REG - Titon Holdings PLC - Preliminary Announcement results year to 30/09/21
21/12/2021 07:00
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RNS Number : 2677W Titon Holdings PLC 21 December 2021
21 December
2021
LEI: 213800ZHXS8G27RM1DD7
Titon Holdings Plc
Preliminary results for the year to 30 September 2021
Titon Holdings Plc ("Titon", the "Group" or the "Company"), a leading
international manufacturer and supplier of ventilation systems, and window and
door hardware, announces its unaudited preliminary results for the year ended
30 September 2021.
Summary Financial Results (unaudited)
2021 2020 Change (%)
Net revenue £23.4m £20.7m +13%
EBITDA £2.0m £1.0m +100%
Group profit before tax £1.075m £0.02m +5,375%
Basic earnings per share (EPS) 9.24p 0.52p +1,777%
Full year dividends per share 4.5p 2.0p +125%
Net cash £4.79m £5.57m -14%
· Net revenue increased 13% to £23.4 million (2020: £20.7 million) as
a result of the return of normal trading operations in the UK and Europe
following the initial Covid-19 pandemic lockdowns
§ We enjoyed a full and strong year of trading following the
disruption to production suffered in 2020
§ Trading in South Korea continued to be weak reflecting challenging
market conditions and supply chain issues
· Gross margin of 31.4% (2020: 27.4%), back above pre-pandemic levels
(2019: 30.2%)
· EBITDA of £2.0 million (2020: £1.0 million) and Group profit before
tax of £1.075 million (2020: £0.02 million) reflecting the recovery in
trading and margins
· Proposed final dividend of 3.0 pence per share, (2020: 2.0 pence) in
addition to the interim dividend of 1.5p (2020: nil)
· Strong balance sheet maintained with net cash of £4.79 million at 30
September 2021 whilst the Group's inventory and trade receivables increased as
trading normalised.
Operational and divisional highlights
· Despite the industry-wide supply chain and sourcing issues during the
year, the Group's UK and European based businesses saw revenue increase by 28%
as demand was strong for the Group's products:
§ Revenue from the UK window & door hardware business was up 24%
as both the new build market and RM&I market recovered strongly
§ Mechanical ventilation systems revenues rose by 34% overall:
· 43% mechanical ventilation systems revenue growth in the UK,
helped significantly by sales of the new Titon FireSafe® Air Brick Range
· Sales into mainland Europe of mechanical ventilation products
were up 18%, despite the UK leaving the Single Market during the period
· Titon Korea's revenue fell 27% as a result of the continued slowdown
in residential construction activity and delays in projects, the impact of the
pandemic and supply chain issues.
· Continuing focus on product development with the Titon Ultimate®
dMEV
(https://www.titon.com/uk/products/ventilation-systems/continuous_mechanical_extract/titon-ultimate-dmev/)
extract fan launched in the UK in early 2021 and additional new products to be
launched in 2022. In the South Korean market, we are widening our product
offering to include mechanical ventilation products in order to adapt to
changing market conditions.
Current trading and outlook
· Trading in October and November 2021 in the UK and Europe has been at
a similar level to the same months in 2020 despite the difficulties caused by
the industry-wide supply chain issues. Sales in Korea in October remained
subdued.
· We are seeing ongoing price increases for raw materials, components
and labour and expect that to continue throughout 2022, which we are
mitigating by applying our sales price increases.
· We are currently recruiting a new CEO and 2 independent Non-executive
Directors and anticipate making other senior management appointments during
2022 to support our growth ambitions.
· Customer demand remains strong, but we expect that component
shortages will continue to present challenges in 2022, which the Group will
continue to seek to manage. However, the Board remains optimistic over the
medium-term prospects for the Group.
Executive Chairman, Keith Ritchie, said:
"We have been pleased that sales have rebounded following the impact of the
first UK lockdown in March 2020, as the house building and RM&I sectors
have recovered. The on-going supply challenges are a well-publicised issue
affecting the whole industry. Whilst we expect this will hold back 2022
performance to some degree, we will continue to do everything we can to manage
and alleviate these challenges. Titon remains profitable and cash generative;
we were pleased to reinstate the interim dividend earlier this year and a
final dividend for the year is proposed.
We are currently waiting to find out how virulent the new Omicron variant is,
and the extent of the UK government's response to it. Whilst the potential
impact on economic activity in both the UK and Europe remains unclear, we have
a very strong balance sheet, talented employees and a good range of products
that give us confidence in our future despite these uncertainties."
For further information please contact:
Titon Holdings Plc
Keith Ritchie, Executive Chairman Tel: +44 (0)7748 146834
Shore Capital - Nominated Adviser and Broker Tel: +44 (0)20 7408 4090
Daniel Bush
James O'Neil
The Preliminary results for the year to 30 September 2021 is contained below.
This document can be accessed with the benefit of page referencing on the
Company's website: www.titon.com/uk/investors/
(http://www.titon.com/uk/investors/)
Chairman's Statement
We are now emerging from the Covid-19 pandemic and the UK currently remains
open, albeit that concerns over the effect of Covid-19 persist and some
restrictions have been reimposed of late by the UK government. We are seeing
some European countries return to lockdowns but the main markets in which we
trade are open and trading relatively normally and I am pleased to say that
Titon is also operating normally. As I reported at the time of the Group's
interim results, we have traded throughout the period and have seen a good
recovery in trading in the UK and Europe compared to 2020. Our financial
position remains strong.
During the year we have followed the Government's guidelines for safe working
in our factory in Haverhill and in our offices and have developed and updated
an ongoing Covid-19 risk assessment to guide our actions. We decided not to
bring our office-based employees back when the guidelines were removed in
July, as at that time the number of infections were rising in the East of
England and we felt that it was safer for our employees to remain working from
home, where possible. Where employees have been required to work from the
office, we have maintained a careful limit on the numbers coming in and
required regular lateral flow testing to take place. We remain committed to
ensuring that the health and safety of all of our employees is maintained and
we thank them for the efforts they have made to ensure that both the office
and factory remain safe working places.
Profit and loss
In the year ended 30 September 2021, the Group's net revenue (which excludes
inter-segment activity) increased by 13% to £23.4m (2020: £20.7m).
The Group's gross margin increased from 27.4% in 2020 to 31.4% in 2021, which
is back above pre-pandemic levels (2019: 30.2%). We achieved a full, strong
year of trading compared to the previous year where the results were
exacerbated by the production suspension in the year, triggered by the first
UK lockdown which impacted our UK business. We realised an operating profit in
the period of £1.1m (2020: operating loss of £39,000). EBITDA was 100%
higher at £2.0m (2020: £1.0m).
Net finance interest cost amounted to £16,000 (2020 interest: £26,000). The
share of profits from the Group's South Korean associate, BTS, fell from a
profit of £83,000 in 2020 to a loss of £28,000 in 2021 due to continuing
challenging market conditions and several supply chain issues in Korea. Due to
an overall strong performance in the UK business the Group profit before tax
realised was £1.08m (2020: £18,000).
Basic statutory earnings per share for the year was 9.24 pence (2020: 0.52
pence).
An interim dividend of 1.5 pence per share was paid in the year to 30
September 2021 and the Directors are proposing a final dividend of 3.0 pence
per share (2020: 2.0 pence). The total dividend for the year will therefore be
4.5 pence per share (2020: 2.0 pence). If approved by shareholders at the
forthcoming Annual General Meeting on 23 February 2022, the dividend will be
payable on 4 March 2022 to shareholders on the register at 28 January 2022.
The ex-dividend date is 27 January 2022.
Statements of financial position and cash flows
The Group benefits from a robust and liquid balance sheet with no financial
debt. Net assets, including non-controlling interests, increased to £16.8m at
30 September 2021, at which point net cash stood at £4.8m (2020: £5.57m),
which is equivalent to 28.5% of net assets (2020: 33.1%).
Cash generated from operations (before working capital changes) was £2.0m
(2020: £1.0m). Inventory levels at the year-end increased by £0.64m on 2020.
This was mainly due to increased stock held in the UK business because of an
increase in material and labour costs during the year and an increase in the
goods in transit at year end where we have been trying to maintain our levels
of stock to meet demand and overcome supply issues. This reduced cash
generated from operations to £1.15m (2020: £2.72m). Cash generated from
operations in 2020 also benefited from trade receivables being reduced by
£1.7m due to lower 2020 revenues.
Capital expenditure increased to £0.96m (2020: £0.78m) and the Group paid
dividends in 2021 in respect of 2020 to the shareholders of Titon Holdings Plc
of £0.39m (2020: £0.33m). During the year, Titon Korea paid a further
dividend to Titon Holdings Plc and non-controlling shareholders, resulting in
£0.39m (2020: £0.69m) of cash being received by Titon Holdings Plc and a
cash outflow from the Group to non-controlling shareholders of Titon Korea of
£0.39m (2020: £0.67m).
The overall effect has been a net decrease in the Group's cash reserves in the
period of £0.78m (2020: increase of £0.99m). Net current assets at 30
September 2021 were £9.3m (2020: £9.1m) with a Quick Ratio(1) of 1.9 (2020:
2.0). ROCE(2) was 11.7%, as the business returned to more normal trading
conditions (2020: 1.4%).
Segment analysis
The Directors look initially at geographical areas to evaluate the Group's
performance and then consider product splits at the secondary level.
UK and Europe
We started the financial period with significant uncertainty due to two major
items: the pandemic and Brexit. The impact of the pandemic has reduced
significantly during 2021 as the impact of the vaccination programme has been
felt with reductions in hospitalisations and deaths and this has allowed most
sectors to function reasonably normally. However, the construction sector has
suffered from labour shortages, which have led to delays in projects being
started or being paused. In respect of Brexit, we had significant concerns
about the impact of the UK leaving the Single Market on 31 December 2020.
Although there were some long delays in shipping goods to our European
customers early in 2021 these have largely been alleviated and we have worked
with our logistics partners to ensure that shipments now proceed smoothly,
albeit they are taking a few days more than when we were in the Single Market.
I would like to thank all our customers in the EU for their patience in this
situation and for continuing to buy our products.
As I noted in the Interim Report we have had to deal with some procurement
issues as many basic materials such as plastics, cardboard and metals have all
been difficult to find at times. In the second half of the year, we have
additionally had challenges in maintaining supplies of components for some of
our mechanical ventilation products, which has delayed some of our sales to
customers. This is an industry wide problem but has been a source of
frustration to us during the year. We have also suffered from price increases
for many items and have had to pass these on to our customers, where we can.
Revenue from the Hardware business, comprising sales of our trickle vents plus
window and door hardware, was higher in the year by 24% as sales into the
PVCu, Timber and Aluminium sectors of the UK market recovered after the
lockdowns in 2020. Sales of Titon branded door and window hardware products
rose by 37% as we introduced new products and converted more customers to our
range, which was a positive performance.
In our Ventilation Systems business, revenues from mechanical ventilation
products rose by 34% overall as sales to the new build market recovered. Sales
in the UK were up by 43%, and a significant part of this was down to the
success of the new Titon FireSafe® Air Brick Range; Ventilation Systems
sales in mainland Europe were up 18% as our European markets expanded.
Titon continues to invest in research and development which, in turn, yields a continuing number of new products for both the Ventilation Systems and Hardware businesses. We launched the
Titon Ultimate® dMEV (https://www.titon.com/uk/products/ventilation-systems/continuous_mechanical_extract/titon-ultimate-dmev/)
extract fan early in 2021, which is the first extract fan that we have designed and manufactured ourselves. We expect to release a number of new products across the range in 2022. We have also spent considerable time in sourcing new bought-in products during the year, including a more advanced door cylinder to meet stringent security tests in the UK. We were sorry to learn during the year that Sobinco has decided to sell its window and door hardware products direct to UK systems companies, rather than through Titon, as we have been their sole UK distributor for many years. We have therefore been seeking alternative products and suppliers to replace these lines.
We continue to promote good indoor air quality and welcomed the Government's
video released in November 2021 about ventilation, in response to the threat
of coronavirus particles in the home. We have worked with our trade
association, Beama Ltd, which sponsors the Healthy Homes and Buildings All
Party Parliamentary Group and the Air Pollution All Party Parliamentary Group
on a number of campaigns during the year to improve ventilation in homes and
buildings.
We have been waiting for the publication of the final regulations for changes
to Part L (Conservation of fuel and power), Part F (Ventilation) and Part O
(Overheating), of the Buildings Regulations in England for new dwellings and
existing buildings, these were published on the 15 December 2021 and
initial reviews confirm that these are positive for our products.
Looking at the macro-economic picture the Experian UK Construction forecast in
October 2021 shows a rise in total housing expenditure of 17.7% against 2020,
as the economy recovered and forecasts a further 7.1% increase in 2022. At the
same time, the expected value of repair, maintenance and improvement in the
private and public residential sectors is forecast to be up by 14.8% in 2021
against 2020, but it then slows in 2022 to show an increase of a more modest
4.2% against 2021.
South Korea
In South Korea, the Group's subsidiary, Titon Korea (51% owned), manufactures
natural window ventilation products. In the 2021 interim results statement we
noted the contraction in house building and the delay in a number of building
projects and this has continued in the second half and has also been impacted
by new Covid-19 restrictions imposed nationally in Korea. These factors have
resulted in a reduction in revenue to £3.60m (2020: £4.9m) down 27%, whilst
the contribution to Group profit before tax declined to a loss of £14,000
(2020: profit of £0.14m).
The Group's associate company (49% owned), Browntech Sales Co. Limited
('BTS'), which principally distributes Titon Korea's natural ventilation
products, was similarly impacted by the downturn experienced by Titon Korea.
The loss recognised in respect of associates (which is all in respect of BTS)
in 2021 was £28,000 (2020: profit £83,000). In addition to distributing
ventilation products in South Korea, BTS invested in and developed properties
in the domestic residential real estate market. A further property was sold
during the year and a small post-tax profit was realised. BTS no longer holds
any direct investments in residential properties. BTS has been engaged in
expanding its product range to include mechanical ventilation products and has
signed an exclusive distribution agreement with a manufacturer of a hybrid
mechanical ventilation product for the Korean market. BTS is now actively
marketing this product to its customers but does not expect any meaningful
revenue to be realised from this arrangement until the 2022/23 financial
period. BTS also intends to supply mechanical heat recovery products to its
customers and is working with a product manufacturer to achieve this. Taking
Titon Korea and BTS together, South Korea made a negative contribution of
£0.04m to the Group's profit before tax for the year (2020: profit £0.22m).
United States
Our US operations represent the smallest geographical segment and results from
this business reduced in the period. Sales for the year fell by 19% to £0.63m
(2020: £0.78m) as the market continued to be impacted by the pandemic and,
while Titon Inc. made a small statutory profit before tax of £29,000 in the
full year (2020: loss of £32,000), it did generate a return for our UK
manufacturing business and made a positive contribution to Group income.
Board
I was very disappointed to inform you in November that our new CEO, Mat
Norris, has decided to leave the Board to take up another role. He will leave
Titon in February 2022 at the end of his notice period. We immediately
commenced a search for a new CEO and I will keep you informed of progress.
Following the announcement in September of their resignations Kevin Sargeant
and Bernd Ratzke have now left the Board. I would like to thank both of them
for their counsel and contributions to Titon over their respective times on
the Board. We have commenced a search for two independent Non-executive
Directors to replace them and further announcements will be made in due
course.
The external environment continues to present challenges and it will require
us to change the way we do business in order for us to make the progress that
shareholders require. Putting in place a new long-term executive management
structure, with the support of a strong Board of directors, will play a vital
part in this.
Employees
I offer my sincere thanks to all our employees, as the success of the Group is
down to their hard work and talents. They have continued to operate via a
mixture of home working and returning to the office or factory and have
remained upbeat and flexible in the face of the changing regulations during
the year. As with last year without their willingness to adapt to the new ways
of working we would not have been able to function as well as we have done in
the face of the pandemic. My colleagues on the Board also recognise the
contribution that they have made and thank them for their efforts and
dedication.
Investors
Shore Capital, our Nominated Adviser and Broker, has continued to write
research coverage on Titon during the year. Of particular note, in October
2021 they published a research note entitled "Net Zero Winners: Stock
selection in a decarbonising world" focussed on stocks that they believe will
benefit from the move to Net Zero. Titon was selected as one of these stocks
as they believe that the "fabric first" approach taken by the UK Government
will lead to more sales of the MVHR products that we manufacture and sell.
As usual, I would like to mention the Group's dividend reinvestment programme
(DRIP) which has operated for several years. This represents a
straight-forward and cost-effective way for shareholders to increase their
holdings in Titon should they wish to do so.
Current Trading and Outlook
Trading in October and November 2021 in the UK and Europe has been at a
similar level to the same months in 2020 despite the difficulties caused by
the industry-wide supply chain issues. Sales in Korea in October remained
subdued.
The UK economy has certainly rebounded from the very significant fall in GDP
of 9.9% that it experienced in 2020 with Experian forecasting UK GDP growth in
2021 of 6.6% and 5.4% in 2022. In the housing markets Experian are forecasting
expenditure to rise by 16% for public housing and 18% for private housing in
2021 and 6% and 7% increases for 2022 respectively. For Repairs and
Maintenance expenditure they are forecasting increases of 10% for public
housing in 2021 and 17% for private housing and then growth of 3% and 5%
respectively for 2022. These forecasts are positive for our business.
During 2022, we will continue to pursue progress against a range of strategic
initiatives. In particular, and in addition to the recruitment of a new CEO,
we anticipate making other senior management appointments, as well as making
additional mechanical ventilation sales force hires to drive growth in the
business. Alongside on-going initiatives to update and improve our production
through better resource planning, we intend to launch a new internal ERP
system for the UK, European and US operations in early 2022 to allow greater
automation of production and sales processes, and better management
information.
The biggest risks to our business in 2022 at present are the shortage of
materials and components and continuing price increases for these items as
well as labour and energy costs. As mentioned above, we have struggled to
maintain supplies of components for some of our mechanical ventilation
products particularly and there is little sign that this will rapidly improve
in 2022. We are doing everything we can to find alternative suppliers and have
had some success doing so but the ongoing supply challenges are well
publicised issues affecting the whole industry. Whilst this will hold back
2022 performance to some degree, we will continue to do everything we can to
manage and alleviate these challenges. Labour costs are also rising and
finding good people remains difficult. We are committed to investing in high
quality people and we anticipate there will be costs associated with
attracting and retaining the best people in the year. Price increases for our
components and raw materials will also continue to impact the Group, as with
other companies across the sector. We will raise our prices early in 2022 to
recover input cost increases but there is likely to be some margin erosion due
to the differences in the timing of these changes.
In South Korea, the economy is set to expand in 2022 as the recovery from the
pandemic continues. Bank of Korea forecasts GDP growth of 4.0% in 2021 and 3%
in 2022 but construction investment is only forecast to grow by 0.9% in 2021
and 2.9% in 2022. As previously noted, we continue to be in a transitionary
period for our ventilation products in South Korea as market requirements
change.
Of course, the pandemic remains with us, and I also need to mention the
possible impact of new variants. We are currently waiting to find out how
virulent the new Omicron variant is, and the extent of the UK government's
response to this. Whilst it is too early to draw conclusions, we recognise
that at this stage, it could lead to a reduction in economic activity. The
impact of expected materials, labour and component shortages combined with
price increases means that we anticipate that the business environment will
remain challenging for us in 2022. Despite this, we continue to have a very
strong balance sheet, talented employees and a good range of products that
give us confidence in our medium-term future.
On behalf of the Board.
K A Ritchie
Chairman
20 December 2021
Notes:
(Non IFRS GAAP measures)
(1 )The Quick Ratio measures liquidity and is calculated as follows: Current
Assets-less-Stocks divided by Current Liabilities.
(2) ROCE is calculated by dividing EBIT by capital employed (capital
employed being the sum of shareholders' funds, non-controlling interests and
all debt less intangible assets and cash).
Unaudited Consolidated Income Statement
for the year ended 30 September 2021
2021 2020
Note £'000 £'000
Revenue 4 23,412 20,652
Cost of sales (16,070) (15,200)
Grant Income 8 202
Gross profit 7,350 5,654
Distribution costs (1,144) (1,289)
Administrative expenses (4,521) (4,305)
Research and development expenses (582) (446)
Grant Income - 326
Other income 16 21
Operating profit / (loss) 1,119 (39)
Finance income - 10
Finance expense (16) (36)
Share of post-tax (loss) / profit from associate (28) 83
Profit before tax 1,075 18
Income tax (expense) / credit 5 (72) 104
Profit after income tax 1,003 122
Attributable to:
Equity holders of the parent 1,028 58
Non-controlling interest (25) 64
Profit for the year 1,003 122
Earnings per share attributed to equity holders of the parent:
Basic 9.24p 0.52p
Diluted 9.18p 0.52p
Unaudited Consolidated Statement of Comprehensive Income
for the year ended 30 September
2021
2021 2020
£'000 £'000
Profit for the year 1,003 122
Other comprehensive income - items which may be reclassified to profit or loss
in subsequent periods:
Exchange difference on retranslation of net assets of overseas operations (284) (62)
Total comprehensive income for the year 719 60
Attributable to:
Equity holders of the parent 793 (17)
Non-controlling interest (74) 77
719 60
Unaudited Consolidated Statement of Financial Position
at 30 September 2021
2021 2020
£'000 £'000
Assets
Property, plant and 3,476 3,469
equipment
Right-of-use assets 546 772
Intangible assets 925 753
Investments in associates 2,681 2,877
Deferred tax assets 278 333
Total non-current assets 7,906 8,204
Inventories 5,042 4,367
Trade and other receivables 4,224 3,779
Cash and cash equivalents 4,794 5,572
Total current assets 14,060 13,718
Total Assets 21,966 21,922
Liabilities
Lease liabilities 402 531
Total non-current liabilities 402 531
Trade and other payables 4,554 4,303
Lease liabilities 193 277
Total current liabilities 4,747 4,580
Total Liabilities 5,149 5,111
Equity
Share capital 1,119 1,113
Share premium reserve 1,077 1,049
Capital redemption reserve 56 56
Treasury shares (27) (27)
Foreign exchange reserve 96 327
Retained earnings 14,093 13,425
Total Equity attributable to equity holders of the parent 16,414 15,943
Non-controlling Interest 403 868
Total Equity 16,817 16,811
Total Liabilities and Equity 21,966 21,922
Unaudited Consolidated Statement of Changes in Equity
at 30 September 2021
Share Share Capital Foreign exchange Treasury shares Retained Total Non- Total
Capital premium redemption reserve earnings controlling interest Equity
reserve reserve
£'000 £'000 £'000 £'000 £000 £'000 £'000 £'000 £'000
At 1 October 2019 1,113 1,049 56 402 (27) 13,653 16,246 1,459 17,705
Translation differences - - - (75) - - (75) 13 (62)
on overseas operations
Profit for the year - - - - - 58 58 64 122
Total Comprehensive income for the year - - - (75) - 58 (17) 77 60
Dividends paid - - - - - (332) (332) - (332)
Dividends paid to NCI in subsidiary - - - - - - - (668) (668)
Share-based payment expense - - - - - 46 46 - 46
At 30 September 2020 1,113 1,049 56 327 (27) 13,425 15,943 868 16,811
Translation differences - - - (231) - (4) (235) (49) (284)
on overseas operations
Profit for the year - - - - - 1,028 1,028 (25) 1,003
Total Comprehensive income for the year - - - (231) - 1,024 793 (74) 719
Dividends paid - - - - - (390) (390) - (390)
Dividends paid to NCI in subsidiary - - - - - - - (391) (391)
Share-based payment expense - - - - - 34 34 - 34
Exercise of Share options 6 28 - - - 34 - 34
At 30 September 2021 1,119 1,077 56 96 (27) 14,093 16,414 403 16,817
Unaudited Consolidated Statement of Cash Flows
for the year ended 30 September 2021
2021 2020
£'000 £'000
Cash generated from operating activities
Profit before tax 1,075 18
Depreciation of property, plant & equipment 479 559
Depreciation of right-of-use assets 164 257
Amortisation of intangible assets 240 236
Profit on sale of plant & equipment (7) (16)
Share based payment expense - equity settled 34 46
Finance income - (10)
Finance costs 16 36
Share of associate's post-tax loss / (profit) 28 (83)
2,029 1,043
(Increase) / decrease in inventories (640) 519
(Increase) / decrease in receivables (428) 1,667
Increase / (decrease) in payables and other current liabilities 206 (468)
Cash generated by operations 1,167 2,761
Income taxes paid (22) (43)
Net cash generated by operating activities 1,145 2,718
Cash flows from investing activities
Purchase of plant & equipment (502) (246)
Purchase of intangible assets (412) (271)
Proceeds from sale of plant & equipment 25 46
Finance income - 10
Net cash used in investing activities (889) (461)
Cash flows from financing activities
Dividends paid to equity shareholders of the parent (390) (332)
Dividends paid to non-controlling shareholders of a subsidiary (391) (668)
Payment of lease liability (198) (261)
Finance costs (16) (36)
Exercise of share options 34 -
Net cash used in financing activities (961) (1,297)
Net (decrease) / increase in cash* (709) 960
Foreign exchange (69) 25
Cash at beginning of the year 5,572 4,587
Cash at end of the year 4,794 5,572
Notes to the Unaudited Financial Statements
1 Basis of preparation
The principal accounting policies adopted in the preparation of the financial
statements are set out below. The policies have been consistently applied to
all the years presented, unless otherwise stated. The Group financial
statements have been prepared in accordance with International Financial
Reporting Standards as adopted by the United Kingdom.
The financial statements have been prepared on a going concern basis. In
adopting the going concern basis the Directors have considered potential
scenarios arising from the Covid-19 pandemic and from its other principal
risks.
The preparation of financial statements in compliance with adopted IFRS
requires the use of certain critical accounting estimates. It also requires
Group management to exercise judgement in applying the Group's accounting
policies.
During the period, no new standards, amendments, and interpretations to
existing standards were published. The Group does not expect any other
standards issued by the IASB, but not yet effective, to have a material impact
on the group.
The information in this preliminary announcement does not constitute the
statutory accounts of the Group and Parent Company within the meaning of
Section 435 of the Companies Act 2006 for the year ended 30 September 2021 or
2020.
The financial information for the year ended 30 September 2020 is derived from
the statutory accounts for that year which have been delivered to the
Registrar of Companies. The auditors have reported on those accounts; their
report was unqualified, did not draw attention to any matters by way of
emphasis, and did not contain a statement under s498(2) or s498(3) of the
Companies Act 2006.
The financial information for the year ended 30 September 2021 is unaudited.
The statutory accounts for that year will be delivered to the Registrar of
Companies following the Company's Annual General Meeting which will be held on
23 February 2022.
2 Earnings per ordinary share
The calculation of the basic and diluted earnings per share is based on the
following data:
2021 2020
£'000 £'000
Numerator
Earnings for the purposes of basic earnings per share being
earnings after tax attributable to members of Titon Holdings Plc 1,028 58
Denominator Number Number
Weighted average number of ordinary shares for the purposes of basic
earnings per share 11,124,517 11,083,750
Effect of dilutive potential ordinary shares: share options 74,610 83,375
Weighted average number of ordinary shares for the purposes of diluted 11,199,127 11,167,125
earnings per share
Earnings per share (pence)
Basic 9.24p 0.52p
Diluted 9.18p 0.52p
3 Dividends
2021 2020
£'000 £'000
Final 2020 dividend of 2.0 pence (2019: 3.00 pence) per ordinary
share proposed and paid during the year relating to the 223 332
previous year's results
Interim dividend of 1.5 pence (2020: 0.00 pence) per ordinary 167 -
share paid during the year
390 332
The Directors are proposing a final dividend of 3.0 pence (2020: 2.0 pence)
per share. This will result in a final dividend totalling £334,313 (2020:
£221,675), subject to approval by the shareholders at the Annual General
Meeting. This dividend has not been accrued at the balance sheet date.
4 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.
Details of the deferred revenue movements during the year is as follows:
2021 2020
£'000 £'000
Deferred Revenue at beginning of year 478 687
Released in the year (478) (687)
Provided for in the year 443 478
Deferred Revenue at end of year 443 478
The deferred revenue noted above is the Group's only contract liability and is
shown within Other Payables.
The Group has no material contract assets.
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 in the remainder of this note.
Operating segment
The Directors' primary review of performance is by geographical regions.
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 / (loss) 1,026 (41) 52 38 1,075
Tax charge (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 915 21 - - 936
(other than financial instruments
and deferred tax assets)
The South Korea Segment loss includes the Group's share of the losses 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.
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
Operating segment
For the year ended United South North All other Consolidated
30 September 2020 Kingdom Korea America countries
£'000 £'000 £'000 £'000 £'000
Segment revenue 12,570 4,919 777 2,751 21,017
Inter-segment revenue (365) - - - (365)
Total Revenue 12,205 4,919 777 2,751 20,652
Segment profit/(loss) (205) 222 182 (181) 18
Tax credit 104
Profit for the year 122
Depreciation and amortisation 891 161 - - 1,052
Total assets 15,555 6,058 309 - 21,922
Total assets include: 2,877 - - - 2,877
Investments in associates
Additions to non-current assets 481 297 - - 778
(other than financial instruments
and deferred tax assets)
The South Korea Segment profit includes the Group's share of the profits from
Browntech Sales Co. Ltd., (BTS), the Group's associate undertaking in South
Korea, of £83,000.
Sales to BTS of £4.92m represented 24% of Group Revenue (2019: £8.33m -
38%). There are no other concentrations of revenue above 10% during the year.
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 Kingdom Europe USA and Canada South All other regions Total
30 September 2020 Korea
Revenues £'000 £'000 £'000 £'000 £'000 £'000
By entities' country of domicile 14,956 - 777 4,919 - 20,652
By country from which derived 12,205 2,694 777 4,919 57 20,652
Non-current assets
By entities' country of domicile 4,903 - 40 3,261 - 8,204
Information about the Group's products
Within geographical segments the Directors also monitor the revenue
performance of the Group within its two identified business streams. The
Group's operations are separated between trickle ventilation and window and
door hardware products and mechanical ventilation products. The following
table provides an analysis of the Group's external revenue, irrespective of
the geographical region of sale.
2021 2020
£'000 £'000
Trickle ventilation and window and door hardware products 14,672 14,593
Mechanical ventilation products 8,740 6,059
Revenue 23,412 20,652
5 Tax (expense) / credit
2021 2020
Current income tax: £'000 £'000
Corporation tax expense (22) (38)
Adjustment in respect of prior - 7
years
(22) (31)
Deferred tax:
Origination and reversal of temporary differences (50) 135
Income tax (expense) / credit (72) 104
2021 2020
The charge for the year can be reconciled to the profit £'000 £'000
per the income statement as
follows:
Profit before tax 1,075 18
Effect of:
Expected tax charge based on the standard rate of
Corporation tax in the UK of 19% (2020: 19%) (204) (4)
Additional deduction for R&D expenditure 167 171
Effect of Associate's results reported net of tax (5) 16
Expenses deductible for tax purposes (8) (28)
Difference in overseas tax rates (22) (44)
Adjustments in respect of prior periods - (7)
Income tax (expense) / credit (72) 104
The tax rate in the United Kingdom, being the primary economic environment in
which the Group conducts its business is 19% from 1 April 2017. The rate is
due to change to 25% from 1 April 2023.
6 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 2020
within the Report on Risk Management (pages 16 to 18) available at
www.titon.com/uk/investors/. The Board considers that these remain a current
reflection of the risks and uncertainties facing the business.
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