Source - LSE Regulatory
RNS Number : 5803I
Titon Holdings PLC
10 December 2015
 



Titon Holdings Plc

Preliminary Announcement for the year ended 30 September 2015

 

Chairman's Statement

The result for the year to 30 September 2015 is a net Profit before Taxation of £1,869,000 (2014: £1,333,000), on Revenues 16% higher at £22.3 million (2014: £19.3 million). The Profit after Taxation is £1,709,000 (2014: £1,277,000) resulting in Earnings per Share of 12.6p (2014: 8.52p).

Net cash balances at the year-end were £2.87 million (2014: £2.15 million) and total capital expenditure during the year was £626,000 (2014: £386,000).

The Directors are proposing a final dividend of 1.75p per share (2014: 1.5p). This, when added to the interim dividend paid on 23 June 2015 gives a total for the year of 3.0p (2014: 2.5p).  If approved by shareholders at the forthcoming Annual General Meeting, the dividend will be payable on 19 February 2016 to shareholders on the register on 29 January 2016.  The ex-dividend date is 28 January 2016.

Trading Commentary

I am pleased to report that the Group Profit before Tax of £1,869,000 increased by 40% over last year and has helped generate an increase in Earnings per Share of 48%. This is largely due to another very good result from our subsidiary in Korea, which has traded strongly throughout the year. I can also report that the underlying trading performance in the United Kingdom has continued to improve. Our overall Group Revenue has increased by 16% over the last financial period, which reflects the better conditions in the UK, the growth in Korea and an increase in sales in the USA

Sales for our UK door and window hardware products business have shown a small year-on-year increase. We have noted that the general level of repairs, maintenance and improvements in domestic housing tends to depend on the number of housing transactions taking place and this has been subdued during the year. In the private house building sector, the major house builders continue to record good trading results as they try to satisfy housing demand. Our sales of high value items are not directly correlated with the sales and growth of private house builders in the UK since they tend to specify minimum allowable standards of ventilation for private dwellings. As noted last year, the amount of funding for social housing has been reduced and we have also seen changes to the regulatory regime, which previously encouraged energy efficient products, such as mechanical ventilation with heat recovery ("MVHR"). As a result, we have noted a reduction in sales into this sector in the last quarter of the financial year. However, where noise, indoor air quality and proximity to traffic are key issues, there is a much greater need to ventilate using MVHR.  We have been very pleased with the increase in sales of Ventilation Systems products during the financial year due to the continuing demand for apartments in the South East. We have also been pleased with the increase in demand for our MVHR products in Europe, where in some regions there is a requirement to fit MVHR as the only ventilation option.

Over the past few years we have spent considerable time and effort in developing new products both for our Hardware and Ventilation Systems businesses in order to expand our product offering and I believe that we now have an extensive range of products for our customers. I would like to thank our Design and Research & Development teams for the hard work they have put in during the year. In our Hardware business we now have a number of new products, including a high security locking cylinder for doors and have recently been accredited by Secured by Design for a number of our products. We expect to launch several new products early in 2016.

                                                        

 

                                                                                  Page 1

 

 

 

Titon Holdings Plc

Preliminary Announcement for the year ended 30 September 2015

Chairman's Statement (continued)

 

Once again, the best performer for us has undoubtedly been our subsidiary in Korea, which saw an increase in revenues of 26% from £5.7m in 2014 to £7.2m in the current period. This result has been due to higher sales into the private house building sector compared to last year. David Ruffell and I visited Korea in November 2015 to attend the audit meeting and again, we were impressed by the effort that all of our Korean colleagues have made to grow the business, for which we thank them. The strong cash generating performance of the Korean businesses over the past two years have enabled them to repay all of the outstanding debt that they owed Titon in the UK. Our associate in Korea, Browntech Sales Co, Ltd, has subsequently loaned £390,000 of its surplus funds to a residential and commercial property development in Korea arranged by one of its major customers.

Employees

Employee numbers within the Group have risen from 193 at the beginning of the year to 219 at 30 September 2015. We have taken on some extra staff in the UK, but the bulk of the increase has been in Titon Korea due to the rapid growth of the business. In the UK we have noted the Government's proposals to introduce the National Living Wage from 1st April 2016. This will undoubtedly increase our wage costs as a significant number of our staff will fall within the scope of the new regime. In response to this, we will step up our efforts to improve the productivity of our manufacturing facilities in the UK.

I would like to thank all of our employees for their hard work during the year and I fully recognise that they make a very large contribution to the success of the Group. 

Prospects

The UK economy has continued to grow during 2015 and is expected to do so again in 2016, despite the increased labour costs to be incurred in the UK. As noted above, we will continue to launch new products in the UK and we remain optimistic that we will see increased sales. Notwithstanding the UK Government's recent announcements on new house building, we remain sceptical that this will lead to a large increase in build quantities in the short term. In Europe we expect our sales of Ventilation Systems products to continue to increase as a result of the investment in both people and products that we have made in the last two years.

In Korea we anticipate a more moderate rate of growth than we have seen in recent years as our share of the market has probably reached its peak and there is more competition in the ventilation market.

In conclusion we are optimistic that we will continue to grow our businesses in 2016 but, no doubt, there will be challenges as we do so. The balance sheet remains strong and we will continue to invest in the people and products that will help us achieve growth.

 

On behalf of the Board.

 

K A Ritchie

Chairman

10th December 2015

 

                                                                                               Page 2

 

 

 

Titon Holdings Plc

Preliminary Announcement for the year ended 30 September 2015

 

Unaudited Consolidated Income Statement

for the year ended 30 September 2015

 


Unaudited

2015

 

2014


£'000

£'000

Revenue

22,258

19,256

Cost of sales

(16,280)

(13,926)

Gross profit

5,978

5,330

Distribution costs

(628)

(578)

Administrative expenses

(3,799)

(3,624)

Other income

11

12

Operating profit

1,562

1,140

Finance income

9

5

Share of profits from associate

298

188

Profit before tax

1,869

1,333

Income tax expense

(160)

(56)

Profit after income tax

1,709

1,277

Attributable to:



Equity holders of the parent

1,333

899

Non-controlling interest

376

378

Profit for the year

1,709

1,277

Earnings per share attributed to equity holders of the parent:



Basic

12.60p

8.52p

                                Diluted

12.27p

8.36p

 

Unaudited Consolidated Statement of Comprehensive Income

for the year ended 30 September 2015

                                                                                                       

Unaudited

2015

 

2014


£'000

£'000

Profit for the year

1,709

1,277

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

(90)

69

Total comprehensive income for the year

1,619

1,346

Attributable to:



Equity holders of the parent

1,258

968

Non-controlling interest

361

378


1,619

1,346

 

                                                         Page 3

 

 

 

 

 

Titon Holdings Plc

Preliminary Announcement for the year ended 30 September 2015

 

Unaudited Consolidated Statement of Financial Position

at 30 September 2015

                                                                                                       

Unaudited

2015

 

2014


£'000

£'000

Assets



Property, plant and equipment                                                                                   

3,218

3,169

Intangible assets

623

661

Investments in associates

796

498

Deferred tax

83

46

Total non-current assets

4,720

4,374

Inventories

3,786

3,479

Trade and other receivables

4,992

4,589

Cash and cash equivalents

2,870

2,149

Total current assets

11,648

10,217

Total Assets

16,368

14,591



Deferred tax

19

19

Total non-current liabilities

19

19

Trade and other payables

4,131

3,732

Corporation tax

125

162

Total current liabilities

4,256

3,894

Total Liabilities

4,275

3,913



Share capital

1,063

1,056

Share premium reserve

891

865

Capital redemption reserve

56

56

Treasury shares

(27)

(27)

Translation reserve

(52)

23

Retained earnings

9,119

8,023

Total Equity attributable to equity holders of the parent

11,050

9,996

Non-controlling Interest

1,043

682

Total Equity

12,093

10,678

Total Liabilities and Equity

16,368

14,591

 

 

Page 4

 

 

 

                                                                                                                                             

 

Titon Holdings Plc

Preliminary Announcement for the year ended 30 September 2015

 

Unaudited Consolidated Statement of Changes in Equity

at 30 September 2015

 

 


Share

Capital

Share 

premium

 reserve

Capital

redemption

reserve

Trans-

lation

reserve

Treasury shares

 

Retained

earnings

Total

Non-

controlling interest

Total

 equity


£'000

£'000

£'000

£'000

£000

£'000

£'000

£'000

£'000

At 1 October 2013

1,056

865

56

(46)

-

7,282

9,213

304

9,517

Translation differences

on overseas operations

-

-

-

69

 

-

-

69

 

-

69

Profit for the year

-

-

-

-

-

899

899

378

1,277

Total Comprehensive Income for the year

-

-

-

69

 

-

899

968

378

1,346

Dividends paid

-

-

-

-

-

(211)

(211)

-

(211)

Share-based payment expense

-

-

-

-

 

-

53

53

 

-

53

Purchase of treasury shares

-

-

-

-

(27)

-

(27)

-

(27)

At 30 September 2014

1,056

865

56

23

(27)

8,023

9,996

682

10,678

Translation differences

on overseas operations

-

-

-

(75)

 

 

-

-

(75)

 

 

(15)

(90)

Profit for the year

-

-

-

-

-

1,333

1,333

376

1,709

Total Comprehensive Income  for the year

-

-

-

(75)

 

-

1,333

1,258

361

1,619

Dividends paid

-

-

-

-

-

(289)

(289)

-

(289)

Share-based payment expense

-

-

-

-

-

52

52

-

52

Ordinary Shares issued

7

26

-

-

-

-

33

-

33

At 30 September 2015

1,063

891

56

(52)

(27)

9,119

11,050

1,043

12,093

 

 

                                                                                                          

 

                    Page 5

 

 

 

         

Titon Holdings Plc

Preliminary Announcement for the year ended 30 September 2015

 

Unaudited Consolidated Statement of Cash Flows

for the year ended 30 September 2015

 

                                                                                                       

Unaudited

2015

 

2014


£'000

£'000

Cash generated from operating activities



Profit before tax

1,869

1,333

Depreciation of property, plant & equipment

403

419

Amortisation on intangible assets

163

145

Increase in inventories

(363)

(564)

Increase in receivables

(491)

(1,209)

Increase in payables and other current liabilities

454

736

Profit on sale of plant & equipment

(4)

(15)

Share based payment - equity settled

52

53

Interest received

(8)

(5)

Share of associate's profit

(298)

(188)

Cash generated from operations

1,777

705

Income taxes paid

(234)

(68)

Net cash generated from operating activities

1,543

637

Cash flows from investing activities



Purchase of plant & equipment

(498)

(290)

Purchase of intangible assets

(128)

(96)

Proceeds from sale of plant & equipment

52

15

Interest received

8

5

Net cash used in investing activities

(566)

(366)

Cash flows from financing activities



Exercise of Share Options

33

-

Purchase of Treasury Shares

-

(27)

Dividends paid to equity shareholders

(289)

(211)

Net cash used in financing activities

(256)

(238)




Net increase in cash & cash equivalents

721

33

Cash & cash equivalents at beginning of the year

2,149

2,116

Cash & cash equivalents at end of the year

2,870

2,149

 

 

 

Page 6

 

 

 

 

 

Titon Holdings Plc

Notes to the Preliminary Announcement for the year ended 30 September 2015

 

1   Earnings per ordinary share

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


2015

2014


£'000

£'000

Numerator



Earnings for the purposes of basic earnings per share being



earnings after tax attributable to members of Titon Holdings Plc

1,333

899

Denominator

Number

Number

Weighted average number of ordinary shares for the purposes of basic



Earnings per share

10,575,600

10,543,150

Effect of dilutive potential ordinary shares : Share Options

288,288

209,539

Weighted average number of ordinary shares for the purposes of diluted earnings per share

10,863,888

10,752,689

Earnings per share (pence)



Basic

12.60p

8.52p

Diluted

12.27p

8.36p

 

 

2    Dividends


2015

2014


£'000

£'000

Final 2014 dividend of 1.5 pence (2013: 1.0 pence) per ordinary

share proposed and paid during the year relating to the

previous year's results

                      157

                      105

Interim dividend of 1.25 pence (2014: 1.0 pence) per ordinary

share paid during the year

                      132

                      106


                  289

      211

 

The Directors are proposing a final dividend of 1.75 pence (2014: 1.5 pence) per share. This will result in a final dividend totalling £185,948 (2014: £157,600), subject to approval by the shareholders at the Annual General Meeting. This dividend has not been accrued at the balance sheet date.

 

 

 

Page 7

 

 

 

 

 

Titon Holdings Plc

Notes to the Preliminary Announcement for the year ended 30 September 2015

 

 

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:

 


2015

2014

          

£'000

£'000

Cash available on demand

1,870

1,137

Short-term deposits

1,000

1,012

Cash at bank

2,870

2,149

Net increase in cash equivalents

721

33

Cash and cash equivalents at beginning of year

2,149

2,116

Cash and cash equivalents at end of year

2,870

2,149

 

 

 

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 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.

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 the page.

 

 

          Page 8

 

 

 

 

 

Titon Holdings Plc

Notes to the Preliminary Announcement for the year ended 30 September 2015

 

4      Revenue and segmental information (continued)

 

Business segment

The Directors primary review of performance is by geographical regions.

 

For the year ended

30 September 2015

United

 Kingdom

South

 Korea

All other

 countries

                   Consolidated


£'000

£'000

£'000

£'000

Segment revenue

12,461

7,161

2,636

22,258

Inter-segment revenue

-

-

601

601

Total Revenue

12,461

7,161

3,237

22,859

Segment profit

2,606

1,264

286

4,156

Unallocated expenses



Research and Development expenses



Sales Administration expenses



Other Expenses



Finance income




9

Profit before tax




1,869

Tax expense




(160)

Profit for the year




1,709

Depreciation and amortisation

528

38

-

566

Total assets

11,352

4,600

416

16,368

Total assets include:

Investments in associates

796

-

-

796

Additions to non-current assets

(other than financial instruments

 and deferred tax assets)

527

99

-

626


The South Korean Segment profit 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 £7.161m represent 32.2% of Group Revenue (2014: £5.608m - 29.1%). 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 2015

United

Kingdom

Europe

USA

South

East Asia

All other

regions

Total

Revenues

£'000

£'000

£'000

£'000

£'000

£'000

By entities' country of domicile

13,906

-

1,191

7,161

-

22,258

By country from which derived

12,461

1,389

1,191

7,189

28

22,258

Non-current assets







By entities' country of domicile

3,898

-

1

821

-

4,720

 

 

 

Page 9

 

 

 

 

Titon Holdings Plc

Notes to the Preliminary Announcement for the year ended 30 September 2015

 

4      Revenue and segmental information (continued)

 

For the year ended

30 September 2014

United

 Kingdom

South

 Korea

All other

 countries

                   Consolidated


£'000

£'000

£'000

£'000

Segment revenue

11,781

5,662

1,813

19,256

Inter-segment revenue

-

-

408

408

Total Revenue

11,781

5,662

2,221

19,664

Segment profit

2,181

884

127

3,192

Unallocated expenses



Research and Development expenses



Sales Administration expenses



Other Expenses



Finance income




5

Profit before tax




1,333

Tax expense




(56)

Profit for the year




1,277

Depreciation and amortisation

530

34

-

564

Total assets

10,864

3,497

230

14,591

Total assets include:

Investments in associates

498

-

-

498

Additions to non-current assets

(other than financial instruments

 and deferred tax assets)

345

40

1

386


The South Korean Segment profit includes the Group's share of the profits 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 2014

United

Kingdom

Europe

USA

South

East Asia

All other

regions

Total

Revenues

£'000

£'000

£'000

£'000

£'000

£'000

By entities' country of domicile

12,827

-

767

5,662

-

19,256

By country from which derived

11,786

959

767

5,667

77

19,256

Non-current assets







By entities' country of domicile

3,864

-

1

509

-

4,374

 

 

 

Page 10

 

 

 

 

Titon Holdings Plc

Notes to the Preliminary Announcement for the year ended 30 September 2015

 

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 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.

 


2015

2014


£'000

£'000

Trickle ventilation and window and door hardware products

17,589

15,763

Mechanical ventilation products

4,669

3,493

Revenue

22,258

19,256

 

 

5     Tax (expense) / credit                                                                                                                          

                                                                                                       

2015

2014

Current income tax:

£'000

£'000

Corporation tax expense

(208)

(59)

Adjustment in respect of prior years

11

(75)


(197)

(134)

Deferred tax:



Origination and reversal of temporary differences

37

30

Adjustment in respect of prior years

-

75


37

105

Income tax expense

(160)

(29)

 

 

 

The charge for the year can be reconciled to the profit



per the income statement as follows:                                               



Profit before tax

Effect of:

1,869

1,333

Expected tax charge based on the standard rate of



corporation tax in the UK of 20.5% (2014: 22.0%)

(383)

(293)

Additional deduction for R&D expenditure

148

80

Effect of Associate's results reported net of tax

65

45

Expenses not deductible for tax purposes

12

-

Difference in deferred tax rates

(3)

10

Other short term timing differences

(10)

-

Recognition of timing differences asset not previously recognised

-

101

Adjustments in respect of prior periods

11

1

Income tax expense

(160)

(56)

 

 

 

 

Page 11

 

 

 

 

Titon Holdings Plc

Notes to the Preliminary Announcement for the year ended 30 September 2015

 

 

 

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.

 

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


2015

2014

2015

2014


£'000

£'000

£'000

£'000

Browntech Sales Co. Ltd

7,161

5,608

1,976

1,885

 

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.

 

 

 

7    Principal risks 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 2014 within the Strategic Report (page 7 and 8) available at www.titonholdings.com. The Board considers that these remain a current reflection of the risks and uncertainties facing the business. 

 

 

 

8    Basis of preparation 

The financial information for the year ended 30 September 2015 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 2014 Financial Statements which is available from the Group's website at www.titonholdings.com.

 

Except for the implementation of the new Standards, interpretations and amendments to existing Standards,  set out on pages 35 and 36 of the Notes to the 2014 Financial Statements, which have had no material impact on the consolidated results or financial position of the Group, there have been no changes to the accounting policies during the year.

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 2015 or 2014.

 

Page 12

 

 

Titon Holdings Plc

Notes to the Preliminary Announcement for the year ended 30 September 2015

 

 

8     Basis of preparation (continued)

 

The financial information for the year ended 30 September 2014 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 2015, 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. 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 17 February 2016.

 

For further information please contact:

Keith Ritchie, Chairman            Phone: +44 (0)1206 713821

 

 

 

 

 

 

 

 

 

Page 13

 

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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