Source - LSE Regulatory
RNS Number : 3358V
Titon Holdings PLC
12 December 2013
 



Titon Holdings Plc

Preliminary Announcement for the year ended 30 September 2013

 

Chairman's Statement

 

Financial Performance

The result for the year to 30 September 2013 is a net Profit before Taxation of £505,000 (2012: Loss of £984,000), on Revenues 8.3 % higher at £15.7 million (2012: £14.5 million). The Profit after Taxation is £476,000 (2012: £737,000 Loss) resulting in Earnings per Share of 2.87p (2012: Loss per Share of 6.83p).

 

Net cash balances at the year end were £2.12 million (2012: £1.81 million) and total capital expenditure during the year was £408,000 (2012: £632,000).

 

The Directors are proposing a final dividend of 1.0p per share (2012: 0.5p). This, when added to the interim dividend paid on 24 June 2013 gives a total for the year of 2.0p (2012: 1.5p).  If approved by shareholders at the forthcoming Annual General Meeting, the dividend will be payable on 21 February 2014 to shareholders on the register on 24 January 2014.  The ex dividend date is 22 January 2014.

 

Trading Commentary

 

I am very pleased that the Group Profit before Tax of £505,000 has improved so significantly from the loss last year of £984,000. The overriding objective of the Directors has been to restore your Company to profitability and the results have reflected this. As I mentioned in our 2013 Interim Statement the improvement in our first half trading position was largely due to two factors: the improved return from our Korean operations and the cash settlement that we received from Nuaire Limited. In the second half we have continued to see good returns from Korea whilst the UK trading position has also improved.

 

The state of the UK economy clearly has a major role to play in our fortunes as our revenue is largely UK centric. In the UK we are principally interested in the replacement doors and windows market and the house building part of the construction sector. In the replacement doors and windows market the first half of the financial year saw activity levels fall by about 4% versus the same period last year, but during our third quarter replacements increased by 8.5% and by 9.5% in our fourth quarter. These industry statistics, published by FENSA, do reveal that there has been some improvement in consumer spending on such big ticket items as windows and doors, albeit that these growth numbers are the first evidenced since before the banking crash in 2008. We have not seen any evidence that the Government's Green Deal policy has led to this increased demand for new windows and doors, which is a disappointment after all the initial hype.

 

In the house building sector we have recently seen some strong growth statistics from the major house builders as consumer demand has increased. However, our sales are more aligned to the social housing sector where local authorities and housing associations tend to specify mechanical ventilation with heat recovery ("MVHR") in far greater volumes than in the private sector. In the social housing sector the National House Building Council published statistics showing the number of housing registrations by builders before they start on site for each quarter over the last 7 years. 

 

                                                                                          Page 1

 

Titon Holdings Plc

Preliminary Announcement for the year ended 30 September 2013

 

Chairman's Statement (continued)

 

 

These statistics clearly show the peak of social house building in 2011 of over 40,000 and a subsequent fall of 37% in 2012, but they show an increase of 35% from the 2012 financial year to the current year. We have certainly seen this trend reflected in the quarterly results of our business during this financial year. Within the private sector we have seen that some house builders have actually moved away from MVHR at times in the last year as they can achieve an acceptable level of building energy efficiency using alternative technologies. We are also concerned at the recent announcement by the Government that it plans to abolish the Code for Sustainable Homes. This would represent a real blow to the house building industry's efforts to build energy efficient homes. It is clear from the Gross Domestic Product numbers which have been published in 2013 that the British economy has finally started growing again and I welcome that. However, some recent statistics showing the state of household finances reveal a contraction in conditions in the retail sector and a dampening of consumers' appetites for big ticket purchases, which illustrates that the recovery is not guaranteed.

I now turn to the results of our businesses during the period. UK revenues have continued to be slow and have fallen by 5.8% against last year to £10.6m. Both sales of hardware and ventilation systems products have struggled during the year as the continued weakness in the UK economy affected our trading, although we did see a small increase in revenues for the second half year. We will continue to work hard on introducing new products for our UK business and are devoting considerable resources to achieving this. A significant amount of work has been carried out by our Design and Research & Development teams during the year and we hope that these efforts will be rewarded in increased sales in the future. We will continue to develop new products and there are plenty of new ideas that we will be working on in 2014.

The star performer for us has undoubtedly been our business in Korea, which saw an increase in revenues of 91.7% from £1.9m in 2012 to £3.7m in the current period. As I noted in the Interim Statement this result has been due to higher sales to the private house building sector compared to 2012 and this has continued in the second half. We continue to work with our Korean partners to develop new products for them and to support them wherever we can.

Trading profits for our business largely reflect the revenues that are discussed above. Our UK trading business has incurred a loss of £0.42m in the year, which is significantly reduced from last year. The payment from Nuaire Limited has been recorded in the Other Income line in the Income Statement, but it is appropriate for us to regard it as compensation for the losses that the Ventilation Systems business suffered due to the alleged infringement of our intellectual property. If we include that compensation with the trading result then the loss in the UK is reduced to £0.19m for the year. In Korea the return from our subsidiary Titon Korea Limited, when added to our share of profits of our associate Browntech Sales Limited has resulted in a profit before tax of £0.69m in the year versus a loss of £0.09m in the last financial year.

 

                                                                                               Page 2

 

 

 

Titon Holdings Plc

Preliminary Announcement for the year ended 30 September 2013

 

Chairman's Statement (continued)

 

As I have noted above we are delighted with the progress that our partners in Korea have made this year and we are very grateful for all their hard work. Since the year end Browntech Sales Co. Limited has been able to repay its loans from Titon that were advanced during the early stages of our partnership in Korea.

Sales into all other countries have risen by 7% during the period compared to the last financial year. Demand has continued to be sluggish, but sales in Denmark have improved and sales to the US have also risen slightly.

 

Employees

Employee numbers within the Group have risen from 163 at the beginning of the year to 178 at 30 September 2013. The majority of this increase was in our business in Korea, where business has been very strong during the period and the rest of the increase has been in our UK manufacturing operation where we have taken on additional staff to ensure that our customer demands can be satisfied. We have also taken on several apprentices this year under the Government's apprenticeship programme and we very much hope that they have long and rewarding careers with Titon.

It has been another difficult year for all of our employees as they have adjusted to the weak trading conditions experienced in the UK. I would like to thank them for their hard work during the year and I fully recognise that they make a very large contribution to the success of the Company because if our employees don't design, manufacture, sell or service our products then we don't have a business.

 

Prospects

We are encouraged that the UK economy is now growing again after a long period of stagnation and we hope that this will lead to increased consumer confidence. This should feed through into higher sales of our window and door products. However, we will remain cautious about the recovery until we see a continuing pick up in sales of our products. We have anticipated higher demand in the past and have been left with higher overheads when the demand proved to be fickle.

We expect that Korea will have another good year and that our sales will show an increase from this year's performance. We have been working with our Korean partners on some new products, which are now being fitted to show homes. If the Korean economy continues to grow at its current rate, which will help in the level of individual and government indebtedness being kept under control, we anticipate another good return from our investment.

In export markets we will look to specific countries to increase our sales and we now have in place the products and people to increase sales of our mechanical products in world markets.

 

 

  

Page 3

 

 

 

 

Titon Holdings Plc

Preliminary Announcement for the year ended 30 September 2013

 

Chairman's Statement (continued)

 

Titon has consistently had a strong balance sheet with very good asset backing and we do not expect any change to this situation in 2014. We will invest cash in our business to ensure that we can continue to meet customer demands, but when introducing new products there can be delays between having stock in the warehouse and winning new business from our customers.

We are very close to unveiling our new website for internet sales, TitonDirect, which will allow us to sell initially over 300 products from our range to customers online. We anticipate increasing this offering early next year. We have seen that a vast range of items are now being sold online and there is no reason why our products should not also be offered in this way and we will increase our marketing effort in this direction.

In conclusion, we believe that the strength of your Company and the improved economic conditions in the UK should result in another profitable year ahead, but we will remain cautious on these prospects until solid evidence of the UK recovery is reflected in our results.

On behalf of the Board

 

 

K A Ritchie                    

Chairman 

11 December 2013

  

                                                                                   Page 4

 

 

  

 

 

Titon Holdings Plc

Preliminary Announcement for the year ended 30 September 2013

 

Unaudited Consolidated Income Statement

for the year ended 30 September 2013     


Unaudited



2013

2012


£'000

£'000

Revenue

15,740

14,548

Cost of sales

(12,059)

(11,668)

Gross profit

3,681

2,880

Distribution costs

(793)

(665)

Administrative expenses

(2,895)

(3,186)

Other income

237

-

Operating profit / (loss)

230

(971)

Finance income

13

26

Share of profits / (losses) from associate

262

(39)

Profit / (loss) before tax

505

(984)

Income tax (expense) / credit

(29)

247

Profit / (loss) after income tax

476

(737)

Attributable to:



Equity holders of the parent

303

(721)

Non-controlling interest

173

(16)

Profit / (loss) profit for the year

476

(737)

Earnings / (loss) per share - basic

2.87p

(6.83p)

                                               - diluted

2.87p

(6.83p)

 

 

Unaudited Consolidated Statement of Comprehensive Income

for the year ended 30 September 2013


Unaudited


         

2013

2012


£'000

£'000

Profit / (loss) for the year

476

(737)

Exchange difference on retranslation



of net assets of overseas operations

(39)

6

Total comprehensive  income / (expense) for the year

437

(731)

Attributable to:


 

Equity holders of the parent

264

(715)

Non-controlling interest

173

(16)


437

(731)

                                                                                                            

                                                         Page 5

 

 

 

 

 

 

Titon Holdings Plc

Preliminary Announcement for the year ended 30 September 2013

 

Unaudited Consolidated Statement of Financial Position

at 30 September 2013


Unaudited


         

2013

2012


£'000

£'000

Assets



Property, plant and equipment

3,298

3,484

Intangible assets

710

774

Investments in associates

310

48

Total non-current assets

4,318

4,306

Inventories

2,855

2,578

Trade and other receivables

3,309

3,133

Corporation tax

-

75

Cash and cash equivalents

2,151

1,840

Total current assets

8,315

7,626

Total Assets

12,633

11,932

Liabilities



Deferred tax

105

210

Total non-current liabilities

105

 

210

 

Trade and other payables

2,934

2,478

Bank overdraft

35

27

Corporation tax

42

20

Total current liabilities

3,011

2,525

Total Liabilities

3,116

2,735

Equity



Share capital

1,056

1,056

Share premium reserve

865

865

Capital redemption reserve

56

56

Translation reserve

(46)

(7)

Retained earnings

7,282

7,096

Total Equity attributable to equity holders of the parent

9,213

9,066

Non-controlling Interest

304

131

Total Equity

9,517

9,197

Total Liabilities and Equity

12,633

11,932

 

 

   

                                                                              Page 6

                                                                                                      

 

 

 

 

 

                                                                                      

 

Titon Holdings Plc

Preliminary Announcement for the year ended 30 September 2013

 

Unaudited Consolidated Statement of Changes in Equity

at 30 September 2013

 

                                                                                                          


Share

Capital

Share 

premium

 reserve

Capital

redemption

reserve

Trans-

lation

reserve

Retained

earnings

Total

Non-

controlling interest

Total

 equity


£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

At 1 October 2011

1,056

865

56

(13)

8,017

9,981

147

10,128

Translation differences

on overseas operations

-

-

-

6

-

6

-

6

Loss for the year

-

-

-

-

(721)

(721)

(16)

(737)

Total Comprehensive Income for the year

-

-

-

6

(721)

(715)

(16)

(731)

Dividends paid

-

-

-

-

(211)

(211)

-

(211)

Share-based payment expense

-

-

-

-

11

11

 

-

11

At 30 September 2012

1,056

865

56

(7)

7,096

9,066

131

9,197

Translation differences

on overseas operations

-

-

-

(39)

-

(39)

-

(39)

Profit for the year

-

-

-

-

303

303

173

476

Total Comprehensive income  for the year

-

-

-

(39)

303

264

173

437

Dividends paid

-

-

-

-

(158)

(158)

-

(158)

Share-based payment expense

-

-

-

-

41

41

 

-

41

At 30 September 2013

1,056

865

56

(46)

7,282

9,213

304

9,517

 

 

 

 

          Page 7

 

 

 

 

 

 

         

Titon Holdings Plc

Preliminary Announcement for the year ended 30 September 2013

 

Unaudited Consolidated Statement of Cash Flows

for the year ended 30 September 2013

 


Unaudited


         

2013

2012


£'000

£'000

Cash generated from operating activities



Profit / (loss) before tax

505

(984)

Depreciation of property, plant & equipment

462

496

Amortisation on intangible assets

192

117

(Increase) / decrease in inventories

(323)

21

(Increase) / decrease in receivables

(209)

151

Increase / (decrease) in payables and other current liabilities

496

(145)

Profit on sale of plant & equipment

(19)

(11)

Share based payment - equity settled

41

11

Interest received

(13)

(26)

Share of associate's (profit) / loss

(262)

39

Cash generated  from / (used in) operations

870

(331)

Income taxes (paid) / refunded

(37)

74

Net cash generated from / (used in) operating activities

833

(257)

Cash flows from investing activities



Purchase of plant & equipment

(280)

(327)

Purchase of intangible assets

(128)

(305)

Proceeds from sale of plant & equipment

23

40

Interest received

13

26

Net cash used in investing activities

(372)

(566)

Cash flows from financing activities



Dividends paid to equity shareholders

(158)

(211)

Net cash used in financing activities

(158)

(211)




Net increase / (decrease) in cash & cash equivalents

303

(1,034)

Cash & cash equivalents at beginning of the year

1,813

2,847

Cash & cash equivalents at end of the year

2,116

1,813

 

  

Page 8

 

 

 

 

 

Titon Holdings Plc

Notes to the Preliminary Announcement for the year ended 30 September 2013

 

1   Earnings / loss per ordinary share

The calculation of the basic and diluted earnings per share is based on the following data:


2013

2012


£'000

£'000

Numerator



Earnings / (loss) for the purposes of basic earnings per share being



Earnings / (loss) after tax attributable to members of Titon Holdings Plc

303

(721)

Denominator

Number

Number

Weighted average number of ordinary shares for the purposes of basic



Earnings / (losses) per share - at the beginning and end of the year

10,555,650

10,555,650

Earnings / (loss) per share (pence)



Basic

2.87p

(6.83p)

Diluted

2.87p

(6.83p)

 

 

 

 

2   Dividends


2013

2012


£'000

£'000

Final 2012 dividend of 0.5 pence (2011: 1.0 pence) per ordinary

share paid and proposed during the year relating to the

previous year's results

 

 53

106

Interim dividend of 1.0 pence (2012: 1.0 pence) per ordinary

share paid during the year

                    106

105


                    159

211

 

The Directors are proposing a final dividend of 1.0 pence (2012: 0.5 pence) per share. This will result in a final dividend totalling £105,600 (2012: £52,800), 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 2013

 

 

3   Notes supporting the statement of cash flows

The table below provides an analysis of net cash and cash equivalents during the year ended 30 September:


2013

2012

    

£'000

£'000

Cash available on demand  

1,136

1,580

Short-term deposits

1,015

260

Cash at bank

2,151

1,840

Overdraft

(35)

(27)


2,116

1,813

Net increase / (decrease) in cash equivalents

303

(1,034)

Cash and cash equivalents at beginning of year

1,813

2,847

Cash and cash equivalents at end of year

2,116

1,813

 

 

4       Revenue and segmental information

In identifying its operating segments, management generally follows the Group's reporting lines, which represent the main geographic markets in which the Group operates. The segment reporting below is shown in a manner consistent with the internal reporting provided to the Board, which is the Chief Operating Decision Maker (CODM). These operating segments are monitored and strategic decisions are made on the basis of segment operating results.  The Group operates three 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 manufacturers. In addition to this, it is a leading supplier of window hardware to its window-manufacturing customers.

South Korea

Sales of passive ventilation products to construction companies.

All other countries

Sales of passive and powered ventilation products to distributors, window manufacturers and construction companies

 


Inter-segment revenue is transacted on an arm's length basis and charged at prevailing market prices for a specific product and market or cost plus where no direct comparative market price is available.  Segment results include items directly attributable to a segment as well as those that can be allocated on a reasonable basis.  Research and development entity-wide financial expenses are not allocated to the business activities for which R&D is specifically performed and it is not therefore reported as a separate operating segment. Sales Administration and Other Expenses are not currently allocated to operating segments in the group's reporting to the CODM, and 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 page.

                                                           

 

 

Page 10

 

 

 

 

 

 

Titon Holdings Plc

Notes to the Preliminary Announcement for the year ended 30 September 2013

 

4      Revenue and segmental information (continued)

Business segment

The Directors' primary review of performance is by geographical regions.

For the year ended

30 September 2013

United

 Kingdom

South

 Korea

All other

 countries

 

Consolidated


£'000

£'000

£'000

£'000

Segment revenue

10,548

3,680

1,512

15,740

Inter-segment revenue

-

-

300

300

Total Revenue

10,548

3,680

1,812

16,040

Segment profit / (loss)

1,806

649

(12)

Unallocated expenses





Research and Development expenses




(383)

Sales Administration expenses




(554)

Other Expenses




(1,014)

Finance income




13

Profit before tax




505

Tax expense




(29)

Profit for the year




476

Depreciation and amortisation

569

84

1

654

Total assets

10,130

2,356

147

12,633

Total assets include:

Investments in associates

313

-

-

313

Additions to non-current assets

(other than financial instruments

 and deferred tax assets)

368

32

-

400

The South Korean Segment profit / (loss) includes the Group's share of the profits from the Associate.

Sales to one customer, Browntech Sales Co. Ltd (the Group's associate undertaking in South Korea), of £3.680m represent 23.4% of Group Revenue (2012: £1.916m - 13.2%). There are no other concentrations of Revenue above 10% during the year.

IFRS 8 requires entity wide disclosures to be made about the regions in which it earns its revenues and holds its non-current assets which are shown below.

For the year ended

30 September 2013

United

Kingdom

Europe

USA

South

East Asia

All other

regions

Total

Revenues

£'000

£'000

£'000

£'000

£'000

£'000

By entities' country of domicile

11,400

-

660

3,680

-

15,740

By country from which derived

10,548

737

660

3,762

33

15,740

Non-current assets







By entities' country of domicile

3,987

-

-

331

-

4,318

 

 

 

             Page 11

 

 

 

 

 

Titon Holdings Plc

Notes to the Preliminary Announcement for the year ended 30 September 2013

 

4      Revenue and segmental information (continued)

For the year ended

30 September 2012

United

 Kingdom

South

 Korea

All other

 countries

                   Consolidated


£'000

£'000

£'000

£'000

Segment revenue

11,213

1,916

1,419

14,548

Inter-segment revenue

-

-

213

213

Total Revenue

11,213

1,916

1,632

14,761

Segment profit / (loss)

1,473

(113)

75

1,435

Unallocated expenses





Research and Development expenses




(402)

Sales Administration expenses




(591)

Other expenses




(1,452)

Finance income




26

Loss before tax




(984)

Tax credit




247

Loss for the year




(737)

Depreciation and amortisation

538

87

4

629

Total assets

10,113

1,606

213

11,932

Total assets include:

Investments in associates

48

-

-

48

Additions to non-current assets

(other than financial instruments

 and deferred tax assets)

583

49

-

632

The South Korean Segment  profit / (loss)  includes the Group's share of  losses from the Associate.

 

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

30 September 2012

United

Kingdom

Europe

USA

South

East Asia

All other

regions

Total

Revenues

£'000

£'000

£'000

£'000

£'000

£'000

By entities' country of domicile

12,066

-

566

1,916

-

14,548

By country from which derived

11,213

785

566

1,916

68

14,548

Non-current assets







By entities' country of domicile

4,023

-

1

282

-

4,306

 

                                                                                          Page 12

 

 

 

 

Titon Holdings Plc

Notes to the Preliminary Announcement for the year ended 30 September 2013

 

4      Revenue and segmental information (continued)

Business 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 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.

 


2013

2012


£'000

£'000

Trickle ventilation and window hardware products

13,299

11,620

Mechanical ventilation products

2,441

2,928

Revenue

15,740

14,548

         

 

 

5   Tax (expense) / credit                                            

         

2013

2012


£'000

£'000

Current income tax:



Corporation tax (expense) / credit

(59)

56

Adjustment in respect of prior years    

(75)

9


(134)

65

Deferred tax:



Origination and reversal of temporary differences

30

182

 Adjustment in respect of prior years

75

-


105

182

Income tax (expense) / credit

(29)

247

 

The charge for the year can be reconciled to the profit / (loss)



per the income statement as follows:   


 

Profit / (loss) before tax

Effect of:

505

(984)

Expected tax (charge) / credit  based on the standard rate of



corporation tax in the UK of 23.5% (2012: 25%)

(119)

246

Additional deduction for R&D expenditure

54

85

Expenses not deductible for tax purposes

(31)

(13)

Difference in deferred tax rates

24

4

Other short term timing differences

(13)

1

Utilisation of unrecognised tax losses

56

-

Surrender of losses for R&D tax credit

-

(85)

Adjustments in respect of prior periods

-

9

Income tax (expense) / credit

(29)

247

 

 

 

 

Page 13

 

 

 

 

 

 

Titon Holdings Plc

Notes to the Preliminary Announcement for the year ended 30 September 2013

 

 

Basis of preparation 

The financial information for the year ended 30 September 2013 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 polices of the Group under International Financial Reporting Standards (IFRSs) are set out in detail in the 2012 Financial Statements which is available from the Group's website at www.titonholdings.com.

 

Except for the implementation of the amendments to IAS 1 and IAS 12 there have been no changes to the accounting policies during the year.

·      Amendments to IAS 1 - Presentation of Items of Other Comprehensive Income

·      Amendments to IAS 12 - Deferred Tax: Recovery of Underlying Assets

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 2013 or 2012.

  

 The financial information for the year ended 30 September 2012 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 statutory accounts for 2013, on which the auditors have not yet reported, will be finalised on the basis of the financial information presented by the Directors in this preliminary announcement and will be delivered to the Registrar of Companies following the Company's Annual General Meeting which will be held on 19 February 2014.

 

For further information please contact :

Keith Ritchie, Chairman

Phone: +44 (0)1206 713800

 

 

 

 

Titon Holdings Plc

Registered Office: International House, Peartree Road, Stanway, Colchester, Essex CO3 0JL. Registered in England and Wales (registered no. 1604952).

 

 

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This information is provided by RNS
The company news service from the London Stock Exchange
 
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