REG - Titon Holdings PLC - Commencement of Process to Dispose of Korean Ops

Titon HoldingsAnnouncement

24/10/2024 07:00

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RNS Number : 3810J  Titon Holdings PLC  24 October 2024

LEI: 213800ZHXS8G27RM1D97

 

This announcement contains inside information for the purposes of Article 7 of
the UK version of the Market Abuse Regulation (EU) No.596/2014, which forms
part of UK law by virtue of the European Union (Withdrawal) Act 2018.

24 October 2024

 

Titon Holdings Plc

 

Commencement of Process to Dispose of Interests in South Korean Operations

 

Titon Holdings Plc ("Titon", the "Group" or the "Company") is pleased to
announce that it has entered into a conditional agreement to commence a
process for the disposal of its interests in its 51% owned South Korean
subsidiary company, Titon Korea Co. Ltd ("Titon Korea"), and its 49% owned
South Korean associate company, Browntech Sales Co. Limited ("BTS"),
(together, the "Disposal") for a total gross cash consideration of £750,000.

As previously announced, market conditions in South Korea have proven very
challenging in recent years and the Group has been working with its partners
in South Korea to consider various options to streamline the corporate
structure and operations of the South Korean business, which has led to the
proposed Disposal. The Disposal, if completed, will allow Titon to further
focus on the Group's strategic initiatives within its core UK and European
geographies to return the Group to profitability and growth. The proceeds of
the Disposal will be used by the Group to invest in the key strategic actions
identified as part of the review of Titon's strategic approach which were
identified in the announcement of 11 July 2024.

Current trading

Revenue in the UK and Europe has been in line with previously reported
expectations and has achieved a slightly better operating loss than forecast.
The Group results are yet to be finalised as we await the results from Korea.
The Group intends to publish its final results for the year to 30 September
2024 on 23 January 2025.

Disposal terms

Titon has entered into a conditional sale agreement with BTS which provides
that the Disposal will be affected by way of: (i) an acquisition by BTS of
Titon's 51% interest in the share capital of Titon Korea, and (ii) a share
repurchase by BTS of Titon's 49% interest in the share capital of BTS, for a
total consideration of £750,000, minus local taxes, payable in cash on
completion. The agreement commences a process to effect the Disposal, which is
conditional on the completion of a transfer rights process by BTS and receipt
of funds into a third party lawyer's escrow account in Korea.

Subject to the completion of the Disposal, the Group will cease to have any
interest in Titon Korea or BTS, which together represent all of the Group's
interests in South Korea, and will no longer have an operating and reportable
South Korean business segment.

In aggregate, Titon Korea and BTS made a negative contribution of £645,000 to
the Group's loss before tax for the year to 30 September 2023, and in the
Group's balance sheet as at 31 March 2024, Titon Korea and BTS had aggregate
net assets of £2.1m.

The Disposal is subject to the satisfaction of the Conditions, which are
outside of Titon's control, and as such completion and its timing are
uncertain. The Company will make a further announcement in due course.

Related Party Transaction

As BTS is a company whose directors are considered to customarily act in
accordance with the directions of one of the directors and a substantial
shareholder, Mr Hong Sung Hoon, of a subsidiary of the Group, Titon Korea, the
Disposal is classified as a related party transaction pursuant to Rule 13 of
the AIM Rules for Companies. Accordingly, the Directors of the Company
consider, having consulted with the Company's Nominated Adviser, Shore
Capital, that the Disposal is fair and reasonable insofar as Titon's
shareholders are concerned.

 

Tom Carpenter, Chief Executive, commented:

"Titon originally invested in BTS and Titon Korea over 13 years ago during
which time the returns to Titon have been positive. However, in the past few
years, the performance of this investment has declined to a loss. This,
coupled with the divergence from our strategic direction, gives us an
attractive opportunity to refocus the Group on its core markets. We will
update shareholders in due course as to the progress of the Disposal process."

 

For further information please contact:

 Titon Holdings Plc                             Tel: +44 (0)1206 713 800

 Tom Carpenter

 Carolyn Isom

 Shore Capital (Nominated Adviser and Broker)  Tel: +44 (0)20 7408 4090

 Daniel Bush

 Tom Knibbs

 

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