Titon Regulatory News (TON)

Titon Holdings Plc

Interim Financial Statements

for the six months ended 31 March 2013

Business Review

Financial performance

Profit before Taxation for the six-month period ended 31 March 2013 was £79,000 (2012: Loss of £400,000) on Revenues 2.5% lower at £7,340,000 (2012: £7,532,000).

Earnings per share for the period were 0.57p (2012: losses per share 2.79p) and the Directors have declared an unchanged interim dividend of 1.0p per share (2012: 1.0p per share).

Net Cash Balances at 31 March 2013 were £2,118,000 (2012: £2,226,000).

Trading commentary

In the 2012 Annual Report we stated that the overriding objective of the Directors is to return the business to profit in the current financial year. I am pleased to report that we have made a profit for the six months ended 31 March 2013 compared to the loss we suffered in the comparable period. However, this positive position is largely due to two factors: the improved return from our Korean operations which is now profitable again as we anticipated at the beginning of the financial year and the cash settlement that we received from Nuaire Limited in the period.

From the UK perspective trading conditions have remained difficult as consumers have generally not felt confident enough to invest in new doors and windows. We are also now seeing the full effects of the decline in social housing that we anticipated in the Annual Report. Both of these factors are symptomatic of the UK economy's well discussed problems: a weak consumer sector accompanied by the Government's austerity programme which has contributed to a reduction in capital projects. This is shown clearly by the very weak construction numbers in the Gross Domestic Product statistics in the last two years. We are in the process of introducing new hardware and ventilation systems products to our customers although we do not expect that there will be any significant impact on our sales in this financial year.

As reported at the last year end, we have taken significant action to reduce our overheads and will continue to seek cost savings in our UK business to reflect the weak trading conditions. Our UK overheads for the 6 months are £266,000 lower than for the same period last year.

I am pleased to report that total revenues from our operations in Korea have improved significantly to £2.2m against £1.3m for the comparable period last year. This is due largely to increased sales to the private house building market than in prior years although the government funded house building market is still an important source of business for us. Higher revenues have also generated pre tax profits in our subsidiary, Titon Korea and our associate company, Browntech Sales. We are very conscious that our partners in Korea have worked very hard to build up this business and we thank them for their efforts.

Elsewhere outside the UK, revenues generated in our export markets have improved by 33% in the six months to 31 March 2013 compared to the comparable period. This is largely due to increased sales to the USA, Germany and Denmark. We will continue to focus on export markets to offset lost sales in the UK.

We have already announced to shareholders that we have reached an agreement to settle our legal action for alleged patent infringement against Nuaire Limited. Nuaire has agreed to cease the sale and marketing of one of its ventilation products and has paid Titon a cash sum disclosed as 'Other income' in the Income Statement. We will take whatever steps are necessary in future to defend our intellectual property as we continue to invest significant resources in developing new products and processes.

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Board Changes

We have already announced that that Peter Fitt and Professor Patrick O'Sullivan have left the Titon Holdings Board in the period. Peter Fitt has been on the Board since the flotation of the Company in 1988 and has been a source of wise counsel for over 25 years. Professor O'Sullivan has been a consultant to the Company since the early 1980's and has been on the Board since 2003 and has contributed significantly to the expertise we have accumulated on ventilation products. We thank them both for their service to Titon and wish them both well for the future.

Prospects

We are encouraged that a small increase in private house building in 2013 is expected but this is countered by the stagnation of social house construction. As I have noted above a large part of our business depends on consumers buying new windows and doors. However, consumer confidence remains fragile and we see few signs of this changing for the positive in the next few months. Over time the Government's Green Deal, which provides funding for people and businesses to become more energy efficient will, hopefully, lead to increased spending on new doors and windows by consumers, but for the immediate future we remain cautious about the prospects for both our UK and export markets in the second half year.

We are optimistic that our operations in Korea will continue to grow during 2013 and we will continue to support them, particularly on the design side, wherever possible.

Our balance sheet remains strong and we have significant cash balances of £2.118,000 (2012: £2,226,000), which will allow us to continue to invest in new products and markets in 2013.

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 2012 within the Directors' Report (page 7) available at www.titonholdings.com. The Board considers that these remain a current reflection of the risks and uncertainties facing the business.

Responsibility Statement

The Directors confirm that, to the best of their knowledge, this condensed set of financial statements has been prepared in accordance with IAS 34 as adopted by the European Union and that this Interim Report includes a fair review of the information required by DTR 4.2.7R and DTR 4.2.8R. 

The Directors of Titon Holdings Plc are listed on page 14 of this document. A list of current directors is maintained on the Group's website: www.titonholdings.com.

On behalf of the Board

K A Ritchie

Chairman

9 May 2013

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Titon Holdings Plc

Consolidated Interim Income Statement

for the six months ended 31 March 2013

Consolidated Interim Statement of Comprehensive Income

for the six months ended 31 March 2013

 The notes on pages 7 to 13 form an integral part of this condensed interim information.

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Titon Holdings Plc

Consolidated Statement of Financial Position

at 31 March 2013

The notes on pages 7 to 13 form an integral part of this condensed interim information.

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Titon Holdings Plc

Consolidated Interim Statement of Changes in Equity

The notes on pages 7 to 13 form an integral part of this condensed interim information.

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Titon Holdings Plc

Consolidated Interim Statement of Cash Flows

for the six months ended 31 March 2013

The notes on pages 7 to 13 form an integral part of this condensed interim information.

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Titon Holdings Plc

Notes to the Condensed Consolidated Interim Statements

at 31 March 2013

1 Basis of preparation

Titon Holdings Plc (the 'Company') is a company domiciled in England. The condensed consolidated interim financial statements of the Group for the six months ended 31 March 2013 comprise the Company and its subsidiaries (together referred to as the 'Group').

The IASB has issued the following revised and updated IFRIC amendments which have been adopted, although they have no impact on the Group's reporting; amendments to IAS 12 - Deferred Tax: Recovery of Underlying Assets. IAS 12 requires an entity to measure the deferred tax relating to an asset depending on whether the entity expects to recover the carrying amount of the asset through use or sale and amendments to IAS 1 - Presentation of Items of Other Comprehensive Income - requires companies to group together items within Other Comprehensive Income (OCI) that may be reclassified to the profit or loss section of the income statement.

Otherwise, the condensed interim financial statements have been prepared using accounting policies set out in the Report and Accounts 2012 and have been applied consistently to all periods presented in these financial statements. They are in accordance with IAS 34. The six months results for both 31 March 2012 and 2013 have neither been audited nor reviewed pursuant to guidance issued by the Auditing Practices Board. The financial information for the year end 30 September 2012 does not constitute the full statutory accounts for that period. The Company's Report and Accounts 2012 have been delivered to the Registrar of Companies. The independent auditors' 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.

The condensed interim financial statements do not constitute full accounts within the meaning of Section 434 of the Companies Act 2006.

The interim report was approved by the Board and authorised for issue on 9 May 2013. Copies of the interim report will be sent to shareholders in the next few weeks.

This statement is being sent to shareholders, will be available on the Group's website at www.titonholdings.com and from the Company's registered office at International House, Peartree Road, Stanway, Colchester, Essex CO3 0JL.

2 Segment reporting

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 :

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 in this note.

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Notes to the Condensed Consolidated Interim Statements

at 31 March 2013

2 Segment reporting (continued)

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.

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Notes to the Condensed Consolidated Interim Statements

at 31 March 2012

2 Segment reporting (continued)

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Notes to the Condensed Consolidated Interim Statements

at 31 March 2013

2 Segment reporting (continued)

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Notes to the Condensed Consolidated Interim Statements

at 31 March 2013

2 Segment reporting (continued)

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.

One customer accounted for more than 10% of Group revenue and sales to this customer totalled £1,413,000 (included within South East Asia)

.

One customer accounted for more than 10% of Group revenue and sales to this customer totalled £980,000 (included within South East Asia)

One customer accounted for more than 10% of Group revenue and sales to this customer totalled £1,916,000 (included within South East Asia)

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Notes to the Condensed Consolidated Interim Statements

at 31 March 2013

3 Tax

Tax for the interim period is charged at 20.0% (six months to 31 March 2012: 20.5%) representing the best estimate of the average annual effective income tax rate for the full financial year.

4 Dividends

An interim dividend in respect of the six months ended 31 March 2013 of 1.0p per share, amounting to a total dividend of £105,000 was approved by the Directors of Titon Holdings Plc on 9 May 2013. These consolidated interim statements do not reflect the dividend payable.

The interim dividend will be payable on 24 June 2013 to the shareholders on the register on 24 May 2013. The ex dividend date is 22 May 2013.

The following dividends have beenrecognisedand paid by the Company:

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Notes to the Condensed Consolidated Interim Statements

at 31 March 2013

5 Earnings per ordinary share

Basic earnings / losses per share has been calculated by dividing the profits / loss attributable to shareholders by the weighted average number of ordinary shares in issue during the period, being 10,555,650 (six months ended 31 March 2012: 10,555,650; year ended 30 September 2012: 10,555,650).

Diluted earnings / losses per share has been calculated by dividing the profits / loss attributable to shareholders by the weighted average number of ordinary shares and potential dilutive ordinary shares during the period, being 10,555,650 (six months ended 31 March 2012: 10,555,650; year ended 30 September 2012: 10,555,650).

6 Property, plant and equipment

Additions and disposals

During the six months ended 31 March 2013, the Group acquired assets with a cost of £55,000 (six months to 31 March 2012: £125,000; year ended 30 September 2012: £327,000).

7 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:

There have been no additional significant or unusual related party transactions to those disclosed in the Group's Annual Report for 30 September 2012.

8 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.

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Directors and Advisors

Directors

Executive

KA Richie (Chairman)

D A Ruffell (Chief Executive)

T N Anderson

N C Howlett

C S Jarvis

Non-executive

J N Anderson (Deputy Chairman)

Secretary and registered office

D A Ruffell

International House

Peartree Road

Stanway

Colchester

Essex CO3 0JL

COMPANY REGISTRATION NUMBER

1604952 (Registered in England & Wales)

WEBSITE

www.titonholdings.com

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