TIDMTON
RNS Number : 8826N
Titon Holdings PLC
26 January 2023
26 January 2023 LEI: 213800ZHXS8G27RM1DD7
Titon Holdings Plc
Final results for the year to 30 September 2022
Titon Holdings Plc ("Titon", the "Group" or the "Company"), a
leading international manufacturer and supplier of ventilation
systems, and window and door hardware, announces its audited final
results for the year ended 30 September 2022 ("FY22").
Summary Financial Results*
Change
2022 2021 (%)
Net revenue GBP22.1m GBP23.4m -5.7%
Underlying** EBITDA GBP0.14m GBP2.0m -93%
Underlying** Group (loss) GBP(0.6)m GBP1.08m n/a
/ profit before tax
(Loss) / earnings per
share (3.89)p 9.24p n/a
Full year dividends
per share 2.0p 4.5p -56%
Net cash GBP1.7m GBP4.8m -64%
-- Net revenue reduced by 5.7% to GBP22.1 million (2021: GBP23.4
million) as the Group managed shortages of raw materials, key
components and labour; and reflecting weaker trading conditions in
South Korea and operational impacts of the implementation of the
Group's new ERP system.
-- Gross margin of 26.4% (2021: 31.4%), driven by industry-wide
input cost inflation and the natural timing lag in recovery through
our implemented price actions with customers and operational
efficiencies.
-- Underlying EBITDA of GBP0.14 million (2021: GBP2.0 million)
and underlying Group loss before tax of GBP0.6 million (2021 profit
before tax: GBP1.07 million) reflecting the lower sales in the year
and reduced margins.
-- Proposed final dividend of 0.5 pence per share (2021: 3.0
pence) in addition to the interim dividend of 1.5p (2021: 1.5
pence).
-- Strong balance sheet maintained at the period end with net
cash, no debt, net assets of GBP16.0 million at 30 September 2022
(2021: GBP16.8m) and net current assets of GBP7.9 million (2021:
GBP9.3m).
Operational and divisional highlights
-- During 2022, we restructured and strengthened the Board and
senior leadership team, welcoming a new Chief Executive and two new
Non-Executive Directors to improve business performance.
-- A new ERP system for the UK and European operations was
implemented which will allow greater automation of production and
sales processes and better management information for the business
in the future. As previously announced the initial implementation
led to short-term production and despatch delays, however the
system is now functioning as planned.
-- Strengthened Supply Chain team to focus on strategic supplier
management to mitigate the impacts we have seen from material
shortages and input cost increases.
-- We continued our focus on product development with several
new products expected to be launched in 2023.
-- Revenues from UK and Europe overall fell by 3.6% on 2021:
-- In the UK, sales of trickle vents were up 8% on the prior
year and up 18% in the period July to September 2022 following the
introduction of the revised building regulations and associated
standards in the UK in 2022.
-- Revenue from the UK window and door hardware business as a
whole was down by 3% as sales into the aluminium sector fell
following the conclusion of a distributor relationship with a
supplier of bought-in products. Sales of Titon branded bought-in
products rose 15% in the year.
-- Mechanical ventilation systems revenues fell by 4% overall.
UK sales rose by 9% as customer demand for our products remained
strong whilst sales into mainland Europe fell by 34%, as a result
of the previously reported component shortages and the operational
challenges.
-- In the South Korean market, revenues fell by 15% as a result
of the previously reported weak housing market and shift in market
demand to mechanical ventilation products from natural ventilation
in the South Korean market. W e are widening our product offering
to include mechanical ventilation products in order to adapt to
changing market conditions.
Current trading and outlook
-- Sales in the first quarter of the current financial year to
30 September 2023 ("FY23") in the UK and Europe has exceeded the
comparative quarter in FY22, reflecting the continued strong demand
for our products. Sales in South Korea in Q1 FY23 were in line with
our expectations.
-- The supply chain constraints have eased, and there is a
backlog of customer orders that Titon is working hard to
manufacture and ship as soon as possible in the coming months.
-- We continue to develop strategies that will deliver margin
improvements to offset the impacts of increasing material, labour
and energy costs. W e have implemented, and are continuing to
implement, price increases to ensure we achieve maximum price
realisation, alongside targeted operational actions.
-- We have a strong order book and a clear strategy to increase
capacity and ensure we quickly clear the backlog of customer orders
and return to our previous high levels of customer service.
-- We have a strong leadership team in place who have defined a
clear set of business imperatives, which we believe will enable the
Group to return to profitability in H2 FY23.
-- The Board remains confident in the prospects of the Group as
the drive for energy efficiency, combined with the need for better
air quality via adequately ventilated buildings, remains a
priority.
Chief Executive, Alexandra French, said:
"Since joining Titon in May 2022 I have been impressed by the
hard work, commitment, and dedication of all our employees. Despite
trading conditions having been challenging for us in 2022 as we
suffered from cost increases, operational challenges and component
shortages, we are taking actions to mitigate these factors and
improve underlying business performance. I am pleased that the
component shortages have eased as the year progressed and we are
now in a strong position with respect to supply of critical
components. I am confident that with the strong leadership team now
in place and the clear business imperatives that we have defined,
we have a clear route forward for the business that will deliver
stability, strong levels of customer service and ultimately a
return to profit in the UK and Europe in H2 FY23.
Customers and employees remain at the heart of our business. We
thank all of our customers for their loyalty, and we look forward
to continuing our strong business relationships. We also thank our
employees for their continued hard work and commitment during what
has been a difficult year.
The outlook for the global economy in 2023 is difficult to
predict with cost pressures and energy shortages impacting on all
the major markets in which we operate. Whilst the potential impact
on economic activity in both the UK and Europe remains unclear, the
2022 building regulations and associated standards revisions
provide a regulatory tailwind to drive long-term growth for both
our natural and mechanical ventilation products. We have a strong
balance sheet, talented employees and a good range and pipeline of
products that give us confidence in our future despite these
uncertainties."
For further information please contact:
Titon Holdings Plc
Keith Ritchie, Non-executive Chair Tel: + 44 (0)7748
Alexandra French, Chief Executive 146834
Tel: +44 (0)7949
409132
Shore Capital - Nominated Adviser and Tel: +44 (0)20
Broker 7408 4090
Daniel Bush
Tom Knibbs
The full text of the Report and Accounts for the year to 30
September 2022 is contained below. This document can be accessed
with the benefit of page referencing on the Company's website:
https://www.titon.com/uk/wp-content/uploads/sites/10/2023/01/Annual-Report-and-Financial-Statements-2022.pdf
* Non IFRS measures included
**Excludes exceptional items of GBP0.3m which includes a one-off
cost of living bonus paid to all qualifying employees and
restructuring costs
Annual Report and Financial Statements
for the year ended 30 September 2022
CONTENTS
02 Chair's Statement
07 Strategic Report
17 Strategic Report: Environmental Social and Governance Report
21 Strategic Report: Directors' Section 172 Statement
23 Strategic Report: Report on Risk Management
27 Directors' Report
33 Directors' Remuneration Report
37 Corporate Governance Report
41 Audit Committee Report
43 Independent Auditor's Report
50 Consolidated Income Statement
50 Consolidated Statement of Comprehensive Income
51 Consolidated Statement of Financial Position
52 Company Statement of Financial Position
53 Consolidated Statement of Changes in Equity
54 Company Statement of Changes in Equity
55 Group and Company Statement of Cash Flows
56 Notes to the Consolidated Financial Statements
85 Five Year Summary
86 Notice of Annual General Meeting
90 Directors and Advisers
Chair's Statement
This has been an important year for Titon as we celebrated our
50(th) anniversary. John Anderson founded Titon in September 1972
when Titon Hardware Limited was incorporated. The company was
acquired by Titon Holdings Limited after it was incorporated in
December 1981, which then became Titon Holdings Plc when the Group
was first listed on the Unlisted Securities Market of the London
Stock Exchange in 1988. Titon Hardware Limited remains the
principal operating subsidiary of the Group, although we now have
Titon Inc. and our investments in Korea, as our business has
expanded its reach. I am very pleased that we have reached the
50-year milestone and we celebrated that date with our hardworking
staff. I know John Anderson is very proud of his creation and I
hope that the second fifty years is similarly successful.
I am pleased to say that Covid-19 restrictions on working have
stopped in our core UK and European regions. However, during the
financial year to 30 September 2022 we continued to see the after
effects of the pandemic in the form of supply chain disruptions.
Whilst these have started to recede, the challenges of the pandemic
have been replaced as a major concern by the inflationary
environment, dictating tightening monetary policy, and by the war
in Ukraine and its further impact on the cost of living due to
energy shortages and energy price increases. We have seen broad
based cost increases from our suppliers and for labour and this has
been a major factor in the downturn in our financial results for
the year, which we discuss below.
Profit and loss
In the year ended 30 September 2022, the Group's net revenue
(which excludes inter-segment activity) decreased by 5.7% to
GBP22.1m (2021: GBP23.4m).
The Group's gross margin decreased from 31.4% in 2021 to 26.4%
in 2022, which reflects the challenges we have faced this year with
managing and recovering rising prices. We have faced unprecedented
increases in the costs of many raw materials, components and
labour, which we have not been able to pass onto customers
immediately. We have implemented price increases to our customers,
but there is a natural lag in recovering the impact of increases
from suppliers. We suffered an underlying operating loss in the
period before exceptional items of GBP770,000; including
exceptional items the operating loss was GBP1,119,000 (2021:
operating profit of GBP1,119,000). Underlying EBITDA was 92.8%
lower at GBP143,000 and excluding exceptional items EBITDA was a
loss of GBP206,000 (2021: GBP2.0m). Exceptional items amounted to
GBP349,000 consisting of redundancy and other costs associated with
the changes in people we have had to make during the year and also
a one-off cost of living bonus we paid to all qualifying
employees.
Net finance interest cost amounted to GBP7,000 (2021 interest:
GBP16,000). The share of profits from the Group's South Korean
associate, BTS, rose from a loss of GBP28,000 in 2021 to a profit
of GBP173,000 in 2022 due to the final realisations from the
property transactions that BTS had entered into in prior years. The
Korean business, however, continued to suffer from challenging
market conditions and the transition to mechanical ventilation in
the period. As a result of the underlying loss in the UK and
including exceptional items the Group loss before tax was
GBP953,000 (2021 profit before tax: GBP1,075,000).
Basic statutory earnings per share for the year was a loss of
3.89 pence (2021: 9.24 pence).
An interim dividend of 1.5 pence per share was paid in the year
to 30 September 2022 and the Directors are proposing a final
dividend of 0.5 pence per share (2021: 3.0 pence). The total
dividend for the year will therefore be 2.0 pence per share (2021:
4.5 pence). If approved by shareholders at the forthcoming Annual
General Meeting on 22 March 2023, the dividend will be payable on
31 March 2023 to shareholders on the register at 10 February 2023.
The ex-dividend date is 9 February 2023.
Statements of financial position and cash flows
The Group benefits from a strong balance sheet with no bank
borrowings. Net assets, including non-controlling interests,
reduced to GBP16.0m at 30 September 2022 (2021: GBP16.8m), with net
cash at GBP1.7m (2021: GBP4.79m), which is equivalent to 10.8% of
net assets (2021: 28.5%).
Cash used in operations before working capital changes was
GBP0.2m (2021: GBP2.0m cash generated). Inventory levels at the
year-end increased by GBP1.53m on 2021. This was mainly due to
increased stock held in the UK business because of an increase in
material and labour costs and advanced purchasing of some of our
key components where supply constraints had affected our
performance during the year. Together with a GBP0.7m increase in
receivables, this reduced cash generated from operations to an
outflow of GBP1.9m (2021: inflow of GBP1.15m). A key focus and
business imperative for the financial year to 30 September 2023 is
to improve the underlying performance of the business and reduce
stock levels to augment our net cash position.
Capital expenditure reduced to GBP0.83m (2021: GBP1.11m) and the
Group paid dividends in 2022 in respect of 2021 to the shareholders
of Titon Holdings Plc of GBP0.50m (2021: GBP0.39m). During the
year, no dividends were paid by Titon Korea to Titon Holdings Plc
and non-controlling shareholders.
The overall effect has been a net decrease in the Group's cash
reserves in the period of GBP3.07m (2021: decrease of GBP0.78m).
Net current assets at 30 September 2022 were GBP7.6m (2021:
GBP9.3m) with a Quick Ratio(1) of 1.2 (2021: 1.9). ROCE(2) was a
loss of 8.4%, as the business suffered in the difficult trading
conditions (2021: 10.1%).
Segment analysis
The Directors look initially at geographical areas to evaluate
the Group's performance and then consider product segmentation at
the secondary level.
UK and Europe
The UK and Europe comprise of 83.8% of our overall business
(2021: 82.0%). As I noted in the Interim Report, the Group suffered
from shortages of certain materials and components and continuing
cost increases as well as labour and energy cost inflation during
the year. These factors have continued to impact us in the second
half, although some of the component issues have eased.
We also upgraded our internal ERP system for our UK and European
operations in May 2022, which should allow greater automation of
production and sales processes. The implementation has not been
without its challenges and we have had difficulties in the period
since May in manufacturing and shipping products to our customers
at the time and in the quantity they require. I know this has been
difficult for our customers as well as our own employees who have
been trying very hard to meet their customers' expectations, and I
am sorry that the usual Titon standards of customer service have
not been met. We have been working very hard to restore the levels
of service that customers quite rightly expect from us. Whilst a
key macro-economic trend that many businesses are facing, it has
been particularly difficult to pass on the cost increases we have
suffered to our customers as many of our Ventilation Systems
division sales are on a project-by-project basis and customers have
contracted to buy at fixed prices.
Revenue from the Hardware division, comprising sales of our
trickle vents plus window and door hardware, was slightly lower in
the year by 3% as our distribution agreement with Sobinco
concluded. Sales of Titon branded bought-in products rose by 15% as
the Asterion II range launched in 2022 became recognised for its
home security attributes.
In our Ventilation Systems division, revenues from mechanical
ventilation products fell by 4% overall as we struggled to supply
our customers. Sales in the UK were up by 9%, with the Titon
FireSafe(R) Air Brick range continuing to be popular with sales up
16.2% on last year; Ventilation Systems sales in mainland Europe
were down 34% as our customers suffered from delays on account of
component shortages and waited for our new products to come to
market.
Titon continues to invest in research and development which, in
turn, yields a continuing number of new products for both the
Ventilation Systems and Hardware divisions. We have a very healthy
pipeline of new products which we expect to launch in 2023. Further
detail on our R&D and new products is detailed within the
strategic report.
The final regulations for changes to Part L (Conservation of
fuel and power), Part F (Ventilation) and Part O (Overheating), of
the Buildings Regulations in England for new dwellings and existing
buildings were published on the 15 December 2021 with an effective
date for implementation for natural ventilation for existing
dwellings being 15 June 2022 and for new build dwellings both
natural and mechanical ventilation being 12 months after that date.
We have seen increased demand for trickle vents as window
fabricators are now required to fit vents on virtually all
replacement windows, or provide a suitable alternative, when energy
efficient measures are being installed in domestic properties. For
mechanical ventilation systems the house builders have a transition
period of 12 months before they have to apply the new regulations
and we expect to see increased demand for our mechanical products
in 2023.
We are faced with a negative outlook in 2023 with the Experian
UK Construction forecast in January 2022 showing public and private
housing expenditure falling by 7% against 2022, as the economy goes
into recession. At the same time, the expected value of repair,
maintenance and improvement in the private and public residential
sectors is forecast to be the same in 2023 against 2022, leaving
overall housing expenditure in 2023 forecast to be 4% lower than
2022. In 2024 total housing expenditure is forecast to be only
marginally higher than the 2023 forecast, indicating only a very
slow recovery from the challenging times expected in 2023.
South Korea
In South Korea, the Group's subsidiary, Titon Korea (51% owned),
manufactures natural window ventilation products. In the 2022
interim results statement we noted that revenues were weaker than
expected due to continuing Covid-19 challenges and delays in
construction site projects with sales being deferred and this has
continued in the second half. Additionally, as the Group has
reported in the past, there has been a shift in market demand in
Korea to mechanical ventilation products and away from natural
ventilation. These factors have resulted in a reduction in revenue
to GBP3.0m (2021: GBP3.6m) whilst the contribution to Group profit
before tax declined to a loss of GBP209,000 (2021: loss of
GBP14,000).
The Group's associate company (49% owned), Browntech Sales Co.
Limited ('BTS'), which principally distributes Titon Korea's
natural ventilation products, was similarly impacted by the
downturn experienced by Titon Korea, excluding the final
realisations from the property activities that it had previously
entered into. The profit recognised in respect of associates (which
is all in respect of BTS) in 2022 was GBP173,000 (2021: loss
GBP28,000). This included the release of a provision made in 2020
against those property investments. We do not expect to see
meaningful sales of mechanical products in BTS to start coming
through before financial year 2024/25 as it develops its trading
relationships. BTS is marketing both a hybrid mechanical
ventilation product in conjunction with the manufacturer of that
product and also mechanical ventilation with heat recovery products
that it is developing or buying in from other manufacturers. Taking
Titon Korea and BTS together, South Korea made a negative
contribution of GBP0.04m to the Group's profit before tax for the
year (2021: loss GBP0.04m).
United States
Our US operations represent the smallest geographical segment
and results reduced in the period. Sales for the year fell by 16%
to GBP0.53m (2021: GBP0.63m) as the market remained in a subdued
state but our customers remained loyal and continued to use our
products where there was a need for trickle vents. Titon Inc. made
a statutory loss before tax of GBP26,000 in the full year (2021:
profit of GBP29,000) but contributed a margin to our UK
manufacturing business.
Board
As I reported in the Interim Report our Board recruitment
process was completed earlier in the year and our new non-executive
directors are making a significant contribution to the business. I
am also pleased to report that Alexandra French, our new Chief
Executive, who joined Titon in May 2022 has settled in really well
and is utilising her experience to guide Titon through the
challenges that we have faced this year.
As we announced in September I have stepped back from executive
responsibilities after ten years at Titon and have become
Non-executive Chair. This will allow me to focus fully on
facilitating further governance and strategy initiatives and grant
an enhanced autonomy to Alexandra and her Executive team to make
the operating changes we need. Of course, I remain in regular
contact with all of the Board Directors.
Once again, I would like to thank all of my fellow directors for
their efforts in the year and their contributions to Titon, in what
has been a challenging year.
Employees
I offer my sincere thanks to all our employees for all their
hard work and skills they have shown, particularly in the difficult
trading conditions we have seen during the year and the
introduction of the new ERP system in May, which proved challenging
for them. I really appreciate the difficulties that many of them
have faced when we have not been able to meet our customers' needs
and I apologise to them for this. We have moved to a hybrid pattern
of working for office-based employees to allow them to work from
home two days per week where feasible and this provides them with
the flexibility that many other employers are also offering. All of
our office-based employees returned to office working in February
2022. I would also like to welcome all of our new colleagues to
Titon and thank them for the enthusiastic manner in which they have
tackled the challenges we face. My colleagues on the Board also
recognise the contribution that all our employees have made and
thank them for their efforts and dedication.
Investors
Shore Capital, our Nominated Adviser and Broker, has continued
to write research coverage on Titon during the year, focusing on
our trading updates which have been required and we also thank them
for their sound financial advice during the year.
As usual, I would like to mention the Group's dividend
reinvestment programme (DRIP) which has operated for several years.
This represents a straight-forward and cost-effective way for
shareholders to increase their holdings in Titon should they wish
to do so.
Current Trading
UK and Europe
Sales in the first quarter of the current financial year to 30
September 2023 ("FY23") in the UK and Europe have exceeded the
comparative quarter in FY22, reflecting the continued strong demand
for our products. Sales in South Korea in Q1 FY23 were in line with
our expectations.
We enter 2023 with the Office for Budget Responsibility
forecasting a recession in the UK starting in October 2022 with
output falling by 2.1% in total with a slow recovery of 1.3% in
2024. In the housing markets Experian are forecasting total housing
expenditure including repairs, maintenance and improvements to fall
by 4% in 2023 against 2022 with only a marginal improvement in
2024.
In 2023 we have identified a number of business imperatives that
we expect to deliver during the year and Alexandra French has set
out details of them in the Strategic Report. These are intended to
stabilise the UK and European business and return the business to
growth. We will also start work on a review of the business
strategy so that we can plan and steer the growth of the business
in the medium term. There are significant opportunities for Titon
as the key role that ventilation provides for indoor air quality
and public health becomes more appreciated. The tragic death of a
2-year-old child in Rochdale in 2020 that was revealed in November
2022 illustrated very clearly the threat that inadequate
ventilation carries, particularly to the young, the elderly and all
individuals with underlying health conditions.
As noted above we had difficulties supplying customers with
Titon products during 2022 on account of the ERP challenges and
component shortages. The supply chain constraints have eased, and
there is a backlog of customer orders that we are working hard to
manufacture and ship as soon as possible in the coming months. This
is one of our business imperatives, and it is crucial for our
performance in 2023 that we meet this challenge and our customers'
demands. The Group has increased the output of Ventilation Systems
products and we have invested to increase capacity for our trickle
vents to satisfy the increased demand resulting from the Building
Regulations changes in June 2022.
We have filled key management vacancies in the year but had some
difficulties recruiting people in other roles, and with the current
low levels of unemployment in our region, we expect that we will
continue to have some challenges in doing so in 2023. We also
acknowledge that the cost of labour will increase in the year. We
anticipate that cost increases for our components and raw materials
will also continue to impact the Group, consistent with other
companies across the sector and the economy more widely in 2023. We
continue to seek to manage these inflationary pressures and margin
erosion. The Group has raised prices in January 2023 and expects to
implement further price rises during the year to recover these
input cost increases, although there may remain a natural lag in
margin recovery due to the differences in the timing of these
changes.
In the UK and Europe, we currently expect to report a loss
before tax in H1 FY22/23, but we expect to return to profitability
in H2 FY22/23.
South Korea
In South Korea, The Bank of Korea forecasts GDP growth for 2022
will be 2.6%, but for 2023 is projected to increase by 1.7%.
Construction investment is forecast to continue its sluggish
performance with a slowdown in housing demand and lower government
support for the housing sector. As previously noted, we continue to
be in a transitionary period for our ventilation products in South
Korea as market requirements change.
Outlook
The outlook for the global economy in 2023 is difficult to
predict with cost pressures and energy shortages impacting on all
the major markets in which we operate. We certainly expect that
cost increases will continue in 2023, which will keep the pressure
on our margins and demand may weaken if the new build market
declines. The impact of the cost-of-living crisis on consumer
expenditure is also expected to reduce demand for replacement
windows and doors. However, this may be tempered by the changes in
building regulations and associated standards in the UK, which
Titon is well positioned to benefit from with a range of
ventilation products that cover all our customers' needs.
Therefore, for our UK and European markets we expect that the
business environment will remain challenging for us in 2023 and we
remain in a transitionary period in South Korea. Despite these
challenges, we continue to have a strong balance sheet, talented
employees, a high quality range of products and an exciting
pipeline of new products that give us confidence in our medium-term
future.
On behalf of the Board.
K A Ritchie
Chair
25 January 2023
Notes:
(Non IFRS GAAP measures)
(1) The Quick Ratio measures liquidity and is calculated as
follows: Current Assets-less-Stocks divided by Current
Liabilities.
(2) ROCE is calculated by dividing EBIT by capital employed
(capital employed being the sum of shareholders' funds,
non-controlling interests and all debt less intangible assets and
cash).
Strategic Report
The Strategic Report has been prepared in accordance with
Section 414C of the Companies Act 2006 (the "Act"). Its purpose is
to inform shareholders of Titon Holdings Plc ("Titon" or "the
Company" or "the Group") and help them to assess how the Directors
have performed their legal duty under Section 172 of the Act to
promote the success of the Group.
Introductory Statement from Alexandra French, Chief Executive
Officer
"Since joining Titon in May 2022 I have been particularly
impressed by the hard work, commitment, and dedication of all our
employees. Throughout my career I have worked in businesses that
have been focussed on making a difference to our world and I am
delighted to be continuing that at Titon where we are passionate
about improving indoor air quality so that people sustain health
and comfort. My first six months have certainly been a challenge
and full of surprises as we contended with supply chain and
operational constraints and it is clear that we have not performed
as well as previous years. However, Titon is a great company with
excellent people and products and a healthy balance sheet. It's
clear to me that we need a much stronger direction to bring the
business back on track during the coming year and then a clear
strategy that will outline how we will grow and deliver value for
shareholders and for society. I am committed and excited to be
leading us on that journey."
Summary
Revenue reduction of 5.7% to GBP22.1m (2021: GBP23.4m)
Group loss before tax of GBP953,000 (2021 profit before tax:
GBP1,075,000)
Group underlying loss before tax of GBP604,000 (2021: underlying
profit of GBP1,075,000)
EPS loss of 3.89 pence (2021: profit of 9.24 pence)
Year-end net cash balances down to GBP1.7m (2021: GBP4.8m)
Total dividend for the year of 2.0 pence per share (2021: 4.5
pence per share)
Overview
In evaluating the performance of the business, the Directors
initially review geographical areas and then consider product group
segmentation at the secondary level.
The Titon Group performance is monitored across three
geographical segments of UK and Europe, South Korea and United
States. Within these segments, the principal business activities
are design, manufacture, marketing and sales:
-- natural ventilation (trickle vents) and hardware products for
the window and door fabricator markets in the UK, Europe and the
USA;
-- mechanical ventilation products for the new build residential
markets in the UK and Europe; and
-- natural and mechanical ventilation products for the new
build, re-build and refurbishment residential market in South
Korea.
The first two activities above are carried out by Titon Hardware
Limited and Titon Inc. (in the US), both wholly owned subsidiaries.
Titon is one of the leaders in the window trickle vent market in
the UK, trickle vents being used extensively in the new build and
refurbishment sectors. The third activity is carried out by Titon
Korea Co. Ltd ("Titon Korea"), a 51% owned subsidiary, which
designs and manufactures products and Browntech Sales Co. Limited
("BTS"), a 49% owned associate company, which markets and sells
these products to customers.
Titon's strategy is to grow both the natural ventilation and
mechanical ventilation businesses by market growth, market
penetration and development of new products.
Chief Executive's Review
The principal activities of the Group have not changed during
the year and consist of the design, manufacture and marketing of
ventilation products and door and window fittings.
The Consolidated Income Statement is set out on page 50. A
summary of the results along with other selected Key Performance
Indicators ("KPIs") is as follows:
2022 2021
GBP'000 GBP'000
Revenue 22,087 23,412
(Loss) / profit before
tax (953) 1,075
Taxation 410 (72)
------------------------- --------- ---------
(Loss) / profit after
tax (543) 1,003
Revenue per employee 108 116
------------------------- --------- ---------
(Loss) / profit after
tax per employee (2.6) 5.0
------------------------- --------- ---------
Year-end net cash and
cash equivalents 1,726 4,794
------------------------- --------- ---------
The Group has suffered this year from shortages of raw
materials, key components and labour as well as significant cost
increases for materials, labour and energy. As result there has
been a negative impact on our financial performance and position.
The Group has sought to manage the inflationary margin erosion
which has impacted our financial performance through price
increases, material cost savings and operational efficiencies. Our
trading was also affected by unforeseen operational impacts
associated with the implementation of a new internal ERP system for
our UK and Europe operations. Business in South Korea also remains
below previous levels due to a slowing in the housing construction
market and an ongoing change in product requirements. Group Revenue
has decreased by 5.7% to GBP22.1m (2021: GBP23.4m) and this has
resulted in an underlying Group loss before tax (excluding
exceptional items) of GBP0.6m (2021 underlying profit before tax:
GBP1.1m) and a Group loss before tax including exceptional items of
GBP0.95m (2021: profit before tax GBP1.1m). The tax credit for the
year of GBP0.4m (2021: charge of GBP0.07m) is due to a deferred tax
credit reflecting trading losses and capital allowances. A full
review of the Group's performance during the year is given in the
Chair's Statement.
Organisational structure
The Group has made a number of strategic organisational changes
during 2022 to position it for change and for future growth. Key
new hires have strengthened the senior leadership and management
teams. We have a new Operations Director and have also recruited a
Head of Supply Chain and recruiting a new Head of IT, both newly
defined roles required to deliver the business imperatives detailed
in the goals and strategy section. Both Procurement and Planning
are areas that offer us significant opportunities for financial and
operational improvements. We are also actively recruiting for a
Commercial Director to lead sales, marketing and customer service
on a global basis across both the Hardware and Ventilation Systems
divisions. Strengthening and shaping the organisation to ensure the
Group hits its financial targets will be an exciting key focus in
2023.
Covid-19
The health and safety of all our employees remains a top
priority for the Group. The Group is no longer impacted by the
Covid-19 pandemic, and we feel well equipped to deal with any
future waves in the UK. However, we continue to monitor the
Covid-19 situation very carefully in the UK and Europe as well as
in countries of our key suppliers where government imposed
lockdowns could have the potential to cause supply disruption. Our
supply chain strategy would be to forward order and hold higher
stocks should we deem there to be a high risk of disruption. We
also have a policy of dual sourcing key components where
possible.
Goals and strategy
We are passionate to improve indoor air quality; good indoor air
quality means clean air for society to sustain health and
comfort.
During 2023 we will be working on a review of the Group's
strategy that will clearly outline how we are going to advance and
grow the organisation to deliver value both to shareholders and to
society. However, in the meantime the senior leadership team has
defined a set of eight business imperatives that will guide us
through the year and ensure that we stabilise the business and also
position the Group for growth.
Our business imperatives are the crucial things that we must
achieve this year. They are closely interlinked and complement one
another. Each imperative will be regularly monitored through a
defined set of financial and operational KPIs.
Our business Why it is important What we are doing
imperative for us and will we be doing
to achieve it
----------------- ------------------------------------------------------------ -----------------------------------------------------------
Catch back on
production * to enable increased sales * increasing production output through increased
arrears and manning, operational efficiencies, process and
maintain planning improvements and capital investment
ag reed * to return to our previous high levels of customer
finished service
goods stock * once arrears are cleared, maintaining target finishe
levels d
good stocks for all make-to-stock products
----------------- ------------------------------------------------------------ -----------------------------------------------------------
Improve working
capital * to improve the balance sheet and release cash held in * reducing raw material and obsolete finished goods
including inventory stock holdings
reducing site
inventory
* to create space on site to optimise stock management * maintaining high inventory record accuracy
and support delivery of production plans
* ensuring strong supplier relationship management and
implementing improved terms with top suppliers
* maintaining debtor tracking
----------------- ------------------------------------------------------------ -----------------------------------------------------------
Achieve stable,
engaged and * to ensure that we have sufficient and correct * implementing the appropriate organisational
present resources available to deliver each business structures to meet the business needs
workforce imperative
* implementing objective setting and performance
* to ensure that we have the correct people resources reviews for all employees linked to these business
to deliver a growth strategy imperatives
* conducting an employee survey and acting on the
feedback
* providing required employee training and support
----------------- ------------------------------------------------------------ -----------------------------------------------------------
Realise
business * to deliver operational efficiencies and higher output * use of embedded BI and other D365 reporting tools
benefits from
new
Microsoft D365 * to improve visibility of data that drives key * implementing workflows within D365
ERP business decisions
system through
improved * scoping and delivering end to end continuous
business * to enhance control of key processes improvement project with defined benefits case
processes
----------------- ------------------------------------------------------------ -----------------------------------------------------------
Deliver
innovative * to ensure our product range meets future customer and * launching several key new products to the market in
new products to regulatory requirements 2023
drive business
growth
* to remain market leading in our product offerings * maintaining and enhancing new product introduction
process from idea through to launch
* to enable increased sales
----------------- ------------------------------------------------------------ -----------------------------------------------------------
Improve
profitability * to improve business financials * reducing the hardware product range offering
and margin
through
hardware * to improve operational efficiency through reduced * implementing optimised minimum order quantities
product product complexity
range
rationalisation * reviewing and aligning pricing
----------------- ------------------------------------------------------------ -----------------------------------------------------------
Develop strong
sales pipeline * to enable increased sales and position the Group for * restructuring and strengthening the Customer Service
through growth team
existing and
new
customers * to rebuild and strengthen customer relationships * implementing an enhanced CRM within Microsoft D365
after a challenging year
* ongoing monitoring and analysis of sales funnel with
* to return to our previous high levels of customer defined growth targets
service
----------------- ------------------------------------------------------------ -----------------------------------------------------------
Improve
workplace * to ensure the health, safety and wellbeing of all our * improving health and safety culture by setting an
safety by employees Environmental Health and Safety (EHS) objective for
reducing every employee
workplace
incidents
* ensuring visible felt leadership
* developing and improving our EHS Committee
----------------- ------------------------------------------------------------ -----------------------------------------------------------
Business model
Within its main geographical classifications of the UK and
Europe, South Korea, North America and All Other Countries, the
Group operates in two divisions:
(i) the natural (trickle) ventilation and Window & Door
Hardware division, in which Titon has operated since its formation
50 years ago in 1972 which includes South Korea. This activity
accounted for 62% of Group revenue in 2022 (2021: 63%); and
(ii) the mechanical Ventilation Systems division, which the
Group entered 15 years ago in 2007 and which accounted for 38% of
revenue in 2022 (2021: 37%). See Business Segmentation information
on page 63.
The Group generally organises its sales and marketing activities
into these divisions with manufacturing and all other services
supporting them both on a shared basis. The executive leadership
team manage both divisions.
In the UK, the Group has a direct sales force for each division
and aims to win specifications for its products through its
dealings with developers/housebuilders, architects, building
services engineers and local authorities. Where a project isn't
specified, Titon aims to sell directly to its wide customer base of
electrical contractors, installers and window fabricators.
Titon operates in a wide range of export markets and has made
sales to a significant number of countries from the UK during this
year. Our policy for exporting, in respect of both Window &
Door Hardware and Ventilation Systems, is to appoint local
distributors and to support them in specifying and building the
Titon brand. Within the Ventilation Systems division, the Group
also supplies OEM (Original Equipment Manufacturer) products for
its customers and continues to target a significant increase in its
activities in continental Europe.
In South Korea, Titon Korea makes almost all its sales to BTS
which sells products onward to its customers in the residential
construction sector. Titon entered the South Korean market in
2008.
The Group also has a wholly owned subsidiary, Titon Inc., based
in Indiana in the USA. Sales into this market accounted for 2% of
Group revenues during the year (2021: 3%).
The Group manufactures products in the UK and in South Korea.
Production in South Korea is entirely for the South Korean market,
whilst products manufactured in the UK are sold domestically and
exported. Products manufactured in the UK factory account for 61%
(2021: 58%) of overall Group turnover and products manufactured in
South Korea account for 18% (2021: 15%). The remaining 21% (2021:
27%) of revenue is obtained by the sale of products bought-in from
third party manufacturers. These bought-in products tend to be
complementary to and are generally sold alongside our own
manufactured lines.
Research and Development
Research and development continues to play an important role in
the Group's success as the need to provide increasingly energy
efficient ventilation products remains a growing requirement of our
market over the coming years. This year we significantly improved
our New Product Introduction (NPI) process to include robust
business case and project justification analysis, stage gate sign
off by all stakeholders at each stage and comprehensive project
milestone tracking, ensuring that all the new products we launch
will deliver value .
Investment in research and development was GBP629,000 during the
year (2021: GBP509,000), amounting to 3% of sales (2021: 3%). We
saw an increase in spend over prior year due to increased testing
costs as we approved and released alternative components during
worldwide supply chain shortages.
Design, development and launch of new products has been a
significant contributor to the success of the Group over past
years. Over the last 5 years the Group has successfully developed
and launched many new products and product variants which have made
a significant contribution to our revenue, both in securing new
business and also in maintaining existing business through product
evolution. Our approach is driven by customer, market and
regulatory needs.
These are some of our recent new product highlights:
The Titon FireSafe (R) Air Brick launched in 2020 recently won
'Ancillary of Year' at the prestigious HVR awards. We developed
this product in response to the terrible Grenfell disaster and
subsequent legislation changes in building regulations Part B. It
remains a market leading product.
The Titon Ultimate (R) dMEV launched in 2021 achieved the
accolade of 'Highly Commended' at the recent Energy Saving Awards
for Domestic Product of the Year. We developed this product to meet
new June 2022 building regulations Part F and comply with new
strict test procedures from Building Research Establishment (BRE) .
Changes to the BRE testing process for dMEV fans requires that the
fan should now be more powerful to overcome external wind pressure.
This means that a large number of traditional extract fans can no
longer be used. The Titon Ultimate (R) dMEV is one of only a few
fans to meet, and also exceed, the new test requirement and is
therefore well placed to take advantage of these changes. The Titon
Ultimate (R) dMEV was one of the first products listed when the new
SAP10 database went live, initially being one of only two
options.
In 2022 we developed and launched our Asterion II 3-Star high
security anti-manipulation profile cylinder to protect against ever
increasing security threats and more stringent security testing
requirements in the UK. It is BSI Kitemark certified and has been
awarded Secured by Design (SBD) status.
We have developed new advanced control systems, including Wi-Fi
connectivity and control of MVHR units using a mobile phone App
(Android and Apple). Our industry standard MODBUS interface also
allows interfacing with Building Control Systems (BMS), enabling
building owners to monitor the entire site for maintenance and
fault detection purposes.
During 2022 our popular ranges of MVHR and CME units were
expanded to dual source critical components whilst maintaining high
quality and high levels of performance. This enabled us to mitigate
the continuing global supply chain issues and positions us well
going forward.
During 2023 we will be launching several key new products to the
market that will deliver growth across both our Hardware and
Ventilation Systems divisions for the UK and Europe. On the
Hardware side we have developed and patented a new trickle vent
that responds to external air pressure and regulates the flow of
air into the property. This is important in ensuring that
regardless of the outside air pressure the property is adequately
ventilated without causing draughts, one of the prime reasons that
house occupiers close their trickle vents and thereby reduce or
stop the levels of ventilation required. One of our upcoming
launches for Ventilation Systems is a new larger, more energy
efficient mechanical ventilation product with heat recovery unit
for our UK and European markets.
Key Performance Indicators (KPIs)
The Board looks at a range of KPIs to monitor the performance of
the Group throughout the financial year. These include KPIs to
track delivery of the business imperatives. At individual team and
departmental level relevant KPIs are also monitored and tracked
regularly. The financial KPIs monitored by the Board regularly
include:
KPI Timing
Group Revenue Measured against budget and prior year
on monthly basis
Group Profit Before Measured against budget and prior year
Tax on monthly basis
Individual legal Measured against budget and prior year
entities' performance on monthly basis
Individual division
performance Measured against targets and prior year
on weekly basis
Sales, margins and Top 25 products reviewed monthly (at
prices of core products divisional management levels and operating
segments)
Sales to customers Top 25 customers and 12 month rolling
sales reviewed monthly (at divisional
management levels and operating segments).
Sales by individual area sales managers
reviewed weekly
Purchases Top 25 suppliers and delivery performance
reviewed monthly
Net cash Reviewed weekly by Board and by senior
management
Working capital Inventory, average debtor days and average
creditor days reviewed monthly by senior
management
Graphical representations of some of these KPIs and other
financial performance measures for the years ended 30 September are
as follows:
Note: 2018 figures are restated
2021/22 performance
The financial results for the year are shown above and are
discussed throughout the Annual Report. The significant outcomes
for the year are as follows:
-- The implementation of the new internal ERP system for the UK
and Europe operations was completed.
-- Recruitment was completed for key new leadership roles in
Operations and Supply Chain (Procurement and Planning).
-- In the UK sales of trickle vents were up 8% on the prior year
and up 18% in the period July to September 2022 following the
introduction of the revised building regulations and associated
standards for the UK in 2022. However, sales of window and door
hardware products fell by 20% as our distribution agreement with
Sobinco came to an end following its decision to sell its window
and door hardware products direct to customers, rather than through
Titon. However, we have developed a successful partnership with
European window and door hardware company Roto to sell their
products in the UK and we expect to see our window and door
hardware sales improve next year as a result of this, although not
immediately to the level of prior years.
-- Despite supply chain constraints for part of the year, we saw
sales of Ventilation System products and services in the UK rise by
9% in the period against prior year. However, sales to continental
Europe and the rest of the world were down by 34% as we struggled
to meet demand and recover the production arrears caused by the
component shortages earlier in the year.
-- Sales of the Titon FireSafe (R) Air Brick , which was
introduced in 2019/20, grew by 16.2% on 2021. We have won
prestigious industry awards for our Titon FireSafe (R) Air Brick
and Titon Ultimate (R) dMEV , reflecting the success of our
continued product development activities.
-- Sales to Titon Inc. in the US were 16% below the prior year
due to a weak market for multiple occupancy homes.
-- Sales in Korea of natural ventilation products were 15% below
the prior year due to a continued slowdown in residential new build
construction. The market transition to marketing and selling
mechanical ventilation products alongside natural ventilation
products is taking longer than originally anticipated.
-- We have implemented leaner, more efficient processes for some
of our manufacturing activities to recover production arrears and
increase output to support future growth. We have also started a
new Sales Inventory and Operations Planning (SIOP) process to
create a longer-term, forward-looking plan that will enable us to
achieve our business goals.
-- We have put considerable attention on improving our culture
and focus on health and safety with positive results.
-- Employee numbers decreased slightly during the period from
214 in September 2021 to 209 at September 2022. In Korea we saw a
small reduction in people to align with the market slowdown
partially offset in the UK by additional people in key new
strategic roles plus increased staffing in production to catch up
on order backlogs. Salaries are reviewed annually, and market level
increases were given to all Titon Hardware Ltd employees with
effect from 1 October 2022. The Group will continue to review its
performance and the market conditions and will review salaries
again in early 2023.
2022/23 activities
The focus for 2022/2023 is to stabilise the business and then
return it to profit through delivery of the business imperatives
outlined in the goals and strategy section on pages 9 to 11. We
have set budgets for all regions and divisions of our Group which
reflect our view of market conditions: the anticipated positive
impact from the 2022 building regulation and associated standards
changes and our internal growth ambitions. Specific initiatives for
the current fiscal year include:
-- Delivery of all business imperatives including:
o conclude organisational changes;
o return to previous high levels of customer service;
o reduce site inventory;
o increase production output through efficiencies and
investments;
o strong supplier relationship management with improved
terms;
o implement a new CRM system within our new Microsoft D365 ERP
system;
o realise process efficiencies from our new ERP system;
o rationalise our Window & Door Hardware product range;
o launch of several key new products for the UK and Europe
markets;
o a continued focus on improving health and safety culture and
reporting of incidents;
-- Develop plans for and initiate a review of the Group strategy.
-- Increase our penetration into the residential mechanical
ventilation market in the UK through increased sales to new and
existing customers. The revised building regulations and associated
standards for the UK drive towards increasingly more airtight
dwellings for energy efficiency. This means a likely move away from
intermittent extract systems to continuous running products, such
as Titon's CME, MVHR and Ultimate(R) dMEV, which will become the
predominant solutions.
-- Increase our sales into the social housing market with
existing products and also new products that will be launched in
2023, where there is now a more robust analysis when property
upgrades are undertaken, driving an improvement in quality of the
ventilation product installed, ideally meeting the same standard as
new build dwellings.
-- Increase our natural ventilation sales in the UK where the
revised building regulations and associated standards now require
trickle vents to be fitted in virtually all replacement windows.
Our growth will be supported through already identified and
commenced capital investment and operational efficiency
improvements.
-- Increase market share of Titon branded bought-in hardware,
particularly our new advanced door cylinder and friction hinges,
and develop the new distribution partnership with Roto in the
UK.
-- Continue to drive efficiencies and improved customer service
throughout our UK operations through the implementation of lean
principles and practices.
-- Continue working with Regulatory and Governmental
organisations to increase awareness of the effects of inadequate
ventilation and poor indoor air quality. Revised building
regulations and associated standards released in 2022 remain
positive for our business.
-- Streamline the corporate structure and operations of the Korean business.
Environmental Social and Governance Report
Titon prepared its first separate report on Environmental,
Social and Governance (ESG) last year. ESG reporting remains
increasingly important for investors and we also want to continue
demonstrating that we recognise our own responsibilities to the
environment. In 2019 we publicly committed to becoming a net zero
company by 2050.
The UK Government introduced regulations in April 2022 that
require climate-related financial disclosures to be made for
publicly quoted companies, large private companies and LLPs. For
companies quoted on AIM this applies if the business has more than
500 employees, so Titon is not currently required to make these
disclosures but again, the direction of travel is clear and
supports our intentions.
One of the key questions raised by investors in the context of
ESG is "Does this company make the world a better place?" Within
this question there are many different ways of measuring whether a
company achieves this, and it is not possible to use a single
equation or methodology to arrive at an answer. Different
stakeholders will have different requirements in answering this
question but as a Board we have a duty to enshrine this principle
in every action we take. One way of answering this question is to
look at the products we make and how they benefit the community: we
design, manufacture and sell ventilation equipment and this boils
down to providing an essential need for every person, which is
clean air. All of our ventilation products are designed to provide
fresh, clean air to homes and buildings' occupants and to dispel
moisture, carbon dioxide and volatile organic chemicals from those
buildings, any of which could cause respiratory illnesses or
allergies to those occupants. In many countries in which we sell
our products local building regulations require ventilation to be
included in all new house building. We are also seeing more
commitment from governments in ensuring that in the retrofit market
attention is paid to ventilation: if a building is insulated then
the natural pathways for air to flow in and out are blocked up and
it becomes essential that new routes to allow clean air in are
provided.
In the drive for energy efficiency and ensuring that buildings
are adequately ventilated we work with a network of stakeholders
including our customers in the window and door market and the house
building market in the UK and Europe. We also work with our trade
associations, Beama Ltd and FETA to promote ventilation in the UK
and a number of other organisations, including the UK All Party
Parliamentary Group for Healthy Homes and Buildings and the Air
Pollution APPG.
Environmental Pillar
The Board recognises its responsibility to minimise the impact
of the Group's activities on the environment.
The Group seeks to reduce its environmental impact in a way that
benefits a broad group of stakeholders, including customers,
shareholders, employees and the local community. The Group follows
ISO 14001:2015 for Environmental Management Systems within its UK
manufacturing operation and places great emphasis on ensuring that
it conducts its operations such that:
-- Emissions to air, releases to water and land filling of waste
do not cause unacceptable environmental impacts and do not offend
the community.
-- Significant plant and process changes are assessed and positively pursued to prevent adverse environmental impacts.
-- Energy is used efficiently and consumption is monitored.
-- Natural resources are used efficiently.
-- Raw material waste is minimised.
-- Waste is reduced, reused or recycled where practicable.
-- The amount of packaging used for our products is minimised.
As part of its processes, the Group's environmental performance
is reviewed regularly by senior management and a programme of
continuous improvement for the benefit of customers, employees and
the environment has been adopted. We remain focussed on reducing
our energy usage and maintain detailed records of each area's gas
and electricity consumption with the aim of taking prompt action if
any unexplained increase is observed. Based on the latest energy
figures available our UK electricity usage decreased by 9% in 2022
against 2021 whilst UK gas usage decreased by 4%. UK motor vehicle
fuel usage has decreased by 23% over 2021.
In accordance with Statutory Instrument 2008/410 the Group
presents the following information in respect of its CO 2 emissions
during the period.
Global Greenhouse Gas (GHG) emissions data for the period
are:
2022 2021
Source: tCO 2 tCO 2
e e
Combustion of fuel and operation of facilities 535 553
Electricity, heat, steam and cooling purchased
for own use 235 304
------------------------------------------------- ------- -------
Total t onnes of CO 2 equivalent 770 857
CO 2 emissions normalised per GBP million of
sales of manufactured products 45.6 50.1
These sources fall within our consolidated financial reporting.
We do not have responsibility for any emission sources outside of
our consolidated financial reporting, including those of our
Associate Company.
We have used the GHG Protocol Corporate Accounting and Reporting
Standard (revised edition), data gathered to fulfil our
requirements under the CRC Energy Efficiency scheme, and emission
factors from UK Government's GHG Conversion Factors for Company
Reporting 2022.
We have taken action over recent years to reduce our
environmental footprint and will continue to do so. Actions we have
already taken include:
-- An investment of over GBP150,000 in solar panels, which are
installed on the roof of our Haverhill factory. These panels
continue to generated over 125 Mwh of electricity per year, which
we use in the factory or sell back to the National Grid;
-- Installation of LED lighting throughout the Colchester Office and the Haverhill factory;
-- Replacing all diesel cars in the company car fleet with
electric vehicles, wherever possible, when they come up for
renewal. We have EV charging points installed at both the
Colchester office and Haverhill site;
-- Replacement of older fixed asset plant and machinery with
new, more efficient units, for example our Amada Press which we
purchased in April 2021. In 2023 we are planning to make such
investments in our Mould Shop.
-- Installation of a reverse osmosis plant in our paint
facility, which has reduced the usage of caustic soda and
hydrochloric acid by 50%, with an added health and safety
benefit.
-- We have an ongoing initiative to reduce single use packaging
for raw material supplies and have replaced our own plastic
packaging with either cardboard or recycled plastic, wherever
possible.
-- We have a target to reduce waste to landfill from the
Haverhill production site by 50% by end 2023, with a further goal
of zero waste to landfill in subsequent years.
We apply the waste hierarchy, as laid down in law, and which
forms part of our ISO 14001:2015 certification. The basic
principles are "Reduce, Reuse and Recycle" and are incorporated in
the Titon Recycling Policy under which we aim to reduce waste in
all our packaging, products and processes.
We will continue to take all actions that reduce our energy,
water and waste usage. We will also look to report our
environmental footprint using a third-party reporting
mechanism.
Social Pillar
The Group has various published policies relating to the Social
pillar. These are communicated through our Intranet, noticeboards
and the Employee Handbook. Our comprehensive Employee Handbook
published in 2021 includes all of our employment policies, a
summary of the Health and Safety policy, our Diversity Policy, our
Safeguarding and IT Security and our Environmental policies. The
chapter entitled "Valuing Diversity and Respect at Work" covers the
following matters:
-- Equal Opportunities Policy: Titon is committed to encouraging
equality and diversity among our workforce. Our objective is to
create a working environment in which there is no unlawful
discrimination and where all decisions are based on merit. The
policy applies to all employees, workers, agency workers,
contractors and job applicants and covers all of the nine protected
characteristics set out in the Equality Act 2010.
-- Bullying and Harassment Policy: we are committed to providing
a working environment free from bullying and harassment and this
policy covers both at work and out of the workplace, including work
trips, work-related events and social functions. It also includes
all employees, agency, casual workers and independent
contractors.
-- Grievance Policy: every employee has the right to raise a
grievance if they have a genuine complaint about their job, work or
terms and conditions of employment and the policy principles are
written down in the Handbook.
-- Disciplinary Policy: the policy sets out the process for
dealing with disciplinary and performance issues and to ensure that
any matters are dealt with fairly and consistently.
-- Whistleblowing Policy: Titon is committed to the highest
possible standards of ethical, moral and legal business conduct.
The policy aims to provide a route for employees to raise any
concerns they may have on matters that could have a serious impact
on Titon such as incorrect financial reporting, unlawful actions or
serious improper conduct.
I can report that there have been no occurrences under any of
these policies during the financial year.
The Safeguarding and IT Security Policy includes the policies on
Anti-corruption and Modern Slavery and Human Trafficking. Under the
Anti-Corruption Policy the Titon Group lists a number of
fundamental principles and values which it believes are the
foundation of sound and fair business practice and which are
important to uphold. It is the Titon policy to comply with all
laws, rules and regulations governing anti-bribery and corruption
in all countries in which Titon operates. As a UK company Titon is
also bound by English law which covers our conduct both in the UK
and abroad. The penalties for breaching this law are significant
both for the individuals involved and the Company and we take our
legal obligations very seriously.
Titon is committed to the principles of the Modern Slavery Act
2015 and the abolition of modern slavery and human trafficking. We
do not enter into business with any organisation which knowingly
supports or is found to be involved in slavery, servitude and
forced or compulsory labour. Due to the nature of our business, we
have assessed that we have a low risk of modern slavery in our
business and supply chains. Our supply chains are limited, and we
procure goods and services from a restricted range of UK and
overseas suppliers. We will continue to embed these principles
through our procurement and employment policies and practices.
Employee Gender Breakdown
As at the end of the financial year the analysis by gender of
employees, was as follows:
2022 2022 2022 2021 2021 2021
Male Female Total Male Female Total
Directors 5 2 7 8 - 8
Senior Managers 6 2 8 8 2 10
Other 121 73 194 131 65 196
------------------- ------ ----------- --------------- ------ -------- -------
Total 132 77 209 147 67 214
We continue to support a number of local and national charities
throughout the year. Our colleagues in Colchester and Haverhill
also carry out a number of charity collections during the year.
We are committed to respecting human rights across our business
operations and aim to comply with all local and international
legislation and standards.
Corporate Governance Pillar
We have presented our Corporate Governance position for many
years, firstly under the UK Corporate Governance Code when we were
quoted on the Main Market of the London Stock Exchange and since
2020 under the Quoted Companies Alliance (QCA) code after we moved
to AIM. Please see page 37 of this Report for the detailed
Corporate Governance Report. Our website also contains more details
of the governance disclosure including how we apply the 10
principles identified by the QCA Code.
In summary, I am confident that we have applied the 10
principles identified by the QCA Code throughout the accounting
period in question and will continue to do so in the current
financial year.
Health and safety
Health and safety is a top priority for the Group and we expect
all employees to take responsibility for keeping themselves and
each other safe. It is critical as a manufacturing business that
our employees operate in a safe environment and that our Health and
Safety culture, policies and practices are as good as they can be.
We are always looking to improve them and importantly adhere to
them. We continually review and update our Health and Safety
policies and have a dedicated Health and Safety Manager role in the
business. During 2022 we have put increased focus on hazard
spotting, reporting and resolution by all employees in order to
further improve the safety of our work environment. We are pleased
to witness significant improvements in this area. The Group has
also developed a Health and Safety roadmap that allows us to track
and manage our health and safety compliance, training and priority
projects.
The approach to health and safety management for the Group is as
follows:
Board of Directors Overall responsibility for setting
policy and performance, promoting
excellence in EHS as a personal
and organisational core value and
role modelling the expected behaviours.
Senior leadership team Meets weekly to review statistics,
every reported incident and the
status of the EHS roadmap. The Chief
Executive, Chief Financial Officer
and all executive directors attend.
Also promotes excellence in EHS
and shows the expected behaviours.
---------------------------------------------
Local management Meets daily to review health and
safety incidents and issues. Responsible
for setting expectations, following
the rules set, managing EHS risks
and promptly addressing EHS incidents
and issues, including non-compliance.
---------------------------------------------
All employees Have the responsibility to look
after the health and safety of themselves
and others by proactive hazard reporting
and resolution, prompt reporting
of all incidents and cooperating
with instruction and training.
---------------------------------------------
Health and Safety Manager Responsible for driving a positive
health and safety culture, supporting
resolution of day-to-day issues,
leading on incident investigation
and implementing lessons learned,
and implementation of changes to
policy.
---------------------------------------------
Health and Safety Committee Is represented by operational team
members across all departments and
is chaired by the Operations Director
with support from the Health and
Safety Manager. The committee meets
monthly to discuss and address operational
health and safety issues. Minutes
are produced and distributed along
with an action plan.
---------------------------------------------
The accident statistics for our UK operations are as
follows:
-- January to December 2021 17 reported accidents, 0 RIDDOR reported
-- January to December 2022 51 reported accidents, 0 RIDDOR reported
Compared to 2021 we have seen a significant increase in the
number of accidents reported, although the vast majority of these
are minor. This is due to an improved reporting culture and the
focus applied to a 'safety first' approach, and not a reflection of
a drop in health and safety performance. We have improved our
reporting processes for all incidents (including accidents,
hazards, and near misses) and have also improved our processes for
sharing lessons learned. The Group is very pleased to see this
improvement in culture. Alongside the increase in accident
reporting we have also seen a significant increase in hazard
reporting which we know helps prevent the occurrence of more
serious incidents.
RIDDOR is the Reporting of Injuries, Diseases and Dangerous
Occurrences Regulations 2013. These Regulations require employers,
the self-employed and those in control of premises to report
specified workplace incidents. As at 31 December 2022, we had
reached 1,506 days without a RIDDOR report being required, which is
a reflection of the minor severity rating of our incidents.
Statement by the Directors in relation to their statutory duty
in accordance with section 172(1) of the Companies Act 2006
Stakeholder Why do we engage How does the Board engage
Group with them? with them?
Shareholders The Board needs to We have regular dialogue
know investors' views with institutional Investors
so they can be considered and individual shareholders
when making strategic in order to develop an understanding
and governance decisions. of their views.
We listen to the views of
We aim to provide our Nominated Adviser in
fair, balanced and this respect.
understandable information Our AGM is an important forum
about the business for private shareholders
to enable informed to meet the board and ask
investment decisions any questions they may have.
to be made. Our website has an investors
section which gives investors
direct access to reports,
press releases and other
information. There is also
a contact mailbox facility.
------------------------------- -------------------------------------------------------
Employees Employee engagement We engage with our employees
is critical to our through site communications,
success. We aim to consultation with employees,
create a diverse briefings, question boxes,
and inclusive workplace performance reviews, surveys,
where employees can newsletters and notice boards.
reach their full Employees are also written
potential. This ensures to individually on matters
we can retain and which are deemed important.
develop talented Every employee is issued
people. with a comprehensive employee
handbook with all of the
We have the highest employment conditions and
regard for the health, policies set out clearly
safety and wellbeing so that everyone can see
of our employees. what is expected of them.
We have another employee
survey planned for 2023.
We continue to make every
effort to protect our employees.
------------------------------- -------------------------------------------------------
Customers Our strategy of attaining We engage with our customers
sustainable growth through:
in profit and building * Regular visits and meetings including virtual
goodwill in our brands meetings
will only be achieved
through an understanding
of the needs of our * Industry exhibitions
customers and the
markets we serve.
* Customer site tours and presentations
* Our website
* Supplying samples and supporting literature
* Delivering a high standard of technical support
* Providing design services and support
* Providing accredited Continuing Professional
Development (CPD) courses
------------------------------- -------------------------------------------------------
Suppliers Our suppliers make Our supplier relationship
an important contribution management is led by our
to our business success. procurement team and supported
Engaging with our by R&D and Sales. We engage
supply chain means with our suppliers by holding
that we can ensure regular meetings with them
security of supply and via a feedback process
and speed to market. through monitoring their
Carefully selected performance.
high-quality suppliers
ensure we deliver
market leading innovative
products to meet
our customers' expectations.
------------------------------- -------------------------------------------------------
Community/ The Board has a full We provide ventilation products
Environment understanding of that are beneficial to health
the importance of and that are better for the
good community relations. environment.
We aim to contribute Many of our capital expenditure
positively to the projects focus on improving
communities and environment energy efficiency and reducing
in which we operate. environmental emissions from
our factories.
We have ISO 14001 Accreditation
in the UK.
We work with our stakeholders
to promote good indoor air
quality.
We support local charities
through fundraising and donations.
------------------------------- -------------------------------------------------------
Government Government set the We participate in industry
and Regulatory regulatory framework bodies and working groups
Bodies within which we operate. and our directors chair ventilation
We engage to ensure groups within the trade associations.
we can help in shaping We attend All-Party Parliamentary
new policies, regulations Groups and plenary sessions.
and standards, which We participate in and respond
assist in improving to industry and government
indoor air quality, consultations.
and ensure compliance
with existing legislation.
------------------------------- -------------------------------------------------------
In compliance with the Companies Act 2006, the Board of
Directors are required to act in accordance with a set of general
duties. During the year to 30 September 2022, the Board of
Directors consider that they have, individually and collectively,
acted in a way they consider, in good faith, would be most likely
to promote the success of the Company for the benefit of its
shareholders as a whole, having regard to a number of broader
matters including the likely consequence of decisions for the long
term and the Company's wider relationships. In doing so, the Board
holds regard to the matters contained in section 172(1) (a)-(f) of
the Companies Act 2006.
The Directors fulfil their duties by ensuring that there is a
strong governance structure in place across the Group's operations,
backed up by robust processes.
The strategy for the Group is regularly monitored by the Board
during the year. In respect of major matters discussed at board
level, the likely impact on all stakeholders are carefully
considered and where possible, decisions are carefully explained
and discussed with affected stakeholders before actions are
implemented to engender the necessary support.
The Group's key stakeholders and why and how we engage with them
are set out below:
Application of s.172 during the year
During the year the Board has, amongst other things, recruited a
new Chief Executive to drive change in the business, looked at the
structure of the Titon Holdings and Titon Hardware boards and
developed the growth strategy of the business. We have also
implemented a new ERP system for the operations and finance parts
of our business, which has generated many issues which we have had
to resolve. In Korea we have discussed and considered a
re-structure of the Korean businesses to simplify the
arrangement.
We have continued to comply with the requirements under s.172 in
the period of the Covid-19 pandemic and the easing of restrictions
in early 2022. Key decisions made included:
-- Enabling office-based staff and sales executives to work from
home by providing them with laptops and appropriate software
applications.
-- Implementing Covid-19 Health & Safety procedures in line with Government guidelines.
-- Providing lateral flow tests to all employees and daily
monitoring of Covid-19 outbreaks in our sites.
Report on Risk Management
Principal risks and uncertainties
The Group has established procedures for monitoring and
controlling principal operational risks and these are detailed
below. The Board is responsible for ensuring that the Group
maintains an effective risk management system. It determines the
Group's approach to risk, its policies and the procedures that are
implemented to mitigate exposure to risk.
Process for managing risk
The Board continually assesses and monitors the key risks in the
business and has developed a risk management matrix to identify,
report and manage its principal risks and uncertainties. This
includes the recording of all principal risks and uncertainties,
which are reviewed annually. Risks are fully analysed, their
potential impact on the business assessed and relevant mitigations
established. The risk matrix is reviewed regularly at Board
Meetings along with the appropriateness and effectiveness of the
key mitigating controls.
The table below highlights the principal risks and uncertainties
which could have a material impact on the Group's performance and
prospects and the mitigating activities which are aimed at reducing
the impact or likelihood of a major risk materialising. The Board
does recognise, however, that it will not always be possible to
eliminate these risks entirely.
Risk Matrix
Risk Potential Impact Mitigations
Associate companies
The Group is exposed Failure to maintain The Group's senior
to the risks related good working relationships management has a regular
to working with associate and to exert sufficient schedule of visits
companies over which control and influence to meet with the Associate
it does not have in respect of our South Company's management
full operating control Korean Associate Company, in South Korea.
through its equity Browntech Sales Co.
holding. Ltd could affect the A formal Distribution
Group's ability to deliver Agreement exists between
on its objectives in Titon Korea Co. Ltd
this market. and Browntech Sales
Co. Ltd which aligns
those companies for
trading purposes. The
Group is evaluating
options for streamlining
the corporate structure
and operations of the
Korean business.
----------------------------------- ------------------------------------------------
Business disruption Incidents such as a
fire at the Group's The Group has developed
The Group's manufacturing or sub-contractor premises business continuity
and distribution or the failure of IT and disaster recovery
operations could systems could result plans.
be subjected to disruption in the temporary cessation
due to factors including in activity or disruption The Group maintains
incidents such as of the Group's production a significant amount
a major fire, a failure facilities impeding of insurance to cover
of essential IT equipment the Group's ability business interruption
or a major cyber-attack to deliver its products and damage to property
on the Group. to its customers. A from such events. Additional
There is also a risk cyber-attack could leave measures have been
of business disruption the Group open to a taken to ensure the
if key sub-contractors ransom demand or compromise security of the Group
experience an incident data security both for and customer data.
on their site or the Group and customers. The Group gets a fire
were to cease trading. risk assessment carried
out by an external
party (last completed
6 September 2022) and
actions/suggestions
raised are reviewed
and actioned accordingly.
A fire suppression
system is installed
in relevant manufacturing
areas.
Visits take place by
the local fire service
to review and provide
feedback on fire safety
systems and practices.
The Group implemented
multifactor authentication
for relevant employees.
The Group has implemented
a Cyber Security training
and awareness programme
for all employees.
The Group's strategy
is to maintain essential
systems in the Cloud.
The Group has an email
security gateway system
in place.
The Group has a register
of Titon owned tooling
held at sub-contractors.
The Group looks to
review sub-contractor
insurance and business
continuity policies.
----------------------------------- ------------------------------------------------
Reliance on key
customers and suppliers
Parts of the Group's Failure to manage relationships The Group's strategic
business are dependent with key customers and objective is to broaden
on key customers suppliers could lead its customer base
and key suppliers. to a loss of business wherever
affecting the financial possible.
results of the Group.
The Group focuses on
delivering high levels of
customer service and
maintains strong
relationships with major
customers through direct
engagement at all levels.
We also maintain close
links with suppliers
to ensure products are
up-to-date and service
levels are maintained.
The Group maintains ISO
9001 standard and a
robust complaints
process.
The Group closely manages
its pricing, rebates and
commercial terms
with its customers and
suppliers to ensure that
they remain competitive.
The Group has a policy of
dual sourcing key
components where
possible.
----------------------------------- ------------------------------------------------
Supply chain risks
The risk of extended Decrease in cash due The Group operates
lead times beyond to increased stock holding. strategic purchasing
forecast windows Loss of customers due of key long lead time
due to restricted to an inability to meet items.
component availability. demand or uncompetitive The Group holds weekly
pricing. Sales Inventory and
The risk of continued Increased risk of obsolescence. Operations Planning
material price inflation reviews.
and hence margin The Group has a policy
erosion. of dual sourcing key
components where possible.
The Group ensures robust
supplier relationship
management.
The Group can implement
customer agreements
to incorporate specification
changes if required.
----------------------------------- ------------------------------------------------
Recruitment and
retention of key
staff
Loss of any key staff The Group will be preparing
The Group is dependent without adequate and a formal succession
on the continued timely replacement could plan in 2023.
employment and performance disrupt business operations
of its senior management and the Group's ability The Group aims to provide
and other skilled to implement and deliver competitive remuneration
personnel. its growth strategies packages and bonus
and financial targets schemes to retain and
. motivate key staff.
----------------------------------- ------------------------------------------------
Risk Potential Impact Mitigations
----------------------------------- ------------------------------------------------
Recruitment and
retention of staff
The Group is dependent Failure to maintain The Group reviews market
on the continued adequate staffing levels conditions, cost of
employment and performance could impact on all living and the National
of all staff. business activities Living Wage and aims
and the Group's ability to provide competitive
to meet its defined remuneration packages
targets. and bonus schemes to
retain and motivate
staff.
The Group has a robust
recruitment and onboarding
process.
The Group has several
employee engagement
initiatives in place
including training
and personal development
opportunities and performance
review and objective
setting processes.
The Group has a two-way
employee feedback process
in place.
----------------------------------- ------------------------------------------------
Economic conditions
The Group is dependent Lower levels of construction The Group closely monitors
on the level of activity industry activity within trends in the industry
in the construction any of the key markets using a wide range
industry in the countries in which the Group operates of external data including
in which it markets could reduce sales and Experian's reports
its products and production volumes adversely, and forecasts for the
is therefore susceptible thus affecting the Group's UK and other reports
to any changes in financial results. This in the rest of the
economic conditions. is considered to be world. Current forecasts
a high risk to the Group for residential new-build
given the current inflationary and refurbishment markets
pressures and prospects in the UK and South
of a recession in our Korea for 2022/23 suggest
markets. a slowing in activity.
However, the social
housing sector is expected
to remain fairly strong.
The Group spreads its
risk by having product
lines and customer
bases across new-build,
refurbishment and social
housing sectors, and
is not reliant on single
key customers.
The Group monitors
product demand on a
weekly basis and is
able to respond accordingly
in re-allocating or
varying resources.
The Group continually
seeks to expand the
geographical markets
into which it sells
its products.
----------------------------------- ------------------------------------------------
Government action
and policy Many of the Group's The Group closely monitors
The Group's business products are provided and attempts to influence
is significantly to customers in order Building Regulations
affected by Building to help them to comply through its work with
Regulations in its with Building Regulations industry working groups.
core markets as well in respect of ventilation. The UK ventilation
as by Government Changes to Regulations and heat and power
action and policies could adversely impact use regulations will
relating to public on sales volumes affecting be subject to a comprehensive
and private investment. the Group's financial review by 2025.
results. The Group structures
Additionally, significant its operations so that
downward trends in Government it has a balanced exposure
spending could have to the construction
an adverse impact on sectors and the refurbishment
the construction industry sector to reduce the
which could impact on impact of any adverse
sales and production Government action or
volumes affecting the policy on any one of
Group's financial results. these sectors.
----------------------------------- ------------------------------------------------
Risk Potential Impact Mitigations
----------------------------------- ------------------------------------------------
Product liability
The Group manufactures A product safety issue The Group operates
electrical products or a failure or recall comprehensive quality
that could cause could result in a liability assurance systems and
injury to people claim for personal injury procedures within its
or property. The or other damage leading UK manufacturing processes
Group's products to substantial money and is subject to regular
are also often incorporated settlements, damage external audit as part
into the fabric of to the Group's brand of its ISO 9001 accreditation.
a building or dwelling, reputation, costs and Comprehensive end of
which could be difficult expenses and diversion line testing is carried
to access, repair, of key management's out on all in-house
recall or replace attention from the operation manufactured electrical
in the event of product of the Group, which products. Sample testing
failure. could all affect the is carried out on bought-in
Group's financial results. hardware products.
Wherever required,
the Group obtains certifications
over its products to
the relevant standards
of the countries in
which it markets its
products. These certifications
incorporate electrical
safety testing.
The Group endeavors
to ensure that its
products are in compliance
with relevant fire
safety regulations.
The Group maintains
product liability insurance
to cover personal injury
and property damage
claims from product
failures as well as
professional indemnity
cover for areas of
the business where
advice about products
is provided as part
of the sales process.
----------------------------------- ------------------------------------------------
Financial risk management
The Group's operations Losses from any of these The Group has financial
expose it to a variety financial risks could risk management procedures
of financial risks impact the Group's financial and controls in place
including fraud, results. that seek to limit
credit and foreign the adverse effects
exchange risk. of the financial risks.
----------------------------------- ------------------------------------------------
This Strategic Report was approved by the Board on 25 January
2023 and signed on its behalf by:
A French
Chief Executive
Directors' Report
The Directors present their report and the Group and Company
financial statements for the year ended 30 September 2022.
The Directors of Titon Holdings Plc throughout the financial
year or subsequent to the year-end are listed on page 35.
A detailed commentary on the results for the year and discussion
of future developments is given in the Chair's Statement on pages 2
to 7 and an explanation of the Group's business strategy is
included within the Strategic Report on pages 9 to 12.
The Group's compliance with the QCA Code is set out in the
report on page 37.
Substantial shareholders
As at 30 September 2022, the Company had been notified of the
following voting interests in its ordinary share capital, other
than Directors' holdings, of 3 per cent or more in the ordinary
share capital of the Company:
Name Shares %
Rights & Issues Investment
Trust PLC 1,265,000 11.28
Harwood Capital LLP 980,000 8.74
Ms A J Farrar 663,079 5.91
Mr D J Barry 338,000 3.01
Share capital
The total issued ordinary share capital at 30 September 2022
consisted of 11,218,750 Titon Holdings Plc shares of 10p each.
25,000 new ordinary shares were issued during the year to satisfy
share option exercises.
Details of the authorised and issued share capital of the
Company as at 30 September 2022 are set out in note 19 of the Notes
to the Financial Statements.
All of the Company's shares are ranked equally and the rights
and obligations attaching to the Company's shares are set out in
the Company's Articles of Association, copies of which can be
obtained from Companies House in England and Wales and on the
Company's website at www.titon.com/uk/investors/ .
There are no restrictions on the voting rights of shares and
there are no restrictions on their transfer other than:
-- certain restrictions as may from time to time be imposed by
laws and regulations (for example insider trading laws); and
-- pursuant to Article 19(11) of 'UK MAR' (the EU Market Abuse
Regulation as amended by the Market Abuse Exit Regulations 2020)
whereby Directors of the Company require approval to deal in the
Company's shares (see
https://www.fca.org.uk/markets/market-abuse/regulation).
Additionally, the Company is not aware of any agreements between
shareholders of the Company that may result in restrictions on the
transfer of ordinary shares or voting rights.
Proposed dividends
The Directors recommend the payment of a final ordinary dividend
of 0.5 pence (2021: 3.0 pence) per ordinary share. An interim
dividend of 1.5 pence per share was paid during the year (2021: 1.5
pence) so the total dividend for the year ended 30 September 2022
is 2.0 pence per share (2021: 4.5 pence). Titon operates a dividend
reinvestment programme for shareholders details of which are
available from our registrars, Link Group.
Research and development
The Directors consider that research and development continues
to play an important role in the Group's success as the need to
provide increasingly energy efficient ventilation products remains
a feature of our market over the coming years. Further details on
our research and development activities can be found in the
Strategic Report.
Investment in research and development amounted to GBP629,000
during the year (2021: GBP509,000). Development expenditure
capitalised in 2022 amounted to an additional GBP130,000 (2021:
GBP166,000). See note 11 of the Financial Statements. Financial
risk management
The Directors assess the financial risks facing the business and
spend appropriate time considering them. The Group has a system of
risk management, which identifies these items and seeks ways of
mitigating such risks as far as is possible. The Report on Risk
Management set out on pages 23 to 26 includes information on
financial risk and also see note 21 to the Financial
Statements.
Employees
The Group recognises the importance of its employees in
achieving its objectives and has contractual arrangements in place
to encourage and reward loyalty and to safeguard the interests of
the Group.
Employees are provided with information about the Group's
activities via consultation with employees, other staff meetings
and staff notice boards. The Group aims to foster an environment in
which employees and management can enjoy a free flow of information
and ideas.
The Group is an equal opportunities employer and its policies
for recruitment, training, career development and promotion are
based on the aptitude and abilities of the individual. All of these
policies are included in the Employee Handbook which is issued to
every employee. See the Strategic Report for more details.
The Group recognises the importance of its employees in
achieving its objectives and has contractual arrangements in place
to encourage and reward loyalty and to safeguard the interests of
the Group.
Employees are provided with information about the Group's
activities via the Employee Consultative Committee, other staff
meetings and staff notice boards. The Group aims to foster an
environment in which employees and management can enjoy a free flow
of information and ideas.
The Group is an equal opportunities employer and its policies
for recruitment, training, career development and promotion are
based on the aptitude and abilities of the individual.
The Group's approach and responsibilities for social and
community issues are not covered in this report.
Disabled employees
The Group gives full consideration to the career development and
promotion of disabled persons, and to applications for employment
from disabled persons, where the requirements of the job can be
adequately fulfilled by a handicapped or disabled person.
The Group considers the training requirements of each disabled
person on an individual basis. Where an employee becomes disabled
during the course of their employment, the Group will consider
providing the employee with such means, including appropriate
training, as will enable the employee to continue to carry out
their job, where it reasonably can, or will attempt to provide an
alternative suitable position.
Capital management
The Group's objectives when managing capital are to safeguard
the Group's ability to continue as a going concern, so that it can
continue to provide returns for its shareholders and benefits for
its other stakeholders.
The Group considers its capital to comprise ordinary share
capital, share premium, the capital redemption reserve and
accumulated retained earnings (see 'Consolidated Statement of
Changes in Equity' on page 53). The translation reserve is not
considered as capital. In order to maintain or adjust its working
capital at an acceptable level and to meet strategic investment
needs, the Group may adjust the amount of dividends paid to
shareholders, return capital to shareholders or sell assets.
The Group does not seek to maintain any particular debt to
capital ratio but will consider investment opportunities on their
merits and fund them in the most effective manner.
Environmental issues
An explanation of how the Group deals with its environmental
responsibilities is included within the Strategic Report, under the
heading Environmental Social and Governance.
Directors' responsibilities
The Directors are responsible for preparing the annual report
and the financial statements in accordance with applicable law and
regulations.
Company law requires the Directors to prepare financial
statements for each financial year. The Directors have elected to
prepare the Group and Company financial statements in accordance
with International Financial Reporting Standards and International
Financial Reporting Standards adopted in the United Kingdom ("UK
adopted IFRS"). Under company law the Directors must not approve
the financial statements unless they are satisfied that they give a
true and fair view of the state of affairs of the Group and Company
and of the profit or loss for the Group for that period.
In preparing these financial statements, the Directors are
required to:
-- Select suitable accounting policies and then apply them consistently.
-- Make judgements and accounting estimates that are reasonable and prudent.
-- State whether they have been prepared in accordance with
IFRSs,, subject to any material departures disclosed and explained
in the financial statements.
-- P repare the financial statements on the going concern basis
unless it is inappropriate to presume that the group and parent
company will continue in business; and
-- Prepare a Directors' Report, a Strategic Report and
Directors' Remuneration Report which comply with the requirements
of the Companies Act 2006.
-- Prepare financial statements in accordance with the rules of
the London Stock Exchange for companies trading securities on
AIM.
Directors' responsibilities (continued)
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Group's
transactions and disclose with reasonable accuracy at any time the
financial position of the Group and enable them to ensure that the
financial statements comply with the Companies Act 2006. They are
also responsible for safeguarding the assets of the Group and hence
for taking reasonable steps for the prevention and detection of
fraud and other irregularities.
Website publication
The Directors are responsible for ensuring that the annual
report and the financial statements are made available on a
website. Financial statements are published on the Company's
website, which can be found at www.titon.com/uk/investors/ in
accordance with legislation in the United Kingdom governing the
preparation and dissemination of financial statements, which may
vary from legislation in other jurisdictions. The maintenance and
integrity of the Company's website is the responsibility of the
Directors. The Directors are also responsible for disclosing
additional information under Rule 26 of the AIM Rules, which is
available at www.titon.com/uk/investors/ . The Directors'
responsibility also extends to the ongoing integrity of the
financial statements contained therein.
The Directors confirm to the best of their knowledge:
-- the Group financial statements have been prepared in
accordance with International Financial Reporting Standards (IFRSs)
as issued by the IASB and adopted by the UK and give a true and
fair view of the assets, liabilities, financial position and profit
and loss of the Group; and
-- the Annual Report includes a fair review of the development
and performance of the business and the financial position of the
Group and the parent company, together with a description of the
principal risks and uncertainties that they face.
Directors' statement as to disclosure of information to
auditors
The Directors at the time of approving the Directors' Report are
listed on page 35. Having made enquiries of fellow Directors and of
the Officers of the Company, each of the Directors confirms
that:
-- to the best of each Director's knowledge and belief, there is
no relevant audit information of which the Company's auditors are
unaware; and
-- each Director has taken all steps a Director ought to have
taken to make themselves aware of any information needed by the
Company's auditors for the purpose of their audit and to establish
that the Company's auditors are aware of that information.
Directors' liability insurance and indemnity
The Company has purchased liability insurance cover, which
remained in force at the date of the report, for the benefit of the
Directors of the Company which gives appropriate cover for legal
action brought against them. The Company also provides an indemnity
for its Directors (to the extent permitted by law) in respect of
liabilities which could occur as a result of their office. This
indemnity does not provide cover should a Director be proved to
have acted fraudulently or dishonestly.
Purchase of own shares
The Company has authority from shareholders to purchase up to
10% of its own ordinary shares in the market. This authority was
not used during the year nor in the period to 25 January 2023 and
the Board intends to seek shareholder approval to renew the
authority at the forthcoming Annual General Meeting.
In accordance with the Companies (Acquisition of Own Shares)
(Treasury Shares) Regulations 2003, companies are permitted to hold
purchased shares rather than cancelling them. At 30 September 2022
and 25 January 2023 the Company held nil shares in treasury. The
Company may use this power in the future depending on market
conditions and the financial position of the Company.
Events after the reporting date
There have been no events after the reporting date that
materially affect the position of the Group.
Going concern
The Group's business activities, its financial position,
together with the factors likely to affect the Group's performance,
are set out in the Strategic Report. In addition, note 21 to the
financial statements includes the Group's risk management
objectives and policies, managing its financial risk and its
exposures to credit risk, foreign exchange risk and liquidity
risk.
The financial statements have been prepared on a going concern
basis. In adopting the going concern basis the Directors have
considered all of the above factors, including the principal risks
set out on pages 23 to 26. Under the worst-case scenario
considered, which is severe and considered highly unlikely, the
Group remains liquid for a period of 12 months from the date of
reporting and the Directors therefore believe, at the time of
approving the financial statements that the Group is well placed to
manage its business risks successfully and remains a going concern.
The key facts and assumptions in reaching this determination are
summarised below.
The financial position remains robust with cash of GBP1.7m
available to the Group and no debt and therefore no bank covenants
in place. Our base case scenario has been prepared using forecasts
from each of our operating companies, with each considering both
the challenges and opportunities they are facing because of various
market forecasts and also supply chain challenges. Due to the
strength of the Group's balance sheet and market outlook, the
Directors believe there is no material uncertainty around going
concern. To this end a reverse stress test scenario has also been
modelled, with the most extreme conditions being considered. 50% of
budgeted revenue was removed for all operating companies within the
Group from 1 April 2023 to 31 January 2024 with all overheads being
reduced accordingly. All discretionary expenditure was reduced or
removed such as capital expenditure and dividends. The result of
this scenario is that we remain cash positive within 12 months of
the signing date. This extreme scenario excludes all other
resources we would have at our disposal as means of raising further
cash, such as:
-- the Group owns the freehold interest in our Haverhill site
which had a fair value of GBP5.4 million in September 2022. This
could be used as collateral to borrow funds from our bank in the
form of a mortgage;
-- the Group has significant fixed assets that would have a
second-hand market value that could be realised;
-- a rights issue could be made;
-- the Group has a large stock balance that could be sold on if there was reduced production;
-- salary costs could be reduced by virtue of either restructuring or through pay reductions;
-- BTS, our associate Company, has GBP3.4m of cash which could
be paid to shareholders in the form of a dividend.
Annual General Meeting
The Annual General Meeting of Titon Holdings Plc ("the Company")
will be held at the Company's premises at Falconer Road, Haverhill,
CB9 7XU on 22 March 2023 commencing at 10.00 a.m. A Notice
convening the Annual General Meeting of the Company for the year
ended 30 September 2022 may be found on page 86 of this
document.
Shareholders are being asked to vote on various items of
ordinary business, being Resolutions 1 to 10 inclusive, as listed
below.
Resolution 1 - to receive and adopt the audited accounts
The Directors recommend that shareholders adopt the reports of
the Directors and the Auditors and the audited accounts of the
Company for the year ended 30 September 2022.
The Directors' Report was approved by the Board on 25 January
2023 and signed by order of the Board.
Resolution 2 - to declare a final dividend
The Directors recommend a final dividend of 0.5 pence per
ordinary share. Subject to approval by shareholders, the final
dividend will be paid on 31 March 2023 to shareholders on the
register on 10 February 2023.
Resolution 3 - to re-elect Mr Tyson Anderson as a Director
The Chair confirms that following performance evaluation Mr
Anderson continues to be effective and demonstrates commitment in
his role.
Resolution 4 - to re-elect Mr Keith Ritchie as a Director
The Deputy Chair confirms that following performance evaluation
Mr Ritchie continues to be effective and demonstrates commitment in
his role.
Resolution 5 - to re-elect Mr Nicholas Howlett as a Director
The Chair confirms that following performance evaluation Mr
Howlett continues to be effective and demonstrates commitment in
his role.
Resolution 6 - to re-elect Mr Paul Hooper as a Director
The Chair confirms that following performance evaluation Mr
Hooper continues to be effective and demonstrates commitment in his
role.
Resolution 7 - to re-elect Mr Jeff Ward as a Director
The Chair confirms that following performance evaluation Mr Ward
continues to be effective and demonstrates commitment in his
role.
Resolution 8 - to re-elect Miss Alexandra French as a
Director
The Chair confirms that following performance evaluation Miss
French continues to be effective and demonstrates commitment in her
role.
Resolution 9 - to re-elect Ms Carolyn Isom as a Director
The Chair confirms that following performance evaluation Ms Isom
continues to be effective and demonstrates commitment in her
role.
Resolution 10 - to re-appoint MacIntyre Hudson LLP as
auditors
This resolution proposes that MacIntyre Hudson LLP should be
re-appointed as the Company's Auditors and authorises the Directors
to determine their remuneration.
Resolution 11 - to approve the Directors' Remuneration
Report
Resolution 11 in the Notice of Annual General Meeting, which
will be proposed as an Ordinary Resolution, is to receive and
approve the Directors' Remuneration Report as set out on pages 33
to 36 and also to approve a new Executive Management Bonus
Structure, details of which are contained in the Directors'
Remuneration Report.
Resolution 12 - authority to allot shares
The Companies Act 2006 prevents directors of a public company
from allotting unissued shares, other than pursuant to an employee
share scheme, without the authority of shareholders in general
meeting. In certain circumstances this could be unduly restrictive.
The Directors' existing authority to allot shares, which was
granted at the Annual General Meeting held on 23 February 2022,
will expire at the forthcoming Annual General Meeting.
Resolution 12 in the notice of Annual General Meeting will be
proposed, as an Ordinary Resolution, to authorise the Directors to
allot ordinary shares in the capital of the Company up to a maximum
nominal amount of GBP270,000, representing approximately 24% of the
nominal value of the ordinary shares in issue on 25 January
2023.
The authority conferred by the resolution will expire on 22 June
2024 or, if sooner, at the 2024 Annual General Meeting.
The Directors have no present plans to allot unissued shares
other than on the exercise of share options under the Company's
employee share option schemes. However, the Directors believe it to
be in the best interests of the Company that they should continue
to have this authority so that such allotments can take place to
finance appropriate business opportunities that may arise.
Resolution 13 - to disapply pre-emption rights
Unless they are given an appropriate authority by shareholders,
if the Directors wish to allot any of the unissued shares for cash
or grant rights over shares or sell treasury shares for cash (other
than pursuant to an employee share scheme) they must first offer
them to existing shareholders in proportion to their existing
holdings. These are known as pre-emption rights.
The existing disapplication of these statutory pre-emption
rights, which was granted at the Annual General Meeting held on 23
February 2022 will expire at the forthcoming Annual General
Meeting. Accordingly, Resolution 13 in the Notice of Annual General
Meeting will be proposed, as a Special Resolution, to give the
Directors power to allot shares or sell treasury shares without the
application of these statutory pre-emption rights: first, in
relation to offers of equity securities by way of rights issue,
open offer or similar arrangements; and second, in relation to the
allotment of equity securities for cash up to a maximum aggregate
nominal amount of GBP160,000 (representing approximately 14.3% of
the nominal value of the ordinary shares in issue on 25 January
2023). The power conferred by this Resolution will expire on 22
June 2024 or, if sooner, at the 2024 Annual General Meeting.
In addition, there is one item of special business, being
Resolution 14, as listed below.
Resolution 14 - Company's authority to purchase its own
shares
Resolution 14 in the Notice of Annual General Meeting, which
will be proposed as a Special Resolution, will authorise the
Company to make market purchases of up to 1,121,875 ordinary
shares. This represents approximately 10% of the Company's ordinary
shares in issue on 25 January 2023. The maximum price per share
that may be paid shall be the higher of: (i) 5% above the average
of the middle market quotations for an ordinary share for the five
business days immediately before the day on which the purchase is
made (exclusive of expenses); and (ii) the higher of the price of
the last independent trade and the highest current independent bid
on the trading venue where the purchase is carried out (exclusive
of expenses). The minimum price shall not be less than 10p per
share. The authority conferred by this resolution will expire on 22
June 2024 or, if sooner, at the 2024 Annual General Meeting.
Your directors are committed to managing the Company's capital
effectively and although they have no plans to make such purchases,
buying back the Company's ordinary shares is one of the options
they keep under review. Purchases would only be made after
considering the effect on earnings per share and the benefits for
shareholders generally.
The Company may hold in treasury any of its own shares that it
purchases in accordance with the Companies Act 2006 and the
authority conferred by this resolution. This would give the Company
the ability to re-issue treasury shares quickly and cost
effectively and would provide the Company with greater flexibility
in the management of its capital base. The Company does not
currently hold any shares in treasury.
As at 25 January 2023 there were options outstanding over
437,000 ordinary shares which, if exercised at that date, would
have represented 3.90% of the Company's issued ordinary share
capital. If the authority given by Resolution 14 was to be fully
used, these would then represent 4.33% of the Company's issued
ordinary share capital.
Recommendation
The Directors believe that the resolutions which are to be
proposed at the Annual General Meeting are in the best interests of
the Company and its shareholders as a whole and recommend that all
shareholders vote in favour of them, as each of the Directors
intends to do, in respect of his or her beneficial holding.
The Directors' Report was approved by the Board on 25 January
2023 and signed on its behalf by:
C V Isom
Company Secretary
Directors' Remuneration Report
Statement from the Chair of the Committee
I am pleased to present the Directors' Remuneration Report for
the year ended 30 September 2022.
There has been no change to the Directors' Remuneration Policy
during the period and there have been no significant changes in
individual Director's levels of remuneration during the year,
except as a result of the performance related elements, which are
linked to the amount by which the Group's results exceeds budget.
For this period no payments were made in respect of performance
related elements.
Details of the Directors' Remuneration Policy are shown on the
Group's website in the Corporate Governance section . The
Directors' Remuneration Policy was approved in its entirety at the
2018 AGM. An Ordinary Resolution will be put to shareholders at the
forthcoming Annual General Meeting to be held on 22 March 2023, to
receive and adopt the Directors' Remuneration Report and to approve
a new bonus arrangement for Titon Holdings executive management
that includes financial performance-based targets as well as
individual performance.
The new Executive Management bonus structure has a base level
bonus of 35% for the Chief Executive and 25% for the Chief
Financial Officer of base salary. It consists of four components,
the majority of which is based on Group PBT with smaller
contributions from Group Revenue, Group Quick Ratio and personal
objective performance. Personal objectives are directly linked to
the business imperatives that will drive the business back to
profit. The maximum possible bonus payable where targets are
significantly exceeded is 63% and 45% of base salary for the Chief
Executive and Chief Financial Officer respectively.
The Directors' interests in the ordinary share capital of the
Company at the year-end are reported below on page 35.
Remuneration Committee
The Committee presently consists of Mr J Ward, Mr G P Hooper, Mr
N Howlett, all Non-executive Directors and Mr K Ritchie,
Non-executive Chair. The Committee has been established by the
Board to set Remuneration Policy and to deal with all matters
relating to Directors' Remuneration and reporting thereon. It has
clear Terms of Reference established by the Board.
Directors' remuneration compared to certain other distributions
are as follows:
2022 2021 Percentage
change
GBP'000 GBP'000 %
Directors' remuneration 831 901 (10%)
Other employee remuneration 6,179 5,794 7%
Dividend payments to shareholders 502 390 28%
Other employee remuneration includes grant income relating to
the Coronavirus Job Retention Scheme of GBPnil (2021:
GBP0.008m).
Directors' remuneration
The remuneration paid to the Directors during the year, together
with a comparison of the previous year, is as follows:
Year ended Salary Benefits Short term Pension Total
30 September and in performance benefits
fees kind related
(a) (k) remuneration
(b)
Executive Directors: GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
T N Anderson 2022 97 - - 8 105
2021 99 - 26 8 133
T D Gearey (c) 2022 84 8 - 37 129
2021 58 8 20 28 114
K A Ritchie 2022 160 7 - - 167
2021 157 13 41 - 211
D A Ruffell (d) 2022 - - - - -
2021 170 13 - 10 193
M J Norris (e) 2022 61 - - 5 66
2021 37 - 10 3 50
C V Isom (f) 2022 112 - - 15 127
2021 - - - - -
A C French (g) 2022 76 - - 5 81
2021 - - - - -
Non-executive
Directors:
J N Anderson (h) 2022 21 - - - 21
2021 37 - - - 37
N C Howlett 2022 63 - - 5 68
2021 66 - - 5 71
K Sargeant (i) 2022 13 - - - 13
2021 46 - - - 46
B Ratzke (i) 2022 13 - - - 13
2021 46 - - - 46
G P Hooper (j) 2022 20 - - - 20
2021 - - - - -
J Ward (j) 2022 20 - - - 20
2021 - - - - -
Totals 2022 740 16 - 75 831
2021 716 34 97 54 901
(a) A 'salary sacrifice' system is in operation, where the
Company makes a pension contribution on behalf of each Director,
where applicable, and their salary is reduced by a corresponding
amount.
(b) In accordance with the proposals adopted by shareholders,
performance related remuneration is not due for this period to
Executive Directors.
(c) T D Gearey was a beneficiary of an agreement with the
Company relating to his departure from the Company on 6 April 2022
entitling him to a payment of GBP30,000 which is included in salary
above as well as payment in lieu of notice amounting to
GBP46,000.
(d) D A Ruffell was a beneficiary of an agreement with the
Company relating to his departure from the Company on 30 April 2021
entitling him to a payment of GBP90,000 which was included in
salary above.
(e) M J Norris joined the Board on 12 July 2021 and left the
Board on 8 February 2022.
(f) C V Isom joined the Board on 22 December 2021.
(g) A C French joined the Board on 3 May 2022.
(h) J N Anderson left the Board on 31 March 2022.
(i) B Ratzke and K Sargeant both left the Board on 7 December
2021.
(j) G P Hooper and J Ward both joined the Board on 1 April
2022.
(k) The remuneration package of each Executive Director includes
non-cash benefits, which for K Ritchie, D A Ruffell, T D Gearey, T
N Anderson and C V Isom also included the provision of a company
car. The aggregate gains made by Directors on the exercise of share
options during 2022 were GBP11,220 (2021: GBP33,200). It also
includes any discretionary amounts payable, as agreed by the
Remuneration Committee, where applicable.
Directors and their interests in shares
The Directors of the Company during the year and at the year-end
and their beneficial interests in the ordinary share capital were
as follows:
30 September 2022 30 September
Ordinary shares of 2021
10p each Ordinary shares
of
10p each
K A Ritchie* Non-executive Chair 1,031,381 981,381
---------------- ---------------------------------- ----------- ------------------
Chief Executive Officer (left
D A Ruffell* 30 April 2021) - 178,500
---------------- ---------------------------------- ----------- ------------------
M J Norris Chief Executive Officer (left - -
8 February 2022)
---------------- ---------------------------------- ----------- ------------------
A C French Chief Executive Officer (joined 12,738 -
3 May 2022)
---------------- ---------------------------------- ----------- ------------------
C V Isom Chief Financial Officer (joined - -
22 December 2021)
---------------- ---------------------------------- ----------- ------------------
J N Anderson* (left 31 March 2022) - 1,737,802
---------------- ---------------------------------- ----------- ------------------
T N Anderson* Deputy Chair 693,750 693,750
---------------- ---------------------------------- ----------- ------------------
I.T. Director (left 6 April
T D Gearey 2022) - 20,500
---------------- ---------------------------------- ----------- ------------------
N C Howlett* Non-executive Director 63,500 38,500
---------------- ---------------------------------- ----------- ------------------
Non-executive Director (left
K Sargeant 7 December 2021) - 10,000
---------------- ---------------------------------- ----------- ------------------
Non-executive Director (left
B Ratzke 7 December 2021) - 10,000
---------------- ---------------------------------- ----------- ------------------
G P Hooper Non-executive Director (joined 35,498 -
1 April 2022)
---------------- ---------------------------------- ----------- ------------------
J Ward Non-executive Director (joined - -
1 April 2022)
---------------- ---------------------------------- ----------- ------------------
There were no other changes in Directors' beneficial
shareholdings between 30 September 2022 and 25 January 2023.
* Includes spouses' holdings
Share options
Details of the interests of Directors, who served during the
year, in options over ordinary shares are as follows:
Exercise At Granted Exercised Lapsed At
price 1 October during during during 30 September
per share 2021 the the year the year 2022
year
Number Number Number Number Number
T N Anderson (a) 58.0p 25,000 - - - 25,000
T D Gearey (b) 156.5p 18,000 - - 18,000 -
------------ --------- ----------- ----------- ---------------
N C Howlett (a) 58.0p 25,000 - 25,000 - -
------------ --------- ----------- ----------- ---------------
K A Ritchie (a) 58.0p 50,000 - 50,000 - -
M J Norris (c) 138.5p 150,000 - - 150,000 -
------------ --------- ----------- ----------- ---------------
C V Isom (c) 138.5p 50,000 - - - 50,000
------------ --------- ----------- ----------- ---------------
A C French (d) 95.0p - 150,000 - - 150,000
No other directors had interests in options over shares during
the year.
There have been no changes to the number of share options held
by Directors between 30 September 2022 and 25 January 2023.
Share options
Share options are exercisable between the following dates:
(a) 15 January and 15 January 2024
2017
(b) 30 January and 30 January 2028
2021
(c) 15 July 2024 and 15 July 2031
(d) 15 June 2025 and 15 June 2032
The Directors may only exercise share options if the growth in
the earnings per share of the Company over any period of three
consecutive financial years of the Company following the date of
grant, exceeds the growth in the retail price index over the same
period by at least 9 per cent.
At 30 September 2022 the market price of the Company's shares
was 81p. The range during the year was 75p to 115p.
Approval
The Directors' Remuneration Report was approved by the
Remuneration Committee on 25 January 2023 and signed on its behalf
by:
J Ward
Remuneration Committee Chair
Corporate Governance Report
Chair's Introductory Statement
As noted in our ESG report we present the Corporate Governance
Report for the last financial year. As I have said in the past, we
take our corporate governance responsibilities very seriously. We
continue to apply the Quoted Companies Alliance Corporate
Governance Code ("QCA Code") as this fits more naturally with our
listing on the AIM Market. The QCA Code is available from the QCA
and it involves us following ten general principles and ensuring
that a number of minimum disclosure requirements are made in the
Annual Report or on the Company's website,
www.titon.com/uk/investors/ . The website also contains more
details of the governance disclosures. It is then up to us to
determine how the ten principles will be applied.
As shareholders will be aware a number of Board changes have
taken place during the year as part of a process to strengthen the
Board and to allow the Board to focus on delivering the Group's
strategy and financial performance while ensuring that operational
matters are managed at the level of the main subsidiary.
K A Ritchie
Chair
Compliance with QCA Code
The Board is accountable to the Company's shareholders for good
corporate governance and the Company's website sets out how the 10
principles identified in the QCA Code are applied by the Company.
Titon's business approach is based on openness and high levels of
accountability and there is a commitment to high standards of
corporate governance throughout the Group. With an international
presence, the Group acts in accordance with the national laws of
the various countries in which it operates and encourages the
highest standards of business practice and procedure.
I am confident that the goals and strategy that we have set for
our business have been followed during the year under review. As
noted above we have certainly had some difficult times during the
year but we have continued to treat our employees fairly, to invest
in research and development and to communicate openly and honestly
with our shareholders, to highlight three of our specific
goals.
The Board seeks to instil a healthy corporate culture in all of
its dealings with its stakeholders and believes that Titon is
regarded by those stakeholders in a positive light and will meet
its obligations in a fair and transparent way. The Board
acknowledges that there have been some challenges in meeting
customer demands during the year due to supply chain issues and the
implementation of the new ERP system. However, a considerable
amount of senior management time has been spent on trying to
resolve these issues and plans to catch-up with demand are now
bearing fruit.
Please see the Audit Committee Report for a description of the
main features of the internal control process and the risk
management system in relation to the financial reporting process
adopted by the Group. The disclosure of information on significant
shareholdings in the Company is shown in the Directors' Report.
The Directors consider that the Annual Report and Financial
Statements taken as a whole are fair, balanced and understandable
and provide the information necessary for shareholders to assess
the Group's performance, business model and strategy.
The Group consolidated accounts are prepared by the Group
Finance Manager and are reviewed by the Chief Financial Officer and
the Chief Executive. The review includes a detailed inspection of
the accounts of all the constituent companies that comprise the
Group along with the relevant consolidation adjustments and
journals.
Composition and operation of the Board of Directors
As at 30 September 2022 the Board consisted of the Non-executive
Chair, the Chief Executive, the Chief Financial Officer, and four
Non-executive Directors.
The Board as a whole comprises a wealth of skills and experience
from the wide range of activities undertaken by its individual
members, as follows:
Keith Ritchie joined the Company in 2012, having had a 25-year
career in the City of London. He is a member of the Institute of
Chartered Accountants in England and Wales and has extensive
experience of finance, legal, tax and commercial matters. He is
also a Non-executive director of Beama Ltd, the trade association
for the electro-technical manufacturers association and is Chair of
the Ventilation Group, within Beama Ltd. As a result of these
different activities, he continues to utilise the skills gained
over his working career. Keith became Non-executive Chair of the
Board on 1 October 2022 and has a service contract which terminates
at the 2023 Annual General Meeting unless he is re-elected;
Alexandra French joined the Board on 3 May 2022 as Chief
Executive Officer. She was previously at Johnson Matthey, where she
spent 25 years working in a number of commercial, operational,
technical, sales and marketing roles. Alexandra graduated from the
University of Cambridge with a degree in Natural Sciences;
Tyson Anderson has been with the Company since 1993, when he
joined the Marketing team and was elected to the board of Titon
Hardware Limited in 1999. Tyson joined the Board on 1 January 2004
as Marketing Director, was appointed Sales & Marketing Director
on 1 February 2007 and now acts as Business Projects Director in
Titon Hardware Limited. Tyson was appointed as a Non-executive
Director and Deputy Chair in April 2022. In his role as Deputy
Chair he has a service contract which terminates at the 2023 Annual
General Meeting unless he is re-elected.
Carolyn Isom joined Titon in December 2019 as Finance Director
of Titon Hardware and was appointed to the Titon Holdings Board as
CFO in December 2021. She is ACCA qualified and has worked for a
number of companies in the construction sector.
Nicholas Howlett joined Titon in 1991 and has held a number of
positions within the Group since then. He was appointed to the
Board in 2002 and became a Non-executive Director with effect from
1 October 2017. He has a service contract which terminates at the
2023 Annual General Meeting unless he is re-elected. Nick has
carried out many roles for Titon, including Production Director at
the Haverhill factory, head of Research & Development and then
Managing Director of Ventilation Systems in the UK and Europe. Nick
works closely with UK trade associations involved in the
ventilation industry and on the impact of building regulations and
other Government laws both for Titon and the wider industry;
Jeff Ward joined the Board of Titon on 1 April 2022. Jeff is
currently CEO of Guardian Fall, one of the largest independent
height safety companies in the world. He was previously CEO of
Centurion Safety Products from December 2015 until July 2020 and
before then held a number of leadership roles in hardware and
safety businesses where he was responsible for a range of
activities, including sales, marketing, supply chain and strategy.
Jeff holds an MBA from Warwick Business School and also serves as a
Director of the British Safety Industry Federation. Jeff has a
service contract which terminates at the 2023 Annual General
Meeting unless he is re-elected;
Paul Hooper joined the Board of Titon on 1 April 2022. Paul is
currently Chief Executive of The Alumasc Group plc, a position he
has held since April 2003. Alumasc is a UK-based supplier of
sustainable building products and solutions. He joined Alumasc in
April 2001 as Group Managing Director. His earlier career included
a first Managing Director role with BTR plc in 1992. He
subsequently joined Williams Holdings plc in Special Operations,
implementing acquisitions in Europe and North America, prior to
joining Rexam PLC as a Divisional Managing Director with
responsibility for operations in Europe and South East Asia. Paul
holds an MBA from Cranfield School of Management. Paul has a
service contract which terminates at the 2023 Annual General
Meeting unless he is re-elected;
All Executive Directors are subject to annual appraisals of
their performance and membership of relevant board committees, as
appropriate, during the financial year. This takes the form of a
review of the targets and objectives for the period, a meeting with
the appraiser and the setting of targets and objectives for the
current year. It also includes a process whereby a failure to meet
the targets is discussed and changes are agreed to improve
performance. A continuing failure to meet targets or performance
could lead ultimately to dismissal. The Non-executive Directors
also provide feedback and appraisal of the Executive Directors on
an ad hoc basis, and this is included in the appraisals of the
relevant individuals.
The Non-executive Chair has a range of responsibilities to
perform including, inter alia, the proper functioning of the Board
of Directors and over-seeing the strategic development of the
Company and Group. The Chief Executive has a specific range of
responsibilities including setting the strategic development of the
Group, the day-to-day management of the Group and implementing the
strategy agreed by the Board. The five current Non-executive
Directors provide a range of skills and wide experience to the
Group alongside the necessary independence, as required under
principle 5, as follows:
1. Mr N C Howlett is deemed to be independent for the purposes
of the Code despite his previous service and role as an executive
director of the Company due to his independence of character and
judgment;
2. Mr T N Anderson is not deemed to be independent as he is a
significant shareholder and has an existing service contract with a
Group subsidiary;
3. Mr G P Hooper is deemed to be independent for the purposes of
the Code as he has no previous links with the Company;
4. Mr J Ward is deemed to be independent for the purposes of the
Code as he has no previous links with the Company.
5. Mr K A Ritchie is not deemed to be independent due to his
previous service and role as an executive director of the Company
and his significant shareholding.
The Board has a schedule of matters specifically reserved to it
for decision including major capital expenditure decisions,
business acquisitions and disposals and the setting of treasury
policy. This also includes matters such as material financial
commitments, commencing or settling major litigation and
appointments to main and subsidiary company boards. The Executive
Directors are involved with day-to-day matters arising and the size
of the Group allows the Board to have rapid access to any issues
which arise in dealings with stakeholders.
Scheduled Board meetings in 2022 took place monthly with further
ad hoc meetings arranged as necessary. To enable the Board to
function effectively and Directors to discharge their
responsibilities, full and timely access is given to all relevant
information. In the case of Board meetings, this consists of
comprehensive management reporting information and discussion
documents regarding specific matters. All directors commit
sufficient time to the Group to discharge their responsibilities:
the executive directors on a full-time basis, the Non-executive
Directors, as required by the needs of the business.
The individual attendance by Executive Directors and
Non-executive Directors at the Board and principal Board Committee
Meetings held during the financial year is shown in the table
below.
Main Remuneration Audit Nominations
Board Committee Committee Committee
Total meetings held 10 1 3 2
---------------------- -------- -------------- ------------ -------------
K A Ritchie 10 1 3 2
---------------------- -------- -------------- ------------ -------------
M J Norris 6 - - -
---------------------- -------- -------------- ------------ -------------
T N Anderson 10 - - -
---------------------- -------- -------------- ------------ -------------
T D Gearey 6 - - -
---------------------- -------- -------------- ------------ -------------
C V Isom 10 - 3 -
---------------------- -------- -------------- ------------ -------------
A C French 4 - - -
---------------------- -------- -------------- ------------ -------------
N C Howlett 10 1 - 2
---------------------- -------- -------------- ------------ -------------
K Sargeant 2 - - -
---------------------- -------- -------------- ------------ -------------
J N Anderson 6 - - -
---------------------- -------- -------------- ------------ -------------
B Ratzke 2 - - -
---------------------- -------- -------------- ------------ -------------
G P Hooper 4 - 2 -
---------------------- -------- -------------- ------------ -------------
J Ward 3 - - -
---------------------- -------- -------------- ------------ -------------
There is an agreed procedure for Directors to take independent
professional advice if necessary and at the Company's expense. This
is in addition to the access which every Director has to the
Company Secretary. The Company Secretary is charged by the Board
with ensuring that Board procedures are followed.
When new members are appointed to the Board, they are provided
with advice from the Company Secretary in respect of their role and
duties as a public company director. Furthermore, all Directors
have ongoing access to the Company Secretary for advice during the
course of their appointment.
Appointments to the Board of both Executive and Non-executive
Directors are considered by the Nominations Committee for
endorsement by the Board as a whole.
Any Director appointed during the year is required, under the
provisions of the Company's Articles of Association, to retire and
seek election by the shareholders at the next Annual General
Meeting. The Articles of Association also require that one third of
the Directors retire by rotation each year and seek re-election at
the Annual General Meeting. The Directors required to retire are
those in office longest since their previous re-election and in
practice this means that each Director retires at least every three
years, in accordance with the requirements of the Code. It is the
Company's practice that all of the Non-executive Directors will
seek re-election at each Annual General Meeting.
All of the Directors retire at the next AGM and being eligible,
offer themselves for re-election.
A statement of Directors' interests and copies of their service
contracts are available for inspection during usual business hours
at the registered office of the Company, on any weekday (excluding
public holidays), and will be available at the place of the Annual
General Meeting for at least fifteen minutes prior to and during
the meeting.
The Remuneration Committee
The Remuneration Committee Report is set out on pages 33 to 36.
The Remuneration Committee's terms of reference, established by the
Board, are to:
-- determine and to keep under review the Group's policy on remuneration;
-- determine the basic salaries and non-cash emoluments payable
to all Executive Directors, including Executive Directors of
subsidiary Group companies, giving due consideration to individual
responsibility and performance and to salaries paid to Executive
Directors of similar companies in comparable business sectors;
-- select the performance targets for the Executive Directors' bonus arrangements;
-- select the performance conditions relating to the Group's
Share Option Schemes. Such performance conditions to be aimed to
align Directors' interests to shareholder value;
-- make recommendations to the Board of Directors on other
matters relating to remuneration in the Group; and
-- prepare an annual report on remuneration to the Company's
shareholders for approval by the Board for submission to a vote of
shareholders at the Company's Annual General Meeting and to advise
the Board if it believes that, in any year, there are particular
matters relating to remuneration which should be put to the
Company's shareholders.
Nominations Committee
The Nominations Committee is responsible for proposing
candidates as Directors of Titon Holdings Plc for endorsement by
the Board. The selection of suitable candidates will be based on
the suitability of the person for the position regardless of age,
ethnicity or gender. Candidates may be either internal or external
and executive search consultants may be used in the process. The
Nominations Committee met a number of times during the year to
recruit the new Non-executive Directors and the new Chief
Executive. The Nominations Committee at 30 September 2022 comprised
Mr N C Howlett, Mr J Ward and Mr G P Hooper.
Communications with shareholders
The Board recognises the importance of communications with
shareholders. The Strategic Report on pages 8 to 26 gives a
detailed review of the business, and there is regular dialogue with
institutional shareholders at the time of the Group's preliminary
announcement of the year end results and at the half year. The main
contact with shareholders is through the Chair or Chief
Executive.
The Group's results and other announcements are published on the
London Stock Exchange RNS service and on the Company's website.
The Board uses the Annual General Meeting to communicate with
private and institutional investors and welcomes their
participation.
The Corporate Governance Report was approved by the Board on 25
January 2023 and signed on its behalf by:
K A Ritchie
Chair
Audit Committee Report
The Audit Committee reports to the Board on matters concerning
the Group's internal financial controls, financial reporting and
risk management systems, identifying any matters in respect of
which it considers that action or improvement is needed and making
recommendations as to the steps to be taken.
Composition of the Audit Committee
The Audit Committee is appointed by the Board for a period of
three years and comprised Mr K A Ritchie ACA who has financial
reporting experience and Mr G P Hooper, who has extensive
accounting experience from his career and position as Chief
Executive of The Alumasc Group Plc. I confirm that the Titon Audit
Committee continues to have competence relevant to the sector in
which the Company operates.
Role of the Audit Committee
The Audit Committee operates within defined terms of reference
and its main functions are:
-- to monitor the internal financial control and risk management
systems on which the Group is reliant;
-- to consider whether there is a need for the Group to have its own internal audit function;
-- to monitor the integrity of the Group's financial statements
and formal announcements relating to the Group's financial
performance, reviewing significant financial reporting judgements
contained in them;
-- to review arrangements by which staff may, in confidence,
raise concerns about possible improprieties in matters of financial
reporting or any other matter;
-- to meet the independent Auditor of the Group to review their
proposed audit programme of work and the subsequent Audit Report
and to assess the effectiveness of the audit process and the levels
of fees paid in respect of both audit and non-audit work;
-- to make recommendations to the Board in relation to the
appointment, re-appointment or removal of the Auditor, and to
negotiate their remuneration and terms of engagement on audit and
non-audit work; and
-- to monitor and review annually the external Auditor's
independence, objectivity, effectiveness, resources and
qualification.
Review of financial statements and risks identified
Financial statements issued by the Company need to be fair,
balanced, and understandable. The Audit Committee reviews the
Annual Report as a whole and makes recommendations to the Board.
The Audit Committee has advised the Board that, in its opinion, the
Annual Report and Financial Statements are fair, balanced and
understandable and provides the information necessary for
shareholders to assess the Company's position and performance,
business model and strategy. The Company's unaudited interim
results are also reviewed by the Audit Committee prior to their
publication.
The Audit Committee assesses annually whether it is appropriate
to prepare the Group's financial statements on a going concern
basis and makes its recommendation to the Board. The Board's
conclusions are set out in the Directors' Report. As noted in the
Strategic Report and the Directors' Report a considerable amount of
work has been carried out to assess the Group's financial position
as a result of the pandemic. The Audit Committee has been fully
involved in all of the financial forecasting that has been
performed and the cash management steps which have been taken and
has made a recommendation to the Board that the Group should
continue to prepare the financial statements on a going concern
basis.
In planning its own work, and reviewing the audit plan of the
Auditors, the Audit Committee takes account of the most significant
issues and risks, both operational and financial, likely to impact
on the Group's financial statements.
The Committee considers that the timing of revenue recognition
is a significant area of risk to accurate financial reporting and
ensures that necessary credit note provisions and warranty
provisions are made. In relation to activities in South Korea,
revenues are only recognised once the third-party customer has
accepted the successful installation of either the first fix or the
second fix products into buildings rather than the delivery of such
product from our factory.
The carrying value of the Group's assets is an area where the
Committee places great emphasis. In particular, calculating the
carrying value for the Group's inventory is a vital factor as the
Group has a wide range of product lines that may fluctuate
regularly in terms of their sales volumes. Consequently, every
product line is assessed at the year-end to ensure that accurate
provisions for obsolescence are made.
A significant risk considered by the Committee is the Group's
investment in its South Korean business and in particular the
accuracy of accounting information. The Committee manage this risk
through senior management making regular trips to South Korea
combined with the receipt of detailed monthly management accounts
from South Korea. As noted above travel to South Korea was opened
up during 2022, before then regular video calls with senior
managers were held instead.
Internal audit
The Board believes that due to the size of the business there is
currently no requirement for an internal audit function. This
matter is reviewed annually.
Internal control
The respective responsibilities of the Directors in connection
with the financial statements are set out on pages 28 and 29, and
those of the Auditors are detailed in the Independent Auditor's
Report on page 48.
The Audit Committee is responsible for ensuring that suitable
internal controls systems to prevent and detect fraud and error are
designed and is also responsible for reviewing the effectiveness of
such controls. The Board confirms that there is an ongoing process
for identifying, evaluating and managing the significant risks
faced by the Group in line with the FRC's Guidance on Risk
Management, Internal Control and Related Financial and Business
Reporting, published in September 2014 and the FRC's Guidance on
Audit Committees published in April 2016. This process has been in
place for the year under review and up to the date of approval of
this report and accords with the guidance. In particular, the
Committee has reviewed and updated the process for identifying and
evaluating the significant risks affecting the Group and policies
by which these risks are managed. The risks of any failure of such
controls are identified in a Risk Matrix (set out in the Risk
Management Report on pages 23 to 26) which is regularly reviewed by
the Board and which identifies the likelihood and severity of the
impact of such risks and the controls in place to mitigate the
probability of such risks occurring.
Internal control systems are designed to meet the Group's
particular needs and the risks to which it is exposed. They do not
eliminate the risk of failure to achieve business objectives. The
following are the key components which the Group has in place to
provide effective internal control:
-- an appropriate control environment through the definition of
the organisation structure and authority levels;
-- the identification of the major business risks facing the
Group and the development of appropriate procedures and controls to
manage these risks;
-- a comprehensive budgeting and reporting system with monthly
results compared with budgets and with previous years; and
-- the principal aspects of the Group's internal control
processes used in preparing the Group's consolidated accounts
include second reviews of consolidation workings and Board review
of the composition of the Group's financial information.
The Directors acknowledge that they are responsible for
establishing and maintaining the Group's system of internal control
and risk management and reviewing their effectiveness, which they
have done during the year. Internal control systems are designed to
meet the particular needs of the Group and the risks to which it is
exposed and by their nature can provide reasonable but not absolute
assurance against material misstatement or loss. Appropriate risk
monitoring systems have been in place throughout the year and up to
the date of approval of the Annual Report and have been regularly
reviewed by the Board. The Report on Risk Management sets out the
principal risks identified by the Directors, the potential impact
and the mitigation measures which apply. No significant weaknesses
have been identified in this report by the Directors during the
year.
The Company has a shareholding in an associate company. Controls
within this entity are not reviewed as part of the Company's formal
review processes due to the local delegation of managerial
responsibilities, but instead are reviewed as part of regular
management process.
External audit process
During the year BDO LLP decided to resign as Group Auditors. The
Audit Committee met to discuss this situation and agreed to
recommend the appointment of MacIntyre Hudson LLP for the current
year. The Audit Committee meets at least twice a year with the
Auditor, who provides a planning report in advance of the annual
audit and a report on the annual audit. The Committee has an
opportunity to question and challenge the Auditor in respect of
each of these reports. No significant deficiencies were noted by
the Auditor in respect of the period ended 30 September 2022. The
Committee also discussed the basis of preparation of the going
concern opinion and the key audit matters with the Auditor.
After each audit, the Audit Committee reviews the audit process
and considers its effectiveness.
Auditor assessment and independence
The Group's external auditor is MacIntyre Hudson LLP (MHA), who
replaced BDO LLP during the period.
The Audit Committee reviewed MHA's independence policies and
procedures including quality assurance procedures and it was
confirmed that those policies and procedures were fit for purpose.
Accordingly, the Audit Committee recommends that MHA should be
reappointed as the Group's auditor for the next financial year and
a resolution to that effect will be proposed at the 2023 AGM.
The fees for audit services provided by MHA for 2022 were
GBP143,000 (2021: GBP116,000). The Audit Committee discussed the
non-audit services provided by MHA during the year. The cost of
non-audit services provided by the Auditor for the financial year
ended 30 September 2022 was GBP1,000 (2021: GBP1,450).
K A Ritchie
Audit Committee Chair
25 January 2023
Independent Auditor's Report
To the Members of Titon Holdings Plc
For the purpose of this report, the terms "we" and "our" denote
MHA MacIntyre Hudson in relation to UK legal, professional and
regulatory responsibilities and reporting obligations to the
members of Titon Holdings Plc. For the purposes of the table that
sets out the key audit matters and how our audit addressed the key
audit matters, the terms "we" and "our" refer to MHA MacIntyre
Hudson. The Group financial statements, as defined below,
consolidate the accounts of Titon Holdings Plc and its subsidiaries
(the "Group"). The "Parent Company" is defined as Titon Holdings
Plc. The relevant legislation governing the Parent Company is the
United Kingdom Companies Act 2006 ("Companies Act 2006").
Opinion
We have audited the financial statements for Titon Holdings Plc,
for the year ended 30 September 2022, which comprise:
-- the consolidated income statement;
-- the consolidated statement of comprehensive income;
-- the consolidated statement of financial position;
-- the company statement of financial position;
-- the consolidated statement of changes in equity;
-- the company statement of changes in equity;
-- the Group and Company statement of cash flows; and
-- the notes to the consolidated financial statements 1 to 26.
The financial reporting framework that has been applied in the
preparation of the group and parent company's financial statements
is applicable law and United Kingdom adopted International
Financial Reporting Standards (UK Adopted IFRS).
In our opinion:
-- the financial statements give a true and fair view of the
state of the Group's and the Parent Company's affairs as at 30
September 2022 and of the Group's loss for the year then ended;
-- the financial statements have been properly prepared properly
prepared in accordance with International Financial Reporting
Standards and Interpretations (collectively "IFRSs'") as adopted in
the United Kingdom ("UK-adopted IFRS"); and
-- the financial statements have been prepared in accordance
with the requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our
responsibilities under those standards are further described in the
Auditor's Responsibilities for the Audit of the Financial
Statements section of our report. We are independent of the Group
in accordance with the ethical requirements that are relevant to
our audit of the financial statements in the UK, including the
FRC's Ethical Standard as applied to listed entities, and we have
fulfilled our other ethical responsibilities in accordance with
these requirements. We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a basis for our
opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the
Directors' use of the going concern basis of accounting in the
preparation of the financial statements is appropriate. Our
evaluation of the Directors' assessment of the entity's ability to
continue to adopt the going concern basis of accounting
included:
-- The consideration of inherent risks to the Group's and parent
Company's operations and specifically its business model.
-- The evaluation of how those risks might impact on the Group's available financial resources.
-- Review of the mathematical accuracy of the cashflow forecast model prepared by management and corroboration of key data inputs to supporting documentation for consistency of assumptions used with our knowledge obtained during the audit.
-- Challenging management for reasonableness of assumptions in
respect of the timing and value of cash receipts and payments
included in the cash flow model.
-- Where additional resources may be required the reasonableness
and practicality of the assumptions made by the Directors when
assessing the probability and likelihood of those resources
becoming available.
-- Holding discussions with management regarding future
financing plans, corroborating these where necessary and assessing
the impact on the cash flow forecast.
-- Evaluating the accuracy of historical forecasts against
actual results to ascertain the accuracy of management's
forecasts.
Based on the work we have performed, we have not identified any
material uncertainties relating to events or conditions that,
individually or collectively, may cast significant doubt on the
Group's ability to continue as a going concern for a period of at
least twelve months from when the financial statements are
authorised for issue. Our responsibilities and the responsibilities
of the directors with respect to going concern are described in the
relevant sections of this report.
Overview of our audit approach
Materiality The overall materiality that we used for the
Group financial statements was GBP221,000 (2021:
GBP250,000), which was determined as 1% of turnover
(2021: 1.1% of turnover).
The overall materiality for the Parent Company
financial statements was GBP138,000 (2021: GBP150,000),
which was determined as 2% of net assets (2021:
60 of group materiality).
Performance materiality was set at 60% (2021:
60%) of materiality for both the Group and Parent.
Scope Our Group audit was scoped by obtaining an understanding
of the Group including the Parent Company, and
its environment, including the Group's system
of internal control, and assessing the risks
of material misstatement in the financial statements.
We also addressed the risk of management override
of internal controls, including assessing whether
there was evidence of bias by the directors
that may have represented a risk of material
misstatement.
The Group consists of five reporting components,
four of which were considered to be significant
components: Titon Holdings Plc, Titon Hardware
Ltd, Titon Korea Co. Ltd and Browntech Sales
Co. The significant components were subjected
to full scope audits for the purposes of our
audit report on the Group financial statements.
The other component, Titon Inc. is not deemed
significant and was subject to specific audit
procedures for the purposes of our audit report
on the Group financial statements.
Material subsidiaries were determined based
on:
1) financial significance of the component to
the Group as a whole, and
2) assessment of the risk of material misstatements
applicable to each component.
Our audit scope results in all major operations
of the Group being subject to audit work, with
Titon Korea Co, Ltd and Browntech Sales Co.
being audited by BTI Korea acting on specific
instructions.
----------------------------------------------------------
Key audit matters In addition to the matters described in the
Basis for opinion section, we have determined
the matters described below to be the key audit
matters at Group level to be communicated in
our report:
* Inventory valuation
* Management override of controls
* Revenue recognition
----------------------------------------------------------
First-year We developed a detailed audit transition plan,
audit transition designed to deliver an effective transition
from the Group's predecessor auditor, BDO LLP
("BDO"). Our audit planning and transition commenced
on 25 August 2022, following our appointment.
Our transition activities were performed for
components located in the UK and South Korea,
which included (but were not limited to) reviewing
the Audit Committee meeting minutes and reviewing
BDO's 2021 audit working papers. Our transition
focused on obtaining an understanding of the
Group's system of internal control, evaluating
the Group's accounting policies and areas of
accounting judgement, and meeting with management
across all major divisions.
----------------------------------------------------------
Key Audit Matters
Key Audit Matters are those matters that, in our professional
judgement, were of most significance in our audit of the financial
statements of the current period and include the most significant
assessed risks of material misstatement, whether or not due to
fraud, that we identified. These matters included those which had
the greatest effect on the overall audit strategy, the allocation
of resources in the audit; and directing the efforts of the
engagement team.
These matters were addressed in the context of our audit of the
financial statements as a whole, and in forming our opinion
thereon, and we do not provide a separate opinion on these matters.
We have determined the matters described below to be the Key Audit
Matters to be communicated in our report.
Inventory valuation including provisions
Key audit The inventory held by the Group is a key material
matter description area to the financial statements and accounts for
a large amount of the Group's current assets. Due
to the nature of the Group's operations, the inventory
balance is inherently linked to both the purchases
and the sales cycles.
The Group uses a standard costing model to determine
the value of inventory. This carries a risk of material
misstatement due to the use of key management judgements
in respect of overhead and labour recovery rates.
We consider inventory to be a key audit matter due
to its significant importance to the Group's operations
and its linkage to multiple areas of the financial
statements.
--------------------------------------------------------------
How the Our audit work included, but was not restricted
scope of to the following:
our audit
responded * We have attended the year end stock count including
to the key sample testing of stock items recorded on stock count
audit matter sheets to physical stock location in the warehouses
and vice versa and physically inspecting inventory
held for indication of obsolescence or impairment.
* We have reviewed the inventory listing and stock
physically present in the warehouses for any
slow-moving or obsolete inventory items which require
write off or providing for and then also reviewed and
considered the appropriateness of the provision made
by management, as well as reperforming the
calculations made by management .
* We have performed substantive testing for a sample of
inventory items held at the year end to the original
purchase invoice and also to post year end sales to
ensure inventory is held at the lower of cost and net
realisable value in the financial statements.
* We have obtained and reviewed managements
calculations and key judgements regarding the
standard costing model used and assessed the
appropriateness of the costs included. We have also
sample tested payroll and overhead costs back to
source invoices and documentation to confirm the
accuracy of the figures used.
* We have reviewed the audit working papers completed
by the component auditor to ensure that the work
performed on overseas subsidiaries sufficiently
addresses the risk at group level.
--------------------------------------------------------------
Key observations Based on the outcome of our procedures we identified
no material issues with the valuation of inventory
or the provisions for slow moving, damaged or obsolete
goods.
--------------------------------------------------------------
Management override of controls
Key audit In accordance with ISA 240 (UK) management override
matter description is presumed to be a significant risk.
The ability to override controls puts management
in a unique position to perpetrate or conceal the
effects of fraud. This may take a number of forms
such as falsifying accounting entries in order to
conceal misappropriation of assets or other manipulation
of accounting entries intended to result in the
production of financial statements which give a
misleading view of the entity's financial position
or performance.
--------------------------------------------------------------
How the Our audit work included, but was not restricted
scope of to the following:
our audit
responded * We evaluated the design and implementation of key
to the key controls, in particular high-level management review
audit matter controls.
* We evaluated whether the judgements and decisions
made in determining the accounting estimates included
in the financial statements, even if they are
individually reasonable, indicated a possible bias on
the part of the entity's management that may
represent a risk of material misstatement due to
fraud.
* We utilised our data analytics software to identify
journals deemed to carry the highest risk or fraud or
error. These journals were then queried and the
business rationale confirmed as appropriate.
* We have tested the consolidation workings for
mathematical accuracy and reviewed the consolidation
workings and journals to confirm their
appropriateness.
* We have also reviewed the journals and processes used
and applied with regard to the change in accounting
system which occurred during the year.
--
--------------------------------------------------------------
Key observations No issues have been identified from the audit procedures
performed over management override of controls.
--------------------------------------------------------------
Revenue recognition
Key audit Revenue is one of the most prominent key performance
matter description indicators for the business.
There is a risk that revenue is not recognised in
line with IFRS15 in the appropriate period with
regards to the cut-off of transactions around the
year-end. This is a heightened risk in Korea where
the revenue is recognised over time due to the requirements
to perform a second fix on components fitted, therefore
resulting in a deferral of revenue at the year end.
--------------------------------------------------------------
How the Our audit work included, but was not restricted
scope of to the following:
our audit
responded * We have completed a walkthrough of each of the key
to the key revenue streams from start to finish, documenting
audit matter details of the current internal processes, systems
and controls to better understand them.
* We have completed cut-off testing by selecting a
sample of sales transactions across the various
streams either side of the year end to ensure the
revenue has been accounted for in the correct period.
* Substantive testing has been carried out across the
different income streams by picking samples from
finance system and tracing to the appropriate
supporting documentation.
* We have evaluated the Group's revenue recognition in
the context of the 5-step approach as set out within
IFRS15.
* We have reviewed the audit working papers completed
by the component auditors regarding the method of
revenue recognition, its compliance with the
principles of IFRS15 and consideration of the
adequacy of the work performed.
--------------------------------------------------------------
Key observations W e are satisfied, based on the results of the testing
performed, that the recognition criteria employed
by management is materially consistent with the
requirements of IFRS15.
It is noted that adjustments are made at group level
to ensure income is correctly recognised in light
of IFRS15, these consolidation adjustments have
been confirmed as accurate.
--------------------------------------------------------------
Our application of materiality
The scope of our audit was influenced by our application of
materiality. We set certain quantitative thresholds for
materiality. These, together with qualitative considerations,
helped us to determine the scope of our audit and the nature,
timing and extent of our audit procedures on the individual
financial statement line items and disclosures and in evaluating
the effect of misstatements, both individually and in aggregate on
the financial statements as a whole.
Our definition of materiality considers the value of error or
omission on the financial statements that, individually or in
aggregate, would change or influence the economic decision of a
reasonably knowledgeable user of those financial statements.
Misstatements below these levels will not necessarily be evaluated
as immaterial as we also take account of the nature of identified
misstatements, and the particular circumstances of their
occurrence, when evaluating their effect on the financial
statements as a whole. Materiality is used in planning the scope of
our work, executing that work and evaluating the results.
Based on our professional judgement, we determined materiality
for the financial statements as a whole as follows:
Group financial statements Parent Company financial
statements
Overall GBP221,000 (2021: GBP250,000) GBP138,000 (2021: GBP150,000)
materiality
--------------------------------- ---------------------------------
How we 1% of turnover (2021: 1.1% 2% of net assets (2021:
determined of turnover) 60% of group materiality)
it
--------------------------------- ---------------------------------
Rationale We consider turnover to The Parent Company is largely
for the be the main measure by a holding company incurring
benchmark which the users of the limited costs and therefore
applied financial statements assess net assets has been considered
the financial performance the most appropriate benchmark
and success of the Group for materiality.
and is a Key Performance
Indicator identified by
management. Therefore,
we consider this to be
the most appropriate benchmark
for Group materiality.
--------------------------------- ---------------------------------
Performance materiality is the application of materiality at the
individual account or balance level, set at an amount to reduce, to
an appropriately low level, the probability that the aggregate of
uncorrected and undetected misstatements exceeds materiality for
the financial statements as a whole.
We set performance materiality at a level lower than materiality
to reduce the probability that, in aggregate, uncorrected and
undetected misstatements exceed the materiality for the financial
statements as a whole. Group and the Parent Company performance
materiality was set at 60% (2021: 60%) of Group and Parent Company
materiality respectively for the 2022 audit being GBP132,600 for
the Group and GBP82,800 for the Parent Company. In determining
performance materiality, we considered our understanding of the
entity, including the quality of the control environment and
whether we were able to rely on controls, and the nature, volume
and size of uncorrected misstatements in the previous period.
We agreed with management that we would report to them all audit
differences in excess of GBP11,050 (2021: GBP5,000) for the Group
and GBP6,850 (2021: GBP5,000) for the Company as well as
differences below that threshold that, in our view, warranted
reporting on qualitative grounds. We also report to management on
disclosure matters that we identified when assessing the overall
presentation of the financial statements.
Overview of the scope of our audit
Our assessment of audit risk, evaluation of materiality and our
determination of performance materiality sets our audit scope for
each company within the Group. Taken together, this enables us to
form an opinion on the consolidated financial statements. This
assessment takes into account the size, risk profile, organisation
/ distribution and effectiveness of group-wide controls, changes in
the business environment and other factors such as recent internal
audit results when assessing the level of work to be performed at
each component.
In assessing the risk of material misstatement to the
consolidated financial statements, and to ensure we had adequate
quantitative and qualitative coverage of significant accounts in
the consolidated financial statements, of the 5 reporting
components of the group, 2 of which are based in the UK and audited
by the Group audit team, being Titon Holdings Plc and Titon
Hardware Ltd, 2 of which are based in South Korea and audited by
BTI Korea being Titon Korea Co. Ltd and Browntech Sales Co. and the
other being Titon Inc. based in the USA.
The audit procedures undertaken covered the following percentage
of the group benchmarks below:
Number of Revenue Total assets Loss before
components tax
-------------- ------------- --------- -------------- -------------
Full scope
audit 4 99% 100% 91%
-------------- ------------- --------- -------------- -------------
Specific
procedures 1 1% 0% 9%
-------------- ------------- --------- -------------- -------------
Total 5 100% 100% 100%
-------------- ------------- --------- -------------- -------------
Other Information
The other information comprises the information included in the
annual report other than the financial statements and our auditor's
report thereon. The Directors are responsible for the other
information contained within the annual report. Our opinion on the
financial statements does not cover the other information and,
except to the extent otherwise explicitly stated in our report, we
do not express any form of assurance conclusion thereon. Our
responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent
with the financial statements, or our knowledge obtained in the
course of the audit, or otherwise appears to be materially
misstated. If we identify such material inconsistencies or apparent
material misstatements, we are required to determine whether this
gives rise to a material misstatement in the financial statements
themselves. If, based on the work we have performed, we conclude
that there is a material misstatement of this other information, we
are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act
2006
In our opinion, based on the work undertaken in the course of
the audit:
-- the information given in the Strategic Report and the
Directors' Report for the financial year for which the financial
statements are prepared is consistent with the financial
statements; and
-- the Strategic Report and the Directors' Report have been
prepared in accordance with applicable legal requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the Group and
Parent Company and their environment obtained in the course of the
audit, we have not identified material misstatements in the
Strategic Report or the Directors' Report.
We have nothing to report in respect of the following matters in
relation to which the Companies Act 2006 requires us to report to
you if, in our opinion:
-- adequate accounting records have not been kept, or returns
adequate for our audit have not been received from branches not
visited by us; or
-- the financial statements are not in agreement with the
accounting records and returns; or
-- certain disclosures of Directors' remuneration specified by
law are not made; or
-- we have not received all the information and explanations we
require for our audit.
Responsibilities of the Directors
As explained more fully in the Directors' responsibilities
statement, as set out on pages 28 to 29, the Directors are
responsible for the preparation of the financial statements and for
being satisfied that they give a true and fair view, and for such
internal control as the Directors determine is necessary to enable
the preparation of financial statements that are free from material
misstatement, whether due to fraud or error. In preparing the
financial statements, the Directors are responsible for assessing
the Group's and the Parent Company's ability to continue as a going
concern, disclosing as applicable, matters related to going concern
and using the going concern basis of accounting unless the
Directors either intend to liquidate the Group or the Parent
Company or to cease operations, or have no realistic alternative
but to do so.
Auditor responsibilities for the audit of the financial
statements
Our objectives are to obtain reasonable assurance about whether
the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an
auditor's report that includes our opinion. Reasonable assurance is
a high level of assurance but is not a guarantee that an audit
conducted in accordance with ISAs (UK) will always detect a
material misstatement when it exists. Misstatements can arise from
fraud or error and are considered material if, individually or in
the aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of these financial
statements.
Irregularities, including fraud, are instances of non-compliance
with laws and regulations. We design procedures in line with our
responsibilities, outlined above, to detect material misstatements
in respect of irregularities, including fraud. The extent to which
our procedures are capable of detecting irregularities, including
fraud, is detailed below.
Because of the inherent limitations of an audit, there is a risk
that we will not detect all irregularities, including those leading
to a material misstatement in the financial statements or
non-compliance with regulation. This risk increases the more that
compliance with a law or regulation is removed from the events and
transactions reflected in the financial statements, as we will be
less likely to become aware of instances of non-compliance. The
risk is also greater regarding irregularities occurring due to
fraud rather than error, as fraud involves intentional concealment,
forgery, collusion, omission or misrepresentation.
The specific procedures for this engagement and the extent to
which these are capable of detecting irregularities, including
fraud is detailed below:
-- Enquiry of management to identify any instances of
non-compliance with laws and regulations.
-- Enquiry of management around actual and potential litigation
and claims.
-- Enquiry of management to identify any instances of known or
suspected instances of fraud.
-- Discussing among the engagement team regarding how and where
fraud might occur in the financial statements and any potential
indicators of fraud.
-- Reviewing minutes of meetings of those charged with
governance.
-- Performing audit work over the risk of management override of
controls, including testing of journal entries and other
adjustments for appropriateness, evaluating the business rationale
of significant transactions outside the normal course of business,
and reviewing accounting estimates for bias.
-- Reviewing financial statement disclosures and testing to
supporting documentation to assess compliance with applicable laws
and regulations.
-- Challenging assumptions and judgements made by management in
their significant accounting estimates, in particular with respect
to provisions for claims incurred but not reported.
A further description of our responsibilities for the audit of
the financial statements is located on the Financial Reporting
Council's website at: www.frc.org.uk/auditorsresponsibilities .
www.frc.org.uk/auditorsresponsibilities
This description forms part of our auditor's report.
Use of our report
This report is made solely to the Company's members, as a body,
in accordance with Chapter 3 of Part 16 of the Companies Act 2006.
Our audit work has been undertaken so that we might state to the
Company's members those matters we are required to state to them in
an auditor's report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to
anyone other than the Company and the Company's members as a body,
for our audit work, for this report, or for the opinions we have
formed.
Andrew Moyser FCA FCCA (Senior Statutory Auditor)
For and on behalf of MHA MacIntyre Hudson, Statutory Auditor
London
25 January 2023
Consolidated Income Statement
for the year ended 30 September 2022
2022 2021
Note GBP'000 GBP'000
Revenue 3 22,087 23,412
Cost of sales (16,270) (16,070)
Grant Income 4 - 8
------------------------------------------ ------ ---------- ------------
Gross profit 5,817 7,350
Distribution costs (1,393) (1,144)
Administrative expenses (4,586) (4,521)
Administrative expenses - exceptional 26 (349) -
Research and development expenses (629) (582)
Other income 21 16
------------------------------------------ ------ ---------- ------------
Operating (loss) / profit (1,119) 1,119
Finance income 5 9 -
Finance expense 5 (16) (16)
Share of post-tax (loss) / profit
from associate 13 173 (28)
------------------------------------------ ------ ---------- ------------
(Loss) / profit before tax 6 (953) 1,075
Income tax credit / (expense) 7 410 (72)
------------------------------------------ ------ ---------- ------------
(Loss) / profit after income tax (543) 1,003
------------------------------------------ ------ ---------- ------------
Attributable to:
Equity holders of the parent (436) 1,028
Non-controlling interest (107) (25)
------------------------------------------ ------ ---------- ------------
(Loss) / profit for the year (543) 1,003
------------------------------------------ ------ ---------- ------------
(Loss) / earnings per share attributed
to equity holders of the parent:
Basic 9 (3.89p) 9.24p
Diluted 9 (3.89p) 9.18p
Consolidated Statement of Comprehensive Income
for the year ended 30 September 2022
2022 2021
GBP'000 GBP'000
(Loss) / profit for the year (543) 1,003
Other comprehensive income - items
which may be reclassified to profit
or loss in subsequent periods:
Exchange difference on retranslation
of net assets of overseas operations 112 (284)
Total comprehensive income for the year (431) 719
Attributable to:
Equity holders of the parent (333) 793
Non-controlling interest (98) (74)
----------------------------------------------------------------------------------------------------------- --------- ---------
(431) 719
----------------------------------------------------------------------------------------------------------- --------- ---------
The notes on pages 56 to 84 form part of these financial
statements.
Consolidated Statement of Financial Position
At 30 September 2022
2022 2021
Note GBP'000 GBP'000
Assets
Property, plant and equipment 10 3,321 3,476
Right-of-use assets 10 553 546
Intangible assets 11 915 925
Investments in associates 13 2,909 2,681
Deferred tax assets 16 697 278
Total non-current assets 8,395 7,906
------------- ---------
Inventories 14 6,571 5,042
Trade and other receivables 15 4,920 4,224
Cash and cash equivalents 20 1,726 4,794
------------- ---------
Total current assets 13,217 14,060
--------------------------------------- --------- ------------- ---------
Total Assets 21,612 21,966
--------------------------------------- --------- ------------- ---------
Liabilities
Lease liabilities 18 378 402
------------- ---------
Total non-current liabilities 378 402
------------- ---------
Trade and other payables 17 5,051 4,554
Lease liabilities 18 232 193
Total current liabilities 5,283 4,747
--------------------------------------- --------- ------------- ---------
Total Liabilities 5,661 5,149
--------------------------------------- --------- ------------- ---------
Equity
Share capital 19 1,122 1,119
Share premium 19 1,091 1,077
Capital redemption reserve 56 56
Treasury shares 19 - (27)
Foreign exchange reserve 198 96
Retained earnings 13,179 14,093
--------------------------------------- --------- ------------- ---------
Total Equity attributable to equity
holders of the parent 15,646 16,414
--------------------------------------- --------- ------------- ---------
Non-controlling Interest 305 403
--------------------------------------- --------- ------------- ---------
Total Equity 15,951 16,817
--------------------------------------- --------- ------------- ---------
Total Liabilities and Equity 21,612 21,966
--------------------------------------- --------- ------------- ---------
The notes on pages 56 to 84 form part of these financial
statements.
These financial statements were approved and authorised for
issue by the Board on 25 January 2023 and signed on its behalf
by:
K A Ritchie
Chair
Company Statement of Financial Position
at 30 September 2022
Company No. 01604952
2022 2021
Note GBP'000 GBP'000
Assets
Property and motor vehicles 10 1,773 1,836
Investments in subsidiaries 12 554 554
Investments in associates 13 225 225
Deferred tax assets 16 4 -
--------- ---------
Total non-current assets 2,556 2,615
--------- ---------
Trade and other receivables 15 4,769 3,818
Cash and cash equivalents 20 4 1,324
--------- ---------
Total current assets 4,773 5,142
------------------------------------------------------------------------------------ ---- --------- ---------
Total Assets 7,329 7,757
------------------------------------------------------------------------------------ ---- --------- ---------
Liabilities
Deferred tax 16 - 274
--------- ---------
Total non-current liabilities - 274
--------- ---------
Trade and other payables 17 135 168
--------- ---------
Total current liabilities 135 168
------------------------------------------------------------------------------------ ---- --------- ---------
Total Liabilities 135 442
------------------------------------------------------------------------------------ ---- --------- ---------
Equity
Share capital 19 1,122 1,119
Share premium account 19 1,091 1,077
Capital redemption reserve 56 56
Treasury shares 19 - (27)
Retained earnings 4,925 5,090
------------------------------------------------------------------------------------ ---- --------- ---------
Total Equity 7,194 7,315
------------------------------------------------------------------------------------ ---- --------- ---------
Total Liabilities and Equity 7,329 7,757
------------------------------------------------------------------------------------ ---- --------- ---------
As permitted by section 408(3) of the Companies Act 2006 the
Company has elected not to present its own Statement of Profit and
Loss for the year. Titon Holdings Plc reported a profit before tax
for the financial year ended 30 September 2022 of GBP35,000 (2021:
GBP243,000). The notes on pages 56 to 84 form part of these
financial statements.
These financial statements were approved and authorised for
issue by the Board on 25 January 2023 and signed on its behalf
by:
K A Ritchie
Chair
Consolidated Statement of Changes in Equity
at 30 September 2022
Share Share Capital Foreign Treasury Retained Total Non- Total
Capital premium redemption exchange shares earnings controlling Equity
reserve reserve interest
GBP'000 GBP'000 GBP'000 GBP'000 GBP000 GBP'000 GBP'000 GBP'000 GBP'000
At 30
September
2020 1,113 1,049 56 327 (27) 13,425 15,943 868 16,811
---------------- --------- --------- ------------ ---------------- ---------- ---------- --------- ------------- ---------
Translation
differences
on overseas
operations - - - (231) - (4) (235) (49) (284)
Profit for the
year - - - - - 1,028 1,028 (25) 1,003
---------------- --------- --------- ------------ ---------------- ---------- ---------- --------- ------------- ---------
Total
Comprehensive
Income for
the
year - - - (231) - 1,024 793 (74) 719
---------------- --------- --------- ------------ ---------------- ---------- ---------- --------- ------------- ---------
Dividends paid - - - - - (390) (390) - (390)
Dividends paid
to NCI in
subsidiary - - - - - - - (391) (391)
Share-based
payment
expense - - - - - 34 34 - 34
Exercise of
share
options 6 28 - - - 34 - 34
At 30
September
2021 1,119 1,077 56 96 (27) 14,093 16,414 403 16,817
---------------- --------- --------- ------------ ---------------- ---------- ---------- --------- ------------- ---------
Translation
differences
on overseas
operations - - - 102 1 103 9 112
Loss for the
year - - - - - (436) (436) (107) (543)
---------------- --------- --------- ------------ ---------------- ---------- ---------- --------- ------------- ---------
Total
Comprehensive
Income for
the
year - - - 102 - (435) (333) (98) (431)
---------------- --------- --------- ------------ ---------------- ---------- ---------- --------- ------------- ---------
Dividends paid - - - - - (502) (502) - (502)
Dividends paid - - - - - - - - -
to NCI in
subsidiary
Share-based
payment
expense - - - - - 23 23 - 23
Exercise of
share
options 3 14 - - - 17 - 17
Transfer of
treasury
shares - - - 27 - 27 - 27
At 30
September
2022 1,122 1,091 56 198 - 13,179 15,646 305 15,951
---------------- --------- --------- ------------ ---------------- ---------- ---------- --------- ------------- ---------
The notes on pages 56 to 84 form part of these financial
statements.
The following describes the nature and purpose of each reserve
within equity:
Reserve Description and purpose
Share capital Nominal value of the issued share capital of the
Share premium Company
Premium on shares issued in excess of nominal
value
Capital redemption Amounts transferred from share capital on redemption
of issued shares
Treasury shares Weighted average cost of own shares held in Treasury
Foreign exchange Cumulative gains/losses arising on retranslating
reserve the net assets of overseas operations into Sterling
Retained earnings All other net gains and losses and transactions
with owners (e.g. dividends) not recognised elsewhere
Non-controlling Interest in subsidiaries not owned by Titon Holdings
interest Plc shareholders
Company Statement of Changes in Equity
at 30 September 2022
Share Share Capital Treasury Retained Total
Capital premium redemption shares earnings Equity
reserve
GBP'000 GBP'000 GBP'000 GBP000 GBP'000 GBP'000
At 30 September
2020 1,113 1,049 56 (27) 5,203 7,394
----------------------- ---------- ---------- ------------- ---------- ----------- ---------
Profit for the year - - - - 243 243
----------------------- ---------- ---------- ------------- ---------- ----------- ---------
Total Comprehensive
Income for the year - - - - 243 243
----------------------- ---------- ---------- ------------- ---------- ----------- ---------
Share-based payment
expense - - - - 34 34
----------------------- ---------- ---------- ------------- ---------- ----------- ---------
Dividends paid - - - - (390) (390)
----------------------- ---------- ---------- ------------- ---------- ----------- ---------
Exercise of Share
options 6 28 - - - 34
----------------------- ---------- ---------- ------------- ---------- ----------- ---------
At 30 September
2021 1,119 1,077 56 (27) 5,090 7,315
----------------------- ---------- ---------- ------------- ---------- ----------- ---------
Profit for the year - - - - 314 314
----------------------- ---------- ---------- ------------- ---------- ----------- ---------
Total Comprehensive
Income for the year - - - - 314 314
----------------------- ---------- ---------- ------------- ---------- ----------- ---------
Share-based payment
expense - - - - 23 23
----------------------- ---------- ---------- ------------- ---------- ----------- ---------
Dividends paid - - - - (502) (502)
----------------------- ---------- ---------- ------------- ---------- ----------- ---------
Exercise of Share
options 3 14 - - - 17
----------------------- ---------- ---------- ------------- ---------- ----------- ---------
Transfer of Treasury
shares - - - 27 - 27
----------------------- ---------- ---------- ------------- ---------- ----------- ---------
At 30 September
2022 1,122 1,091 56 - 4,925 7,194
----------------------- ---------- ---------- ------------- ---------- ----------- ---------
The notes on pages 56 to 84 form part of these financial
statements.
The following describes the nature and purpose of each reserve
within equity:
Reserve Description and purpose
Share capital Nominal value of the issued share capital
of the Company
Share premium Premium on shares issued in excess of nominal
value
Capital redemption Amounts transferred from share capital
on redemption and cancellation of issued
shares
Treasury shares Weighted average cost of own shares held
in Treasury
Retained earnings All other net gains and losses and transactions
with owners (e.g. dividends) not recognised
elsewhere
Group and Company Statement of Cash Flows
for the year ended 30 September 2022
Group Company
2022 2021 2022 2021
Note GBP'000 GBP'000 GBP'000 GBP'000
Cash generated from operating activities
(Loss) / profit before tax (953) 1,075 35 (99)
Depreciation of property, plant
& equipment 10 518 479 64 68
Depreciation of right-of-use assets 10 232 164 - -
Amortisation of intangible assets 11 298 240 - -
Profit on sale of plant & equipment (19) (7) - (1)
Share based payment expense - equity
settled 23 23 34 23 34
Finance income 5 (9) - (1) -
Finance costs 5 16 16 - -
Share of associate's post-tax (profit)
/ (loss) 13 (173) 28 - -
------------------------------------------- ----- --------- --------- --------- ---------
(67) 2,029 121 2
(Increase) in inventories (1,529) (640) - -
(Increase) / decrease in receivables (696) (428) (952) 1
Increase / (decrease) in payables
and other current liabilities 498 206 (32) (715)
Cash generated (used in) / generated
by operations (1,794) 1,167 (863) (712)
------------------------------------------- ----- --------- --------- --------- ---------
Income taxes paid - (22) - -
------------------------------------------- ----- --------- --------- --------- ---------
Net cash (used in) / generated
by operating activities (1,794) 1,145 (863) (712)
------------------------------------------- ----- --------- --------- --------- ---------
Cash flows from investing activities
Purchase of plant & equipment 10 (386) (502) - -
Purchase of intangible assets 11 (288) (412) - -
Proceeds from sale of plant & equipment 44 25 - 6
Finance income 5 9 - 1 -
Dividends received from subsidiary
companies - - - 385
------------------------------------------- ----- --------- --------- --------- ---------
Net cash (used in) / generated
by investing activities (621) (889) 1 391
------------------------------------------- ----- --------- --------- --------- ---------
Cash flows from financing activities
Dividends paid to equity shareholders
of the parent 8 (502) (390) (502) (390)
Dividends paid to non-controlling
shareholders of a subsidiary 24 - (391) - -
Payment of lease liability 18 (226) (198) - -
Finance costs 5 (16) (16) - -
Exercise of share options 23 44 34 44 34
Net cash used in financing activities (700) (961) (458) (356)
------------------------------------------- ----- --------- --------- --------- ---------
Net decrease in cash (3,115) (705) (1,320) (677)
Effect of exchange rate changes 47 (73) - -
Cash at beginning of the year 4,794 5,572 1,324 2,001
Cash and Cash Equivalents at end
of the year 1,726 4,794 4 1,324
------------------------------------------- ----- --------- --------- --------- ---------
The notes on pages 56 to 84 form part of these financial
statements .
Notes to the Consolidated Financial Statements
at 30 September 2022
General information
The consolidated financial statements of the Group for the year
ended 30 September 2022 incorporates Titon Holdings Plc ("the
Company") and its subsidiaries (together referred to as "the
Group").
Titon Holdings Plc shares are publicly traded on the AIM market
of the London Stock Exchange. The nature of the Group's operations
and its principal activities are set out in the Strategic Report on
page 8. The consolidated financial statements were authorised for
release on 25 January 2023.
1 Summary of significant accounting policies
(a) Basis of preparation
Statement of compliance
The Group and Parent Company financial statements have been
prepared in accordance with International Financial Reporting
Standards and Interpretations (collectively "IFRSs'") as adopted in
the United Kingdom ("UK-adopted IFRS").
The principal accounting policies adopted in the preparation of
the financial statements are set out below. The policies have been
consistently applied to all the years presented, unless otherwise
stated.
The consolidated financial statements are presented in GBP and
all values are rounded to the nearest thousand (GBP000), except as
otherwise indicated.
The preparation of financial statements in compliance with
adopted IFRS requires the use of certain critical accounting
estimates. It also requires Group management to exercise judgment
in applying the Group's accounting policies. The areas where
significant judgements and estimates have been made in preparing
the financial statements and their effect are disclosed in note
2.
There were no new or amended standards that were required to be
adopted by the Group in these financial statements. The Group does
not expect any standards issued by the IASB, but not yet effective,
to have a material impact on the group.
Going concern
The financial statements have been prepared on a going concern
basis. In adopting the going concern basis the Directors have
considered potential worst-case scenarios that could have a
material impact on the business and from its other principal risks
set out on pages 23 to 26. Under the worst-case scenario
considered, which is severe and considered highly unlikely, the
Group remains liquid for a period of more than 12 months from the
date of reporting and the Directors therefore believe, at the time
of approving the financial statements that the Group is well placed
to manage its business risks successfully and remains a going
concern. The key facts and assumptions in reaching this
determination are detailed on pages 29 to 30.
Use of judgement and estimates
In the application of the Group's accounting policies,
management is required to make judgements, estimates and
assumptions about the carrying amounts of assets and liabilities
that are not readily apparent from other sources. The estimates and
underlying assumptions are reviewed on an ongoing basis. Revisions
to accounting estimates are recognised in the period in which the
estimate is revised if the revision affects only that period, or in
the period of the revision and future periods if the revision
affects both current and future periods. The key assumptions
concerning the future and other key sources of estimation
uncertainty at the reporting date that have a significant risk of
causing a material adjustment to the carrying amounts of the assets
and liabilities within the next financial year are described under
the relevant notes.
(b) Basis of consolidation
Subsidiaries
The Group's consolidated financial statements incorporate the
financial statements of the Company (Titon Holdings Plc) and the
entities controlled by the Company (its subsidiaries) made up to 30
September 2022. Control exists when the Company is exposed to, or
has rights to, variable returns from its involvement with the
subsidiary and has the ability to affect those returns through its
power over the subsidiary.
Intragroup balances, and any unrealised gains and losses or
income and expenses arising from intragroup transactions, are
eliminated in preparing the financial statements.
Non-controlling interests
A non-controlling interest is the equity in a subsidiary not
attributable, directly or indirectly, to a parent. Non-controlling
interests at the end of reporting period represent the
non-controlling shareholders' portion of the fair values of the
identifiable assets and liabilities of the subsidiary at the
acquisition date and the non-controlling interests' portion of
movements in equity since the date of the combination.
Non-controlling interest is presented within equity, separately
from the parent's shareholders' equity.
Losses within a subsidiary are attributed to the non-controlling
interest even if that results in deficit balance.
Associates
Where the Group has the power to participate in (but not
control) the financial and operating policy decisions of another
entity, it is classified as an associate. Associates are initially
recognised in the Consolidated Statement of Financial position at
cost.
The Group's share of post-acquisition profits and losses is
recognised in the consolidated profit or loss, except that losses
in excess of the Group's investment in the associate are not
recognised unless there is an obligation to make good those losses.
Profits or losses arising on transactions between the Group and its
associates are recognised only to the extent of unrelated
investors' interests in the associate.
The investors' share in the associate's profits or losses
resulting from these transactions is eliminated against the
carrying value of the associate. Any premium paid for an associate
above the fair value of the Group's share of the identifiable
assets, liabilities and contingent liabilities acquired is
capitalised and included in the carrying amount of the associate.
The carrying amount of the investment in associates is subject to
impairment in the same way as goodwill arising on a business
combination (see accounting policy (h)).
Business combinations
The consolidated financial statements incorporate the results of
business using the purchase method. In the Consolidated Statement
of Financial Position, the Group's identifiable assets, liabilities
and contingent liabilities are initially recognised at their fair
values at the acquisition date. The Group's share of the results of
acquired operations are included in the consolidated income
statement from the date on which control is obtained . Foreign
currency
Transactions entered into by group entities in a currency other
than the currency of the primary economic environment in which they
operate (their "functional currency") are recorded at the rates
ruling when the transactions occur. Foreign currency monetary
assets and liabilities are translated at the rates ruling at the
reporting date. Exchange differences arising on the retranslation
of unsettled monetary assets and liabilities are recognised
immediately in the consolidated profit or loss.
On consolidation, the results of overseas operations are
translated into Sterling, which is the presentational currency of
the Company and Group, at rates approximating those ruling when the
transactions took place. All assets and liabilities of overseas
operations are translated at the rate ruling at the balance sheet
date. Exchange differences arising on translating the opening net
assets at opening rate and the results of overseas operations at
actual rate are recognised directly in other comprehensive
income.
Upon disposal of all overseas operations, exchange differences
arising from the translation of the financial statements of foreign
operations are recycled and taken to the consolidated profit or
loss as part of the profit or loss on disposal. The Company has
elected, in accordance with IFRS 1, that in respect of all foreign
operations, any differences that have arisen before 1 October 2004
have been set to zero. Any gain or loss on the subsequent disposal
of those foreign operations would exclude translation differences
that arose before the date of transition to IFRS and include only
subsequent translation differences.
More than 92% (2021: 89%) of sales from the Group's UK business
are invoiced in Sterling.
(c) Property, plant and equipment
Items of property, plant and equipment are stated at cost less
accumulated depreciation and impairment losses.
Cost includes the original purchase price of the asset and the
costs attributable to bringing the asset to its working condition
for intended use. All other repairs and maintenance costs are
recognised in the income statement as incurred.
Freehold land is not depreciated. Depreciation is provided on
all other items of property, plant and equipment to write down the
cost to their residual values over the estimated useful lives. It
is applied at the following rates:
Freehold buildings - 2% per annum straight line
Improvements to leasehold property - 10% to 20% per annum
straight line (or the lease term, is shorter)
Plant and equipment - 10% to 33.3% per annum straight line
Motor vehicles - 25% per annum straight line
The estimated useful lives, residual values and depreciation
methods are reviewed at each year end, with the effect of any
changes in estimates accounted for on a prospective basis.
The gain or loss arising on the disposal of an asset is
determined as the difference between the sales proceeds and the
carrying amount of the asset and is recognised in the statement of
comprehensive income.
The carrying values of tangible property, plant and equipment
are reviewed for impairment when events or changes in circumstances
indicate the carrying value may not be recoverable (see accounting
policy (h)).
The Group also recognises right-of-use assets and lease
liabilities under IFRS 16 (see note 18), for most leases with the
exception of low value assets based on the value of the underlying
asset when new or for short-term leases with a lease term of 12
months or less. Right-of-use assets, which include Property
(factory units and office accommodation), plant and equipment and
motor vehicles are initially measured at an amount equal to the
lease liability, adjusted by the amount of any prepaid or accrued
lease payments, and are depreciated on a straight-line basis to
write off the carrying value of the assets over the contractual
term of each lease.
The carrying values of right-of-use assets are reviewed for
impairment when events, such as a change in the term of the lease,
or in other circumstances indicate the carrying value may not be
recoverable (see accounting policy (h)).
(e) Intangible assets
Intangible assets other than goodwill that are acquired by the
Group are stated at cost less accumulated amortisation and
impairment losses (see accounting policy (h)). Amortisation is
charged to Administrative Expenses within the Consolidated Income
Statement. The gain or loss arising on the disposal of an
intangible asset, other than goodwill, is determined as the
difference between the sales proceeds (where appropriate) and the
carrying amount of the asset and is recognised in the statement of
comprehensive income.
i Goodwill
Goodwill represents the excess of the cost of an acquisition
over the fair value of the Group's share of the net identifiable
assets of the acquired subsidiary or associate at the date of
acquisition and subject to annual impairment testing. Goodwill on
acquisitions of subsidiaries is included in intangible assets.
Goodwill associated with the acquisition of associates is included
within the investment in associates.
Goodwill is not subject to amortisation but is tested for
impairment annually. On disposal of a subsidiary the attributable
amount of goodwill is included in the determination of the profit
or loss recognised in the income statement on disposal.
ii Internally generated intangible assets (development costs)
Capitalised development costs are amortised over the periods the
Group expects to benefit from selling the products developed.
Expenditure on internally developed products is capitalised if
all of the following can be demonstrated:
-- it is technically feasible to complete the intangible asset
so that it will be available for use or sale;
-- there is an intention to complete the intangible asset and use or sell it;
-- an ability to use or sell the intangible asset;
-- how the intangible asset will generate probable future economic benefits;
-- the availability of adequate technical, financial and other
resources to complete the development; and
-- the ability to measure reliably the expenditure attributable
to the intangible asset during its development.
Development costs are amortised using the straight-line method
over their remaining estimated useful lives from the date that the
products are available for sale to customers, which is normally
between 3 and 5 years. The remaining useful lives of such
development assets are assessed by the Directors annually.
Development expenditure not satisfying the above criteria and
expenditure on the research phase of internal projects is
recognised in the consolidated income statement as incurred.
iii Computer software
Costs incurred on the acquisition of computer software are
capitalised if they meet the recognition criteria of IAS 38 as
described above. Computer software costs recognised as assets are
written off over their estimated useful lives, which is normally
between 3 and 10 years.
iv Other intangible assets
Other intangible assets arising on business combinations,
including patents, are recorded at fair value at the date of
acquisition. Amortisation is charged to the income statement on a
straight-line basis over the estimated useful lives, which is
normally 5 years. The remaining useful lives of such assets are
assessed by the Directors annually.
v Assets under development
Assets under development are not amortised until they are
complete and in use by the Group.
vi Subsequent expenditure
Subsequent expenditure on capitalised intangible assets is
capitalised only when it increases the future economic benefits
embodied in the specific asset to which it relates. All other
expenditure is expensed as incurred.
(f) Inventories
Inventories are stated at the lower of cost and net realisable
value. Cost is calculated as follows:
Raw materials and Bought In finished goods - cost of purchase
Work in progress and manufactured finished goods - cost of raw
materials and labour, together with
attributable overheads based on the normal level
of activity
Net realisable value is based on estimated selling price less
further costs to completion and disposal. Slow moving and obsolete
inventory is written off to profit or loss. The charge is reviewed
at each balance sheet date.
(g) Cash and cash equivalents
Cash and cash equivalents comprise cash balances, bank
overdrafts and treasury deposits for cash flow purposes. The Group
has no long-term borrowings and any available cash surpluses are
placed on deposit.
(h) Impairment
The carrying amount of the Group's assets, other than deferred
tax assets, are reviewed at each balance sheet date to determine
whether there is any indication of impairment. If any such
indication exists, the asset's recoverable amount is estimated.
Impairment losses are recognised in profit or loss.
Reversals of impairment
Other than in respect of goodwill, an impairment loss is
reversed if there has been a change in the estimates used to
determine the recoverable amount. An impairment loss is reversed
only to the extent that the asset's carrying amount does not exceed
the carrying amount that would have been determined, net of
depreciation or amortisation, if no impairment loss had been
recognised.
(i) Employee benefits
Share-based payment transactions
The Company provides share option schemes for Directors and for
other members of staff.
In accordance with IFRS 2 - Share-based Payments, the fair value
of the employee services received in exchange for the grant of
options is recognised as an expense to the income statement over
the vesting period of the option and the corresponding credit
recognised to the Retained Earnings within equity. The
Black-Scholes option pricing model has been used for calculating
the fair value of the Group's share options. The Directors believe
that this model is the most suitable for calculating the fair value
of the equity-based share options.
The fair value of the options is determined excluding the impact
of any non-market vesting conditions. Non-market vesting conditions
are included in assumptions about the number of options that are
expected to vest. At each balance sheet date the Group revises its
estimates of the number of option awards that are expected to vest.
The impact of the revision of original estimates, if any, is
recognised in the income statement, with a corresponding adjustment
to equity. No adjustment is made for failure to achieve market
vesting conditions providing all other vesting conditions are
met.
Pension costs
The Group operates a defined contribution pension scheme. The
assets of the scheme are held separately from those of the Group in
independently administered funds. Contributions to the pension
scheme are charged to the income statement in the year in which
they become payable.
Accrued holiday pay
Provision is made at each balance sheet date for holidays
accrued but not taken at the salary of the relevant employee at
that date.
(j) Provisions
A provision is recognised in the balance sheet when the Group
has a present legal or constructive obligation as a result of a
past event, and it is probable that an outflow of economic benefits
will be required to settle the obligation. They are discounted at a
pre-tax rate reflecting current market assessments of the time
value of money and risks specific to the liability.
( k) Revenue
Revenue is derived principally from the sale of goods and is
measured at the fair value of consideration received or receivable,
after deducting discounts, settlement discounts, rebates and is net
of value added tax. The Group has concluded that it is the
principal in its revenue arrangements as it has control of those
goods before transferring them to the customer.
Sale of goods arises from sales of products to third parties and
related parties. Revenue from the sale of goods is recognised when
the control of the goods is transferred to the buyer. This occurs
when the goods are transferred to the customer in accordance with
the terms of the trade contract. Before a contract is entered into,
customers are assessed using a credit reference agency before
credit is granted and where sufficient credit cannot be granted,
payment is required in advance of the goods being delivered and is
held under other creditors until the goods are delivered and the
revenue is then recognised.
Some goods sold by the group include warranties which require
the group to either replace or mend a defective product during the
warranty period if the goods fail to comply with agreed upon
specifications. In accordance with IFRS 15, such warranties are not
accounted for as separate performance obligations and hence no
revenue is attached to them. Instead, a provision is made for the
costs of satisfying the warranties in accordance with IAS 37
Provisions, Contingent Liabilities and Contingent Assets. Extended
warranties are not offered to customers.
(l) Finance income
Finance income comprises interest receivable on funds invested
.
(m) Corporation and deferred taxes
Tax on the profit or loss for the periods presented comprises
current and deferred tax.
Current tax
Current tax is the expected corporation tax payable on the
taxable income for the year, using rates and laws enacted or
substantively enacted at the balance sheet date, and any adjustment
to tax payable in respect of previous years.
Deferred tax
Deferred tax is provided using the balance sheet liability
method, using rates and laws enacted or substantively enacted at
the balance sheet date, providing for temporary differences between
the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for taxation purposes.
Temporary differences are not provided on goodwill that is not
deductible for tax purposes or on the initial recognition of assets
or liabilities that affect neither accounting nor taxable profit,
to the extent that they will probably not reverse in the
foreseeable future. The amount of deferred tax provided is based on
the expected manner of realisation or settlement of the carrying
amount of assets and liabilities, using tax rates enacted or
substantively enacted at the balance sheet date.
A deferred tax asset is recognised only to the extent that it is
probable that future taxable profits will be available against
which the asset can be utilised. Deferred tax assets are reduced to
the extent that it is no longer probable that the related tax
benefit will be realised.
Deferred tax assets and liabilities are offset when the Group
has a legally enforceable right to offset current tax assets and
liabilities and the deferred tax assets and liabilities relate to
taxes levied by the same tax authority on either:
-- the same taxable group company; or
-- different Group entities which intend either to settle
current tax assets and liabilities on a net basis, or to realise
the assets and settle the liabilities simultaneously, in each
future period in which significant amounts of deferred tax assets
or liabilities are expected to be settled or recovered.
(n) Leased assets
All leases are accounted for by recognising a right-of-use asset
and a lease liability except for:
-- Leases of low value assets; and
-- Leases with a duration of twelve months or less.
Lease liabilities are measured at the present value of the
contractual payments due to the lessor over the lease term, with
the discount rate determined by reference to the rate inherent in
the lease unless (as is typically the case) this is not readily
determinable, in which case the Group's incremental borrowing rate
on commencement of the lease is used. Variable lease payments are
only included in the measurement of the lease liability if they
depend on an index or rate. In such cases, the initial measurement
of the lease liability assumes the variable element will remain
unchanged throughout the lease term. Other variable lease payments
are expensed in the period to which they relate. On initial
recognition, the carrying value of the lease liability also
includes:
-- Amounts expected to be payable under any residual value guarantee;
-- The exercise price of any purchase option granted in favour
of the Group if it is reasonably certain to assess that option;
-- Any penalties payable for terminating the lease, if the term
of the lease has been estimated on the basis of termination option
being exercised.
Right-of-use assets are initially measured at the amount of the
lease liability, reduced for any lease incentives received, and
increased for:
-- Lease payments made at or before commencement of the lease;
-- Initial direct costs incurred; and
-- The amount of any provision recognised where the Group is
contractually required to dismantle, remove or restore the leased
asset (typically leasehold dilapidations - see Note 18).
Subsequent to initial measurement lease liabilities increase as
a result of interest charged at a constant rate on the balance
outstanding and are reduced for lease payments made. Right-of-use
assets are depreciated on a straight-line basis over the remaining
term of the lease or over the remaining estimated useful life of
the asset if, rarely, this is judged to be shorter than the lease
term.
When the Group revises its estimate of the term of any lease
(because, for example, it re-assesses the probability of a lessee
extension or termination option being exercised), it adjusts the
carrying amount of the lease liability to reflect the payments to
make over the revised term, which are discounted at the same
discount rate that applied on lease commencement. The carrying
value of lease liabilities is similarly revised when the variable
element of future lease payments dependent on a rate or index is
revised. In both cases
an equivalent adjustment is made to the carrying value of the
right-of-use asset, with the revised carrying amount being
amortised over the remaining (revised) lease term.
(o) Dividends
Dividends are recognised when they become legally payable. In
the case of interim dividends to equity shareholders, this is when
paid. In the case of final dividends, this is when approved by the
shareholders at the AGM.
(p) Financial assets
The Group's financial assets include cash and cash equivalents
and trade receivables. All financial assets are recognised when the
Group becomes party of the contractual provisions if the
instrument.
Trade receivables are recognised and carried at amortised cost
less expected credit loss. IFRS 9 requires the Group to recognise
expected credit losses ('ECL') whereby expected losses as well as
incurred losses are provided for. The Group applies the simplified
approach when determining ECL provisions for trade receivables. In
making the assessment of credit risk and estimating ECL provisions,
the Group uses reasonable and supportable information about past
events, current conditions and forecasts of future events and
economic conditions.
From time to time, the Group elects to renegotiate the terms of
trade receivables due from customers with which it has previously
had a good trading history. Such renegotiations will lead to
changes in the timing of payments rather than changes to the
amounts owed, and if the revised present value of cash flows is not
significantly different from the carrying amount, no impairment is
recorded.
Cash and cash equivalents includes cash in hand, deposits held
at call with banks, other short term highly liquid investments with
original maturities of twelve months or less, such as short-term
fixed deposits with banks, and bank overdrafts. Bank overdrafts are
shown on the face of the balance sheet.
(q) Financial liabilities
The Group holds only one class of financial liabilities, namely
trade payables. Trade payables and other short-term monetary
liabilities are initially recognised at fair value and subsequently
carried at amortised cost.
(r) Treasury shares
Consideration paid or received for the purchase or sale of
treasury shares is recognised directly in Equity - see page 53. The
cost of treasury shares held is presented as a separate item
("Treasury shares"). Any excess of the consideration received on
the sale of treasury shares over the weighted average cost of the
shares sold is reflected in share premium.
(s) Government grants
The Group has took advantage of the Coronavirus Job Retention
Scheme in 2021 and 2020 in the UK. This income was recognised in
the period to which the furloughed staff costs related to and only
when it was reasonably likely for the conditions to be met. The
payroll liability had been incurred by the Group and therefore had
met the conditions to claim for the payroll period. All other
conditions had been satisfied. The Group elected to net the grant
income against the costs to which it related i.e., wages and
salaries.
(t) Exceptional items
Material items of income or expense that are deemed exceptional
due to their size or incidence are disclosed separately in the
Consolidated Income Statement.
2 Critical accounting estimates and judgements
The Group makes estimates and judgements regarding the future.
Estimates and judgements are continually evaluated based on
historical experience and other factors, including expectations of
future events that are believed to be reasonable under the
circumstances. In the future, actual experience may differ from
these estimates and assumptions.
The judgements and estimates that have a significant risk of
causing a material adjustment to the carrying amounts of assets and
liabilities within the next financial year are discussed below.
Estimates
Valuation of inventory
The Group reviews its inventory on a regular basis and, where
appropriate, makes provision for slow moving and obsolete stock
based on estimates of future sales activity. The estimate of the
future sales activity will be based on both historical experience
and expected outcomes based on knowledge of the markets in which
the Group operates (see note 14 of the Consolidated Financial
Statements). The Group also calculates an amount representing wages
and overheads for direct labour and includes an estimate of this
amount in the valuation of inventory.
Revenue recognition
The timing of revenue recognition is a significant area of risk
to accurate financial reporting and the Group also ensures that
accurate estimates of credit note provisions and warranty
provisions are made.
Depreciation of property, plant and equipment and right-of-use
assets
Depreciation is provided so as to write down the assets to their
residual values over their estimated useful lives as set out in
note 1 (d). The selection of these estimated lives requires the
exercise of management judgement.
Useful lives of intangible assets
Intangible assets are amortised over their useful lives. Useful
lives are based on the management's estimates of the period that
the assets will generate revenue, which are periodically reviewed
for continued appropriateness. Changes to estimates can result in
significant variations in the carrying value and amounts charged to
the consolidated income statement in specific periods (see notes 1
(e) and 11 of the Consolidated Financial Statements).
Expected credit losses and asset impairment
Expected credit losses are assessed under IFRS 9 using
reasonable information about past events and current conditions and
forecasts of future events. Asset impairment considers the likely
returns from financial assets owned by the Group and their
recoverability, based on market values and management's judgement
of any other relevant factors.
Judgements
Recognition of deferred tax asset
The extent to which deferred taxation assets can be recognised
is based on an assessment of the probability that future taxable
income will be available against which the deductible temporary
differences and taxation loss carry - forward amounts can be
utilised. The deferred tax asset of GBP750k (2021: GBP278k) has
been recognised on the basis that the Group is forecasting
sufficient levels of profits in future periods.
3 Revenue and segmental information
In identifying its operating segments, management generally
follows the Group's reporting lines, which represent the main
geographic markets in which the Group operates. The segment
reporting below is shown in a manner consistent with the internal
reporting provided to the Board, which is the Chief Operating
Decision Maker (CODM). These operating segments are monitored, and
strategic decisions are made on the basis of segment operating
results.
The Group operates in four main business segments which are:
Segment Activities undertaken include:
United Kingdom Sales of passive and powered ventilation products
to housebuilders, electrical contractors and
window and door manufacturers. In addition
to this, it is a leading supplier of window
and door hardware
South Korea Sales of passive ventilation products to construction
companies
North America Sales of passive ventilation products to window
and door manufacturers
All other Sales of passive and powered ventilation products
countries to distributors, window manufacturers and construction
companies
Inter-segment revenue is transacted on an arm's length basis and
charged at prevailing market prices for a specific product and
market or cost plus where no direct comparative market price is
available. Segment results include items directly attributable to a
segment as well as those that can be allocated on a reasonable
basis. Research and development entity-wide financial expenses are
allocated to the business activities for which R&D is
specifically performed. Administration Expenses are currently
allocated to operating segments in the Group's reporting to the
CODM and include central and parent company overheads relating to
Group management, the finance function and regulatory
requirements.
The measurement policies the Group uses for segment reporting
under IFRS 8 are the same as those used in its financial
statements.
The Group recognises revenue at a single point in time in its UK
and US subsidiary. The nature of business practice at its South
Korean subsidiary means that the Group recognises revenue there
over time, this being at first fix and second fix stages. As
invoicing for both first fix and second fix components usually
takes place at the first fix stage, the revenue on the second fix
products is deferred in the Financial Statements until the point
that those second fix products are accepted by the customer.
Details of the deferred revenue movements during the year is as
follows:
2022 2021
GBP'000 GBP'000
Deferred Revenue at beginning
of year 443 478
Released in the year (443) (478)
Provided for in the year 396 443
-------------------------------- --------- ---------
Deferred Revenue at end
of year 396 443
-------------------------------- --------- ---------
The deferred revenue noted above is the Group's only contract
liability and is shown within Other Payables.
The Group has no material contract assets.
3 Revenue and segmental information (continued)
The total assets for the segments represent the consolidated
total assets attributable to these reporting segments. Parent
company results and consolidation adjustments reconciling the
segmental results and total assets to the consolidated financial
statements, are included within the United Kingdom segment figures
stated in the remainder of this note 3.
Operating segment
For the year ended United South North All other
30 September 2022 Kingdom Korea America countries Consolidated
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Segment revenue 16,497 3,037 538 2,303 22,375
Inter-segment revenue (288) - - - (288)
-------------------------------- ---------- --------- ---------- ------------ --------------------------------
Total Revenue 16,209 3,037 538 2,303 22,087
-------------------------------- ---------- --------- ---------- ------------ --------------------------------
Segment profit/(loss) (651) (37) 160 (425) (953)
Tax credit 410
-------------------------------- ---------- --------- ---------- ------------ --------------------------------
Loss for the year (543)
-------------------------------- ---------- --------- ---------- ------------ --------------------------------
Depreciation and amortisation 920 42 - - 962
-------------------------------- ---------- --------- ---------- ------------ --------------------------------
Total assets 17,021 4,491 178 - 21,690
-------------------------------- ---------- --------- ---------- ------------ --------------------------------
Total assets include:
Investments in associates 2,910 - - - 2,910
Additions to non-current
assets
(other than financial
instruments
and deferred tax
assets) 671 3 - - 674
-------------------------------- ---------- --------- ---------- ------------ --------------------------------
The South Korea Segment profit includes the Group's share of the
profits from Browntech Sales Co. Ltd., (BTS), the Group's associate
undertaking in South Korea, of GBP173,000.
Sales to BTS of GBP4.71m represented 21% of Group Revenue (2021:
GBP3.58m - 15%). There are no other concentrations of revenue of
10% or more during the year (see Note 24 - Related party
transactions).
IFRS 8 requires entity wide disclosures to be made about the
regions in which it earns its revenues and holds its non-current
assets which are shown below.
For the year ended United Europe USA and South All other Total
30 September 2022 Kingdom Canada Korea regions
Revenues GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
By entities' country
of domicile 18,512 - 538 3,037 - 22,087
By country from which
derived 16,209 2,303 538 3,037 - 22,087
------------------------ ---------- --------- --------- --------- ----------- ---------
Non-current assets
By entities' country
of domicile 5,355 - 46 3,061 - 8,461
------------------------ ---------- --------- --------- --------- ----------- ---------
3 Revenue and segmental information (continued)
Operating segment
For the year ended United South North All other
30 September 2021 Kingdom Korea America countries Consolidated
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Segment revenue 16,368 3,578 629 3,150 23,725
Inter-segment revenue (313) - - - (313)
-------------------------------- ---------- --------- ---------- ------------ --------------------------------
Total Revenue 16,055 3,578 629 3,150 23,412
-------------------------------- ---------- --------- ---------- ------------ --------------------------------
Segment profit/(loss) 1,026 (41) 52 38 1,075
Tax expense (72)
-------------------------------- ---------- --------- ---------- ------------ --------------------------------
Profit for the year 1,003
-------------------------------- ---------- --------- ---------- ------------ --------------------------------
Depreciation and amortisation 809 74 - - 883
-------------------------------- ---------- --------- ---------- ------------ --------------------------------
Total assets 17,181 4,592 193 - 21,966
-------------------------------- ---------- --------- ---------- ------------ --------------------------------
Total assets include:
Investments in associates 2,681 - - - 2,681
Additions to non-current
assets
(other than financial
instruments
and deferred tax
assets) 893 21 - - 914
-------------------------------- ---------- --------- ---------- ------------ --------------------------------
The South Korea Segment loss includes the Group's share of the
losses from Browntech Sales Co. Ltd., (BTS), the Group's associate
undertaking in South Korea, of GBP28,000.
Sales to BTS of GBP3.58m represented 15% of Group Revenue (2020:
GBP4.92m - 24%). There are no other concentrations of revenue of
10% or more during the year (see Note 24 - Related party
transactions).
IFRS 8 requires entity wide disclosures to be made about the
regions in which it earns its revenues and holds its non-current
assets which are shown below.
For the year ended United Europe USA and South All other Total
30 September 2021 Kingdom Canada Korea regions
Revenues GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
By entities' country
of domicile 19,205 - 629 3,578 - 23,412
By country from which
derived 16,055 3,088 629 3,578 62 23,412
------------------------ ---------- --------- --------- --------- ----------- ---------
Non-current assets
By entities' country
of domicile 4,996 - 32 2,878 - 7,906
------------------------ ---------- --------- --------- --------- ----------- ---------
Information about the Group's products
Within geographical segments the Directors also monitor the
revenue performance of the Group within its two identified business
streams. The Group's operations are separated between trickle
ventilation and window and door hardware products and mechanical
ventilation products. The following table provides an analysis of
the Group's external revenue, irrespective of the geographical
region of sale.
2022 2021
GBP'000 GBP'000
Trickle ventilation and window and door hardware
products 13,586 14,672
Mechanical ventilation products 8,501 8,740
---------------------------------------------------- --------- ---------
Revenue 22,087 23,412
---------------------------------------------------- --------- ---------
4 Directors and employees
Group Company
2022 2021 2022 2021
Staff costs, including Directors, GBP'000 GBP'000 GBP'000 GBP'000
were as follows:
Wages and salaries 6,384 6,155 363 527
Grant income - (8) - -
-------------------------------------- --------- --------- --------- ---------
Wages and salaries after Government
grant 6,384 6,147 363 527
Employer's social security costs
and similar taxes 664 604 56 58
Defined contribution pension
cost 564 495 10 14
Share based payment expense -
equity settled 38 34 - 34
-------------------------------------- --------- --------- --------- ---------
7,650 7,280 429 633
-------------------------------------- --------- --------- --------- ---------
Grant income represents amounts claimed under coronavirus job
retention scheme.
Group Company
2022 2021 2022 2021
The average monthly number of Number Number Number Number
employees during
the year was as follows:
Manufacturing 137 133 - -
Sales, marketing, and administration 72 69 5 5
209 202 5 5
---------------------------------------- -------- -------- -------- --------
Details of Directors' emoluments, pension contributions and
interests in share options are given in the Directors' Remuneration
Report set out on pages 33 to 36.
5 Finance income and expense
Finance income Group Company
2022 2021 2022 2021
GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------ --------- --------- --------- ---------
Bank interest receivable on short
term deposits 9 - 1 -
------------------------------------ --------- --------- --------- ---------
Finance expense Group Company
2022 2021 2022 2021
GBP'000 GBP'000 GBP'000 GBP'000
---------------------------------------- --------- --------- --------- ---------
Interest expense on lease liabilities 16 16 - -
---------------------------------------- --------- --------- --------- ---------
6 Loss before tax (2021: profit)
2022 2021
GBP'000 GBP'000
This is arrived at after charging / (crediting):
Depreciation of property, plant & equipment 518 479
Depreciation of right-of-use assets 232 164
Amortisation of intangible assets 298 240
Research and development expenditure written
off 629 509
Short term rentals - vehicles and plant &
equipment 53 30
Foreign exchange (gain) / loss (109) 66
Share-based payment expense 38 34
Profit on disposal of property, plant & equipment 19 7
Auditors' remuneration:
- for the audit of these accounts 20 14
- for the audit of the accounts of the Company's
subsidiaries 110 85
- for the audit of the accounts of the Group's
associate 13 17
- non-audit services - comprising other assurance
services - 1
7 Tax credit / (expense)
2022 2021
Current income tax: GBP'000 GBP'000
Corporation tax expense - (22)
Adjustment in respect of prior years - -
--------- ---------
- (22)
Deferred tax:
Origination and reversal of temporary Note
differences 16 410 (75)
Note
Effect of rate change on opening balances 16 - 25
Income tax credit / (expense) 410 (72)
----------------------------------------------------------------------------------------------------------- -------- --------- ---------
2022 2021
The charge for the year can be reconciled GBP'000 GBP'000
to the profit
per the income statement as follows:
(Loss) / profit before tax (953) 1,075
Effect of:
Expected tax credit based on the standard
rate of
Corporation tax in the UK of 19% (2021: 19%) (181) (204)
Additional deduction for R&D expenditure 189 167
Effect of Associate's results reported net
of tax 33 (5)
Expenses deductible for tax purposes 7 (8)
Difference in overseas tax rates - (22)
Impact of deferred tax assets not recognised 384 -
Other adjustments (22) -
Income tax credit / (expense) 410 (72)
------------------------------------------------ --------- ---------
The tax rate in the United Kingdom, being the primary economic
environment in which the Group conducts its business is 19% from 1
April 2017. The rate is due to change to 25% from 1 April 2023.
8 Dividends
2022 2021
GBP'000 GBP'000
Final 2021 dividend of 3.00 pence (2020:
2.00 pence) per ordinary
share proposed and paid during the year
relating to the
previous year's results 335 223
Interim dividend of 1.50 pence (2021:
1.50 pence) per ordinary
share paid during the year 167 167
-------------------------------------------- ---------- -----------------
502 390
-------------------------------------------- ---------- -----------------
The Directors are proposing a final dividend of 0.5 pence (2021:
3.0 pence) per share. This will result in a final dividend
totalling GBP56,094 (2021: GBP334,313), subject to approval by the
shareholders at the Annual General Meeting. This dividend has not
been accrued at the balance sheet date.
9 Earnings per ordinary share
The calculation of the basic and diluted earnings per share is
based on the following data:
2022 2021
GBP'000 GBP'000
Numerator
Earnings for the purposes of basic earnings
per share being
earnings after tax attributable to members
of Titon Holdings Plc (436) 1,028
------------------------------------------------- ------------ ------------
Denominator Number Number
Weighted average number of ordinary shares
for the purposes of basic
earnings per share 11,196,627 11,124,517
Effect of dilutive potential ordinary shares:
share options 18,173 74,610
------------ ------------
Weighted average number of ordinary shares
for the purposes of diluted earnings per
share 11,214,800 11,199,127
------------ ------------
Earnings per share (pence)
Basic (3.89p) 9.24p
Diluted (3.89p) 9.18p
------------------------------------------------- ------------ ------------
The total number of options in issue is also disclosed in note
23.
10 Property, plant and equipment
Group Freehold Improvements Plant Total
land and to leasehold and Motor
buildings property equipment vehicles
Cost GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 October 2020 3,455 193 8,197 260 12,105
Additions - - 426 76 502
Disposals - - (70) (48) (118)
Foreign exchange
revaluation - (2) (41) - (43)
---------------------- ------------ --------------- ------------ ------------ ---------
At 1 October 2021 3,455 191 8,512 288 12,446
Additions - - 339 47 386
Disposals - - (40) (66) (106)
Foreign exchange - - - - -
revaluation
At 30 September
2022 3,455 191 8,811 269 12,726
---------------------- ------------ --------------- ------------ ------------ ---------
Depreciation
At 1 October 2020 1,554 47 6,848 187 8,636
Charge for the year 64 84 236 95 479
Disposals - - (70) (40) (110)
Foreign exchange
revaluation - (1) (34) - (35)
---------------------- ------------ --------------- ------------ ------------ ---------
At 1 October 2021 1,618 130 6,980 242 8,970
Charge for the year 64 (19) 430 43 518
Disposals - - (28) (54) (82)
Foreign exchange
revaluation - (1) - - (1)
At 30 September
2022 1,682 110 7,382 231 9,405
---------------------- ------------ --------------- ------------ ------------ ---------
Net book value
At 30 September
2022 1,773 81 1,429 38 3.321
---------------------- ------------ --------------- ------------ ------------ ---------
At 30 September
2021 1,837 61 1,532 46 3,476
---------------------- ------------ --------------- ------------ ------------ ---------
At 1 October 2020 1,901 146 1,349 73 3,469
---------------------- ------------ --------------- ------------ ------------ ---------
The Directors are not aware of any events or changes in
circumstances during the year which would have a significant impact
on the carrying value of the Group's property, plant and equipment
at the balance sheet date.
At 30 September 2022, the Group had entered into contractual
commitments for the acquisition of plant and equipment amounting to
GBP83,000 (2021: GBP116,000).
10 Property, plant and equipment (continued)
Group: right-of-use assets Leasehold Plant and Motor
property equipment vehicles Total
Cost GBP'000 GBP'000 GBP'000 GBP'000
At 1 October 2020 662 25 336 1,023
Additions - - 51 51
Disposals (103) - (9) (112)
Foreign exchange revaluation (9) - (8) (17)
------------------------------- ----------- ------------ ----------- ---------
At 1 October 2021 550 25 370 945
Additions 85 47 106 238
Disposals (85) - (40) (125)
Foreign exchange revaluation - - - -
At 30 September 2022 550 72 436 1,058
------------------------------- ----------- ------------ ----------- ---------
Depreciation
At 1 October 2020 133 4 114 251
Charge for the year 8 5 151 164
Disposals - - (9) (9)
Foreign exchange revaluation (4) - (3) (7)
------------------------------- ----------- ------------ ----------- ---------
At 1 October 2021 137 9 253 399
Charge for the year 115 10 107 232
Disposals (85) - (40) (125)
Foreign exchange revaluation (1) - - (1)
------------------------------- ----------- ------------ ----------- ---------
At 30 September 2022 166 19 320 505
------------------------------- ----------- ------------ ----------- ---------
Net book value
At 30 September 2022 384 53 116 553
------------------------------- ----------- ------------ ----------- ---------
At 30 September 2021 413 16 117 546
------------------------------- ----------- ------------ ----------- ---------
At 30 September 2022, the Group had entered into contractual
commitments for the acquisition of motor vehicles under finance
leases amounting to GBP119,000 (2021: GBP182,000).
10 Property, plant and equipment (continued)
Company
The Company has no right-of-use assets (2020: GBPnil)
Freehold
land and Motor
Company: property and motor vehicles buildings vehicles Total
Cost GBP'000 GBP'000 GBP'000
At 1 October 2020 3,455 52 3,507
Additions - - -
Disposals - (25) (25)
--------------------------------------- ------------ ------------ ---------
At 1 October 2021 3,455 27 3,482
Additions - - -
Disposals - - -
At 30 September 2022 3,455 27 3,482
--------------------------------------- ------------ ------------ ---------
Depreciation
At 1 October 2020 1,554 43 1,597
Charge for the year 65 4 69
Disposals - (20) (20)
--------------------------------------- ------------ ------------ ---------
At 1 October 2021 1,619 27 1,646
Charge for the year 63 - 63
Disposals - - -
At 30 September 2022 1,682 27 1,709
--------------------------------------- ------------ ------------ ---------
Net book value
at 30 September 2022 1,773 - 1,773
--------------------------------------- ------------ ------------ ---------
At 30 September 2021 1,836 - 1,836
--------------------------------------- ------------ ------------ ---------
At 1 October 2020 1,901 9 1,910
--------------------------------------- ------------ ------------ ---------
11 Intangible assets
Group Development
costs
Computer (internally Assets
software generated) Goodwill under development Patents Total
Cost GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 October 2020 805 1,082 78 179 257 2,401
Additions - 152 - 260 - 412
Disposals - - - - - -
Foreign exchange
revaluation - - - - (1) (1)
At 1 October 2021 805 1,234 78 439 256 2,812
Additions 595 130 - (439) 2 288
At 30 September
2022 1,400 1,364 78 - 258 3,100
-------------------- ----------- -------------- ---------- -------------------- ----------- ---------
Amortisation
At 1 October 2020 611 786 - - 251 1,648
Charge for the
year 87 151 - - 2 240
Disposals - - - - - -
Foreign exchange - - - (1)
revaluation
At 1 October 2021 698 937 - - 252 1,887
Charge for the
year 148 149 - - 1 298
At 30 September
2022 846 1,086 - - 253 2,185
-------------------- ----------- -------------- ---------- -------------------- ----------- ---------
Net book value
at 30 September
2022 554 278 78 - 5 915
-------------------- ----------- -------------- ---------- -------------------- ----------- ---------
At 30 September
2021 107 297 78 439 4 925
-------------------- ----------- -------------- ---------- -------------------- ----------- ---------
At 1 October 2020 194 296 78 179 6 753
-------------------- ----------- -------------- ---------- -------------------- ----------- ---------
All assets have an average useful life of 3.6 years (2021: 3.5
years) except for Goodwill which has an indefinite useful life.
Included with Computer Software is the Group's new Enterprise
Resource Planning software system which was operational from 1 May
2022 and was transferred from assets under development in the year.
The carrying value of the new system at 30 September 2022 is
GBP491,000 with a remaining amortisation period of 4.6 years.
Additionally, included within Computer Software is the Group's
old Enterprise Resource Planning software system which has a
carrying value of GBPnil at 30 September 2022 (2021: GBP40,000) and
is fully amortised (2021: 0.9 years amortisation remaining).
The Directors are not aware of any events or changes in
circumstances during the year which would have a significant impact
on the carrying value of the Group's intangible assets at the
balance sheet date.
Company
The Company has no intangible assets (2021: GBPnil).
12 Investments in subsidiaries
Investments comprise direct shareholdings of the ordinary share
capital in the following subsidiaries, all of which are included in
the Consolidated Financial Statements. A list of the investments in
subsidiaries, including the name, country of incorporation and
proportion of ownership is as follows:
Proportion
of voting
rights
held at
30
Country September
Principal of Address 2021 and
Name of subsidiary activity incorporation 2022
--------------------- ---------------------- ----------------- ----------------------- ------------
Design, manufacture
and marketing 894 The Crescent,
of window Colchester Business
Titon Hardware fittings and Park, Colchester
Ltd ventilators England CO4 9YQ 100%
--------------------- ---------------------- ----------------- ----------------------- ------------
Titon Automation
Ltd Dormant company England As above 100%
--------------------- ---------------------- ----------------- ----------------------- ------------
Titon Components
Ltd Dormant company England As above 100%
--------------------- ---------------------- ----------------- ----------------------- ------------
Titon Developments
Ltd Dormant company England As above 100%
--------------------- ---------------------- ----------------- ----------------------- ------------
Titon Investments
Ltd Dormant company England As above 100%
--------------------- ---------------------- ----------------- ----------------------- ------------
PO Box 241,
Distribution Granger, Indiana
Titon Inc. of Group products USA 46530 100%
--------------------- ---------------------- ----------------- ----------------------- ------------
257-4 Ra-dong,
Manufacture Munwon-gil,
Titon Korea Co. of window Republic Jori-eup, Paju-si,
Ltd ventilators of Korea Gyeonggi-do 51%
--------------------- ---------------------- ----------------- ----------------------- ------------
Titon HK Holdings Hong Kong, 402 Jardine
Ltd Dormant company China House, 100%
1 Connaught
Place Central
-------------------------------------------------------------------------------------- ------------
For the subsidiaries listed above, the country of operation is
the same as the country of incorporation.
Company Investment 2022 2021
GBP'000 GBP'000
At 30 September 554 554
--------------------- --------- ---------
13 Investments in associates
The following entity meets the definition of an associate, the
Group considers it has power to exercise significant influence, and
has been equity accounted in these consolidated financial
statements:
Proportion
of voting
rights
held at
Country 30 September
Name of associate Principal of Address 2021 and
activity incorporation 2022
---------------------- ------------------ ------------------ ---------------------- ---------------
257-4 Ra-dong,
Munwon-gil,
Browntech Sales Sales of window Republic Jori-eup, Paju-si,
Co. Ltd ventilators of Korea Gyeonggi-do 49%
---------------------- ------------------ ------------------ ---------------------- ---------------
The remaining 51% shareholding of BTS is held by South Korean
investors who, through their voting shares, have operational
control of the company.
Company Investment 2022 2021
GBP'000 GBP'000
--------------------- --------- ---------
At 30 September 225 225
--------------------- --------- ---------
13 Investments in associates (continued)
The aggregated amounts relating to BTS are as follows:
As at 30 September 2022 2021
GBP'000 GBP'000
Current assets 5,760 5,636
Non-current assets 470 276
-------------------------------- --------- ---------
Total Assets 6,230 5,912
-------------------------------- --------- ---------
Current liabilities 546 792
Non-current liabilities 148 51
-------------------------------- --------- ---------
Total Liabilities 694 843
-------------------------------- --------- ---------
Net Assets 5,536 5,069
-------------------------------- --------- ---------
Group 49% share of Net Assets 2,712 2,484
Group investment in Goodwill 197 197
-------------------------------- --------- ---------
Group share of investment 2,909 2,681
-------------------------------- --------- ---------
For the year ended 30 September 2022 2021
GBP'000 GBP'000
Revenue 4,714 5,388
---------------------------------- --------- ---------
Profit / (loss) after tax 173 (28)
---------------------------------- --------- ---------
BTS has been included based on audited financial statements
drawn up for the year to 30 September 2022. Transactions between it
and the Group are set out in note 24.
The Group's investment in BTS at 30 September 2022 includes
GBP197,000 (2021: GBP197,000) of goodwill.
14 Inventories
Group 2022 2021
GBP'000 GBP'000
Raw materials and consumables 2,733 1,747
Work in progress 176 710
Finished goods and goods for
resale 3,662 2,585
-------------------------------- --------- ---------
6,571 5,042
-------------------------------- --------- ---------
The carrying value of inventory represents cost less appropriate
provisions. During the year there was a net debit of GBP151,706
(2021: net debit of GBP25,000) to the Consolidated Income Statement
in relation to the inventory provisions. The movements in the
inventory write-down are included within cost of sales in the
Consolidated Income Statement. The value of inventory that has been
recognised in cost of sales over the year is GBP16,270,000 (2021:
GBP16,061,000).
Company
The Company had no inventories at 30 September 2022 (2021:
GBPnil).
15 Trade and other receivables
Group Company
2022 2021 2022 2021
GBP'000 GBP'000 GBP'000 GBP'000
Trade receivables 4,566 3,624 1 1
Less: Impairment Allowance (209) (86) - -
--------- --------- --------- ---------
Trade receivables - net 4,357 3,538 1 1
Related parties receivables 180 310 4,768 3,815
Less: provision for impairment - - - -
--------- --------- --------- ---------
Related parties receivables
(See Note 24) 180 310 4,768 3,816
Other receivables 214 197 - 2
Prepayments and accrued income 169 179 - -
------------------------------------- --------- --------- --------- ---------
Total trade and other receivables 4,920 4,224 4,769 3,818
------------------------------------- --------- --------- --------- ---------
Other than the amounts due from related parties there were no
significant concentrations of credit risk at either 30 September
2022 or 30 September 2021.
The average credit period taken on sale of goods by the Group's
trade debtors is 58 days (2021: 50 days).
Trade receivables included in the Statement of Financial
Position are stated net of expected credit loss (ECL) provisions
which have been calculated using a provision matrix grouping trade
receivables on the basis of their shared credit risk
characteristics. An analysis of the provision held against trade
debtors is set out below:
Group Group
2022 2022 2021 2021
GBP'000 GBP'000 GBP'000 GBP'000
Gross Impairment Gross Impairment
trade Allowance trade Allowance
and related (ECL) and related (ECL)
party receivables party
receivables
Current - not overdue 3,058 (29) 2,655 (17)
Up to 30 days past due 1,047 (56) 1,022 (19)
Up to 60 days past due 259 (53) 92 (14)
Up to 90 days past due 173 (71) 61 (10)
Over 90 days past due - - 99 (26)
4,537 (209) 3,929 (86)
-------------------------- -------------------- ------------ -------------- ------------
Of the GBP209,000 ECL provision, GBPnil (2021: GBPnil) relates
to amounts due from the Group's associate. See note 13.
The main factors considered in determining the level of the loss
provisions set are external customer credit ratings information,
prevailing market and economic conditions and the historic levels
of losses experienced by the Group.
There are no indications as at 30 September 2022 that the
debtors will not meet their payment obligations in respect of the
amount of trade and related party receivables recognised in the
balance sheet that are overdue and unprovided. The proportion of
trade debtors at 30 September 2022 that are overdue for payment is
37% (2021: 32%).
The carrying amount of a financial asset is reduced by the
impairment loss directly for all financial assets with the
exception of trade receivables, where the carrying amount is
reduced through the use of a provision account. When a trade
receivable is considered uncollectible, based on its age and likely
recoverability, it is written off against the provision account.
Subsequent recoveries of amounts previously written off are
credited against the provision account. Changes in the carrying
amount of the provision account are recognised in the income
statement.
15 Trade and other receivables (continued)
Group
Movements on the provision for impairment 2022 2021
of trade and
related party receivables are as follows:
GBP'000 GBP'000
At the beginning of the year 86 114
Provision for receivables impairment 209 86
Receivables written off during the year
as uncollectible (29) (6)
Unused amounts reversed (57) (108)
---------------------------------------------- --------------------------------------- ---------
At the end of the year 209 86
---------------------------------------------- --------------------------------------- ---------
16 Deferred tax
Group
Deferred tax is calculated in full on temporary differences
under the liability method using a tax rate of 25% (2021: 25.0%).
The movement on the deferred tax account is as shown below:
Total Effect Foreign Credited Total Asset Asset
deferred of rate exchange / deferred 2022 2022
tax at change movement (expensed) tax at
1 October on opening to 30 UK Non-UK
2021 balances Income September
Statement 2022
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
GBP'000 GBP'000
UK accelerated
capital allowances (407) - - 407 - - -
Non-UK accelerated
capital allowances 2 - - - 2 - 2
UK other temporary
and deductible
differences 77 - - (91) (14) (14) -
Non-UK other
temporary
and deductible
differences 30 - - (3) 27 - 27
UK available
losses 457 - - 96 553 553 -
Non-UK available
losses 119 - 9 1 129 - 129
---------------------- ------------ ------------- ----------- ------------- ------------ ---------- ----------
Total deferred
tax 278 - 9 410 697 539 158
---------------------- ------------ ------------- ----------- ------------- ------------ ---------- ----------
A deferred tax asset of GBP384k (2021: GBPnil) has not been
recognised, which is in respect of further losses of GBP1,537k
(2021: GBPnil) at the substantively enacted rate of 25%.
16 Deferred tax (continued)
Total Effect Foreign Credited/ Total Asset Asset
deferred of rate exchange (expensed) deferred 2021 2021
tax at change movement to tax at
1 October on opening Income 30 UK Non-UK
2020 balances Statement September
2021
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
GBP'000
UK accelerated
capital allowances (268) (84) - (55) (407) (407) -
Non-UK accelerated
capital allowances 2 - - - 2 - 2
UK other temporary
and deductible
differences 47 16 -- 14 77 77 -
Non-UK other
temporary and
deductible
differences 31 - - (1) 30 - 30
UK available
losses 355 93 - 9 457 457 -
Non-UK available
losses 166 - (5) (42) 119 - 119
----------------------- ------------ ------------- ----------- ------------- ------------ ---------- ----------
Total deferred
tax 333 25 (5) (75) 278 127 151
----------------------- ------------ ------------- ----------- ------------- ------------ ---------- ----------
Company
Deferred tax is calculated in full on timing differences under
the liability method using a tax rate of 25% (2021: 25%). The
movement on the deferred tax account is as shown below:
Total Effect Credited Total
deferred of / (expensed) deferred
tax at rate change to tax at
1 October on opening Income Statement 30
2021 balances September
2022
GBP'000
GBP'000 GBP'000 GBP'000
UK Accelerated
capital allowances (303) - 303 -
UK other temporary
and deductible
differences 22 - (18) 4
UK available losses 7 - (7) -
----------------------- ------------ -------------- ------------------- ------------
Total deferred
tax (274) - 278 4
----------------------- ------------ -------------- ------------------- ------------
Total Effect Credited Total Liability
deferred of to deferred 2021
tax at rate change Income Statement tax at
1 October on opening 30 UK
2020 balances September
GBP'000 2021
GBP'000 GBP'000
GBP'000 GBP'000
UK Accelerated
capital allowances (242) (77) 16 (303) (303)
UK other temporary
and deductible
differences 10 3 9 22 22
UK available losses - - 7 7 7
---------------------- ------------ -------------- ------------------- ------------ -----------
Total deferred
tax (232) (74) 32 (274) (274)
---------------------- ------------ -------------- ------------------- ------------ -----------
17 Trade and other payables - current
Group Company
2022 2021 2022 2021
GBP'000 GBP'000 GBP'000 GBP'000
Trade payables 3,121 2,472 (4) -
Other payables 722 386 - -
Other tax and social
security taxes 286 418 - -
Accruals and deferred
income 922 1,278 139 168
--------- ---------
5,051 4,554 135 168
--------- ---------
Group trade payables and accruals principally comprise amounts
outstanding for trade purchases and ongoing costs. Year-end Group
trade creditors represent 52 days (2021: 62 days) average
purchases. The contractual maturities of these liabilities are from
30 days up to approximately 60 days.
The Directors consider that the carrying amount of trade
payables is approximate to their fair value.
18 Leases
Nature of leasing activities (in the capacity as lessee)
The group leases a number of properties in the jurisdictions
from which it operates. In some jurisdictions it is customary for
lease contracts to provide for payments to increase each year by
inflation and in others to be reset periodically to market rental
rates. In some jurisdictions property leases the periodic rent is
fixed over the lease term.
The group also leases certain items of plant and equipment. In
some contracts for services with distributors, those contracts
contain a lease of vehicles. Leases of plant, equipment and
vehicles comprise only fixed payments over the lease terms.
The group sometimes negotiates break clauses in its property
leases. On a case-by-case basis, the group will consider whether
the absence of a break clause would expose the group to excessive
risk. Typically factors considered in deciding to negotiate a break
clause include:
-- the length of the lease term;
-- the economic stability of the environment in which the property is located; and
-- whether the location represents a new area of operations for the group
At 30 September 2022 the carrying amounts of lease liabilities
are not reduced by the amount of payments that would be avoided
from exercising break clauses as there are no break clauses
available.
Freehold
land and Plant and Motor
Right-of-Use Assets buildings equipment vehicles Total
GBP'000 GBP'000 GBP'000 GBP'000
At 1 October 2021 413 16 117 546
Additions 85 47 106 238
Amortisation (115) (10) (107) (232)
Disposals - - - -
Foreign exchange revaluation 1 - - 1
At 30 September 2022 384 53 116 553
Lease Liabilities GBP'000
At 1 October 2021 595
Additions 238
Interest expense 16
Lease payments (242)
Foreign exchange revaluation 3
---------
At 30 September 2022 610
---------
18 Leases (continued)
Lease liabilities Up to Between Between Over 5 Total
1 year 1 and 2 2 and 5 years
years years
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 30 September
2021 193 160 212 30 595
At 30 September
2022 232 145 233 - 610
Lease expense 2022
GBP'000
Short term lease expense 53
Low value lease expense -
Aggregate undiscounted commitments -
for short term leases
---------
53
---------
19 Share capital
2022 2021
Authorised GBP'000 GBP'000
13,600,000 ordinary shares of 10p each 1,360 1,360
The Company's issued and fully paid ordinary shares of 10p
during the year is:
2022 2022 2021 2021
Number GBP'000 Number GBP'000
At the beginning of the
year 11,193,750 1,119 11,133,750 1,113
Share options exercised
during the year 25,000 3 60,000 6
At the end of the year 11,218,750 1,122 11,193,750 1,119
Share premium
2022 2021
GBP'000 GBP'000
At the beginning of the year 1,077 1,077
Share options exercised during the year 14 -
At the end of the year 1,091 1,077
Treasury shares held by the Group
2022 2022 2021 2021
Number GBP'000 Number GBP'000
At the beginning of the
year 50,000 27 50,000 27
Transfer of treasury Shares (50,000) (27) - -
At the end of the year - - 50,000 27
Treasury shares held by the Group were acquired in July 2014.
All Treasury shares were disposed of during the year to satisfy an
exercise of share options.
19 Share capital (continued)
Share options
Options have been granted over the following number of ordinary
shares which were outstanding:
Date granted Exercise Number Exercisable between
price of
shares
15.01.14 58.0p 65,000 15.01.17 and 15.01.24
30.01.18 156.5p 132,000 30.01.21 and 30.01.28
15.07.21 138.5p 90,000 15.07.24 And 15.07.31
01.07.22 95.0p 150,000 01.07.25 and 01.07.32
At 30 September
2022 437,000
At 30 September 2021 615,000
No share options were exercised between 30 September 2022 and 25
January 2023.
20 Cash and cash equivalents
Financial assets
The Group has floating rate financial assets which comprise
treasury deposits, cash to finance its operations together with the
retained profits generated by operating companies (refer to the
'Financial Assets' note 1(p) on page 61 for further details).
The Group has no long-term borrowings and any available cash
surpluses are placed on deposit. The Group uses cash on deposit to
manage short term liquidity risks which may arise.
The Group's floating rate financial assets (see below) at 30
September were:
Group Company
2022 2021 2022 2021
Currency GBP'000 GBP'000 GBP'000 GBP'000
Sterling 1,374 3,882 4 1,324
US Dollar 82 126 - -
Euro 196 532 - -
South Korean Won 74 254 - -
1,726 4,794 4 1,324
The Sterling financial assets comprises cash held on current
account with banks.
The Group's cash and floating rate financial assets at 30
September comprise:
Group Company
2022 2021 2022 2021
GBP'000 GBP'000 GBP'000 GBP'000
Bank current accounts 1,726 4,794 4 1,324
The Group had a floating term deposit of GBP1m with the bank at
30 September 2022 (2021: GBPnil).
Financial liabilities
The Group had no floating rate financial liabilities at 30
September 2022 (2021: GBPnil). Any liability is offset against bank
deposits for the purposes of interest payment calculation. The
Board considers the fair value of the Group's financial assets and
liabilities to be the same as their book value.
21 Financial instruments - risk management
The Group is exposed through its operations to credit risk,
foreign exchange risk and liquidity risk.
In common with other businesses, the Group is exposed to risks
that arise from its use of financial instruments. This note, read
in conjunction with the 'Capital Management' section of the
Directors' Report on page 28, and the Report on Risk Management on
pages 23 to 26 describe the Group's objectives, policies and
processes for managing those risks. Further quantitative
information in respect of these risks is presented throughout these
financial statements.
There have been no substantive changes in the Group's exposure
to financial instrument risks, its objectives, policies and
processes for managing those risks from previous periods unless
otherwise stated in this note.
General objectives, policies and processes
The Board has overall responsibility for the determination of
the Group's risk management objectives and policies and, whilst
retaining ultimate responsibility for them, it has delegated the
authority for designing and operating processes that ensure the
effective implementation of the objectives and policies to the
Group's finance function. The Audit Committee reviews and reports
to the Board on the effectiveness of policies and processes put in
place.
The overall objective of the Board is to set policies that seek
to reduce risk as far as possible without unduly affecting the
Group's competitiveness and flexibility. Further details regarding
these policies are set out on pages 41 and 42.
Principal financial instruments
The principal financial instruments used by the Group, from
which financial instrument risks arise are trade receivables, cash
at bank, bank overdrafts, trade and other payables and loans to
related parties (see Notes 15, 17 and 20).
Credit risk
Credit risk is the risk of financial loss to the Group if a
customer, associate company or counterparty to a financial
instrument fails to meet its contractual obligations. The Group is
mainly exposed to credit risk from credit sales. It is Group
policy, implemented locally, to assess the credit risk of new
customers before entering contracts along with local business
practices. The Group is not reliant on any key customers.
The Group's finance function has established a credit policy
under which each new customer is analysed individually for
creditworthiness before the Group's standard payment and delivery
terms and conditions are offered. The Group's review includes
external ratings, when available, and trade references. Purchase
limits are established for each customer, which represents the
maximum open amount without requiring senior management's approval.
These limits are reviewed on an on-going basis. Customers that fail
to meet the Group's benchmark creditworthiness may transact with
the Group on a prepayment basis.
Credit risk also arises from cash and cash equivalents and
deposits with banks. The Group has cash and cash equivalents with
banks with a minimum long term "A" rating.
Quantitative disclosures of the credit risk exposure in relation
to Trade and other receivables are provided in note 15.
Liquidity risk
Liquidity risk arises from the Group's management of working
capital in that the Group may encounter difficulty in meeting its
financial obligations as they fall due. The Group's policy is to
ensure that it will always have sufficient cash to allow it to meet
its liabilities when they become due (see Note 17). To achieve this
aim, it seeks to maintain cash balances to meet expected
requirements for a period of 90 days or longer. The Board receives
cash flow projections as well as information regarding cash
balances. At the balance sheet date, these projections indicated
that the Group expected to have sufficient liquid resources to meet
its obligations under all reasonably expected circumstances.
The liquidity risk of each Group entity is managed locally. Each
operation has a facility with the Group, the amount of the facility
being based on budgets. The budgets are set locally and agreed by
the Board in advance, enabling the Group's cash requirements to be
anticipated. Where facilities of Group entities need to be
increased, approval must be sought from the Board.
Foreign exchange risk
Foreign exchange risk arises because the Group has operations
located in various parts of the world whose functional currency is
not the same as the functional currency in which the Group
companies are operating. Although its global market penetration
reduces the Group's operational risk in that it has diversified
into several markets, the Group's net assets arising from such
overseas operations are exposed to currency risk resulting in gains
or losses on retranslation into Sterling. Only in exceptional
circumstances would the Group consider hedging its net investments
in overseas operations as generally it does not consider that the
reduction in foreign currency exposure warrants the cash flow risk
created from such hedging techniques.
21 Financial instruments - risk management (continued)
Foreign exchange risk also arises when individual Group entities
enter into transactions denominated in a currency other than their
functional currency.
The Group's policy is, where possible, to allow Group entities
to settle liabilities denominated in their functional currency
(primarily Sterling, US Dollar or South Korean Won) with the cash
generated from their own operations in that currency. Where Group
entities have liabilities denominated in a currency other than
their functional currency (and have insufficient reserves of that
currency to settle them) cash already denominated in that currency
will, where possible, be transferred from elsewhere within the
Group.
The Group has two overseas subsidiaries in the USA and South
Korea. Their revenues and expenses, other than those incurred with
the UK business, are primarily denominated in their functional
currency. The Board does not believe that there are any significant
risks arising from the movements in exchange rates with these
companies due to the insignificance to the Group of Titon Inc.'s
net assets and the long-term nature of the Group's investment in
Titon Korea.
The UK businesses make purchases from approximately twenty
overseas suppliers who invoice in the local currency of that
supplier. This, in addition to the Euro and US Dollar cash balances
held in the UK and the 7% (2021:11%) of sales from the UK
businesses not invoiced in Sterling, gives rise to foreign currency
exposure which is detailed in the table below.
As of 30 September the Group's UK net exposure to foreign
exchange risk was as follows:
Net foreign currency financial assets 2022 2021
/ (liabilities)
GBP'000 GBP'000
Euro (587) 72
US Dollar 686 163
---------
Total net exposure 99 235
---------
The effect of a 10% weakening of the Euro and the US Dollar
against Sterling at the reporting date of 30 September 2022 on
these denominated trade and other receivables, trade and other
payables and cash balances carried at that date would, had all
other variables held constant, have resulted in a decrease in
pre-tax profit for the year and decrease of net assets of GBP9,000
(2021: decrease in liability of GBP21,000). A 10% strengthening in
the exchange rate would, on the same basis, have increased pre-tax
profit and increased net assets by GBP10,000 (2021: increase of
GBP23,000).
22 Pension
The Group operates a defined contribution pension scheme. The
assets of the scheme are held separately from those of the Group in
independently administered funds. The pension cost charge
represents contributions payable by the Group to these funds during
the year (see note 4). The unpaid contributions outstanding at the
year end, included in accruals (note 17) are GBP37,000 (2021:
GBP40,000).
23 Share-based payments
Equity settled share option schemes
The Group provides share option schemes for Directors and for
other members of staff.
There are presently three equity settled share option schemes;
one HMRC approved and one unapproved in which employees may be
invited to participate, which were both introduced in March 2010.
The third scheme was introduced in July 2021 and an additional
tranche was introduced in July 2022 and is HMRC registered. The
exercise of options granted under these schemes is dependent upon
the growth in the earnings per share of the Group, over any three
consecutive financial years following the date of grant, exceeding
the growth in the retail price index over the same period by at
least 9 per cent.
The vesting period of all share option schemes is three years.
If the options remain unexercised after a period of ten years from
the date of grant, or on an employee leaving the Group, the options
expire.
In the year to 30 September 2022 150,000 shares were granted
(2021: 260,000).
23 Share-based payments (continued)
Details of the share options granted and exercised during the
year and the assumptions used in the Black-Scholes model for each
share-based payment are as follows:
Number
Date of share option of share
grant 09/06/11 15/01/14 30/01/21 15/07/21 01/07/22 options
Exercise price (pence) 48.0 58.0 156.5 138.5 95.0
Number of share options
granted initially 259,950 320,000 205,000 260,000 150,000
Number of share
options outstanding
at 01/10/20 10,000 200,000 205,000 - - 415,000
Share options granted - - - 260,000 - 260,000
Share options exercised (10,000) (50,000) - - - (60,000)
Number of share
options outstanding
at 30/09/21 - 150,000 205,000 260,000 - 615,000
Share options lapsed - (10,000) (73,000) (170,000) 150,000 (103,000)
Share options exercised - (75,000) - - - (75,000)
Number of share
options outstanding
at 30/09/22 - 65,000 132,000 90,000 150,000 437,000
The inputs to the
Black-Scholes pricing
model are:
Expected volatility
% 111 116 88 97 97
Expected option life
(years) 6 6 6 6 6
Risk free rate % 2.50 2.18 1.13 0.46 0.46
Expected dividend
yield % 5 5 3 3 3
During the year no additional share options, included in the
table above, met the conditions of exercise (2021: 207,000).
At the end of the financial year 64,000 share options met the
conditions of exercise and have a weighted average exercise price
of 58p (2021: 207,000 at 57.5p). The 437,000. share options
outstanding at 30 September 2022 had a weighted average price of
1.134p (2021: 615,000 at 124.9p) and a weighted average remaining
contractual life of 7.13 years (2021: 6.8 years).
The share price at 30 September 2022 was 81.0p (2021: 115.0p).
The average market price during the year was 95.0p (2021:
96.8p).
The Group uses a Black-Scholes pricing model to determine the
annual fair value charge for its share-based payments. Expected
volatility is based on historical volatility over the last six
years' data of the Company. The calculated fair values of the share
option awards are adjusted to reflect actual and expected vesting
levels.
In accordance with IFRS 2, the fair value of equity-settled
share-based payments to employees is determined at the date of
grant and is expensed on a straight-line basis over the vesting
period on the Group's estimate of shares that will eventually vest.
A charge of GBP23,000 was recognised in respect of share options in
the year (2021: GBP34,000) of which GBP7,000 (2021: GBP11,000) was
the charge made in respect of key management personnel.
24 Related party transactions
Transactions between the Company and its subsidiaries, which are
related parties, have been eliminated on consolidation and are not
disclosed in this note.
Related party transactions are made on terms equivalent to those
that prevail in arm's length transactions only where such terms can
be substantiated.
During the year the Company recharged management service fees
and rent to other wholly owned Group members totalling GBP777,000
(2021: GBP739,000). See Note 15 for the related party balances at
30 September 2022.
Titon Korea Co. Ltd., the Company's 51% owned subsidiary, paid a
dividend during the year to its shareholders amounting to GBPnil
(2021: GBP798,000). Of this amount, GBPnil (2021: GBP407,000)
before withholding tax, was paid to the Company with the other
GBPnil (2021: GBP391,000) being paid to the non-controlling
interests.
Transactions for the year between the Group companies and the
associate company, which is a related party, were as follows:
Sales of goods Amount owed by
related party
2022 2021 2022 2021
GBP'000 GBP'000 GBP'000 GBP'000
Browntech Sales
Co. Ltd 3,037 3,577 180 310
---------
Trading debts between subsidiaries and BTS are created only when
the ultimate customer has accepted the successful inclusion of our
products into buildings .
There have been no transactions between the Company and BTS
during the year.
Key management who hold the authority and responsibility for
planning, directing and controlling activities of the Group are
comprised solely of the Directors. Aside from compensation
arrangements including share options, there were no transactions,
agreements or other arrangements, direct or indirect, during the
year in which the Directors had any interest, The Directors'
remuneration is disclosed in the Remuneration Report on page 34 of
this document.
Remuneration paid to key management personnel during the year
was as follows:
2022 2021
GBP'000 GBP'000
Short term benefits 835 897
Post-employment benefits 75 55
Share based payments 7 4
---------
917 956
---------
The Non-executive Directors received fees for their services to
the Titon Holdings Plc Board as disclosed in the Directors'
Remuneration Report.
25 Events after the reporting date
There have been no events after the reporting date that
materially affect the position of the Group.
26 Exceptional items
2022 2021
GBP'000 GBP'000
One off cost of living bonus to 89 -
all employees
Restructuring costs 260 -
---------
Administrative costs - exceptional 349 -
---------
Five Year Summary
Summarised consolidated results
2022 2021 2020 2019 2018
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Revenue 22,087 23,412 20,652 27,157 29,774
Gross profit 5,817 7,350 5,654 8,198 8,604
Operating (loss) /
profit (1,119) 1,119 (39) 1,629 2,016
Share of profit /
(loss) from associate 173 (28) 83 329 741
(Loss) / profit before
tax (953) 1,075 18 1,970 2,770
Income tax credit
/ (expense) 410 (72) 104 (186) (315)
(Loss) / profit after
tax (543) 1,003 122 1,784 2,455
Dividends 502 390 332 526 489
Basic (loss) / earnings
per share (3.89p) 9.24p 0.52p 12.84p 18.21p
Assets Employed
Property, plant &
equipment 3,321 3,476 3,469 3,799 3,655
Net cash and cash
equivalents 1,726 4,794 5,572 4,587 3,415
Net current assets 7,588 9,313 9,138 10,112 9,838
Financed by
Shareholders' funds:
all equity 15,646 16,414 15,943 16,262 15,421
The five year summary does not form part of the audited
financial statements and is not an IFRS statement.
Notice of Annual General Meeting
THIS INFORMATION IS IMPORTANT AND REQUIRES YOUR IMMEDIATE
ATTENTION.
If you are in any doubt as to what action to take, you should
consult your stockbroker, solicitor, accountant or other
appropriate independent professional adviser authorised under the
Financial Services and Markets Act 2000. If you have sold or
otherwise transferred all of your shares in Titon Holdings Plc,
please forward this document and the accompanying documents to the
person through whom the sale or transfer was effected, for
transmission to the purchaser or transferee.
Notice is hereby given that the Annual General Meeting of Titon
Holdings Plc ("the Company") will be held at the Company's premises
at Falconer Road, Haverhill, CB9 7XU on 22 March 2023 at 10.00 a.m.
for the following purposes:
To consider and, if thought fit, to pass the following
resolutions, of which Resolutions 1 to 13 will be proposed as
Ordinary Resolutions and Resolution 14 will be proposed as a
Special Resolution.
Explanatory notes in respect of the resolutions are set out on
pages 30 to 32 of the Directors' Report which accompanies this
Notice.
Please note you will not receive a form of proxy for the 2023
AGM in the post. Instead, you can vote online at
www.signalshares.com . To register you will need your Investor
Code, which can be found on your share certificate. You may also
request a hard copy proxy form directly from our Registrars, Link
Group, on 0371 664 0300. For full details on proxy voting please
see the notes below, which accompany this Notice of Annual General
Meeting.
1. To receive and adopt the reports of the Directors and the
Auditors and the audited accounts of the Company for the year ended
30 September 2022.
2. To declare a final dividend of 0.5p per ordinary share
payable to shareholders on the Company's register of members at
close of business on 10 February 2023 payable on 31 March 2023.
3. To re-elect Mr Tyson Anderson who retires from the Board as a Director of the Company.
4. To re-elect Mr Keith Ritchie, who retires from the Board as a Director of the Company.
5. To re-elect Mr Nicholas Howlett, who retires from the Board
as a Director of the Company.
6. To re-elect Mr Paul Hooper, who retires from the Board as a Director of the Company.
7. To re-elect Mr Jeff Ward, who retires from the Board as a Director of the Company.
8. To re-elect Miss Alexandra French, who retires from the Board
as a Director of the Company.
9. To re-elect Ms Carolyn Isom, who retires from the Board as a Director of the Company.
10. To re-appoint MacIntyre Hudson LLP as Auditors of the
Company and to authorise the Directors to determine their
remuneration.
11. That the Directors' Remuneration Report set out on pages 33
to 36 of the Annual Report and Financial Statements for the year
ended 30 September 2022 a new Executive Management Bonus Structure,
details of which are contained in the Directors' Remuneration
Report, be approved.
12. That in place of all existing authorities, the Directors be
generally and unconditionally authorised pursuant to section 551 of
the Companies Act 2006 to exercise all the powers of the Company to
allot shares in the Company and to grant rights to subscribe for,
or to convert any security into, shares in the Company ("Relevant
Securities"), up to a maximum aggregate nominal amount of
GBP270,000 (representing approximately 24% of the nominal value of
the ordinary shares in issue on 25 January 2023) for a period
expiring (unless previously revoked, varied or renewed) on 22 June
2024 or, if sooner, at the end of the 2024 Annual General Meeting
of the Company, but in each case the Company may, before such
expiry, make an offer or agreement which would or might require
Relevant Securities to be allotted after this authority expires and
the Directors may allot Relevant Securities in pursuance of such
offer or agreement as if this authority had not expired.
13. That subject to the passing of Resolution 12 above and in
place of all existing powers, the Directors be generally empowered
pursuant to section 570 and 573 of the Companies Act 2006 to allot
equity securities (within the meaning of section 560 of the
Companies Act 2006) for cash, pursuant to the authority conferred
by Resolution 12 as if section 561(1) of the Companies Act 2006 did
not apply to such allotment, provided that this power shall expire
on 22 June 2024 or, if sooner, the end of the 2024 Annual General
Meeting of the Company. This power shall be limited to the
allotment of equity securities:
13.1 in connection with an offer of equity securities
(including, without limitation, under a rights issue, open offer or
similar arrangement) in favour of holders of ordinary shares in the
capital of the Company in proportion (as nearly as may be
practicable) to their existing holdings of ordinary shares but
subject to such exclusions or other arrangements as the Directors
deem necessary or expedient in relation to fractional entitlements
or any legal, regulatory or practical problems under the laws of
any territory, or the requirements of any regulatory body or stock
exchange; and
13.2 otherwise than pursuant to paragraph 13.1 up to an
aggregate nominal amount of GBP160,000 (representing approximately
14.3% of the nominal value of the ordinary shares in issue on 25
January 2023);
but the Company may, before such expiry, make an offer or
agreement which would or might require equity securities to be
allotted after this power expires and the Directors may allot
equity securities in pursuance of such offer or agreement as if
this power had not expired.
This power applies in relation to a sale of shares which is an
allotment of equity securities by virtue of section 560(3) of the
Companies Act 2006 as if in the first paragraph of this resolution
the words "pursuant to the authority conferred by Resolution 12"
were omitted.
14. That the Company be generally authorised pursuant to section
701 of the Companies Act 2006 to make market purchases (within the
meaning of section 693(4) of the Companies Act 2006) of its
ordinary shares of 10p each on such terms and in such manner as the
Directors shall determine, provided that:
14.1 the maximum number of ordinary shares hereby authorised to
be purchased is 1,121,875 (representing approximately 10% of the
nominal value of the ordinary shares in issue on 25 January
2023);
14.2 the maximum price which may be paid for each ordinary share
shall be the higher of (i) 5% above the average of the middle
market quotations for an ordinary share (as derived from the AIM
Appendix to the Stock Exchange Daily Official List) for the five
business days immediately before the day on which the purchase is
made (in each case exclusive of expenses); and (ii) the higher of
the price of the last independent trade and the current independent
bid on the trading venue where the purchase is carried out
(exclusive of expenses);
14.3 the minimum price which may be paid for each ordinary share shall be 10p; and
14.4 this authority (unless previously revoked, varied or
renewed) shall expire on 22 June 2024 or, if sooner, the end of the
2024 Annual General Meeting of the Company except in relation to
the purchase of ordinary shares the contract for which was
concluded before such date and which will or may be executed wholly
or partly after such date.
By order of the Board
C V Isom Registered Office:
Secretary
894 The Crescent
25 January 2023 Colchester Business Park
Colchester
Essex
CO4 9YQ
Notes:
Rights to appoint a proxy
1. Shareholders can vote online by logging on to
www.signalshares.com and following the instructions given.
Alternatively shareholders can request a hard copy proxy form by
contacting our Registrars, Link Group, on 0371 664 0300 (Calls are
charged at the standard geographic rate and will vary by provider.
Calls outside the United Kingdom will be charged at the applicable
international rate. Link Group are open between 09:00 - 17:30,
Monday to Friday excluding public holidays in England and Wales)
and returning it to the address shown on the form. The appointment
of a proxy will not prevent a member from subsequently attending
and voting at the meeting in person.
2. M embers of the Company are entitled to appoint a proxy to
exercise all or any of their rights to attend and to speak and vote
at a meeting of the Company. A proxy does not need to be a member
of the Company. A member may appoint more than one proxy in
relation to a meeting provided that each proxy is appointed to
exercise the rights attached to a different share or shares held by
that member. To appoint more than one proxy you may photocopy the
proxy form.
Procedure for appointing a proxy
3. To be valid, the proxy instruction must be received by one of
the below methods no later than 10.00 a.m. on Monday 20 March 2023
. It should be accompanied by the power of attorney or other
authority (if any) under which it is signed or a notarially
certified copy of such power or authority :
-- via www.signalshares.com by logging in and selecting the
'Proxy Voting' link. If you have not previously registered, you
will first be asked to register as a new user, for which you will
require your investor code (which can be found on your share
certificate and dividend confirmation), family name and postcode
(if resident in the UK);
-- if your shares are held electronically via CREST, the proxy
appointment may be lodged using the CREST Proxy Voting Service in
accordance with note 7 below; and
-- in hard copy form by post, by courier or by hand to the
Company's registrars, Link Group, PXS 1, Central Square, 29
Wellington Street, Leeds, LS1 4DL ;
-- unless otherwise indicated on the Form of Proxy, CREST voting
or any other electronic voting channel instruction, the proxy will
vote as they think fit or, at their discretion withhold from
voting.
Nominated persons
4. Any person to whom this notice is sent who is a person
nominated under section 146 of the Companies Act 2006 to enjoy
information rights (a "Nominated Person") may, under an agreement
between him or her and the member by whom he or she was nominated,
have a right to be appointed (or to have someone else appointed) as
a proxy for the Annual General Meeting. If a Nominated Person has
no such proxy appointment right or does not wish to exercise it, he
or she may, under any such agreement, have a right to give
instructions to the member as to the exercise of voting rights.
5. The statement of the rights of members in relation to the
appointment of proxies in notes 1 , 2 and 3 above does not apply to
Nominated Persons. The rights described in those notes can only be
exercised by members of the Company.
CREST
6. CREST members who wish to appoint a proxy or proxies through
the CREST electronic proxy appointment service may do so by using
the procedures described in the CREST Manual. CREST personal
members or other CREST sponsored members and those CREST members
who have appointed a voting service provider(s), should refer to
their CREST sponsor or voting service provider(s), who will be able
to take the appropriate action on their behalf.
7. In order for a proxy appointment or instruction made by means
of CREST to be valid, the appropriate CREST message (a "CREST Proxy
Instruction") must be properly authenticated in accordance with
Euroclear UK & Ireland Limited's specifications and must
contain the information required for such instructions, as
described in the CREST Manual. The message must be transmitted so
as to be received by the Company's agent, Link Group (CREST
Participant ID: RA10), no later than 48 hours before the time
appointed for the meeting. For this purpose, the time of receipt
will be taken to be the time (as determined by the time stamp
applied to the message by the CREST Application Host) from which
the Company's agent is able to retrieve the message by enquiry to
CREST in the manner prescribed by CREST.
8. CREST members and, where applicable, their CREST sponsors or
voting service providers should note that Euroclear does not make
available special procedures in CREST for any particular messages.
Normal system timings and limitations will therefore apply in
relation to the input of CREST Proxy Instructions. It is the
responsibility of the CREST member concerned to take (or, if the
CREST member is a CREST personal member or sponsored member or has
appointed a voting service provider(s) to procure that his CREST
sponsor or voting service provider(s) take(s)) such action as shall
be necessary to ensure that a message is transmitted by means of
the CREST system by any particular time. In this connection, CREST
members and, where applicable, their CREST sponsors or voting
service providers are referred, in particular, to those sections of
the CREST Manual concerning practical limitations of the CREST
system and timings.
9. The Company may treat as invalid a CREST Proxy Instruction in
the circumstances set out in Regulation 35(5)(a) of the
Uncertificated Securities Regulations 2001 (as amended).
Entitlement to Attend
10. Entitlement to attend and vote at the meeting (and the
number of votes which may be cast at the meeting), will be
determined by reference to the Company's register of members at
close of business on 20 March 2023, or, if the meeting is
adjourned, 48 hours before the time fixed for the adjourned meeting
(ignoring for these purposes non-working days). In each case,
changes to the register after such time will be disregarded.
Corporate representatives
11. Any corporation which is a member can appoint one or more
corporate representatives, who may exercise on its behalf all of
its powers as a member provided that they do not do so in relation
to the same shares.
Total voting rights
12. Holders of ordinary shares are entitled to attend and vote
at general meetings of the Company. The total number of issued
ordinary shares in the Company on 25 January 2023, which is the
latest practicable date before the publication of this document, is
11,218,750. On a vote by show of hands, every member who is present
has one vote and every proxy present who has been duly appointed by
a member entitled to vote has one vote. On a poll vote, every
member who is present in person or by proxy has one vote for every
ordinary share of which they are the holder.
Publication on website
13. Under section 527 of the Companies Act 2006, members meeting
the threshold requirements set out in that section have the right
to require the Company to publish on a website a statement setting
out any matter relating to: (i) the audit of the Company's accounts
(including the auditor's report and the conduct of the audit) that
are to be laid before the Annual General Meeting; or (ii) any
circumstance connected with an auditor of the Company ceasing to
hold office since the previous meeting at which annual accounts and
reports were laid in accordance with section 437 of the Companies
Act 2006. The Company may not require the members requesting any
such website publication to pay its expenses in complying with
sections 527 or 528 of the Companies Act 2006. Where the Company is
required to place a statement on a website under section 527 of the
Companies Act 2006, it must forward the statement to the Company's
auditor not later than the time when it makes the statement
available on the website. The business which may be dealt with at
the Annual General Meeting includes any statement that the Company
has been required under section 527 of the Companies Act 2006 to
publish on a website
14. A copy of this notice, and other information required by
section 311A of the Companies Act 2006, can be found on the website
at www.titon.com/uk/investors/ .
15. Any member attending the meeting has the right to ask
questions. The Company must cause to be answered any such question
relating to the business being dealt with at the meeting but no
such answer need be given if (a) to do so would interfere unduly
with the preparation for the meeting or involve the disclosure of
confidential information, (b) the answer has already been given on
a website in the form of an answer to a question, or (c) it is
undesirable in the interests of the Company or the good order of
the meeting that the question be answered.
Documents available for inspection
16. Copies of the service contract of each Executive Director
and the letter of appointment of each Non-executive Director will
be available for inspection at the registered office of the Company
during normal business hours on any weekday (excluding Saturdays
and public holidays) and at Falconer Road, Haverhill, CB9 7XU, for
at least 15 minutes prior to and during the Annual General
Meeting.
Communications
17. Members who have general enquiries about the meeting should
use the following means of communication. No other means of
communication will be accepted. You may:
-- call the Link shareholders' helpline on 0371 664 0300 Calls
are charged at the standard geographic rate and will vary by
provider. Calls outside the United Kingdom will be charged at the
applicable international rate. We are open between 09:00 - 17:30,
Monday to Friday excluding public holidays in England and Wales;
or
-- write to Link Group, Link Group, PXS 1, Central Square, 29
Wellington Street, Leeds, LS1 4DL .
18. You may not use any electronic address provided in this
notice of Annual General Meeting for communicating with the Company
for any purposes other than those expressly stated.
Directors and Advisers
Directors
Executive
A C French (Chief Executive) - (appointed 3 May 2022)
C V Isom (Chief Financial Officer) - (appointed 22 December
2021)
Non-executive
K A Ritchie (Group Non-Executive Chair)
T N Anderson (Deputy Chair)
N C Howlett
G P Hooper (appointed 1 April 2022)
J Ward (appointed 1 April 2022)
Secretary and registered office
C V Isom
894 The Crescent
Colchester Business Park
Colchester
Essex
CO4 9YQ
COMPANY REGISTRATION NUMBER
1604952 (Registered in England & Wales)
WEBSITE
www.titon.com/uk/investors/
auditor
MHA Macintyre Hudson
6(th) Floor, 2 London Wall Place
London
EC2Y 5AU
NOMINATED ADVISER
Shore Capital and Corporate Ltd
Cassini House
57-58 St. James's Street
London
SW1A 1LD
BROKER
Shore Capital Stockbrokers Ltd
Cassini House
57-58 St. James's Street
London
SW1A 1LD
REGISTRARS AND TRANSFER OFFICE
Link Group
10(th) Floor
Central Square
29 Wellington Street
Leeds
LS1 4DL
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END
FR FLFIDLAIEFIV
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