TIDMTON
RNS Number : 1837L
Titon Holdings PLC
12 May 2022
12 May 2022
LEI: 213800ZHXS8G27RM1DD7
Titon Holdings Plc
Unaudited Interim Results for the six months to 31 March
2022
Titon Holdings Plc ("Titon", the "Group" or the "Company"), a
leading international manufacturer and supplier of ventilation
systems and window and door hardware, today announces its unaudited
interim results for the six months ended 31 March 2022 ("H1
2022").
Financial Results
Six months Six months % Change
ended 31 March ended 31 March
2022 2021
Net revenue GBP11.48m GBP11.68m -1.7%
EBITDA GBP0.28m GBP1.13m -75.2%
(Loss)/Profit before GBP(0.25)m GBP0.55m n/a
tax
Basic (loss)/ earnings
per share (1.46)p 4.29p n/a
Interim dividend per
share 1.5p 1.5p 0%
Period-end cash balance GBP3.73m GBP4.63m -19.4%
Financial highlights
-- Group net revenue fell by 1.7% as a result of weaker trading
conditions in Korea and reduced European sales, offset by pleasing
growth in UK revenues
-- EBITDA decreased to GBP0.28 million (H1 2021: GBP1.13m),
reflecting the fall in revenues as well as lower gross margins (28%
in H1 2022 against 31.9% in H1 2021) driven by industry-wide input
and overhead cost inflation, and component sourcing challenges and
some restructuring expenses
o Price increases were implemented in the period to seek to
recover cost increases, with further price increases expected in
the second half of the financial year
-- Loss before tax of GBP0.25m (H1 2021: profit of GBP0.55m)
after depreciation and amortisation charges of GBP0.49m (H1 2021:
GBP0.51m)
-- Cash balance of GBP3.73m at the end of the period (H1 2021:
GBP4.63m) after the payment of dividends to Titon shareholders, as
well as the resumption of capital expenditure following the
COVID-19 pandemic and a decision to build inventory levels and put
in place long-term orders with suppliers to mitigate against supply
shortages
-- Interim dividend of 1.5p per share approved by the Board to
be paid on 1 July 2022 reflecting the continued strength of the
Group's balance sheet
Operational highlights
-- UK Ventilation Systems sales rose by 13% against H1 2021,
driven by sales of the Titon FireSafe(R) Air Brick range. UK Window
and Door Hardware sales rose by 8%
-- European sales fell by 33%, principally reflecting certain
mechanical ventilation component shortages and a temporary pause in
sales to one customer whilst amounts due to the Group were
outstanding; sales to this customer have resumed
-- Trading conditions in South Korea remained challenging due to
a weak housing market and the movement to mechanical ventilation
products, which our colleagues in South Korea are addressing
-- Strategic investments have been made in the period to support
the growth of our higher margin Mechanical Ventilation Systems
division, in technology to support our European business, and in
our ERP system which has gone live in May and which will increase
automation and efficiencies
-- Strengthened management team and Board through the
appointments of Alexandra French as CEO and Paul Hooper and Jeff
Ward as independent Non-Executive Directors
Outlook
-- Whilst we are optimistic that the supply chain challenges
will start to ease in the second half of the financial year, H2
2022 trading to date has remained subdued due to the shortages of
components and we expect these conditions to continue in the
immediate term
-- After a reasonable start to 2022, the Bank of England is now
forecasting a slowdown in economic growth, with Q4 2022 and Q1 2023
showing negative GDP growth. The Construction Products Association
now forecasts that private housebuilding output will only be 1%
higher in 2022 and 2023 with falls in RM&I of 3% in 2022 and 4%
in 2023 in the UK. Uncertainty remains, both in the UK and Europe,
about the level of economic activity and the impact this may have
on consumer spending, given inflationary pressures and the sharp
increases in energy prices
-- Despite the economic headwinds, with the changes to the UK
Building Regulations designed to improve indoor ventilation coming
into force in June 2022, the Group's broad product spread and
market position, together with its strong balance sheet, gives the
Board confidence in the medium-term prospects of the Group
Executive Chairman Keith Ritchie said: "We are disappointed with
the trading performance of the Group over the six months period to
31 March 2022, which, despite good levels of sales in the UK has
resulted in a loss for the period. We continue to be impacted by
the constraints in supply of raw materials and components but are
hopeful that some of these supply chain pressures will reduce in
H2.
We have invested in our products and people during the period
and will continue to do so as we seek to change and improve the
business. We have followed Government guidelines for safe working
and, whilst we have experienced some additional employee absence as
a result of Covid-19, this has not had a significant impact on our
business in the UK.
Despite the economic headwinds expected we take comfort from the
strength of our balance sheet, the cash resources that we have, the
range of products that we manufacture and sell and markets in which
we trade. The Group is well capitalised with a strong balance sheet
and no debt. We remain confident in the medium-term prospects of
the business."
For further information please contact
Titon Holdings Plc
Keith Ritchie +44 (0) 7748 146834
Shore Capital - Nominated Adviser and Broker
Daniel Bush +44 (0)20 7408 4090
Tom Knibbs
Titon Holdings PLC
Interim results for the six months to 31 March 2022
Chairman's statement
I am disappointed to report that trading conditions have been
difficult for us during the six months to 31 March 2022. As we
indicated in the trading update on 22 February 2022, whilst the
year started as we expected and revenues in the first four months
of the year were slightly higher than the six months to 31 March
2021, the shortages we have experienced of materials and
components, and the cost increases for materials, components,
labour and energy necessitated us to revise our expectations for
the current financial year. Whilst supply shortages and input cost
increases have persisted, we are optimistic that we will see some
easing of some of the supply chain issues in the second half of the
current financial year.
Despite these inflationary challenges, we have continued to
carry on with key investments for our future. We have invested in
strategic overhead to support growth of our higher margin
Mechanical Ventilation Systems area of the business. We have
continued to invest in our product software that will support
qualified leads to grow our business in Europe. We have also
executed select investments in additional talent within Finance,
Supply Chain and HR. Our new ERP system implementation went live in
May.
We have spent much of the last two years considering Covid-19
and the effect this has had on the economy and our own business. I
am pleased to report that the impact of Covid-19 on our UK and
European business and the wider construction industry generally in
these areas has been greatly reduced and we have returned to normal
pre-pandemic operations throughout the period. We have continued to
follow Government guidelines for safe working and, whilst we have
experienced some additional employee absence as a result of
Covid-19, this has not had a significant impact on our business in
the UK. All of our office-based employees have now returned to the
office on a flexible working basis.
Income Statement
In the six months to 31 March 2022, Titon's net revenue (which
excludes inter-segment activity) decreased by 1.7% to GBP11.5
million (2021: GBP11.7 million). All UK businesses saw an increase
in sales over the period but sales of Ventilation Systems products
to Europe fell as we suffered from shortages of components for
mechanical products. Sales in Titon Korea, our 51% owned subsidiary
fell by 27% reflecting the on-going difficult trading conditions
and market dynamics in South Korea.
Gross margin fell to 28.0% (2021: 31.9%) due to higher raw
material, labour and overhead costs in the UK and Europe and the
lower contributions from Titon Korea. EBITDA was 75% lower at
GBP0.28 million (2021: GBP1.13 million), whilst we made an
operating loss of GBP0.21 million (2021 profit: GBP0.62 million).
The results from the Group's associate, Browntech Sales Co. Ltd
(BTS) in South Korea, amounted to a loss of GBP29,000 (2021 loss:
GBP59,000) as a result of the continuing weak housing market in
Korea and the Korean market shift towards mechanical ventilation.
In aggregate, the Group made a loss before tax of GBP0.25 million
(2021 profit: GBP0.55 million).
The Group's earnings per share for the period was a loss of 1.46
pence (2021: profit of 4.29 pence) with the total loss of GBP0.22m
(2021 profit: GBP0.48m) and an apportionment to minority
shareholders of a loss of GBP47,000 (2021: profit of GBP2,000)
which reflected the weaker trading incurred by the Group's 51%
owned subsidiary, Titon Korea.
Whilst trading conditions were more challenging than originally
anticipated, the Group continues to maintain a strong balance sheet
and cash position and the Board has therefore approved the payment
of an interim dividend in respect of the 6 months ending 31 March
2022 of 1.5 pence per share (2021: 1.5 pence per share). The
interim dividend is payable on 1 July 2022 to shareholders on the
register at 27 May 2022. The ex-dividend date is 26 May 2022.
Balance sheet and cash flow
Net assets including non-controlling interests fell by 1.3% or
GBP0.2 million to GBP16.3 million (31 March 2021: GBP16.5 million)
with net cash of GBP3.7 million (31 March 2021: GBP4.6 million)
which is equivalent to 23.0% of net assets (31 March 2021: 28.0%).
The Group had no financial indebtedness at 31 March 2022, other
than lease liabilities. The cash held by Titon Korea reduced to
GBP0.1 million at 31 March 2022 (31 March 2021: GBP0.3
million).
The half year saw cash used in operations of GBP0.29 million
(2021: used GBP0.13 million), primarily due to increasing our
inventory to allow for component shortages - this has also required
an increase in amounts paid in advance of receipt of goods. Capital
expenditure in the period was GBP0.38 million (2021: GBP0.19
million) as we resume investing in plant and machinery and our new
ERP system. Net current assets were GBP8.7 million at 31 March 2022
(2021: GBP9.2 million) with a Quick Ratio(1) of 1.97 (2021: 2.19).
Asset Turn was 1.97 (2021: 2.11).
Segmental and operational review
We previously identified the shortages of certain materials and
components and continuing cost increases for these items, as well
as labour and energy cost inflation, were the biggest challenges in
H1 2022 and these risks have certainly impacted us to date this
year. Although our top-line sales revenue in the period is only
marginally below 2020/21 the mix of products sold has meant that
margins have reduced. Revenues in South Korea have continued to
fall but sales in Titon Inc. have remained at the same level as
last year.
Gross margins have fallen by 3.9% compared to the same period
last year. The reduction in gross margin and an increase in
overheads has meant that our operating result is a loss of GBP0.25m
versus an operating profit of GBP0.62m in 2021. The increase in
overheads is mainly due to the expansion in our headcount to drive
growth in our higher gross margin Mechanical Ventilation Systems
area of the business and to increase the strength in teams such as
Finance, HR and Research & Development, all areas of the
business that required investment.
UK and Continental Europe
As noted above, revenues in the UK and Europe have increased
slightly against the prior period, rising by 3.7%. Sales in UK
Window and Door Hardware have risen by 8% due to increased demand
for trickle vents and aluminium products. As noted in the 2021
Annual Report, our distributor relationship with Sobinco has now
terminated but we did see an increase in sales as our aluminium
customers ordered higher quantities of products before the change
in their supply chain. Gross profit margins have fallen in the
period for sales of both Titon manufactured products and bought-in
products as we have suffered from raw material and labour cost
increases.
In our Ventilation Systems division sales in the UK have risen
by 13% against the same period last year as sales of the Titon
FireSafe(R) Air Brick range continued to grow. Within this, sales
of Titon manufactured mechanical products grew by 17% but sales of
ducting bought-in products were 8% down against last year. Sales of
the new Titon Ultimate(R) dMEV extract fan started to increase in
the period as some initial production issues were resolved. We
expect sales of this product to continue to increase in the second
half of the year.
In Europe, sales fell by 33% in the period due to some component
shortages and also due to one particular customer where we
suspended sales to them until amounts owed to the Group were paid.
These have now been settled and sales have resumed. We will ensure
that product availability to our European customers will improve in
the second half of the year. There are also several very
interesting opportunities for our European sales in the next twelve
months and we have spent considerable time and expense in
developing our product software to meet the requirements to
capitalise on these opportunities. Exports of our Window and Door
Hardware products were up slightly in the period.
Our Window and Door Hardware division made a profit in the
period but our Ventilation Systems division made a loss compared to
the six months ended 31 March 2021.
On environmental measures we continue to invest in more energy
efficient plant and vehicles and will update further on this at the
year-end.
South Korea
Revenues from South Korea were weaker than expected in the first
half year. This has been caused by a number of factors, including
on-going Covid-19 related challenges and delays in site
construction projects in that market leading to sales being
deferred,. We have not yet seen any significant sales of mechanical
products in South Korea but marketing is underway and we expect to
see sales start to come through in financial year 2022/23. In terms
of the segmental contribution from South Korea, the two businesses,
Titon Korea and BTS are aggregated. The revenue in the Group's
accounts, which is solely that from Titon Korea (the Group's share
of BTS's profits/losses are accounted for as an associate) was 27%
lower at GBP1.5 million (2021: GBP2.1 million).
The segment contribution, which includes the pre-tax loss of
Titon Korea plus 49% of the post-tax loss of BTS, was a loss of
GBP153,000 (2021 loss: GBP54,000).
United States
Sales in our US business remain a very small portion of the
Group's overall sales and were flat against the same period last
year at GBP292,000 (2021: GBP294,000). Titon Inc. made a small
pre-tax loss in the period, but when we include the associated
Haverhill production profit, the US contribution to Group profit
before tax was positive.
Board
I am very pleased to report that we have now completed the
recruitment process for the vacancies on the Board that have
existed during the period. Paul Hooper and Jeff Ward, our two new
independent Non-executive Directors, have both now started their
appointments and are swiftly gaining an understanding of our
business and the ventilation industry generally. Following Mat
Norris leaving Titon in February 2022, I am delighted to welcome
Alexandra French to the Board as our new CEO. As we announced,
Alexandra brings a wealth of experience from her career with
Johnson Matthey over 25 years and she is now meeting her new
colleagues and developing her understanding of our products and
processes.
The fourth new member of the Board this year is Carolyn Isom,
who was promoted to the Board in December 2021 as the Chief
Financial Officer. Carolyn has done a great job since she joined
Titon in December 2019 and has taken on significant additional
workload and day-to-day responsibilities, for which I am very
grateful.
I look forward to the contributions of all four new Board
members.
Tony Gearey has now left Titon after 36 years and I would like
to thank him for everything he has done for Titon during those
years. John Anderson has now stepped down from the Board and has
accepted the position of president. He will remain involved in
Titon's affairs from this new position.
The period under review has been challenging, and I personally
would like to thank all of my colleagues on the Board for their
hard work and counsel during these difficult times.
Employees
Our employees have continued to show a high level of dedication
to the business. We have followed the Government guidelines and our
own Covid Risk Assessment for safe working in the Haverhill factory
to ensure all our employees are protected as much as possible and
have removed restrictions when we have deemed it safe for our
staff. We brought all of our Colchester based staff back into the
office from February 2022 on a hybrid working basis, which is
working well. Once again, I offer mine and the Board's thanks for
all their efforts.
Investors
Due to the good trading performance of the Group in 2021 we paid
a final dividend for the period ended 30 September 2021 of 3p per
share. Despite the weak trading performance in this period I am
pleased that, due to the strong balance sheet of the Group, we will
pay an interim dividend of 1.5 pence per share for the period.
I was pleased that we were able to hold our AGM in February in
person and it was good to have the opportunity to tour some
shareholders around the factory and demonstrate the various
modernization programmes. We always appreciate their interest in
Titon.
Shore Capital, our Nominated Adviser and Broker has continued
with its research coverage. Following the trading update in
February they issued a research note with the headline "Significant
dividend support despite update". I am pleased that our balance
sheet allows us this protection against short term shocks.
Outlook
Only four months ago Experian forecasted UK GDP to grow by 5.4%
in 2022. The Office for Budget Responsibility forecast a rate of
GDP growth of 3.8% at the time of the March 2022 Budget, as the UK
economy is affected by inflation and especially the rise in energy
costs, and only 1.75% in 2023 and thereafter. It forecasts a
significant reduction in earlier expectations. Experian were
forecasting an increase in total housing output of 6.8% in 2022 and
a further 4.7% in 2023 but this was before the reduction in GDP
growth that is now expected. Given the increases in energy and
other cost increases, and rising interest rates to compensate, the
risks to these forecasts are on the downside. We also have to take
into account the war in Ukraine and the impact that is already
having on consumer confidence and growth prospects as costs
increase. There have also been some very recent forecasts from the
Bank of England that the UK will suffer a recession in 2023 as
economic activity slows due to the inflationary pressures.
We have yet to witness any benefit from the changes to the UK
Building Regulations for ventilation, as the effective date for
implementation is 15 June 2022. The new regulations generally
require increased rates of ventilation in new build properties and
the inclusion of trickle vents in most replacement windows, which
was not required under the old regulations. We have certainly seen
greater interest in trickle vents from our window fabricator
customers and we are anticipating an increase in our production of
vents and canopies to reflect the higher demand from the RM&I
market. For mechanical products in new builds we do expect to see
an increase as the volume housebuilders are required to build more
tightly, which forces them away from natural ventilation. We do not
expect to see this change make any difference to sales of
mechanical products in this financial period, but rather over the
medium term. Of course, the need for good indoor air quality has
been reinforced by the Covid-19 pandemic and we continue to promote
this, particularly as the Government emphasises the "Fabric First"
policy to reduce energy usage as part of its Net Zero policies.
In South Korea we do not expect a significant rebound in
profitability until the transition from natural ventilation
products to mechanical products takes effect over the next few
financial years.
Current trading
We continue to be impacted by component shortages for our
Ventilation Systems division and this has led to longer delivery
times for customers. We have made strenuous efforts to improve this
position and are hopeful that the supply chain will improve in the
second half. As a consequence of the component shortages we have
ensured that we now have long term orders in place with our
suppliers until the end of 2023. We will continue to keep all of
our supply chains under close scrutiny for the foreseeable
future.
Consistent with the sector more generally, cost increases have
been imposed by our suppliers as the general level of inflation
increases. We have increased our prices during the first half and
will do so again in the second half as conditions dictate. We are
in competitive markets and cannot rely on pricing alone to regain
profitability so we will also focus closely on our ways of working
and manufacturing and production planning efficiencies. We have
made a number of new hires in manufacturing recently and expect to
see the benefits of this being reflected in the second half and in
2023. We are excited by the appointment of Alexandra French as our
new CEO and expect her and the senior team to make improvements to
our business in all areas.
I am pleased to say that we have now implemented a new internal
ERP system for the UK and European operations and this will allow
greater automation of production and sales processes and better
management information for the business in the future.
We expect that material shortages and cost increases will
continue in the second half and this will impact our profitability.
However, we are optimistic that we will see some easing to the
supply chain constraints as the second half of the current
financial year progresses. Despite these challenges we continue to
have a strong balance sheet, very talented employees and a good
range of products in both our divisions that give us confidence in
our medium-term future.
Principal risk and uncertainties
The key financial and non-financial risks faced by the Group are
disclosed in the Group's Annual Report and Accounts for the year
ended 30 September 2021 within the Strategic Report (page 6)
available at www.titon.com . Assessments of exposure to financial
and other risks are always difficult given the uncertainties about
the inflationary risks in the UK economy, especially the rise in
energy costs, which will impact many people and the effects of the
Ukraine war. The impact of Covid-19 has significantly reduced as a
risk since last year. The Board has considered the potential impact
of these matters on the Group's specific circumstances, including
current and potential cash resources together with the diverse
range of customers and suppliers, across different geographic areas
and markets. As a consequence, the Directors continue to believe
that the Group is well placed to manage business risks
successfully.
The Directors have reviewed the budgets, projected cash flows,
principal risks and other relevant information for a period of 12
months from the period end date. On the basis of this review the
Directors have a reasonable expectation that the Group and Company
have adequate resources to continue in operational existence for a
period of at least twelve months and beyond. For this reason, the
Directors believe it is appropriate to continue to adopt the going
concern basis in preparing the financial statements.
A list of current directors is maintained on the Group's website
www.titon.com.
On behalf of the Board
KA Ritchie
Chairman
11 May 2022
Notes
1. The Quick Ratio measures liquidity and is calculated by
dividing Current Assets less inventories by Current Liabilities
Titon Holdings Plc
Consolidated Interim Income Statement
for the six months ended 31 March 2022
6 months 6 months Year to
to 31.3.22 to 31.3.21 30.9.21
unaudited unaudited audited
Note GBP'000 GBP'000 GBP'000
Revenue 2 11,478 11,684 23,412
Cost of sales (8,261) (7,973) (16,070)
Grant Income - 13 8
Gross profit 3,217 3,724 7,350
Distribution costs (612) (575) (1,144)
Administrative expenses (2,504) (2,280) (4,521)
Research and development expenses (330) (256) (582)
Other income 15 4 16
---------------------------------------- ---- ------------------ ---------- --------
Operating (loss) / profit (214) 617 1,119
Finance costs (7) (9) (16)
Share of post-tax (loss) from
associates (29) (59) (28)
---------------------------------------- ---- ------------------ ---------- --------
(Loss) / profit before tax (250) 549 1,075
Income tax credit / (expense) 3 37 (71) (72)
(Loss) / profit after income
tax (213) 478 1,003
---------------------------------------- ---- ------------------ ---------- --------
Attributable to:
Equity holders of the parent (166) 476 1,028
Non-controlling interest (47) 2 (25)
---------------------------------------- ---- ------------------ ---------- --------
(Loss) / profit for the period (213) 478 1,003
---------------------------------------- ---- ------------------ ---------- --------
Earnings per share attributed to equity
holders of the parent:
Basic 5 (1.46p) 4.29p 9.24p
Diluted 5 (1.44p) 4.26p 9.18p
Consolidated Interim Statement of Comprehensive Income
for the six months ended 31 March 2022
6 months 6 months Year to
to 31.3.22 to 31.3.21 30.9.21
unaudited unaudited Audited
GBP'000 GBP'000 GBP'000
(Loss) / profit for the period (213) 478 1,003
Other comprehensive income - items
which may be reclassified to profit
or loss in subsequent periods:
Exchange difference on re-translation
of net assets of overseas operations 27 (195) (284)
--------------------------------------- ---------- ---------- -------
Total comprehensive income / (expense)
for the period (186) 283 719
Attributable to :
Equity holders of the parent (142) 330 793
Non-controlling interest (44) (47) (74)
(186) 283 719
--------------------------------------- ---------- ---------- -------
Titon Holdings Plc
Consolidated Interim Statement of Financial Position
at 31 March 2022
31.3.22 31.03.21 30.09.21
unaudited unaudited audited
GBP'000 GBP'000 GBP'000
Assets
Property, plant and equipment 3,445 3,244 3,476
Right-of-use assets 613 619 546
Intangible assets 925 808 925
Investments in associates 2,668 2,739 2,681
Deferred tax assets 308 284 278
--------- --------- --------
Total non-current assets 7,959 7,694 7,906
--------- --------- --------
Inventories 5,320 4,278 5,042
Trade and other receivables 3,896 4,453 4,224
Cash and cash equivalents 3,728 4,633 4,794
--------- --------- --------
Total current assets 12,944 13,364 14,060
Total Assets 20,903 21,058 21,966
------------------------------- --------- --------- --------
Liabilities
Lease liabilities 430 379 402
--------- --------- --------
Total non-current liabilities 430 379 402
--------- --------- --------
Trade and other payables 3,937 3,889 4,554
Lease liabilities 229 258 193
Total current liabilities 4,166 4,147 4,747
Total Liabilities 4,596 4,526 5,149
------------------------------- --------- --------- --------
Equity
Share capital 1,119 1,119 1,119
Share premium reserve 1,077 1,077 1,077
Capital redemption reserve 56 56 56
Treasury shares (27) (27) (27)
Foreign exchange reserve 120 180 96
Retained earnings 13,603 13,697 14,093
------------------------------- --------- --------- --------
Total Equity attributable
to the equity holders
of the parent 15,948 16,102 16,414
Non-controlling Interest 359 430 403
Total Equity 16,307 16,532 16,817
Total Liabilities and
Equity 20,903 21,058 21,966
------------------------------- --------- --------- --------
Titon Holdings Plc
Consolidated Interim Statement of Changes in Equity
at 31 March 2022
Share Share Capital Foreign Treasury Retained Total Non- Total
capital premium redemption exchange Shares earnings controlling Equity
reserve reserve reserve interest
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------- --------- --------- ----------- --------- --------- ---------- -------- ------------ --------
At 30
September
2020 1,113 1,049 56 327 (27) 13,425 15,943 868 16,811
--------------- --------- --------- ----------- --------- --------- ---------- -------- ------------ --------
Translation
differences
on overseas
operations - - - (147) - - (147) (49) (196)
Profit for the
period - - - - - 476 476 2 478
--------------- --------- --------- ----------- --------- --------- ---------- -------- ------------ --------
Total
comprehensive
income/(loss)
for the
period - - - (147) - 476 329 (47) 282
--------------- --------- --------- ----------- --------- --------- ---------- -------- ------------ --------
Dividends paid - - - - - (223) (223) - (223)
Dividends paid
to NCI in
subsidiary - - - - - - - (391) (391)
Share-based
payment
credit - - - - - 19 19 - 19
Exercise of
share options 6 28 - - - - 34 - 34
--------------- --------- --------- ----------- --------- --------- ---------- -------- ------------ --------
At 31 March
2021 1,119 1,077 56 180 (27) 13,697 16,102 430 16,532
--------------- --------- --------- ----------- --------- --------- ---------- -------- ------------ --------
Translation
differences
on overseas
operations - - - (84) - (4) (88) - (88)
Profit/(loss)
for the
period - - - - - 552 552 (27) 525
--------------- --------- --------- ----------- --------- --------- ---------- -------- ------------ --------
Total
comprehensive
income/(loss)
for the
period - - - (84) - 548 464 (27) 437
--------------- --------- --------- ----------- --------- --------- ---------- -------- ------------ --------
Dividends paid - - - - - (167) (167) - (167)
Share-based
payment
credit - - - - - 15 15 - 15
--------------- --------- --------- ----------- --------- --------- ---------- -------- ------------ --------
At 30
September
2021 1,119 1,077 56 96 (27) 14,093 16,414 403 16,817
--------------- --------- --------- ----------- --------- --------- ---------- -------- ------------ --------
Translation
differences
on overseas
operations - - - 24 - 1 25 3 28
Profit for the
period - - - - - (166) (166) (47) (213)
--------------- --------- --------- ----------- --------- --------- ---------- -------- ------------ --------
Total
comprehensive
Income/(loss)
for the
period - - - 24 - (165) (141) (44) (185)
--------------- --------- --------- ----------- --------- --------- ---------- -------- ------------ --------
Dividends paid - - - - - (335) (335) - (335)
Share-based
payment
credit - - - - - 10 10 - 10
At 31 March
2022 1,119 1,077 56 120 (27) 13,603 15,948 359 16,307
--------------- --------- --------- ----------- --------- --------- ---------- -------- ------------ --------
Titon Holdings Plc
Consolidated Interim Statement of Cash Flow
for the six months ended 31 March 2022
6 months 6 months Year to
to 31.3.22 to 31.3.21 30.09.21
unaudited unaudited Audited
Note GBP'000 GBP'000 GBP'000
Cash generated from operating activities
(Loss) / profit before tax (250) 549 1,075
Depreciation of property, plant &
equipment 279 235 479
Depreciation of right-of-use assets 85 161 164
Amortisation of intangible assets 126 118 240
Profit on sale of plant & equipment 22 - (7)
Share based payment - equity settled 10 19 34
Finance costs 7 17 16
Share of associate's post-tax loss 29 59 28
--------
308 1,158 2,029
(Increase) / decrease in inventories (270) 89 (640)
(Increase) / decrease in receivables 367 (745) (428)
(Decrease) / increase in payables
and other current liabilities (690) (635) 206
----------------------------------------- ---- ---------- ---------- --------
Cash generated (used in) / by operations (285) (133) 1,167
----------------------------------------- ---- ---------- ---------- --------
Income taxes paid - (22) (22)
----------------------------------------- ---- ---------- ---------- --------
Net cash (used in) / generated by
operating activities (285) (155) 1,145
----------------------------------------- ---- ---------- ---------- --------
Cash flows from investing activities
Purchase of plant & equipment (256) (14) (502)
Purchase of intangible assets (126) (173) (412)
Proceeds from sale of plant & equipment 42 - 25
Net cash used in investing activities (340) (187) (889)
----------------------------------------- ---- ---------- ---------- --------
Cash flows from financing activities
Dividends paid to equity shareholders
of the parent 4 (335) (223) (390)
Dividends paid to non-controlling
shareholders of a subsidiary - (391) (391)
Payment of lease liability (109) - (198)
Finance costs (7) (17) (16)
Exercise of Share Options - 34 34
Net cash used in financing activities (451) (597) (961)
----------------------------------------- ---- ---------- ---------- --------
Net decrease in cash (1,076) (894) (705)
Foreign exchange 10 (45) (73)
Cash at beginning of the period 4,794 5,572 5,572
----------------------------------------- ---- ---------- ---------- --------
Cash at end of the period 3,728 4,633 4,794
----------------------------------------- ---- ---------- ---------- --------
Notes to the Condensed Consolidated Interim Statements
at 31 March 2022
1 Accounting policies
a ) General information
Titon Holdings Plc (the 'Company') is incorporated and domiciled
in England and its shares are publicly traded on AIM. The
registered office address is 894 The Crescent, Colchester Business
Park, Colchester, Essex, CO4 9YQ. The company's registered number
is 1604952. The principal activities of the Group are as described
in Note 2.
The Board considers the principal risks and uncertainties
relating to the Group for the next six months to be the same as
detailed in the last Annual Report and Financial Statements to 30
September 2021. The Group's financial risk management objectives
and policies are consistent with those disclosed in the
consolidated financial statements as at and for the year ended 30
September 2021.
b) Basis of preparation
These condensed consolidated interim financial statements of the
Group for the six months ended 31 March 2022 comprise the Company
and its subsidiaries (together referred to as the 'Group').
The condensed consolidated interim financial statements have
been prepared in accordance with the AIM rules. Neither the six
months results for 2022 nor the six months results for 2021 have
been audited nor reviewed pursuant to guidance issued by the
Auditing Practices Board. This condensed Interim Group financial
Statements do not comprise statutory accounts within the meaning of
Section 435 of the Companies Act 2006. The comparative figures for
the year ended 30 September 2021 do not constitute statutory
accounts within the meaning of Section 435 of the Companies Act
2006, but they have been derived from the audited Report and
Accounts for that year, which have been filed with the Registrar of
Companies. The independent auditor's report on those accounts was
unqualified, did not draw attention to any matters by way of
emphasis and did not contain a statement under Section 498(2) or
(3) of the Companies Act 2006.
This report should be read in conjunction with the Group's
Annual Report and Accounts for the year ended 30 September 2021,
which have been prepared in accordance with International Financial
Reporting Standards and International Accounting Standards as
issued by the International Accounting Standards Board (IASB) and
Interpretations (collectively IFRSs) as adopted by the UK in
conformity with the requirements of the Companies Act 2006.
These unaudited interim Group Financial Statements were approved
for issue on 11 May 2022. Copies will be sent to shareholders
within the next few weeks and will be available on the Group's
website at www.titon.com/uk/investors/ and from the Company's
registered office at 894 The Crescent, Colchester Business Park,
Colchester, Essex CO4 9YQ.
c) Accounting policies
These condensed consolidated interim financial statements have
been prepared in accordance with the recognition and measurement
requirements of the UK adopted international accounting
standards.
In preparing these condensed consolidated interim financial
statements the Board have considered the impact of new standards
which will be applied in the 2022 Annual Report and Accounts.
There are not expected to be any changes in the accounting
policies compared to those applied at 30 September 2021.
A full description of accounting policies is contained with our
2021 Annual Report and Financial Statements, which is available on
our website.
New accounting standards
The Group does not expect any other standards issued by the
IASB, but not yet effective, to have a material impact on the
Group.
2 Revenue and segmental information
In identifying its operating segments, management generally
follows the Group's reporting lines, which represent the main
geographic markets in which the Group operates. The segment
reporting below is shown in a manner consistent with the internal
reporting provided to the Board, which is the Chief Operating
Decision Maker (CODM). These operating segments are monitored and
strategic decisions are made on the basis of segment operating
results. The Group operates in four main business segments which
are:
Segment Activities undertaken include:
United Kingdom Sales of passive and powered ventilation products
to housebuilders, electrical contractors and
window and door manufacturers. In addition to
this, it is a leading supplier of window and
door hardware
South Korea Sales of passive ventilation products to construction
companies
North America Sales of passive ventilation products to window
and door manufacturers
All other 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. 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 Total
Kingdom Korea America countries
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
6 months ended 31 March
2022
Segment revenue 8,655 1,501 290 1,181 11,627
Inter-segment revenue (149) - - - (149)
------------------------------------- --------- -------- --------- ----------- --------
Total Revenue 8,506 1,501 290 1,181 11,478
------------------------------------- --------- -------- --------- ----------- --------
Segment (loss) / profit 87 (153) (18) (166) (250)
Income tax credit 37
------------------------------------- --------- -------- --------- ----------- --------
Profit for the period (213)
------------------------------------- --------- -------- --------- ----------- --------
Depreciation and amortisation 366 39 - - 405
------------------------------------- --------- -------- --------- ----------- --------
Depreciation of Right-of-use-assets 62 23 - - 85
------------------------------------- --------- -------- --------- ----------- --------
Total assets 16,270 4,399 234 - 20,903
------------------------------------- --------- -------- --------- ----------- --------
Total assets include:
Investments in associates 2,668
Additions to non-current
assets (other than financial
instruments and deferred
tax assets) 367 15 - - 382
------------------------------------- --------- -------- --------- ----------- --------
The South Korean Segment profit includes the Group's share of
the post-tax loss from the Group's associate undertaking, Browntech
Sales Co. Ltd. Sales to Browntech Sales Co. Ltd. of GBP1.50 million
represent 13% of Group Revenue. There are no other concentrations
of revenue above 10% during the year (see Note 6 - Related party
transactions).
IFRS 8 requires entity-wide disclosures to be made about the
regions in which it earns its revenues and holds its non-current
assets which are shown below.
United Europe USA and Asia All other Total
Kingdom Canada regions
Revenues GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
by entities' country of
domicile 9,687 - 290 1,501 - 11,478
by country from which
derived 8,506 1,152 290 1,501 29 11,478
------------------------- --------- -------- -------- -------- ---------- --------
Non-current assets
By entities' country of
domicile 5,081 - 33 2,845 - 7,959
------------------------- --------- -------- -------- -------- ---------- --------
Operating segment United South North All other Total
Kingdom Korea America countries
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
6 months ended 31 March
2021
Segment revenue 7,910 2,051 294 1,598 11,853
Inter-segment revenue (169) - - - (169)
------------------------------------- --------- -------- --------- ----------- --------
Total Revenue 7,741 2,051 294 1,598 11,684
------------------------------------- --------- -------- --------- ----------- --------
Segment (loss) / profit 517 (54) 22 64 549
Income tax expense (71)
------------------------------------- --------- -------- --------- ----------- --------
Profit for the period 478
------------------------------------- --------- -------- --------- ----------- --------
Depreciation and amortisation 336 17 - - 353
------------------------------------- --------- -------- --------- ----------- --------
Depreciation of right-of-use-assets 68 93 - - 161
------------------------------------- --------- -------- --------- ----------- --------
Total assets 16,168 4,705 185 21,058
------------------------------------- --------- -------- --------- ----------- --------
Total assets include:
Investments in associates 2,739 - - - 2,739
Additions to non-current
assets (other than financial
instruments and deferred
tax assets) 181 6 - - 187
------------------------------------- --------- -------- --------- ----------- --------
The South Korean Segment profit includes the Group's share of
the post-tax profit from the Group's associate undertaking,
Browntech Sales Co. Ltd. Sales to Browntech Sales Co. Ltd. of
GBP2.05 million represent 25% of Group Revenue. There are no other
concentrations of revenue above 10% during the year (see Note 6 -
Related party transactions).
IFRS 8 requires entity-wide disclosures to be made about the
regions in which it earns its revenues and holds its non-current
assets which are shown below.
6 months ended 31 March United Europe USA and Asia All other Total
2021 Kingdom Canada regions
Revenues GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
by entities' country of
domicile 9,339 - 294 2,051 - 11,684
by country from which
derived 7,741 1,565 294 2,051 33 11,684
------------------------- --------- -------- -------- -------- ---------- --------
Non-current assets
By entities' country of
domicile 4,628 - 43 3,023 - 7,694
------------------------- --------- -------- -------- -------- ---------- --------
For the year ended United South North All other
30 September 2021 Kingdom Korea America countries Consolidated
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Segment revenue 16,368 3,578 629 3,150 23,725
Inter-segment revenue (313) - - - (313)
------------------------------ -------- ------- -------- ---------- ------------------------------
Total Revenue 16,055 3,578 629 3,150 23,412
------------------------------ -------- ------- -------- ---------- ------------------------------
Segment profit 1,026 (41) 52 38 1,075
Tax expense (72)
------------------------------ -------- ------- -------- ---------- ------------------------------
Profit for the year 1,003
------------------------------ -------- ------- -------- ---------- ------------------------------
Depreciation and amortisation 809 74 - - 883
------------------------------ -------- ------- -------- ---------- ------------------------------
Total assets 17,181 4,592 193 - 21,966
------------------------------ -------- ------- -------- ---------- ------------------------------
Total assets include:
Investments in associates 2,681 - - - 2,681
Additions to non-current
assets
(other than financial
instruments
and deferred tax
assets) 893 21 - - 914
------------------------------ -------- ------- -------- ---------- ------------------------------
The South Korea Segment loss includes the Group's share of the
post-tax loss from Browntech Sales Co. Ltd., (BTS), the Group's
associate undertaking in South Korea, of GBP28,000. Sales to BTS of
GBP3.58m represented 15% of Group Revenue (2020: GBP4.92m - 24%).
There are no other concentrations of revenue above 10% during the
year (see Note 6 - Related party transactions).
IFRS 8 requires entity wide disclosures to be made about the
regions in which it earns its revenues and holds its non-current
assets which are shown below.
For the year ended United Europe USA and South All other Total
30 September 2021 Kingdom Canada Korea regions
Revenues GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
By entities' country
of domicile 19,205 - 629 3,578 - 23,412
By country from which
derived 16,055 3,088 629 3,578 62 23,412
---------------------- -------- ------- ------- ------- --------- -------
Non-current assets
By entities' country
of domicile 4,996 - 32 2,878 - 7,906
---------------------- -------- ------- ------- ------- --------- -------
3 Taxation
6 months 6 months Year to
to 31.3.22 to 31.3.21 30.9.21
Current income tax: GBP'000 GBP'000 GBP'000
Corporation tax expense - (22) (22)
Adjustment in respect of prior years - - -
---------- ---------- -------
- (22) (22)
---------- ---------- -------
Deferred tax:
Origination and reversal of temporary
differences 37 (49) (50)
Income tax (expense) / credit 37 (71) (72)
-------------------------------------- ---------- ---------- -------
Taxation for the interim period is credited at 11.2% (six months
to 31 March 2021: charged at 12.9%) representing the best estimate
of the average annual income tax rate for the full financial
year.
4 Dividends
The following dividends have been recognised and paid by the
Company:
6 months 6 months Year
to
to 31.3.22 to 31.3.21 30.9.21
Date Pence
Paid per GBP'000 GBP'000 GBP'000
share
Final 2020 dividend 12.03.21 2.00 - 223 -
Interim 2021 dividend 25.06.21 1.50 - 167
Final 2021 dividend 04.03.22 3.00 334 - -
---------- ---------- ---------
334 223 167
---------- ---------- ---------
5 Earnings per ordinary share
Basic earnings per share has been calculated by dividing the
profits or losses attributable to shareholders of Titon Holdings
Plc by the weighted average number of ordinary shares in issue
during the period, being 11,143,750 (six months ended 31 March
2021: 11,105,179; year ended 30 September 2021: 11,124,517).
Diluted earnings per share (EPS) is calculated by dividing the
profits or losses attributable to shareholders by the weighted
average number of ordinary shares and potential dilutive ordinary
shares during the period, being 11,219,391 at 31 March 2022, except
that at this date, when the inclusion of potential ordinary shares
(POSs) in the calculation would increase the EPS, or decrease the
loss per share, from continuing operations, then these POSs are
anti-dilutive and are ignored in diluted EPS. Potential dilutive
ordinary shares at: six months ended 31 March 2021: 11,168,179 and
year ended 30 September 2021: 11,199,127.
6 Related party transactions
Transactions between the Company and its subsidiaries, which are
related parties, have been eliminated on consolidation and are not
disclosed in this note. Transactions between subsidiary companies
and the associate company, which is a related party, were as
follows:
Sale of goods Amount owed by related
party
6 months 6 months Year 6 months 6 months Year
to 31.3.22 to 31.3.21 to to 31.3.22 to 31.3.21 to
to 30.9.21 to 30.9.21
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Browntech Sales
Co. Ltd 1,501 2,051 3,577 155 - 310
------------ ------------ ------------ ------------ ------------ ------------
There have been no additional significant or unusual related
party transactions to those disclosed in the Group's Annual Report
for 30 September 2021.
7 Liability statement
Neither the Group nor the Directors accept any liability to any
person in relation to the interim statement except to the extent
that such liability could arise under English Law. Accordingly, any
liability to a person who has demonstrated reliance on any untrue
or misleading statement or omission shall be determined in
accordance with section 90A of the Financial Services and Markets
Act 2000.
Directors and Advisers
Directors
Executive
KA Ritchie (Chairman)
C V Isom (appointed 22 December 2021)
M Norris (resigned 9 February 2022)
T N Anderson (Deputy Chairman)
T D Gearey (resigned 6 April 2022)
A C French (Chief Executive) (appointed 3 May 2022)
Non-executive
J N Anderson (resigned 1 April 2022)
N C Howlett
J Ward (appointed 1 April 2022)
GP Hooper (appointed 1 April 2022)
Secretary and registered office
CV Isom
894 The Crescent
Colchester Business Park
Colchester
Essex
CO4 9YQ
COMPANY REGISTRATION NUMBER
1604952 (Registered in England & Wales)
WEBSITE
www.titon.com/uk/investors
auditor
BDO LLP
55 Baker Street
London
W1U 7EU
NOMINATED ADVISER
Shore Capital and Corporate Ltd
Cassini House
57-58 St. James's Street
London
SW1A 1LD
BROKER
Shore Capital Stockbrokers Ltd
Cassini House
57-58 St. James's Street
London
SW1A 1LD
REGISTRARS AND TRANSFER OFFICE
Link Market Services Ltd
10(th) Floor
Central Square
29 Wellington Street
Leeds
LS1 4DL
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