Last close As at 05/08/2026
GBP0.36
▲ 1.90 (5.56%)
Market capitalisation
GBP71m
Research: Consumer
The acquisition of certain assets of CTD Tiles (CTD) brings complementary activities to Topps Tiles’ (TPT’s) existing Omnichannel and Commercial businesses. Management believes these will enable faster progress in some current markets (with architects and designers) and provide a meaningful entry into new addressable markets, such as the volume housebuilder segment. The acquired revenue and profit will accelerate TPT towards its Mission 365 financial goals. We upgrade our FY25–26 profit estimates by 11–13%.
Topps Tiles |
Acquisition of a well-respected competitor |
Acquisition |
Retail |
22 August 2024 |
Share price performance
Business description
Next events
Analysts
Topps Tiles is a research client of Edison Investment Research Limited |
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The acquisition of certain assets of CTD Tiles (CTD) brings complementary activities to Topps Tiles’ (TPT’s) existing Omnichannel and Commercial businesses. Management believes these will enable faster progress in some current markets (with architects and designers) and provide a meaningful entry into new addressable markets, such as the volume housebuilder segment. The acquired revenue and profit will accelerate TPT towards its Mission 365 financial goals. We upgrade our FY25–26 profit estimates by 11–13%.
Year end |
Revenue (£m) |
PBT* |
EPS* |
DPS |
P/E |
Yield |
09/22 |
247.2 |
16.1 |
6.2 |
3.6 |
7.6 |
7.6 |
09/23 |
262.7 |
13.4 |
4.5 |
3.6 |
10.6 |
7.6 |
09/24e |
247.3 |
6.5 |
2.1 |
1.4 |
22.4 |
3.0 |
09/25e |
294.4 |
11.0 |
4.0 |
3.7 |
11.8 |
7.8 |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.
CTD helpful to retail and B2B aspirations
TPT has acquired the brands, 30 stores (from a total of 86), selected stock and all related intellectual property of CTD Tiles from its administrators for a £9m consideration paid in cash. The acquired stores generated c £20m in revenue in the year to June 2024, from total store-based revenue of c £50m and total revenue of c £74m, which included c £16m to housebuilders and c £8m to architects and designers. We believe TPT has acquired the best and most profitable CTD stores. CTD has a higher concentration of trade customers (more than 70%) than Topps Tiles (c 60%). Its stores are formatted differently to Topps Tiles stores (separate entrances for trade and retail) and it offers different products and brands. The closure of CTD’s remaining stores provides potential upside as its customers will shop elsewhere. Management believes the non-store assets provide an important platform to better leverage its brands in the commercial/B2B world, a key focus of Mission 365. However, the initial focus will be to steady the ship as revenue has been declining due to a lack of investment from the previous private equity owners.
Double-digit profit upgrades
Ahead of management providing further insight into the future strategy, likely at the FY24 results, we incorporate £30m (£20m store and £10m non-store) revenue into our FY25 estimates with a gross margin of 50% and an operating margin of 5%, lower than TPT’s core business. Management has indicated that the acquisition will be accretive to FY25 earnings.
Valuation: Attractive re-rating opportunity
The recent increase in the share price has taken the prospective FY25 EV/sales multiple (excluding leases) to 0.3x. Our recent outlook note highlighted the valuation discrepancy versus TPT’s historical multiples when comparing expected profitability and the potential for a re-rating if the Mission 365 financial goals are achieved.
Exhibit 1: Financial summary
£m |
2022 |
2023 |
2024e |
2025e |
2026e |
|
30-September |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
|
INCOME STATEMENT |
||||||
Revenue |
|
247.2 |
262.7 |
247.3 |
294.4 |
315.9 |
Cost of Sales |
(111.8) |
(123.5) |
(114.3) |
(138.2) |
(149.2) |
|
Gross Profit |
135.4 |
139.2 |
133.0 |
156.2 |
166.7 |
|
EBITDA |
|
44.3 |
41.6 |
33.0 |
37.1 |
40.6 |
Operating profit (before amort. and excepts.) |
|
20.0 |
17.7 |
10.5 |
15.1 |
17.8 |
Amortisation of acquired intangibles |
0.0 |
0.0 |
(0.5) |
(0.5) |
(0.5) |
|
Exceptionals |
(4.7) |
(5.7) |
(6.0) |
0.0 |
0.0 |
|
Share-based payments |
(0.5) |
(0.9) |
(0.2) |
(0.5) |
(0.9) |
|
Reported operating profit |
14.8 |
11.1 |
3.8 |
14.2 |
16.4 |
|
Net Interest |
(3.9) |
(4.3) |
(4.0) |
(4.1) |
(4.0) |
|
Joint ventures & associates (post tax) |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
|
Exceptionals |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
|
Adjusted Profit Before Tax (company) |
|
15.6 |
12.5 |
5.8 |
10.1 |
12.4 |
Profit Before Tax (norm) |
|
16.1 |
13.4 |
6.5 |
11.0 |
13.8 |
Profit Before Tax (reported) |
|
10.9 |
6.8 |
(0.2) |
10.1 |
12.4 |
Reported tax |
(1.8) |
(2.9) |
(0.9) |
(2.8) |
(3.4) |
|
Profit After Tax (norm) |
12.5 |
9.7 |
4.6 |
8.0 |
10.0 |
|
Profit After Tax (reported) |
9.2 |
3.9 |
(1.1) |
7.3 |
9.0 |
|
Minority interests |
(0.2) |
(0.7) |
(0.4) |
0.0 |
0.0 |
|
Discontinued operations |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
|
Net income (normalised) |
12.3 |
9.0 |
4.2 |
8.0 |
10.0 |
|
Net income (reported) |
9.0 |
3.2 |
(1.5) |
7.3 |
9.0 |
|
Average Number of Shares Outstanding (m) |
196 |
196 |
197 |
197 |
197 |
|
EPS - normalised (p) |
|
6.31 |
4.57 |
2.15 |
4.07 |
5.09 |
EPS - normalised fully diluted (p) |
|
6.24 |
4.50 |
2.12 |
4.02 |
5.02 |
EPS - basic reported (p) |
|
4.60 |
1.63 |
(0.74) |
3.72 |
4.58 |
EPS - adjusted (company) (p) |
|
6.14 |
4.49 |
1.42 |
3.72 |
4.58 |
Dividend (p) |
3.60 |
3.60 |
1.42 |
3.72 |
3.60 |
|
Revenue growth (%) |
8.4 |
6.3 |
(5.9) |
19.1 |
7.3 |
|
Gross Margin (%) |
54.8 |
53.0 |
53.8 |
53.1 |
52.8 |
|
Normalised Operating Margin |
8.1 |
6.7 |
4.2 |
5.1 |
5.6 |
|
BALANCE SHEET |
||||||
Fixed Assets |
|
119.0 |
109.0 |
114.1 |
117.5 |
116.0 |
Intangible Assets |
7.5 |
6.9 |
15.4 |
14.6 |
13.4 |
|
Tangible Assets |
109.4 |
100.2 |
96.8 |
100.9 |
100.7 |
|
Investments & other |
2.1 |
1.9 |
1.9 |
1.9 |
1.9 |
|
Current Assets |
|
61.8 |
65.4 |
47.8 |
53.8 |
58.6 |
Stocks |
38.6 |
36.4 |
34.2 |
40.7 |
43.7 |
|
Debtors |
6.4 |
5.3 |
5.0 |
5.9 |
6.4 |
|
Cash & cash equivalents |
16.2 |
23.4 |
4.6 |
3.2 |
4.6 |
|
Other |
0.5 |
0.4 |
3.9 |
3.9 |
3.9 |
|
Current Liabilities |
|
(63.3) |
(66.9) |
(65.8) |
(78.4) |
(82.5) |
Creditors |
(43.7) |
(45.1) |
(49.8) |
(59.3) |
(63.7) |
|
Tax and social security |
(1.2) |
(0.4) |
(0.4) |
(0.4) |
(0.4) |
|
Short term borrowings |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
|
Leases |
(18.2) |
(15.6) |
(15.6) |
(15.6) |
(15.6) |
|
Other |
(0.4) |
(5.9) |
0.0 |
(3.0) |
(2.9) |
|
Long Term Liabilities |
|
(88.4) |
(81.1) |
(73.8) |
(70.2) |
(66.5) |
Long term borrowings |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
|
Leases |
(84.7) |
(78.9) |
(71.5) |
(68.0) |
(64.3) |
|
Other long term liabilities |
(3.7) |
(2.2) |
(2.2) |
(2.2) |
(2.2) |
|
Net Assets |
|
29.0 |
26.4 |
22.3 |
22.7 |
25.5 |
Minority interests |
2.5 |
3.2 |
(0.0) |
(0.0) |
(0.0) |
|
Shareholders' equity |
|
31.5 |
29.6 |
22.3 |
22.7 |
25.5 |
CASH FLOW |
||||||
Operating Cash Flow |
44.3 |
41.6 |
33.0 |
37.1 |
40.6 |
|
Working capital |
(11.0) |
3.4 |
7.2 |
2.0 |
0.9 |
|
Exceptional & other |
(3.1) |
(0.4) |
(3.1) |
(0.5) |
(0.5) |
|
Tax |
(3.5) |
(3.3) |
(0.9) |
(2.8) |
(3.4) |
|
Net operating cash flow |
|
26.8 |
41.3 |
36.2 |
35.9 |
37.7 |
Capex |
(3.0) |
(4.2) |
(8.0) |
(10.0) |
(6.0) |
|
Acquisitions/disposals |
(4.0) |
0.0 |
(18.8) |
0.0 |
0.0 |
|
Net interest |
(3.9) |
(4.0) |
(4.0) |
(4.1) |
(4.0) |
|
Equity financing |
0.1 |
0.0 |
0.0 |
0.0 |
0.0 |
|
Dividends |
(8.0) |
(7.5) |
(5.6) |
(4.3) |
(7.2) |
|
Other |
(19.6) |
(18.5) |
(18.5) |
(18.9) |
(19.1) |
|
Net Cash Flow |
(11.5) |
7.1 |
(18.7) |
(1.4) |
1.4 |
|
Opening net debt/(cash) |
|
(27.8) |
(16.2) |
(23.4) |
(4.6) |
(3.2) |
FX |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
|
Other non-cash movements |
(0.1) |
0.1 |
0.0 |
0.0 |
0.0 |
|
Closing net debt/(cash) |
|
(16.2) |
(23.4) |
(4.6) |
(3.2) |
(4.6) |
Closing net debt/(cash) including leases |
|
86.7 |
71.1 |
82.6 |
80.4 |
75.3 |
Source: Company accounts, Edison Investment Research
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