REG - Titon Holdings PLC - Annual Financial Report year ended 30 Sept 2023
25/01/2024 07:00
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RNS Number : 8261A Titon Holdings PLC 25 January 2024
25 January
2024
LEI: 213800ZHXS8G27RM1D97
Titon Holdings Plc
Final results for the year to 30 September 2023
Titon Holdings Plc ("Titon", the "Group" or the "Company"), a leading
international manufacturer and supplier of ventilation systems, and window and
door hardware, announces its audited final results for the year ended 30
September 2023 ("FY23").
Summary Financial Results*
FY23 FY22 Change (%)
Net revenue £22.33m £22.09m 1.1%
Underlying** EBITDA £0.43m £0.14m 207.1%
Underlying** Group loss before tax £(0.80)m £(0.60)m -33.3%
Loss per share (6.01)p (3.89)p -54.5%
Full year dividends per share 1.0p 2.0p -50.0%
Net cash £2.24m £1.73m 29.5%
· Net revenue increased by 1.1% to £22.33 million (2022: £22.09
million)
· Gross margin of 26.5% (2022: 26.4%) as input cost inflation abated
and customer price increases were implemented to maintain margins.
· Underlying EBITDA of £0.43 million (2022: £0.14 million) as trading
in UK and Europe through to the end of FY22/23 surpassed the Group's
expectations.
· Underlying Group loss before tax of £0.80 million (2022 loss before
tax: £0.60 million), principally reflecting on-going weaker trading
conditions in South Korea.
· Proposed final dividend of 0.5 pence per share (2022: 0.5 pence) in
addition to the interim dividend of 0.5p (2022: 1.5 pence).
· Strong balance sheet maintained at the period end with net cash of
£2.24 million, no financial debt, net assets of £14.76 million at 30
September 2023 (2022: £15.95 million) and net current assets of £7.96
million (2022: £7.59 million).
Operational and divisional highlights
· Revenue from the Hardware division, comprising sales of our
background ventilators plus window and door hardware, was lower in the year by
8% as the effect of the ending of our supplier relationship with Sobinco was
fully recognised.
· Mechanical ventilation systems revenues rose overall by 17%. UK sales
rose by 3% as customer demand for our products grew slowly whilst sales into
mainland Europe rose by 71%, as our manufacturing processes improved after
component shortages in 2022.
· In the South Korean market, revenues fell by 18% as a result of the
continuing weak housing market and shift in market demand to mechanical
ventilation products from natural ventilation.
· Working capital carefully managed to reduce stock levels and improve
cash generation, reflecting the investment in people and processes.
· Continued development of the ERP system to deliver further
improvements to business processes.
· Recruitment completed for key leadership roles in Operations,
Commercial, and Research and Development alongside a strengthened sales team
to increase our market presence.
· The Group continued its focus on product development with several new
products launched in 2023, gaining industry recognition as our HRV4.25 product
won Domestic Ventilation Product of the Year at the Energy Savings Awards
2023.
Current trading and outlook
· The Board remains confident in the medium and long-term prospects of
the Group as the drive for energy efficiency, combined with the need for
better air quality via adequately ventilated buildings, remains a priority.
· Our new Chief Executive will complete our enhanced leadership team.
Management's continuing focus is on driving efficiencies and improved customer
service through the implementation of our business imperatives and the
delivery of lean principles and practices which we believe will enable the
Group to return to sustained profitability.
· Operating profit in the first quarter of the current financial year
to 30 September 2024 in UK and Europe was in line with the Board's
expectations, but sales were lower than Q1 FY23, reflecting a slowdown in the
new build market, with profit performance mitigated by an improved gross
margin and careful management of overheads.
· We anticipate that the macro-economic backdrop in our UK and European
markets will continue to be uncertain and challenging in 2024 and that
consumer demand for home improvements will remain subdued.
· We do not expect that trading in South Korea will materially improve
in 2024. However, we are working to streamline the corporate structure and
operations which will reduce costs.
Commenting, Chief Financial Officer, Carolyn Isom, said:
"Whilst it has been another challenging year, I have been inspired by the
dedication and commitment of our employees here at Titon. We have had to
manage another period without a Chief Executive, but the strength of our
senior leadership team has shone through, and we very much look forward to
welcoming Tom Carpenter, our recently appointed Chief Executive, into the team
in April 2024. We believe he is a great fit for Titon and will bring the
leadership required to continue to build on the foundations already in place.
At the beginning of the year, we reported that we had identified several
business imperatives that we would focus on in the UK, and I am pleased that
we have made significant progress in most areas. We have revised the business
imperatives for the coming year, and we are now starting our strategic
planning process, aiming to have a 3-5-year strategy by the end of FY24.
Following resolution of the issues we previously encountered both with the
implementation of our new ERP system and the worldwide supply chain
constraints, we are pleased we have been able to return to providing the
service levels historically enjoyed by our loyal customer base. We continue to
develop award winning products as we look to grow our market share in the
ventilation market.
We have a strong balance sheet, talented employees and a good range and
pipeline of products that give us confidence in our future."
For further information please contact:
Titon Holdings Plc
Jamie Brooke, Non-Executive Chair Tel: +44 (0)7715 603 587
Carolyn Isom, Chief Financial Officer Tel: +44 (0)1206 713800
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 2023 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/10/2024/01/Annual-Report-and-Financial-Statements-2023pdf.pdf
(https://www.titon.com/uk/wp-content/uploads/sites/10/2024/01/Annual-Report-and-Financial-Statements-2023pdf.pdf)
* Non IFRS measures included
**Excludes exceptional items of £0.04m for restructuring costs
Annual Report and Financial Statements
for the year ended 30 September 2023
Chair's Statement
I would like to start by expressing my thanks to my fellow Titon Board members
for the warm welcome they have given me since joining the Board this month.
Additionally, on behalf of the entire Board, I extend our sincere thanks to
Keith Ritchie for his commitment and robust support to Titon throughout his
tenure of eleven years as Chair. I will be spending time getting up to speed
on our people, products and markets over the next few months. I look forward
to meeting as many shareholders as possible at the Annual General Meeting in
March.
Profit and loss
In the year ended 30 September 2023, the Group's net revenue (which excludes
inter-segment activity) increased by 1.1% to £22.3m (2022: £22.1m).
The Group's gross margin increased marginally from 26.4% in 2022 to 26.5% in
2023. We suffered an underlying operating loss in the period before
exceptional items of £537,000 (2022: £770,000); including exceptional items
the operating loss was £576,000 (2022: £1,119,000). Underlying EBITDA(1)
improved to £431,000 (2022: £143,000) and including exceptional items EBITDA
was £392,000 (2022: loss £206,000).
Net finance interest cost amounted to £14,000 (2022: £7,000). The share of
profits from the Group's South Korean associate, Browntech Sales Co. Limited
("BTS"), fell from a profit of £173,000 in 2022 to a loss of £241,000 in
2023 due to the very challenging market conditions and the continued slow
transition to mechanical ventilation in South Korea in the period. As a result
of the operating loss in the UK, including exceptional items the Group loss
before tax was £839,000 (2022 loss before tax: £953,000).
Basic statutory loss per share for the year was 6.01 pence (2022: loss of 3.89
pence).
An interim dividend of 0.5 pence per share was paid in the year to 30
September 2023 and the Directors are proposing a final dividend of 0.5 pence
per share (2022: 0.5 pence). The total dividend for the year will therefore be
1.0 pence per share (2022: 2.0 pence). If approved by shareholders at the
forthcoming Annual General Meeting on 26 March 2024, the dividend will be
payable on 5 April 2024 to shareholders on the register at 23 February 2024.
The ex-dividend date is 22 February 2024.
Statements of financial position and cash flows
The Group benefits from a strong balance sheet with no bank borrowings. Net
assets, including non-controlling interests, reduced to £14.76m at 30
September 2023 (2022: £16.0m), with net cash at £2.2m (2022: £1.7m), which
is equivalent to 15.2% of net assets (2022: 10.8%).
Cash generated from operations before working capital changes was £0.3m
(2022: £0.07m cash used). Inventory levels at the year-end decreased by 6.6%
or £0.4m on 2022. This reflected the hard work undertaken by the supply chain
team to reduce stock levels, albeit more work is required in this respect in
2024. Together with a £1.3m decrease in receivables, cash generated from
operations improved to an inflow of £0.9m in the year (2022: outflow of
£1.8m). A continuing focus and business imperative for the current financial
year is to improve the underlying performance of the business and reduce stock
levels to augment our net cash position and return the business to
profitability.
Capital expenditure in the year was £0.64m (2022: £0.67m) and the Group
paid dividends in 2023 in respect of 2022 to the shareholders of Titon
Holdings Plc of £0.11m (2022: £0.50m). During the year, we received a
dividend of £0.29m from our associate company in South Korea, BTS.
The overall effect has been a net increase in the Group's cash reserves in the
period of £0.51m (2022: decrease of £3.07m). Net current assets at 30
September 2023 were £7.9m (2022: £7.6m) with a Quick Ratio(2) of 1.4 (2022:
1.2).
Segment analysis
The Directors look initially at geographical areas to evaluate the Group's
performance and then consider product segmentation at the secondary level.
UK and Europe
UK and Europe contributes 85.0% of our overall business revenue (2022: 83.8%).
As was noted in the Interim Report, the business environment has been
challenging throughout the financial year with a weaker housing market,
impacting demand for our products. However, performance in the UK and Europe
in the second half of the year surpassed expectations, due to managing our
cost base and achieving improved margins.
I am pleased to report that the cost increases that we suffered during FY22
have abated and we have been able to pass on price increases to customers so
that our margins have been maintained for Titon manufactured products and
increased for bought in products.
Revenue from the Hardware division, comprising sales of our background
ventilators plus window and door hardware, was lower in the year by 8% as the
effect of the ending of our supplier relationship with Sobinco was fully
recognised. We are continuing to develop new and existing branded supplier
partnerships, but this has not offset the impact of the loss.
In our Ventilation Systems division, revenues from mechanical ventilation
products rose by 17% overall as we improved our supply chain and processes.
Sales in the UK were up by 3%, with the Titon FireSafe® Air Brick range
continuing to be popular with customers. Ventilation Systems sales in mainland
Europe were up 71% as our supply chains improved. We thank all our customers
for their patience during the year.
Titon continues to invest in research and development which, in turn, yields a
continuing number of new products for both the Ventilation Systems and
Hardware divisions. We have recently launched new Mechanical Ventilation with
Heat Recovery Products, the HRV4 and HRV4.25 to address specific opportunities
in the market and we are delighted that the HRV4.25 recently won the Domestic
Ventilation Product of the Year at the Energy Savings Awards 2023.
South Korea
In South Korea, the Group's subsidiary, Titon Korea (51% owned), manufactures
natural window ventilation products. In the 2023 interim results statement we
noted that trading conditions would remain difficult and that losses would
continue due to a slowdown in the housing marketing activity which continued
in the second half. These factors have resulted in a reduction in revenue to
£0.5m (2022: £3.0m) and the contribution to Group loss before tax further
increased to a loss of £404,000 (2022: loss of £209,000).
The Group's associate company (49% owned), BTS, which principally distributes
Titon Korea's natural ventilation products, was similarly impacted by the
downturn experienced by Titon Korea. The loss recognised in respect of
associates (which is all in respect of BTS) in 2023 was £241,000 (2022:
profit £173,000). Taking Titon Korea and BTS together, South Korea made a
negative contribution of £0.64m to the Group's loss before tax for the year
(2022: loss £0.04m).
United States
Our US operations represent the smallest geographical segment and results
improved in the period. Sales in the year increased by 59% to £0.84m (2022:
£0.53m) as the market improved in the period. Titon Inc. made a statutory
profit before tax of £69,000 in the full year (2022: loss of £26,000) and
contributed a margin to our UK manufacturing business.
Board
As we noted in the Interim Report Alexandra French stepped down from her role
as Chief Executive and left the Board with immediate effect in April 2023. We
immediately commenced a recruitment process, and the Board was pleased to
announce in November the appointment of Tom Carpenter, as our new Chief
Executive. Tom is currently serving his notice period with his current
employer and will join Titon in late April 2024.
As announced on 29 November Keith Ritchie announced his decision to retire and
step down as Non-Executive Chair with immediate effect and as a Non-Executive
Director on 28 February 2024. He stepped back from executive
responsibilities in October 2022 after ten years at Titon. The Board wishes to
express its sincere gratitude and thanks to Keith for his significant
commitment, service and contribution to Titon over the last eleven years and
wish him well when he retires from the Board. Paul Hooper replaced Keith as
Chair on an interim basis pending the appointment of a permanent replacement
and I took over the Chair role following my appointment to the Board on 2
January 2024.
I would like to thank all of my fellow directors for their efforts in the year
and their contributions to Titon, in what has been another challenging year.
Employees
I offer my sincere thanks to all our employees for their hard work and skills
they have shown, particularly in the difficult trading conditions we have seen
during the year. I would also like to welcome all our new colleagues to Titon
and thank them for the enthusiastic manner in which they have tackled the
challenges we face. My colleagues on the Board also recognise the contribution
that all our employees have made and thank them for their efforts and
dedication.
Investors
We note the presence of Rockwood Strategic PLC, a company managed by Harwood
Capital LLP, as a 27% shareholder in Titon and look forward to driving returns
for all shareholders.
Shore Capital, our Nominated Adviser and Broker, has continued to write
research coverage on Titon during the year and we also thank them for their
sound financial advice during the year. We welcome all contributions from
shareholders and look forward to meeting them at the Annual General Meeting in
March.
Current Trading and Outlook
UK and Europe
Sales in the first quarter of the current financial year to 30 September 2024
("FY24") in UK and Europe are lower than the comparative quarter in FY23 and
our expectations, reflecting the slowdown in the new build market. However,
the effect of the lower sales on the overall performance has been mitigated by
achieving a higher margin and through managing overheads and operating profit
was in line with our expectations for the quarter.
We enter 2024 with the Office for Budget Responsibility forecasting very low
growth in UK GDP of 0.7% for 2024 due to the squeeze on real wages, the
reduction in levels of government support and higher interest rates. In the
housing markets the Construction Products Association is forecasting total
housing expenditure including repairs, maintenance and improvements to be flat
in 2024 against 2023 with only a 3.2% improvement in 2025.
In 2023, we identified a number of business imperatives that we wanted to
deliver during the year and we report on progress against them in the
Strategic Report. We also started work on a review of the business strategy so
that we can plan and steer the growth of the business in the medium term and
enable the Group to return to sustained profitability. This will be a key task
for our new Chief Executive when he starts at Titon, working alongside our
Senior Leadership Team. We still believe that here are significant
opportunities for Titon as the key role that ventilation provides for indoor
air quality and public health becomes more appreciated.
South Korea
In South Korea, The Bank of Korea forecasts GDP growth for 2023 will be 1.4%,
and for 2024 is projected to increase to 2.1% due to the easing of
sluggishness of exports. However, they note that consumption recovery has been
slow, which weighs heavily on the construction sector.
Sales in South Korea in Q1 FY24 were in line with our expectations. Titon
Korea is expected to remain loss-making in FY24 due to the continuing
challenging conditions in that market, and the Group is taking steps to
progress its plan to streamline the Korean corporate structure and operations.
Outlook
The outlook for the global economy in 2024 is difficult to predict with many
macro issues continuing alongside a weak economy which is constraining
consumers leading to a reduced demand for replacement windows and doors.
Therefore, for our UK and European markets we expect that the business
environment will remain challenging for us in 2024 and we remain in a
transitionary period in South Korea. Despite these challenges, we continue to
have a strong balance sheet, talented employees, a high-quality range of
products and a good pipeline of new products that give us confidence in our
medium-term future.
On behalf of the Board.
J Brooke
Chair
24 January 2024
Notes:
(Non IFRS GAAP measures)
(1) EBITDA is measured as operating profit before net finance costs, tax,
depreciation and amortisation. Underlying EBITDA is EBITDA adjusted for
exceptional items such as restructuring costs, as shown in note 26.
(2) The Quick Ratio measures liquidity and is calculated as follows: Current
Assets-less-Stocks divided by Current Liabilities
Strategic Report
The Strategic Report has been prepared in accordance with Section 414C of the
Companies Act 2006 (the "Act"). Its purpose is to inform shareholders of Titon
Holdings Plc ("Titon" or "the Company" or "the Group") and help them to assess
how the Directors have performed their legal duty under Section 172 of the Act
to promote the success of the Group.
Introductory Statement from Carolyn Isom, Chief Financial Officer
"Whilst it has been another challenging year, I have been inspired by the
dedication and commitment of our employees here at Titon. We have had to
manage another period without a Chief Executive, but the strength of our
senior leadership team has shone through, and we very much look forward to
welcoming Tom Carpenter into the team in April 2024. We believe he is a great
fit for Titon and will bring the leadership required to continue to build on
the foundations already in place.
At the beginning of the year, we reported that we had identified several
business imperatives that we would focus on in the UK, and I am pleased that
we have made significant progress in most areas. We have revised the business
imperatives for the coming year, and we are now starting our strategic
planning process, aiming to have a 3-5-year strategy by the end of FY24.
Following resolution of the issues we previously encountered both with the
implementation of our new ERP system and the worldwide supply chain
constraints, we are pleased we have been able to return to providing the
service levels historically enjoyed by our loyal customer base, and
manufacture and deliver our high-quality products on time. We continue to
develop award winning products as we look to grow our market share in the
ventilation market.
The senior leadership team and I would like to wish Keith Ritchie all the best
in his retirement from March 2024. He has provided a great deal of support and
continuity through some challenging times at Titon, and he will be missed by
all in the UK and in Korea."
Summary
Revenue increase of 1.1% to £22.3m (2022: £22.1m)
Group loss before tax of £839,000 (2022 loss before tax: £953,000)
Group underlying loss before tax of £800,000 (2022: underlying loss of
£604,000)
Loss per share of 6.01 pence (2022: loss of 3.89 pence)
Year-end net cash balances of £2.2m (2022: £1.7m)
Total dividend for the year of 1.0 pence per share (2022: 2.0 pence per share)
Overview
In evaluating the performance of the business, the Directors initially review
geographical areas and then consider product group segmentation at the
secondary level.
The Titon Group performance is monitored across three geographical segments of
UK and Europe, South Korea and United States. Within these segments, the
principal business activities are design, manufacture, marketing and sales:
· natural ventilation (background ventilators) and hardware products
for the window and door fabricator markets in the UK, Europe and the USA;
· mechanical ventilation products for the new build residential markets
in the UK and Europe; and
· natural and mechanical ventilation products for the new build,
re-build and refurbishment residential market in South Korea.
The first two activities above are carried out by Titon Hardware Limited and
Titon Inc. (in the US), both wholly owned subsidiaries. Titon is one of the
leaders in the window background ventilator market in the UK, background
ventilators being used extensively in the new build and refurbishment sectors.
The third activity is carried out by Titon Korea Co. Ltd ("Titon Korea"), a
51% owned subsidiary, which designs and manufactures products and Browntech
Sales Co. Limited ("BTS"), a 49% owned associate company, which markets and
sells these products to customers.
Titon's strategy is to grow both the natural ventilation and mechanical
ventilation businesses by market growth, market penetration and development of
new products.
Chief Financial Officer's Review
The principal activities of the Group have not changed during the year and
consist of the design, manufacture and marketing of ventilation products and
door and window fittings.
The Consolidated Income Statement is set out on page 47. A summary of the
results along with other selected Key Performance Indicators ("KPIs") is as
follows:
2023 2022
£'000 £'000
Revenue 22,334 22,087
Loss before tax (839) (953)
Tax (expense) / credit (86) 410
Loss after tax (925) (543)
Revenue per employee 111 108
Loss after tax per employee (4.5) (2.6)
Year-end net cash and cash equivalents 2,238 1,726
Group Revenue has increased by 1.1% to £22.3m (2022: £22.1m) and the Group
has posted an underlying loss before tax (excluding exceptional items) of
£0.8m (2022: underlying loss before tax of £0.6m) and a Group loss before
tax including exceptional items of £0.84m (2022: loss before tax £0.95m). A
full review of the Group's performance during the year is given in the Chair's
Statement.
While the loss before tax was only marginally improved on last year, there
have been some significant improvements in particular entities. The loss
before tax for the year in FY22 included £0.9m relating to UK, Europe and
America compared to a much improved £0.19m in FY23. However, business
performance in South Korea remains below previous levels due to a slowing in
the housing construction market and an ongoing change in product requirements.
The combined loss before tax in FY23 for both Korean entities, was £0.65m
against a small loss of £0.03m in FY22.
Our trading in UK and Europe was affected for part of the year as we sought to
catch up on production arrears caused by unforeseen operational impacts
associated with the implementation of a new internal ERP system. In H2 these
issues were resolved, and we resumed business as usual. We also previously
reported that we were being severely affected by worldwide supply chain issues
with component shortages and that eased this year. We have continued to manage
our margins that have been affected by increased material prices, energy and
labour costs.
Organisational structure
We have continued to strengthen our senior leadership team and we were
successful in our recruitment for a Commercial Director. This role leads
sales, marketing and customer service for UK and Europe across both the
Hardware and Ventilation Systems divisions and will play a vital role in
setting our business strategy and assisting us in hitting its financial
targets in FY24.
We look forward to the arrival of Tom Carpenter, our new Chief Executive, in
April 2024 to complete our senior leadership team.
Goals and strategy
We seek to provide high quality ventilation systems and we are passionate to
improve indoor air quality to ensure our customers feel safe, feel secure and
breathe easy.
During 2024, we will be working on a review of the Group's strategy that will
clearly outline how we are going to advance and grow the organisation to
deliver value both to shareholders and to society. However, in the meantime
the senior leadership team has defined a refined set of business imperatives
that will guide us through the year and ensure that we stabilise the business
and also position the Group for growth.
Our business imperatives are the crucial things that we must achieve this
year. They are closely interlinked and complement one another. Each imperative
will be regularly monitored through a defined set of financial and operational
KPIs.
Our Business Imperative What are we doing to achieve it?
Environmental Health & Safety
- ensure the health, safety and wellbeing of all our employees - establishing Incident Rate tracking and reporting
- IOSH training for all senior members of staff and first line managers and
supervisors
- EHS SharePoint live for Risk assessments, EHS training matrices and EHS
resources
- revised and updated EHS compliance dashboard
People
- enhance the employee experience - implementing a people strategy integral to the overall business strategy
- create an environment where everyone can bring their best to work - producing development plans for all staff to prepare for succession and
skill enhancement
- recognise effort, contribution and achievement
- introducing a transparent pay, reward and recognition structure
- enhancing non-financial benefits and wellbeing initiatives
Customer
- grow revenue and margin - developing the commercial strategy
- improve customer experience - implementing the new CRM system
- win new business - growing our sales pipeline
- implementing a consistent pricing strategy for all areas of the business
Delivery
- deliver quality products and processes - introducing non-conformance reporting process, linked to CRM
- deliver on time and in full - removing / reducing slow moving and obsolete inventory
- reduce inventory to generate cash - introducing demand forecasting
- scheduling achievement targets in all areas of production
Innovation
- provide technical leadership - launching several key new products to the market in FY24
- develop innovative products - developing the product strategy
- improve business processes - driving efficiency through product rationalisation
- standardising particular product ranges
Business model
Within its main geographical classifications of the UK and Europe, South
Korea, North America and All Other Countries, the Group operates in two
divisions:
(i) the natural ventilation and Window & Door Hardware division, in
which Titon has operated since its formation 50 years ago in 1972 which
includes South Korea. This activity accounted for 55% of Group revenue in 2023
(2022: 62%); and
(ii) the mechanical Ventilation Systems division, which the Group entered 15
years ago in 2007 and which accounted for 45% of revenue in 2023 (2022: 38%).
See Business Segmentation information on page 61.
The Group generally organises its sales and marketing activities into these
divisions with manufacturing and all other services supporting them both on a
shared basis. The executive leadership team manage both divisions.
In the UK, the Group has a direct sales force for each division and aims to
win specifications for its products through its dealings with
developers/housebuilders, architects, building services engineers and local
authorities. Where a project isn't specified, Titon aims to sell directly to
its wide customer base of electrical contractors, installers and window
fabricators.
Titon operates in a wide range of export markets and has made sales to a
significant number of countries from the UK during this year. Our policy for
exporting, in respect of both Window & Door Hardware and Ventilation
Systems, is to appoint local distributors and to support them in specifying
and building the Titon brand. Within the Ventilation Systems division, the
Group also supplies OEM (Original Equipment Manufacturer) products for its
customers and continues to target a significant increase in its activities in
continental Europe.
In South Korea, Titon Korea makes almost all its sales to BTS which sells
products onward to its customers in the residential construction sector. Titon
entered the South Korean market in 2008.
The Group also has a wholly owned subsidiary, Titon Inc., based in Indiana in
the USA. Sales into this market accounted for 4% of Group revenues during the
year (2022: 2%).
The Group manufactures products in the UK and in South Korea. Production in
South Korea is entirely for the South Korean market, whilst products
manufactured in the UK are sold domestically and exported. Products
manufactured in the UK factory account for 71% (2022: 61%) of overall Group
turnover and products manufactured in South Korea account for 11% (2022: 18%).
The remaining 18% (2022: 21%) of revenue is obtained by the sale of products
bought-in from third party manufacturers. These bought-in products tend to be
complementary to and are generally sold alongside our own manufactured lines.
Research and Development
Research and Development continues to play an important role in the Group's
success as we look forward to innovation in our products, processes and
business model. Maintaining quality, predicting trends, diversifying offerings
and generating intellectual capital remain in focus ensuring the business
stays competitive. At the same time we are very aware of the need to keep in
step with challenges concerning cost, technological evolution and regulatory
change Beyond this is R&D's contribution to long-term viability where we
will foster a culture of innovation and learning by attracting talent, growing
our industry leadership and promote a mindset driving economic growth.
Improvement to our business processes will continue in 2024 as we identify
opportunities to introduce efficiencies, better manage risk and increase value
in what we deliver.
Investment in research and development was £467,000 during the year (2022:
£629,000), amounting to 2% of sales (2022: 3%). We saw an increase in spend
in the prior year due to increased testing costs as we approved and released
alternative components during worldwide supply chain shortages.
Design, development and launching of new products is a significant contributor
to the success of the Group. Over the last 5 years the Group has successfully
developed and launched many new products and product variants which have made
a substantial contribution to our revenue, both in securing new business and
in maintaining existing business through product evolution. Our approach is
driven by customer, market and regulatory needs.
During 2024, we will be launching several key new products to the market that
will deliver growth across both our Hardware and Ventilation Systems divisions
for the UK and Europe.
These are some of our recent development and new product highlights:
Added to the range of Titon FireSafe
(https://www.titon.com/uk/products/ventilation-systems/ducting-terminals/firesafe-air-brick/)
(®
(https://www.titon.com/uk/products/ventilation-systems/ducting-terminals/firesafe-air-brick/)
) Air Brick
(https://www.titon.com/uk/products/ventilation-systems/ducting-terminals/firesafe-air-brick/)
in 2023 is the Titon FireSafe(®) 100m Round Push Through Wall Kit. Winner
of the Ancillary Product of the Year at the prestigious HRV Awards 2023.
This product extends the Titon range of FireSafe airbricks introducing a new
kit ideal for residential applications in social housing, new build and
refurbishment. Developed to work with Titon's energy efficient constant flow
Ultimate(®).dMEV fan.
The Titon Ultimate
(https://www.titon.com/uk/products/ventilation-systems/continuous_mechanical_extract/titon-ultimate-dmev/)
(®
(https://www.titon.com/uk/products/ventilation-systems/continuous_mechanical_extract/titon-ultimate-dmev/)
) dMEV
(https://www.titon.com/uk/products/ventilation-systems/continuous_mechanical_extract/titon-ultimate-dmev/)
launched in 2021 achieved the accolade of 'Highly Commended' at the recent
Energy Saving Awards for Domestic Product of the Year. We developed this
product to meet new June 2022 building regulations Part F and comply with new
strict test procedures from Building Research Establishment (BRE). The Titon
Ultimate
(https://www.titon.com/uk/products/ventilation-systems/continuous_mechanical_extract/titon-ultimate-dmev/)
(®
(https://www.titon.com/uk/products/ventilation-systems/continuous_mechanical_extract/titon-ultimate-dmev/)
) dMEV
(https://www.titon.com/uk/products/ventilation-systems/continuous_mechanical_extract/titon-ultimate-dmev/)
is one of only a few fans to meet, and also exceed, the new test requirement
and is therefore well placed to take advantage of these changes. The Titon
Ultimate
(https://www.titon.com/uk/products/ventilation-systems/continuous_mechanical_extract/titon-ultimate-dmev/)
(®
(https://www.titon.com/uk/products/ventilation-systems/continuous_mechanical_extract/titon-ultimate-dmev/)
) dMEV
(https://www.titon.com/uk/products/ventilation-systems/continuous_mechanical_extract/titon-ultimate-dmev/)
was one of the first products listed when the new SAP10 database went live,
initially being one of only two options. In 2023 we have developed an
upgraded version, the Ultimate dMEV "I" which replaces the original unit.
This adds new features demanded by the UK market and others aimed at success
in Europe.
2023 has seen the launch and first sales of Hexalok, a lock for sliding doors
and the first door lock developed by us in-house. It features six locking
points for added security in the increasingly popular aluminium residential
sliding door market and has been designed to replace business products,
formerly bought in, at a more competitive price point.
The Window and Door Hardware R&D team also completed work on the Terminus
security multi-point lock for aluminium windows, again a growing sector of the
residential window market. Close work with target customers ensured immediate
orders for the product.
Work continued within our partnership with Roto, one of the largest hardware
brands in the world, and we have customised their tilt and turn hardware range
and have a Titon centric offering to suit the UK target aluminium systems
company and fabricator audience. First sales have been realised and we have
budgeted to increase those in FY24. The added benefit of our relationship with
Roto is that it will in the future give us access to their portfolio of
products for all window and door types.
We have developed new advanced control systems, including Wi-Fi connectivity
and control of MVHR units using a mobile phone App (Android and Apple). Our
industry standard MODBUS interface also allows interfacing with Building
Control Systems (BMS), enabling building owners to monitor the entire site for
maintenance and fault detection purposes.
In 2023 we have seen new Titon HRV and dMEV products added to those already
supported by the mobile phone App.
During 2023, our popular range of MVHR units were upgraded with the
introduction of models HRV4 and HRV4.25. These are compact units which offer
cutting edge performance, high airflow coupled with extremely low Specific
Fans Power and high efficiency heat exchange capabilities. These support
connectivity via the Titon App and to facilitate installation into complex
whole-house systems, a MODBUS interface is now provided as an option.
We are developing units for the Ventilation Systems MVHR range capable of a
constant flow operation which will allow the unit to maintain a set airflow
even when filters become partially blocked or the duct system changed. This
is an emerging requirement, already common in European territories, for which
we expect demand to increase.
An addition to the HRV range, employing the HRV4.25 unit, is the HRV Cool Plus
product. Today our homes are built to be energy efficient in winter months
with increased levels of insulation and air tightness. However recent
changes to the UK weather and increased summer temperatures can give rise to
overheating in modern properties. The HRV Cool Plus is mounted above the
main HRV unit and provides up to 1.8kW of cooling as a means of combating
overheating.
During the year we have developed and patented a self-regulating background
ventilator, called the Active Vent and we are currently working on our launch
plan. This vent can respond to an increase in outside air pressure and
maintain a constant airflow into the property.
Key Performance Indicators (KPIs)
The Board looks at a range of KPIs to monitor the performance of the Group
throughout the financial year. These include KPIs to track delivery of the
business imperatives. At individual team and departmental level relevant KPIs
are also monitored and tracked regularly. The financial KPIs monitored by the
Board regularly include:
KPI Timing
Group Revenue Measured against budget and prior year on monthly basis
Group Profit Before Tax Measured against budget and prior year on monthly basis
Individual legal entities' performance Measured against budget and prior year on monthly basis
Individual division performance Measured against targets and prior year on weekly basis
Sales, margins and prices of core products Top 25 products reviewed weekly (at divisional management levels and operating
segments)
Sales to customers Top 25 customers (at divisional management levels and operating segments).
Sales by individual area sales managers reviewed weekly
Purchases Top 25 suppliers and delivery performance reviewed monthly
Net cash Reviewed 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 the years ended 30 September are as follows:
2022/23 performance
The financial results for the year are shown above and are discussed
throughout the Annual Report. The significant outcomes for the year are as
follows:
· The backlog of orders caused by the implementation of the new ERP
system in FY22 in UK and Europe were cleared in H1, and we returned to
delivering on time, in full.
· Significant improvement in working capital including stock levels and
cash generation, reflecting the investment in people and processes.
· Continued development of the ERP system to deliver further
improvements to business processes.
· Recruitment was completed for key new leadership roles in Operations,
Commercial, and Research and Development. We also strengthened our external
sales team in several key areas to increase our market presence.
· Development up to launch for several new key products including the
HRV4 and HRV4.25, the Titon FireSafe(®) 100m Round Push Through Wall Kit and
the Hexalock door lock product.
· In the UK sales of background ventilators were marginally up on the
prior year. However, sales of bought in hardware products fell by 26% as our
supplier agreement with Sobinco came to an end following its decision to sell
its range direct to customers, rather than through Titon. However, we have
developed a successful partnership with European window and door hardware
company Roto to sell their products in the UK and we expect to continue to see
our window and door hardware sales improve next year as a result of this.
· With supply chain constraints lifting, we saw sales of Ventilation
System products and services in the UK increase by 17% in the period against
prior year. Sales to continental Europe and the rest of the world were also up
by 71%.
· Sales to Titon Inc. in the US were 58% above the prior year as their
market conditions improved.
· Sales in Korea of natural ventilation products were 18% below the
prior year due to a continued slowdown in residential new build construction.
The market transition to marketing and selling mechanical ventilation products
alongside natural ventilation products is taking longer than originally
anticipated.
· We have 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 have continued to put considerable attention on improving our
culture and focus on health and safety with positive results and this
including strengthening our Environment, Health and Safety team.
· Employee numbers decreased during the period from 209 in September
2022 to 183 in September 2023. In Korea we saw a small reduction in people to
align with the continued market contraction and a bigger reduction in the UK
as we experienced a slowdown in demand, after clearing our backlog.
2023/24 activities
The focus for 2023/2024 is to return to profit through delivery of the
business imperatives outlined in the goals and strategy section on pages 7 to
9. We have set budgets for all regions and divisions 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:
· Continuing delivery of all business imperatives.
· Develop our Group strategy which will include a committed focus on
ESG.
· Increase our penetration into the residential mechanical ventilation
market in the UK through increased sales to new and existing customers.
· We will respond and work within our industry trade bodies to the
proposed Future New Homes Standard and the Home Energy Modelling (the proposed
replacement for SAP). The proposed revised building regulations and associated
standards published in December 2023 for the UK drive towards increasingly
more airtight dwellings for energy efficiency.
· The recently launched award-winning HRV4.25 and HRV4 MVHR units were
developed to meet the performance levels required by the new regulations and
we have already seen strong demand for these products. In addition, we are
currently launching an MVHR cooler unit in response to the emphasis on the
prevention of overheating in dwellings in the current regulatory framework.
· Refine our strategy for the social housing market with existing
products, where there is now a more robust analysis when property upgrades are
undertaken, driving an improvement in quality of the ventilation product
installed, ideally meeting the same standard as new build dwellings.
· Increase our natural ventilation sales in the UK where the revised
building regulations and associated standards now require background
ventilators to be fitted in replacement windows in many more applications.
Previous capital investment and operational efficiency improvements are now
being utilised to gain growth in the relevant sectors.
· Increase market share of Titon branded hardware, particularly our new
door lock, advanced door cylinder and friction hinges, and further develop the
new supplier relationship with Roto in the UK.
· Continue to drive efficiencies and improved customer service
throughout our UK operations through the implementation of lean principles and
practices.
· Streamline the corporate structure and operations of the Korean
business.
Environmental Social and Governance Report
Titon prepared its first separate report on Environmental, Social and
Governance (ESG) last year. ESG reporting remains increasingly important for
investors and we also want to continue demonstrating that we recognise our own
responsibilities to the environment. In 2019 we publicly committed to becoming
a net zero company by 2050.
The UK Government introduced regulations in April 2022 that require
climate-related financial disclosures to be made for publicly quoted
companies, large private companies and LLPs. For companies quoted on AIM this
applies if the business has more than 500 employees, so Titon is not currently
required to make these disclosures but again, the direction of travel is clear
and supports our intentions. We intend to disclose as much as possible of our
climate related activities.
We asked the question in last year's Annual Report about the how Titon makes
the world a better place and the provision of fresh, clean air really answers
this question comprehensively. Nothing has changed this belief in 2023, 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. the Our ventilation products
In the drive for energy efficiency and ensuring that buildings are adequately
ventilated we work with a network of stakeholders including our customers in
the window and door market and the house building market in the UK and Europe.
We also work with our trade associations, Beama Ltd and FETA to promote
ventilation in the UK and a number of other organisations, including the UK
All Party Parliamentary Group for Healthy Homes and Buildings and the Air
Pollution APPG.
Environmental Pillar
The Board recognises its responsibility to minimise the impact of the Group's
activities on the environment.
The Group seeks to reduce its environmental impact in a way that benefits a
broad group of stakeholders, including customers, shareholders, employees and
the local community. The Group follows ISO 14001:2015 for Environmental
Management Systems within its UK manufacturing operation and places great
emphasis on ensuring that it conducts its operations such that:
· Emissions to air, releases to water and land filling of waste do not
cause unacceptable environmental impacts and do not offend the community.
· Significant plant and process changes are assessed and positively
pursued to prevent adverse environmental impacts.
· Energy is used efficiently and consumption is monitored.
· Natural resources are used efficiently.
· Raw material waste is minimised.
· Waste is reduced, reused or recycled where practicable.
· The amount of packaging used for our products is minimised.
During the 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 will be 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. 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.
As part of its processes, the Group's environmental performance is reviewed
regularly by senior management and a programme of continuous improvement for
the benefit of customers, employees and the environment has been adopted. We
remain focussed on reducing our energy usage and maintain detailed records of
each area's gas and electricity consumption with the aim of taking prompt
action if any unexplained increase is observed. Based on the latest energy
figures available our UK electricity usage decreased by 5% in 2023 against
2022 whilst UK gas usage increased by 1%. UK motor vehicle fuel usage has
decreased by 9% over 2022.
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:
2023 2022
Source: tCO2e tCO2e
Combustion of fuel and operation of facilities 532 535
Electricity, heat, steam and cooling purchased for own 216 235
use
Total tonnes of CO2 equivalent 748 770
CO2 emissions normalised per £ million of sales of manufactured products 40.9 45.6
These sources fall within our consolidated financial reporting. We do not have
responsibility for any emission sources outside of our consolidated financial
reporting, including those of our Associate Company.
We have used the GHG Protocol Corporate Accounting and Reporting Standard
(revised edition), data gathered to fulfil our requirements under the CRC
Energy Efficiency scheme, and emission factors from UK Government's GHG
Conversion Factors for Company Reporting 2022.
We have taken action over recent years to reduce our environmental footprint
and will continue to do so. Actions we have already taken include:
· An investment of over £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 2023 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:
2023 2023 2023 2022 2022 2022
Male Female Total Male Female Total
Directors 5 1 6 5 2 7
Senior Managers 6 2 8 6 2 8
Other 111 58 169 121 73 194
Total 122 61 183 132 77 209
We continue to support a number of local and national charities throughout the
year. Our colleagues in Colchester and Haverhill also carry out a number of
charity collections during the year.
We are committed to respecting human rights across our business operations and
aim to comply with all local and international legislation and standards.
Corporate Governance Pillar
We have presented our Corporate Governance position for many years, firstly
under the UK Corporate Governance Code when we were quoted on the Main Market
of the London Stock Exchange and since 2020 under the Quoted Companies
Alliance (QCA) code after we moved to AIM. Please see page 34 of this Report
for the detailed Corporate Governance Report. Our website also contains more
details of the governance disclosure including how we apply the 10 principles
identified by the QCA Code.
In summary, I am confident that we have applied the 10 principles identified
by the QCA Code throughout the accounting period in question. There is a new
QCA code for 2024 and we will apply this to our own governance in the current
period.
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 2023, 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 2022 51 reported
accidents, 0 RIDDOR reported
· January to December 2023 54 reported
accidents, 0 RIDDOR reported
Compared to 2022, we have seen a similar number of accidents reported in 2023,
and the vast majority of these have been minor. 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 2023
over 700 individual hazards (risks) were reported with over 80% resolved
immediately, with the remainder escalated for resolution by a capable person.
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 2023, we had reached 1,871 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 2023, 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 individual
strategic and governance decisions. shareholders in order to develop an understanding of their views.
We listen to the views of our Nominated Adviser in this respect.
We aim to provide fair, balanced and understandable information about the Our AGM is an important forum for private shareholders to meet the board and
business to enable informed investment decisions to be made. 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,
ensures we can retain and develop talented people. newsletters and notice 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 have another employee survey planned for 2024.
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.
We support local charities through fundraising and donations.
Government and Regulatory Bodies Government set the regulatory framework within which we operate. We engage We participate in industry bodies and working groups and our directors chair
to ensure we can help in shaping new policies, regulations and standards, ventilation groups within the trade associations.
which assist in improving indoor air quality, and ensure compliance with
existing legislation. We attend All-Party Parliamentary Groups and plenary sessions.
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:
· Recruited a new Chief Executive to the Board of Directors.
· Recruited our Commercial Director, a key role to the ongoing success
of the business.
· Continued the process to restructure the operations in Korea.
· Performed our first Investor Meet presentation to shareholders for
our interim results.
· Initiated a 'Strategy on a Page' session with a third party to start
planning for producing our business strategy.
· Appointed an external consultant to work with us to achieve our net
zero ambitions.
Report on Risk Management
Principal risks and uncertainties
The Group has established procedures for monitoring and controlling principal
operational risks and these are detailed below. The Board is responsible for
ensuring that the Group maintains an effective risk management system. It
determines the Group's approach to risk, its policies and the procedures that
are implemented to mitigate exposure to risk.
Process for managing risk
The Board continually assesses and monitors the key risks in the business and
has developed a risk management matrix to identify, report and manage its
principal risks and uncertainties. This includes the recording of all
principal risks and uncertainties, which are reviewed annually. Risks are
fully analysed, their potential impact on the business assessed and relevant
mitigations established. The risk matrix is reviewed regularly at Board
Meetings along with the appropriateness and effectiveness of the key
mitigating controls.
The table below highlights the principal risks and uncertainties which could
have a material impact on the Group's performance and prospects and the
mitigating activities which are aimed at reducing the impact or likelihood of
a major risk materialising. The Board does recognise, however, that it will
not always be possible to eliminate these risks entirely.
Risk Matrix
Risk Potential Impact Mitigations
Associate companies
The Group is exposed to the risks related to working with associate companies Failure to maintain good working relationships and to exert sufficient control The Group's senior management has a regular schedule of visits to meet with
over which it does not have full operating control through its equity holding. and influence in respect of our South Korean Associate Company, Browntech the Associate Company's management in South Korea.
Sales Co. Ltd could affect the Group's ability to deliver on its objectives in
this market.
A formal Distribution Agreement exists between Titon Korea Co. Ltd and
Browntech Sales Co. Ltd which aligns those companies for trading purposes. The
Group is evaluating options for streamlining the corporate structure and
operations of the Korean business.
Business disruption
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 6 September 2023) 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.
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.
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 will be preparing a formal succession plan in 2024.
business operations and the Group's ability to implement and deliver its
growth strategies and financial targets.
The Group aims to provide competitive remuneration packages and bonus schemes
to retain and motivate key staff.
Risk Potential Impact Mitigations
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 and
predicted low growth economy. South Korea for 2023/24 suggest limited growth.
The Group spreads its risk by having product lines and customer bases across
new-build, refurbishment and social housing sectors, and is not reliant on
single key customers.
The Group monitors product demand on a weekly basis and is able to respond
accordingly in re-allocating or varying resources.
The Group continually seeks to expand the geographical markets into which it
sells its products.
Government action and policy
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 closely monitors and attempts to influence Building Regulations
core markets as well as by Government action and policies relating to public to comply with Building Regulations in respect of ventilation. Changes to through its work with industry working groups. The UK ventilation and heat and
and private investment. Regulations could adversely impact on sales volumes affecting the Group's power use regulations will be subject to a comprehensive review by 2025.
financial results.
The Group structures its operations so that it has a balanced exposure to the
Additionally, significant downward trends in Government spending could have an construction sectors and the refurbishment sector to reduce the impact of any
adverse impact on the construction industry which could impact on sales and adverse Government action or policy on any one of these sectors.
production volumes affecting the Group's financial results.
Risk Potential Impact Mitigations
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.
This Strategic Report was approved by the Board on 24 January 2024 and signed
on its behalf by:
C V Isom
Chief Financial Officer
Directors' Report
The Directors present their report and the Group and Company financial
statements for the year ended 30 September 2023.
The Directors of Titon Holdings Plc throughout the financial year or
subsequent to the year-end are listed on page 32.
A detailed commentary on the results for the year and discussion of future
developments is given in the Chair's Statement on pages 2 to 5 and an
explanation of the Group's business strategy is included within the Strategic
Report on pages 6 to 13.
The Group's compliance with the QCA Code is set out in the report on page 34.
Substantial shareholders
As at 30 September 2023, 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 3,040,000 27.03
J N Anderson 868,902 7.74
P E Anderson 868,900 7.74
R Anderson 593,750 5.28
D J Barry 561,500 4.99
Share capital
The total issued ordinary share capital at 30 September 2023 consisted of
11,228,750 Titon Holdings Plc shares of 10p each. 10,000 new ordinary shares
were issued during the year to satisfy share option exercises.
Details of the authorised and issued share capital of the Company as at 30
September 2023 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 recommend the payment of a final ordinary dividend of 0.5 pence
(2022: 0.5 pence). An interim dividend of 0.5 pence per share was paid during
the year (2022: 1.5 pence) so the total dividend for the year ended 30
September 2023 is 1.0 pence per share (2022: 2.0 pence). Titon operates a
dividend reinvestment programme for shareholders details of which are
available from our registrars, Link Group.
Research and development
The Directors consider that research and development continues to play an
important role in the Group's success as the need to provide increasingly
energy efficient ventilation products remains a feature of our market over the
coming years. Further details on our research and development activities can
be found in the Strategic Report.
Investment in research and development during the year amounted to £658,000
(2022: £759,000), of which £467,000 (2022: £629,000) was expensed to the
income statement and £191,000 (2022: £130,000) 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 22 includes
information on financial risk and also see note 21 to the Financial
Statements.
Employees
The Group recognises the importance of its employees in achieving its
objectives and has contractual arrangements in place to encourage and reward
loyalty and to safeguard the interests of the Group.
Employees are provided with information about the Group's activities via
consultation with employees, other staff meetings and staff notice boards. The
Group aims to foster an environment in which employees and management can
enjoy a free flow of information and ideas.
The Group is an equal opportunities employer and its policies for recruitment,
training, career development and promotion are based on the aptitude and
abilities of the individual. All of these policies are included in the
Employee Handbook which is issued to every employee. See the Strategic Report
for more details.
The Group recognises the importance of its employees in achieving its
objectives and has contractual arrangements in place to encourage and reward
loyalty and to safeguard the interests of the Group.
Employees are provided with information about the Group's activities via the
Employee Consultative Committee, other staff meetings and staff notice boards.
The Group aims to foster an environment in which employees and management can
enjoy a free flow of information and ideas.
The Group is an equal opportunities employer and its policies for recruitment,
training, career development and promotion are based on the aptitude and
abilities of the individual.
The Group's approach and responsibilities for social and community issues are
not covered in this report.
Disabled employees
The Group gives full consideration to the career development and promotion of
disabled persons, and to applications for employment from disabled persons,
where the requirements of the job can be adequately fulfilled by a handicapped
or disabled person.
The Group considers the training requirements of each disabled person on an
individual basis. Where an employee becomes disabled during the course of
their employment, the Group will consider providing the employee with such
means, including appropriate training, as will enable the employee to continue
to carry out their job, where it reasonably can, or will attempt to provide an
alternative suitable position.
Capital management
The Group's objectives when managing capital are to safeguard the Group's
ability to continue as a going concern, so that it can continue to provide
returns for its shareholders and benefits for its other stakeholders.
The Group considers its capital to comprise ordinary share capital, share
premium, the capital redemption reserve and accumulated retained earnings (see
'Consolidated Statement of Changes in Equity' on page 50). 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 24 January 2024 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 2023 and 24 January 2024 the Company held nil
shares in treasury. The Company may use this power in the future depending on
market conditions and the financial position of the Company.
Events after the reporting date
There have been no events after the reporting date that materially affect the
position of the Group.
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 £2.2m 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 operating companies
within the Group from 1 March 2024 to 31 January 2025 with all overheads being
reduced accordingly. All discretionary expenditure was reduced or removed such
as capital expenditure and dividends. The result of this scenario is that we
remain cash positive within 12 months of the signing date. This extreme
scenario excludes all other resources we would have at our disposal as means
of raising further cash, such as:
· the Group owns the freehold interest in our Haverhill site which had
a fair value of £5.4 million in September 2022. This could be used as
collateral to borrow funds from our bank in the form of a mortgage;
· the Group has significant fixed assets that would have a second-hand
market value that could be realised;
· a rights issue could be made;
· the Group has a large stock balance that could be sold on if there
was reduced production;
· salary costs could be reduced by virtue of either restructuring or
through pay reductions;
· BTS, our associate Company, has £1.9m of cash which could be paid to
shareholders in the form of a dividend.
Annual General Meeting
The Annual General Meeting of Titon Holdings Plc ("the Company") will be held
at the Company's premises at Falconer Road, Haverhill, CB9 7XU on 26 March
2024 commencing at 10.00 a.m. A Notice convening the Annual General Meeting of
the Company for the year ended 30 September 2023 may be found on page 86 of
this document.
Shareholders are being asked to vote on various items of ordinary business,
being Resolutions 1 to 11 nclusive, as listed below.
Resolution 1 - to receive and adopt the audited accounts
The Directors recommend that shareholders adopt the reports of the Directors
and the Auditors and the audited accounts of the Company for the financial
year ended 30 September 2023.
The Directors' Report was approved by the Board on 24 January 2024 and signed
by order of the Board.
Resolution 2 - to declare a final dividend
The Directors recommend a final dividend of 0.5 pence per ordinary share.
Subject to approval by shareholders, the final dividend will be paid on 5
April 2024 to shareholders whose name appear on the Company's register at
close of business on 23 February 2024.
Resolution 3 - to re-elect Mr James 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 Tyson Anderson as a Director
The Chair confirms that following performance evaluation Mr Anderson continues
to be effective and demonstrates commitment in his role.
Resolution 5 - to re-elect Mr Nicholas Howlett as a Director
The Chair confirms that following performance evaluation Mr Howlett continues
to be effective and demonstrates commitment in his role.
Resolution 6 - to re-elect Mr Paul Hooper as a Director
The Chair confirms that following performance evaluation Mr Hooper continues
to be effective and demonstrates commitment in his role.
Resolution 7 - to re-elect Mr Jeff Ward as a Director
The Chair confirms that following performance evaluation Mr Ward continues to
be effective and demonstrates commitment in his role.
Resolution 8 - to re-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 33.
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 22 March 2023,
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 24 January 2024.
The authority conferred by the resolution will expire on 26 June 2025 or, if
sooner, at the 2025 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 - 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 22 March 2023 will expire at the
forthcoming Annual General Meeting. Accordingly, Resolution 11 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 24
January 2024). The power conferred by this Resolution will expire on 26 June
2025 or, if sooner, at the 2025 Annual General Meeting.
In addition, there is one item of special business, being Resolution 12, as
listed below.
Resolution 12 - Company's authority to purchase its own shares
Resolution 12 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 1,122,875 ordinary shares. This represents approximately 10% of the
Company's ordinary shares in issue on 24 January 2024. 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 26 June 2025 or, if sooner, at the 2025 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 24 January 2024 there were options outstanding over 207,000 ordinary
shares which, if exercised at that date, would have represented 1.8% of the
Company's issued ordinary share capital. If the authority given by Resolution
12 was to be fully used, these would then represent 2.0% 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 24 January 2024 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 2023.
There has been no change to the Directors' Remuneration Policy during the
period and there have been no significant changes in individual Director's
levels of remuneration during the year, except as a result of the performance
related elements, which are linked to the amount by which the Group's results
exceeds budget. For this period no payments were made in respect of
performance related elements.
Details of the Directors' Remuneration Policy are shown on the Group's website
in the Corporate Governance section. The Directors' Remuneration Policy was
approved in its entirety at the 2018 Annual General Meeting. An Ordinary
Resolution will be put to shareholders at the forthcoming Annual General
Meeting to be held on 26 March 2024, 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, Mr N
Howlett and Mr K A Ritchie, 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:
2023 2022 Percentage
change
£'000 £'000
Directors' remuneration 576 831 (30.7%)
Other employee remuneration 6,450 6,179 4.4%
Dividend payments to shareholders 112 502 (75.9%)
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 2023 105 1 - 18 124
2022 112 - - 15 127
A C French (d) 2023 139 - - 2 141
2022 76 - - 5 81
M J Norris (e) 2023 - - - - -
2022 61 - - 5 66
T D Gearey (f) 2023 - - - - -
2022 84 8 - 37 129
Non-executive Directors:
T N Anderson (g) 2023 89 1 - 9 99
2022 97 - - 8 105
N C Howlett 2023 56 - - 5 61
2022 63 - - 5 68
G P Hooper (h) 2023 40 - - - 40
2022 20 - - - 20
J Ward (h) 2023 40 - - - 40
2022 20 - - - 20
K A Ritchie (i) 2023 70 1 - - 71
2022 160 7 - - 167
K Sargeant (j) 2023 - - - - -
2022 13 - - - 13
B Ratzke (j) 2023 - - - - -
2022 13 - - - 13
J N Anderson (k) 2023 - - - - -
2022 21 - - - 21
Totals 2023 539 3 - 34 576
2022 740 16 - 75 831
(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 also included the provision of a company car. The
aggregate gains made by Directors on the exercise of share options during 2023
were £nil (2022: £11,220).
(c) In accordance with the proposals adopted by shareholders, performance
related remuneration is not due for this period to Executive Directors.
(d) A C French joined the Board on 3 May 2022 and left the Board on 6 April
2023.
(e) M J Norris joined the Board on 12 July 2021 and left the Board on 8
February 2022.
(f) T D Gearey was a beneficiary of an agreement with the Company relating to
his departure from the Company on 6 April 2022 entitling him to a payment of
£30,000 which is included in salary above as well as payment in lieu of
notice amounting to £46,000.
(g) T N Anderson was an Executive Director on the Board until 31 August 2022.
From 1 September he moved to a Non-executive Director position on the Board
and took on the role as Deputy Chair. The salary reflected above represents
the salary he received for his director position in Titon Hardware Ltd. The
remuneration he receives for his Non-executive Chair role is £1.
(h) G P Hooper and J Ward both joined the Board on 1 April 2022.
(i) K A Ritchie moved from Executive Chair to Non-executive Chair from 1
October 2022.
(i) B Ratzke and K Sargeant both left the Board on 7 December 2021.
(k) J N Anderson left the Board on 31 March 2022 and now receives £5,000 per
annum for advisory services provided.
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 2023 30 September 2022
Ordinary shares of Ordinary shares of
10p each 10p each
K A Ritchie* Non-executive Director 1,031,381 1,031,381
A C French Chief Executive Officer (joined 3 May 2022, left 6 April 2023) - 12,738
C V Isom Chief Financial Officer - -
T N Anderson Deputy Chair - 693,750
N C Howlett* Non-executive Director 63,500 63,500
G P Hooper Non-executive Director 35,498 35,498
J Ward Non-executive Director - -
There were no other changes in Directors' beneficial shareholdings between 30
September 2023 and 24 January 2024.
* Includes spouses' holdings
Share options
Details of the interests of Directors, who served during the year, in options
over ordinary shares are as follows:
Exercise price per share At Granted during Exercised Lapsed At
1 October the year during during 30 September
2022 the year the year 2023
Number Number Number Number Number
T N Anderson (a) 58.0p 25,000 - - - 25,000
C V Isom (b) 138.5p 50,000 - - - 50,000
A C French (c) 95.0p 150,000 - - 150,000 -
The share options in respect of AC French lapsed when she left the Company in
April 2023. No other directors had interests in options over shares during the
year.
Between 30 September 2023 and 24 January 2024, the share options held by T N
Anderson have lapsed. There were no other changes in this period.
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) 15 June 2025 and 15 June 2032
The Directors may only exercise share options if the growth in the earnings
per share of the Company over any period of three consecutive financial years
of the Company following the date of grant, exceeds the growth in the retail
price index over the same period by at least 9 per cent.
At 30 September 2023 the market price of the Company's shares was 80p. The
range during the year was 68p to 87p.
Approval
The Directors' Remuneration Report was approved by the Remuneration Committee
on 24 January 2024 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 going forward.
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. Please 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 Finance Manager 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 2023 the Board consisted of the Non-executive Chair, the
Chief Financial Officer, and four Non-executive Directors.
The Board as a whole comprises a wealth of skills and experience from the wide
range of activities undertaken by its individual members, as follows:
Keith Ritchie joined the Company in 2012, having had a 25-year career in the
City of London. He is a member of the Institute of Chartered Accountants in
England and Wales and has extensive experience of finance, legal, tax and
commercial matters. He is also a Non-executive director of Beama Ltd, the
trade association for the electro-technical manufacturers association and is
Chair of the Ventilation Group, within Beama Ltd. As a result of these
different activities, he continues to utilise the skills gained over his
working career. Keith announced his intention to resign from the Board with
effect from 28 February 2024.
Tyson Anderson has been with the Company since 1993, when he joined the
Marketing team and was elected to the board of Titon Hardware Limited in 1999.
Tyson joined the Board on 1 January 2004 as Marketing Director, was appointed
Sales & Marketing Director on 1 February 2007 and now acts as Business
Projects Director in Titon Hardware Limited. Tyson was appointed as a
Non-executive Director and Deputy Chair in April 2022. In his role as Deputy
Chair he has a service contract which terminates at the 2024 Annual General
Meeting unless he is re-elected.
Carolyn Isom joined Titon in December 2019 as Finance Director of Titon
Hardware and was appointed to the Titon Holdings Board as CFO in December
2021. She is ACCA qualified and has worked for a number of companies in the
construction sector.
Nicholas Howlett joined Titon in 1991 and has held a number of positions
within the Group since then. He was appointed to the Board in 2002 and became
a Non-executive Director with effect from 1 October 2017. He has a service
contract which terminates at the 2024 Annual General Meeting unless he is
re-elected. Nick has carried out many roles for Titon, including Production
Director at the Haverhill factory, head of Research & Development and then
Managing Director of Ventilation Systems in the UK and Europe. Nick works
closely with UK trade associations involved in the ventilation industry and on
the impact of building regulations and other Government laws both for Titon
and the wider industry. Nick also is a Non-executive Director of the
Federation of Environmental Trade Associations and the Chair of the
Residential Ventilation Association.
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 2024
Annual General Meeting unless he is re-elected;
Paul Hooper joined the Board of Titon on 1 April 2022. Paul is currently Chief
Executive of The Alumasc Group plc, a position he has held since April 2003.
Alumasc is a UK-based supplier of sustainable building products and solutions.
He joined Alumasc in April 2001 as Group Managing Director. His earlier career
included a first Managing Director role with BTR plc in 1992. He subsequently
joined Williams Holdings plc in Special Operations, implementing acquisitions
in Europe and North America, prior to joining Rexam PLC as a Divisional
Managing Director with responsibility for operations in Europe and South East
Asia. Paul holds an MBA from Cranfield School of Management. Paul has a
service contract which terminates at the 2024 Annual General Meeting unless he
is re-elected;
James Brooke was appointed to the Board on 2 January 2024 and is Non-executive
Chair. For the past 25 years, 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, he spent twelve years 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.
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 (the
position is currently vacant) has a specific range of responsibilities
including setting the strategic development of the Group, the day-to-day
management of the Group and implementing the strategy agreed by the Board. The
five current Non-executive Directors provide a range of skills and wide
experience to the Group alongside the necessary independence, as required
under principle 5, as follows:
1. Mr N C Howlett is deemed to be independent for the purposes of the
Code. He provides industry advice, on a part time basis to the Group and is a
recognised figure through his involvement in various trade bodies.
2. Mr T N Anderson is not deemed to be independent as he has an existing
service contract with a Group subsidiary.
3. Mr G P Hooper is deemed to be independent for the purposes of the Code
as he has no previous links with the Company. Mr G P Hooper was nominated as
the Senior Independent Director of the Board in December 2023.
4. Mr J Ward is deemed to be independent for the purposes of the Code as
he has no previous links with the Group.
5. Mr K A Ritchie is not deemed to be independent due to his previous
service and role as an executive director of the Group and his significant
shareholding.
6. 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 2023 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 13 1 2 1
K A Ritchie 13 1 2 1
T N Anderson 11 - - -
C V Isom 13 - 2 -
A C French 8 - - -
N C Howlett 13 1 - 1
G P Hooper 12 - 2 1
J Ward 11 - - 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 other than Mr K A
Ritchie.
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 33. 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 2023 comprised the
Chair, Mr N C Howlett, Mr J Ward, Mr K A Ritchie and Mr G P Hooper.
Communications with shareholders
The Board recognises the importance of communications with shareholders. The
Strategic Report on pages 6 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 24 January 2024
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 Committeehe Audit and Risk Committee is appointed by the Board for a period of three years and comprised the Chair, Mr K A Ritchie ACA who has financial reporting experience and Mr G P Hooper, who has extensive accounting experience from his career and position as Chief Executive of The Alumasc Group Plc. I confirm that the Titon Audit and Risk Committee continues to have competence relevant to the sector in which the Company 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 Company 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 Company'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 is the Group's investment in
its South Korean business and in particular the accuracy of accounting
information. The Committee manage this risk through senior management making
regular trips to South Korea combined with the receipt of detailed monthly
management accounts from South Korea.
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 40.
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 2023. 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 2023 were £143,000 (2022:
£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 2023 was £1,000 (2022: £1,000).
K A Ritchie
Audit and Risk Committee Chair
24 January 2024
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 for Titon Holdings Plc, for the year
ended 30 September 2023.
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 Group and Company statement of Cash Flows
· Notes 1 to 26 to the consolidated financial statements, including
significant accounting polices
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 the Parent
Company's affairs as at 30 September 2023 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's Responsibilities for the
Audit of the Financial Statements section of our report. We are independent of
the Group in accordance with the ethical requirements that are relevant to our
audit of the financial statements in the UK, including the FRC's Ethical
Standard as applied to listed entities, and we have fulfilled our 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 parent
Company's operations and specifically its business model.
· The evaluation of how those risks might impact on the Group's
available financial resources.
· Review of the mathematical accuracy of the cashflow forecast model
prepared by management and corroboration of key data inputs to supporting
documentation for consistency of assumptions used with our knowledge obtained
during the audit.
· 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.
· Viability assessments at Group and Parent Company levels, including
consideration of reserve levels and business plans.
Based on the work we have performed, we have not identified any material
uncertainties relating to events or conditions that, individually or
collectively, may cast significant doubt on the Group's ability to continue as
a going concern for a period of at least twelve months from when the financial
statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to
going concern are described in the relevant sections of this report.
Overview of our audit approach
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, and our component auditors acting on specific group instructions,
undertook full scope audits on the complete financial information of one
component.
Materiality 2023 2022
Group £224k £221k 1% (2022: 1%) of group revenue
Parent Company £131k £137k 2% (2022: 2%) of net assets
Key audit matters
Recurring · Revenue Recognition
· Inventory Valuation
· Management Override of Controls
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 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. This is a heightened risk in Korea where the revenue is recognised
over time due to the requirements to perform a second fix on components
fitted, therefore resulting in a deferral of revenue at the year end.
How the 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, documenting details of the current internal
processes, systems and controls to better understand them;
· we have completed cut-off testing by selecting a sample of sales
transactions across the various streams either side of the year end to ensure
the revenue has been accounted for in the correct period;
· substantive testing has been carried out across the different
income streams by picking samples from finance system and tracing to the
appropriate supporting documentation;
· we have evaluated the Group's revenue recognition in the context
of the 5-step approach as set out within IFRS15.
· we have reviewed the audit working papers completed by the
component auditors regarding the method of revenue recognition, its compliance
with the principles of IFRS15 and consideration of the adequacy of the work
performed.
Key observations communicated to the Group's Audit Committee We are satisfied, based on the results of the testing performed, that the
recognition criteria employed by management is materially consistent with the
requirements of IFRS15. It is noted that adjustments are made at group level
to ensure income is correctly recognised in light of IFRS15, these
consolidation adjustments have been confirmed as accurate.
Inventory Valuation
Key audit matter description 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 off or providing for and then also reviewed and considered
the appropriateness of the provision made by management, as well as
reperforming the calculations made by management;
· we have performed substantive testing for a sample of inventory
items held at the year end to the original purchase invoice and also to post
year end sales to ensure inventory is held at the lower of cost and net
realisable value in the financial statements;
· we have obtained and reviewed managements calculations and key
judgements regarding the standard costing model used and assessed the
appropriateness of the costs included. We have also sample tested payroll and
overhead costs back to source invoices and documentation to confirm the
accuracy of the figures used;
· we have reviewed the audit working papers completed by the
component auditor to ensure that the work performed on overseas subsidiaries
sufficiently addresses the risk at group level.
Key observations communicated to the Group's Audit Committee Based on the outcome of our procedures we identified no material issues with
the valuation of inventory or the provisions for slow moving, damaged or
obsolete goods.
Management Override of Controls
Key audit In accordance with ISA 240 (UK) management override is presumed to be a
significant risk. The ability to override controls puts management in a unique
matter description position to perpetrate or conceal the effects of fraud. This may take a number
of forms such as falsifying accounting entries in order to conceal
misappropriation of assets or other manipulation of accounting entries
intended to result in the production of financial statements which give a
misleading view of the entity's financial position or performance.
How the scope of our audit responded to the key audit matter Our audit work included, but was not restricted to the following:
· we evaluated the design and implementation of key controls, in
particular high-level management review controls;
· we evaluated whether the judgements and decisions made in
determining the accounting estimates included in the financial statements,
even if they are individually reasonable, indicated a possible bias on the
part of the entity's management that may represent a risk of material
misstatement due to fraud;
· we utilised our data analytics software to identify journals
deemed to carry the highest risk or fraud or error. These journals were then
queried, and the business rationale confirmed as appropriate;
· we have tested the consolidation workings for mathematical
accuracy and reviewed the consolidation workings and journals to confirm their
appropriateness;
· we have also reviewed the journals and processes used and applied
with regard to the change in accounting system which occurred during the year.
Key observations communicated to the Group's Audit Committee No issues have been identified from the audit procedures performed over
management override of controls
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 £226,000 (2022: 221,000) which
was determined on the basis of 1% (2021: 1%) of the Group's total revenue.
Group's total revenue was deemed to be the appropriate benchmark for the
calculation of Group materiality as this is the main measure by which the
users of the financial statements assess the financial performance and success
of the Group and is a Key Performance Indicator identified by management.
Materiality in respect of the Parent Company was set at £131,000 (2022:
£137,000), determined on the basis of 2% (2022: 2%) of the Parent Company's
Net assets. Net assets was deemed to be the appropriate benchmark for the
calculation of materiality in respect of the Parent Company as this is a key
area of the financial statements because this is the metric by which the
performance and risk exposure of the Group and Parent Company is principally
assessed. In our opinion this is therefore the benchmark 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 £156,800 (2022: £132,600)
and at £91,700 (2022: £82,800) for the Parent Company which represents 70%
(2022: 60%) 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
£11,200 and £6,550 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 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 components based in South Korea and audited by component
auditors in the local market, being Titon Korea Co. Ltd and Browntech Sales
Co. and the other component being Titon Inc. based in the USA.
Full scope audits - Of the 5 components selected, audits of the complete
financial information of 4 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 4 99% 100% 91%
Specific Procedures 1 1% 0 9%
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,
regular communications and a visit to the component auditor and group
operations in South Korea which allowed for detailed review and discussion of
key audit risks and the work performed to address these.
The final component auditor and group reporting were then reviewed and
considered to ensure consistency with previous discussions and audit work
performed
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.
In the light of the knowledge and understanding of the Company and its
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 by 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, as set
out on pages 28 to 29, the Directors are responsible for the preparation of
the financial statements and for being satisfied that they give a true and
fair view, and for such internal control as the Directors determine is
necessary to enable the preparation of financial statements that are free from
material misstatement, whether due to fraud or error.
In preparing the financial statements, the Directors are responsible for
assessing the Group's and the Parent Company's ability to continue as a going
concern, disclosing as applicable, matters related to going concern and using
the going concern basis of accounting unless the Directors either intend to
liquidate the Group or the Parent Company or to cease operations, or have no
realistic alternative but to do so.
Auditor responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial
statements as a whole are free from material misstatement, whether due to
fraud or error, and to issue an auditor's report that includes our opinion.
Reasonable assurance is a high level of assurance but is not a guarantee that
an audit conducted in accordance with ISAs (UK) will always detect a material
misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if,
individually or in 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 Company's members, as a body, in accordance
with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been
undertaken so that we might state to the Company's members those matters we
are required to state to them in an auditor's report and for no other purpose.
To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the Company and the Company's members as a
body, for our audit work, for this report, or for the opinions we have formed.
Andrew Moyser FCA FCCA (Senior Statutory Auditor)
For and on behalf of MHA, Statutory Auditor
London
24 January 2024
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 2023
2023 2022
Note £'000 £'000
Revenue 3 22,334 22,087
Cost of sales (16,413) (16,270)
Gross profit 5,921 5,817
Distribution costs (1,546) (1,393)
Administrative expenses (4,471) (4,586)
Exceptional items 26 (39) (349)
Research and development expenses (467) (629)
Other income 26 21
Operating loss (576) (1,119)
Finance income 5 5 9
Finance expense 5 (27) (16)
Share of post-tax (loss) / profit from associate 13 (241) 173
Loss before tax 6 (839) (953)
Income tax (expense) / credit 7 (86) 410
Loss after income tax (925) (543)
Attributable to:
Equity holders of the parent (686) (436)
Non-controlling interest (239) (107)
Loss for the year (925) (543)
Loss per share attributed to equity holders of the parent:
Basic 9 (6.01p) (3.89p)
Diluted 9 (6.01p) (3.89p)
Consolidated Statement of Comprehensive Income
for the year ended 30 September
2023
2023 2022
£'000 £'000
Loss for the year (925) (543)
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 (83) 112
Total comprehensive income for the year (1,008) (431)
Attributable to:
Equity holders of the parent (775) (333)
Non-controlling interest (233) (98)
(1,008) (431)
The notes on pages 53 to 82 form part of these financial
statements.
Consolidated Statement of Financial Position
at 30 September 2023
2023 2022
Note £'000 £'000
Assets
Property, plant and 10 3,183 3,321
equipment
Right-of-use assets 10 565 553
Intangible assets 11 926 915
Investments in associates 13 2,295 2,909
Deferred tax assets 16 264 697
Total non-current assets 7,233 8,395
Inventories 14 6,139 6,571
Trade and other receivables 15 3,754 4,920
Cash and cash equivalents 20 2,238 1,726
Total current assets 12,131 13,217
Total Assets 19,364 21,612
Liabilities
Lease liabilities 18 426 378
Total non-current liabilities 426 378
Trade and other payables 17 3,968 5,051
Lease liabilities 18 206 232
Total current liabilities 4,174 5,283
Total Liabilities 4,600 5,661
Equity
Share capital 19 1,123 1,122
Share premium 19 1,096 1,091
Capital redemption reserve 56 56
Foreign exchange reserve 109 198
Retained earnings 12,320 13,179
Total Equity attributable to equity holders of the parent 14,704 15,646
Non-controlling Interest 60 305
Total Equity 14,764 15,951
Total Liabilities and Equity 19,364 21,612
The notes on pages 53 to 82 form part of these financial statements.
These financial statements were approved and authorised for issue by the Board
on 24 January 2024 and signed on its behalf by:
J Brooke
Chair
Company Statement of Financial Position
at 30 September 2023
Company No. 01604952
2023 2022
Note £'000 £'000
Assets
Property and motor vehicles 10 1,709 1,773
Investments in subsidiaries 12 554 554
Investments in associates 13 225 225
Deferred tax assets 16 7 4
Total non-current assets 2,495 2,556
Trade and other receivables 15 4,815 4,769
Cash and cash equivalents 20 94 4
Total current assets 4,909 4,773
Total Assets 7,404 7,329
Trade and other payables 17 107 135
Total current liabilities 107 135
Total Liabilities 107 135
Equity
Share capital 19 1,123 1,122
Share premium account 19 1,096 1,091
Capital redemption reserve 56 56
Retained earnings 5,022 4,925
Total Equity 7,297 7,194
Total Liabilities and Equity 7,404 7,329
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 2023 of £281,000 (2022: £35,000). The notes on pages 53 to 82
form part of these financial statements.
These financial statements were approved and authorised for issue by the Board
on 24 January 2024 and signed on its behalf by:
J Brooke
Chair
Consolidated Statement of Changes in Equity
at 30 September 2023
Share Share Capital Foreign exchange Treasury shares Retained Total Non- Total
Capital premium redemption reserve earnings controlling interest Equity
reserve
£'000 £'000 £'000 £'000 £000 £'000 £'000 £'000 £'000
At 30 September 2021 1,119 1,077 56 96 (27) 14,093 16,414 403 16,817
Translation differences - - - 102 - 1 103 9 112
on overseas operations
Loss for the year - - - - - (436) (436) (107) (543)
Total Comprehensive Income for the year - - - 102 - (435) (333) (98) (431)
Dividends paid - - - - - (502) (502) - (502)
Share-based payment expense - - - - - 23 23 - 23
Exercise of share options 3 14 - - - 17 - 17
Transfer of treasury shares - - - - 27 - 27 - 27
At 30 September 2022 1,122 1,091 56 198 - 13,179 15,646 305 15,951
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) (762) (245) (1,008)
Dividends paid - - - - - (112) (112) - (112)
Share-based payment expense - - - - - (72) (72) - (72)
Exercise of share options 1 5 - - - 6 - 6
Other - - - - (2) (2) 1 (1)
At 30 September 2023 1,123 1,096 56 109 - 12,320 14,704 60 14,764
The notes on pages 53 to 82 form part of these financial statements.
The following describes the nature and purpose of each reserve within equity:
Reserve Description and purpose
Share capital Nominal value of the issued share capital of the Company
Share premium Premium on shares issued in excess of nominal value
Capital redemption Amounts transferred from share capital on redemption of issued shares
Treasury shares Weighted average cost of own shares held in Treasury
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 2023
Share Share Capital Treasury shares Retained Total
Capital premium redemption earnings Equity
reserve
£'000 £'000 £'000 £000 £'000 £'000
At 30 September 2021 1,119 1,077 56 (27) 5,090 7,315
Profit for the year - - - - 314 314
Total Comprehensive Income for the year - - - 314 314
-
Share-based payment expense - - - - 23 23
Dividends paid - - - - (502) (502)
Exercise of Share options 3 14 - - - 17
Transfer of Treasury Shares - - - 27 - 27
At 30 September 2022 1,122 1,091 56 - 4,925 7,194
Profit for the year - - - - 281 281
Total Comprehensive Income for the year - - - 281 281
-
Share-based payment credit - - - - (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
The notes on pages 53 to 82 form part of these financial statements.
The following describes the nature and purpose of each reserve within equity:
Reserve Description and purpose
Share capital Nominal value of the issued share capital of the Company
Share premium Premium on shares issued in excess of nominal value
Capital redemption Amounts transferred from share capital on redemption and cancellation of
issued shares
Treasury shares Weighted average cost of own shares held in Treasury
Retained earnings All other net gains and losses and transactions with owners (e.g. dividends)
not recognised elsewhere
Group and Company Statement of Cash Flows
for the year ended 30 September 2023 Group Company
2023 2022 2023 2022
Note £'000 £'000 £'000 £'000
Cash generated from operating activities
(Loss) / profit before tax (839) (953) 278 35
Depreciation of property, plant & equipment 10 533 518 64 64
Depreciation of right-of-use assets 10 240 232 - -
Amortisation of intangible assets 11 195 298 - -
Profit on sale of plant & equipment (25) (19) (11) -
Share based payment (credit) / expense - equity settled 23 (72) 23 (72) 23
Dividend received from Associate (291)
Finance income 5 (5) (9) (1) (1)
Finance costs 5 27 16 - -
Share of associate's post-tax loss / (profit) 13 241 (173) - -
295 (67) (33) 121
Decrease / (increase) in inventories 431 (1,529) - -
Decrease / (increase) in receivables 1,288 (696) (45) (952)
(Decrease) / increase in payables and other current liabilities (1,082) 498 (27) (32)
Cash generated by / (used in) operations 932 (1,794) (105) (863)
Income taxes received 220 - - -
Net cash generated by / (used in) operating activities 1,152 (1,794) (105) (863)
Cash flows from investing activities
Purchase of plant & equipment 10 (433) (386) - -
Purchase of intangible assets 11 (205) (288) - -
Proceeds from sale of plant & equipment 58 44 11 -
Finance income 5 5 9 1 1
Dividends received from associate company 290 - 290 -
Net cash (used in) / generated by investing activities (285) (621) 302 1
Cash flows from financing activities
Dividends paid to equity shareholders of the parent 8 (112) (502) (112) (502)
Payment of lease liability 18 (243) (226) - -
Finance costs 5 (27) (16) - -
Exercise of share options 23 5 44 5 44
Net cash used in financing activities (377) (700) (107) (458)
Net increase in cash 490 (3,115) 90 (1,320)
Effect of exchange rate changes 22 47 - -
Cash at beginning of the year 1,726 4,794 4 1,324
Cash and Cash Equivalents at end of the year 2,238 1,726 94 4
The notes on pages 53 to 82 form part of these financial statements.
Notes to the Consolidated Financial Statements
at 30 September 2023
General information
The consolidated financial statements of the Group for the year ended 30
September 2023 incorporates Titon Holdings Plc ("the Company") and its
subsidiaries (together referred to as "the Group").
Titon Holdings Plc shares are publicly traded on the AIM market of the London
Stock Exchange. The nature of the Group's operations and its principal
activities are set out in the Strategic Report on page 8. The consolidated
financial statements were authorised for release on 24 January 2024.
1 Summary of significant accounting policies
(a) Basis of preparation
Statement of compliance
The Group and Parent Company financial statements have been prepared in
accordance with International Financial Reporting Standards and
Interpretations (collectively "IFRSs'") as adopted in the United Kingdom
("UK-adopted IFRS").
The principal accounting policies adopted in the preparation of the financial
statements are set out below. The policies have been consistently applied to
all the years presented, unless otherwise stated.
The consolidated financial statements are presented in GBP, 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 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.
(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 2023. 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 he 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.
(c) 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 89% (2022: 92%) of sales from the Group's UK business are invoiced
in Sterling.
(d) Property, plant and equipment
Items of property, plant and equipment are stated at cost less accumulated
depreciation and impairment losses.
Cost includes the original purchase price of the asset and the costs
attributable to bringing the asset to its working condition for intended use.
All other repairs and maintenance costs are recognised in the income statement
as incurred.
Freehold land is not depreciated. Depreciation is provided on all other items
of property, plant and equipment to write down the cost to their residual
values over the estimated useful lives. It is applied at the following rates:
Freehold
buildings
- 2% per annum straight line
Improvements to leasehold property - 10% to 20% per annum straight line
(or the lease term, is shorter)
Plant and
equipment - 10% to
33.3% per annum straight line
Motor
vehicles
- 25% per annum straight line
The estimated useful lives, residual values and depreciation methods are
reviewed at each year end, with the effect of any changes in estimates
accounted for on a prospective basis.
The gain or loss arising on the disposal of an asset is determined as the
difference between the sales proceeds and the carrying amount of the asset and
is recognised in the statement of comprehensive income.
The carrying values of tangible property, plant and equipment are reviewed for
impairment when events or changes in circumstances indicate the carrying value
may not be recoverable (see accounting policy (h)).
The Group also recognises right-of-use assets and lease liabilities under IFRS
16 (see note 18), for most leases with the exception of low value assets based
on the value of the underlying asset when new or for short-term leases with a
lease term of 12 months or less. Right-of-use assets, which include Property
(factory units and office accommodation), plant and equipment and motor
vehicles are initially measured at an amount equal to the lease liability,
adjusted by the amount of any prepaid or accrued lease payments, and are
depreciated on a straight-line basis to write off the carrying value of the
assets over the contractual term of each lease.
The carrying values of right-of-use assets are reviewed for impairment when
events, such as a change in the term of the lease, or in other circumstances
indicate the carrying value may not be recoverable (see accounting policy
(h)).
(e) Intangible assets
Intangible assets other than goodwill that are acquired by the Group are
stated at cost less accumulated amortisation and impairment losses (see
accounting policy (h)). Amortisation is charged to Administrative Expenses
within the Consolidated Income Statement. The gain or loss arising on the
disposal of an intangible asset, other than goodwill, is determined as the
difference between the sales proceeds (where appropriate) and the carrying
amount of the asset and is recognised in the statement of comprehensive
income.
i Goodwill
Goodwill represents the excess of the cost of an acquisition over the fair
value of the Group's share of the net identifiable assets of the acquired
subsidiary or associate at the date of acquisition and subject to annual
impairment testing. Goodwill on acquisitions of subsidiaries is included in
intangible assets. Goodwill associated with the acquisition of associates is
included within the investment in associates.
Goodwill is not subject to amortisation but is tested for impairment annually.
On disposal of a subsidiary the attributable amount of goodwill is included in
the determination of the profit or loss recognised in the income statement on
disposal.
ii Internally generated intangible assets (development costs)
Capitalised development costs are amortised over the periods the Group expects
to benefit from selling the products developed.
Expenditure on internally developed products is capitalised if all of the
following can be demonstrated:
· it is technically feasible to complete the intangible asset so that
it will be available for use or sale;
· there is an intention to complete the intangible asset and use or
sell it;
· an ability to use or sell the intangible asset;
· how the intangible asset will generate probable future economic
benefits;
· the availability of adequate technical, financial and other resources
to complete the development; and
· the ability to measure reliably the expenditure attributable to the
intangible asset during its development.
Development costs are amortised using the straight-line method over their
remaining estimated useful lives from the date that the products are available
for sale to customers, which is normally between 3 and 5 years. The remaining
useful lives of such development assets are assessed by the Directors
annually.
Development expenditure not satisfying the above criteria and expenditure on
the research phase of internal projects is recognised in the consolidated
income statement as incurred.
iii Computer software
Costs incurred on the acquisition of computer software are capitalised if they
meet the recognition criteria of IAS 38 as described above. Computer software
costs recognised as assets are written off over their estimated useful lives,
which is normally between 3 and 10 years.
iv Other intangible assets
Other intangible assets arising on business combinations, including patents,
are recorded at fair value at the date of acquisition. Amortisation is charged
to the income statement on a straight-line basis over the estimated useful
lives, which is normally 5 years. The remaining useful lives of such assets
are assessed by the Directors annually.
v Assets under development
Assets under development are not amortised until they are complete and in use
by the Group.
vi Subsequent expenditure
Subsequent expenditure on capitalised intangible assets is capitalised only
when it increases the future economic benefits embodied in the specific asset
to which it relates. All other expenditure is expensed as incurred.
(f) Inventories
Inventories are stated at the lower of cost and net realisable value, 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 profit or
loss.
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 notes 15 and 17.
(k) Revenue
Revenue is derived principally from the sale of goods and is measured at the
fair value of consideration, which is the price at the date of the
transaction, after deducting discounts, settlement discounts, rebates and is
net of value added tax. The Group has concluded that it is the principal in
its revenue arrangements as it has control of those goods before transferring
them to the customer.
Sale of goods arises from sales of products to third parties and related
parties. Revenue from the sale of goods is recognised when the control of the
goods is transferred to the buyer. This occurs when the goods are transferred
to the customer in accordance with the terms of the trade contract. Before a
contract is entered into, customers are assessed using a credit reference
agency before credit is granted and where sufficient credit cannot be granted,
payment is required in advance of the goods being delivered and is held under
other creditors until the goods are delivered and the revenue is then
recognised.
Some goods sold by the group include warranties which require the group to
either replace or mend a defective product during the warranty period if the
goods fail to comply with agreed upon specifications. In accordance with IFRS
15, such warranties are not accounted for as separate performance obligations
and hence no revenue is attached to them. Instead, a provision is made for the
costs of satisfying the warranties in accordance with IAS 37 Provisions,
Contingent Liabilities and Contingent Assets. Extended warranties are not
offered to customers. The warranty provision is included in other creditors
and is calculated as a percentage of applicable sales over a 3 year period.
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.
(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 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) Treasury shares
Consideration paid or received for the purchase or sale of treasury shares is
recognised directly in Equity - see page 53. The cost of treasury shares held
is presented as a separate item ("Treasury shares"). Any excess of the
consideration received on the sale of treasury shares over the weighted
average cost of the shares sold is reflected in share premium.
(s) 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 £264,000 (2022:
£697,000) 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. 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:
2023 2022
£'000 £'000
Deferred Revenue at beginning of year 396 443
Released in the year (396) (443)
Provided for in the year 270 396
Deferred Revenue at end of year 270 396
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 South North Europe and all other Consolidated
30 September 2023 Kingdom Korea America countries
£'000 £'000 £'000 £'000 £'000
Segment revenue 15,781 2,488 842 3,623 22,734
Inter-segment revenue (400) - - - (400)
Total Revenue 15,381 2,488 842 3,623 22,334
Segment profit/(loss) (247) (645) 164 (111) (839)
Tax expense (86)
Loss for the year (925)
Depreciation and amortisation 869 99 - - 968
Total assets 15,521 3,599 243 - 19,363
Total assets include: 2,295 - - - 2,295
Investments in associates
Additions to non-current assets 701 (30) 1 - 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
Operating segment
For the year ended United South North Europe and all other Consolidated
30 September 2022 Kingdom Korea America countries
£'000 £'000 £'000 £'000 £'000
Segment revenue 16,497 3,037 538 2,303 22,375
Inter-segment revenue (288) - - - (288)
Total Revenue 16,209 3,037 538 2,303 22,087
Segment profit/(loss) (651) (37) 160 (425) (953)
Tax credit 410
Loss for the year (543)
Depreciation and amortisation 920 42 - - 962
Total assets 17,021 4,491 178 - 21,690
Total assets include: 2,910 - - - 2,910
Investments in associates
Additions to non-current assets 671 3 - - 674
(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 £173,000.
Sales to BTS of £4.71m represented 21% of Group Revenue (2021: £3.58m -
15%). There are no other concentrations of revenue of 10% or more during the
year (see Note 24 - Related party transactions).
IFRS 8 requires entity wide disclosures to be made about the regions in which
it earns its revenues and holds its non-current assets which are shown below.
For the year ended United Europe USA and Canada South All other Total
30 September 2022 Kingdom Korea regions
Revenues £'000 £'000 £'000 £'000 £'000 £'000
By entities' country of domicile 18,512 - 538 3,037 - 22,087
By country from which derived 16,209 2,303 538 3,037 - 22,087
Non-current assets
By entities' country of domicile 5,354 - 46 3,061 - 8,461
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.
2023 2022
£'000 £'000
Background ventilators and window and door hardware products 12,501 13,586
Mechanical ventilation products 9,833 8,501
Revenue 22,334 22,087
4 Directors and employees
Group Company
2023 2022 2023 2022
Staff costs, including Directors, were as follows: £'000 £'000 £'000 £'000
Wages and salaries 6,534 6,384 293 363
Employer's social security costs and similar taxes 718 664 37 56
Defined contribution pension cost 512 564 2 10
Share based payment expense - equity settled (72) 38 - -
7,692 7,650 332 429
Group Company
2023 2022 2023 2022
The average monthly number of employees during Number Number Number Number
the year was as follows:
Manufacturing 142 137 - -
Sales, marketing, and administration 60 72 4 5
202 209 4 5
Details of Directors' emoluments, pension contributions and interests in share
options are given in the Directors' Remuneration Report set out on pages 30 to
33.
5 Finance income and expense
Finance income Group Company
2023 2022 2023 2022
£'000 £'000 £'000 £'000
Bank interest receivable on short term deposits 5 9 1 1
Finance expense Group Company
2023 2022 2023 2022
£'000 £'000 £'000 £'000
Interest expense on lease liabilities 27 16 - -
6 Loss before
tax
2023 2022
£'000 £'000
This is arrived at after charging / (crediting):
Depreciation of property, plant & equipment 533 518
Depreciation of right-of-use assets 240 232
Amortisation of intangible 194 298
assets
Research and development expenditure written off 467 629
Short term rentals - vehicles and plant & equipment 18 53
Foreign exchange loss / (gain) 55 (109)
Share-based payment (credit) / expense (72) 38
Profit on disposal of property, plant & equipment (25) (19)
Auditors' remuneration:
- for the audit of these accounts 20 20
- for the audit of the accounts of the Company's subsidiaries 110 110
- for the audit of the accounts of the Group's associate 13 13
- non-audit services - comprising other assurance services 1 -
7 Tax credit / (expense)
2023 2022
Current income tax: £'000 £'000
Corporation tax credit / (expense) 121 -
Adjustment in respect of prior 220 -
years
341 -
Deferred tax:
Origination and reversal of temporary differences Note 16 (150) 410
Adjustment in respect of prior year (277) -
Income tax (expense) / credit (86) 410
2023 2022
The charge for the year can be reconciled to the profit £'000 £'000
per the income statement as
follows:
Loss before tax (839) (953)
Effect of:
Expected tax credit based on the standard rate of
Corporation tax in the UK of 25% (2022: 19%) 185 (181)
Additional deduction for R&D expenditure 42 189
Adjustment in respect of prior years (57) 33
Expenses deductible for tax purposes (44) 7
Difference in overseas tax rates (15) -
Impact of deferred tax assets not recognised (144) 384
Other adjustments (53) (22)
Income tax (expense) /credit (86) 410
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.
8 Dividends
2023 2022
£'000 £'000
Final 2022 dividend of 0.50 pence (2021: 3.00 pence) per ordinary 56 335
share proposed and paid during the year relating to the
previous year's results
Interim dividend of 0.50 pence (2022: 1.50 pence) per 56 167
ordinary
share paid during the
year
112 502
The Directors are proposing a final dividend of 0.5 pence (2022: 0.5 pence)
per share. This will result in a final dividend totalling £56,244 (2022:
£56,094), 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:
2023 2022
£'000 £'000
Numerator
Loss for the purposes of basic earnings per share being
loss after tax attributable to members of Titon Holdings Plc (673) (436)
Denominator Number Number
Weighted average number of ordinary shares for the purposes of basic
loss per share 11,205,723 11,196,627
Effect of dilutive potential ordinary shares: share options 10,829 18,173
Weighted average number of ordinary shares for the purposes of diluted loss 11,216,552 11,214,800
per share
Loss per share (pence)
Basic (6.01p) (3.89p)
Diluted (6.01p) (3.89p)
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 2021 3,455 191 8.512 288 12,446
Additions - - 339 47 386
Disposals - - (40) (66) (106)
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 30 September 2023 3,455 190 9,158 176 12,979
Depreciation
At 1 October 2021 1,618 130 6,980 242 8,970
Charge for the year 64 (19) 430 43 518
Disposals - - (28) (54) (82)
Foreign exchange revaluation - (1) - - (1)
At 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 30 September 2023 1,746 134 7,771 145 9,796
Net book value
At 30 September 2023 1,709 56 1,387 31 3,183
At 30 September 2022 1,773 81 1,429 38 3,321
At 1 October 2021 1,837 61 1,532 46 3,476
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 2023, the Group had entered into contractual commitments for
the acquisition of plant and equipment amounting to £53,000 (2022: £83,000).
10 Property, plant and equipment (continued)
Group: right-of-use assets Leasehold Plant and Motor Total
property equipment vehicles
Cost £'000 £'000 £'000 £'000
At 1 October 2021 550 25 370 945
Additions 85 47 106 238
Disposals (85) - (40) (125)
At 1 October 2022 550 72 436 1,058
Additions - 186 69 255
Disposals - - (64) (64)
Foreign exchange revaluation (3) - (5) (8)
At 30 September 2023 547 258 436 1,241
Depreciation
At 1 October 2021 137 9 253 399
Charge for the year 115 10 107 232
Disposals (85) - (40) (125)
Foreign exchange revaluation (1) - - (1)
At 1 October 2022 166 19 320 505
Charge for the year 67 35 138 240
Disposals - - (64) (64)
Foreign exchange revaluation 44 - (49) (5)
At 30 September 2023 277 54 345 676
Net book value 270 204 91 565
At 30 September 2023
At 30 September 2022 384 53 116 553
At 30 September 2023, the Group had entered into contractual commitments for
the acquisition of motor vehicles under finance leases amounting to £48,000
(2022: £119,000).
10 Property, plant and equipment (continued)
Company
The Company has no right-of-use assets (2022: £nil)
Company: property and motor vehicles Freehold Total
land and Motor
buildings vehicles
Cost £'000 £'000 £'000
At 1 October 2021 3,455 27 3,482
Additions - - -
At 1 October 2022 3,455 27 3,482
Disposals - (27) -
At 30 September 2023 3,455 - 3,455
Depreciation
At 1 October 2021 1,619 27 1,646
Charge for the year 63 - 63
At 1 October 2022 1,682 27 1,709
Charge for the year 64 - 64
Disposals - (27) (27)
At 30 September 2023 1,746 - 1,746
Net book value
at 30 September 2023 1,709 - 1,709
At 30 September 2022 1,773 - 1,773
At 1 October 2021 1,836 - 1,836
11 Intangible assets
Group Computer Development Goodwill Assets under development Total
software costs Patents
(internally
generated)
Cost £'000 £'000 £'000 £'000 £'000 £'000
At 1 October 2021 805 1,234 78 439 256 2,812
Additions 595 130 - (439) 2 288
At 1 October 2022 1,400 1,364 78 - 258 3,100
Additions 14 191 - - - 205
At 30 September 2023 1,414 1,555 78 - 258 3,305
Amortisation
At 1 October 2021 698 937 - - 252 1,887
Charge for the year 148 149 - - 1 298
At 1 October 2022 846 1,086 - - 253 2,185
Charge for the year 45 148 - - 1 194
At 30 September 2023 891 1,234 - - 254 2,379
Net book value
at 30 September 2023 523 321 78 - 4 926
At 30 September 2022 554 278 78 - 5 915
At 1 October 2021 107 297 78 439 4 925
All assets have an average useful life of 3.1 years (2022: 3.6 years) except for Goodwill which has an indefinite useful life.
The Directors are not aware of any events or changes in circumstances during
the year which would have a significant impact on the carrying value of the
Group's intangible assets at the balance sheet date.
Company
The Company has no intangible assets (2022: £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 2022 and 2023
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.
Company Investment 2023 2022
£'000 £'000
At 30 September 554 554
13 Investments in associates
The following entity meets the definition of an associate, the Group considers
it has power to exercise significant influence, and has been equity accounted
in these consolidated financial statements:
Proportion of voting
rights held at 30 September 2022 and 2023
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 2023 2022
£'000 £'000
At 30 September 225 225
13 Investments in associates (continued)
The aggregated amounts relating to BTS are as follows:
As at 30 September 2023 2022
£'000 £'000
Current assets 3,404 5,760
Non-current assets 1,242 470
Total Assets 4,646 6,230
Current liabilities 222 546
Non-current liabilities 325 148
Total Liabilities 547 694
Net Assets 4,099 5,536
Group 49% share of Net Assets 2,098 2,712
Group investment in Goodwill 197 197
Group share of investment 2,295 2,909
For the year ended 30 September 2023 2022
£'000 £'000
Revenue 4,038 4,714
(Loss) / profit after tax (241) 173
BTS has been included based on audited financial statements drawn up for the
year to 30 September 2023. Transactions between it and the Group are set out
in note 24.
The Group's investment in BTS at 30 September 2023 includes £197,000 (2022:
£197,000) of goodwill.
14 Inventories
Group 2023 2022
£'000 £'000
Raw materials and consumables 3,087 2,733
Work in progress 40 176
Finished goods and goods for resale 3,012 3,662
6,139 6,571
The carrying value of inventory represents cost less appropriate write down.
During the year there was a net debit of £48,197 (2022: net debit of
£151,706) to the Consolidated Income Statement in relation to the inventory
provisions. The movements in the inventory write-down are included within cost
of sales in the Consolidated Income Statement. The amount of inventories
recognised as an expense during the year is £16,413,000 (2022: £16,270,000).
Company
The Company had no inventories at 30 September 2023 (2022: £nil).
15 Trade and other receivables
Group Company
2023 2022 2023 2022
£'000 £'000 £'000 £'000
Trade receivables 3,247 4,566 1 1
Less: Impairment Allowance (174) (209) - -
Trade receivables - net 3,073 4,357 1 1
Related parties receivables 42 180 4,811 4,768
Less: Impairment allowance - - - -
Related parties receivables (See Note 24) 42 180 4,811 4,768
Other receivables 183 214 - -
Current tax debtor 121 - - -
Prepayments and accrued income 335 169 3 -
Total trade and other receivables 3,754 4,920 4,815 4,769
Other than the amounts due from related parties there were no significant
concentrations of credit risk at either 30 September 2023 or 30 September
2022.
The average credit period taken on sale of goods by the Group's trade debtors
is 51 days (2022: 58 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
2023 2023 2022 2022
£'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 1,978 (24) 3,058 (29)
Up to 30 days past due 965 (25) 1,047 (56)
Up to 60 days past due 157 (37) 259 (53)
Up to 90 days past due 146 (88) 173 (71)
Over 90 days past due - - - -
3,246 (174) 4,537 (209)
Of the £174,000 ECL provision, £nil (2022: £nil) relates to amounts due
from the Group's associate. See note 13.
The main factors considered in determining the level of the loss provisions
set are external customer credit ratings information, prevailing market and
economic conditions and the historic levels of losses experienced by the
Group.
There are no indications as at 30 September 2023 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 2023 that are
overdue for payment is 42% (2022: 33%).
The carrying amount of a financial asset is reduced by the impairment loss
directly for all financial assets with the exception of trade receivables,
where the carrying amount is reduced through the use of a provision account.
When a trade receivable is considered uncollectible, based on its age and
likely recoverability, it is written off against the provision account.
Subsequent recoveries of amounts previously written off are credited against
the provision account. Changes in the carrying amount of the provision account
are recognised in the income statement.
15 Trade and other receivables (continued)
Group
Movements on the impairment allowance of trade and 2023 2022
related party receivables are as follows:
£'000 £'000
At the beginning of the year 209 86
Impairment allowance 102 209
Receivables written off during the year as uncollectible (71) (29)
Unused amounts reversed (66) (57)
At the end of the year 174 209
16 Deferred tax
Group
Deferred tax is calculated in full on temporary differences under the
liability method using a tax rate of 25% (2022: 25.0%). The movement on the
deferred tax account is as shown below:
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
At 30 September 2023, a deferred tax asset of £175k was not recognised in
relation to the losses carried forward by Titon Korea. At 30 September 2022, a
deferred tax asset of £384k was not recognised, in respect of further losses
of £1,537k in the UK, at the substantively enacted rate of 25%. The UK
deferred tax asset has been recognised in full at 30 September 2023.
16 Deferred tax (continued)
Total deferred tax at 1 October 2021 Effect of rate change on opening balances Foreign exchange movement Credited/ Total Asset Asset
(expensed) to deferred tax at 30 2022 2022
£'000 £'000 Income Statement September
2022 UK Non-UK
£'000 £'000
£'000
£'000 £'000
UK accelerated capital allowances (407) - - 407 - - -
Non-UK accelerated capital allowances 2 - - - 2 - 2
UK other temporary and deductible differences 77 - -- (91) (14) (14) -
Non-UK other temporary and deductible differences 30 - - (3) 27 - 27
UK available losses 457 - - 96 553 553 -
Non-UK available losses 119 - 9 1 129 - 129
Total deferred tax 278 - 9 410 697 539 158
Company
Deferred tax is calculated in full on temporary differences under the
liability method using a tax rate of 25% (2022: 25%). The movement on the
deferred tax account is as shown below:
Total deferred tax at 1 October 2022 Effect of Credited / (expensed) 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
Total deferred tax at 1 October 2021 Effect of Credited to Total
rate change on opening balances Income Statement deferred tax at 30
£'000 September
2022
£'000 £'000
£'000
UK Accelerated capital allowances (303) - 303 -
UK other temporary and deductible differences 22 - (18) 4
UK available losses 7 - (7) -
Total deferred tax (274) - 278 4
17 Trade and other payables - current
Group Company
2023 2022 2023 2022
£'000 £'000 £'000 £'000
Trade payables 2,045 3,121 29 (4)
Other payables 803 722 - -
Other tax and social security taxes 378 286 - -
Accruals and deferred income 742 922 78 139
3,968 5,051 107 135
Group trade payables and accruals principally comprise amounts outstanding for
trade purchases and ongoing costs. Year-end Group trade creditors represent 46
days (2022: 52 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 2023 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 2022 384 53 116 553
Additions - 186 69 255
Amortisation (67) (35) (138) (240)
Foreign exchange revaluation (47) - 44 (3)
At 30 September 2023 270 204 91 565
Lease Liabilities £'000
At 1 October 2022 610
Additions 270
Interest expense 27
Lease payments (270)
Foreign exchange revaluation (5)
At 30 September 2023 632
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 2022 232 145 233 - 610
At 30 September 2023 206 175 196 55 632
Lease expense 2023
£'000
Short term lease expense 18
Low value lease expense -
Aggregate undiscounted commitments for short term leases -
18
19 Share capital
2023 2022
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:
2023 2023 2022 2022
Number £'000 Number £'000
At the beginning of the year 11,218,750 1,122 11,193,750 1,119
Share options exercised during the year 10,000 1 25,000 3
At the end of the year 11,228,750 1,123 11,218,750 1,122
Share premium
2023 2022
£'000 £'000
At the beginning of the year 1,091 1,077
Share options exercised during the year 5 14
At the end of the year 1,096 1,091
Treasury shares held by the Group
2023 2023 2022 2022
Number £'000 Number £'000
At the beginning of the year - - 50,000 27
Transfer of treasury Shares - - (50,000) (27)
At the end of the year - - - -
Treasury shares held by the Group were acquired in July 2014 and were disposed
of during 2022 to satisfy an exercise of share options.
19 Share capital (continued)
Share options
Options have been granted over the following number of ordinary shares which
were outstanding:
Date granted Exercise Number of Exercisable between
price shares
15.01.14 58.0p 45,000 15.01.17 and 15.01.24
30.01.18 156.5p 72,000 30.01.21 and 30.01.28
15.07.21 138.5p 90,000 15.07.24 And 15.07.31
At 30 September 2023 207,000
At 30 September 2022 437,000
20,000 share options were exercised between 30 September 2023 and 24 January
2024.
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 58 for
further details).
The Group has no long-term borrowings and any available cash surpluses are
placed on deposit. The Group uses cash on deposit to manage short term
liquidity risks which may arise.
The Group's floating rate financial assets (see below) at 30 September were:
Group Company
2023 2022 2023 2022
Currency £'000 £'000 £'000 £'000
Sterling 1,905 1,374 94 4
US Dollar 223 82 - -
Euro 78 196 - -
South Korean Won 32 74 - -
2,238 1,726 94 4
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
2023 2022 2023 2022
£'000 £'000 £'000 £'000
Bank current accounts 2,238 1,726 94 4
The Group had no floating term deposits at 30 September 2023 (2022: £1m).
Financial liabilities
The Group had no floating rate financial liabilities at 30 September 2023
(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 41
to 43.
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 10% (2022: 7%) 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) 2023 2022
£'000 £'000
Euro (176) (587)
US Dollar 469 686
Total net exposure 293 99
The effect of a 10% weakening of the Euro and the US Dollar against Sterling
at the reporting date of 30 September 2023 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 £27,000 (2022:
decrease in liability of £9,000). A 10% strengthening in the exchange rate
would, on the same basis, have increased pre-tax profit and increased net
assets by £29,000 (2022: increase of £10,000).
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
£37,000 (2022: £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 2022 and is HMRC
registered. The exercise of options granted under these schemes is dependent
upon the growth in the earnings per share of the Group, over any three
consecutive financial years following the date of grant, exceeding the growth
in the retail price index over the same period by at least 9 per cent.
The vesting period of all share option schemes is three years. If the options
remain unexercised after a period of ten years from the date of grant, or on
an employee leaving the Group, the options expire.
In the year to 30 September 2023 there were no share options granted (2022:
150,000).
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 30/01/21 15/07/21 01/07/22 Number
of share
options
Exercise price (pence) 58.0 156.5 138.5 95.0
Number of share options granted initially 320,000 205,000 260,000 150,000
Number of share options outstanding at 01/10/21 150,000 205,000 260,000 - 615,000
Share options lapsed (10,000) (73,000) (170,000) 150,000 (103,000)
Share options exercised (75,000) - - - (75,000)
Number of share options outstanding at 30/09/22 65,000 132,000 90,000 150,000 437,000
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
The inputs to the Black-Scholes pricing model are:
Expected volatility % 111 116 88 97 97
Expected option life (years) 6 6 6 6 6
Risk free rate % 2.50 2.18 1.13 0.46 0.46
Expected dividend yield % 5 5 3 3 3
During the year no additional share options, included in the table above, met
the conditions of exercise (2022: NIL).
At the end of the financial year 45,000 share options met the conditions of
exercise and have a weighted average exercise price of 58p (2022: 64,000 at
58p). The 207,000 share options outstanding at 30 September 2023 had a
weighted average exercise price of £1.273 (2022: 437,000 at £1.134) and a
weighted average remaining contractual life of 5.46 years (2022: 7.13 years).
The share price at 30 September 2023 was 80.0p (2022: 81.0p). The average
market price during the year was 76.4p (2022: 95.0p).
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 £72,000 was recognised in respect of
share options in the year (2022: charge £23,000) of which £11,000 (2022:
£7,000) 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 £590,000 (2022: £777,000). See
Note 15 for the related party balances at 30 September 2023.
Titon Korea Co. Ltd, the Company's 51% owned subsidiary, paid a dividend
during the year to its shareholders amounting to £nil (2022: £nil). Of this
amount, £nil (2022: £nil) before withholding tax, was paid to the Company
with the other £nil (2022: £nil) being paid to non-controlling interests.
Transactions for the year between the Group companies and the associate
company, which is a related party, were as follows:
Sales of goods Amount owed (to)/ by
related party
2023 2022 2023 2022
£'000 £'000 £'000 £'000
Browntech Sales Co. Ltd 2,488 3,037 42 180
Trading debts between subsidiaries and BTS are created only when the ultimate
customer has accepted the successful inclusion of our products into buildings.
Browntech Sales Co. Ltd, the Company's 49% owned associate, paid a dividend
during the year to the Company amounting to £291,012 (2022: £nil).
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:
2023 2022
£'000 £'000
Short term benefits 604 835
Post-employment benefits 34 75
Share based payments 11 7
649 917
The Non-executive Directors received fees for their services to the Titon
Holdings Plc Board as disclosed in the Directors' Remuneration Report.
25 Events after the reporting date
There have been no events after the reporting date that materially affect the
position of the Group.
26 Exceptional items
2023 2022
£'000 £'000
One off cost of living bonus to all employees - 89
Restructuring costs 39 260
Administrative costs - exceptional 39 349
Summarised consolidated results
2023 2022 2021 2020 2019
£'000 £'000 £'000 £'000 £'000
Revenue 22,334 22,087 23,412 20,652 27,157
Gross profit 5,921 5,817 7,350 5,654 8,198
Operating (loss) / profit (576) (1,119) 1,119 (39) 1,629
Share of profit / (loss) from associate (240) 173 (28) 83 329
(Loss) / profit before tax (839) (953) 1,075 18 1,970
Income tax expense (86) 410 (72) 104 (186)
(Loss) / profit after tax (925) (543) 1,003 122 1,784
Dividends 112 502 390 332 526
Basic (loss) / earnings per share (6.01p) (3.89p) 9.24p 0.52p 12.84p
Assets Employed
Property, plant & 3,183 3,321 3,476 3,469 3,799
equipment
Net cash and cash equivalents 2,238 1,726 4,794 5,572 4,587
Net current assets 7,531 7,934 9,313 9,138 10,112
Financed by
Shareholders' funds: all equity 14,703 15,707 16,414 15,943 16,262
The five year summary does not form part of the audited financial statements
and is not an IFRS statement.
Directors and Advisers
Directors
Executive
C V Isom (Chief Financial Officer)
Non-executive
J Brooke (Group Non-Executive Chair, appointed 2 January 2024)
T N Anderson (Deputy Chair)
N C Howlett
G P Hooper
J Ward
K A Ritchie
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
Link Group
10(th) Floor
Central Square
29 Wellington Street
Leeds
LS1 4DL
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