REG - Titon Holdings PLC - Annual Report & Financial Statements
26/01/2023 07:15
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RNS Number : 8826N Titon Holdings PLC 26 January 2023
26 January
2023
LEI: 213800ZHXS8G27RM1DD7
Titon Holdings Plc
Final results for the year to 30 September 2022
Titon Holdings Plc ("Titon", the "Group" or the "Company"), a leading
international manufacturer and supplier of ventilation systems, and window and
door hardware, announces its audited final results for the year ended 30
September 2022 ("FY22").
Summary Financial Results*
2022 2021 Change (%)
Net revenue £22.1m £23.4m -5.7%
Underlying** EBITDA £0.14m £2.0m -93%
Underlying** Group (loss) / profit before tax £(0.6)m £1.08m n/a
(Loss) / earnings per share (3.89)p 9.24p n/a
Full year dividends per share 2.0p 4.5p -56%
Net cash £1.7m £4.8m -64%
· Net revenue reduced by 5.7% to £22.1 million (2021: £23.4 million)
as the Group managed shortages of raw materials, key components and labour;
and reflecting weaker trading conditions in South Korea and operational
impacts of the implementation of the Group's new ERP system.
· Gross margin of 26.4% (2021: 31.4%), driven by industry-wide input
cost inflation and the natural timing lag in recovery through our implemented
price actions with customers and operational efficiencies.
· Underlying EBITDA of £0.14 million (2021: £2.0 million) and
underlying Group loss before tax of £0.6 million (2021 profit before tax:
£1.07 million) reflecting the lower sales in the year and reduced margins.
· Proposed final dividend of 0.5 pence per share (2021: 3.0 pence) in
addition to the interim dividend of 1.5p (2021: 1.5 pence).
· Strong balance sheet maintained at the period end with net cash, no
debt, net assets of £16.0 million at 30 September 2022 (2021: £16.8m) and
net current assets of £7.9 million (2021: £9.3m).
Operational and divisional highlights
· During 2022, we restructured and strengthened the Board and senior
leadership team, welcoming a new Chief Executive and two new Non-Executive
Directors to improve business performance.
· A new ERP system for the UK and European operations was implemented
which will allow greater automation of production and sales processes and
better management information for the business in the future. As previously
announced the initial implementation led to short-term production and despatch
delays, however the system is now functioning as planned.
· Strengthened Supply Chain team to focus on strategic supplier
management to mitigate the impacts we have seen from material shortages and
input cost increases.
· We continued our focus on product development with several new
products expected to be launched in 2023.
· Revenues from UK and Europe overall fell by 3.6% on 2021:
· In the UK, sales of trickle vents were up 8% on the prior year and up
18% in the period July to September 2022 following the introduction of the
revised building regulations and associated standards in the UK in 2022.
· Revenue from the UK window and door hardware business as a whole was
down by 3% as sales into the aluminium sector fell following the conclusion of
a distributor relationship with a supplier of bought-in products. Sales of
Titon branded bought-in products rose 15% in the year.
· Mechanical ventilation systems revenues fell by 4% overall. UK
sales rose by 9% as customer demand for our products remained strong whilst
sales into mainland Europe fell by 34%, as a result of the previously reported
component shortages and the operational challenges.
· In the South Korean market, revenues fell by 15% as a result of the
previously reported weak housing market and shift in market demand to
mechanical ventilation products from natural ventilation in the South Korean
market. We are widening our product offering to include mechanical ventilation
products in order to adapt to changing market conditions.
Current trading and outlook
· Sales in the first quarter of the current financial year to 30
September 2023 ("FY23") in the UK and Europe has exceeded the comparative
quarter in FY22, reflecting the continued strong demand for our products.
Sales in South Korea in Q1 FY23 were in line with our expectations.
· The supply chain constraints have eased, and there is a backlog of
customer orders that Titon is working hard to manufacture and ship as soon as
possible in the coming months.
· We continue to develop strategies that will deliver margin
improvements to offset the impacts of increasing material, labour and energy
costs. We have implemented, and are continuing to implement, price increases
to ensure we achieve maximum price realisation, alongside targeted operational
actions.
· We have a strong order book and a clear strategy to increase capacity
and ensure we quickly clear the backlog of customer orders and return to our
previous high levels of customer service.
· We have a strong leadership team in place who have defined a clear
set of business imperatives, which we believe will enable the Group to return
to profitability in H2 FY23.
· The Board remains confident in the prospects of the Group as the
drive for energy efficiency, combined with the need for better air quality via
adequately ventilated buildings, remains a priority.
Chief Executive, Alexandra French, said:
"Since joining Titon in May 2022 I have been impressed by the hard work,
commitment, and dedication of all our employees. Despite trading conditions
having been challenging for us in 2022 as we suffered from cost increases,
operational challenges and component shortages, we are taking actions to
mitigate these factors and improve underlying business performance. I am
pleased that the component shortages have eased as the year progressed and we
are now in a strong position with respect to supply of critical components. I
am confident that with the strong leadership team now in place and the clear
business imperatives that we have defined, we have a clear route forward for
the business that will deliver stability, strong levels of customer service
and ultimately a return to profit in the UK and Europe in H2 FY23.
Customers and employees remain at the heart of our business. We thank all of
our customers for their loyalty, and we look forward to continuing our strong
business relationships. We also thank our employees for their continued hard
work and commitment during what has been a difficult year.
The outlook for the global economy in 2023 is difficult to predict with cost
pressures and energy shortages impacting on all the major markets in which we
operate. Whilst the potential impact on economic activity in both the UK and
Europe remains unclear, the 2022 building regulations and associated standards
revisions provide a regulatory tailwind to drive long-term growth for both our
natural and mechanical ventilation products. We have a strong balance sheet,
talented employees and a good range and pipeline of products that give us
confidence in our future despite these uncertainties."
For further information please contact:
Titon Holdings Plc
Keith Ritchie, Non-executive Chair Tel: +44 (0)7748 146834
Alexandra French, Chief Executive Tel: +44 (0)7949 409132
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 2022 is
contained below. This document can be accessed with the benefit of page
referencing on the Company's website:
https://www.titon.com/uk/wp-content/uploads/sites/10/2023/01/Annual-Report-and-Financial-Statements-2022.pdf
(https://www.titon.com/uk/wp-content/uploads/sites/10/2023/01/Annual-Report-and-Financial-Statements-2022.pdf)
* Non IFRS measures included
**Excludes exceptional items of £0.3m which includes a one-off cost of living
bonus paid to all qualifying employees and restructuring costs
Annual Report and Financial Statements
for the year ended 30 September 2022
CONTENTS
02 Chair's Statement
07 Strategic Report
17 Strategic Report: Environmental Social and Governance
Report
21 Strategic Report: Directors' Section 172 Statement
23 Strategic Report: Report on Risk Management
27 Directors' Report
33 Directors' Remuneration Report
37 Corporate Governance Report
41 Audit Committee Report
43 Independent Auditor's Report
50 Consolidated Income Statement
50 Consolidated Statement of Comprehensive Income
51 Consolidated Statement of Financial Position
52 Company Statement of Financial Position
53 Consolidated Statement of Changes in Equity
54 Company Statement of Changes in Equity
55 Group and Company Statement of Cash Flows
56 Notes to the Consolidated Financial Statements
85 Five Year Summary
86 Notice of Annual General Meeting
90 Directors and Advisers
Chair's Statement
This has been an important year for Titon as we celebrated our 50(th)
anniversary. John Anderson founded Titon in September 1972 when Titon Hardware
Limited was incorporated. The company was acquired by Titon Holdings Limited
after it was incorporated in December 1981, which then became Titon Holdings
Plc when the Group was first listed on the Unlisted Securities Market of the
London Stock Exchange in 1988. Titon Hardware Limited remains the principal
operating subsidiary of the Group, although we now have Titon Inc. and our
investments in Korea, as our business has expanded its reach. I am very
pleased that we have reached the 50-year milestone and we celebrated that date
with our hardworking staff. I know John Anderson is very proud of his creation
and I hope that the second fifty years is similarly successful.
I am pleased to say that Covid-19 restrictions on working have stopped in our
core UK and European regions. However, during the financial year to 30
September 2022 we continued to see the after effects of the pandemic in the
form of supply chain disruptions. Whilst these have started to recede, the
challenges of the pandemic have been replaced as a major concern by the
inflationary environment, dictating tightening monetary policy, and by the war
in Ukraine and its further impact on the cost of living due to energy
shortages and energy price increases. We have seen broad based cost increases
from our suppliers and for labour and this has been a major factor in the
downturn in our financial results for the year, which we discuss below.
Profit and loss
In the year ended 30 September 2022, the Group's net revenue (which excludes
inter-segment activity) decreased by 5.7% to £22.1m (2021: £23.4m).
The Group's gross margin decreased from 31.4% in 2021 to 26.4% in 2022, which
reflects the challenges we have faced this year with managing and recovering
rising prices. We have faced unprecedented increases in the costs of many raw
materials, components and labour, which we have not been able to pass onto
customers immediately. We have implemented price increases to our customers,
but there is a natural lag in recovering the impact of increases from
suppliers. We suffered an underlying operating loss in the period before
exceptional items of £770,000; including exceptional items the operating loss
was £1,119,000 (2021: operating profit of £1,119,000). Underlying EBITDA was
92.8% lower at £143,000 and excluding exceptional items EBITDA was a loss of
£206,000 (2021: £2.0m). Exceptional items amounted to £349,000 consisting
of redundancy and other costs associated with the changes in people we have
had to make during the year and also a one-off cost of living bonus we paid to
all qualifying employees.
Net finance interest cost amounted to £7,000 (2021 interest: £16,000). The
share of profits from the Group's South Korean associate, BTS, rose from a
loss of £28,000 in 2021 to a profit of £173,000 in 2022 due to the final
realisations from the property transactions that BTS had entered into in prior
years. The Korean business, however, continued to suffer from challenging
market conditions and the transition to mechanical ventilation in the period.
As a result of the underlying loss in the UK and including exceptional items
the Group loss before tax was £953,000 (2021 profit before tax: £1,075,000).
Basic statutory earnings per share for the year was a loss of 3.89 pence
(2021: 9.24 pence).
An interim dividend of 1.5 pence per share was paid in the year to 30
September 2022 and the Directors are proposing a final dividend of 0.5 pence
per share (2021: 3.0 pence). The total dividend for the year will therefore be
2.0 pence per share (2021: 4.5 pence). If approved by shareholders at the
forthcoming Annual General Meeting on 22 March 2023, the dividend will be
payable on 31 March 2023 to shareholders on the register at 10 February 2023.
The ex-dividend date is 9 February 2023.
Statements of financial position and cash flows
The Group benefits from a strong balance sheet with no bank borrowings. Net
assets, including non-controlling interests, reduced to £16.0m at 30
September 2022 (2021: £16.8m), with net cash at £1.7m (2021: £4.79m), which
is equivalent to 10.8% of net assets (2021: 28.5%).
Cash used in operations before working capital changes was £0.2m (2021:
£2.0m cash generated). Inventory levels at the year-end increased by £1.53m
on 2021. This was mainly due to increased stock held in the UK business
because of an increase in material and labour costs and advanced purchasing of
some of our key components where supply constraints had affected our
performance during the year. Together with a £0.7m increase in receivables,
this reduced cash generated from operations to an outflow of £1.9m (2021:
inflow of £1.15m). A key focus and business imperative for the financial year
to 30 September 2023 is to improve the underlying performance of the business
and reduce stock levels to augment our net cash position.
Capital expenditure reduced to £0.83m (2021: £1.11m) and the Group paid
dividends in 2022 in respect of 2021 to the shareholders of Titon Holdings Plc
of £0.50m (2021: £0.39m). During the year, no dividends were paid by Titon
Korea to Titon Holdings Plc and non-controlling shareholders.
The overall effect has been a net decrease in the Group's cash reserves in the
period of £3.07m (2021: decrease of £0.78m). Net current assets at 30
September 2022 were £7.6m (2021: £9.3m) with a Quick Ratio(1) of 1.2 (2021:
1.9). ROCE(2) was a loss of 8.4%, as the business suffered in the difficult
trading conditions (2021: 10.1%).
Segment analysis
The Directors look initially at geographical areas to evaluate the Group's
performance and then consider product segmentation at the secondary level.
UK and Europe
The UK and Europe comprise of 83.8% of our overall business (2021: 82.0%). As
I noted in the Interim Report, the Group suffered from shortages of certain
materials and components and continuing cost increases as well as labour and
energy cost inflation during the year. These factors have continued to impact
us in the second half, although some of the component issues have eased.
We also upgraded our internal ERP system for our UK and European operations in
May 2022, which should allow greater automation of production and sales
processes. The implementation has not been without its challenges and we have
had difficulties in the period since May in manufacturing and shipping
products to our customers at the time and in the quantity they require. I know
this has been difficult for our customers as well as our own employees who
have been trying very hard to meet their customers' expectations, and I am
sorry that the usual Titon standards of customer service have not been met. We
have been working very hard to restore the levels of service that customers
quite rightly expect from us. Whilst a key macro-economic trend that many
businesses are facing, it has been particularly difficult to pass on the cost
increases we have suffered to our customers as many of our Ventilation Systems
division sales are on a project-by-project basis and customers have contracted
to buy at fixed prices.
Revenue from the Hardware division, comprising sales of our trickle vents plus
window and door hardware, was slightly lower in the year by 3% as our
distribution agreement with Sobinco concluded. Sales of Titon branded
bought-in products rose by 15% as the Asterion II range launched in 2022
became recognised for its home security attributes.
In our Ventilation Systems division, revenues from mechanical ventilation
products fell by 4% overall as we struggled to supply our customers. Sales in
the UK were up by 9%, with the Titon FireSafe® Air Brick range continuing to
be popular with sales up 16.2% on last year; Ventilation Systems sales in
mainland Europe were down 34% as our customers suffered from delays on account
of component shortages and waited for our new products to come to market.
Titon continues to invest in research and development which, in turn, yields a continuing number of new products for both the Ventilation Systems and Hardware divisions. We have a very healthy pipeline of new products which we expect to launch in 2023. Further detail on our R&D and new products is detailed within the strategic report.
The final regulations for changes to Part L (Conservation of fuel and power),
Part F (Ventilation) and Part O (Overheating), of the Buildings Regulations in
England for new dwellings and existing buildings were published on the 15
December 2021 with an effective date for implementation for natural
ventilation for existing dwellings being 15 June 2022 and for new build
dwellings both natural and mechanical ventilation being 12 months after that
date. We have seen increased demand for trickle vents as window fabricators
are now required to fit vents on virtually all replacement windows, or provide
a suitable alternative, when energy efficient measures are being installed in
domestic properties. For mechanical ventilation systems the house builders
have a transition period of 12 months before they have to apply the new
regulations and we expect to see increased demand for our mechanical products
in 2023.
We are faced with a negative outlook in 2023 with the Experian UK Construction
forecast in January 2022 showing public and private housing expenditure
falling by 7% against 2022, as the economy goes into recession. At the same
time, the expected value of repair, maintenance and improvement in the private
and public residential sectors is forecast to be the same in 2023 against
2022, leaving overall housing expenditure in 2023 forecast to be 4% lower than
2022. In 2024 total housing expenditure is forecast to be only marginally
higher than the 2023 forecast, indicating only a very slow recovery from the
challenging times expected in 2023.
South Korea
In South Korea, the Group's subsidiary, Titon Korea (51% owned), manufactures
natural window ventilation products. In the 2022 interim results statement we
noted that revenues were weaker than expected due to continuing Covid-19
challenges and delays in construction site projects with sales being deferred
and this has continued in the second half. Additionally, as the Group has
reported in the past, there has been a shift in market demand in Korea to
mechanical ventilation products and away from natural ventilation. These
factors have resulted in a reduction in revenue to £3.0m (2021: £3.6m)
whilst the contribution to Group profit before tax declined to a loss of
£209,000 (2021: loss of £14,000).
The Group's associate company (49% owned), Browntech Sales Co. Limited
('BTS'), which principally distributes Titon Korea's natural ventilation
products, was similarly impacted by the downturn experienced by Titon Korea,
excluding the final realisations from the property activities that it had
previously entered into. The profit recognised in respect of associates (which
is all in respect of BTS) in 2022 was £173,000 (2021: loss £28,000). This
included the release of a provision made in 2020 against those property
investments. We do not expect to see meaningful sales of mechanical products
in BTS to start coming through before financial year 2024/25 as it develops
its trading relationships. BTS is marketing both a hybrid mechanical
ventilation product in conjunction with the manufacturer of that product and
also mechanical ventilation with heat recovery products that it is developing
or buying in from other manufacturers. Taking Titon Korea and BTS together,
South Korea made a negative contribution of £0.04m to the Group's profit
before tax for the year (2021: loss £0.04m).
United States
Our US operations represent the smallest geographical segment and results
reduced in the period. Sales for the year fell by 16% to £0.53m (2021:
£0.63m) as the market remained in a subdued state but our customers remained
loyal and continued to use our products where there was a need for trickle
vents. Titon Inc. made a statutory loss before tax of £26,000 in the full
year (2021: profit of £29,000) but contributed a margin to our UK
manufacturing business.
Board
As I reported in the Interim Report our Board recruitment process was
completed earlier in the year and our new non-executive directors are making a
significant contribution to the business. I am also pleased to report that
Alexandra French, our new Chief Executive, who joined Titon in May 2022 has
settled in really well and is utilising her experience to guide Titon through
the challenges that we have faced this year.
As we announced in September I have stepped back from executive
responsibilities after ten years at Titon and have become Non-executive Chair.
This will allow me to focus fully on facilitating further governance and
strategy initiatives and grant an enhanced autonomy to Alexandra and her
Executive team to make the operating changes we need. Of course, I remain in
regular contact with all of the Board Directors.
Once again, I would like to thank all of my fellow directors for their efforts
in the year and their contributions to Titon, in what has been a challenging
year.
Employees
I offer my sincere thanks to all our employees for all their hard work and
skills they have shown, particularly in the difficult trading conditions we
have seen during the year and the introduction of the new ERP system in May,
which proved challenging for them. I really appreciate the difficulties that
many of them have faced when we have not been able to meet our customers'
needs and I apologise to them for this. We have moved to a hybrid pattern of
working for office-based employees to allow them to work from home two days
per week where feasible and this provides them with the flexibility that many
other employers are also offering. All of our office-based employees returned
to office working in February 2022. I would also like to welcome all of our
new colleagues to Titon and thank them for the enthusiastic manner in which
they have tackled the challenges we face. My colleagues on the Board also
recognise the contribution that all our employees have made and thank them for
their efforts and dedication.
Investors
Shore Capital, our Nominated Adviser and Broker, has continued to write
research coverage on Titon during the year, focusing on our trading updates
which have been required and we also thank them for their sound financial
advice during the year.
As usual, I would like to mention the Group's dividend reinvestment programme
(DRIP) which has operated for several years. This represents a
straight-forward and cost-effective way for shareholders to increase their
holdings in Titon should they wish to do so.
Current Trading
UK and Europe
Sales in the first quarter of the current financial year to 30 September 2023
("FY23") in the UK and Europe have exceeded the comparative quarter in FY22,
reflecting the continued strong demand for our products. Sales in South Korea
in Q1 FY23 were in line with our expectations.
We enter 2023 with the Office for Budget Responsibility forecasting a
recession in the UK starting in October 2022 with output falling by 2.1% in
total with a slow recovery of 1.3% in 2024. In the housing markets Experian
are forecasting total housing expenditure including repairs, maintenance and
improvements to fall by 4% in 2023 against 2022 with only a marginal
improvement in 2024.
In 2023 we have identified a number of business imperatives that we expect to
deliver during the year and Alexandra French has set out details of them in
the Strategic Report. These are intended to stabilise the UK and European
business and return the business to growth. We will also start work on a
review of the business strategy so that we can plan and steer the growth of
the business in the medium term. There are significant opportunities for Titon
as the key role that ventilation provides for indoor air quality and public
health becomes more appreciated. The tragic death of a 2-year-old child in
Rochdale in 2020 that was revealed in November 2022 illustrated very clearly
the threat that inadequate ventilation carries, particularly to the young, the
elderly and all individuals with underlying health conditions.
As noted above we had difficulties supplying customers with Titon products
during 2022 on account of the ERP challenges and component shortages. The
supply chain constraints have eased, and there is a backlog of customer orders
that we are working hard to manufacture and ship as soon as possible in the
coming months. This is one of our business imperatives, and it is crucial for
our performance in 2023 that we meet this challenge and our customers'
demands. The Group has increased the output of Ventilation Systems products
and we have invested to increase capacity for our trickle vents to satisfy the
increased demand resulting from the Building Regulations changes in June 2022.
We have filled key management vacancies in the year but had some difficulties
recruiting people in other roles, and with the current low levels of
unemployment in our region, we expect that we will continue to have some
challenges in doing so in 2023. We also acknowledge that the cost of labour
will increase in the year. We anticipate that cost increases for our
components and raw materials will also continue to impact the Group,
consistent with other companies across the sector and the economy more widely
in 2023. We continue to seek to manage these inflationary pressures and margin
erosion. The Group has raised prices in January 2023 and expects to implement
further price rises during the year to recover these input cost increases,
although there may remain a natural lag in margin recovery due to the
differences in the timing of these changes.
In the UK and Europe, we currently expect to report a loss before tax in H1
FY22/23, but we expect to return to profitability in H2 FY22/23.
South Korea
In South Korea, The Bank of Korea forecasts GDP growth for 2022 will be 2.6%,
but for 2023 is projected to increase by 1.7%. Construction investment is
forecast to continue its sluggish performance with a slowdown in housing
demand and lower government support for the housing sector. As previously
noted, we continue to be in a transitionary period for our ventilation
products in South Korea as market requirements change.
Outlook
The outlook for the global economy in 2023 is difficult to predict with cost
pressures and energy shortages impacting on all the major markets in which we
operate. We certainly expect that cost increases will continue in 2023, which
will keep the pressure on our margins and demand may weaken if the new build
market declines. The impact of the cost-of-living crisis on consumer
expenditure is also expected to reduce demand for replacement windows and
doors. However, this may be tempered by the changes in building regulations
and associated standards in the UK, which Titon is well positioned to benefit
from with a range of ventilation products that cover all our customers' needs.
Therefore, for our UK and European markets we expect that the business
environment will remain challenging for us in 2023 and we remain in a
transitionary period in South Korea. Despite these challenges, we continue to
have a strong balance sheet, talented employees, a high quality range of
products and an exciting pipeline of new products that give us confidence in
our medium-term future.
On behalf of the Board.
K A Ritchie
Chair
25 January 2023
Notes:
(Non IFRS GAAP measures)
(1) The Quick Ratio measures liquidity and is calculated as follows: Current
Assets-less-Stocks divided by Current Liabilities.
(2) ROCE is calculated by dividing EBIT by capital employed (capital employed
being the sum of shareholders' funds, non-controlling interests and all debt
less intangible assets and cash).
Strategic Report
The Strategic Report has been prepared in accordance with Section 414C of the
Companies Act 2006 (the "Act"). Its purpose is to inform shareholders of Titon
Holdings Plc ("Titon" or "the Company" or "the Group") and help them to assess
how the Directors have performed their legal duty under Section 172 of the Act
to promote the success of the Group.
Introductory Statement from Alexandra French, Chief Executive Officer
"Since joining Titon in May 2022 I have been particularly impressed by the
hard work, commitment, and dedication of all our employees. Throughout my
career I have worked in businesses that have been focussed on making a
difference to our world and I am delighted to be continuing that at Titon
where we are passionate about improving indoor air quality so that people
sustain health and comfort. My first six months have certainly been a
challenge and full of surprises as we contended with supply chain and
operational constraints and it is clear that we have not performed as well as
previous years. However, Titon is a great company with excellent people and
products and a healthy balance sheet. It's clear to me that we need a much
stronger direction to bring the business back on track during the coming year
and then a clear strategy that will outline how we will grow and deliver value
for shareholders and for society. I am committed and excited to be leading us
on that journey."
Summary
Revenue reduction of 5.7% to £22.1m (2021: £23.4m)
Group loss before tax of £953,000 (2021 profit before tax: £1,075,000)
Group underlying loss before tax of £604,000 (2021: underlying profit of
£1,075,000)
EPS loss of 3.89 pence (2021: profit of 9.24 pence)
Year-end net cash balances down to £1.7m (2021: £4.8m)
Total dividend for the year of 2.0 pence per share (2021: 4.5 pence per share)
Overview
In evaluating the performance of the business, the Directors initially review
geographical areas and then consider product group segmentation at the
secondary level.
The Titon Group performance is monitored across three geographical segments of
UK and Europe, South Korea and United States. Within these segments, the
principal business activities are design, manufacture, marketing and sales:
· natural ventilation (trickle vents) and hardware products for the
window and door fabricator markets in the UK, Europe and the USA;
· mechanical ventilation products for the new build residential markets
in the UK and Europe; and
· natural and mechanical ventilation products for the new build,
re-build and refurbishment residential market in South Korea.
The first two activities above are carried out by Titon Hardware Limited and
Titon Inc. (in the US), both wholly owned subsidiaries. Titon is one of the
leaders in the window trickle vent market in the UK, trickle vents being used
extensively in the new build and refurbishment sectors. The third activity is
carried out by Titon Korea Co. Ltd ("Titon Korea"), a 51% owned subsidiary,
which designs and manufactures products and Browntech Sales Co. Limited
("BTS"), a 49% owned associate company, which markets and sells these products
to customers.
Titon's strategy is to grow both the natural ventilation and mechanical
ventilation businesses by market growth, market penetration and development of
new products.
Chief Executive's Review
The principal activities of the Group have not changed during the year and
consist of the design, manufacture and marketing of ventilation products and
door and window fittings.
The Consolidated Income Statement is set out on page 50. A summary of the
results along with other selected Key Performance Indicators ("KPIs") is as
follows:
2022 2021
£'000 £'000
Revenue 22,087 23,412
(Loss) / profit before tax (953) 1,075
Taxation 410 (72)
(Loss) / profit after tax (543) 1,003
Revenue per employee 108 116
(Loss) / profit after tax per employee (2.6) 5.0
Year-end net cash and cash equivalents 1,726 4,794
The Group has suffered this year from shortages of raw materials, key
components and labour as well as significant cost increases for materials,
labour and energy. As result there has been a negative impact on our financial
performance and position. The Group has sought to manage the inflationary
margin erosion which has impacted our financial performance through price
increases, material cost savings and operational efficiencies. Our trading was
also affected by unforeseen operational impacts associated with the
implementation of a new internal ERP system for our UK and Europe operations.
Business in South Korea also remains below previous levels due to a slowing in
the housing construction market and an ongoing change in product requirements.
Group Revenue has decreased by 5.7% to £22.1m (2021: £23.4m) and this has
resulted in an underlying Group loss before tax (excluding exceptional items)
of £0.6m (2021 underlying profit before tax: £1.1m) and a Group loss before
tax including exceptional items of £0.95m (2021: profit before tax £1.1m).
The tax credit for the year of £0.4m (2021: charge of £0.07m) is due to a
deferred tax credit reflecting trading losses and capital allowances. A full
review of the Group's performance during the year is given in the Chair's
Statement.
Organisational structure
The Group has made a number of strategic organisational changes during 2022 to
position it for change and for future growth. Key new hires have strengthened
the senior leadership and management teams. We have a new Operations
Director and have also recruited a Head of Supply Chain and recruiting a new
Head of IT, both newly defined roles required to deliver the business
imperatives detailed in the goals and strategy section. Both Procurement and
Planning are areas that offer us significant opportunities for financial and
operational improvements. We are also actively recruiting for a Commercial
Director to lead sales, marketing and customer service on a global basis
across both the Hardware and Ventilation Systems divisions. Strengthening and
shaping the organisation to ensure the Group hits its financial targets will
be an exciting key focus in 2023.
Covid-19
The health and safety of all our employees remains a top priority for the
Group. The Group is no longer impacted by the Covid-19 pandemic, and we feel
well equipped to deal with any future waves in the UK. However, we continue to
monitor the Covid-19 situation very carefully in the UK and Europe as well as
in countries of our key suppliers where government imposed lockdowns could
have the potential to cause supply disruption. Our supply chain strategy would
be to forward order and hold higher stocks should we deem there to be a high
risk of disruption. We also have a policy of dual sourcing key components
where possible.
Goals and strategy
We are passionate to improve indoor air quality; good indoor air quality means
clean air for society to sustain health and comfort.
During 2023 we will be working on a review of the Group's strategy that will
clearly outline how we are going to advance and grow the organisation to
deliver value both to shareholders and to society. However, in the meantime
the senior leadership team has defined a set of eight business imperatives
that will guide us through the year and ensure that we stabilise the business
and also position the Group for growth.
Our business imperatives are the crucial things that we must achieve this
year. They are closely interlinked and complement one another. Each imperative
will be regularly monitored through a defined set of financial and operational
KPIs.
Our business imperative Why it is important for us What we are doing and will we be doing to achieve it
Catch back on production arrears and maintain agreed finished goods stock - to enable increased sales - increasing production output through increased manning, operational
levels
efficiencies, process and planning improvements and capital investment
- to return to our previous high levels of customer service
- once arrears are cleared, maintaining target finished good stocks for all
make-to-stock products
Improve working capital including reducing site inventory - to improve the balance sheet and release cash held in inventory - reducing raw material and obsolete finished goods stock holdings
- to create space on site to optimise stock management and support delivery - maintaining high inventory record accuracy
of production plans
- ensuring strong supplier relationship management and implementing improved
terms with top suppliers
- maintaining debtor tracking
Achieve stable, engaged and present workforce - to ensure that we have sufficient and correct resources available to - implementing the appropriate organisational structures to meet the
deliver each business imperative business needs
- to ensure that we have the correct people resources to deliver a growth - implementing objective setting and performance reviews for all employees
strategy linked to these business imperatives
- conducting an employee survey and acting on the feedback
- providing required employee training and support
Realise business benefits from new Microsoft D365 ERP system through improved - to deliver operational efficiencies and higher output - use of embedded BI and other D365 reporting tools
business processes
- to improve visibility of data that drives key business decisions - implementing workflows within D365
- to enhance control of key processes - scoping and delivering end to end continuous improvement project with
defined benefits case
Deliver innovative - to ensure our product range meets future customer and regulatory - launching several key new products to the market in 2023
new products to drive business growth requirements
- maintaining and enhancing new product introduction process from idea
- to remain market leading in our product offerings through to launch
- to enable increased sales
Improve profitability - to improve business financials - reducing the hardware product range offering
and margin through hardware product range rationalisation
- to improve operational efficiency through reduced product complexity - implementing optimised minimum order quantities
- reviewing and aligning pricing
Develop strong sales pipeline through existing and new customers - to enable increased sales and position the Group for growth - restructuring and strengthening the Customer Service team
- to rebuild and strengthen customer relationships after a challenging year - implementing an enhanced CRM within Microsoft D365
- to return to our previous high levels of customer service - ongoing monitoring and analysis of sales funnel with defined growth
targets
Improve workplace safety by reducing workplace incidents - to ensure the health, safety and wellbeing of all our employees - improving health and safety culture by setting an Environmental Health and
Safety (EHS) objective for every employee
- ensuring visible felt leadership
- developing and improving our EHS Committee
Business model
Within its main geographical classifications of the UK and Europe, South
Korea, North America and All Other Countries, the Group operates in two
divisions:
(i) the natural (trickle) ventilation and Window & Door Hardware
division, in which Titon has operated since its formation 50 years ago in 1972
which includes South Korea. This activity accounted for 62% of Group revenue
in 2022 (2021: 63%); and
(ii) the mechanical Ventilation Systems division, which the Group entered 15
years ago in 2007 and which accounted for 38% of revenue in 2022 (2021: 37%).
See Business Segmentation information on page 63.
The Group generally organises its sales and marketing activities into these
divisions with manufacturing and all other services supporting them both on a
shared basis. The executive leadership team manage both divisions.
In the UK, the Group has a direct sales force for each division and aims to
win specifications for its products through its dealings with
developers/housebuilders, architects, building services engineers and local
authorities. Where a project isn't specified, Titon aims to sell directly to
its wide customer base of electrical contractors, installers and window
fabricators.
Titon operates in a wide range of export markets and has made sales to a
significant number of countries from the UK during this year. Our policy for
exporting, in respect of both Window & Door Hardware and Ventilation
Systems, is to appoint local distributors and to support them in specifying
and building the Titon brand. Within the Ventilation Systems division, the
Group also supplies OEM (Original Equipment Manufacturer) products for its
customers and continues to target a significant increase in its activities in
continental Europe.
In South Korea, Titon Korea makes almost all its sales to BTS which sells
products onward to its customers in the residential construction sector. Titon
entered the South Korean market in 2008.
The Group also has a wholly owned subsidiary, Titon Inc., based in Indiana in
the USA. Sales into this market accounted for 2% of Group revenues during the
year (2021: 3%).
The Group manufactures products in the UK and in South Korea. Production in
South Korea is entirely for the South Korean market, whilst products
manufactured in the UK are sold domestically and exported. Products
manufactured in the UK factory account for 61% (2021: 58%) of overall Group
turnover and products manufactured in South Korea account for 18% (2021: 15%).
The remaining 21% (2021: 27%) of revenue is obtained by the sale of products
bought-in from third party manufacturers. These bought-in products tend to be
complementary to and are generally sold alongside our own manufactured lines.
Research and Development
Research and development continues to play an important role in the Group's
success as the need to provide increasingly energy efficient ventilation
products remains a growing requirement of our market over the coming years.
This year we significantly improved our New Product Introduction (NPI) process
to include robust business case and project justification analysis, stage gate
sign off by all stakeholders at each stage and comprehensive project milestone
tracking, ensuring that all the new products we launch will deliver value.
Investment in research and development was £629,000 during the year (2021:
£509,000), amounting to 3% of sales (2021: 3%). We saw an increase in spend
over prior year due to increased testing costs as we approved and released
alternative components during worldwide supply chain shortages.
Design, development and launch of new products has been a significant
contributor to the success of the Group over past years. Over the last 5 years
the Group has successfully developed and launched many new products and
product variants which have made a significant contribution to our revenue,
both in securing new business and also in maintaining existing business
through product evolution. Our approach is driven by customer, market and
regulatory needs.
These are some of our recent new product highlights:
The Titon FireSafe
(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/)
launched in 2020 recently won 'Ancillary of Year' at the prestigious HVR
awards. We developed this product in response to the terrible Grenfell
disaster and subsequent legislation changes in building regulations Part B. It
remains a market leading product.
The Titon Ultimate
(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). Changes to
the BRE testing process for dMEV fans requires that the fan should now be more
powerful to overcome external wind pressure. This means that a large number of
traditional extract fans can no longer be used. The Titon Ultimate
(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 2022 we developed and launched our Asterion II 3-Star high security
anti-manipulation profile cylinder to protect against ever increasing security
threats and more stringent security testing requirements in the UK. It is BSI
Kitemark certified and has been awarded Secured by Design (SBD) status.
We have developed new advanced control systems, including Wi-Fi connectivity
and control of MVHR units using a mobile phone App (Android and Apple). Our
industry standard MODBUS interface also allows interfacing with Building
Control Systems (BMS), enabling building owners to monitor the entire site for
maintenance and fault detection purposes.
During 2022 our popular ranges of MVHR and CME units were expanded to dual
source critical components whilst maintaining high quality and high levels of
performance. This enabled us to mitigate the continuing global supply chain
issues and positions us well going forward.
During 2023 we will be launching several key new products to the market that
will deliver growth across both our Hardware and Ventilation Systems divisions
for the UK and Europe. On the Hardware side we have developed and patented a
new trickle vent that responds to external air pressure and regulates the flow
of air into the property. This is important in ensuring that regardless of the
outside air pressure the property is adequately ventilated without causing
draughts, one of the prime reasons that house occupiers close their trickle
vents and thereby reduce or stop the levels of ventilation required. One of
our upcoming launches for Ventilation Systems is a new larger, more energy
efficient mechanical ventilation product with heat recovery unit for our UK
and European markets.
Key Performance Indicators (KPIs)
The Board looks at a range of KPIs to monitor the performance of the Group
throughout the financial year. These include KPIs to track delivery of the
business imperatives. At individual team and departmental level relevant KPIs
are also monitored and tracked regularly. The financial KPIs monitored by the
Board regularly include:
KPI Timing
Group Revenue Measured against budget and prior year on monthly basis
Group Profit Before 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 monthly (at divisional management levels and
operating segments)
Sales to customers Top 25 customers and 12 month rolling sales reviewed monthly (at divisional
management levels and operating segments). Sales by individual area sales
managers reviewed weekly
Purchases Top 25 suppliers and delivery performance reviewed monthly
Net cash Reviewed weekly by Board and by senior management
Working capital Inventory, average debtor days and average creditor days reviewed monthly by
senior management
Graphical representations of some of these KPIs and other financial
performance measures for the years ended 30 September are as follows:
Note: 2018 figures are restated
2021/22 performance
The financial results for the year are shown above and are discussed
throughout the Annual Report. The significant outcomes for the year are as
follows:
· The implementation of the new internal ERP system for the UK and
Europe operations was completed.
· Recruitment was completed for key new leadership roles in Operations
and Supply Chain (Procurement and Planning).
· In the UK sales of trickle vents were up 8% on the prior year and up
18% in the period July to September 2022 following the introduction of the
revised building regulations and associated standards for the UK in 2022.
However, sales of window and door hardware products fell by 20% as our
distribution agreement with Sobinco came to an end following its decision to
sell its window and door hardware products direct to customers, rather than
through Titon. However, we have developed a successful partnership with
European window and door hardware company Roto to sell their products in the
UK and we expect to see our window and door hardware sales improve next year
as a result of this, although not immediately to the level of prior years.
· Despite supply chain constraints for part of the year, we saw sales
of Ventilation System products and services in the UK rise by 9% in the period
against prior year. However, sales to continental Europe and the rest of the
world were down by 34% as we struggled to meet demand and recover the
production arrears caused by the component shortages earlier in the year.
· Sales of the Titon FireSafe
(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/)
, which was introduced in 2019/20, grew by 16.2% on 2021. We have won
prestigious industry awards for our 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/)
and 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/)
, reflecting the success of our continued product development activities.
· Sales to Titon Inc. in the US were 16% below the prior year due to a
weak market for multiple occupancy homes.
· Sales in Korea of natural ventilation products were 15% below the
prior year due to a continued slowdown in residential new build construction.
The market transition to marketing and selling mechanical ventilation products
alongside natural ventilation products is taking longer than originally
anticipated.
· We have implemented leaner, more efficient processes for some of our
manufacturing activities to recover production arrears and increase output to
support future growth. We have also started a new Sales Inventory and
Operations Planning (SIOP) process to create a longer-term, forward-looking
plan that will enable us to achieve our business goals.
· We have put considerable attention on improving our culture and focus
on health and safety with positive results.
· Employee numbers decreased slightly during the period from 214 in
September 2021 to 209 at September 2022. In Korea we saw a small reduction in
people to align with the market slowdown partially offset in the UK by
additional people in key new strategic roles plus increased staffing in
production to catch up on order backlogs. Salaries are reviewed annually, and
market level increases were given to all Titon Hardware Ltd employees with
effect from 1 October 2022. The Group will continue to review its performance
and the market conditions and will review salaries again in early 2023.
2022/23 activities
The focus for 2022/2023 is to stabilise the business and then return it to
profit through delivery of the business imperatives outlined in the goals and
strategy section on pages 9 to 11. We have set budgets for all regions and
divisions of our Group which reflect our view of market conditions: the
anticipated positive impact from the 2022 building regulation and associated
standards changes and our internal growth ambitions. Specific initiatives for
the current fiscal year include:
· Delivery of all business imperatives including:
o conclude organisational changes;
o return to previous high levels of customer service;
o reduce site inventory;
o increase production output through efficiencies and investments;
o strong supplier relationship management with improved terms;
o implement a new CRM system within our new Microsoft D365 ERP system;
o realise process efficiencies from our new ERP system;
o rationalise our Window & Door Hardware product range;
o launch of several key new products for the UK and Europe markets;
o a continued focus on improving health and safety culture and reporting of
incidents;
· Develop plans for and initiate a review of the Group strategy.
· Increase our penetration into the residential mechanical ventilation
market in the UK through increased sales to new and existing customers. The
revised building regulations and associated standards for the UK drive towards
increasingly more airtight dwellings for energy efficiency. This means a
likely move away from intermittent extract systems to continuous running
products, such as Titon's CME, MVHR and Ultimate® dMEV, which will become the
predominant solutions.
· Increase our sales into the social housing market with existing
products and also new products that will be launched in 2023, where there is
now a more robust analysis when property upgrades are undertaken, driving an
improvement in quality of the ventilation product installed, ideally meeting
the same standard as new build dwellings.
· Increase our natural ventilation sales in the UK where the revised
building regulations and associated standards now require trickle vents to be
fitted in virtually all replacement windows. Our growth will be supported
through already identified and commenced capital investment and operational
efficiency improvements.
· Increase market share of Titon branded bought-in hardware,
particularly our new advanced door cylinder and friction hinges, and develop
the new distribution partnership with Roto in the UK.
· Continue to drive efficiencies and improved customer service
throughout our UK operations through the implementation of lean principles and
practices.
· Continue working with Regulatory and Governmental organisations to
increase awareness of the effects of inadequate ventilation and poor indoor
air quality. Revised building regulations and associated standards released in
2022 remain positive for our business.
· Streamline the corporate structure and operations of the Korean
business.
Environmental Social and Governance Report
Titon prepared its first separate report on Environmental, Social and
Governance (ESG) last year. ESG reporting remains increasingly important for
investors and we also want to continue demonstrating that we recognise our own
responsibilities to the environment. In 2019 we publicly committed to becoming
a net zero company by 2050.
The UK Government introduced regulations in April 2022 that require
climate-related financial disclosures to be made for publicly quoted
companies, large private companies and LLPs. For companies quoted on AIM this
applies if the business has more than 500 employees, so Titon is not currently
required to make these disclosures but again, the direction of travel is clear
and supports our intentions.
One of the key questions raised by investors in the context of ESG is "Does
this company make the world a better place?" Within this question there are
many different ways of measuring whether a company achieves this, and it is
not possible to use a single equation or methodology to arrive at an answer.
Different stakeholders will have different requirements in answering this
question but as a Board we have a duty to enshrine this principle in every
action we take. One way of answering this question is to look at the products
we make and how they benefit the community: we design, manufacture and sell
ventilation equipment and this boils down to providing an essential need for
every person, which is clean air. All of our ventilation products are designed
to provide fresh, clean air to homes and buildings' occupants and to dispel
moisture, carbon dioxide and volatile organic chemicals from those buildings,
any of which could cause respiratory illnesses or allergies to those
occupants. In many countries in which we sell our products local building
regulations require ventilation to be included in all new house building. We
are also seeing more commitment from governments in ensuring that in the
retrofit market attention is paid to ventilation: if a building is insulated
then the natural pathways for air to flow in and out are blocked up and it
becomes essential that new routes to allow clean air in are provided.
In the drive for energy efficiency and ensuring that buildings are adequately
ventilated we work with a network of stakeholders including our customers in
the window and door market and the house building market in the UK and Europe.
We also work with our trade associations, Beama Ltd and FETA to promote
ventilation in the UK and a number of other organisations, including the UK
All Party Parliamentary Group for Healthy Homes and Buildings and the Air
Pollution APPG.
Environmental Pillar
The Board recognises its responsibility to minimise the impact of the Group's
activities on the environment.
The Group seeks to reduce its environmental impact in a way that benefits a
broad group of stakeholders, including customers, shareholders, employees and
the local community. The Group follows ISO 14001:2015 for Environmental
Management Systems within its UK manufacturing operation and places great
emphasis on ensuring that it conducts its operations such that:
· Emissions to air, releases to water and land filling of waste do not
cause unacceptable environmental impacts and do not offend the community.
· Significant plant and process changes are assessed and positively
pursued to prevent adverse environmental impacts.
· Energy is used efficiently and consumption is monitored.
· Natural resources are used efficiently.
· Raw material waste is minimised.
· Waste is reduced, reused or recycled where practicable.
· The amount of packaging used for our products is minimised.
As part of its processes, the Group's environmental performance is reviewed
regularly by senior management and a programme of continuous improvement for
the benefit of customers, employees and the environment has been adopted. We
remain focussed on reducing our energy usage and maintain detailed records of
each area's gas and electricity consumption with the aim of taking prompt
action if any unexplained increase is observed. Based on the latest energy
figures available our UK electricity usage decreased by 9% in 2022 against
2021 whilst UK gas usage decreased by 4%. UK motor vehicle fuel usage has
decreased by 23% over 2021.
In accordance with Statutory Instrument 2008/410 the Group presents the
following information in respect of its CO2 emissions during the period.
Global Greenhouse Gas (GHG) emissions data for the period are:
2022 2021
Source: tCO2e tCO2e
Combustion of fuel and operation of facilities 535 553
Electricity, heat, steam and cooling purchased for own 235 304
use
Total tonnes of CO2 equivalent 770 857
CO2 emissions normalised per £ million of sales of manufactured products 45.6 50.1
These sources fall within our consolidated financial reporting. We do not have
responsibility for any emission sources outside of our consolidated financial
reporting, including those of our Associate Company.
We have used the GHG Protocol Corporate Accounting and Reporting Standard
(revised edition), data gathered to fulfil our requirements under the CRC
Energy Efficiency scheme, and emission factors from UK Government's GHG
Conversion Factors for Company Reporting 2022.
We have taken action over recent years to reduce our environmental footprint
and will continue to do so. Actions we have already taken include:
· An investment of over £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.
In 2023 we are planning to make such investments in our Mould Shop.
· Installation of a reverse osmosis plant in our paint facility, which
has reduced the usage of caustic soda and hydrochloric acid by 50%, with an
added health and safety benefit.
· We have an ongoing initiative to reduce single use packaging for raw
material supplies and have replaced our own plastic packaging with either
cardboard or recycled plastic, wherever possible.
· We have a target to reduce waste to landfill from the Haverhill
production site by 50% by end 2023, with a further goal of zero waste to
landfill in subsequent years.
We apply the waste hierarchy, as laid down in law, and which forms part of our
ISO 14001:2015 certification. The basic principles are "Reduce, Reuse and
Recycle" and are incorporated in the Titon Recycling Policy under which we aim
to reduce waste in all our packaging, products and processes.
We will continue to take all actions that reduce our energy, water and waste
usage. We will also look to report our environmental footprint using a
third-party reporting mechanism.
Social Pillar
The Group has various published policies relating to the Social pillar. These
are communicated through our Intranet, noticeboards and the Employee Handbook.
Our comprehensive Employee Handbook published in 2021 includes all of our
employment policies, a summary of the Health and Safety policy, our Diversity
Policy, our Safeguarding and IT Security and our Environmental policies. The
chapter entitled "Valuing Diversity and Respect at Work" covers the following
matters:
· Equal Opportunities Policy: Titon is committed to encouraging
equality and diversity among our workforce. Our objective is to create a
working environment in which there is no unlawful discrimination and where all
decisions are based on merit. The policy applies to all employees, workers,
agency workers, contractors and job applicants and covers all of the nine
protected characteristics set out in the Equality Act 2010.
· Bullying and Harassment Policy: we are committed to providing a
working environment free from bullying and harassment and this policy covers
both at work and out of the workplace, including work trips, work-related
events and social functions. It also includes all employees, agency, casual
workers and independent contractors.
· Grievance Policy: every employee has the right to raise a grievance
if they have a genuine complaint about their job, work or terms and conditions
of employment and the policy principles are written down in the Handbook.
· Disciplinary Policy: the policy sets out the process for dealing with
disciplinary and performance issues and to ensure that any matters are dealt
with fairly and consistently.
· Whistleblowing Policy: Titon is committed to the highest possible
standards of ethical, moral and legal business conduct. The policy aims to
provide a route for employees to raise any concerns they may have on matters
that could have a serious impact on Titon such as incorrect financial
reporting, unlawful actions or serious improper conduct.
I can report that there have been no occurrences under any of these policies
during the financial year.
The Safeguarding and IT Security Policy includes the policies on
Anti-corruption and Modern Slavery and Human Trafficking. Under the
Anti-Corruption Policy the Titon Group lists a number of fundamental
principles and values which it believes are the foundation of sound and fair
business practice and which are important to uphold. It is the Titon policy to
comply with all laws, rules and regulations governing anti-bribery and
corruption in all countries in which Titon operates. As a UK company Titon is
also bound by English law which covers our conduct both in the UK and abroad.
The penalties for breaching this law are significant both for the individuals
involved and the Company and we take our legal obligations very seriously.
Titon is committed to the principles of the Modern Slavery Act 2015 and the
abolition of modern slavery and human trafficking. We do not enter into
business with any organisation which knowingly supports or is found to be
involved in slavery, servitude and forced or compulsory labour. Due to the
nature of our business, we have assessed that we have a low risk of modern
slavery in our business and supply chains. Our supply chains are limited, and
we procure goods and services from a restricted range of UK and overseas
suppliers. We will continue to embed these principles through our procurement
and employment policies and practices.
Employee Gender Breakdown
As at the end of the financial year the analysis by gender of employees, was
as follows:
2022 2022 2022 2021 2021 2021
Male Female Total Male Female Total
Directors 5 2 7 8 - 8
Senior Managers 6 2 8 8 2 10
Other 121 73 194 131 65 196
Total 132 77 209 147 67 214
We continue to support a number of local and national charities throughout the
year. Our colleagues in Colchester and Haverhill also carry out a number of
charity collections during the year.
We are committed to respecting human rights across our business operations and
aim to comply with all local and international legislation and standards.
Corporate Governance Pillar
We have presented our Corporate Governance position for many years, firstly
under the UK Corporate Governance Code when we were quoted on the Main Market
of the London Stock Exchange and since 2020 under the Quoted Companies
Alliance (QCA) code after we moved to AIM. Please see page 37 of this Report
for the detailed Corporate Governance Report. Our website also contains more
details of the governance disclosure including how we apply the 10 principles
identified by the QCA Code.
In summary, I am confident that we have applied the 10 principles identified
by the QCA Code throughout the accounting period in question and will continue
to do so in the current financial year.
Health and safety
Health and safety is a top priority for the Group and we expect all employees
to take responsibility for keeping themselves and each other safe. It is
critical as a manufacturing business that our employees operate in a safe
environment and that our Health and Safety culture, policies and practices are
as good as they can be. We are always looking to improve them and importantly
adhere to them. We continually review and update our Health and Safety
policies and have a dedicated Health and Safety Manager role in the business.
During 2022 we have put increased focus on hazard spotting, reporting and
resolution by all employees in order to further improve the safety of our work
environment. We are pleased to witness significant improvements in this area.
The Group has also developed a Health and Safety roadmap that allows us to
track and manage our health and safety compliance, training and priority
projects.
The approach to health and safety management for the Group is as follows:
Board of Directors Overall responsibility for setting policy and performance, promoting
excellence in EHS as a personal and organisational core value and role
modelling the expected behaviours.
Senior leadership team Meets weekly to review statistics, every reported incident and the status of
the EHS roadmap. The Chief Executive, Chief Financial Officer and all
executive directors attend. Also promotes excellence in EHS and shows the
expected behaviours.
Local management Meets daily to review health and safety incidents and issues. Responsible for
setting expectations, following the rules set, managing EHS risks and promptly
addressing EHS incidents and issues, including non-compliance.
All employees Have the responsibility to look after the health and safety of themselves and
others by proactive hazard reporting and resolution, prompt reporting of all
incidents and cooperating with instruction and training.
Health and Safety Manager Responsible for driving a positive health and safety culture, supporting
resolution of day-to-day issues, leading on incident investigation and
implementing lessons learned, and implementation of changes to policy.
Health and Safety Committee Is represented by operational team members across all departments and is
chaired by the Operations Director with support from the Health and Safety
Manager. The committee meets monthly to discuss and address operational health
and safety issues. Minutes are produced and distributed along with an action
plan.
The accident statistics for our UK operations are as follows:
· January to December 2021 17 reported
accidents, 0 RIDDOR reported
· January to December 2022 51 reported
accidents, 0 RIDDOR reported
Compared to 2021 we have seen a significant increase in the number of
accidents reported, although the vast majority of these are minor. This is due
to an improved reporting culture and the focus applied to a 'safety first'
approach, and not a reflection of a drop in health and safety performance. We
have improved our reporting processes for all incidents (including accidents,
hazards, and near misses) and have also improved our processes for sharing
lessons learned. The Group is very pleased to see this improvement in culture.
Alongside the increase in accident reporting we have also seen a significant
increase in hazard reporting which we know helps prevent the occurrence of
more serious incidents.
RIDDOR is the Reporting of Injuries, Diseases and Dangerous Occurrences
Regulations 2013. These Regulations require employers, the self-employed and
those in control of premises to report specified workplace incidents. As at 31
December 2022, we had reached 1,506 days without a RIDDOR report being
required, which is a reflection of the minor severity rating of our incidents.
Statement by the Directors in relation to their statutory duty in accordance
with section 172(1) of the Companies Act 2006
Stakeholder 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.
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 2023.
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.
In compliance with the Companies Act 2006, the Board of Directors are required
to act in accordance with a set of general duties. During the year to 30
September 2022, the Board of Directors consider that they have, individually
and collectively, acted in a way they consider, in good faith, would be most
likely to promote the success of the Company for the benefit of its
shareholders as a whole, having regard to a number of broader matters
including the likely consequence of decisions for the long term and the
Company's wider relationships. In doing so, the Board holds regard to the
matters contained in section 172(1) (a)-(f) of the Companies Act 2006.
The Directors fulfil their duties by ensuring that there is a strong
governance structure in place across the Group's operations, backed up by
robust processes.
The strategy for the Group is regularly monitored by the Board during the
year. In respect of major matters discussed at board level, the likely impact
on all stakeholders are carefully considered and where possible, decisions are
carefully explained and discussed with affected stakeholders before actions
are implemented to engender the necessary support.
The Group's key stakeholders and why and how we engage with them are set out
below:
Application of s.172 during the year
During the year the Board has, amongst other things, recruited a new Chief
Executive to drive change in the business, looked at the structure of the
Titon Holdings and Titon Hardware boards and developed the growth strategy of
the business. We have also implemented a new ERP system for the operations
and finance parts of our business, which has generated many issues which we
have had to resolve. In Korea we have discussed and considered a re-structure
of the Korean businesses to simplify the arrangement.
We have continued to comply with the requirements under s.172 in the period of
the Covid-19 pandemic and the easing of restrictions in early 2022. Key
decisions made included:
· Enabling office-based staff and sales executives to work from home by
providing them with laptops and appropriate software applications.
· Implementing Covid-19 Health & Safety procedures in line with
Government guidelines.
· Providing lateral flow tests to all employees and daily monitoring of
Covid-19 outbreaks in our sites.
Report on Risk Management
Principal risks and uncertainties
The Group has established procedures for monitoring and controlling principal
operational risks and these are detailed below. The Board is responsible for
ensuring that the Group maintains an effective risk management system. It
determines the Group's approach to risk, its policies and the procedures that
are implemented to mitigate exposure to risk.
Process for managing risk
The Board continually assesses and monitors the key risks in the business and
has developed a risk management matrix to identify, report and manage its
principal risks and uncertainties. This includes the recording of all
principal risks and uncertainties, which are reviewed annually. Risks are
fully analysed, their potential impact on the business assessed and relevant
mitigations established. The risk matrix is reviewed regularly at Board
Meetings along with the appropriateness and effectiveness of the key
mitigating controls.
The table below highlights the principal risks and uncertainties which could
have a material impact on the Group's performance and prospects and the
mitigating activities which are aimed at reducing the impact or likelihood of
a major risk materialising. The Board does recognise, however, that it will
not always be possible to eliminate these risks entirely.
Risk Matrix
Risk Potential Impact Mitigations
Associate companies
The Group is exposed 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 Incidents such as a fire at the Group's or sub-contractor premises or the
failure of IT systems could result in the temporary cessation in activity or
disruption of the Group's production facilities impeding the Group's ability The Group has developed business continuity and disaster recovery plans.
to deliver its products to its customers. A cyber-attack could leave the Group
The Group's manufacturing and distribution operations could be subjected to open to a ransom demand or compromise data security both for the Group and
disruption due to factors including incidents such as a major fire, a failure customers.
of essential IT equipment or a major cyber-attack on the Group. 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.
The Group gets a fire risk assessment carried out by an external party (last
completed 6 September 2022) and actions/suggestions raised are reviewed and
actioned accordingly.
A fire suppression system is installed in relevant manufacturing areas.
Visits take place by the local fire service to review and provide feedback on
fire safety systems and practices.
The Group implemented multifactor authentication for relevant employees.
The Group has implemented a Cyber Security training and awareness programme
for all employees.
The Group's strategy is to maintain essential systems in the Cloud.
The Group has an email security gateway system in place.
The Group has a register of Titon owned tooling held at sub-contractors. The
Group looks to review sub-contractor insurance and business continuity
policies.
Reliance on key customers and suppliers
Parts of the Group's 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.
Increased risk of obsolescence. The Group has a policy of dual sourcing key components where possible.
The risk of continued material price inflation and hence margin erosion.
The Group ensures robust supplier relationship management.
The Group can implement customer agreements to incorporate specification
changes if required.
Recruitment and retention of key staff
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 2023.
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 Experian's reports and forecasts for the UK and other
to any changes in economic conditions. adversely, thus affecting the Group's financial results. This is considered to reports in the rest of the world. Current forecasts for residential new-build
be a high risk to the Group given the current inflationary pressures and and refurbishment markets in the UK and South Korea for 2022/23 suggest a
prospects of a recession in our markets. slowing in activity.
However, the social housing sector is expected to remain fairly strong.
The Group spreads its risk by having product lines and customer bases across
new-build, refurbishment and social housing sectors, and is not reliant on
single key customers.
The Group monitors product demand on a weekly basis and is able to respond
accordingly in re-allocating or varying resources.
The Group continually seeks to expand the geographical markets into which it
sells its products.
Government action and policy
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 25 January 2023 and signed
on its behalf by:
A French
Chief Executive
Directors' Report
The Directors present their report and the Group and Company financial
statements for the year ended 30 September 2022.
The Directors of Titon Holdings Plc throughout the financial year or
subsequent to the year-end are listed on page 35.
A detailed commentary on the results for the year and discussion of future
developments is given in the Chair's Statement on pages 2 to 7 and an
explanation of the Group's business strategy is included within the Strategic
Report on pages 9 to 12.
The Group's compliance with the QCA Code is set out in the report on page 37.
Substantial shareholders
As at 30 September 2022, the Company had been notified of the following voting
interests in its ordinary share capital, other than Directors' holdings, of 3
per cent or more in the ordinary share capital of the Company:
Name Shares %
Rights & Issues Investment Trust PLC 1,265,000 11.28
Harwood Capital LLP 980,000 8.74
Ms A J Farrar 663,079 5.91
Mr D J Barry 338,000 3.01
Share capital
The total issued ordinary share capital at 30 September 2022 consisted of
11,218,750 Titon Holdings Plc shares of 10p each. 25,000 new ordinary shares
were issued during the year to satisfy share option exercises.
Details of the authorised and issued share capital of the Company as at 30
September 2022 are set out in note 19 of the Notes to the Financial
Statements.
All of the Company's shares are ranked equally and the rights and obligations
attaching to the Company's shares are set out in the Company's Articles of
Association, copies of which can be obtained from Companies House in England
and Wales and on the Company's website at www.titon.com/uk/investors/
(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
(2021: 3.0 pence) per ordinary share. An interim dividend of 1.5 pence per
share was paid during the year (2021: 1.5 pence) so the total dividend for the
year ended 30 September 2022 is 2.0 pence per share (2021: 4.5 pence). Titon
operates a dividend reinvestment programme for shareholders details of which
are available from our registrars, Link Group.
Research and development
The Directors consider that research and development continues to play an
important role in the Group's success as the need to provide increasingly
energy efficient ventilation products remains a feature of our market over the
coming years. Further details on our research and development activities can
be found in the Strategic Report.
Investment in research and development amounted to £629,000 during the year
(2021: £509,000). Development expenditure capitalised in 2022 amounted to an
additional £130,000 (2021: £166,000). See note 11 of the Financial
Statements. Financial risk management
The Directors assess the financial risks facing the business and spend
appropriate time considering them. The Group has a system of risk management,
which identifies these items and seeks ways of mitigating such risks as far as
is possible. The Report on Risk Management set out on pages 23 to 26 includes
information on financial risk and also see note 21 to the Financial
Statements.
Employees
The Group recognises the importance of its employees in achieving its
objectives and has contractual arrangements in place to encourage and reward
loyalty and to safeguard the interests of the Group.
Employees are provided with information about the Group's activities via
consultation with employees, other staff meetings and staff notice boards. The
Group aims to foster an environment in which employees and management can
enjoy a free flow of information and ideas.
The Group is an equal opportunities employer and its policies for recruitment,
training, career development and promotion are based on the aptitude and
abilities of the individual. All of these policies are included in the
Employee Handbook which is issued to every employee. See the Strategic Report
for more details.
The Group recognises the importance of its employees in achieving its
objectives and has contractual arrangements in place to encourage and reward
loyalty and to safeguard the interests of the Group.
Employees are provided with information about the Group's activities via the
Employee Consultative Committee, other staff meetings and staff notice boards.
The Group aims to foster an environment in which employees and management can
enjoy a free flow of information and ideas.
The Group is an equal opportunities employer and its policies for recruitment,
training, career development and promotion are based on the aptitude and
abilities of the individual.
The Group's approach and responsibilities for social and community issues are
not covered in this report.
Disabled employees
The Group gives full consideration to the career development and promotion of
disabled persons, and to applications for employment from disabled persons,
where the requirements of the job can be adequately fulfilled by a handicapped
or disabled person.
The Group considers the training requirements of each disabled person on an
individual basis. Where an employee becomes disabled during the course of
their employment, the Group will consider providing the employee with such
means, including appropriate training, as will enable the employee to continue
to carry out their job, where it reasonably can, or will attempt to provide an
alternative suitable position.
Capital management
The Group's objectives when managing capital are to safeguard the Group's
ability to continue as a going concern, so that it can continue to provide
returns for its shareholders and benefits for its other stakeholders.
The Group considers its capital to comprise ordinary share capital, share
premium, the capital redemption reserve and accumulated retained earnings (see
'Consolidated Statement of Changes in Equity' on page 53). The translation
reserve is not considered as capital. In order to maintain or adjust its
working capital at an acceptable level and to meet strategic investment needs,
the Group may adjust the amount of dividends paid to shareholders, return
capital to shareholders or sell assets.
The Group does not seek to maintain any particular debt to capital ratio but
will consider investment opportunities on their merits and fund them in the
most effective manner.
Environmental issues
An explanation of how the Group deals with its environmental responsibilities
is included within the Strategic Report, under the heading Environmental
Social and Governance.
Directors' responsibilities
The Directors are responsible for preparing the annual report and the
financial statements in accordance with applicable law and regulations.
Company law requires the Directors to prepare financial statements for each
financial year. The Directors have elected to prepare the Group and Company
financial statements in accordance with International Financial Reporting
Standards and International Financial Reporting Standards adopted in the
United Kingdom ("UK adopted IFRS"). Under company law the Directors must not
approve the financial statements unless they are satisfied that they give a
true and fair view of the state of affairs of the Group and Company and of the
profit or loss for the Group for that period.
In preparing these financial statements, the Directors are required to:
· Select suitable accounting policies and then apply them consistently.
· Make judgements and accounting estimates that are reasonable and
prudent.
· State whether they have been prepared in accordance with IFRSs,,
subject to any material departures disclosed and explained in the financial
statements.
· 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.
Directors' responsibilities (continued)
The Directors are responsible for keeping adequate accounting records that are
sufficient to show and explain the Group's transactions and disclose with
reasonable accuracy at any time the financial position of the Group and enable
them to ensure that the financial statements comply with the Companies Act
2006. They are also responsible for safeguarding the assets of the Group and
hence for taking reasonable steps for the prevention and detection of fraud
and other irregularities.
Website publication
The Directors are responsible for ensuring that the annual report and the
financial statements are made available on a website. Financial statements are
published on the Company's website, which can be found at
www.titon.com/uk/investors/ (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 35. Having made enquiries of fellow Directors and of the Officers of the
Company, each of the Directors confirms that:
· to the best of each Director's knowledge and belief, there is no
relevant audit information of which the Company's auditors are unaware; and
· each Director has taken all steps a Director ought to have taken to
make themselves aware of any information needed by the Company's auditors for
the purpose of their audit and to establish that the Company's auditors are
aware of that information.
Directors' liability insurance and indemnity
The Company has purchased liability insurance cover, which remained in force
at the date of the report, for the benefit of the Directors of the Company
which gives appropriate cover for legal action brought against them. The
Company also provides an indemnity for its Directors (to the extent permitted
by law) in respect of liabilities which could occur as a result of their
office. This indemnity does not provide cover should a Director be proved to
have acted fraudulently or dishonestly.
Purchase of own shares
The Company has authority from shareholders to purchase up to 10% of its own
ordinary shares in the market. This authority was not used during the year nor
in the period to 25 January 2023 and the Board intends to seek shareholder
approval to renew the authority at the forthcoming Annual General Meeting.
In accordance with the Companies (Acquisition of Own Shares) (Treasury Shares)
Regulations 2003, companies are permitted to hold purchased shares rather than
cancelling them. At 30 September 2022 and 25 January 2023 the Company held nil
shares in treasury. The Company may use this power in the future depending on
market conditions and the financial position of the Company.
Events after the reporting date
There have been no events after the reporting date that materially affect the
position of the Group.
Going concern
The Group's business activities, its financial position, together with the
factors likely to affect the Group's performance, are set out in the Strategic
Report. In addition, note 21 to the financial statements includes the Group's
risk management objectives and policies, managing its financial risk and its
exposures to credit risk, foreign exchange risk and liquidity risk.
The financial statements have been prepared on a going concern basis. In
adopting the going concern basis the Directors have considered all of the
above factors, including the principal risks set out on pages 23 to 26. Under
the worst-case scenario considered, which is severe and considered highly
unlikely, the Group remains liquid for a period of 12 months from the date of
reporting and the Directors therefore believe, at the time of approving the
financial statements that the Group is well placed to manage its business
risks successfully and remains a going concern. The key facts and assumptions
in reaching this determination are summarised below.
The financial position remains robust with cash of £1.7m available to the
Group and no debt and therefore no bank covenants in place. Our base case
scenario has been prepared using forecasts from each of our operating
companies, with each considering both the challenges and opportunities they
are facing because of various market forecasts and also supply chain
challenges. Due to the strength of the Group's balance sheet and market
outlook, the Directors believe there is no material uncertainty around going
concern. To this end a reverse stress test scenario has also been modelled,
with the most extreme conditions being considered. 50% of budgeted revenue was
removed for all operating companies within the Group from 1 April 2023 to 31
January 2024 with all overheads being reduced accordingly. All discretionary
expenditure was reduced or removed such as capital expenditure and dividends.
The result of this scenario is that we remain cash positive within 12 months
of the signing date. This extreme scenario excludes all other resources we
would have at our disposal as means of raising further cash, such as:
· the Group owns the freehold interest in our Haverhill site which
had a fair value of £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 £3.4m of cash which could be
paid to shareholders in the form of a dividend.
Annual General Meeting
The Annual General Meeting of Titon Holdings Plc ("the Company") will be held
at the Company's premises at Falconer Road, Haverhill, CB9 7XU on 22 March
2023 commencing at 10.00 a.m. A Notice convening the Annual General Meeting of
the Company for the year ended 30 September 2022 may be found on page 86 of
this document.
Shareholders are being asked to vote on various items of ordinary business,
being Resolutions 1 to 10 inclusive, as listed below.
Resolution 1 - to receive and adopt the audited accounts
The Directors recommend that shareholders adopt the reports of the Directors
and the Auditors and the audited accounts of the Company for the year ended 30
September 2022.
The Directors' Report was approved by the Board on 25 January 2023 and signed
by order of the Board.
Resolution 2 - to declare a final dividend
The Directors recommend a final dividend of 0.5 pence per ordinary share.
Subject to approval by shareholders, the final dividend will be paid on 31
March 2023 to shareholders on the register on 10 February 2023.
Resolution 3 - to re-elect Mr Tyson Anderson as a Director
The Chair confirms that following performance evaluation Mr Anderson continues
to be effective and demonstrates commitment in his role.
Resolution 4 - to re-elect Mr Keith Ritchie as a Director
The Deputy Chair confirms that following performance evaluation Mr Ritchie
continues to be effective and demonstrates commitment in his role.
Resolution 5 - to re-elect Mr Nicholas Howlett as a Director
The Chair confirms that following performance evaluation Mr Howlett continues
to be effective and demonstrates commitment in his role.
Resolution 6 - to re-elect Mr Paul Hooper as a Director
The Chair confirms that following performance evaluation Mr Hooper continues
to be effective and demonstrates commitment in his role.
Resolution 7 - to re-elect Mr Jeff Ward as a Director
The Chair confirms that following performance evaluation Mr Ward continues to
be effective and demonstrates commitment in his role.
Resolution 8 - to re-elect Miss Alexandra French as a Director
The Chair confirms that following performance evaluation Miss French continues
to be effective and demonstrates commitment in her role.
Resolution 9 - to re-elect Ms Carolyn Isom as a Director
The Chair confirms that following performance evaluation Ms Isom continues to
be effective and demonstrates commitment in her role.
Resolution 10 - to re-appoint MacIntyre Hudson LLP as auditors
This resolution proposes that MacIntyre Hudson LLP should be re-appointed as
the Company's Auditors and authorises the Directors to determine their
remuneration.
Resolution 11 - to approve the Directors' Remuneration Report
Resolution 11 in the Notice of Annual General Meeting, which will be proposed
as an Ordinary Resolution, is to receive and approve the Directors'
Remuneration Report as set out on pages 33 to 36 and also to approve a new
Executive Management Bonus Structure, details of which are contained in the
Directors' Remuneration Report.
Resolution 12 - authority to allot shares
The Companies Act 2006 prevents directors of a public company from allotting
unissued shares, other than pursuant to an employee share scheme, without the
authority of shareholders in general meeting. In certain circumstances this
could be unduly restrictive. The Directors' existing authority to allot
shares, which was granted at the Annual General Meeting held on 23 February
2022, will expire at the forthcoming Annual General Meeting.
Resolution 12 in the notice of Annual General Meeting will be proposed, as an
Ordinary Resolution, to authorise the Directors to allot ordinary shares in
the capital of the Company up to a maximum nominal amount of £270,000,
representing approximately 24% of the nominal value of the ordinary shares in
issue on 25 January 2023.
The authority conferred by the resolution will expire on 22 June 2024 or, if
sooner, at the 2024 Annual General Meeting.
The Directors have no present plans to allot unissued shares other than on the
exercise of share options under the Company's employee share option schemes.
However, the Directors believe it to be in the best interests of the Company
that they should continue to have this authority so that such allotments can
take place to finance appropriate business opportunities that may arise.
Resolution 13 - to disapply pre-emption rights
Unless they are given an appropriate authority by shareholders, if the
Directors wish to allot any of the unissued shares for cash or grant rights
over shares or sell treasury shares for cash (other than pursuant to an
employee share scheme) they must first offer them to existing shareholders in
proportion to their existing holdings. These are known as pre-emption
rights.
The existing disapplication of these statutory pre-emption rights, which was
granted at the Annual General Meeting held on 23 February 2022 will expire at
the forthcoming Annual General Meeting. Accordingly, Resolution 13 in the
Notice of Annual General Meeting will be proposed, as a Special Resolution, to
give the Directors power to allot shares or sell treasury shares without the
application of these statutory pre-emption rights: first, in relation to
offers of equity securities by way of rights issue, open offer or similar
arrangements; and second, in relation to the allotment of equity securities
for cash up to a maximum aggregate nominal amount of £160,000 (representing
approximately 14.3% of the nominal value of the ordinary shares in issue on 25
January 2023). The power conferred by this Resolution will expire on 22 June
2024 or, if sooner, at the 2024 Annual General Meeting.
In addition, there is one item of special business, being Resolution 14, as
listed below.
Resolution 14 - Company's authority to purchase its own shares
Resolution 14 in the Notice of Annual General Meeting, which will be proposed
as a Special Resolution, will authorise the Company to make market purchases
of up to 1,121,875 ordinary shares. This represents approximately 10% of the
Company's ordinary shares in issue on 25 January 2023. The maximum price per
share that may be paid shall be the higher of: (i) 5% above the average of the
middle market quotations for an ordinary share for the five business days
immediately before the day on which the purchase is made (exclusive of
expenses); and (ii) the higher of the price of the last independent trade and
the highest current independent bid on the trading venue where the purchase is
carried out (exclusive of expenses). The minimum price shall not be less than
10p per share. The authority conferred by this resolution will expire on 22
June 2024 or, if sooner, at the 2024 Annual General Meeting.
Your directors are committed to managing the Company's capital effectively and
although they have no plans to make such purchases, buying back the Company's
ordinary shares is one of the options they keep under review. Purchases would
only be made after considering the effect on earnings per share and the
benefits for shareholders generally.
The Company may hold in treasury any of its own shares that it purchases in
accordance with the Companies Act 2006 and the authority conferred by this
resolution. This would give the Company the ability to re-issue treasury
shares quickly and cost effectively and would provide the Company with greater
flexibility in the management of its capital base. The Company does not
currently hold any shares in treasury.
As at 25 January 2023 there were options outstanding over 437,000 ordinary
shares which, if exercised at that date, would have represented 3.90% of the
Company's issued ordinary share capital. If the authority given by Resolution
14 was to be fully used, these would then represent 4.33% of the Company's
issued ordinary share capital.
Recommendation
The Directors believe that the resolutions which are to be proposed at the
Annual General Meeting are in the best interests of the Company and its
shareholders as a whole and recommend that all shareholders vote in favour of
them, as each of the Directors intends to do, in respect of his or her
beneficial holding.
The Directors' Report was approved by the Board on 25 January 2023 and signed
on its behalf by:
C V Isom
Company Secretary
Directors' Remuneration Report
Statement from the Chair of the Committee
I am pleased to present the Directors' Remuneration Report for the year ended
30 September 2022.
There has been no change to the Directors' Remuneration Policy during the
period and there have been no significant changes in individual Director's
levels of remuneration during the year, except as a result of the performance
related elements, which are linked to the amount by which the Group's results
exceeds budget. For this period no payments were made in respect of
performance related elements.
Details of the Directors' Remuneration Policy are shown on the Group's website
in the Corporate Governance section. The Directors' Remuneration Policy was
approved in its entirety at the 2018 AGM. An Ordinary Resolution will be put
to shareholders at the forthcoming Annual General Meeting to be held on 22
March 2023, to receive and adopt the Directors' Remuneration Report and to
approve a new bonus arrangement for Titon Holdings executive management that
includes financial performance-based targets as well as individual
performance.
The new Executive Management bonus structure has a base level bonus of 35% for
the Chief Executive and 25% for the Chief Financial Officer of base salary. It
consists of four components, the majority of which is based on Group PBT with
smaller contributions from Group Revenue, Group Quick Ratio and personal
objective performance. Personal objectives are directly linked to the business
imperatives that will drive the business back to profit. The maximum possible
bonus payable where targets are significantly exceeded is 63% and 45% of base
salary for the Chief Executive and Chief Financial Officer respectively.
The Directors' interests in the ordinary share capital of the Company at the
year-end are reported below on page 35.
Remuneration Committee
The Committee presently consists of Mr J Ward, Mr G P Hooper, Mr N Howlett,
all Non-executive Directors and Mr K Ritchie, Non-executive Chair. The
Committee has been established by the Board to set Remuneration Policy and to
deal with all matters relating to Directors' Remuneration and reporting
thereon. It has clear Terms of Reference established by the Board.
Directors' remuneration compared to certain other distributions are as
follows:
2022 2021 Percentage
change
£'000 £'000 %
Directors' remuneration 831 901 (10%)
Other employee remuneration 6,179 5,794 7%
Dividend payments to shareholders 502 390 28%
Other employee remuneration includes grant income relating to the Coronavirus
Job Retention Scheme of £nil (2021: £0.008m).
Directors' remuneration
The remuneration paid to the Directors during the year, together with a
comparison of the previous year, is as follows:
Year ended Salary and Benefits in Short term performance related remuneration Pension benefits Total
30 September fees kind (b)
(a) (k)
Executive Directors: £'000 £'000 £'000 £'000 £'000
T N Anderson 2022 97 - - 8 105
2021 99 - 26 8 133
T D Gearey (c) 2022 84 8 - 37 129
2021 58 8 20 28 114
K A Ritchie 2022 160 7 - - 167
2021 157 13 41 - 211
D A Ruffell (d) 2022 - - - - -
2021 170 13 - 10 193
M J Norris (e) 2022 61 - - 5 66
2021 37 - 10 3 50
C V Isom (f) 2022 112 - - 15 127
2021 - - - - -
A C French (g) 2022 76 - - 5 81
2021 - - - - -
Non-executive Directors:
J N Anderson (h) 2022 21 - - - 21
2021 37 - - - 37
N C Howlett 2022 63 - - 5 68
2021 66 - - 5 71
K Sargeant (i) 2022 13 - - - 13
2021 46 - - - 46
B Ratzke (i) 2022 13 - - - 13
2021 46 - - - 46
G P Hooper (j) 2022 20 - - - 20
2021 - - - - -
J Ward (j) 2022 20 - - - 20
2021 - - - - -
Totals 2022 740 16 - 75 831
2021 716 34 97 54 901
(a) A 'salary sacrifice' system is in operation, where the Company makes a
pension contribution on behalf of each Director, where applicable, and their
salary is reduced by a corresponding amount.
(b) In accordance with the proposals adopted by shareholders, performance
related remuneration is not due for this period to Executive Directors.
(c) T D Gearey was a beneficiary of an agreement with the Company relating to
his departure from the Company on 6 April 2022 entitling him to a payment of
£30,000 which is included in salary above as well as payment in lieu of
notice amounting to £46,000.
(d) D A Ruffell was a beneficiary of an agreement with the Company relating to
his departure from the Company on 30 April 2021 entitling him to a payment of
£90,000 which was included in salary above.
(e) M J Norris joined the Board on 12 July 2021 and left the Board on 8
February 2022.
(f) C V Isom joined the Board on 22 December 2021.
(g) A C French joined the Board on 3 May 2022.
(h) J N Anderson left the Board on 31 March 2022.
(i) B Ratzke and K Sargeant both left the Board on 7 December 2021.
(j) G P Hooper and J Ward both joined the Board on 1 April 2022.
(k) The remuneration package of each Executive Director includes non-cash
benefits, which for K Ritchie, D A Ruffell, T D Gearey, T N Anderson and C V
Isom also included the provision of a company car. The aggregate gains made by
Directors on the exercise of share options during 2022 were £11,220 (2021:
£33,200). It also includes any discretionary amounts payable, as agreed by
the Remuneration Committee, where applicable.
Directors and their interests in shares
The Directors of the Company during the year and at the year-end and their
beneficial interests in the ordinary share capital were as follows:
30 September 2022 30 September 2021
Ordinary shares of Ordinary shares of
10p each 10p each
K A Ritchie* Non-executive Chair 1,031,381 981,381
D A Ruffell* Chief Executive Officer (left 30 April 2021) - 178,500
M J Norris Chief Executive Officer (left 8 February 2022) - -
A C French Chief Executive Officer (joined 3 May 2022) 12,738 -
C V Isom Chief Financial Officer (joined 22 December 2021) - -
J N Anderson* (left 31 March 2022) - 1,737,802
T N Anderson* Deputy Chair 693,750 693,750
T D Gearey I.T. Director (left 6 April 2022) - 20,500
N C Howlett* Non-executive Director 63,500 38,500
K Sargeant Non-executive Director (left 7 December 2021) - 10,000
B Ratzke Non-executive Director (left 7 December 2021) - 10,000
G P Hooper Non-executive Director (joined 1 April 2022) 35,498 -
J Ward Non-executive Director (joined 1 April 2022) - -
There were no other changes in Directors' beneficial shareholdings between 30
September 2022 and 25 January 2023.
* Includes spouses' holdings
Share options
Details of the interests of Directors, who served during the year, in options
over ordinary shares are as follows:
Exercise price per share At Granted during Exercised Lapsed At
1 October the year during during 30 September
2021 the year the year 2022
Number Number Number Number Number
T N Anderson (a) 58.0p 25,000 - - - 25,000
T D Gearey (b) 156.5p 18,000 - - 18,000 -
N C Howlett (a) 58.0p 25,000 - 25,000 - -
K A Ritchie (a) 58.0p 50,000 - 50,000 - -
M J Norris (c) 138.5p 150,000 - - 150,000 -
C V Isom (c) 138.5p 50,000 - - - 50,000
A C French (d) 95.0p - 150,000 - - 150,000
No other directors had interests in options over shares during the year.
There have been no changes to the number of share options held by Directors
between 30 September 2022 and 25 January 2023.
Share options
Share options are exercisable between the following dates:
(a) 15 January 2017 and 15 January 2024
(b) 30 January 2021 and 30 January 2028
(c) 15 July 2024 and 15 July 2031
(d) 15 June 2025 and 15 June 2032
The Directors may only exercise share options if the growth in the earnings
per share of the Company over any period of three consecutive financial years
of the Company following the date of grant, exceeds the growth in the retail
price index over the same period by at least 9 per cent.
At 30 September 2022 the market price of the Company's shares was 81p. The
range during the year was 75p to 115p.
Approval
The Directors' Remuneration Report was approved by the Remuneration Committee
on 25 January 2023 and signed on its behalf by:
J Ward
Remuneration Committee Chair
Corporate Governance Report
Chair's Introductory Statement
As noted in our ESG report we present the Corporate Governance Report for the
last financial year. As I have said in the past, we take our corporate
governance responsibilities very seriously. We continue to apply the Quoted
Companies Alliance Corporate Governance Code ("QCA Code") as this fits more
naturally with our listing on the AIM Market. The QCA Code is available from
the QCA and it involves us following ten general principles and ensuring that
a number of minimum disclosure requirements are made in the Annual Report or
on the Company's website, www.titon.com/uk/investors/
(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.
As shareholders will be aware a number of Board changes have taken place
during the year as part of a process to strengthen the Board and to allow the
Board to focus on delivering the Group's strategy and financial performance
while ensuring that operational matters are managed at the level of the main
subsidiary.
K A Ritchie
Chair
Compliance with QCA Code
The Board is accountable to the Company's shareholders for good corporate
governance and the Company's website sets out how the 10 principles identified
in the QCA Code are applied by the Company. Titon's business approach is based
on openness and high levels of accountability and there is a commitment to
high standards of corporate governance throughout the Group. With an
international presence, the Group acts in accordance with the national laws of
the various countries in which it operates and encourages the highest
standards of business practice and procedure.
I am confident that the goals and strategy that we have set for our business
have been followed during the year under review. As noted above we have
certainly had some difficult times during the year but we have continued to
treat our employees fairly, to invest in research and development and to
communicate openly and honestly with our shareholders, to highlight three of
our specific goals.
The Board seeks to instil a healthy corporate culture in all of its dealings
with its stakeholders and believes that Titon is regarded by those
stakeholders in a positive light and will meet its obligations in a fair and
transparent way. The Board acknowledges that there have been some challenges
in meeting customer demands during the year due to supply chain issues and the
implementation of the new ERP system. However, a considerable amount of senior
management time has been spent on trying to resolve these issues and plans to
catch-up with demand are now bearing fruit.
Please see the Audit Committee Report for a description of the main features
of the internal control process and the risk management system in relation to
the financial reporting process adopted by the Group. The disclosure of
information on significant shareholdings in the Company is shown in the
Directors' Report.
The Directors consider that the Annual Report and Financial Statements taken
as a whole are fair, balanced and understandable and provide the information
necessary for shareholders to assess the Group's performance, business model
and strategy.
The Group consolidated accounts are prepared by the Group Finance Manager and
are reviewed by the Chief Financial Officer and the Chief Executive. The
review includes a detailed inspection of the accounts of all the constituent
companies that comprise the Group along with the relevant consolidation
adjustments and journals.
Composition and operation of the Board of Directors
As at 30 September 2022 the Board consisted of the Non-executive Chair, the
Chief Executive, the Chief Financial Officer, and four Non-executive
Directors.
The Board as a whole comprises a wealth of skills and experience from the wide
range of activities undertaken by its individual members, as follows:
Keith Ritchie joined the Company in 2012, having had a 25-year career in the
City of London. He is a member of the Institute of Chartered Accountants in
England and Wales and has extensive experience of finance, legal, tax and
commercial matters. He is also a Non-executive director of Beama Ltd, the
trade association for the electro-technical manufacturers association and is
Chair of the Ventilation Group, within Beama Ltd. As a result of these
different activities, he continues to utilise the skills gained over his
working career. Keith became Non-executive Chair of the Board on 1 October
2022 and has a service contract which terminates at the 2023 Annual General
Meeting unless he is re-elected;
Alexandra French joined the Board on 3 May 2022 as Chief Executive Officer.
She was previously at Johnson Matthey, where she spent 25 years working in a
number of commercial, operational, technical, sales and marketing roles.
Alexandra graduated from the University of Cambridge with a degree in Natural
Sciences;
Tyson Anderson has been with the Company since 1993, when he joined the
Marketing team and was elected to the board of Titon Hardware Limited in 1999.
Tyson joined the Board on 1 January 2004 as Marketing Director, was appointed
Sales & Marketing Director on 1 February 2007 and now acts as Business
Projects Director in Titon Hardware Limited. Tyson was appointed as a
Non-executive Director and Deputy Chair in April 2022. In his role as Deputy
Chair he has a service contract which terminates at the 2023 Annual General
Meeting unless he is re-elected.
Carolyn Isom joined Titon in December 2019 as Finance Director of Titon
Hardware and was appointed to the Titon Holdings Board as CFO in December
2021. She is ACCA qualified and has worked for a number of companies in the
construction sector.
Nicholas Howlett joined Titon in 1991 and has held a number of positions
within the Group since then. He was appointed to the Board in 2002 and became
a Non-executive Director with effect from 1 October 2017. He has a service
contract which terminates at the 2023 Annual General Meeting unless he is
re-elected. Nick has carried out many roles for Titon, including Production
Director at the Haverhill factory, head of Research & Development and then
Managing Director of Ventilation Systems in the UK and Europe. Nick works
closely with UK trade associations involved in the ventilation industry and on
the impact of building regulations and other Government laws both for Titon
and the wider industry;
Jeff Ward joined the Board of Titon on 1 April 2022. Jeff is currently CEO of
Guardian Fall, one of the largest independent height safety companies in the
world. He was previously CEO of Centurion Safety Products from December 2015
until July 2020 and before then held a number of leadership roles in hardware
and safety businesses where he was responsible for a range of activities,
including sales, marketing, supply chain and strategy. Jeff holds an MBA from
Warwick Business School and also serves as a Director of the British Safety
Industry Federation. Jeff has a service contract which terminates at the 2023
Annual General Meeting unless he is re-elected;
Paul Hooper joined the Board of Titon on 1 April 2022. Paul is currently Chief
Executive of The Alumasc Group plc, a position he has held since April 2003.
Alumasc is a UK-based supplier of sustainable building products and solutions.
He joined Alumasc in April 2001 as Group Managing Director. His earlier career
included a first Managing Director role with BTR plc in 1992. He subsequently
joined Williams Holdings plc in Special Operations, implementing acquisitions
in Europe and North America, prior to joining Rexam PLC as a Divisional
Managing Director with responsibility for operations in Europe and South East
Asia. Paul holds an MBA from Cranfield School of Management. Paul has a
service contract which terminates at the 2023 Annual General Meeting unless he
is re-elected;
All Executive Directors are subject to annual appraisals of their performance
and membership of relevant board committees, as appropriate, during the
financial year. This takes the form of a review of the targets and objectives
for the period, a meeting with the appraiser and the setting of targets and
objectives for the current year. It also includes a process whereby a failure
to meet the targets is discussed and changes are agreed to improve
performance. A continuing failure to meet targets or performance could lead
ultimately to dismissal. The Non-executive Directors also provide feedback and
appraisal of the Executive Directors on an ad hoc basis, and this is included
in the appraisals of the relevant individuals.
The Non-executive Chair has a range of responsibilities to perform including,
inter alia, the proper functioning of the Board of Directors and over-seeing
the strategic development of the Company and Group. The Chief Executive has a
specific range of responsibilities including setting the strategic development
of the Group, the day-to-day management of the Group and implementing the
strategy agreed by the Board. The five current Non-executive Directors provide
a range of skills and wide experience to the Group alongside the necessary
independence, as required under principle 5, as follows:
1. Mr N C Howlett is deemed to be independent for the purposes of the Code
despite his previous service and role as an executive director of the Company
due to his independence of character and judgment;
2. Mr T N Anderson is not deemed to be independent as he is a significant
shareholder and has an existing service contract with a Group subsidiary;
3. Mr G P Hooper is deemed to be independent for the purposes of the Code
as he has no previous links with the Company;
4. Mr J Ward is deemed to be independent for the purposes of the Code as
he has no previous links with the Company.
5. Mr K A Ritchie is not deemed to be independent due to his previous
service and role as an executive director of the Company and his significant
shareholding.
The Board has a schedule of matters specifically reserved to it for decision
including major capital expenditure decisions, business acquisitions and
disposals and the setting of treasury policy. This also includes matters such
as material financial commitments, commencing or settling major litigation and
appointments to main and subsidiary company boards. The Executive Directors
are involved with day-to-day matters arising and the size of the Group allows
the Board to have rapid access to any issues which arise in dealings with
stakeholders.
Scheduled Board meetings in 2022 took place monthly with further ad hoc
meetings arranged as necessary. To enable the Board to function effectively
and Directors to discharge their responsibilities, full and timely access is
given to all relevant information. In the case of Board meetings, this
consists of comprehensive management reporting information and discussion
documents regarding specific matters. All directors commit sufficient time to
the Group to discharge their responsibilities: the executive directors on a
full-time basis, the Non-executive Directors, as required by the needs of the
business.
The individual attendance by Executive Directors and Non-executive Directors
at the Board and principal Board Committee Meetings held during the financial
year is shown in the table below.
Main Remuneration Audit Nominations
Board Committee Committee Committee
Total meetings held 10 1 3 2
K A Ritchie 10 1 3 2
M J Norris 6 - - -
T N Anderson 10 - - -
T D Gearey 6 - - -
C V Isom 10 - 3 -
A C French 4 - - -
N C Howlett 10 1 - 2
K Sargeant 2 - - -
J N Anderson 6 - - -
B Ratzke 2 - - -
G P Hooper 4 - 2 -
J Ward 3 - - -
There is an agreed procedure for Directors to take independent professional
advice if necessary and at the Company's expense. This is in addition to the
access which every Director has to the Company Secretary. The Company
Secretary is charged by the Board with ensuring that Board procedures are
followed.
When new members are appointed to the Board, they are provided with advice
from the Company Secretary in respect of their role and duties as a public
company director. Furthermore, all Directors have ongoing access to the
Company Secretary for advice during the course of their appointment.
Appointments to the Board of both Executive and Non-executive Directors are
considered by the Nominations Committee for endorsement by the Board as a
whole.
Any Director appointed during the year is required, under the provisions of
the Company's Articles of Association, to retire and seek election by the
shareholders at the next Annual General Meeting. The Articles of Association
also require that one third of the Directors retire by rotation each year and
seek re-election at the Annual General Meeting. The Directors required to
retire are those in office longest since their previous re-election and in
practice this means that each Director retires at least every three years, in
accordance with the requirements of the Code. It is the Company's practice
that all of the Non-executive Directors will seek re-election at each Annual
General Meeting.
All of the Directors retire at the next AGM and being eligible, offer
themselves for re-election.
A statement of Directors' interests and copies of their service contracts are
available for inspection during usual business hours at the registered office
of the Company, on any weekday (excluding public holidays), and will be
available at the place of the Annual General Meeting for at least fifteen
minutes prior to and during the meeting.
The Remuneration Committee
The Remuneration Committee Report is set out on pages 33 to 36. The
Remuneration Committee's terms of reference, established by the Board, are to:
· determine and to keep under review the Group's policy on
remuneration;
· determine the basic salaries and non-cash emoluments payable to all
Executive Directors, including Executive Directors of subsidiary Group
companies, giving due consideration to individual responsibility and
performance and to salaries paid to Executive Directors of similar companies
in comparable business sectors;
· select the performance targets for the Executive Directors' bonus
arrangements;
· select the performance conditions relating to the Group's Share
Option Schemes. Such performance conditions to be aimed to align
Directors' interests to shareholder value;
· make recommendations to the Board of Directors on other matters
relating to remuneration in the Group; and
· prepare an annual report on remuneration to the Company's
shareholders for approval by the Board for submission to a vote of
shareholders at the Company's Annual General Meeting and to advise the Board
if it believes that, in any year, there are particular matters relating to
remuneration which should be put to the Company's shareholders.
Nominations Committee
The Nominations Committee is responsible for proposing candidates as Directors
of Titon Holdings Plc for endorsement by the Board. The selection of suitable
candidates will be based on the suitability of the person for the position
regardless of age, ethnicity or gender. Candidates may be either internal or
external and executive search consultants may be used in the process. The
Nominations Committee met a number of times during the year to recruit the new
Non-executive Directors and the new Chief Executive. The Nominations Committee
at 30 September 2022 comprised Mr N C Howlett, Mr J Ward and Mr G P Hooper.
Communications with shareholders
The Board recognises the importance of communications with shareholders. The
Strategic Report on pages 8 to 26 gives a detailed review of the business, and
there is regular dialogue with institutional shareholders at the time of the
Group's preliminary announcement of the year end results and at the half year.
The main contact with shareholders is through the Chair or Chief Executive.
The Group's results and other announcements are published on the London Stock
Exchange RNS service and on the Company's website.
The Board uses the Annual General Meeting to communicate with private and
institutional investors and welcomes their participation.
The Corporate Governance Report was approved by the Board on 25 January 2023
and signed on its behalf by:
K A Ritchie
Chair
Audit Committee Report
The Audit Committee reports to the Board on matters concerning the Group's internal financial controls, financial reporting and risk management systems, identifying any matters in respect of which it considers that action or improvement is needed and making recommendations as to the steps to be taken.
Composition of the Audit Committee
The Audit Committee is appointed by the Board for a period of three years and
comprised Mr K A Ritchie ACA who has financial reporting experience and Mr G P
Hooper, who has extensive accounting experience from his career and position
as Chief Executive of The Alumasc Group Plc. I confirm that the Titon Audit
Committee continues to have competence relevant to the sector in which the
Company operates.
Role of the Audit Committee
The Audit Committee operates within defined terms of reference and its main
functions are:
· to monitor the internal financial control and risk management systems
on which the Group is reliant;
· to consider whether there is a need for the Group to have its own
internal audit function;
· to monitor the integrity of the Group's financial statements and
formal announcements relating to the Group's financial performance, reviewing
significant financial reporting judgements contained in them;
· to review arrangements by which staff may, in confidence, raise
concerns about possible improprieties in matters of financial reporting or any
other matter;
· to meet the independent Auditor of the Group to review their proposed
audit programme of work and the subsequent Audit Report and to assess the
effectiveness of the audit process and the levels of fees paid in respect of
both audit and non-audit work;
· to make recommendations to the Board in relation to the appointment,
re-appointment or removal of the Auditor, and to negotiate their remuneration
and terms of engagement on audit and non-audit work; and
· to monitor and review annually the external Auditor's independence,
objectivity, effectiveness, resources and qualification.
Review of financial statements and risks identified
Financial statements issued by the Company need to be fair, balanced, and
understandable. The Audit Committee reviews the Annual Report as a whole and
makes recommendations to the Board. The Audit Committee has advised the Board
that, in its opinion, the Annual Report and Financial Statements are fair,
balanced and understandable and provides the information necessary for
shareholders to assess the Company's position and performance, business model
and strategy. The Company's unaudited interim results are also reviewed by the
Audit Committee prior to their publication.
The Audit Committee assesses annually whether it is appropriate to prepare the
Group's financial statements on a going concern basis and makes its
recommendation to the Board. The Board's conclusions are set out in the
Directors' Report. As noted in the Strategic Report and the Directors' Report
a considerable amount of work has been carried out to assess the Group's
financial position as a result of the pandemic. The Audit Committee has been
fully involved in all of the financial forecasting that has been performed and
the cash management steps which have been taken and has made a recommendation
to the Board that the Group should continue to prepare the financial
statements on a going concern basis.
In planning its own work, and reviewing the audit plan of the Auditors, the
Audit Committee takes account of the most significant issues and risks, both
operational and financial, likely to impact on the Group's financial
statements.
The Committee considers that the timing of revenue recognition is a
significant area of risk to accurate financial reporting and ensures that
necessary credit note provisions and warranty provisions are made. In relation
to activities in South Korea, revenues are only recognised once the
third-party customer has accepted the successful installation of either the
first fix or the second fix products into buildings rather than the delivery
of such product from our factory.
The carrying value of the Group's assets is an area where the Committee places
great emphasis. In particular, calculating the carrying value for the Group's
inventory is a vital factor as the Group has a wide range of product lines
that may fluctuate regularly in terms of their sales volumes. Consequently,
every product line is assessed at the year-end to ensure that accurate
provisions for obsolescence are made.
A significant risk considered by the Committee is the Group's investment in
its South Korean business and in particular the accuracy of accounting
information. The Committee manage this risk through senior management making
regular trips to South Korea combined with the receipt of detailed monthly
management accounts from South Korea. As noted above travel to South Korea was
opened up during 2022, before then regular video calls with senior managers
were held instead.
Internal audit
The Board believes that due to the size of the business there is currently no
requirement for an internal audit function. This matter is reviewed annually.
Internal control
The respective responsibilities of the Directors in connection with the
financial statements are set out on pages 28 and 29, and those of the Auditors
are detailed in the Independent Auditor's Report on page 48.
The Audit Committee is responsible for ensuring that suitable internal
controls systems to prevent and detect fraud and error are designed and is
also responsible for reviewing the effectiveness of such controls. The Board
confirms that there is an ongoing process for identifying, evaluating and
managing the significant risks faced by the Group in line with the FRC's
Guidance on Risk Management, Internal Control and Related Financial and
Business Reporting, published in September 2014 and the FRC's Guidance on
Audit Committees published in April 2016. This process has been in place for
the year under review and up to the date of approval of this report and
accords with the guidance. In particular, the Committee has reviewed and
updated the process for identifying and evaluating the significant risks
affecting the Group and policies by which these risks are managed. The risks
of any failure of such controls are identified in a Risk Matrix (set out in
the Risk Management Report on pages 23 to 26) which is regularly reviewed by
the Board and which identifies the likelihood and severity of the impact of
such risks and the controls in place to mitigate the probability of such risks
occurring.
Internal control systems are designed to meet the Group's particular needs and
the risks to which it is exposed. They do not eliminate the risk of failure to
achieve business objectives. The following are the key components which the
Group has in place to provide effective internal control:
· an appropriate control environment through the definition of the
organisation structure and authority levels;
· the identification of the major business risks facing the Group and
the development of appropriate procedures and controls to manage these risks;
· a comprehensive budgeting and reporting system with monthly results
compared with budgets and with previous years; and
· the principal aspects of the Group's internal control processes used
in preparing the Group's consolidated accounts include second reviews of
consolidation workings and Board review of the composition of the Group's
financial information.
The Directors acknowledge that they are responsible for establishing and
maintaining the Group's system of internal control and risk management and
reviewing their effectiveness, which they have done during the year. Internal
control systems are designed to meet the particular needs of the Group and the
risks to which it is exposed and by their nature can provide reasonable but
not absolute assurance against material misstatement or loss. Appropriate
risk monitoring systems have been in place throughout the year and up to the
date of approval of the Annual Report and have been regularly reviewed by the
Board. The Report on Risk Management sets out the principal risks identified
by the Directors, the potential impact and the mitigation measures which
apply. No significant weaknesses have been identified in this report by the
Directors during the year.
The Company has a shareholding in an associate company. Controls within this
entity are not reviewed as part of the Company's formal review processes due
to the local delegation of managerial responsibilities, but instead are
reviewed as part of regular management process.
External audit process
During the year BDO LLP decided to resign as Group Auditors. The Audit
Committee met to discuss this situation and agreed to recommend the
appointment of MacIntyre Hudson LLP for the current year. The Audit Committee
meets at least twice a year with the Auditor, who provides a planning report
in advance of the annual audit and a report on the annual audit. The Committee
has an opportunity to question and challenge the Auditor in respect of each of
these reports. No significant deficiencies were noted by the Auditor in
respect of the period ended 30 September 2022. The Committee also discussed
the basis of preparation of the going concern opinion and the key audit
matters with the Auditor.
After each audit, the Audit Committee reviews the audit process and considers
its effectiveness.
Auditor assessment and independence
The Group's external auditor is MacIntyre Hudson LLP (MHA), who replaced BDO
LLP during the period.
The Audit Committee reviewed MHA's independence policies and procedures
including quality assurance procedures and it was confirmed that those
policies and procedures were fit for purpose. Accordingly, the Audit Committee
recommends that MHA should be reappointed as the Group's auditor for the next
financial year and a resolution to that effect will be proposed at the 2023
AGM.
The fees for audit services provided by MHA for 2022 were £143,000 (2021:
£116,000). The Audit Committee discussed the non-audit services provided by
MHA during the year. The cost of non-audit services provided by the Auditor
for the financial year ended 30 September 2022 was £1,000 (2021: £1,450).
K A Ritchie
Audit Committee Chair
25 January 2023
Independent Auditor's Report
To the Members of Titon Holdings Plc
For the purpose of this report, the terms "we" and "our" denote MHA MacIntyre
Hudson in relation to UK legal, professional and regulatory responsibilities
and reporting obligations to the members of Titon Holdings Plc. For the
purposes of the table that sets out the key audit matters and how our audit
addressed the key audit matters, the terms "we" and "our" refer to MHA
MacIntyre Hudson. The Group financial statements, as defined below,
consolidate the accounts of Titon Holdings Plc and its subsidiaries (the
"Group"). The "Parent Company" is defined as Titon Holdings Plc. The relevant
legislation governing the Parent Company is the United Kingdom Companies Act
2006 ("Companies Act 2006").
Opinion
We have audited the financial statements for Titon Holdings Plc, for the year
ended 30 September 2022, which comprise:
· the consolidated income statement;
· the consolidated statement of comprehensive income;
· the consolidated statement of financial position;
· the company statement of financial position;
· the consolidated statement of changes in equity;
· the company statement of changes in equity;
· the Group and Company statement of cash flows; and
· the notes to the consolidated financial statements 1 to 26.
The financial reporting framework that has been applied in the preparation of
the group and parent company's financial statements is applicable law and
United Kingdom adopted International Financial Reporting Standards (UK Adopted
IFRS).
In our opinion:
· the financial statements give a true and fair view of the state of
the Group's and the Parent Company's affairs as at 30 September 2022 and of
the Group's loss for the year then ended;
· the financial statements have been properly prepared properly
prepared in accordance with International Financial Reporting Standards and
Interpretations (collectively "IFRSs'") as adopted in the United Kingdom
("UK-adopted IFRS"); and
· the financial statements have been prepared in accordance with the
requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing
(UK) (ISAs (UK)) and applicable law. Our responsibilities under those
standards are further described in the Auditor's Responsibilities for the
Audit of the Financial Statements section of our report. We are independent of
the Group in accordance with the ethical requirements that are relevant to our
audit of the financial statements in the UK, including the FRC's Ethical
Standard as applied to listed entities, and we have fulfilled our other
ethical responsibilities in accordance with these requirements. We believe
that the audit evidence we have obtained is sufficient and appropriate to
provide a basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the Directors'
use of the going concern basis of accounting in the preparation of the
financial statements is appropriate. Our evaluation of the Directors'
assessment of the entity's ability to continue to adopt the going concern
basis of accounting included:
· The consideration of inherent risks to the Group's and parent
Company's operations and specifically its business model.
· The evaluation of how those risks might impact on the Group's
available financial resources.
· Review of the mathematical accuracy of the cashflow forecast model
prepared by management and corroboration of key data inputs to supporting
documentation for consistency of assumptions used with our knowledge obtained
during the audit.
· Challenging management for reasonableness of assumptions in respect
of the timing and value of cash receipts and payments included in the cash
flow model.
· Where additional resources may be required the reasonableness and
practicality of the assumptions made by the Directors when assessing the
probability and likelihood of those resources becoming available.
· Holding discussions with management regarding future financing plans,
corroborating these where necessary and assessing the impact on the cash flow
forecast.
· Evaluating the accuracy of historical forecasts against actual
results to ascertain the accuracy of management's forecasts.
Based on the work we have performed, we have not identified any material
uncertainties relating to events or conditions that, individually or
collectively, may cast significant doubt on the Group's ability to continue as
a going concern for a period of at least twelve months from when the financial
statements are authorised for issue. Our responsibilities and the
responsibilities of the directors with respect to going concern are described
in the relevant sections of this report.
Overview of our audit approach
Materiality The overall materiality that we used for the Group financial statements was
£221,000 (2021: £250,000), which was determined as 1% of turnover (2021:
1.1% of turnover).
The overall materiality for the Parent Company financial statements was
£138,000 (2021: £150,000), which was determined as 2% of net assets (2021:
60 of group materiality).
Performance materiality was set at 60% (2021: 60%) of materiality for both the
Group and Parent.
Scope Our Group audit was scoped by obtaining an understanding of the Group
including the Parent Company, and its environment, including the Group's
system of internal control, and assessing the risks of material misstatement
in the financial statements. We also addressed the risk of management
override of internal controls, including assessing whether there was evidence
of bias by the directors that may have represented a risk of material
misstatement.
The Group consists of five reporting components, four of which were considered
to be significant components: Titon Holdings Plc, Titon Hardware Ltd, Titon
Korea Co. Ltd and Browntech Sales Co. The significant components were
subjected to full scope audits for the purposes of our audit report on the
Group financial statements. The other component, Titon Inc. is not deemed
significant and was subject to specific audit procedures for the purposes of
our audit report on the Group financial statements.
Material subsidiaries were determined based on:
1) financial significance of the component to the Group as a whole, and
2) assessment of the risk of material misstatements applicable to each
component.
Our audit scope results in all major operations of the Group being subject to
audit work, with Titon Korea Co, Ltd and Browntech Sales Co. being audited by
BTI Korea acting on specific instructions.
Key audit matters In addition to the matters described in the Basis for opinion section, we have
determined the matters described below to be the key audit matters at Group
level to be communicated in our report:
· Inventory valuation
· Management override of controls
· Revenue recognition
First-year audit transition We developed a detailed audit transition plan, designed to deliver an
effective transition from the Group's predecessor auditor, BDO LLP ("BDO").
Our audit planning and transition commenced on 25 August 2022, following our
appointment. Our transition activities were performed for components located
in the UK and South Korea, which included (but were not limited to) reviewing
the Audit Committee meeting minutes and reviewing BDO's 2021 audit working
papers. Our transition focused on obtaining an understanding of the Group's
system of internal control, evaluating the Group's accounting policies and
areas of accounting judgement, and meeting with management across all major
divisions.
Key Audit Matters
Key Audit Matters are those matters that, in our professional judgement, were
of most significance in our audit of the financial statements of the current
period and include the most significant assessed risks of material
misstatement, whether or not due to fraud, that we identified. These matters
included those which had the greatest effect on the overall audit strategy,
the allocation of resources in the audit; and directing the efforts of the
engagement team.
These matters were addressed in the context of our audit of the financial
statements as a whole, and in forming our opinion thereon, and we do not
provide a separate opinion on these matters. We have determined the matters
described below to be the Key Audit Matters to be communicated in our report.
Inventory valuation including provisions
Key audit 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 attended the year end stock count including sample
testing of stock items recorded on stock count sheets to physical stock
location in the warehouses and vice versa and physically inspecting inventory
held for indication of obsolescence or impairment.
· We have reviewed the inventory listing and stock physically
present in the warehouses for any slow-moving or obsolete inventory items
which require write off or providing for and then also reviewed and considered
the appropriateness of the provision made by management, as well as
reperforming the calculations made by management.
· We have performed substantive testing for a sample of inventory
items held at the year end to the original purchase invoice and also to post
year end sales to ensure inventory is held at the lower of cost and net
realisable value in the financial statements.
· We have obtained and reviewed managements calculations and key
judgements regarding the standard costing model used and assessed the
appropriateness of the costs included. We have also sample tested payroll and
overhead costs back to source invoices and documentation to confirm the
accuracy of the figures used.
· We have reviewed the audit working papers completed by the
component auditor to ensure that the work performed on overseas subsidiaries
sufficiently addresses the risk at group level.
Key observations Based on the outcome of our procedures we identified no material issues with
the valuation of inventory or the provisions for slow moving, damaged or
obsolete goods.
Management override of controls
Key audit matter description 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 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 No issues have been identified from the audit procedures performed over
management override of controls.
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 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.
Our application of materiality
The scope of our audit was influenced by our application of materiality. We
set certain quantitative thresholds for materiality. These, together with
qualitative considerations, helped us to determine the scope of our audit and
the nature, timing and extent of our audit procedures on the individual
financial statement line items and disclosures and in evaluating the effect of
misstatements, both individually and in aggregate on the financial statements
as a whole.
Our definition of materiality considers the value of error or omission on the
financial statements that, individually or in aggregate, would change or
influence the economic decision of a reasonably knowledgeable user of those
financial statements. Misstatements below these levels will not necessarily
be evaluated as immaterial as we also take account of the nature of identified
misstatements, and the particular circumstances of their occurrence, when
evaluating their effect on the financial statements as a whole. Materiality is
used in planning the scope of our work, executing that work and evaluating the
results.
Based on our professional judgement, we determined materiality for the
financial statements as a whole as follows:
Group financial statements Parent Company financial statements
Overall materiality £221,000 (2021: £250,000) £138,000 (2021: £150,000)
How we determined it 1% of turnover (2021: 1.1% of turnover) 2% of net assets (2021: 60% of group materiality)
Rationale for the benchmark applied We consider turnover to be the main measure by which the users of the The Parent Company is largely a holding company incurring limited costs and
financial statements assess the financial performance and success of the Group therefore net assets has been considered the most appropriate benchmark for
and is a Key Performance Indicator identified by management. Therefore, we materiality.
consider this to be the most appropriate benchmark for Group materiality.
Performance materiality is the application of materiality at the individual
account or balance level, set at an amount to reduce, to an appropriately low
level, the probability that the aggregate of uncorrected and undetected
misstatements exceeds materiality for the financial statements as a whole.
We set performance materiality at a level lower than materiality to reduce the
probability that, in aggregate, uncorrected and undetected misstatements
exceed the materiality for the financial statements as a whole. Group and the
Parent Company performance materiality was set at 60% (2021: 60%) of Group and
Parent Company materiality respectively for the 2022 audit being £132,600 for
the Group and £82,800 for the Parent Company. In determining performance
materiality, we considered our understanding of the entity, including the
quality of the control environment and whether we were able to rely on
controls, and the nature, volume and size of uncorrected misstatements in the
previous period.
We agreed with management that we would report to them all audit differences
in excess of £11,050 (2021: £5,000) for the Group and £6,850 (2021:
£5,000) for the Company as well as differences below that threshold that, in
our view, warranted reporting on qualitative grounds. We also report to
management on disclosure matters that we identified when assessing the overall
presentation of the financial statements.
Overview of the scope of our audit
Our assessment of audit risk, evaluation of materiality and our determination
of performance materiality sets our audit scope for each company within the
Group. Taken together, this enables us to form an opinion on the consolidated
financial statements. This assessment takes into account the size, risk
profile, organisation / distribution and effectiveness of group-wide controls,
changes in the business environment and other factors such as recent internal
audit results when assessing the level of work to be performed at each
component.
In assessing the risk of material misstatement to the consolidated financial
statements, and to ensure we had adequate quantitative and qualitative
coverage of significant accounts in the consolidated financial statements, of
the 5 reporting components of the group, 2 of which are based in the UK and
audited by the Group audit team, being Titon Holdings Plc and Titon Hardware
Ltd, 2 of which are based in South Korea and audited by BTI Korea being Titon
Korea Co. Ltd and Browntech Sales Co. and the other being Titon Inc. based in
the USA.
The audit procedures undertaken covered the following percentage of the group
benchmarks below:
Number of 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%
Other Information
The other information comprises the information included in the annual report
other than the financial statements and our auditor's report thereon. The
Directors are responsible for the other information contained within the
annual report. Our opinion on the financial statements does not cover the
other information and, except to the extent otherwise explicitly stated in our
report, we do not express any form of assurance conclusion thereon. Our
responsibility is to read the other information and, in doing so, consider
whether the other information is materially inconsistent with the financial
statements, or our knowledge obtained in the course of the audit, or otherwise
appears to be materially misstated. If we identify such material
inconsistencies or apparent material misstatements, we are required to
determine whether this gives rise to a material misstatement in the financial
statements themselves. If, based on the work we have performed, we conclude
that there is a material misstatement of this other information, we are
required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
· the information given in the Strategic Report and the Directors' Report for
the financial year for which the financial statements are prepared is
consistent with the financial statements; and
· the Strategic Report and the Directors' Report have been prepared in
accordance with applicable legal requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the Group and Parent
Company and their environment obtained in the course of the audit, we have not
identified material misstatements in the Strategic Report or the Directors'
Report.
We have nothing to report in respect of the following matters in relation to
which the Companies Act 2006 requires us to report to you if, in our opinion:
· adequate accounting records have not been kept, or returns adequate for our
audit have not been received from branches not visited by us; or
· the financial statements are not in agreement with the accounting records
and returns; or
· certain disclosures of Directors' remuneration specified by law are not
made; or
· we have not received all the information and explanations we require for
our audit.
Responsibilities of the Directors
As explained more fully in the Directors' responsibilities statement, as set
out on pages 28 to 29, the Directors are responsible for the preparation of
the financial statements and for being satisfied that they give a true and
fair view, and for such internal control as the Directors determine is
necessary to enable the preparation of financial statements that are free from
material misstatement, whether due to fraud or error. In preparing the
financial statements, the Directors are responsible for assessing the Group's
and the Parent Company's ability to continue as a going concern, disclosing as
applicable, matters related to going concern and using the going concern basis
of accounting unless the Directors either intend to liquidate the Group or the
Parent Company or to cease operations, or have no realistic alternative but to
do so.
Auditor responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial
statements as a whole are free from material misstatement, whether due to
fraud or error, and to issue an auditor's report that includes our opinion.
Reasonable assurance is a high level of assurance but is not a guarantee that
an audit conducted in accordance with ISAs (UK) will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and
are considered material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users taken on
the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and
regulations. We design procedures in line with our responsibilities, outlined
above, to detect material misstatements in respect of irregularities,
including fraud. The extent to which our procedures are capable of detecting
irregularities, including fraud, is detailed below.
Because of the inherent limitations of an audit, there is a risk that we will
not detect all irregularities, including those leading to a material
misstatement in the financial statements or non-compliance with regulation.
This risk increases the more that compliance with a law or regulation is
removed from the events and transactions reflected in the financial
statements, as we will be less likely to become aware of instances of
non-compliance. The risk is also greater regarding irregularities occurring
due to fraud rather than error, as fraud involves intentional concealment,
forgery, collusion, omission or misrepresentation.
The specific procedures for this engagement and the extent to which these are
capable of detecting irregularities, including fraud is detailed below:
· Enquiry of management to identify any instances of non-compliance with laws
and regulations.
· Enquiry of management around actual and potential litigation and claims.
· Enquiry of management to identify any instances of known or suspected
instances of fraud.
· Discussing among the engagement team regarding how and where fraud might
occur in the financial statements and any potential indicators of fraud.
· Reviewing minutes of meetings of those charged with governance.
· Performing audit work over the risk of management override of controls,
including testing of journal entries and other adjustments for
appropriateness, evaluating the business rationale of significant transactions
outside the normal course of business, and reviewing accounting estimates for
bias.
· Reviewing financial statement disclosures and testing to supporting
documentation to assess compliance with applicable laws and regulations.
· Challenging assumptions and judgements made by management in their
significant accounting estimates, in particular with respect to provisions for
claims incurred but not reported.
A further description of our responsibilities for the audit of the financial
statements is located on the Financial Reporting Council's website at:
www.frc.org.uk/auditorsresponsibilities
(http://www.frc.org.uk/auditorsresponsibilities) .
www.frc.org.uk/auditorsresponsibilities
This description forms part of our auditor's report.
Use of our report
This report is made solely to the Company's members, as a body, in accordance
with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been
undertaken so that we might state to the Company's members those matters we
are required to state to them in an auditor's report and for no other purpose.
To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the Company and the Company's members as a
body, for our audit work, for this report, or for the opinions we have formed.
Andrew Moyser FCA FCCA (Senior Statutory Auditor)
For and on behalf of MHA MacIntyre Hudson, Statutory Auditor
London
25 January 2023
Consolidated Income Statement
for the year ended 30 September 2022
2022 2021
Note £'000 £'000
Revenue 3 22,087 23,412
Cost of sales (16,270) (16,070)
Grant Income 4 - 8
Gross profit 5,817 7,350
Distribution costs (1,393) (1,144)
Administrative expenses (4,586) (4,521)
Administrative expenses - exceptional 26 (349) -
Research and development expenses (629) (582)
Other income 21 16
Operating (loss) / profit (1,119) 1,119
Finance income 5 9 -
Finance expense 5 (16) (16)
Share of post-tax (loss) / profit from associate 13 173 (28)
(Loss) / profit before tax 6 (953) 1,075
Income tax credit / (expense) 7 410 (72)
(Loss) / profit after income tax (543) 1,003
Attributable to:
Equity holders of the parent (436) 1,028
Non-controlling interest (107) (25)
(Loss) / profit for the year (543) 1,003
(Loss) / earnings per share attributed to equity holders of the parent:
Basic 9 (3.89p) 9.24p
Diluted 9 (3.89p) 9.18p
Consolidated Statement of Comprehensive Income
for the year ended 30 September
2022
2022 2021
£'000 £'000
(Loss) / profit for the year (543) 1,003
Other comprehensive income - items which may be reclassified to profit or loss
in subsequent periods:
Exchange difference on retranslation of net assets of overseas operations 112 (284)
Total comprehensive income for the year (431) 719
Attributable to:
Equity holders of the parent (333) 793
Non-controlling interest (98) (74)
(431) 719
The notes on pages 56 to 84 form part of these financial statements.
Consolidated Statement of Financial Position
At 30 September 2022
2022 2021
Note £'000 £'000
Assets
Property, plant and 10 3,321 3,476
equipment
Right-of-use assets 10 553 546
Intangible assets 11 915 925
Investments in associates 13 2,909 2,681
Deferred tax assets 16 697 278
Total non-current assets 8,395 7,906
Inventories 14 6,571 5,042
Trade and other receivables 15 4,920 4,224
Cash and cash equivalents 20 1,726 4,794
Total current assets 13,217 14,060
Total Assets 21,612 21,966
Liabilities
Lease liabilities 18 378 402
Total non-current liabilities 378 402
Trade and other payables 17 5,051 4,554
Lease liabilities 18 232 193
Total current liabilities 5,283 4,747
Total Liabilities 5,661 5,149
Equity
Share capital 19 1,122 1,119
Share premium 19 1,091 1,077
Capital redemption reserve 56 56
Treasury shares 19 - (27)
Foreign exchange reserve 198 96
Retained earnings 13,179 14,093
Total Equity attributable to equity holders of the parent 15,646 16,414
Non-controlling Interest 305 403
Total Equity 15,951 16,817
Total Liabilities and Equity 21,612 21,966
The notes on pages 56 to 84 form part of these financial statements.
These financial statements were approved and authorised for issue by the Board
on 25 January 2023 and signed on its behalf by:
K A Ritchie
Chair
Company Statement of Financial Position
at 30 September 2022
Company No. 01604952
2022 2021
Note £'000 £'000
Assets
Property and motor vehicles 10 1,773 1,836
Investments in subsidiaries 12 554 554
Investments in associates 13 225 225
Deferred tax assets 16 4 -
Total non-current assets 2,556 2,615
Trade and other receivables 15 4,769 3,818
Cash and cash equivalents 20 4 1,324
Total current assets 4,773 5,142
Total Assets 7,329 7,757
Liabilities
Deferred tax 16 - 274
Total non-current liabilities - 274
Trade and other payables 17 135 168
Total current liabilities 135 168
Total Liabilities 135 442
Equity
Share capital 19 1,122 1,119
Share premium account 19 1,091 1,077
Capital redemption reserve 56 56
Treasury shares 19 - (27)
Retained earnings 4,925 5,090
Total Equity 7,194 7,315
Total Liabilities and Equity 7,329 7,757
As permitted by section 408(3) of the Companies Act 2006 the Company has
elected not to present its own Statement of Profit and Loss for the year.
Titon Holdings Plc reported a profit before tax for the financial year ended
30 September 2022 of £35,000 (2021: £243,000). The notes on pages 56 to 84
form part of these financial statements.
These financial statements were approved and authorised for issue by the Board
on 25 January 2023 and signed on its behalf by:
K A Ritchie
Chair
Consolidated Statement of Changes in Equity
at 30 September 2022
Share Share Capital Foreign 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 2020 1,113 1,049 56 327 (27) 13,425 15,943 868 16,811
Translation differences - - - (231) - (4) (235) (49) (284)
on overseas operations
Profit for the year - - - - - 1,028 1,028 (25) 1,003
Total Comprehensive Income for the year - - - (231) - 1,024 793 (74) 719
Dividends paid - - - - - (390) (390) - (390)
Dividends paid to NCI in subsidiary - - - - - - - (391) (391)
Share-based payment expense - - - - - 34 34 - 34
Exercise of share options 6 28 - - - 34 - 34
At 30 September 2021 1,119 1,077 56 96 (27) 14,093 16,414 403 16,817
Translation differences - - - 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)
Dividends paid to NCI in subsidiary - - - - - - - - -
Share-based payment expense - - - - - 23 23 - 23
Exercise of share options 3 14 - - - 17 - 17
Transfer of treasury shares - - - 27 - 27 - 27
At 30 September 2022 1,122 1,091 56 198 - 13,179 15,646 305 15,951
The notes on pages 56 to 84 form part of these financial statements.
The following describes the nature and purpose of each reserve within equity:
Reserve Description and purpose
Share capital Nominal value of the issued share capital of the 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 2022
Share Share Capital Treasury shares Retained Total
Capital premium redemption earnings Equity
reserve
£'000 £'000 £'000 £000 £'000 £'000
At 30 September 2020 1,113 1,049 56 (27) 5,203 7,394
Profit for the year - - - - 243 243
Total Comprehensive Income for the year - - - 243 243
-
Share-based payment expense - - - - 34 34
Dividends paid - - - - (390) (390)
Exercise of Share options 6 28 - - - 34
At 30 September 2021 1,119 1,077 56 (27) 5,090 7,315
Profit for the year - - - - 314 314
Total Comprehensive Income for the year - - - 314 314
-
Share-based payment expense - - - - 23 23
Dividends paid - - - - (502) (502)
Exercise of Share options 3 14 - - - 17
Transfer of Treasury shares - - - 27 - 27
At 30 September 2022 1,122 1,091 56 - 4,925 7,194
The notes on pages 56 to 84 form part of these financial statements.
The following describes the nature and purpose of each reserve within equity:
Reserve Description and purpose
Share capital Nominal value of the issued share capital of the Company
Share premium Premium on shares issued in excess of nominal value
Capital redemption Amounts transferred from share capital on redemption and cancellation of
issued shares
Treasury shares Weighted average cost of own shares held in Treasury
Retained earnings All other net gains and losses and transactions with owners (e.g. dividends)
not recognised elsewhere
Group and Company Statement of Cash Flows
for the year ended 30 September 2022
Group Company
2022 2021 2022 2021
Note £'000 £'000 £'000 £'000
Cash generated from operating activities
(Loss) / profit before tax (953) 1,075 35 (99)
Depreciation of property, plant & equipment 10 518 479 64 68
Depreciation of right-of-use assets 10 232 164 - -
Amortisation of intangible assets 11 298 240 - -
Profit on sale of plant & equipment (19) (7) - (1)
Share based payment expense - equity settled 23 23 34 23 34
Finance income 5 (9) - (1) -
Finance costs 5 16 16 - -
Share of associate's post-tax (profit) / (loss) 13 (173) 28 - -
(67) 2,029 121 2
(Increase) in inventories (1,529) (640) - -
(Increase) / decrease in receivables (696) (428) (952) 1
Increase / (decrease) in payables and other current liabilities 498 206 (32) (715)
Cash generated (used in) / generated by operations (1,794) 1,167 (863) (712)
Income taxes paid - (22) - -
Net cash (used in) / generated by operating activities (1,794) 1,145 (863) (712)
Cash flows from investing activities
Purchase of plant & equipment 10 (386) (502) - -
Purchase of intangible assets 11 (288) (412) - -
Proceeds from sale of plant & equipment 44 25 - 6
Finance income 5 9 - 1 -
Dividends received from subsidiary companies - - - 385
Net cash (used in) / generated by investing activities (621) (889) 1 391
Cash flows from financing activities
Dividends paid to equity shareholders of the parent 8 (502) (390) (502) (390)
Dividends paid to non-controlling shareholders of a subsidiary 24 - (391) - -
Payment of lease liability 18 (226) (198) - -
Finance costs 5 (16) (16) - -
Exercise of share options 23 44 34 44 34
Net cash used in financing activities (700) (961) (458) (356)
Net decrease in cash (3,115) (705) (1,320) (677)
Effect of exchange rate changes 47 (73) - -
Cash at beginning of the year 4,794 5,572 1,324 2,001
Cash and Cash Equivalents at end of the year 1,726 4,794 4 1,324
The notes on pages 56 to 84 form part of these financial statements.
Notes to the Consolidated Financial Statements
at 30 September 2022
General information
The consolidated financial statements of the Group for the year ended 30
September 2022 incorporates Titon Holdings Plc ("the Company") and its
subsidiaries (together referred to as "the Group").
Titon Holdings Plc shares are publicly traded on the AIM market of the London
Stock Exchange. The nature of the Group's operations and its principal
activities are set out in the Strategic Report on page 8. The consolidated
financial statements were authorised for release on 25 January 2023.
1 Summary of significant accounting policies
(a) Basis of preparation
Statement of compliance
The Group and Parent Company financial statements have been prepared in
accordance with International Financial Reporting Standards and
Interpretations (collectively "IFRSs'") as adopted in the United Kingdom
("UK-adopted IFRS").
The principal accounting policies adopted in the preparation of the financial
statements are set out below. The policies have been consistently applied to
all the years presented, unless otherwise stated.
The consolidated financial statements are presented in GBP and all values are
rounded to the nearest thousand (£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 judgment in applying the Group's accounting
policies. The areas where significant judgements and estimates have been made
in preparing the financial statements and their effect are disclosed in note
2.
There were no new or amended standards that were required to be adopted by the
Group in these financial statements. The Group does not expect any standards
issued by the IASB, but not yet effective, to have a material impact on the
group.
Going concern
The financial statements have been prepared on a going concern basis. In
adopting the going concern basis the Directors have considered potential
worst-case scenarios that could have a material impact on the business and
from its other principal risks set out on pages 23 to 26. Under the worst-case
scenario considered, which is severe and considered highly unlikely, the Group
remains liquid for a period of more than 12 months from the date of reporting
and the Directors therefore believe, at the time of approving the financial
statements that the Group is well placed to manage its business risks
successfully and remains a going concern. The key facts and assumptions in
reaching this determination are detailed on pages 29 to 30.
Use of judgement and estimates
In the application of the Group's accounting policies, management is required
to make judgements, estimates and assumptions about the carrying amounts of
assets and liabilities that are not readily apparent from other sources. The
estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognised in the period in which the
estimate is revised if the revision affects only that period, or in the period
of the revision and future periods if the revision affects both current and
future periods. The key assumptions concerning the future and other key
sources of estimation uncertainty at the reporting date that have a
significant risk of causing a material adjustment to the carrying amounts of
the assets and liabilities within the next financial year are described under
the relevant notes.
(b) Basis of consolidation
Subsidiaries
The Group's consolidated financial statements incorporate the financial
statements of the Company (Titon Holdings Plc) and the entities controlled by
the Company (its subsidiaries) made up to 30 September 2022. Control exists
when the Company is exposed to, or has rights to, variable returns from its
involvement with the subsidiary and has the ability to affect those returns
through its power over the subsidiary.
Intragroup balances, and any unrealised gains and losses or income and
expenses arising from intragroup transactions, are eliminated in preparing the
financial statements.
Non-controlling interests
A non-controlling interest is the equity in a subsidiary not attributable,
directly or indirectly, to a parent. Non-controlling interests at the end of
reporting period represent the non-controlling shareholders' portion of the
fair values of the identifiable assets and liabilities of the subsidiary at
the acquisition date and the non-controlling interests' portion of movements
in equity since the date of the combination. Non-controlling interest is
presented within equity, separately from the parent's shareholders' equity.
Losses within a subsidiary are attributed to the non-controlling interest even
if that results in deficit balance.
Associates
Where the Group has the power to participate in (but not control) the
financial and operating policy decisions of another entity, it is classified
as an associate. Associates are initially recognised in the Consolidated
Statement of Financial position at cost.
The Group's share of post-acquisition profits and losses is recognised in the
consolidated profit or loss, except that losses in excess of the Group's
investment in the associate are not recognised unless there is an obligation
to make good those losses. Profits or losses arising on transactions between
the Group and its associates are recognised only to the extent of unrelated
investors' interests in the associate.
The investors' share in the associate's profits or losses resulting from these
transactions is eliminated against the carrying value of the associate. Any
premium paid for an associate above the fair value of the Group's share of the
identifiable assets, liabilities and contingent liabilities acquired is
capitalised and included in the carrying amount of the associate. The carrying
amount of the investment in associates is subject to impairment in the same
way as goodwill arising on a business combination (see accounting policy (h)).
Business combinations
The consolidated financial statements incorporate the results of business
using the purchase method. In the Consolidated Statement of Financial
Position, the Group's identifiable assets, liabilities and contingent
liabilities are initially recognised at their fair values at the acquisition
date. The Group's share of the results of acquired operations are included in
the consolidated income statement from the date on which control is
obtained.Foreign currency
Transactions entered into by group entities in a currency other than the
currency of the primary economic environment in which they operate (their
"functional currency") are recorded at the rates ruling when the transactions
occur. Foreign currency monetary assets and liabilities are translated at the
rates ruling at the reporting date. Exchange differences arising on the
retranslation of unsettled monetary assets and liabilities are recognised
immediately in the consolidated profit or loss.
On consolidation, the results of overseas operations are translated into
Sterling, which is the presentational currency of the Company and Group, at
rates approximating those ruling when the transactions took place. All assets
and liabilities of overseas operations are translated at the rate ruling at
the balance sheet date. Exchange differences arising on translating the
opening net assets at opening rate and the results of overseas operations at
actual rate are recognised directly in other comprehensive income.
Upon disposal of all overseas operations, exchange differences arising from
the translation of the financial statements of foreign operations are recycled
and taken to the consolidated profit or loss as part of the profit or loss on
disposal. The Company has elected, in accordance with IFRS 1, that in respect
of all foreign operations, any differences that have arisen before 1 October
2004 have been set to zero. Any gain or loss on the subsequent disposal of
those foreign operations would exclude translation differences that arose
before the date of transition to IFRS and include only subsequent translation
differences.
More than 92% (2021: 89%) of sales from the Group's UK business are invoiced
in Sterling.
(c) Property, plant and equipment
Items of property, plant and equipment are stated at cost less accumulated
depreciation and impairment losses.
Cost includes the original purchase price of the asset and the costs
attributable to bringing the asset to its working condition for intended use.
All other repairs and maintenance costs are recognised in the income statement
as incurred.
Freehold land is not depreciated. Depreciation is provided on all other items
of property, plant and equipment to write down the cost to their residual
values over the estimated useful lives. It is applied at the following rates:
Freehold
buildings
- 2% per annum straight line
Improvements to leasehold property - 10% to 20% per annum straight line
(or the lease term, is shorter)
Plant and
equipment - 10% to
33.3% per annum straight line
Motor
vehicles
- 25% per annum straight line
The estimated useful lives, residual values and depreciation methods are
reviewed at each year end, with the effect of any changes in estimates
accounted for on a prospective basis.
The gain or loss arising on the disposal of an asset is determined as the
difference between the sales proceeds and the carrying amount of the asset and
is recognised in the statement of comprehensive income.
The carrying values of tangible property, plant and equipment are reviewed for
impairment when events or changes in circumstances indicate the carrying value
may not be recoverable (see accounting policy (h)).
The Group also recognises right-of-use assets and lease liabilities under IFRS
16 (see note 18), for most leases with the exception of low value assets based
on the value of the underlying asset when new or for short-term leases with a
lease term of 12 months or less. Right-of-use assets, which include Property
(factory units and office accommodation), plant and equipment and motor
vehicles are initially measured at an amount equal to the lease liability,
adjusted by the amount of any prepaid or accrued lease payments, and are
depreciated on a straight-line basis to write off the carrying value of the
assets over the contractual term of each lease.
The carrying values of right-of-use assets are reviewed for impairment when
events, such as a change in the term of the lease, or in other circumstances
indicate the carrying value may not be recoverable (see accounting policy
(h)).
(e) Intangible assets
Intangible assets other than goodwill that are acquired by the Group are
stated at cost less accumulated amortisation and impairment losses (see
accounting policy (h)). Amortisation is charged to Administrative Expenses
within the Consolidated Income Statement. The gain or loss arising on the
disposal of an intangible asset, other than goodwill, is determined as the
difference between the sales proceeds (where appropriate) and the carrying
amount of the asset and is recognised in the statement of comprehensive
income.
i Goodwill
Goodwill represents the excess of the cost of an acquisition over the fair
value of the Group's share of the net identifiable assets of the acquired
subsidiary or associate at the date of acquisition and subject to annual
impairment testing. Goodwill on acquisitions of subsidiaries is included in
intangible assets. Goodwill associated with the acquisition of associates is
included within the investment in associates.
Goodwill is not subject to amortisation but is tested for impairment annually.
On disposal of a subsidiary the attributable amount of goodwill is included in
the determination of the profit or loss recognised in the income statement on
disposal.
ii Internally generated intangible assets (development costs)
Capitalised development costs are amortised over the periods the Group expects
to benefit from selling the products developed.
Expenditure on internally developed products is capitalised if all of the
following can be demonstrated:
· it is technically feasible to complete the intangible asset so that
it will be available for use or sale;
· there is an intention to complete the intangible asset and use or
sell it;
· an ability to use or sell the intangible asset;
· how the intangible asset will generate probable future economic
benefits;
· the availability of adequate technical, financial and other resources
to complete the development; and
· the ability to measure reliably the expenditure attributable to the
intangible asset during its development.
Development costs are amortised using the straight-line method over their
remaining estimated useful lives from the date that the products are available
for sale to customers, which is normally between 3 and 5 years. The remaining
useful lives of such development assets are assessed by the Directors
annually.
Development expenditure not satisfying the above criteria and expenditure on
the research phase of internal projects is recognised in the consolidated
income statement as incurred.
iii Computer software
Costs incurred on the acquisition of computer software are capitalised if they
meet the recognition criteria of IAS 38 as described above. Computer software
costs recognised as assets are written off over their estimated useful lives,
which is normally between 3 and 10 years.
iv Other intangible assets
Other intangible assets arising on business combinations, including patents,
are recorded at fair value at the date of acquisition. Amortisation is charged
to the income statement on a straight-line basis over the estimated useful
lives, which is normally 5 years. The remaining useful lives of such assets
are assessed by the Directors annually.
v Assets under development
Assets under development are not amortised until they are complete and in use
by the Group.
vi Subsequent expenditure
Subsequent expenditure on capitalised intangible assets is capitalised only
when it increases the future economic benefits embodied in the specific asset
to which it relates. All other expenditure is expensed as incurred.
(f) Inventories
Inventories are stated at the lower of cost and net realisable value. Cost is
calculated as follows:
Raw materials and Bought In finished goods - cost
of purchase
Work in progress and manufactured finished goods -
cost of raw materials and labour, together with
attributable overheads based on the normal level
of activity
Net realisable value is based on estimated selling price less further costs to
completion and disposal. Slow moving and obsolete inventory is written off to
profit or loss. The charge is reviewed at each balance sheet date.
(g) Cash and cash equivalents
Cash and cash equivalents comprise cash balances, bank overdrafts and treasury
deposits for cash flow purposes. The Group has no long-term borrowings and any
available cash surpluses are placed on deposit.
(h) Impairment
The carrying amount of the Group's assets, other than deferred tax assets, are
reviewed at each balance sheet date to determine whether there is any
indication of impairment. If any such indication exists, the asset's
recoverable amount is estimated. Impairment losses are recognised in profit or
loss.
Reversals of impairment
Other than in respect of goodwill, an impairment loss is reversed if there has
been a change in the estimates used to determine the recoverable amount. An
impairment loss is reversed only to the extent that the asset's carrying
amount does not exceed the carrying amount that would have been determined,
net of depreciation or amortisation, if no impairment loss had been
recognised.
(i) Employee benefits
Share-based payment transactions
The Company provides share option schemes for Directors and for other members
of staff.
In accordance with IFRS 2 - Share-based Payments, the fair value of the
employee services received in exchange for the grant of options is recognised
as an expense to the income statement over the vesting period of the option
and the corresponding credit recognised to the Retained Earnings within
equity. The Black-Scholes option pricing model has been used for calculating
the fair value of the Group's share options. The Directors believe that this
model is the most suitable for calculating the fair value of the equity-based
share options.
The fair value of the options is determined excluding the impact of any
non-market vesting conditions. Non-market vesting conditions are included in
assumptions about the number of options that are expected to vest. At each
balance sheet date the Group revises its estimates of the number of option
awards that are expected to vest. The impact of the revision of original
estimates, if any, is recognised in the income statement, with a corresponding
adjustment to equity. No adjustment is made for failure to achieve market
vesting conditions providing all other vesting conditions are met.
Pension costs
The Group operates a defined contribution pension scheme. The assets of the
scheme are held separately from those of the Group in independently
administered funds. Contributions to the pension scheme are charged to the
income statement in the year in which they become payable.
Accrued holiday pay
Provision is made at each balance sheet date for holidays accrued but not
taken at the salary of the relevant employee at that date.
(j) Provisions
A provision is recognised in the balance sheet when the Group has a present
legal or constructive obligation as a result of a past event, and it is
probable that an outflow of economic benefits will be required to settle the
obligation. They are discounted at a pre-tax rate reflecting current market
assessments of the time value of money and risks specific to the liability.
(k) Revenue
Revenue is derived principally from the sale of goods and is measured at the
fair value of consideration received or receivable, after deducting discounts,
settlement discounts, rebates and is net of value added tax. The Group has
concluded that it is the principal in its revenue arrangements as it has
control of those goods before transferring them to the customer.
Sale of goods arises from sales of products to third parties and related
parties. Revenue from the sale of goods is recognised when the control of the
goods is transferred to the buyer. This occurs when the goods are transferred
to the customer in accordance with the terms of the trade contract. Before a
contract is entered into, customers are assessed using a credit reference
agency before credit is granted and where sufficient credit cannot be granted,
payment is required in advance of the goods being delivered and is held under
other creditors until the goods are delivered and the revenue is then
recognised.
Some goods sold by the group include warranties which require the group to
either replace or mend a defective product during the warranty period if the
goods fail to comply with agreed upon specifications. In accordance with IFRS
15, such warranties are not accounted for as separate performance obligations
and hence no revenue is attached to them. Instead, a provision is made for the
costs of satisfying the warranties in accordance with IAS 37 Provisions,
Contingent Liabilities and Contingent Assets. Extended warranties are not
offered to customers.
(l) Finance income
Finance income comprises interest receivable on funds invested.
(m) Corporation and deferred taxes
Tax on the profit or loss for the periods presented comprises current and
deferred tax.
Current tax
Current tax is the expected corporation tax payable on the taxable income for
the year, using rates and laws enacted or substantively enacted at the balance
sheet date, and any adjustment to tax payable in respect of previous years.
Deferred tax
Deferred tax is provided using the balance sheet liability method, using rates
and laws enacted or substantively enacted at the balance sheet date, providing
for temporary differences between the carrying amounts of assets and
liabilities for financial reporting purposes and the amounts used for taxation
purposes.
Temporary differences are not provided on goodwill that is not deductible for
tax purposes or on the initial recognition of assets or liabilities that
affect neither accounting nor taxable profit, to the extent that they will
probably not reverse in the foreseeable future. The amount of deferred tax
provided is based on the expected manner of realisation or settlement of the
carrying amount of assets and liabilities, using tax rates enacted or
substantively enacted at the balance sheet date.
A deferred tax asset is recognised only to the extent that it is probable that
future taxable profits will be available against which the asset can be
utilised. Deferred tax assets are reduced to the extent that it is no longer
probable that the related tax benefit will be realised.
Deferred tax assets and liabilities are offset when the Group has a legally
enforceable right to offset current tax assets and liabilities and the
deferred tax assets and liabilities relate to taxes levied by the same tax
authority on either:
· the same taxable group company; or
· different Group entities which intend either to settle current tax
assets and liabilities on a net basis, or to realise the assets and settle the
liabilities simultaneously, in each future period in which significant amounts
of deferred tax assets or liabilities are expected to be settled or recovered.
(n) Leased assets
All leases are accounted for by recognising a right-of-use asset and a lease
liability except for:
· Leases of low value assets; and
· Leases with a duration of twelve months or less.
Lease liabilities are measured at the present value of the contractual
payments due to the lessor over the lease term, with the discount rate
determined by reference to the rate inherent in the lease unless (as is
typically the case) this is not readily determinable, in which case the
Group's incremental borrowing rate on commencement of the lease is used.
Variable lease payments are only included in the measurement of the lease
liability if they depend on an index or rate. In such cases, the initial
measurement of the lease liability assumes the variable element will remain
unchanged throughout the lease term. Other variable lease payments are
expensed in the period to which they relate. On initial recognition, the
carrying value of the lease liability also includes:
· Amounts expected to be payable under any residual value guarantee;
· The exercise price of any purchase option granted in favour of the
Group if it is reasonably certain to assess that option;
· Any penalties payable for terminating the lease, if the term of the
lease has been estimated on the basis of termination option being exercised.
Right-of-use assets are initially measured at the amount of the lease
liability, reduced for any lease incentives received, and increased for:
· Lease payments made at or before commencement of the lease;
· Initial direct costs incurred; and
· The amount of any provision recognised where the Group is
contractually required to dismantle, remove or restore the leased asset
(typically leasehold dilapidations - see Note 18).
Subsequent to initial measurement lease liabilities increase as a result of
interest charged at a constant rate on the balance outstanding and are reduced
for lease payments made. Right-of-use assets are depreciated on a
straight-line basis over the remaining term of the lease or over the remaining
estimated useful life of the asset if, rarely, this is judged to be shorter
than the lease term.
When the Group revises its estimate of the term of any lease (because, for
example, it re-assesses the probability of a lessee extension or termination
option being exercised), it adjusts the carrying amount of the lease liability
to reflect the payments to make over the revised term, which are discounted at
the same discount rate that applied on lease commencement. The carrying value
of lease liabilities is similarly revised when the variable element of future
lease payments dependent on a rate or index is revised. In both cases
an equivalent adjustment is made to the carrying value of the right-of-use
asset, with the revised carrying amount being amortised over the remaining
(revised) lease term.
(o) Dividends
Dividends are recognised when they become legally payable. In the case of
interim dividends to equity shareholders, this is when paid. In the case of
final dividends, this is when approved by the shareholders at the AGM.
(p) Financial assets
The Group's financial assets include cash and cash equivalents and trade
receivables. All financial assets are recognised when the Group becomes party
of the contractual provisions if the instrument.
Trade receivables are recognised and carried at amortised cost less expected
credit loss. IFRS 9 requires the Group to recognise expected credit losses
('ECL') whereby expected losses as well as incurred losses are provided for.
The Group applies the simplified approach when determining ECL provisions for
trade receivables. In making the assessment of credit risk and estimating ECL
provisions, the Group uses reasonable and supportable information about past
events, current conditions and forecasts of future events and economic
conditions.
From time to time, the Group elects to renegotiate the terms of trade
receivables due from customers with which it has previously had a good trading
history. Such renegotiations will lead to changes in the timing of payments
rather than changes to the amounts owed, and if the revised present value of
cash flows is not significantly different from the carrying amount, no
impairment is recorded.
Cash and cash equivalents includes cash in hand, deposits held at call with
banks, other short term highly liquid investments with original maturities of
twelve months or less, such as short-term fixed deposits with banks, and bank
overdrafts. Bank overdrafts are shown on the face of the balance sheet.
(q) Financial liabilities
The Group holds only one class of financial liabilities, namely trade
payables. Trade payables and other short-term monetary liabilities are
initially recognised at fair value and subsequently carried at amortised cost.
(r) Treasury shares
Consideration paid or received for the purchase or sale of treasury shares is
recognised directly in Equity - see page 53. The cost of treasury shares held
is presented as a separate item ("Treasury shares"). Any excess of the
consideration received on the sale of treasury shares over the weighted
average cost of the shares sold is reflected in share premium.
(s) Government grants
The Group has took advantage of the Coronavirus Job Retention Scheme in 2021
and 2020 in the UK. This income was recognised in the period to which the
furloughed staff costs related to and only when it was reasonably likely for
the conditions to be met. The payroll liability had been incurred by the Group
and therefore had met the conditions to claim for the payroll period. All
other conditions had been satisfied. The Group elected to net the grant income
against the costs to which it related i.e., wages and salaries.
(t) Exceptional items
Material items of income or expense that are deemed exceptional due to their
size or incidence are disclosed separately in the Consolidated Income
Statement.
2 Critical accounting estimates and judgements
The Group makes estimates and judgements regarding the future. Estimates and
judgements are continually evaluated based on historical experience and other
factors, including expectations of future events that are believed to be
reasonable under the circumstances. In the future, actual experience may
differ from these estimates and assumptions.
The judgements and estimates that have a significant risk of causing a
material adjustment to the carrying amounts of assets and liabilities within
the next financial year are discussed below.
Estimates
Valuation of inventory
The Group reviews its inventory on a regular basis and, where appropriate,
makes provision for slow moving and obsolete stock based on estimates of
future sales activity. The estimate of the future sales activity will be based
on both historical experience and expected outcomes based on knowledge of the
markets in which the Group operates (see note 14 of the Consolidated Financial
Statements). The Group also calculates an amount representing wages and
overheads for direct labour and includes an estimate of this amount in the
valuation of inventory.
Revenue recognition
The timing of revenue recognition is a significant area of risk to accurate
financial reporting and the Group also ensures that accurate estimates of
credit note provisions and warranty provisions are made.
Depreciation of property, plant and equipment and right-of-use assets
Depreciation is provided so as to write down the assets to their residual
values over their estimated useful lives as set out in note 1 (d). The
selection of these estimated lives requires the exercise of management
judgement.
Useful lives of intangible assets
Intangible assets are amortised over their useful lives. Useful lives are
based on the management's estimates of the period that the assets will
generate revenue, which are periodically reviewed for continued
appropriateness. Changes to estimates can result in significant variations in
the carrying value and amounts charged to the consolidated income statement in
specific periods (see notes 1 (e) and 11 of the Consolidated Financial
Statements).
Expected credit losses and asset impairment
Expected credit losses are assessed under IFRS 9 using reasonable information
about past events and current conditions and forecasts of future events. Asset
impairment considers the likely returns from financial assets owned by the
Group and their recoverability, based on market values and management's
judgement of any other relevant factors.
Judgements
Recognition of deferred tax asset
The extent to which deferred taxation assets can be recognised is based on an
assessment of the probability that future taxable income will be available
against which the deductible temporary differences and taxation loss carry -
forward amounts can be utilised. The deferred tax asset of £750k (2021:
£278k) has been recognised on the basis that the Group is forecasting
sufficient levels of profits in future periods.
3 Revenue and segmental information
In identifying its operating segments, management generally follows the
Group's reporting lines, which represent the main geographic markets in which
the Group operates. The segment reporting below is shown in a manner
consistent with the internal reporting provided to the Board, which is the
Chief Operating Decision Maker (CODM). These operating segments are monitored,
and strategic decisions are made on the basis of segment operating results.
The Group operates in four main business segments which are:
Segment Activities undertaken include:
United Kingdom Sales of passive and powered ventilation products to housebuilders, electrical
contractors and window and door manufacturers. In addition to this, it is a
leading supplier of window and door hardware
South Korea Sales of passive ventilation products to construction companies
North America Sales of passive ventilation products to window and door manufacturers
All other 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:
2022 2021
£'000 £'000
Deferred Revenue at beginning of year 443 478
Released in the year (443) (478)
Provided for in the year 396 443
Deferred Revenue at end of year 396 443
The deferred revenue noted above is the Group's only contract liability and is
shown within Other Payables.
The Group has no material contract assets.
3 Revenue and segmental information (continued)
The total assets for the segments represent the consolidated total assets
attributable to these reporting segments. Parent company results and
consolidation adjustments reconciling the segmental results and total assets
to the consolidated financial statements, are included within the United
Kingdom segment figures stated in the remainder of this note 3.
Operating segment
For the year ended United South North All other 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 profit includes the Group's share of the profits 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 5,355 - 46 3,061 - 8,461
3 Revenue and segmental information (continued)
Operating segment
For the year ended United South North All other Consolidated
30 September 2021 Kingdom Korea America countries
£'000 £'000 £'000 £'000 £'000
Segment revenue 16,368 3,578 629 3,150 23,725
Inter-segment revenue (313) - - - (313)
Total Revenue 16,055 3,578 629 3,150 23,412
Segment profit/(loss) 1,026 (41) 52 38 1,075
Tax expense (72)
Profit for the year 1,003
Depreciation and amortisation 809 74 - - 883
Total assets 17,181 4,592 193 - 21,966
Total assets include: 2,681 - - - 2,681
Investments in associates
Additions to non-current assets 893 21 - - 914
(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 £28,000.
Sales to BTS of £3.58m represented 15% of Group Revenue (2020: £4.92m -
24%). There are no other concentrations of revenue of 10% or more during the
year (see Note 24 - Related party transactions).
IFRS 8 requires entity wide disclosures to be made about the regions in which
it earns its revenues and holds its non-current assets which are shown below.
For the year ended United Europe USA and Canada South All other Total
30 September 2021 Kingdom Korea regions
Revenues £'000 £'000 £'000 £'000 £'000 £'000
By entities' country of domicile 19,205 - 629 3,578 - 23,412
By country from which derived 16,055 3,088 629 3,578 62 23,412
Non-current assets
By entities' country of domicile 4,996 - 32 2,878 - 7,906
Information about the Group's products
Within geographical segments the Directors also monitor the revenue
performance of the Group within its two identified business streams. The
Group's operations are separated between trickle ventilation and window and
door hardware products and mechanical ventilation products. The following
table provides an analysis of the Group's external revenue, irrespective of
the geographical region of sale.
2022 2021
£'000 £'000
Trickle ventilation and window and door hardware products 13,586 14,672
Mechanical ventilation products 8,501 8,740
Revenue 22,087 23,412
4 Directors and employees
Group Company
2022 2021 2022 2021
Staff costs, including Directors, were as follows: £'000 £'000 £'000 £'000
Wages and salaries 6,384 6,155 363 527
Grant income - (8) - -
Wages and salaries after Government grant 6,384 6,147 363 527
Employer's social security costs and similar taxes 664 604 56 58
Defined contribution pension cost 564 495 10 14
Share based payment expense - equity settled 38 34 - 34
7,650 7,280 429 633
Grant income represents amounts claimed under coronavirus job retention
scheme.
Group Company
2022 2021 2022 2021
The average monthly number of employees during Number Number Number Number
the year was as follows:
Manufacturing 137 133 - -
Sales, marketing, and administration 72 69 5 5
209 202 5 5
Details of Directors' emoluments, pension contributions and interests in share
options are given in the Directors' Remuneration Report set out on pages 33 to
36.
5 Finance income and expense
Finance income Group Company
2022 2021 2022 2021
£'000 £'000 £'000 £'000
Bank interest receivable on short term deposits 9 - 1 -
Finance expense Group Company
2022 2021 2022 2021
£'000 £'000 £'000 £'000
Interest expense on lease liabilities 16 16 - -
6 Loss before tax (2021: profit)
2022 2021
£'000 £'000
This is arrived at after charging / (crediting):
Depreciation of property, plant & equipment 518 479
Depreciation of right-of-use assets 232 164
Amortisation of intangible 298 240
assets
Research and development expenditure written off 629 509
Short term rentals - vehicles and plant & equipment 53 30
Foreign exchange (gain) / loss (109) 66
Share-based payment expense 38 34
Profit on disposal of property, plant & equipment 19 7
Auditors' remuneration:
- for the audit of these accounts 20 14
- for the audit of the accounts of the Company's subsidiaries 110 85
- for the audit of the accounts of the Group's associate 13 17
- non-audit services - comprising other assurance services - 1
7 Tax credit / (expense)
2022 2021
Current income tax: £'000 £'000
Corporation tax expense - (22)
Adjustment in respect of prior - -
years
- (22)
Deferred tax:
Origination and reversal of temporary differences Note 16 410 (75)
Effect of rate change on opening balances Note 16 - 25
Income tax credit / (expense) 410 (72)
2022 2021
The charge for the year can be reconciled to the profit £'000 £'000
per the income statement as
follows:
(Loss) / profit before tax (953) 1,075
Effect of:
Expected tax credit based on the standard rate of
Corporation tax in the UK of 19% (2021: 19%) (181) (204)
Additional deduction for R&D expenditure 189 167
Effect of Associate's results reported net of tax 33 (5)
Expenses deductible for tax purposes 7 (8)
Difference in overseas tax rates - (22)
Impact of deferred tax assets not recognised 384 -
Other adjustments (22) -
Income tax credit / (expense) 410 (72)
The tax rate in the United Kingdom, being the primary economic environment in
which the Group conducts its business is 19% from 1 April 2017. The rate is
due to change to 25% from 1 April 2023.
8 Dividends
2022 2021
£'000 £'000
Final 2021 dividend of 3.00 pence (2020: 2.00 pence) per ordinary
share proposed and paid during the year relating to the 335 223
previous year's results
Interim dividend of 1.50 pence (2021: 1.50 pence) per 167 167
ordinary
share paid during the
year
502 390
The Directors are proposing a final dividend of 0.5 pence (2021: 3.0 pence)
per share. This will result in a final dividend totalling £56,094 (2021:
£334,313), subject to approval by the shareholders at the Annual General
Meeting. This dividend has not been accrued at the balance sheet date.
9 Earnings per ordinary share
The calculation of the basic and diluted earnings per share is based on the
following data:
2022 2021
£'000 £'000
Numerator
Earnings for the purposes of basic earnings per share being
earnings after tax attributable to members of Titon Holdings Plc (436) 1,028
Denominator Number Number
Weighted average number of ordinary shares for the purposes of basic
earnings per share 11,196,627 11,124,517
Effect of dilutive potential ordinary shares: share options 18,173 74,610
Weighted average number of ordinary shares for the purposes of diluted 11,214,800 11,199,127
earnings per share
Earnings per share (pence)
Basic (3.89p) 9.24p
Diluted (3.89p) 9.18p
The total number of options in issue is also disclosed in note 23.
10 Property, plant and equipment
Group Freehold Improvements Plant Total
land and to leasehold and Motor
buildings property equipment vehicles
Cost £'000 £'000 £'000 £'000 £'000
At 1 October 2020 3,455 193 8,197 260 12,105
Additions - - 426 76 502
Disposals - - (70) (48) (118)
Foreign exchange revaluation - (2) (41) - (43)
At 1 October 2021 3,455 191 8,512 288 12,446
Additions - - 339 47 386
Disposals - - (40) (66) (106)
Foreign exchange revaluation - - - - -
At 30 September 2022 3,455 191 8,811 269 12,726
Depreciation
At 1 October 2020 1,554 47 6,848 187 8,636
Charge for the year 64 84 236 95 479
Disposals - - (70) (40) (110)
Foreign exchange revaluation - (1) (34) - (35)
At 1 October 2021 1,618 130 6,980 242 8,970
Charge for the year 64 (19) 430 43 518
Disposals - - (28) (54) (82)
Foreign exchange revaluation - (1) - - (1)
At 30 September 2022 1,682 110 7,382 231 9,405
Net book value
At 30 September 2022 1,773 81 1,429 38 3.321
At 30 September 2021 1,837 61 1,532 46 3,476
At 1 October 2020 1,901 146 1,349 73 3,469
The Directors are not aware of any events or changes in circumstances during
the year which would have a significant impact on the carrying value of the
Group's property, plant and equipment at the balance sheet date.
At 30 September 2022, the Group had entered into contractual commitments for
the acquisition of plant and equipment amounting to £83,000 (2021:
£116,000).
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 2020 662 25 336 1,023
Additions - - 51 51
Disposals (103) - (9) (112)
Foreign exchange revaluation (9) - (8) (17)
At 1 October 2021 550 25 370 945
Additions 85 47 106 238
Disposals (85) - (40) (125)
Foreign exchange revaluation - - - -
At 30 September 2022 550 72 436 1,058
Depreciation
At 1 October 2020 133 4 114 251
Charge for the year 8 5 151 164
Disposals - - (9) (9)
Foreign exchange revaluation (4) - (3) (7)
At 1 October 2021 137 9 253 399
Charge for the year 115 10 107 232
Disposals (85) - (40) (125)
Foreign exchange revaluation (1) - - (1)
At 30 September 2022 166 19 320 505
Net book value 384 53 116 553
At 30 September 2022
At 30 September 2021 413 16 117 546
At 30 September 2022, the Group had entered into contractual commitments for
the acquisition of motor vehicles under finance leases amounting to £119,000
(2021: £182,000).
10 Property, plant and equipment (continued)
Company
The Company has no right-of-use assets (2020: £nil)
Company: property and motor vehicles Freehold Total
land and Motor
buildings vehicles
Cost £'000 £'000 £'000
At 1 October 2020 3,455 52 3,507
Additions - - -
Disposals - (25) (25)
At 1 October 2021 3,455 27 3,482
Additions - - -
Disposals - - -
At 30 September 2022 3,455 27 3,482
Depreciation
At 1 October 2020 1,554 43 1,597
Charge for the year 65 4 69
Disposals - (20) (20)
At 1 October 2021 1,619 27 1,646
Charge for the year 63 - 63
Disposals - - -
At 30 September 2022 1,682 27 1,709
Net book value
at 30 September 2022 1,773 - 1,773
At 30 September 2021 1,836 - 1,836
At 1 October 2020 1,901 9 1,910
11 Intangible assets
Group Computer Development Goodwill Assets under development Total
software costs Patents
(internally
generated)
Cost £'000 £'000 £'000 £'000 £'000 £'000
At 1 October 2020 805 1,082 78 179 257 2,401
Additions - 152 - 260 - 412
Disposals - - - - - -
Foreign exchange revaluation - - - - (1) (1)
At 1 October 2021 805 1,234 78 439 256 2,812
Additions 595 130 - (439) 2 288
At 30 September 2022 1,400 1,364 78 - 258 3,100
Amortisation
At 1 October 2020 611 786 - - 251 1,648
Charge for the year 87 151 - - 2 240
Disposals - - - - - -
Foreign exchange revaluation - - - (1)
At 1 October 2021 698 937 - - 252 1,887
Charge for the year 148 149 - - 1 298
At 30 September 2022 846 1,086 - - 253 2,185
Net book value
at 30 September 2022 554 278 78 - 5 915
At 30 September 2021 107 297 78 439 4 925
At 1 October 2020 194 296 78 179 6 753
All assets have an average useful life of 3.6 years (2021: 3.5 years) except for Goodwill which has an indefinite useful life.
Included with Computer Software is the Group's new Enterprise Resource
Planning software system which was operational from 1 May 2022 and was
transferred from assets under development in the year. The carrying value of
the new system at 30 September 2022 is £491,000 with a remaining amortisation
period of 4.6 years.
Additionally, included within Computer Software is the Group's old Enterprise
Resource Planning software system which has a carrying value of £nil at 30
September 2022 (2021: £40,000) and is fully amortised (2021: 0.9 years
amortisation remaining).
The Directors are not aware of any events or changes in circumstances during
the year which would have a significant impact on the carrying value of the
Group's intangible assets at the balance sheet date.
Company
The Company has no intangible assets (2021: £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 2021 and 2022
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 2022 2021
£'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 2021 and 2022
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 2022 2021
£'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 2022 2021
£'000 £'000
Current assets 5,760 5,636
Non-current assets 470 276
Total Assets 6,230 5,912
Current liabilities 546 792
Non-current liabilities 148 51
Total Liabilities 694 843
Net Assets 5,536 5,069
Group 49% share of Net Assets 2,712 2,484
Group investment in Goodwill 197 197
Group share of investment 2,909 2,681
For the year ended 30 September 2022 2021
£'000 £'000
Revenue 4,714 5,388
Profit / (loss) after tax 173 (28)
BTS has been included based on audited financial statements drawn up for the
year to 30 September 2022. Transactions between it and the Group are set out
in note 24.
The Group's investment in BTS at 30 September 2022 includes £197,000 (2021:
£197,000) of goodwill.
14 Inventories
Group 2022 2021
£'000 £'000
Raw materials and consumables 2,733 1,747
Work in progress 176 710
Finished goods and goods for resale 3,662 2,585
6,571 5,042
The carrying value of inventory represents cost less appropriate provisions.
During the year there was a net debit of £151,706 (2021: net debit of
£25,000) to the Consolidated Income Statement in relation to the inventory
provisions. The movements in the inventory write-down are included within cost
of sales in the Consolidated Income Statement. The value of inventory that has
been recognised in cost of sales over the year is £16,270,000 (2021:
£16,061,000).
Company
The Company had no inventories at 30 September 2022 (2021: £nil).
15 Trade and other receivables
Group Company
2022 2021 2022 2021
£'000 £'000 £'000 £'000
Trade receivables 4,566 3,624 1 1
Less: Impairment Allowance (209) (86) - -
Trade receivables - net 4,357 3,538 1 1
Related parties receivables 180 310 4,768 3,815
Less: provision for impairment - - - -
Related parties receivables (See Note 24) 180 310 4,768 3,816
Other receivables 214 197 - 2
Prepayments and accrued income 169 179 - -
Total trade and other receivables 4,920 4,224 4,769 3,818
Other than the amounts due from related parties there were no significant
concentrations of credit risk at either 30 September 2022 or 30 September
2021.
The average credit period taken on sale of goods by the Group's trade debtors
is 58 days (2021: 50 days).
Trade receivables included in the Statement of Financial Position are stated
net of expected credit loss (ECL) provisions which have been calculated using
a provision matrix grouping trade receivables on the basis of their shared
credit risk characteristics. An analysis of the provision held against trade
debtors is set out below:
Group Group
2022 2022 2021 2021
£'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 3,058 (29) 2,655 (17)
Up to 30 days past due 1,047 (56) 1,022 (19)
Up to 60 days past due 259 (53) 92 (14)
Up to 90 days past due 173 (71) 61 (10)
Over 90 days past due - - 99 (26)
4,537 (209) 3,929 (86)
Of the £209,000 ECL provision, £nil (2021: £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 2022 that the debtors will not
meet their payment obligations in respect of the amount of trade and related
party receivables recognised in the balance sheet that are overdue and
unprovided. The proportion of trade debtors at 30 September 2022 that are
overdue for payment is 37% (2021: 32%).
The carrying amount of a financial asset is reduced by the impairment loss
directly for all financial assets with the exception of trade receivables,
where the carrying amount is reduced through the use of a provision account.
When a trade receivable is considered uncollectible, based on its age and
likely recoverability, it is written off against the provision account.
Subsequent recoveries of amounts previously written off are credited against
the provision account. Changes in the carrying amount of the provision account
are recognised in the income statement.
15 Trade and other receivables (continued)
Group
Movements on the provision for impairment of trade and 2022 2021
related party receivables are as follows:
£'000 £'000
At the beginning of the year 86 114
Provision for receivables impairment 209 86
Receivables written off during the year as uncollectible (29) (6)
Unused amounts reversed (57) (108)
At the end of the year 209 86
16 Deferred tax
Group
Deferred tax is calculated in full on temporary differences under the
liability method using a tax rate of 25% (2021: 25.0%). The movement on the
deferred tax account is as shown below:
Total 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
A deferred tax asset of £384k (2021: £nil) has not been recognised, which is
in respect of further losses of £1,537k (2021: £nil) at the substantively
enacted rate of 25%.
16 Deferred tax (continued)
Total deferred tax at 1 October 2020 Effect of rate change on opening balances Foreign exchange movement Credited/ Total Asset Asset
(expensed) to deferred tax at 30 2021 2021
£'000 £'000 Income Statement September
2021 UK Non-UK
£'000 £'000
£'000
£'000 £'000
UK accelerated capital allowances (268) (84) - (55) (407) (407) -
Non-UK accelerated capital allowances 2 - - - 2 - 2
UK other temporary and deductible differences 47 16 -- 14 77 77 -
Non-UK other temporary and deductible differences 31 - - (1) 30 - 30
UK available losses 355 93 - 9 457 457 -
Non-UK available losses 166 - (5) (42) 119 - 119
Total deferred tax 333 25 (5) (75) 278 127 151
Company
Deferred tax is calculated in full on timing differences under the liability
method using a tax rate of 25% (2021: 25%). The movement on the deferred tax
account is as shown below:
Total deferred tax at 1 October 2021 Effect of Credited / (expensed) 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
Total deferred tax at 1 October 2020 Effect of Credited to Total Liability
rate change on opening balances Income Statement deferred tax at 30 2021
£'000 September
2021 UK
£'000 £'000
£'000
£'000
UK Accelerated capital allowances (242) (77) 16 (303) (303)
UK other temporary and deductible differences 10 3 9 22 22
UK available losses - - 7 7 7
Total deferred tax (232) (74) 32 (274) (274)
17 Trade and other payables - current
Group Company
2022 2021 2022 2021
£'000 £'000 £'000 £'000
Trade payables 3,121 2,472 (4) -
Other payables 722 386 - -
Other tax and social security taxes 286 418 - -
Accruals and deferred income 922 1,278 139 168
5,051 4,554 135 168
Group trade payables and accruals principally comprise amounts outstanding for
trade purchases and ongoing costs. Year-end Group trade creditors represent 52
days (2021: 62 days) average purchases. The contractual maturities of these
liabilities are from 30 days up to approximately 60 days.
The Directors consider that the carrying amount of trade payables is
approximate to their fair value.
18 Leases
Nature of leasing activities (in the capacity as lessee)
The group leases a number of properties in the jurisdictions from which it
operates. In some jurisdictions it is customary for lease contracts to provide
for payments to increase each year by inflation and in others to be reset
periodically to market rental rates. In some jurisdictions property leases the
periodic rent is fixed over the lease term.
The group also leases certain items of plant and equipment. In some contracts
for services with distributors, those contracts contain a lease of vehicles.
Leases of plant, equipment and vehicles comprise only fixed payments over the
lease terms.
The group sometimes negotiates break clauses in its property leases. On a
case-by-case basis, the group will consider whether the absence of a break
clause would expose the group to excessive risk. Typically factors considered
in deciding to negotiate a break clause include:
· the length of the lease term;
· the economic stability of the environment in which the property is
located; and
· whether the location represents a new area of operations for the group
At 30 September 2022 the carrying amounts of lease liabilities are not reduced
by the amount of payments that would be avoided from exercising break clauses
as there are no break clauses available.
Right-of-Use Assets Freehold Total
land and Plant and equipment Motor
buildings vehicles
£'000 £'000 £'000 £'000
At 1 October 2021 413 16 117 546
Additions 85 47 106 238
Amortisation (115) (10) (107) (232)
Disposals - - - -
Foreign exchange revaluation 1 - - 1
At 30 September 2022 384 53 116 553
Lease Liabilities £'000
At 1 October 2021 595
Additions 238
Interest expense 16
Lease payments (242)
Foreign exchange revaluation 3
At 30 September 2022 610
18 Leases (continued)
Lease liabilities Up to 1 year Between 1 and 2 years Between 2 and 5 years Over 5 years Total
£'000 £'000 £'000 £'000 £'000
At 30 September 2021 193 160 212 30 595
At 30 September 2022 232 145 233 - 610
Lease expense 2022
£'000
Short term lease expense 53
Low value lease expense -
Aggregate undiscounted commitments for short term leases -
53
19 Share capital
2022 2021
Authorised £'000 £'000
13,600,000 ordinary shares of 10p each 1,360 1,360
The Company's issued and fully paid ordinary shares of 10p during the year is:
2022 2022 2021 2021
Number £'000 Number £'000
At the beginning of the year 11,193,750 1,119 11,133,750 1,113
Share options exercised during the year 25,000 3 60,000 6
At the end of the year 11,218,750 1,122 11,193,750 1,119
Share premium
2022 2021
£'000 £'000
At the beginning of the year 1,077 1,077
Share options exercised during the year 14 -
At the end of the year 1,091 1,077
Treasury shares held by the Group
2022 2022 2021 2021
Number £'000 Number £'000
At the beginning of the year 50,000 27 50,000 27
Transfer of treasury Shares (50,000) (27) - -
At the end of the year - - 50,000 27
Treasury shares held by the Group were acquired in July 2014. All Treasury
shares were disposed of during the year to satisfy an exercise of share
options.
19 Share capital (continued)
Share options
Options have been granted over the following number of ordinary shares which
were outstanding:
Date granted Exercise Number of Exercisable between
price shares
15.01.14 58.0p 65,000 15.01.17 and 15.01.24
30.01.18 156.5p 132,000 30.01.21 and 30.01.28
15.07.21 138.5p 90,000 15.07.24 And 15.07.31
01.07.22 95.0p 150,000 01.07.25 and 01.07.32
At 30 September 2022 437,000
At 30 September 2021 615,000
No share options were exercised between 30 September 2022 and 25 January 2023.
20 Cash and cash equivalents
Financial assets
The Group has floating rate financial assets which comprise treasury deposits,
cash to finance its operations together with the retained profits generated by
operating companies (refer to the 'Financial Assets' note 1(p) on page 61 for
further details).
The Group has no long-term borrowings and any available cash surpluses are
placed on deposit. The Group uses cash on deposit to manage short term
liquidity risks which may arise.
The Group's floating rate financial assets (see below) at 30 September were:
Group Company
2022 2021 2022 2021
Currency £'000 £'000 £'000 £'000
Sterling 1,374 3,882 4 1,324
US Dollar 82 126 - -
Euro 196 532 - -
South Korean Won 74 254 - -
1,726 4,794 4 1,324
The Sterling financial assets comprises cash held on current account with
banks.
The Group's cash and floating rate financial assets at 30 September comprise:
Group Company
2022 2021 2022 2021
£'000 £'000 £'000 £'000
Bank current accounts 1,726 4,794 4 1,324
The Group had a floating term deposit of £1m with the bank at 30 September
2022 (2021: £nil).
Financial liabilities
The Group had no floating rate financial liabilities at 30 September 2022
(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 28, and the
Report on Risk Management on pages 23 to 26 describe the Group's objectives,
policies and processes for managing those risks. Further quantitative
information in respect of these risks is presented throughout these financial
statements.
There have been no substantive changes in the Group's exposure to financial
instrument risks, its objectives, policies and processes for managing those
risks from previous periods unless otherwise stated in this note.
General objectives, policies and processes
The Board has overall responsibility for the determination of the Group's risk
management objectives and policies and, whilst retaining ultimate
responsibility for them, it has delegated the authority for designing and
operating processes that ensure the effective implementation of the objectives
and policies to the Group's finance function. The Audit Committee reviews and
reports to the Board on the effectiveness of policies and processes put in
place.
The overall objective of the Board is to set policies that seek to reduce risk
as far as possible without unduly affecting the Group's competitiveness and
flexibility. Further details regarding these policies are set out on pages 41
and 42.
Principal financial instruments
The principal financial instruments used by the Group, from which financial
instrument risks arise are trade receivables, cash at bank, bank overdrafts,
trade and other payables and loans to related parties (see Notes 15, 17 and
20).
Credit risk
Credit risk is the risk of financial loss to the Group if a customer,
associate company or counterparty to a financial instrument fails to meet its
contractual obligations. The Group is mainly exposed to credit risk from
credit sales. It is Group policy, implemented locally, to assess the credit
risk of new customers before entering contracts along with local business
practices. The Group is not reliant on any key customers.
The Group's finance function has established a credit policy under which each
new customer is analysed individually for creditworthiness before the Group's
standard payment and delivery terms and conditions are offered. The Group's
review includes external ratings, when available, and trade references.
Purchase limits are established for each customer, which represents the
maximum open amount without requiring senior management's approval. These
limits are reviewed on an on-going basis. Customers that fail to meet the
Group's benchmark creditworthiness may transact with the Group on a prepayment
basis.
Credit risk also arises from cash and cash equivalents and deposits with
banks. The Group has cash and cash equivalents with banks with a minimum long
term "A" rating.
Quantitative disclosures of the credit risk exposure in relation to Trade and
other receivables are provided in note 15.
Liquidity risk
Liquidity risk arises from the Group's management of working capital in that
the Group may encounter difficulty in meeting its financial obligations as
they fall due. The Group's policy is to ensure that it will always have
sufficient cash to allow it to meet its liabilities when they become due (see
Note 17). To achieve this aim, it seeks to maintain cash balances to meet
expected requirements for a period of 90 days or longer. The Board receives
cash flow projections as well as information regarding cash balances. At the
balance sheet date, these projections indicated that the Group expected to
have sufficient liquid resources to meet its obligations under all reasonably
expected circumstances.
The liquidity risk of each Group entity is managed locally. Each operation has
a facility with the Group, the amount of the facility being based on budgets.
The budgets are set locally and agreed by the Board in advance, enabling the
Group's cash requirements to be anticipated. Where facilities of Group
entities need to be increased, approval must be sought from the Board.
Foreign exchange risk
Foreign exchange risk arises because the Group has operations located in
various parts of the world whose functional currency is not the same as the
functional currency in which the Group companies are operating. Although its
global market penetration reduces the Group's operational risk in that it has
diversified into several markets, the Group's net assets arising from such
overseas operations are exposed to currency risk resulting in gains or losses
on retranslation into Sterling. Only in exceptional circumstances would the
Group consider hedging its net investments in overseas operations as generally
it does not consider that the reduction in foreign currency exposure warrants
the cash flow risk created from such hedging techniques.
21 Financial instruments - risk management (continued)
Foreign exchange risk also arises when individual Group entities enter into
transactions denominated in a currency other than their functional currency.
The Group's policy is, where possible, to allow Group entities to settle
liabilities denominated in their functional currency (primarily Sterling, US
Dollar or South Korean Won) with the cash generated from their own operations
in that currency. Where Group entities have liabilities denominated in a
currency other than their functional currency (and have insufficient reserves
of that currency to settle them) cash already denominated in that currency
will, where possible, be transferred from elsewhere within the Group.
The Group has two overseas subsidiaries in the USA and South Korea. Their
revenues and expenses, other than those incurred with the UK business, are
primarily denominated in their functional currency. The Board does not believe
that there are any significant risks arising from the movements in exchange
rates with these companies due to the insignificance to the Group of Titon
Inc.'s net assets and the long-term nature of the Group's investment in Titon
Korea.
The UK businesses make purchases from approximately twenty overseas suppliers
who invoice in the local currency of that supplier. This, in addition to the
Euro and US Dollar cash balances held in the UK and the 7% (2021:11%) of sales
from the UK businesses not invoiced in Sterling, gives rise to foreign
currency exposure which is detailed in the table below.
As of 30 September the Group's UK net exposure to foreign exchange risk was as
follows:
Net foreign currency financial assets / (liabilities) 2022 2021
£'000 £'000
Euro (587) 72
US Dollar 686 163
Total net exposure 99 235
The effect of a 10% weakening of the Euro and the US Dollar against Sterling
at the reporting date of 30 September 2022 on these denominated trade and
other receivables, trade and other payables and cash balances carried at that
date would, had all other variables held constant, have resulted in a decrease
in pre-tax profit for the year and decrease of net assets of £9,000 (2021:
decrease in liability of £21,000). A 10% strengthening in the exchange rate
would, on the same basis, have increased pre-tax profit and increased net
assets by £10,000 (2021: increase of £23,000).
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 (2021: £40,000).
23 Share-based payments
Equity settled share option schemes
The Group provides share option schemes for Directors and for other members of
staff.
There are presently three equity settled share option schemes; one HMRC
approved and one unapproved in which employees may be invited to participate,
which were both introduced in March 2010. The third scheme was introduced in
July 2021 and an additional tranche was introduced in July 2022 and is HMRC
registered. The exercise of options granted under these schemes is dependent
upon the growth in the earnings per share of the Group, over any three
consecutive financial years following the date of grant, exceeding the growth
in the retail price index over the same period by at least 9 per cent.
The vesting period of all share option schemes is three years. If the options
remain unexercised after a period of ten years from the date of grant, or on
an employee leaving the Group, the options expire.
In the year to 30 September 2022 150,000 shares were granted (2021: 260,000).
23 Share-based payments (continued)
Details of the share options granted and exercised during the year and the
assumptions used in the Black-Scholes model for each share-based payment are
as follows:
Date of share option grant 09/06/11 15/01/14 30/01/21 15/07/21 01/07/22 Number
of share
options
Exercise price (pence) 48.0 58.0 156.5 138.5 95.0
Number of share options granted initially 259,950 320,000 205,000 260,000 150,000
Number of share options outstanding at 01/10/20 10,000 200,000 205,000 - - 415,000
Share options granted - - - 260,000 - 260,000
Share options exercised (10,000) (50,000) - - - (60,000)
Number of share options outstanding at 30/09/21 - 150,000 205,000 260,000 - 615,000
Share options lapsed - (10,000) (73,000) (170,000) 150,000 (103,000)
Share options exercised - (75,000) - - - (75,000)
Number of share options outstanding at 30/09/22 - 65,000 132,000 90,000 150,000 437,000
The inputs to the Black-Scholes pricing model are:
Expected volatility % 111 116 88 97 97
Expected option life (years) 6 6 6 6 6
Risk free rate % 2.50 2.18 1.13 0.46 0.46
Expected dividend yield % 5 5 3 3 3
During the year no additional share options, included in the table above, met
the conditions of exercise (2021: 207,000).
At the end of the financial year 64,000 share options met the conditions of
exercise and have a weighted average exercise price of 58p (2021: 207,000 at
57.5p). The 437,000. share options outstanding at 30 September 2022 had a
weighted average price of 1.134p (2021: 615,000 at 124.9p) and a weighted
average remaining contractual life of 7.13 years (2021: 6.8 years).
The share price at 30 September 2022 was 81.0p (2021: 115.0p). The average
market price during the year was 95.0p (2021: 96.8p).
The Group uses a Black-Scholes pricing model to determine the annual fair
value charge for its share-based payments. Expected volatility is based on
historical volatility over the last six years' data of the Company. The
calculated fair values of the share option awards are adjusted to reflect
actual and expected vesting levels.
In accordance with IFRS 2, the fair value of equity-settled share-based
payments to employees is determined at the date of grant and is expensed on a
straight-line basis over the vesting period on the Group's estimate of shares
that will eventually vest. A charge of £23,000 was recognised in respect of
share options in the year (2021: £34,000) of which £7,000 (2021: £11,000)
was the charge made in respect of key management personnel.
24 Related party transactions
Transactions between the Company and its subsidiaries, which are related
parties, have been eliminated on consolidation and are not disclosed in this
note.
Related party transactions are made on terms equivalent to those that prevail
in arm's length transactions only where such terms can be substantiated.
During the year the Company recharged management service fees and rent to
other wholly owned Group members totalling £777,000 (2021: £739,000). See
Note 15 for the related party balances at 30 September 2022.
Titon Korea Co. Ltd., the Company's 51% owned subsidiary, paid a dividend
during the year to its shareholders amounting to £nil (2021: £798,000). Of
this amount, £nil (2021: £407,000) before withholding tax, was paid to the
Company with the other £nil (2021: £391,000) being paid to the
non-controlling interests.
Transactions for the year between the Group companies and the associate
company, which is a related party, were as follows:
Sales of goods Amount owed by
related party
2022 2021 2022 2021
£'000 £'000 £'000 £'000
Browntech Sales Co. Ltd 3,037 3,577 180 310
Trading debts between subsidiaries and BTS are created only when the ultimate
customer has accepted the successful inclusion of our products into buildings.
There have been no transactions between the Company and BTS during the year.
Key management who hold the authority and responsibility for planning,
directing and controlling activities of the Group are comprised solely of the
Directors. Aside from compensation arrangements including share options, there
were no transactions, agreements or other arrangements, direct or indirect,
during the year in which the Directors had any interest, The Directors'
remuneration is disclosed in the Remuneration Report on page 34 of this
document.
Remuneration paid to key management personnel during the year was as follows:
2022 2021
£'000 £'000
Short term benefits 835 897
Post-employment benefits 75 55
Share based payments 7 4
917 956
The Non-executive Directors received fees for their services to the Titon
Holdings Plc Board as disclosed in the Directors' Remuneration Report.
25 Events after the reporting date
There have been no events after the reporting date that materially affect the
position of the Group.
26 Exceptional items
2022 2021
£'000 £'000
One off cost of living bonus to all employees 89 -
Restructuring costs 260 -
Administrative costs - exceptional 349 -
Five Year Summary
Summarised consolidated results
2022 2021 2020 2019 2018
£'000 £'000 £'000 £'000 £'000
Revenue 22,087 23,412 20,652 27,157 29,774
Gross profit 5,817 7,350 5,654 8,198 8,604
Operating (loss) / profit (1,119) 1,119 (39) 1,629 2,016
Share of profit / (loss) from associate 173 (28) 83 329 741
(Loss) / profit before tax (953) 1,075 18 1,970 2,770
Income tax credit / (expense) 410 (72) 104 (186) (315)
(Loss) / profit after tax (543) 1,003 122 1,784 2,455
Dividends 502 390 332 526 489
Basic (loss) / earnings per share (3.89p) 9.24p 0.52p 12.84p 18.21p
Assets Employed
Property, plant & equipment 3,321 3,476 3,469 3,799 3,655
Net cash and cash equivalents 1,726 4,794 5,572 4,587 3,415
Net current assets 7,588 9,313 9,138 10,112 9,838
Financed by
Shareholders' funds: all equity 15,646 16,414 15,943 16,262 15,421
The five year summary does not form part of the audited financial statements
and is not an IFRS statement.
Notice of Annual General Meeting
THIS INFORMATION IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION.
If you are in any doubt as to what action to take, you should consult your
stockbroker, solicitor, accountant or other appropriate independent
professional adviser authorised under the Financial Services and Markets Act
2000. If you have sold or otherwise transferred all of your shares in Titon
Holdings Plc, please forward this document and the accompanying documents to
the person through whom the sale or transfer was effected, for transmission to
the purchaser or transferee.
Notice is hereby given that the Annual General Meeting of Titon Holdings Plc
("the Company") will be held at the Company's premises at Falconer Road,
Haverhill, CB9 7XU on 22 March 2023 at 10.00 a.m. for the following purposes:
To consider and, if thought fit, to pass the following resolutions, of which
Resolutions 1 to 13 will be proposed as Ordinary Resolutions and Resolution 14
will be proposed as a Special Resolution.
Explanatory notes in respect of the resolutions are set out on pages 30 to 32
of the Directors' Report which accompanies this Notice.
Please note you will not receive a form of proxy for the 2023 AGM in the post.
Instead, you can vote online at www.signalshares.com
(http://www.signalshares.com) . To register you will need your Investor Code,
which can be found on your share certificate. You may also request a hard copy
proxy form directly from our Registrars, Link Group, on 0371 664 0300. For
full details on proxy voting please see the notes below, which accompany this
Notice of Annual General Meeting.
1. To receive and adopt the reports of the Directors and the
Auditors and the audited accounts of the Company for the year ended 30
September 2022.
2. To declare a final dividend of 0.5p per ordinary share
payable to shareholders on the Company's register of members at close of
business on 10 February 2023 payable on 31 March 2023.
3. To re-elect Mr Tyson Anderson who retires from the Board as
a Director of the Company.
4. To re-elect Mr Keith Ritchie, who retires from the Board as
a Director of the Company.
5. To re-elect Mr Nicholas Howlett, who retires from the Board
as a Director of the Company.
6. To re-elect Mr Paul Hooper, who retires from the Board as a
Director of the Company.
7. To re-elect Mr Jeff Ward, who retires from the Board as a
Director of the Company.
8. To re-elect Miss Alexandra French, who retires from the
Board as a Director of the Company.
9. To re-elect Ms Carolyn Isom, who retires from the Board as
a Director of the Company.
10. To re-appoint MacIntyre Hudson LLP as Auditors of the Company
and to authorise the Directors to determine their remuneration.
11. That the Directors' Remuneration Report set out on pages 33 to 36
of the Annual Report and Financial Statements for the year ended 30 September
2022 a new Executive Management Bonus Structure, details of which are
contained in the Directors' Remuneration Report, be approved.
12. That in place of all existing authorities, the Directors be
generally and unconditionally authorised pursuant to section 551 of the
Companies Act 2006 to exercise all the powers of the Company to allot shares
in the Company and to grant rights to subscribe for, or to convert any
security into, shares in the Company ("Relevant Securities"), up to a maximum
aggregate nominal amount of £270,000 (representing approximately 24% of the
nominal value of the ordinary shares in issue on 25 January 2023) for a period
expiring (unless previously revoked, varied or renewed) on 22 June 2024 or, if
sooner, at the end of the 2024 Annual General Meeting of the Company, but in
each case the Company may, before such expiry, make an offer or agreement
which would or might require Relevant Securities to be allotted after this
authority expires and the Directors may allot Relevant Securities in pursuance
of such offer or agreement as if this authority had not expired.
13. That subject to the passing of Resolution 12 above and in place
of all existing powers, the Directors be generally empowered pursuant to
section 570 and 573 of the Companies Act 2006 to allot equity securities
(within the meaning of section 560 of the Companies Act 2006) for cash,
pursuant to the authority conferred by Resolution 12 as if section 561(1) of
the Companies Act 2006 did not apply to such allotment, provided that this
power shall expire on 22 June 2024 or, if sooner, the end of the 2024 Annual
General Meeting of the Company. This power shall be limited to the allotment
of equity securities:
13.1 in connection with an offer of equity securities (including, without
limitation, under a rights issue, open offer or similar arrangement) in favour
of holders of ordinary shares in the capital of the Company in proportion (as
nearly as may be practicable) to their existing holdings of ordinary shares
but subject to such exclusions or other arrangements as the Directors deem
necessary or expedient in relation to fractional entitlements or any legal,
regulatory or practical problems under the laws of any territory, or the
requirements of any regulatory body or stock exchange; and
13.2 otherwise than pursuant to paragraph 13.1 up to an aggregate nominal
amount of £160,000 (representing approximately 14.3% of the nominal value of
the ordinary shares in issue on 25 January 2023);
but the Company may, before such expiry, make an offer or agreement which
would or might require equity securities to be allotted after this power
expires and the Directors may allot equity securities in pursuance of such
offer or agreement as if this power had not expired.
This power applies in relation to a sale of shares which is an allotment of
equity securities by virtue of section 560(3) of the Companies Act 2006 as if
in the first paragraph of this resolution the words "pursuant to the authority
conferred by Resolution 12" were omitted.
14. That the Company be generally authorised pursuant to section 701
of the Companies Act 2006 to make market purchases (within the meaning of
section 693(4) of the Companies Act 2006) of its ordinary shares of 10p each
on such terms and in such manner as the Directors shall determine, provided
that:
14.1 the maximum number of ordinary shares hereby authorised to be
purchased is 1,121,875 (representing approximately 10% of the nominal value of
the ordinary shares in issue on 25 January 2023);
14.2 the maximum price which may be paid for each ordinary share shall
be the higher of (i) 5% above the average of the middle market quotations for
an ordinary share (as derived from the AIM Appendix to the Stock Exchange
Daily Official List) for the five business days immediately before the day on
which the purchase is made (in each case exclusive of expenses); and (ii) the
higher of the price of the last independent trade and the current independent
bid on the trading venue where the purchase is carried out (exclusive of
expenses);
14.3 the minimum price which may be paid for each ordinary share shall be
10p; and
14.4 this authority (unless previously revoked, varied or renewed) shall
expire on 22 June 2024 or, if sooner, the end of the 2024 Annual General
Meeting of the Company except in relation to the purchase of ordinary shares
the contract for which was concluded before such date and which will or may be
executed wholly or partly after such date.
By order of the Board
C V Isom
Registered Office:
Secretary
894 The
Crescent
25 January 2023
Colchester Business Park
Colchester
Essex
CO4 9YQ
Notes:
Rights to appoint a proxy
1. Shareholders can vote online by logging on to www.signalshares.com
and following the instructions given. Alternatively shareholders can request
a hard copy proxy form by contacting our Registrars, Link Group, on 0371 664
0300 (Calls are charged at the standard geographic rate and will vary by
provider. Calls outside the United Kingdom will be charged at the applicable
international rate. Link Group are open between 09:00 - 17:30, Monday to
Friday excluding public holidays in England and Wales) and returning it to the
address shown on the form. The appointment of a proxy will not prevent a
member from subsequently attending and voting at the meeting in person.
2. Members of the Company are entitled to appoint a proxy to exercise
all or any of their rights to attend and to speak and vote at a meeting of the
Company. A proxy does not need to be a member of the Company. A member may
appoint more than one proxy in relation to a meeting provided that each proxy
is appointed to exercise the rights attached to a different share or shares
held by that member. To appoint more than one proxy you may photocopy the
proxy form.
Procedure for appointing a proxy
3. To be valid, the proxy instruction must be received by one of the
below methods no later than 10.00 a.m. on Monday 20 March 2023. It should be
accompanied by the power of attorney or other authority (if any) under which
it is signed or a notarially certified copy of such power or authority:
· via www.signalshares.com by logging in and selecting the 'Proxy
Voting' link. If you have not previously registered, you will first be asked
to register as a new user, for which you will require your investor code
(which can be found on your share certificate and dividend confirmation),
family name and postcode (if resident in the UK);
· if your shares are held electronically via CREST, the proxy
appointment may be lodged using the CREST Proxy Voting Service in accordance
with note 7 below; and
· in hard copy form by post, by courier or by hand to the Company's
registrars, Link Group, PXS 1, Central Square, 29 Wellington Street, Leeds,
LS1 4DL;
· unless otherwise indicated on the Form of Proxy, CREST voting or any
other electronic voting channel instruction, the proxy will vote as they think
fit or, at their discretion withhold from voting.
Nominated persons
4. Any person to whom this notice is sent who is a person nominated
under section 146 of the Companies Act 2006 to enjoy information rights (a
"Nominated Person") may, under an agreement between him or her and the member
by whom he or she was nominated, have a right to be appointed (or to have
someone else appointed) as a proxy for the Annual General Meeting. If a
Nominated Person has no such proxy appointment right or does not wish to
exercise it, he or she may, under any such agreement, have a right to give
instructions to the member as to the exercise of voting rights.
5. The statement of the rights of members in relation to the
appointment of proxies in notes 1, 2 and 3 above does not apply to Nominated
Persons. The rights described in those notes can only be exercised by members
of the Company.
CREST
6. CREST members who wish to appoint a proxy or proxies through the
CREST electronic proxy appointment service may do so by using the procedures
described in the CREST Manual. CREST personal members or other CREST sponsored
members and those CREST members who have appointed a voting service
provider(s), should refer to their CREST sponsor or voting service
provider(s), who will be able to take the appropriate action on their behalf.
7. In order for a proxy appointment or instruction made by means of
CREST to be valid, the appropriate CREST message (a "CREST Proxy Instruction")
must be properly authenticated in accordance with Euroclear UK & Ireland
Limited's specifications and must contain the information required for such
instructions, as described in the CREST Manual. The message must be
transmitted so as to be received by the Company's agent, Link Group (CREST
Participant ID: RA10), no later than 48 hours before the time appointed for
the meeting. For this purpose, the time of receipt will be taken to be the
time (as determined by the time stamp applied to the message by the CREST
Application Host) from which the Company's agent is able to retrieve the
message by enquiry to CREST in the manner prescribed by CREST.
8. CREST members and, where applicable, their CREST sponsors or voting
service providers should note that Euroclear does not make available special
procedures in CREST for any particular messages. Normal system timings and
limitations will therefore apply in relation to the input of CREST Proxy
Instructions. It is the responsibility of the CREST member concerned to take
(or, if the CREST member is a CREST personal member or sponsored member or has
appointed a voting service provider(s) to procure that his CREST sponsor or
voting service provider(s) take(s)) such action as shall be necessary to
ensure that a message is transmitted by means of the CREST system by any
particular time. In this connection, CREST members and, where applicable,
their CREST sponsors or voting service providers are referred, in particular,
to those sections of the CREST Manual concerning practical limitations of the
CREST system and timings.
9. The Company may treat as invalid a CREST Proxy Instruction in the
circumstances set out in Regulation 35(5)(a) of the Uncertificated Securities
Regulations 2001 (as amended).
Entitlement to Attend
10. Entitlement to attend and vote at the meeting (and the number of
votes which may be cast at the meeting), will be determined by reference to
the Company's register of members at close of business on 20 March 2023, or,
if the meeting is adjourned, 48 hours before the time fixed for the adjourned
meeting (ignoring for these purposes non-working days). In each case, changes
to the register after such time will be disregarded.
Corporate representatives
11. Any corporation which is a member can appoint one or more
corporate representatives, who may exercise on its behalf all of its powers as
a member provided that they do not do so in relation to the same shares.
Total voting rights
12. Holders of ordinary shares are entitled to attend and vote at
general meetings of the Company. The total number of issued ordinary shares in
the Company on 25 January 2023, which is the latest practicable date before
the publication of this document, is 11,218,750. On a vote by show of hands,
every member who is present has one vote and every proxy present who has been
duly appointed by a member entitled to vote has one vote. On a poll vote,
every member who is present in person or by proxy has one vote for every
ordinary share of which they are the holder.
Publication on website
13. Under section 527 of the Companies Act 2006, members meeting the
threshold requirements set out in that section have the right to require the
Company to publish on a website a statement setting out any matter relating
to: (i) the audit of the Company's accounts (including the auditor's report
and the conduct of the audit) that are to be laid before the Annual General
Meeting; or (ii) any circumstance connected with an auditor of the Company
ceasing to hold office since the previous meeting at which annual accounts and
reports were laid in accordance with section 437 of the Companies Act 2006.
The Company may not require the members requesting any such website
publication to pay its expenses in complying with sections 527 or 528 of the
Companies Act 2006. Where the Company is required to place a statement on a
website under section 527 of the Companies Act 2006, it must forward the
statement to the Company's auditor not later than the time when it makes the
statement available on the website. The business which may be dealt with at
the Annual General Meeting includes any statement that the Company has been
required under section 527 of the Companies Act 2006 to publish on a website
14. A copy of this notice, and other information required by section
311A of the Companies Act 2006, can be found on the website at
www.titon.com/uk/investors/ (http://www.titon.com/uk/investors/) .
15. Any member attending the meeting has the right to ask questions.
The Company must cause to be answered any such question relating to the
business being dealt with at the meeting but no such answer need be given if
(a) to do so would interfere unduly with the preparation for the meeting or
involve the disclosure of confidential information, (b) the answer has already
been given on a website in the form of an answer to a question, or (c) it is
undesirable in the interests of the Company or the good order of the meeting
that the question be answered.
Documents available for inspection
16. Copies of the service contract of each Executive Director and the
letter of appointment of each Non-executive Director will be available for
inspection at the registered office of the Company during normal business
hours on any weekday (excluding Saturdays and public holidays) and at Falconer
Road, Haverhill, CB9 7XU, for at least 15 minutes prior to and during the
Annual General Meeting.
Communications
17. Members who have general enquiries about the meeting should use
the following means of communication. No other means of communication will be
accepted. You may:
· call the Link shareholders' helpline on 0371 664 0300 Calls are
charged at the standard geographic rate and will vary by provider. Calls
outside the United Kingdom will be charged at the applicable international
rate. We are open between 09:00 - 17:30, Monday to Friday excluding public
holidays in England and Wales; or
· write to Link Group, Link Group, PXS 1, Central Square, 29 Wellington
Street, Leeds, LS1 4DL.
18. You may not use any electronic address provided in this notice of
Annual General Meeting for communicating with the Company for any purposes
other than those expressly stated.
Directors and Advisers
Directors
Executive
A C French (Chief Executive) - (appointed 3 May 2022)
C V Isom (Chief Financial Officer) - (appointed 22 December 2021)
Non-executive
K A Ritchie (Group Non-Executive Chair)
T N Anderson (Deputy Chair)
N C Howlett
G P Hooper (appointed 1 April 2022)
J Ward (appointed 1 April 2022)
Secretary and registered office
C V Isom
894 The Crescent
Colchester Business Park
Colchester
Essex
CO4 9YQ
COMPANY REGISTRATION NUMBER
1604952 (Registered in England & Wales)
WEBSITE
www.titon.com/uk/investors/ (http://www.titon.com/uk/investors/)
auditor
MHA Macintyre Hudson
6(th) Floor, 2 London Wall Place
London
EC2Y 5AU
NOMINATED ADVISER
Shore Capital and Corporate Ltd
Cassini House
57-58 St. James's Street
London
SW1A 1LD
BROKER
Shore Capital Stockbrokers Ltd
Cassini House
57-58 St. James's Street
London
SW1A 1LD
REGISTRARS AND TRANSFER OFFICE
Link Group
10(th) Floor
Central Square
29 Wellington Street
Leeds
LS1 4DL
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