Titon : Interim Presentation (6 months to 31st March 2024)

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