Preliminary Announcement 2006

Titon Holdings PLC 07 December 2006 Titon Holdings Plc Preliminary announcement for the year ended 30 September 2006 Chairman's Statement Financial Performance Profit before taxation for the year to 30 September 2006 was 24.5% down at Â£0.89 million (2005: Â£1.18 million), on Revenue 1.0% higher at Â£16.60 million (2005: Â£16.44 million). Earnings per share were 20.8% lower at 6.40p (2005: 8.08p). This has been a heavy year for capital expenditure with a Â£1.48 million spend, compared to a Â£0.68 million depreciation charge, reducing our year-end cash reserves to Â£2.07 million (2005: Â£3.36 million). The Directors are proposing a final dividend of 4.8p (2005: 4.8p), which when added to the interim dividend paid in May 2006, makes a total for the year of 7.1p (2005: 7.1p). The dividend will be payable on 23 February 2007 to shareholders on the register on 2 February 2007. The ex-dividend date is 31 January 2007. Trading Commentary This has been a difficult year, largely due to a combination of uncertainty in the timing of Building Regulation implementation and a significant downturn in market activity in the months of April and May, which disguised an improved performance toward the end of the year. In my 2006 interim report I informed shareholders that the new Building Regulations (England and Wales) for Ventilation were published in April 2006, and that the requirement to fit trickle ventilators in all replacement windows had been included with effect from October 2006. It is now most disappointing to have to report that this important part of the Regulation was controversially withdrawn only two weeks before the proposed implementation date. The reason is that, following a challenge from sections of the window industry, the Government department involved decided that the costs might outweigh the benefits. One of the key objectives highlighted in the original Regulatory Consultation Document was to address major health issues, such as asthma and other respiratory illnesses, through the improvement of indoor air quality. It is well documented that new tightly sealed double-glazed windows can reduce indoor air quality to an unacceptable level and this was an opportunity for the Government to introduce consistent regulation for controlled ventilation. However, rather than introduce such regulation it has allowed the window industry to fit trickle ventilators on the basis of "Good Practice", which in the view of the Directors may not achieve the health benefits hoped for by Government. We have invested some Â£0.3 million on specific plant and tooling to introduce product for this part of the Regulation, as well as a great deal of design, development and technical resource. We must now wait and see what the impact of the Good Practice Document will be in order to determine whether value is achieved for this investment. The indecision and change has been most disconcerting and I will update shareholders further at the interim stage of 2006/2007. We have launched our new Titon range of Trimvent Select Xtra ventilators for both the new-build and replacement window market and they have been well received by the industry. These products provide a much increased airflow performance over the majority of ventilators on the market and we are confident that, in combination with our powered ventilation range, they will provide effective compliant solutions for all domestic ventilation needs. We have provided an enhanced level of marketing activity to support our enlarged direct sales force and are pleased with the level of new customers and the specifications being gained. Our Export sales have again increased and now account for 13% of total revenue. One disappointing aspect of our overseas activity was our US subsidiary, Titon Inc, where revenue was 9% lower, reflecting the downturn in US building activity over the year. I reported last year that measures taken to reduce our cost base and improve manufacturing efficiency had benefited us. The difficulties of manufacturing in the UK are well known and efficiency improvements need to be ongoing in order for us to remain competitive. For this reason we continue to seek cost effective supply options from overseas to complement our UK manufacturing base. Employees Our overall employee base remains similar to last year, but includes a greater number of sales personnel. Our employees remain a vital part of the strength of our business and their continued support for the Group is most important as we seek new initiatives. I wish to thank them all for their efforts during these difficult and changing times. Prospects The implications of the Government U-turn on the replacement window regulations have yet to be determined. We will actively support the window industry with their efforts to introduce and adhere to Ventilation Good Practice and hope that this may have a positive impact. As far as new build is concerned, our new Trimvent Select Xtra products and our ability to provide total solutions via powered and passive products should enable us to increase market share. The new financial year has started with reasonably strong sales being recorded. Although the recent increase in UK interest rates is likely to have a detrimental effect on demand as the year progresses, the Directors believe that the enhanced product offering, an increase in market activity and further cost saving initiatives should offset this. John Anderson Chairman 6 December 2006 Titon Holdings Plc Preliminary announcement for the year ended 30 September 2006 Consolidated Income Statement for the year ended 30 September 2006 2006 2005 Â£'000 Â£'000 Revenue 16,600 16,436 Cost of sales 12,439 12,372 -------------------------------------------------------------------------------- Gross profit 4,161 4,064 Distribution costs 690 648 Administrative expenses 2,689 2,388 -------------------------------------------------------------------------------- 3,379 3,036 ---------------------- Operating profit 782 1,028 Finance income 112 151 -------------------------------------------------------------------------------- Profit before tax 894 1,179 Tax expense 219 328 -------------------------------------------------------------------------------- Profit for the year attributable to the equity holders of the parent 675 851 -------------------------------------------------------------------------------- Earnings per share - basic 6.40p 8.08p - diluted 6.40p 8.06p Consolidated Statement of Recognised Income & Expense for the year ended 30 September 2006 2006 2005 Â£'000 Â£'000 Profit for the year attributable to the equity holders of the parent 675 851 Exchange difference on retranslation of net assets of subsidiary undertakings 20 (3) -------------------------------------------------------------------------------- Total recognised income and expense for the year 695 848 attributable to equity holders of the parent -------------------------------------------------------------------------------- Titon Holdings Plc Preliminary announcement for the year ended 30 September 2006 Consolidated Balance Sheet at 30 September 2006 2006 2005 Â£'000 Â£'000 Assets Property, plant and equipment 5,009 4,242 Intangible assets 67 6 -------------------- Total non-current assets 5,076 4,248 -------------------- Inventories 2,950 2,511 Trade and other receivables 3,624 3,695 Cash and cash equivalents 2,078 3,380 -------------------- Total current assets 8,652 9,586 -------------------------------------------------------------------------------- Total Assets 13,728 13,834 -------------------------------------------------------------------------------- Liabilities Deferred tax 170 104 ------------------- Total non-current liabilities 170 104 ------------------- Trade and other payables 2,362 2,427 Bank overdraft 9 21 Corporation tax 75 144 ------------------- Total current liabilities 2,446 2,592 -------------------------------------------------------------------------------- Total Liabilities 2,616 2,696 -------------------------------------------------------------------------------- Equity Share capital 1,056 1,053 Share premium reserve 865 841 Capital redemption reserve 56 56 Translation reserve 17 (3) Share schemes reserve 2 1 Retained earnings 9,116 9,190 -------------------------------------------------------------------------------- Total Equity attributable to equity holders of the parent 11,112 11,138 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Total Liabilities and Equity 13,728 13,834 -------------------------------------------------------------------------------- Titon Holdings Plc Preliminary announcement for the year ended 30 September 2006 Consolidated Cash Flow Statement for the year ended 30 September 2006 2006 2005 Â£'000 Â£'000 Cash generated from operating activities Operating profit 782 1,028 Depreciation of plant & equipment 682 594 Amortisation on intangible assets 25 5 (Increase) / decrease in inventories (424) 69 Decrease / (increase) in receivables 76 (494) (Decrease) / increase in payables and other current liabilities (66) 270 Profit on sale of plant & equipment (22) (19) Share based payment - equity settled 1 1 -------------------------------------------------------------------------------- Cash generated from operations 1,054 1,454 -------------------------------------------------------------------------------- Income taxes paid (221) (271) -------------------------------------------------------------------------------- Net cash generated from operating activities 833 1,183 -------------------------------------------------------------------------------- Cash flows from investing activities Purchase of property, plant & equipment (1,485) (569) Purchase of intangible assets (86) - Proceeds from sale of plant & equipment 58 30 Interest received 112 151 -------------------------------------------------------------------------------- Net cash used in investing activities (1,401) (388) -------------------------------------------------------------------------------- Cash flows from financing activities Dividends paid to equity shareholders (749) (747) Proceeds from issue of share capital 27 - -------------------------------------------------------------------------------- Net cash used in financing activities (722) (747) -------------------------------------------------------------------------------- Net (decrease) / increase in cash & cash equivalents (1,290) 48 Cash & cash equivalents at beginning of the year 3,359 3,311 -------------------------------------------------------------------------------- Cash & cash equivalents at end of the year 2,069 3,359 -------------------------------------------------------------------------------- Titon Holdings Plc Notes to the preliminary announcement for the year ended 30 September 2006 1) Earnings per ordinary share The calculation of the basic and diluted earnings per share is based on the following data: 2006 2005 Â£'000 Â£'000 Earnings Earnings for the purposes of basic earnings per share being profit after taxation attributable to members of Titon Holdings Plc 675 851 -------------------------------------------------------------------------------- Shares Number Number Weighted average number of ordinary shares for the purposes of basic earnings per share 10,547,501 10,528,800 Effect of dilutive potential ordinary shares : share options 1,706 48,052 -------------------------------------------------------------------------------- Weighted average number of ordinary shares for the purposes of diluted earnings per share 10,549,207 10,576,852 -------------------------------------------------------------------------------- Earnings per share (pence) Basic 6.40p 8.08p Diluted 6.40p 8.06p -------------------------------------------------------------------------------- All dilutive ordinary shares relate to share options. 2) Dividends 2006 2005 Â£'000 Â£'000 Final dividend of 4.8 pence ( 2005 : 4.8 pence) per 506 505 ordinary share paid and proposed during the year relating to the previous year's results -------------------------------------------------------------------------------- Interim dividend of 2.3 pence ( 2005: 2.3 p) per 243 242 ordinary share paid during the period -------------------------------------------------------------------------------- 749 747 -------------------------------------------------------------------------------- The directors are proposing a final dividend of 4.8 pence (2005 : 4.8 pence) per share totalling Â£507,000 (2005 - Â£506,000), subject to approval by the shareholders at the Annual General Meeting. This dividend has not been accrued at the balance sheet date. Titon Holdings Plc Notes to the preliminary announcement for the year ended 30 September 2006 3) Analysis of cash and cash equivalents 2006 2005 Â£'000 Â£'000 Cash available on demand 58 118 Short-term deposits 2,020 3,262 Overdraft (9) (21) -------------------------------------------------------------------------------- 2,069 3,359 -------------------------------------------------------------------------------- Net cash (decrease) / increase in cash and cash equivalents (1,290) 48 Cash and cash equivalents at beginning of year 3,359 3,311 -------------------------------------------------------------------------------- Cash and cash equivalents at end of year 2,069 3,359 -------------------------------------------------------------------------------- 4) Basis of Preparation This is the first year when the consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB). The comparatives for 2005 have accordingly been restated from UK Generally Accepted Accounting Practice (UK GAAP). The accounting polices of the Group under IFRS, including the exemptions taken under IFRS 1 "First-time Adoption of International Financial Reporting Standards", together with the restated IFRS financial statements for 2005, which include reconciliations of UK GAAP to IFRS, are set out in detail in the 2006 Interim Statement which is available from the Group's website on www.titon.com, and will be included in the full 2006 annual report and accounts. The financial information set out above does not constitute the Group's statutory accounts for the years ended 30 September 2006 or 2005. Statutory accounts for 2005, which were prepared under UK GAAP, have been delivered to the Registrar of Companies. The auditors have reported on those accounts; their report was unqualified and did not contain a statement under section 237(2) or (3) of the Companies Act 1985. The statutory accounts for 2006 which are prepared under IFRS adopted by the EU, 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. This information is provided by RNS The company news service from the London Stock Exchange

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