Titon Holdings (LSE:TON) — Interim Results

0:00 Good morning, and welcome to the TITON HOLDINGS PLC Interim Results Investor Presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged and can be submitted at any time by the Q and A tab situated in the right hand corner of your screen. Just simply type in your questions and press send. The company may not be in a position to answer every question it receives during the meeting itself. However, company will review all questions submitted today and publish responses where it is appropriate to do so. Before we begin, I'd like to submit the following poll. I'd now like to hand you over to Keith Ritchie, non executive chair. Good morning, sir. Thank you very much, and good morning to to all our shareholders and investors who are who've signed up for this. Our first investor meet presentation, we're very pleased to be able to do this and to reach out to to many more shareholders and investors than we've historically been able to do, and and credit to the technology and to the investor meet team for getting you with us all set up.

0:59 So we're very pleased to be able to present our interim results for the six months to the 03/31/2023. As as you heard, I'm I'm the nonexec chair of TITON. Alongside me is Carolyn Eisen, who is the chief financial officer. And Carolyn is is going to take a large part of the presentation this morning dealing with all of the operational and financial side of the results. I will deal with some of more general business and market overview. But between the two of us, we can answer we're looking forward to answering any questions you may have. As was explained, you can post them straight away or we'll post them at the end. So any further ado, Caroline, unless you wish to add anything at this point, we'll get into the presentation.

1:58 No. Good to go, Keith. Okay. Thank you. Right. So right. So just to summarize a little bit about TITON in case in case you're new to to us. Firstly, we're established market player. We've been around for for over fifty years now. We're a leading company in The UK ventilation industry supplying ventilation and door and window products. We place a great emphasis on product development in the market, and we we're always looking for new innovative products, and we play quite a significant role in driving where the market is going in terms of the regulatory developments.

2:49 I sit on the trade association bodies alongside one of my non exec colleagues, and we're fully plugged into what is what is happening there. So the and and the regulation is key to TITON. Building regulations and the standards that sit alongside those are are important in in driving the demand for ventilation both in new build and also in refurbishment. That is it's important to understand that it is very much based on what the regulations say. If if you didn't have regulations, nobody would fit ventilation and there would be there would be a major health issue caused as a result of that. So it it is important that you understand that regulations are are are key to tighten both in The UK and and Europe.

3:46 So the the increasing focus on indoor air quality that's been driven by COVID is is a really important factor to bear in mind. Yeah. It's the first time that in in really public domain here in The UK that, that ventilation has been has been considered. And when government is talking about it, you know that you're on the the agenda, particularly with COVID. But as we go into, more energy efficiency, which is obviously key to the to the net zero debate, it is vital that buildings are properly ventilated, and that's that's our business. So we have a diversified global footprint and revenue streams. We sell into mainly The UK, but the European market is very important for us. South Korea, we'll come on and talk about that in a bit more, and we also sell into The US.

4:42 So we certainly got a good international coverage, and we've got quite a wide range of products going into those markets, both both the natural and the mechanical ventilation markets, as well as we sell window and door hardware, which we've always sold to the window and door fabricators. So from a marketing and product range perspective, as I've already mentioned, we've got a strong investment in r and d to make sure we always offer good leading market leading products. And, you know, we've our products have been awarded some some of the trade awards recently, which we're always very pleased to do that they have done. We we look to to compete against our against the other companies in the ventilation space by bringing out innovative products and beating them at it. And we've always got a pretty good pipeline of products that we're looking to introduce.

5:48 That's strength alongside the balance sheet. We've got positive cash, no borrowings, net assets as of the last last date to 15,000,000. So moving on to the business overview. The executive team, as you know, we have a vacancy for our CEO and I'm sure there'll be a question about that at the end of the session. We've shown the senior leadership team on this slide led by Carolyn, alongside our operations director, new commercial director who joined this week, our technical director, and then Tyson Anderson, the the business projects director.

6:34 They are a very competent group of individuals, and I'm very confident that they will do a great job for us as we go forward in the interim while we're while we're recruiting a new CEO. As I said in in the introduction, it is a diverse business, two distinct product streams being the window and door hardware side side and the ventilation system side, which deals with the mechanical ventilation products that we make and sell. You can see that set out in the left hand box under TITON HOLDINGS which is the main operating subsidiary in The UK. That is the manufacturer and the seller of all of our PLC products in The UK and Europe.

7:23 TITON also manufactures all the products that we sell into The US, where we have a small subsidiary that sells to very limited parts of The US which require trickle vents. We haven't been able to, at this stage, expand it in selling mechanical products. That's a big investment for us and we haven't done that yet. And then we come on to Career, where we have two entities that we've invested in through a joint venture agreement. We have 51% of a company called TITON Career and then 49% of a company called Brown Tech Sales. We consolidate TITON Career, it's a subsidiary of ours, we bring in 100% of their revenues into our top line sales number and we bring in all of their profits and losses.

8:20 And then the associate, which buys all of its products from TITON Career, then sells out into the marketplace. That is not consolidated in the TITON accounts. We just bring in our share of the net profit after tax into our accounts. That company has gained quite strong asset backing and we show the headline figures in our annual report if anybody is interested. So that's just a very quick run through of the TITON group. So products, I've already stressed how important this is to us, mechanical ventilation products.

9:06 We've pictured here some of the key items and I do want to highlight the TITON HOLDINGS PLC air brick, which is something we brought out as a result of the Grenfell tragedy five years ago now, 2017. That is a metal air brick which is designed to go into high rise buildings and heaven forbid there is another fire like Brentfall, anything on the outside of the building that's plastic will burn and will melt. The metal air brick is designed to ensure that it doesn't have that jeopardy and we've continued to see good sales of that into the residential building market.

9:57 And the TITON Ultimate DMEV is a new product for us. We've been making and selling it for over two years now. Again, that's market leading, designed, it's a constantly running fan that boosts when moisture is created in a wet room or in a bathroom or in a kitchen, and then it ramps up and extracts at a high rate. The reason why that is of interest is because there are a vast number of small fans which are being sold and fitted into The UK market, which do not provide necessary or sufficient performance to actually expel moisture.

10:44 That's a failure of the market, but the regulator has upgraded the standards for these products. Our fan is, when it was launched, was only one other fan in the marketplace that could do what the ultimate fan could do. So we're pleased about that and we're seeing good levels of sales of that one now. And then in the ventilation and hardware products, just shown some of the items that we manufacture and buy in, the Trim Vent selected, one of our original trickle vents. The SF Xtravent is a metal vent that we bought out about seven or eight years ago that is good stellar. Then you can see a couple of the products that we buy in, A friction hinge which goes into a window and then the Asterian door cylinder which is a product we've developed and enhanced in the last three or four years, a couple of years, which is a security led product that goes into The UK market and we've seen good sales. So, there's a snapshot of the kind of products we're selling and I've passed over the NVHR range, that's a key part of the range in the mechanical ventilation space, but I just wanted to highlight some of the newer items that we've been selling or developing and selling over the years. But the NVHR range is

12:15 crucial to our business as well. Product highlights in 2023, I've talked about the AIRBRICS, I've talked about the TITON Ultimate DMEV, I've highlighted the Asterion two three star high security anti manipulation profile cylinder. And then just worth also highlighting some of the work we've been doing on controllers. All of our mechanical ventilation products are now capable of being managed through a WiFi connection. So you can be anywhere in the world with a Wi Fi connection, and you can control your ventilation, your NVHR, turn it up, turn it down, see what's going on, see what the temperatures are, and that's we're convinced and we've seen it with lots of other products that having that connectivity and being able to control the ventilation is critical in the digital world.

13:29 We are working with customers to develop interface with building control systems, and that will enable building owners to monitor the entire site for maintenance and fault detection purposes as well. So we spend a lot of time on electronics and that will continue going forward. And then finally on this slide, we're just bringing out a new product which we call the HR V4, which will enable us to replace a couple of our older products with better quality, better levels of performance, and that's a product that we're being launching in the next month or so.

14:24 So I'm not going spend a lot of time on The UK and Europe overview. Hopefully, if you've read our annual report, lot of this fact is in there as well. As I said earlier, window and door hardware is one division and then ventilation systems is the other. I've listed the products out there that we sell in that. The markets, just worth flagging that, window and door hardware goes into residential new build and the repairs, maintenance and improvement sectors, and we also sell some products into the commercial new build market. Ventilation systems. We're focused on The UK and European residential new build markets under building regulations and the route to market for both of those ventilation systems.

15:21 We sell direct to house builders via their contractors, and in Europe we sell via distributors. For the window and door hardware market, we sell to the window and door fabricators in The UK, so two distinct routes to market there. And in the last set of results, we sold just under £5,000,000 in the window and door hardware section and just £5,500,000 in the ventilation systems section. So that's the first time actually that Vent Systems has exceeded the window and door hardware part of the market. So just moving on to the market overview and again I am not going to spend too long on this, but there are a number of different ways that you can ventilate your property.

16:15 If we start on the right hand side with mechanical ventilation with heat recovery, that's where the bulk of our value goes buying a unit like this. The selling price for even the smallest of those units is about £500 and going up to well over £1,000 for the largest unit. So that's where in terms of our sales, we get the biggest the biggest value, biggest amount of sales. That is a whole house system. You install it in the roof space or in a utility cupboard, and then you extract moisture, volatile organic compounds, wherever the dirty air is from the wet rooms and you supply clean air into the living rooms, both the bedrooms and then the living area downstairs.

17:16 Moving to the left, continuous mechanical extract ventilation, again it's a box in the roof space that is extracting only from the wet rooms, and the distinction between those two is that with mechanical ventilation, with heat recovery, what you're doing is you're actually recovering the the warm air that you've that you've spent your money on heating, and you you you can benefit from about 90% of that energy. You can recover that through through MDHR. With with centralized mechanical extract, you don't recover the energy. You're just, yeah, you're just extracting that air to the outside.

18:03 It's a cheaper system compared to NVHR, but it is one that is accredited under part f of the building regulations. Moving to the left, the decentralized mechanical extract. These are small fans as you can see, there's a big distinction between the ultimate DMEV and the mechanical extract ventilation or centralized MEV. These go into individual wet rooms, in this property, there'll be a fan in the bathrooms upstairs, a kitchen downstairs, or a cloakroom downstairs, so they're easier to fit.

18:50 It's not a whole house system, and that's a development which we're seeing a lot more of in The UK and also into the refurbishment world. And then finally on this slide, we've got the traditional market which was trickle vents in the windows and intermittent extract vans and that's a market which in new builds certainly we're seeing movement away from due to the regulations requiring a higher standard of ventilation than that provides. So as I said, building regulations are pretty important to us. The three main types I've already talked about: natural ventilation, continuous mechanical ventilation, and then mechanical ventilation with heat recovery.

19:36 I'm not going to spend any more time on that. If anybody's interested, no doubt they'll ask. In terms of the market size, of course there's been a lot of debate recently about The UK economy and we flagged that in report that most recent forecasts have been quite bearish on house building, new house building in the in The UK in the next next well, certainly in 2023. We've actually shown the the forecast from Experian going out to 2024, 2025.

20:22 They're not as bearish as the Construction Products Association, which I also flagged in the interim report, but they both yeah. Both of them see a dip in both new build and RMNI in the next in 2023, which is which, of course, impacts our business. So that covers very quickly the market overview and a kind of introduction to TITON. So we'll now move on to the short term business focus and I'm gonna hand over to to Caroline to to to cover these this part of the presentation. So Caroline, over to you.

21:13 Thank you, Keith, and good morning all. We documented at the beginning of this financial year and in our interim report, we had identified our short term focus areas for 2023 to return us back to profitability. One of the key things in doing that is the senior leadership team got together and put together all of the key areas that we would need to focus on as a business. We call them business imperatives, and I'll come on to those in a minute as we have a separate slide. The next thing was margin improvement. We flagged in our twenty twenty twenty two report that we had been unable to pass cost increases quickly enough onto our customers.

22:00 We've now got processes in place to make sure that we stay on top of that now. So we are on the road to recovering margin. We're also going through a project of rationalizing our product range. We also have strength for data supply management policies, and we're also still looking at our higher value products, like the TITON HOLDINGS PLC. Third one was market penetration, and I won't go too much into that. He's covered a lot of that. But with that, we have introduced a new commercial director. As Keith mentioned earlier, he started this week, and and that that will will assist us in our strategy in terms of that market penetration. It strengthened our whole sales area.

22:47 We also introduced the new operations director in November. He settled in very well and is making a big impact in the factory here. And another thing is streamlining the corporate structure and the operations of Korea, and I'm sure we'll get some questions on that at the end. But we are looking to do that and take some cost out of that business and also just simplify that area of the business. And the fifth item was reviewing the business and the growth strategy. And what we've made, a promise to shareholders that that would be on our agenda and that we would look to get to that by the end of twenty twenty three. So it's coming on to business imperatives, which I mentioned. So we had key eight key areas that we were gonna focus on this year.

23:36 The areas that we knew that we needed to focus on to bring the business back to profitability, that's what we're all here for after all. And a lot of progress has been made in most of those areas. Most notably, probably the production operations, one shown in blue on the right there. We were in a catch back situation. We had a backlog of customer orders. We've been quite in our two last reports about that. Not just because of the supply chain issues, but the introduction of our ERP system. We did have a huge backlog of orders, which which thankfully are now up to date. We are back to normal. We have finished good stock, and we have good lead times to kind of return to those high levels of customer service levels.

24:24 So just coming on to, you know, this list of business imperatives in detail. I won't go through every single one. The good thing is the senior leadership team now is at full strength of the vacant CEO position, but we carry on aiming to to achieve all of these by the end of financial year. We remain committed to do so. There's been a lot of progress in all areas. As I say, the biggest one was catching back on those arrears, which then really frees up the business to focus on other areas. And the second one, we get asked a lot about improving our working capital and ultimately reducing inventory. We do hold high levels of inventory and they have grown up over the last two years. Years. Part of that strategic, we hold a high level of raw materials that comprise key components that we had issues with when we had the supply chain shortage last year.

25:19 But we do recognize that that's cash tied up. So there are lots of internal initiatives to to reduce those stock levels and that's ongoing. And third one was to achieve a stable engaged present workforce. Again, lots of progress in that area. A real focus on staff. We've reduced our staff turnover levels. We now have a stable senior leadership team, which was was pretty key, we're implementing different people initiatives within the business. And the fourth was recognizing the business benefits from our new system. It did cause us some issues last year, but we recognize that actually we now have the opportunity to use that system and to improve our efficiencies, and improve margins, and introduce that level of automation within the business so that we have better data, quicker information.

26:17 So that's ongoing and we've we've introduced Power BI into the business, which has been very helpful automated workflows, those types of things. Deliver innovative new products to drive business growth. Again, Keith touched on that. We've got an ongoing commitment to new products, and we're always releasing, new products, every year. And they tend to have very big success when they enter the market, so we'll continue to do that. We're showing them exhibitions. We attended ISH in, Germany last month, which was really successful and gives us that, platform to show the market what we've what we've achieved. Improve profitability and margin through hardware product range rationalization.

27:04 So on the Windows and hardware side, we did recognize that we had, a very large, product offering. We have undergone a full review of that and we are in the process of finalizing that plan to reduce the number of SKUs. We have a very large number of SKUs, and and we recognize that having that many, probably hinges our efficiencies and we're working towards that. Hopefully, the commercial director will get very heavily involved in that as well. Developing the strong sales pipeline through existing new customers, that's ongoing and always remains a focus. Again, strengthening those sales and customer service teams has been quite key this year. Again, bringing the commercial director in and we bought a customer service management, which we've not had before as well. And we're currently undergoing a review of CRM as we look to, integrate that with Microsoft d three six five, which again will just broaden, the data that's available to all. So it should help make decisions.

28:08 And improve workplace safety by reducing workplace incidents. Now that by no means means that we had an issue with workplace incidents. We absolutely didn't. But what we wanted to do was change the health and safety culture. And again, we've we're we're recruiting an EHS manager at the moment, but we had a very strong interim in place and he's made a lot of changes in terms of our compliance changing that culture. It's been very successful. So I think it's fair to say, I mean, there's there's eight focuses there, but we are well underway in achieving those and and having that impact on the business. So financials and then the current trading and outlook, you would have all seen our RNS last week in our interim statement.

28:54 This table here shows the comparative of the six months to March 23 against the six months to March 22 and the percentage change. Group revenue actually raised by 5.2% due to the stronger trading in The UK and Europe, which was slightly ahead of our expectations. Part of that was due to us catching up on all our backlog orders. So that put us in a really good position. EBITDA reduced slightly reflecting our lower gross margins against last year. We again, we've we've highly publicized the issues we've had on margin and labor costs, material costs, energy costs inflation, all of the the same issues that most businesses are are facing.

29:43 But I'm sure you can appreciate when you're in a backlog position, it's quite difficult to pass price increases on to customers. But as I said earlier, that's something that's under review and we have, put price increases on, in this financial year. And loss before tax, 450,000 loss against 250,000 loss last year. Again, a lot of that was due to our business in Korea. UK actually were was slightly ahead of expectation, but Korea fell short, hence the RNS last week actually indicates the market that this year, we were behind, where we wanted to be, where we forecast to be.

30:31 Cash balance, 1,600,000 at the end of, March against 1.7 end of September. And we have received a dividend, from the group's associate, Brown Tech sales, amounted to 291,000, which is good and the board approved an interim dividend of $0.05 pence per share, which will be paid to shareholders on the July 7. So financial summary, so cash flow and balance sheet. So although the net assets had slightly decreased to GBP 15,400,000 from GBP 16,000,000, we still have a strong balance sheet. We have no borrowings at all. Net cash had slightly decreased, which was equivalent to 10.4% of net assets, but cash continues to remain at a stable level.

31:22 Cash generated operations was slightly up, primarily due to actively improving our working capital management. And we are targeting those reductions in stock levels for the main product lines. Inventory is 6,900,000, so slightly up on September 22. Had invested 250,000 in capital expenditure, which was mainly on tooling in our factory. And as mentioned before, we received the dividend in March for 291,000 from our associate company. Dividend of 0.5p, which I mentioned, net current assets were 8,000,000 with a quick ratio of 1.23.

32:08 A return on capital employed was a loss of 5.9% with the business continuing to operate in challenging trading conditions against last year's loss of 3.7%. I won't cover off all of this slide, but this is just highlight what Keith mentioned before in terms of the second and the analysis. In the window and door hardware division, revenue was lower by 12%, and ventilation systems had increased by 31%. And and a lot of that was from our sales to the export market, so Europe, as we, cleared that backlog. And also, we've had some of our new products, achieving good sales. For example, the TITON ultimate DMEV, which has grown by more than four times in the last period.

33:03 So current trading and outlook, look, we remain confident in the prospects of the group. We've made very good progress on all of our business imperatives and we remain focused on bringing on bringing the group back to profit. And Keith touched on some of the market outlook things earlier on. And we still have a high quality range of products that in the market currently, but also an exciting pipeline of new products, including the HIV-four, which is launching in June. We expect that the second half for UK and Europe will be slightly lower than H1 as the market slows down. But we expect that in Korea, the trading conditions will remain very difficult and the losses will continue.

33:53 Hence, the change in forecast that we announced last week. And there is a strong focus at board level to streamline that corporate structure and introduce more rigorous controls. But we do continue to have a strict to have a strong balance sheet. So we have Keith, shall I hand back to you? Yes. Thank you, Carolyn, for that very rigorous run through of of of where we stand today. And and the last couple of slides, just so that everybody's aware, the identities of the the the six directors on the TITON HOLDINGS board that that are managing the business.

34:43 Put them there. They're on our website, so we're always very transparent about that background on on on the non exec directors, which is, I think, important. And then finally, just the latest latest details on the shareholdings, you know, who exceed 3%. As you know, Harbour Capital are now our largest institutional shareholder and largest shareholder throughout now, owning just under 20% of the company. John Anderson, the company founder, he and his his wife continue to own over 15% of of the company. My my shareholding's up there along along again with my wife's shareholding.

35:32 TITON, John Anderson's son, holds just under 700,000 shares. And then Amanda Farah and David Barry are the the last two who own over 3%. So, again, always very transparent about that. We have to disclose these these these shareholdings whenever there is changes in those over and above 3%. They are flagged, so there's no no there's every all visibility on that is clear. So just to run that out and again you've got our contact details both mine and Carolyn's they're on the website. We're always available. I'm always very happy to speak to shareholders to answer your questions and to hope that you remain very keen and interested in TITON.

36:33 So thank you for that, for your attendance, and for your attention on that one. And I think we're now ready to take some q and a. So Caroline to Alessandro. Yeah. Perfect. Keith, Caroline, thank you very much for your presentation. What I'll do is I'll just bring your cameras back up. Ladies and gentlemen, please do continue to submit your questions just by using the q and a tab, is situated on the top right hand corner of your screen. Just while the company take a few minutes to review those questions that have been submitted today, I'd just like to remind you that recording of this presentation along with a copy of the slides and the published q and a can be accessed via your investor dashboard. As you can see, we received a number of questions throughout today's presentation. Keith, if I could just hand back to you just to read out those questions where it's appropriate to do so. I'll pick up from you at the end.

37:18 Right. And Alessandra, I can't see the questions in front of me. So on the right hand side, can you see chat, q and a, and polls, Keith? Yep. Yep. If you click on the q and a, the questions will be in there, sir. Yeah. And I'm clicking on that, and I can't see anything. If you click on the new, so that No. I've just got an old one up there. I've got them. Would you like me to Okay. Yeah. If you if you can see them, I can't see them in a minute. So Okay. We have a question which says, can we comment on the current situation regarding availability of components? I think the short answer to that is the the supply chain shortages that we experienced last year have have pretty much gone away. We've got a few key components that remain on long lead times, but we do have stocks of those.

38:14 Keith, do you wanna make any other comment on that? No. I think that covers it. Yeah. Supply chain has been a real issue for us over the last couple of years, as you know. You know, when the the supply of motors goes out from kind of four weeks availability to, you know, to to six months and and longer, and we're now being required to to put our orders in for the for the whole of 2023 and 2024, you'll understand that actually that's that has has been a big impediment to us over the last couple of years in terms of managing those high value items. So it's been hard, been very hard, but we are in a we're in a better place than we were this time a year ago.

39:06 Yeah. And and almost linking to that, we've also been asked we built up inventory during the last financial year with expensive cash, and it was the understanding that it would unwind, however, it's continued to grow in the first half. Is this goal proving more problematic than anticipated? I think it's fair to say, you know, this is more problematic. It's very difficult when you have high levels of stock and high lead times on some items to bring those levels down. As I mentioned earlier, a high value of stock, is in relation to raw materials and it is those higher value items that are difficult, to get a short notice. But we also have introduced quite a lot of internal processes to start bringing inventory down, a lot more automation, a lot more clearer forecasting.

40:00 So we are hoping that that starts to unwind by the end of financial year. Caroline, I think there was a question posted at the outset before we started on the on the recruitment of the CEO and the process. Do you want just wanted to to read that one out, please? Yes. We were asked having had two CEOs and shareholder, can the board take their time and appointment for the next one and ensure the next one fits with company culture? Could there be a candidate already working for the company who would fit better with the company culture? And someone else linked to that actually said, what qualities are we looking for from the new CA that perhaps wasn't present before?

40:52 Okay. And it's a great question. We've adopted we've used a recruitment a search team based based in in East Anglia that has a really good client list in the in the region, and we've used them quite a few times now for our senior recruitment, including Carolyn herself, the two NEEDs who joined us last year, and both of the previous two chief executives. And we've been through the process. You know, we we went through long list, short list, interview candidates, brought them to full board full board where they made presentations, and we and we selected on the basis of choosing the best candidate that we could at the time.

41:52 So absolutely have not shortcut any part of that process. We we've been on we've we've been a tad unlucky. I'm not gonna hide that, but we've we've adopted the the exactly the same process this time around. You know, we go through rigorous interviews. We psychometric test our candidates, and we select on that basis. And that's what we were doing this time around. The process started. We have set a very clear criteria for the candidates in terms of what we expect them to bring to TITON.

42:39 We've emphasized that teamwork is is a critical part of what we expect the the the candidates to to bring to to TITON because it's a key feature that of TITON itself. Having a a strong team ethic is really, really important to us, and we've, you know, we've we've stressed that in there. And we I think we've you know, the the other ingredient that I I want to just highlight is, we want somebody who can develop individuals, develop the team as well, and that requires somebody who does show a high level of EQ as well as obviously IQ. We've stressed that that's the basis on which we will be looking at candidates going forward. Now the second part of that question was in terms of any internal candidates.

43:36 I've always encouraged my colleagues if they feel they've that they have their capabilities to apply, that we we didn't select on that basis in the in the first first cup in in the first round that we did. In terms of this process, I've made the same point to my colleagues that if anybody wishes to apply, then, of course, they'd be they'd be considered. And and as a candidate who comes from the from TITON already, they clearly know the culture, they know the background, and that would stand them in in in very good stead, against, external candidates if they so choose to do so.

44:22 So absolutely, they're encouraged to apply. Okay. We have a question around the loss of the Sobinko relationship. It's identified as being considerable, and they are wanting to know whether there's news to establish another similar relationship with companies here and abroad. Yeah. And, again, we flagged we flagged that over the last couple of reports. Yeah. So Binko is a large Belgium hardware manufacturer that sells sells product into the commercial commercial building market. So office blocks, university buildings, hospitals is that is the market for for their products.

45:16 And we had a we had a an exclusive distributor relationship with them in The UK, so we were responsible for all their distribution in The UK for many, many years. They over time, they had just they had they had in their in their export market, so outside Belgium, they had moved from using distributors to selling direct. So they've set up subsidiaries and were selling direct to customers on that basis, And you can appreciate that that cuts out a margin. And they finally got round to taking the same decision in respect to The UK market, which we were very sorry about having had a a long standing relationship with them. It it came to an end.

46:03 You know, we parted amicably, and and we're now in a position where we're developing new products to replace those Subinko products, And we also have a relationship with another European hardware manufacturer called Roto, which has got a wide range of products both for the commercial and also the residential market. We've we've got to know them over the last few years anyway. They've we've, you know, we've talked to them on a pretty regular basis, and we're just setting up to to now supply their products as well. So, yes, yes, we're we're we're trying to replace Subinco. It won't happen immediately that the the the amount of revenue that we earn from Subinco will be replaced straight away, but over time, yeah, we are looking to bring in alternative sources of hardware.

47:00 And an interesting question on Korea. They asked if the Korean market is moving to mechanical ventilation, why are TITON not selling their mechanical ventilation products into Korea? Yeah. And that is a good question. And and the answer to that is that the the two markets are are really separate in terms of the the products that can go into you know, that we sell into The UK and sell into Korea. The the Korean market, the the the mechanical ventilation with heat recovery is a much, much is a lower quality, much cheaper product than we sell in The UK or indeed into Europe, and that's down to standards. You know, the requirements in The UK for heat recovery, for energy use are are much higher than than they are currently in Korea.

47:53 So, yeah, you could buy a an MVHR unit for maybe a $152,100 dollars in Korea. We've got no chance of of selling our products at that kind of level. So so it's not a it's not possible just to sell you know, transfer our products into into Korea and and sell them. They just they wouldn't they wouldn't sell. And what that means then in terms of our strategy there is that we have to look at we are looking at high value high value products that we can sell there, and there is there are elements of the Korean building regulations where we have which we have identified where we can combine both our natural ventilation products and mechanical ventilation products, and that is and that is what we are that's what we are moving towards. It's taken longer than we than we hoped it would, but, you know, the we are hopeful of seeing progress in selling products into the mechanical ventilation business over the next year or so, but I'm not gonna make any promises on that one at this stage.

49:12 So I hope that's answered the question. And we have a new shareholder asking if we can give an idea in scale in terms of number of employees, locations we operate from and geographically where we derive our revenue. I'm hoping that the presentation is covered off that geographical part. But in terms of number of employees, we've got around 23 in Korea, one sales director who operates out of Europe, one sales manager in The US, and about a 180 in The UK. Good. Anything else? No. I think just one more. We've been asked why we've been unable to pass on cost increases via pricing and what's been done to rectify it so we can cope with a high inflation environment.

50:07 And I think a covered part of that earlier due to the situation we're in terms of backlog, it was very difficult to get the balance right in terms of passing those increases on to customers. We did have a number of fixed price contracts as well, which we've reduced going forward. But we've again introduced quite a lot of internal processes to make sure that margin is reviewed regularly and any cost increases that we receive are passed on. And to couple that with looking at internal efficiencies as well, so it doesn't all have to be cost related. Do you want to add anything to that, Keith? No. I I think it's I think that's that's pretty pretty accurate.

50:56 Yeah. Just to emphasize the point, you know, when you, you know, when you owe a customer product because you're behind, it's actually very, very difficult at that point to go along and say, oh, by the way, there's a 10% price increase as well. So we have had some resistance from customers in that, understandably. We're over that now and price increases are back in our ability, but it's competitive, think it's fair to say. Final question. Has the new IT system been fully and successfully implemented with the replacement or bolstering of an IT team to keep the system maintained and progressing while reducing costs associated with the introduction of this system.

51:51 Will ongoing training be offered to each user to properly benefit from the data generated and to assist with holding or reducing stock levels, related to what was mentioned earlier. And yes, it's been fully and successfully implemented. We are over all the initial hurdles that we have that most, you know, most companies experience with an introduction of the new ERP. We're we're over that now. It's being it is being maintained. We have an agreement with a d three six five consultant have an SLA with them, and they are looking at helping us optimize that system now. So day to day, it does its job. We can, you know, do everything finance related, dispatch production.

52:39 But now we're looking to optimize it because there are ways that we can gain efficiencies by using the system better. We are currently looking at super user training. So we are looking to, increase, the training of our end users, which will get again help going forward. And in relation to the specific point on stock levels, yes, we're using the system now to optimize the stock levels as well. So a lot of the data is being cleansed in terms of that minimum order quantities, lead times and linking that with our forecast data as well so that we can manage stock levels. So, yeah, lots lots going on, but we're we're fully aware that we can use the IT system as well benefit and and reap the rewards of, you know, having gone through the pain of increments that we wanna get that benefit back now.

53:29 And I think that was our final one. Yeah. Perfect. Keith, Carolyn, thank you very much for that. And I think you've addressed those questions. You can't from investors. And of course, the company will review all questions submitted today and we'll publish those responses on the investment company platform. Just But before redirecting investors provide you with their feedback, which I know is particularly important to the company, Keith, could I just ask you for a few closing comments? Yes. Thank you all for joining us this morning. As I said at the top, it's it's really good to have this facility, this platform to be able to to meet you, to to hear some of your questions. As I said, we're we're very open to your comments and questions. We recognize that we're running the business. It's your business.

54:15 You own it, and and we want to do the best we can for you and, obviously, ourselves as shareholders. So very pleased to be able to do this this morning. We will repeat the exercise in in the future for our other reporting. I note that it's also possible to do this for AGMs and we'll investigate doing that for that for next year. But again, to finish, thank you for joining us and we look forward to seeing you again. Thank you very much indeed. Thank And thanks, Caroline. And thanks, Caroline, for for all your contribution on this as well. Keith, Caroline, thanks once again for updating investors today. Could I please ask investors not to close the session as you now be automatically redirected to provide your feedback in order that the management team can better understand your views and expectations.

55:08 This will only take a few moments to complete, but I'm sure be greatly valued by the company. On behalf of the management team of TITON HOLDINGS PLC, we'd like to thank you for attending today's presentation, and good morning to you all.