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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Titon Holdings Plc | LSE:TON | London | Ordinary Share | GB0008941402 | ORD 10P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 85.00 | 80.00 | 90.00 | 85.00 | 85.00 | 85.00 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Manufacturing Industries,nec | 22.33M | -686k | -0.0610 | -13.93 | 9.56M |
From May 2019 to May 2024
TIDMTON
RNS Number : 3151K
Titon Holdings PLC
13 December 2018
13 December 2018 LEI: 213800ZHXS8G27RM1DD7
Titon Holdings PLC
Preliminary results for the year to 30 September 2018
Another record year of delivery
Titon Holdings Plc ("Titon", the "Group" or the "Company"), a leading international manufacturer and supplier of ventilation systems, and window and door hardware, is pleased to announce its preliminary results for the year ended 30 September 2018.
Summary Financial Results
Hot Features
Premium
2018 2017 Change
Net revenue GBP29.9m GBP28.0m +7%
EBITDA GBP2.85m GBP2.46m +16%
EBIT GBP2.19m GBP1.85m +18%
Profit before tax GBP2.98m GBP2.49m +20%
Earnings per share (EPS) 19.17p 16.55p +16%
Full year dividends per
share (DPS) 4.75p 4.20p +13%
Financial Highlights
-- Group net revenue rose 7% to a record GBP29.9 million (2017: GBP28.0 million), an increase of 8% on a constant currency basis.
-- Gross profit margin increased by 0.9%, to 26.8%. -- Profit before tax of GBP2.98 million increased by 20% (2017: GBP2.49 million).
-- Proposed final dividend of 3.0 pence per share, up 11% (2017: 2.7 pence), taking dividends for the full year to 4.75 pence, an increase of 13% (2017: 4.2 pence).
-- Net cash at 30 September 2018 of GBP3.42 million (2017: GBP3.27 million). -- Maiden cash dividend of GBP433,000 paid by Titon Korea to the Company. -- Group return on capital employed (ROCE) (1) of 15.3% (2017: 15.1%). -- Trading for the first two months of 2019 in line with expectations.
Operational highlights
-- Titon Korea's revenue grew by 21% and its net profit after tax rose by 24%; it remains the Group's largest contributor to Group profits.
-- The UK and European based businesses saw revenue rise 7% in the year:
-- Mechanical ventilation products again performed well, with good growth in exports in both existing and new markets in Continental Europe, up by 13%.
-- The UK hardware business also improved on last year with Titon branded door and window products recording 34% growth in revenue; other sub-sectors also continued to grow.
-- Sales in the USA have fallen significantly in the year due to the completion of a large subsidised maintenance programme and a general slowdown in Titon's regional markets. Titon's US business represents only 2% of Group revenue (2017: 6%) and there are a number of projects in the pipeline, which, if delivered, will return the US business to growth.
-- The Group has also continued to promote the benefits of good indoor air quality in the UK.
Executive Chairman Keith Ritchie said: "It was another record year for Titon with revenues of GBP30 million and profit before tax growing by 20%, to GBP2.98 million. The total dividend for the year was also increased by 13% which is now the 6(th) consecutive year of rising dividends underpinned by a robust balance sheet and a growing cash position.
"The UK economy continues to grow at a modest rate in both historic and relative terms with consensus forecasts for GDP growth clustered around 1.5% per annum in both 2019 and 2020. These forecasts, too, are made assuming that the UK reaches an agreement with the EU about withdrawing in an orderly manner and any continuing uncertainty is unwelcome to our business. In the first two months of the new fiscal year, we have been pleased with UK and Continental European trading, which is in line with the same period in 2017, when October and November were particularly good months.
"In South Korea, the World's 12th largest economy(2) and the Group's largest net profit contributor, Q3 of calendar 2018 saw slightly slower GDP growth in relative terms at 2.0% compared with 2.8% in Q2 due largely to weaker construction and business investment. We anticipate that increasing levels of air pollution may raise demand for mechanical ventilation units over natural ventilation products in fiscal 2019, resulting in a slowdown in our core natural ventilation business. We are, however, in the process of developing new solutions for the South Korean ventilation market. Most importantly, the trajectory of the South Korean economy remains enviably positive with FocusEconomics forecasting GDP growth of 2.6% in both 2019 and 2020 as Government spending increases and monetary policy remains accommodative. We are therefore positive on the medium-term outlook for our South Korean business.
"Titon builds and delivers popular products across a unique geographical spread. It has good people and a perennially strong balance sheet. We also continue to look for new opportunities for growth within our target markets. 2019 may be a more testing year in South Korea and the UK, compounded by the continuing uncertainty over Brexit. However, provided that Brexit doesn't negatively impact the UK economy we expect another year of growth in revenue and profits for Titon in line with market expectations.
For further information please contact:
Titon Holdings Plc
Keith Ritchie, Executive Chairman Tel: +44 (0)1206
713821
Shore Capital - Nominated Adviser and Tel: +44 (0)20
Broker 7408 4090
Dru Danford
Edward Mansfield
Daniel Bush
Notes:
(1) ROCE is calculated by dividing EBIT by capital employed (capital employed being the sum of shareholders' funds, non-controlling interests and all debt less intangible assets and cash)
(2) International Monetary Fund data at May 2018
Chairman's Statement
It was another record year for Titon, generating revenue of GBP30 million and delivering a 20% increase in profit before tax to GBP3.0 million. The total declared dividend for the year was also increased by 13%.
Profit and loss
In the year ended 30 September 2018, the Group's net revenue (which excludes inter-segment activity) rose 7% to GBP29.9 million (2017: GBP28.1 million). On a constant currency basis, however, the increase is 8%.
The gross margin increased from 25.9% to 26.8% and EBITDA was 16% higher at GBP2.85 million (2017: GBP2.46 million). Earnings before interest and tax (EBIT) or operating profit rose 18% to GBP2.19 million (2017: GBP1.85 million) with the operating margin higher at 7.3% (2017: 6.6%).
Net interest contributed GBP13,000 (2017: GBP10,000) while the share of profits from the Group's associate (in South Korea) rose 23% to GBP778,000 (2017: GBP633,000) resulting in profit before tax of GBP2.98 million, which was an increase of 20% (2017: GBP2.49 million). On a constant currency basis there was no material change to the 2018 profit before tax.
Earnings per share for the year increased 16% to 19.2 pence (2017: 16.5 pence). The effective rate of taxation increased to 12% (2017: 11%).
The Directors are proposing a final dividend of 3.0 pence per share (2017: 2.7 pence). When added to the interim dividend of 1.75 pence, paid on 21 June 2018 (2017: 1.5 pence), this represents a total dividend for the year of 4.75 pence (2017: 4.20 pence) a 13% rise on 2017. If approved by shareholders at the forthcoming Annual General Meeting on 20 February 2019, the dividend is payable on 26 February 2019 to shareholders on the register at 18 January 2019. The ex-dividend date is 17 January 2019.
Statements of financial position and cash flows
Net assets including non-controlling interests rose GBP2.3 million to GBP18.5 million with net cash at GBP3.42 million (2017: GBP3.27 million) which is equivalent to 18.5% of net assets (2017: 20.2%). Inventory levels at the year-end increased by GBP997,000 on 2017 due to strong business growth in South Korea and the introduction of new products into the UK and European markets. In turn, this meant that cash generated from operations in the year was GBP1.94 million (2017: GBP2.24 million). Capital expenditure increased to GBP893,000 (2017: GBP706,000) and dividends paid to the shareholders of Titon Holdings Plc increased by 19% to GBP489,000 (2017: GBP410,000). Titon Korea also paid a maiden dividend in the year and this led to a cash outflow from the Group to the Non-Controlling Interests of GBP416,000 (2017: GBP0), whilst simultaneously repatriating a similar amount to the UK as a dividend to Titon Holdings Plc. The result of the above is an overall net increase in the Group's cash reserves in the period of GBP146,000 (2017: GBP831,000). Net current assets were GBP11.2 million (2017: GBP9.9 million) with a Quick Ratio(1) of 1.97 (2017: 2.13).
ROCE(2) was 15.3% (2017: 15.1%) with Capital Turn at 2.1 (2017: 2.3).
Segment analysis
The directors look initially at geographical areas to evaluate the Group's performance and then consider product group splits at the secondary level.
UK and Europe
Revenue from the UK and Europe increased by 7% in fiscal 2018. This increase was derived chiefly from a strong performance in the Hardware business comprising sales of our traditional trickle vents, and window and door hardware. Here, sales into the aluminium window and door sector continued to perform strongly, up 12%. I am also pleased to report that sales of Titon branded door and window hardware products had a strong year with a 34% annualised revenue increase in the year, which reflects a lot of hard work put into this product area.
Results from the Ventilation System's sales of mechanical ventilation products saw an increase of 7.5% in revenue, with pleasing demand for exports again as new customers have been introduced. The latter reflects a continued targeting of and investment in new geographical markets, particularly Eastern Europe. Within the UK, sales were up marginally on 2017 as we restructured our sales areas outside of London and the South East.
Titon continues to invest in research and development which, in turn, yields a continuing number of new products for both the Ventilation Systems and Hardware businesses and this will also be true in 2019. The importance of air quality, both outdoors and indoors, continues to expand as the impact of poor quality air becomes more understood by the medical profession, governments and consumers. Titon has worked with one of our trade associations, Beama (British Electrotechnical & Allied Manufacturers Association), which represents manufacturers of electro technical products, such as ventilation products, to promote the benefits of good indoor air quality. In October 2018, the Healthy Homes and Buildings All Party Parliamentary Group published a White Paper entitled Building our Future, Laying the Foundations for Healthy Homes and Buildings. I am very pleased to say that Titon was a significant contributor to this paper, which we hope will lead to healthier homes and higher sales of ventilation products.
The value of UK private and public housebuilding output is forecast to increase in 2018 by 4.5% against calendar 2017 according to the Construction Products Association. At the same time, the expected value of repair, maintenance and improvement (RMI) in the private and public residential sectors is forecast to be flat in 2018 against 2017.
South Korea
In South Korea, the Group's subsidiary, Titon Korea (51% owned), manufactures natural window ventilation products and is the national market leader with an estimated market share in this core sub-sector in excess of 75%. In fiscal 2018, it also had another very good year with revenue increasing by 21% to GBP11.6 million, due to higher private sector demand, and its contribution to Group profit after tax was up by 24% to GBP1.0million.
The Group's associate company, Browntech Sales Co. Limited ('BTS') also operates exclusively in South Korea and it generated another higher contribution in the year, with the Group recognising a share of profits from BTS of GBP778,000 (2017: GBP633,000) up 23% on 2017. In terms of activity, BTS distributes ventilation products in South Korea and both invests in and develops schemes in the domestic residential real estate market. There are three such schemes active at this time: the first in the form of a secured loan, which is expected to be repaid in 2019; the second, a residential refurbishment in Seoul, which is tenanted; and the third, the development of a residential property in Seoul, which has now been completed and is currently being marketed. Taking Titon Korea and BTS together, South Korea is the largest contributor to the Group's profit after tax at GBP1.8million for the year. (2017: GBP1.5million).
United States
Finally, as I noted in the interim results, revenue in the US was substantially lower and this continued in the second half, although the US represents only a small proportion of Group sales (2% in 2018 and 6% in 2017). In fact, sales for the year were down by almost two-thirds against 2017, which was very disappointing and due largely to the ending of a subsidised window replacement programme in New York and a general market slowdown in one of our core markets in Washington State. It is important to add, however, that we benefit from very low fixed costs in our US business and the region has made a positive contribution overall to the Group's results.
Board
We have not made any changes to the Board in the last twelve months. However, we have agreed, in connection with our move to AIM, that we will appoint another independent Non-executive Director to the Board in 2019. The process of selecting an appropriate person for this role is underway and an announcement will be made in due course.
Employees
Once again, I offer my sincere thanks to all of the employees of Titon as the success of the Group is down to their hard work and talents. We continue to grow and develop as a business and it would not be possible without their contribution. As with last year, we have continued to make increases in the wages of our UK weekly paid employees in line with the National Minimum Wage.
Investors
We have now completed our move from the Main Market of the London Stock Exchange to the AIM market, which was effective from 10 December 2018. We are very pleased that shareholders voted in favour of this change as the Board believes it offers significant benefits to existing shareholders and new investors in Titon.
We have continued to engage the corporate research house Hardman & Co. which regularly writes and distributes investment research on Titon and which we believe has both widened interest in the Group and continues to have a positive impact in the share price over the past three years. We have engaged Shore Capital as our Nominated Advisor and Broker for the purposes of the move to AIM and they will initiate research coverage on Titon in early 2019. Finally, here, I would like to mention again the Group's dividend reinvestment programme (DRIP) which has operated for a number of years. This represents a straight-forward and cost effective way for shareholders to increase their holdings in Titon should they wish to do so.
Outlook
It was another record year for Titon with revenue of GBP30 million and profit before tax ahead by a fifth to GBP2.98 million. The dividend for the year was also increased by 13% which is the 6th consecutive year of rising dividends.
The UK economy continues to grow at a modest rate in both historic and relative terms with consensus forecasts for GDP growth clustered around 1.5% per annum in both 2019 and 2020. These forecasts, too, are made assuming that the UK reaches an agreement with the EU about withdrawing in an orderly manner and any continuing uncertainty is unwelcome to our business. By way of a failsafe, though, we have already placed orders for certain extra components with our EU suppliers. That said, in the first two months of the new fiscal year, we are very pleased with UK and continental European trading, which is in line with the same period in 2017 when October and November were particularly good months.
In South Korea, the World's 12th largest economy(3) and the Group's largest net profit contributor, Q3 of calendar 2018 saw slightly slower GDP growth in relative terms at 2.0% compared with 2.8% in Q2 due largely to weaker construction and business investment. We anticipate that rising levels of air pollution may raise demand for mechanical ventilation units over natural ventilation products in fiscal 2019, resulting in a slowdown in our core natural ventilation business. We are, however, in the process of developing new solutions for the South Korean ventilation market. Most importantly, the trajectory of the South Korean economy remains enviably positive with FocusEconomics forecasting GDP growth of 2.6% in both 2019 and 2020 as Government spending increases and monetary policy remains accommodative. We are therefore positive on the medium-term outlook for our South Korean business.
Titon builds and delivers popular products and has a unique geographical spread. It has good people and a perennially strong balance sheet. We also continue to look for new opportunities for growth within our target markets. 2019 will be a more testing year in the UK and in South Korea as noted above. However, provided that Brexit doesn't negatively impact the UK economy we expect another year of growth in revenue and profits for Titon in line with market expectations.
On behalf of the Board.
K A Ritchie
Chairman
12 December 2018
Notes:
(1) The Quick Ratio measures liquidity and is calculated as follows Current Assets-less-Stocks divided by Current Liabilities
(2) ROCE is calculated by dividing EBIT by capital employed (capital employed being the sum of shareholders' funds, non-controlling interests and all debt less intangible assets and cash); with Capital Turn calculated by dividing revenue by capital employed
(3) International Monetary Fund data at May 2018
Unaudited Consolidated Income Statement
for the year ended 30 September 2018
Unaudited
2018 2017
GBP'000 GBP'000
Revenue 29,946 28,011
Cost of sales (21,920) (20,746)
------------------------------------------- ----------- ----------
Gross profit 8,026 7,265
Distribution costs (704) (717)
Administrative expenses (4,707) (4,249)
Research and development expenses (446) (467)
Other income 19 18
------------------------------------------- ----------- ----------
Operating profit 2,188 1,850
Finance income 13 10
Share of post-tax profits from associate 778 633
------------------------------------------- ----------- ----------
Profit before tax 2,979 2,493
Income tax expense (352) (269)
------------------------------------------- ----------- ----------
Profit after income tax 2,627 2,224
------------------------------------------- ----------- ----------
Attributable to:
Equity holders of the parent 2,113 1,804
Non-controlling interest 514 420
Profit for the year 2,627 2,224
------------------------------------------- ----------- ----------
Earnings per share attributed to equity
holders of the parent:
Basic 19.17p 16.55p
Diluted 18.88p 16.24p
Unaudited Consolidated Statement of Comprehensive Income
for the year ended 30 September 2018
Unaudited
2018 2017
GBP'000 GBP'000
Profit for the year 2,627 2,224
Other comprehensive income - items which
may be reclassified to profit or loss
in subsequent periods:
Exchange difference on retranslation
of net assets of overseas operations 423 (443)
Total comprehensive income for the year 3,050 1,781
Attributable to:
Equity holders of the parent 2,399 1,509
Non-controlling interest 651 272
------------------------------------------- ----------- ---------
3,050 1,781
------------------------------------------- ----------- ---------
Unaudited Consolidated Statement of Financial Position
at 30 September 2018
Unaudited
2018 2017
GBP'000 GBP'000
Assets
Property, plant and equipment 3,655 3,548
Intangible assets 737 638
Investments in associates 2,876 1,966
Deferred tax assets 52 116
Total non-current assets 7,320 6,268
----------- ---------
Inventories 5,667 4,670
Trade and other receivables 7,799 6,644
Income tax receivable 12 79
Cash and cash equivalents 3,415 3,269
----------- ---------
Total current assets 16,893 14,662
-------------------------------------- ----------- ---------
Total Assets 24,213 20,930
-------------------------------------- ----------- ---------
Liabilities
Deferred tax liability 37 39
----------- ---------
Total non-current liabilities 37 39
----------- ---------
Trade and other payables 5,554 4,627
Income tax payable 154 63
Total current liabilities 5,708 4,690
-------------------------------------- ----------- ---------
Total Liabilities 5,745 4,729
-------------------------------------- ----------- ---------
Equity
Share capital 1,113 1,098
Share premium reserve 1,049 985
Capital redemption reserve 56 56
Treasury shares (27) (27)
Foreign exchange reserve 502 216
Retained earnings 13,554 11,887
-------------------------------------- ----------- ---------
Total Equity attributable to equity
holders of the parent 16,247 14,215
-------------------------------------- ----------- ---------
Non-controlling Interest 2,221 1,986
-------------------------------------- ----------- ---------
Total Equity 18,468 16,201
-------------------------------------- ----------- ---------
Total Liabilities and Equity 24,213 20,930
-------------------------------------- ----------- ---------
Unaudited Consolidated Statement of Changes in Equity
at 30 September 2018
Share Share Capital Foreign Treasury Retained Total Non- Total
Capital premium redemption exchange shares earnings controlling equity
reserve reserve reserve interest
GBP'000 GBP'000 GBP'000 GBP'000 GBP000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 October
2016 1,091 950 56 511 (27) 10,479 13,060 1,714 14,774
---------------- --------- --------- ------------ ---------- ---------- ---------- --------- ------------- ---------
Translation
differences
on overseas
operations - - - (295) - - (295) (148) (443)
Profit for the
year - - - - - 1,804 1,804 420 2,224
---------------- --------- --------- ------------ ---------- ---------- ---------- --------- ------------- ---------
Total
Comprehensive
Income for
the
year - - - (295) - 1,804 1,509 272 1,781
---------------- --------- --------- ------------ ---------- ---------- ---------- --------- ------------- ---------
Dividends paid - - - - - (410) (410) - (410)
Share-based
payment
expense - - - - - 14 14 - 14
Ordinary
shares
issued 7 35 - - - - 42 - 42
---------------- --------- --------- ------------ ---------- ---------- ---------- --------- ------------- ---------
At 30
September
2017 1,098 985 56 216 (27) 11,887 14,215 1,986 16,201
---------------- --------- --------- ------------ ---------- ---------- ---------- --------- ------------- ---------
Translation
differences
on overseas
operations - - - 286 - - 286 137 423
Profit for the
year - - - - - 2,113 2,113 514 2,627
---------------- --------- --------- ------------ ---------- ---------- ---------- --------- ------------- ---------
Total
Comprehensive
income for
the
year - - - 286 - 2,113 2,399 651 3,050
---------------- --------- --------- ------------ ---------- ---------- ---------- --------- ------------- ---------
Dividends paid - - - - - (489) (489) - (489)
Dividends paid
to NCI in
subsidiary - - - - - - (416) (416)
Share-based
payment
expense - - - - - 43 43 - 43
Ordinary
shares
issued 15 64 - - - - 79 - 79
At 30
September
2018 1,113 1,049 56 502 (27) 13,554 16,247 2,221 18,468
---------------- --------- --------- ------------ ---------- ---------- ---------- --------- ------------- ---------
Unaudited Consolidated Statement of Cash Flows
for the year ended 30 September 2018
Unaudited
2018 2017
GBP'000 GBP'000
Cash generated from operating activities
Profit before tax 2,979 2,493
Depreciation of property, plant & equipment 448 438
Amortisation of intangible assets 209 175
Profit on sale of plant & equipment (16) -
Share based payment expense - equity
settled 43 14
Finance income (13) (10)
Share of associate's post-tax profit (778) (633)
------------------------------------------------- ----------- ---------
2,872 2,477
Increase in inventories (836) (133)
Increase in receivables (890) (161)
Increase in payables and other current
liabilities 792 57
Cash generated from operations 1,938 2,240
------------------------------------------------- ----------- ---------
Income taxes paid (132) (390)
------------------------------------------------- ----------- ---------
Net cash generated from operating activities 1,806 1,850
------------------------------------------------- ----------- ---------
Cash flows from investing activities
Purchase of plant & equipment (578) (520)
Purchase of intangible assets (315) (186)
Proceeds from sale of plant & equipment 46 45
Finance income 13 10
Net cash used in investing activities (834) (651)
------------------------------------------------- ----------- --------- Cash flows from financing activities Exercise of Share Options 79 42 Dividends paid to equity shareholders of the parent (489) (410) Dividends paid to Non-controlling shareholders (416) - of a subsidiary Cash withdrawn from / (transferred to) treasury deposit accounts 300 (100) Net cash used in financing activities (526) (468) ------------------------------------------------- ----------- --------- Net increase in cash (excluding movement on treasury deposits)* 446 731 Cash at beginning of the year (excluding treasury deposits) 2,069 1,338 Cash at end of the year (excluding treasury deposits) 2,515 2,069 ------------------------------------------------- ----------- ---------
The cash and cash equivalents figure on the Consolidated Statement of Financial Position includes both the cash at the year end and the cash on treasury deposit of GBP900,000 (2017: GBP1,200,000) and totals GBP3,415,000 at 30 September 2018 (2017: GBP3,269,000).
*The net increase in cash including the movements on treasury deposits for the year is GBP146,000 (2017: GBP831,000).
In respect of this change in presentation of the Consolidated Statement of Cash Flows, the comparative figures have been amended.
Notes to the Preliminary Announcement for the year ended 30 September 2018
1 Earnings per ordinary share
The calculation of the basic and diluted earnings per share is based on the following data:
2018 2017
GBP'000 GBP'000
Numerator
Earnings for the purposes of basic earnings
per share being
earnings after tax attributable to members
of Titon Holdings Plc 2,113 1,804
----------------------------------------------- ------------ ------------
Denominator Number Number
Weighted average number of ordinary shares
for the purposes of basic
earnings per share 11,024,243 10,903,394
Effect of dilutive potential ordinary shares
: Share Options 165,212 207,855
------------ ------------
Weighted average number of ordinary shares
for the purposes of diluted earnings per
share 11,189,455 11,111,249
------------ ------------
Earnings per share (pence)
Basic 19.17p 16.55p
Diluted 18.88p 16.24p
----------------------------------------------- ------------ ------------
2 Dividends
2018 2017
GBP'000 GBP'000
Final 2017 dividend of 2.70 pence (2016:
2.25 pence) per ordinary
share proposed and paid during the year relating
to the previous year's results 295 245
Interim dividend of 1.75 pence (2017: 1.50
pence) per ordinary
share paid during the year 194 165
489 410
---------------------------------------------------- --------- ---------
The Directors are proposing a final dividend of 3.0 pence (2017: 2.70 pence) per share. This will result in a final dividend totalling GBP334,013 (2017: GBP296,561), subject to approval by the shareholders at the Annual General Meeting. This dividend has not been accrued at the balance sheet date.
3 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 in four main business segments which are:
Segment Activities undertaken include:
United Kingdom Sales of passive and powered ventilation products
to housebuilders, electrical contractors and
window and door manufacturers. In addition to
this, it is a leading supplier of window and
door hardware.
South Korea Sales of passive ventilation products to construction
companies.
North America Sales of passive ventilation products to window
and door manufacturers.
All other Sales of passive and powered ventilation products
countries 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 allocated to the business activities for which R&D is specifically performed. Sales Administration and Other Expenses are currently allocated to operating segments in the Group's reporting to the CODM. 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.
Operating segment
The Directors' primary review of performance is by geographical regions.
For the year ended United South North All other
30 September 2018 Kingdom Korea America countries Consolidated
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Segment revenue 15,221 11,561 652 2,941 30,375
Inter-segment revenue (429) - - - (429)
-------------------------------- ---------- --------- ---------- ------------ --------------------------------
Total Revenue 14,792 11,561 652 2,941 29,946
-------------------------------- ---------- --------- ---------- ------------ --------------------------------
Segment profit 1,005 2,084 (109) (1) 2,979
Tax expense (352)
-------------------------------- ---------- --------- ---------- ------------ --------------------------------
Profit for the year 2,627
-------------------------------- ---------- --------- ---------- ------------ --------------------------------
Depreciation and amortisation 607 49 1 - 657
-------------------------------- ---------- --------- ---------- ------------ --------------------------------
Total assets 14,087 9,888 238 - 24,213
-------------------------------- ---------- --------- ---------- ------------ --------------------------------
Total assets include:
Investments in associates 2,651 - - - 2,651
Additions to non-current
assets
(other than financial
instruments
and deferred tax
assets) 889 4 - - 893
-------------------------------- ---------- --------- ---------- ------------ --------------------------------
The South Korea Segment profit includes the Group's share of the profits from the Associate of GBP778,000
Sales to Browntech Sales Co. Ltd (the Group's associate undertaking in South Korea) of GBP11.56m represent 38% of Group Revenue (2017: GBP9.53m - 34%). There are no other concentrations of revenue above 10% during the year. (see Note 5 - Related party transactions).
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 United Europe North Asia All other Total 30 September 2018 Kingdom America regions Revenues GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 By entities' country of domicile 17,733 - 652 11,561 - 29,946 By country from which derived 14,792 2,804 652 11,639 59 29,946 ------------------------ ---------- --------- ---------- --------- ----------- --------- Non-current assets By entities' country of domicile 4,439 - 23 2,858 - 7,320 ------------------------ ---------- --------- ---------- --------- ----------- ---------
Operating segment
For the year ended United South North All other
30 September 2017 Kingdom Korea America countries Consolidated
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Segment revenue 14,823 9,530 1,781 2,735 28,869
Inter-segment revenue (858) - - - (858)
-------------------------------- ---------- --------- ---------- ------------ --------------------------------
Total Revenue 13,965 9,530 1,781 2,735 28,011
-------------------------------- ---------- --------- ---------- ------------ --------------------------------
Segment profit 706 1,638 166 (17) 2,493
Tax expense (269)
-------------------------------- ---------- --------- ---------- ------------ --------------------------------
Profit for the year 2,224
-------------------------------- ---------- --------- ---------- ------------ --------------------------------
Depreciation and amortisation 563 49 1 - 613
-------------------------------- ---------- --------- ---------- ------------ --------------------------------
Total assets 12,916 7,704 310 - 20,930
-------------------------------- ---------- --------- ---------- ------------ --------------------------------
Total assets include:
Investments in associates 1,741 - - - 1,741
Additions to non-current
assets
(other than financial
instruments
and deferred tax
assets) 672 34 - - 706
-------------------------------- ---------- --------- ---------- ------------ --------------------------------
The South Korea Segment profit includes the Group's share of the profits from the Associate of GBP633,000
Sales to Browntech Sales Co. Ltd (the Group's associate undertaking in South Korea) of GBP9.53m represent 34% of Group Revenue (2016: GBP7.11m - 30%). There are no other concentrations of revenue above 10% during the year (see Note 5 - Related party transactions).
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 United Europe North Asia All other Total 30 September 2017 Kingdom America regions Revenues GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 By entities' country of domicile 16,700 - 1,781 9,530 - 28,011 By country from which derived 13,965 2,565 1,781 9,684 16 28,011 ------------------------ ---------- --------- ---------- --------- ----------- --------- Non-current assets By entities' country of domicile 4,295 - 1 1,972 - 6,268 ------------------------ ---------- --------- ---------- --------- ----------- ---------
Within geographical segments the Directors also monitor the revenue performance of the Group within its two identified business streams. The Group's operations are separated between trickle ventilation and window and door hardware products and mechanical ventilation products. The following table provides an analysis of the Group's external revenue, irrespective of the geographical region of sale.
2018 2017
GBP'000 GBP'000
Trickle ventilation and window and door
hardware products 23,194 21,734
Mechanical ventilation products 6,752 6,277
----------------------------------------- --------- ---------
Revenue 29,946 28,011
----------------------------------------- --------- ---------
4 Tax expense
2018 2017
Current income tax: GBP'000 GBP'000
Corporation tax expense (307) (249)
Adjustment in respect of prior years 17 (43)
--------- ---------
(290) (292)
Deferred tax:
Origination and reversal of temporary differences (62) 23
Income tax expense (352) (269)
---------------------------------------------------- --------- ---------
The charge for the year can be reconciled
to the profit
per the income statement as follows:
Profit before tax
Effect of: 2,979 2,493
Expected tax charge based on the standard
rate of
Corporation tax in the UK of 19.0% (2017:
19.5%) (566) (486)
Additional deduction for R&D expenditure 148 171
Effect of Associate's results reported net
of tax 151 127
Expenses not deductible for tax purposes (31) (11)
Difference in overseas tax rates (47) (27)
Withholding taxes paid on Subsidiary's dividend (24) -
Adjustments in respect of prior periods 17 (43)
Income tax expense (352) (269)
-------------------------------------------------- ------- -------
5 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.
During the year the Company recharged management service fees and rent to other wholly-owned Group members totalling GBP384,000 (2017: GBP351,000).
Titon Korea Co. Ltd., the 51% owned subsidiary, paid a dividend during the year to its shareholders amounting to GBP849,000 (2017: GBPnil). Of this amount, GBP433,000, before withholding tax, was paid to the Company with the other GBP416,000 being paid to the non-controlling interests.
Transactions for the year between the subsidiary companies and the associate company, which is a related party, were as follows:
Sales of goods Amount owed by
related party
2018 2017 2018 2017
GBP'000 GBP'000 GBP'000 GBP'000
------------------ --------- --------- --------- ---------
Browntech Sales
Co. Ltd 11,561 9,530 4,059 2,798
------------------ --------- --------- --------- ---------
Trading debts between subsidiaries and BTS are created only when the ultimate customer has accepted the successful inclusion of our products into buildings.
Key management who hold the authority and responsibility for planning, directing and controlling activities of the Group are comprised solely of the Directors. Aside from compensation arrangements, there were no transactions, agreements or other arrangements, direct or indirect, during the year in which the Directors had any interest.
6 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 2017 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.
7 Basis of preparation
The financial information for the year ended 30 September 2018 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 policies of the Group under International Financial Reporting Standards (IFRSs) are set out in detail in the 2017 Financial Statements which are available from the Group's website at www.titonholdings.com.
Except for the implementation of the amendments below, which had no material impact on the Group, there have been no changes to the accounting policies during the year.
* Recognition of deferred tax assets for unrealised
losses (Amendments to IAS 12). The amendments to IAS
12 are intended to clarify the requirements on
recognition of deferred tax assets for unrealised
losses on debt instrument financial assets measured
at fair value.
* Disclosure Initiative: Amendments to IAS 7. The
amendments to IAS 7 are intended to improve
information provided to users of financial statements
about changes in financial liabilities, and financial
assets if they meet the same definition, arising from
an entity's financing activities. Entities will be
required to disclose the cash flow and non-cash
changes arising from these financing activities.
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 2018 or 2017.
The financial information for the year ended 30 September 2017 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 draw attention to any matters by way of emphasis, and did not contain a statement under 498(2) or 498(3) of the Companies Act 2006.
The financial information for the year ended 30 September 2018 is unaudited. The statutory accounts for that year will be delivered to the Registrar of Companies following the Company's Annual General Meeting which will be held on 20 February 2019.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
END
FR DMMMZNZZGRZM
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December 13, 2018 02:00 ET (07:00 GMT)
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