TIDMTON
RNS Number : 2948Z
Titon Holdings PLC
14 December 2017
Titon Holdings PLC
Preliminary Announcement for the year ended 30 September
2017
Titon Holdings PLC LEI: 213800ZHXS8G27RM1DD7
Final results for the year to 30 September 2017
Titon Holdings Plc, a leading international manufacturer and
supplier of ventilation systems and window and door hardware, today
announces its Final Results for the year ended 30 September
2017.
TITON DELIVERS ANOTHER RECORD YEAR
Financial Results
2017 2016 % Change
Net revenue GBP28.0m GBP23.7m +18
EBITDA GBP2.46m GBP2.33m +6
EBIT GBP1.85m GBP1.77m +4
Profit before tax GBP2.49m GBP2.14m +17
Earnings per share
(EPS) 16.55p 15.21p +9
DPS 4.2p 3.5p +20
Financial Highlights
-- Group net revenue rose 18% to a record GBP28.0 million (2016:
GBP23.7 million) which is an increase of 13% on a constant currency
basis
-- Profit before tax of GBP2.49 million increased 17% (2016: GBP2.14 million)
-- Proposed final dividend of 2.70 pence per share, up 20%
(2016: 2.25 pence) making 4.20 pence for the full year, up 20%
(2016: 3.50 pence)
-- Net cash of GBP3.27 million (2016: GBP2.44 million); and a
Quick Ratio(1) of 2.13 (2016: 1.95)
-- Return on capital employed (ROCE) (2) was 15.1% (2016: 15.1%)
with Capital Turn(2) at 2.3x (2016: 2.0x)
Operational highlights
-- South Korea's net profit after tax contribution rose by 49%
and remains the Group's largest income generator after tax; and in
Q3, South Korean GDP grew at 3.6%
-- The UK-based businesses saw revenue rise 12% in fiscal 2017;
and it was a particularly good year for mechanical ventilation
products with exports doing well in both existing and new
markets
-- The UK hardware business also improved on last year with
Titon branded door and window products recording 33% growth in
revenue; other sub-sectors, however, grew at modest rates
particularly in the latter fiscal months
-- The Group has also continued to promote the benefits of good indoor air quality in the UK
-- As noted at the half year, the strategic decision had been
taken to withdraw from a new venture in fabricating commercial
ducting and this is now complete at a net cost of GBP370,000
Executive Chairman Keith Ritchie said: "it was another record
year for Titon with revenue of GBP28 million and a 17% increase in
profit before tax to GBP2.5 million. The dividend for the year was
also increased by 20% for the second year in a row.
"The UK economy continues to grow at a modest rate in both
historic and relative terms. However, even the most pessimistic
forecasts are at an average 1% or better for GDP growth per annum
in calendar 2017 through 2019. These forecasts, too, are made
cognisant of the protracted Brexit negotiations and the uncertainty
associated with this process. For our part, at Titon we urge the
Government to enter into a transitional agreement with the EU as
soon as possible so as to ensure trade flows are not disrupted from
April 2019.
"In the first two months of the new fiscal year, we are
satisfied with UK and continental European trading, which is in
line with the same period in 2016. October and November last year
were exceptionally strong and we are pleased to have a similar
performance this year.
"In South Korea(3) , the World's 12th largest economy and the
Group's largest net profit contributor, it is a dramatically
different outlook with robust economic growth continuing; and doing
so despite a swirl of domestic and international issues. For
example, GDP grew at 3.6% in Q3 (after 2.7% in Q2). At the same
time, FocusEconomics is forecasting GDP growth of 2.8% in 2018 (an
upward revision in November of 0.1%) and 2.7% in 2019.
Page 1
Titon Holdings PLC
Preliminary Announcement for the year ended 30 September
2017
"Titon makes innovative and popular products, has a unique
international spread, very good people and a consistently strong
balance sheet. We will also continue to look for new opportunities
within our target product and geographical markets. I look forward
to another year of progress and one in line with market
expectations".
For further information please contact Keith Ritchie: +44 (0)
1206 713821
Chairman's statement
It was another record year for Titon with revenue of GBP28
million and a 17% increase in profit before tax to GBP2.5 million.
The dividend for the year was also increased by 20% for the second
year in a row.
Profit and loss
In the year ended 30 September 2017, Titon's net revenue (which
excludes inter-segment activity) rose 18% to GBP28.1 million (2016:
GBP23.7 million). On a constant currency basis, however, the
increase is 13%.
The gross margin dipped from 29.7% to 25.9% due to lower margins
in South Korea and a closure debit while EBITDA was 6% higher at
GBP2.46 million (2016: GBP2.33 million). Earnings before interest
and tax (EBIT) or operating profit rose 4.4% to GBP1.85 million
(2016: GBP1.77 million) with the operating margin slightly lower at
6.6% (2016: 7.5%) which was also impacted by the same closure costs
which amounted to GBP370,000 and relate to a commercial ducting
fabrication venture (which is explained below).
Net interest contributed GBP10,000 (2016: GBP8,000) while the
share of profits from the Group's associate rose 78% to GBP633,000
(2016: GBP356,000) resulting in profit before tax of GBP2.49
million, which was an increase of 17% (2016: GBP2.14 million) or
+11% to GBP2.36 million on constant currency basis.
Earnings per share for the year increased 9% to 16.6 pence
(2016: 15.2 pence). Taxation was higher at 11% (2016: 9%) due to a
higher deferred tax charge and the non-controlling interests'
deduction increased from GBP317,000 to GBP420,000 which reflects
the higher contribution from Titon Korea.
The Directors are proposing a final dividend of 2.7 pence per
share (2016: 2.25 pence). When added to the interim dividend of 1.5
pence, paid on 23 June 2017 (2016: 1.25 pence), this would make a
total for the year of 4.2 pence (2016: 3.5 pence) i.e. a 20% rise.
If approved by shareholders at the forthcoming Annual General
Meeting on 21 February 2018, the dividend is payable on 27 February
2018 to shareholders on the register at 19 January 2018. The
ex-dividend date is 18 January 2018.
Statements of Financial Position and cash flows
Net assets including non-controlling interests rose GBP1.4
million to GBP16.2 million with net cash at GBP3.27 million (2016:
GBP2.44 million) which is equivalent to 20.2% of net assets (2016:
16.5%). A lower working capital requirement during the year has
resulted in a significant improvement in the cash generated from
operations this year when compared to last year from GBP848,000 to
GBP2.24 million. At the same time, lower capital expenditure in the
year of GBP520,000 (2016: GBP721,000) has also helped cash
generation. Whilst some of this improvement has been offset by
higher tax and dividend payments, the subsequent cash inflow for
the year was GBP831,000 (2016: outflow of GBP432,000).
Net current assets were GBP9.9 million (2016: GBP9.0 million)
with a Quick Ratio(1) of 2.13 (2016: 1.95).
ROCE(2) was 15.1% (2016: 15.1%) with Capital Turn at 2.3 (2016:
2.0).
Segment Analysis
Revenue derived from UK-based businesses saw an increase of 12%
in fiscal 2017. This included the Ventilation Systems business for
mechanical ventilation products which generated a 12% rise in
revenue, with exports doing particularly well. The latter reflects
a continued targeting of and investment in new geographical
markets. Other sub-sector UK sales were up marginally on 2016
across a wide and widening range of mechanical products. However,
sales did slow down as the year progressed as a result of lower
business demand outside London and the South East.
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; and this will also be
true in calendar 2018.
Page 2
Titon Holdings PLC
Preliminary Announcement for the year ended 30 September
2017
Titon has continued to promote the benefits of good indoor air
quality in the UK through one of our trade associations, BEAMA
(British Electrotechnical and Allied Manufacturers Association);
and the aim here is to promote the use of ventilation products in
the home to improve air quality. Given the increasing number of
reports about poor levels of both outdoor and indoor air quality in
the UK, we firmly believe that this is an area of our business
which will continue to grow. Similarly, a number of public meetings
of the All Party Parliamentary Group for Healthy Homes and
Buildings were convened during the year which we have attended. In
turn, a draft green paper has now been published, which sets out a
number of recommendations for the Government. It will also ask for
further input and comments from all interested parties.
Results for our UK Hardware business also improved on last year
including a further increase in sales to the aluminium sector and a
rise in door and window products to the Timber/PVCu segment of the
market. I am also pleased to report that sales of Titon branded
door and window hardware products have increased 33% in fiscal 2017
when compared with 2016.
In the UK, the value of both private and public housebuilding
activity increased in Titon's fiscal year by 8% and 13%
respectively in real terms according to Office of National
Statistics Office (ONS) data. At the same time, repair, maintenance
and improvement (RMI) in the private residential sector housing
rose by 9% in the year and 4% in the latest quarter. RMI in public
residential, however, has declined in both periods.
As noted in the 2017 Interim Statement, we took the decision to
withdraw from a new venture fabricating commercial ducting, which
simply did not establish an economic niche in its target market
place. This exit is now complete and, during the second half of the
year, we have disposed of all of the stock, assets and debts from
this venture which has resulted in a net loss for the full year of
GBP370,000.
In South Korea, Titon's subsidiary company, Titon Korea (51%
owned), manufactures natural window ventilation products and is the
national market leader with an estimated market share in this core
sub-sector in excess of 75%. In fiscal 2017, it also had a very
good year with revenue increasing by 34% to GBP9.5 million, due to
higher private sector demand, and its contribution to Group profit
after tax was up by 34% to GBP821,000.
The Group's associate company, Browntech Sales Co. Limited
('BTS') also operates exclusively in South Korea and it generated a
significantly higher contribution in the year i.e. +78% to
GBP633,000 (2016: GBP356,000), which is the entire Associate
contribution to the Group Income Statement. In terms of activity,
BTS distributes ventilation products in South Korea and both
invests in and develops schemes in the domestic residential real
estate market. Three are active at this time, one in Seoul which is
currently being marketed and another, in the form of a secured
interest-bearing loan, has taken longer than anticipated to
realise, but for which repayment is expected to commence in
calendar year 2018. The third scheme is the development of a
residential property in Seoul for which construction has only very
recently commenced with completion expected in calendar 2018. All
of these activities are budgeted to generate post tax profits for
Titon as the 49% shareholder in BTS.
In combination, at the subsidiary and associate level, South
Korea is the largest single contributor to the Group's profit after
tax; and in 2017 this number was markedly higher at GBP1,491,000
(2016: GBP1,003,000).
Finally, sales in the United States continued to grow. However,
the contribution from Titon Inc. was lower in the year at
GBP166,000 (2016: GBP281,000) as margins dipped due to increased
competition locally. The market for natural ventilation products in
the US continues to grow year on year. In scale it remains
relatively modest at this time and it is geographically focused on
the North East and the North West regions.
Board
As promulgated by way of a London Stock Exchange announcement in
September, Nick Howlett has moved from Executive to Non-executive
Director and retired from his role as Managing Director of
Ventilation Systems. I would like to take this opportunity to thank
Nick publicly for his contribution to the Group since 1991 and I am
also very pleased that he has agreed to continue working for Titon
as a Non-executive director.
Employees
My annual statement would not be complete without offering a
heart-felt vote of thanks to the Group's employees. Nor is this lip
service, because without our team, Titon would not be able to grow
and prosper as it has done over time; and once again in fiscal
2017. The number of people employed in the Group dipped last year
from 237 at the end of September 2016 to 229 at the end of
September 2017 due to redundancies associated with the decision to
close the commercial ducting fabrication business noted above.
Whilst we regret this action the strategic decision was not taken
lightly and it was made in the best interests of the Group and,
ultimately, its continuing work force. At the same time, we have
continued to make increases in the wages of our weekly paid
employees in line with the National Minimum Wage.
Page 3
Titon Holdings PLC
Preliminary Announcement for the year ended 30 September
2017
Investors
We have continued to engage the corporate research house Hardman
& Co. which regularly writes and distributes investment
research on Titon, which we believe has both widened interest in
the Group and had a very positive impact in its share price over
the past two years. On 3 January next year the UK and European
investment research landscape will change dramatically with the
implementation of MiFID II (Markets in Financial Instruments
Directive) across 17 EU countries including the UK. Essentially, it
means that investment banks will be legally bound to charge fund
managers for investment research. In turn, this will most likely
result in less notes being written on many companies particularly
small and middle sized ones such as Titon. Happily, the corporate
research sector, including Hardman, is not impacted by MiFID
II.
Finally, here, I would like to mention the Group's dividend
reinvestment programme (DRIP) which has operated for a number of
years. This represents a straight-forward and cost effective way
for shareholders to increase their holdings in Titon should they
wish to do so.
Outlook
The UK economy continues to grow at a modest rate in both
historic and relative terms. However, even the most pessimistic
forecasts are at an average 1% or better for GDP growth per annum
in 2018 and 2019. Similarly, Experian is forecasting construction
output to grow at an average 1.3% per annum over the same three
years. These forecasts, too, are made cognisant of the protracted
Brexit negotiations and the uncertainty associated with this
process. For our part, at Titon we urge the Government to enter
into a transitional agreement with the EU as soon as possible so as
to ensure trade flows are not disrupted from April 2019.
In the first two months of the new fiscal year, we are satisfied
with UK and continental European trading, which is in line with the
same period in 2016. October and November last year were
exceptionally strong and we are pleased to have a similar
performance this year.
In South Korea, the World's 12th largest economy(3) and the
Group's largest net profit contributor, it is a dramatically
different outlook with robust economic growth continuing; and doing
so despite a swirl of domestic and international issues. For
example, annualised GDP grew at 3.6% in Q3 (after 2.7% in Q2). At
the same time, FocusEconomics is forecasting GDP growth of 2.8% in
2018 (an upward revision in November of 0.1%) and 2.7% in 2019.
Positively, too, President Moon Jae-in, since 9 May, had made a
refreshing and positive impact (after his predecessor was fired)
and US President Donald Trump recently made a high profile visit to
the Country. There is no change in North Korea where Kim Jong-un
continues with his bellicosity but in terms of economic reality
this has made very little impact. Another first class year is
expected for Titon Korea and BTS.
Titon makes innovative and popular products, has a unique
international spread, very good people and a consistently strong
balance sheet. We will also continue to look for new opportunities
within our target product and geographical markets. I look forward
to another year of progress and one in line with market
expectations.
On behalf of the Board
K A Ritchie
Chairman
Notes:
(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 the sum of
shareholders' funds, non-controlling interests and all debt less
intangible assets and cash; with Capital Turn calculated by
dividing revenue by capital employed
(3) International Monetary Fund data (IMF) at April 2017
13 December 2017
Page 4
Titon Holdings PLC
Preliminary Announcement for the year ended 30 September
2017
Unaudited Consolidated Income Statement
for the year ended 30 September 2017
Unaudited
2017 2016
GBP'000 GBP'000
Revenue 28,011 23,721
Cost of sales (20,746) (16,673)
------------------------------------------ ----------- ----------
Gross profit 7,265 7,048
Distribution costs (717) (756)
Administrative expenses (4,249) (3,998)
Research and development expenses (467) (539)
Other income 18 17
------------------------------------------ ----------- ----------
Operating profit 1,850 1,772
Finance income 10 8
Share of profits from associate 633 356
------------------------------------------ ----------- ----------
Profit before tax 2,493 2,136
Income tax expense (269) (184)
------------------------------------------ ----------- ----------
Profit after income tax 2,224 1,952
------------------------------------------ ----------- ----------
Attributable to:
Equity holders of the parent 1,804 1,635
Non-controlling interest 420 317
Profit for the year 2,224 1,952
------------------------------------------ ----------- ----------
Earnings per share attributed to equity
holders of the parent:
Basic 16.55p 15.21p
Diluted 16.24p 14.95p
Unaudited Consolidated Statement of Comprehensive Income
for the year ended 30 September 2017
Unaudited
2017 2016
GBP'000 GBP'000
Profit for the year 2,224 1,952
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 (443) 917
Total comprehensive income for the year 1,781 2,869
Attributable to:
Equity holders of the parent 1,509 2,198
Non-controlling interest 272 671
------------------------------------------- ----------- ---------
1,781 2,869
------------------------------------------- ----------- ---------
Page 5
Titon Holdings PLC
Preliminary Announcement for the year ended 30 September
2017
Unaudited Consolidated Statement of Financial Position
at 30 September 2017
Unaudited
2017 2016
GBP'000 GBP'000
Assets
Property, plant and equipment 3,548 3,511
Intangible assets 638 627
Investments in associates 1,966 1,464
Deferred tax 116 158
Total non-current assets 6,268 5,760
----------- ---------
Inventories 4,670 4,586
Trade and other receivables 6,644 6,702
Corporation tax 79 -
Cash and cash equivalents 3,269 2,438
----------- ---------
Total current assets 14,662 13,726
-------------------------------------- ----------- ---------
Total Assets 20,930 19,486
-------------------------------------- ----------- ---------
Liabilities
Deferred tax 39 25
----------- ---------
Total non-current liabilities 39 25
----------- ---------
Trade and other payables 4,627 4,526
Corporation tax 63 161
Total current liabilities 4,690 4,687
-------------------------------------- ----------- ---------
Total Liabilities 4,729 4,712
-------------------------------------- ----------- ---------
Equity
Share capital 1,098 1,091
Share premium reserve 985 950
Capital redemption reserve 56 56
Treasury shares (27) (27)
Translation reserve 216 511
Retained earnings 11,887 10,479
-------------------------------------- ----------- ---------
Total Equity attributable to equity
holders of the parent 14,215 13,060
-------------------------------------- ----------- ---------
Non-controlling Interest 1,986 1,714
-------------------------------------- ----------- ---------
Total Equity 16,201 14,774
-------------------------------------- ----------- ---------
Total Liabilities and Equity 20,930 19,486
-------------------------------------- ----------- ---------
Page 6
Titon Holdings PLC
Preliminary Announcement for the year ended 30 September
2017
Unaudited Consolidated Statement of Changes in Equity
at 30 September 2017
Share Share Capital Trans- Treasury Retained Total Non- Total
Capital premium redemption lation shares earnings controlling equity
reserve reserve reserve interest
GBP'000 GBP'000 GBP'000 GBP'000 GBP000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 October
2015 1,063 891 56 (52) (27) 9,119 11,050 1,043 12,093
---------------- --------- --------- ------------ --------- ---------- ---------- --------- ------------- ---------
Translation
differences
on overseas
operations - - - 563 - - 563 354 917
Profit for the
year - - - - - 1,635 1,635 317 1,952
---------------- --------- --------- ------------ --------- ---------- ---------- --------- ------------- ---------
Total
Comprehensive
Income for
the
year - - - 563 - 1,635 2,198 671 2,869
---------------- --------- --------- ------------ --------- ---------- ---------- --------- ------------- ---------
Dividends paid - - - - - (324) (324) - (324)
Share-based
payment
expense - - - - - 49 49 - 49
Ordinary
shares
issued 28 59 - - - - 87 - 87
---------------- --------- --------- ------------ --------- ---------- ---------- --------- ------------- ---------
At 30
September
2016 1,091 950 56 511 (27) 10,479 13,060 1,714 14,774
---------------- --------- --------- ------------ --------- ---------- ---------- --------- ------------- ---------
Translation
differences
on overseas
operations - - - (295) - - (295) (148) (443)
Profit for the
year - - - - - 1,804 1,804 420 2,224
---------------- --------- --------- ------------ --------- ---------- ---------- --------- ------------- ---------
Total
Comprehensive
income for
the
year - - - (295) - 1,804 1,509 272 1,781
---------------- --------- --------- ------------ --------- ---------- ---------- --------- ------------- ---------
Dividends paid - - - - - (410) (410) - (410)
Share-based
payment
expense - - - - - 14 14 - 14
Ordinary
shares
issued 7 35 - - - - 42 - 42
At 30
September
2017 1,098 985 56 216 (27) 11,887 14,215 1,986 16,201
---------------- --------- --------- ------------ --------- ---------- ---------- --------- ------------- ---------
Page 7
Titon Holdings PLC
Preliminary Announcement for the year ended 30 September
2017
Unaudited Consolidated Statement of Cash Flows
for the year ended 30 September 2017
Unaudited
2017 2016
GBP'000 GBP'000
Cash generated from operating activities
Profit before tax 2,493 2,136
Depreciation of property, plant & equipment 438 400
Amortisation of intangible assets 175 156
Increase in inventories (133) (370)
Increase in receivables (161) (1,061)
Increase / (decrease) in payables and
other current liabilities 57 (79)
Profit on sale of plant & equipment - (19)
Share based payment - equity settled 14 49
Interest received (10) (8)
Share of associate's profit (633) (356)
----------------------------------------------- ----------- ---------
Cash generated from operations 2,240 848
----------------------------------------------- ----------- ---------
Income taxes paid (390) (217)
----------------------------------------------- ----------- ---------
Net cash generated from operating activities 1,850 631
----------------------------------------------- ----------- ---------
Cash flows from investing activities
Purchase of plant & equipment (520) (721)
Purchase of intangible assets (186) (163)
Proceeds from sale of plant & equipment 45 50
Interest received 10 8
----------------------------------------------- ----------- ---------
Net cash used in investing activities (651) (826)
----------------------------------------------- ----------- ---------
Cash flows from financing activities
Exercise of Share Options 42 87
Dividends paid to equity shareholders (410) (324)
Net cash used in financing activities (368) (237)
----------------------------------------------- ----------- ---------
Net increase / (decrease) in cash &
cash equivalents 831 (432)
Cash & cash equivalents at beginning
of the year 2,438 2,870
Cash & cash equivalents at end of the
year 3,269 2,438
----------------------------------------------- ----------- ---------
Page 8
Titon Holdings PLC
Notes to the Preliminary Announcement for the year ended 30
September 2017
1 Earnings per ordinary share
The calculation of the basic and diluted earnings per share is
based on the following data:
2017 2016
GBP'000 GBP'000
Numerator
Earnings for the purposes of basic earnings
per share being
earnings after tax attributable to members
of Titon Holdings PLC 1,804 1,635
----------------------------------------------- ------------ ------------
Denominator Number Number
Weighted average number of ordinary shares
for the purposes of basic
earnings per share 10,903,394 10,752,964
Effect of dilutive potential ordinary shares
: Share Options 207,855 184,129
------------ ------------
Weighted average number of ordinary shares
for the purposes of diluted earnings per
share 11,111,249 10,937,093
------------ ------------
Earnings per share (pence)
Basic 16.55p 15.21p
Diluted 16.24p 14.95p
----------------------------------------------- ------------ ------------
2 Dividends
2017 2016
GBP'000 GBP'000
Final 2016 dividend of 2.25 pence (2015:
1.75 pence) per ordinary
share proposed and paid during the year relating
to the
previous year's results 245 188
Interim dividend of 1.50 pence (2016: 1.25
pence) per ordinary
share paid during the year 165 136
410 324
--------------------------------------------------- ------------------------- --------------------------
The Directors are proposing a final dividend of 2.7 pence (2016:
2.25 pence) per share. This will result in a final dividend
totalling GBP296,561 (2016: GBP245,447), subject to approval by the
shareholders at the Annual General Meeting. This dividend has not
been accrued at the balance sheet date.
Page 9
Titon Holdings PLC
Notes to the Preliminary Announcement for the year ended 30
September 2017
3 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 house builders, 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 Sales of passive and powered ventilation products
countries 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. Sales Administration and Other Expenses are
currently allocated to operating segments in the Group's reporting
to the CODM. Other Expenses include mainly 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 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 over the page.
Page 10
Titon Holdings PLC
Notes to the Preliminary Announcement for the year ended 30
September 2017
3 Revenue and segmental information (continued)
Operating segment
The Directors' primary review of performance is by geographical
regions.
For the year ended United South North All other
30 September 2017 Kingdom Korea America countries Consolidated
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Segment revenue 14,823 9,530 1,781 2,735 28,869
Inter-segment revenue (858) - - - (858)
-------------------------------- ---------- --------- ---------- ------------ --------------------------------
Total Revenue 13,965 9,530 1,781 2,735 28,011
-------------------------------- ---------- --------- ---------- ------------ --------------------------------
Segment profit 706 1,638 166 (17) 2,493
Tax expense (269)
-------------------------------- ---------- --------- ---------- ------------ --------------------------------
Profit for the year 2,224
-------------------------------- ---------- --------- ---------- ------------ --------------------------------
Depreciation and amortisation 563 49 1 - 613
-------------------------------- ---------- --------- ---------- ------------ --------------------------------
Total assets 12,916 7,704 310 - 20,930
-------------------------------- ---------- --------- ---------- ------------ --------------------------------
Total assets include:
Investments in associates - 1,741 - - 1,741
Additions to non-current
assets
(other than financial
instruments
and deferred tax
assets) 672 34 - - 706
-------------------------------- ---------- --------- ---------- ------------ --------------------------------
The South Korea Segment profit includes the Group's share of the
profits from the Associate.
Sales to Browntech Sales Co. Ltd (the Group's associate
undertaking in South Korea) of GBP9.530m represent 35.1% of Group
Revenue (2016: GBP7.110m - 30.0%). There are no other
concentrations of revenue above 10% during the year (see Note 5 -
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 North Asia All other Total
30 September 2017 Kingdom America regions
Revenues GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
By entities' country
of domicile 16,700 - 1,781 9,530 - 28,011
By country from which
derived 13,965 2,565 1,781 9,684 16 28,011
------------------------ ---------- --------- ---------- --------- ----------- ---------
Non-current assets
By entities' country
of domicile 4,295 - 1 1,972 - 6,268
------------------------ ---------- --------- ---------- --------- ----------- ---------
Page 11
Titon Holdings PLC
Notes to the Preliminary Announcement for the year ended 30
September 2017
3 Revenue and segmental information (continued)
Operating segment
The Directors primary review of performance is by geographical
regions.
For the year ended United South North All other
30 September 2016 Kingdom Korea America countries Consolidated
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Segment revenue 13,651 7,110 1,715 1,995 24,471
Inter-segment revenue (750) - - - (750)
-------------------------------- ---------- --------- ---------- ------------ --------------------------------
Total Revenue 12,901 7,110 1,715 1,995 23,721
-------------------------------- ---------- --------- ---------- ------------ --------------------------------
Segment profit 810 1,135 260 (69) 2,136
Tax expense (184)
-------------------------------- ---------- --------- ---------- ------------ --------------------------------
Profit for the year 1,952
-------------------------------- ---------- --------- ---------- ------------ --------------------------------
Depreciation and amortisation 508 47 1 - 556
-------------------------------- ---------- --------- ---------- ------------ --------------------------------
Total assets 12,786 6,098 602 - 19,486
-------------------------------- ---------- --------- ---------- ------------ --------------------------------
Total assets include:
Investments in associates - 1,464 - - 1,464
Additions to non-current
assets
(other than financial
instruments
and deferred tax
assets) 839 43 2 - 884
-------------------------------- ---------- --------- ---------- ------------ --------------------------------
The South Korea Segment profit includes the Group's share of the
profits from the Associate.
Sales to Browntech Sales Co. Ltd (the Group's associate
undertaking in South Korea) of GBP7.110m represent 30.0% of Group
Revenue (2015: GBP7.161m - 32.2%). There are no other
concentrations of revenue above 10% during the year (see Note 5 -
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 North Asia All other Total
30 September 2016 Kingdom America regions
Revenues GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
By entities' country
of domicile 14,896 - 1,715 7,110 - 23,721
By country from which
derived 12,848 1,934 1,715 7,155 69 23,721
------------------------ ---------- --------- ---------- --------- ----------- ---------
Non-current assets
By entities' country
of domicile 4,272 - 3 1,485 - 5,760
------------------------ ---------- --------- ---------- --------- ----------- ---------
Page 12
Titon Holdings PLC
Notes to the Preliminary Announcement for the year ended 30
September 2017
3 Revenue and segmental information (continued)
Operating segments
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.
2017 2016
GBP'000 GBP'000
Trickle ventilation and window and door
hardware products 21,734 17,931
Mechanical ventilation products 6,277 5,790
------------------------------------------ --------- ---------
Revenue 28,011 23,721
------------------------------------------ --------- ---------
4 Tax (expense) / credit
2017 2016
Current income tax: GBP'000 GBP'000
Corporation tax expense (249) (256)
Adjustment in respect of prior years (43) 3
--------- ---------
(292) (253)
Deferred tax:
Origination and reversal of temporary
differences 23 69
Income tax expense (269) (184)
---------------------------------------- --------- ---------
The charge for the year can be reconciled
to the profit
per the income statement as follows:
Profit before tax
Effect of: 2,493 2,136
Expected tax charge based on the standard
rate of
Corporation tax in the UK of 19.5% (2016:
20.0%) (486) (427)
Additional deduction for R&D expenditure 171 172
Effect of Associate's results reported
net of tax 127 75
Expenses deductible / (not deductible)
for tax purposes (11) 33
Difference in overseas tax rates (27) (40)
Adjustments in respect of prior periods (43) 3
Income tax expense (269) (184)
-------------------------------------------- ------- -------
Page 13
Titon Holdings PLC
Notes to the Preliminary Announcement for the year ended 30
September 2017
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.
Key management who hold the authority and responsibility for
planning, directing and controlling activities of the Group are
comprised solely of the Directors. Aside from compensation
arrangements, there were no transactions, agreements or other
arrangements, direct or indirect, during the year in which the
Directors had any interest.
Transactions for the year between the subsidiary companies and
the associate company, which is a related party, were as
follows:
Sales of goods Amount owed by
related party
2017 2016 2017 2016
GBP'000 GBP'000 GBP'000 GBP'000
------------------ --------- --------- --------- ---------
Browntech Sales
Co. Ltd 9,530 7,110 2,798 2,575
------------------ --------- --------- --------- ---------
Trading debts between subsidiaries and Browntech Sales Co. Ltd
are created only when the ultimate customer has accepted the
successful inclusion of our products into buildings.
5 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 2016 within the Report on Risk Management (pages
9 to 13) available at www.titonholdings.com. The Board considers
that these remain a current reflection of the risks and
uncertainties facing the business.
6 Basis of preparation
The financial information for the year ended 30 September 2017
together with the comparative year has been prepared in accordance
with the recognition and measurement criteria of International
Financial Reporting Standards (IFRSs) as adopted by the European
Union.
The accounting policies of the Group under International
Financial Reporting Standards (IFRSs) are set out in detail in the
2016 Financial Statements which is available from the Group's
website at www.titonholdings.com.
Except for the implementation of the amendments below there have
been no changes to the accounting policies during the year.
* Accounting for Acquisitions of Interests in Joint
Operations: Amendments to IFRS 11. The amendments
require the acquirer of an interest in a joint
operation in which the activity constitutes a
business, as defined in IFRS 3 Business Combinations,
to apply all of the principles on business
combinations accounting in IFRS 3 and other IFRSs
except for those principles that conflict with the
guidance in IFRS 11. In addition, the acquirer shall
disclose the information required by IFRS 3 and other
IFRSs for business combinations.
* Clarification of Acceptable Methods of Depreciation
and Amortisation: Amendments to IAS 16 and IAS 38.
The amendment to IAS 16 clarifies that the use of
revenue-based methods to calculate the depreciation
of an asset is not appropriate because revenue
generated by an activity that includes the use of an
asset generally reflects factors other than the
consumption of the economic benefits embodied in the
asset.
* Equity Method in Separate Financial Statements
(Amendments to IAS 27). The amendments introduce an
option for an entity to account for its investments
in subsidiaries, joint ventures, and associates using
the equity method in its separate financial
statements. The accounting approach that is selected
is required to be applied for each category of
investment.
* Annual Improvements to IFRSs (2012-2014 Cycle). These
amendments affect the following IFRSs: IFRS 5
Non-current Assets Held for Sale and Discontinued
Operations (Prospective application), IFRS 7
Financial Instruments: Disclosures (Retrospective
application), IAS 19 Employee Benefits (Beginning of
earliest period presented), IAS 34 Interim Financial
Reporting (Retrospective application).
* Disclosure Initiative: Amendments to IAS 1. The IASB
has issued amendments to IAS 1 Presentation of
Financial Statements as part of an initiative to
improve presentation and disclosure in financial
reports.
* Investment Entities: Applying the Consolidation
Exception (Amendments to IFRS 10, IFRS 12 and IAS
28). The narrow-scope amendments to IFRS 10
Consolidated Financial Statements, IFRS 12 Disclosure
of Interests in Other Entities and IAS 28 Investments
in Associates and Joint Ventures introduce
clarifications to the requirements when accounting
for investment entities.
Page 14
Titon Holdings PLC
Notes to the Preliminary Announcement for the year ended 30
September 2017
7 Basis of preparation (continued)
The information in this preliminary announcement does not
constitute the statutory accounts of the Group within the meaning
of Section 435 of the Companies Act 2006 for the year ended 30
September 2017 or 2016.
The financial information for the year ended 30 September 2016
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 498(2) or 498(3) of the Companies Act
2006. The financial information for the year ended 30 September
2017 is unaudited. The statutory accounts for that year will be
delivered to the Registrar of Companies following the Company's
Annual General Meeting. The independent Auditors' Report will be
based on those statutory accounts once they are complete. The
statutory accounts will be delivered to the Registrar of Companies
following the Company's Annual General Meeting which will be held
on 21February 2018.
For further information please contact:
Keith Ritchie, Chairman Phone: +44 (0)1206 713821
Page 15
Titon Holdings PLC
Registered Office: 894 The Crescent, Colchester Business Park,
Colchester, Essex CO4 9YQ. Registered in England and Wales
(registered no. 1604952).
This information is provided by RNS
The company news service from the London Stock Exchange
END
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