Preliminary Results - year en

RNS Number : 6241X
Titon Holdings PLC
09 December 2010
 



 

 

Titon Holdings Plc

Preliminary Announcement for the year ended 30 September 2010

 

 

Chairman's Statement

 

Financial Performance

Following two years of losses in the aftermath of the global recession, I am pleased to report a return to profitability during this year. Net Profit before Taxation for the year to 30 September 2010 was  £606,000 (2009: loss £210,000), achieved on increased Revenues of £15.6 million (2009: £14.1 million). Earnings per share for the year were 3.85p (2009: loss 1.91p).

 

Net Cash Balances at the year end were relatively unchanged at £3.11 million (2009: £3.10 million) with cash generation over the year restrained partly by the increase in working capital at our South Korean manufacturing operation. Capital Expenditure levels have also increased to £0.50 million this year (2009: 0.26 million) as a result of investment in new IT systems and in new products to be launched in 2010/11.

 

Reflecting the improved results but acknowledging the still difficult times ahead, the Directors are proposing a final dividend of 1.25p per share (2009: 1.0p).  This, when added to the interim dividend paid on 24 June 2010 gives a total for the year of 2.25p (2009: 2.0p).  If approved by shareholders at the forthcoming Annual General Meeting, the dividend will be payable on 22 February 2011 to shareholders on the register on 21 January 2011.  The ex dividend date is 19 January 2011. The Directors have previously noted the importance of the level of dividend paid to shareholders and, subject to financial performance, intend to adopt a progressive dividend policy going forward.

 

Trading Commentary

Although trading conditions in many of our markets remain subdued, we are pleased to report a satisfactory outcome to the financial year. Building on the £102,000 Profit before Tax reported at the half year, we have seen steady growth in certain key areas of the business over the second half resulting in the increased profit levels now being reported. The overall increase in Revenue over the year was 11.1%, with a 9.2% improvement in the first half and 12.8% in the second half. Sales of own manufactured products have been boosted by growth at our South Korean subsidiary and now account for 64% of total Group Revenues (2009: 57%). This has contributed towards the improvement in Gross Margin.

 

Performance within the UK market, from where we derived over 80% of our Revenues (2009: 84%), has been particularly pleasing despite the general disarray in the UK housing market and the low levels of consumer confidence. We have achieved solid growth with our sales of both passive and powered ventilation products, which has helped us to improve efficiencies within our UK manufacturing operation. As expected, the UK residential ventilation market is changing rapidly as many developers realise the benefits of installing energy efficient heat recovery ventilation systems (MVHR). The growth in this market is being driven by the need to meet the upper levels of the Code for Sustainable Homes and will continue to increase as the Zero Carbon Homes initiative drives up building standards to even higher levels. Titon is now recognised as a major player in this fast developing market and was the first to design and launch the compact and efficient MVHR units widely used today. Our Research and Development team has been further enhanced throughout the year in order that we can maintain this market leading position and new additions to our product range will be launched in 2011.

 

Sales of some of our window and door hardware ranges have fared less well during the year, particularly those products that are sold into the UK commercial aluminium window market. Whilst this market held up strongly at the beginning of the recession it has fallen markedly over the past year as building of schools, hospitals and other commercial buildings stagnates. The expectation is that this market will continue to decline during the current financial year and it may be several years before any real recovery is evident.

 

Page 1

 

 

 

Titon Holdings Plc

Preliminary Announcement for the year ended 30 September 2010

 

Chairman's Statement (continued)

 

Outside the UK, our joint venture in South Korea is now showing the growth that was anticipated. Revenues from our Titon Korea factory increased by 132% over the year to £1.51 million (2009: £0.65 million) and further expansion is planned for the year ahead. As anticipated, this part of our business  has operated profitably over the second half of the year. The full year combined result of Titon Korea Ltd and our interest in Browntech Sales Co. Ltd is now at breakeven level (2009: loss of £0.16 million). We will be upgrading and enhancing our product offering during the coming year in order to maintain our market leading position.

 

Employees

 

Employee numbers have increased from 171 at the beginning of the year to 190 at the 30 September 2010. The rise is largely as a result of a greater number of production operatives at both our UK and our Korean factories in response to increased throughput.

 

The past few years have been most difficult for all our employees as we have dealt with the severe impact of recession whilst implementing the changes necessary to shape the business for the future. Without the support and determination of our employees we would not be in the position of returning these results. We wish to sincerely thank them all for their contribution.

 

Mr Ron Brighton, The Managing Director of our UK Manufacturing Division has announced his retirement and will be leaving office at the end of April 2011, following 32 years of service. Ron has been a Titon Holdings Plc Main Board Director since 1997 and we wish to thank him for his loyal contribution to the success of the Company and wish him and his wife a long, healthy and happy retirement.

 

We are pleased to announce that Mr Kelvin Tabron will be appointed to the Board of the UK operating subsidiary, Titon Hardware Ltd. with effect from 1 January 2011. In the new position as Production Director, Kelvin's role will be to oversee the UK Manufacturing Division following Ron Brighton's retirement.

 

Prospects

 

It is very satisfying to report the steady improvement that has been achieved over the past 18 months, which would appear to signify that difficult times are now behind us. The reality, however, is that the future is still very uncertain. UK Government spending cutbacks are yet to impact fully on the economy and the likely outcome will be a further decline in social housing spending and public building construction. Additionally, the lack of consumer confidence and the difficulty in obtaining mortgage funding will continue to suppress private sector housing activity levels.

 

Against this backdrop, we will endeavour to maintain our momentum in the UK through greater penetration into the fast growing energy efficient ventilation market. We anticipate being able to sustain the improved results through this and through expansion of our overseas activities.

 

 

On behalf of the Board

 

J N Anderson                                                                            

Chairman                                                                                    

 

9 December 2010

Page 2

 

 

 

Titon Holdings Plc

Preliminary Announcement for the year ended 30 September 2010

 

Unaudited Consolidated Income Statement

for the year ended 30 September 2010

 


Unaudited

2010

 

2009


£'000

 

£'000

Revenue

15,609

14,053

Cost of sales

(11,438)

(10,993)

Gross profit

4,171

3,060

Distribution costs

(670)

(625)

Administrative expenses

(2,833)

(2,654)

Operating profit / (loss)

668

(219)

Finance income

29

37

Share of losses from associate

(91)

(28)

Profit / (loss) before tax

 

606

(210)

Income tax (expense) / credit

(199)

8

Profit / (loss) for the year attributable to the equity holders of the parent

 

 

407

 

 

(202)




Earnings / (loss) per share - basic                     

                           

3.85p

(1.91p)

              - diluted

3.85p

(1.91p)




 

 



Unaudited Consolidated Statement of Comprehensive Income

for the year ended 30 September 2010

 

 

                                                                                                       

Unaudited

2010

 

2009


£'000

£'000




Profit / (loss) for the period

407

(202)

Exchange difference on retranslation



of overseas operations

11

(14)

Total comprehensive income / (expense) for the year

attributable to equity holders of the parent

418

(216)

 

 

Page 3

 

 

 

 

 

Titon Holdings Plc

Preliminary Announcement for the year ended 30 September 2010

 

Unaudited Consolidated Statement of Financial Position

at 30 September 2010

 

                                                                                                       


Unaudited

2010

 

2009



£'000

£'000

Assets




Property, plant and equipment                                                                                        


3,744

3,972

Intangible assets

Investments in associates

Financial assets                                                                                                                                                     


214

94

106

88

185

103

Total non-current assets


4,158

4,348

Inventories


2,523

2,057

Trade and other receivables


3,310

2,947

Corporation tax


-

8

Cash and cash equivalents


3,110

3,096

Total current assets


8,943

8,108

Total Assets


13,101

12,456

Liabilities




Deferred tax


449

361

Total non-current liabilities


449

361

Trade and other payables


2,522

2,266

Bank overdraft


-

23

Corporation tax


117

-

Total current liabilities


2,639

2,289

Total Liabilities


3,088

2,650

Equity




Share capital


1,056

1,056

Share premium reserve


865

865

Capital redemption reserve


56

56

Translation reserve


(2)

(13)

Share schemes reserve


9

9

Retained earnings

 

8,029

7,833

Total Equity attributable to equity holders of the parent


10,013

9,806





Total Liabilities and Equity

13,101

12,456

 

 

Page 4

 

 

 

 

Titon Holdings Plc

Preliminary Announcement for the year ended 30 September 2010

 

Unaudited Consolidated Statement of Changes in Equity

at 30 September 2010

 

 

 


Share

Capital

Share

premium

 reserve

Capital

redemption

reserve

Translation

reserve

Share

schemes

 reserve

Retained

earnings

Total

 equity


£'000

£'000

£'000

£'000

£'000

£'000

£'000









At 1 October 2008

1,056

865

56

1

6

8,246

10,230

Translation differences on

overseas operations

-

-

-

(14)

-

-

(14)

Loss for the year

-

-

-

-

-

(202)

(202)

Total Comprehensive expense for the year

-

-

-

(14)

-

(202)

(216)

Dividends paid

-

-

-

-

-

(211)

(211)

Share-based payment expense

-

-

-

-

3

-

3

At 30 September 2009

1,056

865

56

(13)

9

7,833

9,806

Translation differences on

overseas operations

-

-

-

11

-

-

11

Profit for the year

-

-

-

-

-

407

407

Total Comprehensive income  for the year

-

-

-

11

-

407

418

Dividends paid

-

-

-

-

-

(211)

(211)

At 30 September 2010

1,056

865

56

(2)

9

8,029

10,013

 

 

Page 5

 

 

 

 

Titon Holdings Plc

Preliminary Announcement for the year ended 30 September 2010

 

 

Unaudited Consolidated Statement of Cash Flows

for the year ended 30 September 2010

 

 

                                                                                                       

Unaudited

2010

 

2009


£'000

£'000

Cash generated from operating activities



Profit/ (loss) before tax

606

(210)

Depreciation of property, plant & equipment

560

616

Amortisation on intangible assets

38

30

(Increase) / decrease in inventories

(461)

437

(Increase) / decrease in receivables

(360)

274

Increase / (decrease) in payables and other current liabilities

256

(161)

(Profit) / loss on sale of plant & equipment

(12)

8

Share based payment - equity settled

-

3

Interest received

(29)

(37)

Share of associate loss

91

28

Cash generated from operations

689

988

Income taxes refunded/ (paid)

14

(11)

Net cash generated from operating activities

703

977

Cash flows from investing activities



Purchase of plant & equipment

(332)

(206)

Purchase of intangible assets

(164)

(57)

Proceeds from sale of plant & equipment

12

5

Interest received

29

37

Net cash used in investing activities

(455)

(221)

Cash flows from financing activities



Dividends paid to equity shareholders

(211)

(211)

Net cash used in financing activities

(211)

(211)




Net increase in cash & cash equivalents

37

545

Cash & cash equivalents at beginning of the year

3,073

2,528

Cash & cash equivalents at end of the year

3,110

3,073

 

 

Page 6

 


 

Titon Holdings Plc

Notes to the Preliminary Announcement for the year ended 30 September 2010

 

 

 

1    Earnings / (loss) per ordinary share

 

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

 


Unaudited



2010

2009


£'000

£'000

Numerator



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



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

407

(202)




Denominator

Number

Number

Weighted average number of ordinary shares for the purposes of basic



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

10,555,650

10,555,650




Earnings / (loss) per share (pence)



Basic

3.85p

(1.91p)

Diluted

3.85p

(1.91p)

 

 

 

 

2   Dividends

           


Unaudited

2010

 

2009


£'000

£'000

Final dividend of 1.0 pence (2009: 1.0 pence) per ordinary

share paid and proposed during the year relating to the

previous year's results

 

                       106

 

106

Interim dividend of 1.0 pence (2009: 1.0 pence) per ordinary

share paid during the year

                105

105


               211

211

 

 

The Directors are proposing a final dividend of 1.25 pence (2010: 1.0 pence) per share. This will result in a final dividend totalling £132,000 (2010: £106,000), 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 2010

 

 

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 2010:


   Unaudited

             2010

 

2009     

      

£'000

£'000

Cash available on demand

130

221

Short-term deposits

2,980

2,875

Cash at bank

3,110

3,096

Overdraft

-

(23)


3,110

3,073

Net increase in cash equivalents

37

545

Cash and cash equivalents at beginning of year

3,073

2,528

Cash and cash equivalents at end of year

3,110

3,073

 

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. Research and development expenses are included within the total un-allocated expenses figures set out below.

 

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 below.

 

 

Page 8

 

 

 

Titon Holdings Plc

Notes to the Preliminary Announcement for the year ended 30 September 2010

 

 

Revenue and segmental information (continued)

 

Business segment


Unaudited

Unaudited

Unaudited

Unaudited

For the year ended

30 September 2010

United

 Kingdom

South

 Korea

All other

 countries

                   Consolidated


£'000

£'000

£'000

£'000

12,560

1,514

1,535

15,609

Inter-segment revenue

-

-

197

197

Total Revenue

12,560

1,514

1,732

15,806

Depreciation and amortisation

553

5

40

598

Operating profit - segment result

2,401

80

31

2,512

Unallocated expenses




(1,844)

Losses from associates




(91)

Finance income




29

Profit before tax




606

Tax expense




(199)

Profit for the year attributable to the equity holders of the parent




407

Total assets

11,765

1,135

201

13,101

Total assets include:

Investments in associates

94

-

-

94

Additions to non-current assets

(other than financial instruments

 and deferred tax assets)

412

84

-

496

 

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 2010

United

Kingdom

Europe

USA

South

East

Asia

All

Other

regions

Total








Revenues

£'000

£'000

£'000

£'000

£'000

£'000

By entities' country of domicile

13,667

-

428

1,514

-

15,609

By country from which derived

12,560

1,056

428

1,557

8

15,609

Non-current assets







By entities' country of domicile

4,015

-

14

142

-

4,171

 

 

Page 9

 

 

 

 

Titon Holdings Plc

Notes to the Preliminary Announcement for the year ended 30 September 2010

 

Revenue and segmental information (continued)

 

Business segment

 

For the year ended

30 September 2009

United

 Kingdom

South

 Korea

All other

 countries

                   Consolidated







£'000

£'000

£'000

£'000

Segment revenue

11,864

648

1,541

14,053

Inter-segment revenue

-

-

177

177

Total Revenue

11,864

648

1,718

14,230

Depreciation and amortisation

615

24

7

646

Operating profit / (loss) - segment result

1,551

(132)

176

1,595

Unallocated expenses




(1,814)

Losses from associates




(28)

Finance income




37

Loss before tax




(210)

Tax credit




8

Loss for the year attributable to the equity holders of the parent




(202)

Total assets

11,552

743

161

12,456

Total assets include:

Investments in associates

185

-

-

185

Additions to non-current assets

(other than financial instruments

and deferred tax assets)

234

13

16

263

 

 

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 2009

United

Kingdom

Europe

USA

South

East

Asia

All

Other

regions

Total








Revenues

£'000

£'000

£'000

£'000

£'000

£'000

By entities' country of domicile

12,817

-

588

648

-

14,053

By country from which derived

11,864

804

588

788

9

14,053

Non-current assets







By entities' country of domicile

4,236

-

14

98

-

4,348

 

 

Page 10

 

 

 

 

Titon Holdings Plc

Notes to the Preliminary Announcement for the year ended 30 September 2010

 

Revenue and segmental information (continued)

 

Business segments

The Group's operations are separated between Group manufactured products and bought in products. The following table provides an analysis of the Group's external revenue by source of products, irrespective of the geographical region of sale.


      Unaudited

                     2010

     

       2009


£'000

      £'000

Group manufactured products

10,025

8,077

Bought in products

5,584

5,976

 

Revenue

15,609

14,053

 

 

 

5       Tax expense / (credit)

                                                                                                       

Unaudited

2010

 

2009


£'000

£'000

UK corporation tax expense / (credit)

117

(8)

Adjustment in respect of (over) / under provision in prior years                                    

(6)

6

Total UK corporation tax                

111

(2)

Deferred tax - origination and reversal of temporary differences

88

(6)

Total tax expense / (credit)

199

(8)

 

 

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



per the income statement as follows:                                                           


 


£'000

£'000

Profit / (loss) before tax

Effect of:

 

606

(210)

Expected tax charge based on the standard rate of



corporation tax in the UK of 28% (2009: 21%)

170

(44)

Additional deduction for R&D expenditure

(44)

(29)

Income not taxable

(6)

-

Expenses not deductible for tax purposes

12

40

Difference in deferred tax rates

106

-

Marginal relief

(5)

-

(Relieved) / unrelieved tax losses

(22)

27

Adjustment in respect of IBAs

(6)

(6)

Effect of difference in exchange rates

-

(2)

Adjustments in respect of prior periods

(6)

6

Total tax expense / (credit) for the year

199

(8)

 

The effective tax rate for the year is 32.8% (2009: 3.8%)

                                                                                                    

                                                                                                    

                                                                                         Page 11

 

 

 

 

Titon Holdings Plc

Notes to the Preliminary Announcement for the year ended 30 September 2010

 

 

 

6   Basis of preparation

 

The financial information for the year ended 30 September 2010 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 2009 Financial Statements which is available from the Group's website at www.titonholdings.com.

 

Except for the implementation of IFRS 8 and IAS 1 there have been no changes to the accounting policies during the year.

 

·   IAS 1 (revised) updates the presentation of the key statements of performance and position for the Group.

 

·   IFRS 8 introduces new requirements for segmental reporting to be based on the information provided to the Chief Operating Decision Maker (CODM). It also introduces additional disclosure and reconciliation requirements. The segmental reporting bases used in previous years are those which are currently reported to the CODM, hence the only changes to the segmental reporting for 2009/10 are in respect of the additional disclosure.

 

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 2010 or 2009.

 

The financial information for the year ended 30 September 2009 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. The statutory accounts for 2010, 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 17 February 2011.

 

 

 

 

Titon Holdings Plc

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

 

 

 

 

Page 12


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