Titon Holdings Plc
Half Year Results 31 March 2024
May 2024
CEO Initial Observations
My initial thoughts:
- Clearly work to do:
- We are not achieving the same growth or margins as our competitors
- Not enough focus on the Window & Door Hardware Business Unit
- Lots of work already completed on internal processes by management team
- Further work to be done, but not holding the company back
- Good indications that actions with Mechanical Ventilation Business Unit sales are working
- Culture is positive, team is flexible and open to change
- Team is managing cash well and actively driving inventory levels down
- My Immediate Priorities
- Complete revised strategy for the business
- Making Titon a more outwardly focused business
- Review our go-to-market methodologies with the Window & Door Hardware business
- Build & reinforce work ongoing with Mechanical Ventilation Systems sales - focus on system level wins
- Further improvements with customer service processes & systems
- Reviewing the strategic fit of the Korean business
H1 2024 Key Messages
First Half 2024 Revenue:
• 1Sales (UK and Europe) decreased 28.6%
• Impact of new-build residential construction slowdown
• Prior year comparative included sales from order backlog following implementation of a new ERP system
• Sales from South Korea 13.8% lower than 2023
• Titon Inc sales up 65.2%
Strong Balance Sheet:
- Net assets £14.1m (£14.8m 31 March 2023)
- Net cash of £2.2m (£1.6m 31 March 2023)
- No indebtedness, other than lease liabilities
- Net current assets £7.4m (£8.0m 31 March 2023)
Positioned for Growth:
- Restructured operations, planning and sales support
- Resilient and motivated employees
- Strengthened sales force
- Growing Ventilation Systems UK sales pipeline
Total Sales:
£9.1m (-24.6%)
From £12.1m HY 2023
Gross Margin
25.1% (-1.1%)
From 26.2% HY 2023
Net Loss
£0.7m (-58.7%)
From loss £0.4m HY2023
Cash
£2.2m (+38.7%)
From £1.6m HY2023
Interim results H1 2024
Segment and Divisional analysis
Window and Door Hardware Business Unit
- Revenue lower by 21%:
- Sales in the UK were down 26%
- Sales in Europe up 12%
- Sales of plastic background ventilators decreased by 39% on the prior year with metal ventilators decreasing 9%
- Sales of Titon branded bought-in products decreased by 10% with sales of our new Hexalok multi point lock offsetting reduced demand in other bought-in products
Mechanical Ventilation Systems Business Unit
- Revenues decreased by 34%:
- Sales in the UK were down 21%
- Sales in Europe down 58%
- Bought-inducting sales up 80% on prior year period
- Titon Ultimate dMEV sales up 107% on prior year period
Half Year Revenue: £9.1m
Titon Inc, 5%
Titon Korea, 14%
Titon UK and
Europe, 81%
UK and Europe product mix
Ventilation | Window and |
Door Hardware, | |
Systems, 49% | |
51% |
4
Noteworthy Customer Wins From New Products
Large multi-dwelling complex Southeast
- Mech. Ventilation Systems
- Over 450 apartments
- Ducting and newly released products:
- c. £500k in multiple phases
Orders coming in for new cooler unit | High Volume Hexalok Customer | ||
• | First large HRV Cool Plus win | • | Window & Door Hardware |
• | Offering extra protection against | • Highest volumes for our own design | |
overheating | Hexalok award nominated door lock | ||
• | £150k p.a. |
HRV1.65HRV4.25
FY24 Interim Financial Performance
Interim results H1 2024
Financial summary*: Income Statement
H1 2024 | H1 2023 | Change (%) | H2 2023 | Change (%) | Full year | |
2023 | ||||||
Net revenue | £9.11m | £12.08m | -24.6% | £10.25m | -11.1% | £22.33m |
Gross Profit | £2.28m | £3.16m | -27.8% | £2.76m | -17.4% | £5.92m |
Gross Margin | 25.1% | 26.2% | -1.1% | 26.9% | -1.8% | 26.5% |
Group loss before tax | £(0.71)m | £(0.45)m | -58.9% | £(0.39)m | -82.1% | £(0.84)m |
Loss per share | (5.46)p | (2.86)p | -91.0% | (3.15)p | -73.3% | (6.01)p |
Total dividend for the | - | 0.5p | -100.0% | 0.5p | -100.0% | 1.0p |
period per share | ||||||
- The Group managed to offset some of the impact to our results from the downturn in the new build market by:
- Focus on growing our highest margin product lines
- Strengthening Mechanical Ventilation Systems sales team
- Our order book for Mechanical Ventilation Systems is recovering
- Introduction of new innovative products
- Remaining focused on careful cost management
- Within the Group loss before tax, Korea total loss was £0.12m, (2023 loss £0.25m) 16.9% of the total Group loss
- No dividend declared for the period
*Non IFRS measures included
7
Interim results H1 2024
Financial summary: Balance Sheet
H1 2024 | H1 2023 | Change (%) | |
Non-current assets | £6.95m | £7.83m | -11.2% |
Inventories | £5.79m | £6.92m | -16.3% |
Cash and cash equivalents | £2.23m | £1.61m | 38.5% |
Other net current assets | £(0.59)m | £(0.53)m | -11.3% |
Non-current liabilities | £(0.33)m | £(0.41)m | -19.5% |
Net assets | £14.05m | £15.42m | -8.9% |
- Strong balance sheet with no financial debt, cash increased c. £600k
- Continued focus on reducing inventory levels
- Freehold property with fair value of £5.4m at September 2022 (NBV £1.71m at 30 September 2023)
- Capital expenditure in the period was £0.02 million (2023: £0.26 million)
- The cash held by Titon Korea remained consistent at £0.03 million at 31 March 2024 (30 September 2023: £0.03 million)
8
Summary & Outlook
H1 Trading Below Expectations
- Internally focussed business in limbo awaiting new CEO
- Transitionary sales team with little focus on WDH
- Poor market conditions
Sales down c.£3m but loss reduction limited to c.£300k
- Good cost control
- Sales reduction principally in lower margin products
Good work done fixing internal issues and developing the team
- Solid platform for growth with good processes (ERP system now working well)
- Revitalised sales team. Senior new hires in Sales, Production and R&D
Medium Term Prospects are good with some encouraging early indicators
- Significant growth in Mechanical Ventilation pipeline
-
Strong growth in ducting sales (MV), first sales of new MV product ranges
The Board remains confident in the prospects of the Group - Anticipate a return to profitability in H2 FY24 in the core UK businesses
9
Appendices