REG - Titon Holdings PLC - Interim Results for six months to 31 March 2022
12/05/2022 07:00
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RNS Number : 1837L Titon Holdings PLC 12 May 2022
12 May
2022
LEI: 213800ZHXS8G27RM1DD7
Titon Holdings Plc
Unaudited Interim Results for the six months to 31 March 2022
Titon Holdings Plc ("Titon", the "Group" or the "Company"), a leading
international manufacturer and supplier of ventilation systems and window and
door hardware, today announces its unaudited interim results for the six
months ended 31 March 2022 ("H1 2022").
Financial Results
Six months ended 31 March 2022 Six months ended 31 March 2021 % Change
Net revenue £11.48m £11.68m -1.7%
EBITDA £0.28m £1.13m -75.2%
(Loss)/Profit before tax £(0.25)m £0.55m n/a
Basic (loss)/ earnings per share (1.46)p 4.29p n/a
Interim dividend per share 1.5p 1.5p 0%
Period-end cash balance £3.73m £4.63m -19.4%
Financial highlights
· Group net revenue fell by 1.7% as a result of weaker trading
conditions in Korea and reduced European sales, offset by pleasing growth in
UK revenues
· EBITDA decreased to £0.28 million (H1 2021: £1.13m), reflecting
the fall in revenues as well as lower gross margins (28% in H1 2022 against
31.9% in H1 2021) driven by industry-wide input and overhead cost inflation,
and component sourcing challenges and some restructuring expenses
o Price increases were implemented in the period to seek to recover cost
increases, with further price increases expected in the second half of the
financial year
· Loss before tax of £0.25m (H1 2021: profit of £0.55m) after
depreciation and amortisation charges of £0.49m (H1 2021: £0.51m)
· Cash balance of £3.73m at the end of the period (H1 2021:
£4.63m) after the payment of dividends to Titon shareholders, as well as the
resumption of capital expenditure following the COVID-19 pandemic and a
decision to build inventory levels and put in place long-term orders with
suppliers to mitigate against supply shortages
· Interim dividend of 1.5p per share approved by the Board to be
paid on 1 July 2022 reflecting the continued strength of the Group's balance
sheet
Operational highlights
· UK Ventilation Systems sales rose by 13% against H1 2021, driven
by sales of the Titon FireSafe® Air Brick range. UK Window and Door Hardware
sales rose by 8%
· European sales fell by 33%, principally reflecting certain
mechanical ventilation component shortages and a temporary pause in sales to
one customer whilst amounts due to the Group were outstanding; sales to this
customer have resumed
· Trading conditions in South Korea remained challenging due to a
weak housing market and the movement to mechanical ventilation products, which
our colleagues in South Korea are addressing
· Strategic investments have been made in the period to support the
growth of our higher margin Mechanical Ventilation Systems division, in
technology to support our European business, and in our ERP system which has
gone live in May and which will increase automation and efficiencies
· Strengthened management team and Board through the appointments
of Alexandra French as CEO and Paul Hooper and Jeff Ward as independent
Non-Executive Directors
Outlook
· Whilst we are optimistic that the supply chain challenges will
start to ease in the second half of the financial year, H2 2022 trading to
date has remained subdued due to the shortages of components and we expect
these conditions to continue in the immediate term
· After a reasonable start to 2022, the Bank of England is now
forecasting a slowdown in economic growth, with Q4 2022 and Q1 2023 showing
negative GDP growth. The Construction Products Association now forecasts that
private housebuilding output will only be 1% higher in 2022 and 2023 with
falls in RM&I of 3% in 2022 and 4% in 2023 in the UK. Uncertainty remains,
both in the UK and Europe, about the level of economic activity and the impact
this may have on consumer spending, given inflationary pressures and the sharp
increases in energy prices
· Despite the economic headwinds, with the changes to the UK
Building Regulations designed to improve indoor ventilation coming into force
in June 2022, the Group's broad product spread and market position, together
with its strong balance sheet, gives the Board confidence in the medium-term
prospects of the Group
Executive Chairman Keith Ritchie said: "We are disappointed with the trading
performance of the Group over the six months period to 31 March 2022, which,
despite good levels of sales in the UK has resulted in a loss for the period.
We continue to be impacted by the constraints in supply of raw materials and
components but are hopeful that some of these supply chain pressures will
reduce in H2.
We have invested in our products and people during the period and will
continue to do so as we seek to change and improve the business. We have
followed Government guidelines for safe working and, whilst we have
experienced some additional employee absence as a result of Covid-19, this has
not had a significant impact on our business in the UK.
Despite the economic headwinds expected we take comfort from the strength of
our balance sheet, the cash resources that we have, the range of products that
we manufacture and sell and markets in which we trade. The Group is well
capitalised with a strong balance sheet and no debt. We remain confident in
the medium-term prospects of the business."
For further information please contact
Titon Holdings Plc
Keith
Ritchie
+44 (0) 7748 146834
Shore Capital - Nominated Adviser and
Broker
Daniel
Bush
+44 (0)20 7408 4090
Tom Knibbs
Titon Holdings PLC
Interim results for the six months to 31 March 2022
Chairman's statement
I am disappointed to report that trading conditions have been difficult for us
during the six months to 31 March 2022. As we indicated in the trading update
on 22 February 2022, whilst the year started as we expected and revenues in
the first four months of the year were slightly higher than the six months to
31 March 2021, the shortages we have experienced of materials and components,
and the cost increases for materials, components, labour and energy
necessitated us to revise our expectations for the current financial year.
Whilst supply shortages and input cost increases have persisted, we are
optimistic that we will see some easing of some of the supply chain issues in
the second half of the current financial year.
Despite these inflationary challenges, we have continued to carry on with key
investments for our future. We have invested in strategic overhead to
support growth of our higher margin Mechanical Ventilation Systems area of the
business. We have continued to invest in our product software that will
support qualified leads to grow our business in Europe. We have also
executed select investments in additional talent within Finance, Supply Chain
and HR. Our new ERP system implementation went live in May.
We have spent much of the last two years considering Covid-19 and the effect
this has had on the economy and our own business. I am pleased to report that
the impact of Covid-19 on our UK and European business and the wider
construction industry generally in these areas has been greatly reduced and we
have returned to normal pre-pandemic operations throughout the period. We have
continued to follow Government guidelines for safe working and, whilst we have
experienced some additional employee absence as a result of Covid-19, this has
not had a significant impact on our business in the UK. All of our
office-based employees have now returned to the office on a flexible working
basis.
Income Statement
In the six months to 31 March 2022, Titon's net revenue (which excludes
inter-segment activity) decreased by 1.7% to £11.5 million (2021: £11.7
million). All UK businesses saw an increase in sales over the period but sales
of Ventilation Systems products to Europe fell as we suffered from shortages
of components for mechanical products. Sales in Titon Korea, our 51% owned
subsidiary fell by 27% reflecting the on-going difficult trading conditions
and market dynamics in South Korea.
Gross margin fell to 28.0% (2021: 31.9%) due to higher raw material, labour
and overhead costs in the UK and Europe and the lower contributions from Titon
Korea. EBITDA was 75% lower at £0.28 million (2021: £1.13 million), whilst
we made an operating loss of £0.21 million (2021 profit: £0.62 million). The
results from the Group's associate, Browntech Sales Co. Ltd (BTS) in South
Korea, amounted to a loss of £29,000 (2021 loss: £59,000) as a result of the
continuing weak housing market in Korea and the Korean market shift towards
mechanical ventilation. In aggregate, the Group made a loss before tax of
£0.25 million (2021 profit: £0.55 million).
The Group's earnings per share for the period was a loss of 1.46 pence (2021:
profit of 4.29 pence) with the total loss of £0.22m (2021 profit: £0.48m)
and an apportionment to minority shareholders of a loss of £47,000 (2021:
profit of £2,000) which reflected the weaker trading incurred by the Group's
51% owned subsidiary, Titon Korea.
Whilst trading conditions were more challenging than originally anticipated,
the Group continues to maintain a strong balance sheet and cash position and
the Board has therefore approved the payment of an interim dividend in respect
of the 6 months ending 31 March 2022 of 1.5 pence per share (2021: 1.5 pence
per share). The interim dividend is payable on 1 July 2022 to shareholders on
the register at 27 May 2022. The ex-dividend date is 26 May 2022.
Balance sheet and cash flow
Net assets including non-controlling interests fell by 1.3% or £0.2 million
to £16.3 million (31 March 2021: £16.5 million) with net cash of £3.7
million (31 March 2021: £4.6 million) which is equivalent to 23.0% of net
assets (31 March 2021: 28.0%). The Group had no financial indebtedness at 31
March 2022, other than lease liabilities. The cash held by Titon Korea reduced
to £0.1 million at 31 March 2022 (31 March 2021: £0.3 million).
The half year saw cash used in operations of £0.29 million (2021: used £0.13
million), primarily due to increasing our inventory to allow for component
shortages - this has also required an increase in amounts paid in advance of
receipt of goods. Capital expenditure in the period was £0.38 million (2021:
£0.19 million) as we resume investing in plant and machinery and our new ERP
system. Net current assets were £8.7 million at 31 March 2022 (2021: £9.2
million) with a Quick Ratio(1) of 1.97 (2021: 2.19). Asset Turn was 1.97
(2021: 2.11).
Segmental and operational review
We previously identified the shortages of certain materials and components and
continuing cost increases for these items, as well as labour and energy cost
inflation, were the biggest challenges in H1 2022 and these risks have
certainly impacted us to date this year. Although our top-line sales revenue
in the period is only marginally below 2020/21 the mix of products sold has
meant that margins have reduced. Revenues in South Korea have continued to
fall but sales in Titon Inc. have remained at the same level as last year.
Gross margins have fallen by 3.9% compared to the same period last year. The
reduction in gross margin and an increase in overheads has meant that our
operating result is a loss of £0.25m versus an operating profit of £0.62m in
2021. The increase in overheads is mainly due to the expansion in our
headcount to drive growth in our higher gross margin Mechanical Ventilation
Systems area of the business and to increase the strength in teams such as
Finance, HR and Research & Development, all areas of the business that
required investment.
UK and Continental Europe
As noted above, revenues in the UK and Europe have increased slightly against the prior period, rising by 3.7%. Sales in UK Window and Door Hardware have risen by 8% due to increased demand for trickle vents and aluminium products. As noted in the 2021 Annual Report, our distributor relationship with Sobinco has now terminated but we did see an increase in sales as our aluminium customers ordered higher quantities of products before the change in their supply chain. Gross profit margins have fallen in the period for sales of both Titon manufactured products and bought-in products as we have suffered from raw material and labour cost increases.
In our Ventilation Systems division sales in the UK have risen by 13% against the same period last year as sales of the Titon FireSafe® Air Brick range continued to grow. Within this, sales of Titon manufactured mechanical products grew by 17% but sales of ducting bought-in products were 8% down against last year. Sales of the new
Titon Ultimate® dMEV (https://www.titon.com/uk/products/ventilation-systems/continuous_mechanical_extract/titon-ultimate-dmev/)
extract fan started to increase in the period as some initial production issues were resolved. We expect sales of this product to continue to increase in the second half of the year.
In Europe, sales fell by 33% in the period due to some component shortages and also due to one particular customer where we suspended sales to them until amounts owed to the Group were paid. These have now been settled and sales have resumed. We will ensure that product availability to our European customers will improve in the second half of the year. There are also several very interesting opportunities for our European sales in the next twelve months and we have spent considerable time and expense in developing our product software to meet the requirements to capitalise on these opportunities. Exports of our Window and Door Hardware products were up slightly in the period.
Our Window and Door Hardware division made a profit in the period but our Ventilation Systems division made a loss compared to the six months ended 31 March 2021.
On environmental measures we continue to invest in more energy efficient plant and vehicles and will update further on this at the year-end.
South Korea
Revenues from South Korea were weaker than expected in the first half year.
This has been caused by a number of factors, including on-going Covid-19
related challenges and delays in site construction projects in that market
leading to sales being deferred,. We have not yet seen any significant sales
of mechanical products in South Korea but marketing is underway and we expect
to see sales start to come through in financial year 2022/23. In terms of the
segmental contribution from South Korea, the two businesses, Titon Korea and
BTS are aggregated. The revenue in the Group's accounts, which is solely that
from Titon Korea (the Group's share of BTS's profits/losses are accounted for
as an associate) was 27% lower at £1.5 million (2021: £2.1 million).
The segment contribution, which includes the pre-tax loss of Titon Korea plus
49% of the post-tax loss of BTS, was a loss of £153,000 (2021 loss:
£54,000).
United States
Sales in our US business remain a very small portion of the Group's overall
sales and were flat against the same period last year at £292,000 (2021:
£294,000). Titon Inc. made a small pre-tax loss in the period, but when we
include the associated Haverhill production profit, the US contribution to
Group profit before tax was positive.
Board
I am very pleased to report that we have now completed the recruitment process
for the vacancies on the Board that have existed during the period. Paul
Hooper and Jeff Ward, our two new independent Non-executive Directors, have
both now started their appointments and are swiftly gaining an understanding
of our business and the ventilation industry generally. Following Mat Norris
leaving Titon in February 2022, I am delighted to welcome Alexandra French to
the Board as our new CEO. As we announced, Alexandra brings a wealth of
experience from her career with Johnson Matthey over 25 years and she is now
meeting her new colleagues and developing her understanding of our products
and processes.
The fourth new member of the Board this year is Carolyn Isom, who was promoted
to the Board in December 2021 as the Chief Financial Officer. Carolyn has done
a great job since she joined Titon in December 2019 and has taken on
significant additional workload and day-to-day responsibilities, for which I
am very grateful.
I look forward to the contributions of all four new Board members.
Tony Gearey has now left Titon after 36 years and I would like to thank him
for everything he has done for Titon during those years. John Anderson has now
stepped down from the Board and has accepted the position of president. He
will remain involved in Titon's affairs from this new position.
The period under review has been challenging, and I personally would like to
thank all of my colleagues on the Board for their hard work and counsel during
these difficult times.
Employees
Our employees have continued to show a high level of dedication to the
business. We have followed the Government guidelines and our own Covid Risk
Assessment for safe working in the Haverhill factory to ensure all our
employees are protected as much as possible and have removed restrictions when
we have deemed it safe for our staff. We brought all of our Colchester based
staff back into the office from February 2022 on a hybrid working basis, which
is working well. Once again, I offer mine and the Board's thanks for all their
efforts.
Investors
Due to the good trading performance of the Group in 2021 we paid a final
dividend for the period ended 30 September 2021 of 3p per share. Despite the
weak trading performance in this period I am pleased that, due to the strong
balance sheet of the Group, we will pay an interim dividend of 1.5 pence per
share for the period.
I was pleased that we were able to hold our AGM in February in person and it
was good to have the opportunity to tour some shareholders around the factory
and demonstrate the various modernization programmes. We always appreciate
their interest in Titon.
Shore Capital, our Nominated Adviser and Broker has continued with its
research coverage. Following the trading update in February they issued a
research note with the headline "Significant dividend support despite update".
I am pleased that our balance sheet allows us this protection against short
term shocks.
Outlook
Only four months ago Experian forecasted UK GDP to grow by 5.4% in 2022. The
Office for Budget Responsibility forecast a rate of GDP growth of 3.8% at the
time of the March 2022 Budget, as the UK economy is affected by inflation and
especially the rise in energy costs, and only 1.75% in 2023 and thereafter. It
forecasts a significant reduction in earlier expectations. Experian were
forecasting an increase in total housing output of 6.8% in 2022 and a further
4.7% in 2023 but this was before the reduction in GDP growth that is now
expected. Given the increases in energy and other cost increases, and rising
interest rates to compensate, the risks to these forecasts are on the
downside. We also have to take into account the war in Ukraine and the impact
that is already having on consumer confidence and growth prospects as costs
increase. There have also been some very recent forecasts from the Bank of
England that the UK will suffer a recession in 2023 as economic activity slows
due to the inflationary pressures.
We have yet to witness any benefit from the changes to the UK Building
Regulations for ventilation, as the effective date for implementation is 15
June 2022. The new regulations generally require increased rates of
ventilation in new build properties and the inclusion of trickle vents in most
replacement windows, which was not required under the old regulations. We have
certainly seen greater interest in trickle vents from our window fabricator
customers and we are anticipating an increase in our production of vents and
canopies to reflect the higher demand from the RM&I market. For mechanical
products in new builds we do expect to see an increase as the volume
housebuilders are required to build more tightly, which forces them away from
natural ventilation. We do not expect to see this change make any difference
to sales of mechanical products in this financial period, but rather over the
medium term. Of course, the need for good indoor air quality has been
reinforced by the Covid-19 pandemic and we continue to promote this,
particularly as the Government emphasises the "Fabric First" policy to reduce
energy usage as part of its Net Zero policies.
In South Korea we do not expect a significant rebound in profitability until
the transition from natural ventilation products to mechanical products takes
effect over the next few financial years.
Current trading
We continue to be impacted by component shortages for our Ventilation Systems
division and this has led to longer delivery times for customers. We have made
strenuous efforts to improve this position and are hopeful that the supply
chain will improve in the second half. As a consequence of the component
shortages we have ensured that we now have long term orders in place with our
suppliers until the end of 2023. We will continue to keep all of our supply
chains under close scrutiny for the foreseeable future.
Consistent with the sector more generally, cost increases have been imposed by
our suppliers as the general level of inflation increases. We have increased
our prices during the first half and will do so again in the second half as
conditions dictate. We are in competitive markets and cannot rely on pricing
alone to regain profitability so we will also focus closely on our ways of
working and manufacturing and production planning efficiencies. We have made a
number of new hires in manufacturing recently and expect to see the benefits
of this being reflected in the second half and in 2023. We are excited by the
appointment of Alexandra French as our new CEO and expect her and the senior
team to make improvements to our business in all areas.
I am pleased to say that we have now implemented a new internal ERP system for
the UK and European operations and this will allow greater automation of
production and sales processes and better management information for the
business in the future.
We expect that material shortages and cost increases will continue in the
second half and this will impact our profitability. However, we are optimistic
that we will see some easing to the supply chain constraints as the second
half of the current financial year progresses. Despite these challenges we
continue to have a strong balance sheet, very talented employees and a good
range of products in both our divisions that give us confidence in our
medium-term future.
Principal risk and uncertainties
The key financial and non-financial risks faced by the Group are disclosed in
the Group's Annual Report and Accounts for the year ended 30 September 2021
within the Strategic Report (page 6) available at www.titon.com
(http://www.titon.com) . Assessments of exposure to financial and other risks
are always difficult given the uncertainties about the inflationary risks in
the UK economy, especially the rise in energy costs, which will impact many
people and the effects of the Ukraine war. The impact of Covid-19 has
significantly reduced as a risk since last year. The Board has considered the
potential impact of these matters on the Group's specific circumstances,
including current and potential cash resources together with the diverse range
of customers and suppliers, across different geographic areas and markets. As
a consequence, the Directors continue to believe that the Group is well placed
to manage business risks successfully.
The Directors have reviewed the budgets, projected cash flows, principal risks
and other relevant information for a period of 12 months from the period end
date. On the basis of this review the Directors have a reasonable expectation
that the Group and Company have adequate resources to continue in operational
existence for a period of at least twelve months and beyond. For this reason,
the Directors believe it is appropriate to continue to adopt the going concern
basis in preparing the financial statements.
A list of current directors is maintained on the Group's website
www.titon.com.
On behalf of the Board
KA
Ritchie
Chairman
11 May 2022
Notes
1. The Quick Ratio measures liquidity and is calculated by dividing Current
Assets less inventories by Current Liabilities
Titon Holdings Plc
Consolidated Interim Income Statement
for the six months ended 31 March 2022
6 months 6 months Year to
to 31.3.22 to 31.3.21 30.9.21
unaudited unaudited audited
Note £'000 £'000 £'000
Revenue 2 11,478 11,684 23,412
Cost of sales (8,261) (7,973) (16,070)
Grant Income - 13 8
Gross profit 3,217 3,724 7,350
Distribution costs (612) (575) (1,144)
Administrative expenses (2,504) (2,280) (4,521)
Research and development expenses (330) (256) (582)
Other income 15 4 16
Operating (loss) / profit (214) 617 1,119
Finance costs (7) (9) (16)
Share of post-tax (loss) from associates (29) (59) (28)
(Loss) / profit before tax (250) 549 1,075
Income tax credit / (expense) 3 37 (71) (72)
(Loss) / profit after income tax (213) 478 1,003
Attributable to:
Equity holders of the parent (166) 476 1,028
Non-controlling interest (47) 2 (25)
(Loss) / profit for the period (213) 478 1,003
Earnings per share attributed to equity holders of the parent:
Basic 5 (1.46p) 4.29p 9.24p
Diluted 5 (1.44p) 4.26p 9.18p
Consolidated Interim Statement of Comprehensive Income
for the six months ended 31 March 2022
6 months 6 months Year to
to 31.3.22 to 31.3.21 30.9.21
unaudited unaudited Audited
£'000 £'000 £'000
(Loss) / profit for the period (213) 478 1,003
Other comprehensive income - items which may be reclassified to profit or loss
in subsequent periods:
Exchange difference on re-translation of net assets of overseas operations 27 (195) (284)
Total comprehensive income / (expense) for the period (186) 283 719
Attributable to:
Equity holders of the parent (142) 330 793
Non-controlling interest (44) (47) (74)
(186) 283 719
Titon Holdings Plc
Consolidated Interim Statement of Financial Position
at 31 March 2022
31.3.22 31.03.21 30.09.21
unaudited unaudited audited
£'000 £'000 £'000
Assets
Property, plant and equipment 3,445 3,244 3,476
Right-of-use assets 613 619 546
Intangible assets 925 808 925
Investments in associates 2,668 2,739 2,681
Deferred tax assets 308 284 278
Total non-current assets 7,959 7,694 7,906
Inventories 5,320 4,278 5,042
Trade and other receivables 3,896 4,453 4,224
Cash and cash equivalents 3,728 4,633 4,794
Total current assets 12,944 13,364 14,060
Total Assets 20,903 21,058 21,966
Liabilities
Lease liabilities 430 379 402
Total non-current liabilities 430 379 402
Trade and other payables 3,937 3,889 4,554
Lease liabilities 229 258 193
Total current liabilities 4,166 4,147 4,747
Total Liabilities 4,596 4,526 5,149
Equity
Share capital 1,119 1,119 1,119
Share premium reserve 1,077 1,077 1,077
Capital redemption reserve 56 56 56
Treasury shares (27) (27) (27)
Foreign exchange reserve 120 180 96
Retained earnings 13,603 13,697 14,093
Total Equity attributable to the equity holders of the parent 15,948 16,102 16,414
Non-controlling Interest 359 430 403
Total Equity 16,307 16,532 16,817
Total Liabilities and Equity 20,903 21,058 21,966
Titon Holdings Plc
Consolidated Interim Statement of Changes in Equity
at 31 March 2022
Share Share Capital Foreign exchange reserve Treasury Retained Total Non- Total
capital premium redemption reserve Shares earnings controlling Equity
reserve interest
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
At 30 September 2020 1,113 1,049 56 327 (27) 13,425 15,943 868 16,811
Translation differences on overseas operations - - - (147) - - (147) (49) (196)
Profit for the period - - - - - 476 476 2 478
Total comprehensive - - - (147) - 476 329 (47) 282
income/(loss) for the period
Dividends paid - - - - - (223) (223) - (223)
Dividends paid to NCI in subsidiary - - - - - - - (391) (391)
Share-based payment credit - - - - - 19 19 - 19
Exercise of share options 6 28 - - - - 34 - 34
At 31 March 2021 1,119 1,077 56 180 (27) 13,697 16,102 430 16,532
Translation differences on overseas operations - - - (84) - (4) (88) - (88)
Profit/(loss) for the period - - - - - 552 552 (27) 525
Total comprehensive income/(loss) for the period - - - (84) - 548 464 (27) 437
Dividends paid - - - - - (167) (167) - (167)
Share-based payment credit - - - - - 15 15 - 15
At 30 September 2021 1,119 1,077 56 96 (27) 14,093 16,414 403 16,817
Translation differences on overseas operations - - - 24 - 1 25 3 28
Profit for the period - - - - - (166) (166) (47) (213)
Total comprehensive - - - 24 - (165) (141) (44) (185)
Income/(loss) for the period
Dividends paid - - - - - (335) (335) - (335)
Share-based payment credit - - - - - 10 10 - 10
At 31 March 2022 1,119 1,077 56 120 (27) 13,603 15,948 359 16,307
Titon Holdings Plc
Consolidated Interim Statement of Cash Flow
for the six months ended 31 March 2022
6 months 6 months Year to
to 31.3.22 to 31.3.21 30.09.21
unaudited unaudited Audited
Note £'000 £'000 £'000
Cash generated from operating activities
(Loss) / profit before tax (250) 549 1,075
Depreciation of property, plant & equipment 279 235 479
Depreciation of right-of-use assets 85 161 164
Amortisation of intangible assets 126 118 240
Profit on sale of plant & equipment 22 - (7)
Share based payment - equity settled 10 19 34
Finance costs 7 17 16
Share of associate's post-tax loss 29 59 28
308 1,158 2,029
(Increase) / decrease in inventories (270) 89 (640)
(Increase) / decrease in receivables 367 (745) (428)
(Decrease) / increase in payables and other current liabilities (690) (635) 206
Cash generated (used in) / by operations (285) (133) 1,167
Income taxes paid - (22) (22)
Net cash (used in) / generated by operating activities (285) (155) 1,145
Cash flows from investing activities
Purchase of plant & equipment (256) (14) (502)
Purchase of intangible assets (126) (173) (412)
Proceeds from sale of plant & equipment 42 - 25
Net cash used in investing activities (340) (187) (889)
Cash flows from financing activities
Dividends paid to equity shareholders of the parent 4 (335) (223) (390)
Dividends paid to non-controlling shareholders of a subsidiary - (391) (391)
Payment of lease liability (109) - (198)
Finance costs (7) (17) (16)
Exercise of Share Options - 34 34
Net cash used in financing activities (451) (597) (961)
Net decrease in cash (1,076) (894) (705)
Foreign exchange 10 (45) (73)
Cash at beginning of the period 4,794 5,572 5,572
Cash at end of the period 3,728 4,633 4,794
Notes to the Condensed Consolidated Interim Statements
at 31 March 2022
1 Accounting policies
a) General information
Titon Holdings Plc (the 'Company') is incorporated and domiciled in England
and its shares are publicly traded on AIM. The registered office address is
894 The Crescent, Colchester Business Park, Colchester, Essex, CO4 9YQ. The
company's registered number is 1604952. The principal activities of the Group
are as described in Note 2.
The Board considers the principal risks and uncertainties relating to the
Group for the next six months to be the same as detailed in the last Annual
Report and Financial Statements to 30 September 2021. The Group's financial
risk management objectives and policies are consistent with those disclosed in
the consolidated financial statements as at and for the year ended 30
September 2021.
b) Basis of preparation
These condensed consolidated interim financial statements of the Group for the
six months ended 31 March 2022 comprise the Company and its subsidiaries
(together referred to as the 'Group').
The condensed consolidated interim financial statements have been prepared in
accordance with the AIM rules. Neither the six months results for 2022 nor the
six months results for 2021 have been audited nor reviewed pursuant to
guidance issued by the Auditing Practices Board. This condensed Interim Group
financial Statements do not comprise statutory accounts within the meaning of
Section 435 of the Companies Act 2006. The comparative figures for the year
ended 30 September 2021 do not constitute statutory accounts within the
meaning of Section 435 of the Companies Act 2006, but they have been derived
from the audited Report and Accounts for that year, which have been filed with
the Registrar of Companies. The independent auditor's report on those accounts
was unqualified, did not draw attention to any matters by way of emphasis and
did not contain a statement under Section 498(2) or (3) of the Companies Act
2006.
This report should be read in conjunction with the Group's Annual Report and
Accounts for the year ended 30 September 2021, which have been prepared in
accordance with International Financial Reporting Standards and International
Accounting Standards as issued by the International Accounting Standards Board
(IASB) and Interpretations (collectively IFRSs) as adopted by the UK in
conformity with the requirements of the Companies Act 2006.
These unaudited interim Group Financial Statements were approved for issue on
11 May 2022. Copies will be sent to shareholders within the next few weeks
and will be available on the Group's website at www.titon.com/uk/investors/
and from the Company's registered office at 894 The Crescent, Colchester
Business Park, Colchester, Essex CO4 9YQ.
c) Accounting policies
These condensed consolidated interim financial statements have been prepared
in accordance with the recognition and measurement requirements of the UK
adopted international accounting standards.
In preparing these condensed consolidated interim financial statements the
Board have considered the impact of new standards which will be applied in the
2022 Annual Report and Accounts.
There are not expected to be any changes in the accounting policies compared
to those applied at 30 September 2021.
A full description of accounting policies is contained with our 2021 Annual
Report and Financial Statements, which is available on our website.
New accounting standards
The Group does not expect any other standards issued by the IASB, but not yet
effective, to have a material impact on the Group.
2 Revenue and segmental information
In identifying its operating segments, management generally follows the
Group's reporting lines, which represent the main geographic markets in which
the Group operates. The segment reporting below is shown in a manner
consistent with the internal reporting provided to the Board, which is the
Chief Operating Decision Maker (CODM). These operating segments are monitored
and strategic decisions are made on the basis of segment operating results.
The Group operates in four main business segments which are:
Segment Activities undertaken include:
United Kingdom Sales of passive and powered ventilation products to housebuilders, electrical
contractors and window and door manufacturers. In addition to this, it is a
leading supplier of window and door hardware
South Korea Sales of passive ventilation products to construction companies
North America Sales of passive ventilation products to window and door manufacturers
All other countries Sales of passive and powered ventilation products to distributors, window
manufacturers and construction companies
Inter-segment revenue is transacted on an arm's length basis and charged at
prevailing market prices for a specific product and market or cost plus where
no direct comparative market price is available. Segment results include items
directly attributable to a segment as well as those that can be allocated on a
reasonable basis. Research and development entity-wide financial expenses are
allocated to the business activities for which R&D is specifically
performed. Administration Expenses are currently allocated to operating
segments in the Group's reporting to the CODM and include central and parent
company overheads relating to Group management, the finance function and
regulatory requirements.
The measurement policies the Group uses for segment reporting under IFRS 8 are
the same as those used in its financial statements.
The Group recognises revenue at a single point in time in its UK and US
subsidiary. The nature of business practice at its South Korean subsidiary
means that the Group recognises revenue there over time, this being at first
fix and second fix stages. As invoicing for both first fix and second fix
components usually takes place at the first fix stage, the revenue on the
second fix products is deferred in the Financial Statements until the point
that those second fix products are accepted by the customer.
The total assets for the segments represent the consolidated total assets
attributable to these reporting segments. Parent company results and
consolidation adjustments reconciling the segmental results and total assets
to the consolidated financial statements are included within the United
Kingdom segment figures stated.
Operating segment United South North All other countries Total
Kingdom Korea America
£'000 £'000 £'000 £'000 £'000
6 months ended 31 March 2022
Segment revenue 8,655 1,501 290 1,181 11,627
Inter-segment revenue (149) - - - (149)
Total Revenue 8,506 1,501 290 1,181 11,478
Segment (loss) / profit 87 (153) (18) (166) (250)
Income tax credit 37
Profit for the period (213)
Depreciation and amortisation 366 39 - - 405
Depreciation of Right-of-use-assets 62 23 - - 85
Total assets 16,270 4,399 234 - 20,903
Total assets include:
Investments in associates 2,668
Additions to non-current assets (other than financial instruments and deferred 367 15 - - 382
tax assets)
The South Korean Segment profit includes the Group's share of the post-tax
loss from the Group's associate undertaking, Browntech Sales Co. Ltd. Sales to
Browntech Sales Co. Ltd. of £1.50 million represent 13% of Group Revenue.
There are no other concentrations of revenue above 10% during the year (see
Note 6 - Related party transactions).
IFRS 8 requires entity-wide disclosures to be made about the regions in which
it earns its revenues and holds its non-current assets which are shown below.
United Kingdom Europe USA and Canada Asia All other regions Total
Revenues £'000 £'000 £'000 £'000 £'000 £'000
by entities' country of domicile 9,687 - 290 1,501 - 11,478
by country from which derived 8,506 1,152 290 1,501 29 11,478
Non-current assets
By entities' country of domicile 5,081 - 33 2,845 - 7,959
Operating segment United South North All other countries Total
Kingdom Korea America
£'000 £'000 £'000 £'000 £'000
6 months ended 31 March 2021
Segment revenue 7,910 1,598 11,853
2,051 294
Inter-segment revenue (169) - - - (169)
Total Revenue 7,741 2,051 294 1,598 11,684
Segment (loss) / profit 517 (54) 22 64 549
Income tax expense (71)
Profit for the period 478
Depreciation and amortisation 336 17 - - 353
Depreciation of right-of-use-assets 68 93 - - 161
Total assets 16,168 4,705 185 21,058
Total assets include:
Investments in associates 2,739 - - - 2,739
Additions to non-current assets (other than financial instruments and deferred 181 6 - - 187
tax assets)
The South Korean Segment profit includes the Group's share of the post-tax
profit from the Group's associate undertaking, Browntech Sales Co. Ltd. Sales
to Browntech Sales Co. Ltd. of £2.05 million represent 25% of Group Revenue.
There are no other concentrations of revenue above 10% during the year (see
Note 6 - Related party transactions).
IFRS 8 requires entity-wide disclosures to be made about the regions in which
it earns its revenues and holds its non-current assets which are shown below.
6 months ended 31 March 2021 United Kingdom Europe USA and Canada Asia All other regions Total
Revenues £'000 £'000 £'000 £'000 £'000 £'000
by entities' country of domicile 9,339 - 294 2,051 - 11,684
by country from which derived 7,741 1,565 294 2,051 33 11,684
Non-current assets
By entities' country of domicile 4,628 - 43 3,023 - 7,694
For the year ended United South North All other Consolidated
30 September 2021 Kingdom Korea America countries
£'000 £'000 £'000 £'000 £'000
Segment revenue 16,368 3,578 629 3,150 23,725
Inter-segment revenue (313) - - - (313)
Total Revenue 16,055 3,578 629 3,150 23,412
Segment profit 1,026 (41) 52 38 1,075
Tax expense (72)
Profit for the year 1,003
Depreciation and amortisation 809 74 - - 883
Total assets 17,181 4,592 193 - 21,966
Total assets include: 2,681 - - - 2,681
Investments in associates
Additions to non-current assets 893 21 - - 914
(other than financial instruments
and deferred tax assets)
The South Korea Segment loss includes the Group's share of the post-tax loss
from Browntech Sales Co. Ltd., (BTS), the Group's associate undertaking in
South Korea, of £28,000. Sales to BTS of £3.58m represented 15% of Group
Revenue (2020: £4.92m - 24%). There are no other concentrations of revenue
above 10% during the year (see Note 6 - Related party transactions).
IFRS 8 requires entity wide disclosures to be made about the regions in which
it earns its revenues and holds its non-current assets which are shown below.
For the year ended United Europe USA and Canada South All other Total
30 September 2021 Kingdom Korea regions
Revenues £'000 £'000 £'000 £'000 £'000 £'000
By entities' country of domicile 19,205 - 629 3,578 - 23,412
By country from which derived 16,055 3,088 629 3,578 62 23,412
Non-current assets
By entities' country of domicile 4,996 - 32 2,878 - 7,906
3 Taxation
6 months 6 months Year to
to 31.3.22 to 31.3.21 30.9.21
Current income tax: £'000 £'000 £'000
Corporation tax expense - (22) (22)
Adjustment in respect of prior years - - -
- (22) (22)
Deferred tax:
Origination and reversal of temporary differences 37 (49) (50)
Income tax (expense) / credit 37 (71) (72)
Taxation for the interim period is credited at 11.2% (six months to 31 March
2021: charged at 12.9%) representing the best estimate of the average annual
income tax rate for the full financial year.
4 Dividends
The following dividends have been recognised and paid by the Company:
6 months 6 months Year to
to 31.3.22 to 31.3.21 30.9.21
Date Pence
Paid per share £'000 £'000 £'000
Final 2020 dividend 12.03.21 2.00 - 223 -
Interim 2021 dividend 25.06.21 1.50 - 167
Final 2021 dividend 04.03.22 3.00 334 - -
334 223 167
5 Earnings per ordinary share
Basic earnings per share has been calculated by dividing the profits or losses
attributable to shareholders of Titon Holdings Plc by the weighted average
number of ordinary shares in issue during the period, being 11,143,750 (six
months ended 31 March 2021: 11,105,179; year ended 30 September 2021:
11,124,517).
Diluted earnings per share (EPS) is calculated by dividing the profits or
losses attributable to shareholders by the weighted average number of ordinary
shares and potential dilutive ordinary shares during the period, being
11,219,391 at 31 March 2022, except that at this date, when the inclusion of
potential ordinary shares (POSs) in the calculation would increase the EPS, or
decrease the loss per share, from continuing operations, then these POSs are
anti-dilutive and are ignored in diluted EPS. Potential dilutive ordinary
shares at: six months ended 31 March 2021: 11,168,179 and year ended 30
September 2021: 11,199,127.
6 Related party transactions
Transactions between the Company and its subsidiaries, which are related
parties, have been eliminated on consolidation and are not disclosed in this
note. Transactions between subsidiary companies and the associate company,
which is a related party, were as follows:
Sale of goods Amount owed by related party
6 months 6 months Year to 6 months 6 months Year to
to 31.3.22 to 31.3.21 to 30.9.21 to 31.3.22 to 31.3.21 to 30.9.21
£'000 £'000 £'000 £'000 £'000 £'000
Browntech Sales Co. Ltd 1,501 2,051 3,577 155 - 310
There have been no additional significant or unusual related party
transactions to those disclosed in the Group's Annual Report for 30 September
2021.
7 Liability statement
Neither the Group nor the Directors accept any liability to any person in
relation to the interim statement except to the extent that such liability
could arise under English Law. Accordingly, any liability to a person who has
demonstrated reliance on any untrue or misleading statement or omission shall
be determined in accordance with section 90A of the Financial Services and
Markets Act 2000.
Directors and Advisers
Directors
Executive
KA Ritchie (Chairman)
C V Isom (appointed 22 December 2021)
M Norris (resigned 9 February 2022)
T N Anderson (Deputy Chairman)
T D Gearey (resigned 6 April 2022)
A C French (Chief Executive) (appointed 3 May 2022)
Non-executive
J N Anderson (resigned 1 April 2022)
N C Howlett
J Ward (appointed 1 April 2022)
GP Hooper (appointed 1 April 2022)
Secretary and registered office
CV Isom
894 The Crescent
Colchester Business Park
Colchester
Essex
CO4 9YQ
COMPANY REGISTRATION NUMBER
1604952 (Registered in England & Wales)
WEBSITE
www.titon.com/uk/investors
auditor
BDO LLP
55 Baker Street
London
W1U 7EU
NOMINATED ADVISER
Shore Capital and Corporate Ltd
Cassini House
57-58 St. James's Street
London
SW1A 1LD
BROKER
Shore Capital Stockbrokers Ltd
Cassini House
57-58 St. James's Street
London
SW1A 1LD
REGISTRARS AND TRANSFER OFFICE
Link Market Services Ltd
10(th) Floor
Central Square
29 Wellington Street
Leeds
LS1 4DL
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