REG - Titon Holdings PLC - Interim results for the six months to 31 Mar 2023
19/05/2023 07:00
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RNS Number : 9417Z Titon Holdings PLC 19 May 2023
19 May
2023
LEI: 213800ZHXS8G27RM1D97
THIS ANNOUNCEMENT RELATES TO THE DISCLOSURE OF INFORMATION THAT QUALIFIED OR
MAY HAVE QUALIFIED AS INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF THE
MARKET ABUSE REGULATION (EU) 596/2014 AS IT FORMS PART OF UK DOMESTIC LAW BY
VIRTUE OF THE EUROPEAN UNION (WITHDRAWAL) ACT 2018.
Titon Holdings Plc
Unaudited Interim Results for the six months to 31 March 2023 and Investor
Presentation via Investor Meet Company
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 2023 ("H1 2023").
Financial Results
Six months ended 31 March 2023 Six months ended 31 March 2022 % Change
Net revenue £12.08m £11.48m 5.2%
EBITDA £0.18m £0.28m (35.7)%
Loss before tax £0.45m £0.25m (80.0)%
Basic loss per share 2.86p 1.46p (96.0)%
Interim dividend per share 0.5p 1.5p (66.7)%
Cash balance £1.61m £3.73m (56.8)%
Financial highlights
· Group net revenue rose by 5.2% due to stronger trading in the UK
and Europe, which was slightly ahead of the Board's expectations
· EBITDA was £0.18 million (2022: £0.28m), reflecting lower gross
margins (26% in H1 2023 against 28% in H1 2022) as the Group continued to
manage labour, material and energy cost inflation
· Loss before tax of £0.45m after depreciation and amortisation
charges of £0.49m (H1 2022 loss before tax: £0.25m)
· Cash balance of £1.6m at the end of the period (30 September
2022: £1.7m) after the payment of dividends to Titon shareholders. The
balance includes a receipt of a dividend from the Group's Associate, Browntech
Sales Co. Ltd
· Interim dividend of 0.5p per share approved by the Board to be
paid on 7 July 2023.
Operational highlights
· Ventilation Systems sales rose by 31% against H1 2022, driven by
a strong European performance where sales rose by 124% as component shortages
eased and production caught up with demand
· Window and Door Hardware sales fell by 9%. We continue to develop
a new product partnership, whilst sales of Titon manufactured products
increased by 16%
· Good progress made against all 2023 key business imperatives,
having caught up on our order backlog and improved management of stock levels
for the main product lines
· Trading conditions in South Korea remained challenging due to the
weak housing market and the movement to mechanical ventilation products. Sales
were marginally lower against the same period last year and losses were higher
· New product development is continuing with a number of new
mechanical and hardware product launches planned, targeting specific
applications and market opportunities.
Current trading and outlook
· In March 2023 the Office for Budget Responsibility forecast two
quarters of negative growth in GDP before the economy starts growing again in
Q3 2023. The Construction Products Association now forecasts that private
housebuilding output will fall by 17% in 2023 before recovering by 4% in 2024
and with falls in RM&I of 9% in 2023 and rising by 2% in 2024 in the UK
· The Board remains committed to achieving all of its business
imperatives for the rest of the year and continues to focus on managing the
cost base and improving efficiency throughout the business
· Against the macro-economic backdrop, the Group anticipates that
H2 revenues from the UK and Europe will be slightly lower than H1 as the
slowdown in the housing market activity occurs. On a full year basis, we
continue to expect trading at our UK and European businesses to be in line
with our prior expectations, supported by the H1 performance
· In South Korea we anticipate that trading conditions will remain
difficult and we expect that losses will continue in H2. As a result of the
weaker trading in South Korea, we anticipate that the Group's full year
results will be lower than previously expected. As previously reported, we
intend to streamline the corporate structure and operations of the Korean
business
· The Board of Titon remains confident in the long-term prospects
of the Group given the broad product spread and the Group's strong balance
sheet at the period end, together with the growth opportunities available to
the Group, supported by recent regulatory changes and new product development.
Non-executive Chair Keith Ritchie said:
"The trading performance of the Group over the six months period to 31 March
2023 generated good levels of sales in our main UK and European markets for
our products. Trading in South Korea remained difficult as the construction
market saw projects delayed, and losses were higher than we expected. Although
our full year performance in the UK and Europe is expected to be consistent
with our prior expectations, our Group results for the full year to 30
September 2023 will be lower than we previously expected as a result of the
weak trading in South Korea that we continue to suffer from. We have continued
to invest in our products and people during the period, with a number of new
hires as we seek to change and improve the business. We have started a
recruitment process to hire a new Chief Executive after the departure of
Alexandra French and will update shareholders at the appropriate time.
We continue to benefit from the strength of our balance sheet, 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 long-term prospects of the business."
Notice of Investor Presentation
Titon is pleased to announce that Keith Ritchie (Non-executive Chair)
and Carolyn Isom (Chief Financial Officer) will provide a live presentation
relating to the Interim Report via Investor Meet Company on 26 May 2023 at
9.30am.
The presentation is open to all existing and potential shareholders. Questions
can be submitted pre-event via your Investor Meet Company dashboard up until
9am the day before the meeting or at any time during the live presentation.
Investors can sign up to Investor Meet Company for free and add to
meet Titon via:
https://www.investormeetcompany.com/titon-holdings-plc/register-investor
(https://url.avanan.click/v2/___https:/www.investormeetcompany.com/titon-holdings-plc/register-investor___.YXAxZTpzaG9yZWNhcDphOm86YjAzZjk1MDQyMGMyODI5ODNjOTJhODNkNmZhM2RlNGE6NjphNGJmOmU4NTE5NWJlNjk0NmJjZmVmNDJlMGIyZTUzNDdmYjRkYWExZTA4ODEyMjQwYzJlYWE1N2MwYTQ5M2NlNDY5NDQ6cDpU)
Investors who already follow Titon on the Investor Meet Company platform will
automatically be invited.
For the purposes of UK MAR and Article 2 of the binding technical standards
published by the Financial Conduct Authority in relation to MAR as regards
Commission Implementing Regulation (EU) 2016/1055, this announcement is made
by Keith Ritchie, Non-executive Chair.
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 2023
Chair's statement
As we anticipated and set out in the Group's 2022 Annual Report, the business
environment has remained challenging for us in the six months to 31 March 2023
as the pressure on our margins continued, resulting in a reported Group loss
before tax for the period of £0.45m (2022 loss before tax: £0.25m). However,
I am pleased to report that sales were 5% higher than in the period to 31
March 2022 although, as we had forecast, our gross margins are lower compared
to last year due to the cost increases we have continued to suffer. I am
pleased that in this period we received a dividend from our Associate Company
in South Korea of £0.3m, which has benefited our cash position. As indicated
in the Group's AGM trading update, overall revenues in the six months to 31
March 2023 were slightly in line with the Board's expectations.
We identified a number of key business imperatives that we wanted to deliver
on in 2023 and I am pleased to report that progress has been made in all of
these. I can also report that our new ERP system, which caused us some
significant challenges in 2022 is working well and we now seek to enhance this
system to bring further process improvement and automation where we can. We
are committed to achieving all the business imperatives for the rest of the
year and these will be replaced by our next set of objectives which will be
separate from the work required to set out our medium-term strategic plan,
which we will commence this year.
Income Statement
In the six months to 31 March 2023, Titon's net revenue (which excludes
inter-segment activity) increased by 5.2% to £12.1 million (2022: £11.5
million). Sales of Window and Door Hardware products fell by 9% in the period
due to the lower sales of bought-in hardware products following the ending of
a distributor relationship, which benefited the prior year revenues, offset
somewhat by growth in sales of Titon manufactured hardware products. Sales of
Ventilation Systems products rose by 31% as the backlog of orders from both
our UK and European customers were manufactured and despatched. Sales in Titon
Korea, our 51% owned subsidiary fell slightly by 1% reflecting the continuing
difficult trading conditions and market dynamics in South Korea.
Gross margins fell to 26.1% (2022: 28.0%) due mainly to the cost increases we
have been unable to reflect in our own pricing to customers, but also the
lower contribution from Titon Korea. EBITDA was 36% lower at £0.18 million
(2022: £0.28 million), whilst we made an operating loss of £0.39 million
(2022 loss: £0.21 million). The results from the Group's associate, Browntech
Sales Co. Ltd (BTS) in South Korea, amounted to a loss of £54,000 (2022 loss:
£29,000) as a result of the continuing weak new build market in Korea and the
Korean market shift towards mechanical ventilation. In aggregate, the Group
made a loss before tax of £0.45 million (2022 loss before tax: £0.25
million).
The Group's loss per share for the period was 2.86 pence (2022: loss per share
of 1.46 pence) with the total loss after tax of £0.39m (2022 loss: £0.21m)
and an apportionment to minority shareholders of a loss of £93,000 (2022:
loss of £47,000) which reflected the weak trading incurred by Titon Korea.
Whilst it is always disappointing to make a loss in the period, the Group
continues to maintain a strong balance sheet and the Board has therefore
approved the payment of an interim dividend in respect of the 6 months ending
31 March 2023 of 0.5 pence per share (2022: 1.50 pence per share). The interim
dividend is payable on 7 July 2023 to shareholders on the register at 26 May
2023. The ex-dividend date is 25 May 2023.
Balance sheet and cash flow
Net assets including non-controlling interests fell by 3.3% or £0.5 million
to £15.4 million (30 September 2022: £16.0 million) with net cash (excluding
lease liabilities) of £1.6 million (30 September 2022: £1.7 million) which
is equivalent to 11.1% of net assets (30 September 2022: 10.8%). The Group had
no financial indebtedness at 31 March 2023, other than lease liabilities. The
cash held by Titon Korea reduced to £0.05 million at 31 March 2023 (30
September 2022: £0.07 million).
The half year saw cash generated by operations of £0.02 million (2022: cash
used in operations £0.29 million), primarily due to actively improving our
working capital management through accurate targeting of stock levels for the
main product lines. Capital expenditure in the period was £0.26 million
(2022: £0.39 million) as we continue investing in plant and machinery and
tooling. We were pleased to receive a dividend from BTS in March 2023
amounting to £0.3 million (net of withholding tax) (2022: nil).
Net current assets were £8.0 million at 31 March 2023 (30 September 2022:
£7.6 million) with a Quick Ratio(1) of 1.23 (30 September 2022: 1.2). Asset
Turn was 1.85 (30 September 2022: 1.65).
Segmental and operational review
As we noted in the Annual Report, we had identified a number of business
imperatives that we wanted to deliver on in the current financial period to
stabilise the UK and European businesses and to return the Group to growth.
The key imperative that we identified was to catch up with backlog of orders
caused by the initial implementation issues of the new ERP system in May 2022
and the previous supply chain challenges we had faced and I am pleased to
report that we have achieved that. The other key imperative is to reduce the
site inventory held and I am pleased to see that this has also started to
improve and will continue throughout the rest of this financial year. Revenues
in South Korea have stabilised although new building projects continue to be
delayed and sales in Titon Inc. have fallen slightly compared to last year.
Gross margins have fallen by 1.9% compared to the same period last year due
mainly to the material, labour and energy cost increases we have experienced
that we haven't been able to pass on, as previously reported, and the lower
contribution from Titon Korea. The reduction in gross margin and an increase
in overheads, resulting from enhancing our management team and technology, has
meant that our operating result is a loss of £0.39m versus an operating loss
of £0.21m in 2022. Titon Korea contributed £0.19m of this loss (2022 loss:
£0.12m).
UK and Europe
I am pleased to report that sales in the UK and Europe have increased over the same period last year, rising by 6% as we worked hard to reduce the backlog of orders. Sales in UK Window and Door Hardware have fallen by 9%. Sales of Titon manufactured products rose by 16% against the same prior period but sales of bought-in products fell by 51% due to the lower sales of hardware products following the ending of our distributor relationship with Sobinco, which benefited the prior year's H1 revenues, whilst we develop our new distribution partnership with Roto in order to replace some of those products.
In our Ventilation Systems division, sales in the UK have risen by 6% against the same period last year as sales of Mechanical Ventilation with Heat Recovery products grew. However, sales of ducting bought-in products fell as the production back-log resulted in lower enquiries for whole house systems in the period. Sales of the new
Titon Ultimate® dMEV (https://url.avanan.click/v2/___https:/www.titon.com/uk/products/ventilation-systems/continuous_mechanical_extract/titon-ultimate-dmev/___.YXAxZTpzaG9yZWNhcDphOm86NmY0ODlkZWZhMjIwYjY5MWFlNzdkYWJiYTc3NjIyOWE6NjpiNzUwOjQ4MTM5NmZiZTQxZTA2MDk1OWYxNjIwYmVlMTU2NWVjMmZkZTRiZDc5MGYyODk1MzJjZGFmN2JhYTA0ZjE1OWY6cDpU)
extract fan started to increase with revenues growing by approximately four times 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. Sales of the Titon FireSafe® Air Brick range continue at healthy levels as demand continues for this safety product.
In Europe, Ventilation Systems sales rose by 124% as the production backlog eased and outstanding orders for our Export customers were delivered. Exports of our Window and Door Hardware products were up 15% in the period.
South Korea
Revenues from South Korea were marginally lower than in 2022. This reflects
the difficult conditions for new build in Korea and the continuing delays in
starting new projects. 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 flat at £1.5
million (2022: £1.5 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 £245,000 (2022 loss:
£152,000) which was higher than we previously expected.
United States
Sales in our US business remain a very small portion of the Group's overall
sales and were broadly flat against the same period last year at £279,000
(2022: £290,000). Titon Inc. made a small pre-tax profit in the period.
Board
As we announced on 6 April 2023, Alexandra French stepped down from her role
as Chief Executive and left the Board with immediate effect. I thank Alexandra
for all her hard work over the 11 months that she was Chief Executive. We have
started a recruitment process for her successor and will update shareholders
in due course.
I am pleased to say that there have been no other changes to the Board in the
period under review.
I personally thank my colleagues on the Board for their hard work and counsel
over recent months.
Employees
As usual our employees have continued to show a high level of dedication to
the business. In the period under review, we have managed to catch up on our
backlog of customer orders which has now meant we can return to the high
customer service levels our customers had previously enjoyed. We have trained
our factory employees to be flexible so that they can be allocated to wherever
our production need is which has greatly assisted us in achieving the position
we are in now. Our office staff have also worked tirelessly to ensure that
business as usual has been resumed. I offer my, and the Board's, thanks for
all their efforts.
Investors
Despite the recent weak trading performance, we will pay an interim dividend
of 0.5 pence per share for the period.
We held our AGM in March 2023 in Haverhill and it was good to have the
opportunity to meet some new shareholders and to show them around the factory
and the progress we are making. We always appreciate their interest in Titon.
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 2022
within the Strategic Report (page 6) available at www.titon.com
(https://url.avanan.click/v2/___http:/www.titon.com___.YXAxZTpzaG9yZWNhcDphOm86NmY0ODlkZWZhMjIwYjY5MWFlNzdkYWJiYTc3NjIyOWE6NjphODk5OmZiNTc1OTlkNjhlOWVlZDJmYWY0YTVkMzBlYjE3MTJlZGFlZjg0MWU5YTBmNTE4MGU4NWFkZjM5MWUzZDUxZDg6cDpU)
. Assessments of exposure to financial and other risks are always difficult
given the uncertainties about the inflationary risks in the UK economy. 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. Consequently, 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. Based on 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.
Outlook
The economic outlook for the UK has improved in recent months compared to the
forecasts at the beginning of 2023 when most forecasts were that the UK would
suffer a recession in 2023. The Office for Budget Responsibility forecast in
March this year that there would be two quarters of falling GDP before the
economy starts growing again in Q3 2023. The Construction Products Association
(CPA) also expects that the UK economy will flat line in 2023 rather than
entering a technical recession, so there is some positive news generally
compared to earlier forecasts. However, the CPA expects to see private housing
output to fall by 17% in 2023 due to the sharp rise in interest rates over the
last 12 months before recovering in 2024 by 4% and for private repairs,
maintenance and improvements to fall by 9% in 2023 before rising by 2% in
2024. These are significant forecast reductions in activities, and we will be
impacted by them if they are on this scale. The changes to UK Building
Regulations in 2022 have now all just about come into effect as the transition
rules for house builders using mechanical ventilation expire in June 2023. We
do expect to see a further shift by them in future away from natural
ventilation to mechanical ventilation as they are required to build more
tightly. This will certainly give us opportunities to sell higher value whole
house systems, at the expense of some trickle vent sales, into new build.
Our new product development continues to progress well. We are in the process
of launching our higher performing, easier to specify HRV4 unit, which will
replace a number of existing MVHR variants in our range and will be attractive
in both our UK and European markets. We exhibited this at the recent ISH show
in Germany and received positive interest from our customers. Our new Ultimate
dMEV fan is proving popular and we expect sales to continue to accelerate as
the new build regulation revisions hit the market, with further versions of
that product to come for the social housing sector. Also shown at the ISH
exhibition was the Ultimate Active vent prototype. As previously mentioned, we
aim to gain interest and then specifications for its use, where it improves
householder thermal comfort compared to standard trickle vents. We also
continue to develop some new hardware products for specific market sectors and
look forward to growth in the aluminium window and door sector through our new
partnership with Roto.
In South Korea we still do not expect a rebound in profitability until the
transition from natural ventilation products to mechanical products takes
effect although we do hope to see a small increase in sales in 2023/24 as the
transition starts to take effect. We are working with our partners in Korea to
streamline the corporate structure and operations of the Korean business. We
are forecasting a higher loss from our Korean operations than we previously
indicated.
While we recruit a new Chief Executive, we are confident that our senior
leadership team, led by Board members Carolyn Isom and Tyson Anderson will
continue making progress to return the Group to profitability. Now we have
cleared the backlog and our Operations Director is more embedded, having only
joined in November 2022, we are pleased that we can now offer competitive lead
times to our customers. We have also increased our capacity to be able to meet
market demand. Our newly appointed Commercial Director joins us in this month
as we look to enhance our sales strategies.
Current trading
I am pleased to report that the supply chain component issues I have flagged
in recent financial statements have now largely eased and the CPA also
recently noted that materials and product availability has improved recently.
H1 trading in the UK and Europe was slightly above the Board's expectations.
We expect that revenues in the second half year will be slightly lower than
the first half, which benefited from the backlog of orders that we had at the
start of the financial year. As a result of this we have decided to slow down
our hiring plans in the second half and to focus on reducing costs and
improving efficiency throughout the business in the UK and Europe. In South
Korea we anticipate that trading conditions will remain difficult and we
expect that losses will continue in H2. As a result of the weak trading in
South Korea we anticipate that the Group's full year results will be lower
than previously expected.
Despite the challenges the business has faced, 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.
A list of current directors is maintained on the Group's website
www.titon.com.
On behalf of the Board
Keith A Ritchie
Chair
18 May 2023
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 2023
6 months 6 months Year to
to 31.3.23 to 31.3.22 30.9.22
unaudited unaudited audited
Note £'000 £'000 £'000
Revenue 2 12,077 11,478 22,087
Cost of sales (8,918) (8,261) (16,270)
Gross profit 3,159 3,217 5,817
Distribution costs (593) (612) (1,393)
Administrative expenses (2,704) (2,504) (4,586)
Administrative expenses - exceptional - - (349)
Research and development expenses (261) (330) (629)
Other income 12 15 21
Operating loss (387) (214) (1,119)
Finance expense (10) (7) (16)
Finance income 3 - 9
Share of post-tax (loss) / profit from associates (54) (29) 173
Loss before tax (449) (250) (953)
Income tax credit 3 57 37 410
Loss after income tax (392) (213) (543)
Attributable to:
Equity holders of the parent (320) (166) (436)
Non-controlling interest (72) (47) (107)
Loss for the period (392) (213) (543)
Loss per share attributed to equity holders of the parent:
Basic (2.86p) (1.46p) (3.89p)
Diluted (2.86p) (1.44p) (3.89p)
Consolidated Interim Statement of Comprehensive Income
for the six months ended 31 March 2023
6 months 6 months Year to
to 31.3.23 to 31.3.22 30.9.22
unaudited unaudited Audited
£'000 £'000 £'000
Loss for the period (392) (213) (543)
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 (114) 27 112
Total comprehensive expense for the period (506) (186) (431)
Attributable to:
Equity holders of the parent (428) (142) (333)
Non-controlling interest (79) (44) (98)
(506) (186) (431)
Titon Holdings Plc
Consolidated Interim Statement of Financial Position
at 31 March 2023
31.3.23 31.03.22 30.09.22
unaudited unaudited audited
£'000 £'000 £'000
Assets
Property, plant and equipment 3,264 3,445 3,321
Right-of-use assets 573 613 553
Intangible assets 760 925 915
Investments in associates 2,482 2,668 2,909
Deferred tax assets 747 308 697
Total non-current assets 7,826 7,959 8,395
Inventories 6,917 5,320 6,571
Trade and other receivables 4,199 3,896 4,920
Cash and cash equivalents 1,610 3,728 1,726
Total current assets 12,726 12,944 13,217
Total Assets 20,556 20,903 21,612
Liabilities
Lease liabilities 409 430 378
Total non-current liabilities 409 430 378
Trade and other payables 4,500 3,937 5,051
Lease liabilities 230 229 232
Total current liabilities 4,730 4,166 5,283
Total Liabilities 5,139 4,596 5,661
Equity
Share capital 1,122 1,119 1,122
Share premium reserve 1,091 1,077 1,091
Capital redemption reserve 56 56 56
Treasury shares - (27) -
Foreign exchange reserve 90 120 198
Retained earnings 12,831 13,603 13,179
Total Equity attributable to the equity holders of the parent 15,190 15,948 15,646
Non-controlling Interest 227 359 305
Total Equity 15,417 16,307 15,951
Total Liabilities and Equity 20,556 20,903 21,612
Titon Holdings Plc
Consolidated Interim Statement of Changes in Equity
at 31 March 2023
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 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
Translation differences on overseas operations - - - 78 - - 78 - 78
Loss for the year - - - - - (270) (270) (54) (324)
Total comprehensive income / (loss) for the period - - - 78 - (270) (192) (54) (246)
Dividends paid - - - - - (167) (167) - (167)
Share-based payment credit - - - - - 13 13 - 13
Exercise of share options 3 14 - - - - 17 - 17
Transfer of treasury shares 27 27 27
At 30 September 2022 1,122 1,091 56 198 - 13,179 15,646 305 15,951
Translation differences on overseas operations - - - (108) - - (108) (6) (114)
Loss for the period - - - - - (320) (320) (72) (392)
Total comprehensive - - - (108) - (320) (428) (78) (506)
income / (loss) for the period
Dividends paid - - - - - (56) (56) - (56)
Share-based payment credit - - - - - 28 28 - 28
At 31 March 2023 1,122 1,091 56 90 - 12,831 15,190 227 15,417
Titon Holdings Plc
Consolidated Interim Statement of Cash Flow
for the six months ended 31 March 2023
6 months 6 months Year to
to 31.3.23 to 31.3.22 30.09.22
unaudited unaudited Audited
Note £'000 £'000 £'000
Cash generated from operating activities
Loss before tax (449) (250) (953)
Depreciation of property, plant & equipment 308 279 518
Depreciation of right-of-use assets 100 85 232
Amortisation of intangible assets 163 126 298
Profit on sale of plant & equipment (10) 22 (19)
Share based payment - equity settled 28 10 23
Finance Income (3) - (9)
Finance costs 10 7 16
Share of associate's post-tax loss / (profit) 54 29 (173)
201 308 (67)
Increase in inventories (264) (270) (1,529)
(Increase) / decrease in receivables 1,203 367 (696)
(Decrease) / increase in payables and other current liabilities (1,116) (690) 498
Cash generated by / (used in) operations 24 (285) (1,794)
Cash flows from investing activities
Purchase of plant & equipment (258) (256) (386)
Purchase of intangible assets (8) (126) (288)
Proceeds from sale of plant & equipment 42 42 44
Finance income 3 - 9
Dividends received from associate company 290 - -
Net cash generated by / (used) in investing activities 69 (340) (621)
Cash flows from financing activities
Dividends paid to equity shareholders of the parent 4 (56) (335) (502)
Payment of lease liability (114) (109) (226)
Finance costs (10) (7) (16)
Exercise of Share Options - - 44
Net cash used in financing activities (180) (451) (700)
Net decrease in cash (87) (1,076) (3,115)
Foreign exchange (29) 10 47
Cash at beginning of the period 1,726 4,794 4,794
Cash at end of the period 1,610 3,728 1,726
Notes to the Condensed Consolidated Interim Statements
at 31 March 2023
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 2022. 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 2022.
b) Basis of preparation
These condensed consolidated interim financial statements of the Group for the
six months ended 31 March 2023 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 2023 nor the
six months results for 2022 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 2022 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 2022, which have been prepared in
accordance with International Financial Reporting Standards and
Interpretations (collectively IFRSs) as adopted in the UK.
These unaudited interim Group Financial Statements were approved for issue on
18 May 2023. 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
2023 Annual Report and Accounts.
There are not expected to be any changes in the accounting policies compared
to those applied at 30 September 2022.
A full description of accounting policies is contained with our 2022 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 2023
Segment revenue 8,240 1,489 279 2,303 12,311
Inter-segment revenue (234) - - - (234)
Total Revenue 8,006 1,489 279 2,303 12,077
Segment (loss) / profit (211) (245) 6 - (450)
Income tax credit 57
Loss for the period (392)
Depreciation and amortisation 400 39 - - 439
Depreciation of Right-of-use-assets 78 22 - - 100
Total assets 16,131 4,205 220 - 20,556
Total assets include:
Investments in associates 2,482 - - - 2,482
Additions to non-current assets (other than financial instruments and deferred 251 15 - - 266
tax assets)
The South Korean Segment loss 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 £1.49 million represent 12% 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 10,309 - 279 1,489 - 12,077
by country from which derived 8,006 2,303 279 1,489 - 12,077
Non-current assets
By entities' country of domicile 4,869 - 35 2,926 - 7,830
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 1,181 11,627
1,501 290
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
Loss 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 - - - 2,668
Additions to non-current assets (other than financial instruments and deferred 367 15 - - 382
tax assets)
The South Korean Segment loss 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 £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.
6 months ended 31 March 2022 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
For the year ended United South North All other Consolidated
30 September 2022 Kingdom Korea America countries
£'000 £'000 £'000 £'000 £'000
Segment revenue 16,497 3,037 538 2,303 22,375
Inter-segment revenue (288) - - - (288)
Total Revenue 16,209 3,037 538 2,303 22,087
Segment (loss) / profit (651) (37) 160 (425) (953)
Tax credit 410
Loss for the year (543)
Depreciation and amortisation 920 42 - - 962
Total assets 16,953 4,491 166 - 21,611
Total assets include: 2,910 - - - 2,910
Investments in associates
Additions to non-current assets 671 3 - - 674
(other than financial instruments
and deferred tax assets)
The South Korea Segment loss includes the Group's share of the post-tax
profits from Browntech Sales Co. Ltd., (BTS), the Group's associate
undertaking in South Korea, of £173,000. Sales to BTS of £4.71m represented
21% of Group Revenue (2021: £3.58m - 15%). 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 2022 Kingdom Korea regions
Revenues £'000 £'000 £'000 £'000 £'000 £'000
By entities' country of domicile 18,512 - 538 3,037 - 22,087
By country from which derived 16,209 2,303 538 3,037 - 22,087
Non-current assets
By entities' country of domicile 5,355 - 46 3,061 - 8,461
3 Taxation
6 months 6 months Year to
to 31.3.23 to 31.3.22 30.9.22
£'000 £'000 £'000
Deferred tax:
Origination and reversal of temporary differences 57 37 410
Income tax credit 57 37 410
Taxation for the interim period is credited at 12.7% (six months to 31 March
2022: credited at 11.2%) 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 31.3.23 to 31.3.22 30.9.22
Date Pence
Paid per share £'000 £'000 £'000
Final 2021 dividend 04.03.22 3.00 - 334 -
Interim 2022 dividend 27.05.22 1.50 - 167
Final 2022 dividend 31.03.23 0.50 56 - -
56 334 167
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 11,197,707 (six
months ended 31 March 2022: 11,124,517; year ended 30 September 2022:
11,196,627).
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
11,213,324 at 31 March 2023, 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 2022: 11,219,391 and year ended 30
September 2022: 11,214,800.
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 31.3.23 to 31.3.22 30.9.22 to 31.3.23 to 31.3.22 30.9.22
£'000 £'000 £'000 £'000 £'000 £'000
Browntech Sales Co. Ltd 1,489 1,501 3,037 108 155 180
There have been no additional significant or unusual related party
transactions to those disclosed in the Group's Annual Report for 30 September
2022.
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
C V Isom (Chief Financial Officer)
A C French (Chief Executive) (resigned 6 April 2023)
Non-executive
K A Ritchie (Group Non-Executive Chair)
T N Anderson (Deputy Chair)
N C Howlett
J Ward
G P Hooper
Secretary and registered office
C V 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
MHA
6(th) Floor, 2 London Wall Place
London
EC2Y 5AU
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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