Final Results

Topps Tiles PLC
22 July 2002

NEWS RELEASE
22nd July 2002



                                Topps Tiles Plc

                    The UK's largest ceramic tile specialist

                Final results for the 52 weeks ended 1 June 2002



Highlights

  • Turnover of £91.026 million (2001: £74.642 million)             22% increase

  • Profit before tax of £11.516 million (2001: £9.414 million)     22% increase

  • EPS of 17.90p (2001: 14.80p)                                    21% increase

  • Total dividend for period 7.15p per share (2001: 5.00p)         43% increase

  • Gross margin increased to 56.0% (2001: 55.0%)

  • Sales for the period were 11.3% ahead on a like-for-like basis and up
    22.0% overall

  • On target for roll out with 26 new stores opened during the period

  • Joint venture with a Dutch flooring retailer

  • Concession agreement with Harris Carpets

  • Like for like sales for the first six weeks of the current period are 8.1%
    ahead of last period's with total sales up 18.2%

Commenting on the results, Barry Bester, Chief Executive said:

'Since our flotation in June 1997 we have  achieved double digit growth in both
sales and pre tax profits every year, demonstrating both the underlying strength
of the ceramic tile market and the enduring appeal to consumers of our product
and service offering.

We are confident, given the growth opportunities in our market, that we can
continue to produce the  strong financial performances of the past and grow our
market share.'

For further information:

Ann-Marie Wilkinson, Beattie Financial            020 7398 3300/07730 415019


JOINT STATEMENT BY THE CHAIRMAN AND CHIEF EXECUTIVE

We are delighted to report another excellent period of trading for Topps Tiles
Plc. Profit before tax was £11.516 million (2001: £9.414 million) from a
turnover of £91.026 million (2001: £74.642 million).

The Company has now achieved double digit growth in both sales and pre tax
profits every period since its public listing in June 1997.

A growth of 11.3% in like for like sales was recorded for the 52 week period,
demonstrating the underlying strength of the ceramic tile market and the
enduring appeal to consumers of our product and service offer.

Our balance sheet remains robust with no net borrowings at the period end and
cash balances of £5.142 million (2001: £2.206 million).

The Company continues to be cash generative even with significant investment in
new stores and refurbishment of older stores.

The Board is committed to maintaining an efficient capital structure, and
therefore, at the next Annual General Meeting we shall seek shareholder approval
for authority to increase the authorised share capital and to buy back a
proportion of our shares if appropriate.

Dividend

The Board is recommending a final dividend of 5.80 pence per share, which
together with the interim dividend of 1.35 pence per share, brings the total
dividend for the period to 7.15 pence, an increase of 43.0% over the previous
period. The dividend will be paid on 1 November 2002 to all shareholders on the
register as at 4 October 2002.

The Board

We announced in September that Nicholas Ounstead was appointed Chief Operating
Officer. Nicholas has made a smooth transition to this role whilst continuing to
oversee customer services and marketing functions. We are confident that we have
in place a strong and experienced management team to drive the business forward.

Outlook

We continue to build on the proven appeal of the 'Topps Tiles' and 'Tile
Clearing House' formats which provide a secure foundation for the successful
future expansion of the Company.

We are confident, given the growth opportunities in our market, that we can
continue to produce the strong financial performances of the past and grow our
market share.

Barry Bester                                          Stuart Williams
Chief Executive                                              Chairman


OPERATIONS REVIEW

We started the period with 147 stores (121 Topps and 26 Tile Clearing House)
trading and ended with 171 (139 Topps and 32 Tile Clearing House) a net increase
of 24. During the period we actually opened 26 new outlets comprising, 19 Topps
Tiles and 7 Tile Clearing Houses, refitted 23 stores including our Floorstore
concept and closed 2 older stores. Whilst early sales figures within the MFI
stores were encouraging, the venture did not perform to our expectations. We
therefore withdrew our presence in November 2001. The trading losses and exit
costs which were all incurred in the first half of the period totalled £0.156
million. During the year we opened a concession store within the Harris Carpet
chain which has performed well, we will continue to explore similar
opportunities in the forthcoming period.

Gross margin continued to improve and was up a full one percentage point on last
period and has increased more than seven percentage points over the last five
periods. With an increasing mix of products being supplied through our own
warehouse, margin should continue to improve. New suppliers have been enlisted
from lower cost sources outside of the EU to ensure a continued competitive
supply.

The Tile Clearing House brand performed well, taking advantage of sites that are
not suitable for the Topps Tiles brand. Its customers, in the main, are jobbing
builders, small contractors and bulk purchasers and its product offer, which
includes end of lines, discontinued tiles and job lots, is distinctive and does
not overlap with that of the Topps Tiles stores. It acts as a complement to the
Topps Tiles brand and appeals to a different sector of customers.

The Group recently entered a 50/50 joint venture with a Dutch Group. The venture
comprises five well established laminate and wood flooring stores, plus our
pilot store. We plan to introduce laminate and wood flooring to the Sliedreicht
store and ceramic tiles to the five laminate and wood flooring stores. The
management of the joint venture resides with our Dutch co-investor. The long
experience of our Dutch co-investor in the laminate and wood market will enable
us to benefit from buying synergies for these products in our UK operation.

Stock days have continued to fall as we roll out our new core range into the
business and now stands at 175, compared with 187 last year. This reduction has
been achieved through greater focus on the product range assisted by the new
I.T. systems which are now fully operational.

The Market

Our market in the UK for tiles continues to grow and is estimated to increase in
volume in 2002 to 30.1 million square metres, this growth is forecast to
continue, reaching 34.8 million by 2006.* The reason for the sustained growth
can be attributed to the increased awareness of tiles as a major part of home
decoration, not only as a functional product used in traditional wet areas such
as kitchens and bathrooms, but also for their aesthetic value throughout the
home. The areas where ceramic tiles are now used in increasing numbers has
expanded to include conservatories, hallways and cloakrooms and has benefited
from consumers extending their homes to have bigger kitchens as well as second
bathrooms and shower-rooms. It is also being driven by the introduction of under
floor heating systems which are more commonplace in other EU countries where use
of ceramic floor tiles is up to six times greater than the UK. Consumer interest
is fuelled by the extensive media coverage of home improvement television
programmes and by increased tourism to countries which have greater tile usage.

Current Trading and Prospects

Total sales in the first six weeks of 2002/2003 increased by 18.2%, compared
with the corresponding period last year with like for like sales increasing by
8.1%. The outlook for the ceramic tiles and laminate and wood flooring market
remains positive and is forecast to grow steadily over the next four years. We
are now well on the way with our expansion plans for 2002/2003 with 24 new
stores planned, advancing us towards our target of 350 stores across the UK.

                                                               Nicholas Ounstead
                                                         Chief Operating Officer



*source MSI ceramic tiles UK, June 2002


FINANCIAL REVIEW

PROFIT AND LOSS ACCOUNT

Turnover

During the period, overall turnover increased by 22.0% to £91.026 million from
£74.642 million last period. Like for like sales increased by 11.3%, with new
stores contributing a further 10.7% increase.

Gross Margin

Overall gross margin was 56.0% compared to 55.0% last period and an interim
figure of 55.6%. In the second half of the period gross margin increased to
56.5%, resulting in an increase of 1.0% for the full period.

Operating Expenses

Costs as a percentage of sales were 43.2% compared to 42.1% last period. However
this period has included the pilot scheme costs for both MFI and Holland which
represented £0.524 million (2001 - £Nil) whilst last period's costs were net of
profits on disposal of fixed assets of £0.344 million. Taking these elements
into account gives 2002 figures of 42.6% compared to 42.6% in 2001.

Profit Before Tax

We have achieved an overall increase of 22.3% to £11.516 million compared to a
profit before tax of £9.414 million last period. The core of the business
actually demonstrated even stronger growth after taking into account pilot
schemes at MFI and Holland which showed a total loss of £0.369 million.
Therefore, the comparable operating core business showed £11.885 million
compared to  £9.070 million (excluding profit on disposal of fixed assets of
£0.344 million) last period, an increase of 31.0%.

Taxation

We continue to fully provide for deferred taxation in line with FRS19. The
effective rate of corporation tax is 30.2% (2001 - 30.5%).

Earnings and Dividends

Our Earnings per share has grown to 17.9 pence compared to 14.8 pence last
period, an increase of 20.9%. The board is recommending a final dividend of 5.80
pence per share which will give a total dividend for the period of 7.15 pence
compared to 5.00 pence last period, an increase of 43.0%. This gives a dividend
cover of 2.5 times compared to 2.9 times in 2001.

We are confident in reducing the cover, as the business has demonstrated over a
number of periods its ability to generate cash and it has now matured to a stage
where the board considers the change to be appropriate.

BALANCE SHEET

Fixed Assets

Capital expenditure in the period amounted to £3.9 million. This reflects the
cost of acquiring two freehold/development sites for £0.6 million, the opening
of 26 new stores costing £1.7 million and the refurbishment of a further 23
stores at a cost of £0.9 million. We have also continued to update our
Electronic Point of Sale system at a cost of £0.4 million and during the period
five freehold properties were sold which resulted in gross proceeds of £2.8
million. The Group currently has seven freehold and two development sites with a
net book value of £2.1 million.

Stock

Stock days have reduced to 175 days compared to 187 days last period. At the
interim announcement stock days were 177 days and the trend of improvement
reflects the continued efforts to achieve efficiencies in our stock management
which is now benefiting from the investment in the I.T. systems.

Gearing

Cash reserves at the period end were £5.142 million and borrowings were £0.746
million giving the Group a net funds position at the period end of £4.396
million.

OTHER MATTERS

Joint venture in Holland

On the 10 June 2002 the Group entered a joint venture with a Dutch flooring
company. The joint venture comprises five well established laminate and wood
flooring stores and our pilot store. For a cash consideration of £493,000 the
Group acquired 50% in the joint venture with the remaining 50% held by the Dutch
management team.

Accounting period end date change

The Group intends to change its accounting period end date, from the nearest
Saturday to 31 May, to the nearest Saturday to 30 September. This change will
take effect in the accounting period 2002/03 and therefore this period will
report 16 months trading resulting in interim announcements to 30 November 2002
(6 months), 29 March 2003 (4 months) and the period end of 27 September 2003.

Annual General Meeting

The A.G.M. for the period to 1 June 2002 will be held on 8 October 2002. This is
a month later than last period's A.G.M. due to the proposed period end date
change to 30 September. The next A.G.M. will then be held in early January 2004,
15 months after this period's A.G.M.

Change of Auditors

In the UK, an agreement for the partners and personnel of Arthur Andersen to
join Deloitte & Touche has recently been concluded. As a consequence of this,
the board has concluded that it is now appropriate to propose a resolution at
the Annual General Meeting to appoint Deloitte & Touche as auditors to the Group
for the ensuing period.


                                                                  Andrew Liggett
                                                                Finance Director



CONSOLIDATED PROFIT & LOSS ACCOUNT
for the period ended 1 June 2002


                                   Notes               2002          2001
                                                      £'000         £'000
Turnover                             2               91,026        74,642
Cost of sales                                       (40,029)      (33,552)
 
Gross profit                                         50,997        41,090
Operating expenses               
- employee profit sharing                            (2,859)       (2,266)
- other operating expenses                          (36,478)      (29,187)
 
Operating profit                                     11,660         9,637
Finance charges (net)                                  (144)         (223)
 
Profit on ordinary activities 
before taxation                                      11,516         9,414
Tax on profit on ordinary activities                 (3,477)       (2,867)
 
Profit on ordinary activities after 
taxation                                              8,039         6,547
Dividends                            3               (3,208)       (2,245)
 
Retained profit for the financial 
period                                                4,831         4,302
 
Earnings per ordinary share
- basic                              4                 17.9p         14.8p
- diluted                            4                 17.8p         14.6p
 
 

BALANCE SHEETS
1 June 2002

                                                       2002          2001
                                                      £'000         £'000     
Fixed assets     
Goodwill                                                285           302
Tangible assets                                      15,044        16,236
                                                     15,329        16,538
Current assets
Stocks                                               19,019        17,293
Debtors                                               3,802         4,678
Cash at bank and in hand                              5,142         2,206
                                                     27,963        24,177
Creditors: Amounts falling due within one year      (17,935)      (18,707)

Net current assets                                   10,028         5,470

Total assets less current liabilities                25,357        22,008
 
Creditors: Amounts falling due after more than 
one year                                               (526)       (2,446)
     
Provisions for liabilities and charges               (1,007)         (893)
Net assets                                           23,824        18,669

Capital and reserves
Called-up share capital                               5,623         5,601
Share premium account                                 1,307         1,005
Merger reserve                                         (399)         (399)
Profit and loss account                              17,293        12,462

Equity shareholders' funds                           23,824        18,669




CONSOLIDATED CASH FLOW STATEMENT
for the period ended 1 June 2002

                                                       2002          2001
                                                      £'000         £'000

Net cash inflow from operating activities            10,426        11,019
Returns on investments and servicing of finance        (163)         (245)
Taxation                                             (3,005)       (2,849)
Capital expenditure and financial investment           (163)       (4,820)
Equity dividends paid                                (2,323)       (1,934)

Cash inflow before financing                          4,772         1,171
Financing                                            (1,836)          600

Increase in cash in the period                        2,936         1,771



RECONCILIATION TO NET FUNDS
for the period ended 1 June 2002


                                                       2002          2001
                                                      £'000         £'000

Increase in cash in the period                        2,936         1,771

Cash outflow from decrease in debt and hire 
purchase contracts                                    2,160           585

Change in net funds from cash flows                   5,096         2,356
New hire purchase contracts                               -          (234)

Movement in net funds in the period                   5,096         2,122
Net debt start of period                               (700)       (2,822)

Net funds (debt) end of period                        4,396          (700)


NOTES
1 June 2002

1      Accounting policies

The accounting policies used in preparation of the accounts for the period ended
1 June 2002 are consistent with those applied in the preceding period.

2      Turnover

Turnover and profit before taxation are attributable to one activity, the retail
and wholesale distribution of ceramic tiles, wood flooring and related products,
and arises predominantly within the UK.

3      Dividends

An interim dividend of 1.35 pence (2001: 1.15 pence) per ordinary share was paid
to shareholders of the Company on the 28 February 2002.  The directors recomend
a final dividend of 5.80 pence (2001:  3.85 pence) per ordinary share to be paid
on 1 November 2002 to shareholders on the register on 4 October 2002 making a
total dividend for the period of 7.15 pence (2001: 5.00 pence) per ordinary
share.

4      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 as follows:

                                                      2002               2001
                                                 Number of          Number of
                                                    shares             shares

         Weighted average number of shares:
         For basic earnings per share           44,865,992         44,218,175
         Weighted average number of shares 
         under option                              691,761          2,802,600
         Number of shares that would have been 
         issued at fair value                     (466,524)        (2,219,604)

         For diluted earnings per share         45,091,229         44,801,171

5      Post balance sheet events

On 10 June 2002 the Company acquired 50% of the ordinary shares in Topps Holding
BV for a cash consideration of £493,000.

6      Financial information

The financial information set out above does not constitute the Group's
statutory financial staements for the period ended 1 June 2002 or 2 June 2001
but is derived from those statements.  Statutory financial statements for 2001
have been delivered to the Registrar of Companies and those for 2002 will be
delivered following the Company's Annual General Meeting to be held on the 8
October 2002.  The Auditors have reported on the accounts to 2 June 2001 and 1
June 2002 and their report was unqualified and did not contain statements under
section 237(2) or 237(3) of the Companies Act 1985.

The Annual Report and Financial Statements for the period ended 1 June 2002 will
be posted to Shareholders today and additional copies will be available from the
Secretary at the Company's registered office; Topps Tiles Plc, Rushworth House,
Handforth, Wilmslow, Cheshire, SK9 3HJ.


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