2021
Annual Report &
Financial Statements
Overleaf: Titon’s new Amada punch press, MVHR schematic and our staff at London Build Exhibition in November 2021.
Annual Report and Financial Statements
for the year ended 30 September 2021
Contents
Chairman’s Statement ...................................................................................................... 2
Strategic Report ................................................................................................................ 6
Strategic Report: Environmental Social and Governance Report ............................11
Strategic Report: Director’s Section 172 Statement .................................................14
Report on Risk Management .........................................................................................16
Directors’ Report .............................................................................................................19
Directors’ Remuneration Report ...................................................................................24
Corporate Governance Report .......................................................................................28
Audit Committee Report ...............................................................................................32
Independent Auditor’s Report .......................................................................................34
Consolidated Income Statement ..................................................................................40
Consolidated Statement of Comprehensive Income .................................................40
Consolidated Statement of Financial Position ...........................................................41
Company Statement of Financial Position ..................................................................42
Consolidated Statement of Changes in Equity ...........................................................43
Company Statement of Changes in Equity ..................................................................44
Group and Company Statement of Cash Flows ..........................................................45
Notes to the Consolidated Financial Statements .......................................................46
Five Year Summary .........................................................................................................73
Notice of Annual General Meeting ...............................................................................74
Directors and Advisers ...................................................................................................78
1
Titon Holdings Plc I 2021 Annual Report Chairman’s Statement
We are now emerging from the Covid-19 pandemic and the UK currently remains open, albeit that concerns over the effect
of Covid-19 persist and some restrictions have been reimposed of late by the UK government. We are seeing some European
countries return to lockdowns but the main markets in which we trade are open and trading relatively normally and I am pleased
to say that Titon is also operating normally. As I reported at the time of the Group’s interim results, we have traded throughout
the period and have seen a good recovery in trading in the UK and Europe compared to 2020. Our financial position remains
strong.
During the year we have followed the Government’s guidelines
for safe working in our factory in Haverhill and in our offices
and have developed and updated an ongoing Covid-19 risk
assessment to guide our actions. We decided not to bring our
office-based employees back when the guidelines were removed
in July, as at that time the number of infections were rising in the
East of England and we felt that it was safer for our employees
to remain working from home, where possible. Where employees
have been required to work from the office, we have maintained a
careful limit on the numbers coming in and required regular lateral
flow testing to take place. We remain committed to ensuring that
the health and safety of all of our employees is maintained and
we thank them for the efforts they have made to ensure that
both the office and factory remain safe working places.
Profit and loss
In the year ended 30 September 2021, the Group’s net revenue
(which excludes inter-segment activity) increased by 13% to
£23.4m (2020: £20.7m).
The Group’s gross margin increased from 27.4% in 2020 to
31.4% in 2021, which is back above pre-pandemic levels (2019:
30.2%). We achieved a full, strong year of trading compared
to the previous year where the results were exacerbated by
the production suspension in the year, triggered by the first
UK lockdown which impacted our UK business. We realised an
operating profit in the period of £1,119,000 (2020: operating loss
of £39,000). EBITDA was 100% higher at £2.0m (2020: £1.0m).
Net finance interest cost amounted to £16,000 (2020 interest:
£26,000). The share of profits from the Group’s South Korean
associate, BTS, fell from a profit of £83,000 in 2020 to a loss of
£28,000 in 2021 due to continuing challenging market conditions
and several supply chain issues in Korea. Due to an overall strong
performance in the UK business the Group profit before tax
realised was £1,075,000 (2020: £18,000).
Basic statutory earnings per share for the year was 9.24 pence
(2020: 0.52 pence).
Statements of financial position and cash flows
The Group benefits from a robust and liquid balance sheet with
no financial debt. Net assets, including non-controlling interests,
increased to £16.8m at 30 September 2021, at which point net
cash stood at £4.79m (2020: £5.57m), which is equivalent to
28.5% of net assets (2020: 33.1%).
Cash generated from operations before working capital changes
was £2.0m (2020: £1.0m). Inventory levels at the year-end
increased by £0.68m on 2020. This was mainly due to increased
stock held in the UK business because of an increase in material
and labour costs during the year and an increase in the goods in
transit at year end where we have been trying to maintain our
levels of stock to meet demand and overcome supply issues.
This reduced cash generated from operations to £1.15m (2020:
£2.72m). Cash generated from operations in 2020 also benefited
from trade receivables being reduced by £1.7m due to lower
2020 revenues.
Capital expenditure increased to £1.11m (2020: £0.78m) and
the Group paid dividends in 2021 in respect of 2020 to the
shareholders of Titon Holdings Plc of £0.39m (2020: £0.33m).
During the year, Titon Korea paid a further dividend to Titon
Holdings Plc and non-controlling shareholders, resulting in
£0.39m (2020: £0.66m) of cash being received by Titon Holdings
Plc and a cash outflow from the Group to non-controlling
shareholders of Titon Korea of £0.39m (2020: £0.67m).
The overall effect has been a net decrease in the Group’s cash
reserves in the period of £0.78m (2020: increase of £0.98m). Net
current assets at 30 September 2021 were £9.3m (2020: £9.1m)
with a Quick Ratio1 of 1.9 (2020: 2.0). ROCE2 was 11.7%, as the
business returned to more normal trading conditions (2020:
1.4%).
Segment analysis
The Directors look initially at geographical areas to evaluate the
Group’s performance and then consider product splits at the
secondary level.
An interim dividend of 1.5 pence per share was paid in the year
to 30 September 2021 and the Directors are proposing a final
dividend of 3.0 pence per share (2020: 2.0 pence). The total
dividend for the year will therefore be 4.5 pence per share (2020:
2.0 pence). If approved by shareholders at the forthcoming
Annual General Meeting on 23 February 2022, the dividend will
be payable on 4 March 2022 to shareholders on the register at 28
January 2022. The ex-dividend date is 27 January 2022.
UK and Europe
We started the financial period with significant uncertainty due
to two major items: the pandemic and Brexit. The impact of the
pandemic has reduced significantly during 2021 as the impact
of the vaccination programme has been felt with reductions in
hospitalisations and deaths and this has allowed most sectors to
function reasonably normally. However, the construction sector
has suffered from labour shortages, which have led to delays
2
Titon Holdings Plc I 2021 Annual Report in projects being started or being paused. In respect of Brexit,
we had significant concerns about the impact of the UK leaving
the Single Market on 31 December 2020. Although there were
some long delays in shipping goods to our European customers
early in 2021 these have largely been alleviated and we have
worked with our logistics partners to ensure that shipments
now proceed smoothly, albeit they are taking a few days more
than when we were in the Single Market. I would like to thank all
our customers in the EU for their patience in this situation and
for continuing to buy our products.
As I noted in the Interim Report, we have had to deal with
some procurement issues as many basic materials such as
plastics, cardboard and metals have all been difficult to find at
times. In the second half of the year, we have additionally had
challenges in maintaining supplies of components for some of
our mechanical ventilation products, which has delayed some of
our sales to customers. This is an industry wide problem but has
been a source of frustration to us during the year. We have also
suffered from price increases for many items and have had to
pass these on to our customers, where we can. Revenue from
the Hardware business, comprising sales of our trickle vents
plus window and door hardware, was higher in the year by 24%
as sales into the PVCu, Timber and Aluminium sectors of the UK
market recovered after the lockdowns in 2020. Sales of Titon
branded door and window hardware products rose by 37% as we
introduced new products and converted more customers to our
range, which was a positive performance.
In our Ventilation Systems business, revenues from mechanical
ventilation products rose by 28% overall as sales to the new
build market recovered. Sales in the UK were up by 43%, and a
significant part of this was down to the success of the new Titon
FireSafe® Air Brick Range; Ventilation Systems sales in mainland
Europe were up 18% as our European markets expanded.
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 businesses. We launched the
Titon Ultimate® dMEV extract fan early in 2021, which is the first
extract fan that we have designed and manufactured ourselves.
We expect to release a number of new products across the range
in 2022. We have also spent considerable time in sourcing new
bought-in products during the year, including a more advanced
door cylinder to meet stringent security tests in the UK. We were
sorry to learn during the year that Sobinco has decided to sell
its window and door hardware products direct to UK systems
companies, rather than through Titon, as we have been their
sole UK distributor for many years. We have therefore been
seeking alternative products and suppliers to replace these lines.
We continue to promote good indoor air quality and welcomed
the Government’s video released in November 2021 about
ventilation, in response to the threat of coronavirus particles
in the home. We have worked with our trade association,
Beama Ltd, which sponsors the Healthy Homes and Buildings
All Party Parliamentary Group and the Air Pollution All Party
Parliamentary Group on a number of campaigns during the year
to improve ventilation in homes and buildings.
We have been waiting for the publication of 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 and Wales for new dwellings and existing
buildings, these were published on the 15th of December
2021 and initial reviews confirm that these are positive for our
products.
Looking at the macro-economic picture the Experian UK
Construction forecast in October 2021 shows a rise in total
housing expenditure of 17.7% against 2020, as the economy
recovered and forecasts a further 7.1% increase in 2022. At
the same time, the expected value of repair, maintenance and
improvement in the private and public residential sectors is
forecast to be up by 14.8% in 2021 against 2020, but it then
slows in 2022 to show an increase of a more modest 4.2%
against 2021.
South Korea
In South Korea, the Group’s subsidiary, Titon Korea (51% owned),
manufactures natural window ventilation products. In the 2021
interim results statement we noted the contraction in house
building and the delay in a number of building projects and this
has continued in the second half and has also been impacted by
new Covid-19 restrictions imposed nationally in Korea. These
factors have resulted in a reduction in revenue to £3.6m (2020:
£4.9m) down 27% whilst the contribution to Group profit before
tax declined to a loss £14,000 (2020: profit of £139,000).
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. The loss recognised in
respect of associates (which is all in respect of BTS) in 2021
was £28,000 (2020: profit £83,000). In addition to distributing
ventilation products in South Korea, BTS invested in and
developed properties in the domestic residential real estate
market. A further property was sold during the year and a small
post-tax profit was realised. BTS no longer holds any direct
investments in residential properties. BTS has been engaged in
expanding its product range to include mechanical ventilation
products and has signed an exclusive distribution agreement
with a manufacturer of a hybrid mechanical ventilation product
for the Korean market. BTS is now actively marketing this
product to its customers but does not expect any meaningful
revenue to be realised from this arrangement until the 2022/23
financial period. BTS also intends to supply mechanical heat
recovery products to its customers and is working with a product
manufacturer to achieve this. Taking Titon Korea and BTS
together, South Korea made a negative contribution of £0.04m
3
Titon Holdings Plc I 2021 Annual Report Chairman’s Statement (continued)
to the Group’s profit before tax for the year (2020: profit £0.22m).
United States
Our US operations represent the smallest geographical segment
and results from this business reduced in the period. Sales for
the year fell by 19% to £0.63m (2020: £0.78m) as the market
continued to be impacted by the pandemic and, while Titon Inc.
made a small statutory profit before tax of £29,000 in the full
year (2020: loss of £32,000), it did generate a return for our UK
manufacturing business and made a positive contribution to
Group income.
Board
I was very disappointed to inform you in November that our
new CEO, Mat Norris, has decided to leave the Board to take up
another role. He will leave Titon in February 2022 at the end of
his notice period. We immediately commenced a search for a
new CEO and I will keep you informed of progress.
Following the announcement in September of their resignations
Kevin Sargeant and Bernd Ratzke have now left the Board.
I would like to thank both of them for their counsel and
contributions to Titon over their respective times on the Board.
We have commenced a search for two independent Non-
executive Directors to replace them and further announcements
will be made in due course.
The external environment continues to present challenges and it
will require us to change the way we do business in order for us
to make the progress that shareholders require. Putting in place
a new long-term executive management structure, with the
support of a strong Board of directors, will play a vital part in this.
Employees
I offer my sincere thanks to all our employees, as the success
of the Group is down to their hard work and talents. They
have continued to operate via a mixture of home working and
returning to the office or factory and have remained upbeat and
flexible in the face of the changing regulations during the year. As
with last year without their willingness to adapt to the new ways
of working we would not have been able to function as well as
we have done in the face of the pandemic. My colleagues on the
Board also recognise the contribution that they 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. Of particular
note, in October 2021 they published a research note entitled
“Net Zero Winners: Stock selection in a decarbonising world”
focussed on stocks that they believe will benefit from the
move to Net Zero. Titon was selected as one of these stocks
as they believe that the ”fabric first” approach taken by the UK
Government will lead to more sales of the MVHR products that
we manufacture and sell.
I would
like to mention the Group’s dividend
As usual,
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 and outlook
Trading in October and November 2021 in the UK and Europe
has been at a similar level to the same months in 2020 despite
the difficulties caused by the industry-wide supply chain issues.
Sales in Korea in October remained subdued.
The UK economy has certainly rebounded from the very
significant fall in GDP of 9.9% that it experienced in 2020 with
Experian forecasting UK GDP growth in 2021 of 6.6% and
5.4% in 2022. In the housing markets Experian are forecasting
expenditure to rise by 16% for public housing and 18% for private
housing in 2021 and 6% and 7% increases for 2022 respectively.
For Repairs and Maintenance expenditure they are forecasting
increases of 10% for public housing in 2021 and 17% for private
housing and then growth of 3% and 5% respectively for 2022.
These forecasts are positive for our business.
During 2022, we will continue to pursue progress against a
range of strategic initiatives. In particular, and in addition to
the recruitment of a new CEO, we anticipate making other
senior appointments, as well as making additional mechanical
ventilation sales force hires to drive growth in the business.
Alongside on-going initiatives to update and improve our
production through better resource planning, we intend to
launch a new internal ERP system for the UK, European and
US operations in early 2022 to allow greater automation of
production and sales processes, and better management
information.
The biggest risks to our business in 2022 at present are the
shortage of materials and components and continuing price
increases for these items as well as labour and energy costs.
As mentioned above, we have struggled to maintain supplies
of components for some of our mechanical ventilation products
particularly and there is little sign that this will rapidly improve
in 2022. We are doing everything we can to find alternative
suppliers and have had some success doing so but the ongoing
supply challenges are a well publicised issue affecting the whole
industry. Whilst this will hold back 2022 performance to some
degree, we will continue to do everything we can to manage
and alleviate these challenges. Labour costs are also rising and
finding good people remains difficult. We are committed to
investing in high quality people and we anticipate there will be
costs associated with attracting and retaining the best people in
4
Titon Holdings Plc I 2021 Annual Report the year. Price increases for our components and raw materials
will also continue to impact the Group, as with other companies
across the sector. We will raise our prices early in 2022 to recover
input cost increases but there is likely to be some margin erosion
due to the differences in the timing of these changes.
In South Korea, the economy is set to expand in 2022 as the
recovery from the pandemic continues. Bank of Korea forecasts
GDP growth of 4.0% in 2021 and 3% in 2022 but construction
investment is only forecast to grow by 0.9% in 2021 and 2.9% in
2022. As previously noted, we continue to be in a transitionary
period for our ventilation products in South Korea as market
requirements change.
Of course, the pandemic remains with us, and I also need to
mention the possible impact of new variants. We are currently
waiting to find out how virulent the new Omicron variant is, and
the extent of the UK government’s response to this. Whilst it is
too early to draw conclusions, we recognise that at this stage,
it could lead to a reduction in economic activity. The impact of
expected materials, labour and component shortages combined
with price increases means that we anticipate that the business
environment will remain challenging for us in 2022. Despite
these challenges, we continue to have a very strong balance
sheet, talented employees and a good range of products that
give us confidence in our medium-term future.
On behalf of the Board.
K A Ritchie
Chairman
19 January 2022
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).
5
Titon Holdings Plc I 2021 Annual Report
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.
Summary
Revenue growth of 13% to £23.4m (2020: £20.7m)
Group profit before tax of £1,075,000 (2020: £18,000)
EPS up 1677% to 9.24 pence (2020: 0.52 pence)
Net cash balances down by £0.78m to £4.8m (2020: £5.6m)
Total dividend for the year of 4.5 pence per share (2020: 2.0 pence per share)
Overview
In evaluating the performance of the business, the Directors initially review geographical areas and then consider product
group splits at the secondary level.
The Titon Group performance is monitored across three geographical segments. Within these segments, the principal business
activities are design, manufacture, marketing and sales:
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 ventilation products for the new build 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 the businesses organically on a continuing basis and to develop new products. In South Korea the
Group seeks to maintain its position as a market leader in natural ventilation in the residential market but is also widening its
product offering to include mechanical ventilation products. More details of the Group’s strategy are discussed below.
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 40. A summary of the results along with other selected Key Performance
Indicators (“KPIs”) is as follows:
Revenue
Profit before tax
Taxation
Profit after tax
Revenue per employee
Profit after tax per employee
2021
£’000
23,412
1,075
(72)
1,003
116
5.0
2020
£’000
20,652
18
104
122
105
0.6
Net cash and cash equivalents
4,794
5,572
There has been a good recovery from the last financial period, which was badly impacted by first the UK national lockdown
in response to Covid-19. We have seen normal levels of trading for the whole of the financial year as the construction sector
has remained open and our customers in Europe have also been busy. Business in South Korea has not returned to previous
levels. Group Revenue has increased by 13% to £23.4m (2020: £20.7m) and this has resulted in a Group Profit before Tax result
of £1.1m (2020: £18,000). A full review of the Group’s performance during the year is given in the Chairman’s Statement.
Covid-19 response
We continue to monitor the Covid-19 situation in the UK and Europe very carefully as it has changed during the financial year.
The success of the vaccination programme in the UK has allowed us to move from the third national lockdown imposed in
January 2021 to the position in July when virtually all restrictions were lifted. A similar situation has been seen in Europe and
we have suffered no business interruptions due to the pandemic in either the UK or Europe in the second half year. However,
6
Titon Holdings Plc I 2021 Annual Report
whilst it is too early to draw any conclusions, we are mindful of the potential effect that the Omicron variant might have on
global economies if new restrictions are imposed.
The health and safety of all our employees remains a key objective of the Group. We have followed the UK Government’s
guidelines for safe working during the entire period and when the restrictions were lifted in July, we continued to require
masks to be worn on site and for social distancing. We felt that this was justified by the local incidences of Covid-19. Our
employees based in Colchester remain largely working from home, but we have brought most of them into the office on
some days for team meetings or training activities. As we are now seeing with the new Omicron variant the situation remains
fluid and we will take whatever action is necessary in future periods to ensure that our working practices are safe for our
employees and visitors to our sites.
Goals and strategy
We are passionate to improve indoor air quality: good indoor air quality means clean air for building occupiers to sustain health
and comfort.
We aim to meet our goal through the following actions:
Markets
Employees
Grow market share of natural and mechanical ventilation products and window and door hardware in the
residential housing markets of the UK, Europe, US and South Korea
Provide a challenging but rewarding and supportive environment for our employees which offers them
long term careers
Products
Offer products which are of high quality and that the “as built” performance is as expected
Shareholders
Interact with shareholders and generate rising returns through a rising share price and a progressive
dividend policy on a consistent basis
Management
Set and maintain a high standard of management and business behaviour, which will ensure that
employees, customers and suppliers are treated fairly
The broad actions described above are broken down into smaller steps as follows:
Grow market share in the UK, Europe, US and South Korea
Increase sales of our existing products
Find new customers for our products
Develop new products
Improve existing products
Employees
Pay our employees fairly for their services
Provide a safe working environment for every person
Retain a long-term view and not a “hire and fire” mentality
Provide employees with the necessary support and training to do their jobs
Ensure that the diversity of every employee is recognised and that everybody is treated equally
Conduct regular and transparent appraisals with all employees
Product offering
Invest in research and development resources to bring innovative new products to market
Set high standards for product design
Continuously improve production performance
Take customer complaints seriously and improve products as required
Work with suppliers to bring enhanced products to the market
Interaction with shareholders
Pay dividends commensurate with the results of the business
Communicate openly and honestly with an absence of jargon
Be accessible to all shareholders at all times
Management behaviour
Set high standards for management and all employees
Be accountable and take responsibility for decision taking
Communicate effectively with all stakeholders
Ensure all dealings are open and cannot be misconstrued
Business model
7
Titon Holdings Plc I 2021 Annual Report
Strategic Report (continued)
Within its main geographical classifications of the United Kingdom, South Korea, North America and All Other Countries, the
Group operates in two business streams:
i.
Trickle ventilation and window and door hardware business, in which Titon has operated since its formation in 1972 and
including South Korea. This activity accounted for 63% of Group revenue in 2021 (2020: 71%); and
ii. Mechanical ventilation business, which the Group entered in 2007 and which accounted for 37% of revenue in 2021
(2020: 29%). See Business Segmentation information on page 52.
The Group generally organises its sales and marketing activities into these business streams with manufacturing and other
services supporting them both on a shared basis. The management of these two business streams also follows this split with
regular meetings of the senior managers alongside the Directors.
In the UK, the Group has a direct sales force for both business streams and aims to win specifications for its products through
its dealings with developers/housebuilders, architects, building services engineers and local authorities. Where specifications
are not possible, Titon aims to sell directly to its wide customer base of electrical contractors, installers and window fabricators.
Titon operates in a wide range of export markets and has made sales to a significant number of countries from the UK during
this year. Our policy for exporting, in respect of both window and door hardware and mechanical ventilation products, is
to appoint local distributors and to support them in building the Titon brand. Within the mechanical ventilation business,
the Group also manufactures 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 of its sales to BTS, which sells products onward to its customers in the new
residential construction sector. Titon entered the South Korean market in 2008. BTS had previously entered into a number of
property developments but has now disposed of these developments.
The Group also has a wholly owned subsidiary, Titon Inc., based in Indiana in the USA. Sales into this market accounted for 3%
of Group revenues during the year (2020: 4%).
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 58% (2020: 52%) of overall Group turnover and products manufactured in South Korea account for 15% (2020:
24%). The remaining 27% (2020: 24%) 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.
The Board has spent considerable time reviewing the activities of the Group and reviewing the structure and considering
recruitment requirements, given the need to focus the business on faster growing sectors. A number of key hires have been
identified to strengthen senior management and to increase resources in the mechanical ventilation business which, we
believe, will be faster growing than the natural ventilation market. We also continue to focus on working capital management,
which will be maintained in the future.
Key Performance Indicators (KPIs)
The Board looks at a range of KPIs to monitor the performance of the Group throughout the financial year and within the
individual business departments further KPIs are reviewed. The financial KPIs monitored by the Board regularly include:
KPI
Group Revenue
Timing
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 business sector performance
Measured against targets and prior year on weekly basis
Revenue and Profit per employee
Measured annually within the Strategic Report
Sales, margins and prices of core products
Top 25 products reviewed monthly and at Divisional Management levels
Sales to customers
Purchases
Net cash
Top 25 customers and 12 month rolling sales reviewed monthly and at
Divisional Management levels. Sales by individual area sales managers
reviewed weekly
Top 25 suppliers and delivery performance reviewed monthly
Reviewed weekly by Board and by senior management
Graphical representations of some of these KPIs and other financial performance measures for the years ended 30
September are as follows:
8
Titon Holdings Plc I 2021 Annual Report Note: 2018 figures are restated
Revenue
£23.4m
Operating profit
£1.12m
Profit before tax
£1.075m
28.0
29.8
27.2
23.4
20.7
2.02
1.85
1.63
2.77
2.49
1.97
1.12
2017
2018
2019
2020
2021
2017
2018
2019
-0.04
2020
1.08
0.02
2021
2017
2018
2019
2020
2021
Dividend paid
4.5p
4.75
4.45
3.75
Earnings per share
9.24p
Net cash & cash equivalents
£4.794m
4.50
18.21
16.55
12.84
5.57
4.59
4.79
2.00
9.24
3.27
3.41
2017
2018
2019
2020
2021
2017
2018
2019
2020
2021
2017
2018
2019
2020
2021
0.52
2020/21 performance
The financial results for the year are shown above and are discussed throughout the Annual Report. In respect of the strategies
identified, the significant outcomes are as follows:
UK, Europe and USA
●
●
Sales of trickle vents and door and window hardware products rose by 24% in the UK and in Europe during the year but
fell by 19% in the US. There was a good improvement in trading following the lockdowns in 2020 as the housing market
remained open and new housing starts recovered from 2020 numbers. It is encouraging to see continued interest in sales
of Titon branded hardware in the UK;
Sales of Ventilation System products in the UK rose by 43% in the period against the prior year, and sales to continental
Europe and the rest of the world were up by 18% as our important European customers continued to purchase from us.
Sales of the Titon FireSafe® Single Air Brick, which was introduced in 2019/20 did very well for a new product;
● We continued to invest in new products during the year and launched the Titon Ultimate® dMEV, a new decentralised
mechanical extract fan for use in residential and light commercial buildings. Product development remains a core activity
of the Group;
● We have spent considerable time updating and improving our production facilities in Haverhill, through the introduction
of better resource planning and daily monitoring of each team’s activities. This will also provide us with more accurate
data on factory efficiency;
● We have also spent considerable time in sourcing new bought-in products during the year. We have introduced a more
advanced door cylinder to meet more stringent security tests in the UK. During the year, we were sorry to learn that
Sobinco decided to sell its window and door hardware products direct, rather than through Titon, as we have been their
sole UK distributor for many years. We have been seeking alternative products and suppliers to replace revenue from
these lines.
9
Titon Holdings Plc I 2021 Annual Report
Strategic Report (continued)
South Korea
●
Sales of natural ventilation products through our subsidiary in South Korea fell by 27% as sales into the private sector
declined due to a slowdown in residential new build construction and the impact of the pandemic in South Korea. The
business is transitioning to offer both natural and mechanical ventilation products in this market to adapt to changing
demands.
Other
●
●
Research and development expenditure in the year increased to £509,000 (2020: £446,000), the amount of capitalised
development expenditure was £152,000 in 2021 (£186,000 in 2020);
Employee numbers rose during the period to 214 at September 2021 against 189 at September 2020. Salaries are
reviewed annually, and inflationary increases were given to all employees with effect from 1 October 2021.
2021/22 activities
The Board anticipates that the Group’s business will continue with broadly the same approach as it did in 2020/21, where we
managed to exceed our budget expectations. We have set budgets for all parts of our business which reflect agreed growth
ambitions, and these will be monitored on a weekly basis. Specific initiatives for the current fiscal year include:
●
●
●
recruiting a new CEO and updating the growth strategy of the Group;
restructuring the management of the UK business to ensure that the operational management is conducted at the Titon
Hardware level. This will allow Titon Holdings to dedicate more time and attention to the group strategy and financial
reporting. This will also involve a number of senior appointments to drive growth in the business and, as noted above,
there will be initial costs associated with these changes;
increasing our penetration into the residential mechanical ventilation market in the UK through an increase in sales force
numbers and sales activities;
● working on a number of business development projects covering all areas of the UK and European business designed to
improve the way we operate and our efficiency;
● working with Regulatory and Governmental organisations to increase the awareness of the effects of inadequate
ventilation and poor indoor air quality. Revised building regulations for ventilation are expected to be released by
Government before the end of 2021, which we expect will be positive for our business in future;
●
●
●
continuing efforts to sell more Titon branded bought-in hardware, particularly cylinders and friction hinges and
development of more distributor relationships for hardware in the UK;
our new ERP system for the UK, European and US operations was delayed in 2021 due to a number of development
issues but expect to “Go Live” in early 2022. This will allow more automation of the production and sales processes and
better management information. Phase 2 with other applications will follow, including a new CRM system; and
in South Korea GDP growth is forecast by Bank of Korea to grow by 4.0% in 2021 and 3% in 2022. Construction expenditure
is forecast to grow by only 0.9% in 2021 but 2.9% in 2022 and we expect more projects to be completed.
10
Titon Holdings Plc I 2021 Annual Report Environmental Social and Governance Report
Titon has not previously published a separate report on Environmental, Social and Governance (ESG) but has made reference
to each pillar of ESG in different parts of the Annual Report. However, there is evidence now that investors increasingly judge
companies on their ESG reporting and given the increasing scrutiny on all companies to report on their ESG position the Board
has decided to bring together all the disparate elements into one place to ensure that a cohesive approach is taken. It is
also highly relevant that COP 26 has just concluded in Glasgow and many important measures have been announced by the
various stakeholders that will help the climate. We want to demonstrate that we recognise our own responsibilities to the
environment.
The UK Government has also announced that regulations will be introduced that will 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 they have 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. Possibly the most
obvious 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 interest 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 pursuing this goal of clean air, 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 as a manufacturing business 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, and employees and, in particular, 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;
natural resources are used efficiently;
energy is used efficiently and consumption is monitored;
●
●
●
●
● waste is reduced, reused or recycled where practicable; and
the amount of packaging used for our products is minimised.
●
raw material waste is minimised;
As part of its processes, the Group’s environmental performance is reviewed monthly 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 increased by 21% in 2021 against 2020 whilst gas usage increased 12%. 2020 figures were impacted by the
closure of the Haverhill site during March and April 2020 and lower levels of production caused by the Covid-19 pandemic.
2021 gas and electric usage has increased in line with production for 2021, with motor vehicle fuel reducing by 42% over 2020.
In accordance with Statutory Instrument 2008/410 the Group presents the following information in respect of its CO2
emissions during the period.
11
Titon Holdings Plc I 2021 Annual Report Strategic Report (continued)
Corporate and Social Responsibility Report (continued)
Global Greenhouse Gas (GHG) emissions data for the period are:
Source:
Combustion of fuel and operation of facilities
Electricity, heat, steam and cooling purchased for own use
Total tonnes of CO2 equivalent
CO2 emissions normalised per £ million of sales of manufactured products
2021
tCO2e
553
304
857
50.1
2020
tCO2e
576
280
856
54.3
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 2021.
We have been taking action over recent years to reduce our environmental footprint and will continue to look for ways 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. In 2020 these
panels generated over 127 Mwh of electricity, which we have used in the factory or have sold back to the National Grid;
installation of LED lighting throughout the Colchester Office. We have started to install LED lighting in the Haverhill
factory, which is currently 47% complete;
replacing all diesel cars in the company car fleet with electric vehicles, wherever possible, when they come up for renewal.
We have installed EV charging points at both the Colchester office and Haverhill and;
replacement of older fixed asset plant and machinery with new, more efficient units. The new Amada Press which we
purchased in April 2021 uses an average of 5.7kw per hour against the machine it replaced which used 16kw per hour,
according to the Amada public records. It also punches quicker, has many fewer parts and requires less labour and
maintenance;
● we have looked at all of our plastic packaging and replaced it with either cardboard or recycled plastic, wherever possible.
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, such as CDP (www.cdp.net).
Social Pillar
We have published various policies and data relating to the Social Pillar in our previous annual reports, including the
Employee gender breakdown, which was contained in the Strategic Report. All of our policies on diversity and other
employee matters have been published on the company intranet or displayed on noticeboards. However, in 2020 we
decided that we should update all of our policies and publish them in a handbook for every employee, which was completed
in 2021. The Employee Handbook includes all of our employment policies, a summary of the Health and Safety policy, the
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 and;
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 apart from one formal
disciplinary issue that has now been resolved.
12
Titon Holdings Plc I 2021 Annual Report 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 laws 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:
Directors
Senior Managers
Other
Total
2021
Male
8
8
131
147
2021
Female
-
2
65
67
2021
Total
8
10
196
214
2020
Male
8
8
92
108
2020
Female
-
1
80
81
2020
Total
8
9
172
189
We continue to support a number of national charities throughout the year and have identified a specific local charity each
year as well for collections. 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 28 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. We are currently engaged in recruiting two new non-
executive directors so the composition of the Board and the committees will change from the current roster as at the date of
the Annual Report.
Health and safety
It is critical as a manufacturing business that our employees operate in a safe environment and that our Health & Safety
policies and practices are as good as they can be, and we are always looking to improve the policy and importantly adherence.
We continually review our Health & Safety policies and have a full time Health & Safety officer. As noted above we continue
to ensure that all of our employees and stakeholders are safe in their dealings with Titon and have followed the Government
guidelines for safe working throughout our UK operations and this will continue as long as necessary.
The Health & Safety management system is as follows:
Board of Directors
Overall responsibility for setting policy and performance
Health & Safety Management Committee
Meets quarterly to review statistics and every reported incident. Both the
Chairman and CEO attend
Local Management
Health & Safety Officer
Responsible for oversight of Health & Safety Officer and any local incidents
Responsible for all day-to-day issues, implementation of changes to policy
and reaction to incidents
The accident statistics for our UK operations are as follows:
●
●
January to December 2020
January to December 2021
24 reported accidents, 0 RIDDOR reported
17 reported accidents, 0 RIDDOR reported
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. At the date of this
Annual Report, we had reached 1,126 days without a RIDDOR report being required.
13
Titon Holdings Plc I 2021 Annual Report
Strategic Report (continued)
Statement by the Directors in relation to their statutory duty in accordance with
section 172(1) of the Companies Act 2006
In compliance with the Companies Act 2006, the Board of Directors are required to act in accordance with a set of general
duties. During the year to 30 September 2021, 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 has had regard to the matters contained in section
172(1) (a)-(f) of the Companies Act 2006.
The Directors fulfil their duties by ensuring that there is a strong governance structure in place across the Group’s operations,
backed up by robust processes.
The strategy for the Group is regularly monitored by the Board during the year. In respect of major matters discussed at board
level, the likely impact on all stakeholders are carefully considered and where possible, decisions are carefully explained and
discussed with affected stakeholders before actions are implemented to engender the necessary support.
The Group’s key stakeholders and why and how we engage with them are set out below:
Stakeholder Group
Why do we engage with them?
How does the Board engage with them?
Shareholders
The Board needs to know investors’ views
so they can be considered when making
strategic and governance decisions.
We have regular dialogue with institutional
Investors and individual shareholders in order to
develop an understanding of their views.
We aim to provide fair, balanced and
understandable information about the
business to enable informed investment
decisions to be made.
We listen to the views of our Nominated Adviser
in this respect.
Our AGM is an important forum for private
shareholders to meet the board and ask any
questions they may have.
Our website has an investors section which gives
investors direct access to reports, press releases
and other information. There is also a contact
mailbox facility.
Employees
Employee engagement is critical to our
success. We aim to create a diverse and
inclusive workplace where employees can
reach their full potential. This ensures we
can retain and develop talented people.
We have great regard for the health, safety
and welfare of our employees.
We engage with our employees through site
communications, consultation with the Employee
Consultative Committee, briefings, performance
reviews, newsletters and notice boards.
Employees are also written to individually on
matters which are deemed important. We issued
a comprehensive employee handbook during the
year with all of the employment conditions and
policies set out clearly so that everyone could see
what is expected of them.
We maintained good communication with
employees through another employee survey and
have taken into account their views in drafting a
new hybrid working policy. We have updated our
Covid policies, as necessary, during the year to
reflect the latest Government guidance, including
for the Omicron variant in December 2021.
We continue to make every effort to protect our
employees.
14
Titon Holdings Plc I 2021 Annual Report Stakeholder Group
Why do we engage with them?
How does the Board engage with them?
Customers
Suppliers
Community/ Environment
Our strategy of attaining sustainable
growth in profit and building goodwill in
our brands will only be achieved through
an understanding of the needs of our
customers and the markets we serve.
Our suppliers make an important
contribution to our business success.
Engaging with our supply chain means that
we can ensure security of supply and speed
to market. Carefully selected high-quality
suppliers ensure we deliver market leading
innovative products to meet our customers’
expectations.
The Board has a full understanding of the
importance of good community relations.
We aim to contribute positively to the
communities and environment in which we
operate.
We engage with our customers through:
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
We engage with our suppliers by holding regular
meetings with them and via a feedback process
through monitoring their performance.
We provide ventilation products that are beneficial
to health and that are better for the environment.
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 to
ensure we can help in shaping new policies,
regulations and standards, which assist
in improving indoor air quality, and ensure
compliance with existing legislation.
We participate in industry bodies and working
groups and our directors chair ventilation groups
within the trade associations.
We attend All-Party Parliamentary Groups and
plenary sessions.
We participate in and respond to industry and
government consultations.
Application of s.172 during the year
During the year the Board has, amongst other things, recruited a new CEO to drive change in the business, considered the
re-structure of the Korean businesses to simplify the arrangement, looked at the structure of the Titon Holdings and Titon
Hardware boards and developed the growth strategy of the business. As noted above, we have to recruit a new CEO in the
current year.
We have continued to comply with the requirements under s.172 in the period of the Covid-19 pandemic and the easing of
restrictions. 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; and
providing lateral flow tests to all employees and daily monitoring of Covid-19 outbreaks in our sites.
15
Titon Holdings Plc I 2021 Annual Report Strategic Report (continued)
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 quarterly 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
Associate companies
Potential Impact
Mitigations
The Group is exposed to the risks related
to working with associate companies over
which it does not have full operating control
through its equity holding.
Failure to maintain good working
relationships and to exert sufficient control
and influence in respect of our South Korean
Associate Company, Browntech Sales Co. Ltd
could affect the Group’s ability to deliver on
its objectives in this market.
The Group’s senior management has a
regular schedule of visits to meet with
the Associate Company’s management in
South Korea. During 2021 visits have been
prevented but regular video calls with local
management have taken place.
A formal Distribution Agreement exists
between Titon Korea Co. Ltd and Browntech
Sales Co. Ltd which aligns those companies
for trading purposes.
Trading with the EU
The Group relies significantly on trading with
the EU and disputes between the UK and the
EU could harm this.
Imports and exports of goods and raw
materials to and from the EU could be
subject to additional checks and increased
documentation which may increase costs
and make the Group’s products less
competitive.
The Group will ensure that stocks of
raw materials and components from
EU suppliers are adequate to allow for
disruptions to supply chains. The Group also
works very closely with its customers and
carriers to ensure that exports are received
on time. Carriers have introduced new
processes to reduce delays and costs.
Covid-19
The Group is exposed to the impact on the
markets in which it trades of the Covid-19
pandemic and particularly if governments
impose lockdowns on their populations in
response.
Falls in sales due to governments imposing
lockdowns is considered to be a medium risk
to the Group. It is possible that the Group
could use up a significant amount of its
financial assets to remain in business.
The Group has strong cash balances and can
reduce costs through staff redundancies
and cutting other expenditure. It is also likely
that governments will provide support for
affected businesses. In extremis, the Group
could look to shareholders for new equity or
debt, if third party lenders are unwilling to
lend to the Group or could sell other assets
e.g., inventory or fixed assets.
16
Titon Holdings Plc I 2021 Annual Report Risk
Potential Impact
Mitigations
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 a loss
of business affecting the financial results of
the Group.
The Group’s strategic objective is to broaden
its customer base wherever 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 customer service
KPIs which are monitored monthly through
the Group’s ISO 9001 procedures and
intervention is made where required.
The Group closely manages its pricing,
rebates and commercial terms with its
customers and suppliers to ensure that they
remain competitive.
Recruitment and retention of key personnel
The Group is dependent on the continued
employment and performance of its senior
management and other skilled personnel.
Economic conditions
The Group is dependent on the level of
activity in the construction industry in the
countries in which it markets its products
and is therefore susceptible to any changes
in economic conditions.
Government action and policy
The Group’s business is significantly affected
by Building Regulations in its core markets
as well as by Government action and policies
relating to public and private investment.
Loss of any key personnel without adequate
and timely replacement could disrupt
business operations and the Group’s
ability to implement and deliver its growth
strategies.
The Group will be preparing a formalised
succession plan in 2022.
The Group aims to provide competitive
remuneration packages and bonus schemes
to retain and motivate key personnel.
Lower levels of construction industry activity
within any of the key markets in which
the Group operates could reduce sales
and production volumes adversely, thus
affecting the Group’s financial results. This is
considered to be a medium risk to the Group
given the current impact of COVID-19.
The Group closely monitors trends in the
industry using a wide range of external data
including Experian’s reports and forecasts
for the UK and other reports in the rest of
the world. Current forecasts for economic
activity in the UK and South Korea for 2022
both show increases, which would mitigate
the risk.
The Group monitors product demand on a
weekly basis and is able to respond quickly
in re-allocating or varying resources.
The Group continually seeks to expand the
geographical markets into which it sells its
products.
Many of the Group’s products are provided
to customers in order to help them to
comply with Building Regulations in respect
of ventilation. Changes to Regulations could
adversely impact on sales volumes affecting
the Group’s financial results.
Additionally, significant downward trends
in Government spending could have an
adverse impact on the construction industry
which could impact on sales and production
volumes affecting the Group’s financial
results.
The Group closely monitors and attempts
to influence Building Regulations through
its work with industry working groups. The
UK ventilation and heat and power use
regulations are likely to be amended in 2022
before a more comprehensive review by
2025.
The Group structures its operations so that
it has a balanced exposure to the residential
and commercial construction sectors and
the refurbishment sector so as to reduce the
impact of any adverse Government action or
policy on any one of these sectors
17
Titon Holdings Plc I 2021 Annual Report Strategic Report (continued)
Report on Risk Management (continued)
Risk
Product liability
Potential Impact
Mitigations
The Group manufactures electrical products
that could cause injury to people or property.
The Group’s products are also often
incorporated into the fabric of a building or
dwelling, which could be difficult to access,
repair, recall or replace in the event of
product failure.
A product safety issue or a failure or recall
could result in a liability claim for personal
injury or other damage leading to substantial
money settlements, damage to the Group’s
brand reputation, costs and expenses and
diversion of key management’s attention
from the operation of the Group, which could
all affect the Group’s financial results.
The Group operates comprehensive quality
assurance systems and procedures within
its UK manufacturing processes and is
subject to regular external audit as part of its
ISO 9001 accreditation.
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 endeavours 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 fraud, credit and
foreign exchange risk.
Losses from any of these financial risks
could impact the Group’s financial results
The Group has financial risk management
procedures and controls in place that seek
to limit the adverse effects of the financial
risks.
This Strategic Report was approved by the Board on 19 January 2022 and signed on its behalf by:
M Norris
Chief Executive
18
Titon Holdings Plc I 2021 Annual Report Directors’ Report
The Directors present their report and the Group and Company financial statements for the year ended 30
September 2021.
The Directors of Titon Holdings Plc throughout the financial year or subsequent to the year-end are listed on page 26.
A detailed commentary on the results for the year and discussion of future developments is given in the Chairman’s Statement
on pages 2 to 5 and an explanation of the Group’s business strategy is included within the Strategic Report on pages 8 and 9.
The Group’s compliance with the QCA Code is set out in the report on page 28.
Substantial shareholders
As at 30 September 2021, the Company had been notified of the following voting interests in its ordinary share capital
(excluding ordinary shares held in treasury), other than Directors’ holdings, of 3 per cent or more in the ordinary share capital
of the Company:
Name
Rights & issues Investment Trust PLC
MI Discretionary Unit Fund Managers Ltd
Ms A J Farrar
Mr DJ Barry
Shares
1,265,000
823,304
713,079
338,000
%
11.35
7.39
6.40
3.03
Share capital
The total issued ordinary share capital at 30 September 2021 consisted of 11,193,750 Titon Holdings Plc shares of 10p each,
of which 50,000 shares were held in treasury. 60,000 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 2021 are set out in note 19 of the Notes
to the Financial Statements.
All of the Company’s shares are ranked equally and the rights and obligations attaching to the Company’s shares are set out
in the Company’s Articles of Association, copies of which can be obtained from Companies House in England and Wales and
on the Company’s website at www.titon.com/uk/investors/ .
There are no restrictions on the voting rights of shares and there are no restrictions on their transfer other than:
●
●
certain restrictions as may from time to time be imposed by laws and regulations (for example insider trading laws); and
pursuant to Article 19(11) of ‘UK MAR’ (the EU Market Abuse Regulation as amended by the Market Abuse Exit Regulations
2020) whereby Directors of the Company require approval to deal in the Company’s shares (see https://www.fca.org.uk/
markets/market-abuse/regulation).
Additionally, the Company is not aware of any agreements between shareholders of the Company that may result in
restrictions on the transfer of ordinary shares or voting rights.
Proposed dividends
The Directors recommend the payment of a final ordinary dividend of 3.0 pence (2020: 2.0 pence) per ordinary share. An
interim dividend of 1.5 pence per share was paid during the year (2020: Nil pence) so the total dividend for the year ended 30
September 2021 is 4.5 pence per share (2020: 2.0 pence). Titon operates a dividend reinvestment programme for shareholders
details of which are available from our registrars, Link Group.
Research and development
The Directors consider that research and development continues to play an important role in the Group’s success as the need
to provide increasingly energy efficient ventilation products will be a feature of our market over the coming years.
Investment in research and development amounted to £509,000 during the year (2020: £446,000). Development expenditure
capitalised in 2021 amounted to an additional £152,000 (2020: £186,000). 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 16 to 18 includes information on financial risk and also see note 21 to the
Financial Statements.
19
Titon Holdings Plc I 2021 Annual Report Directors’ Report (continued)
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 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. All of these policies were included in a new Employee Handbook which
was issued to every employee during the year. See the Strategic Report for more details.
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 43). 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 Accounting Standards as issued by the International Accounting Standards Board (IASB) and Interpretations
(collectively IFRSs) as adopted by the UK in conformity with the requirements of the Companies Act 2006. 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;
prepare a Directors’ Report, a Strategic Report and Directors’ Remuneration Report which comply with the requirements
of the Companies Act 2006; and
prepare financial statements in accordance with the rules of the London Stock Exchange for companies trading securities
on AIM.
20
Titon Holdings Plc I 2021 Annual Report Directors’ responsibilities (continued)
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Group’s
transactions and disclose with reasonable accuracy at any time the financial position of the Group and enable them to ensure
that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of
the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
Website publication
The Directors are responsible for ensuring that the annual report and the financial statements are made available on a website.
Financial statements are published on the Company’s website, which can be found at www.titon.com/uk/investors/ in
accordance with legislation in the United Kingdom governing the preparation and dissemination of financial statements, which
may vary from legislation in other jurisdictions. The maintenance and integrity of the Company’s website is the responsibility
of the Directors. The Directors are also responsible for disclosing additional information under Rule 26 of the AIM Rules, which
is available at www.titon.com/uk/investors/. The Directors’ responsibility also extends to the ongoing integrity of the financial
statements contained therein.
The Directors confirm to the best of their knowledge:
●
●
the Group financial statements have been prepared in accordance with International Financial Reporting Standards
(IFRSs) as issued by the IASB and 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 26. 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 19 January 2022 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 and as at 30 September 2021 and 19 January 2022 the Company held
50,000 such shares in treasury. The Company may use this power again in the future depending on market conditions and the
financial position of the Company.
Post balance sheet events
There have been no events since the balance sheet 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 16 to 18. 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.
21
Titon Holdings Plc I 2021 Annual Report Directors’ Report (continued)
The financial position remains robust with cash of £4.8m 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 October 2021
to 31 January 2023 but with all overheads remaining constant. 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 £3.4 million in September 2019. 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 £3.8m 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 23 February 2022 commencing at 10.00 a.m. A Notice convening the Annual General Meeting
of the Company for the year ended 30 September 2021 may be found on page 74 of this document.
Shareholders are being asked to vote on various items of ordinary business, being Resolutions 1 to 10 inclusive, as listed
below.
It is possible that new government restrictions due to the Covid-19 pandemic may be introduced before the AGM, which may
mean that shareholders are not recommended to attend the meeting in person. If this occurs, then shareholders should vote
either via Link Group by the means set out in the notes of the Notice.
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 2021.
The Directors’ Report was approved by the Board on 19 January 2022 and signed by order of the Board.
Resolution 2 - to declare a final dividend
The Directors recommend a final dividend of 3.0 pence per ordinary share. Subject to approval by shareholders, the final
dividend will be paid on 4 March 2022 to shareholders on the register on 28 January 2022.
Resolution 3 - to re-elect Mr John Neil Anderson as a Director
The Chairman 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 Chairman confirms that following performance evaluation Mr Ritchie continues to be effective and demonstrates
commitment in his role.
Resolution 5 - to re-elect Mr Nicholas Charles Howlett as a Director
The Chairman confirms that following performance evaluation Mr Howlett continues to be effective and demonstrates
commitment in his role.
Resolution 6 - to re-appoint BDO LLP as auditors
This resolution proposes that BDO LLP should be re-appointed as the Company’s Auditors and authorises the Directors to
determine their remuneration.
Resolution 7 – to approve the Directors’ Remuneration Report
Resolution 7 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 24 to 27.
Resolution 8 – authority to allot shares
The Companies Act 2006 prevents directors of a public company from allotting unissued shares, other than pursuant to an
22
Titon Holdings Plc I 2021 Annual Report 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
10 March 2021, will expire at the forthcoming Annual General Meeting.
Resolution 8 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 19 January 2022 (excluding treasury shares). The Company
currently holds 50,000 shares in treasury.
The authority conferred by the resolution will expire on 22 May 2023 or, if sooner, at the 2023 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 9 - 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 10 March 2021 will expire at the forthcoming Annual General Meeting. Accordingly, Resolution 9 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 19 January 2022). The power conferred by this Resolution will expire on 22 May 2023 or, if sooner, at the
2023 Annual General Meeting.
In addition, there is one item of special business, being Resolution 10, as listed below.
Resolution 10 - Company’s authority to purchase its own shares
Resolution 10 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 1,119,000 ordinary shares. This represents approximately 10% of the Company’s
ordinary shares in issue on 19 January 2022. 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 May 2023 or, if sooner,
at the 2023 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. As noted above the
Company currently holds 50,000 shares in treasury.
As at 19 January 2022 there were options outstanding over 615,000 ordinary shares which, if exercised at that date, would
have represented 5.5% of the Company’s issued ordinary share capital (including treasury shares). If the authority given by
Resolution 9 were to be fully used, these would then represent 6.1% 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 19 January 2022 and signed on its behalf by:
C Isom
Company Secretary
23
Titon Holdings Plc I 2021 Annual Report
Directors’ Remuneration Report
Statement from the Chairman of the Committee
I am pleased to present the Directors’ Remuneration Report for the year ended 30 September 2021.
The vote on the Directors’ Remuneration Report is, as previously, an advisory vote. An Ordinary Resolution will be put to
shareholders at the forthcoming Annual General Meeting to be held on 23 February 2022, to receive and adopt the Directors’
Remuneration Report. I can report that at the 2021 AGM there were 5,065,796 votes in favour, 0 votes against and 6,282
votes withheld for the Resolution to receive and adopt the Directors’ Remuneration Report.
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 directly linked to the amount by which the Group’s profit before taxation exceeds budget. As the results exceeded the
targeted budget, performance related elements have been paid this year.
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. A new remuneration policy will be proposed for
executive directors in 2022 and will be put to shareholders for approval in due course.
The Directors’ interests in the ordinary share capital of the Company at the year-end are reported below on page 26.
Remuneration Committee
The Committee consisted of Mr K Sargeant and Mr B Ratzke for the entire financial year and continued until 7 December 2021
when they left the Board. The Committee presently consists of Mr. N Howlett, a Non-executive Director and Mr. K Ritchie,
Executive Chairman for the period until the new Non-executive Directors have been appointed, when the membership of the
Committee will be reviewed. 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:
Directors’ remuneration
Other employee remuneration
Dividend payments to shareholders
2021
2020
Percentage
change
£’000
901
5,794
390
£’000
662
5,557
332
%
36
4
17
Other employee remuneration includes grant income relating to the Coronavirus Job Retention Scheme of £0.008m
(2020: £0.5m).
24
Titon Holdings Plc I 2021 Annual Report
Directors’ remuneration
The remuneration paid to the Directors during the year, together with a comparison of the previous year, is as follows:
Year
ended
30 September
Salary
and
fees
(a) (e)
Benefits
in
kind
Short term
performance
related
remuneration
Pension
benefits
Total
Executive Directors:
T N Anderson
T D Gearey
K A Ritchie
D A Ruffell (c)
M. Norris (d)
Non-executive Directors:
J N Anderson
N C Howlett
K Sargeant
B Ratzke
Totals
£’000
£’000
(b)
£’000
£’000
2021
2020
2021
2020
2021
2020
2021
2020
2021
2021
2020
2021
2020
2021
2020
2021
2020
99
96
58
55
157
128
170
119
37
37
35
66
52
46
36
46
36
-
-
8
9
13
20
13
19
-
-
-
-
-
-
-
-
-
2021
2020
716
556
34
48
26
-
20
-
41
-
-
-
10
-
-
-
-
-
-
-
-
97
-
8
8
28
28
-
-
10
17
3
-
-
5
4
-
-
-
-
54
56
£’000
133
104
114
92
211
148
193
155
50
37
35
71
56
46
36
46
36
901
662
(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 due for this period to
Executive Directors. The maximum performance was achieved in the period and a bonus of approximately 25% of salary
is payable.
(c) D 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 is included in salary above.
(d) M Norris joined the Board on 12 July 2021.
(e) The remuneration package of each Executive Director includes non-cash benefits, which for K Ritchie, D Ruffell and T
Gearey also included the provision of a company car. The aggregate gains made by Directors on the exercise of share
options during 2021 were £33,200 (2020: £nil).
25
Titon Holdings Plc I 2021 Annual Report
Directors’ Remuneration Report (continued)
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:
K A Ritchie
Executive Director and Chairman
D A Ruffell
Chief Executive (left 30 April 2021)
M Norris
Chief Executive (joined 12 July 2021)
J N Anderson
Non-executive Director and Deputy Chairman
T N Anderson
Sales & Marketing Director
T D Gearey
I.T. Director
N C Howlett
Non-executive Director
K Sargeant
Non-executive Director
B Ratzke
Non-executive Director
30 September 2021
Ordinary shares of
10p each
30 September 2020
Ordinary shares of
10p each
981,381
178,500
-
1,737,802
693,750
20,500
38,500
10,000
10,000
981,381
118,500
-
1,737,802
693,750
20,500
38,500
10,000
14,924
There were no other changes in Directors’ beneficial shareholdings between 30 September 2021 and 19 January 2022 other
than the sale by Mr. B Ratzke of 9,900 shares on 12 November 2021. Mr B Ratzke and Mr K Sargeant left the Board on 7
December 2021.Ms CV Isom joined the Board on 22 December 2021. She did not hold any shares at 30 September 2021
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
T N Anderson
(b)
58.0p
T D Gearey
(c)
156.5p
N C Howlett
(b)
58.0p
K A Ritchie
(b)
58.0p
At 1
October
2020
Number
25,000
25,000
18,000
18,000
25,000
25,000
50,000
50,000
Granted
during
the year
Exercised
during
the year
Lapsed
during the
year
Number
Number
Number
At
30 September
2021
Number
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
25,000
25,000
18,000
18,000
25,000
25,000
50,000
50,000
150,000
-
-
-
M Norris
D A Ruffell
(d)
(a)
(b)
138.5p
-
150,000
48.0p
58.0p
10,000
50,000
60,000
-
-
-
(10,000)
(50,000)
(60,000)
Mr J N Anderson, Mr K Sargeant and Mr B Ratzke had no interests in options over shares during the year.
26
Titon Holdings Plc I 2021 Annual Report
There have been no changes to the number of share options held by Directors between 30 September 2021 and 19 January
2022. Ms CV Isom joined the Board on 22 December 2021 and holds options over 50,000 shares, which were granted on 15
July 2021.
Share options
Share options are exercisable between the following dates:
(a) 9 June 2014
(b) 15 January 2017
(c) 30 January 2021
(d) 15 July 2024
and
and
and
and
9 June 2021
15 January 2024
30 January 2028
15 July 2031
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 2021 the market price of the Company’s shares was 115p. The range during the year was 81.5p to 140p.
Approval
The Directors’ Remuneration Report was approved by the Remuneration Committee on 19 January 2022 and signed on its
behalf by:
N Howlett
Remuneration Committee Chairman
27
Titon Holdings Plc I 2021 Annual Report
Corporate Governance Report
Chairman’s Introductory Statement
As noted in our ESG report we present the Corporate Governance Report for the last financial year. As I have said in the
past, we take our corporate governance responsibilities very seriously. We continue to apply the Quoted Companies Alliance
Corporate Governance Code (“QCA Code”) as this fits more naturally with our listing on the AIM Market. The QCA Code is
available from the QCA and it involves us following ten general principles and ensuring that a number of minimum disclosure
requirements are made in the Annual Report or on the Company’s website, www.titon.com/uk/investors/. The website also
contains more details of the governance disclosures. It is then up to us to determine how the ten principles will be applied.
KA Ritchie
Chairman
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.
During the last year COVID-19 has required difficult decisions to be taken 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. During the year
we undertook a further employee survey to hear their views about working from home due to COVID-19. The Board believes
that the corporate culture is in a good state and that the reputation of Titon amongst our stakeholders is high.
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 Financial Controller and are reviewed by the Finance Director of
Titon Hardware Ltd 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 2021 the Board consisted of the Executive Chairman, the Chief Executive, two other Executive Directors
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 chairman 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;
Mat Norris joined the Board on 12 July 2021 having previously worked for Ford Motor Company and a number of other UK
manufacturing companies. He has significant experience of modern manufacturing practices and management. Mat is due to
leave the Group on 9 February 2022;
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. He has wide experience of the ventilation and hardware industry and continues to
develop his skills through being closely involved with new product development and procurement and also with the latest
marketing approaches;
Tony Gearey joined Titon in 1985 and has held a number of positions within the Group since then. He is currently responsible
28
Titon Holdings Plc I 2021 Annual Report for IT and for the operations of Titon Inc. and was appointed to the Board on 2 November 2016. He has extensive technical
skills and experience from a number of roles within Titon. Tony led the introduction of Microsoft’s ERP system in 2012 and
has been heavily involved in the upgrade of that system to the latest Microsoft package, which means that he remains closely
involved with all aspects of production, purchasing, sales and the finance outputs to enable the business to function;
John Anderson founded the Company in 1972 and was its Chairman until 2012 when he became a Non-executive Director.
As the Company’s founder he knows more about the Company and many of its products than most other employees and
has always been involved in product development and marketing, skills which he continues to offer to the business. He has a
service contract which terminates at the 2022 Annual General Meeting unless he is re-elected;
Kevin Sargeant joined the Board on 1 September 2016. He worked at Vent-Axia, a subsidiary of Smith Industries PLC, from
1990 until 2002 when Volution Holdings (comprising Vent-Axia) was created. Kevin led the buyout of Volution Holdings in the
same year and was CEO of the newly named Volution Group until its sale to Towerbrook Private Equity and the management
in 2012. Since then, he has held a number of senior strategic development roles with major companies in the ventilation
sector and was Non-executive Chairman of Nuaire Ltd from November 2013 until its sale to Polypipe PLC in August 2015.
Kevin qualified as a member of the Chartered Institute of Management Accountants in 1980. He left the Board on 7 December
2021;
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 2022 Annual General Meeting unless he is re-elected. Nick has carried out many roles for Titon, including
Production Manager 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;
Bernd Ratzke joined the Titon Board in March 2019 following a career as a corporate lawyer in the City of London. He has
extensive legal and commercial skills from many years of practising law for a wide range of corporate clients. Bernd holds
a practising certificate from the SRA and is a senior adviser to a UK legal practice. He is Group Legal Director and, in this
role, advises the Company on any relevant legal matters which arise during the course of business. He left the Board on 7
December 2021.
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 Executive Chairman has a range of responsibilities to perform including, inter alia, the proper functioning of the Board
of Directors and setting the strategic development of the Company and Group. The Chief Executive also has a specific range
of responsibilities including the day-to-day management of the Group and implementing the strategy set out by the Board.
The two current Non-executive Directors provide a range of skills and wide experience to the Group alongside the necessary
independence, as required under principle 5, as follows:
1. Mr NC 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 JN Anderson is not deemed to be independent as he is a significant shareholder and was a previous chairman of the
Company.
The Group is in the process of appointing two new NEDs to replace Mr Sargeant and Mr Ratzke and the search criteria is that
they will be independent for the purposes of the QCA Code.
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 2021 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.
29
Titon Holdings Plc I 2021 Annual Report
Corporate Governance Report (continued)
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
Board
Remuneration
Committee
Audit
Committee
Nominations
Committee
Total meetings held
K A Ritchie
D A Ruffell
M Norris
T N Anderson
T D Gearey
N C Howlett
K Sargeant
J N Anderson
B Ratzke
9
9
5
2
9
8
8
9
9
8
2
2
-
-
-
-
-
2
-
2
2
2
1
-
-
-
-
1
-
-
1
1
-
-
-
-
1
-
1
There is an agreed procedure for Directors to take independent professional advice if necessary and at the Company’s expense.
This is in addition to the access which every Director has to the Company Secretary. The Company Secretary is charged by the
Board with ensuring that Board procedures are followed.
When new members are appointed to the Board, they are provided with advice from the Company Secretary in respect of their
role and duties as a public company director. Furthermore, all Directors have ongoing access to the Company Secretary for
advice during the course of their appointment.
Appointments to the Board of both Executive and Non-executive Directors are considered by the Nominations Committee for
endorsement by the Board as a whole.
Any Director appointed during the year is required, under the provisions of the Company’s Articles of Association, to retire and
seek election by the shareholders at the next Annual General Meeting. The Articles of Association also require that one third
of the Directors retire by rotation each year and seek re-election at the Annual General Meeting. The Directors required to
retire are those in office longest since their previous re-election and in practice this means that each Director retires at least
every three years, in accordance with the requirements of the Code. It is the Company’s practice that all of the Non-executive
Directors will seek re-election at each Annual General Meeting.
The Directors who retire at the next AGM are Mr John Anderson, Mr Keith Ritchie and Mr Nicholas Howlett. All three Directors,
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 24 to 27. 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.
30
Titon Holdings Plc I 2021 Annual Report Nominations Committee
The Nominations Committee during the year comprised Mr Sargeant and Mr Ratzke. It 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 once in the financial period
under review to nominate a candidate for the post of CEO. As noted above unfortunately Mr Norris will leave Titon on 9
February 2022. Executive search consultants have been appointed to recruit the new CEO. Since the year-end Mr Sargeant
and Mr Ratzke have left the Board. Mr Howlett and Mr Ritchie have been appointed to the Nominations Committee to replace
them.
Communications with shareholders
The Board recognises the importance of communications with shareholders. The Strategic Report on pages 6 to 18 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
Chairman 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 19 January 2022 and signed on its behalf by:
KA Ritchie
Chairman
31
Titon Holdings Plc I 2021 Annual Report
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 K Sargeant ACMA, who has extensive accounting experience from his time in industry. Since the
year end Mr Sargeant has left the Board and a new member of the Audit Committee is being recruited. 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. During 2021 it was not
possible to travel to South Korea but 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.
32
Titon Holdings Plc I 2021 Annual Report Internal control
The respective responsibilities of the Directors in connection with the financial statements are set out on pages 20 and 21,
and those of the Auditors are detailed in the Independent Auditor’s Report on pages 34 to 39.
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 16 to 18) which is regularly reviewed by the Board and which identifies the likelihood and severity of the impact of
such risks and the controls in place to mitigate the probability of such risks occurring.
Internal control systems are designed to meet the Group’s particular needs and the risks to which it is exposed. They do not
eliminate the risk of failure to achieve business objectives. The following are the key components which the Group has in place
to provide effective internal control:
●
●
●
●
an appropriate control environment through the definition of the organisation structure and authority levels;
the identification of the major business risks facing the Group and the development of appropriate procedures and
controls to manage these risks;
a comprehensive budgeting and reporting system with monthly results compared with budgets and with previous years;
and
the principal aspects of the Group’s internal control processes used in preparing the Group’s consolidated accounts include
second reviews of consolidation workings and Board review of the composition of the Group’s financial information.
The Directors acknowledge that they are responsible for establishing and maintaining the Group’s system of internal control
and risk management and reviewing their effectiveness, which they have done during the year. Internal control systems
are designed to meet the particular needs of the Group and the risks to which it is exposed and by their nature can provide
reasonable but not absolute assurance against material misstatement or loss. Appropriate risk monitoring systems have
been in place throughout the year and up to the date of approval of the Annual Report and have been regularly reviewed by
the Board. The Report on Risk Management sets out the principal risks identified by the Directors, the potential impact and
the mitigation measures which apply. No significant weaknesses have been identified in this report by the Directors during
the year.
The Company has a shareholding in an associate company. Controls within this entity are not reviewed as part of the
Company’s formal review processes due to the local delegation of managerial responsibilities, but instead are reviewed as
part of regular management process.
External audit process
The Audit Committee meets at least twice a year with the Auditor, who provides a planning report in advance of the annual
audit and a report on the annual audit. The Committee has an opportunity to question and challenge the Auditor in respect of
each of these reports. No significant deficiencies were noted by the Auditor in respect of the period ended 30th September
2021. The Committee also discussed the basis of preparation of the going concern opinion and the key audit matters with the
Auditor, specifically in the context this year of the pandemic.
After each audit, the Audit Committee reviews the audit process and considers its effectiveness.
Auditor assessment and independence
The Group’s external auditor is BDO LLP, which has been the Group’s auditor since 2006.
The Audit Committee also reviewed BDO’s independence policies and procedures including quality assurance procedures and
it was confirmed that those policies and procedures remained fit for purpose. Accordingly, the Audit Committee recommends
that BDO should be reappointed as the Group’s auditor for the next financial year and a resolution to that effect will be
proposed at the 2022 AGM.
The fees for audit services provided by BDO for 2021 were £116,000 (2020: £107,000). The Audit Committee discussed the
non-audit services provided by BDO during the year. The cost of non-audit services provided by the Auditor for the financial
year ended 30 September 2021 was £1,450 (2020: £1,000).
K A Ritchie
Audit Committee Chairman
19 January 2022
33
Titon Holdings Plc I 2021 Annual Report
Independent Auditor’s Report
Opinion on the financial statements
In our opinion:
●
the financial statements give a true and fair view of the state of the Group’s and of the Parent Company’s affairs as at 30
September 2021 and of the Group’s profit for the year then ended;
●
●
●
the Group financial statements have been properly prepared in accordance with international accounting standards in
conformity with the requirements of the Companies Act 2006;
the Parent Company financial statements have been properly prepared in accordance with international accounting
standards in conformity with the requirements of the Companies Act 2006 and as applied in accordance with the
provisions of the Companies Act 2006; and
the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
We have audited the financial statements of Titon Holdings Plc (the ‘Parent Company’) and its subsidiaries (the ‘Group’) for
the year ended 30 September 2021 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 notes to the financial statements, including a summary of significant accounting policies.
The financial reporting framework that has been applied in their preparation is applicable law and international accounting
standards in conformity with the requirements of the Companies Act 2006 and as regards the Parent Company financial
statements, as applied in accordance with the provisions 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 believe that the audit evidence we have obtained is sufficient and appropriate to provide
a basis for our opinion.
Independence
We remain independent of the Group and the Parent Company 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.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the Directors’ use of the going concern basis of accounting in the
preparation of the financial statements is appropriate.
Our evaluation of the Directors’ assessment of the Group and the Parent Company’s ability to continue to adopt the going
concern basis of accounting included:
● We agreed the opening cash position used in the cash flow forecast as at 1 December 2021 to bank statements.
● We performed an accuracy check on the mechanics of the cash flow forecast model prepared by management and the
Directors.
● We assessed management’s and the Directors’ financial forecasts prepared for a period of at least 12 months from the
date of these financial statements. This included consideration of the reasonableness of key underlying assumptions by
reference to current expenditure and revenue. We also evaluated the Directors and management’s assessment against
third party industry data, where available.
● We considered any potential impact of Covid-19 on the financial position of the Parent Company and Group over the
going concern review period and assessed the stress tested forecasts which included a decrease in forecast revenue and
the resulting impact on cash flows.
● We evaluated the adequacy and consistency of the going concern disclosures made in the financial statements with
reference to management and the Directors’ financial 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 and the Parent Company’s ability to continue as a going
concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the relevant
sections of this report.
34
Titon Holdings Plc I 2021 Annual Report Overview
Coverage
97% (2020: 96%) of Group revenue
93% (2020: 92%) of Group total assets
98% (2020: 97%) of Group profit before tax
Key audit matters
2. Inventory – standard costing
1. Revenue recognition
3. Inventory – provision for
slow moving and obsolete inventory
2021
2020
Yes
Yes
Yes
Yes
Yes
Yes
Materiality
Group financial statements as a whole
£250k (2020: £150k) based on 1.1% (2020: 0.7%) of revenue
An overview of the scope of our audit
Our Group audit was scoped by obtaining an understanding of the Group 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.
In approaching the audit, we considered how the Group and Parent Company is organised and managed.
We assessed there to be four significant components being the Parent Company, Titon Holdings Plc, Titon Hardware Limited,
Browntech Sales Co. and Titon Korea Co Ltd. The financial information of the remaining non-significant components were
subject to analytical review procedures or specific procedures performed by the Group engagement team.
The Parent Company and Titon Hardware were subject to a full scope audit by the Group engagement team. A full scope audit
for Group reporting purposes was performed by a BDO network firm in Korea on Titon Korea Co Ltd and Browntech Sales Co.
Our involvement with component auditors
For the work performed by component auditors, we determined the level of involvement needed in order to be able to conclude
whether sufficient appropriate audit evidence has been obtained as a basis for our opinion on the Group financial statements
as a whole. Our involvement with component auditor included the following:
A planning meeting was held with the component auditor remotely and detailed group reporting instructions on matters
such as materiality, timetables and procedures to be performed over significant areas sent to them. We also performed a
remote review of their audit working papers and discussed the findings with the component audit partner, the audit team and
component management.
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, including 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.
35
Titon Holdings Plc I 2021 Annual Report
Independent Auditor’s Report (continued)
Key audit matter
Revenue Recognition
Refer to the accounting policy included in
note 1(k) and the disclosures in note 3 to the
financial statements
The Group generated revenue of £23.4m
(2020: £20.7m) during the financial year.
Revenue is an area of particular audit focus
as it is one of the most prominent key
performance indicators for the business.
We considered that the more likely way in
which revenue may be incorrectly recognised
is in the cut-off of transactions around
the year end both in the UK and in Korea.
This risk is heightened in Korea where
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.
Inventory – standard costing
Refer to the accounting policy included in
note 1(f), the critical accounting estimates
in note 2 and disclosures in note 14 to the
financial statements.
We identified the standard costing model
applied to the Group’s inventory balance as
carrying a risk of material misstatement due
to the use of key management judgements
in respect of overhead and labour recovery
rates.
How the scope of our audit addressed
the key audit matter
We have agreed a sample of revenue
transactions across the revenue streams
to the underlying documentation including
proof of despatch and delivery and cash
received for evidence of when the Group
has fulfilled its performance obligations and
verified the accuracy of the revenue amount
recognised.
Cut-off testing on both the UK and Korean
components was performed by selecting a
sample of dispatches for a defined period
before and after the year end and agreeing
to the related sales invoice and customer
signed delivery note checking that revenue
was recorded in the correct period.
For the Korean entities we tested a sample
of items included in the deferred revenue
adjustment and agreed that revenue had
been recognised appropriately and deferred
as the second fix was required to take
place by agreeing to proof of delivery and
supporting documents from the customer
that the second fix occurred post year end.
Key observation:
Based on the procedures performed, we
found the judgement and estimates made
by management to be reasonable.
We assessed the overhead and labour costs
used in the calculation of standard costs by
agreeing a sample of payroll costs to payroll
reports over which we have performed audit
procedures and overhead costs to invoices.
We assessed the cost types included within
the overhead apportionment calculation
and checked that only the appropriate cost
types were included as per the applicable
accounting standard requirement on costs
that meet the definition of inventory cost.
We compared the overhead apportionment
calculation to the prior year to assess
the accuracy and completeness of the
calculation.
We evaluated the rigour of the process by
which standard production times are set
by recalculating Management’s efficiency
rate and evaluating the judgments made
in adjusting the average efficiency for the
year to determine that the final efficiency
rate was accurate by comparing the final
efficiency rate used by Management to the
average of operational months.
We recalculated the standard cost and
compared to that set by Management for
each of the above sample of the overhead
and labour costs.
Key observation:
As a result of performing the above
procedures, we did not identify any
matters which indicate that Management’s
judgements relating to the costing of stock
were not reasonable.
36
Titon Holdings Plc I 2021 Annual Report Inventory – provision for slow moving and
obsolete inventory
Refer to the accounting policy included in
note 1(f), the critical accounting estimates
in note 2 and disclosures in note 14 to the
financial statements.
We identified the standard costing model
applied to the Group’s inventory balance as
carrying a risk of material misstatement due
to the use of key management judgements
in respect of overhead and labour recovery
rates.
We confirmed that the report used by
Management to quantify historical usage
of inventory, used in calculating the slow-
moving inventory provision, was accurate by
agreeing a sample of aged inventory items
from the report to the last recorded invoice
or movement of the inventory such as
purchase or issue to production.
We reperformed the calculation of the
inventory that was considered slow moving
and corroborated the assumptions applied
by Management in estimating inventory
provisions by considering and inspecting
recent receipt of inventory and the future
sales activity by agreeing to purchase orders
and reviewing post year end inventory
movements such as sales and issue to
production for evidence of inventory age and
movement.
We inspected the condition of inventory
at our physical inventory observations for
indications of whether additional provisions
should be made.
We assessed the accuracy of prior year
provisions by comparing to actual results.
Key observation:
Based on the procedures performed, we
found the judgement and estimates made
by management to be reasonable.
Our application of materiality
We apply the concept of materiality both in planning and performing our audit, and in evaluating the effect of misstatements.
We consider materiality to be the magnitude by which misstatements, including omissions, could influence the economic
decisions of reasonable users that are taken on the basis of the financial statements.
In order to reduce to an appropriately low level the probability that any misstatements exceed materiality, we use a lower
materiality level, performance materiality, to determine the extent of testing needed. Importantly, 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.
Based on our professional judgement, we determined materiality for the financial statements as a whole and performance
materiality as follows:
Group financial statements
Parent company financial statements
2021
£
2020
£
2021
£
2020
£
£250,000
£150,000
£150,000
£100,000
1.1% of Revenue
0.7% of Revenue
60% of Group materiality
1.5% of Total Assets
Materiality
Basis for determining
materiality
Rationale for the
benchmark applied
We considered revenue to be the most important
metric to users of the financial statements, including
investors who would consider revenue in their short /
medium term investment decisions.
Capped at 60% of Group
materiality given the
assessment of the
components aggregation
risk.
The entity is a holding
company and asset-
based therefore total
assets was considered to
be the most appropriate
benchmark.
Performance materiality
£175,000
£105,000
£105,000
£70,000
Basis for determining
performance materiality
70% of materiality taking into consideration our assessment of the control environment and the low level of
adjustments found in the prior year.
37
Titon Holdings Plc I 2021 Annual Report
Independent Auditor’s Report (continued)
Component materiality
We set materiality for each component of the Group based on a percentage of between 20% and 80% of Group materiality
dependent on the size and our assessment of the risk of material misstatement of that component. Component materiality
ranged from £50,000 to £200,000. In the audit of each component, we further applied performance materiality levels of
70% of the component materiality to our testing to ensure that the risk of errors exceeding component materiality was
appropriately mitigated.
Reporting threshold
We agreed with the Audit Committee that we would report to them all individual audit differences in excess of £5,000 (2020:
£3,000). We also agreed to report differences below this threshold that, in our view, warranted reporting on qualitative
grounds.
Other information
The Directors are responsible for the other information. The other information comprises the information included in the
Annual Report and Financial Statements, other than the financial statements and our auditor’s report thereon. 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.
Other Companies Act 2006 reporting
Based on the responsibilities described below and our work performed during the course of the audit, we are required by the
Companies Act 2006 and ISAs (UK) to report on certain opinions and matters as described below.
Strategic report and Directors’ report
In our opinion, based on the work undertaken in the course of the audit:
●
●
the information given in the strategic report and the Directors’ report for the financial year for which the financial
statements are prepared is consistent with the financial statements; and
the strategic report and the Directors’ report have been prepared in accordance with applicable legal requirements.
In the light of the knowledge and understanding of the Group and the Parent Company and its environment obtained in the
course of the audit, we have not identified material misstatements in the strategic report or the Directors’ report.
Matters on which we are required to report by exception
● We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to
●
report to you if, in our opinion:
adequate accounting records have not been kept by the Parent Company, or returns adequate for our audit have not been
received from branches not visited by us; or
the Parent Company financial statements are not in agreement with the accounting records and returns; or
●
●
certain disclosures of Directors’ remuneration specified by law are not made; or
● we have not received all the information and explanations we require for our audit.
Responsibilities of Directors
As explained more fully in the Directors’ responsibilities statement, the Directors are responsible for the preparation of the
financial statements and for being satisfied that they give a true and fair view, and for such internal control as the Directors
determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether
due to fraud or error.
In preparing the financial statements, the Directors are responsible for assessing the Group’s and the Parent Company’s
ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern
basis of accounting unless the Directors either intend to liquidate the Group or the Parent Company or to cease operations, or
have no realistic alternative but to do so.
Auditor’s 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.
38
Titon Holdings Plc I 2021 Annual Report 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.
Extent to which the audit was capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with
our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent
to which our procedures are capable of detecting irregularities, including fraud is detailed below:
We obtained an understanding of the legal and regulatory framework applicable to the Group and considered the most
significant laws and regulations to be Companies Act 2006, Corporate and VAT legislation, Employment Taxes, Health Safety,
the Bribery Act 2010 and any local laws in Korea.
We evaluated management’s incentives and opportunities for fraudulent manipulation of the financial statements (including
the risk of management override of controls and improper revenue recognition) and determined that the principal risks were
related to management bias in accounting estimates and posting inappropriate journal entries to manipulate the operating
results.
Audit procedures performed by the engagement team included:
● We obtained an understanding of the processes and controls that the Group has established to address risks identified,
or that otherwise prevent, deter and detect fraud and how management monitors those processes and controls;
●
●
For significant components in Korea, we issued group audit engagement instructions which specified the audit procedures
that we required the component auditor to perform in regard to the fraud risks and reviewed their working papers for
results of work performed in this regard.
In respect of the risk of fraud in revenue recognition, the procedures set out in the revenue recognition key audit matter
above;
● We targeted journal entry testing based on identified characteristics the audit team considered could be indicative of
fraud, as well as a focus on large and unusual transactions based upon our knowledge of the business;
● We made enquiries of Management, those charged with governance and those responsible for legal and compliance
procedures as to whether there was any correspondence from regulators in so far as the correspondence related to
financial statements and also if they were aware of any actual or suspected instances of non-compliance with laws and
regulations and fraud; and
● We also communicated relevant identified laws and regulations and potential fraud risks to all engagement team
members and remained alert to any indications of fraud or non-compliance with laws and regulations throughout the
audit.
Our audit procedures were designed to respond to risks of material misstatement in the financial statements, recognising that
the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error,
as fraud may involve deliberate concealment by, for example, forgery, misrepresentations or through collusion. There are
inherent limitations in the audit procedures performed and the further removed non-compliance with laws and regulations is
from the events and transactions reflected in the financial statements, the less likely we are to become aware of it.
A further description of our responsibilities is available on the Financial Reporting Council’s website at: 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 Parent Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the
Companies Act 2006. Our audit work has been undertaken so that we might state to the Parent Company’s members those
matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted
by law, we do not accept or assume responsibility to anyone other than the Parent Company and the Parent Company’s
members as a body, for our audit work, for this report, or for the opinions we have formed.
Matt Crane (Senior Statutory Auditor)
For and on behalf of BDO LLP, Statutory Auditor
London, UK
19 January 2022
BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).
39
Titon Holdings Plc I 2021 Annual Report Consolidated Income Statement
for the year ended 30 September 2021
Revenue
Cost of sales
Grant Income
Gross profit
Distribution costs
Administrative expenses
Research and development expenses
Grant Income
Other income
Operating profit / (loss)
Finance income
Finance expense
Share of post-tax (loss) / profit from associate
Profit before tax
Income tax (expense) / credit
Profit after income tax
Attributable to:
Equity holders of the parent
Non-controlling interest
Profit for the year
Earnings per share attributed to equity holders of the parent:
Basic
Diluted
Note
3
4
4
5
5
13
6
7
9
9
Consolidated Statement of Comprehensive Income
for the year ended 30 September 2021
Profit for the year
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
Total comprehensive income for the year
Attributable to:
Equity holders of the parent
Non-controlling interest
The notes on pages 46 to 72 form part of these financial statements.
2021
£’000
2020
£’000
23,412
20,652
(16,070)
(15,200)
8
7,350
(1,144)
(4,521)
(582)
-
16
1,119
-
(16)
(28)
1,075
(72)
1,003
1,028
(25)
1,003
202
5,654
(1,289)
(4,305)
(446)
326
21
(39)
10
(36)
83
18
104
122
58
64
122
9.24p
9.18p
0.52p
0.52p
2021
£’000
1,003
(284)
719
793
(74)
719
2020
£’000
122
(62)
60
(17)
77
60
40
Titon Holdings Plc I 2021 Annual Report Consolidated Statement of Financial Position
at 30 September 2021
Assets
Property, plant and equipment
Right-of-use assets
Intangible assets
Investments in associates
Deferred tax assets
Total non-current assets
Inventories
Trade and other receivables
Cash and cash equivalents
Total current assets
Total Assets
Liabilities
Lease liabilities
Total non-current liabilities
Trade and other payables
Lease liabilities
Total current liabilities
Total Liabilities
Equity
Share capital
Share premium reserve
Capital redemption reserve
Treasury shares
Foreign exchange reserve
Retained earnings
Total Equity attributable to equity holders of the parent
Non-controlling Interest
Total Equity
Total Liabilities and Equity
Note
10
10
11
13
16
14
15
20
18
17
18
19
19
2021
£’000
3,476
546
925
2,681
278
7,906
5,042
4,224
4,794
2020
£’000
3,469
772
753
2,877
333
8,204
4,367
3,779
5,572
14,060
13,718
21,966
21,922
402
402
4,554
193
4,747
5,149
1,119
1,077
56
(27)
96
14,093
16,414
531
531
4,303
277
4,580
5,111
1,113
1,049
56
(27)
327
13,425
15,943
403
868
16,817
16,811
21,966
21,922
The notes on pages 46 to 72 form part of these financial statements.
These financial statements were approved and authorised for issue by the Board on 19 January 2022 and signed on its
behalf by:
KA Ritchie
Chairman
41
Titon Holdings Plc I 2021 Annual Report
Company Statement of Financial Position
at 30 September 2021
Company No. 01604952
Assets
Property and motor vehicles
Investments in subsidiaries
Investments in associates
Total non-current assets
Trade and other receivables
Cash and cash equivalents
Total current assets
Total Assets
Liabilities
Deferred tax
Total non-current assets
Trade and other payables
Total current liabilities
Total Liabilities
Equity
Share capital
Share premium account
Capital redemption reserve
Treasury shares
Retained earnings
Total Equity
Total Liabilities and Equity
Note
10
12
13
15
20
16
17
19
2021
£’000
1,836
554
225
2,615
3,818
1,324
5,142
7,757
274
274
168
168
442
1,119
1,077
56
(27)
5,090
7,315
7,757
2020
£’000
1,910
554
225
2,689
3,147
2,001
5,148
7,837
232
232
211
211
443
1,113
1,049
56
(27)
5,203
7,394
7,837
As permitted by section 408(3) of the Companies Act 2006 the Company has elected not to present its own
profit and loss account for the year. Titon Holdings Plc reported a profit before tax for the financial year ended
30 September 2021 of £243,000 (2020: £517,000). The notes on pages 46 to 72 form part of these financial
statements.
These financial statements were approved and authorised for issue by the Board on 19 January 2022 and
signed on its behalf by:
KA Ritchie
Chairman
42
Titon Holdings Plc I 2021 Annual Report Consolidated Statement of Changes in Equity
at 30 September 2021
Share
capital
£’000
Share
premium
reserve
£’000
Capital
redemption
reserve
£’000
Foreign
exchange
reserve
£’000
Treasury
shares
Retained
earnings
Total
£’000
£’000
£’000
Non-
controlling
interest
£’000
Total
Equity
£’000
At 1 October 2019
1,113
1,049
56
402
(27)
13,653
16,246
1,459
17,705
Translation differences on
overseas operations
Profit for the year
Total Comprehensive Income
for the year
Dividends paid
Dividends paid to NCI in
subsidiary
Share-based payment
expense
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(75)
-
(75)
-
-
-
-
-
-
-
-
-
-
58
58
(75)
58
(17)
(332)
(332)
13
64
77
-
(62)
122
60
(332)
-
46
-
46
(668)
(668)
-
46
At 30 September 2020
1,113
1,049
56
327
(27)
13,425
15,943
868
16,811
Translation differences on
overseas operations
Profit for the year
Total Comprehensive Income
for the year
Dividends paid
Dividends paid to NCI in
subsidiary
Share-based payment
expense
Exercise of share options
-
-
-
-
-
-
6
-
-
-
-
-
-
28
(231)
-
(231)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(4)
(235)
1,028
1,028
1,024
793
(49)
(25)
(74)
(284)
1,003
719
(390)
(390)
-
(390)
-
34
-
-
34
34
(391)
(391)
-
-
34
34
At 30 September 2021
1,119
1,077
56
96
(27)
14,093
16,414
403
16,817
The notes on pages 46 to 72 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
43
Titon Holdings Plc I 2021 Annual Report
Company Statement of Changes in Equity
at 30 September 2021
Share
capital
£’000
Share
premium
reserve
£’000
Capital
redemption
reserve
£’000
Treasury
shares
Retained
earnings
£’000
£’000
At 30 September 2019
1,113
1,049
56
(27)
4,972
Profit for the year
Total Comprehensive Income for the year
Dividends paid
Share-based payment expense
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Total
Equity
£’000
7,163
517
517
517
517
(332)
(332)
46
46
At 30 September 2020
1,113
1,049
56
(27)
5,203
7,394
Profit for the year
Total Comprehensive Income for the year
Share-based payment expense
Dividends paid
Exercise of Share options
-
-
-
-
6
-
-
-
-
28
-
-
-
-
-
-
-
-
-
-
243
243
34
243
243
34
(390)
(390)
-
34
At 30 September 2021
1,119
1,077
56
(27)
5,090
7,315
The notes on pages 46 to 72 form part of these financial statements.
The following describes the nature and purpose of each reserve within equity:
Reserve
Description and purpose
Share capital
Share premium
Capital redemption
Treasury shares
Retained earnings
Nominal value of the issued share capital of the Company
Premium on shares issued in excess of nominal value
Amounts transferred from share capital on redemption and cancellation of issued shares
Weighted average cost of own shares held in Treasury
All other net gains and losses and transactions with owners (e.g. dividends) not recognised
elsewhere
44
Titon Holdings Plc I 2021 Annual Report
Group and Company Statement of Cash Flows
for the year ended 30 September 2021
Group
Company
2020
£’000
2021
£’000
2020
£’000
Cash generated from operating activities
Profit / (loss) before tax
Depreciation of property, plant & equipment
Depreciation of right-of-use assets
Amortisation of intangible assets
Profit on sale of plant & equipment
Share based payment expense – equity settled
Finance income
Finance costs
Share of associate’s post-tax loss / (profit)
(Increase) / decrease in inventories
(Increase) / decrease in receivables
Increase / (decrease) in payables and other current liabilities
Cash generated by / (used in) operations
Note
10
10
11
23
5
5
13
2021
£’000
1,075
479
164
240
(7)
34
-
16
28
2,029
(640)
(428)
206
1,167
18
559
257
236
(16)
46
(10)
36
(83)
1,043
519
1,667
(468)
2,761
Income taxes paid
(22)
(43)
Net cash generated by / (used in) operating activities
1,145
2,718
(712)
Cash flows from investing activities
Purchase of plant & equipment
Purchase of intangible assets
Proceeds from sale of plant & equipment
Finance income
Dividends received from subsidiary companies
Net cash (used in) / generated by investing activities
Cash flows from financing activities
Dividends paid to equity shareholders of the parent
Dividends paid to non-controlling shareholders of a
subsidiary
Payment of lease liability
Finance costs
Exercise of share options
Net cash used in financing activities
Net (decrease) / increase in cash
Foreign exchange
Cash at beginning of the year
Cash at end of the year
10
11
5
8
24
18
5
23
(502)
(412)
25
-
-
(246)
(271)
46
10
-
(889)
(461)
-
-
6
-
385
391
(390)
(391)
(198)
(16)
34
(961)
(705)
(73)
5,572
4,794
(332)
(668)
(261)
(36)
-
(1,297)
960
25
4,587
5,572
(390)
(332)
-
-
-
34
(356)
(677)
-
2,001
1,324
-
-
-
-
(332)
507
-
1,494
2,001
(99)
68
-
-
(1)
34
-
-
-
2
-
1
(715)
(712)
-
(43)
77
-
-
-
46
(9)
-
-
71
-
(25)
126
172
-
172
-
-
-
9
658
667
The notes on pages 46 to 72 form part of these financial statements.
45
Titon Holdings Plc I 2021 Annual Report Notes to the Consolidated Financial Statements
at 30 September 2021
General information
The consolidated financial statements of the Group for the year ended 30 September 2021 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 6. The consolidated financial statements were
authorised for release on 19 January 2022.
1 - Summary of significant accounting policies
(a) Basis of preparation
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 Group and Parent Company financial
statements have been prepared in accordance with International Financial Reporting Standards and International Accounting
Standards as issued by the International Accounting Standards Board (IASB) and Interpretations (collectively IFRSs) as adopted
by the UK in conformity with the requirements of the Companies Act 2006.
The financial statements have been prepared on a going concern basis. In adopting the going concern basis the Directors have
considered potential scenarios arising from the Covid-19 pandemic and from its other principal risks set out on pages 16 to
18. 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 page 21.
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 judgments and estimates have been made in preparing the financial statements and their effect are
disclosed in note 2.
During the period, no new standards, amendments and interpretations to existing standards were published. The Group does
not expect any other standards issued by the IASB, but not yet effective, to have a material impact on the Group.
(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 2021. 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 balance sheet at cost.
The Group’s share of post-acquisition profits and losses is recognised in the consolidated income statement, 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 and 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 and 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)).
46
Titon Holdings Plc I 2021 Annual Report Business combinations
The consolidated financial statements incorporate the results of business using the purchase method. In the consolidated
balance sheet, the Group’s identifiable assets, liabilities and contingent liabilities are initially recognised at their fair values at
the acquisition date. The Group’s share of the results of acquired operations are included in the consolidated income statement
from the date on which control is obtained.
(c) Foreign currency
Transactions entered into by group entities in a currency other than the currency of the primary economic environment in
which they operate (their “functional currency”) are recorded at the rates ruling when the transactions occur. Foreign currency
monetary assets and liabilities are translated at the rates ruling at the balance sheet date. Exchange differences arising on the
retranslation of unsettled monetary assets and liabilities are recognised immediately in the consolidated income statement.
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 income statement as part of the profit or loss on disposal.
The Company has elected, in accordance with IFRS 1, that in respect of all foreign operations, any differences that have
arisen before 1 October 2004 have been set to zero. Any gain or loss on the subsequent disposal of those foreign operations
would exclude translation differences that arose before the date of transition to IFRS and include only subsequent translation
differences.
More than 89% (2020: 90%) of sales from the Group’s UK business are invoiced in Sterling.
(d) Property, plant and equipment
Items of property, plant and equipment are stated at cost less accumulated depreciation.
The Group recognises in the carrying amount of an item of property, plant and equipment the cost of replacing part of such an
item when that cost is incurred, if it is probable that the future economic benefits embodied within the item will flow to the
Group and the cost of the item can be measured reliably. All other 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 off the
carrying value of items over their expected useful economic lives. It is applied at the following rates:
- 2% per annum straight line
Freehold buildings
Improvements to leasehold property - 10% to 20% per annum straight line (or the lease term, is shorter)
Plant and equipment
Motor vehicles
- 10% to 33.3% per annum straight line
- 25% per annum straight line
The carrying values of tangible fixed assets 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.
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.
47
Titon Holdings Plc I 2021 Annual Report Notes to the Consolidated Financial Statements
at 30 September 2021
1 - Summary of significant accounting policies (continued)
Internally generated intangible assets (development costs)
ii
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
Work in progress and manufactured finished goods
- cost of purchase
- 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. A charge is made to the
income statement for slow moving inventories. 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 the income statement.
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.
48
Titon Holdings Plc I 2021 Annual Report (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 value added tax. A sale is recognised when control of the goods
supplied has passed to the customer, which is upon the transport of the goods from the company’s premises or in South
Korea, upon customer acceptance of goods, staged over time, as first and second fix components are supplied and installed,
and at which point contractual entitlement to payment is established and the customer obtains control of the goods.
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
49
Titon Holdings Plc I 2021 Annual Report Notes to the Consolidated Financial Statements
at 30 September 2021
1 - Summary of significant accounting policies (continued)
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 amortised on a straight-line basis over the
remaining term of the lease or over the remaining economic 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 classifies its financial assets depending on the business model that they are used in and the nature of the cash
flows they are expected to generate.
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.
50
Titon Holdings Plc I 2021 Annual Report 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 43. 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 taken advantage of the Coronavirus Job Retention Scheme during the year in the UK. This income is recognised
in the period to which the furloughed staff costs relate to and only when it is reasonably likely for the conditions are to be
met. The payroll liability has been incurred by the Group and therefore has met the conditions to claim for the payroll period.
All other conditions have been satisfied. The Group has elected to net the grant income against the costs to which it relates
i.e., wages and salaries.
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 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.
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
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 IFRS9 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.
51
Titon Holdings Plc I 2021 Annual Report Notes to the Consolidated Financial Statements
at 30 September 2021
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:
Deferred Revenue at beginning of year
Released in the year
Provided for in the year
Deferred Revenue at end of year
2021
£’000
478
(478)
443
443
2020
£’000
687
(687)
478
478
The deferred revenue noted above is the Group’s only contract liability and is shown within Other Payables.
The Group has no material contract assets.
The total assets for the segments represent the consolidated total assets attributable to these reporting segments. Parent
company results and consolidation adjustments reconciling the segmental results and total assets to the consolidated
financial statements, are included within the United Kingdom segment figures stated in the remainder of this note 3.
52
Titon Holdings Plc I 2021 Annual Report Operating segment
The Directors’ primary review of performance is by geographical regions
For the year ended
30 September 2021
Segment revenue
Inter-segment revenue
Total Revenue
Segment profit / (loss)
Tax expense
Profit for the year
Depreciation and amortisation
Total assets
Total assets include:
Investments in associates
Additions to non-current assets (other than financial
instruments and deferred tax assets)
United
Kingdom
£’000
16,368
(313)
16,055
1,026
809
17,181
2,681
893
South
Korea
£’000
3,578
-
3,578
(41)
74
4,592
-
21
North
America
£’000
629
-
629
52
-
193
-
-
All other
countries
Consolidated
£’000
3,150
-
3,150
38
-
-
-
-
£’000
23,725
(313)
23,412
1,075
(72)
1003
883
21,966
2,681
914
The South Korea Segment loss includes the Group’s share of the losses from Browntech Sales Co. Ltd., (BTS), the Group’s
associate undertaking in South Korea, of £28,000.
Sales to BTS of £3.58m represented 15% of Group Revenue (2020: £4.92m – 24%). There are no other concentrations of
revenue above 10% 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
30 September 2021
Revenues
By entities’ country of domicile
By country from which derived
Non-current assets
United
Kingdom
£’000
19,205
16,055
Europe
USA and
Canada
£’000
£’000
-
3,088
629
629
South
Korea
£’000
3,578
3,578
All other
regions
£’000
-
62
Total
£’000
23,412
23,412
By entities’ country of domicile
4,996
-
32
2,878
-
7,906
53
Titon Holdings Plc I 2021 Annual Report Notes to the Consolidated Financial Statements
at 30 September 2021
3 - Revenue and segmental information (continued)
Operating segment
For the year ended
30 September 2020
Segment revenue
Inter-segment revenue
Total Revenue
Segment (loss) / profit
Tax credit
Profit for the year
Depreciation and amortisation
Total assets
Total assets include:
Investments in associates
Additions to non-current assets (other than financial
instruments and deferred tax assets)
United
Kingdom
South
Korea
North
America
All other
countries
Consolidated
£’000
12,570
(365)
12,205
(205)
891
15,555
2,877
481
£’000
4,919
-
4,919
222
161
6,058
-
297
£’000
777
-
777
182
-
309
-
-
£’000
2,751
-
2,751
(181)
-
-
-
-
£’000
21,017
(365)
20,652
18
104
122
1,052
21,922
2,877
778
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 £83,000.
Sales to BTS of £4.92m represented 24% of Group Revenue (2019: £8.33m – 38%). There are no other concentrations of
revenue above 10% 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
30 September 2020
Revenues
By entities’ country of domicile
By country from which derived
Non-current assets
United
Kingdom
£’000
14,956
12,205
Europe
USA and
Canada
£’000
£’000
-
2,694
777
777
South
Korea
£’000
4,919
4,919
By entities’ country of domicile
4,903
-
40
3,261
All other
regions
£’000
-
57
-
Total
£’000
20,652
20,652
8,204
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.
Trickle ventilation and window and door hardware products
Mechanical ventilation products
Revenue
2021
£’000
14,672
8,740
2020
£’000
14,593
6,059
23,412
20,652
54
Titon Holdings Plc I 2021 Annual Report 4 - Directors and employees
Staff costs, including Directors, were as follows:
Wages and salaries
Grant Income
Wages and salaries after Government grant
Employer’s social security costs and similar taxes
Defined contribution pension cost
Share based payment expense – equity settled
Group
2021
£’000
6,155
(8)
6,147
604
495
34
2020
£’000
6,232
(528)
5,704
557
457
46
7,280
6,764
Company
2021
£’000
527
-
527
58
14
34
633
2020
£’000
293
(15)
278
39
17
6
340
Grant income represents amounts claimed under coronavirus job retention scheme.
The average monthly number of employees
during the year was as follows:
Manufacturing
Sales, marketing and administration
Group
2021
Company
2020
2021
2020
Number
Number
Number
Number
133
69
202
128
69
197
-
5
5
-
5
5
Details of Directors’ emoluments, pension contributions and interests in share options are given in the Directors’ Remuneration
Report set out on pages 24 to 27.
5 - Finance income and expense
Finance income
Bank interest receivable on short term deposits
Finance expense
Interest expense on lease liabilities
Group
2021
£’000
-
Group
2021
£’000
16
2020
£’000
10
2020
£’000
36
Company
2021
£’000
-
Company
2021
£’000
-
2020
£’000
9
2020
£’000
-
55
Titon Holdings Plc I 2021 Annual Report Notes to the Consolidated Financial Statements
at 30 September 2021
6 - Profit before tax
This is arrived at after charging/(crediting):
Depreciation of property, plant & equipment
Depreciation of right-of-use assets
Amortisation of intangible assets
Research and development expenditure written off
Short term rentals - vehicles and plant & equipment
Foreign exchange losses
Share-based payment expense
Profit on disposal of fixed assets
Auditors’ remuneration:
- for the audit of these accounts
- for the audit of the accounts of the Company’s subsidiaries
- for the audit of the accounts of the Group’s associate
- non-audit services - comprising other assurance services
7 - Tax credit/(expense)
Current income tax:
Corporation tax expense
Adjustment in respect of prior years
Deferred tax:
Origination and reversal of temporary differences Note 16
Effect of rate change on opening balances Note 16
Income tax credit / (expense)
The charge for the year can be reconciled to the profit
per the income statement as follows:
Profit before tax
Effect of:
Expected tax charge based on the standard rate of
Corporation tax in the UK of 19% (2020: 19%)
Additional deduction for R&D expenditure
Effect of Associate’s results reported net of tax
Expenses deductible / (not deductible) for tax purposes
Difference in overseas tax rates
Adjustments in respect of prior periods
Income tax credit / (expense)
2021
£’000
479
164
240
509
30
66
34
7
14
85
17
1
2021
£’000
(22)
-
(22)
(75)
25
(72)
2020
£’000
559
257
236
446
16
7
46
16
12
79
16
1
2020
£’000
(38)
7
(31)
132
3
104
1,075
18
(204)
167
(5)
(8)
(22)
-
(72)
(4)
171
16
(28)
(44)
(7)
104
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.
56
Titon Holdings Plc I 2021 Annual Report 8 - Dividends
Final 2020 dividend of 2.0 pence (2019: 3.00 pence) per ordinary share proposed and paid during the year
relating to the previous year’s results
Interim dividend of 1.5 pence (2020: 0.00 pence) per ordinary share paid during the year
2021
£’000
223
167
390
2020
£’000
332
-
332
The Directors are proposing a final dividend of 3.0 pence (2020: 2.0 pence) per share. This will result in a final dividend totalling
£334,313 (2020: £221,675), 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:
Numerator
Earnings for the purposes of basic earnings per share being earnings after tax attributable to members of
Titon Holdings Plc
Denominator
2021
£’000
1,028
2020
£’000
58
Number
Number
Weighted average number of ordinary shares for the purposes of basic earnings per share
11,124,517
11,083,750
Effect of dilutive potential ordinary shares: share options
74,610
83,375
Weighted average number of ordinary shares for the purposes of diluted earnings per share
11,199,127
11,167,125
Earnings per share (pence)
Basic
Diluted
The total number of options in issue is also disclosed in note 23.
9.24p
9.18p
0.52p
0.52p
57
Titon Holdings Plc I 2021 Annual Report Notes to the Consolidated Financial Statements
at 30 September 2021
10 - Property, plant and equipment
Group
Cost
At 1 October 2019
Additions
Disposals
Foreign exchange revaluation
At 1 October 2020
Additions
Disposals
Foreign exchange revaluation
Freehold
land and
buildings
Improvements
to leasehold
property
Plant and
equipment
Motor
vehicles
Total
£’000
3,455
-
-
-
£’000
174
15
-
4
£’000
7,972
201
(59)
83
3,455
193
8,197
-
-
-
-
-
(2)
426
(70)
(41)
£’000
349
30
(119)
-
260
76
(48)
-
£’000
11,950
246
(178)
87
12,105
502
(118)
(43)
At 30 September 2021
3,455
191
8,512
288
12,446
Depreciation
At 1 October 2019
Charge for the year
Disposals
Foreign exchange revaluation
At 1 October 2020
Charge for the year
Disposals
Foreign exchange revaluation
At 30 September 2021
Net book value at 30 September 2021
At 30 September 2020
At 1 October 2019
1,490
64
-
-
1,554
64
-
-
1,618
1,837
1,901
1,965
10
33
-
4
47
84
-
(1)
130
61
146
164
6,433
394
(49)
70
6,848
236
(70)
(34)
6,980
1,532
1,349
1,539
218
68
(99)
-
187
95
(40)
-
242
46
73
131
8,151
559
(148)
74
8,636
479
(110)
(35)
8,970
3,476
3,469
3,799
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 2021, the Group had entered into contractual commitments for the acquisition of plant and equipment
amounting to £116,000 (2020: £18,000).
58
Titon Holdings Plc I 2021 Annual Report Group: right-of-use assets
Cost
At 1 October 2019
Additions
Disposals
Foreign exchange revaluation
At 1 October 2020
Additions
Disposals
Foreign exchange revaluation
At 30 September 2021
Depreciation
At 1 October 2019
Charge for the year
Disposals
Foreign exchange revaluation
At 1 October 2020
Charge for the year
Disposals
Foreign exchange revaluation
At 30 September 2021
Net book value at 30 September 2021
At 30 September 2020
Leasehold
property
Plant and
equipment
Motor
vehicles
£’000
465
194
-
3
662
-
(103)
(9)
550
-
132
-
1
133
8
-
(4)
137
413
529
£’000
-
25
-
-
25
-
-
-
25
-
4
-
-
4
5
-
-
9
16
21
£’000
305
42
(8)
(3)
336
51
(9)
(8)
370
-
121
(8)
1
114
151
(9)
(3)
253
117
222
Total
£’000
770
261
(8)
-
1,023
51
(112)
(17)
945
-
257
(8)
2
251
164
(9)
(7)
399
546
772
At 30 September 2021, the Group had entered into contractual commitments for the acquisition of motor vehicles under
finance leases amounting to £182,000 (2020: £nil).
Company
The Company has no right-of-use assets (2020: £nil)
59
Titon Holdings Plc I 2021 Annual Report Notes to the Consolidated Financial Statements
at 30 September 2021
10 - Property, plant and equipment (continued)
Company: property and motor vehicles
Cost
At 1 October 2019
Additions
Disposals
At 1 October 2020
Additions
Disposals
At 30 September 2021
Depreciation
At 1 October 2019
Charge for the year
Disposals
At 1 October 2020
Charge for the year
Disposals
At 30 September 2021
Net book value at 30 September 2021
At 30 September 2020
At 1 October 2019
Freehold
land and
buildings
£’000
3,455
-
-
3,455
-
-
3,455
1,490
64
-
1,554
65
-
1,619
1,836
1,901
1,965
Motor
vehicles
£’000
52
-
-
52
-
(25)
27
30
13
-
43
4
(20)
27
-
9
22
Total
£’000
3,507
-
-
3,507
-
(25)
3,482
1,520
77
-
1,597
69
(20)
1,646
1,836
1,910
1,987
60
Titon Holdings Plc I 2021 Annual Report 11 - Intangible assets
Group
Cost
At 1 October 2019
Additions
Disposals
Foreign exchange revaluation
At 1 October 2020
Additions
Disposals
Foreign exchange revaluation
Computer
software
Development
costs
(internally
generated)
£’000
904
-
(99)
-
805
-
-
-
£’000
901
186
(5)
-
1,082
152
-
-
At 30 September 2021
805
1,234
Amortisation
At 1 October 2018
Charge for the year
Disposals
Foreign exchange revaluation
At 1 October 2020
Charge for the year
Disposals
Foreign exchange revaluation
At 30 September 2021
Net book value at 30 September 2021
At 30 September 2020
At 1 October 2019
522
89
-
-
611
87
-
-
698
107
194
382
644
147
(5)
-
786
151
-
-
937
297
296
257
Goodwill
Assets under
development
Patents
Total
£’000
78
-
-
-
78
-
-
-
78
-
-
-
-
-
-
-
-
-
78
78
78
£’000
-
179
-
-
179
260
-
-
439
-
-
-
-
-
-
-
-
-
439
179
-
£’000
249
5
-
3
257
-
-
(1)
£’000
2,132
370
(104)
3
2,401
412
-
(1)
256
2,812
248
-
-
3
251
2
-
(1)
1,414
236
(5)
3
1,648
240
-
(1)
252
1,887
4
6
1
925
753
718
All assets have an average useful economic life of 3.5 years (2020: 3.1 years) except for Goodwill which has an indefinite
useful economic life.
Assets under development comprises of a new Enterprise Resource Planning software system that is currently in development
and expected to go live early 2022 after which time will be amortised.
Included within Computer Software is the Group’s Enterprise Resource Planning software system which has a carrying value
of £40,000 at 30 September 2021 (2020: £85,000) and a remaining amortisation period of 0.9 years (2020: 1.9 years).
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 (2020: £nil)
61
Titon Holdings Plc I 2021 Annual Report Notes to the Consolidated Financial Statements
at 30 September 2021
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
incorporation
Address
Titon Hardware Ltd
Design, manufacture
and marketing of
window fittings and
ventilators
Titon Automation Ltd
Dormant company
Titon Components Ltd
Dormant company
Titon Developments Ltd
Dormant company
Titon Investments Ltd
Dormant company
England
England
England
England
England
Titon Inc.
Distribution of Group
products
USA
Titon Korea Co. Ltd
Manufacture of
window ventilators
Republic of Korea
Titon HK Holdings Ltd
Dormant company
Hong Kong, China
894 The Crescent,
Colchester Business
Park, Colchester,
CO4 9YQ
As above
As above
As above
As above
PO Box 241, Granger,
Indiana 46530
257-4 Ra-dong,
Munwon-gil, Jori-eup,
Paju-si, Gyeonggi-do
402 Jardine House,
1 Connaught Place
Central
Proportion of voting
rights held at 30
September 2020 and
2021
100%
100%
100%
100%
100%
100%
51%
100%
For the subsidiaries listed above, the country of operation is the same as the country of incorporation.
Company Investment
At 30 September
2021
£’000
554
2020
£’000
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:
Name of associate
Principal activity
Country of
incorporation
Address
Proportion of
voting rights held
at 30 September
2020 and 2021
Browntech Sales Co. Ltd
Sales of window
ventilators
Republic of Korea
257-4 Ra-dong,
Munwon-gil, Jori-eup,
Paju-si, Gyeonggi-do
49%
The remaining 51% shareholding of Browntech Sales Co. Ltd (“BTS”) is held by South Korean investors who, through their
voting shares, have operational control of the company.
Company Investment
At 30 September
2021
£’000
225
2020
£’000
225
62
Titon Holdings Plc I 2021 Annual Report The aggregated amounts relating to BTS are as follows:
As at 30 September
Current assets
Non-current assets
Total Assets
Current liabilities
Non-current liabilities
Total Liabilities
Net Assets
Group 49% share of Net Assets
Group investment in Goodwill
Group share of investment
For the year ended 30 September
Revenue
(Loss) / profit after tax
2021
£’000
5,636
276
5,912
792
51
843
5,069
2,484
197
2,681
2021
£’000
5,388
(28)
2020
£’000
6,607
305
6,912
1,341
101
1,442
5,470
2,680
197
2,877
2020
£’000
7,312
83
BTS did not record any other comprehensive income for the years ended 30 September 2021 or 30 September 2020 in its
own accounts, although the Consolidated Statement of Comprehensive Income includes £213,000 of other comprehensive
expense for 2021 (2020: income £100,000). BTS has been included based on audited financial statements drawn up for the
year to 30 September 2021. Transactions between it and the Group are set out in note 24.
The Group’s investment in BTS at 30 September 2021 includes £197,000 (2020: £197,000) of goodwill.
14 - Inventories
Group
Raw materials and consumables
Work in progress
Finished goods and goods for resale
2021
£’000
1,747
710
2,585
5,042
2020
£’000
1,805
551
2,011
4,367
No inventories (2020: £nil) are carried at fair value less costs to sell.
The carrying value of inventory represents cost less appropriate provisions. During the year there was a net debit of £25,000
(2020: net debit of £189,000) to the Consolidated Income Statement in relation to the inventory provisions. The movements
in the inventory provisions 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 £16,061,000 (2020: £14,928,000).
Company
The Company had no inventories at 30 September 2021 (2020: £nil).
63
Titon Holdings Plc I 2021 Annual Report Notes to the Consolidated Financial Statements
at 30 September 2021
15 - Trade and other receivables
Trade receivables
Less: provision for impairment
Trade receivables - net
Related parties receivables
Less: provision for impairment
Related parties receivables (See Note 24)
Other receivables
Grants receivable
Prepayments and accrued income
Total trade and other receivables
Group
Company
2021
£’000
3,624
(86)
3,538
310
-
310
197
-
179
2020
£’000
3,211
(114)
3,097
293
-
293
258
12
119
2021
£’000
1
-
1
3,815
-
3,816
2
-
-
2020
£’000
-
-
-
3,143
-
3,143
1
2
1
4,224
3,779
3,818
3,147
Other than the amounts due from related parties there were no significant concentrations of credit risk at either 30 September
2021 or 30 September 2020.
The average credit period taken on sale of goods by the Group’s trade debtors is 50 days (2020: 46 days).
Trade debtors included in the balance sheet 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:
Current – not overdue
Up to 30 days past due
Up to 60 days past due
Up to 90 days past due
Over 90 days past due
Group
2021
£’000
2021
£’000
Group
2020
£’000
2020
£’000
Gross trade
and related
party
receivables
Loss
provision
(ECL)
Gross trade
and related
party
receivables
Loss
provision
(ECL)
2,655
1,022
92
61
99
3,929
(17)
(19)
(14)
(10)
(26)
(86)
2,458
853
133
56
4
(27)
(27)
(33)
(23)
(4)
3,504
(114)
Of the £86,000 ECL provision, £nil (2020: £114,000) 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 2021 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 2021 that are overdue for payment is 32% (2020: 30%).
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.
64
Titon Holdings Plc I 2021 Annual Report Group
Movements on the provision for impairment of trade and related party
receivables are as follows:
At the beginning of the year
Provision for receivables impairment
Receivables written off during the year as uncollectible
Unused amounts reversed
At the end of the year
2021
£’000
114
86
(6)
(108)
86
2020
£’000
83
113
(19)
(63)
114
16 - Deferred tax
Group
Deferred tax is calculated in full on temporary differences under the liability method using a tax rate of 25% (2020: 19.0%). The
movement on the deferred tax account is as shown below:
Total
deferred
tax at 1
October
2020
Effect
of rate
change on
opening
balances
Foreign
exchange
movement
Credited /
(expensed)
to Income
Statement
£’000
£’000
£’000
£’000
UK accelerated capital allowances
(268)
(84)
Non-UK accelerated capital allowances
UK other temporary and deductible differences
Non-UK other temporary and deductible differences
UK available losses
Non-UK available losses
Total deferred tax
2
47
31
355
166
333
-
16
-
93
-
25
-
-
-
-
-
(5)
(5)
(55)
-
14
(1)
9
(42)
(75)
Total
deferred
tax at 30
September
2021
£’000
(407)
2
77
30
457
119
278
Liability
2021
UK
Asset
2021
Non-UK
£’000
£’000
(407)
-
77
-
457
-
127
-
2
-
30
-
119
151
Total
deferred tax
at 1 October
2019
Effect of
rate change
on opening
balances
Credited/
(expensed) to
Income
Statement
Total
deferred
tax at 30
September
2020
Liability
2020
UK
Asset
2020
Non-UK
UK accelerated capital allowances
Non-UK accelerated capital allowances
UK other temporary and deductible differences
Non-UK other temporary and deductible differences
UK available losses
Non-UK available losses
Total deferred tax
£’000
(295)
£’000
(35)
-
102
258
110
23
198
-
8
-
30
-
3
£’000
62
2
(63)
(227)
215
143
132
£’000
(268)
£’000
(268)
2
47
31
355
166
333
-
47
-
355
-
134
£’000
-
2
-
31
-
166
199
There are no unrecognised deferred tax assets at 30 September 2020 or 30 September 2021.
65
Titon Holdings Plc I 2021 Annual Report Notes to the Consolidated Financial Statements
at 30 September 2021
16 - Deferred tax (continued)
Company
Deferred tax is calculated in full on timing differences under the liability method using a tax rate of 25% (2020: 19.0%).
The movement on the deferred tax account is as shown below:
UK Accelerated capital allowances
UK other temporary and deductible differences
UK available losses
Total deferred tax
UK Accelerated capital allowances
UK other temporary and deductible differences
UK available losses
Total deferred tax
17 - Trade and other payables - current
Trade payables
Other payables
Other tax and social security taxes
Accruals and deferred income
Total deferred
tax at 1
October 2020
Effect of
rate change
on opening
balances
Credited /
(expensed)
to Income
Statement
£’000
(242)
10
-
£’000
(77)
3
-
(232)
(74)
£’000
16
9
7
32
Total deferred
tax at 1
October 2019
Effect of
rate change
on opening
balances
Credited /
(expensed)
to Income
Statement
£’000
(228)
26
68
£’000
(27)
3
8
(134)
(16)
£’000
13
(19)
(76)
(82)
Total
deferred
tax at 30
September
2021
£’000
(303)
22
7
Liability
2021
UK
£’000
(303)
22
7
(274)
(274)
Total
deferred
tax at 30
September
2020
£’000
(242)
10
-
Liability
2020
UK
£’000
(242)
10
-
(232)
(232)
Group
2021
£’000
2,472
386
418
1,278
4,554
2020
£’000
2,261
342
511
1,189
4,303
Company
2021
£’000
-
-
-
168
168
2020
£’000
-
-
-
211
211
Group trade creditors and accruals principally comprise amounts outstanding for trade purchases and ongoing costs. Year-end
Group trade creditors represent 62 days (2020: 58 days) average purchases. The contractual maturities of these liabilities are
from 30 days up to approximately 100 days.
The Directors consider that the carrying amount of trade payables is approximate to their fair value.
66
Titon Holdings Plc I 2021 Annual Report 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 2021 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
At 1 October 2020
Additions
Amortisation
Disposals
Foreign exchange revaluation
At 30 September 2021
Lease Liabilities
At 1 October 2020
Additions
Interest expense
Lease payments
Foreign exchange revaluation
At 30 September 2021
Lease liabilities
At 1 October 2020
At 30 September 2021
Lease expense
Short term lease expense
Low value lease expense
Aggregate undiscounted commitments for short term leases
Freehold land
and buildings
Plant and
equipment
Motor
vehicles
Total
£’000
529
-
(8)
(103)
(5)
413
£’000
£’000
£’000
222
51
(142)
(9)
(5)
117
772
51
(155)
(112)
(10)
546
21
-
(5)
-
-
16
£’000
808
51
16
(265)
(15)
595
Up to
1 year
£’000
277
193
Between 1
and 2 years
Between 2
and 5 years
Over
5 years
Total
£’000
£’000
84
30
808
595
£’000
211
160
£’000
236
212
2021
£’000
30
-
-
30
67
Titon Holdings Plc I 2021 Annual Report Notes to the Consolidated Financial Statements
at 30 September 2021
19 - Share capital
Authorised
13,600,000 ordinary shares of 10p each
2021
£’000
1,360
2020
£’000
1,360
The Company’s issued and fully paid ordinary shares of 10p during the year is:
At the beginning of the year
Share options exercised during the year
2021
Number
11,133,750
60,000
2021
£’000
1,113
6
2020
Number
11,133,750
-
2020
£’000
1,113
-
At the end of the year
11,193,750
1,119
11,133,750
1,113
Treasury shares held by the Group
At the beginning of the year
Treasury shares purchased
At the end of the year
2021
Number
50,000
-
50,000
2021
£’000
27
-
27
2020
Number
50,000
-
50,000
2020
£’000
27
-
27
Treasury shares held by the Group were acquired in July 2014. The Group has no current plans to dispose of these.
Share options
Options have been granted over the following number of ordinary shares which were outstanding:
Date granted
Exercise price
15.01.14
30.01.18
15.07.21
58.0p
156.5p
138.5p
At 30 September 2021
At 30 September 2020
Number of
shares
150,000
205,000
260,000
615,000
415,000
Exercisable between
15.01.17
30.01.21
15.07.24
and
and
and
15.01.24
30.01.28
15.07.31
No share options were exercised between 30 September 2021 and 19 January 2022.
68
Titon Holdings Plc I 2021 Annual Report 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 50 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:
Currency
Sterling
US Dollar
Euro
South Korean Won
Group
2021
£’000
3,882
126
532
254
4,794
2020
£’000
4,082
110
218
1,162
5,572
Company
2021
£’000
1,324
-
-
-
2020
£’000
2,001
-
-
-
1,324
2,001
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:
Bank current accounts
Group
2021
£’000
4,794
2020
£’000
5,572
Company
2021
£’000
1,324
2020
£’000
2,001
The Group had no floating term deposits with banks at 30 September 2021 or 30 September 2020.
Financial liabilities
The Group had no floating rate financial liabilities at 30 September 2021 (2020: £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 19, and the Report on Risk
Management on pages 16 to 18 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 32 and 33.
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).
69
Titon Holdings Plc I 2021 Annual Report Notes to the Consolidated Financial Statements
at 30 September 2021
21 - Financial instruments – risk management (continued)
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’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.
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 11% (2020:10%) of sales from the UK
businesses not invoiced in Sterling, gives rise to foreign currency exposure which is detailed in the table below:
As of 30 September the Group’s UK net exposure to foreign exchange risk was as follows:
Net foreign currency financial assets / (liabilities)
Euro
US Dollar
Total net exposure
70
2021
£’000
72
163
235
2020
£’000
(242)
90
(152)
Titon Holdings Plc I 2021 Annual Report The effect of a 10% weakening of the Euro and the US Dollar against Sterling at the reporting date of 30 September 2021 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 £21,000
(2020: decrease in liability of £13,000). A 10% strengthening in the exchange rate would, on the same basis, have increased
pre-tax profit and increased net assets by £23,000 (2020: increase of £15,000).
22 - Pensions
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
£40,000 (2020: £34,000).
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
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 2021 260,000 shares were granted (2020: nil).
Details of the share options granted and exercised during the year and the assumptions used in the Black-Scholes model for
each share-based payment are as follows:
Number
of share
options
415,000
-
-
415,000
Date of share option grant
09/06/11
03/01/13
15/01/14
05/01/15
30/01/18 15/07/21
Exercise price (pence)
48.0
24.5
58.0
67.0
156.5
138.5
Number of share options granted
initially
259,950
203,000
320,000
25,000
205,000
260,000
Number of share options
outstanding at 01/10/19
Share options exercised
Share options lapsed
Number of share options
outstanding at 30/09/20
Share options granted
Share options exercised
Number of share options
outstanding at 30/09/21
The inputs to the Black-Scholes
pricing model are:
Expected volatility %
Expected option life (years)
Risk free rate %
Expected dividend yield %
Weighted fair value of options at
initial grant
10,000
-
-
10,000
-
(10,000)
-
-
-
-
-
-
-
-
200,000
-
-
200,000
-
(50,000)
150,000
-
-
-
-
-
-
-
205,000
-
-
205,000
-
-
-
-
-
-
260,000
260,000
-
(60,000)
205,000
260,000
615,000
111
6
2.50
5
114
6
1.08
5
116
6
2.18
5
102
6
1.28
5
88
6
1.13
3
97
7
1.46
3
£75,000
£37,000
£114,000
£9,000
£188,000
£224,646
During the year 207,000 share options, included in the table above, met the conditions of exercise (2020: 210,000).
71
Titon Holdings Plc I 2021 Annual Report
Notes to the Consolidated Financial Statements
at 30 September 2021
23 - Share-based payments (continued)
At the end of the financial year 210,000 share options met the conditions of exercise and have a weighted average exercise
price of 57.5p (2020: 210,000 at 57.5p). The 615,000 share options outstanding at 30 September 2021 had a weighted
average price of 124.9p (2020: 415,000 at 106.4p) and a weighted average remaining contractual life of 6.8 years (2020: 5.2
years).
The share price at 30 September 2021 was 115.0p (2020: 81.5p). The average market price during the year was 96.8p (2020:
95.5p).
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 £34,000 was recognised in respect of share options in the year (2020: £46,000) of which £11,000 (2020:
£4,000) 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
£739,000 (2020: £752,000). See Note 15 for the related party balances at 30 September 2021.
Titon Korea Co. Ltd., the Company’s 51% owned subsidiary, paid a dividend during the year to its shareholders amounting to
£798,000 (2020: £1,364,000). Of this amount, £407,000 (2020: £696,000) before withholding tax, was paid to the Company
with the other £391,000 (2020: £668,000) 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
2021
£’000
3,577
2020
£’000
4,919
Amount owed by
related party
2021
£’000
310
2020
£’000
293
Browntech Sales Co. Ltd
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. Mr D. Ruffell had an interest in an agreement with the Company relating to his departure
from the Company in April 2021 which resulted in a payment to him of £90,000. Mr D. Ruffell exercised 60,000 share options
during the year which amounted to £34,000. 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 27 of this document.
Remuneration paid to key management personnel during the year was as follows:
Short term benefits
Post-employment benefits
Share based payments
2021
£’000
897
55
4
956
2020
£’000
625
57
4
686
The Non-executive Directors received fees for their services to the Titon Holdings Plc Board as disclosed in the Directors’
Remuneration Report.
25 - Post balance sheet events
There have been no events since the balance sheet date that materially affect the position of the Group.
72
Titon Holdings Plc I 2021 Annual Report Five Year Summary
Summarised consolidated results
Results
Revenue
Gross profit
Operating (loss) / profit
Share of profit from associate
Profit before tax
Income tax credit / (expense)
Profit after tax
Dividends
Basic earnings per share
Assets Employed
2021
£’000
2020
£’000
2019
£’000
2018
£’000
2017
£’000
23,412
20,652
27,157
29,774
28,011
7,350
1,119
(28)
1,075
(72)
1,003
390
9.24p
5,654
(39)
83
18
104
122
332
8,198
1,629
329
8,604
2,016
741
7,265
1,850
633
1,970
2,770
2,493
(186)
(315)
(269)
1,784
2,455
2,224
526
489
410
0.52p
12.84p
18.21p
16.55p
Property, plant & equipment
3,476
Net cash and cash equivalents
Net current assets
4,794
9,313
3,469
5,572
3,799
4,587
9,138
10,112
3,655
3,415
9,838
3,548
3,269
9,972
Financed by
Shareholders’ funds: all equity
16,414
15,943
16,262
15,421
14,215
The five year summary does not form part of the audited financial statements.
73
Titon Holdings Plc I 2021 Annual Report 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 23 February 2022 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 9 will be proposed as Ordinary
Resolutions and Resolutions 10 will be proposed as Special Resolutions. It is possible that new government restrictions due
to the Covid-19 pandemic may be introduced before the AGM, which may mean that shareholders are not recommended to
attend the meeting in person. If this occurs, then shareholders should vote either via Link Group by the means set out in the
notes of the Notice.
Explanatory notes in respect of the resolutions are set out on pages 19 to 23 of the Directors’ Report which accompanies this
Notice.
Please note you will not receive a form of proxy for the 2022 AGM in the post. Instead, you can vote online at www.signalshares.
com. To register you will need your Investor Code, which can be found on your share certificate. You may also request a hard
copy proxy form directly from our Registrars, Link Group, on 0371 664 0300. For full details on proxy voting please see the
notes below, which accompany this Notice of Annual General Meeting.
1
2.
3.
4.
5.
6.
7.
8.
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 2021.
To declare a final dividend of 3.0p per ordinary share payable to shareholders on the Company’s register of members
at close of business on 28 January 2022 payable on 4 March 2022.
To re-elect Mr John Neil Anderson who retires from the Board in accordance with Article 104, as a Director of the
Company.
To re-elect Mr Keith Ritchie, who retires from the Board in accordance with Article 104, as a Director of the Company.
To re-elect Mr Nicholas Charles Howlett, who retires from the Board in accordance with Article 104, as a Director of
the Company.
To re-appoint BDO LLP as Auditors of the Company and to authorise the Directors to determine their remuneration.
That the Directors’ Remuneration Report set out on pages 24 to 27 of the Annual Report and Financial Statements for
the year ended 30 September 2021, be approved.
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 19 January 2022) for a period expiring (unless previously revoked, varied or renewed) on 22 May 2023 or,
if sooner, at the end of the 2023 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.
9.
That subject to the passing of Resolution 8 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 8 as if section
561(1) of the Companies Act 2006 did not apply to such allotment, provided that this power shall expire on 22 May
2023 or, if sooner, the end of the 2023 Annual General Meeting of the Company. This power shall be limited to the
allotment of equity securities:
9.1
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
9.2
otherwise than pursuant to paragraph 9.1 up to an aggregate nominal amount of £160,000 (representing
74
Titon Holdings Plc I 2021 Annual Report
approximately 14.4% of the nominal value of the ordinary shares in issue on 19 January 2022);
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 8” were omitted.
10.
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:
10.1
10.2
the maximum number of ordinary shares hereby authorised to be purchased is 1,114,000 (representing
approximately 10% of the nominal value of the ordinary shares in issue on 19 January 2022);
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);
10.3
the minimum price which may be paid for each ordinary share shall be 10p; and
10.4
this authority (unless previously revoked, varied or renewed) shall expire on 22 May 2023 or, if sooner, the end
of the 2023 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 Isom
Secretary
Registered Office:
19 January 2022 Colchester Business Park
894 The Crescent
Colchester
Essex
CO4 9YQ
75
Titon Holdings Plc I 2021 Annual Report
Notice of Annual General Meeting (continued)
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
21 February 2022. 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.
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.
7.
8.
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.
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.
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).
76
Titon Holdings Plc I 2021 Annual Report
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 21 February 2022, 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 15 December 2021, which is the latest practicable date before the
publication of this document, is 11,193,750. The Company holds 50,000 ordinary shares in treasury. On a vote by
show of hands, every member who is present has one vote and every proxy present who has been duly appointed by a
member entitled to vote has one vote. On a poll vote, every member who is present in person or by proxy has one vote
for every ordinary share of which they are the holder.
Publication on website
13.
Under section 527 of the Companies Act 2006, members meeting the threshold requirements set out in that section
have the right to require the Company to publish on a website a statement setting out any matter relating to: (i) the
audit of the Company’s accounts (including the auditor’s report and the conduct of the audit) that are to be laid before
the Annual General Meeting; or (ii) any circumstance connected with an auditor of the Company ceasing to hold office
since the previous meeting at which annual accounts and reports were laid in accordance with section 437 of the
Companies Act 2006. The Company may not require the members requesting any such website publication to pay
its expenses in complying with sections 527 or 528 of the Companies Act 2006. Where the Company is required to
place a statement on a website under section 527 of the Companies Act 2006, it must forward the statement to the
Company’s auditor not later than the time when it makes the statement available on the website. The business which
may be dealt with at the Annual General Meeting includes any statement that the Company has been required under
section 527 of the Companies Act 2006 to publish on a website
14.
A copy of this notice, and other information required by section 311A of the Companies Act 2006, can be found on the
website at www.titon.com/uk/investors/.
15. Any member attending the meeting has the right to ask questions. The Company must cause to be answered any
such question relating to the business being dealt with at the meeting but no such answer need be given if (a) to do so
would interfere unduly with the preparation for the meeting or involve the disclosure of confidential information, (b)
the answer has already been given on a website in the form of an answer to a question, or (c) it is undesirable in the
interests of the Company or the good order of the meeting that the question be answered.
Documents available for inspection
16. Copies of the service contract of each Executive Director and the letter of appointment of each Non-executive Director will
be available for inspection at the registered office of the Company during normal business hours on any weekday (excluding
Saturdays and public holidays) and at Falconer Road, Haverhill, CB9 7XU, for at least 15 minutes prior to and during the Annual
General Meeting.
Communications
17.
Members who have general enquiries about the meeting should use the following means of communication. No other
means of communication will be accepted. You may:
● call the Link shareholders’ helpline on 0371 664 0300 Calls are charged at the standard geographic rate and will
vary by provider. Calls outside the United Kingdom will be charged at the applicable international rate. We are open
between 09:00 - 17:30, Monday to Friday excluding public holidays in England and Wales; or
● write to Link Group, Link Group, PXS 1, Central Square, 29 Wellington Street, Leeds, LS1 4DL.
18.
You may not use any electronic address provided in this notice of Annual General Meeting for communicating with the
Company for any purposes other than those expressly stated.
77
Titon Holdings Plc I 2021 Annual Report Directors and Advisers
DIRECTORS
Executive
K A Ritchie (Group Chairman)
M Norris (Chief Executive) - appointed 12 July 2021
T N Anderson
T D Gearey
CV Isom (Chief Financial Officer) - appointed 22 December 2021
Non-executive
J N Anderson (Deputy Chairman)
N C Howlett
SECRETARY AND REGISTERED OFFICE
C 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
AUDITORS
BDO LLP
55 Baker Street
London
W1U 7EU
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
10th Floor
Central Square
29 Wellington Street
Leeds
LS1 4DL
78
Titon Holdings Plc I 2021 Annual Report
TITON HOLDINGS PLC
894 The Crescent, Colchester Business Park, Colchester, Essex, CO4 9YQ
Tel: +44 (0)1206 713800
Email: enquiries@titon.co.uk
Web: www.titon.com/uk/investors/