Preliminary Results - 30.9.04
Titon Holdings PLC
09 December 2004
Titon Holdings Plc
Preliminary Results for the year ended 30 September 2004
CHAIRMAN'S STATEMENT
FINANCIAL RESULTS
Profit before taxation for the year was 30.3% lower than last year at £1.06
million (2003: £1.52 million), on turnover 0.6% higher at £16.40 million (2003:
£16.31 million). Interest income has decreased slightly and, at the operating
level, profits were 31.4% down at £0.94 million (2003: £1.37 million). Earnings
per share are 29.4% lower at 7.19p (2003: 10.19p).
Reflecting the Group's strong cash position, the Directors are proposing a final
dividend of 4.8p per ordinary share (2003: 4.8p), making a total of 7.1p for the
year (2003: 7.1p). The dividend will be payable on 18 February 2005 to
shareholders on the register on 28 January 2005. The ex-dividend date will be 26
January 2005.
SALES COMMENTARY
Year on year sales growth, which was running at 5.4% at the half year, stalled
during the second half as activity levels within the UK window market slowed.
This situation was not peculiar to Titon and was experienced by other major
suppliers to the window industry. Whilst overall turnover for the year has been
maintained, pricing pressures and a change in our product mix have had an
adverse impact on our margins. In response to this declining profitability, the
Company has taken measures to reduce its costs in many areas of the business.
Although our traditional UK business has come under pressure, I am pleased to
record certain areas of improvement. Our export sales have again increased and
now account for 10% of Group turnover. The weakness of the US dollar has,
however, affected the profitability of our business in the USA. It is also
pleasing to note that our Commercial Department, which mainly services the
higher value aluminium window and door market, has shown continued growth. We
are currently recruiting extra staff to increase our market penetration in this
area of the business.
In my Interim Report I announced the introduction of several exciting new
powered ventilation products. Additional lines have been added during the second
half as we pursue our aim of becoming total domestic ventilation solutions
providers. In order to effectively promote this image and these product ranges,
Titon has restructured its operations to launch the new Ventilation Division
early in the new financial year. Specialist staff have been recruited from
within the powered ventilation industry, and we are encouraged by initial
reactions from the market.
MANUFACTURING
I reported at the previous year-end that we had purchased and refurbished a unit
adjacent to our existing factory premises. The move into this 'new' warehouse
and distribution unit took place during the year and I am pleased to report that
the unit is now functioning effectively. It now provides the capacity necessary
to stock and distribute our new Ventilation Division products as well as all our
traditional window hardware product ranges.
Additionally, during the year, we have invested £500,000 in a new powder coating
paint plant. The anticipated cost savings in terms of direct labour, power usage
and operational efficiency will provide a quick pay back on this investment. At
the same time it will improve our response times and reduce our stock levels.
This plant has been installed in the freehold building vacated by moving the
warehouse facility. The lease on the building that housed the old plant expired
at the end of the financial year providing us with an annual rent savings of
£70,000.
We are committed to UK manufacturing wherever possible, and we will continue to
improve our manufacturing efficiency through considered investment in quality
plant, through automation of our assembly processes and through rationalisation
of our product ranges.
PERSONNEL
It is with much regret that the efficiency and cost saving measures introduced
towards the end of the financial year have led to job losses throughout the
business. We begin the new 2004/5 financial year with 265 employees compared to
296 a year ago. One-off costs associated with restructuring during the year
amounted to £60,000.
In the light of the reduced profits, our workforce, staff and Directors will not
be receiving an inflationary pay increase this year. I should like to thank them
all for their loyalty and commitment during this difficult period.
PROSPECTS
As already stated, certain cost saving measures have been implemented towards
the latter part of the year. In addition, the Directors have undertaken, and
will continue to evaluate, an in-depth business review to enable the Company to
operate more efficiently and to pursue a more focused strategy.
Like many companies within our industry, we have been deeply involved in
analysing the Building Regulations Part F consultation documents that were
released in July 2004. Although benefits may accrue, the proposals within the
consultation document are wide-ranging and complex and it is too early to
comment on what their overall impact on Titon might be. The outcome of the
consultation exercise and the final scope of the Regulation changes will be
announced during the spring of 2005.
Whilst we are confident that the efficiency of our business will improve, the UK
window marketplace in which we predominantly operate, remains competitive due to
overcapacity. Our cost reductions will, however, begin to have an impact and we
anticipate that this, combined with our strategies of diversification and
focusing resources, will enable us to halt the recently experienced profit
declines.
John Anderson
Chairman
9 December 2004
CONSOLIDATED PROFIT AND LOSS ACCOUNT
Preliminary Results for the year ended 30 September 2004
2004 2003
£'000 £'000
Turnover 16,401 16,310
Cost of sales 12,505 11,889
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Gross profit 3,896 4,421
Distribution costs 561 669
Administrative expenses 2,398 2,383
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2,959 3,052
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Operating profit 937 1,369
Interest receivable 131 153
Interest payable and similar charges -6 -3
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Profit on ordinary activities before
taxation 1,062 1,519
Taxation on profit on ordinary
activities 305 433
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Profit on ordinary activities after
taxation
attributable to the members of Titon
Holdings Plc 757 1,086
Dividends 749 718
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Retained profit for the financial year 8 368
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Earnings per share - basic 7.19p 10.19p
- diluted 7.14p 10.16p
All amounts relate to continuing activities.
There are no recognised gains and losses other than the profit attributable to
the shareholders of the Company of £757,000 in the year ended 30 September 2004
and the profit of £1,086,000 in the year ended 30 September 2003.
CONSOLIDATED BALANCE SHEET
Preliminary Results for the year ended 30 September 2004
2004 2003
£'000 £'000
Fixed asset
Tangible assets 4,291 4,025
Current assets
Stocks 2,580 2,442
Debtors 3,201 3,248
Cash at bank and in hand 4,017 3,897
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9,798 9,587
Creditors:
Amounts falling due within one year -3,463 -3,046
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Net current assets 6,335 6,541
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Total assets less current liabilities 10,626 10,566
Deferred taxation -95 -68
------- -------
10,531 10,498
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Capital and reserves
Called up share capital 1,053 1,050
Share premium account 841 819
Share capital redemption reserve 56 56
Profit and loss account 8,581 8,573
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Equity shareholders' funds 10,531 10,498
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COMPANY BALANCE SHEET
Preliminary Results for the year ended 30 September 2004
2004 2003
£'000 £'000
Fixed assets
Tangible assets 2,906 2,813
Investments 202 204
------- -------
3,108 3,017
Current assets
Debtors 3,623 2,103
Cash at bank and in hand 3,300 3,800
------- -------
6,923 5,903
Creditors:
Amounts falling due within one year -1,307 -730
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Net current assets 5,616 5,173
------- -------
Total assets less current liabilities 8,724 8,190
Deferred taxation -190 -174
------- -------
8,534 8,016
======= =======
Capital and reserves
Called up share capital 1,053 1,050
Share premium account 841 819
Share capital redemption reserve 56 56
Profit and loss account 6,584 6,091
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Equity shareholders' funds 8,534 8,016
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CONSOLIDATED CASH FLOW STATEMENT
Preliminary Results for the year ended 30 September 2004
2004 2003
£'000 £'000
Net cash inflow from operating
activities 1,545 1,667
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Returns on investments and servicing of
finance
Interest received 131 153
Interest paid -6 -3
------- -------
125 150
------- -------
Taxation
UK corporation tax -431 -449
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Capital expenditure
Purchase of tangible fixed assets -940 -1,309
Sale of tangible fixed assets 66 43
------- -------
-874 -1,266
------- -------
Equity dividends paid -745 -746
------- -------
Cash outflow before use of management
of liquid resources and financing -380 -644
Management of liquid resources
Disposal of treasury deposits 500 1,100
Financing
Purchase of ordinary share capital - -560
Shares issued under the Company's
share option scheme 25 -
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Decrease in cash -145 -104
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Notes to the Preliminary Results for the year ended 30 September 2004
1 Earnings per share has been calculated in accordance with
FRS14. Basic earnings per share has been calculated by dividing the profit
attributable to shareholders of £757,000 (2003: £1,086,000) by the weighted
average number of ordinary shares in issue during the year of 10,523,878 (2003:
10,657,159).
The diluted earnings per share has been calculated by dividing the profit
attributable to shareholders of £757,000 (2003: £1,086,000) by the weighted
average number of ordinary shares and potential dilutive ordinary shares during
the year of 10,597,741 (2003: 10,693,452). all dilutive ordinary shares relate
to share options.
2 Reconciliation of operating profit to net cash inflow from operating
activities
2004 2003
£'000 £'000
Operating profit 937 1,369
Depreciation 607 602
Increase in stocks -138 -205
Decrease/(increase) in debtors 47 -7
Increase/(decrease) in creditors 93 -78
Profit on sale of fixed assets -1 -14
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Net cash inflow from operating activities 1,545 1,667
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3 Reconciliation of net cash flow to movement in net funds
2004 2003
£'000 £'000
Increase/(decrease) in cash in the year 145 -104
Decrease in liquid resources -500 -1,100
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Change in net funds resulting from cashflows and
movement
in net funds in the year -355 -1,204
Opening net funds 3,666 4,870
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Closing net funds 3,311 3,666
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4 The Preliminary Announcement does not constitute statutory
accounts. The auditors' report on the full accounts for the year ended 30
September 2004 has yet to be signed.
5 The actual results for the year ended 30 September 2003 as shown in this
statement are an abridged version of the Group's 2003 accounts which have been
filed with the Registrar of Companies and which received an unqualified audit
report.
The results for the year ended 30 September 2004 have been prepared on a basis
consistent with the accounting policies set out in the statutory accounts for
the year ended 30 September 2003.
6 The Preliminary Announcement was approved by the Board of Directors on 08
December 2004.
This statement is being sent to shareholders and will be available from the
Company's registered office at International House, Peartree Road, Stanway,
Colchester, Essex CO3 0JL.
This information is provided by RNS
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