REG - Titon Holdings PLC - Interim Results for six months to 31 March 2024
15/05/2024 07:00
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RNS Number : 4419O Titon Holdings PLC 15 May 2024
15 May
2024
LEI: 213800ZHXS8G27RM1D97
THIS ANNOUNCEMENT RELATES TO THE DISCLOSURE OF INFORMATION THAT QUALIFIED OR
MAY HAVE QUALIFIED AS INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF THE
MARKET ABUSE REGULATION (EU) 596/2014 AS IT FORMS PART OF UK DOMESTIC LAW BY
VIRTUE OF THE EUROPEAN UNION (WITHDRAWAL) ACT 2018.
Titon Holdings Plc
Unaudited Interim Results for the six months to 31 March 2024
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 2024 ("H1 2024").
Commenting on the interim results, newly appointed Chief Executive, Tom
Carpenter said:
"The trading performance of the Group over the six-month period to 31 March
2024 has been impacted by the contraction in the new build residential
market. Nevertheless, during this period we have seen an increase in project
wins within our higher margin ventilation systems business and growth in our
order book.
The results of our last six months notwithstanding, I am delighted and excited
to join Titon. While there is further work to do to make Titon the success we
all want, I do believe that the recent investment in robust processes and a
revitalised and committed management team will be beneficial for the Group and
shareholders.
We have maintained our cash levels through focused cost and working capital
management and continue to enjoy a strong balance sheet with no debt. That
said, we have made the decision to pause paying dividends, while we allow the
business to focus its resources on our strategic imperatives in order to
return the Group to growth.
Looking to my immediate goals for the business, I am currently developing a
revised strategy with the Senior Leadership Team and Board which will
prioritise making Titon a more outwardly facing business, revising our
go-to-market methodologies to return window and door hardware to growth,
further building on the progress made in our ventilation systems business,
increasing margins and improving the customer experience."
Financial results
· Group net revenue declined by 24.6% to £9.1m (2023: £12.1m)
largely driven by the weaker housing market and a prior year comparative which
included the clearing of a backlog of orders caused by the implementation of
our new ERP system.
· EBITDA loss of £0.25m (2023: profit of £0.1m).
· Loss before tax of £0.7m after depreciation and amortisation
charges of £0.5m (2023: £0.6m) and exceptional costs of £0.1m (2023: £nil)
relating to a restructure as part of a cost saving initiative.
· Cash balance of £2.2m at the end of the period (30 September
2023: £2.2m; 31 March 2023: £1.6m) maintained following careful management
of the cost base and working capital.
· The Group had no financial indebtedness at 31 March 2024, other
than lease liabilities.
Operational review
· Sales in UK and Europe decreased by 28.6% the same period last
year.
o Trading heavily impacted by the slowdown in construction of new build
residential, the Group's principal market. Prior year comparative also
included clearing a backlog of orders.
· Sales in Titon Korea, our 51% owned subsidiary, fell by 13.8%
reflecting the continuing difficult trading conditions and market dynamics in
South Korea but achieved a slightly better loss due to a reduction in
overheads.
o Market conditions in South Korea remain challenging and we are working
with our partners in Korea to streamline the corporate structure and
operations of the Korean business.
· Sales in our US business remain a very small portion of the
Group's overall sales, but pleasingly increased by 65.2% against the same
period last year to £461,000 (2023: £279,000). Titon Inc. made a pre-tax
profit in the period.
· Good progress made against 2024 key business imperatives
including:
o Continued inventory reduction which is contributing positively to working
capital.
o Renewed external sales team.
o New Customer Relationship Management system implemented.
· New product development is continuing with a number of new
mechanical and hardware product launches planned, targeting specific
applications and market opportunities.
Current trading and outlook
· The Board remains committed to developing and executing its
strategy to turn around performance and continues to focus on managing the
cost base and improving efficiency.
· The challenging conditions in the Group's core markets have
continued and the Construction Products Association predicts a fall private
housing output by 5.0% this year after double-digit declines in 2023, followed
by a forecasted rise of 5.0% in 2025. Private housing repair, maintenance and
improvement is also set to drop by 4.0% in 2024 before rising by 3.0% in 2025.
· The Group is continuing to focus on driving its new business
pipeline. Whilst it is seeing extended lead-times between project wins and
placement of orders, the Board is encouraged by the increasing project funnel,
together with specification and design wins.
· The sales pipeline and orderbook for mechanical ventilation has
grown significantly in the past six months and we are hopeful that this will
translate into improving sales in H2 FY24. As a result, the Board continues to
anticipate a return to profitability in H2 FY24 in the core UK based business.
· The Group has a strong balance sheet, a committed workforce, a
strengthened leadership team and a solid range of products which gives the
Board confidence in Titon's prospects for future value creation.
For the purposes of UK MAR and Article 2 of the binding technical standards
published by the Financial Conduct Authority in relation to MAR as regards
Commission Implementing Regulation (EU) 2016/1055, this announcement is made
by Carolyn Isom, Chief Financial Officer.
For further information please contact
Titon Holdings
Plc
+44 (0) 1206 713800
Tom Carpenter (Chief
Executive)
Carolyn Isom (Chief Financial
Officer)
Shore Capital - Nominated Adviser and
Broker
+44 (0)20 7408 4090
Daniel
Bush
Tom Knibbs
Titon Holdings PLC
Interim results for the six months to 31 March 2024
Chair's statement
As reported in our AGM trading update on 26 March, trading in UK and Europe in
the six months to 31 March 2024 was affected by the downturn in the new build
market. We have managed to offset some of the impact on our results through
increasing market share in the mechanical ventilation segment, our highest
margin product line, introducing new innovative products and recently
augmenting our largely refreshed sales team. Additionally, we have remained
focused on careful cost management and pursuing margin enhancing opportunities
which has helped to mitigate some of the negative effect on the result for the
period.
Korea has continued to produce lower than expected results, despite sales for
the period being in line with expectations, due to lower realised margins and
increased overheads. The Board are committed to reviewing this partnership
going forward.
While the first six months of this financial year has been disappointing, I am
reassured by the progress that has been made in the business to date to
restructure, strengthen and better position our operations, as well as the
Group's commitment to further improvement. I strongly believe that this will
support renewed growth over the next few years and return our business back to
sustained profitability.
Our work on our UK ventilation systems business unit is yielding results and
we are seeing a recovery of this business from the lows of last summer. We are
winning new projects and growing our design win pipeline. Our order levels in
this segment are approaching the same levels as this time last year but have
not yet overtaken them. We still have work to do to return our window and door
hardware business to growth. As such we are continuing to invest in new
products and are reviewing our sales strategy.
I am extremely pleased that our new Chief Executive, Tom Carpenter, has now
joined the Group. The Board and I are looking forward to seeing the
contribution he will undoubtedly make to the business.
Segmental and operational review
The Directors look initially at geographical areas to evaluate the Group's
performance and then consider product segmentation at a secondary level.
UK and Europe
Sales in UK and Europe have decreased over the same period last year by 28.6%. Trading in our core markets has been heavily impacted by the slowdown in construction of new build residential, which is the dominant market we operate in. The comparative period last year also included sales from clearing the order backlog that had mounted during the implementation of our new ERP system, so was higher than in previous comparable periods. We also suffered from a diminished external sales team, which has since been renewed, and reduced pipeline as a result of this which meant we struggled to maintain our market share across some product lines, particularly in the first quarter of FY24.
In our ventilation systems division, sales in the UK declined by 20.5%. However, sales of ducting products increased by 79.9%, which is a good leading indicator of Mechanical Ventilation Heat Recovery unit demand to come. Sales of the new
Titon Ultimate® dMEV (https://url.avanan.click/v2/___https:/www.titon.com/uk/products/ventilation-systems/continuous_mechanical_extract/titon-ultimate-dmev/___.YXAxZTpzaG9yZWNhcDphOm86NmY0ODlkZWZhMjIwYjY5MWFlNzdkYWJiYTc3NjIyOWE6NjpiNzUwOjQ4MTM5NmZiZTQxZTA2MDk1OWYxNjIwYmVlMTU2NWVjMmZkZTRiZDc5MGYyODk1MzJjZGFmN2JhYTA0ZjE1OWY6cDpU)
extract fan also started to increase with revenues growing on the same period last year. Sales of the Titon FireSafe® Air Brick range continue at healthy levels as demand continues for this safety product. In our window and door hardware division, sales in the UK declined by 25.6% in line with the market.
In Europe, ventilation systems sales declined by 57.8% partly due to the weakened economy impacting demand in the new build sector. As mentioned above, in the comparative period, our production backlog eased and outstanding orders for our European export customers were delivered, which inflated the sales for that period. Exports of our window and door hardware products were up 12.3% in the period, as we continue to increase our customer base.
As we noted in the 30 September 2023 Annual Report, we refined our business
imperatives in the current financial period to target stabilising the UK and
European business and returning to growth, while we continue to develop the
Group's overall strategy. The key imperative that we are currently focusing on
is growing revenue and margin and improving customer experience. We have
managed to enhance our sales team in the period, and we have successfully
implemented our new Customer Relationship Management (CRM) system. As a
result, we have significantly grown our pipeline. Another key imperative is to
continue to reduce our site inventory and I am pleased to see that this has
been successful in this period with a resulting positive effect on our working
capital, and we expect this to continue throughout the rest of this financial
year. While we are still not experiencing the growth in sales we would like,
we have built a business where the processes are now robust and ready for
increased demand.
South Korea
Revenues from South Korea were 13.8% lower than in 2023. This reflects the
difficult conditions for new build in Korea and the continuing delays in
starting new projects. 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 £1.3 million
(2023: £1.5 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 £115,000 (2023 loss:
£245,000) which was higher than we previously expected.
United States
Sales in our US business remain a very small portion of the Group's overall
sales but pleasingly increased by 65.2% against the same period last year at
£461,000 (2023: £279,000). Titon Inc. made a pre-tax profit in the period.
Income statement
In the six months to 31 March 2024, Titon's net revenue (which excludes
inter-segment activity) decreased by 24.6% to £9.1 million (2023: £12.1
million). Against the same period in 2023, sales of window and door hardware
products fell by 17.0% and ventilation systems products by 33.9%, due to the
weaker housing market. In 2023, the £12.1m achieved included the clearing of
a backlog of orders caused by the implementation of our new ERP system. Sales
in Titon Korea, our 51% owned subsidiary, fell by 13.8% reflecting the
continuing difficult trading conditions and market dynamics in South Korea.
Gross margins fell to 25.1% (2023: 26.1%) due to lower sales in the UK and
Europe as well as the lower contribution from Titon Korea. An EBITDA(1) loss
of £0.25 million was generated (2023 EBITDA profit: £0.18 million), whilst
we made an operating loss of £0.73 million (2023 loss: £0.39 million). The
results from the Group's associate, Browntech Sales Co. Ltd (BTS) in South
Korea, amounted to a profit of £30,000 (2023 loss: £54,000). In aggregate,
the Group made a loss before tax of £0.71 million (2023 loss before tax:
£0.45 million).
The Group's loss per share for the period was 5.46 pence (2023: loss per share
of 2.86 pence) with the total loss after tax of £0.69m (2023 loss: £0.39m)
and an apportionment to minority shareholders of a loss of £71,000 (2023:
loss of £72,000) which reflected the weak trading incurred by Titon Korea.
Based on the performance of the Group in this period, the Board has decided it
is not appropriate to pay an interim dividend (2023: 0.5 pence per share). We
feel this is prudent while the Group remains loss making.
Balance sheet and cash flow
Net assets, including non-controlling interests, fell by 4.8%, or £0.7
million, to £14.1 million (30 September 2023: £14.8 million) with net cash
(excluding lease liabilities) of £2.2 million (30 September 2023: £2.2
million) which is equivalent to 15.9% of net assets (30 September 2023:
15.2%). The Group had no financial indebtedness at 31 March 2024, other than
lease liabilities. The cash held by Titon Korea remained consistent at £0.03
million at 31 March 2024 (30 September 2023: £0.03 million).
The half year saw cash generated by operations of £0.25 million (2023: £0.02
million), primarily due to continuing to improve our working capital
management through tighter stock control systems. Capital expenditure in the
period was £0.02 (2023: £0.26 million) as we reduced capital expenditure
while we manage expenditure in line with trading performance.
Net current assets were £7.4 million at 31 March 2024 (30 September 2023:
£8.0 million) with a Quick Ratio(2) of 1.42 (30 September 2023: 1.44).
Board
In February 2024, Keith Ritchie, Non-Executive Director, retired from the
Board after 11 dedicated years of service to the Group.
On 23 April 2024, Tom Carpenter joined the Group as Chief Executive. Tom
brings a wealth of experience to the Group, and I look forward to working with
him.
I personally thank my colleagues on the Board for their hard work and counsel
since I joined Titon in January 2024.
Employees
Our employees remain resilient and have responded positively to the changes in
structure and roles that we have put in place. Restructures in operations,
planning and sales/customer support have created leaner, more focussed teams
and through our annual review process, everyone is clear on how they can
contribute to achieving the Group's business imperatives and are incentivised
by both their individual and Group performance. We have strengthened our sales
force with highly experienced people, have improved our planning process and
upskilled our production team, resulting in a flexible team that can respond
to fluctuating customer demand across the factory. Our headcount is lower,
but staff turnover is now stable, and our employees are ready for the future
challenges that we face. The Board is grateful for every person's
contribution, their flexibility, determination and readiness to be part of our
future.
Investors
Whilst we are disappointed not to declare an interim dividend for this period,
the Board intends to review our dividend policy once the Group returns to
profitability.
We held our AGM in March 2024 in Haverhill, my first as Chair. It was good to
have the opportunity to meet some of our shareholders and I appreciate their
interest in Titon.
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 2023
within the Strategic Report (page 6) available at www.titon.com
(https://url.avanan.click/v2/___http:/www.titon.com___.YXAxZTpzaG9yZWNhcDphOm86NmY0ODlkZWZhMjIwYjY5MWFlNzdkYWJiYTc3NjIyOWE6NjphODk5OmZiNTc1OTlkNjhlOWVlZDJmYWY0YTVkMzBlYjE3MTJlZGFlZjg0MWU5YTBmNTE4MGU4NWFkZjM5MWUzZDUxZDg6cDpU)
. Assessments of exposure to financial and other risks are always difficult
given the uncertainties about the inflationary risks in the UK economy. 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. Consequently, 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. Based on 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.
Outlook
The anticipated recovery following the reported recession in the construction
industry last year has yet to transpire. Government figures also showed a
considerable drop in Q4 2023 house starts compared to Q4 levels over the last
decade (excluding COVID affected years). It appears this has not improved
substantially in Q1 2024, compounded by the poor weather preventing builds
from commencing and progressing.
This is echoed by the Spring Report from the Construction Products Association
(CPA) which predicts a continued fall in total construction output this year
of 2.2%, followed by a recovery in 2025 and 2026. The CPA also reports private
housing output falling by 5.0% this year after double-digit declines in 2023,
followed by a forecasted rise of 5.0% in 2025. Private housing repair,
maintenance and improvement is also set to drop by 4.0% in 2024 before rising
by 3.0% in 2025.
During the first half of this fiscal year, we continued to see an erosion of
sales, with our customers largely reporting lower demand in line with industry
metrics outlined above. As a result, we reduced our costs, including
headcount, in October 2023.
Nevertheless, we are continuing to drive our new business pipeline. Due to
market factors described above, we are seeing extending lead-times between
project wins and placement of orders. However, we are encouraged by our
increasing project funnel, together with specification and design wins.
We believe that the transition to mechanical ventilation in new build will
continue regardless, and that our product range is well set to meet
specifications following the legislative changes with further regulatory
drivers to reduce the potential for overheating in dwellings.
Market conditions in South Korea remain challenging and we are working with
our partners in Korea to streamline the corporate structure and operations of
the Korean business.
We are pleased that our Senior Leadership Team is now complete as Tom
Carpenter, Chief Executive, has now joined the business. His focus will be on
leading the Group strategy, returning the Group to profitability and focussing
on enhancing shareholder value.
Current trading
As announced in March, H1 trading in the UK and Europe was below the Board's
expectations, primarily attributed to the downturn in the new build market
which is expected to continue to influence performance throughout the year. We
continue to manage our cost base and promote higher margin opportunities to
offset the lower sales environment.
The sales pipeline and orderbook for mechanical ventilation has grown
significantly in the past six months and we are hopeful that this will
translate into improving sales in H2 FY24. As a result, we anticipate a return
to profitability in H2 FY24 in the core UK based business, however we expect
continued losses from our Korean joint venture.
Despite the challenges the business has faced, we continue to have a strong
balance sheet, a committed workforce and a solid range of products. Although
there is still much work to do and many improvements that can be made, these
factors, give us confidence in our prospects for future value creation.
A list of current directors is maintained on the Group's website
www.titon.com.
On behalf of the Board
Jamie Brooke
Chair
14 May 2024
Notes
(Non IFRS GAAP measures)
(1) EBITDA is measured as operating profit before net finance costs, tax,
depreciation and amortisation.
(2) The Quick Ratio measures liquidity and is calculated as follows: Current
Assets-less-Stocks divided by Current Liabilities.
Titon Holdings Plc
Consolidated Interim Income Statement
for the six months ended 31 March 2024
6 months 6 months Year to
to 31.3.24 to 31.3.23 30.9.23
unaudited unaudited audited
Note £'000 £'000 £'000
Revenue 2 9,107 12,077 22,334
Cost of sales (6,825) (8,918) (16,413)
Gross profit 2,282 3,159 5,921
Distribution costs (308) (593) (1,546)
Administrative expenses (2,407) (2,704) (4,471)
Administrative expenses - exceptional (55) - (39)
Research and development expenses (245) (261) (467)
Other income - 12 26
Operating loss (733) (387) (576)
Finance expense (10) (10) (27)
Finance income - 3 5
Share of post-tax profit / (loss) from associate 30 (54) (241)
Loss before tax (713) (449) (839)
Income tax credit / (expense) 3 28 57 (86)
Loss after income tax (685) (392) (925)
Attributable to:
Equity holders of the parent (614) (320) (686)
Non-controlling interest (71) (72) (239)
Loss for the period (685) (392) (925)
Loss per share attributed to equity holders of the parent:
Basic (5.46) (2.86p) (6.01p)
Diluted (5.46) (2.86p) (6.01p)
Consolidated Interim Statement of Comprehensive Income
for the six months ended 31 March 2024
6 months 6 months Year to
to 31.3.24 to 31.3.23 30.9.23
unaudited unaudited Audited
£'000 £'000 £'000
Loss for the period (685) (392) (925)
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 (13) (114) (83)
Total comprehensive expense for the period (698) (506) (1,008)
Attributable to:
Equity holders of the parent (627) (428) (775)
Non-controlling interest (71) (78) (233)
(698) (506) (1,008)
Titon Holdings Plc
Consolidated Interim Statement of Financial Position
at 31 March 2024
31.3.24 31.03.23 30.09.23
unaudited unaudited audited
£'000 £'000 £'000
Assets
Property, plant and equipment 2,913 3,264 3,183
Right-of-use assets 554 573 565
Intangible assets 862 760 926
Investments in associates 2,326 2,482 2,295
Deferred tax assets 298 751 264
Total non-current assets 6,953 7,830 7,233
Inventories 5,794 6,917 6,139
Trade and other receivables 3,270 4,199 3,754
Cash and cash equivalents 2,232 1,610 2,238
Total current assets 11,296 12,726 12,131
Total Assets 18,249 20,556 19,364
Liabilities
Lease liabilities 333 409 426
Total non-current liabilities 333 409 426
Trade and other payables 3,703 4,500 3,968
Lease liabilities 160 230 206
Total current liabilities 3,863 4,730 4,174
Total Liabilities 4,196 5,139 4,600
Equity
Share capital 1,124 1,122 1,123
Share premium reserve 1,106 1,091 1,096
Capital redemption reserve 56 56 56
Foreign exchange reserve 96 90 109
Retained earnings 11,681 12,831 12,320
Total Equity attributable to the equity holders of the parent 14,063 15,190 14,704
Non-controlling Interest (10) 227 60
Total Equity 14,053 15,417 14,764
Total Liabilities and Equity 18,249 20,556 19,364
Titon Holdings Plc
Consolidated Interim Statement of Changes in Equity
at 31 March 2024
Share Share Capital Foreign exchange reserve Treasury Retained Total Non- Total
capital premium redemption reserve Shares earnings controlling Equity
reserve interest
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
At 30 September 2022 1,122 1,091 56 198 - 13,179 15,646 305 15,951
Translation differences on overseas operations - - - (108) - - (108) (6) (114)
Loss for the period - - - - - (320) (320) (72) (392)
Total comprehensive - - - (108) - (320) (428) (78) (506)
loss for the period
Dividends paid - - - - - (56) (56) - (56)
Share-based payment expense - - - - - 28 28 - 28
At 31 March 2023 1,122 1,091 56 90 - 12,831 15,190 227 15,417
Translation differences on overseas operations - - - 19 - - 19 12 31
Loss for the year - - - - - (353) (353) (180) (533)
Total comprehensive income / (loss) for the period - - - 19 - (353) (334) (168) (502)
Dividends paid - - - - - (56) (56) - (56)
Share-based payment credit - - - - - (100) (100) - (100)
Exercise of share options 1 5 - - - - 6 - 6
Other - - - - - (2) (2) 1 (1)
At 30 September 2023 1,123 1,096 56 109 - 12,320 14,704 60 14,764
Translation differences on overseas operations - - - (13) - - (13) - (13)
Loss for the period - - - - - (614) (614) (71) (685)
Total comprehensive - - - (13) - (614) (627) (71) (698)
loss for the period
Share-based payment credit - - - - - (24) (24) - (24)
Exercise of Share Options 1 10 - - - - 11 - 11
Other - - - - - (1) (1) 1 -
At 31 March 2024 1,124 1,106 56 96 - 11,681 14,063 (10) 14,053
Titon Holdings Plc
Consolidated Interim Statement of Cash Flow
for the six months ended 31 March 2024
6 months 6 months Year to
to 31.3.24 to 31.3.23 30.09.23
unaudited unaudited Audited
Note £'000 £'000 £'000
Cash generated from operating activities
Loss before tax (713) (449) (839)
Depreciation of property, plant & equipment 263 308 533
Depreciation of right-of-use assets 97 100 240
Amortisation of intangible assets 126 163 195
Profit on sale of plant & equipment (10) (10) (25)
Share based payment - equity settled (24) 28 (72)
Finance income - (3) (5)
Finance costs 10 10 27
Share of associate's post-tax (profit) / loss (30) 54 241
(281) 201 295
Decrease / (increase) in inventories 345 (264) 431
Decrease in receivables 525 1,203 1,288
Decrease in payables and other current liabilities (340) (1,116) (1,082)
Cash generated by operations 249 24 932
Income taxes received - - 220
Net cash generated by operating activities 249 24 1,152
Cash flows from investing activities
Purchase of plant & equipment - (258) (433)
Purchase of intangible assets (62) (8) (205)
Proceeds from sale of plant & equipment 10 42 58
Finance income - 3 5
Dividends received from associate company - 290 290
Net cash (used in) / generated by investing activities (52) 69 (285)
Cash flows from financing activities
Dividends paid to equity shareholders of the parent 4 - (56) (112)
Payment of lease liability (192) (114) (243)
Finance costs (10) (10) (27)
Exercise of Share Options 12 - 5
Net cash used in financing activities (190) (180) (377)
Net increase / (decrease) in cash 7 (87) 490
Foreign exchange (13) (29) 22
Cash at beginning of the period 2,238 1,726 1,726
Cash at end of the period 2,232 1,610 2,238
Notes to the Condensed Consolidated Interim Statements
at 31 March 2024
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 2023. 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 2023.
b) Basis of preparation
These condensed consolidated interim financial statements of the Group for the
six months ended 31 March 2024 comprise the Company and its subsidiaries
(together referred to as the 'Group').
The condensed consolidated interim financial statements have been prepared in
accordance with IAS 34 Interim Financial Reporting as adopted for use in the
UK and the requirements of the AIM Rules for Companies. Neither the six months
results for 2024 nor the six months results for 2023 have been audited nor
reviewed pursuant to guidance issued by the Auditing Practices Board. These
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 2023 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 2023, which have been prepared in
accordance with International Financial Reporting Standards and
Interpretations (collectively IFRSs) as adopted in the UK.
These unaudited interim Group Financial Statements were approved for issue on
14 May 2024. 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
2024 Annual Report and Accounts.
There are not expected to be any changes in the accounting policies compared
to those applied at 30 September 2023.
A full description of accounting policies is contained with our 2023 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 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
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 countries Total
Kingdom Korea America
£'000 £'000 £'000 £'000 £'000
6 months ended 31 March 2024
Segment revenue 6,386 1,283 461 1,228 9,358
Inter-segment revenue (251) - - - (251)
Total Revenue 6,135 1,283 461 1,228 9,107
Segment (loss) / profit (492) (115) 59 (165) (713)
Income tax credit 28
Loss for the period (685)
Depreciation and amortisation 377 12 - - 389
Depreciation of Right-of-use-assets 89 8 - - 97
Total assets 14,551 3,472 226 - 18,249
Total assets include:
Investments in associates 2,326 - - - 2,326
Additions to non-current assets (other than financial instruments and deferred 62 - - - 62
tax assets)
The South Korean Segment loss 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 £1.28 million represent 14% 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 Kingdom Europe USA and Canada Asia All other regions Total
Revenues £'000 £'000 £'000 £'000 £'000 £'000
by entities' country of domicile 7,363 - 461 1,283 - 9,107
by country from which derived 6,135 1,228 461 1,283 - 9,107
Non-current assets
By entities' country of domicile 4,338 - 23 2,591 - 6,952
Operating segment United South North All other countries Total
Kingdom Korea America
£'000 £'000 £'000 £'000 £'000
6 months ended 31 March 2023
Segment revenue 8,240 2,303 12,311
1,489 279
Inter-segment revenue (234) - - - (234)
Total Revenue 8,006 1,489 279 2,303 12,077
Segment (loss) / profit (281) (245) 6 69 (449)
Income tax credit 57
Loss for the period (392)
Depreciation and amortisation 400 39 - - 439
Depreciation of right-of-use-assets 78 22 - - 100
Total assets 16,131 4,205 220 - 20,556
Total assets include:
Investments in associates 2,482 - - - 2,482
Additions to non-current assets (other than financial instruments and deferred 251 15 - - 266
tax assets)
The South Korean Segment loss 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 £1.49 million represent 12% 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 2023 United Kingdom Europe USA and Canada Asia All other regions Total
Revenues £'000 £'000 £'000 £'000 £'000 £'000
by entities' country of domicile 10,309 - 279 1,489 - 12,077
by country from which derived 8,006 2,303 279 1,489 - 12,077
Non-current assets
By entities' country of domicile 4,869 - 35 2,926 - 7,830
For the year ended United South North All other Consolidated
30 September 2023 Kingdom Korea America countries
£'000 £'000 £'000 £'000 £'000
Segment revenue 15,781 2,488 842 3,623 22,734
Inter-segment revenue (400) - - - (400)
Total Revenue 15,381 2,488 842 3,623 22,334
Segment (loss) / profit (247) (645) 164 (111) (839)
Tax expense (86)
Loss for the year (925)
Depreciation and amortisation 869 99 - - 968
Total assets 15,521 3,599 243 - 19,363
Total assets include: 2,295 - - - 2,295
Investments in associates
Additions to non-current assets 701 (30) 1 - 672
(other than financial instruments
and deferred tax assets)
The South Korea Segment loss includes the Group's share of the post-tax losses
from Browntech Sales Co. Ltd., (BTS), the Group's associate undertaking in
South Korea, of £241,000. Sales to BTS during the year ended 30 September
2023 of £4.038m represented 18% of Group Revenue (2022: £4.71m - 21%). There
were 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 Canada South All other Total
30 September 2023 Kingdom Korea regions
Revenues £'000 £'000 £'000 £'000 £'000 £'000
By entities' country of domicile 19,004 - 842 2,488 - 22,334
By country from which derived 15,381 3,623 842 2,488 - 22,334
Non-current assets
By entities' country of domicile 4,683 - 24 2,526 - 7,233
3 Taxation
6 months 6 months Year to
to 31.3.24 to 31.3.23 30.9.23
£'000 £'000 £'000
Deferred tax:
Origination and reversal of temporary differences 28 57 (86)
Income tax credit / (expense) 28 57 (86)
Taxation for the interim period is credited at 3.98% (six months to 31 March
2023: 12.7%) 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 31.3.24 to 31.3.23 30.9.23
Date Pence
Paid per share £'000 £'000 £'000
Final 2022 dividend 31.03.23 0.50 - 56 -
Interim 2023 dividend 07.07.23 0.50 - - 56
- 56 56
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 11,245,362 (six
months ended 31 March 2023: 11,197,707 year ended 30 September 2023:
11,205,723).
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
11,245,362 at 31 March 2024, 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 2023: 11,213,324 and year ended 30
September 2023: 11,216,552.
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 to 6 months 6 months Year to
to 31.3.24 to 31.3.23 30.9.23 to 31.3.24 to 31.3.23 30.9.23
£'000 £'000 £'000 £'000 £'000 £'000
Browntech Sales Co. Ltd 1,283 1,489 2,488 - 108 42
There have been no additional significant or unusual related party
transactions to those disclosed in the Group's Annual Report for 30 September
2023.
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
C V Isom (Chief Financial Officer)
T Carpenter (Chief Executive, appointed 23 April 2024)
Non-executive
J Brooke (Group Non-Executive Chair, appointed 2 January 2024)
T N Anderson (Deputy Chair)
N C Howlett
J Ward
G P Hooper
Secretary and registered office
C V 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
MHA
6(th) Floor, 2 London Wall Place
London
EC2Y 5AU
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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