXERCISE PRICE - PENCE nil
EXPECTED VOLATILITY - % 28.68
EXPECTED LIFE - YEARS 3.5
RISK-FREE RATE OF INTEREST - % 0.26
DIVIDEND YIELD - % 4.36
During the financial period, the Group granted an additional 695,717 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 £588,695.
The inputs to the Black-Scholes Model are as follows:
WEIGHTED AVERAGE SHARE PRICE - PENCE 96.75
WEIGHTED AVERAGE EXERCISE PRICE - PENCE nil
EXPECTED VOLATILITY - % 34.26
EXPECTED LIFE - YEARS 4.0
RISK-FREE RATE OF INTEREST - % 0.26
DIVIDEND YIELD - % 3.62
In total, the Group recognised a total revenue of £358,502 (2016: £1,827,021) relating to share based payments.
30 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 (2016: 10.6% shareholding of 20,593,950 ordinary shares).
At 1 October 2017 S.K.M. Williams was the landlord of 2 properties leased to Multi Tile Limited, a trading subsidiary of
Topps Tiles Plc, for £114,000 (2016: 3 properties for £187,000) per annum.
No amounts were outstanding with S.K.M. Williams at 30 September 2017 (2016: £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 £1.1 million
(2016: £2.2 million) including share-based payments of £0.4 million (2016: £0.7 million). Further information about the
remuneration of the individual Directors is provided in the Remuneration Report on pages 50 to 69.
The Group's defined contribution pension scheme is administered by Legal and General. During the year the Group made
contributions of
£862,000 (2016: £863.000) and at year end the Group has outstanding contributions of £142,669 (2016: £136,619).
Company Balance Sheet
As at 30 September 2017
Notes 52 weeksended 30 September2017£'000 52 weeksended 1 October2016£'000
FIXED ASSETSINVESTMENTS 3 3,396 2,320
CURRENT ASSETSDEBTORS DUE WITHIN ONE YEAR 4 51,106 47,615
CASH AT BANK AND IN HAND 1,083 -
CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR 5 (1,268) (3,805)
NET CURRENT ASSETS 50,921 43,810
NET ASSETS 54,317 46,130
CAPITAL AND RESERVES
CALLED-UP SHARE CAPITAL 6,7 6,548 6,539
SHARE PREMIUM 7 2,487 2,473
SHARE BASED PAYMENT RESERVE 7 4,455 4,814
CAPITAL REDEMPTION RESERVE 7 20,359 20,359
OTHER RESERVE 7 6,200 6,200
PROFIT AND LOSS ACCOUNT 7 14,268 5,745
EQUITY SHAREHOLDERS' FUNDS 54,317 46,130
The financial statements of Topps Tiles Plc, Companies House number 3213782, were approved by the board of directors on 28
November 2017 and signed on its behalf by:
MATTHEW WILLIAMS ROB PARKER
Directors
Notes to the Company Financial Statements
For the 52 weeks ended 30 September 2017
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.
As permitted by FRS 101, the Company has taken advantage of the following disclosure exemptions available under that
standard:
i. The requirements of IFRS 7 Financial Instruments: Disclosures
ii. The requirement in paragraph 38 of IAS 1 'Presentation of Financial Statements' to present comparative information
in respect of:
a. Paragraph 79(a)(iv) of IAS 1
b. Paragraph 73(e) of IAS 16 Property, Plant and Equipment
c. Paragraph 118(e) of IAS 38 Intangible Assets
iii. The requirements of IAS 7 Statement of Cash Flows
iv. The requirements of IAS 24 Related Party Disclosures to disclose related party transactions entered into between two
or more members of a group, provided that any subsidiary which is a party to the transaction is wholly owned by such a
member
v. The requirements of paragraphs 10(d), 10(f), and 134 to 136 of IAS 1 Presentation of Financial Statements
vi. The requirements of paragraphs 30 and 31 of IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors
Where relevant, equivalent disclosures have been given in the group accounts of which the Company's results are included.
The financial statements have been prepared under the historical cost convention. Comparative data is for the period ended 1 October 2016
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 30 September 2017 of £15,447,000
(2016: £6,666,000).
The auditor's remuneration for services to the company was £46,000 for audit related work (2016: £41,000 for audit related
work). Fees relating to non-audit work totalled £nil (2016: £nil); see note 5 to the Group financial statements for further
details.
The Company had no employees other than the Directors (2016: same), whose remuneration is detailed on page 62.
3. FIXED ASSET INVESTMENTS
£'000
AT 1 OCTOBER 2016 2,320
MOVEMENT IN SHARE OPTIONS GRANTED TO EMPLOYEES (359)
ACQUISITION OF SUBSIDIARY 1,435
AT 30 SEPTEMBER 2017 3,396
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 (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
PARKSIDE CERAMICS LIMITED* 100% RETAIL AND WHOLESALE OF CERAMIC TILES, WOOD FLOORING AND RELATED PRODUCTS
* Held directly by Topps Tiles Plc
The investments are represented by ordinary shares.
All undertakings are incorporated in Great Britain and are registered and operate in England and Wales.
The registered address of all of the above entities (excluding Parkside Ceramics Limited) is Thorpe Way, Grove Park,
Enderby, Leicestershire, LE19 1SU, United Kingdom.
The registered address of Parkside Ceramics Limited is 51 Highmeres Road, Thurmaston, Leicester, LE4 9LZ.
4. DEBTORS
2017£'000 2016£'000
AMOUNTS FALLING DUE WITHIN ONE YEAR: 51,080 47,598
AMOUNTS OWED BY SUBSIDIARY UNDERTAKINGS
OTHER DEBTORS - 3
PREPAYMENTS AND ACCRUED INCOME 26 14
51,106 47,615
5. CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR
2017£'000 2016£'000
BANK LOANS AND OVERDRAFTS - 857
TRADE AND OTHER CREDITORS 106 12
AMOUNTS OWED TO SUBSIDIARY UNDERTAKINGS 65 72
ACCRUALS AND DEFERRED INCOME 1,097 2,864
1,268 3,805
6. CALLED-UP SHARE CAPITAL
2017£'000 2016 £'000
ISSUED AND FULLY-PAID 196,437,298 (2016: 196,153,770) ORDINARY SHARES OF 3.33P EACH (2016: 3.33P) 6,548 6,539
During the period 254,998 shares were purchased by Topps Tiles Employee Benefit Trust for £8,491 on behalf of the Group
(2016: 4,139,000 shares - £4,415,000).
During the period the Group issued and allotted 283,528 (2016: 2,453,311) ordinary shares with a nominal value of £9,441
(2016: £81,712) under share option schemes for an aggregate cash consideration of £15,631 (2016: £612,500).
7. CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share-based Capital Profit
COMPANY Share capital£'000 Share premium£'000 Share-basedpayment reserve£'000 Capital redemptionreserve£'000 Other reserves£000 Profitand loss account£'000 Total £'000
BALANCE 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 SHAREHODLERS - - - - - (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
BALANCE AT 1 OCTOBER 2016 6,539 2,473 4,814 20,359 6,200 5,745 46,130
PROFIT FOR THE PERIOD - - - - - 15,447 15,447
DIVIDENDS - - - - - (6,924) (6,924)
ISSUE OF NEW SHARES 9 14 - - - - 23
DEBIT TO EQUITY FOR EQUITY-SETTLED SHARE BASED PAYMENTS - - (359) - - - (359)
BALANCE AT 30 September 2017 6,548 2,487 4,455 20,359 6,200 14,268 54,317
At 30 September 2017, the Directors consider the other reserve of £6,200,000 to remain non-distributable.
The Directors consider £nil (2016: £nil) of profit and loss account reserves not to be distributable at 30 September 2017.
Five Year RecordUNAUDITED
COMPANY 52 weeksended 28 September2013£'000 52 weeksended 27 September2014£'000 53 weeksended 3 October2015£'000 52 weeksended 1 October2016£'000 52 weeksended 30 September2017£'000
GROUP REVENUE 177,849 195,237 212,221 214,994 211,848
GROUP OPERATING PROFIT 13,845 18,186 18,883 21,073 17,889
PROFIT BEFORE TAXATION 10,601 16,691 17,019 19,982 16,999
SHAREHOLDERS' FUNDS (DEFICIT) (10,184) 843 10,798 17,545 23,553
BASIC EARNINGS PER SHARE 4.76p 6.49p 6.75p 8.05p 6.98p
DIVIDEND PER SHARE 1.25p 1.65p 2.34p 3.50p 3.40p
DIVIDEND COVER 3.17 3.94 2.88 2.48 2.20p
AVERAGE NUMBER OF EMPLOYEES 1,720 1,794 1,915 1,977 2,030
SHARE PRICE (PERIOD END) 93.0p 105.0p 148.75p 112.25p 75.50
All figures quoted are inclusive of continued and discontinued operations.
This information is provided by RNS
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