REG - Topps Tiles - Annual Financial Results
29/11/2022 07:00
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RNS Number : 8516H Topps Tiles PLC 29 November 2022
29 November 2022
Topps Tiles Plc
Annual Financial Results
Second consecutive record year of revenue and significant market share gain
Topps Tiles Plc ("Topps Group", the "Company" or the "Group"), the UK's
leading tile specialist, announces its unaudited annual financial results for
the 52 weeks ended 1 October 2022.
Strategic and Operational Highlights
• Second consecutive record year of revenue for the Group
• Group market share increased to 19.0% from 17.6% last year - well on track to
achieve '1 in 5 by 2025' goal
• 62% of Group sales to professional trade customers, up 12ppts since 2015
• Record sales in the Topps Tiles brand, with right-sized estate and ongoing
growth through format development, category expansion and world class customer
service
• Average sales per Topps Tiles store up 25.3% compared to 2019 levels
• A record year of sales for Parkside - now trading at breakeven and forecast to
move into profit in 2023
• Pro Tiler Tools delivering strong sales and profits since acquisition in March
and Tile Warehouse becoming established after starting trading in May 2022
• Strong Group recovery from Covid period - trading ahead of 2019 levels with
all businesses contributing to sales growth in a developed and diversified
Group
Financial Highlights
2022 was a 52 week trading period, 2021 was a 53 week period. Year on year
variances throughout this report are not adjusted for the different time
periods covered in each financial year.
52 weeks ended 53 weeks ended YoY
1 October 2 October
2022 2021
(restated(5))
Statutory Measures
Group revenue £247.2 million £228.0 million +8.4%
Gross profit £135.4 million £130.7 million +3.6%
Gross margin 54.8% 57.3% (2.5)ppts
Profit before tax £10.9 million £14.0 million (22.1)%
Basic earnings per share 4.60p 5.47p (15.9)%
Final dividend per share 2.6p 3.1p (16.1)%
Total dividend per share 3.6p 3.1p +16.1%
Adjusted Measures
Topps Tiles like-for-like revenue year-on-year(1) 9.4% 19.6% n/a
Adjusted profit before tax(2) £15.6 million £15.0 million +4.0%
Adjusted earnings per share(3) 6.14p 6.02p +2.0%
Adjusted net cash(4) £16.2 million £27.8 million £(11.6) million
Financial Summary
• Group revenue up 8.4% to £247.2 million
• Group gross profit up 3.6% to £135.4 million with gross margin down due to
business mix and inflation
• Costs well controlled, with increases due to inflation and normalisation of
business rates expense offset by cost savings and reduction in store numbers
• Adjusted profit before tax up 4.0% to £15.6 million and adjusted EPS up 2.0%
to 6.14 pence
• Strong operational cash flows - closing net cash lower than last year largely
due to one-off items
• Strong balance sheet with £16.2 million net cash and new £30.0 million
revolving credit facility, committed to at least October 2025
• Proposed final dividend of 2.6 pence per share (2021: 3.1 pence per share),
giving a full year dividend of 3.6 pence per share (2021: 3.1 pence per
share), up 16.1% year on year
Current Trading and Outlook
• Robust trading in the first eight weeks of the new financial year, with
like-for-like sales in Topps Tiles up 3.4% year on year and other parts of the
Group performing in line with our expectations
• Macroeconomic pressures remain from high inflation, low consumer confidence
and weakening levels of disposable income
• Our clear growth strategy, operational flexibility and strong balance sheet
leave us well-positioned to respond to a more challenging macroeconomic
environment and continued delivery of our '1 in 5 by 2025' goal
Commenting on the results, Rob Parker, Chief Executive said:
"We are pleased to have delivered a year of strong strategic progress, with
record sales for a second year running and excellent delivery against our '1
in 5 by 2025' market share goal. We are continuing to develop and diversify
the Group and further strengthening our position as the UK's leading tile
specialist.
"Within our Topps Tiles brand, where the majority of sales are being made to
professional tradespeople, our focus on fewer more profitable stores and
category extensions has driven sales per store up 25% since 2019. Parkside,
our commercial brand, has delivered a record year of sales and now moved into
profit. Pro Tiler Tools and Tile Warehouse have added a new, high growth,
online-only sales channel to the Group, leveraging our core strengths in
product, service and scale.
"Looking forwards, we are mindful of the macroeconomic headwinds which will
impact both UK consumers and businesses in the year ahead. Against this
backdrop, our trading performance in the early weeks of the new financial year
has been robust, with like-for-like sales growth in Topps Tiles over the first
eight weeks of 3.4%.
"Our market share growth during 2022, combined with our clear strategy and
strong balance sheet, give us confidence that we will continue to deliver
growth and create value over the medium term."
Notes
(1)Topps Tiles like-for-like revenue is defined as sales from online and Topps
Tiles stores that have been trading for more than 52 weeks. In 2022
like-for-like revenue was £225.6 million (2021: £216.6 million), with an
average of 310 stores included in the weekly calculation.
(2) Adjusted profit before tax excludes the impact of items which are either
one-off in nature or fluctuate significantly from year to year.
(3) Adjusted earnings per share is adjusted for the items highlighted above,
plus the impact of corporation tax, and a £1.2 million deferred tax credit in
respect of previous periods which is not expected to repeat. See note 7 of
the financial statements.
(4) Adjusted net cash is defined as cash and cash equivalents, less bank
loans, before unamortised issue costs as at the balance sheet date. It
excludes lease liabilities under IFRS 16.
(5) Prior year values are restated following the adoption of the IFRIC agenda
decision in relation to configuration and customisation expenditure relating
to cloud computing arrangements. See note 2(A) in the notes to the financial
statements.
For further information please contact:
Topps Tiles Plc (29/11/22) 020 7638 9571
Rob Parker, CEO (Thereafter) 0116 282 8000
Stephen Hopson, CFO
Citigate Dewe Rogerson 020 7638 9571
Kevin Smith/Ellen Wilton
Summary of performance
2022 was a second consecutive record year of sales for Topps Group.
Following a record-breaking 2021, with revenues rising to £228.0 million,
2022 saw the Group deliver a further increase of 8.4%(1) to £247.2 million.
Adjusted profits before tax rose 4.0% year on year(1) despite significant
inflationary headwinds across gross margins and operating costs, adjusted EPS
was up 2.0%(1) and the full year dividend has increased 16.1% to 3.6 pence.
The strength of the UK RMI market continued to support our financial
performance, but we believe our Group growth strategy is delivering. We
estimate our market share in the year has increased from 17.6% in 2021 to
19.0% this year, leaving us well on track to achieve our 20% market share goal
of '1 in 5 by 2025'.
Sales performance was strong over the course of the year. Like-for-like
sales in the Topps Tiles brand were up 22.7% on a two-year basis in the first
half. In the prior year, like-for-like sales over the second half had been
up 17.4% on a two-year basis, and we had expected that some of this
performance would soften this year as consumer spending on other areas,
particularly holidays, travel and leisure, began to recover. In fact,
like-for-like sales in Topps Tiles continued to grow slightly in the second
half of 2022, up 0.8% on a one-year basis. Overall, like-for-like sales in
Topps Tiles were up 9.4% in the year on a one-year basis, and, when compared
to the last pre-pandemic period of 2019, average sales per store were up
25.3%.
Sales in the Group's other trading businesses were also strong. Over the year,
Parkside, our commercial brand, saw sales growth of 26.7%(1). Pro Tiler
Tools delivered year-on-year sales growth of 32.4% across the twelve-month
period and Tile Warehouse generated a small amount of sales in its first few
months of trading.
We have maintained good stock availability over the course of the year,
despite a variety of external factors impacting the Group, including
significant supply chain disruption which included a dramatic rise in global
shipping costs, a national shortage of HGV drivers and major issues at the
UK's ports. The year also saw significant gas price inflation, which
directly increases tile pricing because gas, which powers kilns, accounts for
a very significant proportion of the cost of manufacturing a tile. Our
response across the year has been to increase the prices of tiles to pass on
this inflation to our customers on a pound-for-pound basis, which has
protected gross profits but impacted the gross margin percentage. The war in
Ukraine also impacted the tile industry, as Ukraine has traditionally been an
important source of clay for tile manufacturers based in European markets,
however we successfully managed this through our strong supplier
relationships. Wider cost pressures impacted our overheads including our own
gas bill rising substantially, although these cost pressures were well
controlled.
Overall, our sales performance was strong across all our businesses, our
action on pricing, sourcing and cost control was effective, and adjusted
profits before tax were £15.6 million, up 4.0% year on year(1). An
important benchmark is to compare our performance in 2022 to our performance
in 2019, the last financial year before the Covid pandemic. Relative to that
trading period, Group sales in 2022 were £28.0 million higher (a 12.8%
increase), adjusted profit before tax was up £1.9 million (a 14.1%
increase)(2) and market share has increased 2 percentage points.
Our balance sheet remains strong. Net cash at year end fell to £16.2
million (2021: £27.8 million) due to the acquisition of Pro Tiler Limited,
the timing of dividend payments and a number of specific outflows, however we
have renegotiated our credit facilities and begin the new financial year with
substantial financial strength. Given our profit performance and the
strength of our balance sheet, we are proposing a final dividend of 2.6 pence
per share, taking the full year dividend to 3.6 pence per share, 16.1% higher
than last year.
Note 1: 2021 was a 53 week trading period. Year on year variances are
therefore comparing 52 weeks in 2022 to 53 weeks in 2021.
Note 2: Adjusted profit before tax in 2019 has been restated in line with the
IFRIC agenda decision on cloud computing (see the Financial Review) and
includes the trading loss from the Parkside brand which was excluded from
adjusted profit at the time.
Purpose, goal and strategy
The core purpose of Topps Group is to inspire customers through our love of
tiles. This gives us a very clear focus on our specialism in tiles and
associated products, and encourages all our colleagues to be passionate about
the products we sell. It also puts our customers at the heart of what we do
and reminds us that all roles in the Group are either serving customers
directly or supporting those colleagues that are.
The value of the UK market for tiles, adhesives, grouts and tools is slightly
over £1 billion, and the market for all the products we sell is around £1.3
billion, across the residential and commercial sectors. In 2020, we
announced a new goal for the business based on our market share, which was to
account for £1 in every £5 spent on tiles and associated products in the UK
by 2025: '1 in 5 by 2025'. A 20% market share would represent a significant
increase from our estimated 2019 market share of 17% and would require an
out-performance of the market by around 3.5% per year between 2020 and 2025.
In 2021, we estimated that our market share in periods where we were allowed
to trade without restrictions was approximately 17.6%, representing a good
initial step towards our goal. This year, including the addition of Pro
Tiler Tools into the Group, we have estimated our market share at 19.0%,
leaving us well on track to deliver our goal by 2025. Given the growth in
the market since 2020, our strategic moves into new areas and the recent
success of the core business, our revenues are already almost at the level we
set out for 2025 when the goal was launched, £250 million, with three years
to go.
In 2020, our strategy consisted of four elements - Retail, Commercial, Leading
Product and Leading People. However, over the past two years, the Group has
continued to develop and diversify. Our growth strategy to deliver our goal
now consists of three business areas - Omnichannel (Topps Tiles), Commercial
(Parkside) and Online Pure Play (Pro Tiler Tools and Tile Warehouse) - all of
which are underpinned by our three Group strategies of Leading Product,
Leading People and Environmental Leadership.
Leading Product
As the UK's leading tile specialist, our expertise in the ranging, sourcing
and procurement of tiles on a global basis is a core part of our competitive
advantage. Over the last 18 months, the numerous pressures on the end-to-end
supply chain for tiles has made this advantage more important than ever.
Manufacturers have faced dramatic increases in the cost of production relating
to gas prices and raw material inflation. Supply chains have been disrupted by
HGV driver shortages, strikes in our ports and significant increases in global
shipping costs.
Our ability to rely on long term strategic relationships with our strategic
supplier base, freight forwarding and logistics partners in this environment
has been key. In the year, we sourced 73% of our supply from our strategic
supplier base (2021: 70%). We have also responded by resourcing products
towards suppliers or regions of the world which are less impacted by the
factors above, as well as maintaining a strong inventory position.
As well as responding to the factors described above, we continued our
iterative programme to develop and produce differentiated products that are
innovative, of high quality and exclusive to Topps Group. During the year,
we launched 34 new products into Topps Tiles (2021: 52 product introductions)
and 76% of ranges within Topps Tiles are either exclusive or own brand (2021:
74%). We also curated a new product range for Tile Warehouse, significantly
extended our range of Everscape(TM) outdoor tiles, rolled out Luxury Vinyl
Tiles to the majority of Topps Tiles stores, and are now trialling more
category expansion in XXL tiles and shower panels.
The role of product brands within the business has been an area of focus.
First, we have created own brands which are portable across the Group, such
as:
● DexTM, our tiling tools brand aimed at the general builder and DIY enthusiast;
● Regenr8TM, our sustainable adhesive containing up to 53% recycled content;
● Excel BondTM, our core own brand of adhesive; and
● RiseTM, our new underfloor heating brand.
Secondly, we are increasing our understanding of the role of proprietary
brands within non-tile products aimed at our trade customer base. Our
acquisition of Pro Tiler Tools has increased our access to a very wide variety
of trade-focused brands and we are currently working to understand the
opportunity that these products may provide for trade customers within our
Topps Tiles stores, where trade sales accounted for 59% of total sales in
2022, increasing to 60% in the final quarter.
Leading People
The Group's success is underpinned by industry-leading levels of customer
service. Our core product is both a building material, requiring technical
knowledge, and a decorative item, requiring inspirational selling, and we need
our colleagues to be able to work and communicate effectively across both
areas, requiring high levels of capability and engagement.
Our Leading People strategy is based around four key areas: recruitment and
retention, colleague experience, capability and well-being.
Recruitment and retention has been a challenge for many companies over the
last year. Given the tightness of the UK labour market, we have focused on
improving our recruitment processes and better communicating our employer
brand. Our compensation strategy for service specialists within Topps Tiles
includes an average of £2,500 per year in commission on top of basic salary,
as well as pension contributions, an employee discount scheme and no evening,
late night or Christmas working (which are common in equivalent jobs in retail
and hospitality). Our culture, based around small teams with big ambitions,
who have high levels of trust and who celebrate success, is also a big part of
the attraction of working for Topps Group.
Other highlights in the year include the launch of our new charity
relationship with Alzheimer's Society and an ongoing focus on colleague
engagement through our Team-Talk employee forums. We also launched our new
learning experience platform and extended our coaching programme across middle
and senior managers. We aim to promote internally wherever possible, and we
were pleased that last year, 65% of candidates appointed to management
positions were internal promotions.
Our ongoing focus on well-being continues. A highlight last year was the
launch of our new partnership with Bupa, which provides colleagues with
occupational health support, an improved employee assistance programme and
access to Bupa's wealth of resources on wellbeing. Much more information can
be found on colleague experience, capability and wellbeing in the
Sustainability section of the Annual Report.
The success of our Leading People strategy is evidenced by our customer
satisfaction scores, and seen directly in our Employee Engagement scores which
we measure through our annual MyVoice staff survey. Overall colleague
engagement was at 80% in the last annual survey (FY 2021: 80%) compared to the
UK average of 68%.
Environmental Leadership
Topps Group has a long history of considering its environmental impact. In
2004, we established our first environmentally focused working group; in 2010,
we partnered with the Carbon Trust, implementing lighting energy efficiency
upgrades which we have subsequently improved upon, year by year; and, in 2013,
we began reporting carbon emissions in our Annual Report, providing a key
metric for investors to evaluate the Group's environmental performance.
However, the severity of the global climate crisis is growing and the
requirements for all businesses to do much more to limit their environmental
impact is clear.
As such, in recent years, Topps Group has been accelerating its environmental
agenda. In 2019, we established our Sustainability Council, a
cross-functional committee now chaired by our Chief Executive, Rob Parker,
which was tasked with aligning the business to a low carbon model. In 2021,
we placed Environmental Leadership front and centre as part of the core
strategy of Topps Group and we challenged ourselves with an ambitious goal of
becoming carbon neutral across Scopes 1 and 2 by 2030, five years ahead of the
BRC's equivalent target for the wider retail industry. This year we are
delighted that our Commercial business has become carbon balanced - the first
part of the Group to reach this milestone. Other improvements have included
the addition of EV chargers at our Head Office and the renewal of our
commercial fleet with more efficient, lower polluting vehicles, which,
alongside improved driver training and the latest route planning software, led
to our fleet using 6% less fuel than the previous year (despite covering 23%
more miles). Carbon emissions per store are down 35.4% year-on-year as a
result of the Group moving to a renewable source of electricity in 2022. We
believe the Scope 3 emissions are far more significant than Scope 1 and 2
whilst being harder to monitor and influence. As such we will start to
report the Group's Scope 3 emissions from 2024.
In 2022, we have added a second pillar to our Environmental Leadership
strategy: supporting circularity. As part of this, we have signed up to WRAP's
Plastic Pact UK, obligating us to eliminate non-recyclable plastic packaging,
and we have begun promoting recycled content in products at the point of sale,
both online and in-store, to help customers make environmentally conscious
choices.
We have reformatted the five elements of our Environmental Leadership strategy
from 2021 into two main pillars, governed by our executive-led Sustainability
Council. These are:
1. Achieving carbon balance (Scopes 1 & 2)
● Reduce as much as possible our current carbon emissions
● Use high quality, auditable carbon offsets to balance the remainder by 2030
2. Supporting circularity
● Work with partners to minimise waste and manage the remainder responsibly,
with a focus on recycling
● Drive innovation to increase the use of recycled and recyclable materials in
tiles, related products, and packaging (e.g. through the Plastic Pact UK).
Omni-channel: Topps Tiles
Topps Tiles is our well-established, market-leading, omni-channel specialist,
serving the domestic RMI market, with significant opportunities for further
profitable growth.
This year saw record sales in Topps Tiles of £227.0 million (2021: £219.4
million over 53 weeks), with like-for-like sales growth of 9.4%. Sales per
store were 25.3% higher than in the pre-pandemic period of 2019 and total
profit in Topps Tiles has increased despite having 15% fewer stores compared
to that year. Our strategy for future growth focuses on three main areas:
increasing customer numbers, online and in store, delivering world class
customer service, and management of our physical store portfolio.
Our customer base continues to be a mix of professional trade customers and
homeowners. Trade customers are key as they provide repeat custom and also
form an important link to homeowners, both in terms of recommendation and also
direct sales on behalf of homeowners who prefer to transact through their
fitter rather than with us directly. We have been actively growing our sales
to trade customers over recent years, as follows:
FY15 FY19 FY22 Q4 FY22
Trade customers: 50% 56% 59% 60%
% of sales in Topps Tiles
As such, the business is now more of a merchant than a retailer, with the
majority of sales being made to professional tradespeople.
This year, our sales of products other than tiles (such as adhesives and
grouts) have been encouraging and we have maintained good levels of stock and
offered particularly keen value to our trade customers across these product
areas, including trade pricing, bulk deals and a trade loyalty scheme. We
also provide a direct sales team, which offers contractors and larger trade
customers an enhanced service.
Growing customer numbers is a key function of our digital operations, as we
know that many purchasing journeys start with research online. This year we
have made various technical improvements to our multiple award-winning
website, for example halving page load speeds and adding new payment
methods. We have launched a new app for trade customers and extended our
social media presence, including a launch on TikTok. At the end of the year,
we launched a Topps Tiles range on Very.co.uk - this is Topps Tiles' first
move into marketplaces and is a good fit given Very's core customer group is
complementary to Topps Tiles' customer base.
The output of this work is that we enjoy high levels of brand awareness
online. Our website, toppstiles.co.uk, has higher brand searches than any
other flooring retailer in the UK, we have the second highest brand awareness
(behind SCS) and the third highest visibility (behind SCS and Carpetright)
(Source: "Flooring - Salience Index 2022"). We also maintained our position
as the leading tile specialist in Internet Retailing's annual "RetailX Top
500" report and were ranked in the top 100 websites across the whole of the UK
retail sector in that report.
Our stores remain central to our omni-channel offer, particularly for our
trade customers. Given the nationwide coverage of our store estate, almost
every customer will visit a store at some point in their purchasing journey,
and almost all customers will visit the website too. This year we have
established three store formats within Topps Tiles. 33 of our largest stores
are branded as 'Topps Tiles Superstores'. These larger stores contain the
widest breadth of Topps' range of products as well as further amenities and
are now, following modest investment, outperforming the rest of the estate.
Our 14 'Topps Tiles Clearance' stores provide even greater value to customers,
whilst allowing us to clear mixed batch and discontinued lines. The balance
of 257 stores are core stores, which will continue to deliver excellent
service and range for trade and homeowner customers.
This year we completed our multi-year programme of store closures, and we
believe our estate is now right-sized. During the year we closed ten stores
and opened one. The Topps Tiles store estate has reduced from 372 stores at
the end of 2017, to 304 stores at the end of 2022, a reduction of 18%, and
this reduction in stores has helped drive incremental profits as we
transitioned sales from closed stores to other local stores whilst reducing
our cost base. Our estate management has been strong throughout the process,
and we finished the year with 11 closed Topps Tiles sites (down from 21 at the
start of the year, despite ten additional Topps Tiles store closures in the
year), of which four more are expected to exit the business in the first half
of 2023. We retain a flexible property portfolio, with an average unexpired
lease term to the next break opportunity of 2.8 years (2021: 3.3 years), or
2.6 years excluding strategically important stores (2021: 3.0 years).
Through the quality of our digital operations, our store estate and our
colleagues, we aim to deliver world class service. Homeowners shop with us
infrequently and require advice and expertise, whether in store or online, and
trade customers value strong local relationships and technical knowledge. We
were delighted that our customer satisfaction levels improved again in 2022,
from 88% last year to 90% this year. That means that 90% of the c.17,000
customer surveys which we collect each year rated us as five out of five - we
believe this is a genuinely world-class result.
Overall, Topps Tiles has had a very strong year both financially and
strategically, with good growth in sales and profits, a right-sized estate
with new formats in place, further developments in digital, a move into
marketplaces in place with Very, growth in trade sales and even higher
satisfaction scores from our customers.
Commercial: Parkside
Parkside is a specialist tile distributor, aimed at architects, designers and
contractors in the commercial market. Becoming part of Topps Group in 2017,
Parkside is now a top-five competitor within the sector and is established as
one of the fastest growing brands in this market.
This year, Parkside delivered a fifth consecutive year of record sales, up
26.7% to £10.9 million (2021: £8.6 million over 53 weeks). This represents
a significant out-performance of the new build commercial market, which was up
2.5% in the year (across all product types) but remains 21.7% lower than its
level before the Covid pandemic (source: ONS). We estimate that the element
of the commercial market for tiles and associated products which is attractive
for us to address is worth approximately £200 million. On that basis,
Parkside represents at least a £25 million sales opportunity for the Group.
In the year, Parkside acquired more than 120 new clients, ranging from one-off
purchases to repeat business across multi-site locations, and continued to
push forward in its specialist sectors of retail and leisure, hotels,
infrastructure and transport, and residential. The business is building a
strong sales culture and has further opportunity to leverage the Group's scale
and infrastructure, in areas such as brands, supply chain and inventory.
Environmental credentials are particularly important to architects and
designers focused on the commercial market, and we work with them to build
sustainability into their projects. This year, Parkside became the first
part of the Group to become carbon neutral across Scope 1 and 2 emissions,
building on our ISO14001 accreditation, recycled and recyclable samples
packaging, commitment to sustainable products, our various CPD sessions at our
Clerkenwell Sustainability and Design Studio and many other initiatives.
Parkside's financial performance is improving at pace. Trading losses in the
year halved to £0.8 million (2021: £1.6 million loss), however £0.7 million
of that was from the first half year, and the business was trading at
breakeven by the final quarter. We expect Parkside to deliver a positive
contribution to the Group's profitability in 2023.
Online Pure Play: Pro Tiler Tools and Tile Warehouse
In 2021 we identified a significant opportunity to add complementary trading
businesses which operate solely online, serving different customer groups with
different needs, but always focused on our specialism of tiles and associated
products, to Topps Group. These businesses can benefit from the Group's scale,
flexible supply chain, financial resources and operational expertise, and in
turn the rest of the business can benefit from the specialist knowledge and
experience of new colleagues from these successful online businesses as they
join the Group. In 2022, we added two new Online Pure Play trading
businesses to the Group - Pro Tiler Tools and Tile Warehouse - and we see the
potential for more in time.
Pro Tiler Tools
The Group acquired 60% of the issued share capital of Pro Tiler Limited in
March 2022, with a contract to acquire the remaining 40% in 2024. Pro Tiler
Tools is an online specialist supplier of tiling-related consumables and
equipment to trade customers. Pro Tiler is highly complementary to the
existing Group's operations, enabling us to serve trade customers both
physically (through Topps Tiles) and online (through Pro Tiler Tools).
Trading post acquisition has been strong. On acquisition, we reported that
Pro Tiler's sales in the 12 months to January 2022 were £11.9 million.
Sales in the 12 months to September 2022 were £14.7 million and sales in the
second half of the Group's financial year annualise at £16.5 million. Year
on year sales growth across the full year was 32.4%. The business runs at a
gross margin of approximately 30% meaning that continued growth will have a
dilutive impact to the Group's percentage gross margins, but will provide
incremental gross profits. We are targeting sales in excess of £25 million
over time from Pro Tiler Tools.
The Pro Tiler Tools platform, management and team also allow us the
opportunity to grow in other areas of the online market and the Group is
encouraging the team to deliver additional value where appropriate.
Additionally, Pro Tiler Tools has access to a significant number of
proprietary brands which we believe will present opportunities for further
long term value creation for the wider Group.
Tile Warehouse
Tile Warehouse was launched in May 2022 as a new online-only brand built from
the ground up to offer homeowners everyday low pricing on a focused range of
tiles and associated products. Tile Warehouse focuses on quality tiles at
very competitive price points and is complementary to Topps Tiles as it will
target a different customer group, whilst leveraging the Group's scale,
supplier relationships, digital expertise and financial resources. The
market for online-only tiles in the UK is estimated to be worth more than
£100 million and we are targeting sales of approximately £15 million from
Tile Warehouse within the first five years. We expect to make small losses
in the first few years as the brand is established but believe it will play a
significant role in the Group as we move forward.
The first few months of trading have been focused on establishing the
technical aspects of the offer including product range, samples, online
functionality, search strategies, SEO content and supply chain solutions.
The brand has been developed at a low cost however the investment in growth
will start in 2023 as we start to invest in pay per click to drive traffic in
a more meaningful way.
Key Performance Indicators ("KPIs")
The Board monitors a number of financial and non-financial metrics and KPIs
both for the Group and by individual store. This information is reviewed and
updated as the Directors feel appropriate. Specific measures include:
52 weeks to 53 weeks to YoY
1 October 2 October
2022 2021
(restated)
Financial KPIs
Group revenue growth year-on-year 8.4% 18.3% n/a
Topps Tiles like-for-like sales growth year-on-year* 9.4% 19.6% n/a
Group gross margin 54.8% 57.3% (2.5)ppts
Adjusted profit before tax* £15.6m £15.0m +4.0%
Adjusted earnings per share* 6.14 pence 6.02 pence +2.0%
Adjusted net cash* £16.2m £27.8m £(11.6)m
Inventory days 126 123 +3 days
Non-financial KPIs
Topps Tiles customer overall satisfaction score 89.9% 88.4% +1.5 ppts
Colleague turnover 36.5% 31.2% +5.3 ppts
Carbon emissions per store (tonnes per annum) 15.5 24.0 (35.4)%
Number of Topps Tiles stores at year end 304 313 (9)
* as defined in the Financial Review
Notes: Customer overall satisfaction scores are calculated from the responses
we receive through our TileTalk customer feedback programme. Overall
satisfaction (OSAT) is the percentage of customers that score us 5 in the
scale of 1 - 5, where 1 is highly dissatisfied, and 5 is highly satisfied.
Energy carbon emissions have been compiled in conjunction with our electricity
and gas suppliers. This is based on the actual energy consumed multiplied by
Environment Agency approved emissions factors. Vehicle emissions have been
calculated by our in-house transport team based on mileage covered multiplied
by manufacturer quoted emission statistics. Carbon emissions per store for
FY21 have been restated to remove emissions connected with sub-contractors,
which classify as scope 3 emissions and do not form part of this metric.
FINANCIAL REVIEW
The 2022 financial year covers the 52 weeks to 1 October 2022. The previous
financial year covers the 53 weeks to 2 October 2021.
Adjusted Measures
The Group's management uses adjusted performance measures, to plan for,
control and assess the performance of the Group.
Adjusted profit before tax differs from the statutory profit before tax as it
excludes the effect of one-off or fluctuating items, allowing stakeholders to
understand results across years in a more consistent manner. In line with
the prior year, we have included the business-as-usual impact of IFRS 16 in
adjusted profit but continue to adjust for any impairment charges or
impairment reversals of right of use assets, derecognition of lease
liabilities where we have exited a store, and one-off gains and losses through
sub-lets. In the period 2022 - 2024 we will also exclude the cost relating
to the 40% purchase of shares of Pro Tiler Limited which we expect to make
from March 2024, which under IFRS 3 is treated as a remuneration expense
rather than an acquisition cost, and this period we have excluded deal costs
related to the Pro Tiler Limited acquisition and set up costs relating to Tile
Warehouse.
Analysis of movements from adjusted profit before tax to statutory profit
before tax are detailed below:
2022 £m 2021 £m
(restated)
Adjusted profit before tax 15.6 15.0
Property
Accelerated depreciation and impairment of property, plant and equipment (0.5) (1.0)
Vacant property and closure costs (1.7) (2.1)
Store impairments and lease gains and losses (0.2) (0.2)
(2.4) (3.3)
Business Development
Pro Tiler Tools deal costs (0.2) nil
Pro Tiler Tools share purchase expense (1.6) nil
Tile Warehouse set up costs (0.5) nil
(2.3) nil
Other
Business rates relief from April to September 2021* nil 2.3
nil 2.3
Statutory profit before tax 10.9 14.0
* In the second half of the prior year we included a normal level of business
rates within adjusted profit, despite business rates relief of £2.3 million
over this period, to allow improved comparison with the future and prior
years. The business traded without material restrictions in the second half of
the prior year, and not including a business rates expense within adjusted
profit for this period would be unrepresentative of our underlying
performance. This contrasts with the first half of the prior year where we
suffered material trading restrictions and so no adjustment for business rates
relief was made.
Adjusted earnings per share is adjusted for the items listed above, as well as
the impact of corporation tax. In addition, adjusted earnings per share
excludes a non-repeating credit of £1.2 million relating to deferred tax
adjustments in respect of previous periods.
Acquisition of Pro Tiler Limited
The Group acquired a controlling 60% shareholding of Pro Tiler Limited on 9
March 2022, for consideration of £5.3 million in cash, plus a closing
adjustment of £0.2 million. The Group will acquire the remaining 40% of the
issued share capital from March 2024, based on an agreed multiple of profits
for the 12-month period to March 2024.
Following the completion of a purchase price allocation exercise over the
second half year, the Group recognised the following amounts on acquisition:
tangible assets of £1.6 million, including £0.9 million of net cash, £0.2
million of net working capital and £0.5 million of fixed assets, and
intangible assets consisting of the brand value of £4.1 million net of
deferred tax and goodwill of £2.1 million, together with a non-controlling
interest of £2.3 million.
The brand asset will be amortised over 10 years in line with it's useful
economic life.
The purchase of the remaining 40% of shares in Pro Tiler Limited will be
accounted for as a remuneration expense over the earn out period, rather than
contingent consideration, as required by IFRS 3, due to certain conditions
placed on the selling shareholders to remain employed by the Group during this
time. This expense will be treated as an adjusting item over the next two
years and will therefore reduce the Group's statutory profit in forthcoming
trading periods. This expense is not treated as a deductible expense for
corporation tax purposes and therefore has increased the Group's effective
rate of corporation tax in FY22 and over the next two financial years as a
result of this accounting treatment.
The Group has consolidated the financial performance of Pro Tiler Limited from
the date of acquisition, including revenue of £9.2 million and profit before
tax of £0.6 million. Acquisition costs of £0.2 million and remuneration
costs of £1.6 million in relation to the 40% share purchase were treated as
adjusting items.
Configuration Costs in a Cloud Computing Arrangement
Following the IFRS Interpretations Committee (IFRIC) agenda decision in
relation to configuration and customisation expenditure relating to cloud
computing arrangements, including Software as a Service (SaaS), the Group has
reviewed and revised its accounting policy relating to IAS 38 Intangible
Assets. This has resulted in reclassifying expenditure that was previously
capitalised as an intangible asset in previous years and expensing this to the
Consolidated Statement of Profit or Loss as administrative costs. The impact
on profit before tax for the 53-week period ended 2 October 2021 is a
reduction in statutory profit before tax and adjusted profit before tax of
£0.3 million. All comparatives in the Financial Review and the financial
statements have been restated and further details are given in the notes to
the accounts.
STATEMENT OF FINANCIAL PERFORMANCE
Revenue
Total revenue for the 52-week period increased by 8.4% to £247.2 million
(2021: £228.0 million). Revenue consolidated into the Group accounts by
brand was as follows:
Revenue by brand (£m) 2022 (52 weeks) 2021 (53 weeks) Variance
Topps Tiles 227.0 219.4 +3.5%
Parkside 10.9 8.6 +26.7%
Pro Tiler Tools 9.2 0.0 n/a
Tile Warehouse 0.1 0.0 n/a
Topps Group 247.2 228.0 +8.4%
Topps Tiles like-for-like sales were 9.4% higher than the prior year, which
consisted of a 19.7% increase in the first half of the financial year and a
0.8% increase in the second half.
Total revenue in Topps Tiles was up 3.5% year on year to £227.0 million.
There was a net closure of 9 Topps Tiles stores in the year and the brand
finished the trading period with 304 trading stores. Prior year revenue was
impacted by trading restrictions related to the Covid-19 pandemic in the
second quarter, when homeowners were unable to go inside our stores and
registered traders were allowed to enter to visit the trade counter only.
In the commercial market, sales to our clients through Parkside were up 26.7%
year on year to £10.9 million. The Group consolidated sales of £9.2
million from the seven months of ownership of Pro Tiler Tools and recorded a
further £0.1 million of sales in the start-up period of Tile Warehouse.
Overall, we estimate that 62% of sales in the Group are made to trade or
professional customers, with 38% of sales direct to homeowners.
Gross Margin and Gross Profit
Group gross margin was 54.8%, a decrease from 57.3% in the prior year. Group
gross profits increased £4.7 million to £135.4 million, including £3.2
million relating to Parkside, Pro Tiler Tools and Tile Warehouse.
The change in gross margin was due to three main factors. Within Topps
Tiles, the impact of higher cost of goods following increases in gas prices,
other raw materials and shipping costs in the year have been passed through to
customers on a pound-for-pound basis. Our pricing response has protected
gross profits but impacted the gross margin percentage by (0.9) percentage
points. Secondly, there have been changes in customer and product mix,
specifically improved sales to trade customers, more sales of products other
than tiles, and new product areas including outdoor tiles and luxury vinyl
tiles, which impacted gross margins by (0.5) percentage points. Finally, the
growth in our other trading businesses, specifically the acquisition of Pro
Tiler Tools and the growth in sales from Parkside, reduced Group gross margin
by (1.3) percentage points. Other minor changes increased gross margins by
the balance of 0.2 percentage points.
Gross profits increased across each of the three business areas due to the
positive sales impact of the factors above.
Operating Expenses
Operating expenses were £120.6 million compared to £112.7 million in FY21
(restated), which included c. £6.7 million of Business Rates Relief. On an
adjusted basis, operating expenses increased from £111.7 million in FY21 to
£116.0 million in FY22.
The £4.3 million increase in adjusted operating costs is explained by the
following key items:
£ million
FY 2021 adjusted operating expenses (restated) 111.7
Reversal of H1 2021 business rates relief 4.4
Reverting to a 52-week accounting period (2.0)
Holiday pay accrual normalisation 1.4
Increased utilities expense 1.0
Other regulatory and inflationary cost increases 3.5
Reduced store space (310 stores on average vs 331 in 2021) (4.3)
Other savings (2.0)
Commercial and Online Pure Play 2.3
FY 2022 adjusted operating expenses 116.0
Finance income and costs
Interest on bank loans and overdrafts, net of bank interest receivable, was
£0.3 million (2021: £0.4 million), relating to commitment fees payable on
the revolving credit facility.
Net interest payable under IFRS 16 was £3.6 million, resulting in total net
finance costs of £3.9 million (2021: £4.1 million).
Profit Before Tax
Excluding the items detailed in the Adjusted Measures section above, adjusted
profit before tax was £15.6 million (2021 restated: £15.0 million). The
Group adjusted profit before tax margin was 6.3% (2021: 6.6%).
Statutory profit before tax was £10.9 million (2021 restated: £14.0
million).
Tax
On an adjusted basis, the effective rate of corporation tax for the period was
21.8% (2021: 21.6%).
The effective rate of corporation tax for the period on a statutory basis was
16.0% (2021: 23.5%). The tax expense includes a one-off deferred tax credit
in relation to previous periods of £1.2 million which is excluded from
adjusted earnings per share metrics.
Earnings Per Share
Adjusted earnings per share were 6.14 pence (2021 restated: 6.02 pence).
Basic earnings per share were 4.60 pence (2021 restated: 5.47 pence).
Diluted earnings per share were 4.55 pence (2021 restated: 5.41 pence).
Dividend and Dividend Policy
In the 2022 Interim Results, the Group outlined a new Capital Allocation and
Dividend Policy. We indicated that we would prioritise the following:
1) Business resilience - we are an operationally geared business and our balance
sheet and banking facilities must be strong enough to withstand cyclical
economic downturns and unexpected shocks like Covid-19;
2) Investment in the core business - we operate a physical store estate which
requires investment to remain attractive to customers, and we will support our
strategy through merchandising, store refits and relocations;
3) Value creative opportunities - we believe it is beneficial to retain some cash
to take advantage of value creation opportunities, such as bolt on M&A
deals or other investments in growth;
4) Dividends - we recognise that equity has a cost, and we understand the
importance of regular dividend payments to our shareholders.
The Board indicated that over the period from 2021 to 2023, it intended to
increase the dividend payout ratio from around 50% of adjusted earnings per
share to around 67%. As such, this year, the Board is proposing a final
dividend of 2.6 pence per share, bringing the full year dividend to 3.6 pence
per share, a year on year increase of 16.1%. This represents 59% of the
adjusted earnings per share of 6.14 pence.
The shares will trade ex-dividend on 22 December 2022 and, subject to approval
at the Annual General Meeting, the dividend will be payable on 3 February
2023.
STATEMENT OF FINANCIAL POSITION
Acquisitions & Disposals
The most significant acquisition in the period was the purchase of 60% of the
shares of Pro Tiler Limited, as described in the section above.
In the prior year we disposed of three freehold or long leasehold stores for
£2.1 million. There were no freehold or long leasehold store disposal or
acquisitions in the current year.
At the period end the Group held two freehold or long leasehold sites, with a
total carrying value of £1.0 million (2021: two freehold or long leasehold
sites valued at £1.0 million). The carrying value is based on the historic
purchase cost and capital expenditure less accumulated depreciation.
Capital Expenditure
Capital expenditure in the period amounted to £3.2 million (2021: £4.4
million), a reduction of 27% year on year.
Key investments were as follows:
• Topps Tiles stores - including one new opening, store improvements,
merchandising and maintenance - £2.5 million
• LED store improvement programme £0.3 million
• Group IT developments £0.4 million
The Board expects capital expenditure in the year ahead to be between £6
million and £7 million. This compares to an average of £8.1 million in the
four years before the pandemic (FY16 to FY19) and is broadly in line with
depreciation on property, plant and equipment and intangible assets. This
amount will cover our core investment plans - any acquisitions that the Group
may consider as part of its growth plans would be additional to this guidance.
Inventory
Inventory at the period end was £38.6 million (2021: £32.8 million)
representing 126 inventory days (2021: 123 inventory days). The £5.8 million
year-on-year increase in stock includes £2.6 million of additional stock
relating to Pro Tiler Tools and Tile Warehouse, an increase of £4.2 million
due to higher cost prices and a slight reduction of £1.0 million relating to
the volume of stock in Topps Tiles.
Cash flow
On a statutory basis, net cash from operating activities was £22.9 million,
compared to £26.4 million in the prior year.
The table below analyses changes in adjusted net cash flow:
2022 2021
(restated)
£m £m
Cash generated by operations, including interest and capital elements of 18.5 20.7
leases, before WC movements
Payment of deferred VAT (2.1) (3.7)
Other changes in working capital (8.9) (10.9)
Capital expenditure (3.2) (4.4)
Disposals 0.2 2.1
Interest (0.3) (0.5)
Tax (3.5) (1.5)
Other 0.1 0.0
Free cash flow 0.8 1.8
Acquisition of Pro Tiler Limited, net of cash and debt acquired (4.4) 0.0
Dividends (8.0) 0.0
Change in adjusted net cash (11.6) 1.8
Adjusted net cash at end of period 16.2 27.8
Adjusted net cash reduced by £11.6 million (2021: £1.8 million increase).
This reduction was driven the following main factors: a £11.0 million outflow
in working capital including a £4.4 million increase in inventory, the
repayment of £2.1 million of deferred VAT, decrease of £3.5 million in other
payables and an increase of £1.0 million in receivables; the purchase of 60%
shares of Pro Tiler Limited at a cash cost of £4.4 million net of cash
acquired and including the repayment of a loan immediately following
acquisition; and the payment of £8.0 million of dividends, which included the
full year payment relating to FY21 as well as the interim dividend from FY22.
Cash and cash equivalents at the period end were £16.2 million (2021: £27.8
million) with nil borrowings (2021: nil).
Return on capital employed
The Group's return on capital employed, including the impact of leases,
improved from 17.2% in 2021 to 17.3% in 2022 following a slight increase in
adjusted profit. Lease adjusted capital employed increased £7.2 million
over the financial year as a result of a £4.0 million increase in total
equity and a £11.6 million reduction in adjusted net cash, partially offset
by a £8.4 million reduction in lease liabilities year-on-year. The Group
defines return on capital employed as the annual adjusted operating profit
divided by the average capital employed (net assets plus net debt, including
lease liabilities).
Banking Facilities
On 21 October 2022, the Group entered a new syndicated £30.0 million
revolving credit facility with two banks, which is committed to October 2025
with extension options for a further two years available. The new facility
contains a slightly favourable interest rate structure compared to our
previous £39.0 million banking facility, which was due to expire in June
2023, and provides continued balance sheet strength and financial resilience
for the Group into the medium term. At the year end, no banking facilities
were drawn (2021: nil). Based on our year end net cash of £16.2 million we
have £46.2 million of headroom to our new banking facility at year end (2021:
headroom of £66.8 million against the £39.0 million facility in place at
that time).
Forward guidance
Increased cost pressures will impact the profitability of the business in
2023. Overall, we expect around £5.0 million of inflationary pressures year
on year across our overhead base, in utilities, employment costs, property
costs and other expenses. We will be able to offset some but not all of this
through efficiency savings and as a result believe our profitability may
modestly fall next year, in line with current market expectations.
Whilst the Group has not historically demonstrated much seasonality in sales
or profits across the two halves of the financial year, in 2023 we expect
Group profitability to be more weighted towards the second half. The key
drivers of this are: a gas expense which we expect to be approximately £1.7
million in the first half and £0.8 million in the second half; a normalised
holiday pay accrual, with a debit in the first half of £0.7 million and a
credit in the second half of £0.7m; continued growth in the newer parts of
the Group across the course of the year; and some easing in elements of supply
chain costs as the year progresses.
Current Trading and Market Conditions for the Year Ahead
There are substantial macroeconomic headwinds impacting both UK consumers and
businesses. Consumer confidence is currently near to record lows and
Government forecasts suggest the country is entering a recession which will
continue throughout 2023 and possibly into 2024, impacting real incomes for UK
consumers. Against this backdrop, our trading performance has been robust,
with like-for-like sales growth in Topps Tiles over the first eight weeks of
the new financial year of 3.4% and other parts of the Group performing in line
with our expectations. Our market share growth during 2022 and our progress
towards our goal of '1 in 5 by 2025', combined with our clear strategy and
strong balance sheet, give us confidence that we will continue to deliver
growth and create value over the medium term.
Rob Parker Stephen Hopson
Chief Executive Officer Chief Financial Officer
29 November 2022
Unaudited Consolidated Statement of Profit or Loss
For the 52 weeks ended 1 OCTOBER 2022
Notes 52 weeks 53 weeks
ended ended
1 October 2 October
2022 2021
£'000 (restated)(1)
£'000
Group revenue 3 247,241 227,997
Cost of sales (111,818) (97,297)
Gross profit 135,423 130,700
Distribution and selling costs (89,316) (83,591)
Other operating expenses (5,953) (6,100)
Administrative costs (19,827) (18,419)
Sales and marketing costs (5,495) (4,564)
Group operating profit 14,832 18,026
Finance income 6 123 87
Finance costs 6 (4,010) (4,158)
Profit before taxation 4 10,945 13,955
Taxation 7 (1,754) (3,279)
Profit for the period 9,191 10,676
Profit is attributable to:
Owners of Topps Tiles Plc 9,005 10,648
Non-controlling interests 186 28
9,191 10,676
All results relate to continuing operations of the Group.
1 See note 2(A) for an explanation of the prior year restatement
52 weeks 53 weeks
ended ended
1 October 2 October
2022 2021
Earnings per ordinary share: Notes £'000 (restated)(1)
£'000
- Basic 9 4.60p 5.47p
- Diluted 9 4.55p 5.41p
Unaudited Consolidated Statement of Comprehensive Income
For the 52 weeks ended 1 OCTOBER 2022
52 weeks 53 weeks
ended ended
1 October 2 October
2022 2021
£'000 (restated)(1)
£'000
Profit for the period 9,191 10,676
Total comprehensive income for the period is attributable to:
Owners of Topps Tiles Plc 9,005 10,648
Non-controlling interests 186 28
9,191 10,676
1 See note 2(A) for an explanation of the prior year restatement
Unaudited Consolidated Statement of Financial Position
as at 1 OCTOBER 2022
Notes 2022 2021
£'000 (restated)(1)
£'000
Non-current assets
Goodwill 2,101 -
Intangible assets 5,423 468
Property, plant and equipment 20,888 23,680
Other financial assets 1,947 2,335
Deferred tax assets 114 564
Right-of-use assets 88,545 95,418
119,018 122,465
Current assets
Inventories 38,605 32,758
Other financial assets 542 518
Trade and other receivables 6,419 4,538
Cash and cash equivalents 10 16,241 27,789
61,807 65,603
Total assets 180,825 188,068
Current liabilities
Bank loans 11 - -
Trade and other payables (43,650) (47,425)
Lease liabilities (18,187) (19,521)
Current tax liabilities (1,152) (2,027)
Provisions (352) (353)
(63,341) (69,326)
Net current liabilities (1,534) (3,723)
Non-current liabilities
Lease liabilities (84,741) (91,817)
Provisions (3,694) (1,969)
Total liabilities (151,776) (163,112)
Net assets 29,049 24,956
Equity
Share capital 6,556 6,555
Share premium 2,636 2,625
Own shares (415) (1,216)
Merger reserve (399) (399)
Share-based payment reserve 5,162 4,642
Capital redemption reserve 20,359 20,359
Accumulated losses (7,319) (7,610)
Capital and reserves attributable to owners of Topps Tiles Plc 26,580 24,956
Non-controlling interests 2,469 -
Total equity 29,049 24,956
1 See note 2(A) for an explanation of the prior year restatement
Unaudited Consolidated Statement of Changes in Equity
For the 52 weeks ended 1 october 2022
Share Share Own Merger Share-based Capital Accumulated losses Total
capital premium shares reserve payment redemption £'000 Non-controlling interest equity
£'000 £'000 £'000 £'000 reserve reserve £'000 £'000
£'000 £'000
Balance at 26 September 2020 as originally presented 6,548 2,492 (1,483) (399) 3,965 20,359 (17,400) (28) 14,054
Correction of error (net of tax) - - - - - - (390) - (390)
Restated balance at 26 September 2020(1) 6,548 2,492 (1,483) (399) 3,965 20,359 (17,790) (28) 13,664
Profit and total comprehensive income for the period (restated)(1) - - - - - - 10,648 28 10,676
Issue of share capital 7 133 - - - - - - 140
Own shares issued in the period - - 267 - - - (267) - -
Credit to equity for equity-settled share-based payments - - - - 677 - - - 677
Deferred tax on share-based payment transactions - - - - - - (47) - (47)
Acquisition of non-controlling interest on business combination - - - - - - (154) - (154)
Balance at 2 October 2021 as originally presented 6,555 2,625 (1,216) (399) 4,642 20,359 (6,992) - 25,574
Correction of error (net of tax) - - - - - - (618) - (618)
Restated balance at 2 October 2021(1) 6,555 2,625 (1,216) (399) 4,642 20,359 (7,610) - 24,956
Profit and total comprehensive income for the period - - - - - - 9,005 186 9,191
Dividends - - - - - - (8,015) - (8,015)
Issue of share capital 1 11 - - - - - - 12
Own shares purchased in the period - - (207) - - - - - (207)
Own shares issued in the period - - 1,008 - - - (699) - 309
Credit to equity for equity-settled share-based payments - - - - 520 - - - 520
Acquisition of non-controlling interest on business combination - - - - - - - 2,283 2,283
Balance at 1 October 2022 6,556 2,636 (415) (399) 5,162 20,359 (7,319) 2,469 29,049
1 See note 2(A) for an explanation of the prior year restatement
Unaudited Consolidated Cash Flow Statement
For the 52 weeks ended 1 OCTOBER 2022
52 weeks 53 weeks
ended ended
1 October 2 October
2022 2021
£'000 (restated)(1)
£'000
Cash flow from operating activities
Profit for the period 9,191 10,676
Taxation 1,754 3,279
Finance costs 4,010 4,158
Finance income (123) (87)
Group operating profit 14,832 18,026
Adjustments for:
Depreciation of property, plant and equipment 5,609 6,268
Depreciation of right-of-use assets 18,212 20,508
Amortisation of intangible assets 500 186
Loss on disposal of property, plant and equipment and intangibles 394 1,736
(Gain)/loss on sublease (88) 134
Impairment charge/(reversal) of property, plant and equipment 240 (604)
Impairment of right-of-use assets 1,473 2,402
Gain on lease disposal (1,544) (2,563)
Share option charge 520 677
Increase in earn out liability provision 1,581 -
Non-cash gain on derivative contracts (455) -
(Increase)/decrease in trade and other receivables (1,080) 7
Increase in inventories (4,362) (3,421)
Decrease in payables (5,603) (11,209)
Cash generated from operations 30,229 32,147
Interest paid (354) (468)
Interest received on operational cash balances 58 -
Interest element of lease liabilities paid (3,626) (3,728)
Taxation paid (3,453) (1,535)
Net cash generated from operating activities 22,854 26,416
Investing activities
Interest received - 11
Interest received on sublease assets 65 76
Receipt of capital element of sublease assets 493 629
Purchase of property, plant and equipment (3,090) (4,221)
Purchase of intangibles (115) (194)
Proceeds on disposal of property, plant and equipment 183 2,096
Acquisition of subsidiary, net of cash acquired (3,968) (154)
Net cash used in investment activities (6,432) (1,757)
Financing activities
Payment of capital element of lease liabilities (19,601) (23,026)
Dividends paid (8,015) -
Proceeds from issue of share capital 12 133
Purchase of own shares (207) -
Receipt on disposal of own shares 309 -
Repayment of bank loans (468) (4,995)
Net cash used in financing activities (27,970) (27,888)
Net decrease in cash and cash equivalents (11,548) (3,229)
Cash and cash equivalents at beginning of period 27,789 31,018
Cash and cash equivalents at end of period 16,241 27,789
1 See note 2(A) for an explanation of the prior year restatement
Notes to the Unaudited Financial Statements
For the 52 weeks ended 1 OCTOBER 2022
1 GENERAL INFORMATION
Topps Tiles Plc is a public limited company, limited by shares, incorporated
and domiciled in the United Kingdom and registered in England under the
Companies Act 2006.
The consolidated financial statements are unaudited and do not constitute
statutory accounts of the Company within the meaning of Section 434(3) of the
companies Act 2006. Statutory accounts for the year ended 2 October 2021 have
been delivered to the Registrar of Companies. The audit report for those
accounts was unqualified, did not draw attention to any matters by way of
emphasis and did not contain a statement under 498(2) or (3) of the Companies
Act 2006.
Statutory accounts for the 52-week period ended 1 October 2022 will be
delivered to the Registrar of Companies following the Company's Annual General
Meeting.
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, other than the IFRIC regarding cloud computing (see
note 2A), there were no new or revised standards and interpretations adopted
that have a material impact on the financial statements. The Group has not
early adopted any other standard, interpretation or amendment that has been
issued but is not yet effective.
STANDARDS ADOPTED IN CURRENT PERIOD
The following new and revised standards and interpretations have been adopted
in the current year. Their adoption has not had any significant impact on the
amounts reported in these financial statements that may impact the accounting
for future transactions and arrangements.
IFRS 17, 'Insurance contracts' (effective 1 January 2023 or when IFRS 9 is
applied) subject to endorsement
Amendments to IFRS 16 Leases: Covid-19-Related rent concessions beyond 30 June
2021 - (effective 1 April 2021)
Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 Interest Rate
Benchmark Reform - Phase 2 (effective 1 January 2021)
Annual Improvements 2018-2020 (effective 1 January 2022)
Narrow scope amendments to IFRS 3, IAS 16 and IAS 37 (effective 1 January
2022)
2 ACCOUNTING POLICIES
The principal accounting policies adopted are set out below.
A) BASIS OF ACCOUNTING
The condensed financial statements of Topps Tiles Plc have been prepared in
accordance with UK-adopted International Accounting Standards and with the
requirements of the Companies Act 2006 as applicable to companies reporting
under those standards. On 31 December 2020, IFRS as adopted by the European
Union at that date was brought into UK law and became UK-adopted international
accounting standards, with future changes being subject to endorsement by the
UK Endorsement Board.
Topps Tiles Plc transitioned to UK-adopted International Accounting Standards
in its consolidated financial statements on 3 October 2021. This change
constitutes a change in accounting framework. However, there is no impact on
recognition, measurement or disclosure in the period reported as a result of
the change in framework.
The condensed 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 goods and services.
The accounting policies set out below have, unless otherwise stated, been
applied consistently to all periods presented in these Group financial
statements.
IFRIC: Configuration or Customisation Costs in a Cloud Computing Arrangement
(IAS38 Intangible Assets)
During the current year management has re-evaluated the impact of the IFRIC
guidance released during the prior year relating to accounting for cloud-based
SaaS arrangements. This guidance was incorrectly applied in the prior year,
resulting in costs associated with a cloud-based SaaS being capitalised and
not expensed as incurred in the consolidated statement of financial
performance. During 2020 £456k was capitalised with no amortisation being
charged. During the prior period a further £319k was capitalised again with
no amortisation being charged. As a result of this error, the intangible
assets as at 26 September 2020 were overstated by £456k and operating costs
for the period understated by the same amount. As at 2 October 2021, the
intangible assets and net assets were overstated by £775k and operating costs
were understated by £319k for the period then ended. In addition, during the
period ended 26 September 2020 operating cashflows were overstated by £456k
and investing cashflows overstated by the same amount. Likewise, for the
period ended 2 October 2021 the operating cashflows were overstated by £319k
and the investing cashflows overstated by the same amount. A summary of the
impact, including taxation, is included in the following tables:
2021 2021
(previously reported) Restatement Restated
£'000 £'000 £'000
Consolidated Statement of Profit or Loss impact
Administrative costs (18,100) (319) (18,419)
Profit before taxation 14,274 (319) 13,955
Tax charge (3,370) 91 (3,279)
Basic earnings per ordinary share (pence) 5.59 (0.12) 5.47
Diluted earnings per ordinary share (pence) 5.52 (0.11) 5.41
Consolidated Statement of Financial Position impact
Intangible assets 1,243 (775) 468
Deferred tax asset 407 157 564
Total assets 188,686 (618) 188,068
Net assets 25,574 (618) 24,956
Accumulated losses (6,992) (618) (7,610)
Total equity 25,574 (618) 24,956
Consolidated Cash Flow Statement
Profit for the period 10,904 (228) 10,676
Taxation 3,370 (91) 3,279
Net cash from operating activities 26,735 (319) 26,416
Purchase of intangibles (513) 319 (194)
Net cash used in investing activities (2,076) 319 (1,757)
2020 Restatement 2020 Restated
(previously reported)
£'000 £'000 £'000
Consolidated Statement of Financial Position impact
Intangible assets 916 (456) 460
Deferred tax asset 1,406 66 1,472
Total assets 205,080 (390) 204,690
Net assets 14,054 (390) 13,664
Accumulated losses (17,400) (390) (17,790)
Total equity 14,054 (390) 13,664
B) GOING CONCERN
When considering the going concern assertion, the Board reviews several
factors including a review of risks and uncertainties, the ability of the
Group to meet its banking covenants and operate within its banking facilities
based on current financial plans, along with a detailed review of more
pessimistic trading scenarios that are deemed severe but plausible. The two
downside scenarios modelled include a moderate decline in sales and a more
severe decline in sales, which result in much lower sales and gross profit
than the base scenario, resulting in worse profit and cash outcomes. The more
severe downside scenario modelled this year was based on a prolonged period of
macroeconomic stress in the UK, lasting for two years, with sales falling
substantially in each year in our main brand, Topps Tiles, as well as year on
year declines in gross margins.
The Group has already taken a number of actions to strengthen its liquidity
over the recent years, and the scenarios start from a position of relative
strength. The going concern review also outlined a range of other mitigating
actions that could be taken in a severe but plausible trading scenario.
These included, but were not limited to, savings on store employee costs,
savings on central support costs, reduced marketing activity, a reduction of
capital expenditure, management of working capital and suspension of the
dividend.
The Group's cash headroom and covenant compliance was reviewed against current
lending facilities in both the base case and the severe but plausible downside
scenario. The current lending facility was refinanced in October 2022 and
expires at the earliest in October 2025. In all scenarios, the Board have
concluded that there is sufficient available liquidity and covenant headroom
for the Group to continue to meet all of its financial commitments as they
fall due for the foreseeable future, a period of not less than 12 months from
the date of this report. Accordingly, the Board continue to adopt the going
concern basis in preparing the financial statements.
C) REVENUE RECOGNITION
Revenue is measured at the transaction price received or receivable and
represents amounts receivable for goods in the normal course of business, net
of discounts, VAT and other sales-related taxes.
Revenue from the sale of goods is recognised on the collection or delivery of
goods, when all the following conditions are satisfied:
● the Group has satisfied its performance obligations to external customers,
being the date goods are collected from store or received by the customers;
and
● the customer has obtained control of the goods being transferred.
These conditions are met, predominantly, at the point of sale. The
exceptions to this are for: goods ordered in advance of collection, where
revenue is recognised at the point that the goods are collected; sales of
goods that result in award credits for customers (see below); and web sales,
where revenue is recognised at the point of delivery.
Sales of goods that result in award credits for customers, under the Company's
Trader Loyalty Scheme, are accounted for as multiple element revenue
transactions and the fair value of the consideration received or receivable is
allocated between the goods supplied and the award credits granted. The
consideration allocated to the award credits is measured by reference to their
fair value being the amount for which the award credits could be sold
separately. Such consideration is not recognised as revenue at the time of the
initial sale transaction, but is deferred and recognised as revenue when the
award credits are redeemed and the Company's performance obligations have been
satisfied.
The level of sales returns is closely monitored by management, and as such,
the Group holds a sales return provision in the Consolidated Statement of
Financial Position to provide for the expected level of returns. The sales
value of the expected returns is recognised within Accruals, with the cost
value of the goods expected to be returned recognised as a current asset
within Inventories.
d) TAXATION
The tax expense represents the sum of the tax currently payable and deferred
tax.
The tax currently payable is based on taxable profit for the period. Taxable
profit differs from net profit as reported in the statement of financial
performance because it excludes items of income or expense that are taxable or
deductible in other periods and it further excludes items that are never
taxable or deductible. The Group's liability for current tax is calculated
using tax rates that have been enacted or substantively enacted by the balance
sheet date.
Deferred tax is the tax expected to be payable or recoverable on differences
between the carrying amounts of assets and liabilities in the financial
statements and the corresponding tax bases used in the computation of taxable
profit, and is accounted for using the balance sheet liability method.
Deferred tax liabilities are generally recognised for all taxable temporary
differences and deferred tax assets are recognised to the extent that it is
probable that taxable profits will be available against which deductible
temporary differences can be utilised. Such assets and liabilities are not
recognised if the temporary difference arises from the initial recognition of
goodwill or from the initial recognition (other than in a business
combination) of other assets and liabilities in a transaction that affects
neither the tax profit nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary differences
arising on investments in subsidiaries, except where the Group is able to
control the reversal of the temporary difference and it is probable that the
temporary difference will not reverse in the foreseeable future.
Deferred tax is calculated at the tax rates that are expected to apply in the
period when the liability is settled or the asset is realised based on tax
laws and rates that have been enacted at the balance sheet date. Deferred tax
is charged or credited in the statement of financial performance, except when
it relates to items charged or credited directly to equity, in which case the
deferred tax is also dealt with in equity.
Deferred tax assets and liabilities are offset when there is a legally
enforceable right to set off current tax assets against current tax
liabilities and when they relate to income taxes levied by the same taxation
authority and the Group intends to settle its current tax assets and
liabilities on a net basis.
E) OPERATING COSTS
Restructuring costs relate to board approved decisions such as business
closures or major organisational changes. Operating profit is stated after
charging/(crediting) restructuring costs but before investment income and
finance costs.
Employee profit sharing costs are classified as distribution and selling costs
and administrative costs.
3 GROUP REVENUE
An analysis of Group revenue is as follows:
52 weeks 53 weeks
ended ended
1 October 2 October
2022 2021
£'000 £'000
Revenue from the sale of goods 247,241 227,997
Total revenue 247,241 227,997
The Group has one reportable segment in accordance with IFRS 8 - Operating
Segments, which encompasses the Topps Tiles Group revenue generated instore
and online from retail and commercial customers. The Board receives monthly
financial information at this level and uses this information to monitor
performance, allocate resources and make operational decisions.
Revenue can be split by the following geographical regions:
52 weeks 53 weeks
ended ended
1 October 2 October
2022 2021
£'000 £'000
UK 246,866 227,997
EU 240 -
Rest of World 135 -
Total 247,241 227,997
The Group's revenue is driven by the consolidation of individual small value
transactions and as a result, Group revenue is not reliant on a major customer
or group of customers.
4 PROFIT/(LOSS) BEFORE TAXATION
Profit/(loss) before taxation for the period has been arrived at after
charging/(crediting):
52 weeks 53 weeks
ended ended
1 October 2 October
2022 2021
£'000 £'000
Depreciation of property, plant and equipment 5,609 6,268
Depreciation of right-of-use assets 18,212 20,508
Operating lease costs not within the scope of IFRS 16 - low value and short 2,201 953
term rentals
Impairment charge/(reversal) of property, plant and equipment 240 (604)
Impairment of right-of-use assets 1,473 2,402
Loss on disposal of property, plant and equipment and intangibles 394 1,736
Amortisation of intangibles 500 186
Staff costs (see note 5) 57,096 57,955
Exchange (gains)/ losses recognised in profit or loss (1,060) 145
Write-down of inventories recognised as an expense 4,254 4,598
Cost of inventories recognised as an expense 108,622 92,554
During the year the business disposed of nil freehold properties (2021: three
freehold properties).
Analysis of the auditors' remuneration is provided below:
52 weeks
ended 53 weeks
1 October ended
2022 2 October
£'000 2021
£'000
Fees payable to the Company's auditors with respect to the Company's annual 111 74
accounts
Fees payable to the Company's auditors and their associates for other audit
services to the Group:
Audit of the Company's subsidiaries pursuant to legislation 262 229
Total audit fees 373 303
Total non-audit fees - -
Total fees payable to the Company's auditors 373 303
5 STAFF COSTS
The average monthly number of persons employed by the Group in the UK during
the accounting period (including Executive Directors) was:
52 weeks 53 weeks
ended ended
1 October 2 October
2022 2021
Number employed Number employed
Selling 1,390 1,533
Administration 361 314
1,751 1,847
The average monthly number of persons (full-time equivalents) employed by the
Group in the UK during the accounting period (including Executive Directors)
was:
52 weeks 53 weeks
ended ended
1 October 2 October
2022 2021
Number employed Number employed
Selling 1,311 1,455
Administration 355 283
1,666 1,738
2022 2021
£'000 £'000
Their aggregate remuneration comprised:
Wages and salaries (including LTIP) 51,585 52,348
Social security costs 4,472 4,498
Other pension costs 1,039 1,109
57,096 57,955
The total charge for Share Based Payments recognised during the year was
£0.5m (2021: £0.7m)
6 FINANCE INCOME AND FINANCE COSTS
52 weeks 53 weeks
ended ended
1 October 2 October
2022 2021
£'000 £'000
Finance income
Bank interest receivable 58 11
Interest income from finance lease receivables 65 76
123 87
Finance costs
Interest on bank loans and overdrafts (384) (430)
Interest payable on lease liabilities (3,626) (3,728)
(4,010) (4,158)
No finance costs have been capitalised in the period, or the prior period.
Interest on bank loans and overdrafts represents gains and losses on financial
liabilities measured at amortised cost. There are no other gains or losses
recognised in respect of financial liabilities measured at amortised cost.
7 TAXATION
52 weeks 53 weeks
ended ended
1 October 2 October
2022 2021
£'000 (restated)(1)
£'000
Current tax - charge for the period 2,577 2,418
Deferred tax - charge for the period 360 1,143
Deferred tax - adjustment in respect of prior periods (1,183) 145
Effect of tax rate change on opening balance - (427)
Total tax charge 1,754 3,279
The charge for the period can be reconciled to the profit/(loss) per the
statement of financial performance as follows:
52 weeks 53 weeks
ended ended
1 October 2 October
2022 2021
£'000 (restated)(1)
£'000
Continuing operations:
Profit before taxation 10,945 13,955
Tax at the UK corporation tax rate of 19.0% (2021: 19.0%) 2,080 2,651
Expenses that are not deductible in determining taxable profit 8 11
Other movements 391 (36)
Fixed asset differences (non-deductible expenses) 657 709
Increase/(Reduction) in UK corporation tax rate - (29)
Non-taxable income (199) (172)
Adjustment in respect of prior periods (1,183) 145
Tax expense for the period 1,754 3,279
In the period, the Group has recognised a corporation tax credit directly to
equity of £nil (2021: £nil) and a deferred tax charge to equity of £nil
(2021: £46,701) in relation to the Group's share option schemes.
The Group continue to fully provide within current tax liabilities for a
historic tax claim relating to EU loss relief in relation to the closed Dutch
business of £988,000 (2021: £988,000).
1 See note 2(A) for an explanation of the prior year restatement
8 DIVIDENDS
Amounts recognised as distributions to equity holders in the period:
52 weeks 53 weeks
ended ended
1 October 2 October
2022 2021
£'000 £'000
Final dividend for the period ended 2 October 2021 of £0.031 (2020: £nil) 6,057 -
per share
Interim dividend for the period ended 1 October 2022 of £0.01 (2021: £nil) 1,958 -
per share
Total dividend paid in the period 8,015 -
Proposed final dividend for the period ended 2 October 2022 of £0.026 (2021: 5,093 6,057
£0.031) per share
The proposed final dividend for the period ended 1 October 2022 is subject to
approval by shareholders at the Annual General Meeting and has not been
included as a liability in these financial statements.
9 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.
52 weeks 53 weeks
ended ended
1 October 2 October
2022 2021
Weighted average number of issued shares for basic earnings per share 196,681,007 196,508,867
Weighted average impact of treasury shares for basic earnings per share (1,099,370) (1,344,844)
Total weighted average number of shares for basic earnings per share 195,581,637 195,164,023
Weighted average number of shares under option 2,165,790 2,274,713
For diluted earnings per share 197,747,427 197,438,736
52 weeks ended 53 weeks ended
1 October 2 October
2022 2021 (restated)(1)
£'000 £'000
Profit for the period 9,005 10,676
Adjusting items 3,005 1,067
Adjusted profit for the period 12,010 11,743
Earnings per ordinary share - basic 4.60p 5.47p
Earnings per ordinary share - diluted 4.55p 5.41p
Earnings per ordinary share - adjusted 6.14p 6.02p
1 See note 2(A) for an explanation of the prior year restatement
The calculation of the basic and diluted earnings per share used the
denominators as shown above for both basic and diluted earnings per share. The
number of potentially exercisable shares is 2,165,790 (2021: 2,274,713).
Adjusted earnings per share were calculated after adjusting for the post-tax
impact of the following items: rates relief £nil benefit (2021: £1,839,000),
impairment of property, plant, equipment of £393,000 (2021: £1,202,000),
vacant property costs for stores closed as part of store reduction programme
of £1,402,000 (2021: £1,704,000), IFRS 16 one off changes including the
impairment of closure programme stores of £104,000 (2021: £nil),
restructuring costs of £42,000 (2021: £nil), project and acquisition costs
of £2,246,000 (2021: £nil) and a deferred tax credit in respect of previous
periods of £1,183,000 (2021: £nil).
10 CASH AND CASH EQUIVALENTS
Cash and cash equivalents comprise cash held by the Group and short-term bank
deposits net of bank overdrafts, where there is a right of offset, with an
original maturity of three months or less. The carrying amount of these assets
approximates their fair value. A breakdown of significant bank and cash
balances by currency is as follows:
2022 2021
£'000 £'000
Sterling 15,543 27,064
US dollar 391 495
Euro 307 230
Total cash and cash equivalents 16,241 27,789
Cash and cash equivalents are in the scope of the expected credit loss model
under IFRS 9, however balances are held with recognised financial institutions
and therefore the expected impairment loss is considered to be minimal.
11 BANK LOANS
2022 2021
£'000 £'000
Bank loans (all sterling) - (106)
2022 2021
£'000 £'000
The borrowings are repayable as follows:
On demand or within one year - -
- -
Less: total unamortised issue costs - (106)
- (106)
The Directors consider that the carrying amount of the bank loan at 1 October
2022 and 2 October 2021 approximates to its fair value since the amounts
relate to floating rate debt.
The average interest rates paid on the loan were as follows:
2022 2021
% %
Loans - -
The following is a reconciliation of changes in financial liabilities to
movement in cash from financing activities:
Lease Current borrowings Non-current borrowings Unamortised
liabilities £'000 £'000 issue costs
£'000 £'000
As at 26 September 2020 124,156 5,000 - (134)
Repayment of bank loan - (5,000) - -
Repayment of lease liabilities (26,754) - - -
Additions/disposals of lease liabilities 10,208 - - -
Interest accrued on lease liabilities 3,728 - - -
Issue costs incurred in the year - - - (98)
Amortisation of issue costs - - - 126
As at 2 October 2021 111,338 - - (106)
Repayment of lease liabilities (23,253) - - -
Non-cash movement - Lease additions and disposals 9,062 - - -
Non-cash movement - leases acquired with business combination 2,155
Interest accrued on lease liabilities 3,626 - - -
Debt acquired through company acquisition - (468) - -
Repayment of debt - 468 - -
Amortisation of issue costs - - - 106
As at 1 October 2022 102,928 - - -
At 2 October 2022, the Group had a revolving credit facility to June 2023 of
£39.0 million. As at the financial period end, £nil of this was drawn (2021:
£nil), leaving £39.0m of undrawn committed banking facilities. The loan
facility contains financial covenants which are tested on a bi-annual basis.
The Group did not breach any covenants in the period.
On 21 October 2022, the Group entered into a new three-year revolving credit
facility arrangement for £30.0m, expiring in October 2025 with an option to
extend for a further two years.
12 ACQUISITION OF SUBSIDIARY
The Group acquired a controlling 60% shareholding of Pro Tiler Limited on 9
March 2022, for consideration of £5.5 million, of which £5.3m was cash
paid. The Group will acquire the remaining 40% of the issued share capital
from March 2024, based on an agreed multiple of profits for the 12-month
period to March 2024.
The Group performed a purchase price allocation exercise on Pro Tiler Limited
to restate assets and liabilities at their fair value. Separately identifiable
intangible assets were recognised in relation to the Pro Tiler brand.
On acquisition, the Group recognised tangible assets of £1.6 million,
including £1.4 million of cash, £0.2 million of net working capital, £0.5m
loan and £0.5 million of Property, Plant and Equipment, and intangible assets
consisting of the brand value of £4.1 million net of deferred tax and
goodwill of £2.1 million, together with a non-controlling interest of £2.3
million. The brand asset will be amortised over 10 years, in line with our
accounting policies.
The future purchase of the remaining 40% of shares in Pro Tiler Limited will
be accounted for as a remuneration expense rather than contingent
consideration, as required by IFRS 3, due to certain conditions placed on the
selling shareholders to remain employed by the Group during this time. This
expense will be treated as an adjusting item over the next two years and will
therefore reduce the Group's statutory profit in forthcoming trading
periods. This expense is not treated as a deductible expense for corporation
tax purposes and therefore the Group's effective rate of corporation tax will
increase in FY22 and the next two financial years as a result of this
accounting treatment.
Acquisition costs of £0.2 million and remuneration costs of £1.6 million in
relation to the 40% share purchase were treated as adjusting items within
adjusted profit.
The fair value of the net assets acquired and liabilities assumed at the
acquisition date were:
£'000
Property, Plant and Equipment 543
Inventories 1,485
Trade and other receivables 460
Trade and other payables (1,749)
Loan (468)
Cash and cash equivalents 1,368
Right-of-use lease asset 2,155
Lease liability (2,155)
Brand valuation 5,341
Deferred tax (1,273)
Non-controlling interest (2,283)
Fair value of assets acquired 3,424
Total consideration 5,525
Goodwill 2,101
The residual goodwill recognised on the acquisition of Pro Tiler Limited
represents the proportion of consideration attributable to value acquired in
excess of the separately identified assets and liabilities presented above.
Consideration comprised:
£'000
Cash 5,336
Directors' loan payable to Pro Tiler Limited 189
Total consideration 5,525
The net cash outflow in the cash flow statement in the period was as follows:
£'000
Cash consideration 5,336
Cash acquired (1,368)
Net cash outflow in the cash flow statement 3,968
Since the date of control, the following amounts have been included within the
Group's financial statements for the period (excluding amortisation of the Pro
Tiler brand):
£'000
Revenue 9,196
Profit before tax 576
Had the acquisition been included from the start of the period, £14,673,000
of revenue and £705,000 of profit before tax would have been included in the
Group's financial statements for the period.
13 RELATED PARTY TRANSACTIONS
MS Galleon AG is a related party by virtue of their 29.9% shareholding
(58,569,649 ordinary shares) in the Group's issued share capital (2021: 20%
shareholding of 38,992,750 ordinary shares).
At 1 October 2022 MS Galleon AG is the owner of Cersanit, a supplier of
ceramic tiles with whom the Group made purchases of £1,253,296 during the
year which is 1.1% of cost of goods sold (2021: purchases of £460,000 during
year which is 0.5% of cost of goods sold).
An amount of £113,718 was outstanding with Cersanit at 1 October 2022 (2021:
£60,000). All transactions were conducted on commercial arm's length terms.
Transactions between the Company and its subsidiaries, which are related
parties, have been eliminated on consolidation and are not disclosed in this
note, in accordance with the exemption available under IAS 24.
The remuneration of the Board of Directors, who are considered key management
personnel of the Group, was £1.4 million (2021: £1.2 million) including
share-based payments of £0.1 million (2021: £nil).
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