Preliminary Announcement 2007

Titon Holdings PLC 06 December 2007 Titon Holdings Plc Preliminary Announcement for the year ended 30 September 2007 Chairman's Statement Financial Performance Profit before tax for the year to 30 September 2007 was 48.3% down at £0.46 million (2006: £0.89 million), on Revenue 4.2% higher at £17.29 million (2006: £16.60 million). Due to a lower tax charge, earnings per share were only 34% lower at 4.2p (2006: 6.4p). Year end cash reserves have reduced to £1.67 million (2006: £2.07 million). The Directors have spent a considerable time this year on determining the amount of the final dividend to be proposed to shareholders. We are aware of the significance of the dividend to shareholders, as we have previously acknowledged. However, the financial results for the year do not permit us to maintain the final dividend at the same level as last year and unfortunately, it is necessary for us to reduce it to an amount more closely aligned with this year's earnings per share. We are also concerned about conserving the cash reserves of the Group to ensure that we are positioned to take advantage of new opportunities as they arise. As a major shareholder in the Company, I have benefited from the dividends paid to shareholders in recent years. Given this, and the need to reduce the final dividend this year, I have decided that, on this occasion, I will waive my entitlement to the final dividend on my personally owned 2,012,802 shares. This means that the final dividend proposed can be increased to 2.3p per share (2006: 4.8p) for all other shareholders rather than 1.9p per share if I received the final dividend on my shareholding. This final dividend of 2.3p per share, when added to the interim dividend paid in May 2007, makes a total for the year of 4.6p (2006: 7.1p). The dividend will be payable on 22 February 2008 to shareholders on the register on 1 February 2008. The ex dividend date is 30 January 2008. Trading Commentary This has been a disappointing trading year for Titon. Although the first half-year was in line with market expectations, the second period showed very low levels of profit, whilst sales growth was curtailed by subdued markets, both at home and abroad. In August, the Company issued a trading update to make shareholders aware of the disappointing second half performance and I am now able to report that the final outcome for the year of Profit before tax of £0.46m was in line with the forecast made at the time. As reported at the time of the trading update, our margins during the year have been adversely impacted by a number of factors. These include increases in raw material prices, the knock on effects of the Building Regulation changes, the initial costs of moving our zinc die casting production to Eastern Europe, and the problems in the US housing market combined with the weakness of the US Dollar. The increases in raw material prices were significant in many instances, and have been compounded by cost increases in other areas such as power and carriage. I am pleased to report that, in response to this, as the financial year ended, we were able to implement a price increase on our own manufactured products, which will be fully effective during 2008. Furthermore, the Group continues to seek reductions in prices from our suppliers to assist in improving gross margins. The improved effects of both of these initiatives, together with the savings forecast for outsourcing our die-casting operations, are encouraging. The changes to the Building Regulations that occurred in the previous year have also had a major impact on profitability during 2006/7. In order to assist with compliance with the new Regulations, we have introduced several new ranges of background ventilators. These new ranges have higher ventilation flows and will replace many of the existing ranges. During the year we have introduced these new ranges running them concurrently with existing products in order to provide a smooth changeover for our customers. The duplication of products has led to inefficiencies within our production processes, which are now being eliminated as the older products are withdrawn. Our Export Sales have also been under pressure during the year, with the weakness of the US Dollar and the housing market in the USA having a detrimental effect on our trading. We have also experienced subdued trading in our European market towards the latter part of the reporting year. Total Export Sales ended the year at £2,010,000 (2006 : £2,173,000). In response to the continued dollar weakness, we have implemented a substantial price increase on our US business from January 2008. The Board is committed to establishing Titon as a leading supplier of ventilation systems and I am pleased to report continued growth in this respect. The market for powered ventilation systems in the UK is expanding as increased air tightness standards for dwellings make these systems more popular. The 'Code for Sustainable Homes' will drive the market towards energy efficient solutions, creating further opportunities for suppliers such as Titon to offer professionally specified and expertly installed systems. We are continually looking for new opportunities in this market. Employees Our average number of employees over the year increased slightly to 260 (2006 : 255). This increase was largely due to taking on temporary factory staff to build up stocks prior to moving our die casting facilities and to dealing with the product range changes explained above. Employee numbers have, however, been reduced over recent months and currently stand at 246. Due to the reduced level of profit we have postponed this year's October staff pay award until April 2008, when it will be considered again. On behalf of the Board I would like to thank all of our team for their patience and understanding as we address the profitability issue. Prospects The increases in selling prices and the reduction in costs are being aggressively driven and closely monitored by the Board. Further cost reductions will occur during the year as current contractual commitments end. The UK window market, into which we predominantly sell, remains subdued although we do expect our export sales to return to growth next year. Although the UK new build market is entering a period of uncertainty, we are confident that any decline in sales of our traditional window ventilation products will be offset by improved sales of powered ventilation systems. John Anderson Chairman 6 December 2007 Titon Holdings Plc Preliminary Announcement for the year ended 30 September 2007 Unaudited Consolidated Income Statement for the year ended 30 September 2007 2007 2006 £'000 £'000 Revenue 17,285 16,600 Cost of sales 13,482 12,439 -------------------------------------------------------------------------------- Gross profit 3,803 4,161 Distribution costs 618 690 Administrative expenses 2,828 2,689 -------------------------------------------------------------------------------- 3,446 3,379 ------------------ Operating profit 357 782 Finance income 102 112 -------------------------------------------------------------------------------- Profit before tax 459 894 Tax expense 15 219 -------------------------------------------------------------------------------- Profit for the year attributable to the equity holders of the parent 444 675 -------------------------------------------------------------------------------- Earnings per share - basic - basic 4.21p 6.40p - diluted 4.21p 6.40p Unaudited Consolidated Statement of Recognised Income and Expense for the year ended 30 September 2007 2007 2006 £'000 £'000 Profit for the year attributable to the equity holders of the parent 444 675 Exchange difference on retranslation of net assets of subsidiary undertakings 16 20 -------------------------------------------------------------------------------- Total recognised income and expense for the year attributable to equity holders of the parent 460 695 -------------------------------------------------------------------------------- Titon Holdings Plc Preliminary Announcement for the year ended 30 September 2007 Unaudited Consolidated Balance Sheet at 30 September 2007 2007 2006 £'000 £'000 Assets Property, plant and equipment 4,662 5,009 Intangible assets 58 67 -------------------- Total non-current assets 4,720 5,076 -------------------- Inventories 2,983 2,950 Trade and other receivables 3,785 3,624 Corporation tax 31 - Cash at bank 1,678 2,078 -------------------- Total current assets 8,477 8,652 -------------------------------------------------------------------------------- Total Assets 13,197 13,728 -------------------------------------------------------------------------------- Liabilities Deferred tax 170 170 -------------------- Total non-current liabilities 170 170 -------------------- Trade and other payables 2,190 2,362 Bank overdraft 13 9 Corporation tax - 75 -------------------- Total current liabilities 2,203 2,446 -------------------------------------------------------------------------------- Total Liabilities 2,373 2,616 -------------------------------------------------------------------------------- Equity Share capital 1,056 1,056 Share premium reserve 865 865 Capital redemption reserve 56 56 Translation reserve 33 17 Share schemes reserve 3 2 Retained earnings 8,811 9,116 -------------------------------------------------------------------------------- Total Equity attributable to equity holders of the parent 10,824 11,112 -------------------------------------------------------------------------------- Total Liabilities and Equity 13,197 13,728 -------------------------------------------------------------------------------- Titon Holdings Plc Preliminary Announcement for the year ended 30 September 2007 Unaudited Consolidated Cash Flow Statement for the year ended 30 September 2007 2007 2006 £'000 £'000 Cash generated from operating activities Operating profit 357 782 Depreciation of property, plant & equipment 675 682 Amortisation on intangible assets 35 25 Increase in inventories (33) (424) (Increase) / decrease in receivables (149) 76 Decrease in payables and other current liabilities (168) (66) Profit on sale of plant & equipment (31) (22) Share based payment - equity settled 1 1 -------------------------------------------------------------------------------- Cash generated from operations 687 1,054 -------------------------------------------------------------------------------- Income taxes paid (121) (221) -------------------------------------------------------------------------------- Net cash generated from operating activities 566 833 ------------------------- ------------------------------------------------------ Cash flows from investing activities Purchase of property, plant & equipment (363) (1,485) Purchase of intangible assets (26) (86) Proceeds from sale of plant & equipment 66 58 Interest received 102 112 -------------------------------------------------------------------------------- Net cash used in investing activities (221) (1,401) -------------------------------------------------------------------------------- Cash flows from financing activities Dividends paid to equity shareholders (749) (749) Proceeds from issue of share capital - 27 -------------------------------------------------------------------------------- Net cash used in financing activities (749) (722) -------------------------------------------------------------------------------- Net decrease in cash & cash equivalents (404) (1,290) Cash & cash equivalents at beginning of the year 2,069 3,359 -------------------------------------------------------------------------------- Cash & cash equivalents at end of the year 1,665 2,069 -------------------------------------------------------------------------------- Titon Holdings Plc Notes to the Preliminary Announcement for the year ended 30 September 2007 1 Earnings per ordinary share The calculation of the basic and diluted earnings per share is based on the following data: 2007 2006 £'000 £'000 Earnings Earnings for the purposes of basic earnings per share being profit aftertaxation attributable to members of Titon Holdings Plc 444 675 -------------------------------------------------------------------------------- Shares Number Number Weighted average number of ordinary shares for the purposes of basic earnings per share 10,555,650 10,547,501 Effect of dilutive potential ordinary shares: share options - 1,706 -------------------------------------------------------------------------------- Weighted average number of ordinary shares for the purposes of diluted earnings per share 10,555,650 10,549,207 -------------------------------------------------------------------------------- Earnings per share (pence) Basic 4.21p 6.40p Diluted 4.21p 6.40p -------------------------------------------------------------------------------- 2 Dividends 2007 2006 £'000 £'000 Final dividend of 4.8 pence (2006 : 4.8 pence) per ordinary share paid and proposed during the year relating totheprevious year's results 506 506 Interim dividend of 2.3 pence (2006: 2.3 pence) per ordinary share paid during the year 243 243 -------------------------------------------------------------------------------- 749 749 -------------------------------------------------------------------------------- The Directors are proposing a final dividend of 2.3 pence (2006: 4.8 pence) per share. After the waiver of dividend on 2,012,802 shares this results in a final dividend totalling £196,000 (2006: £507,000), subject to approval by the shareholders at the Annual General Meeting. This dividend has not been accrued at the balance sheet date. 3 Analysis of cash and cash equivalents The table below provides an analysis of net cash and cash equivalents during the year ended 30 September 2007: 2007 2006 £'000 £'000 Cash available on demand 378 58 Short-term deposits 1,300 2,020 ------------------------- Cash at bank 1,678 2,078 Overdraft (13) (9) -------------------------------------------------------------------------------- 1,665 2,069 -------------------------------------------------------------------------------- Net cash decrease in cash and cash equivalents (404) (1,290) -------------------------------------------------------------------------------- Cash and cash equivalents at beginning of year 2,069 3,359 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Cash and cash equivalents at end of year 1,665 2,069 -------------------------------------------------------------------------------- 4 Basis of Preparation The accounting polices of the Group under International Financial Reporting Standards (IFRSs) are set out in detail in the 2006 Financial Statement which is available from the Group's website at www.titonholdings.com. The financial information set out above does not constitute the Group's statutory accounts for the years ended 30 September 2007 or 2006. The financial information for the year ended 30 September 2006 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 include references to any matters to which the auditors drew attention by way of emphasis without qualifying their report and did not contain statements under the Companies Act 1985, s 237(2) or (3). The statutory accounts for 2007, 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. Registered Office: International House, Peartree Road, Stanway, Colchester, Essex CO3 0JL. Registered in England and Wales (registered no. 1604952). This information is provided by RNS The company news service from the London Stock Exchange

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