Return of cash

Topps Tiles PLC
05 July 2006



                                                                    
                                Topps Tiles plc

                 £122.4 million return of cash to shareholders


Highlights include:

-        Continued robust balance sheet and strong cash conversion at Topps
         Tiles

-        Proposal is to return 54 pence per ordinary share

-        Return is to be financed by existing cash resources and a new £116
         million senior debt facility

-        Result of proposal is:
            •   A more efficient balance sheet
            •   EPS enhancement for shareholders

-        Capital reorganisation will be undertaken in conjunction with the
         return of cash

Topps Tiles plc (the 'Company') announces that it will shortly be posting a
circular to its shareholders and convening an extraordinary general meeting
('EGM'), to be held on 31 July 2006, to obtain shareholder approval for the
proposed return of £122.4 million of cash to shareholders.

Return of cash to shareholders

The Board of the Company is proposing to return cash to shareholders as a result
of the Company's current balance sheet strength and strong cash flows, following
a review of the Company's financing requirements.

The return of cash, which will equate to 54 pence per ordinary share, is to be
implemented through an issue of redeemable B shares and non-redeemable C shares
and a capital reorganisation, and is subject to approval by shareholders.
Subject to such approval, shareholders will have the right to receive one B
share or one C share for every existing ordinary share, and will be able to
elect between the following alternatives in relation to each of their ordinary
shares:

   •    Alternative 1: to receive a C share in relation to which a single
        dividend of 54 pence will be paid shortly after its issue. Following 
        this, each such C share will automatically be converted into a deferred
        share which will have negligible value.

   •    Alternative 2: to receive a C share and retain it (without the benefit 
        of the single dividend of 54 pence per share) until the Company 
        exercises its right to purchase each such C share for 54 pence on 30 
        March 2007.

   •    Alternative 3: to receive a B share which will be redeemed shortly after
        its issue. The B shares will need to be paid up out of the Company's 
        share premium account and special reserves and elections for the B 
        shares will need to be scaled back to the extent that these reserves 
        are insufficient to pay up all the B shares in relation to which 
        elections are received. To the extent that these elections are scaled 
        back, shareholders will receive C shares. Subject to certain conditions
        to be set out in the circular, shareholders will be able to choose, in 
        relation to the C shares issued as a result of this scaling back, 
        whether:

           •   to accept an offer from KBC Peel Hunt Ltd of 54 pence per share;

           •   to receive a single dividend of 54 pence per share in relation 
               to all such C shares, following which such C shares will 
               automatically be converted into deferred shares which will have 
               negligible value; or

           •   to retain all such C shares until the Company exercises its 
               right to purchase such C shares for 54 pence per share on 30 
               March 2007.

The circular and election forms in respect of these three alternatives and the
choices available to shareholders whose elections for B shares are scaled back
will be sent to shareholders on or around 7 July 2006, along with the forms of
proxy for the EGM to be held on 31 July 2006. Shareholders who do not elect for
any of these alternatives will automatically be deemed to be electing for
Alternative 1 and will receive C shares and the single dividend in relation to
all of them. Additionally, Alternatives 2 and 3 are not being offered into the
United States of America and, as a result, US shareholders will only receive C
shares and the single dividend in respect of such shares. Shareholders wishing
to receive the single dividend and US shareholders do not therefore need to
return forms of election.

All shareholders are, however, encouraged to return forms of proxy in relation
to the resolutions to be proposed at the EGM. A number of changes to the
articles of association of the Company are required in order to implement the
return of cash. None of the B shares and C shares will be admitted to the
official list of the UK Listing Authority (the 'Official List') or to trading on
the market for listed securities of London Stock Exchange plc (the 'London Stock
Exchange') or any other exchange, and therefore no prospectus is required to be
published in relation to them.

In conjunction with the return of cash, a capital reorganisation will be
undertaken. Existing ordinary shares will be subdivided and consolidated so that
shareholders will receive 3 new ordinary shares for every 4 existing ordinary
shares they own as at 5.00pm on 31 July 2006. The intention is that, subject to
normal market movements, the share price of one new ordinary share immediately
after the listing of these new ordinary shares should be approximately equal to
the share price of one existing ordinary share immediately beforehand. New
ordinary shares will be traded on the London Stock Exchange in the same way as
existing ordinary shares and will be equivalent to the existing ordinary shares
in all material respects, including in respect of their dividend, voting and
other rights. The effect of the consolidation will be to reduce the number of
issued ordinary shares to reflect the return of 54 pence per B share or C share
to shareholders, but shareholders will own the same proportion of the Company as
they did previously, subject to adjustments for fractional entitlements and to
dilution as a result of the exercise of options in relation to the Company's
ordinary shares.

Full details of the return of cash and associated capital reorganisation will be
contained in the circular. The return of cash will be conditional on the special
resolution approving the return of cash and associated capital reorganisation
being passed at the EGM and on all the conditions to a credit agreement to be
entered into between a subsidiary of the Company and its banks being and
remaining satisfied prior to the return of cash. Further details of this credit
agreement will be contained in the circular.

Timetable


Latest date of posting of circular                          7 July 2006


Latest time and date for receipt of forms of proxy for EGM  10am on 29 July 2006


EGM                                                         10am on 31 July 2006


Latest time and date for dealings in existing ordinary      4.30pm on 31 July
shares                                                      2006


Latest time for receipt of election forms and TTE           4.30pm on 31 July
instructions from CREST holders in relation to              2006   
Alternatives 1, 2 and 3                                      


Record Date for the return of cash and capital              5.00pm on 31 July
reorganisation.  Existing ordinary share register           2006  
closed and existing ordinary shares disabled in CREST

                                
Allotment of B shares and C shares                          31 July 2006


New ordinary Shares admitted to the Official List and to    8.00am on 1 August
trading on  the London Stock Exchange's market for listed   2006
securities                                            


Dealings in the new ordinary shares commence and            8.00am on 1 August
enablement in CREST. New ordinary shares, B shares          2006 
and C shares credited to CREST accounts

                                
Single C share dividend declared and C shares in respect    8 August 2006                                
of which the single C share dividend is payable 
automatically convert into deferred shares


KBC Peel Hunt Ltd to make an offer for C shares by means    8.00am on 8 August
of an announcement on the Regulatory News Service of the    2006 
London Stock Exchange

                                                
B shares redeemed                                           14 August 2006


Cheques issued/CREST accounts credited in respect of the    14 August 2006
single C share dividend, the redemption of the B shares 
and for fractional entitlements, together with tax 
vouchers


Cheques issued/CREST accounts credited in respect of the    14 August 2006
purchase of C Shares by KBC Peel Hunt Ltd


Despatch of new ordinary share certificates and retained C  14 August 2006
Share certificates

KBC Peel Hunt Ltd, which is regulated by the Financial Services Authority 
for the conduct of designated investment business in the UK, is acting for 
Topps Tiles plc and no-one else in connection with the return of cash and will
not be responsible to anyone other than Topps Tiles plc for providing the 
protections afforded to clients of KBC Peel Hunt Ltd or for providing advice 
in relation to the return of cash.

Shareholders in the United States will only be eligible for the single C share
dividend and will not be offered the other alternatives.

                                      - end -

Analyst conference call details

Nick Ounstead, CEO, will be hosting an analyst conference call at 9.00am (BST)
this morning (Wednesday 5 July, 2006).  

The details are as follows:

Participant dial-in no:                    [phone]
Chairperson:                               Nick Ounstead, CEO, Topps Tiles
Conference call title:                     Topps Tiles Announcement 05.07.06


Enquiries:

Topps Tiles
Barry Bester, Chairman:                   01625 446 700
Andrew Liggett, Finance Director:         01625 446 700


Bell Pottinger Corporate & Financial
Ben Woodford/Alex Walton:                 0207 861 3232

KBC Peel Hunt
Adam Hart/Megan MacIntyre:                0207 418 8900





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