TIDMTPT
RNS Number : 8263I
Topps Tiles PLC
07 December 2022
7 December 2022
Topps Tiles Plc
Receipt of Requisition Notices
Topps Tiles Plc (LSE: TPT) ("Topps", the "Company" and together
with its subsidiary undertakings, the "Group"), the UK's leading
tile specialist, announces that on 6 December 2022 it received
requisition notices (the "Requisition Notices") pursuant to section
338 of the Companies Act 2006 (the "Act") requiring that the board
of directors of the Company (the "Board" or the "Directors")
include resolutions (the "Requisitioned Resolutions") in the notice
of the Company's annual general meeting proposed to be held on 18
January 2023 (the "AGM") as follows:
-- that Darren Shapland be removed from office as a director of
the Company, and from the position of Non-Executive Chairman of the
Company, with immediate effect;
-- that Lidia Wolfinger, having consented to act, be appointed
as a non-executive director of the Company with immediate effect;
and
-- that Michael Bartusiak, having consented to act, be appointed
as a non-executive director of the Company with immediate
effect.
The Requisition Notices have been served by Lynchwood Nominees
Limited on behalf of MS Galleon GmbH ("MSG") which currently holds
approximately 29.9 per cent. of the Company's voting share
capital.
The Requisition Notices include a request that the Company
circulate an explanatory statement in respect of each of the
Requisitioned Resolutions in accordance with section 314 of the
Act.
The Board does not consider the Requisitioned Resolutions to be
in the best interests of the Company and its shareholders as a
whole and, therefore, intends to recommend that shareholders vote
AGAINST the Requisitioned Resolutions at the AGM.
Background to the Requisition Notices
MSG owns Cersanit, a major European producer of tiles, in
addition to having a range of home improvement and tile retailing
interests, primarily in the Polish market.
Topps first received a notification of shareholding from MSG in
May 2020, stating that MSG had a 4.1 per cent. beneficial interest
in the voting share capital of Topps. By November 2020, MSG had
built its shareholding to 20 per cent. During this period, the
Company engaged in regular dialogue with MSG, in line with its
stewardship practice with its other major shareholders. In this
initial phase, Cersanit was a minor supplier to Topps.
During 2021, MSG approached Topps regarding (i) the potential
appointment of an MSG representative to the Board, and (ii) a
proposal that Topps should purchase a greater proportion of its
tiles from Cersanit. MSG has consistently set out its belief that
the proportion of Topps' tile supply purchased from Cersanit and
its representation on the Topps Board should directly reflect its
shareholding in Topps, which at that point was approximately 20 per
cent.
Topps did not consider this to be in the interests of
shareholders as a whole and sought to engage with MSG to explain
that the Company's expertise in ranging, sourcing and procurement
of tiles from a wide range of suppliers on a global basis is a core
part of its competitive advantage and its iterative programme to
develop and produce differentiated products that are innovative, of
high quality and exclusive to Topps Group is a key strength of the
Group.
In addition, Topps' sourcing policy does not allow for greater
than 10 per cent. of tile purchases to come from any one supplier
in order to avoid concentration risk. Any purchases from Cersanit
would also need to comply with Chapter 11 of the UK Financial
Conduct Authority's Listing Rules on related party transactions. In
the financial year ending 2 October 2021, Topps sourced 0.5 per
cent. of its cost of goods sold (by value) from Cersanit on
commercial arm's length terms.
In order to consider the merits of appointing a representative
of MSG to the Board, the Board requested that MSG should set out in
writing its rationale for a Board seat, including why an MSG
appointed non-executive director would be additive to the already
well-qualified Board, why the appointment would be in the interests
of all Topps shareholders, and how conflicts of interest would be
managed. No proposal was received.
Subsequently, MSG, through its nominee, voted against the
re-appointment of Darren Shapland as Chairman of Topps, as well as
a number of other customary resolutions, at the 2022 annual general
meeting. Since July 2022, MSG has increased its beneficial
shareholding in Topps to 29.9 per cent. of the Company's voting
share capital.
More recently on 25 November 2022, MSG requested, via Lidia
Wolfinger (who is one of the proposed MSG non-executive directors
as set out above), that Topps should source 29.9 per cent. of its
tile purchases from Cersanit in line with MSG's shareholding in
Topps, with interim stage gates for achieving a 5 per cent. and
then 10 per cent. share over the short term.
Board's rejection of the proposals
The Board unanimously rejects these proposals, which it believes
present a clear conflict of interest between MSG's objective for
Cersanit to be a major supplier of Topps and the interests of all
Topps shareholders. In particular, the Board believes it is
incompatible for the proposed non-executive directors to have the
target of increasing tile purchases from Cersanit to 29.9 per
cent., whilst at the same time acting in the best interests of all
shareholders of Topps.
The Board is currently compliant with the UK Corporate
Governance Code's requirements in relation to board composition, is
well qualified and experienced, and has helped the executive team
steer the business through the COVID-19 pandemic to a position
which is stronger than pre-pandemic, as evidenced by the Topps'
recent FY22 results, which announced a second consecutive record
year of revenue and significant market share gains(1) .
The Board believes that the proposed appointment of MSG's
non-executive directors has the primary objective of aligning
Topps' business and its strategy to MSG's commercial objectives as
owner of Cersanit and is therefore not in the best interests of the
Company and its shareholders as a whole.
In the light of the Requisition Notices, the Board has consulted
certain other major shareholders of Topps representing 39.1 per
cent. of the Company's voting share capital, and has received
confirmation of their intention to vote against the Requisitioned
Resolutions. These confirmations have been received from the
Company's three largest shareholders other than MSG - Aberforth
Partners LLP (acting in its capacity as discretionary fund manager
for clients), Mr Stuart Williams and Invesco Asset Management
Limited - as well as Axa Investment Managers UK Limited and
others.
Accordingly, the Board does not consider the Requisitioned
Resolutions to be in the best interests of the Company and its
shareholders as a whole and, therefore, intends to recommend that
shareholders vote AGAINST the Requisitioned Resolutions at the
AGM.
Darren Shapland, Non-Executive Chairman of Topps, said:
"The Board strongly rejects these proposals, which it believes
expose a clear conflict of interest between MSG's objectives for
Cersanit and the interests of all Topps shareholders. The Board
welcomes the support received from our other largest shareholders,
who have confirmed their intention to vote against the
Requisitioned Resolutions at the AGM."
Keith Down, Senior Independent Director of Topps, said:
"The Board unanimously rejects these resolutions which it does
not consider to be in the best interests of the Company and its
shareholders as a whole. In proposing a resolution to remove the
Chairman, who has led communications with MSG on behalf of the
Board, MSG is seeking simply to strengthen its own position."
A further announcement will be made in due course.
The person responsible for arranging the release of this
announcement on behalf of the Company is Helen Evans, Company
Secretary.
(1) The Group announced full year results on 29 November for the
52 week period ended 1 October 2022. Revenues of GBP247.2 million
were up 8.4% year on year, the second consecutive record year of
revenue for the Group. Adjusted pre-tax profit was GBP15.6 million,
up 4.0% year on year. Estimated market share increased 1.4
percentage points to 19.0%. The full year dividend of 3.6 pence per
share (including a proposed final dividend of 2.6 pence per share)
was up 16.1% year on year. Relative to 2019, the last full year
before Covid-19, Group sales in 2022 were GBP28.0 million higher (a
12.8% increase) and adjusted profit before tax was up GBP1.9
million (a 14.1% increase). Note that adjusted profit before tax in
2019 has been restated in line with the IFRIC agenda decision on
cloud computing and includes the trading loss from the Parkside
brand which was excluded from adjusted profit at the time.
Enquiries:
Topps Tiles Plc +44 (0) 116 282 8000
Helen Evans, Company Secretary
Citigate Dewe Rogerson +44 (0) 20 7638 9571
Kevin Smith/George Peele toppstiles@citigatedewerogerson.com
Notes to editors
Topps Tiles Plc is the UK's leading specialist supplier of tiles
and associated products, targeting the UK domestic refurbishment
and commercial markets and serving homeowners, trade customers,
architects, designers and contractors from 304 nationwide Topps
Tiles stores, four commercial showrooms and six websites:
www.toppstiles.co.uk , www.parkside.co.uk , www.protilertools.co.uk
, www.northantstools.co.uk , www.premiumtiletrim.co.uk and
www.tilewarehouse.co.uk .
Since opening its first store in 1963, Topps has maintained a
simple operating philosophy -- inspiring customers with unrivalled
product choice and providing exceptional levels of customer
service. For further information on the Group, please visit
http://www.toppstilesplc.com/
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END
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(END) Dow Jones Newswires
December 07, 2022 02:00 ET (07:00 GMT)
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