Topps Tiles — Early delivery

Topps Tiles (LSE: TPT)

Last close As at 27/02/2024

GBP0.44

0.05 (0.11%)

Market capitalisation

GBP88m

More on this equity

Research: Consumer

Topps Tiles — Early delivery

Topps Tiles’ (TPT’s) FY23 results confirm the strong progress made, with its focus on growing profitable market share by developing and diversifying its operations. The success is shown in record revenue for the Topps Tiles branded stores and the group as a whole, aided by the achievement of its ‘1 in 5 by 2025’ market share goal two years earlier than predicted. An improving cost environment has translated into an underlying improvement in gross margin through the year, as expected by management. The current trading statement confirms a more challenging external environment since the summer, as reported by others, but management is confident of further market share gains in coming years, with greater visibility on operating costs than there has been recently.

Russell Pointon

Written by

Russell Pointon

Director, Consumer

Consumer

Topps Tiles

Early delivery

FY23 results

Retail

30 November 2023

Price

45p

Market cap

£89m

Net cash (£m) at 30 September 2023 (excluding IFRS 16 liabilities)

23.4

Shares in issue

196.7

Free float

70.2%

Code

TPT

Primary exchange

LSE

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

(2.2)

(9.9)

13.8

Rel (local)

(5.2)

(11.3)

14.8

52-week high/low

56.4p

40.6p

Business description

Topps Tiles is the market-leading specialist retailer/distributor of wall and floor tiles, and associated products such as tools, grouts and adhesives, to its retail, trade and commercial customers in the UK.

Next events

Q124 trading statement

4 January 2024

H124 trading statement

3 April 2024

H124 results

21 May 2024

Analysts

Russell Pointon

+44 (0)20 3077 5700

Milo Bussell

+44 (0)20 3077 5700

Topps Tiles is a research client of Edison Investment Research Limited

Topps Tiles’ (TPT’s) FY23 results confirm the strong progress made, with its focus on growing profitable market share by developing and diversifying its operations. The success is shown in record revenue for the Topps Tiles branded stores and the group as a whole, aided by the achievement of its ‘1 in 5 by 2025’ market share goal two years earlier than predicted. An improving cost environment has translated into an underlying improvement in gross margin through the year, as expected by management. The current trading statement confirms a more challenging external environment since the summer, as reported by others, but management is confident of further market share gains in coming years, with greater visibility on operating costs than there has been recently.

Year end

Revenue (£m)

PBT*
(£m)

EPS*
(p)

DPS
(p)

P/E
(x)

Yield
(%)

09/22

247.2

15.9

6.2

3.6

7.3

8.0

09/23

262.7

13.8

4.6

3.6

9.8

8.0

09/24e

267.0

13.2

4.6

3.6

9.7

8.0

09/25e

280.1

14.7

5.4

3.6

8.4

8.0

Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.

FY23 results ahead of expectations

TPT delivered adjusted profit before tax of £12.5m, modestly ahead of consensus expectations and our estimate of £11.8m. Group revenue of c £263m was modestly ahead of our initial estimate of £261m, while gross profit of £139.2m was in line with our estimate, indicating better control and leverage of operating costs further down the income statement. The revenue growth compares very favourably with estimates of a decline in the tile market of 9% (source: TPT FY23 results presentation) in FY23, pointing to impressive market share gains. The company estimates its market share at 22.1%, from 19.8% (restated) in the prior year.

Tougher markets temper growth outlook

Trading in the first eight weeks of the year has been weaker than expected as the traditional uptick into the November peak as customers prepare for family visits over the festive season has not materialised to the extent expected. The trading weakness is consistent with that of other participants in the repairs, maintenance and installation (RMI) market since the middle of the calendar year. As a result, we temper our revenue growth expectations, which leads to a downgrade to our adjusted PBT estimates (TPT definition) of 7–8% for FY24 and FY25.

Valuation: Highly attractive

TPT’s current valuation is attractive versus its peers, and relative to its own trading history, which is confirmed by the material upside to our discounted cash flow (DCF)-based valuation of 88p/share from 104p/share previously, which incorporates the downgrades to our estimates and a higher weighted average cost of capital (WACC) of 10%, from 9% previously.

FY23 results: Record revenue, cost inflation easing

Income statement

The majority of TPT’s group businesses contributed to the strong 6.3% y-o-y increase in revenue to £262.7m (FY22: £247.2m), which far exceeded management’s estimate of a 9% market decline in the year. Gross profit delivered good underlying growth for all businesses, increasing by 2.8% yo-y to £139.2m, while adjusted PBT declined by c 20% to £12.5m due to cost pressures, which was modestly ahead of consensus expectations of £11.3–12.3m.

Exhibit 1: Summary income statement

£m

H122

H222

FY22

H123

H223

FY23

Group revenue

119.2

128.0

247.2

130.3

132.4

262.7

Growth y-o-y

15.5%

2.6%

8.4%

9.3%

3.4%

6.3%

- Omni-channel

113.1

114.0

227.1

115.8

115.1

230.9

- Online Pure Play

1.1

8.2

9.3

9.9

12.5

22.4

- Commercial

5.0

5.9

10.9

4.6

4.8

9.4

Gross profit

66.9

68.6

135.4

68.7

70.5

139.2

Gross margin

56.1%

53.6%

54.8%

52.8%

53.3%

53.0%

Total operating costs

(59.3)

(61.2)

(120.6)

(64.9)

(63.3)

(128.1)

Net finance costs

(1.9)

(2.0)

(3.9)

(2.2)

(2.1)

(4.3)

Adjusted PBT

7.1

8.5

15.6

4.4

8.3

12.5

Adjustments

(1.5)

(3.2)

(4.7)

(2.7)

(3.2)

(5.7)

Reported PBT

5.6

5.3

10.9

1.7

5.1

6.8

Tax

(1.4)

(0.3)

(1.8)

(1.0)

(1.9)

(2.9)

Effective rate

25.4%

6.2%

16.0%

58.1%

37.4%

42.5%

EPS fully diluted (p)

2.10

2.45

4.55

0.24

1.38

1.62

Adjusted EPS - company definition (p)

2.83

3.31

6.14

1.57

2.92

4.49

Dividend per share (p)

1.00

2.60

3.60

1.20

2.40

3.60

Source: Topps Tiles accounts

The most significant absolute contributor to TPT’s overall revenue growth was Online Pure Play, whose revenue increased from £9.3m in FY22 to £22.4m in FY23. This growth is not like-for-like as FY23 represents the first full year of ownership or trading for the two brands, Pro Tiler Tools and Tile Warehouse, which were acquired or launched in March and May of FY22, respectively. Underlying revenue growth was exceptionally strong at 52% y-o-y, with the majority of this growth by the larger Pro Tiler Tools. Pro Tiler Tools’ growth has been fuelled by a combination of the offer of more trade-focused product brands, an enhanced service proposition and the launch of two new trading brands focused on underfloor heating and other flooring materials, to complement the existing four brands. Management accepts that growth for Tile Warehouse has been slower than originally anticipated due to technical issues (integration with core systems, search strategy needing refining and range issues). However, it is confident of stronger growth in FY24 following changes to the management team and a refreshed focus.

The omni-channel brand, Topps Tiles, recorded its highest-ever annual sales of £230.9m, with y-o-y growth of 1.7%. This was the third consecutive year of year-on-year revenue growth since the outbreak of the COVID pandemic and took revenue to almost 8% above pre-pandemic levels of £214.3m in FY19 despite operating from c 16% fewer stores (303 stores at the end of FY23 versus 362 at the end of FY19). The influence of higher inflation on reported revenue growth is highlighted by the square metres of coverings sold declining by just under 5% in FY23. The improved sales densities, ie sales per average store that were 30% above pre-pandemic levels, are testimony to the self-help measures and new product launches that have enabled Topps Tiles to grow its market share. There was one further store closure in the year, along with three store relocations; management indicates that the store closure programme is now complete. As indicated in the year-end trading update, revenue growth for Topps Tiles slowed through FY23, as inflationary cost pressures eased, thereby reducing how much inflation needed to be passed on to customers, and macroeconomic conditions deteriorated.

As previously reported, the Commercial business, Parkside, had a challenging year due to weakness in its end-markets that necessitated a restructuring of the business. Effectively, the cost base has been right-sized given management did not expect a quick recovery in trading conditions. The division’s cost base was reduced by 35%, mainly via headcount, during the company’s Q3, and management points to a positive business contribution in every month of the final quarter. Management remains confident that the division is capable of delivering at least £20m in profitable sales in the medium term. FY23’s revenue of £9.4m, which was down from the recent FY22 peak of £10.9m, having grown in every year prior to that.

As expected by management earlier in the year, moderating input cost inflation translated to a steady increase in the gross margin as the year progressed: H223’s gross margin of 53.3% was 50bp higher than H123’s 52.8%. Overall group gross profit increased by 2.8% to £139.2m, a group record, from FY22’s £135.4m. The decline in gross margin from 54.8% in the prior year to FY23’s 53% was wholly due to business mix changes (the newer group businesses, Commercial and Online Pure Play, operate with a lower gross margin than Topps Tiles-branded stores) and foreign exchange, which reduced the gross margin by a combined 200bp. The underlying trend in gross margin was more encouraging, with a 20bp increase highlighted by management, with all three of the verticals enjoying some benefit.

Below the gross profit line, adjusted operating costs increased by c 5.7% to £122.6m, with a number of positive and negative drivers. Looking at the positives first, a smaller store base for Topps Tiles (304 average stores in FY23 versus 310 stores in FY22) and the business rationalisation of Parkside provided combined year-on-year cost savings of £2.3m. On the negative side, there was naturally underlying cost inflation of c 5% and the first full 12-month contribution from Pro Tiler Tools added a further c 2.7% to the underlying cost base. Management proudly points out that it has offset virtually all of the inflationary cost pressures faced since FY19 through a combination of self-help and improving average sales densities in the stores, which has enhanced profitability. We remind readers that although the newer businesses have a lower gross margin than Topps Tiles, ultimately management believes they can all generate a net margin of 8–10%. Online Pure Play was not dilutive to net margin in FY23; the other businesses will take some time to scale their margins.

The lower gross margin, higher operating costs and slight increase in the net finance charge led to a year-on-year decline in PBT of c 38% to £6.8m (FY22: £10.9m). Adjusting for one-off costs, predominantly the higher costs related to the acquisition of Pro Tiler Tools (£4.1m for a full 12 months instead of £1.6m for six months in FY22), which are treated as an employment expense instead of an acquisition, the underlying decline in PBT was just under 20% to £12.5m (FY22: £15.6m).

The effective corporation tax rate of 42.5% versus 16% in the prior year is ‘inflated’ as the expenses related to the acquisition of Pro Tiler Tools (above) are not deductible from a tax perspective. Once the acquisition of the remaining 40% of shares is completed in FY24, the effective tax rate should revert to a more normal underlying tax rate, which was 24.9% in FY22.

Shareholders have been rewarded with another full-year dividend of 3.6p per share, which was split 1/3:2/3 between the interim and final dividends. The sustained dividend versus the prior year is consistent with management’s policy of paying out 67% of adjusted EPS, but not reducing dividend payments year-on-year if an EPS decrease was believed to be due to any short-term performance considerations or macroeconomic conditions, providing an attractive reason to hold the shares.

Cash flow and balance sheet

TPT’s operating cash flow generation before net interest improved significantly in FY23 in absolute terms, from £26.8m in FY22 to £41.3m, and relative to revenue. The lower reported profitability was more than offset by a swing back to a working capital inflow that TPT typically enjoys. The inflow of £3.4m in FY23 contrasts with the relatively large outflows of more than £10m per year in each of the two prior financial years as a result of higher inventory days through the pandemic given sourcing problems, the additional stock for the new business, Pro Tiler Tools, and higher input cost inflation. Management attributes the improvement in working capital to good stock control in the main, along with smaller relative gains on both payables and receivables. The significant reduction in inventory days to 107, from 126 in FY22, includes an underlying reduction for Topps Tiles as well as the effects of the growth in Pro Tiler Tools, which typically operates with lower levels of inventory.

The strong absolute and relative gains in operating cash flow were only marginally diluted by a yearonyear increase in investment in tangible and intangibles assets to c £4.1m (FY22: £3.2m) to give a strong improvement in free cash flow generation in the year, an inflow of £14.7m versus £0.8m in FY22.

The significant improvement in free cash generation meant that TPT’s closing cash position improved further, from £16.2m at the end of FY22 through £19.9m at H123 to £23.4m by the end of FY23. TPT has no debt beyond its lease liabilities of £94.5m at the end of the year, which declined in value by just over £8m during the year.

Forward guidance and current trading

As is typical, management has not provided profit guidance, but has given some indication of how it believes operating costs will progress along with any expected changes in cash flow dynamics.

Most importantly, management continues to believe that its market-leading brands, world-class customer service, specialist expertise, strong balance sheet, growing cash position and ambitious growth strategy leave it well-positioned to continue to take market share. Industry data (source: Topps Tiles FY23 results presentation) suggests a CAGR for the UK ceramic tile market of c 3% through 2026.

Management’s current trading statement confirms the industry-wide deterioration in the RMI market, such that total sales declined by 3% in the first eight weeks of the financial year, which includes a like-for-like decline in Topps Tiles of 6.1%, offsetting the continuing strong growth by Pro Tiler Tools.

With respect to operating costs in FY24, management has quantified c £5m in inflationary cost pressures, which include the recently announced increase in the National Living Wage, a 9.8% increase to £11.44 per hour from 1 April 2024 for those aged 21 and over, which follows an increase of a similar magnitude in April 2023, and property costs. However, these inflationary cost pressures will be offset by some cost efficiencies and a lower provision for the cost of the remainder of Pro Tiler Tools, which was £4.1m in FY23. There should be a typical slight skewing of full-year profits to the second half of the year due to the typical holiday pay accrual that occurs in H1 and then reverses out in H2, and energy costs are expected to be £1.5m higher in H1 than H2, also reflecting the winter months when stores and offices require more heating.

Cash flow generation is expected to be helped by an even better working capital inflow of £7m as the company’s current 52-week accounting period means the current financial year will end before the final month-end payroll and supplier payment runs. This will reverse in a few years’ time when the company next has a 53-week accounting period. In the other direction, capex will increase to £6–8m, from just over £4m in FY23, and the company will pay for the remaining 40% of Pro Tiler Tools.

The more challenging trading macroeconomic environment has led us to take a more cautious stance in our forecasts for FY24 and FY25; predominantly lower like-for-like growth in Topps Tiles, with no growth now assumed versus 3% previously, and low single-digit growth for Parkside versus expectations of a stronger recovery of 5% previously. The changes are summarised as follows:

Exhibit 2: Changes to estimates

£m

FY24e new

FY25e new

FY24e old

FY25e old

Change FY24e

Change FY25e

Revenue

267.0

280.1

272.9

286.4

(2.2%)

(2.2%)

Adjusted PBT - company definition

11.8

13.3

12.8

14.3

(8.1%)

(6.9%)

Source: Edison Investment Research

We remind readers that our definition of adjusted profit before tax differs slightly from the company’s – we exclude share-based payments and amortisation of goodwill on acquisitions.

The medium-term revenue opportunity for the business remains very attractive, with management’s ambitions for revenue of the individual businesses of £30m+ for Pro Tiler Tools (FY23: c £20m), £20m+ for Parkside (FY23: £9.4m) and £15m+ for Tile Warehouse (FY23: c £2m).

Valuation

The downgrades to our profit estimates and an increase in our WACC to 10%, which includes a higher UK 10-year bond yield of c 4.3% and equity market risk premium of 5.9% (source: Damodaran), from 9% previously, leads to a reduction in our DCF-based valuation to 88p per share (104p per share previously). The sensitivity of the valuation to changes in WACC and terminal growth (we use 2%) is as follows:

Exhibit 3: DCF sensitivity (p per share)

Terminal growth rate

1.0%

2.0%

3.0%

4.0%

5.0%

WACC

12.0%

70

75

81

89

99

11.5%

72

78

84

93

105

11.0%

74

81

88

98

111

10.5%

77

84

93

104

119

10.0%

80

88

97

110

129

9.5%

83

92

103

118

140

9.0%

87

97

110

128

155

8.5%

91

102

117

139

174

8.0%

96

109

127

154

199

7.5%

102

117

138

172

234

Source: Edison Investment Research

TPT’s valuation relative to its own history

Below we show TPT’s prospective EV/sales multiples relative to its historical high, average (figure quoted) and low multiples in each year. To make the comparison over the long term more valid, we exclude IFRS 16 liabilities from net debt. While we recognise the various drivers of valuations at different stages of TPT’s development and economic cycle, we can see from both charts that it has typically traded at a higher multiple than its prospective multiples when it has historically reported similar rates of revenue growth and profitability according to our forecasts.

Exhibit 4: EV/sales versus revenue growth

Exhibit 5: EV/sales versus EBIT margin

Source: Topps Tiles, Edison Investment Research, Refinitiv. Note: Prices as at 29 November 2023.

Source: Topps Tiles, Edison Investment Research, Refinitiv. Note: Prices as at 29 November 2023.

Exhibit 4: EV/sales versus revenue growth

Source: Topps Tiles, Edison Investment Research, Refinitiv. Note: Prices as at 29 November 2023.

Exhibit 5: EV/sales versus EBIT margin

Source: Topps Tiles, Edison Investment Research, Refinitiv. Note: Prices as at 29 November 2023.

Peer comparison

TPT is currently valued at a significant discount to the median EV/sales and P/E multiples of the two sets of peers that we monitor: manufacturers and distributors of products that are exposed to the same end-markets, and retailers that are exposed to changes in consumer spending on housewares. All figures are annualised to TPT’s September year end.

Exhibit 6: Peer valuations

Sales growth (%)

EBIT growth (%)

EBIT margin (%)

EV/Sales (excl. leases) (x)

P/E (x)

Dividend yield (%)

Company

Share price (p)

Market value (£m)

FY24e

FY25e

FY24e

FY25e

FY24e

FY25e

FY24e

FY25e

FY24e

FY25e

FY24e

FY25e

Forterra PLC

154

397

(5)

4

(20)

21

9.7

11.3

1.0

1.0

13.7

11.3

5.5

4.3

Grafton Group PLC

811

1,668

(0)

3

(20)

5

7.3

7.4

0.5

0.5

12.6

12.0

4.1

4.2

Ibstock PLC

137

670

(6)

4

(28)

9

13.2

13.8

1.5

1.4

12.4

11.5

6.1

5.2

Marshalls PLC

234

821

0

4

(2)

12

10.9

11.8

1.1

1.1

13.2

11.3

4.2

3.7

Norcros PLC

162

214

(2)

(1)

(4)

4

10.1

10.6

0.4

0.5

5.1

5.0

6.3

6.4

Travis Perkins PLC

762

2,493

(0)

4

(5)

19

4.2

4.8

0.4

0.4

13.6

10.7

4.3

4.0

Tyman PLC

279

715

1

5

0

10

11.8

12.4

1.0

0.9

9.3

8.3

4.9

5.0

Victoria PLC

257

322

36

3

(2)

8

8.3

8.7

0.2

0.2

6.2

5.7

N/A

N/A

Median - other

(0)

4

(4)

9

9.9

10.9

0.7

0.7

12.5

11.0

4.9

4.3

AO World plc

82

530

0

9

44

29

3.2

3.7

0.4

0.4

19.7

17.1

N/A

N/A

Currys PLC

47

1,862

(2)

1

3

11

2.4

2.6

0.1

0.1

6.0

5.0

3.1

4.5

CMO Group PLC

25

18

3

10

N/A

N/A

0.5

1.1

0.2

0.2

N/A

56.4

N/A

N/A

DFS Furniture PLC

107

800

1

4

7

26

6.4

7.7

0.4

0.3

9.2

5.9

4.1

4.2

Dunelm Group PLC

1,053

2,414

5

5

6

7

12.2

12.4

1.2

1.2

13.9

12.9

7.4

6.2

Howden Joinery Group PLC

704

4,395

2

5

(1)

9

15.2

15.7

1.6

1.5

14.5

13.1

2.8

2.9

Kingfisher PLC

219

6,306

1

3

(6)

7

5.3

5.5

0.3

0.3

9.2

8.2

5.5

5.5

Marks Electrical Group PLC

89

94

17

15

16

27

5.8

6.5

0.7

0.6

17.0

13.2

1.1

1.2

Victorian Plumbing Group PLC

82

266

6

8

7

15

7.1

7.5

0.7

0.7

16.3

14.4

1.7

2.7

Wickes Group PLC

131

413

1

3

(13)

10

4.3

4.6

0.1

0.1

9.2

7.7

8.3

8.2

Median - retailers

2

5

6

11

5.5

6.0

0.4

0.4

13.9

13.0

3.6

4.3

Topps Tiles PLC

45

89

2

5

(8)

9

6.2

6.5

0.2

0.2

9.7

8.4

8.0

8.0

Source: Edison Investment Research, Refinitiv. Note: Prices as at 29 November 2023.

Exhibit 7: Financial summary

£m

2021

2022

2023

2024e

2025e

30-September

IFRS

IFRS

IFRS

IFRS

IFRS

INCOME STATEMENT

Revenue

 

 

228.0

247.2

262.7

267.0

280.1

Cost of Sales

(97.3)

(111.8)

(123.5)

(123.7)

(130.6)

Gross Profit

130.7

135.4

139.2

143.3

149.5

EBITDA

 

 

47.6

44.2

42.0

40.9

42.8

Operating profit (before amort. and excepts.)

 

 

20.6

19.8

18.1

16.6

18.1

Amortisation of acquired intangibles

0.0

0.0

0.0

(0.5)

(0.5)

Exceptionals

(1.9)

(4.5)

(6.1)

(2.0)

0.0

Share-based payments

(0.7)

(0.5)

(0.9)

(0.9)

(0.9)

Reported operating profit

18.0

14.8

11.1

13.2

16.7

Net Interest

(4.1)

(3.9)

(4.3)

(3.4)

(3.4)

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)

 

 

15.0

15.6

12.5

11.8

13.3

Profit Before Tax (norm)

 

 

16.5

15.9

13.8

13.2

14.7

Profit Before Tax (reported)

 

 

14.0

10.9

6.8

9.8

13.3

Reported tax

(3.3)

(1.8)

(2.9)

(3.2)

(3.7)

Profit After Tax (norm)

13.3

12.4

9.8

9.5

10.7

Profit After Tax (reported)

10.7

9.2

3.9

6.6

9.6

Minority interests

(0.0)

(0.2)

(0.7)

(0.4)

0.0

Discontinued operations

0.0

0.0

0.0

0.0

0.0

Net income (normalised)

13.3

12.2

9.1

9.2

10.7

Net income (reported)

10.6

9.0

3.2

6.3

9.6

Average Number of Shares Outstanding (m)

195

196

196

197

197

EPS - basic normalised (p)

 

 

6.81

6.22

4.63

4.67

5.42

EPS - normalised fully diluted (p)

 

 

6.73

6.15

4.59

4.63

5.37

EPS - basic reported (p)

 

 

5.46

4.60

1.63

3.19

4.90

EPS - adjusted (company) (p)

 

 

6.02

6.14

4.34

3.92

4.90

Dividend (p)

3.10

3.60

3.60

3.60

3.60

Revenue growth (%)

18.2

8.4

6.3

1.6

4.9

Gross Margin (%)

57.3

54.8

53.0

53.7

53.4

Normalised Operating Margin

9.0

8.0

6.9

6.2

6.5

BALANCE SHEET

Fixed Assets

 

 

122.5

119.0

109.0

108.8

108.2

Intangible Assets

0.5

7.5

6.9

8.2

9.4

Tangible Assets

119.1

109.4

100.2

98.6

96.9

Investments & other

2.9

2.1

1.9

1.9

1.9

Current Assets

 

 

65.6

61.8

65.4

65.8

71.3

Stocks

32.8

38.6

36.4

36.4

38.4

Debtors

4.5

6.4

5.3

5.3

5.4

Cash & cash equivalents

27.8

16.2

23.4

23.7

27.0

Other

0.5

0.5

0.4

0.4

0.4

Current Liabilities

 

 

(69.3)

(63.3)

(66.9)

(68.4)

(71.3)

Creditors

(47.4)

(43.7)

(45.1)

(52.1)

(55.0)

Tax and social security

(2.0)

(1.2)

(0.4)

(0.4)

(0.4)

Short term borrowings

0.0

0.0

0.0

0.0

0.0

Leases

(19.5)

(18.2)

(15.6)

(15.6)

(15.6)

Other

(0.4)

(0.4)

(5.9)

(0.3)

(0.3)

Long Term Liabilities

 

 

(93.8)

(88.4)

(81.1)

(79.7)

(78.3)

Long term borrowings

0.0

0.0

0.0

0.0

0.0

Leases

(91.8)

(84.7)

(78.9)

(77.5)

(76.0)

Other long-term liabilities

(2.0)

(3.7)

(2.2)

(2.2)

(2.2)

Net Assets

 

 

25.0

29.0

26.4

26.5

29.9

Minority interests

0.0

2.5

3.2

0.4

0.4

Shareholders' equity

 

 

25.0

31.5

29.6

26.9

30.3

CASH FLOW

EBITDA

47.6

44.2

42.0

40.9

42.8

Working capital

(14.6)

(11.0)

3.4

6.9

0.8

Exceptional & other

(0.8)

(2.9)

(0.8)

(0.9)

(0.5)

Tax

(1.5)

(3.5)

(3.3)

(3.2)

(3.7)

Net operating cash flow

 

 

30.6

26.8

41.3

43.8

39.4

Capex

(2.3)

(3.0)

(4.2)

(6.4)

(6.5)

Acquisitions/disposals

(0.2)

(4.0)

0.0

(7.5)

0.0

Net interest

(4.1)

(3.9)

(4.0)

(3.4)

(3.4)

Equity financing

0.1

0.1

0.0

0.0

0.0

Dividends

0.0

(8.0)

(7.5)

(7.1)

(7.1)

Other

(27.4)

(19.6)

(18.6)

(19.1)

(19.1)

Net Cash Flow

(3.2)

(11.5)

7.1

0.3

3.4

Opening net debt/(cash)

 

 

(26.0)

(27.8)

(16.2)

(23.4)

(23.7)

FX

0.0

0.0

0.0

0.0

0.0

Other non-cash movements

5.1

(0.1)

0.1

0.0

0.0

Closing net debt/(cash)

 

 

(27.8)

(16.2)

(23.4)

(23.7)

(27.0)

Closing net debt/(cash) including leases

 

 

83.5

86.7

71.1

69.5

64.7

Source: Topps Tiles accounts, Edison Investment Research


General disclaimer and copyright

This report has been commissioned by Topps Tiles and prepared and issued by Edison, in consideration of a fee payable by Topps Tiles. Edison Investment Research standard fees are £60,000 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2023 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

General disclaimer and copyright

This report has been commissioned by Topps Tiles and prepared and issued by Edison, in consideration of a fee payable by Topps Tiles. Edison Investment Research standard fees are £60,000 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2023 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

More on Topps Tiles

View All

Latest from the Consumer sector

View All Consumer content

Consumer

SATS — Lean and healthy

iStock-1304804045

Consumer

Compagnie des Alpes — New peaks

Consumer

Dunelm Group — Appealing offer

Research: Real Estate

Picton Property Income — Resilient H124 with fully covered DPS

In a challenging market environment, Picton Property Income (PCTN) produced a resilient H124 financial performance, supporting fully covered DPS. This was underpinned by continued portfolio outperformance of the MSCI UK Quarterly Property Index, building on a long-term track record of upper quartile performance since inception. Rents continued to grow, asset management initiatives are in place, aimed at capturing reversionary income potential, and borrowings are mostly long term and fixed rate.

Continue Reading
Picton-Property-Income_resized

Subscribe to Edison

Get access to the very latest content matched to your personal investment style.

Sign up for free