24th May 2005 07:01
Topps Tiles PLC24 May 2005 TOPPS TILES PLC the UK's leading tile and wood flooring specialist INTERIM RESULTS FOR the 26 weeks ended Saturday 2nd april 2005 Highlights The Group continues to deliver strong financial results • Group turnover increased by 13.4% to £87.48m (2004: £77.12m for 27 weeks) • Group like-for-like turnover increased by 8.5% • Gross margin increased to 61.9% (2004: 59.4%) • Operating costs excluding exceptional items reduced to 39.4% (2004: 40.0%) • Profit before tax and exceptional items increased by 30.7% to £20.03m (2004: £15.32m) • Profit before tax increased 40.1% to £21.75m (2004: £15.52m for 27 weeks) • Net margin, excluding joint venture and exceptional items increased to 22.9% (2004: 19.9%) • Basic earnings per share increased 47.2% to 7.36p (2004: 5.00p) • Interim net dividend declared of 3.50p (2004: 2.00p) payable 30 June 2005 • Net cash position of £16.73m • Sales growth continues with overall sales increasing by 10.2% and like-for-like sales up 1.8% for the first six weeks of the second half • Net 12 new stores opened in the period • Five major store refits • On target to open net 24 new stores this financial period "Overall we have again made excellent progress in the half year with increasedprofits and further margin improvements. Our store roll-out continues apace and whilst the trading environment has becomemore demanding in recent months we believe that our strong competitive positioncoupled with the strong underlying drivers of the UK DIY market will enable thebusiness to continue to deliver benefits to customers and value to shareholders." For further information please contact: Nick Ounstead, CEO 01625 446700Barry Bester, Co-Chairman 0208 269 1900 Ann-Marie Wilkinson/Sarah LandgrebeBell Pottinger 020 7861 3232 Executive Board Statement We are delighted to report another set of strong financial results for the first26 weeks of 2004/2005 continuing our track record of delivering increasedshareholder value. Financial Results 26 Weeks to 27 Weeks to 2 April 2005 3 April 2004 Change £'000 £'000 % Group Turnover 87,482 77,115 +13.4% ---------- ---------- ----------Gross Margin % 61.9% 59.4% ---------- ---------- ----------Profit before tax and exceptional items 20,029 15,324 +30.7% ---------- ---------- ----------Profit before tax 21,748 15,522 +40.1% ---------- ---------- ----------Net margin % excluding joint ventureand exceptional items 22.9% 19.9% ---------- ---------- ----------Earnings per share (pence) 7.36p 5.00p +47.2% ---------- ---------- ----------Interim dividend (pence) 3.50p 2.00p +75.0% ---------- ---------- ----------Net cash position 16,734 16,140 ========== ========== ========== Profit and loss account Set against very strong comparatives last year of 22.7% over 2003, growth inlike-for-like sales for the period was 8.5%, with overall sales growth in thesame period at 13.4% compared to the 27 week period last year. Gross marginshave improved to 61.9% compared to 59.4% last year, with operating costs,excluding exceptional items in the period equivalent to 39.4% of sales comparedto 40.0% in the 27 week period last year. Profit before tax and exceptional items amounted to £20.03m an increase of 30.7%over the 27 week period last year. Basic earnings per share rose by 47.2% from5.00p to 7.36p, which also reflects the share buy-back programme and reduced taxrate in the period. The net exceptional items relate to the profit on disposal of fixed assets lessexceptional operating expenses of £1.72m (2004: £198,000). Profit before tax amounted to £21.75m, an increase of 40.1% over the 27 weekperiod last year. Net margin, excluding joint venture and exceptional items has increased to 22.9%from 19.9% in the 27 week period last year. The effective rate of Corporation Tax for the period was 23.3% (2004: 26.7%)which reflects the full provision for deferred tax and the favourable effects ofthe statutory deductions for share options exercised and tax savings as a resultof intra-Group restructuring changes. Balance sheetThe Group currently owns five freehold sites, one development site, the newTopps warehouse facility and the recently acquired Tile Clearing House (TCH)warehouse facility with a total net book value of £11.36m. Within the period theTCH warehouse site was acquired at a cost of £2.45m and expenditure on thedevelopment sites totalled £0.68m. Also in the period the Group completed a transaction for the sale and leasebackof four freehold properties generating proceeds of £4.16m. Capital expenditure, excluding freehold property and the TCH warehouse, amountedto £2.65m. This reflects a total of 12 new stores opened in the period with afurther two being closed and relocated and five major store refits along withpreparatory work for a further three stores and other minor refits as well asfurther development and upgrading of the Group's systems infrastructure. At the period end cash balances for the Group were £22.73m (2004: £22.65m) andthere were long term bank loans of £6.00m (2004: £6.51m). The Group thereforehas a net cash position of £16.73m (2004: £16.14m). We continue to buy-back shares when employees dispose of shares acquiredfollowing the exercise of their share options under the Group approved andunapproved executive share option schemes and when the Board considers there isan opportunity to do so in the open market. In the period the Group purchased1,550,045 shares at a cost of £3.45m and now holds 1,957,845 shares as treasuryshares. At the period end the Group had £27.61m of stock which represents 158 days stockcover (2004: 135 days). The increase in days stock cover is as expected and isdue to the transitional switch from UK third party distributors to our Toppswarehouse facility. This will allow us to do more direct product sourcing fromcountries of origin. Board changeAs announced at our Annual General Meeting on 11 January 2005, Stuart Williamshas stepped down as a Board Director and Co-Chairman with effect from 31 March2005 and assumed the newly created position of President. Barry Bester will continue his role as Executive Chairman. DividendWe are continuing with our progressive dividend policy and announcing an interimdividend of 3.50p per share (2004: 2.00p), an increase of 75%. This will be paidon 30 June 2005 to shareholders on the register as at 3 June 2005. The currentdividend policy of 1.41 times cover is being maintained and will be applied tothe full period dividend. International Financial Reporting Standards (IFRS)The Group will be working closely with its auditors to implement these proposedchanges. The Group is required to adopt IFRS for the financial period commencing2 October 2005. Operational reviewWe continue to make good progress with our national store expansion programmeopening 12 Topps Tiles stores and Tile Clearing House in the period. We havealso relocated two stores and completely refurbished five stores in the period.We are the market leader and remain on track to achieve our UK store target of aminimum of 350 outlets nationwide. Our joint venture in Holland is trading profitably and beginning to build asolid foundation for expansion. We have opened one new store in the period andare currently trading from 12 stores which sell a combination of ceramic tilesand wood and laminate flooring. We plan to open a further store before the yearend. We continue to invest in national advertising and are currently runningcampaigns with GMTV, Sky's UK Living channel and Carlton TV weather. We alsobuild local brand awareness throughour involvement not only in advertising, but also in working with the localcommunity where we provide new kits and equipment to junior football teams inthe towns and cities where we have stores. The Board has developed an integrated Corporate and Social Responsibility Policythat targets and measures the performance of the Group. The policy is publishedon our website atwww.toppstiles.co.uk. We now employ over 1,500 staff across the business and we endeavour to train andsupport all staff as well as maintaining a strong culture of rewardingperformance. In March 2005 Topps was voted Company of the Year at Price Waterhouse CoopersPLC Awards for the second consecutive year and we were delighted to walk awaywith the top prize again this year. Current trading and future prospectsIn the first six weeks of the current period sales growth has continued withoverall sales increasing by 10.2% and like-for-like sales up 1.8%. Our store roll-out continues apace and whilst the trading environment has becomemore demanding in recent months we believe that our strong competitive positioncoupled with the strong underlying drivers of the UK DIY market will enable thebusiness to continue to deliver benefits to customers and value to shareholders. Barry Bester Nicholas Ounstead Andrew LiggettExecutive Chairman Chief Executive Officer Finance Director Consolidated Profit and Loss AccountFor the 26 weeks ended 2 April 2005 26 weeks ended 27 weeks ended 53 weeks ended 2 April 2005 3 April 2004 2 October 2004 Unaudited Unaudited Audited Notes £'000 £'000 £'000 Turnover, Group and share of joint venture 88,584 78,015 159,430Less: share of joint venture turnover (1,102) (900) (1,818)Group turnover 87,482 77,115 157,612Cost of sales (33,359) (31,325) (62,282) ----------- ------------ ------------Gross Profit 54,123 45,790 95,330Operating expenses - employee profit sharing (4,307) (4,074) (7,853) - other operating expenses (30,187) (27,152) (54,968) ----------- ------------ ------------ (34,494) (31,226) (62,821)Group operating profitGroup operating profit beforeexceptional operating expenses 19,629 14,908 32,853Exceptional operating expenses - (344) (344) ----------- ------------ ----------- 19,629 14,564 32,509Share of operating profit in jointventure 26 19 39 ----------- ------------ ------------Group and share of jointventure of operating profit 19,655 14,583 32,548Exceptional profit on disposal offixed assets 1,719 542 542 ----------- ------------ ------------Profit on ordinary activitiesbefore finance income 21,374 15,125 33,090Net finance income 374 397 704Profit on ordinary activities before taxationBefore exceptional items 20,029 15,324 33,596Net exceptional items 2 1,719 198 198 ----------- ------------ ------------ 1 21,748 15,522 33,794Tax on profit on ordinary activities (5,071) (4,139) (8,146) ----------- ------------ ------------Profit on ordinary activities aftertaxation 16,677 11,383 25,648Dividends (7,870) (4,557) (18,155) ----------- ------------ ------------Retained profit transferred to reserves 8,807 6,826 7,493 =========== ============ ============Earnings per Ordinary share - basic 7.36p 5.00p 11.30p - diluted 7.29p 4.95p 11.12p =========== ============ ============ Note 1: Topps Tiles has no recognised gains or losses in the period other thanthose reflected in the profit and loss account and accordingly a Statement ofTotal Recognised Gains and Losses has not been prepared. All activity arose fromcontinuing operations. Note 2: Comprises exceptional profit on disposal of fixed assets lessexceptional operating expenses. Consolidated Group Balance SheetAs at 2 April 2005 2 April 2005 3 April 2004 2 October 2004 Unaudited Unaudited Audited £'000 £'000 £'000 Fixed assetsGoodwill 534 568 551Tangible assets 30,914 27,024 29,236Joint venture undertaking - share of assets 1,148 990 1,059 - share of liabilities (940) (809) (866) ------------ ------------ ------------ 208 181 193 ------------ ------------ ------------ 31,656 27,773 29,980Current assetsStocks 27,606 21,447 24,373Debtors 4,113 5,371 3,919Cash at bank and in hand 22,734 22,650 29,624 ------------ ------------ ------------ 54,453 49,468 57,916Creditors: amounts falling duewithin one year (36,460) (33,281) (45,452) ------------ ------------ ------------Net current assets 17,993 16,187 12,464 ------------ ------------ ------------Total assets less current liabilities 49,649 43,960 42,444Creditors: amounts falling due aftermore than one year (8,582) (6,000) (7,571)Provisions for liabilities and charges (2,181) (1,504) (1,864) ------------ ------------ ------------Net assets 38,886 36,456 33,009 ============ ============ ============ Capital and reservesCalled-up share capital 5,698 5,732 5,673Share premium 5,384 3,231 4,889Merger reserve (399) (399) (399)Treasury shares (4,183) (2,781) (733)Capital redemption reserve 137 - 137Profit and loss account 32,249 30,673 23,442 ------------ ------------ ------------Equity shareholders' funds 38,886 36,456 33,009 ============ ============ ============ Consolidated Group Cash Flow StatementAs at 2 April 2005 26 weeks to 27 weeks to 53 weeks to 2 April 2005 3 April 2004 2 October 2004 Unaudited Unaudited Audited £'000 £'000 £'000 Net cash inflow from Groupoperating activities 15,470 15,150 37,770Returns on investment andservicing of finance 357 397 530Taxation (4,362) (1,974) (5,236)Capital expenditure and financialinvestment (1,624) (4,410) (8,266)Equity dividends (13,285) (6,989) (11,534) ----------- ------------ ------------Cash (outflow)/inflow beforefinancing (3,444) 2,174 13,264Financing (3,446) 1,896 (2,220) ----------- ------------ ------------ (Decrease)/increase in cash (6,890) 4,070 11,044 =========== ============ ============ Reconciliation of Group operatingprofit to net cash flow from Groupoperating activities Group operating profit 19,629 14,564 32,509Depreciation charges 1,682 1,329 2,729(Profit)/loss on disposal offixed assets - 72 269Goodwill amortisation 17 18 35Increase in stocks (3,233) (1,734) (4,660)(Increase)/decrease in debtors (189) (659) 793Increase/decrease in creditors (2,436) 1,560 6,095 ----------- ------------ ------------ 15,470 15,150 37,770 =========== ============ ============Return on investments andservicing of financeInterest received 522 456 930Interest paid (165) (59) (400) ----------- ------------ ------------ 357 397 530 =========== ============ ============Capital expenditurePayments to acquire tangiblefixed assets (5,781) (7,441) (11,491)Receipts from sales of tangible fixed assets 4,157 3,031 3,225 ----------- ------------ ------------ (1,624) (4,410) (8,266) =========== ============ ============FinancingProceeds from issue of ordinaryshare capital 521 1,589 3,325New loans 16 3,088 3,095 Treasury shares (3,450) (2,781) (8,640)Repayment of loans (533) - - ----------- ------------ ------------ (3,446) 1,896 (2,220) =========== ============ ============SummaryOpening cash position 29,624 18,580 18,580(Decrease)/increase in cash (6,890) 4,070 11,044 ----------- ------------ ------------Closing cash position 22,734 22,650 29,624 =========== ============ ============ Notes to the Interim Financial InformationFor the 26 weeks ended 2 April 2005 1 Basis of preparation (a) The interim report was approved by the Board on 23 May 2005. The financialinformation for the 26 weeks ended 2 April 2005 and similarly the financial information for the 27 weeks ended 3 April 2004 have neither been audited or reviewed. The financial information for the 53 week period ended 2 October 2004has been extracted from the audited financial statements for that period. (b) The financial information contained in the interim report does notconstitute statutory accounts as defined in section 240 of the Companies Act1985. Statutory accounts for the 53 week period ended 2 October 2004incorporating an unqualified audit report, which did not contain statementsunder section 237(2) or (3) of the Companies Act 1985, have been filed with theRegistrar of Companies. (c) The financial information contained in this interim report has been preparedon the basis of the accounting policies set out in the Group's statutoryaccounts for the 53 week period ended 2 October 2004. 2 TaxationAlthough the Corporate tax rate for the 26 weeks ended 2 April 2005 is 30% anddeferred tax has been provided for in full, provision has been made at theestimated underlying rate of 23.3% (2004: 26.7%) reflecting savings from sharesymmetry on options exercised and intra-Group restructuring benefits. 3 Interim dividendAn interim net dividend of 3.50p per ordinary share has been declared payable on30 June 2005 to shareholders on the register on 3 June 2005. 4 Earnings per shareBasic earnings per share for the 26 weeks ended 2 April 2005 have beencalculated on earnings (after the deduction of taxation) of £16,677,000 (2004:£11,383,000 ) and on ordinary shares of 226,615,590 (2004: 227,741,821), beingthe weighted average of ordinary shares in issue during the period. Diluted earnings per share for the 26 weeks ended 2 April 2005 have beencalculated on earnings (after the deduction of taxation) of £16,677,000 (2004:£11,383,000) and on ordinary shares of 228,732,706 (2004: 229,785,930) being theweighted average of ordinary shares and share options in issue during theperiod. 5 Copies of the interim resultsCopies of the interim results have been sent to shareholders, and further copiescan be obtained from the Company's Registered Office at Topps Tiles Plc,Rushworth House, Wilmslow Road, Handforth, Wilmslow, Cheshire SK9 3HJ. Details are also available on our Website:www.toppstiles.co.uk. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Topps Tiles