Titon Regulatory News (TON)

6 Dec 2007 07:00

Titon Holdings PLC06 December 2007 Titon Holdings PlcPreliminary 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 £0.46million (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 amountof the final dividend to be proposed to shareholders. We are aware of thesignificance of the dividend to shareholders, as we have previouslyacknowledged. However, the financial results for the year do not permit us tomaintain the final dividend at the same level as last year and unfortunately, itis necessary for us to reduce it to an amount more closely aligned with thisyear's earnings per share. We are also concerned about conserving the cashreserves of the Group to ensure that we are positioned to take advantage of newopportunities as they arise. As a major shareholder in the Company, I have benefited from the dividends paidto shareholders in recent years. Given this, and the need to reduce the finaldividend this year, I have decided that, on this occasion, I will waive myentitlement to the final dividend on my personally owned 2,012,802 shares. Thismeans 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 thefinal dividend on my shareholding. This final dividend of 2.3p per share, whenadded to the interim dividend paid in May 2007, makes a total for the year of4.6p (2006: 7.1p). The dividend will be payable on 22 February 2008 toshareholders on the register on 1 February 2008. The ex dividend date is 30January 2008. Trading Commentary This has been a disappointing trading year for Titon. Although the firsthalf-year was in line with market expectations, the second period showed verylow levels of profit, whilst sales growth was curtailed by subdued markets, bothat home and abroad. In August, the Company issued a trading update to makeshareholders aware of the disappointing second half performance and I am nowable 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 havebeen adversely impacted by a number of factors. These include increases in rawmaterial prices, the knock on effects of the Building Regulation changes, theinitial costs of moving our zinc die casting production to Eastern Europe, andthe problems in the US housing market combined with the weakness of the USDollar. The increases in raw material prices were significant in many instances, andhave been compounded by cost increases in other areas such as power andcarriage. I am pleased to report that, in response to this, as the financialyear ended, we were able to implement a price increase on our own manufacturedproducts, which will be fully effective during 2008. Furthermore, the Groupcontinues to seek reductions in prices from our suppliers to assist in improvinggross margins. The improved effects of both of these initiatives, together withthe savings forecast for outsourcing our die-casting operations, areencouraging. The changes to the Building Regulations that occurred in the previous year havealso had a major impact on profitability during 2006/7. In order to assist withcompliance with the new Regulations, we have introduced several new ranges ofbackground ventilators. These new ranges have higher ventilation flows and willreplace many of the existing ranges. During the year we have introduced thesenew ranges running them concurrently with existing products in order to providea smooth changeover for our customers. The duplication of products has led toinefficiencies within our production processes, which are now being eliminatedas the older products are withdrawn. Our Export Sales have also been under pressure during the year, with theweakness of the US Dollar and the housing market in the USA having a detrimentaleffect on our trading. We have also experienced subdued trading in our Europeanmarket towards the latter part of the reporting year. Total Export Sales endedthe year at £2,010,000 (2006 : £2,173,000). In response to the continued dollarweakness, we have implemented a substantial price increase on our US businessfrom January 2008. The Board is committed to establishing Titon as a leading supplier ofventilation systems and I am pleased to report continued growth in this respect.The market for powered ventilation systems in the UK is expanding as increasedair tightness standards for dwellings make these systems more popular. The 'Codefor Sustainable Homes' will drive the market towards energy efficient solutions,creating further opportunities for suppliers such as Titon to offerprofessionally specified and expertly installed systems. We are continuallylooking 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 tobuild up stocks prior to moving our die casting facilities and to dealing withthe product range changes explained above. Employee numbers have, however, beenreduced over recent months and currently stand at 246. Due to the reduced level of profit we have postponed this year's October staffpay award until April 2008, when it will be considered again. On behalf of theBoard I would like to thank all of our team for their patience and understandingas we address the profitability issue. Prospects The increases in selling prices and the reduction in costs are beingaggressively driven and closely monitored by the Board. Further cost reductionswill occur during the year as current contractual commitments end. The UK window market, into which we predominantly sell, remains subdued althoughwe do expect our export sales to return to growth next year. Although the UK newbuild market is entering a period of uncertainty, we are confident that anydecline in sales of our traditional window ventilation products will be offsetby improved sales of powered ventilation systems. John AndersonChairman 6 December 2007 Titon Holdings PlcPreliminary Announcement for the year ended 30 September 2007 Unaudited Consolidated Income Statementfor the year ended 30 September 2007 2007 2006 £'000 £'000 Revenue 17,285 16,600Cost of sales 13,482 12,439--------------------------------------------------------------------------------Gross profit 3,803 4,161Distribution costs 618 690Administrative expenses 2,828 2,689-------------------------------------------------------------------------------- 3,446 3,379 ------------------Operating profit 357 782Finance income 102 112--------------------------------------------------------------------------------Profit before tax 459 894Tax expense 15 219--------------------------------------------------------------------------------Profit for the year attributable to theequity 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 Expensefor the year ended 30 September 2007 2007 2006 £'000 £'000Profit for the year attributable to theequity holders of the parent 444 675 Exchange difference on retranslation ofnet 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 PlcPreliminary Announcement for the year ended 30 September 2007 Unaudited Consolidated Balance Sheetat 30 September 2007 2007 2006 £'000 £'000Assets Property, plant and equipment 4,662 5,009Intangible assets 58 67 --------------------Total non-current assets 4,720 5,076 --------------------Inventories 2,983 2,950Trade and other receivables 3,785 3,624Corporation 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 2,362Bank overdraft 13 9Corporation tax - 75 --------------------Total current liabilities 2,203 2,446--------------------------------------------------------------------------------Total Liabilities 2,373 2,616--------------------------------------------------------------------------------Equity Share capital 1,056 1,056Share premium reserve 865 865Capital redemption reserve 56 56Translation reserve 33 17Share schemes reserve 3 2Retained 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 PlcPreliminary Announcement for the year ended 30 September 2007 Unaudited Consolidated Cash Flow Statementfor the year ended 30 September 2007 2007 2006 £'000 £'000Cash generated from operating activitiesOperating profit 357 782 Depreciation of property, plant & equipment 675 682Amortisation on intangible assets 35 25Increase in inventories (33) (424)(Increase) / decrease in receivables (149) 76Decrease 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 58Interest 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 PlcNotes 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 thefollowing data: 2007 2006 £'000 £'000EarningsEarnings for the purposes of basic earningsper share being profit aftertaxation attributableto members of Titon Holdings Plc 444 675-------------------------------------------------------------------------------- Shares Number NumberWeighted average number of ordinary shares for thepurposes of basic earnings per share 10,555,650 10,547,501Effect of dilutive potentialordinary 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 6.40pDiluted 4.21p 6.40p-------------------------------------------------------------------------------- 2 Dividends 2007 2006 £'000 £'000Final dividend of 4.8 pence (2006 : 4.8 pence) per ordinary share paid and proposed during the yearrelating 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) pershare. After the waiver of dividend on 2,012,802 shares this results in a finaldividend totalling £196,000 (2006: £507,000), subject to approval by theshareholders at the Annual General Meeting. This dividend has not been accruedat the balance sheet date. 3 Analysis of cash and cash equivalents The table below provides an analysis of net cash and cash equivalents during theyear ended 30 September 2007: 2007 2006 £'000 £'000Cash available on demand 378 58Short-term deposits 1,300 2,020 -------------------------Cash at bank 1,678 2,078Overdraft (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 ReportingStandards (IFRSs) are set out in detail in the 2006 Financial Statement which isavailable from the Group's website at www.titonholdings.com. The financial information set out above does not constitute the Group'sstatutory accounts for the years ended 30 September 2007 or 2006. The financialinformation for the year ended 30 September 2006 is derived from the statutoryaccounts for that year which have been delivered to the Registrar of Companies.The auditors have reported on those accounts; their report was unqualified, didnot include references to any matters to which the auditors drew attention byway of emphasis without qualifying their report and did not contain statementsunder 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 ofthe financial information presented by the Directors in this preliminaryannouncement and will be delivered to the Registrar of Companies following theCompany'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