Preliminary Announcement for year ended 30/09/2016

RNS Number : 8302R

Titon Holdings PLC

14 December 2016

 

Titon Holdings Plc

Preliminary Announcement for the year ended 30 September 2016

Titon Holdings PLC

 Final results for the year to 30 September 2016

TITON DELIVERS A FOURTH CONSECUTIVE YEAR OF IMPROVED RESULTS

Financial Results

	2016	2015	% Change
Net revenue	£23.7m	£22.3m	+6
EBITDA	£2.33m	£2.13m	+9
Operating profit	£1.77m	£1.56m	+13
Profit before tax	£2.14m	£1.87m	+14
EPS	15.2p	12.6p	+21
DPS	3.50p	3.00p	+17

Financial Highlights

·   Group net revenue rose 6.3% to a record £23.7 million (2015: £22.3 million) or an increase of 4.4% on a constant currency basis

·   Profit before tax of £2.14 million, up 14% year-on-year (2015: £1.87m)

·   Earnings per share increased by 21% to 15.2 pence (2015: 12.6 pence)

·   Proposed final dividend of 2.25 pence per share, up 29% (2015: 1.75 pence) making 3.50 pence for the full year, up 17% (2015: 3.00 pence)

·   Net cash of £2.44 million (2015: £2.87 million)

·   Return on capital employed (ROCE)* was 15.1% (2015: 18.2%)

*ROCE is calculated by dividing EBIT by the sum of shareholders' funds, non-controlling interests and all debt less intangible assets and cash

Operational highlights

·   Continuing to deliver on growth strategy which includes a number of new product launches

·   Improved performance of the UK business

·   South Korea continues to account for the largest share of Group profit before tax although its contribution was little changed year-on-year

·   Good result from Titon Inc. in the US

·   Increased exports to continental Europe and additional resources committed

·   Higher employee numbers, Group Head Office relocated and a key new Non-Executive Director appointed in Kevin Sargeant

Page 1

Titon Holdings Plc

Preliminary Announcement for the year ended 30 September 2016

Keith Ritchie, Chairman of Titon, said:

"I am delighted to report that for the fourth consecutive year Titon has delivered an improved set of results with profit before tax 14% higher year-on-year at £2.14 million on revenue up 6%. Earnings per share also increased significantly (+21%) and the dividend is to be raised 17%, which marks the fourth year of consecutive gains.

In the first two months of the new financial year, UK and continental European sales are above the corresponding period of 12 months ago. We also anticipate that fiscal 2017 sales will rise in South Korea, where Titon is the market leader in natural ventilation.

We are mindful of the uncertainty created by the UK's decision to leave the EU which makes both economic and corporate forecasting more difficult than usual. To date, however, there has been little impact on our business and we remain optimistic that satisfactory exit terms can be negotiated.

We have first class products, an international spread, very good people and a strong balance sheet and we will continue to look for new opportunities within the ventilation and window and door industries. I look forward to another year of progress".

For further information please contact Keith Ritchie

Tel: [phone]

Chairman's statement

Profit and loss account

In the year ended 30 September 2016, Titon's net revenue (which excludes inter-segment activity) rose 6.3% to £23.7 million. On a constant currency basis, however, the increase is 4.4%.

The gross margin rose marginally from 29.2% to 29.7% and EBITDA was struck at £2.33 million (2015: £2.13 million). Earnings before interest and tax (EBIT) or operating profit rose 13% to £1.77 million with operating margins at 7.5% (2015: 7.0%).

Net interest contributed £8,000 (2015: £9,000) while the share of profits from the Group's associate rose 19.5% to £356,000 (2015: £298,000) resulting in profit before tax of £2.14 million which was an increase of 14% year-on-year (2015: £1.87 million). The weakness of the British Pound added £58,000 to profit before tax, which means that on a constant basis, it would have been £2.08 million or 11% higher year-on-year.

Earnings per share for the year increased 21% to 15.2 pence (2015: 12.6 pence). Taxation was little changed at 9% but the non-controlling interests' debit declined from £376,000 to £317,000.

The Directors are proposing a final dividend of 2.25 pence per share (2015: 1.75p). This, when added to the interim dividend paid on 24 June 2016 would make a total for the year of 3.50 pence (2015: 3.0p) which would be a 17% rise.  If approved by shareholders at the forthcoming Annual General Meeting on 15 February 2017, the dividend will be payable on 21 February 2017 to shareholders on the register on 27 January 2017.  The ex-dividend date is 26 January 2017.

Balance sheet and cash flow

Net assets including minorities rose £2.68 million to £14.77 million with net cash at £2.44 million (£2015: £2.87 million) which is equivalent to 16.5% of net assets (2015: 23.7%). There was a net cash outflow in the year of £432,000 (2015: inflow of £721,000) which was caused primarily by higher receivables in Titon Korea and higher capital expenditure. Total capital expenditure in the year was £721,000 (2015: £498,000)

Net current assets were £9.04 million (2015: £7.39 million).

ROCE* was 15.1% (2015: 18.2).

*ROCE is calculated by dividing EBIT by the sum of shareholders' funds, non-controlling interests and all debt less intangible assets and cash

                                                                   Page 2

Titon Holdings Plc

Preliminary Announcement for the year ended 30 September 2016

Chairman's statement (continued)

Segment analysis

Revenue derived from the UK business saw an increase of 7% in fiscal 2016. This included our Ventilation Systems business for mechanical ventilation products which saw sales rise 21% year-on-year, with exports doing particularly well. The latter reflects a continued targeting of and investment in new markets. The UK gains were also driven by an improving product range and a better domestic sales performance i.e. we have concentrated a higher proportion of resources on the economically more active areas of the UK.

Specifically, the Ventilation Systems business also now includes a horizontal heat recovery product and the new Trimbox NO2 filter product. The latter is designed to be used with a whole house-ventilation system and can remove up to 95% of harmful Nitrogen Dioxide emissions as well as a number of other noxious gases which frequent urban areas. Given the poor levels of outdoor air quality in the major conurbations in the UK, we believe that this product will prove to be a very useful addition to our product range in the future. The Trimbox NO2 filter unit was also a winner in the Housebuilder Product Awards 2016.

The Group has also continued to promote the benefits of good indoor air quality in the UK through our trade association, BEAMA (British Electrotechnical and Allied Manufacturers Association). The aim of this campaign is to promote the use of mechanical ventilation products in the home to improve air quality. Given an increasing number of reports about poor levels of both outdoor and indoor air quality in the UK, we firmly believe that this is an area of our business which will grow in the future. A new All Party Parliamentary Group has also recently been formed to debate healthy homes and buildings and we will contribute to this new forum.

Results for our UK Hardware business were mixed. We saw an increase in sales to the Aluminium sector but a fall in door and window products to the Timber/PVCu segment of the market, both against 2015. There has also been a slower rate of growth in private housebuilding year-on-year while public sector housebuilding continues to fall. At the same time, there was only a marginal increase in private and public sector repair, maintenance and improvement (RMI) expenditure in 2016. We had also anticipated increased sale volumes from a number of new hardware products which were introduced in January 2016, but to date these have underperformed expectations.

In South Korea, our subsidiary company Titon Korea (51% owned) manufactures passive ventilation products, and is the national market leader, but it had a more demanding year in 2016. Revenue dipped marginally, due to reduced demand in the public sector and increased competition. This was only partly offset by private sector demand and meant that Titon Korea's contribution was 17% lower as a result of higher costs incurred. However, in 2017 sales are expected to rise.

Meantime, the Group's associate, Browntech Sales Co. Limited ("BTS") generated a higher contribution in the year; and this can be tracked in the Associate line of the profit and loss account where it is the sole contributor. The Associate contribution rose 20% in 2016 to £356,000 (2015: £298,000). BTS distributes ventilation products in South Korea and invests in and develops schemes in the domestic residential real estate market. Two are active at this time, one in Seoul which is currently being marketed and sold out whilst the other, in the form of a secured loan, is expected to be repaid early in calendar 2017. BTS may also make further investments in the South Korean residential market as opportunities arise.

In combination, subsidiary and associate, South Korea is the largest single contributor to the Group's profit after tax and this was virtually unchanged year-on-year at £667,000 (2015: £672,000).

Finally, sales in the US continued to grow and Titon Inc. had another profitable year. However, the market for natural ventilation products remains relatively modest in scale at this time and geographically focused on the North East and the North West regions.

Board

I am delighted to welcome Kevin Sargeant to the Titon Board following his appointment as a Non-Executive Director on 1 September 2016. Kevin brings a wealth of experience and knowledge of the ventilation industry and we look forward to his contribution to the Group in the future. I also welcome Tony Gearey to the Board as an Executive Director following his appointment on 2 November 2016. Tony has been with Titon for over 30 years and is responsible for IT and Titon Inc.

                                                         Page 3

Titon Holdings Plc

Preliminary Announcement for the year ended 30 September 2016

Chairman's statement (continued)

Employees

The number of people employed within the Group has risen from 219 at the beginning of the year to 237 at 30 September 2016. Most of these new individuals are in the UK, where we have employed a team of ten as part of a new ducting fabrication business taken on during the year. We also introduced the National Living Wage in April 2016 which benefited a number of our weekly paid employees. However, we will continue to seek improvements in productivity to offset the additional cost. Here, too, I would like to thank all of our employees for their hard work during the year and the huge contribution they make to the success of the Group.

New Head Office

Since 1984, the Group had been headquartered at International House in Stanway which is west of Colchester in Essex, East of England.  However, due to its age and lack of amenities, the building no longer proved to be efficient or practical and from early September, we have been located in the Colchester Business Park. This has proved both more efficient and popular. The move was also achieved without any disruption to our business.

Investors

As noted in the Interim Report we appointed Hardman & Co. to write research on Titon and to introduce us to a range of institutional and high net worth investors. This has been a valuable experience and we will continue to work with Hardman to further raise our profile.

Outlook

In the first two months of the new financial year, UK and continental European sales are above the corresponding period of 12 months ago. We also anticipate that our fiscal 2017 sales will rise in South Korea, where Titon is the market leader in natural ventilation. We will continue to monitor the current political situation in Korea but don't anticipate major disruption to the economy.

We are mindful of the uncertainty created by the UK's decision to leave the EU which makes both economic and corporate forecasting more difficult than usual. To date, however, there has been little impact on our business and we remain optimistic that satisfactory exit terms can be negotiated.

We have first class products, an international spread, very good people and a strong balance sheet and we will continue to look for new opportunities within our target markets. I look forward to another year of progress.

On behalf of the Board.

K A Ritchie

Chairman

13^th December 2016                                                                     

                                                                                    Page 4

 

Titon Holdings Plc

Preliminary Announcement for the year ended 30 September 2016

Unaudited Consolidated Income Statement

for the year ended 30 September 2016

	Unaudited 2016	Restated * 2015 see Note 8
	£'000	£'000
Revenue	23,721	22,258
Cost of sales	(16,673)	(15,745)*
Gross profit	7,048	6,513
Distribution costs	(756)	(628)
Administrative expenses	(3,998)	(3,799)
Research and development expenses	(539)	(535)*
Other income	17	11
Operating profit	1,772	1,562
Finance income	8	9
Share of profits from associate	356	298
Profit before tax	2,136	1,869
Income tax expense	(184)	(160)
Profit after income tax	1,952	1,709
Attributable to:
Equity holders of the parent	1,635	1,333
Non-controlling interest	317	376
Profit for the year	1,952	1,709
Earnings per share attributed to equity holders of the parent:
Basic	15.21p	12.60p
Diluted	14.95p	12.27p

Unaudited Consolidated Statement of Comprehensive Income

for the year ended 30 September 2016

	Unaudited 2016	2015
	£'000	£'000
Profit for the year	1,952	1,709
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	917	(90)
Total comprehensive income for the year	2,869	1,619
Attributable to:
Equity holders of the parent	2,198	1,258
Non-controlling interest	671	361
	2,869	1,619

                                                         Page 5

Titon Holdings Plc

Preliminary Announcement for the year ended 30 September 2016

Unaudited Consolidated Statement of Financial Position

at 30 September 2016

	Unaudited 2016	2015
	£'000	£'000
Assets
Property, plant and equipment	3,511	3,218
Intangible assets	627	623
Investments in associates	1,464	796
Deferred tax	158	83
Total non-current assets	5,760	4,720
Inventories	4,586	3,786
Trade and other receivables	6,702	4,992
Cash and cash equivalents	2,438	2,870
Total current assets	13,726	11,646
Total Assets	19,486	16,368
Liabilities
Deferred tax	25	19
Total non-current liabilities	25	19
Trade and other payables	4,526	4,131
Corporation tax	161	125
Total current liabilities	4,687	4,256
Total Liabilities	4,712	4,275
Equity
Share capital	1,091	1,063
Share premium reserve	950	891
Capital redemption reserve	56	56
Treasury shares	(27)	(27)
Translation reserve	511	(52)
Retained earnings	10,479	9,119
Total Equity attributable to equity holders of the parent	13,060	11,050
Non-controlling Interest	1,714	1,043
Total Equity	14,774	12,093
Total Liabilities and Equity	19,486	16,368

Page 6

Titon Holdings Plc

Preliminary Announcement for the year ended 30 September 2016

Unaudited Consolidated Statement of Changes in Equity

at 30 September 2016

	Share Capital	Share  premium  reserve	Capital redemption reserve	Trans- lation reserve	Treasury shares		Retained earnings	Total	Non- controlling interest	Total  equity
	£'000	£'000	£'000	£'000	£000		£'000	£'000	£'000	£'000
At 1 October 2014	1,056	865	56	23	(27)		8,023	9,996	682	10,678
Translation differences on overseas operations	-	-	-	(75)	-		-	(75)	(15)	(90)
Profit for the year	-	-	-	-	-		1,333	1,333	376	1,709
Total Comprehensive Income for the year	-	-	-	(75)	-		1,333	1,258	361	1,619
Dividends paid	-	-	-	-	-		(289)	(289)	-	(289)
Share-based payment expense	-	-	-	-	-		52	52	-	52
Ordinary shares issued	7	26	-	-	-		-	33	-	33
At 30 September 2015	1,063	891	56	(52)	(27)		9,119	11,050	1,043	12,093
Translation differences on overseas operations	-	-	-	563	-	-		563	354	917
Profit for the year	-	-	-	-	-	1,635		1,635	317	1,952
Total Comprehensive income  for the year	-	-	-	563	-	1,635		2,198	671	2,869
Dividends paid	-	-	-	-	-	(324)		(324)	-	(324)
Share-based payment expense	-	-	-	-	-	49		49	-	49
Ordinary shares issued	28	59	-	-	-	-		87	-	87
At 30 September 2016	1,091	950	56	511	(27)	10,479		13,060	1,714	14,774

          Page 7

Titon Holdings Plc

Preliminary Announcement for the year ended 30 September 2016

Unaudited Consolidated Statement of Cash Flows

for the year ended 30 September 2016

	Unaudited 2016	2015
	£'000	£'000
Cash generated from operating activities
Profit before tax	2,136	1,869
Depreciation of property, plant & equipment	400	403
Amortisation of intangible assets	156	163
Increase in inventories	(370)	(363)
Increase in receivables	(1,061)	(491)
(Decrease) / increase in payables and other current liabilities	(79)	454
Profit on sale of plant & equipment	(19)	(4)
Share based payment - equity settled	49	52
Interest received	(8)	(8)
Share of associate's profit	(356)	(298)
Cash generated from operations	848	1,777
Income taxes paid	(217)	(234)
Net cash generated from operating activities	631	1,543
Cash flows from investing activities
Purchase of plant & equipment	(721)	(498)
Purchase of intangible assets	(163)	(128)
Proceeds from sale of plant & equipment	50	52
Interest received	8	8
Net cash used in investing activities	(826)	(566)
Cash flows from financing activities
Exercise of Share Options	87	33
Dividends paid to equity shareholders	(324)	(289)
Net cash used in financing activities	(237)	(256)
Net (decrease)/ increase in cash & cash equivalents	(432)	721
Cash & cash equivalents at beginning of the year	2,870	2,149
Cash & cash equivalents at end of the year	2,438	2,870

Page 8

Titon Holdings Plc

Notes to the Preliminary Announcement for the year ended 30 September 2016

1   Earnings per ordinary share

The calculation of the basic and diluted earnings per share is based on the following data:

	2016	2015
	£'000	£'000
Numerator
Earnings for the purposes of basic earnings per share being
earnings after tax attributable to members of Titon Holdings Plc	1,635	1,333
Denominator	Number	Number
Weighted average number of ordinary shares for the purposes of basic
earnings per share	10,752,964	10,575,600
Effect of dilutive potential ordinary shares : Share Options	184,129	288,288
Weighted average number of ordinary shares for the purposes of diluted earnings per share	10,937,093	10,863,888
Earnings per share (pence)
Basic	15.21p	12.60p
Diluted	14.95p	12.27p

2    Dividends

	2016	2015
	£'000	£'000
Final 2015 dividend of 1.75 pence (2014: 1.5 pence) per ordinary share proposed and paid during the year relating to the previous year's results	188	157
Interim dividend of 1.25 pence (2015: 1.25 pence) per ordinary share paid during the year	136	132
	324	289

The Directors are proposing a final dividend of 2.25 pence (2015: 1.75 pence) per share. This will result in a final dividend totalling £245,447 (2015: £185,948), subject to approval by the shareholders at the Annual General Meeting. This dividend has not been accrued at the balance sheet date.

Page 9

Titon Holdings Plc

Notes to the Preliminary Announcement for the year ended 30 September 2016

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 four main business segments which are:

Segment	Activities undertaken include:
United Kingdom	Sales of passive and powered ventilation products to house builders, electrical contractors and window and door manufacturers. In addition to this, it is a leading supplier of window and door hardware.
South Korea North America	Sales of passive ventilation products to construction companies. Sales of passive ventilation products to window manufacturers.
All other countries	Sales of passive and powered ventilation products 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 over page.

          Page 10 

Titon Holdings Plc

Notes to the Preliminary Announcement for the year ended 30 September 2016

3      Revenue and segmental information (continued)

Operating segment

The Directors primary review of performance is by geographical regions.

For the year ended 30 September 2016	United  Kingdom	South  Korea	North America	All other  countries	Consolidated
	£'000	£'000	£'000	£'000	£'000
Segment revenue	12,901	7,110	1,715	1,995	23,721
Inter-segment revenue	750	-	-	-	750
Total Revenue	13,651	7,110	1,715	1,995	24,471
Segment profit	2,843	1,158	281	196	4,478
Allocated expenses
Research and Development expenses	(327)	(23)	(21)	(168)	(539)
Sales Administration expenses	(559)	-	-	(62)	(621)
Other Expenses	(1,155)	-	-	(35)	(1,190)
Finance income	8	-	-	-	8
Profit before tax	810	1,135	260	(69)	2,136
Tax expense					(184)
Profit for the year					1,952
Depreciation and amortisation	508	47	1	-	556
Total assets	12,786	6,098	602	-	19,486
Total assets include: Investments in associates	1,464	-	-	-	1,464
Additions to non-current assets (other than financial instruments  and deferred tax assets)	839	43	2	-	884

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

Sales to Browntech Sales Co. Ltd (the Group's associate undertaking in South Korea) of £7.110m represent 30.0% of Group Revenue (2015: £7.161m - 32.2%). 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 30 September 2016	United Kingdom	Europe	North America	Asia	All other regions	Total
Revenues	£'000	£'000	£'000	£'000	£'000	£'000
By entities' country of domicile	14,896	-	1,715	7,110	-	23,721
By country from which derived	12,848	1,934	1,715	7,155	69	23,721
Non-current assets
By entities' country of domicile	4,369	-	1	1,078	-	5,448

Page 11

Titon Holdings Plc

Notes to the Preliminary Announcement for the year ended 30 September 2016

3      Revenue and segmental information (continued)

Operating Segment

For the year ended 30 September 2015	United  Kingdom	South  Korea	North America	All other  countries	Consolidated
	£'000	£'000	£'000	£'000	£'000
Segment revenue	12,461	7,161	1,191	1,445	22,258
Inter-segment revenue	601	-	-	-	601
Total Revenue	13,062	7,161	1,191	1,445	22,859
Segment profit	2,606	1,264	105	181	4,156
Allocated expenses
Research and Development expenses	(352)	(23)	-	(160)	(535)
Sales Administration expenses	(506)	-	-	(62)	(568)
Other Expenses	(1,160)	-	-	(33)	(1,193)
Finance income	9	-	-	-	9
Profit before tax	597	1,241	105	(74)	1,869
Tax expense					(160)
Profit for the year					1,709
Depreciation and amortisation	528	38	-	-	566
Total assets	11,352	4,600	416	-	16,368
Total assets include: Investments in associates	796	-	-	-	796
Additions to non-current assets (other than financial instruments  and deferred tax assets)	527	99	-	-	626

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

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 30 September 2015	United Kingdom	Europe	North America	Asia	All other regions	Total
Revenues	£'000	£'000	£'000	£'000	£'000	£'000
By entities' country of domicile	13,906	-	1,191	7,161	-	22,258
By country from which derived	12,461	1,389	1,191	7,189	28	22,258
Non-current assets
By entities' country of domicile	3,898	-	1	821	-	4,720

Page 12

Titon Holdings Plc

Notes to the Preliminary Announcement for the year ended 30 September 2016

3      Revenue and segmental information (continued)

Operating segments

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.

	2016	2015
	£'000	£'000
Trickle ventilation and window and door hardware products	17,931	17,589
Mechanical ventilation products	5,790	4,669
Revenue	23,721	22,258

4      Tax (expense) / credit                                                                                                                          

	2016	2015
Current income tax:	£'000	£'000
Corporation tax expense	(256)	(208)
Adjustment in respect of prior years	3	11
	(253)	(197)
Deferred tax:
Origination and reversal of temporary differences	69	37
Income tax expense	(184)	(160)

The charge for the year can be reconciled to the profit
per the income statement as follows:
Profit before tax Effect of:	2,136	1,869
Expected tax charge based on the standard rate of
Corporation tax in the UK of 20.0% (2015: 20.5%)	(427)	(383)
Additional deduction for R&D expenditure	172	148
Effect of Associate's results reported net of tax	75	65
Expenses not deductible for tax purposes	33	2
Difference in overseas tax rates	(40)	(3)
Adjustments in respect of prior periods	3	11
Income tax expense	(184)	(160)

Page 13

Titon Holdings Plc

Notes to the Preliminary Announcement for the year ended 30 September 2016

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.

Key management who hold the authority and responsibility for planning, directing and controlling activities of the Group are comprised solely of the Directors. There were no transactions, agreements or other arrangements, direct or indirect, during the year in which the Directors had any interest.

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
	2016	2015	2016	2015
	£'000	£'000	£'000	£'000
Browntech Sales Co. Ltd	7,110	7,161	2,963	1,976

Trading debts between subsidiaries and Browntech Sales Co. Ltd are created only when the ultimate customer has accepted the successful inclusion of our products into buildings.

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 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. 

7      Basis of preparation 

The financial information for the year ended 30 September 2016 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 2015 Financial Statements which is available from the Group's website at www.titonholdings.com.

Prior period figures for Cost of Sales and Research and Development Expenses shown in the Consolidated Income Statement on page 5 have been restated to provide a comparable cost basis with the costs and expenses reported in the year to 30 September 2016. Cost of Sales for the year to 30 September 2015 have been restated at £15,745,000 (previously reported as £16,280,000) and Research and Development Expenses have been restated at £535,000. The Research and Development Expenses were included within the 2015 figure for Cost of Sales and were not reported separately for the year ended 30 September 2015.

This restatement has had no effect on the profits recorded for the year to 30 September 2015 or to the year to 30 September 2016.

Except for the implementation of the amendments below there have been no changes to the accounting policies during the year.

·     Annual Improvements to IFRSs 2010-2012 Cycle. These amendments affect the following IFRSs - IFRS 2 Share-based Payment, IFRS 3 Business Combinations, IFRS 8 Operating Segments, IFRS 13 Fair Value Measurement, IAS 16 Property, Plant and Equipment, IAS 38 Intangible Assets, IAS 24 Related Party Disclosures and IAS 38 Intangible Assets.

·     Annual Improvements to IFRSs 2011-2013 Cycle. These amendments affect the following IFRSs: IFRS 1 First-time Adoption of International Financial Reporting Standards, IFRS 3 Business Combinations, IFRS 13 Fair Value Measurement and IAS 40 Investment Property.

Page 14

Titon Holdings Plc

Notes to the Preliminary Announcement for the year ended 30 September 2016

7     Basis of preparation (continued)

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 2016 or 2015.

The financial information for the year ended 30 September 2015 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 2016 is unaudited. The statutory accounts for that year will be delivered to the Registrar of Companies following the Company's Annual General Meeting. The independent Auditors' Report will be based on those statutory accounts once they are complete. The statutory accounts will be delivered to the Registrar of Companies following the Company's Annual General Meeting which will be held on 15 February 2017.

For further information please contact:

Keith Ritchie, Chairman            Phone: [phone]

Page 15

Titon Holdings Plc

Registered Office: 894 The Crescent, Colchester Business Park, Colchester, Essex CO4 9YQ. Registered in England and Wales (registered no. 1604952).

 

END

 

 

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