Titon Regulatory News (TON)

Titon Holdings Plc

Business Review

Financial performance

Group Profit before Taxation for the six-month period ended 31 March 2016 was £735,000 (2015: £792,000) on Revenues 1.4% higher at £10,850,000 (2015: £10,699,000).

Earnings per share for the period were 4.55p (2015: 4.59p) and the Directors have declared an unchanged interim dividend of 1.25p per share (2015: 1.25p per share).

Net Cash Balances at 31 March 2016 were £2,458,000 (2015: £2,413,000).

Trading commentary

It is disappointing to report a small fall in Group Profit Before Tax for the six months ended 31st March 2016, down by £57,000, although earnings per share for the period is only fractionally behind last year's result. In summary our performance in Korea has been lower than in the last period, the UK is largely flat but the results from our US business have risen.

Our overall revenue has risen slightly by 1.4% against the last period and we have seen sales rise in the UK marginally and a good rise in the USA. However, we have seen a slight fall in sales in Korea, down by about 2% in the period.

In the UK the performance of our Timber and PVCu Window and Door Hardware division has been disappointing as both sales and profit contribution have fallen below last year. There are a few one off factors that have contributed to this and the contribution from the new hardware products has continued to be disappointing but we are committed to improve our performance here. The Aluminium division has had a very good first half year with both sales and profits up. In our Ventilation Systems Division we saw a very weak start to the period in October 2015, which was echoed by other manufacturers in the sector. Sales have recovered from then and by March 2016 sales had largely recovered from the weak start, which is encouraging.

Outside the UK Ventilation Systems Export sales have risen strongly against the comparable period and we have now seen some consistent customer purchasing, which is pleasing. Sales to our Hardware customers in Europe have fallen slightly but sales by Titon Inc. in the USA have grown helped by a contract to install our products into a large refurbishment project. Our Titon Korea sales are slightly below the prior period and the contribution from Titon Korea has fallen due to lower transfer prices on sales to our Associate, Browntech Sales ("BTS") and some higher administration costs. BTS sales to customers are slightly in front of the prior period as is the profit contribution from BTS.

Investor relations

I have thought for some time that Titon is "below the radar screen" as far as the London stock market is concerned and I am keen to change this to enhance Titon's value. Many shareholders will be aware that in early 2016 we appointed Hardman & Co. to write some research on Titon and to introduce the Company to a range of institutional and high net worth investors. Hardman & Co. published a comprehensive research report on Titon in March and David Ruffell and I have met with a number of institutions since then to introduce Titon to them. We also attended an investor evening organised by Hardman where we presented Titon to about 50 largely high net worth investors. We will continue to "bang the drum" for Titon in the second half year. If any shareholder would like to read this research then please let me know.

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Business Review (continued)

Prospects

We are now within 6 weeks of the referendum to decide if the United Kingdom should remain within the EU and the decision will have significant implications for the UK economy. If we remain in the EU then a major source of uncertainty about the future will be removed; if we vote to leave then the uncertainty we have now will be magnified and will remain a significant risk for the economy for several years to come, as has been pointed out by many commentators. Markets generally prefer stability and we are the same. This gives us, our customers and stakeholders a set of familiar circumstances to make decisions, which is not the same as certainty, I should add. Additionally, we want to continue to have unrestricted access to EU markets both for our suppliers and customers and we also want a good supply of people from Europe as our own unemployment rate moves down towards 5% of the workforce. Accordingly, it is difficult to make many predictions about our own prospects in the UK with the current uncertainty, but the shortage of housing in the UK will remain whatever the result of the referendum. We do anticipate that sales of mechanical ventilation systems will continue to expand in the second half.

In Korea, as we have previously indicated, we are expecting a lower rate of growth for this year as competition increases. However, we remain very positive about the Korean economy and have agreed with BTS that they will continue to look for interesting investments in the property sector. Elsewhere, we are expecting good sales in the USA and Europe and will continue to devote more resources to these markets.

Our balance sheet remains very strong and this gives us the opportunity to invest in new products and a strong research and development programme. I expect this to continue in the second half year. We have a good team of people who work for Titon and I would like to extend my thanks to all of them for the hard work and dedication that they have made and continue to show.

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 2015 within the Report on Risk Management (pages 9 to 13) available at www.titonholdings.com. The Board considers that these remain a current reflection of the risks and uncertainties facing the business. The Board also considers that it is appropriate to adopt the going concern basis of accounting in preparing these financial statements and has not identified any material uncertainties which would prevent us so doing.

Responsibility Statement

The Directors confirm that, to the best of their knowledge, this condensed set of consolidated 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 15 of this document. A list of current directors is maintained on the Group's website www.titonholdings.com. 

On behalf of the Board

KA Ritchie

Chairman

11 May 2016

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Titon Holdings Plc

Consolidated Interim Income Statement

for the six months ended 31 March 2016

Consolidated Interim Statement of Comprehensive Income

for the six months ended 31 March 2016

 The notes on pages 7 to 14 form an integral part of this condensed interim information.

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Titon Holdings Plc

Consolidated Statement of Financial Position

at 31 March 2016

The notes on pages 7 to 14 form an integral part of this condensed interim information.

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Titon Holdings Plc

Consolidated Interim Statement of Changes in Equity

at 31 March 2016

The notes on pages 7 to 14 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 2016

The notes on pages 7 to 14 form an integral part of this condensed interim information.

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Notes to the Condensed Consolidated Interim Statements

at 31 March 2016

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 2016 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, with the exception of IFRSs 9 and 15 where the Group is still assessing the possible future effect of these Standards, they have no impact on the Group's reporting:

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Notes to the Condensed Consolidated Interim Statements

at 31 March 2016

1 Basis of preparation (continued)

Otherwise, the condensed interim financial statements have been prepared using accounting policies set out in the Report and Accounts 2015 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 2015 and 2016 have neither been audited nor reviewed pursuant to guidance issued by the Auditing Practices Board. The financial information for the year end 30 September 2015 does not constitute the full statutory accounts for that period. The Company's Report and Accounts 2015 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 11 May 2016. 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. Sales Administration and Other Expenses are not currently allocated to operating segments in the Group's reporting to the CODM, and Other Expenses include mainly central and parent company overheads relating to group management, the finance function and regulatory requirements. 

The measurement policies the Group uses for segment reporting under IFRS 8 are the same as those used in its financial statements.

The total assets for the segments represent the consolidated total assets attributable to these reporting segments. Parent company results and consolidation adjustments reconciling the segmental results and total assets to the consolidated financial statements, are included within the United Kingdom segment figures stated below.

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Notes to the Condensed Consolidated Interim Statements

at 31 March 2016

2 Segment reporting (continued)

The South Korean Segment profit includes the Group's share of the profits from the Associate.

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Notes to the Condensed Consolidated Interim Statements

at 31 March 2016

2 Segment reporting (continued)

The South Korean Segment profit includes the Group's share of the profits from the Associate.

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Notes to the Condensed Consolidated Interim Statements

at 31 March 2016

2 Segment reporting (continued)

The South Korean Segment profit includes the Group's share of the profits from the Associate.

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Notes to the Condensed Consolidated Interim Statements

at 31 March 2016

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 £3.365m (included within South East Asia).

One customer accounted for more than 10% of Group revenue and sales to this customer totalled £3.445m (included within South East Asia).

Sales to Browntech Sales Co. Ltd (the Group's associate undertaking in South Korea), of £7.161m represent 32.2% of Group Revenue. There are no other concentrations of revenue above 10% during the year (see Note 7 - Related party transactions).

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Notes to the Condensed Consolidated Interim Statements

at 31 March 2016

3 Tax

Tax for the interim period is charged at 25.0% (six months to 31 March 2015: 22.6%) 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 2016 of 1.25p per share, amounting to a total dividend of £135,000 was approved by the Directors of Titon Holdings Plc on 11 May 2016. These consolidated interim statements do not reflect the dividend payable.

The interim dividend will be payable on 24 June 2016 to the shareholders on the register on 3 June 2016. The ex-dividend date is 2 June 2016.

The following dividends have been recognised and paid by the Company:

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Notes to the Condensed Consolidated Interim Statements

at 31 March 2016

5 Earnings per ordinary share

Basic earnings per share has been calculated by dividing the profits attributable to shareholders by the weighted average number of ordinary shares in issue during the period, being 10,663,414 (six months ended 31 March 2015: 10,505,650; year ended 30 September 2015: 10,575,600).

Diluted earnings per share has been calculated by dividing the profits attributable to shareholders by the weighted average number of ordinary shares and potential dilutive ordinary shares during the period, being 10,877,509 (six months ended 31 March 2015: 10,746,848; year ended 30 September 2015: 10,863,888). 

6 Property, plant and equipment

Additions and disposals

During the six months ended 31 March 2016, the Group acquired assets with a cost of £444,000 (six months to 31 March 2015: £298,000; year ended 30 September 2015: £498,000).

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 2015.

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 Ritchie (Chairman)

D A Ruffell (Chief Executive)

T N Anderson

N C Howlett

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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