Topps Tiles : Annual Report and Accounts

TOPPS TILES PLC

ANNUAL REPORT AND ACCOUNTS FOR THE 52-WEEK PERIOD ENDED 1 OCTOBER 2022

Pictured front cover: CapelloTM

Pictured this page: Onea Stone

CONTENTS
Highlights	02
Group at a Glance	04
Investment Case	06
Chairman's Statement	08
01. STRATEGIC REPORT
Marketplace	12
Business Model	14
Our Strategy	16
- Leading Product	20
- Leading People	22
- Environmental Leadership	24
- Omni-channel - Topps Tiles	26
- Online Pure Play - Pro Tiler Tools
and Tile Warehouse	30
- Commercial - Parkside	32
Key Performance Indicators	34
Financial Review	36
Risks and Uncertainties	42
Section 172 Companies Act 2006	46
Sustainability	50
TCFD Disclosures	58
Going Concern and Viability Statement	62
02. OUR GOVERNANCE
Board of Directors	66
Executive Committee	68
Corporate Governance Report	69
Directors' Report	86
Directors' Responsibilities Statement	89
Directors' Remuneration Report	90
03. OUR FINANCIALS
Independent Auditor's Report	116
Consolidated Statement of Profit or Loss	124
Consolidated Statement of
Comprehensive Income	124
Consolidated Statement of
Financial Position	125
Consolidated Statement of
Changes in Equity	126
Consolidated Cash Flow Statement	127
Notes to the Financial Statements	128
Company Balance Sheet	160
Company Statement of
Changes in Equity	161
Notes to the Company Financial
Statements	162
04. ADDITIONAL INFORMATION
Five-Year Record	172
The Team	173
Store Locations	182

WELCOME TO

TOPPS GROUP

Our core purpose is

INSPIRING

CUSTOMERS

THROUGH OUR

LOVE OF TILES

The Group's goal is

to achieve 20% of market share by 2025.

Corporate: www.toppstilesplc.com

Omni-channel: www.toppstiles.co.uk

Commercial: www.parkside.co.uk

Online Pure Play www.protilertools.co.uk

www.tilewarehouse.co.uk

OVERVIEW

01

Group Growth Strategy

OMNI-CHANNEL	ONLINE PURE PLAY	COMMERCIAL

LEADING PRODUCT

LEADING PEOPLE

ENVIRONMENTAL LEADERSHIP

Culture

We are a community of small teams with big ambitions who trust each other, celebrate success, and put the customer at the heart of everything we do, that's the Topps Group way.

02	TOPPS TILES PLC ANNUAL REPORT AND ACCOUNTS FOR THE 52-WEEK PERIOD ENDED 1 OCTOBER 2022

HIGHLIGHTS

Topps Tiles Plc ("Topps", "the Group", "Topps Group" or "the Company"), the UK's leading tile specialist, announces its annual financial results for the 52 weeks ended 1 October 2022.

STATUTORY MEASURES

ADJUSTED MEASURES

GROUP

REVENUE (£M)

Year-on-Year:+8.4%

GROSS

MARGIN (%)

Year-on-Year:(2.5) ppts

TOPPS TILES LIKE-FOR-LIKE	ADJUSTED PROFIT
REVENUE YEAR-ON-YEAR1 (%)	BEFORE TAX2 (£M)
Year-on-Year:(10.2)ppts	Year-on-Year:+4.0%

					247.2
				228.0
219.2
	192.8
19		20		21		22

61.6
	58.5
		57.3
		54.8
19		20		21		22

		19.6
0.6			9.4
19	20	21	22
	(12.5)

15.7		15.0	15.6
	3.5
195	205	215	22

GROSS

PROFIT (£M)

Year-on-Year:	+3.6%
135.0	112.8	130.7	135.4
19	20	21	22

BASIC EARNINGS

PER SHARE (P)

Year-on-Year:(15.9%)

				5.47
5.03
		4.60
195	205		215		22
		(4.16)

PROFIT

BEFORE TAX (£M)

Year-on-Year:(22.1%)

		14.0	10.9
2.2
195	205	215	22
	(9.9)

TOTAL DIVIDEND

DECLARED (P)

Year-on-Year:+16.1%

3.4		3.1	3.6
	Nil
19	20	21	22

ADJUSTED EARNINGS	ADJUSTED
PER SHARE3 (P)		NET CASH/DEBT4 (£M)
Year-on-Year:+2.0%	Year-on-Year:£(11.6)m
6.46		6.02	6.14		26.0	27.8	16.2
195	205 1.52	215	22	(11.3) 19	20	21	22
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.

OVERVIEW

03

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 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.
• 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.
Read more about our Market on pages 12 and 13
Read more about our Group Strategy on pages 16 to 33
Read more about our Financial Performance on
pages 34 to 43
Read more about our Environmental Leadership on	Pictured above: Diamante White
pages 24 and 25