REG - Titon Holdings PLC - Trading Update

Titon HoldingsAnnouncement

29/11/2022 07:00

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RNS Number : 8469H  Titon Holdings PLC  29 November 2022

LEI: 213800ZHXS8G27RM1D97

 

This announcement contains inside information

29 November 2022

 

Titon Holdings Plc

 

Trading Update

 

Titon Holdings Plc ("Titon", the "Group" or the "Company") provides the
following update on the Group's expected results for the year to 30 September
2022 ("FY21/22") and on the outlook for the year to 30 September 2023
("FY22/23").

FY21/22 results

Trading in UK and Europe through to the end of the FY21/22 period continued in
line with the Group's expectations following its update on 22 July 2022, as
the Group managed the inflationary environment, the ERP system implementation
and the supply chain challenges that were present in FY21/22.

However, as a result of the previously reported weak housing market and shift
in market demand to mechanical ventilation products from natural ventilation
in the South Korean market, Titon's South Korean business has reported to the
Group a further decline in results for FY21/22. As a result, Titon now expects
that the Group's overall underlying loss before tax and exceptional items will
be moderately larger than previously anticipated.

The Group's financial results for FY21/22 remain subject to the completion of
the Group's audit. The Group expects that its final audited results for
FY21/22 will be published in January 2023.

Current trading and outlook

Trading in the first two months of the Group's current financial year to 30
September 2023 ("FY22/23") has been in line with our expectations in the UK
and Europe.

While supply chain shortages have eased, the Group continues to manage
inflationary margin erosion through customer price increases, material cost
savings and internal efficiencies. The Group has increased the output of
Ventilation Systems products as supply shortages have eased and we have
invested to increase capacity for our Hardware products to satisfy the
increased demand resulting from the Building Regulation changes in June 2022.

In the UK and Europe, we currently expect to report a loss before tax and
exceptional items in H1 FY22/23, but we expect to return to profitability in
H2 FY22/23. Whilst FY22/23 results overall will be somewhat lower than our
previous expectations, we expect FY22/23 will show a full year improvement in
performance when compared to our expected FY21/22 results.

Having filled key management vacancies, we now have a strong and experienced
leadership team in place whose focus is to improve business performance. In
addition, we have an ongoing strong order book with our customers.

Titon Korea is expected to remain loss-making in FY22/23 due to the
challenging market conditions, as the Group has yet to see significant sales
of mechanical ventilation products launched in response to the shift in demand
in that market.

Strong balance sheet

The Group continues to maintain a healthy balance sheet with no indebtedness.
Group cash at 30 September 2022 was £1.7m. Following the investment in the
Group's inventory holding during FY21/22 in order to mitigate the previous
supply chain issues, a strategic focus in FY22/23 will be to reduce our
inventory holding to normalised levels, to match order book demand and
maximise our liquidity and overall working capital positions.

 

Alexandra French, CEO, commented:

"After a challenging year, we are comforted that the UK and Europe business
performed in line with our revised expectations and has had a reasonable start
to the new financial year. However, we are obviously disappointed to report
that overall, the Group's trading performance for the FY21/22 full year will
be lower than previously indicated due to the poor performance of our Korean
subsidiary.

From a UK and European perspective, we now have a strong leadership team in
place who have defined a clear vision for the business, and we are confident
that this will enable us to deliver stability and ultimately a return to
profit in these regions in H2 FY22/23. Titon Korea's return to profitability
is now likely to be in the medium term while it develops its position in the
mechanical ventilation market and we are therefore evaluating options for
streamlining the corporate structure and operations of the Korean business.

We thank all of our customers for their valued business, and we look forward
to returning to our strong levels of customer service.  We also thank our
employees for their continued hard work and commitment during what has been a
difficult year. Despite these difficulties we remain confident in our
medium-term future, supported by our strong financial position."

 

ENDS

 

For further information please contact:

 

 Titon Holdings Plc

 Keith Ritchie                                 Tel: +44 (0)7748 146834

 Alexandra French                              Tel: +44 (0)7949 409132

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

 Daniel Bush

 Tom Knibbs

 

 

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