REG - Titon Holdings PLC - Annual Financial Report
23/01/2025 07:00
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RNS Number : 3607U Titon Holdings PLC 23 January 2025
23 January 2025
LEI: 213800ZHXS8G27RM1D97
Titon Holdings Plc
Final results for the year to 30 September 2024
Titon Holdings Plc ("Titon", or the "Group"), 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
2024 ("FY24").
Summary Financial Results (continuing operations(2)):
2024 2023 (restated)(2)
£'000 £'000
Revenue 15,476 19,846
Gross profit margin 28.0% 28.4%
Underlying(1) EBITDA 5 813
Underlying(1) loss before exceptionals and tax (916) (155)
Exceptional items (1,515) (39)
Reported operating loss before income tax (2,431) (194)
Year-end net cash and cash equivalents 2,281 2,238
Financial overview
· Net Revenue decreased by 22% to £15.5 million (2023: £19.8
million), primarily due to continued subdued market conditions in the
housebuilding sector.
· Gross margin maintained at 28.0% (2023: 28.4%) as the Group
carefully managed cost and volume pressures.
· Underlying EBITDA(1) of £5,000 (2023: £813,000) with reduced
revenues mitigated by restructuring and actions taken to reduce costs and
improve efficiency in FY24.
· Underlying(1) loss before exceptional costs of £0.9 million
(2023: £0.2 million), principally reflecting the decline in sales. The Group
saw an improving trend as revenues stabilised and losses reduced significantly
in H2 after the benefits of cost actions started to be realised.
· Exceptional costs within continuing operations of £1.5 million
comprise the previously guided inventory write-down and restructuring costs.
· Loss from discontinued operations for FY24 was reported at £1.8
million (2023: £0.76 million), principally comprising a write down of the
carrying value of the investment in our associate, Browntech Sales Co. Ltd, of
£1.48 million (2023: £nil) prior to disposal of the South Korean operations
post FY24 period-end.
· Strong balance sheet maintained with no borrowings and cash
levels consistent across the year, at £2.3 million (2023: £2.2 million),
before the receipt of the £0.7m consideration from the sale of the South
Korean operations post FY24 period-end.
A year of significant strategic progress
· Despite the challenging market conditions, the Group made
significant strategic progress in the year to improve the performance of Titon
and return it to profitability and sustainable growth, including:
o The appointment of a new Chief Executive Officer and the continued
strengthening of the leadership team.
o Completion of a review of the Group's strategy and the initiation of a
comprehensive 5-year transformation strategy to streamline operations, enhance
the Group's capabilities, diversify the business, improve and focus the
product range on select core markets, and prioritise high-margin opportunities
for Titon.
o Improvements to gross margins from strategic actions and restructuring to
reduce overhead costs in H2, allowing the Group to significantly reduce net
losses as H2 FY24 progressed, almost achieving operational breakeven in the
final two months of FY24, a trend that has continued to improve into the start
of the current financial year.
o Continued commitment to innovation, demonstrated by the release of new
offerings in both the Mechanical Ventilation and Window and Door Hardware
businesses. For example, we achieved sales of £0.6m of our HRV4 range which
was launched in the summer of FY23.
o Completion of the sale of the South Korean operations, realising £0.7
million in cash, with funds received in December 2024.
Current trading and outlook
· The Board remains confident in the Group's foundations and its
strategic roadmap to achieve a blended organic revenue growth rate of 10% and
a net margin of 15% by 2028. The initial progress made in realigning our
business and focussing on key markets provides a solid foundation for growth
and, together with tentative early signs of a market recovery and forecast
construction market growth, provides confidence in the medium and long-term
future of the business.
· Early indications from the implementation of the Group's
transformation strategy have been promising with an improving financial
trajectory as restructuring measures undertaken in 2024 have improved the
Group's breakeven level of revenues.
· The Group's order book more than doubled across H2 FY24, with a
book-to-bill ratio of 1.13 by the end of the FY24 financial year (0.92 as at
30 September 2023) which the Board believes is a positive indicator of
improved order momentum.
· Trading in the first quarter of 2025 has been slightly ahead of
the Board's expectations, with operating losses lower than the same period in
each of the last two financial years, and the Group anticipates generating
positive cash flows from operations in the coming year.
· The Board is confident that further meaningful strategic progress
will be made across the business in 2025 and, whilst uncertainties in the
macroeconomic landscape are likely to persist, it remains confident that the
Group is establishing a solid foundation for sustained growth and long-term
success.
Commenting, Chief Executive Officer, Tom Carpenter said:
"We are encouraged by the positive momentum the business saw in the latter
half of FY24 and into the current financial year, supported by a strong uptick
in the Mechanical Ventilation Systems order book and steadier revenues across
both business units. Our focus on cash management, gross margin improvement
and cost reduction has helped preserve a healthy cash balance, enabling us to
continue investing in the business and in new products to enhance our
competitiveness. Looking ahead, we recognise that much work remains and view
2025 as a transitional year as we execute our turnaround strategy to drive
meaningful growth and profitability for the Group."
(1) Underlying loss before tax and underlying EBITDA are non IFRS measures
that the Board use to measure underlying performance excluding exceptional
items.
(2) The Group's FY23 results have been restated to classify the Group's South
Korean operations as a discontinued operation, consistent with the FY24
reporting approach. Revenue and performance metrics, including the changes
reported in FY24 against FY23, stated in this report therefore represent the
continuing operations of the Group, excluding the results of the Group's
former South Korean subsidiary and associated company
This announcement is released by the Company and contains information that
qualified or may have qualified as inside information for the purposes of
Article 7 of the Market Abuse Regulation (EU) 596/2014 ("MAR") as it forms
part of UK domestic law by virtue of the EUWA ("UK MAR"), encompassing
information relating to the Group's final results. For the purposes of UK MAR
and Article 2 of the binding technical standards published by the Financial
Conduct Authority in relation to MAR as regards Commission Implementing
Regulation (EU) 2016/1055, this announcement is made by Carolyn Isom, CFO.
For further information please contact:
Titon Holdings Plc
Tel: +44 (0)1206 713800
Tom Carpenter, Chief Executive
Carolyn Isom, Chief Financial Officer
Shore Capital - Nominated Adviser and Broker
Tel: +44 (0)20 7408 4090
Daniel Bush
Tom Knibbs
The full text of the Report and Accounts for the year to 30 September 2024 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/10/2025/01/Annual-Report-and-Financial-Statements-2024.pdf
(https://url.avanan.click/v2/r02/___https:/www.titon.com/uk/wp-content/uploads/sites/10/2025/01/Annual-Report-and-Financial-Statements-2024.pdf___.YXAxZTpzaG9yZWNhcDphOm86MzEwZDgzNTM1OWVhMDQ3ZjU4MjAxMDZmYTBlMWI1MWI6NzpmMDBhOmE0ZjNlNGY4NzA3ZmNlODdlNmRjZjBiYzJiOTUyM2NlNjllNzdiOGY5OTk5NmI4NTc1NWQ2NjQ3YzgyZDNlN2Q6cDpGOk4)
Annual Report and Financial Statements
for the year ended 30 September 2024
Chair's Statement
This year has been a period of significant transition for Titon Holdings plc.
Approaching the conclusion of my first year as Chair, I reflect on the
progress made in establishing a clear direction for the company's future. With
Tom Carpenter joining as Chief Executive in April, working alongside Carolyn
Isom, our Chief Financial Officer, we have started implementing meaningful
changes to streamline operations and enhance our team's capabilities. I am
confident that these foundations, coupled with the opportunities ahead,
position Titon well to realise its full potential.
Financial performance
In the year ended 30 September 2024, the Group's net revenue from continuing
operations declined to £15.5m (2023: £19.8m(2)), reflecting ongoing
pressures in the housebuilding sector, particularly within the new build
market. This led to an underlying operating loss(1) before exceptionals and
income tax for continuing operations of £0.9m (2023: underlying operating
loss of £0.2m). Despite these challenges, there were clear signs of progress
during the second half of the year, with improvements in underlying operating
performance, moving us closer to breakeven.
The Group carefully managed cost and volume pressures to deliver a relatively
stable gross margin of 28.0% (2023: 28.4%). Underlying EBITDA(1) for the year
remained positive at £0.005m (2023: £0.7m) and with strong working capital
management, we ended the year with a marginally increased cash position on
last year of £2.3m (2023: £2.2m). Given the receipt of a further £0.7m net
cash proceeds from the disposal of our interests in the Group's South Korean
operations post year end; our cash position will provide the financial
stability required to support future strategic investments.
We recognise the need to deliver enhanced profitability and cash generation in
future years and are encouraged by the strategic progress seen in the latter
part of the year and the continuation of this into the new financial year.
Strategy
Under the leadership of our recently appointed Chief Executive, we launched a
comprehensive five-year strategic plan with our core goal and purpose being
the ambition to drive value for our shareholders and stakeholders. A
significant milestone within this strategy was the decision to exit the
loss-making South Korean business, enabling us to focus on core markets closer
to home where we see the greatest potential for growth and profitability. By
simplifying our operations, driving a more focussed product range and
prioritising high-margin opportunities, we are laying the foundations to
create a more agile organisation, capable of responding effectively to
evolving market demands. We continue to explore ways to expand the market
opportunity and business, reviewing new adjacent market sectors, widening
customer networks and reviewing and improving the product range. The early
results of this strategy are promising, and we are committed to its successful
execution.
Dividends
Consistent with the decision taken at the time of the Group's interim results,
the Board has taken the difficult decision not to recommend a final dividend
for this financial year. This approach reflects our priority to rebuild
profitability and invest in opportunities that drive long-term shareholder
value. We understand the importance of dividends to our shareholders and are
committed to reinstating a progressive dividend policy as soon as our
performance supports it.
Our people and culture
Our progress would not have been possible without the resilience and
commitment of our people. Over the past year, they have adapted to significant
changes in leadership and key initiatives while navigating difficult market
conditions. I am grateful for their efforts and the culture of ambition and
collaboration they have fostered, which is central to Titon's strategy and
ambitions.
Board
We have seen significant board changes during the year; I expect more
stability going forward. I joined in January 2024, and we welcomed Chief
Executive Tom Carpenter in April 2024. Tyson Anderson and Nick Howlett left
the Board during the latter part of the year, and I want to thank them for
their contributions during their many years with Titon. I am confident that we
now have a strong and effective Board capable of guiding Titon through the
next stage of its evolution.
Investors
Open communication with our investors is a cornerstone of our approach.
Throughout the year, we have ensured regular engagement and provided updates
on our progress, an area we have focussed on enhancing this year. We remain
committed to transparency and welcome dialogue with our shareholders as we
continue to execute our strategy.
Outlook
The recent cash completion of our exit from the South Korean operations has
reinforced our focus and strengthened our financial position. As we look
ahead, we see 2025 as a pivotal year for Titon. While challenges persist, the
progress made in realigning our business and focussing on key markets gives us
confidence in our future. The performance in the first quarter of 2025 has
been slightly ahead of our expectations and the increased order book and book
to bill ratio is encouraging. Early signs of market recovery, alongside our
strategic initiatives, provide a solid foundation for growth. On behalf of the
Board, I thank all our stakeholders for their ongoing support as we work to
deliver long term sustainable value.
On behalf of the Board.
Jamie Brooke
Chair
22 January 2025
Notes:
(Non IFRS GAAP measures)
(1) The Group uses some alternative performance measures (APMs) to track and
assess the underlying performance of the business. These measures include
underlying operating loss, underlying loss before tax and underlying EBITDA.
The reconciliation of the Group's reported profit before tax to adjusted
profit measures of performance is summarised in the table on page 10.
(2) The Group's FY23 results have been restated to classify the Group's South
Korean operations as a discontinued operation, consistent with the FY24
reporting approach. Revenue and performance metrics, including the changes
reported in FY24 against FY23, stated in this report therefore represent the
continuing operations of the Group, excluding the results of the Group's
former South Korean subsidiary and associated company.
( )
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.
Chief Executive's Review
Overview of 2024
Titon endured a challenging year during 2024, as headwinds in our core
residential new-build construction market resulted in a significant drop in
both sales and profitability. However, despite this we made significant
strategic progress. We introduced new leadership to the business and adopted a
more focused and disciplined approach to our decision making. During this
period, we restructured the company reducing our operating costs and reached
an agreement to divest our stake in the loss-making South Korean business.
Despite recent years of underperformance, Titon's core strengths remain firmly
in place. We are free of borrowings, we have maintained our year-end cash
position at essentially the same level as at the start of the period, our
product offerings remain competitive, and our workforce is committed and
engaged.
Considering our performance over the financial year, it is important to
provide context regarding the factors that have shaped Titon's current
position and to outline the actions being undertaken to restore the company to
growth and profitability. Historically, until 2019, our South Korean business
was the primary driver of the Group's profitability. This strong performance
obscured inefficiencies and weak performance within our core UK business. The
subsequent decline in the South Korean market, compounded by the disruptions
of the Covid-19 pandemic, a significant downturn in the residential new-build
construction sector, and a period of inconsistent leadership, culminated in
the underperformance recorded in FY24.
I joined Titon in April 2024, midway through the financial year. My initial
assessment was that, while the company had made efforts to strengthen its
management team and reduce operational costs, it remained overly
inward-looking and lacked strategic clarity and direction. Over time, organic
expansion had introduced complexity, resulting in a reactive approach,
diminished operational effectiveness and an urgent need for simplification and
streamlining. Since joining, my focus has been on developing a comprehensive
transformation strategy and initiating key actions to drive alignment, improve
efficiency, and position the business for sustainable growth.
Our South Korean business had become loss making and was no longer a strategic
fit and was a clear contributor to the unnecessary complexity in the Group.
Consequently, in collaboration with the Board, the decision was made to
negotiate an exit from the business. On 24 October 2024, we announced that an
agreement had been reached to sell our South Korean interests to our partners
for a net cash sum of £0.7m. The completion of this transaction was announced
on 16 December 2024.
Summary Results
Continuing operations
· Revenue decrease of 22.0% to £15.5m (2023: £19.8m)
· Group underlying operating loss before tax and exceptional items
of £0.9m (2023: £0.2m)
· Group operating loss before tax including exceptional items of
£2.4m (2023: £0.2m)
· Loss per share of 17.41 pence (2023: 1.51 pence)
· Year-end net cash of £2.3m (2023: £2.2m)
· Loss for the year from discontinued operations of £1.8m (2023:
loss of £0.8m)
Business model
In assessing the performance of the business, the Directors evaluate the two
primary operating business units:
· Window and Door Hardware: This business unit designs, manufactures
and sells natural ventilation products (trickle vents) and hardware solutions
for the window and door fabricator markets across the UK, Europe and the
United States. Sales from this business unit accounted for 54% of the Groups
revenue from continuing operations in this period (2023: 50%).
· Mechanical Ventilation Systems: This business unit designs,
manufactures and sells mechanical ventilation systems tailored for residential
applications across UK and Europe. Sales from this business unit accounted for
46% of the Groups revenue from continuing operations in this period (2023:
50%).
The principal activities within these business units include design,
manufacturing, marketing, and sales.
Titon's strategy is to grow both business units through market expansion,
market penetration, and the development of new innovative products.
The Group generally organises its sales and marketing activities into these
business units, with manufacturing and all other services supporting them both
on a shared basis. The executive leadership team manages both business units.
In the UK, the Group has a direct sales force for each business unit and aims
to win specifications for its products through its dealings with
developers/housebuilders, architects, building services engineers, window and
door profile manufacturers 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 and Door Hardware and Mechanical
Ventilation Systems, is to appoint local distributors. Within the Mechanical
Ventilation Systems business unit, the Group also supplies OEM (Original
Equipment Manufacturer) products for its customers.
The Group also has a wholly owned subsidiary, Titon Inc., based in Indiana in
the USA. Sales into this market accounted for 5% of Group revenue from
continuing operations during the year (2023: 4%).
The Group manufactures products in the UK, which are sold domestically and
exported. Products manufactured in our UK factory account for 73% (2023: 80%)
of overall Group turnover The remaining 27% (2023: 20%) 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.
Our markets
Both business units primarily serve the residential new build market. The
United Kingdom remains our largest market, accounting for 81% of Group
revenue. This sector is heavily influenced by regulations governing indoor air
quality, occupant comfort, security and energy efficiency.
In 2024, the UK residential new-build market experienced a substantial
contraction. The Office for National Statistics reported a 56% decline in new
build starts, while Savills highlighted an 11% reduction in completions during
the first half of the year compared to 2023. However, market forecasts
anticipate a return to modest growth in 2025 and 2026. These projections,
combined with the objectives of the new UK government and recent growth in our
order book, provide a cautious optimism as we enter 2025.
Window and door hardware
Our window and door hardware business unit supplies trickle vents and a wide
range of fenestration hardware directly to window, door, and profile
manufacturers. Titon holds a leading position in the UK market for trickle
vents, offering the most extensive product range available. Additionally, we
supply an array of complementary products, including locks, handles, and
hinges.
The market can be broadly segmented into PVCu and aluminium products. PVCu
dominates the high-volume market, while aluminium is primarily used in premium
residential and non-residential applications. For PVCu customers, competitive
pricing and exceptional customer service are critical, with most transactions
being short cycle, typically fulfilled within the same month. In the aluminium
market, product specification, technical expertise, and performance are
paramount areas where Titon is well-positioned to excel.
Despite significant contraction in the window and door hardware market linked
to new-build projects, evidenced by the exit of several PVCu fabricators, we
see opportunities for growth. These include cross-selling a broader product
range to existing customers and expanding our focus on the aluminium segment.
We anticipate that these initiatives, alongside a broader market recovery,
will support modest growth in this business unit in 2025.
In 2024, the window and door hardware business unit reported a 16.8% decline
in revenue, decreasing from £10.0m in 2023 to £8.3m. This contraction was
primarily driven by the UK market, where revenues fell 19.9% year-on-year. In
contrast, exports, which represent a smaller portion of total revenue,
declined by only 0.9% and remained profitable throughout the year.
A review identified key differences between the UK and export markets. The UK
business has been predominantly focused on PVCu window and door manufacturers,
while the export business serves higher-end aluminium and wood window
manufacturers. The UK window and door hardware business contracted in line
with the broader UK PVCu market, leading to intensified price competition
amidst declining market volumes.
While we remain committed to serving PVCu customers, we shifted our focus
towards aluminium product offerings in the UK during the second half of the
year. This strategic pivot began delivering measurable results, improving
margins and contributing to an underlying profit for the business unit in the
final quarter of 2024 and this has continued into FY25.
Overall, the Group strategy review has enabled us to realign our focus toward
markets and opportunities with stronger margins and enhanced returns on
investment. Key decisions, including an increased emphasis on the UK aluminium
window and door segment, have collectively positioned us more favourably for
the year ahead.
Mechanical ventilation systems
Our mechanical ventilation systems business unit delivers a comprehensive
range of solutions to the residential new-build market, with Mechanical
Ventilation Heat Recovery (MVHR) systems representing our largest product
category. As modern homes become increasingly airtight and well-insulated,
effective ventilation has transitioned from an optional feature to an
essential requirement. This business unit has therefore expanded significantly
over the last 15 years and is expected to enjoy further growth over the medium
term. This evolution presents growth opportunities for Titon by providing
innovative systems meeting both current standards and emerging regulations,
such as Part O requirements aimed at mitigating overheating risks.
Operating in a project-driven environment, this business unit typically
secures medium to long-term contracts for building developments, with orders
fulfilled over months or years. In 2024, market growth for ventilation systems
was primarily driven by social housing refurbishment projects, while the
residential new-build segment contracted. Simpler refurbishment-oriented
solutions, such as Positive Input Ventilation (PIV) systems, performed well,
whereas more complex Whole House MVHR systems remained flat. Looking ahead, we
expect demand for MVHR solutions to increase in 2025.
The mechanical ventilation systems business unit experienced a 27% decline in
revenue during 2024, falling from £9.8m in 2023 to £7.2m. This decline was
predominantly driven by ongoing challenges in the European segment, where we
supply customised mechanical ventilation products to OEM partners and
distributors under their branding. The existing business model has proven
ineffective, yielding unsatisfactory margins and returns relative to the
resources deployed.
Following a strategic review, we have decided to deprioritise new OEM
activities in the European region, concentrating on standard products and
engaging only in business opportunities that meet minimum margin thresholds.
In contrast, the UK ventilation systems business demonstrated more promising
trends despite a 16.6% year-on-year decline in revenue. Notably, the second
half of 2024 saw a substantial increase in ordering activity, with sales
growing 9% compared to the first half of the year. Additionally, our market
share in MVHR systems improved after four consecutive quarters of decline.
Between the start and end of the reporting period, the UK Ventilation Systems
order book had more than doubled, positioning the business for a positive
start in 2025.
Strategy
While the company has faced significant challenges due to market conditions,
our results make it evident that the strategies employed in recent years have
not delivered the desired outcomes. Comparative benchmarking against our peers
reveals that Titon operates with lower margins, slower growth, and reduced
productivity. To address these shortcomings, the management team and the Board
have undertaken a comprehensive review of the Group's strategy and developed a
clear 5-year strategy and turnaround plan to reposition the company for
sustainable success.
Our benchmarking indicates that competitors are achieving profitable growth
which when combined with Titon's established product range, production assets,
distribution network and relationships, demonstrates that Titon has the
potential to do the same. Accordingly, we have set an ambitious target of
achieving a blended organic revenue growth rate of 10% and a net margin of 15%
by the end of 2028.
Our purpose is to be the premier partner for solutions that enhance
in-building air quality, occupant comfort, and security. By delivering
competitive solutions and exceptional service, we aim to outpace our
competitors and solidify our position as a leading player in our target
markets.
Our revenues are currently heavily reliant on the UK New Build market, leaving
both business units particularly vulnerable to downturns in this sector.
Additionally, our Window and Door Hardware business unit has been overly
concentrated on lower-margin PVCu fabricators, limiting profitability.
While the UK New Build market remains a key focus, we recognise the need for
both business units to diversify into adjacent markets to support sustainable
future growth. For example, the Ventilation Systems business can expand into
the Social Housing sector, while the Window and Door Hardware business unit
can target the RMI and Non-Residential Commercial markets, particularly for
aluminium windows and doors.
Geographically, while we will continue to engage with mainland Europe and the
United States on a tactical basis, prioritising opportunities where margins
are attractive, and our approved and new products align, we believe our core
strategic focus must remain on the United Kingdom. This approach will enable
us to build a stronger foundation for sustainable growth and resilience. We
believe our local design, testing and sales competency here makes us unique.
The Mechanical Ventilation Systems business unit will concentrate on
influencing project specifications early in the process through expert design
and technical support. Meanwhile, the Window and Door Hardware business unit
will prioritise delivering high-quality products, supported by exceptional
customer service. To achieve our strategic objectives, we are focused on
excelling in the following five key areas:
1. Superior Products: A streamlined product portfolio to prioritise
differentiation and market relevance.
2. Consultative Selling: Proactive engagement with customers early in
the project lifecycle to influence and shape specifications.
3. Customer Service: Added value delivered through reliability,
responsiveness, and comprehensive support.
4. Marketing: Effective communication of our value proposition, brand,
and the generation of leads.
5. Efficient Manufacturing and Organisation: Optimised costs, improved
processes, and enhanced productivity.
To support these priorities, we have launched a series of internal programs
aimed at:
· Improving margins and optimising our product offerings.
· Enhancing our marketing and improving commercial operations.
· Entering new adjacent markets.
· Driving operational excellence and increasing organisational
efficiency.
· Engaging employees and developing a high-performance culture.
These initiatives are designed as long-term efforts focused on sustainable,
incremental improvements rather than quick fixes. By simplifying our business,
strengthening our operations, and optimising our organisational structure, we
aim to build a resilient and profitable business that delivers value to all
stakeholders.
Organisational structure
We have continued to strengthen our senior leadership team, successfully
recruiting a Sales Director for our Mechanical Ventilation Systems business
unit at the end of the financial year. This was a strategic appointment that
reflects our commitment to driving growth and supporting new sector expansion
in this key market.
Additionally, we look forward to onboarding our new Operations Director in
February 2025, who we believe will bring added expertise and change management
into our leadership team.
Outlook
While the financial results for the year reflect a challenging period, Titon
has made significant progress during this period. I am immensely proud of our
team's resilience and adaptability, which have enabled us to navigate
challenging circumstances and emerge in a stronger position. There is a
growing sense that we have turned a corner.
Our order book saw growth in the second half of FY24; we entered into the
current financial year with orders at the same levels we exited FY23 and with
an improved book-to-bill ratio of 1.13 (FY23 exit book to bill ratio of 0.92).
The new financial year has begun positively, with operating profits in the
first 3 months of the year exceeding those of the same period over each of the
prior two years. Our cash flow generation remains robust, and our cash
reserves have also grown with the receipt of funds realised from the sale of
our South Korean operations. These developments underscore the early success
of our turnaround strategy.
As of January 2025, the UK economy is projected to grow modestly, with
forecasts ranging between 1.5% and 2.0% for the year, alongside government
targets to boost residential construction, which provides a level of cautious
optimism regarding improving market conditions. Whilst we acknowledge the
ongoing uncertainties in our relevant sectors and the broader UK economy, we
anticipate 2025 to be a transitional year for Titon as we continue to make
progress against our turnaround plan. The Board remains confident that both of
our business units will achieve meaningful progress in 2025, and further
establish a solid foundation for sustained growth and long-term success.
Financial and operational review
The Consolidated Income Statement is set out on page 47. A summary of the
results for continuing operations along with other selected Key Performance
Indicators ("KPIs") is as follows:
2024 2023
£'000 £'000
Revenue 15,476 19,846
Gross profit 4,333 5,628
Gross profit margin 28.0% 28.4%
Underlying loss before exceptionals and tax(1) (916) (155)
Exceptional items (1,515) (39)
Operating loss before income tax (2,431) (194)
Income tax credit 473 25
Loss after income tax (1,958) (169)
Revenue per employee 109 111
Loss after tax per employee (13.8) (0.9)
Underlying EBITDA(1) 5 813
Loss for the year from discontinued operations (1,813) (756)
Year-end net cash and cash equivalents 2,281 2,238
Titon faced a challenging financial year in 2024, reflecting ongoing pressures
in its core markets and the impact of strategic decisions taken to reposition
the business for long-term growth. Revenue decreased by 22%, falling from
£19.8m in 2023 to £15.5m in 2024. This decline was largely driven by weaker
performance in both business units, primarily influenced by headwinds in the
UK New Build market.
Gross profit reduced from £5.6m in 2023 to £4.3m in 2024, with the gross
profit margin remaining relatively stable at 28.0% compared to 28.4% in the
previous year. This stability underscores the company's ability to manage cost
pressures effectively despite the lower revenue base.
The underlying loss before exceptionals and tax widened to £0.9m in 2024,
compared to a loss of £0.2m in 2023, reflecting the effect of lower revenue
on the Group's overhead cost base.
Exceptional items for the year amounted to £1.5m, a significant increase
compared to £0.04m in 2023. These exceptional costs were primarily comprised
of £0.2m restructuring costs and £1.3m in a one-off, non-cash inventory
write down. The inventory write-down was the result of a comprehensive Board
review of the slow-moving inventory and obsolescence allowance. During the
Covid-19 pandemic, the company made substantial purchases of excess inventory
in anticipation of extended supply lead times. While this decision was deemed
necessary to mitigate supply chain disruptions during the global crisis, the
Group now recognises the need to reassess and recalibrate its purchasing
strategy. Given the decline in trading conditions and the performance
challenges faced over the past year, the decision was made to increase the
allowance for slow-moving and obsolete inventory. This adjustment reflects a
more cautious approach to inventory management moving forward, ensuring that
future purchasing aligns more closely with market conditions and performance
expectations. The impact of this one-off write-down, while non-cash,
underscores the company's commitment to maintaining a more efficient and
aligned inventory strategy as it moves forward with its turnaround efforts.
As a result, the operating loss before tax significantly increased to £2.4m
in 2024, compared to £0.2m in the prior year.
The loss on discontinued operations reflects the overall impact on the sale of
our Korean business. More details on this can be read in note 26.
On a per-employee basis, revenue fell slightly from £111,000 in 2023 to
£109,000 in 2024, while the loss after tax per employee rose sharply from
£900 to £13,800, reflecting the overall downturn in profitability.
Despite the challenging year, the company maintained a robust cash position,
ending the year with net cash and cash equivalents of £2.3m, a slight
increase from £2.2m in 2023. This stability highlights the company's strong
cash management practices and provides a solid foundation for executing its
turnaround strategy. The Group received a cash consideration payment of £0.7m
after the FY24 year end in respect of its disposal of the South Korean
operations announced in October 2024.
Alternative performance measures
The Group uses a range of non-IFRS performance measures to monitor the
performance of the business. The Group believes these provide information on
the ongoing trading of the business to help investors and other stakeholders
evaluate the performance of the business and are measures commonly used by
certain investors for evaluating the performance of the Group. In particular,
the Group uses measures that reflect the underlying performance, on the basis
that this aids the user in understanding the core business performance of the
Group. The Group reports underlying performance in addition to the financial
information prepared under IFRS. The Board believes that underlying
performance provides additional and consistent measures of underlying
performance by removing items that are not closely related to the Group's
day-to-day trading activities, and which would typically be excluded in
assessing the value of the business. Underlying performance is used by the
Board for internal performance analysis, planning and employee compensation
arrangements. This term is not defined under IFRS and may therefore not be
comparable with similarly titled measures reported by other companies. They
are therefore not intended to be a substitute for, or superior to, IFRS
measures of performance. A reconciliation of underlying to IFRS performance is
shown below. The Board uses its judgement to consider the classification of
items as non-underlying at the beginning of each financial year and prior to
commencement of any significant restructuring or similar event, subject to the
relevant criteria. Underlying performance may be adjusted for significant
one-off items such as restructuring costs, gains and losses on disposal of
assets, impairment charges and their reversal, the costs of litigation and its
outcome, and one-off non-trading income and costs. Restructuring costs, which
may include redundancy costs and associated professional fees, are only
included as non-underlying when they will not be incurred in the ongoing
business, and they are incremental to normal operations undertaken to add
value to the business.
The following table shows how these APMs are calculated:
Continuing operations 2024 2023
£'000 £'000
Loss before income tax (2,431) (194)
Exceptional items (note 27) 1,515 39
Underlying operating loss before income tax (916) (155)
Net interest cost 19 14
Depreciation and amortisation 902 869
Underlying EBITDA 5 728
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 strategy. 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 Tax Measured against budget and prior year on monthly basis
EBITDA Measured against budget and prior year on monthly basis
Individual legal entities' performance Measured against budget and prior year on monthly basis
Individual business unit performance Measured against targets and prior year on weekly basis
Sales, margins and prices of core products Top 20 products reviewed monthly (at business unital management levels and
operating segments)
Sales to customers Top 20 customers (at business unital 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 monthly by Board and by senior management
Working capital Inventory, average debtor days and average creditor days reviewed monthly by
Board and senior management
Graphical representations of some of these KPIs and other financial
performance measures for continuing operations only for the years ended 30
September are as follows:
The following graphs show the performance for discontinued operations:
2023/24 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:
· New Chief Executive, Tom Carpenter welcomed to the Group.
· New Chair, Jamie Brooke welcomed to the Group.
· A comprehensive review was conducted during the year, culminating in
the establishment and implementation of a clear 5-year strategy and turnaround
plan for the business. Significant improvement in working capital including
stock levels and cash generation, reflecting the investment in people and
processes.
· Achieved sales of £0.6m of our HRV4 range which was launched in the
summer of FY23.
· Launch of several new key products including the Hexalock door lock
product and the Titon HRV Cool Plus.
· Continued development of the ERP system to deliver further
improvements to business processes.
· Implementation of a new CRM system and improvement to lead
management.
· Continued delivery of all business imperatives as detailed in last
year's report.
· As part of our drive to improve operating costs and simplify the
business, we restructured the business in July and reduced the size of our
Board.
· Recruitment was completed for key new strategic hire of Sales
Director - Ventilation Systems.
· As part of our strategy review and turnaround efforts, we have
undertaken a comprehensive review of roles and responsibilities within the
Group. This process has led to several key changes designed to ensure that we
are operating to our strengths while maintaining a lean and efficient
organisational structure. By aligning roles more closely with core
competencies and business priorities, we aim to enhance productivity and
streamline decision-making processes.
· We have continued to enhance leaner, more efficient processes for
some of our manufacturing activities to increase output to support future
growth. We have made further improvements in our 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 reviewed the gross margins mix of our business units and refocused
our attention on meaningful improvements on margin.
· Since May 2024, we have seen a significant increase in orders, with
our orders now at similar levels to the start of the previous financial year.
Where we ended FY23 with a book-to-bill ratio of 0.92, we end FY24 with a
book-to-bill of 1.13.
2024/25 activities
The focus for 2024/2025 is to return to profit through delivery of the
strategic initiatives outlined in the goals and strategy section on pages 5 to
6. We have set budgets for both business units of our Group which reflect our
view of market conditions: the continued positive impact from the revisions of
building regulations and associated standards and our internal growth
ambitions. Specific initiatives for the current fiscal year include:
· Gross Margin Improvement: Enhancing margins through manufacturing
efficiencies, value engineering, and better product mix.
· Product Roadmap: Streamlining our product portfolio, focusing on
market-driven innovation and patentable technologies.
· Digital & Inbound Marketing: Improving our online presence,
refining our value proposition, and generating high-quality leads.
· Commercial Excellence: Aligning the entire organisation behind
exceptional customer service, including after sales support.
· Entry Into Adjacent Markets: Diversifying beyond the residential
sector to create a more balanced business.
· Operational Excellence: Implementing LEAN principles, reducing waste,
and optimising processes.
· Organisation Development: Aligning structure, roles, and
responsibilities with business unit performance and individual strengths.
· Employee Engagement & Culture: Cultivating the "Titon Way" to
foster accountability, pride, and continuous professional development.
· Total Quality: Enhancing quality metrics, eliminating waste, and
pursuing Six Sigma methodologies to become a world-class manufacturer.
Environmental Social and Governance Report
Environmental, Social and Governance (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 2023 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. We intend to disclose as much as is practical of
our climate related activities.
We believe Titon contributes to making the world a better place with its
purpose being the provision of fresh, clean air. Nothing has changed this
belief in 2024, indeed the incidences of poorly ventilated housing, especially
in the social housing and private rental markets means that good ventilation
is even more necessary than before.
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 trade association Beama Ltd to promote ventilation in the
UK.
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 and is certified and audited to 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.
During the previous financial year Titon joined forces with a Carbon Partner,
Auditel, to deliver our objective of becoming Carbon Neutral, while on our
longer-term journey to reaching Net Zero. This is initially a three-year
programme to calculate our Scope 1,2 and 3 emissions, which will be
increasingly necessary to meet customer requests, and will also focus on
additional actions we can take to reduce those emissions. Our goal is to align
our carbon footprint reduction targets with broader cost-saving initiatives.
We have recently completed the work for 2023 and will be completing 2024 in
due course. Once we have completed the data gathering, our carbon footprint
will be calculated and audited, and we will have a roadmap of how we achieve
our ambitions, with clear milestones in place. We aim to report more on this
in next year's annual report. We look forward to working with our supply chain
to reduce the Scope 3 emissions as they will form the largest part of our
overall emissions.
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. The consumption was recorded
as follows:
2024 2023 Reduction
kWh kWh
Natural gas 361 442 18%
Electricity 167 216 22%
Transport 250 381 35%
Total kWh 778 1,039 25%
In accordance with Statutory Instrument 2008/410 the Group presents the
following information in respect of its CO2 emissions during the period.
Global Greenhouse Gas (GHG) emissions data for the period are:
2024 2023
Source: tCO2e tCO2e
Scope 1 emissions
Combustion of fuel and operation of facilities 420 532
Scope 2 emissions
Electricity, heat, steam and cooling purchased for own 167 216
use
Total tonnes of CO2 equivalent 588 748
CO2 emissions normalised per £ million of sales of manufactured products 42.4 40.9
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 2023.
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 £150,000 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.
· 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 targeted to reduce waste to landfill from the Haverhill
production site by 50% by end 2024 which we achieved, and we have set the same
target for 2024, 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.
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:
2024 2024 2024 2023 2023 2023
Male Female Total Male Female Total
Directors 4 1 5 5 1 6
Senior Managers 7 3 10 6 2 8
Other 73 46 119 111 58 169
Total 84 50 134 122 61 183
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 35 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, we are confident that we have applied the 10 principles identified
by the QCA Code throughout the accounting period in question. There is a new
QCA code for 2024 applicable to Titon from 1 October 2024 and we will
transition to report on this in the next financial year as it takes effect,
but we are confident that we already meet most of the new principles.
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 2024, we continued to 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 2024 19 reported
accidents, 2 RIDDOR reported
· January to December 2023 54 reported
accidents, 0 RIDDOR reported
Compared to 2023, we have seen a reduction in the number of accidents reported
in 2024, and the vast majority of these have been minor. We see this reduction
as a result of our continued promotion of a positive health and safety
culture. Our continued focus on a 'safety first' culture means we actively
encourage the reporting of all incidents, no matter how minor, so that we can
track trends and root causes, which are reviewed monthly by our internal
health and safety committee and representatives. We also have a robust
hazard reporting process in place where anyone can identify a hazard and,
where possible resolve it. During 2024 over 470 individual hazards (risks)
were reported with 93% of those hazards resolved in year. The group is very
pleased to see that our safety culture continues to improve, that all
incidents are properly reported and investigated, and that hazard reporting
and resolution will help 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 2024, we had reached 230 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
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 2024, 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:
Stakeholder Group Why do we engage with them? How does the Board engage with them?
Shareholders The Board needs to know investors' views so they can be considered when making We have regular dialogue with institutional investors and significant
strategic and governance decisions. individual shareholders in order to develop an understanding of their views.
We also consider the views of our Nominated Adviser and Broker in this respect
and the feedback they receive from shareholders.
We aim to provide fair, balanced and understandable information about the
business to enable informed investment decisions to be made. Our AGM is an important forum for private shareholders to meet the board and
ask any questions they may have.
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.
We use Investor Meet Company to present our interim and final results
presentations each year.
Employees Employee engagement is critical to our success. We aim to create a diverse and We engage with our employees through site communications, consultation with
inclusive workplace where employees can reach their full potential. This employees, briefings, question boxes, performance reviews, surveys and notice
ensures we can retain and develop talented people. boards. Employees are also written to individually on matters which are deemed
important. Every employee is issued with a comprehensive employee handbook
with all of the employment conditions and policies set out clearly so that
everyone can see what is expected of them.
We have the highest regard for the health, safety and wellbeing of our
employees. We perform an annual staff survey and also have recently introduced monthly
pulse surveys.
We continue to make every effort to protect our employees.
Customers Our strategy of attaining sustainable growth in profit and building goodwill We engage with our customers through:
in our brands will only be achieved through an understanding of the needs of
our customers and the markets we serve. · Regular visits and meetings including virtual meetings
· Industry exhibitions
· 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 an important contribution to our business success. Engaging Our supplier relationship management is led by our procurement team and
with our supply chain means that we can ensure security of supply and speed to supported by R&D and Sales. We engage with our suppliers by holding
market. Carefully selected high-quality suppliers ensure we deliver market regular meetings with them and via a feedback process through monitoring their
leading innovative products to meet our customers' expectations. performance.
Community/ Environment The Board has a full understanding of the importance of good community We provide ventilation products that are beneficial to health and that are
relations. We aim to contribute positively to the communities and environment better for the environment.
in which we operate.
Many of our capital expenditure projects focus on improving energy efficiency
and reducing environmental emissions from our factories.
We have ISO 14001 Accreditation in the UK.
We work with our stakeholders to promote good indoor air quality.
Government and Regulatory Bodies Government set the regulatory framework within which we operate. We engage We participate in industry bodies and working groups and selective All-Party
to ensure we can help in shaping new policies, regulations and standards, Parliamentary Groups and plenary sessions.
which assist in improving indoor air quality, and ensure compliance with
existing legislation. We participate in and respond to industry and government consultations.
Application of s.172 during the year
We have continued to comply with the requirements under s.172. Key decisions
made included:
· Restructured the Board to ensure its effectiveness.
· Onboarded our new Chief Executive and Chair.
· Produced our 5-year strategic plan.
· Recruited our Sales Director - Ventilation Systems, a strategic hire.
· Agreed and negotiated a divestment from our South Korean operations.
· Agreed a new share option plan to be presented to shareholders for
approval at the AGM.
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
Business disruption
The Group's manufacturing and distribution operations could be subjected to Incidents such as a fire at the Group's or sub-contractor premises or the The Group has developed business continuity and disaster recovery plans.
disruption due to factors including incidents such as a major fire, a failure failure of IT systems could result in the temporary cessation in activity or
of essential IT equipment or a major cyber-attack on the Group. disruption of the Group's production facilities impeding the Group's ability
to deliver its products to its customers.
The Group maintains a significant amount of insurance to cover business
interruption and damage to property from such events. Additional measures have
There is also a risk of business disruption if key sub-contractors experience
been taken to ensure the security of the Group and customer data.
an incident on their site or were to cease trading. A cyber-attack could leave the Group open to a ransom demand or compromise
data security both for the Group and customers.
The Group has an annual building insurance review where actions are raised and
subsequently cleared internally, providing evidence to the insurer.
The Group gets a fire risk assessment carried out by an external party every 2
years (last completed 29 October 2024) and annually internally 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.
Risk Potential Impact Mitigations
Supply chain risks
The risk of extended lead times beyond forecast windows due to restricted Decrease in cash due to increased stock holding. The Group operates strategic purchasing of key long lead time items.
component availability.
Loss of customers due to an inability to meet demand or uncompetitive pricing. The Group holds weekly Sales Inventory and Operations Planning reviews.
The risk of continued material price inflation and hence margin erosion.
Increased risk of obsolescence. The Group has a policy of dual sourcing key components where possible.
The risk of international trade sanctions or interruption of supply due to
geopolitical uncertainty, such as the Russian invasion of Ukraine and supply
interruptions in China.
Delays in supplying customers and additional administrative costs. The Group ensures robust supplier relationship management.
Prices may increase which could impact our sales and profitability. The Group can implement customer agreements to incorporate specification
changes if required.
The Group will obtain supplier declarations and compliance information when
required.
Recruitment and retention of key staff
The Group is dependent on the continued employment and performance of its
senior management and other skilled personnel.
Loss of any key staff without adequate and timely replacement could disrupt The Group aims to provide competitive remuneration packages and bonus schemes
business operations and the Group's ability to implement and deliver its to retain and motivate key staff.
growth strategies and financial targets.
Recruitment and retention of staff
The Group is dependent on the continued employment and performance of all
staff.
Failure to maintain adequate staffing levels could impact on all business The Group reviews market conditions, cost of living and the National Living
activities and the Group's ability to meet its defined targets. Wage and aims to provide competitive remuneration packages 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 on the level of activity in the construction industry Lower levels of construction industry activity within any of the key markets The Group closely monitors trends in the industry using a wide range of
in the countries in which it markets its products and is therefore susceptible in which the Group operates could reduce sales and production volumes external data including the Construction Products Association's reports and
to any changes in economic conditions. adversely, thus affecting the Group's financial results. This is considered to forecasts for the UK and other reports in the rest of the world. Current
be a high risk to the Group given the current inflationary pressures and a forecasts for residential new-build and refurbishment markets in the UK
predicted low growth economy. suggest moderate growth in 2025.
The Group spreads its risk by having multiple product lines and customer bases
across multiple markets and channels. We continually monitor our reliance on
single key customers and actively seek to expand our customer base.
The Group monitors product demand on a weekly basis and is able to respond
accordingly in re-allocating or varying resources.
Risk Potential Impact Mitigations
Government action and policy
The Group's business is significantly affected by Building Regulations in its Many of the Group's products are provided to customers in order to help them The Group monitors and attempts to influence Building Regulations through its
core markets as well as by Government action and policies relating to public to comply with Building Regulations in respect of ventilation. Changes to work with industry working groups.
and private investment. Regulations could adversely impact on sales volumes affecting the Group's
financial results.
Additionally, significant downward trends in Government spending could have an Changes in regulations and Government policy also provide the Group with new
adverse impact on the construction industry which could impact on sales and commercial opportunities.
production volumes affecting the Group's financial results.
Product liability
The Group manufactures electrical products that could cause injury to people A product safety issue or a failure or recall could result in a liability The Group operates comprehensive quality assurance systems and procedures
or property. The Group's products are also often incorporated into the fabric claim for personal injury or other damage leading to substantial money within its UK manufacturing processes and is subject to regular external audit
of a building or dwelling, which could be difficult to access, repair, recall settlements, damage to the Group's brand reputation, costs and expenses and as part of its ISO 9001 accreditation.
or replace in the event of product failure. diversion of key management's attention from the operation of the Group, which
could all affect the Group's financial results. Comprehensive end of line testing is carried out on all in-house manufactured
electrical products. Sample testing is carried out on bought-in 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 expose it to a variety of financial risks including Losses from any of these financial risks could impact the Group's financial The Group has financial risk management procedures and controls in place that
fraud, credit and foreign exchange risk. results. seek to limit the adverse effects of the financial risks.
The Group took out credit insurance during the year to mitigate the risk of
losses from bad debts.
Reliance on key customers and suppliers
Parts of the Group's business are dependent on key customers and key
suppliers.
Failure to manage relationships with key customers and suppliers could lead to The Group's strategic objective is to broaden its customer base wherever
a loss of business affecting the financial results of the Group. possible.
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.
This Strategic Report was approved by the Board on 22 January 2025 and signed
on its behalf by:
T Carpenter
Chief Executive
Directors' Report
The Directors present their report and the Group and Company financial
statements for the year ended 30 September 2024.
The Directors of Titon Holdings Plc throughout the financial year or
subsequent to the year-end are listed on pages 36 to 37.
A detailed commentary on the results for the year and discussion of future
developments is given in the Financial and Operational Review on pages 9 to 13
and an explanation of the Group's business strategy is included within the
Strategic Report on pages 6 to 8.
The Group's compliance with the QCA Code is set out in the report on page 36.
Substantial shareholders
As at 30 September 2024, the Company was aware 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 %
Harwood Capital LLP 3,150,000 28.00
J N Anderson 868,902 7.74
P E Anderson 718,900 6.39
C Ritchie 709,280 6.31
R Anderson 593,750 5.28
D J Barry 561,500 4.99
Share capital
The total issued ordinary share capital at 30 September 2024 consisted of
11,248,750 Titon Holdings Plc shares of 10p each.
Details of the authorised and issued share capital of the Company as at 30
September 2024 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/
(http://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 do not recommend the payment of a final ordinary dividend (2023:
0.5 pence final dividend paid). No interim dividend was paid during the year
(2023: 0.5 pence), so the total dividend for the year ended 30 September 2024
is nil pence per share (2023: 1.0 pence).
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 during the year amounted to £613,000
(2023: £658,000), of which £465,000 (2023: £467,000) was expensed to the
income statement and £148,000 (2023: £191,000) was capitalised as shown in
note 11
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 20 to 23 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 these policies are included in the Employee
Handbook which is issued to every employee. See the Strategic Report for more
details.
he 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 51). 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.
· Prepare 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.
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/ (http://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/ (http://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 32. 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 22 January 2025 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 2024 and 22 January 2025 the Company held no
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 Since the reporting date, the disposal of both
the subsidiary Titon Korea and associate Browntech Sales Co. Ltd was
completed. £0.7m was received 13 December 2024, marking the cessation of
Korean operations from that date.
Auditors
MHA have expressed their willingness to continue in office and a resolution to
reappoint them will be proposed the Annual General Meeting.
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 20 to 23. 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 £2.3m 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. 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 continuing operations
within the Group from 1 April 2025 to 31 January 2026 with all direct costs
being reduced accordingly but with all other costs and outflows remaining the
same. 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 £5.4m 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;
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 25 March 2025 commencing at 10.00 a.m. A notice convening the
Annual General Meeting of the Company for the year ended 30 September 2024 may
be found on page 87 of this document.
Shareholders are being asked to vote on various items set below (the
"Resolutions"). Resolutions 1 to 12 as listed below, are required to be passed
as ordinary resolutions.
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 financial
year ended 30 September 2024.
The Directors' Report was approved by the Board on 22 January 2025 and signed
by order of the Board.
Resolution 2 - to declare a final dividend
The Directors recommend a final dividend of nil pence per ordinary share.
Resolution 3 - to re-elect Mr Jamie Brooke as a Director
The Deputy Chair confirms that since his appointment 2 January 2024, Mr Brooke
has shown to be effective and demonstrates commitment in his role.
Resolution 4 - to re-elect Mr Thomas Carpenter as a Director
The Chair confirms that following performance evaluation Mr Carpenter
continues to be effective and demonstrates commitment in his role.
Resolution 5 - 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 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-appoint MHA as auditors
This resolution proposes that MHA should be re-appointed as the Company's
Auditors and authorises the Audit Committee to determine their remuneration.
Resolution 9 - to approve the Directors' Remuneration Report
Resolution 9 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 30 to 34.
Resolution 10 - 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 26 March 2024,
will expire at the forthcoming Annual General Meeting.
Resolution 10 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 £270,000,
representing approximately 24% of the nominal value of the ordinary shares in
issue on 22 January 2025.
The authority conferred by the resolution will expire on 24 June 2026 or, if
sooner, at the 2026 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 11 - Approval of the EMI Share Option Plan 2025 and the Standalone
Non-Tax Advantaged Option Agreement
Resolution 11 will approve the replacement of the Titon EMI Share Option Plan
2021 with the Titon EMI Share Option Plan 2025 (the principal terms of which
are summarised in the Appendix below and the Rules of which are produced in
draft form to this meeting and, for the purposes of identification, initialled
by the Chair) which shall be and it is hereby adopted and the Rules be and are
hereby approved in such draft form, subject to such amendments thereto
approved by, or by a committee of, the Directors as are necessary to carry the
same into effect and/or are necessary or desirable to obtain HMRC or other
regulatory approval thereto and the Directors be authorised to do all acts and
things which they may consider necessary or expedient for implementing and
giving effect to the said plan.
That, going forward, any options subject to the Rules of the Titon EMI Share
Option Plan 2025 shall be granted with an exercise price being equal to the
Company's volume weighted average share price in Bloomberg for the preceding 6
month period ending on the date immediately before an option is granted, being
the valuation methodology approved by HMRC by way of letter dated 10 December
2024 and subsequent email dated 7 January 2025.
To incentivise non-employees of the Company, the standalone non-tax advantaged
option agreement (the principal terms of which largely replicate the Titon EMI
Share Option Plan 2025) which is produced in draft form to this meeting, and
for the purposes of identification, initialled by the Chair) be and are hereby
adopted and approved in such draft form, subject to such amendments thereto
approved by, or by a committee of, the Directors as are necessary to carry the
same into effect and/or are necessary or desirable to obtain HMRC or other
regulatory approval thereto and the Directors be authorised to do all acts and
things which they may consider necessary or expedient for implementing and
giving effect to the standalone non-tax advantaged option agreement.
Resolution 12 - Approval for the Directors to vote in any meeting regarding
the Titon EMI Share Option Plan 2025 and the Standalone Non-Tax Advantaged
Option Agreement
Resolution 12 in the Notice of Annual General Meeting will give the Directors
power to vote and be counted in a quorum at any meeting of the Directors at
which any matter connected with the EMI Share Option Plan 2025 or the
Standalone Non-Tax Advantaged Option Agreement is considered, regardless of
any interest they may have in the plan or any non-tax advantaged options under
consideration. This is subject to the provision that no Director may vote when
the Directors are considering his own individual rights of participation in
the proposed share plan or non-tax advantaged option agreement.
In addition, there are two resolutions, being Resolutions 13 and 14, as listed
below, which will be required to be passed as special resolutions.
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 26 March 2024 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 £112,488 (representing
approximately 10.0% of the nominal value of the ordinary shares in issue on 22
January 2025). The power conferred by this Resolution will expire on 24 June
2026 or, if sooner, at the 2026 Annual General Meeting.
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 1,124,875 ordinary shares. This represents approximately 10% of the
Company's ordinary shares in issue on 22 January 2025. 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 24 June 2026 or, if sooner, at the 2026 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 22 January 2025 there were options outstanding over 285,000 ordinary
shares which, if exercised at that date, would have represented 2.5% of the
Company's issued ordinary share capital. If the authority given by Resolution
12 was to be fully used, these would then represent 2.5% 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 22 January 2025 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 2024.
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 base remuneration during the year. There is however a resolution to
introduce a new EMI share option scheme to replace the existing scheme.
Details of this are disclosed in the Directors' report and the notice of AGM.
There were no performance related bonuses paid in the year as the Group did
not meet its targets set out at the beginning of the year. However, the
Remuneration Committee did agree discretionary amounts payable both to C Isom
in respect of her covering the role of Chief Executive while the position was
vacant, and to G P Hooper while he temporarily covered the Chair position,
while that was also vacant. On behalf of the Board, I would like to express my
thanks to them both for agreeing to the extra responsibility for those
periods.
An Ordinary Resolution will be put to shareholders at the forthcoming Annual
General Meeting to be held on 25 March 2025, to receive and adopt the
Directors' Remuneration Report.
The Directors' interests in the ordinary share capital of the Company at the
year-end are reported below on page 32.
Remuneration Committee
The Committee presently consists of the Chair, Mr J Ward, Mr G P Hooper and Mr
J Brooke, all Non-executive Directors. 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:
2024 2023 Percentage
change
£'000 £'000
Directors' remuneration 632 576 10%
Other employee remuneration 5,567 6,450 (14%)
Dividend payments to shareholders 56 112 (50%)
Audited 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 and Benefits in Short term performance related remuneration Pension benefits Total
30 September fees kind (c)
(a) (b)
Executive Directors: £'000 £'000 £'000 £'000 £'000
C V Isom 2024 106 2 30 23 161
2023 105 1 - 18 124
T Carpenter 2024 68 - - 10 78
2023 - - - - -
A C French (d) 2024 - - - - -
2023 139 - - 2 141
Non-executive Directors:
T N Anderson (e) 2024 140 2 - 8 150
2023 89 1 - 9 99
N C Howlett (f) 2024 74 - - 19 93
2023 56 - - 5 61
G P Hooper (c) 2024 40 - 4 - 44
2023 40 - - - 40
J Ward 2024 40 - - - 40
2023 40 - - - 40
K A Ritchie (g) 2024 21 - - - 21
2023 70 1 - - 71
J Brooke 2024 45 - - - 45
2023 - - - - -
Totals 2024 534 4 34 60 632
2023 539 3 - 34 576
(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) The remuneration package of each Executive Director includes non-cash
benefits, which for C V Isom and T Carpenter also included the provision of a
company car. The aggregate gains made by Directors on the exercise of share
options during 2024 were £nil (2023: £nil).
(c) In accordance with the proposals adopted by shareholders, performance
related remuneration is not due for this period to Executive Directors.
However, the Remuneration Committee approved a one-off payment of £30,000 to
C V Isom in recognition of 'acting up' for a period of a year while the Chief
Executive position was vacant. Also, a one-off payment of £4,000 was also
made to G P Hooper in recognition of him 'acting up' as Chair for the interim
period between K Ritchie's resignation and J Brooke's appointment.
(d) A C French joined the Board on 3 May 2022 and left the Board on 6 April
2023.
(e) T N Anderson was a beneficiary of an agreement with the Company relating
to his departure from the Company on 11 July 2024 entitling him to a payment
of £19,250 which is included in salary above as well as payment in lieu of
notice amounting to £46,890.
(f) N C Howlett was a beneficiary of an agreement with the Company relating to
his departure from the Company on 3 September July 2024 entitling him to a
payment of £21,000 which is included in salary above as well as payment in
lieu of notice amounting to £14,500.
(g) K A Ritchie moved from Executive Chair to Non-executive Chair from 1
October 2023 and retired from the Group 28 February 2024.
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 2024 30 September 2023
Ordinary shares of Ordinary shares of
10p each 10p each
J Brooke Non-executive Director - -
C V Isom Chief Financial Officer - -
T Carpenter Chief Executive - -
G P Hooper Non-executive Director 35,498 35,498
J Ward Non-executive Director - -
On 28 October 2024 the Company announced that the following purchases of
ordinary shares of 10p each had been made by Directors:
J Brooke Non-executive Director 106,310
T Carpenter Chief Executive 66,500
J Ward Non-executive Director 20,000
Share options
Details of the interests of Directors, who served during the year, in options
over ordinary shares are as follows:
Exercise price per share At Granted during Exercised Lapsed At
1 October the year during during 30 September
2023 the year the year 2024
Number Number Number Number Number
T N Anderson (a) 58.0p 25,000 - - 25,000 -
T Carpenter (c) 70.0p - 150,000 - - 150,000
C V Isom (b) 138.5p 50,000 - - - 50,000
Share options
Share options are exercisable between the following dates:
(a) 15 January 2017 and 15 January 2024
(b) 15 July 2024 and 15 July 2031
(c) 16 July 2027 and 15 June 2034
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 2024 the market price of the Company's shares was 65p. The
range during the year was 63p to 90p.
Directors' Remuneration Policy
Introduction
Our policy is to provide remuneration packages that are competitive, fair, and
designed to retain, motivate, and reward Directors. We consider the size and
complexity of the Group, and we benchmark against similar companies in our
sector. Under UK law, this policy must be approved by shareholders at least
every three years and is subject to a binding vote.
Remuneration Components
Basic salary - Executive Directors' basic salaries are set by the Remuneration Committee, considering each individual's role, responsibilities, performance, and market comparisons. Annual salary reviews take into account inflation and the salary adjustments made to other employees. Reviews take effect from 1 October each year.
Benefits - Executive Directors receive certain taxable non-cash benefits, including company cars. They also participate in the Group Life Insurance Scheme, which provides a lump sum payment of four times their basic salary in the event of death. Private medical insurance is also provided for both the Executive and their families.
Pension contributions - Executive Directors are members of the Company's defined contribution pension scheme in which the Company's contribution is a fixed percentage at 5% of basic salary. Benefits are not pensionable.
Annual Bonus - Each year, the Committee sets financial and/or strategic performance targets. Typically, the bonus is based on achieving EBITDA targets, but the Committee may adjust the measures when appropriate.
· Minimum performance: No bonus
· Target performance: A bonus of 50% of base salary
· Maximum performance: A bonus of up to 100% of base salary
The performance criteria and any discretion exercised by the Committee will be clearly disclosed.
Share option schemes
The Company operates a government approved share option scheme for Directors
and staff, granted at the Remuneration Committee's discretion.
An additional government EMI scheme has been proposed to the AGM, to be held
in March 2025, where the vesting of options is dependent on the achievement of
certain share price targets. (More information is included in the Directors'
Report and the Notice of AGM).
Directors' service contracts
Non-Executive Directors have service contracts that terminate at the
conclusion of the Company's AGM unless they are re-elected as a Director, and
they receive fees determined by the Remuneration Committee. Non-Executive
Directors do not receive pension contributions or participate in share option
schemes, with the exception of the Chair, who will be included under the new
option scheme should this be approved at the Annual General Meeting.
The Company's policy on the duration of, and notice periods and termination
payments under, Directors' contracts is designed to attract and retain persons
of the calibre required by the Company, with due regard being given to the
interests of shareholders.
There are no special predetermined termination payments. Any compensation for
loss of office will be determined on a case-by-case basis.
Directors must not hold other directorships or business interests without
Board approval to prevent conflicts of interest.
Other policy matters
Any views expressed by shareholders on the remuneration being paid to
Directors would be taken into consideration by the Remuneration Committee when
reviewing the Directors' Remuneration Policy and in the annual review of
Directors' salaries.
It is the Company's policy that Directors' notice periods and termination
payments will be based on prevailing best practice guidelines.
Approval
This Remuneration Report and Remuneration Policy was approved by the
Remuneration Committee on 22 January 2025 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. 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/
(http://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. We note that the QCA code has been updated and
will be applying the new Code in future reports.
J Brooke
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.
The Board is confident that the goals and strategy that we have set for our
business have been followed during the year under review. 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. le see the Audit and Risk 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 Financial Controller
and are reviewed by the Chief Financial Officer. 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 2024 the Board consisted of the Non-executive Chair, the
Chief Executive, the Chief Financial Officer, and two 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:
Jamie Brooke was appointed to the Board on 2 January 2024 and is Non-executive
Chair. Jamie has worked in quoted fund management and private equity,
originally starting out with 3i Plc. Most recently he worked with Hanover
Investors and, prior to this, with the Volantis team under the umbrellas of
Lombard Odier, Henderson and Gartmore. Jamie is currently a Non-executive
Director at Flowtech Fluidpower Plc, Chapel Down Group Plc, Oryx International
Growth Fund Plc, Triple Point Venture VCT Plc and Kelso Group Holdings Plc. He
is also a member of the Investment Advisory Group to Rockwood Strategic Plc.
He trained as an ACA with Deloitte. Jamie has a service contract which
terminates at the 2025 Annual General Meeting unless he is re-elected;
Tom Carpenter joined Titon in April 2024 as Chief Executive. He has a track
record of growing businesses both organically and inorganically and has
experience of working in publicly listed companies having joined Belden Inc.
in 2016. Tom has held leadership positions within Belden including Vice
President of Strategy and Business Development, and as Managing Director of
PPC Broadband Inc., a subsidiary of Belden. Prior to this, Tom held various
leadership positions including as Chief Executive Officer at M2FX Limited. Tom
holds a Masters in Business Administration from Loughborough University and a
Degree in Manufacturing Systems Engineering from Nottingham Trent University.
Carolyn Isom joined Titon in December 2019 as Finance Director of Titon
Hardware and was appointed to the Titon Holdings Board as Chief Financial
Officer in December 2021. She is ACCA qualified and has worked for a number of
companies in the construction sector.
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 2025
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 Business unital
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 2025 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 two 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 G P Hooper is deemed to be independent for the purposes of the Code
as he has no previous links with the Group. Mr G P Hooper was nominated as the
Senior Independent Director of the Board in December 2024.
2. Mr J Ward is deemed to be independent for the purposes of the Code as
he has no previous links with the Group.
3. Mr J Brooke is deemed to be independent for the purposes of the Code as
he has no previous links with the Group.
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 2024 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 11 1 3 1
J Brooke 8 1 2 -
T N Anderson 8 - - -
C V Isom 11 1 3 -
T Carpenter 4 1 1 -
N C Howlett 10 - - 1
G P Hooper 11 1 3 1
J Ward 10 1 - 1
K A Ritchie 6 - 2 1
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 Non-executive Directors retire at the next Annual General Meeting
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 30 to 34. 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 was active during the year while recruiting the new
Chief Executive. The Nominations Committee at 30 September 2024 comprised the
Chair, Mr J Brooke, 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 2 to 23 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 22 January 2025
and signed on its behalf by:
J Brooke
Chair
Audit Committee Report
The Audit and Risk 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 and Risk Committee
The Audit and Risk Committee is appointed by the Board for a period of three
years and comprised the Chair, Mr G P Hooper who has extensive financial
experience from his career and position as Chief Executive of The Alumasc
Group Plc and Mr J Brooke who qualified as an ACA with Deloitte and has
chaired and sat on multiple Plc audit committees. I confirm that the Titon
Audit and Risk Committee continues to have competence relevant to the sector
in which the Group operates.
Role of the Audit and Risk Committee
The Audit and Risk 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 Group need to be fair, balanced, and
understandable. The Committee reviews the Annual Report as a whole and makes
recommendations to the Board. The 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 Group's position and performance, business model and strategy. The
Company's unaudited interim results are also reviewed by the Committee prior
to their publication.
The 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. The 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
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 throughout the year was the
Group's investment in its South Korean business and in particular the accuracy
of accounting information. This risk has been removed due to sale of the South
Korean operations post year end.
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 25 and 26, and those of the Auditors
are detailed in the Independent Auditor's Report on page 45.
The 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 20 to 23) 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
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 2024. 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 Committee reviews the audit process and considers its
effectiveness.
Auditor assessment and independence
The Group's external auditor is MHA.
The 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 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 2024 Annual General
Meeting.
The fees for audit services provided by MHA for 2024 were £143,000 (2023:
£143,000). The 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 2024 was £1,000 (2023: £1,000).
G P Hooper
Audit and Risk Committee Chair
22 January 2025
Independent Auditor's Report
To the Members of Titon Holdings Plc
For the purpose of this report, the terms "we" and "our" denote MHA 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 on pages 41 to 43 that sets out the key audit matters and how our
audit addressed the key audit matters, the terms "we" and "our" refer to MHA.
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, as an individual entity. The relevant
legislation governing the Company is the United Kingdom Companies Act 2006
("Companies Act 2006").
Opinion
We have audited the financial statements of Titon Holdings plc for the year
ended 30 September 2024.
The financial statements that we have audited 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 Consolidated Statement of Cash Flows
· the Company Statement of Cash Flows
· Notes 1 to 28 to the consolidated financial statements, including
significant accounting policies
· Notes 1 to 28 to the company financial statements, including
significant accounting policies.
The financial reporting framework that has been applied in the preparation of
the Group and Parent Company's financial statements is applicable law and
International Financial Reporting Standards and Interpretations (collectively
"IFRSs'") as adopted in the United Kingdom ("UK-adopted IFRS").
In our opinion, the financial statements:
· give a true and fair view of the state of the Group's and of the
Parent Company's affairs as at 30 September 2024 and of the Group's loss for
the year then ended;
· have been properly prepared in accordance with International
Financial Reporting Standards and Interpretations (collectively "IFRSs'") as
adopted in the United Kingdom ("UK-adopted IFRS"); and
· 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 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 ethical
responsibilities in accordance with those 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 Group's and the Parent
Company's ability to continue to adopt the going concern basis of accounting
included:
· The consideration of inherent risks to the Group's and the Parent
Company's operations and specifically their business model.
· The evaluation of how those risks might impact on the 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.
· Liquidity considerations including examination of cash flow
projections at Group and Parent Company level.
· The evaluation of the base case scenarios and stress scenarios,
in respect of the Group and the Parent Company, and the respective
sensitivities and rationale.
· Assessments of the forecasts Group and Parent Company levels,
including consideration of reserve levels and future business plans.
· Review of the assets available for security.
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 and Parent Company'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
Scope Our 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.
We undertook full scope audits on the complete financial information of the
Parent Company and main trading subsidiary. Specified audit procedures were
performed by the component auditors on other entities over specific material
balances.
Materiality 2024 2023
Group £176k £224k 1% (2023: 1%) of Group revenue
Parent Company £97k £131k 2% (2023: 2% net assets) of net assets less Group restriction
Key audit matters
Recurring · Revenue Recognition
· Inventory Valuation
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 matters 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.
Revenue Recognition
Key audit matter description The group recognised revenue from continuing operations of £15,476m in the
financial year (see note 4). The operating segments for continued operations
are split across United Kingdom, North America and Europe. Revenue is
primarily generated from the sale of goods and is measured at the fair value
of the consideration received.
Revenue is one of the most prominent key performance 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.
Additionally, there is risk over the revenue occurrence and that transactions
are not genuine. Therefore, revenue may be overstated.
How the scope of our audit responded to the key audit matter Our audit work included, but was not restricted to the following
· we have completed a walkthrough of each of the key revenue
streams from start to finish, reviewing the documentation of details of the
current internal processes, systems and controls to better understand them;
· we have completed controls testing over the revenue controls in
place to ensure there are appropriate controls in place over the occurrence of
revenue.
· 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 directed and assessed the work 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 communicated to the Group's Audit Committee Nothing has come to our attention, based on the results of the testing
performed that indicates that the recognition criteria employed by management
is materially inconsistent with the requirements of IFRS15.
Inventory Valuation
Key audit matter description At 30 September 2024, the group had total inventories of £3,496m (see note
14). During the year, an additional inventory write down of £1.3m that has
been included as an exceptional item.
The inventory held by the Group is a key material 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 scope of our audit responded to the key audit matter Our audit work included, but was not restricted to the following:
· we have reviewed the inventory listing and stock physically
present in the warehouses for any slow-moving or obsolete inventory items
which require write down 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 obtained management's calculations for inventory write
downs and completed additional observations and testing to review whether
there is a need for additional inventory write down;
· 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 management's calculations and key
judgements regarding the standard costing model used and assessed the
appropriateness of the costs included. We have also tested on a sample basis
payroll and overhead costs back to source invoices and documentation to
confirm the accuracy of the figures used; we have directed and assessed the
work completed by the component auditor to ensure that the work performed on
overseas subsidiaries sufficiently addresses the risk at Group level.
Key observations communicated to the Group's Audit Committee Nothing has come to our attention from the outcome of our procedures which
indicates any material issues with the valuation of inventory or the
provisions for slow moving, damaged or obsolete goods.
Our application of materiality
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.
Materiality in respect of the Group was set at £175,500 (2023: 224,000) which
was determined on the basis of 1% (2023: 1%) of the Group's total revenue.
Materiality in respect of the Parent Company was set at £97,000 (2023:
£131,000), determined on the basis of 2% (2023: 2%) of the Parent Company's
net assets less group restriction. For the Parent Company's materiality, a
group restriction was then applied using a mathematical distribution method to
allocate materiality to components, which resulted in a lower materiality for
the Parent Company. Group revenue and net assets were deemed to be the
appropriate benchmark for the calculation of materiality as these are key
areas of the financial statements and also metrics by which the performance
and risk exposure of the Group and Parent Company are principally assessed and
with which the users of the financial statements are principally concerned.
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.
Performance materiality for the Group was set at £122,500 (2023: £156,800)
and at £67,900 (2023: £91,700) for the Parent Company which represents 70%
(2023: 70%) of the above materiality levels.
The determination of performance materiality reflects our assessment of the
risk of undetected errors existing, the nature of the systems and controls and
the level of misstatements arising in previous audits.
We agreed to report any corrected or uncorrected adjustments exceeding £8,750
and £4,850 in respect of the Group and Parent Company respectively to the
Audit Committee as well as differences below this threshold that in our view
warranted reporting on qualitative grounds.
Overview of the scope of the Group and Parent Company audits
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, we identified 2 components in the UK
and audited by the Group audit team, being Titon Holdings Plc and Titon
Hardware Ltd, a further 2 which are based in South Korea being Titon Korea Co.
Ltd and Browntech Sales Co. and the other being Titon Inc. based in the USA.
Full scope audits - Of the 5 components selected, audits of the complete
financial information of 2 components were undertaken, these entities were
selected based upon their size or risk characteristics.
Specified procedures -
Number of Components Revenue Total Assets Loss before tax
Full scope audit 2 97.8% 100% 55%
Specific Procedures 3 2.2% 0% 45%
Total 5 100% 100% 100%
The Group Engagement Team ('GET') maintained oversight of the Group audit
specifically through communication with the component auditors in South Korea.
This was achieved through the issuance of detailed Group audit instructions
and regular communications in South Korea which allowed for detailed review
and discussion of key audit risks and the work performed to address these.
The control environment
We evaluated the design and implementation of those internal controls of the
Group, including the Parent Company, which are relevant to our audit, such as
those relating to the financial reporting cycle. We also tested operating
effectiveness and placed reliance on certain controls over stock cycle,
revenue, purchase, and payroll controls.
Climate-related risks
In planning our audit and gaining an understanding of the Group and Parent
Company, we considered the potential impact of climate-related risks on the
business and its financial statements. We have agreed with managements'
assessment that climate-related risks are not material to these financial
statements.
Reporting on 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.
Strategic report and directors report
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.
In the light of the knowledge and understanding of the Group and the 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.
Matters on which we are required to report by exception
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 by the parent
company, or returns adequate for our audit have not been received from
branches not visited by us; or
· the parent company 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 directors
As explained more fully in the directors' responsibilities statement, 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 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 aggregate, they could reasonably be expected to influence
the economic decisions of users taken on the basis of these financial
statements.
A further description of our responsibilities for the financial statements is
located on the FRC's website at: www.frc.org.uk/auditorsresponsibilities
(http://www.frc.org.uk/auditorsresponsibilities) . This description forms part
of our auditor's report.
Extent to which the audit was considered capable of detecting irregularities,
including fraud
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.
These audit procedures were designed to provide reasonable assurance that the
financial statements were free from fraud or error. The risk of not detecting
a material misstatement due to fraud is higher than the risk of not detecting
one resulting from error and detecting irregularities that result from fraud
is inherently more difficult than detecting those that result from error, as
fraud may involve collusion, deliberate concealment, forgery or intentional
misrepresentations. Also, the further removed non-compliance with laws and
regulations is from events and transactions reflected in the financial
statements, the less likely we would become aware of it.
Identifying and assessing potential risks arising from irregularities,
including fraud
The extent of the procedures undertaken to identify and assess the risks of
material misstatement in respect of irregularities, including fraud, included
the following:
· We considered the nature of the industry and sector, the control
environment, business performance including remuneration policies and the
Group's, including the Parent Company's own risk assessment that
irregularities might occur as a result of fraud or error. From our sector
experience and through discussion with the directors, we obtained an
understanding of the legal and regulatory frameworks applicable to the Group
focusing on laws and regulations that could reasonably be expected to have a
direct material effect on the financial statements, such as provisions of the
Companies Act 2006 and UK tax legislation.
· We enquired of the directors and management including the audit
committee concerning the Group's and the Parent Company's policies and
procedures relating to:
- identifying, evaluating and complying with the laws and
regulations and whether they were aware of any instances of non-compliance;
- detecting and responding to the risks of fraud and whether they
had any knowledge of actual or suspected fraud; and
- the internal controls established to mitigate risks related to
fraud or non-compliance with laws and regulations.
· We assessed the susceptibility of the financial statements to
material misstatement, including how fraud might occur by evaluating
management's incentives and opportunities for manipulation of the financial
statements. This included utilising the spectrum of inherent risk and an
evaluation of the risk of management override of controls. We determined that
the principal risks were related to posting inappropriate journal entries to
increase revenue or reduce costs, creating fictitious transactions to hide
losses or to improve financial performance, and management bias in accounting
estimates.
Audit response to risks identified
In respect of the above procedures:
· we corroborated the results of our enquiries through our review
of the minutes of the Group's and the Parent Company's Board and audit
committee meetings.
· audit procedures performed by the engagement team in connection
with the risks identified included:
- reviewing financial statement disclosures and testing to
supporting documentation to assess compliance with applicable laws and
regulations expected to have a direct impact on the financial statements.
- testing journal entries, including those processed late for
financial statements preparation, those posted by infrequent or unexpected
users, those posted to unusual account combinations;
- evaluating the business rationale of significant transactions
outside the normal course of business, and reviewing accounting estimates for
bias;
- enquiry of management around actual and potential litigation and
claims.
- challenging the assumptions and judgements made by management in
its significant accounting estimates; and
· obtaining confirmations from third parties to confirm existence
of a sample of balances.
· we communicated relevant laws and regulations and potential fraud
risks to all engagement team members, including experts, and the component
auditors and remained alert to any indications of fraud or non-compliance with
laws and regulations throughout the audit.
Use of our report
This report is made solely to the Parent 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 Parent 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 Parent Company and the Parent
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, Statutory Auditor
London, United Kingdom
22 January 2025
MHA is the trading name of MacIntyre Hudson LLP, a limited liability
partnership in England and Wales (registered number OC312313)
Consolidated Income Statement
for the year ended 30 September 2024
2024 2023
Note £'000 £'000
Restated
Continuing operations
Revenue 3 15,476 19,846
Cost of sales (11,143) (14,218)
Gross profit 4,333 5,628
Distribution costs (1,106) (1,486)
Administrative expenses (3,695) (3,842)
Research and development expenses (465) (467)
Other income 36 26
Underlying operating loss (897) (141)
Finance income 5 1 5
Finance expense 5 (20) (19)
Underlying loss before income tax excluding exceptionals 6 (916) (155)
Exceptional items 27 (1,515) (39)
Operating loss before income tax (2,431) (194)
Income tax credit 7 473 25
Loss for the year from continuing operations excluding exceptional items (443) (130)
Loss for the year from continuing operations including exceptional items (1,958) (169)
Loss for the year from discontinued operations 26 (1,813) (756)
Loss for the year (3,771) (925)
Attributable to:
Equity holders of the parent (3,702) (686)
Non-controlling interest (69) (239)
Loss for the year (3,771) (925)
Loss per share for continuing operations attributed to equity holders of the
parent:
Basic 9 (17.41p) (1.51p)
Diluted 9 (17.41p) (1.51p)
Loss per share attributed to equity holders of the parent:
Basic 9 (32.92p) (6.12p)
Diluted 9 (32.92p) (6.12p)
Consolidated Statement of Comprehensive Income
for the year ended 30 September 2024
2024 2023
£'000 £'000
Loss for the year (3,771) (925)
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 (2) (83)
Total comprehensive loss for the year (3,773) (1,008)
Total comprehensive loss for the year is attributable to:
Equity holders of the parent (3,703) (775)
Non-controlling interest (70) (233)
(3,773) (1,008)
Total comprehensive loss for the year attributable to equity holders of the
parent arises from:
Continuing operations (1,888)
Discontinued operations (1,815)
(3,703)
The notes on pages 54 to 85 form an integral part of these financial
statements.
Consolidated Statement of Financial Position
at 30 September 2024
2024 2023
Note £'000 £'000
Assets
Property, plant and 10 2,765 3,183
equipment
Right-of-use assets 10 402 565
Intangible assets 11 825 926
Investments in associates 13 - 2,295
Deferred tax assets 16 741 264
Total non-current assets 4,733 7,233
Inventories 14 3,496 6,139
Trade and other receivables 15 2,986 3,754
Cash and cash equivalents 20 2,281 2,238
Total current assets 8,763 12,131
Current assets classified as held for sale 26 788 -
Total Assets 14,284 19,364
Liabilities
Lease liabilities 18 329 426
Total non-current liabilities 329 426
Trade and other payables 17 2,759 3,968
Lease liabilities 18 150 206
Total current liabilities 2,909 4,174
Current liabilities directly associated with the assets held for sale 26 138 -
Total Liabilities 3,376 4,600
Equity
Share capital 19 1,125 1,123
Share premium 19 1,106 1,096
Capital redemption reserve 56 56
Foreign exchange reserve 108 109
Retained earnings 8,540 12,320
Total Equity attributable to equity holders of the parent 10,935 14,704
Non-controlling Interest (27) 60
Total Equity 10,908 14,764
Total Liabilities and Equity 14,284 19,364
The notes on pages 54 to 85 form an integral part of these financial
statements.
These financial statements were approved and authorised for issue by the Board
on 22 January 2025 and signed on its behalf by:
J Brooke
Chair
Company Statement of Financial Position
at 30 September 2024
Company No. 01604952
2024 2023
Note £'000 £'000
Assets
Property, plant and equipment 10 1,645 1,709
Investments in subsidiaries 12 194 554
Investments in associates 13 - 225
Trade and other receivables 15 4,962 4,811
Deferred tax assets 16 4 7
Total non-current assets 6,805 7,306
Trade and other receivables 15 6 4
Cash and cash equivalents 20 13 94
Total current assets 19 98
Assets classified as held for sale 26 705 -
Total Assets 7,529 7,404
Trade and other payables 17 182 107
Total current liabilities 182 107
Total Liabilities 182 107
Equity
Share capital 19 1,125 1,123
Share premium account 19 1,106 1,096
Capital redemption reserve 56 56
Retained earnings 5,060 5,022
Total Equity 7,347 7,297
Total Liabilities and Equity 7,529 7,404
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 2024 of £116,000 (2023: £281,000). The notes on pages 54 to 85
form an integral part of these financial statements.
These financial statements were approved and authorised for issue by the Board
on 22 January 2025 and signed on its behalf by:
J Brooke
Chair
Consolidated Statement of Changes in Equity
at 30 September 2024
Share Share Capital Foreign exchange Retained Total Non- Total
Capital premium redemption reserve earnings controlling interest Equity
reserve
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
At 30 September 2022 1,122 1,091 56 198 13,179 15,646 305 15,951
Translation differences - - - (89) - (89) 6 (83)
on overseas operations
Loss for the year - - - - (673) (673) (252) (925)
Total Comprehensive Income for the year - - - (89) (673) (673) (245) (1,008)
Dividends paid - - - - (112) (112) - (112)
Share-based payment expense - - - - (72) (72) - (72)
Exercise of share options 1 5 - - - 6 - 6
Transfer of treasury shares - - - - (2) (2) 1 (1)
At 30 September 2023 1,123 1,096 56 109 12,320 14,704 60 14,764
Translation differences - - - (1) - (1) (1) (2)
on overseas operations
Loss for the year - - - - (3,702) (3,702) (69) (3,771)
Total Comprehensive Income for the year - - - - (3,702) (3,703) (70) (3,773)
Dividends paid - - - - (56) (56) - (56)
Share-based payment expense - - - - (22) (22) - (22)
Exercise of share options 2 10 - - - 12 - 12
Other - - - - - - (17) (17)
At 30 September 2024 1,125 1,106 56 108 8,540 10,935 (27) 10,908
The notes on pages 54 to 85 form an integral 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 of issued shares
Foreign exchange reserve Cumulative gains/losses arising on retranslating 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 Interest in subsidiaries not owned by Titon Holdings Plc shareholders
Company Statement of Changes in Equity
at 30 September 2024
Share Share Capital Retained Total
Capital premium redemption earnings Equity
reserve
£'000 £'000 £'000 £'000 £'000
At 30 September 2022 1,122 1,091 56 4,925 7,194
Profit for the year - - - 281 281
Total Comprehensive Income for the year - - - 281 281
Share-based payment expense - - - (72) (72)
Dividends paid - - - (112) (112)
Exercise of Share options 1 5 - - 6
At 30 September 2023 1,123 1,096 56 5,022 7,297
Profit for the year - - - 116 116
Total Comprehensive Income for the year - - - 116 116
Share-based payment credit - - - (22) (22)
Dividends paid - - - (56) (56)
Exercise of Share options 2 10 - - 12
At 30 September 2024 1,125 1,106 56 5,060 7,347
The notes on pages 54 to 85 form an integral 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 for the year ended 30 September 2024
Group Company
2024 2023 2024 2023
Note £'000 £'000 £'000 £'000
Cash generated from operating activities Restated
(Loss) / profit before tax from continuing operations (2,431) (194) - 278
(Loss) / profit before income tax from discontinued operations (1,813) (645) 119 -
Depreciation of property, plant & equipment 10 531 533 64 64
Depreciation of right-of-use assets 10 195 240 - -
Amortisation of intangible assets 11 240 195 - -
Profit on sale of plant & equipment (12) (25) - (11)
Loss on disposal of investment 26 1,558 - (119)
Share based payment credit - equity settled 23 (22) (72) (22) (72)
Dividend received from Associate - - - (291)
Finance income 5 (1) (5) - (1)
Finance costs 5 20 27 - -
Share of associate's post-tax loss 26 114 241 - -
(1,621) 295 42 (33)
Decrease in inventories 2,643 431 - -
Decrease / (increase) in receivables 698 1,288 (150) (45)
(Decrease) / increase in payables and other current liabilities (1,118) (1,082) 71 (27)
Cash generated by / (used in) operations 602 932 (37) (105)
Income taxes received - 220 - -
Net cash generated by / (used in) operating activities 602 1,152 (37) (105)
Cash flows from investing activities
Purchase of plant & equipment 10 (92) (433) - -
Purchase of intangible assets 11 (221) (205) - -
Proceeds from sale of plant & equipment 34 58 - 11
Finance income 5 1 5 - 1
Dividends received from associate company - 290 - 290
Net cash (used in) / generated by investing activities (278) (285) - 302
Cash flows from financing activities
Dividends paid to equity shareholders of the parent 8 (56) (112) (56) (112)
Payment of lease liability 18 (177) (243) - -
Finance costs 5 (20) (27) - -
Exercise of share options 23 12 5 12 5
Net cash used in financing activities (241) (377) (44) (107)
Net increase in cash 83 490 (81) 90
Effect of exchange rate changes (25) 22 - -
Cash at beginning of the year 2,238 1,726 94 4
Cash reclassified to assets held for resale (15) - - -
Cash and Cash Equivalents at end of the year 2,281 2,238 13 94
The notes on pages 54 to 85 form an integral part of these financial
statements.
Notes to the Consolidated Financial Statements
at 30 September 2024
General information
The consolidated financial statements of the Group for the year ended 30
September 2024 incorporates Titon Holdings Plc ("the Company") and its
subsidiaries (together referred to as "the Group").
Titon Holdings Plc is a Company incorporated in England and Wales and
domiciled in the United Kingdom. The Company's 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 5. The consolidated financial statements were authorised for release on
22 January 2025.
1 Material 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 material 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, which is the
functional currency of the Parent and all values are rounded to the nearest
thousand (£000), 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 judgement in applying the Group's material
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 20 to 23. 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 26 to 27.
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.
New and amended standards adopted by the Group
A number of new standards or amendments to existing standards and
interpretations became applicable for the current reporting period:
· Disclosure of Accounting Policies - Amendments to IAS 1 and
IFRS Practice Statement 2
· Definition of Accounting Estimates - Amendments to IAS 8
· Deferred Tax relating to Assets and Liabilities arising from a
Single Transaction - Amendment to IAS 12
The above standards and amendments did not have a material impact on the Group
or Parent Company financial statements.
Adopted IFRS not yet applied
At the date of approval of these financial statements the following standards
and interpretations have been published, but have not yet been applied by the
Group in these financial statements:
The following amendment became effective as at 1 January 2024:
· Amendments to IAS 1 'Classification of liabilities as current
or non-current'
The Directors do not expect that the adoption of the Standard listed above
will have a material impact on the consolidated financial statements of the
Group in future periods.
IFRS 18 and 19 are applicable for financial years beginning on or after 1
January 2027 and is not yet endorsed for use in the United Kingdom. The
Company is considering the impact of IFRS 18 on its future reporting.
(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 2024. 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 acquisition 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 Parent 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 reporting 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 94% (2023: 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 are
available for 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, using
the FIFO method. 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 reporting date.
(g) Cash and cash equivalents
Cash and cash equivalents comprise cash balances, deposits held at call with
banks, other short term highly liquid investments with original maturities of
twelve months or less from inception. 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 the
income statement.
The recoverable amount of an asset is the greater of its fair value less costs
to sell and its value in use. The value in use is determined as the net
present value of future cash flows expected to be derived from the asset,
discounted using a pre-tax discount rate, with the individual cash generating
units cash flow forecast risks adjusted. The cash generating units are
determined as being the individual trading entities.
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.
Provisions are not disclosed separately but are included in note 17.
(k) Revenue
Sales of Products
Revenue is primarily generated from the sale of goods and is measured at the
fair value of the consideration received, which represents the transaction
price at the date of the sale, net of any trade discounts, settlement
discounts, rebates, and value-added tax. The Group has concluded that it acts
as the principal in its revenue arrangements, as it has control over the goods
before transferring them to the customer.
The Group evaluates whether there are other promises within the contract that
constitute separate performance obligations to which a portion of the
transaction price should be allocated, such as warranties and volume rebates.
In determining the transaction price for the sale of ventilation products, the
Group considers the impact of any variable consideration.
Revenue from the sale of goods arises from transactions with both third
parties and related parties. It is recognised when control of the goods is
transferred to the customer, which typically occurs upon delivery, in
accordance with the terms of the trade contract. Prior to entering into a
contract, the Group assesses the customer's creditworthiness using a credit
reference agency. If sufficient credit cannot be granted, payment is required
in advance of delivery. These advance payments are recorded under other
creditors and recognised as revenue once the goods have been delivered.
Due to the nature of business practices at its South Korean subsidiary, the
Group recognises revenue there over time. This is done in two stages: at the
first fix and second fix stages. Invoicing for both stages typically occurs at
the first fix stage; however, revenue for the second fix stage is deferred in
the financial statements until the second fix products are accepted by the
customer.
Volume rebates
The Group provides retrospective volume rebates to certain customers once the
quantity of products purchases during the period exceeds a threshold as
specified in the agreement. The sales rebate is deducted from sales, and any
liability at the period end is included in other payables.
Warranty obligations
Some goods sold by the Group include warranties that require the Group to
repair or replace defective products during the warranty period if the
products fail to meet agreed specifications. In accordance with IFRS 15, these
warranties are not treated as separate performance obligations, and no revenue
is allocated to them. Instead, a provision is made for the associated costs in
accordance with IAS 37 (Provisions, Contingent Liabilities, and Contingent
Assets). The warranty provision is included in other payables in note 17 and
is calculated as a percentage of applicable sales over a three-year period.
The Group does not offer extended warranties 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 and 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 Annual
General Meeting.
(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, using a provision matrix, 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 comprise cash balances, deposits held at call with
banks, other short term highly liquid investments with original maturities of
twelve months or less from inception.
(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) Exceptional items
Material items of income or expense that are deemed exceptional due to their
size or incidence, such a restructuring costs, 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 financial 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 £741,000 (2023:
£264,000) has been recognised on the basis that the Group is forecasting
sufficient levels of profits in future periods.
Impairment
The Group reviews all other non-financial assets for impairment, which
requires management judgements and estimates on the assets' recoverable
amounts. These judgements and estimates are reviewed on an annual basis. The
Directors conclude that there are no major sources of estimation uncertainty
in relation to these assets that have a material adjustment to the carrying
values.
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 countries Sales of passive and powered ventilation products 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:
2024 2023
£'000 £'000
Deferred Revenue at beginning of year 270 396
Released in the year (270) (396)
Provided for in the year - 270
Deferred Revenue at end of year - 270
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.
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 North Europe and all other Consolidated
30 September 2024 Kingdom America countries
£'000 £'000 £'000 £'000
Segment revenue 12,909 777 2,228 15,914
Inter-segment revenue (438) - - (438)
Total Revenue from continuing operations 12,471 777 2,228 15,476
Segment profit / (loss) (737) 106 (285) (916)
Tax credit / (expense) 582 (14) - 568
Loss for the year from continuing operations (155) 92 (285) (348)
Depreciation and amortisation 902 - - 902
Total assets 14,215 164 - 14,379
Total assets include: 788 - - 788
Assets held for sale
Additions to non-current assets 313 - - 313
(other than financial instruments
and deferred tax assets)
The South Korea Segment has been reclassified as discontinued operations.
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 Canada Total
30 September 2024 Kingdom
Revenues from continuing operations £'000 £'000 £'000 £'000
By entities' country of domicile 14,699 - 777 15,476
By country from which derived 12,471 2,228 777 15,476
Non-current assets
By entities' country of domicile 4,720 - 13 4,733
Operating segment
For the year ended United North Europe and all other Continuing operations South Total
30 September 2023 Kingdom America countries Korea
£'000 £'000 £'000 £'000 £'000 £'000
Segment revenue 15,781 842 3,623 20,246 2,488 22,734
Inter-segment revenue (400) - - (400) - (400)
Total Revenue 15,381 842 3,623 19,846 2,488 22,334
Segment profit / (loss) (247) 164 (111) (194) (645) (839)
Tax credit 25 (111) (86)
Loss for the year (169) (756) (925)
Depreciation and amortisation - - 869 99 968
Total assets 15,521 243 - 15,764 3,599 19,363
Total assets include: 2,295 - - 2,295 - 2,295
Investments in associates
Additions to non-current assets 701 1 - 702 (30) 672
(other than financial instruments
and deferred tax assets)
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 £241,000.
Sales to BTS of £4.038m represented 18% of Group Revenue (2022: £4.71m -
21%). 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 Canada South All other Total
30 September 2023 Kingdom Korea regions
Revenues £'000 £'000 £'000 £'000 £'000 £'000
By entities' country of domicile 19,004 - 842 2,488 - 22,334
By country from which derived 15,381 3,623 842 2,488 - 22,334
Non-current assets
By entities' country of domicile 4,683 - 24 2,526 - 7,233
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 background ventilators 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.
2024 2023
£'000 £'000
Background ventilators and window and door hardware products 8,333 10,013
Mechanical ventilation products 7,143 9,833
Revenue 15,476 19,846
4 Directors and employees
Group Company
2024 2023 2024 2023
Staff costs, including Directors, were as follows: £'000 £'000 £'000 £'000
Wages and salaries 5,669 6,534 249 293
Employer's social security costs and similar taxes 576 718 19 37
Defined contribution pension cost 530 512 4 2
Share based payment expense - equity settled (22) (72) (22) -
6,753 7,692 250 332
Group Company
2024 2023 2024 2023
The average monthly number of employees during Number Number Number Number
the year was as follows:
Manufacturing 100 142 - -
Sales, marketing, and administration 64 60 4 4
164 202 4 4
Details of Directors' emoluments, pension contributions and interests in share
options are given in the Directors' Remuneration Report set out on pages 30 to
34. The directors' remuneration disclosures on those pages are an integral
part of these financial statements and have been audited.
5 Finance income and expense
Finance income Group Company
2024 2023 2024 2023
£'000 £'000 £'000 £'000
Bank interest receivable on short term deposits 1 5 - 1
Finance expense Group Company
2024 2023 2024 2023
£'000 £'000 £'000 £'000
Interest expense on lease liabilities 20 27 - -
6 Loss before
tax
2024 2023
£'000 £'000
This is arrived at after charging / (crediting):
Depreciation of property, plant & equipment 475 533
Depreciation of right-of-use assets 187 240
Amortisation of intangible 240 194
assets
Research and development expenditure written off 465 467
Short term rentals - vehicles and plant & equipment 32 18
Foreign exchange (gain) / loss (23) 55
Share-based payment credit (22) (72)
Profit on disposal of property, plant & equipment (12) (25)
Auditors' remuneration:
- for the audit of these accounts 22 20
- for the audit of the accounts of the Company's subsidiaries 112 110
- for the audit of the accounts of the Group's associate 9 13
- non-audit services - comprising other assurance services 1 1
7 Tax credit
2024 2023
Current income tax: £'000 £'000
Corporation tax credit - 121
Adjustment in respect of prior - 220
years
- 341
Deferred tax:
Origination and reversal of temporary differences Note 16 473 (150)
Adjustment in respect of prior year - (277)
Discontinued operation Note 26 - 111
Income tax credit 473 25
2024 2023
The charge for the year can be reconciled to the profit £'000 £'000
per the income statement as
follows:
Loss before income tax from continuing operations (2,431) (194)
Effect of:
Expected tax credit based on the standard rate of
Corporation tax in the UK of 25% (2023: 22%) 608 43
Additional deduction for R&D expenditure - 42
Adjustment in respect of prior years - (57)
Expenses not deductible for tax purposes (7) (3)
Unrelieved tax losses (128) -
Income tax credit 473 25
The tax rate in the United Kingdom, being the economic environment in which
the Company conducts its business was 19% until 31 March 2023, at which point
the rate increased to 25%. A hybrid rate of 22% therefore applies to the year
ended 30 September 2023. The rate of 25% applies to the year ended 30
September 2024.
8 Dividends
2024 2023
£'000 £'000
Final 2023 dividend of 0.50 pence (2022: 0.50 pence) per ordinary 56 56
share proposed and paid during the year relating to the
previous year's results
Interim dividend of 0.50 pence (2023: 1.50 pence) per - 56
ordinary
2
share paid during the
year
56 112
The Directors are proposing a final dividend of nil pence (2023: 0.5 pence)
per share. This will result in a final dividend totalling £nil (2023:
£56,244), subject to approval by the shareholders at the Annual General
Meeting. This dividend has not been accrued at the balance sheet date.
9 Loss per ordinary share
The calculation of the basic and diluted earnings per share is based on the
following data:
2024 2023
£'000 £'000
Numerator
Loss for the purposes of basic earnings per share being
loss after tax attributable to members of Titon Holdings Plc (3,702) (686)
Loss for the purposes of basic earnings per share being loss after tax of (1,958) (169)
continuing operations
Loss for the purposes of basic earnings per share being loss after tax of (1,813) (756)
discontinued operations
Denominator Number Number
Weighted average number of ordinary shares for the purposes of basic
loss per share 11,247,056 11,205,723
Effect of dilutive potential ordinary shares: share options - 10,829
Weighted average number of ordinary shares for the purposes of diluted loss 11,247,056 11,216,552
per share
Loss per share (pence) continuing operations
Basic (17.41p) (1.51p)
Diluted (17.41p) (1.51p)
Loss per share (pence) discontinued operations
Basic (16.12p) (6.75p)
Diluted (16.12p) (6.75p)
Total loss per share (pence)
Basic (32.92p) (6.12p)
Diluted (32.92p) (6.12p)
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 £'000 £'000 £'000 £'000 £'000
At 1 October 2022 3,455 191 8,811 269 12,726
Additions - - 392 41 433
Disposals - - (23) (134) (157)
Foreign exchange revaluation - (1) (22) - (23)
At 1 October 2023 3,455 190 9,158 176 12,979
Additions - - 92 - 92
Disposals - (31) (684) (80) (795)
Foreign exchange revaluation - 3 59 - 62
At 30 September 2024 3,455 162 8,625 96 12,338
Depreciation
At 1 October 2022 1,682 110 7,382 231 9,405
Charge for the year 64 25 428 16 533
Disposals - - (23) (102) (125)
Foreign exchange revaluation - (1) (16) - (17)
At 1 October 2023 1,746 134 7,771 145 9,796
Charge for the year 64 16 369 26 475
Disposals - (29) (588) (81) (698)
At 30 September 2024 1,810 121 7,552 90 9,573
Net book value
At 30 September 2024 1,645 41 1,073 6 2,765
At 30 September 2023 1,709 56 1,387 31 3,183
At 1 October 2022 1,773 81 1,429 38 3,321
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 2024, the Group had entered into contractual commitments for
the acquisition of plant and equipment amounting to £4,000 (2023: £53,000).
Group: right-of-use assets Leasehold Plant and Motor Total
property equipment vehicles
Cost £'000 £'000 £'000 £'000
At 1 October 2022 550 72 436 1,058
Additions - 186 69 255
Disposals - - (64) (64)
Foreign exchange revaluation (3) (5) (8)
At 1 October 2023 547 258 436 1,241
Additions - 11 63 74
Disposals (98) - (225) (323)
At 30 September 2024 449 269 274 992
Depreciation
At 1 October 2022 166 19 320 505
Charge for the year 67 35 138 240
Disposals - - (64) (64)
Foreign exchange revaluation - - (49) (5)
At 1 October 2023 277 54 345 676
Charge for the year 66 63 58 187
Disposals (79) - (194) (273)
At 30 September 2024 264 117 209 590
Net book value 185 152 65 402
At 30 September 2024
At 30 September 2023 270 204 91 565
At 30 September 2024, the Group had entered into contractual commitments for
the acquisition of motor vehicles under finance leases amounting to £nil
(2023: £48,000).
Company
The Company has no right-of-use assets (2023: £nil).
Freehold
land and
buildings
Cost £'000
At 1 October 2022 3,455
At 1 October 2023 3,455
At 30 September 2024 3,455
Depreciation
At 1 October 2022 1,682
Charge for the year 64
At 1 October 2023 1,746
Charge for the year 64
At 30 September 2024 1,810
Net book value
at 30 September 2024 1,645
At 30 September 2023 1,709
At 1 October 2022 1,773
11 Intangible assets
Group Computer Development Goodwill Total
software costs Patents
(internally
generated)
Cost £'000 £'000 £'000 £'000 £'000
At 1 October 2022 1,400 1,364 78 258 3,100
Additions 14 191 - - 205
At 1 October 2023 1,414 1,555 78 258 3,305
Additions 73 148 - - 221
Disposals - - (78) (258) (336)
At 30 September 2024 1,487 1,703 - - 3,190
Amortisation
At 1 October 2022 846 1,086 - 253 2,185
Charge for the year 45 148 - 1 194
At 1 October 2023 891 1,234 - 254 2,379
Charge for the year 84 156 - - 240
Disposals - - - (254) (254)
At 30 September 2024 975 1,390 - - 2,365
Net book value
at 30 September 2024 512 313 - - 825
At 30 September 2023 523 321 78 4 926
At 1 October 2022 554 278 78 5 915
All assets have an average useful life of 3.0 years (2023: 3.1 years).
Company
The Company has no intangible assets (2023: £nil).
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:
Name of subsidiary Principal activity Country of Proportion of voting
incorporation rights held at 30
September 2023 and 2024
Address
Titon Hardware Ltd Design, manufacture and marketing of window fittings and ventilators England 894 The Crescent, 100%
Colchester Business Park, Colchester
CO4 9YQ
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%
Titon Inc. Distribution of Group products USA PO Box 241, Granger, Indiana 46530 100%
Titon Korea Co. Ltd Manufacture of window ventilators Republic of Korea 257-4 Ra-dong, Munwon-gil, Jori-eup, Paju-si, Gyeonggi-do 51%
Titon HK Holdings Ltd Dormant company Hong Kong, China 402 Jardine House, 100%
1 Connaught Place Central
For the subsidiaries listed above, the country of operation is the same as the
country of incorporation.
The assets and liabilities have been reclassified as held for sale for Titon
Korea Co. Ltd in the year to 30 September 2024.
Company Investment 2024 2023
£'000 £'000
At 30 September 194 554
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 30 September 2023 and 2024
Country of
Name of associate Principal activity incorporation Address
Browntech Sales Co. Ltd Sales of window Republic of Korea 257-4 Ra-dong, Munwon-gil, Jori-eup, Paju-si, Gyeonggi-do 49%
ventilators
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 2024 2023
£'000 £'000
At 30 September - 225
The aggregated amounts relating to BTS are as follows:
As at 30 September 2024 2023
£'000 £'000
Current assets - 3,404
Non-current assets - 1,242
Total Assets - 4,646
Current liabilities - 222
Non-current liabilities - 325
Total Liabilities - 547
Net Assets - 4,099
Group 49% share of Net Assets - 2,098
Group investment in Goodwill - 197
Group share of investment - 2,295
As at 30 September 2024 the investment was reclassified as held for sale as
detailed in note 26.
14 Inventories
Group 2024 2023
£'000 £'000
Raw materials and consumables 1,914 3,087
Work in progress 15 40
Finished goods and goods for resale 1,567 3,012
3,496 6,139
The carrying value of inventory represents cost less appropriate write down, where the estimated realisable value is less than the carrying value. During the year there was a net debit of £1.35m (2023: net debit of £48,197) to the Consolidated Income Statement in relation to an inventory write down, allowing for slow moving and obsolete stock. £1.3m of that debit has been included in exceptional items, as a one off exceptional write down recognised in the year. The movements in the inventory write-down are included within cost of sales in the Consolidated Income Statement. The amount of inventories recognised as an expense during the year is £11,142,114 (2023: £16,413,000).
Company
The Company had no inventories at 30 September 2024 (2023: £nil).
15 Trade and other receivables
Current
Group Company
2024 2023 2024 2023
£'000 £'000 £'000 £'000
Trade receivables 2,190 3,247 1 1
Less: Impairment Allowance (53) (174) - -
Trade receivables - net 2,137 3,073 1 1
Related parties' receivables - 42 - -
Other receivables 47 183 5 -
Current tax debtor 121 121 - -
Prepayments and accrued income 681 335 - 3
Total trade and other receivables 2,986 3,754 6 4
Non-current
Group Company
2024 2023 2024 2023
£'000 £'000 £'000 £'000
Related parties' receivables - - 4,962 4,811
Less: Impairment allowance - - - -
Total trade and other receivables (See Note 24) - - -- - 4,962 4,811
Other than the amounts due from related parties there were no significant
concentrations of credit risk at either 30 September 2024 or 30 September
2023.
The average credit period taken on sale of goods by the Group's trade debtors
is 41 days (2023: 51 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
2024 2024 2023 2023
£'000 £'000 £'000 £'000
Gross Impairment Allowance (ECL) Gross Impairment Allowance (ECL)
trade and related party receivables trade and related party receivables
Current - not overdue 1,250 (3) 1,978 (24)
Up to 30 days past due 745 (18) 965 (25)
Up to 60 days past due 140 (4) 157 (37)
Up to 90 days past due 55 (28) 146 (88)
Over 90 days past due - - - -
2,190 (53) 3,246 (174)
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 2024 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 2024 that are
overdue for payment is 43% (2023: 39%).
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.
No expected credit loss provision has been provided for related party
receivables at Company level due to the level of materiality of any likely
adjustment.
Group
Movements on the impairment allowance of trade and 2024 2023
related party receivables are as follows:
£'000 £'000
At the beginning of the year 174 209
Impairment allowance 52 102
Receivables written off during the year as uncollectible (100) (71)
Unused amounts reversed (73) (66)
At the end of the year 53 174
16 Deferred tax
Group
Deferred tax is calculated in full on temporary differences under the
liability method using a tax rate of 25% (2023: 25.0%). The movement on the
deferred tax account is as shown below:
Total deferred tax at 1 October 2023 Effect of rate change on opening balances Foreign exchange movement Credited / Total Asset Asset
(expensed) to deferred tax at 30 2024 2024
£'000 £'000 Income Statement September
2024 UK Non-UK
£'000 £'000
£'000
£'000 £'000
UK accelerated capital allowances (403) - - 56 (347) (347) -
Non-UK accelerated capital allowances - - - - - - -
UK other temporary and deductible differences 63 - - (15) 48 48 -
Non-UK other temporary and deductible differences - - 3 - 3 - 3
UK available losses 580 - 447 1,027 1,027 -
Non-UK available losses 24 - - (14) 10 - 10
Total deferred tax 264 - 3 474 741 728 13
The UK deferred tax asset has been recognised to the extent that it is
probable there will be future taxable profits to set the asset against. The
Group has considered the carrying value of its deferred tax asset at each
reporting date and concluded that based on management's long-term plan, which
includes tax adjusted projections, sufficient taxable profits will be
generated in future years to recover such recognised deferred tax assets. This
has given rise to a non-recognised deferred tax asset of £128k (FY23: £nil)
on £512k (FY23: £nil) of UK tax losses.
Total deferred tax at 1 October 2022 Effect of rate change on opening balances Foreign exchange movement Credited/ Total Asset Asset
(expensed) to deferred tax at 30 2023 2023
£'000 £'000 Income Statement September
2023 UK Non-UK
£'000 £'000
£'000
£'000 £'000
UK accelerated capital allowances - - - (403) (403) (403) -
Non-UK accelerated capital allowances 2 - - (2) - - -
UK other temporary and deductible differences (14) - -- 77 63 63 -
Non-UK other temporary and deductible differences 27 - - (27) - - -
UK available losses 553 - - 27 580 580 -
Non-UK available losses 129 (4) (1) (100) 24 - 24
Total deferred tax 697 (4) (1) (428) 264 240 24
Company
Deferred tax is calculated in full on temporary differences under the
liability method using a tax rate of 25% (2023: 25%). The movement on the
deferred tax account is as shown below:
Total deferred tax at 1 October 2023 Effect of Credited / (expensed) to Total
rate change on opening balances Income Statement deferred tax at 30
£'000 September
2024
£'000
£'000 £'000
UK Accelerated capital allowances - - - -
UK other temporary and deductible differences 4 - - 4
UK available losses 3 - (3) -
Total deferred tax 7 - (3) 4
Total deferred tax at 1 October 2022 Effect of Credited to Total
rate change on opening balances Income Statement deferred tax at 30
£'000 September
2023
£'000 £'000
£'000
UK Accelerated capital allowances - - - -
UK other temporary and deductible differences 4 - - 4
UK available losses - - 3 3
Total deferred tax 4 - 3 7
17 Trade and other payables - current
Group Company
2024 2023 2024 2023
£'000 £'000 £'000 £'000
Trade payables 1,446 2,045 66 29
Other payables 218 803 - -
Other tax and social security taxes 450 378 - -
Accruals and deferred income 645 742 116 78
2,759 3,968 182 107
Group trade payables and accruals principally comprise amounts outstanding for
trade purchases and ongoing costs. Year-end Group trade creditors represent 55
days (2023: 46 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 the periodic rent
for property leases 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 2024 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. Lease liabilities are initially
measured at the present value of future lease payments, discounted using the
Group's incremental borrowing rate.
Right-of-Use Assets Freehold Total
land and Plant and equipment Motor
buildings vehicles
£'000 £'000 £'000 £'000
At 1 October 2023 270 204 91 565
Additions / Disposals (98) 11 (162) (249)
Depreciation 13 (63) 136 86
At 30 September 2024 185 152 65 402
Lease Liabilities £'000
At 1 October 2023 632
Additions 71
Disposals (46)
Interest expense 20
Lease payments (198)
At 30 September 2024 479
18 Leases (continued)
Lease liabilities Up to 1 year Between 1 and 2 years Between 2 and 5 years Over 5 years Total
£'000 £'000 £'000 £'000 £'000
At 30 September 2023 206 175 196 55 632
At 30 September 2024 150 144 139 46 479
Lease expense 2024
£'000
Short term lease expense 32
Low value lease expense -
Aggregate undiscounted commitments for short term leases -
32
19 Share capital
2024 2023
Authorised £'000 £'000
13,600,000 ordinary shares of 10p each 1,360 1,360
Each share has equal voting and dividend rights.
The Company's issued and fully paid ordinary shares of 10p during the year is:
2024 2024 2023 2023
Number £'000 Number £'000
At the beginning of the year 11,228,750 1,123 11,218,750 1,122
Share options exercised during the year 20,000 2 10,000 1
At the end of the year 11,248,750 1,125 11,228,750 1,123
Share premium
2024 2023
£'000 £'000
At the beginning of the year 1,096 1,091
Share options exercised during the year 10 5
At the end of the year 1,106 1,096
Share options
Options have been granted over the following number of ordinary shares which
were outstanding:
Date granted Exercise Number of Exercisable between
price shares
30.01.18 156.5p 65,000 30.01.21 and 30.01.28
15.07.21 138.5p 70,000 15.07.24 and 15.07.31
16.07.24 70.0p 150,000 16.07.27 and 16.07.34
At 30 September 2024 285,000
At 30 September 2023 207,000
No share options were exercised between 30 September 2024 and 22 January 2025.
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 60 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.
Group Company
2024 2023 2024 2023
Currency £'000 £'000 £'000 £'000
Sterling 2,170 1,905 13 94
US Dollar 89 223 - -
Euro 22 78 - -
South Korean Won - 32 - -
2,281 2,238 13 94
The Group's floating rate financial assets (see below) at 30 September were:
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
2024 2023 2024 2023
£'000 £'000 £'000 £'000
Bank current accounts 2,281 2,238 13 94
The Group had no floating term deposits at 30 September 2024 (2023: nil).
Financial liabilities
The Group had no floating rate financial liabilities at 30 September 2024
(2021: £nil). 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 25, and the
Report on Risk Management on pages 20 to 23 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 38
to 39.
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
reporting 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.
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 5% (2023: 10%) 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 / (liabilities) 2024 2023
£'000 £'000
Euro 132 (176)
US Dollar 316 469
Total net exposure 448 293
The effect of a 10% weakening of the Euro and the US Dollar against Sterling
at the reporting date of 30 September 2024 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 £41,000 (2023:
£27,000). A 10% strengthening in the exchange rate would, on the same
basis, have increased pre-tax profit and increased net assets by £45,000
(2023: increase of £29,000).
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
£52,000 (2023: £37,000).
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 2024 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 2024 there were 150,000 share options granted
(2023: nil).
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:
Date of share option grant 15/01/14 30/01/18 15/07/21 01/07/22 22/07/24 Number
of share
options
Exercise price (pence) 58.0 156.5 138.5 95.0 70.0
Number of share options granted initially 320,000 205,000 260,000 150,000 150,000
Number of share options outstanding at 01/10/22 65,000 132,000 90,000 150,000 - 437,000
Share options lapsed (10,000) (60,000) - (150,000) - (220,000)
Share options exercised (10,000) - - - - (10,000)
Number of share options outstanding at 30/09/23 45,000 72,000 90,000 - - 207,000
Share options (lapsed) / granted (25,000) (7,000) (20,000) - 150,000 98,000
Share options exercised (20,000) - - - - (20,000)
Number of share options outstanding at 30/09/24 - 65,000 70,000 - 150,000 285,000
The inputs to the Black-Scholes pricing model are:
Expected volatility % 116 88 97 97 97
Expected option life (years) 6 6 6 6 6
Risk free rate % 2.18 1.13 0.46 0.46 0.46
Expected dividend yield % 5 3 3 3 3
During the year no additional share options, included in the table above, met
the conditions of exercise (2023: nil).
At the end of the financial year 135,000 share options met the conditions of
exercise and have a weighted average exercise price of 147p (2023: 45,000 at
58p). The 285,000 share options outstanding at 30 September 2024 had a
weighted average exercise price of £1.07 (2023: 207,000 at £1.273) and a
weighted average remaining contractual life of 7.93 years (2023: 5.46 years).
The share price at 30 September 2024 was 65.0p (2023: 80.0p). The average
market price during the year was 75.8p (2023: 76.4p).
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 credit of £22,000 was recognised in respect of
share options in the year (2023: credit £72,000) of which £9,000 (2023:
£11,000) 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 £640,000 (2023: £590,000). See
Note 15 for the related party balances at 30 September 2024.
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 (to)/ by
related party
2024 2023 2024 2023
£'000 £'000 £'000 £'000
Browntech Sales Co. Ltd 2,492 2,488 47 42
Trading debts between subsidiaries and BTS are created only when the ultimate
customer has accepted the successful inclusion of our products into buildings.
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 31 of this
document.
Remuneration paid to key management personnel during the year was as follows:
2024 2023
£'000 £'000
Short term benefits 624 604
Post-employment benefits 59 34
Share based payments 9 11
692 649
The Non-executive Directors received fees for their services to the Titon
Holdings Plc Board as disclosed in the Directors' Remuneration Report.
J N Anderson, a substantial shareholder and founder of the Group, received
£3,791 during the year for advisory services (2023: £5,000). The agreement
for these services was terminated 2 July 2024.
25 Contingent liability
A composite company unlimited guarantee has been given by Titon Hardware
Limited, to its bankers to secure all the liabilities of Titon Holdings Plc.
26 Discontinued operations
a) Description
On 24 October 2024 the Group announced its intention to exit from Korea and
had agreed a conditional sale for both the subsidiary Titon Korea and the
associate Browntech Sales Co. Ltd. The associated assets and liabilities were
consequently presented as held of sale in these financial statements.
The process was completed 13 December 2024 where all the conditions of the
agreement were met by both parties and is reported in the current period as a
discontinued operation. Financial information relating to the discontinued
operation is detailed below.
b) Financial Performance and cash flow information
The financial performance and cash flow information presented are for the 12
months ended 30 September 2024 and 30 September 2023.
2024 2023
Note £'000 £'000
Revenue 3 2,492 2,488
Cost of sales (2,298) (2,196)
Gross profit 194 292
Distribution costs (44) (60)
Administrative expenses (291) (636)
Income tax - (111)
Goodwill write off (78) -
Loss after income tax from discontinued operations (219) (515)
Share of post-tax loss from associate (114) (241)
Write-down to adjust the carrying value of assets held for sale in associate 26(c) (1,480) -
to fair value less costs to sell
Loss from discontinued operations (1,813) (756)
Net cash outflow from operating activities (43) 29
Net cash inflow from investing activities 24 (14)
Net cash outflow from financing activities - (65)
Exchange movement 2 8
Net decrease in cash generated by subsidiary (17) (42)
c) Details of the write-down to adjust the carrying value of assets held
for sale for the associate
to fair value less costs to sell
2024
£'000
Consideration agreed net of taxes and legal fees 704
Carrying amount of investment (2,184)
Write-down to adjust the carrying value of assets held for sale to fair value (1,480)
less costs to sell
The following assets and liabilities were reclassified as held for sale in
relation to the discontinued operation as at 30 September 2024, in relation to
the subsidiary Titon Korea Ltd and associate Browntech Sales Co. Ltd:
2024
£'000
Other receivables 21
Amounts owed from related parties 47
Cash 15
Total assets of subsidiary 83
Investment in associate 705
Total assets held for sale 788
Trade payables (76)
Other payables (62)
Total liabilities (138)
Net liabilities of subsidiary (54)
The only asset held for sale relating to the Company's financial position is
the investment in associate of £705k shown above.
27 Exceptional items
2024 2023
£'000 £'000
Restructuring costs 216 39
Allowance for slow moving inventories 1,299 -
Exceptionals total 1,515 39
28 Events after the reporting date
Since the year end, the sale of Titon Korea and Browntech Sales Co. Ltd was
completed. £710,178 was received 13 December 2024.
There have been no other events after the reporting date that materially
affect the position of the Group.
Summarised consolidated results
2024 2023 2022 2021 2020
Continuing operations £'000 £'000 £'000 £'000 £'000
Revenue 15,476 19,846 19,050 19,835 15,733
Gross profit 4,333 5,921 5,817 7,350 5,654
Exceptional items (1,515) (39) (349) - -
Operating (loss) / profit (2,431) (194) (916) 1,117 (239)
Income tax credit / (expense) 473 25 419 (35) 146
(Loss) / profit after tax (1,958) (169) (497) 1,082 (93)
Discontinued operations (1,813) (756) (46) (79) 215
Total (loss) / profit after tax (3,771) (925) (543) 1,003 122
Dividends 56 112 502 390 332
Basic (loss) / earnings per share (32.92p) (6.12p) (3.89p) 9.24p 0.52p
Assets Employed
Property, plant & equipment 2,765 3,183 3,321 3,476 3,469
Net cash and cash equivalents 2,281 2,238 1,726 4,794 5,572
Net current assets 6,504 7,957 7,934 9,313 9,138
Financed by
Shareholders' funds: all equity 10,935 14,704 15,707 16,414 15,943
The five-year summary does not form part of the audited financial statements
and is not an IFRS statement.
Directors and Advisers
Directors
Executive
T Carpenter (Chief Executive, appointed April 2024)
C V Isom (Chief Financial Officer)
Non-executive
J Brooke (Group Non-Executive Chair, appointed January 2024)
T N Anderson (Deputy Chair, resigned July 2024)
N C Howlett (resigned September 2024)
G P Hooper
J Ward
K A Ritchie (resigned February 2024)
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/ (http://www.titon.com/uk/investors/)
auditor
MHA
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
MUFG Corporate Markets
Central Square
29 Wellington Street
Leeds
LS1 4DL
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