LONDON: Titon Holdings Plc has entered into a conditional agreement to sell its stakes in two South Korean entities: its 51% owned subsidiary, Titon Korea Co. Ltd, and its 49% owned associate, Browntech Sales Co. Limited (BTS).
The total gross cash consideration for the disposal is £750,000.
The decision comes after challenging market conditions in South Korea prompted Titon to explore various options to streamline its operations. The disposal will enable Titon to concentrate on its core markets in the UK and Europe, aiming to return to profitability and growth. Proceeds from the sale will be reinvested in strategic initiatives identified in a recent review.
Titon’s revenue in the UK and Europe has met expectations, with a slightly better operating loss than forecast. The final results for the year ending 30 September 2024 will be published on 23 January 2025, pending the results from Korea.
The sale agreement with BTS includes the acquisition of Titon’s 51% interest in Titon Korea and a share repurchase of Titon’s 49% interest in BTS. The total consideration of £750,000, minus local taxes, will be paid in cash upon completion. The process is conditional on the completion of a transfer rights process by BTS and the receipt of funds into an escrow account in Korea.
Upon completion, Titon will no longer have any interests in South Korea, ceasing its operations in the region. Titon Korea and BTS contributed a combined loss of £645,000 to the Group’s pre-tax loss for the year ending 30 September 2023, with net assets of £2.1 million as of 31 March 2024.
The disposal is classified as a related party transaction due to the involvement of Mr. Hong Sung Hoon, a substantial shareholder and director of Titon Korea. The Company’s directors, after consulting with Shore Capital, consider the disposal fair and reasonable for shareholders.
Tom Carpenter, Chief Executive, commented: “Our investment in BTS and Titon Korea has been positive over the years, but recent performance has declined. This disposal aligns with our strategic focus on core markets. We will keep shareholders updated on the progress.”