CELEBRATING
CELEBRATING
YEARS
YEARS
1972 - 2022
1972 - 2022
Celebrating 50 Years
1972 - 2022
2022 Annual Report &
Financial Statements
Annual Report and Financial Statements
for the year ended 30 September 2022
Contents
Chairman’s Statement ...................................................................................................... 2
Strategic Report ................................................................................................................ 6
Strategic Report: Environmental Social and Governance Report ............................14
Strategic Report: Director’s Section 172 Statement .................................................18
Strategic Report: Report on Risk Management ..........................................................20
Directors’ Report .............................................................................................................24
Directors’ Remuneration Report ...................................................................................30
Corporate Governance Report .......................................................................................34
Audit Committee Report ...............................................................................................38
Independent Auditor’s Report .......................................................................................40
Consolidated Income Statement ..................................................................................46
Consolidated Statement of Comprehensive Income .................................................46
Consolidated Statement of Financial Position ...........................................................47
Company Statement of Financial Position ..................................................................48
Consolidated Statement of Changes in Equity ...........................................................49
Company Statement of Changes in Equity ..................................................................50
Group and Company Statement of Cash Flows ..........................................................51
Notes to the Consolidated Financial Statements .......................................................52
Five Year Summary .........................................................................................................80
Notice of Annual General Meeting ...............................................................................81
Directors and Advisers ...................................................................................................85
1
Titon Holdings Plc I 2022 Annual Report Chairman’s Statement
This has been an important year for Titon as we celebrated our 50th anniversary. John Anderson founded Titon in September 1972
when Titon Hardware Limited was incorporated. The company was acquired by Titon Holdings Limited after it was incorporated in
December 1981, which then became Titon Holdings Plc when the Group was first listed on the Unlisted Securities Market of the
London Stock Exchange in 1988. Titon Hardware Limited remains the principal operating subsidiary of the Group, although we now
have Titon Inc. and our investments in Korea, as our business has expanded its reach. I am very pleased that we have reached the
50-year milestone and we celebrated that date with our hardworking staff. I know John Anderson is very proud of his creation and I
hope that the second fifty years is similarly successful.
I am pleased to say that Covid-19 restrictions on working have
stopped in our core UK and European regions. However, during
the financial year to 30 September 2022 we continued to see
the after effects of the pandemic in the form of supply chain
disruptions. Whilst these have started to recede, the challenges
of the pandemic have been replaced as a major concern by the
inflationary environment, dictating tightening monetary policy,
and by the war in Ukraine and its further impact on the cost of
living due to energy shortages and energy price increases. We
have seen broad based cost increases from our suppliers and for
labour and this has been a major factor in the downturn in our
financial results for the year, which we discuss below.
Basic statutory earnings per share for the year was a loss of 3.89
pence (2021: 9.24 pence).
An interim dividend of 1.5 pence per share was paid in the year
to 30 September 2022 and the Directors are proposing a final
dividend of 0.5 pence per share (2021: 3.0 pence). The total
dividend for the year will therefore be 2.0 pence per share (2021:
4.5 pence). If approved by shareholders at the forthcoming
Annual General Meeting on 22 March 2023, the dividend will be
payable on 31 March 2023 to shareholders on the register at 10
February 2023. The ex-dividend date is 9 February 2023.
Profit and loss
In the year ended 30 September 2022, the Group’s net revenue
(which excludes inter-segment activity) decreased by 5.7% to
£22.1m (2021: £23.4m).
The Group’s gross margin decreased from 31.4% in 2021 to
26.4% in 2022, which reflects the challenges we have faced this
year with managing and recovering rising prices. We have faced
unprecedented increases in the costs of many raw materials,
components and labour, which we have not been able to pass onto
customers immediately. We have implemented price increases to
our customers, but there is a natural lag in recovering the impact
of increases from suppliers. We suffered an underlying operating
loss in the period before exceptional items of £770,000; including
exceptional items the operating loss was £1,119,000 (2021:
operating profit of £1,119,000). Underlying EBITDA was 92.8%
lower at £143,000 and excluding exceptional items EBITDA was a
loss of £206,000 (2021: £2.0m). Exceptional items amounted to
£349,000 consisting of redundancy and other costs associated
with the changes in people we have had to make during the year
and also a one-off cost of living bonus we paid to all qualifying
employees.
Net finance interest cost amounted to £7,000 (2021 interest:
£16,000). The share of profits from the Group’s South Korean
associate, BTS, rose from a loss of £28,000 in 2021 to a profit of
£173,000 in 2022 due to the final realisations from the property
transactions that BTS had entered into in prior years. The Korean
business, however, continued to suffer from challenging market
conditions and the transition to mechanical ventilation in the
period. As a result of the underlying loss in the UK and including
exceptional items the Group loss before tax was £953,000 (2021
profit before tax: £1,075,000).
Statements of financial position and cash flows
The Group benefits from a strong balance sheet with no bank
interests,
borrowings. Net assets,
reduced to £16.0m at 30 September 2022 (2021: £16.8m), with
net cash at £1.7m (2021: £4.79m), which is equivalent to 10.8%
of net assets (2021: 28.5%).
including non-controlling
Cash used in operations before working capital changes was
£0.2m (2021: £2.0m cash generated). Inventory levels at the
year-end increased by £1.53m on 2021. This was mainly due to
increased stock held in the UK business because of an increase
in material and labour costs and advanced purchasing of some
of our key components where supply constraints had affected
our performance during the year. Together with a £0.7m increase
in receivables, this reduced cash generated from operations to
an outflow of £1.9m (2021: inflow of £1.15m). A key focus and
business imperative for the financial year to 30 September 2023
is to improve the underlying performance of the business and
reduce stock levels to augment our net cash position.
Capital expenditure reduced to £0.83m (2021: £1.11m) and
the Group paid dividends in 2022 in respect of 2021 to the
shareholders of Titon Holdings Plc of £0.50m (2021: £0.39m).
During the year, no dividends were paid by Titon Korea to Titon
Holdings Plc and non-controlling shareholders.
The overall effect has been a net decrease in the Group’s cash
reserves in the period of £3.07m (2021: decrease of £0.78m). Net
current assets at 30 September 2022 were £7.6m (2021: £9.3m)
with a Quick Ratio1 of 1.2 (2021: 1.9). ROCE2 was a loss of 8.4%,
as the business suffered in the difficult trading conditions (2021:
10.1%).
2
Titon Holdings Plc I 2022 Annual Report Segment analysis
The Directors look initially at geographical areas to evaluate the
Group’s performance and then consider product segmentation
at the secondary level.
UK and Europe
The UK and Europe comprise of 83.8% of our overall business
(2021: 82.0%). As I noted in the Interim Report, the Group
suffered from shortages of certain materials and components
and continuing cost increases as well as labour and energy cost
inflation during the year. These factors have continued to impact
us in the second half, although some of the component issues
have eased.
We also upgraded our internal ERP system for our UK and
European operations
in May 2022, which should allow
greater automation of production and sales processes. The
implementation has not been without its challenges and we
have had difficulties in the period since May in manufacturing
and shipping products to our customers at the time and in
the quantity they require. I know this has been difficult for our
customers as well as our own employees who have been trying
very hard to meet their customers’ expectations, and I am sorry
that the usual Titon standards of customer service have not been
met. We have been working very hard to restore the levels of
service that customers quite rightly expect from us. Whilst a key
macro-economic trend that many businesses are facing, it has
been particularly difficult to pass on the cost increases we have
suffered to our customers as many of our Ventilation Systems
division sales are on a project-by-project basis and customers
have contracted to buy at fixed prices.
Revenue from the Hardware division, comprising sales of our
trickle vents plus window and door hardware, was slightly
lower in the year by 3% as our distribution agreement with
Sobinco concluded. Sales of Titon branded bought-in products
rose by 15% as the Asterion II range launched in 2022 became
recognised for its home security attributes.
In our Ventilation Systems division, revenues from mechanical
ventilation products fell by 4% overall as we struggled to supply
our customers. Sales in the UK were up by 9%, with the Titon
FireSafe® Air Brick range continuing to be popular with sales
up 16.2% on last year; Ventilation Systems sales in mainland
Europe were down 34% as our customers suffered from delays
on account of component shortages and waited for our new
products to come to market.
Titon continues to invest in research and development which, in
turn, yields a continuing number of new products for both the
Ventilation Systems and Hardware divisions. We have a very
healthy pipeline of new products which we expect to launch in
2023. Further detail on our R&D and new products is detailed
within the strategic report.
The final regulations for changes to Part L (Conservation of
fuel and power), Part F (Ventilation) and Part O (Overheating),
of the Buildings Regulations in England for new dwellings and
existing buildings were published on the 15 December 2021
with an effective date for implementation for natural ventilation
for existing dwellings being 15 June 2022 and for new build
dwellings both natural and mechanical ventilation being 12
months after that date. We have seen increased demand for
trickle vents as window fabricators are now required to fit vents
on virtually all replacement windows, or provide a suitable
alternative, when energy efficient measures are being installed
in domestic properties. For mechanical ventilation systems the
house builders have a transition period of 12 months before
they have to apply the new regulations and we expect to see
increased demand for our mechanical products in 2023.
We are faced with a negative outlook in 2023 with the Experian
UK Construction forecast in January 2022 showing public and
private housing expenditure falling by 7% against 2022, as the
economy goes into recession. At the same time, the expected
value of repair, maintenance and improvement in the private
and public residential sectors is forecast to be the same in
2023 against 2022, leaving overall housing expenditure in
2023 forecast to be 4% lower than 2022. In 2024 total housing
expenditure is forecast to be only marginally higher than the
2023 forecast, indicating only a very slow recovery from the
challenging times expected in 2023.
South Korea
In South Korea, the Group’s subsidiary, Titon Korea (51% owned),
manufactures natural window ventilation products. In the 2022
interim results statement we noted that revenues were weaker
than expected due to continuing Covid-19 challenges and delays
in construction site projects with sales being deferred and this
has continued in the second half. Additionally, as the Group has
reported in the past, there has been a shift in market demand in
Korea to mechanical ventilation products and away from natural
ventilation. These factors have resulted in a reduction in revenue
to £3.0m (2021: £3.6m) whilst the contribution to Group profit
before tax declined to a loss of £209,000 (2021: loss of £14,000).
The Group’s associate company (49% owned), Browntech
Sales Co. Limited (‘BTS’), which principally distributes Titon
Korea’s natural ventilation products, was similarly impacted by
the downturn experienced by Titon Korea, excluding the final
realisations from the property activities that it had previously
entered into. The profit recognised in respect of associates
(which is all in respect of BTS) in 2022 was £173,000 (2021:
loss £28,000). This included the release of a provision made in
2020 against those property investments. We do not expect
to see meaningful sales of mechanical products in BTS to start
coming through before financial year 2024/25 as it develops its
trading relationships. BTS is marketing both a hybrid mechanical
in conjunction with the manufacturer
ventilation product
3
Titon Holdings Plc I 2022 Annual Report Chairman’s Statement (continued)
of that product and also mechanical ventilation with heat
recovery products that it is developing or buying in from other
manufacturers. Taking Titon Korea and BTS together, South
Korea made a negative contribution of £0.04m to the Group’s
profit before tax for the year (2021: loss £0.04m).
United States
Our US operations represent the smallest geographical segment
and results reduced in the period. Sales for the year fell by 16%
to £0.53m (2021: £0.63m) as the market remained in a subdued
state but our customers remained loyal and continued to use
our products where there was a need for trickle vents. Titon
Inc. made a statutory loss before tax of £26,000 in the full year
(2021: profit of £29,000) but contributed a margin to our UK
manufacturing business.
Board
As I reported in the Interim Report our Board recruitment
process was completed earlier in the year and our new non-
executive directors are making a significant contribution to the
business. I am also pleased to report that Alexandra French, our
new Chief Executive, who joined Titon in May 2022 has settled in
really well and is utilising her experience to guide Titon through
the challenges that we have faced this year.
As we announced in September I have stepped back from
executive responsibilities after ten years at Titon and have
become Non-executive Chair. This will allow me to focus fully on
facilitating further governance and strategy initiatives and grant
an enhanced autonomy to Alexandra and her Executive team
to make the operating changes we need. Of course, I remain in
regular contact with all of the Board Directors.
Once again, I would like to thank all of my fellow directors for
their efforts in the year and their contributions to Titon, in what
has been a challenging year.
Employees
I offer my sincere thanks to all our employees for all their hard
work and skills they have shown, particularly in the difficult trading
conditions we have seen during the year and the introduction of
the new ERP system in May, which proved challenging for them.
I really appreciate the difficulties that many of them have faced
when we have not been able to meet our customers’ needs and
I apologise to them for this. We have moved to a hybrid pattern
of working for office-based employees to allow them to work
from home two days per week where feasible and this provides
them with the flexibility that many other employers are also
offering. All of our office-based employees returned to office
working in February 2022. I would also like to welcome all of
our new colleagues to Titon and thank them for the enthusiastic
manner in which they have tackled the challenges we face. My
colleagues on the Board also recognise the contribution that all
our employees have made and thank them for their efforts and
dedication.
Investors
Shore Capital, our Nominated Adviser and Broker, has continued
to write research coverage on Titon during the year, focusing on
our trading updates which have been required and we also thank
them for their sound financial advice during the year.
I would
As usual,
like to mention the Group’s dividend
reinvestment programme (DRIP) which has operated for several
years. This represents a straight-forward and cost-effective way
for shareholders to increase their holdings in Titon should they
wish to do so.
Current Trading
UK and Europe
Sales in the first quarter of the current financial year to 30
September 2023 (“FY23”) in the UK and Europe have exceeded
the comparative quarter in FY22, reflecting the continued strong
demand for our products. Sales in South Korea in Q1 FY23 were
in line with our expectations.
We enter 2023 with the Office for Budget Responsibility
forecasting a recession in the UK starting in October 2022
with output falling by 2.1% in total with a slow recovery of
1.3% in 2024. In the housing markets Experian are forecasting
total housing expenditure including repairs, maintenance and
improvements to fall by 4% in 2023 against 2022 with only a
marginal improvement in 2024.
In 2023 we have identified a number of business imperatives
that we expect to deliver during the year and Alexandra French
has set out details of them in the Strategic Report. These are
intended to stabilise the UK and European business and return
the business to growth. We will also start work on a review of the
business strategy so that we can plan and steer the growth of the
business in the medium term. There are significant opportunities
for Titon as the key role that ventilation provides for indoor
air quality and public health becomes more appreciated. The
tragic death of a 2-year-old child in Rochdale in 2020 that was
revealed in November 2022 illustrated very clearly the threat
that inadequate ventilation carries, particularly to the young, the
elderly and all individuals with underlying health conditions.
As noted above we had difficulties supplying customers with
Titon products during 2022 on account of the ERP challenges and
component shortages. The supply chain constraints have eased,
and there is a backlog of customer orders that we are working
hard to manufacture and ship as soon as possible in the coming
months. This is one of our business imperatives, and it is crucial
4
Titon Holdings Plc I 2022 Annual Report changes in building regulations and associated standards in the
UK, which Titon is well positioned to benefit from with a range
of ventilation products that cover all our customers’ needs.
Therefore, for our UK and European markets we expect that the
business environment will remain challenging for us in 2023 and
we remain in a transitionary period in South Korea. Despite these
challenges, we continue to have a strong balance sheet, talented
employees, a high quality range of products and an exciting
pipeline of new products that give us confidence in our medium-
term future.
On behalf of the Board.
K A Ritchie
Chair
25 January 2023
for our performance in 2023 that we meet this challenge and
our customers’ demands. The Group has increased the output of
Ventilation Systems products and we have invested to increase
capacity for our trickle vents to satisfy the increased demand
resulting from the Building Regulations changes in June 2022.
We have filled key management vacancies in the year but had
some difficulties recruiting people in other roles, and with the
current low levels of unemployment in our region, we expect that
we will continue to have some challenges in doing so in 2023.
We also acknowledge that the cost of labour will increase in
the year. We anticipate that cost increases for our components
and raw materials will also continue to impact the Group,
consistent with other companies across the sector and the
economy more widely in 2023. We continue to seek to manage
these inflationary pressures and margin erosion. The Group has
raised prices in January 2023 and expects to implement further
price rises during the year to recover these input cost increases,
although there may remain a natural lag in margin recovery due
to the differences in the timing of these changes.
In the UK and Europe, we currently expect to report a loss before
tax in H1 FY22/23, but we expect to return to profitability in H2
FY22/23.
South Korea
In South Korea, The Bank of Korea forecasts GDP growth for
2022 will be 2.6%, but for 2023 is projected to increase by 1.7%.
Construction investment is forecast to continue its sluggish
performance with a slowdown in housing demand and lower
government support for the housing sector. As previously noted,
we continue to be in a transitionary period for our ventilation
products in South Korea as market requirements change.
Outlook
The outlook for the global economy in 2023 is difficult to predict
with cost pressures and energy shortages impacting on all the
major markets in which we operate. We certainly expect that
cost increases will continue in 2023, which will keep the pressure
on our margins and demand may weaken if the new build market
declines. The impact of the cost-of-living crisis on consumer
expenditure is also expected to reduce demand for replacement
windows and doors. However, this may be tempered by the
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 2022 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.
Introductory Statement from Alexandra French, Chief Executive
“Since joining Titon in May 2022 I have been particularly impressed by the hard work, commitment, and dedication of all our
employees. Throughout my career I have worked in businesses that have been focussed on making a difference to our world
and I am delighted to be continuing that at Titon where we are passionate about improving indoor air quality so that people
sustain health and comfort. My first six months have certainly been a challenge and full of surprises as we contended with
supply chain and operational constraints and it is clear that we have not performed as well as previous years. However, Titon
is a great company with excellent people and products and a healthy balance sheet. It’s clear to me that we need a much
stronger direction to bring the business back on track during the coming year and then a clear strategy that will outline how
we will grow and deliver value for shareholders and for society. I am committed and excited to be leading us on that journey.”
Summary
Revenue reduction of 5.7% to £22.1m (2021: £23.4m)
Group loss before tax of £953,000 (2021 profit before tax: £1,075,000)
Group underlying loss before tax of £604,000 (2021: underlying profit of £1,075,000)
EPS loss of 3.89 pence (2021: profit of 9.24 pence)
Year-end net cash balances down to £1.7m (2021: £4.8m)
Total dividend for the year of 2.0 pence per share (2021: 4.5 pence per share)
Overview
In evaluating the performance of the business, the Directors initially review geographical areas and then consider product
group segmentation at the secondary level.
The Titon Group performance is monitored across three geographical segments of UK and Europe, South Korea and United
States. Within these segments, the principal business activities are design, manufacture, marketing and sales:
●
natural ventilation (trickle vents) and hardware products for the window and door fabricator markets in the UK, Europe
and the USA;
● mechanical ventilation products for the new build residential markets in the UK and Europe; and
●
natural and mechanical ventilation products for the new build, re-build and refurbishment residential market in South
Korea.
The first two activities above are carried out by Titon Hardware Limited and Titon Inc. (in the US), both wholly owned
subsidiaries. Titon is one of the leaders in the window trickle vent market in the UK, trickle vents being used extensively in
the new build and refurbishment sectors. The third activity is carried out by Titon Korea Co. Ltd (“Titon Korea”), a 51% owned
subsidiary, which designs and manufactures products and Browntech Sales Co. Limited (“BTS”), a 49% owned associate
company, which markets and sells these products to customers.
Titon’s strategy is to grow both the natural ventilation and mechanical ventilation businesses by market growth, market
penetration and development of new products.
Chief Executive’s Review
The principal activities of the Group have not changed during the year and consist of the design, manufacture and marketing
of ventilation products and door and window fittings.
The Consolidated Income Statement is set out on page 46. A summary of the results along with other selected Key Performance
Indicators (“KPIs”) is as follows:
Revenue
(Loss) / profit before tax
Taxation
(Loss) / profit after tax
Revenue per employee
(Loss) / profit after tax per employee
Year-end net cash and cash equivalents
6
2022
£’000
22,087
(953)
410
(543)
108
(2.6)
1,726
2021
£’000
23,412
1,075
(72)
1,003
116
5
4,794
Titon Holdings Plc I 2022 Annual Report Strategic Report (continued)
The Group has suffered this year from shortages of raw materials, key components and labour as well as significant cost
increases for materials, labour and energy. As result there has been a negative impact on our financial performance and
position. The Group has sought to manage the inflationary margin erosion which has impacted our financial performance
through price increases, material cost savings and operational efficiencies. Our trading was also affected by unforeseen
operational impacts associated with the implementation of a new internal ERP system for our UK and Europe operations.
Business in South Korea also remains below previous levels due to a slowing in the housing construction market and an
ongoing change in product requirements. Group Revenue has decreased by 5.7% to £22.1m (2021: £23.4m) and this has
resulted in an underlying Group loss before tax (excluding exceptional items) of £0.6m (2021 underlying profit before tax:
£1.1m) and a Group loss before tax including exceptional items of £0.95m (2021: profit before tax £1.1m). The tax credit for
the year of £0.4m (2021: charge of £0.07m) is due to a deferred tax credit reflecting trading losses and capital allowances. A
full review of the Group’s performance during the year is given in the Chair’s Statement.
Organisational structure
The Group has made a number of strategic organisational changes during 2022 to position it for change and for future growth.
Key new hires have strengthened the senior leadership and management teams. We have a new Operations Director and
have also recruited a Head of Supply Chain and recruiting a new Head of IT, both newly defined roles required to deliver
the business imperatives detailed in the goals and strategy section. Both Procurement and Planning are areas that offer us
significant opportunities for financial and operational improvements. We are also actively recruiting for a Commercial Director
to lead sales, marketing and customer service on a global basis across both the Hardware and Ventilation Systems divisions.
Strengthening and shaping the organisation to ensure the Group hits its financial targets will be an exciting key focus in 2023.
Covid-19
The health and safety of all our employees remains a top priority for the Group. The Group is no longer impacted by the
Covid-19 pandemic, and we feel well equipped to deal with any future waves in the UK. However, we continue to monitor the
Covid-19 situation very carefully in the UK and Europe as well as in countries of our key suppliers where government imposed
lockdowns could have the potential to cause supply disruption. Our supply chain strategy would be to forward order and hold
higher stocks should we deem there to be a high risk of disruption. We also have a policy of dual sourcing key components
where possible.
Y
R
E
V
I
L
E
D
SAFETY
Commercial (Sales)
Business Imperative: Develop
strong sales pipeline through
existing and new customers
Environment,
Health & Safety
Business Imperative: Improve
workplace safety by reducing
workplace incidents
ASH
OST/C
C
Commercial (Sales)
Business imperative: Improve
profitability/margin through WDH
product range rationalisation
Production
(Operations)
Business Imperative: Catch back
all arrears and maintain agreed
finished goods stock levels
D
E
L
I
V
E
R
Y
OUR 2022-23
BUSINESS
IMPERATIVES
Technical/R&D
Business Imperative: Deliver
innovative new products to
drive business growth
Supply Chain
(Operations) & Finance
Business Imperative: Improve
working capital including
reducing site inventory by 40%
D
E
L
I
V
E
R
Y
Continuous
Improvement
Business Imperative: Realise business
benefits from D365 through
improved business processes
People
Business Imperative: Achieve
stable, engaged and present
workforce
COST/CASH
E
L
P
O
E
P
Goals and strategy
We are passionate to improve indoor
air quality; good indoor air quality
means clean air for society to sustain
health and comfort.
During 2023 we will be working on a
review of the Group’s strategy that
will clearly outline how we are going
to advance and grow the organisation
to deliver value both to shareholders
and to society. However,
in the
meantime the senior leadership team
has defined a set of eight business
imperatives that will guide us through
the year and ensure that we stabilise
the business and also position the
Group for growth.
ASH
OST/C
C
imperatives are the
Our business
crucial things that we must achieve
this year. They are closely interlinked
and complement one another. Each
imperative will be regularly monitored
through a defined set of financial and
operational KPIs.
7
Titon Holdings Plc I 2022 Annual Report Strategic Report (continued)
Our business imperative
Why it is important for us
Catch back on production arrears and
maintain agreed finished goods stock
levels
- to enable increased sales
- to return to our previous high levels of
customer service
What we are doing and will we be doing to
achieve it
- increasing production output through
increased manning, operational
efficiencies, process and planning
improvements and capital investment
- once arrears are cleared, maintaining
target finished good stocks for all make-
to-stock products
Improve working capital including
reducing site inventory
- to improve the balance sheet and release
- reducing raw material and obsolete
cash held in inventory
finished goods stock holdings
- to create space on site to optimise stock
management and support delivery of
production plans
- maintaining high inventory record
accuracy
- ensuring strong supplier relationship
management and implementing
improved terms with top suppliers
- maintaining debtor tracking
Achieve stable, engaged and present
workforce
- to ensure that we have sufficient and
correct resources available to deliver
each business imperative
- implementing the appropriate
organisational structures to meet the
business needs
- to ensure that we have the correct
- implementing objective setting and
people resources to deliver a growth
strategy
performance reviews for all employees
linked to these business imperatives
- conducting an employee survey and
acting on the feedback
- providing required employee training and
support
Realise business benefits from new
Microsoft D365 ERP system through
improved business processes
- to deliver operational efficiencies and
- use of embedded BI and other D365
higher output
reporting tools
- to improve visibility of data that drives
- implementing workflows within D365
key business decisions
- to enhance control of key processes
- scoping and delivering end to end
continuous improvement project with
defined benefits case
8
Titon Holdings Plc I 2022 Annual Report Strategic Report (continued)
Our business imperative
Why it is important for us
What we are doing and will we be doing to
achieve it
Deliver innovative new products to drive
business growth
- to ensure our product range meets future
customer and regulatory requirements
- launching several key new products to
the market in 2023
- to remain market leading in our product
offerings
- to enable increased sales
- maintaining and enhancing new product
introduction process from idea through
to launch
Improve profitability and margin through
hardware product range rationalisation
- to improve business financials
- reducing the hardware product range
- to improve operational efficiency
offering
through reduced product complexity
- implementing optimised minimum order
quantities
- reviewing and aligning pricing
Develop strong sales pipeline through
existing and new customers
- to enable increased sales and position
- restructuring and strengthening the
the Group for growth
Customer Service team
- to rebuild and strengthen customer
- implementing an enhanced CRM within
relationships after a challenging year
Microsoft D365
- to return to our previous high levels of
- ongoing monitoring and analysis of sales
customer service
funnel with defined growth targets
Improve workplace safety by reducing
workplace incidents
- to ensure the health, safety and
wellbeing of all our employees
- improving health and safety culture
by setting an Environmental Health
and Safety (EHS) objective for every
employee
- ensuring visible felt leadership
- developing and improving our EHS
Committee
9
Titon Holdings Plc I 2022 Annual Report Strategic Report (continued)
Business model
Within its main geographical classifications of the UK and Europe, South Korea, North America and All Other Countries, the
Group operates in two divisions:
i.
ii.
the natural (trickle) ventilation and Window & Door Hardware division, in which Titon has operated since its formation 50
years ago in 1972 which includes South Korea. This activity accounted for 62% of Group revenue in 2022 (2021: 63%); and
the mechanical Ventilation Systems division, which the Group entered 15 years ago in 2007 and which accounted for 38%
of revenue in 2022 (2021: 37%). See Business Segmentation information on page 59.
The Group generally organises its sales and marketing activities into these divisions with manufacturing and all other services
supporting them both on a shared basis. The executive leadership team manage both divisions.
In the UK, the Group has a direct sales force for each division and aims to win specifications for its products through its
dealings with developers/housebuilders, architects, building services engineers and local authorities. Where a project isn’t
specified, Titon aims to sell directly to its wide customer base of electrical contractors, installers and window fabricators.
Titon operates in a wide range of export markets and has made sales to a significant number of countries from the UK during
this year. Our policy for exporting, in respect of both Window & Door Hardware and Ventilation Systems, is to appoint local
distributors and to support them in specifying and building the Titon brand. Within the Ventilation Systems division, the Group
also supplies OEM (Original Equipment Manufacturer) products for its customers and continues to target a significant increase
in its activities in continental Europe.
In South Korea, Titon Korea makes almost all its sales to BTS which sells products onward to its customers in the residential
construction sector. Titon entered the South Korean market in 2008.
The Group also has a wholly owned subsidiary, Titon Inc., based in Indiana in the USA. Sales into this market accounted for 2%
of Group revenues during the year (2021: 3%).
The Group manufactures products in the UK and in South Korea. Production in South Korea is entirely for the South Korean
market, whilst products manufactured in the UK are sold domestically and exported. Products manufactured in the UK factory
account for 61% (2021: 58%) of overall Group turnover and products manufactured in South Korea account for 18% (2021:
15%). The remaining 21% (2021: 27%) of revenue is obtained by the sale of products bought-in from third party manufacturers.
These bought-in products tend to be complementary to and are generally sold alongside our own manufactured lines.
Research and Development
Research and development continues to play an important role in the Group’s success as the need to provide increasingly
energy efficient ventilation products remains a growing requirement of our market over the coming years. This year we
significantly improved our New Product Introduction (NPI) process to include robust business case and project justification
analysis, stage gate sign off by all stakeholders at each stage and comprehensive project milestone tracking, ensuring that all
the new products we launch will deliver value.
Stage 0
Feasibility
Stage 1
Scoping
Stage 2
Design
Stage 3
Development
Stage 4
Production
Stage 5
Launch
Investment in research and development was £629,000 during the year (2021: £509,000), amounting to 3% of sales (2021:
3%). We saw an increase in spend over prior year due to increased testing costs as we approved and released alternative
components during worldwide supply chain shortages.
Design, development and launch of new products has been a significant contributor to the success of the Group over past
years. Over the last 5 years the Group has successfully developed and launched many new products and product variants
which have made a significant contribution to our revenue, both in securing new business and also in maintaining existing
business through product evolution. Our approach is driven by customer, market 7and regulatory needs.
10
Titon Holdings Plc I 2022 Annual Report Strategic Report (continued)
These are some of our recent new product highlights:
The Titon FireSafe® Air Brick launched in 2020 recently won ‘Ancillary
of Year’ at the prestigious HVR awards. We developed this product in
response to the terrible Grenfell disaster and subsequent legislation
changes in building regulations Part B. It remains a market leading
product.
The Titon Ultimate® dMEV launched in 2021 achieved the accolade of
‘Highly Commended’ at the recent Energy Saving Awards for Domestic
Product of the Year. We developed this product to meet new June 2022
building regulations Part F and comply with new strict test procedures
from Building Research Establishment (BRE). Changes to the BRE
testing process for dMEV fans requires that the fan should now be more
powerful to overcome external wind pressure. This means that a large
number of traditional extract fans can no longer be used. The Titon
Ultimate® dMEV is one of only a few fans to meet, and also exceed, the
new test requirement and is therefore well placed to take advantage of
these changes. The Titon Ultimate® dMEV was one of the first products
listed when the new SAP10 database went live, initially being one of only
two options.
In 2022 we developed and launched our Asterion II 3-Star high security
anti-manipulation profile cylinder to protect against ever increasing
security threats and more stringent security testing requirements in the
UK. It is BSI Kitemark certified and has been awarded Secured by Design
(SBD) status.
We have developed new advanced control systems, including Wi-
Fi connectivity and control of MVHR units using a mobile phone App
(Android and Apple). Our industry standard MODBUS interface also
allows interfacing with Building Control Systems (BMS), enabling building
owners to monitor the entire site for maintenance and fault detection
purposes.
During 2022 our popular ranges of MVHR and CME units were expanded
to dual source critical components whilst maintaining high quality and
high levels of performance. This enabled us to mitigate the continuing
global supply chain issues and positions us well going forward.
During 2023 we will be launching several key new products to the market that will deliver growth across both our Hardware
and Ventilation Systems divisions for the UK and Europe. On the Hardware side we have developed and patented a new
trickle vent that responds to external air pressure and regulates the flow of air into the property. This is important in ensuring
that regardless of the outside air pressure the property is adequately ventilated without causing draughts, one of the prime
reasons that house occupiers close their trickle vents and thereby reduce or stop the levels of ventilation required. One of our
upcoming launches for Ventilation Systems is a new larger, more energy efficient mechanical ventilation product with heat
recovery unit for our UK and European markets.
11
Titon Holdings Plc I 2022 Annual Report Strategic Report (continued)
Key Performance Indicators (KPIs)
The Board looks at a range of KPIs to monitor the performance of the Group throughout the financial year. These include KPIs
to track delivery of the business imperatives. At individual team and departmental level relevant KPIs are also monitored and
tracked regularly. The financial KPIs monitored by the Board regularly include:
KPI
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 division performance
Measured against targets and prior year on weekly basis
Sales, margins and prices
of core products
Sales to customers
Top 25 products reviewed monthly (at divisional management levels and operating segments)
Top 25 customers and 12 month rolling sales reviewed monthly (at divisional management levels
and operating segments). Sales by individual area sales managers reviewed weekly
Purchases
Net cash
Top 25 suppliers and delivery performance reviewed monthly
Reviewed weekly by Board and by senior management
Working capital
Inventory, average debtor days and average creditor days reviewed monthly by senior management
Graphical representations of some of these KPIs and other financial performance measures for the years ended 30 September
are as follows:
Revenue
£22.1
Operating loss
£0.770m
Underlying loss before tax
£604k
29.8
27.2
23.4
22.1
20.7
2.02
1.63
2.77
1.97
1.12
1.08
0.02
2018
2019
2020
2021
2022
-0.04
2018
2019
2020
2021
2022
2018
2019
2020
2021
-0.77
Dividend paid
2.0p
Earnings per share
(3.89p)
4.45
4.75
4.50
18.21
Net cash & cash equivalents
£1.726m
5.57
4.59
4.79
2.00
2.00
12.84
9.24
3.41
- 0.6
2022
1.73
2018
2019
2020
2021
2022
2018
2019
2020
2021
2022
0.52
2018
2019
2020
2021
2022
-3.89
Note: 2018 figures are restated
12
Titon Holdings Plc I 2022 Annual Report Strategic Report (continued)
2021/22 performance
The financial results for the year are shown above and are discussed throughout the Annual Report. The significant outcomes
for the year are as follows:
●
●
●
●
●
●
●
the implementation of the new internal ERP system for the UK and Europe operations was completed;
recruitment was completed for key new leadership roles in Operations and Supply Chain (Procurement and Planning);
in the UK sales of trickle vents were up 8% on the prior year and up 18% in the period July to September 2022 following
the introduction of the revised building regulations and associated standards for the UK in 2022. However, sales of
window and door hardware products fell by 20% as our distribution agreement with Sobinco came to an end following
its decision to sell its window and door hardware products direct to customers, rather than through Titon. However, we
have developed a successful partnership with European window and door hardware company Roto to sell their products
in the UK and we expect to see our window and door hardware sales improve next year as a result of this, although not
immediately to the level of prior years;
despite supply chain constraints for part of the year, we saw sales of Ventilation System products and services in the UK
rise by 9% in the period against prior year. However, sales to continental Europe and the rest of the world were down by
34% as we struggled to meet demand and recover the production arrears caused by the component shortages earlier in
the year;
sales of the Titon FireSafe® Air Brick, which was introduced in 2019/20, grew by 16.2% on 2021. We have won prestigious
industry awards for our Titon FireSafe® Air Brick and Titon Ultimate® dMEV, reflecting the success of our continued
product development activities;
sales to Titon Inc. in the US were 16% below the prior year due to a weak market for multiple occupancy homes;
sales in Korea of natural ventilation products were 15% below the prior year due to a continued slowdown in residential
new build construction. The market transition to marketing and selling mechanical ventilation products alongside natural
ventilation products is taking longer than originally anticipated;
● we have implemented leaner, more efficient processes for some of our manufacturing activities to recover production
arrears and increase output to support future growth. We have also started a new Sales Inventory and Operations
Planning (SIOP) process to create a longer-term, forward-looking plan that will enable us to achieve our business goals;
● we have put considerable attention on improving our culture and focus on health and safety with positive results;
●
employee numbers decreased slightly during the period from 214 in September 2021 to 209 at September 2022. In
Korea we saw a small reduction in people to align with the market slowdown partially offset in the UK by additional
people in key new strategic roles plus increased staffing in production to catch up on order backlogs. Salaries are reviewed
annually, and market level increases were given to all Titon Hardware Ltd employees with effect from 1 October 2022.
The Group will continue to review its performance and the market conditions and will review salaries again in early 2023.
2022/23 activities
The focus for 2022/2023 is to stabilise the business and then return it to profit through delivery of the business imperatives
outlined in the goals and strategy section on pages 7 to 9. We have set budgets for all regions and divisions of our Group
which reflect our view of market conditions: the anticipated positive impact from the 2022 building regulation and associated
standards changes and our internal growth ambitions. Specific initiatives for the current fiscal year include:
●
delivery of all business imperatives including:
●
●
●
●
●
●
●
●
●
●
conclude organisational changes;
return to previous high levels of customer service;
reduce site inventory;
increase production output through efficiencies and investments;
strong supplier relationship management with improved terms;
implement a new CRM system within our new Microsoft D365 ERP system;
realise process efficiencies from our new ERP system;
rationalise our Window & Door Hardware product range;
launch of several key new products for the UK and Europe markets;
a continued focus on improving health and safety culture and reporting of incidents;
●
●
develop plans for and initiate a review of the Group strategy;
increase our penetration into the residential mechanical ventilation market in the UK through increased sales to new and
existing customers. The revised building regulations and associated standards for the UK drive towards increasingly more
airtight dwellings for energy efficiency. This means a likely move away from intermittent extract systems to continuous
running products, such as Titon’s CME, MVHR and Ultimate® dMEV, which will become the predominant solutions;
13
Titon Holdings Plc I 2022 Annual Report Strategic Report (continued)
●
●
●
●
●
●
increase our sales into the social housing market with existing products and also new products that will be launched in
2023, where there is now a more robust analysis when property upgrades are undertaken, driving an improvement in
quality of the ventilation product installed, ideally meeting the same standard as new build dwellings;
increase our natural ventilation sales in the UK where the revised building regulations and associated standards now
require trickle vents to be fitted in virtually all replacement windows. Our growth will be supported through already
identified and commenced capital investment and operational efficiency improvements;
increase market share of Titon branded bought-in hardware, particularly our new advanced door cylinder and friction
hinges, and develop the new distribution partnership with Roto in the UK;
continue to drive efficiencies and improved customer service throughout our UK operations through the implementation
of lean principles and practices;
continue working with Regulatory and Governmental organisations to increase awareness of the effects of inadequate
ventilation and poor indoor air quality. Revised building regulations and associated standards released in 2022 remain
positive for our business;
streamline the corporate structure and operations of the Korean business.
Environmental Social and Governance Report
Titon prepared its first separate report on Environmental, Social and Governance (ESG) last year. ESG reporting remains
increasingly important for investors and we also want to continue demonstrating that we recognise our own responsibilities
to the environment. In 2019 we publicly committed to becoming a net zero company by 2050.
The UK Government introduced regulations in April 2022 that require climate-related financial disclosures to be made for
publicly quoted companies, large private companies and LLPs. For companies quoted on AIM this applies if the business has
more than 500 employees, so Titon is not currently required to make these disclosures but again, the direction of travel is
clear and supports our intentions.
One of the key questions raised by investors in the context of ESG is “Does this company make the world a better place?”
Within this question there are many different ways of measuring whether a company achieves this, and it is not possible
to use a single equation or methodology to arrive at an answer. Different stakeholders will have different requirements
in answering this question but as a Board we have a duty to enshrine this principle in every action we take. One way of
answering this question is to look at the products we make and how they benefit the community: we design, manufacture
and sell ventilation equipment and this boils down to providing an essential need for every person, which is clean air. All of our
ventilation products are designed to provide fresh, clean air to homes and buildings’ occupants and to dispel moisture, carbon
dioxide and volatile organic chemicals from those buildings, any of which could cause respiratory illnesses or allergies to
those occupants. In many countries in which we sell our products local building regulations require ventilation to be included
in all new house building. We are also seeing more commitment from governments in ensuring that in the retrofit market
attention is paid to ventilation: if a building is insulated then the natural pathways for air to flow in and out are blocked up and
it becomes essential that new routes to allow clean air in are provided.
In the drive for energy efficiency and ensuring that buildings are adequately ventilated we work with a network of stakeholders
including our customers in the window and door market and the house building market in the UK and Europe. We also work
with our trade associations, Beama Ltd and FETA to promote ventilation in the UK and a number of other organisations,
including the UK All Party Parliamentary Group for Healthy Homes and Buildings and the Air Pollution APPG.
Environmental Pillar
The Board recognises its responsibility to minimise the impact of the Group’s activities on the environment.
The Group seeks to reduce its environmental impact in a way that benefits a broad group of stakeholders, including customers,
shareholders, employees and the local community. The Group follows ISO 14001:2015 for Environmental Management
Systems within its UK manufacturing operation and places great emphasis on ensuring that it conducts its operations such
that:
●
emissions to air, releases to water and land filling of waste do not cause unacceptable environmental impacts and do not
offend the community;
significant plant and process changes are assessed and positively pursued to prevent adverse environmental impacts;
natural resources are used efficiently;
energy is used efficiently and consumption is monitored;
●
●
●
●
● waste is reduced, reused or recycled where practicable;
●
raw material waste is minimised;
the amount of packaging used for our products is minimised.
14
Titon Holdings Plc I 2022 Annual Report Strategic Report (continued)
As part of its processes, the Group’s environmental performance is reviewed regularly by senior management and a
programme of continuous improvement for the benefit of customers, employees and the environment has been adopted. We
remain focussed on reducing our energy usage and maintain detailed records of each area’s gas and electricity consumption
with the aim of taking prompt action if any unexplained increase is observed. Based on the latest energy figures available our
UK electricity usage decreased by 9% in 2022 against 2021 whilst UK gas usage decreased by 4%. UK motor vehicle fuel usage
has decreased by 23% over 2021.
In accordance with Statutory Instrument 2008/410 the Group presents the following information in respect of its CO2
emissions during the period.
Global Greenhouse Gas (GHG) emissions data for the period are:
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
2022
tCO2e
535
235
770
45.6
2021
tCO2e
553
304
857
50.1
These sources fall within our consolidated financial reporting. We do not have responsibility for any emission sources outside
of our consolidated financial reporting, including those of our Associate Company.
We have used the GHG Protocol Corporate Accounting and Reporting Standard (revised edition), data gathered to fulfil our
requirements under the CRC Energy Efficiency scheme, and emission factors from UK Government’s GHG Conversion Factors
for Company Reporting 2022.
We have taken action over recent years to reduce our environmental footprint and will continue to do so. Actions we have
already taken include:
●
●
●
●
●
an investment of over £150,000 in solar panels, which are installed on the roof of our Haverhill factory. These panels
continue to generated over 125 Mwh of electricity per year, which we use in the factory or sell back to the National Grid;
installation of LED lighting throughout the Colchester Office and the Haverhill factory;
replacing all diesel cars in the company car fleet with electric vehicles, wherever possible, when they come up for renewal.
We have EV charging points installed at both the Colchester office and Haverhill site;
replacement of older fixed asset plant and machinery with new, more efficient units, for example our Amada Press which
we purchased in April 2021. In 2023 we are planning to make such investments in our Mould Shop;
installation of a reverse osmosis plant in our paint facility, which has reduced the usage of caustic soda and hydrochloric
acid by 50%, with an added health and safety benefit;
● we have an ongoing initiative to reduce single use packaging for raw material supplies and have replaced our own plastic
packaging with either cardboard or recycled plastic, wherever possible;
● we have a target to reduce waste to landfill from the Haverhill production site by 50% by end 2023, with a further goal of
zero waste to landfill in subsequent years.
We apply the waste hierarchy, as laid down in law, and which forms part of our ISO 14001:2015 certification. The basic
principles are “Reduce, Reuse and Recycle” and are incorporated in the Titon Recycling Policy under which we aim to reduce
waste in all our packaging, products and processes.
We will continue to take all actions that reduce our energy, water and waste usage. We will also look to report our environmental
footprint using a third-party reporting mechanism.
Social Pillar
The Group has various published policies relating to the Social pillar. These are communicated through our Intranet,
noticeboards and the Employee Handbook. Our comprehensive Employee Handbook published in 2021 includes all of our
employment policies, a summary of the Health and Safety policy, our Diversity Policy, our Safeguarding and IT Security and our
Environmental policies. The chapter entitled “Valuing Diversity and Respect at Work” covers the following matters:
●
●
equal Opportunities Policy: Titon is committed to encouraging equality and diversity among our workforce. Our objective
is to create a working environment in which there is no unlawful discrimination and where all decisions are based on
merit. The policy applies to all employees, workers, agency workers, contractors and job applicants and covers all of the
nine protected characteristics set out in the Equality Act 2010;
bullying and Harassment Policy: we are committed to providing a working environment free from bullying and
harassment and this policy covers both at work and out of the workplace, including work trips, work-related events and
social functions. It also includes all employees, agency, casual workers and independent contractors;
15
Titon Holdings Plc I 2022 Annual Report Strategic Report (continued)
●
●
grievance Policy: every employee has the right to raise a grievance if they have a genuine complaint about their job, work
or terms and conditions of employment and the policy principles are written down in the Handbook;
disciplinary Policy: the policy sets out the process for dealing with disciplinary and performance issues and to ensure that
any matters are dealt with fairly and consistently.;
● whistleblowing Policy: Titon is committed to the highest possible standards of ethical, moral and legal business conduct.
The policy aims to provide a route for employees to raise any concerns they may have on matters that could have a
serious impact on Titon such as incorrect financial reporting, unlawful actions or serious improper conduct.
I can report that there have been no occurrences under any of these policies during the financial year.
The Safeguarding and IT Security Policy includes the policies on Anti-corruption and Modern Slavery and Human Trafficking.
Under the Anti-Corruption Policy the Titon Group lists a number of fundamental principles and values which it believes are
the foundation of sound and fair business practice and which are important to uphold. It is the Titon policy to comply with all
laws, rules and regulations governing anti-bribery and corruption in all countries in which Titon operates. As a UK company
Titon is also bound by English law which covers our conduct both in the UK and abroad. The penalties for breaching this law
are significant both for the individuals involved and the Company and we take our legal obligations very seriously.
Titon is committed to the principles of the Modern Slavery Act 2015 and the abolition of modern slavery and human trafficking.
We do not enter into business with any organisation which knowingly supports or is found to be involved in slavery, servitude
and forced or compulsory labour. Due to the nature of our business, we have assessed that we have a low risk of modern
slavery in our business and supply chains. Our supply chains are limited, and we procure goods and services from a restricted
range of UK and overseas suppliers. We will continue to embed these principles through our procurement and employment
policies and practices.
Employee gender breakdown
As at the end of the financial year the analysis by gender of employees, was as follows:
Directors
Senior Managers
Other
Total
2022
Male
5
6
121
132
2022
Female
2
2
73
77
2022
Total
7
8
194
209
2021
Male
8
8
131
147
2021
Female
-
2
65
67
2021
Total
8
10
196
214
We continue to support a number of local and national charities throughout the year. Our colleagues in Colchester and Haverhill
also carry out a number of charity collections during the year.
We are committed to respecting human rights across our business operations and aim to comply with all local and international
legislation and standards.
Corporate Governance Pillar
We have presented our Corporate Governance position for many years, firstly under the UK Corporate Governance Code when
we were quoted on the Main Market of the London Stock Exchange and since 2020 under the Quoted Companies Alliance
(QCA) code after we moved to AIM. Please see page 34 of this Report for the detailed Corporate Governance Report. Our
website also contains more details of the governance disclosure including how we apply the 10 principles identified by the
QCA Code.
In summary, I am confident that we have applied the 10 principles identified by the QCA Code throughout the accounting
period in question and will continue to do so in the current financial year.
Health and safety
It is critical as a manufacturing business that our employees operate in a safe environment and that our Health & Safety
Health and safety is a top priority for the Group and we expect all employees to take responsibility for keeping themselves
and each other safe. It is critical as a manufacturing business that our employees operate in a safe environment and that
our Health and Safety culture, policies and practices are as good as they can be. We are always looking to improve them
and importantly adhere to them. We continually review and update our Health and Safety policies and have a dedicated
Health and Safety Manager role in the business. During 2022 we have put increased focus on hazard spotting, reporting
and resolution by all employees in order to further improve the safety of our work environment. We are pleased to witness
significant improvements in this area. The Group has also developed a Health and Safety roadmap that allows us to track and
manage our health and safety compliance, training and priority projects.
16
Titon Holdings Plc I 2022 Annual Report Strategic Report (continued)
The approach to health and safety management for the Group is as follows:
Board of Directors
Overall responsibility for setting policy and performance, promoting excellence in EHS as a personal
and organisational core value and role modelling the expected behaviours.
Senior leadership team
Meets weekly to review statistics, every reported incident and the status of the EHS roadmap. The
Chief Executive, Chief Financial Officer and all executive directors attend. Also promotes excellence in
EHS and shows the expected behaviours.
Local management
All employees
Meets daily to review health and safety incidents and issues. Responsible for setting expectations,
following the rules set, managing EHS risks and promptly addressing EHS incidents and issues,
including non-compliance.
Have the responsibility to look after the health and safety of themselves and others by proactive
hazard reporting and resolution, prompt reporting of all incidents and cooperating with instruction and
training.
Health and Safety Manager
Responsible for driving a positive health and safety culture, supporting resolution of day-to-day issues,
leading on incident investigation and implementing lessons learned, and implementation of changes to
policy.
Health and Safety Committee
Is represented by operational team members across all departments and is chaired by the Operations
Director with support from the Health and Safety Manager. The committee meets monthly to discuss
and address operational health and safety issues. Minutes are produced and distributed along with an
action plan.
The accident statistics for our UK operations are as follows:
●
●
January to December 2021
January to December 2022
17 reported accidents, 0 RIDDOR reported
51 reported accidents, 0 RIDDOR reported
Compared to 2021 we have seen a significant increase in the number of accidents reported, although the vast majority of
these are minor. This is due to an improved reporting culture and the focus applied to a ‘safety first’ approach, and not a
reflection of a drop in health and safety performance. We have improved our reporting processes for all incidents (including
accidents, hazards, and near misses) and have also improved our processes for sharing lessons learned. The Group is very
pleased to see this improvement in culture. Alongside the increase in accident reporting we have also seen a significant
increase in hazard reporting which we know helps prevent the occurrence of more serious incidents.
RIDDOR is the Reporting of Injuries, Diseases and Dangerous Occurrences Regulations 2013. These Regulations require
employers, the self-employed and those in control of premises to report specified workplace incidents. As at 31 December
2022, we had reached 1,506 days without a RIDDOR report being required, which is a reflection of the minor severity rating
of our incidents.
17
Titon Holdings Plc I 2022 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 2022, the Board of Directors consider that they have, individually and collectively,
acted in a way they consider, in good faith, would be most likely to promote the success of the Company for the benefit of
its shareholders as a whole, having regard to a number of broader matters including the likely consequence of decisions for
the long term and the Company’s wider relationships. In doing so, the Board holds regard to the matters contained in section
172(1) (a)-(f) of the Companies Act 2006.
The Directors fulfil their duties by ensuring that there is a strong governance structure in place across the Group’s operations,
backed up by robust processes.
The strategy for the Group is regularly monitored by the Board during the year. In respect of major matters discussed at board
level, the likely impact on all stakeholders are carefully considered and where possible, decisions are carefully explained and
discussed with affected stakeholders before actions are implemented to engender the necessary support.
The Group’s key stakeholders and why and how we engage with them are set out below:
Stakeholder Group
Why do we engage with them?
How does the Board engage with them?
Shareholders
Employees
Customers
18
The Board needs to know investors’ views
so they can be considered when making
strategic and governance decisions.
We aim to provide fair, balanced and
understandable information about the
business to enable informed investment
decisions to be made.
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 the highest regard for the health,
safety and wellbeing of our employees.
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.
We have regular dialogue with institutional
Investors and individual shareholders in order to
develop an understanding of their views.
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.
We engage with our employees through site
communications, consultation with employees,
briefings, question boxes, performance reviews,
surveys, newsletters and notice boards.
Employees are also written to individually on
matters which are deemed important. Every
employee is issued with a comprehensive
employee handbook with all of the employment
conditions and policies set out clearly so that
everyone can see what is expected of them.
We have another employee survey planned for
2023.
We continue to make every effort to protect our
employees.
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;
providing accredited Continuing Professional
Development (CPD) courses;
Titon Holdings Plc I 2022 Annual Report
Strategic Report (continued)
Suppliers
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.
Our supplier relationship management is led
by our procurement team and supported by
R&D and Sales. We engage with our suppliers
by holding regular meetings with them and via
a feedback process through monitoring their
performance.
Community/ Environment
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 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.
In compliance with the Companies Act 2006, the Board of Directors are required to act in accordance with a set of general
duties. During the year to 30 September 2022, the Board of Directors consider that they have, individually and collectively,
acted in a way they consider, in good faith, would be most likely to promote the success of the Company for the benefit of
its shareholders as a whole, having regard to a number of broader matters including the likely consequence of decisions for
the long term and the Company’s wider relationships. In doing so, the Board holds regard to the matters contained in section
172(1) (a)-(f) of the Companies Act 2006.
The Directors fulfil their duties by ensuring that there is a strong governance structure in place across the Group’s operations,
backed up by robust processes.
The strategy for the Group is regularly monitored by the Board during the year. In respect of major matters discussed at board
level, the likely impact on all stakeholders are carefully considered and where possible, decisions are carefully explained and
discussed with affected stakeholders before actions are implemented to engender the necessary support.
The Group’s key stakeholders and why and how we engage with them are set out below:
Application of s.172 during the year
During the year the Board has, amongst other things, recruited a new Chief Executive to drive change in the business, looked
at the structure of the Titon Holdings and Titon Hardware boards and developed the growth strategy of the business. We
have also implemented a new ERP system for the operations and finance parts of our business, which has generated many
issues which we have had to resolve. In Korea we have discussed and considered a re-structure of the Korean businesses to
simplify the arrangement.
We have continued to comply with the requirements under s.172 in the period of the Covid-19 pandemic and the easing of
restrictions in early 2022. Key decisions made included:
●
●
●
enabling office-based staff and sales executives to work from home by providing them with laptops and appropriate
software applications;
implementing Covid-19 Health & Safety procedures in line with Government guidelines;
providing lateral flow tests to all employees and daily monitoring of Covid-19 outbreaks in our sites.
19
Titon Holdings Plc I 2022 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 regularly at Board Meetings along with the appropriateness and
effectiveness of the key mitigating controls.
The table below highlights the principal risks and uncertainties which could have a material impact on the Group’s performance
and prospects and the mitigating activities which are aimed at reducing the impact or likelihood of a major risk materialising.
The Board does recognise, however, that it will not always be possible to eliminate these risks entirely.
Risk Matrix
Risk
Associate companies
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.
Potential Impact
Mitigations
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.
A formal Distribution Agreement exists
between Titon Korea Co. Ltd and Browntech
Sales Co. Ltd which aligns those companies
for trading purposes. The Group is
evaluating options for streamlining the
corporate structure and operations of the
Korean business.
The Group has developed business
continuity and disaster recovery plans.
The Group maintains a significant amount
of insurance to cover business interruption
and damage to property from such events.
Additional measures have been taken
to ensure the security of the Group and
customer data.
The Group gets a fire risk assessment
carried out by an external party (last
completed 6 September 2022) and actions/
suggestions raised are reviewed and
actioned accordingly.
A fire suppression system is installed in
relevant manufacturing areas.
Visits take place by the local fire service to
review and provide feedback on fire safety
systems and practices.
The Group implemented multifactor
authentication for relevant employees.
The Group has implemented a Cyber
Security training and awareness
programme for all employees.
Business disruption
The Group’s manufacturing and distribution
operations could be subjected to disruption
due to factors including incidents such
as a major fire, a failure of essential IT
equipment or a major cyber-attack on the
Group.
There is also a risk of business disruption if
key sub-contractors experience an incident
on their site or were to cease trading.
Incidents such as a fire at the Group’s or
sub-contractor premises or the failure of
IT systems could result in the temporary
cessation in activity or disruption of the
Group’s production facilities impeding the
Group’s ability to deliver its products to
its customers. A cyber-attack could leave
the Group open to a ransom demand or
compromise data security both for the
Group and customers.
20
Titon Holdings Plc I 2022 Annual Report Strategic Report (continued)
Risk
Potential Impact
Mitigations
Business disruption (continued)
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 strategy is to maintain
essential systems in the Cloud.
The Group has an email security gateway
system in place.
The Group has a register of Titon owned
tooling held at sub-contractors. The Group
looks to review sub-contractor insurance
and business continuity policies.
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 ISO 9001 standard
and a robust complaints process.
The Group closely manages its pricing,
rebates and commercial terms with its
customers and suppliers to ensure that
they remain competitive.
The Group has a policy of dual sourcing key
components where possible.
Supply chain risks
The risk of extended lead times beyond
forecast windows due to restricted
component availability.
The risk of continued material price inflation
and hence margin erosion.
Decrease in cash due to increased stock
holding.
The Group operates strategic purchasing of
key long lead time items.
Loss of customers due to an inability to
meet demand or uncompetitive pricing.
The Group holds weekly Sales Inventory and
Operations Planning reviews.
Increased risk of obsolescence.
The Group has a policy of dual sourcing key
components where possible.
The Group ensures robust supplier
relationship management.
The Group can implement customer
agreements to incorporate specification
changes if required.
Recruitment and retention of key staff
The Group is dependent on the continued
employment and performance of its senior
management and other skilled personnel.
Loss of any key staff without adequate and
timely replacement could disrupt business
operations and the Group’s ability to
implement and deliver its growth strategies
and financial targets.
The Group will be preparing a formal
succession plan in 2023.
The Group aims to provide competitive
remuneration packages and bonus schemes
to retain and motivate key staff.
21
Titon Holdings Plc I 2022 Annual Report
Strategic Report (continued)
Report on Risk Management (continued)
Risk
Potential Impact
Mitigations
Recruitment and retention of staff
The Group is dependent on the continued
employment and performance of all staff.
Failure to maintain adequate staffing levels
could impact on all business activities
and the Group’s ability to meet its defined
targets.
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.
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 high risk to
the Group given the current inflationary
pressures and prospects of a recession in
our markets.
The Group reviews market conditions, cost
of living and the National Living Wage and
aims to provide competitive remuneration
packages and bonus schemes to retain and
motivate staff.
The Group has a robust recruitment and
onboarding process.
The Group has several employee
engagement initiatives in place including
training and personal development
opportunities and performance review and
objective setting processes.
The Group has a two-way employee
feedback process in place.
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 residential
new-build and refurbishment markets
in the UK and South Korea for 2022/23
suggest a slowing in activity.
However, the social housing sector is
expected to remain fairly strong.
The Group spreads its risk by having
product lines and customer bases across
new-build, refurbishment and social
housing sectors, and is not reliant on single
key customers.
The Group monitors product demand on
a weekly basis and is able to respond
accordingly in re-allocating or varying
resources.
The Group continually seeks to expand the
geographical markets into which it sells its
products.
Government action and policy
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.
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.
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 will be subject to a
comprehensive review by 2025.
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 structures its operations so
that it has a balanced exposure to the
construction sectors and the refurbishment
sector to reduce the impact of any adverse
Government action or policy on any one of
these sectors.
22
Titon Holdings Plc I 2022 Annual Report Strategic Report (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 endeavors to ensure that its
products are in compliance with relevant
fire safety regulations.
The Group maintains product liability
insurance to cover personal injury and
property damage claims from product
failures as well as professional indemnity
cover for areas of the business where
advice about products is provided as part of
the sales process.
Financial risk management
The Group’s operations expose it to a
variety of financial risks including 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 25 January 2023 and signed on its behalf by:
A French
Chief Executive
23
Titon Holdings Plc I 2022 Annual Report Directors’ Report
The Directors present their report and the Group and Company financial statements for the year ended 30 September
2022.
The Directors of Titon Holdings Plc throughout the financial year or subsequent to the year-end are listed on page 32.
A detailed commentary on the results for the year and discussion of future developments is given in the Chair’s Statement
on pages 2 to 5 and an explanation of the Group’s business strategy is included within the Strategic Report on pages 7
to 10.
The Group’s compliance with the QCA Code is set out in the report on page 34.
Substantial shareholders
As at 30 September 2022, the Company had been notified of the following voting interests in its ordinary share capital, other
than Directors’ holdings, of 3 per cent or more in the ordinary share capital of the Company:
Name
Rights & issueRights & Issues Investment Trust PLC
Harwood Capital LLP
Ms A J Farrar
Mr D J Barry
Shares
1,265,000
980,000
663,079
338,000
%
11.28
8.74
5.91
3.01
Share capital
The total issued ordinary share capital at 30 September 2022 consisted of 11,218,750 Titon Holdings Plc shares of 10p each.
25,000 new ordinary shares were issued during the year to satisfy share option exercises.
Details of the authorised and issued share capital of the Company as at 30 September 2022 are set out in note 19 of the Notes
to the Financial Statements.
All of the Company’s shares are ranked equally and the rights and obligations attaching to the Company’s shares are set out
in the Company’s Articles of Association, copies of which can be obtained from Companies House in England and Wales and
on the Company’s website at www.titon.com/uk/investors/.
There are no restrictions on the voting rights of shares and there are no restrictions on their transfer other than:
●
●
certain restrictions as may from time to time be imposed by laws and regulations (for example insider trading laws); and
pursuant to Article 19(11) of ‘UK MAR’ (the EU Market Abuse Regulation as amended by the Market Abuse Exit Regulations
2020) whereby Directors of the Company require approval to deal in the Company’s shares (see https://www.fca.org.uk/
markets/market-abuse/regulation).
Additionally, the Company is not aware of any agreements between shareholders of the Company that may result in
restrictions on the transfer of ordinary shares or voting rights.
Proposed dividends
The Directors recommend the payment of a final ordinary dividend of 0.5 pence (2021: 3.0 pence) per ordinary share. An
interim dividend of 1.5 pence per share was paid during the year (2021: 1.5 pence) so the total dividend for the year ended 30
September 2022 is 2.0 pence per share (2021: 4.5 pence). Titon operates a dividend reinvestment programme for shareholders
details of which are available from our registrars, Link Group.
Research and development
The Directors consider that research and development continues to play an important role in the Group’s success as the need
to provide increasingly energy efficient ventilation products remains a feature of our market over the coming years. Further
details on our research and development activities can be found in the Strategic Report.
Investment in research and development amounted to £629,000 during the year (2021: £509,000). Development expenditure
capitalised in 2022 amounted to an additional £130,000 (2021: £166,000). See note 11 of the Financial Statements.
Financial risk management
The Directors assess the financial risks facing the business and spend appropriate time considering them. The Group has a
system of risk management, which identifies these items and seeks ways of mitigating such risks as far as is possible. The
Report on Risk Management set out on pages 20 to 23 includes information on financial risk and also see note 21 to the
Financial Statements.
24
Titon Holdings Plc I 2022 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 consultation with employees, other staff meetings
and staff notice boards. The Group aims to foster an environment in which employees and management can enjoy a free flow
of information and ideas.
The Group is an equal opportunities employer and its policies for recruitment, training, career development and promotion
are based on the aptitude and abilities of the individual. All of these policies are included in the Employee Handbook which is
issued to every employee. See the Strategic Report for more details.
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 49). The translation reserve is not
considered as capital. In order to maintain or adjust its working capital at an acceptable level and to meet strategic investment
needs, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders or sell assets.
The Group does not seek to maintain any particular debt to capital ratio but will consider investment opportunities on their
merits and fund them in the most effective manner.
Environmental issues
An explanation of how the Group deals with its environmental responsibilities is included within the Strategic Report, under
the heading Environmental Social and Governance.
Directors’ responsibilities
The Directors are responsible for preparing the annual report and the financial statements in accordance with applicable law
and regulations.
Company law requires the Directors to prepare financial statements for each financial year. The Directors have elected to
prepare the Group and Company financial statements in accordance with International Financial Reporting Standards and
International Financial Reporting Standards adopted in the United Kingdom (“UK adopted IFRS”). Under company law the
Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state
of affairs of the Group and Company and of the profit or loss for the Group for that period.
In preparing these financial statements, the Directors are required to:
select suitable accounting policies and then apply them consistently;
●
● make judgements and accounting estimates that are reasonable and prudent;
●
state whether they have been prepared in accordance with IFRSs, subject to any material departures disclosed and
explained in the financial statements;
●
●
●
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the group and
parent company will continue in business; and
prepare a Directors’ Report, a Strategic Report and Directors’ Remuneration Report which comply with the requirements
of the Companies Act 2006;
prepare financial statements in accordance with the rules of the London Stock Exchange for companies trading securities
on AIM.
25
Titon Holdings Plc I 2022 Annual Report Directors’ Report (continued)
Directors’ responsibilities (continued)
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Group’s
transactions and disclose with reasonable accuracy at any time the financial position of the Group and enable them to ensure
that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of
the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
Website publication
The Directors are responsible for ensuring that the annual report and the financial statements are made available on a
website. Financial statements are published on the Company’s website, which can be found at www.titon.com/uk/investors/
in accordance with legislation in the United Kingdom governing the preparation and dissemination of financial statements,
which may vary from legislation in other jurisdictions. The maintenance and integrity of the Company’s website is the
responsibility of the Directors. The Directors are also responsible for disclosing additional information under Rule 26 of the
AIM Rules, which is available at www.titon.com/uk/investors/. The Directors’ responsibility also extends to the ongoing
integrity of the financial statements contained therein.
The Directors confirm to the best of their knowledge:
●
●
the Group financial statements have been prepared in accordance with International Financial Reporting Standards
(IFRSs) as issued by the IASB and adopted by the UK and give a true and fair view of the assets, liabilities, financial
position and profit and loss of the Group; and
the Annual Report includes a fair review of the development and performance of the business and the financial position
of the Group and the parent company, together with a description of the principal risks and uncertainties that they face.
Directors’ statement as to disclosure of information to auditors
The Directors at the time of approving the Directors’ Report are listed on page 32. Having made enquiries of fellow Directors
and of the Officers of the Company, each of the Directors confirms that:
●
●
to the best of each Director’s knowledge and belief, there is no relevant audit information of which the Company’s
auditors are unaware; and
each Director has taken all steps a Director ought to have taken to make themselves aware of any information needed
by the Company’s auditors for the purpose of their audit and to establish that the Company’s auditors are aware of that
information.
Directors’ liability insurance and indemnity
The Company has purchased liability insurance cover, which remained in force at the date of the report, for the benefit of the
Directors of the Company which gives appropriate cover for legal action brought against them. The Company also provides an
indemnity for its Directors (to the extent permitted by law) in respect of liabilities which could occur as a result of their office.
This indemnity does not provide cover should a Director be proved to have acted fraudulently or dishonestly.
Purchase of own shares
The Company has authority from shareholders to purchase up to 10% of its own ordinary shares in the market. This authority
was not used during the year nor in the period to 25 January 2023 and the Board intends to seek shareholder approval to
renew the authority at the forthcoming Annual General Meeting.
In accordance with the Companies (Acquisition of Own Shares) (Treasury Shares) Regulations 2003, companies are permitted
to hold purchased shares rather than cancelling them. At 30 September 2022 and 25 January 2023 the Company held nil
shares in treasury. The Company may use this power in the future depending on market conditions and the financial position
of the Company.
Events after the reporting date
There have been no events after the reporting date that materially affect the position of the Group.
Going concern
The Group’s business activities, its financial position, together with the factors likely to affect the Group’s performance,
are set out in the Strategic Report. In addition, note 21 to the financial statements includes the Group’s risk management
objectives and policies, managing its financial risk and its exposures to credit risk, foreign exchange risk and liquidity risk.
The financial statements have been prepared on a going concern basis. In adopting the going concern basis the Directors have
considered all of the above factors, including the principal risks set out on pages 20 to 23. Under the worst-case scenario
considered, which is severe and considered highly unlikely, the Group remains liquid for a period of 12 months from the date
of reporting and the Directors therefore believe, at the time of approving the financial statements that the Group is well
26
Titon Holdings Plc I 2022 Annual Report Directors’ Report (continued)
placed to manage its business risks successfully and remains a going concern. The key facts and assumptions in reaching this
determination are summarised below.
The financial position remains robust with cash of £1.7m available to the Group and no debt and therefore no bank covenants
in place. Our base case scenario has been prepared using forecasts from each of our operating companies, with each
considering both the challenges and opportunities they are facing because of various market forecasts and also supply chain
challenges. Due to the strength of the Group’s balance sheet and market outlook, the Directors believe there is no material
uncertainty around going concern. To this end a reverse stress test scenario has also been modelled, with the most extreme
conditions being considered. 50% of budgeted revenue was removed for all operating companies within the Group from 1 April
2023 to 31 January 2024 with all overheads being reduced accordingly. All discretionary expenditure was reduced or removed
such as capital expenditure and dividends. The result of this scenario is that we remain cash positive within 12 months of the
signing date. This extreme scenario excludes all other resources we would have at our disposal as means of raising further
cash, such as:
●
●
●
●
●
●
the Group owns the freehold interest in our Haverhill site which had a fair value of £5.4 million in September 2022. This
could be used as collateral to borrow funds from our bank in the form of a mortgage;
the Group has significant fixed assets that would have a second-hand market value that could be realised;
a rights issue could be made;
the Group has a large stock balance that could be sold on if there was reduced production;
salary costs could be reduced by virtue of either restructuring or through pay reductions;
BTS, our associate Company, has £3.4m of cash which could be paid to shareholders in the form of a dividend.
Annual General Meeting
The Annual General Meeting of Titon Holdings Plc (“the Company”) will be held at the Company’s premises at Falconer
Road, Haverhill, CB9 7XU on 22 March 2023 commencing at 10.00 a.m. A Notice convening the Annual General Meeting of
the Company for the year ended 30 September 2022 may be found on page 81 of this document.
Shareholders are being asked to vote on various items of ordinary business, being Resolutions 1 to 10 inclusive, as listed
below.
Resolution 1 – to receive and adopt the audited accounts
The Directors recommend that shareholders adopt the reports of the Directors and the Auditors and the audited accounts of
the Company for the year ended 30 September 2022.
The Directors’ Report was approved by the Board on 25 January 2023 and signed by order of the Board.
Resolution 2 - to declare a final dividend
The Directors recommend a final dividend of 0.5 pence per ordinary share. Subject to approval by shareholders, the final
dividend will be paid on 31 March 2023 to shareholders on the register on 10 February 2023.
Resolution 3 - to re-elect Mr Tyson Anderson as a Director
The Chair confirms that following performance evaluation Mr Anderson continues to be effective and demonstrates
commitment in his role.
Resolution 4 - to re-elect Mr Keith Ritchie as a Director
The Deputy Chair confirms that following performance evaluation Mr Ritchie continues to be effective and demonstrates
commitment in his role.
Resolution 5 - to re-elect Mr Nicholas Howlett as a Director
The Chair confirms that following performance evaluation Mr Howlett continues to be effective and demonstrates
commitment in his role.
Resolution 6 - to re-elect Mr Paul Hooper as a Director
The Chair confirms that following performance evaluation Mr Hooper continues to be effective and demonstrates
commitment in his role.
Resolution 7 - to re-elect Mr Jeff Ward as a Director
The Chair confirms that following performance evaluation Mr Ward continues to be effective and demonstrates
commitment in his role.
Resolution 8 - to re-elect Miss Alexandra French as a Director
The Chair confirms that following performance evaluation Miss French continues to be effective and demonstrates
commitment in her role.
27
Titon Holdings Plc I 2022 Annual Report Directors’ Report (continued)
Resolution 9 - to re-elect Ms Carolyn Isom as a Director
The Chair confirms that following performance evaluation Ms Isom continues to be effective and demonstrates
commitment in her role.
Resolution 10 - to re-appoint MacIntyre Hudson LLP as auditors
This resolution proposes that MacIntyre Hudson LLP should be re-appointed as the Company’s Auditors and authorises the
Directors to determine their remuneration.
Resolution 11 – to approve the Directors’ Remuneration Report
Resolution 11 in the Notice of Annual General Meeting, which will be proposed as an Ordinary Resolution, is to receive
and approve the Directors’ Remuneration Report as set out on pages 30 to 33 and also to approve a new Executive
Management Bonus Structure, details of which are contained in the Directors’ Remuneration Report.
Resolution 12 – authority to allot shares
The Companies Act 2006 prevents directors of a public company from allotting unissued shares, other than pursuant to an
employee share scheme, without the authority of shareholders in general meeting. In certain circumstances this could be
unduly restrictive. The Directors’ existing authority to allot shares, which was granted at the Annual General Meeting held
on 23 February 2022, will expire at the forthcoming Annual General Meeting.
Resolution 12 in the notice of Annual General Meeting will be proposed, as an Ordinary Resolution, to authorise the
Directors to allot ordinary shares in the capital of the Company up to a maximum nominal amount of £270,000, representing
approximately 24% of the nominal value of the ordinary shares in issue on 25 January 2023.
The authority conferred by the resolution will expire on 22 June 2024 or, if sooner, at the 2024 Annual General Meeting.
The Directors have no present plans to allot unissued shares other than on the exercise of share options under the Company’s
employee share option schemes. However, the Directors believe it to be in the best interests of the Company that they should
continue to have this authority so that such allotments can take place to finance appropriate business opportunities that may
arise.
Resolution 13 - to disapply pre-emption rights
Unless they are given an appropriate authority by shareholders, if the Directors wish to allot any of the unissued shares for
cash or grant rights over shares or sell treasury shares for cash (other than pursuant to an employee share scheme) they
must first offer them to existing shareholders in proportion to their existing holdings. These are known as pre-emption
rights.
The existing disapplication of these statutory pre-emption rights, which was granted at the Annual General Meeting held
on 23 February 2022 will expire at the forthcoming Annual General Meeting. Accordingly, Resolution 13 in the Notice of
Annual General Meeting will be proposed, as a Special Resolution, to give the Directors power to allot shares or sell treasury
shares without the application of these statutory pre-emption rights: first, in relation to offers of equity securities by way of
rights issue, open offer or similar arrangements; and second, in relation to the allotment of equity securities for cash up to a
maximum aggregate nominal amount of £160,000 (representing approximately 14.3% of the nominal value of the ordinary
shares in issue on 25 January 2023). The power conferred by this Resolution will expire on 22 June 2024 or, if sooner, at the
2024 Annual General Meeting.
In addition, there is one item of special business, being Resolution 14, as listed below.
Resolution 14 - Company’s authority to purchase its own shares
Resolution 14 in the Notice of Annual General Meeting, which will be proposed as a Special Resolution, will authorise
the Company to make market purchases of up to 1,121,875 ordinary shares. This represents approximately 10% of the
Company’s ordinary shares in issue on 25 January 2023. The maximum price per share that may be paid shall be the higher
of: (i) 5% above the average of the middle market quotations for an ordinary share for the five business days immediately
before the day on which the purchase is made (exclusive of expenses); and (ii) the higher of the price of the last independent
trade and the highest current independent bid on the trading venue where the purchase is carried out (exclusive of
expenses). The minimum price shall not be less than 10p per share. The authority conferred by this resolution will expire on
22 June 2024 or, if sooner, at the 2024 Annual General Meeting.
Your directors are committed to managing the Company’s capital effectively and although they have no plans to make such
purchases, buying back the Company’s ordinary shares is one of the options they keep under review. Purchases would only
be made after considering the effect on earnings per share and the benefits for shareholders generally.
The Company may hold in treasury any of its own shares that it purchases in accordance with the Companies Act 2006 and
the authority conferred by this resolution. This would give the Company the ability to re-issue treasury shares quickly and
cost effectively and would provide the Company with greater flexibility in the management of its capital base. The Company
does not currently hold any shares in treasury.
As at 25 January 2023 there were options outstanding over 437,000 ordinary shares which, if exercised at that date, would
28
Titon Holdings Plc I 2022 Annual Report Directors’ Report (continued)
have represented 3.90% of the Company’s issued ordinary share capital. If the authority given by Resolution 14 was to be fully
used, these would then represent 4.33% of the Company’s issued ordinary share capital.
Recommendation
The Directors believe that the resolutions which are to be proposed at the Annual General Meeting are in the best interests
of the Company and its shareholders as a whole and recommend that all shareholders vote in favour of them, as each of the
Directors intends to do, in respect of his or her beneficial holding.
The Directors’ Report was approved by the Board on 25 January 2023 and signed on its behalf by:
C V Isom
Company Secretary
29
Titon Holdings Plc I 2022 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 2022.
There has been no change to the Directors’ Remuneration Policy during the period and there have been no significant changes
in individual Director’s levels of remuneration during the year, except as a result of the performance related elements, which
are linked to the amount by which the Group’s results exceeds budget. For this period no payments were made in respect of
performance related elements.
Details of the Directors’ Remuneration Policy are shown on the Group’s website in the Corporate Governance section.
The Directors’ Remuneration Policy was approved in its entirety at the 2018 AGM. An Ordinary Resolution will be put to
shareholders at the forthcoming Annual General Meeting to be held on 22 March 2023, to receive and adopt the Directors’
Remuneration Report and to approve a new bonus arrangement for Titon Holdings executive management that includes
financial performance-based targets as well as individual performance.
The new Executive Management bonus structure has a base level bonus of 35% for the Chief Executive and 25% for the Chief
Financial Officer of base salary. It consists of four components, the majority of which is based on Group PBT with smaller
contributions from Group Revenue, Group Quick Ratio and personal objective performance. Personal objectives are directly
linked to the business imperatives that will drive the business back to profit. The maximum possible bonus payable where
targets are significantly exceeded is 63% and 45% of base salary for the Chief Executive and Chief Financial Officer respectively.
The Directors’ interests in the ordinary share capital of the Company at the year-end are reported below on page 32.
Remuneration Committee
The Committee presently consists of Mr J Ward, Mr G P Hooper, Mr N Howlett, all Non-executive Directors and Mr K Ritchie,
Non-executive Chair. The Committee has been established by the Board to set Remuneration Policy and to deal with all
matters relating to Directors’ Remuneration and reporting thereon. It has clear Terms of Reference established by the Board.
Directors’ remuneration compared to certain other distributions are as follows:
Directors’ remuneration
Other employee remuneration
Dividend payments to shareholders
2022
2021
Percentage
change
£’000
831
6,179
502
£’000
901
5,794
390
%
(10%)
7%
28%
Other employee remuneration includes grant income relating to the Coronavirus Job Retention Scheme of £nil (2021:
£0.008m).
30
Titon Holdings Plc I 2022 Annual Report
Directors’ Remuneration Report (continued)
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 (c)
K A Ritchie
D A Ruffell (d)
M J Norris (e)
C V Isom (f)
A C French (g)
Non-executive Directors:
J N Anderson (h)
N C Howlett
K Sargeant (i)
B Ratzke (i)
G P Hooper (j)
J Ward (j)
Totals
£’000
£’000
97
99
84
58
160
157
-
170
61
37
112
-
76
-
21
37
63
66
13
46
13
46
20
-
20
-
-
-
8
8
7
13
-
13
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
740
716
16
34
(b)
£’000
-
26
-
20
-
41
-
-
-
10
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
97
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
£’000
8
8
37
28
-
-
-
10
5
3
15
-
5
-
-
-
5
5
-
-
-
-
-
-
-
-
£’000
105
133
129
114
167
211
-
193
66
50
127
-
81
-
21
37
68
71
13
46
13
46
20
-
20
-
75
54
831
901
31
Titon Holdings Plc I 2022 Annual Report
Directors’ Remuneration Report (continued)
(a) A ‘salary sacrifice’ system is in operation, where the Company makes a pension contribution on behalf of each Director,
where applicable, and their salary is reduced by a corresponding amount.
(b)
In accordance with the proposals adopted by shareholders, performance related remuneration is not due for this period
to Executive Directors.
(c) T D Gearey was a beneficiary of an agreement with the Company relating to his departure from the Company on 6
April 2022 entitling him to a payment of £30,000 which is included in salary above as well as payment in lieu of notice
amounting to £46,000.
(d) D A Ruffell was a beneficiary of an agreement with the Company relating to his departure from the Company on 30 April
2021 entitling him to a payment of £90,000 which was included in salary above.
(e) M J Norris joined the Board on 12 July 2021 and left the Board on 8 February 2022.
(f) C V Isom joined the Board on 22 December 2021.
(g) A C French joined the Board on 3 May 2022.
(h)
J N Anderson left the Board on 31 March 2022.
(i) B Ratzke and K Sargeant both left the Board on 7 December 2021.
(j) G P Hooper and J Ward both joined the Board on 1 April 2022.
(k) The remuneration package of each Executive Director includes non-cash benefits, which for K Ritchie, D A Ruffell, T D
Gearey, T N Anderson and C V Isom also included the provision of a company car. The aggregate gains made by Directors
on the exercise of share options during 2022 were £11,220 (2021: £33,200). It also includes any discretionary amounts
payable, as agreed by the Remuneration Committee, where applicable.
Directors and their interests in shares
The Directors of the Company during the year and at the year-end and their beneficial interests in the ordinary share capital
were as follows:
30 September 2022
Ordinary shares of
10p each
30 September 2021
Ordinary shares of
10p each
K A Ritchie*
Non-executive Chair
1,031,381
D A Ruffell*
Chief Executive (left 30 April 2021)
M J Norris
Chief Executive (left 8 February 2022)
A C French
Chief Executive (joined 3 May 2022)
C V Isom
Chief Financial Officer (joined 22 December 2021)
J N Anderson*
(left 31 March 2022)
T N Anderson*
Deputy Chair
T D Gearey
I.T. Director (left 6 April 2022)
N C Howlett*
Non-executive Director
K Sargeant
Non-executive Director (left 7 December 2021)
B Ratzke
Non-executive Director (left 7 December 2021)
G P Hooper
Non-executive Director (joined 1 April 2022)
J Ward
Non-executive Director (joined 1 April 2022)
-
-
12,738
-
-
693,750
-
63,500
-
-
35,498
-
981,381
178,500
-
-
-
1,737,802
693,750
20,500
38,500
10,000
10,000
-
-
There were no other changes in Directors’ beneficial shareholdings between 30 September 2022 and 25 January 2023.
* Includes spouses’ holdings
32
Titon Holdings Plc I 2022 Annual Report Directors’ Remuneration Report (continued)
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
58.0p
156.5p
58.0p
58.0p
138.5p
138.5p
95.0p
T N Anderson
T D Gearey
(a)
(b)
N C Howlett
(a)
K A Ritchie
M J Norris
C V Isom
A C French
(a)
(c)
(c)
(d)
At 1
October
2021
Number
25,000
18,000
25,000
50,000
150,000
50,000
Granted
during
the year
Exercised
during
the year
Lapsed
during the
year
Number
Number
Number
At
30 September
2022
Number
-
-
-
-
-
-
-
-
25,000
50,000
-
-
-
-
25,000
18,000
-
-
150,000
-
-
-
-
-
-
50,000
150,000
-
150,000
No other directors had interests in options over shares during the year.
There have been no changes to the number of share options held by Directors between 30 September 2022 and 25 January
2023.
Share options
Share options are exercisable between the following dates:
(a)
(b)
(c)
(d)
15 January 2017 and
30 January 2021 and
and
15 July 2024
and
15 June 2025
15 January 2024
30 January 2028
15 July 2031
15 June 2032
The Directors may only exercise share options if the growth in the earnings per share of the Company over any period of
three consecutive financial years of the Company following the date of grant, exceeds the growth in the retail price index
over the same period by at least 9 per cent.
At 30 September 2022 the market price of the Company’s shares was 81p. The range during the year was 75p to 115p.
Approval
The Directors’ Remuneration Report was approved by the Remuneration Committee on 25 January 2023 and signed on its
behalf by:
J Ward
Remuneration Committee Chair
33
Titon Holdings Plc I 2022 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.
As shareholders will be aware a number of Board changes have taken place during the year as part of a process to strengthen
the Board and to allow the Board to focus on delivering the Group’s strategy and financial performance while ensuring that
operational matters are managed at the level of the main subsidiary.
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.
As noted above we have certainly had some difficult times during the year but we have continued to treat our employees
fairly, to invest in research and development and to communicate openly and honestly with our shareholders, to highlight
three of our specific goals.
The Board seeks to instil a healthy corporate culture in all of its dealings with its stakeholders and believes that Titon is
regarded by those stakeholders in a positive light and will meet its obligations in a fair and transparent way. The Board
acknowledges that there have been some challenges in meeting customer demands during the year due to supply chain
issues and the implementation of the new ERP system. However, a considerable amount of senior management time has
been spent on trying to resolve these issues and plans to catch-up with demand are now bearing fruit.
Please see the Audit Committee Report for a description of the main features of the internal control process and the risk
management system in relation to the financial reporting process adopted by the Group. The disclosure of information on
significant shareholdings in the Company is shown in the Directors’ Report.
The Directors consider that the Annual Report and Financial Statements taken as a whole are fair, balanced and understandable
and provide the information necessary for shareholders to assess the Group’s performance, business model and strategy.
The Group consolidated accounts are prepared by the Group Finance Manager and are reviewed by the Chief Financial Officer
and the Chief Executive. The review includes a detailed inspection of the accounts of all the constituent companies that
comprise the Group along with the relevant consolidation adjustments and journals.
Composition and operation of the Board of Directors
As As at 30 September 2022 the Board consisted of the Non-executive Chair, the Chief Executive, the Chief Financial Officer,
and four Non-executive Directors.
The Board as a whole comprises a wealth of skills and experience from the wide range of activities undertaken by its individual
members, as follows:
Keith Ritchie joined the Company in 2012, having had a 25-year career in the City of London. He is a member of the Institute
of Chartered Accountants in England and Wales and has extensive experience of finance, legal, tax and commercial matters.
He is also a Non-executive director of Beama Ltd, the trade association for the electro-technical manufacturers association
and is Chair of the Ventilation Group, within Beama Ltd. As a result of these different activities, he continues to utilise the skills
gained over his working career. Keith became Non-executive Chair of the Board on 1 October 2022 and has a service contract
which terminates at the 2023 Annual General Meeting unless he is re-elected;
Alexandra French joined the Board on 3 May 2022 as Chief Executive. She was previously at Johnson Matthey, where she
spent 25 years working in a number of commercial, operational, technical, sales and marketing roles. Alexandra graduated
from the University of Cambridge with a degree in Natural Sciences;
Tyson Anderson has been with the Company since 1993, when he joined the Marketing team and was elected to the board
of Titon Hardware Limited in 1999. Tyson joined the Board on 1 January 2004 as Marketing Director, was appointed Sales
& Marketing Director on 1 February 2007 and now acts as Business Projects Director in Titon Hardware Limited. Tyson was
34
Titon Holdings Plc I 2022 Annual Report Corporate Governance Report (continued)
appointed as a Non-executive Director and Deputy Chair in April 2022. In his role as Deputy Chair he has a service contract
which terminates at the 2023 Annual General Meeting unless he is re-elected;
Carolyn Isom joined Titon in December 2019 as Finance Director of Titon Hardware and was appointed to the Titon Holdings
Board as CFO in December 2021. She is ACCA qualified and has worked for a number of companies in the construction sector.
Nicholas Howlett joined Titon in 1991 and has held a number of positions within the Group since then. He was appointed to
the Board in 2002 and became a Non-executive Director with effect from 1 October 2017. He has a service contract which
terminates at the 2023 Annual General Meeting unless he is re-elected. Nick has carried out many roles for Titon, including
Production Director at the Haverhill factory, head of Research & Development and then Managing Director of Ventilation
Systems in the UK and Europe. Nick works closely with UK trade associations involved in the ventilation industry and on the
impact of building regulations and other Government laws both for Titon and the wider industry;
Jeff Ward joined the Board of Titon on 1 April 2022. Jeff is currently CEO of Guardian Fall, one of the largest independent
height safety companies in the world. He was previously CEO of Centurion Safety Products from December 2015 until July
2020 and before then held a number of leadership roles in hardware and safety businesses where he was responsible for a
range of activities, including sales, marketing, supply chain and strategy. Jeff holds an MBA from Warwick Business School and
also serves as a Director of the British Safety Industry Federation. Jeff has a service contract which terminates at the 2023
Annual General Meeting unless he is re-elected;
Paul Hooper joined the Board of Titon on 1 April 2022. Paul is currently Chief Executive of The Alumasc Group plc, a position he
has held since April 2003. Alumasc is a UK-based supplier of sustainable building products and solutions. He joined Alumasc
in April 2001 as Group Managing Director. His earlier career included a first Managing Director role with BTR plc in 1992. He
subsequently joined Williams Holdings plc in Special Operations, implementing acquisitions in Europe and North America,
prior to joining Rexam PLC as a Divisional Managing Director with responsibility for operations in Europe and South East Asia.
Paul holds an MBA from Cranfield School of Management. Paul has a service contract which terminates at the 2023 Annual
General Meeting unless he is re-elected;
All Executive Directors are subject to annual appraisals of their performance and membership of relevant board committees,
as appropriate, during the financial year. This takes the form of a review of the targets and objectives for the period, a meeting
with the appraiser and the setting of targets and objectives for the current year. It also includes a process whereby a failure
to meet the targets is discussed and changes are agreed to improve performance. A continuing failure to meet targets or
performance could lead ultimately to dismissal. The Non-executive Directors also provide feedback and appraisal of the
Executive Directors on an ad hoc basis, and this is included in the appraisals of the relevant individuals.
The Non-executive Chair has a range of responsibilities to perform including, inter alia, the proper functioning of the Board
of Directors and over-seeing the strategic development of the Company and Group. The Chief Executive has a specific range
of responsibilities including setting the strategic development of the Group, the day-to-day management of the Group and
implementing the strategy agreed by the Board. The five current Non-executive Directors provide a range of skills and wide
experience to the Group alongside the necessary independence, as required under principle 5, as follows:
1. Mr N C Howlett is deemed to be independent for the purposes of the Code despite his previous service and role as an
executive director of the Company due to his independence of character and judgment;
2. Mr T N Anderson is not deemed to be independent as he is a significant shareholder and has an existing service contract
with a Group subsidiary;
3. Mr G P Hooper is deemed to be independent for the purposes of the Code as he has no previous links with the Company;
4. Mr J Ward is deemed to be independent for the purposes of the Code as he has no previous links with the Company.
5. Mr K A Ritchie is not deemed to be independent due to his previous service and role as an executive director of the
Company and his significant shareholding.
The Board has a schedule of matters specifically reserved to it for decision including major capital expenditure decisions,
business acquisitions and disposals and the setting of treasury policy. This also includes matters such as material financial
commitments, commencing or settling major litigation and appointments to main and subsidiary company boards. The
Executive Directors are involved with day-to-day matters arising and the size of the Group allows the Board to have rapid
access to any issues which arise in dealings with stakeholders.
Scheduled Board meetings in 2022 took place monthly with further ad hoc meetings arranged as necessary. To enable the
Board to function effectively and Directors to discharge their responsibilities, full and timely access is given to all relevant
information. In the case of Board meetings, this consists of comprehensive management reporting information and discussion
documents regarding specific matters. All directors commit sufficient time to the Group to discharge their responsibilities: the
executive directors on a full-time basis, the Non-executive Directors, as required by the needs of the business.
35
Titon Holdings Plc I 2022 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
M J Norris
T N Anderson
T D Gearey
C V Isom
A C French
N C Howlett
K Sargeant
J N Anderson
B Ratzke
G P Hooper
J Ward
10
10
6
10
6
10
4
10
2
6
2
4
3
1
1
-
-
-
-
-
1
-
-
-
-
-
3
3
-
-
-
3
-
-
-
-
-
2
-
2
2
-
-
-
-
-
2
-
-
-
-
-
There is an agreed procedure for Directors to take independent professional advice if necessary and at the Company’s expense.
This is in addition to the access which every Director has to the Company Secretary. The Company Secretary is charged by the
Board with ensuring that Board procedures are followed.
When new members are appointed to the Board, they are provided with advice from the Company Secretary in respect of their
role and duties as a public company director. Furthermore, all Directors have ongoing access to the Company Secretary for
advice during the course of their appointment.
Appointments to the Board of both Executive and Non-executive Directors are considered by the Nominations Committee for
endorsement by the Board as a whole.
Any Director appointed during the year is required, under the provisions of the Company’s Articles of Association, to retire and
seek election by the shareholders at the next Annual General Meeting. The Articles of Association also require that one third
of the Directors retire by rotation each year and seek re-election at the Annual General Meeting. The Directors required to
retire are those in office longest since their previous re-election and in practice this means that each Director retires at least
every three years, in accordance with the requirements of the Code. It is the Company’s practice that all of the Non-executive
Directors will seek re-election at each Annual General Meeting.
All of the Directors retire at the next AGM and being eligible, offer themselves for re-election.
A statement of Directors’ interests and copies of their service contracts are available for inspection during usual business
hours at the registered office of the Company, on any weekday (excluding public holidays), and will be available at the place of
the Annual General Meeting for at least fifteen minutes prior to and during the meeting.
The Remuneration Committee
The Remuneration Committee Report is set out on pages 30 to 33. The Remuneration Committee’s terms of reference,
established by the Board, are to:
●
●
●
●
determine and to keep under review the Group’s policy on remuneration;
determine the basic salaries and non-cash emoluments payable to all Executive Directors, including Executive Directors
of subsidiary Group companies, giving due consideration to individual responsibility and performance and to salaries paid
to Executive Directors of similar companies in comparable business sectors;
select the performance targets for the Executive Directors’ bonus arrangements;
select the performance conditions relating to the Group’s Share Option Schemes. Such performance conditions to be
aimed to align Directors’ interests to shareholder value;
● make recommendations to the Board of Directors on other matters relating to remuneration in the Group; and
●
prepare an annual report on remuneration to the Company’s shareholders for approval by the Board for submission to
a vote of shareholders at the Company’s Annual General Meeting and to advise the Board if it believes that, in any year,
there are particular matters relating to remuneration which should be put to the Company’s shareholders.
36
Titon Holdings Plc I 2022 Annual Report Corporate Governance Report (continued)
Nominations Committee
The Nominations Committee is responsible for proposing candidates as Directors of Titon Holdings Plc for endorsement by
the Board. The selection of suitable candidates will be based on the suitability of the person for the position regardless of
age, ethnicity or gender. Candidates may be either internal or external and executive search consultants may be used in the
process. The Nominations Committee met a number of times during the year to recruit the new Non-executive Directors and
the new Chief Executive. The Nominations Committee at 30 September 2022 comprised Mr N C Howlett, Mr J Ward and Mr
G P Hooper.
Communications with shareholders
The Board recognises the importance of communications with shareholders. The Strategic Report on pages 6 to 23 gives
a detailed review of the business, and there is regular dialogue with institutional shareholders at the time of the Group’s
preliminary announcement of the year end results and at the half year. The main contact with shareholders is through the
Chair or Chief Executive.
The Group’s results and other announcements are published on the London Stock Exchange RNS service and on the Company’s
website.
The Board uses the Annual General Meeting to communicate with private and institutional investors and welcomes their
participation.
The Corporate Governance Report was approved by the Board on 25 January 2023 and signed on its behalf by:
K A Ritchie
Chair
37
Titon Holdings Plc I 2022 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 G P Hooper, who has extensive accounting experience from his career and position as Chief
Executive of The Alumasc Group Plc. I confirm that the Titon Audit Committee continues to have competence relevant to the
sector in which the Company operates.
Role of the Audit Committee
The Audit Committee operates within defined terms of reference and its main functions are:
●
●
●
●
●
●
●
to monitor the internal financial control and risk management systems on which the Group is reliant;
to consider whether there is a need for the Group to have its own internal audit function;
to monitor the integrity of the Group’s financial statements and formal announcements relating to the Group’s financial
performance, reviewing significant financial reporting judgements contained in them;
to review arrangements by which staff may, in confidence, raise concerns about possible improprieties in matters of
financial reporting or any other matter;
to meet the independent Auditor of the Group to review their proposed audit programme of work and the subsequent
Audit Report and to assess the effectiveness of the audit process and the levels of fees paid in respect of both audit and
non-audit work;
to make recommendations to the Board in relation to the appointment, re-appointment or removal of the Auditor, and to
negotiate their remuneration and terms of engagement on audit and non-audit work; and
to monitor and review annually the external Auditor’s independence, objectivity, effectiveness, resources and qualification.
Review of financial statements and risks identified
Financial statements issued by the Company need to be fair, balanced, and understandable. The Audit Committee reviews the
Annual Report as a whole and makes recommendations to the Board. The Audit Committee has advised the Board that, in
its opinion, the Annual Report and Financial Statements are fair, balanced and understandable and provides the information
necessary for shareholders to assess the Company’s position and performance, business model and strategy. The Company’s
unaudited interim results are also reviewed by the Audit Committee prior to their publication.
The Audit Committee assesses annually whether it is appropriate to prepare the Group’s financial statements on a going
concern basis and makes its recommendation to the Board. The Board’s conclusions are set out in the Directors’ Report.
As noted in the Strategic Report and the Directors’ Report a considerable amount of work has been carried out to assess
the Group’s financial position as a result of the pandemic. The Audit Committee has been fully involved in all of the financial
forecasting that has been performed and the cash management steps which have been taken and has made a recommendation
to the Board that the Group should continue to prepare the financial statements on a going concern basis.
In planning its own work, and reviewing the audit plan of the Auditors, the Audit Committee takes account of the most
significant issues and risks, both operational and financial, likely to impact on the Group’s financial statements.
The Committee considers that the timing of revenue recognition is a significant area of risk to accurate financial reporting
and ensures that necessary credit note provisions and warranty provisions are made. In relation to activities in South Korea,
revenues are only recognised once the third-party customer has accepted the successful installation of either the first fix or
the second fix products into buildings rather than the delivery of such product from our factory.
The carrying value of the Group’s assets is an area where the Committee places great emphasis. In particular, calculating the
carrying value for the Group’s inventory is a vital factor as the Group has a wide range of product lines that may fluctuate
regularly in terms of their sales volumes. Consequently, every product line is assessed at the year-end to ensure that accurate
provisions for obsolescence are made.
A significant risk considered by the Committee is the Group’s investment in its South Korean business and in particular the
accuracy of accounting information. The Committee manage this risk through senior management making regular trips to
South Korea combined with the receipt of detailed monthly management accounts from South Korea. As noted above travel
to South Korea was opened up during 2022, before then regular video calls with senior managers were held instead.
Internal audit
The Board believes that due to the size of the business there is currently no requirement for an internal audit function. This
matter is reviewed annually.
38
Titon Holdings Plc I 2022 Annual Report Audit Committee Report (continued)
Internal control
The respective responsibilities of the Directors in connection with the financial statements are set out on pages 25 and 26,
and those of the Auditors are detailed in the Independent Auditor’s Report on page 44 and 45.
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 20 to 23) which is regularly reviewed by the Board and which identifies the likelihood and severity of the impact of
such risks and the controls in place to mitigate the probability of such risks occurring.
Internal control systems are designed to meet the Group’s particular needs and the risks to which it is exposed. They do not
eliminate the risk of failure to achieve business objectives. The following are the key components which the Group has in place
to provide effective internal control:
●
●
●
●
an appropriate control environment through the definition of the organisation structure and authority levels;
the identification of the major business risks facing the Group and the development of appropriate procedures and
controls to manage these risks;
a comprehensive budgeting and reporting system with monthly results compared with budgets and with previous years;
and
the principal aspects of the Group’s internal control processes used in preparing the Group’s consolidated accounts include
second reviews of consolidation workings and Board review of the composition of the Group’s financial information.
The Directors acknowledge that they are responsible for establishing and maintaining the Group’s system of internal control
and risk management and reviewing their effectiveness, which they have done during the year. Internal control systems
are designed to meet the particular needs of the Group and the risks to which it is exposed and by their nature can provide
reasonable but not absolute assurance against material misstatement or loss. Appropriate risk monitoring systems have
been in place throughout the year and up to the date of approval of the Annual Report and have been regularly reviewed by
the Board. The Report on Risk Management sets out the principal risks identified by the Directors, the potential impact and
the mitigation measures which apply. No significant weaknesses have been identified in this report by the Directors during
the year.
The Company has a shareholding in an associate company. Controls within this entity are not reviewed as part of the
Company’s formal review processes due to the local delegation of managerial responsibilities, but instead are reviewed as
part of regular management process.
External audit process
During the year BDO LLP decided to resign as Group Auditors. The Audit Committee met to discuss this situation and agreed
to recommend the appointment of MacIntyre Hudson LLP for the current year. The Audit Committee meets at least twice
a year with the Auditor, who provides a planning report in advance of the annual audit and a report on the annual audit.
The Committee has an opportunity to question and challenge the Auditor in respect of each of these reports. No significant
deficiencies were noted by the Auditor in respect of the period ended 30 September 2022. The Committee also discussed the
basis of preparation of the going concern opinion and the key audit matters with the Auditor.
After each audit, the Audit Committee reviews the audit process and considers its effectiveness.
Auditor assessment and independence
The Group’s external auditor is MacIntyre Hudson LLP (MHA), who replaced BDO LLP during the period.
The Audit Committee reviewed MHA’s independence policies and procedures including quality assurance procedures and it
was confirmed that those policies and procedures were fit for purpose. Accordingly, the Audit Committee recommends that
MHA should be reappointed as the Group’s auditor for the next financial year and a resolution to that effect will be proposed
at the 2023 AGM.
The fees for audit services provided by MHA for 2022 were £143,000 (2021: £116,000). The Audit Committee discussed the
non-audit services provided by MHA during the year. The cost of non-audit services provided by the Auditor for the financial
year ended 30 September 2022 was £1,000 (2021: £1,450).
K A Ritchie
Audit Committee Chair
25 January 2023
39
Titon Holdings Plc I 2022 Annual Report Independent Auditor’s Report
To the Members of Titon Holdings Plc
For the purpose of this report, the terms “we” and “our” denote MHA MacIntyre Hudson in relation to UK legal, professional
and regulatory responsibilities and reporting obligations to the members of Titon Holdings Plc. For the purposes of the table
that sets out the key audit matters and how our audit addressed the key audit matters, the terms “we” and “our” refer to
MHA MacIntyre Hudson. The Group financial statements, as defined below, consolidate the accounts of Titon Holdings Plc and
its subsidiaries (the “Group”). The “Parent Company” is defined as Titon Holdings Plc. The relevant legislation governing the
Parent Company is the United Kingdom Companies Act 2006 (“Companies Act 2006”).
Opinion
We have audited the financial statements for Titon Holdings Plc, for the year ended 30 September 2022, which comprise:
●
●
●
●
●
●
●
●
the consolidated income statement;
the consolidated statement of comprehensive income;
the consolidated statement of financial position;
the company statement of financial position;
the consolidated statement of changes in equity;
the company statement of changes in equity;
the Group and Company statement of cash flows; and
the notes to the consolidated financial statements 1 to 26.
The financial reporting framework that has been applied in the preparation of the group and parent company’s financial
statements is applicable law and United Kingdom adopted International Financial Reporting Standards (UK Adopted IFRS).
In our opinion:
●
●
●
the financial statements give a true and fair view of the state of the Group’s and the Parent Company’s affairs as at 30
September 2022 and of the Group’s loss for the year then ended;
the financial statements have been properly prepared properly prepared in accordance with International Financial
Reporting Standards and Interpretations (collectively “IFRSs’”) as adopted in the United Kingdom (“UK-adopted IFRS”);
and
the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our
responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial
Statements section of our report. We are independent of the Group in accordance with the ethical requirements that are
relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard as applied to listed entities,
and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the Directors’ use of the going concern basis of accounting in the
preparation of the financial statements is appropriate. Our evaluation of the Directors’ assessment of the entity’s ability to
continue to adopt the going concern basis of accounting included:
●
●
●
●
the consideration of inherent risks to the Group’s and parent Company’s operations and specifically its business model;
the evaluation of how those risks might impact on the Group’s available financial resources;
review of the mathematical accuracy of the cashflow forecast model prepared by management and corroboration of key
data inputs to supporting documentation for consistency of assumptions used with our knowledge obtained during the
audit;
challenging management for reasonableness of assumptions in respect of the timing and value of cash receipts and
payments included in the cash flow model;
● where additional resources may be required the reasonableness and practicality of the assumptions made by the
Directors when assessing the probability and likelihood of those resources becoming available;
holding discussions with management regarding future financing plans, corroborating these where necessary and
assessing the impact on the cash flow forecast;
evaluating the accuracy of historical forecasts against actual results to ascertain the accuracy of management’s forecasts.
●
●
40
Titon Holdings Plc I 2022 Annual Report Independent Auditor’s Report (continued)
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that,
individually or collectively, may cast significant doubt on the Group’s ability to continue as a going concern for a period of at
least twelve months from when the financial statements are authorised for issue. Our responsibilities and the responsibilities
of the directors with respect to going concern are described in the relevant sections of this report.
Overview of our audit approach
Materiality
The overall materiality that we used for the Group financial statements was £221,000 (2021:
£250,000), which was determined as 1% of turnover (2021: 1.1% of turnover).
Scope
The overall materiality for the Parent Company financial statements was £138,000 (2021: £150,000),
which was determined as 2% of net assets (2021: 60 of group materiality).
Performance materiality was set at 60% (2021: 60%) of materiality for both the Group and Parent.
Our Group audit was scoped by obtaining an understanding of the Group including the Parent
Company, and its environment, including the Group’s system of internal control, and assessing
the risks of material misstatement in the financial statements. We also addressed the risk of
management override of internal controls, including assessing whether there was evidence of bias by
the directors that may have represented a risk of material misstatement.
The Group consists of five reporting components, four of which were considered to be significant
components: Titon Holdings Plc, Titon Hardware Ltd, Titon Korea Co. Ltd and Browntech Sales Co.
The significant components were subjected to full scope audits for the purposes of our audit report
on the Group financial statements. The other component, Titon Inc. is not deemed significant and
was subject to specific audit procedures for the purposes of our audit report on the Group financial
statements.
Material subsidiaries were determined based on:
1.
2.
financial significance of the component to the Group as a whole, and
assessment of the risk of material misstatements applicable to each component.
Our audit scope results in all major operations of the Group being subject to audit work, with Titon
Korea Co, Ltd and Browntech Sales Co. being audited by BTI Korea acting on specific instructions
Key audit matters
In addition to the matters described in the Basis for opinion section, we have determined the matters
described below to be the key audit matters at Group level to be communicated in our report:
Inventory valuation;
●
● Management override of controls;
●
Revenue recognition.
First-year audit transition
We developed a detailed audit transition plan, designed to deliver an effective transition from the
Group’s predecessor auditor, BDO LLP (“BDO”). Our audit planning and transition commenced on 25
August 2022, following our appointment. Our transition activities were performed for components
located in the UK and South Korea, which included (but were not limited to) reviewing the Audit
Committee meeting minutes and reviewing BDO’s 2021 audit working papers. Our transition focused
on obtaining an understanding of the Group’s system of internal control, evaluating the Group’s
accounting policies and areas of accounting judgement, and meeting with management across all
major divisions.
Key Audit Matters
Key Audit Matters are those matters that, in our professional judgement, were of most significance in our audit of the financial
statements of the current period and include the most significant assessed risks of material misstatement, whether or not
due to fraud, that we identified. These matters included those which had the greatest effect on the overall audit strategy, the
allocation of resources in the audit; and directing the efforts of the engagement team.
These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion
thereon, and we do not provide a separate opinion on these matters. We have determined the matters described below to be
the Key Audit Matters to be communicated in our report.
41
Titon Holdings Plc I 2022 Annual Report Independent Auditor’s Report (continued)
Inventory valuation including provisions
Key audit
matter
description
The inventory held by the Group is a key material area to the financial statements and accounts for a large amount of
the Group’s current assets. Due to the nature of the Group’s operations, the inventory balance is inherently linked to
both the purchases and the sales cycles.
How the scope
of our audit
responded to
the key audit
matter
The Group uses a standard costing model to determine the value of inventory. This carries a risk of material
misstatement due to the use of key management judgements in respect of overhead and labour recovery rates.
We consider inventory to be a key audit matter due to its significant importance to the Group’s operations and its
linkage to multiple areas of the financial statements.
Our audit work included, but was not restricted to the following:
●
●
●
●
●
we have attended the year end stock count including sample testing of stock items recorded on stock count sheets
o physical stock location in the warehouses and vice versa and physically inspecting inventory held for indication of
obsolescence or impairment;
we have reviewed the inventory listing and stock physically present in the warehouses for any slow-moving
or obsolete inventory items which require write off or providing for and then also reviewed and considered
the appropriateness of the provision made by management, as well as reperforming the calculations made by
management;
we have performed substantive testing for a sample of inventory items held at the year end to the original purchase
invoice and also to post year end sales to ensure inventory is held at the lower of cost and net realisable value in
the financial statements;
we have obtained and reviewed managements calculations and key judgements regarding the standard costing
model used and assessed the appropriateness of the costs included. We have also sample tested payroll and
overhead costs back to source invoices and documentation to confirm the accuracy of the figures used;
we have reviewed the audit working papers completed by the component auditor to ensure that the work performed
on overseas subsidiaries sufficiently addresses the risk at group level.
Key
observations
Based on the outcome of our procedures we identified no material issues with the valuation of inventory or the
provisions for slow moving, damaged or obsolete goods.
Management override of controls
Key audit
matter
description
How the scope
of our audit
responded to
the key audit
matter
In accordance with ISA 240 (UK) management override is presumed to be a significant risk.
The ability to override controls puts management in a unique position to perpetrate or conceal the effects of fraud.
This may take a number of forms such as falsifying accounting entries in order to conceal misappropriation of assets
or other manipulation of accounting entries intended to result in the production of financial statements which give a
misleading view of the entity’s financial position or performance.
Our audit work included, but was not restricted to the following:
●
●
●
●
●
we evaluated the design and implementation of key controls, in particular high-level management review controls;
we evaluated whether the judgements and decisions made in determining the accounting estimates included in the
financial statements, even if they are individually reasonable, indicated a possible bias on the part of the entity’s
management that may represent a risk of material misstatement due to fraud;
we utilised our data analytics software to identify journals deemed to carry the highest risk or fraud or error. These
journals were then queried and the business rationale confirmed as appropriate;
we have tested the consolidation workings for mathematical accuracy and reviewed the consolidation workings
and journals to confirm their appropriateness;
we have also reviewed the journals and processes used and applied with regard to the change in accounting system
which occurred during the year.
Key
observations
No issues have been identified from the audit procedures performed over management override of controls.
Revenue recognition
Key audit
matter
description
Revenue is one of the most prominent key performance indicators for the business.
There is a risk that revenue is not recognised in line with IFRS15 in the appropriate period with regards to the cut-off of
transactions around the year-end. This is a heightened risk in Korea where the revenue is recognised over time due to
the requirements to perform a second fix on components fitted, therefore resulting in a deferral of revenue at the year
end.
42
Titon Holdings Plc I 2022 Annual Report Independent Auditor’s Report (continued)
How the scope
of our audit
responded to
the key audit
matter
Our audit work included, but was not restricted to the following:
●
●
●
●
●
we have completed a walkthrough of each of the key revenue streams from start to finish, documenting details of
the current internal processes, systems and controls to better understand them;
we have completed cut-off testing by selecting a sample of sales transactions across the various streams either
side of the year end to ensure the revenue has been accounted for in the correct period;
substantive testing has been carried out across the different income streams by picking samples from finance
system and tracing to the appropriate supporting documentation;
we have evaluated the Group’s revenue recognition in the context of the 5-step approach as set out within IFRS15.
we have reviewed the audit working papers completed by the component auditors regarding the method of revenue
recognition, its compliance with the principles of IFRS15 and consideration of the adequacy of the work performed.
Key
observations
We are satisfied, based on the results of the testing performed, that the recognition criteria employed by management
is materially consistent with the requirements of IFRS15.
It is noted that adjustments are made at group level to ensure income is correctly recognised in light of IFRS15, these
consolidation adjustments have been confirmed as accurate.
Our application of materiality
The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for materiality.
These, together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and
extent of our audit procedures on the individual financial statement line items and disclosures and in evaluating the effect of
misstatements, both individually and in aggregate on the financial statements as a whole.
Our definition of materiality considers the value of error or omission on the financial statements that, individually or in
aggregate, would change or influence the economic decision of a reasonably knowledgeable user of those financial statements.
Misstatements below these levels will not necessarily be evaluated as immaterial as we also take account of the nature of
identified misstatements, and the particular circumstances of their occurrence, when evaluating their effect on the financial
statements as a whole. Materiality is used in planning the scope of our work, executing that work and evaluating the results.
Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:
Overall
materiality
How we
determined it
Rationale
for the
benchmark
applied
Group financial statements
Parent Company financial statements
£221,000 (2021: £250,000)
£138,000 (2021: £150,000)
1% of turnover (2021: 1.1% of turnover)
2% of net assets (2021: 60% of group materiality)
We consider turnover to be the main measure by
which the users of the financial statements assess the
financial performance and success of the Group and is
a Key Performance Indicator identified by management.
Therefore, we consider this to be the most appropriate
benchmark for Group materiality.
The Parent Company is largely a holding company
incurring limited costs and therefore net assets has
been considered the most appropriate benchmark for
materiality.
Performance materiality is the application of materiality at the individual account or balance level, set at an amount to reduce,
to an appropriately low level, the probability that the aggregate of uncorrected and undetected misstatements exceeds
materiality for the financial statements as a whole.
We set performance materiality at a level lower than materiality to reduce the probability that, in aggregate, uncorrected and
undetected misstatements exceed the materiality for the financial statements as a whole. Group and the Parent Company
performance materiality was set at 60% (2021: 60%) of Group and Parent Company materiality respectively for the 2022 audit
being £132,600 for the Group and £82,800 for the Parent Company. In determining performance materiality, we considered
our understanding of the entity, including the quality of the control environment and whether we were able to rely on controls,
and the nature, volume and size of uncorrected misstatements in the previous period.
We agreed with management that we would report to them all audit differences in excess of £11,050 (2021: £5,000) for the
Group and £6,850 (2021: £5,000) for the Company as well as differences below that threshold that, in our view, warranted
reporting on qualitative grounds. We also report to management on disclosure matters that we identified when assessing the
overall presentation of the financial statements.
43
Titon Holdings Plc I 2022 Annual Report Independent Auditor’s Report (continued)
Overview of the scope of our audit
Our assessment of audit risk, evaluation of materiality and our determination of performance materiality sets our audit
scope for each company within the Group. Taken together, this enables us to form an opinion on the consolidated financial
statements. This assessment takes into account the size, risk profile, organisation / distribution and effectiveness of group-
wide controls, changes in the business environment and other factors such as recent internal audit results when assessing
the level of work to be performed at each component.
In assessing the risk of material misstatement to the consolidated financial statements, and to ensure we had adequate
quantitative and qualitative coverage of significant accounts in the consolidated financial statements, of the 5 reporting
components of the group, 2 of which are based in the UK and audited by the Group audit team, being Titon Holdings Plc and
Titon Hardware Ltd, 2 of which are based in South Korea and audited by BTI Korea being Titon Korea Co. Ltd and Browntech
Sales Co. and the other being Titon Inc. based in the USA.
The audit procedures undertaken covered the following percentage of the group benchmarks below:
Number of components
Revenue
Total assets
Loss before tax
Full scope audit
Specific procedures
Total
4
1
5
99%
1%
100%
100%
0%
100%
91%
9%
100%
Other Information
The other information comprises the information included in the annual report other than the financial statements and our
auditor’s report thereon. The Directors are responsible for the other information contained within the annual report. Our
opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated
in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial statements, or our
knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material
inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material
misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a
material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
●
●
the information given in the Strategic Report and the Directors’ Report for the financial year for which the financial
statements are prepared is consistent with the financial statements; and
the Strategic Report and the Directors’ Report have been prepared in accordance with applicable legal requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the Group and Parent Company and their environment obtained in the
course of the audit, we have not identified material misstatements in the Strategic Report or the Directors’ Report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to
report to you if, in our opinion:
●
adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches
not visited by us; or
the financial statements are not in agreement with the accounting records and returns; or
●
●
certain disclosures of Directors’ remuneration specified by law are not made; or
● we have not received all the information and explanations we require for our audit.
Responsibilities of the Directors
As explained more fully in the Directors’ responsibilities statement, as set out on pages 25 to 26, 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.
44
Titon Holdings Plc I 2022 Annual Report Independent Auditor’s Report (continued)
Auditor responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance
is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a
material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually
or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of
these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with
our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent
to which our procedures are capable of detecting irregularities, including fraud, is detailed below.
Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading
to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that
compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we
will be less likely to become aware of instances of non-compliance. The risk is also greater regarding irregularities occurring
due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation.
The specific procedures for this engagement and the extent to which these are capable of detecting irregularities, including
fraud is detailed below:
●
●
●
●
●
●
●
●
enquiry of management to identify any instances of non-compliance with laws and regulations;
enquiry of management around actual and potential litigation and claims;
enquiry of management to identify any instances of known or suspected instances of fraud;
Discussing among the engagement team regarding how and where fraud might occur in the financial statements and any
potential indicators of fraud;
reviewing minutes of meetings of those charged with governance;
performing audit work over the risk of management override of controls, including testing of journal entries and other
adjustments for appropriateness, evaluating the business rationale of significant transactions outside the normal course
of business, and reviewing accounting estimates for bias;
reviewing financial statement disclosures and testing to supporting documentation to assess compliance with applicable
laws and regulations;
challenging assumptions and judgements made by management in their significant accounting estimates, in particular
with respect to provisions for claims incurred but not reported.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting
Council’s website at: www.frc.org.uk/auditorsresponsibilities.
This description forms part of our auditor’s report.
Use of our report
This report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies
Act 2006. Our audit work has been undertaken so that we might state to the Company’s members those matters we are
required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not
accept or assume responsibility to anyone other than the Company and the Company’s members as a body, for our audit work,
for this report, or for the opinions we have formed.
Andrew Moyser FCA FCCA (Senior Statutory Auditor)
For and on behalf of MHA MacIntyre Hudson, Statutory Auditor
London
25 January 2023
45
Titon Holdings Plc I 2022 Annual Report Consolidated Income Statement
for the year ended 30 September 2022
Revenue
Cost of sales
Grant Income
Gross profit
Distribution costs
Administrative expenses
Administrative expenses - exceptional
Research and development expenses
Other income
Operating (loss) / profit
Finance income
Finance expense
Share of post-tax (loss) / profit from associate
(Loss) / profit before tax
Income tax credit / (expense)
(Loss) / profit after income tax
Attributable to:
Equity holders of the parent
Non-controlling interest
Profit for the year
(Loss) / earnings per share attributed to equity holders of the parent
Basic
Diluted
Note
3
4
26
5
5
13
6
7
9
9
Consolidated Statement of Comprehensive Income
for the year ended 30 September 2022
(Loss) / 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 56 to 84 form part of these financial statements.
2022
£’000
2021
£’000
22,087
23,412
(16,270)
(16,070)
-
5,817
(1,393)
(4,586)
(349)
(629)
21
8
7,350
(1,144)
(4,521)
-
(582)
16
(1,119)
1,119
9
(16)
173
(953)
410
(543)
(436)
(107)
(543)
(3.89p)
(3.89p)
2022
£’000
(543)
112
(431)
(333)
(98)
(431)
-
(16)
(28)
1,075
(72)
1,003
1,028
(25)
1,003
9.24p
9.18p
2021
£’000
1,003
(284)
719
793
(74)
719
46
Titon Holdings Plc I 2022 Annual Report
Consolidated Statement of Financial Position
at 30 September 2022
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
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
20
18
17
18
19
19
19
2022
£’000
3,321
553
915
2,909
697
8,395
6,571
4,920
1,726
2021
£’000
3,476
546
925
2,681
278
7,906
5,042
4,224
4,794
13,217
14,060
21,612
21,966
378
378
5,051
232
5,283
5,661
1,122
1,091
56
-
198
13,179
15,646
402
402
4,554
193
4,747
5,149
1,119
1,077
56
(27)
96
14,093
16,414
305
403
15,951
16,817
21,612
21,966
The notes on pages 52 to 79 form part of these financial statements.
These financial statements were approved and authorised for issue by the Board on 25 January 2023 and signed on its
behalf by:
KA Ritchie
Chairman
47
Titon Holdings Plc I 2022 Annual Report
Company Statement of Financial Position
at 30 September 2022
Company No. 01604952
Assets
Property and motor vehicles
Investments in subsidiaries
Investments in associates
Deferred tax assets
Total non-current assets
Trade and other receivables
Cash and cash equivalents
Total current assets
Total Assets
Liabilities
Deferred tax
Total non-current liabilities
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
2022
£’000
2021
£’000
10
12
13
16
15
20
16
17
19
19
19
1,773
1,836
554
225
4
554
225
-
2,556
2,615
4,769
4
4,773
7,329
-
-
135
135
135
1,122
1,091
56
-
4,925
7,194
7,329
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
As permitted by section 408(3) of the Companies Act 2006 the Company has elected not to present its own
Statement of Profit and Loss for the year. Titon Holdings Plc reported a profit before tax for the financial year
ended 30 September 2022 of £35,000 (2021: £243,000). The notes on pages 52 to 79 form part of these
financial statements.
These financial statements were approved and authorised for issue by the Board on 25 January 2023 and
signed on its behalf by:
K A Ritchie
Chair
48
Titon Holdings Plc I 2022 Annual Report Consolidated Statement of Changes in Equity
at 30 September 2022
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 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
Translation differences on
overseas operations
Loss 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
Transfer of treasury shares
-
-
-
-
-
-
3
-
-
-
-
-
-
-
14
-
102
-
102
-
-
-
-
-
-
-
-
-
-
-
At 30 September 2022
1,122
1,091
56
198
1
103
9
112
(436)
(436)
(107)
(543)
(435)
(333)
(98)
(431)
(502)
(502)
-
23
-
-
-
23
17
27
-
-
-
-
-
(502)
-
23
17
27
13,179
15,646
305
15,951
-
-
-
-
-
-
27
-
The notes on pages 52 to 79 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
49
Titon Holdings Plc I 2022 Annual Report Total
Equity
£’000
7,394
243
243
34
Company Statement of Changes in Equity
at 30 September 2022
Share
capital
£’000
Share
premium
reserve
£’000
Capital
redemption
reserve
£’000
Treasury
shares
Retained
earnings
£’000
£’000
At 30 September 2020
1,113
1,049
56
(27)
5,203
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
(390)
(390)
-
34
At 30 September 2021
1,119
1,077
56
(27)
5,090
7,315
Profit for the year
Total Comprehensive Income for the year
Share-based payment expense
Dividends paid
Exercise of Share options
Transfer of Treasury shares
-
-
-
-
3
-
-
-
-
-
14
-
-
-
-
-
-
-
At 30 September 2022
1,122
1,091
56
The notes on pages 52 to 79 form part of these financial statements.
-
-
-
-
-
27
-
314
314
23
314
314
23
(502)
(502)
-
-
17
27
4,925
7,194
The following describes the nature and purpose of each reserve within equity:
Reserve
Description and purpose
Share capital
Nominal value of the issued share capital of the Company
Share premium
Premium on shares issued in excess of nominal value
Capital redemption
Amounts transferred from share capital on redemption and cancellation of issued shares
Treasury shares
Weighted average cost of own shares held in Treasury
Retained earnings
All other net gains and losses and transactions with owners (e.g. dividends) not recognised
elsewhere
50
Titon Holdings Plc I 2022 Annual Report Group and Company Statement of Cash Flows
for the year ended 30 September 2022
Group
Company
2022
£’000
Note
2021
£’000
2022
£’000
2021
£’000
Cash generated from operating activities
(Loss) / profit 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 (profit) / (loss)
(Increase) in inventories
(Increase) / decrease in receivables
Increase / (decrease) in payables and other current liabilities
(953)
1,075
10
10
11
23
5
5
13
518
232
298
(19)
23
(9)
16
(173)
(67)
(1,529)
(696)
498
479
164
240
(7)
34
-
16
28
2,029
(640)
(428)
206
Cash generated (used in) / generated by operations
(1,794)
1,167
Income taxes paid
-
(22)
Net cash (used in) / generated by operating activities
(1,794)
1,145
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 in cash
Effect of exchange rate changes
Cash at beginning of the year
Cash and Cash Equivalents at end of the year
10
11
5
8
24
18
5
23
(386)
(288)
44
9
-
(502)
(412)
25
-
-
(621)
(889)
(502)
-
(226)
(16)
44
(700)
(3,115)
47
4,794
1,726
(390)
(391)
(198)
(16)
34
(961)
(705)
(73)
5,572
4,794
(502)
(390)
-
-
-
44
(458)
(1,320)
-
1,324
4
-
-
-
34
(356)
(677)
-
2,001
1,324
35
64
-
-
-
23
(1)
-
-
121
-
(952)
(32)
(863)
-
(863)
-
-
-
1
-
1
(99)
68
-
-
(1)
34
-
-
-
2
-
1
(715)
(712)
-
(712)
-
-
6
-
385
391
The notes on pages 52 to 79 form part of these financial statements.
51
Titon Holdings Plc I 2022 Annual Report Notes to the Consolidated Financial Statements
at 30 September 2022
General information
The consolidated financial statements of the Group for the year ended 30 September 2022 incorporates Titon Holdings Plc
(“the Company”) and its subsidiaries (together referred to as “the Group”).
Titon Holdings Plc shares are publicly traded on the AIM market of the London Stock Exchange. The nature of the Group’s
operations and its principal activities are set out in the Strategic Report on page 6. The consolidated financial statements were
authorised for release on 25 January 2023.
1 - Summary of significant accounting policies
(a) Basis of preparation
Statement of compliance
The Group and Parent Company financial statements have been prepared in accordance with International Financial Reporting
Standards and Interpretations (collectively “IFRSs’”) as adopted in the United Kingdom (“UK-adopted IFRS”).
The principal accounting policies adopted in the preparation of the financial statements are set out below. The policies have
been consistently applied to all the years presented, unless otherwise stated.
The consolidated financial statements are presented in GBP and all values are rounded to the nearest thousand (£000), except
as otherwise indicated.
The preparation of financial statements in compliance with adopted IFRS requires the use of certain critical accounting
estimates. It also requires Group management to exercise judgment in applying the Group’s accounting policies. The areas
where significant judgements and estimates have been made in preparing the financial statements and their effect are
disclosed in note 2.
There were no new or amended standards that were required to be adopted by the Group in these financial statements. The
Group does not expect any standards issued by the IASB, but not yet effective, to have a material impact on the group.
Going concern
The financial statements have been prepared on a going concern basis. In adopting the going concern basis the Directors have
considered potential worst-case scenarios that could have a material impact on the business and from its other principal risks
set out on pages 20 to 23. Under the worst-case scenario considered, which is severe and considered highly unlikely, the
Group remains liquid for a period of more than 12 months from the date of reporting and the Directors therefore believe, at the
time of approving the financial statements that the Group is well placed to manage its business risks successfully and remains
a going concern. The key facts and assumptions in reaching this determination are detailed on pages 26 to 27.
Use of judgement and estimates
In the application of the Group’s accounting policies, management is required to make judgements, estimates and assumptions
about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and
underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period
in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if
the revision affects both current and future periods. The key assumptions concerning the future and other key sources of
estimation uncertainty at the reporting date that have a significant risk of causing a material adjustment to the carrying
amounts of the assets and liabilities within the next financial year are described under the relevant notes.
(b) Basis of consolidation
Subsidiaries
The Group’s consolidated financial statements incorporate the financial statements of the Company (Titon Holdings Plc) and
the entities controlled by the Company (its subsidiaries) made up to 30 September 2022. Control exists when the Company
is exposed to, or has rights to, variable returns from its involvement with the subsidiary and has the ability to affect those
returns through its power over the subsidiary.
Intragroup balances, and any unrealised gains and losses or income and expenses arising from intragroup transactions, are
eliminated in preparing the financial statements.
Non-controlling interests
A non-controlling interest is the equity in a subsidiary not attributable, directly or indirectly, to a parent. Non-controlling
interests at the end of reporting period represent the non-controlling shareholders’ portion of the fair values of the identifiable
assets and liabilities of the subsidiary at the acquisition date and the non-controlling interests’ portion of movements in
equity since the date of the combination. Non-controlling interest is presented within equity, separately from the parent’s
shareholders’ equity.
Losses within a subsidiary are attributed to the non-controlling interest even if that results in deficit balance.
52
Titon Holdings Plc I 2022 Annual Report Notes to the Consolidated Financial Statements (continued)
at 30 September 2022
1 - Summary of significant accounting policies (continued)
Associates
Where the Group has the power to participate in (but not control) the financial and operating policy decisions of another entity,
it is classified as an associate. Associates are initially recognised in the Consolidated Statement of Financial position at cost.
The Group’s share of post-acquisition profits and losses is recognised in the consolidated profit or loss, except that losses in
excess of the Group’s investment in the associate are not recognised unless there is an obligation to make good those losses.
Profits or losses arising on transactions between the Group and its associates are recognised only to the extent of unrelated
investors’ interests in the associate.
The investors’ share in the associate’s profits or losses resulting from these transactions is eliminated against the carrying
value of the associate. Any premium paid for an associate above the fair value of the Group’s share of the identifiable
assets, liabilities and contingent liabilities acquired is capitalised and included in the carrying amount of the associate. The
carrying amount of the investment in associates is subject to impairment in the same way as goodwill arising on a business
combination (see accounting policy (h)).
Business combinations
The consolidated financial statements incorporate the results of business using the purchase method. In the Consolidated
Statement of Financial Position, the Group’s identifiable assets, liabilities and contingent liabilities are initially recognised at
their fair values at the acquisition date. The Group’s share of the results of acquired operations are included in the consolidated
income statement from the date on which control is obtained.
(c) Foreign currency
Transactions entered into by group entities in a currency other than the currency of the primary economic environment in
which they operate (their “functional currency”) are recorded at the rates ruling when the transactions occur. Foreign currency
monetary assets and liabilities are translated at the rates ruling at the reporting date. Exchange differences arising on the
retranslation of unsettled monetary assets and liabilities are recognised immediately in the consolidated profit or loss.
On consolidation, the results of overseas operations are translated into Sterling, which is the presentational currency of
the Company and Group, at rates approximating those ruling when the transactions took place. All assets and liabilities of
overseas operations are translated at the rate ruling at the balance sheet date. Exchange differences arising on translating
the opening net assets at opening rate and the results of overseas operations at actual rate are recognised directly in other
comprehensive income.
Upon disposal of all overseas operations, exchange differences arising from the translation of the financial statements of
foreign operations are recycled and taken to the consolidated profit or loss as part of the profit or loss on disposal. The
Company has elected, in accordance with IFRS 1, that in respect of all foreign operations, any differences that have arisen
before 1 October 2004 have been set to zero. Any gain or loss on the subsequent disposal of those foreign operations would
exclude translation differences that arose before the date of transition to IFRS and include only subsequent translation
differences.
More than 92% (2021: 89%) of sales from the Group’s UK business are invoiced in Sterling.
(d) Property, plant and equipment
Items of property, plant and equipment are stated at cost less accumulated depreciation and impairment losses.
Cost includes the original purchase price of the asset and the costs attributable to bringing the asset to its working condition
for intended use. All other repairs and maintenance costs are recognised in the income statement as incurred.
Freehold land is not depreciated. Depreciation is provided on all other items of property, plant and equipment to write down
the cost to their residual values over the estimated useful lives. It is applied at the following rates:
Freehold buildings
- 2% per annum straight line
Improvements to leasehold property - 10% to 20% per annum straight line (or the lease term, is shorter
Plant and equipment
Motor vehicles
- 10% to 33.3% per annum straight line
- 25% per annum straight line
The estimated useful lives, residual values and depreciation methods are reviewed at each year end, with the effect of any
changes in estimates accounted for on a prospective basis.
The gain or loss arising on the disposal of an asset is determined as the difference between the sales proceeds and the
carrying amount of the asset and is recognised in the statement of comprehensive income.
The carrying values of tangible property, plant and equipment are reviewed for impairment when events or changes in
circumstances indicate the carrying value may not be recoverable (see accounting policy (h)).
The Group also recognises right-of-use assets and lease liabilities under IFRS 16 (see note 18), for most leases with the
exception of low value assets based on the value of the underlying asset when new or for short-term leases with a lease
53
Titon Holdings Plc I 2022 Annual Report Notes to the Consolidated Financial Statements
at 30 September 2022
1 - Summary of significant accounting policies (continued)
term of 12 months or less. Right-of-use assets, which include Property (factory units and office accommodation), plant and
equipment and motor vehicles are initially measured at an amount equal to the lease liability, adjusted by the amount of any
prepaid or accrued lease payments, and are depreciated on a straight-line basis to write off the carrying value of the assets
over the contractual term of each lease.
The carrying values of right-of-use assets are reviewed for impairment when events, such as a change in the term of the
lease, or in other circumstances indicate the carrying value may not be recoverable (see accounting policy (h)).
(e) Intangible assets
Intangible assets other than goodwill that are acquired by the Group are stated at cost less accumulated amortisation and
impairment losses (see accounting policy (h)). Amortisation is charged to Administrative Expenses within the Consolidated
Income Statement. The gain or loss arising on the disposal of an intangible asset, other than goodwill, is determined as the
difference between the sales proceeds (where appropriate) and the carrying amount of the asset and is recognised in the
statement of comprehensive income.
i Goodwill
Goodwill represents the excess of the cost of an acquisition over the fair value of the Group’s share of the net identifiable
assets of the acquired subsidiary or associate at the date of acquisition and subject to annual impairment testing. Goodwill on
acquisitions of subsidiaries is included in intangible assets. Goodwill associated with the acquisition of associates is included
within the investment in associates.
Goodwill is not subject to amortisation but is tested for impairment annually. On disposal of a subsidiary the attributable
amount of goodwill is included in the determination of the profit or loss recognised in the income statement on disposal
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.
54
Titon Holdings Plc I 2022 Annual Report Notes to the Consolidated Financial Statements (continued)
at 30 September 2022
1 - Summary of significant accounting policies (continued)
(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. Slow moving and
obsolete inventory is written off to profit or loss. The charge is reviewed at each balance sheet date.
(g) Cash and cash equivalents
Cash and cash equivalents comprise cash balances, bank overdrafts and treasury deposits for cash flow purposes. The Group
has no long-term borrowings and any available cash surpluses are placed on deposit.
(h) Impairment
The carrying amount of the Group’s assets, other than deferred tax assets, are reviewed at each balance sheet date to
determine whether there is any indication of impairment. If any such indication exists, the asset’s recoverable amount is
estimated. Impairment losses are recognised in profit or loss.
Reversals of impairment
Other than in respect of goodwill, an impairment loss is reversed if there has been a change in the estimates used to determine
the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed
the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been
recognised.
(i) Employee benefits
Share-based payment transactions
The Company provides share option schemes for Directors and for other members of staff.
In accordance with IFRS 2 – Share-based Payments, the fair value of the employee services received in exchange for the grant
of options is recognised as an expense to the income statement over the vesting period of the option and the corresponding
credit recognised to the Retained Earnings within equity. The Black-Scholes option pricing model has been used for calculating
the fair value of the Group’s share options. The Directors believe that this model is the most suitable for calculating the fair
value of the equity-based share options.
The fair value of the options is determined excluding the impact of any non-market vesting conditions. Non-market vesting
conditions are included in assumptions about the number of options that are expected to vest. At each balance sheet date the
Group revises its estimates of the number of option awards that are expected to vest. The impact of the revision of original
estimates, if any, is recognised in the income statement, with a corresponding adjustment to equity. No adjustment is made
for failure to achieve market vesting conditions providing all other vesting conditions are met.
Pension costs
The Group operates a defined contribution pension scheme. The assets of the scheme are held separately from those of the
Group in independently administered funds. Contributions to the pension scheme are charged to the income statement in the
year in which they become payable.
Accrued holiday pay
Provision is made at each balance sheet date for holidays accrued but not taken at the salary of the relevant employee at that
date.
(j) Provisions
A provision is recognised in the balance sheet when the Group has a present legal or constructive obligation as a result of a
past event, and it is probable that an outflow of economic benefits will be required to settle the obligation. They are discounted
at a pre-tax rate reflecting current market assessments of the time value of money and risks specific to the liability.
(k) Revenue
Revenue is derived principally from the sale of goods and is measured at the fair value of consideration received or receivable,
after deducting discounts, settlement discounts, rebates and is net of value added tax. The Group has concluded that it is the
principal in its revenue arrangements as it has control of those goods before transferring them to the customer.
55
Titon Holdings Plc I 2022 Annual Report Notes to the Consolidated Financial Statements
at 30 September 2022
1 - Summary of significant accounting policies (continued)
Sale of goods arises from sales of products to third parties and related parties. Revenue from the sale of goods is recognised
when the control of the goods is transferred to the buyer. This occurs when the goods are transferred to the customer in
accordance with the terms of the trade contract. Before a contract is entered into, customers are assessed using a credit
reference agency before credit is granted and where sufficient credit cannot be granted, payment is required in advance of
the goods being delivered and is held under other creditors until the goods are delivered and the revenue is then recognised.
Some goods sold by the group include warranties which require the group to either replace or mend a defective product during
the warranty period if the goods fail to comply with agreed upon specifications. In accordance with IFRS 15, such warranties
are not accounted for as separate performance obligations and hence no revenue is attached to them. Instead, a provision is
made for the costs of satisfying the warranties in accordance with IAS 37 Provisions, Contingent Liabilities and Contingent
Assets. Extended warranties are not offered to customers.
(l) Finance income
Finance income comprises interest receivable on funds invested.
(m) Corporation and deferred taxes
Tax on the profit or loss for the periods presented comprises current and deferred tax.
Current tax
Current tax is the expected corporation tax payable on the taxable income for the year, using rates and laws enacted or
substantively enacted at the balance sheet date, and any adjustment to tax payable in respect of previous years.
Deferred tax
Deferred tax is provided using the balance sheet liability method, using rates and laws enacted or substantively enacted at the
balance sheet date, providing for temporary differences between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for taxation purposes.
Temporary differences are not provided on goodwill that is not deductible for tax purposes or on the initial recognition of
assets or liabilities that affect neither accounting nor taxable profit, to the extent that they will probably not reverse in the
foreseeable future. The amount of deferred tax provided is based on the expected manner of realisation or settlement of the
carrying amount of assets and liabilities, using tax rates enacted or substantively enacted at the balance sheet date.
A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against
which the asset can be utilised. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax
benefit will be realised.
Deferred tax assets and liabilities are offset when the Group has a legally enforceable right to offset current tax assets and
liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority on either:
●
●
the same taxable group company; or
different Group entities which intend either to settle current tax assets and liabilities on a net basis, or to realise the
assets and settle the liabilities simultaneously, in each future period in which significant amounts of deferred tax assets
or liabilities are expected to be settled or recovered.
(n) Leased assets
All leases are accounted for by recognising a right-of-use asset and a lease liability except for:
●
●
leases of low value assets; and
leases with a duration of twelve months or less.
Lease liabilities are measured at the present value of the contractual payments due to the lessor over the lease term, with
the discount rate determined by reference to the rate inherent in the lease unless (as is typically the case) this is not readily
determinable, in which case the Group’s incremental borrowing rate on commencement of the lease is used. Variable lease
payments are only included in the measurement of the lease liability if they depend on an index or rate. In such cases, the
initial measurement of the lease liability assumes the variable element will remain unchanged throughout the lease term.
Other variable lease payments are expensed in the period to which they relate. On initial recognition, the carrying value of the
lease liability also includes:
amounts expected to be payable under any residual value guarantee;
the exercise price of any purchase option granted in favour of the Group if it is reasonably certain to assess that option;
any penalties payable for terminating the lease, if the term of the lease has been estimated on the basis of termination
option being exercised.
●
●
●
56
Titon Holdings Plc I 2022 Annual Report Notes to the Consolidated Financial Statements (continued)
at 30 September 2022
1 - Summary of significant accounting policies (continued)
Right-of-use assets are initially measured at the amount of the lease liability, reduced for any lease incentives received, and
increased for:
●
●
●
lease payments made at or before commencement of the lease;
initial direct costs incurred; and
the amount of any provision recognised where the Group is contractually required to dismantle, remove or restore the
leased asset (typically leasehold dilapidations – see Note 18).
Subsequent to initial measurement lease liabilities increase as a result of interest charged at a constant rate on the balance
outstanding and are reduced for lease payments made. Right-of-use assets are depreciated on a straight-line basis over the
remaining term of the lease or over the remaining estimated useful life of the asset if, rarely, this is judged to be shorter than
the lease term.
When the Group revises its estimate of the term of any lease (because, for example, it re-assesses the probability of a lessee
extension or termination option being exercised), it adjusts the carrying amount of the lease liability to reflect the payments
to make over the revised term, which are discounted at the same discount rate that applied on lease commencement. The
carrying value of lease liabilities is similarly revised when the variable element of future lease payments dependent on a rate
or index is revised. In both cases an equivalent adjustment is made to the carrying value of the right-of-use asset, with the
revised carrying amount being amortised over the remaining (revised) lease term.
(o) Dividends
Dividends are recognised when they become legally payable. In the case of interim dividends to equity shareholders, this is
when paid. In the case of final dividends, this is when approved by the shareholders at the AGM.
(p) Financial assets
The Group’s financial assets include cash and cash equivalents and trade receivables. All financial assets are recognised when
the Group becomes party of the contractual provisions if the instrument.
Trade receivables are recognised and carried at amortised cost less expected credit loss. IFRS 9 requires the Group to
recognise expected credit losses (‘ECL’) whereby expected losses as well as incurred losses are provided for. The Group applies
the simplified approach when determining ECL provisions for trade receivables. In making the assessment of credit risk and
estimating ECL provisions, the Group uses reasonable and supportable information about past events, current conditions and
forecasts of future events and economic conditions.
From time to time, the Group elects to renegotiate the terms of trade receivables due from customers with which it has
previously had a good trading history. Such renegotiations will lead to changes in the timing of payments rather than changes
to the amounts owed, and if the revised present value of cash flows is not significantly different from the carrying amount,
no impairment is recorded.
Cash and cash equivalents includes cash in hand, deposits held at call with banks, other short term highly liquid investments
with original maturities of twelve months or less, such as short-term fixed deposits with banks, and bank overdrafts. Bank
overdrafts are shown on the face of the balance sheet.
(q) Financial liabilities
The Group holds only one class of financial liabilities, namely trade payables. Trade payables and other short-term monetary
liabilities are initially recognised at fair value and subsequently carried at amortised cost.
(r) Treasury shares
Consideration paid or received for the purchase or sale of treasury shares is recognised directly in Equity - see page 49. The
cost of treasury shares held is presented as a separate item (“Treasury shares”). Any excess of the consideration received on
the sale of treasury shares over the weighted average cost of the shares sold is reflected in share premium.
(s) Government grants
The Group has took advantage of the Coronavirus Job Retention Scheme in 2021 and 2020 in the UK. This income was
recognised in the period to which the furloughed staff costs related to and only when it was reasonably likely for the conditions
to be met. The payroll liability had been incurred by the Group and therefore had met the conditions to claim for the payroll
period. All other conditions had been satisfied. The Group elected to net the grant income against the costs to which it related
i.e., wages and salaries.
(t) Exceptional items
Material items of income or expense that are deemed exceptional due to their size or incidence are disclosed separately in the
Consolidated Income Statement.
57
Titon Holdings Plc I 2022 Annual Report Notes to the Consolidated Financial Statements (continued)
at 30 September 2022
2 - Critical accounting estimates and judgements
The Group makes estimates and judgements regarding the future. Estimates and judgements are continually evaluated based
on historical experience and other factors, including expectations of future events that are believed to be reasonable under the
circumstances. In the future, actual experience may differ from these estimates and assumptions.
The judgements and estimates that have a significant risk of causing a material adjustment to the carrying amounts of assets
and liabilities within the next financial year are discussed below.
Estimates
Valuation of inventory
The Group reviews its inventory on a regular basis and, where appropriate, makes provision for slow moving and obsolete
stock based on estimates of future sales activity. The estimate of the future sales activity will be based on both historical
experience and expected outcomes based on knowledge of the markets in which the Group operates (see note 14 of the
Consolidated Financial Statements). The Group also calculates an amount representing wages and overheads for direct labour
and includes an estimate of this amount in the valuation of inventory.
Revenue recognition
The timing of revenue recognition is a significant area of risk to accurate financial reporting and the Group also ensures that
accurate estimates of credit note provisions and warranty provisions are made.
Depreciation of property, plant and equipment and right-of-use assets
Depreciation is provided so as to write down the assets to their residual values over their estimated useful lives as set out in
note 1 (d). The selection of these estimated lives requires the exercise of management judgement.
Useful lives of intangible assets
Intangible assets are amortised over their useful lives. Useful lives are based on the management’s estimates of the period
that the assets will generate revenue, which are periodically reviewed for continued appropriateness. Changes to estimates
can result in significant variations in the carrying value and amounts charged to the consolidated income statement in specific
periods (see notes 1 (e) and 11 of the Consolidated Financial Statements).
Expected credit losses and asset impairment
Expected credit losses are assessed under IFRS 9 using reasonable information about past events and current conditions and
forecasts of future events. Asset impairment considers the likely returns from financial assets owned by the Group and their
recoverability, based on market values and management’s judgement of any other relevant factors.
Judgements
Recognition of deferred tax asset
The extent to which deferred taxation assets can be recognised is based on an assessment of the probability that future
taxable income will be available against which the deductible temporary differences and taxation loss carry – forward amounts
can be utilised. The deferred tax asset of £750k (2021: £278k) has been recognised on the basis that the Group is forecasting
sufficient levels of profits in future periods.
58
Titon Holdings Plc I 2022 Annual Report Notes to the Consolidated Financial Statements (continued)
at 30 September 2022
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
2022
£’000
443
(443)
396
396
2021
£’000
478
(478)
443
443
The deferred revenue noted above is the Group’s only contract liability and is shown within Other Payables.
The Group has no material contract assets.
59
Titon Holdings Plc I 2022 Annual Report
Notes to the Consolidated Financial Statements (continued)
at 30 September 2022
3 - Revenue and segmental information (continued)
Operating segment
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.
For the year ended
30 September 2022
Segment revenue
Inter-segment revenue
Total Revenue
Segment profit/(loss)
Tax credit
Loss 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
16,497
(288)
16,209
(651)
920
17,021
2,910
671
South
Korea
£’000
3,037
-
3,037
(37)
42
4,491
-
3
North
America
£’000
538
-
538
160
-
178
-
-
All other
countries
Consolidated
£’000
2,303
-
2,303
(425)
-
-
-
-
£’000
22,375
(288)
22,087
(953)
410
(543)
962
21,690
2,910
674
The South Korea Segment profit includes the Group’s share of the profits from Browntech Sales Co. Ltd., (BTS), the Group’s
associate undertaking in South Korea, of £173,000.
Sales to BTS of £4.71m represented 21% of Group Revenue (2021: £3.58m – 15%). There are no other concentrations of
revenue of 10% or more during the year (see Note 24 - Related party transactions).
IFRS 8 requires entity wide disclosures to be made about the regions in which it earns its revenues and holds its non-current
assets which are shown below.
For the year ended
30 September 2022
Revenues
By entities’ country of domicile
By country from which derived
Non-current assets
United
Kingdom
£’000
18,512
16,209
Europe
USA and
Canada
£’000
£’000
-
2,303
538
538
South
Korea
£’000
3,037
3,037
By entities’ country of domicile
5,355
-
46
3,061
All other
regions
£’000
-
-
-
Total
£’000
22,087
22,087
8,461
60
Titon Holdings Plc I 2022 Annual Report Notes to the Consolidated Financial Statements (continued)
at 30 September 2022
3 - Revenue and segmental information (continued)
Operating segment
For the year ended
30 September 2021
Segment revenue
Inter-segment revenue
Total Revenue
Segment profit/(loss)
Tax expense
Profit for the year
United
Kingdom
South
Korea
North
America
All other
countries
Consolidated
£’000
16,368
(313)
16,055
1,026
£’000
3,578
-
3,578
(41)
£’000
629
-
629
52
-
193
-
-
£’000
3,150
-
3,150
38
-
-
-
-
£’000
23,725
(313)
23,412
1,075
(72)
1,003
883
21,966
2,681
914
Depreciation and amortisation
809
74
Total assets
Total assets include:
Investments in associates
Additions to non-current assets (other than financial
instruments and deferred tax assets)
17,181
4,592
2,681
893
-
21
The South Korea Segment loss includes the Group’s share of the losses from Browntech Sales Co. Ltd., (BTS), the Group’s
associate undertaking in South Korea, of £28,000.
Sales to BTS of £3.58m represented 15% of Group Revenue (2020: £4.92m – 24%). There are no other concentrations of
revenue of 10% or more during the year (see Note 24 - Related party transactions).
IFRS 8 requires entity wide disclosures to be made about the regions in which it earns its revenues and holds its non-current
assets which are shown below.
For the year ended
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
By entities’ country of domicile
4,996
-
32
2,878
All other
regions
£’000
-
62
-
Total
£’000
23,412
23,412
7,906
Information about the Group’s products
Within geographical segments the Directors also monitor the revenue performance of the Group within its two identified
business streams. The Group’s operations are separated between trickle ventilation and window and door hardware products
and mechanical ventilation products. The following table provides an analysis of the Group’s external revenue, irrespective of
the geographical region of sale.
Trickle ventilation and window and door hardware products
Mechanical ventilation products
Revenue
2022
£’000
13,586
8,501
2021
£’000
14,672
8,740
22,087
23,412
61
Titon Holdings Plc I 2022 Annual Report Notes to the Consolidated Financial Statements (continued)
at 30 September 2022
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
2022
£’000
6,384
-
6,384
664
564
38
2021
£’000
6,155
(8)
6,147
604
495
34
7,650
7,280
Company
2022
£’000
363
-
363
56
10
-
429
2021
£’000
527
-
527
58
14
34
633
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
2022
Company
2021
2022
2021
Number
Number
Number
Number
137
72
209
133
69
202
-
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 30 to 33.
5 - Finance income and expense
Finance income
Bank interest receivable on short term deposits
Finance expense
Interest expense on lease liabilities
Group
2022
£’000
9
Group
2022
£’000
16
2021
£’000
-
2021
£’000
16
Company
2022
£’000
1
Company
2022
£’000
-
2021
£’000
-
2021
£’000
-
62
Titon Holdings Plc I 2022 Annual Report Notes to the Consolidated Financial Statements (continued)
at 30 September 2022
6 - Loss before tax (2021: profit)
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 (gain) / loss
Share-based payment expense
Profit on disposal of property, plant & equipment
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:
(Loss) / profit before tax
Effect of:
Expected tax credit based on the standard rate of
Corporation tax in the UK of 19% (2021: 19%)
Additional deduction for R&D expenditure
Effect of Associate’s results reported net of tax
Expenses deductible for tax purposes
Difference in overseas tax rates
Impact of deferred tax assets not recognised
Other adjustments
Income tax credit / (expense)
2022
£’000
518
232
298
629
53
(109)
38
19
20
110
13
-
2022
£’000
-
-
-
410
-
410
2022
£’000
2021
£’000
479
164
240
509
30
66
34
7
14
85
17
1
2021
£’000
(22)
-
(22)
(75)
25
(72)
2021
£’000
(953)
1,075
(181)
189
33
7
-
384
(22)
410
(204)
167
(5)
(8)
(22)
-
-
(72)
The tax rate in the United Kingdom, being the primary economic environment in which the Group conducts its business is 19%
from 1 April 2017. The rate is due to change to 25% from 1 April 2023.
63
Titon Holdings Plc I 2022 Annual Report Notes to the Consolidated Financial Statements (continued)
at 30 September 2022
8 - Dividends
Final 2021 dividend of 3.00 pence (2020: 2.00 pence) per ordinary share proposed and paid during the
year relating to the previous year’s results
Interim dividend of 1.5 pence (2020: 0.00 pence) per ordinary share paid during the year
2022
£’000
335
167
502
2021
£’000
223
167
390
The Directors are proposing a final dividend of 0.5 pence (2021: 3.0 pence) per share. This will result in a final dividend totalling
£56,094 (2021: £334,313), subject to approval by the shareholders at the Annual General Meeting. This dividend has not been
accrued at the balance sheet date.
9 - Earnings per ordinary share
The calculation of the basic and diluted earnings per share is based on the following data:
Numerator
Earnings for the purposes of basic earnings per share being earnings after tax attributable to members of
Titon Holdings Plc
Denominator
2022
£’000
(436)
2021
£’000
1,028
Number
Number
Weighted average number of ordinary shares for the purposes of basic earnings per share
11,196,627
11,124,517
Effect of dilutive potential ordinary shares: share options
18,173
74,610
Weighted average number of ordinary shares for the purposes of diluted earnings per share
11,214,800
11,199,127
Earnings per share (pence)
Basic
Diluted
The total number of options in issue is also disclosed in note 23.
(3.89p)
(3.89p)
9.24p
9.18p
64
Titon Holdings Plc I 2022 Annual Report Notes to the Consolidated Financial Statements (continued)
at 30 September 2022
10 - Property, plant and equipment
Group
Cost
At 1 October 2020
Additions
Disposals
Foreign exchange revaluation
At 1 October 2021
Additions
Disposals
Foreign exchange revaluation
Freehold
land and
buildings
Improvements
to leasehold
property
Plant and
equipment
Motor
vehicles
Total
£’000
3,455
-
-
-
3,455
-
-
-
£’000
193
-
-
(2)
191
-
-
-
£’000
8,197
426
(70)
(41)
8,512
339
(40)
-
At 30 September 2022
3,455
191
8,811
Depreciation
At 1 October 2020
Charge for the year
Disposals
Foreign exchange revaluation
At 1 October 2021
Charge for the year
Disposals
Foreign exchange revaluation
At 30 September 2022
Net book value at 30 September 2022
At 30 September 2021
At 1 October 2020
1,554
64
-
-
1,618
64
-
-
1,682
1,773
1,837
1,901
47
84
-
(1)
130
(19)
-
(1)
6,848
236
(70)
(34)
6,980
430
(28)
-
110
7,382
81
61
1,429
1,532
146
1,349
£’000
260
76
(48)
-
288
47
(66)
-
269
187
95
(40)
-
242
43
(54)
-
231
38
46
73
£’000
12,105
502
(118)
(43)
12,446
386
(106)
-
12,726
8,636
479
(110)
(35)
8,970
518
(82)
(1)
9,405
3,321
3,476
3,469
The Directors are not aware of any events or changes in circumstances during the year which would have a significant impact
on the carrying value of the Group’s property, plant and equipment at the balance sheet date.
At 30 September 2022, the Group had entered into contractual commitments for the acquisition of plant and equipment
amounting to £83,000 (2021: £116,000).
65
Titon Holdings Plc I 2022 Annual Report Notes to the Consolidated Financial Statements (continued)
at 30 September 2022
10 - Property, plant and equipment (continued)
Group: right-of-use assets
Cost
At 1 October 2020
Additions
Disposals
Foreign exchange revaluation
At 1 October 2021
Additions
Disposals
Foreign exchange revaluation
At 30 September 2022
Depreciation
At 1 October 2020
Charge for the year
Disposals
Foreign exchange revaluation
At 1 October 2021
Charge for the year
Disposals
Foreign exchange revaluation
At 30 September 2022
Net book value at 30 September 2022
At 30 September 2021
Leasehold
property
Plant and
equipment
Motor
vehicles
Total
£’000
662
-
(103)
(9)
550
85
(85)
-
550
133
8
-
(4)
137
115
(85)
(1)
166
384
413
£’000
25
-
-
-
25
47
-
-
72
4
5
-
-
9
10
-
-
19
53
16
£’000
336
51
(9)
(8)
370
106
(40)
-
£’000
1,023
51
(112)
(17)
945
238
(125)
-
436
1,058
114
151
(9)
(3)
253
107
(40)
-
320
116
117
251
164
(9)
(7)
399
232
(125)
(1)
505
553
546
At 30 September 2022, the Group had entered into contractual commitments for the acquisition of motor vehicles under
finance leases amounting to £119,000 (2021: £182,000).
66
Titon Holdings Plc I 2022 Annual Report Notes to the Consolidated Financial Statements (continued)
at 30 September 2022
10 - Property, plant and equipment (continued)
Company
The Company has no right-of-use assets (2020: £nil)
Company: property and motor vehicles
Cost
At 1 October 2020
Additions
Disposals
At 1 October 2021
Additions
Disposals
At 30 September 2022
Depreciation
At 1 October 2020
Charge for the year
Disposals
At 1 October 2021
Charge for the year
Disposals
At 30 September 2022
Net book value at 30 September 2022
At 30 September 2021
At 1 October 2020
Freehold
land and
buildings
£’000
3,455
-
-
3,455
-
-
3,455
1,554
65
-
1,619
63
-
1,682
1,773
1,836
1,901
Motor
vehicles
£’000
52
-
(25)
27
-
-
27
43
4
(20)
27
-
-
27
-
-
9
Total
£’000
3,507
-
(25)
3,482
-
-
3,482
1,597
69
(20)
1,646
63
-
1,709
1,773
1,836
1,910
67
Titon Holdings Plc I 2022 Annual Report Notes to the Consolidated Financial Statements (continued)
at 30 September 2022
11 - Intangible assets
Group
Cost
At 1 October 2020
Additions
Disposals
Foreign exchange revaluation
At 1 October 2021
Additions
At 30 September 2022
Amortisation
At 1 October 2020
Charge for the year
Disposals
Foreign exchange revaluation
At 1 October 2021
Charge for the year
At 30 September 2022
Net book value at 30 September 2022
At 30 September 2021
At 1 October 2020
Computer
software
Development
costs
(internally
generated)
Goodwill
Assets under
development
Patents
Total
£’000
805
-
-
-
805
595
1,400
611
87
-
-
698
148
846
554
107
194
£’000
1,082
152
-
-
1,234
130
1,364
786
151
-
-
937
149
1,086
278
297
296
£’000
78
-
-
-
78
-
78
-
-
-
-
-
-
-
78
78
78
£’000
179
260
-
-
439
(439)
-
-
-
-
-
-
-
-
-
439
179
£’000
257
-
-
(1)
256
2
258
251
2
-
(1)
252
1
253
5
4
6
£’000
2,401
412
-
(1)
2,812
288
3,100
1,648
240
-
1,887
298
2,185
915
925
753
All assets have an average useful life of 3.6 years (2021: 3.5 years) except for Goodwill which has an indefinite useful life.
Included with Computer Software is the Group’s new Enterprise Resource Planning software system which was operational
from 1 May 2022 and was transferred from assets under development in the year. The carrying value of the new system at
30 September 2022 is £491,000 with a remaining amortisation period of 4.6 years.
Additionally, included within Computer Software is the Group’s old Enterprise Resource Planning software system which has a
carrying value of £nil at 30 September 2022 (2021: £40,000) and is fully amortised (2021: 0.9 years amortisation remaining).
The Directors are not aware of any events or changes in circumstances during the year which would have a significant impact
on the carrying value of the Group’s intangible assets at the balance sheet date.
Company
The Company has no intangible assets (2021: £nil).
68
Titon Holdings Plc I 2022 Annual Report Notes to the Consolidated Financial Statements (continued)
at 30 September 2022
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
2021 and 2022
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
13 - Investments in associates
2022
£’000
554
2021
£’000
554
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
2022
£’000
225
2021
£’000
225
69
Titon Holdings Plc I 2022 Annual Report Notes to the Consolidated Financial Statements (continued)
at 30 September 2022
13 - Investments in associates (continued)
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
Profit / (loss) after tax
2022
£’000
5,760
470
6,230
546
148
694
5,536
2,712
197
2,909
2022
£’000
4,714
173
2021
£’000
5,636
276
5,912
792
51
843
5,069
2,484
197
2,681
2021
£’000
5,388
(28)
BTS has been included based on audited financial statements drawn up for the year to 30 September 2022. Transactions
between it and the Group are set out in note 24.
The Group’s investment in BTS at 30 September 2022 includes £197,000 (2021: £197,000) of goodwill.
14 - Inventories
Group
Raw materials and consumables
Work in progress
Finished goods and goods for resale
2022
£’000
2,733
176
3,662
6,571
2021
£’000
1,747
710
2,585
5,042
The carrying value of inventory represents cost less appropriate provisions. During the year there was a net debit of £151,706
(2021: net debit of £25,000) to the Consolidated Income Statement in relation to the inventory provisions. The movements in
the inventory write-down are included within cost of sales in the Consolidated Income Statement. The value of inventory that
has been recognised in cost of sales over the year is £16,270,000 (2021: £16,061,000).
Company
The Company had no inventories at 30 September 2022 (2021: £nil).
70
Titon Holdings Plc I 2022 Annual Report Notes to the Consolidated Financial Statements (continued)
at 30 September 2022
15 - Trade and other receivables
Trade receivables
Less: Impairment Allowance
Trade receivables - net
Related parties receivables
Less: provision for impairment
Related parties receivables (See Note 24)
Other receivables
Prepayments and accrued income
Total trade and other receivables
Group
Company
2022
£’000
4,566
(209)
4,357
180
-
180
214
169
2021
£’000
3,624
(86)
3,538
310
-
310
197
179
2022
£’000
1
-
1
4,768
-
4,768
-
-
2021
£’000
1
-
1
3,815
-
3,816
2
-
4,920
4,224
4,769
3,818
Other than the amounts due from related parties there were no significant concentrations of credit risk at either 30 September
2022 or 30 September 2021.
The average credit period taken on sale of goods by the Group’s trade debtors is 58 days (2021: 50 days).
Trade receivables included in the Statement of Financial Position are stated net of expected credit loss (ECL) provisions which
have been calculated using a provision matrix grouping trade receivables on the basis of their shared credit risk characteristics.
An analysis of the provision held against trade debtors is set out below:
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)
3,058
1,047
259
173
-
(29)
(56)
(53)
(71)
-
2,655
1,022
92
61
99
4,537
(209)
3,929
(17)
(19)
(14)
(10)
(26)
(86)
Of the £209,000 ECL provision, £nil (2021: £nil) relates to amounts due from the Group’s associate. See note 13.
The main factors considered in determining the level of the loss provisions set are external customer credit ratings information,
prevailing market and economic conditions and the historic levels of losses experienced by the Group.
There are no indications as at 30 September 2022 that the debtors will not meet their payment obligations in respect of
the amount of trade and related party receivables recognised in the balance sheet that are overdue and unprovided. The
proportion of trade debtors at 30 September 2022 that are overdue for payment is 37% (2021: 32%).
The carrying amount of a financial asset is reduced by the impairment loss directly for all financial assets with the exception
of trade receivables, where the carrying amount is reduced through the use of a provision account. When a trade receivable is
considered uncollectible, based on its age and likely recoverability, it is written off against the provision account. Subsequent
recoveries of amounts previously written off are credited against the provision account. Changes in the carrying amount of the
provision account are recognised in the income statement.
71
Titon Holdings Plc I 2022 Annual Report Notes to the Consolidated Financial Statements (continued)
at 30 September 2022
15 - Trade and other receivables (continued)
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
2022
£’000
86
209
(29)
(57)
209
2021
£’000
114
86
(6)
(108)
86
16 - Deferred tax
Group
Deferred tax is calculated in full on temporary differences under the liability method using a tax rate of 25% (2021: 25.0%). The
movement on the deferred tax account is as shown below:
Total
deferred
tax at 1
October
2021
Effect
of rate
change on
opening
balances
Foreign
exchange
movement
Credited /
(expensed)
to Income
Statement
Total
deferred
tax at 30
September
2022
Liability
2021
UK
Asset
2021
Non-UK
£’000
£’000
£’000
(407)
2
77
30
457
119
278
-
-
-
-
-
-
-
-
-
-
-
-
9
9
£’000
407
-
(91)
(3)
96
1
410
£’000
£’000
£’000
-
2
(14)
27
553
129
697
-
-
(14)
-
553
-
539
-
2
-
27
-
129
158
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
A deferred tax asset of £384k (2021: £nil) has not been recognised, which is in respect of further losses of £1,537k (2021: £nil)
at the substantively enacted rate of 25%.
Total
deferred
tax at 1
October
2021
Effect
of rate
change on
opening
balances
£’000
(268)
£’000
(84)
2
47
31
355
166
333
-
16
-
93
-
25
Foreign
exchange
movement
Credited /
(expensed)
to Income
Statement
Total
deferred
tax at 30
September
2022
Liability
2021
UK
Asset
2021
Non-UK
£’000
£’000
-
-
--
-
-
(5)
(5)
(55)
-
14
(1)
9
(42)
(75)
£’000
(407)
£’000
(407)
2
77
30
457
119
278
-
77
-
457
-
127
£’000
-
2
-
30
-
119
151
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
72
Titon Holdings Plc I 2022 Annual Report Notes to the Consolidated Financial Statements (continued)
at 30 September 2022
16 - Deferred tax (continued)
Company
Deferred tax is calculated in full on timing differences under the liability method using a tax rate of 25% (2021: 25%). The
movement on the deferred tax account is as shown below:
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 2021
Effect of
rate change
on opening
balances
Credited /
(expensed)
to Income
Statement
£’000
(303)
22
7
(274)
£’000
-
-
-
-
£’000
303
(18)
(7)
278
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 30
September
2022
£’000
-
4
-
4
Total
deferred
tax at 30
September
2021
£’000
(303)
22
7
Liability
2021
UK
£’000
(303)
22
7
(274)
(274)
Group
2022
£’000
3,121
722
286
922
5,051
2021
£’000
2,472
386
418
1,278
4,554
Company
2022
£’000
(4)
-
-
139
135
2021
£’000
-
-
-
168
168
Group trade payables and accruals principally comprise amounts outstanding for trade purchases and ongoing costs. Year-
end Group trade creditors represent 52 days (2021: 62 days) average purchases. The contractual maturities of these liabilities
are from 30 days up to approximately 60 days.
The Directors consider that the carrying amount of trade payables is approximate to their fair value.
73
Titon Holdings Plc I 2022 Annual Report Notes to the Consolidated Financial Statements (continued)
at 30 September 2022
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;
●
●
● whether the location represents a new area of operations for the group.
the economic stability of the environment in which the property is located; and
At 30 September 2022 the carrying amounts of lease liabilities are not reduced by the amount of payments that would be
avoided from exercising break clauses as there are no break clauses available.
Right-of-Use Assets
At 1 October 2021
Additions
Amortisation
Disposals
Foreign exchange revaluation
At 30 September 2022
Lease Liabilities
At 1 October 2021
Additions
Interest expense
Lease payments
Foreign exchange revaluation
At 30 September 2021
Lease liabilities
At 30 September 2021
At 30 September 2022
Lease expense
Short term lease expense
Low value lease expense
Aggregate undiscounted commitments for short term leases
74
Freehold land
and buildings
Plant and
equipment
Motor
vehicles
Total
£’000
£’000
£’000
£’000
117
106
(107)
-
-
546
238
(232)
-
1
116
553
413
85
(115)
-
1
384
16
47
(10)
-
-
53
£’000
595
238
16
(242)
3
610
Up to
1 year
£’000
193
232
Between 1
and 2 years
Between 2
and 5 years
Over
5 years
Total
£’000
£’000
30
-
595
610
£’000
160
145
£’000
212
233
2022
£’000
53
-
-
53
Titon Holdings Plc I 2022 Annual Report Notes to the Consolidated Financial Statements (continued)
at 30 September 2022
19 - Share capital
Authorised
13,600,000 ordinary shares of 10p each
2022
£’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
2022
Number
11,193,750
25,000
2021
£’000
1,360
2022
£’000
1,119
3
2021
Number
11,133,750
60,000
2021
£’000
1,113
6
At the end of the year
11,218,750
1,122
11,193,750
1,119
Share premium
At the beginning of the year
Treasury shares purchased
At the end of the year
Treasury shares held by the Group
At the beginning of the year
Transfer of treasury Shares
At the end of the year
2022
£’000
1,077
14
1,091
2021
Number
50,000
-
50,000
2021
£’000
1,077
-
1,077
2021
£’000
27
-
27
2022
Number
50,000
(50,000)
-
2022
£’000
27
(27)
-
Treasury shares held by the Group were acquired in July 2014. All Treasury shares were disposed of during the year to satisfy
an exercise of share options.
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
01.07.22
58.0p
156.5p
138.5p
95.0p
At 30 September 2022
At 30 September 2021
Number of
shares
65,000
132,000
90,000
150,000
437,000
615,000
Exercisable between
15.01.17
30.01.21
and
and
15.01.24
30.01.28
15.07.24
And
15.07.31
01.07.25
and
01.07.32
No share options were exercised between 30 September 2022 and 25 January 2023.
75
Titon Holdings Plc I 2022 Annual Report Notes to the Consolidated Financial Statements (continued)
at 30 September 2022
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 57 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
2022
£’000
1,374
82
196
74
2021
£’000
3,882
126
532
254
1,726
4,794
Company
2022
£’000
4
-
-
-
4
2021
£’000
1,324
-
-
-
1,324
The Sterling financial assets comprises cash held on current account with banks.
The Group’s cash and floating rate financial assets at 30 September comprise:
Bank current accounts
Group
2022
£’000
1,726
2021
£’000
4,794
Company
2022
£’000
4
2021
£’000
1,324
The Group had a floating term deposit of £1m with the bank at 30 September 2022 (2021: £nil).
Financial liabilities
The Group had no floating rate financial liabilities at 30 September 2022 (2021: £nil). Any liability is offset against bank
deposits for the purposes of interest payment calculation. The Board considers the fair value of the Group’s financial assets
and liabilities to be the same as their book value.
21 - Financial instruments – risk management
The Group is exposed through its operations to credit risk, foreign exchange risk and liquidity risk.
In common with other businesses, the Group is exposed to risks that arise from its use of financial instruments. This note,
read in conjunction with the ‘Capital Management’ section of the Directors’ Report on page 25, and the Report on Risk
Management on pages 20 to 23 describe the Group’s objectives, policies and processes for managing those risks. Further
quantitative information in respect of these risks is presented throughout these financial statements.
There have been no substantive changes in the Group’s exposure to financial instrument risks, its objectives, policies and
processes for managing those risks from previous periods unless otherwise stated in this note.
General objectives, policies and processes
The Board has overall responsibility for the determination of the Group’s risk management objectives and policies and, whilst
retaining ultimate responsibility for them, it has delegated the authority for designing and operating processes that ensure
the effective implementation of the objectives and policies to the Group’s finance function. The Audit Committee reviews and
reports to the Board on the effectiveness of policies and processes put in place.
The overall objective of the Board is to set policies that seek to reduce risk as far as possible without unduly affecting the
Group’s competitiveness and flexibility. Further details regarding these policies are set out on pages 38 and 39.
Principal financial instruments
The principal financial instruments used by the Group, from which financial instrument risks arise are trade receivables, cash
at bank, bank overdrafts, trade and other payables and loans to related parties (see Notes 15, 17 and 20).
76
Titon Holdings Plc I 2022 Annual Report Notes to the Consolidated Financial Statements (continued)
at 30 September 2022
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 is not reliant on any key customers.
The Group’s finance function has established a credit policy under which each new customer is analysed individually for
creditworthiness before the Group’s standard payment and delivery terms and conditions are offered. The Group’s review
includes external ratings, when available, and trade references. Purchase limits are established for each customer, which
represents the maximum open amount without requiring senior management’s approval. These limits are reviewed on an
on-going basis. Customers that fail to meet the Group’s benchmark creditworthiness may transact with the Group on a
prepayment basis.
Credit risk also arises from cash and cash equivalents and deposits with banks. The Group has cash and cash equivalents with
banks with a minimum long term “A” rating.
Quantitative disclosures of the credit risk exposure in relation to Trade and other receivables are provided in note 15.
Liquidity risk
Liquidity risk arises from the Group’s management of working capital in that the Group may encounter difficulty in meeting its
financial obligations as they fall due. The Group’s policy is to ensure that it will always have sufficient cash to allow it to meet
its liabilities when they become due (see Note 17). To achieve this aim, it seeks to maintain cash balances to meet expected
requirements for a period of 90 days or longer. The Board receives cash flow projections as well as information regarding cash
balances. At the balance sheet date, these projections indicated that the Group expected to have sufficient liquid resources to
meet its obligations under all reasonably expected circumstances.
The liquidity risk of each Group entity is managed locally. Each operation has a facility with the Group, the amount of the
facility being based on budgets. The budgets are set locally and agreed by the Board in advance, enabling the Group’s cash
requirements to be anticipated. Where facilities of Group entities need to be increased, approval must be sought from the
Board.
Foreign exchange risk
Foreign exchange risk arises because the Group has operations located in various parts of the world whose functional currency
is not the same as the functional currency in which the Group companies are operating. Although its global market penetration
reduces the Group’s operational risk in that it has diversified into several markets, the Group’s net assets arising from such
overseas operations are exposed to currency risk resulting in gains or losses on retranslation into Sterling. Only in exceptional
circumstances would the Group consider hedging its net investments in overseas operations as generally it does not consider
that the reduction in foreign currency exposure warrants the cash flow risk created from such hedging techniques.
Foreign exchange risk also arises when individual Group entities enter into transactions denominated in a currency other than
their functional currency.
The Group’s policy is, where possible, to allow Group entities to settle liabilities denominated in their functional currency
(primarily Sterling, US Dollar or South Korean Won) with the cash generated from their own operations in that currency. Where
Group entities have liabilities denominated in a currency other than their functional currency (and have insufficient reserves of
that currency to settle them) cash already denominated in that currency will, where possible, be transferred from elsewhere
within the Group.
The Group has two overseas subsidiaries in the USA and South Korea. Their revenues and expenses, other than those incurred
with the UK business, are primarily denominated in their functional currency. The Board does not believe that there are any
significant risks arising from the movements in exchange rates with these companies due to the insignificance to the Group
of Titon Inc.’s net assets and the long-term nature of the Group’s investment in Titon Korea.
The UK businesses make purchases from approximately twenty overseas suppliers who invoice in the local currency of that
supplier. This, in addition to the Euro and US Dollar cash balances held in the UK and the 7% (2021:11%) of sales from the UK
businesses not invoiced in Sterling, gives rise to foreign currency exposure which is detailed in the table below.
As of 30 September the Group’s UK net exposure to foreign exchange risk was as follows:
Net foreign currency financial assets / (liabilities)
Euro
US Dollar
Total net exposure
2022
£’000
(587)
686
99
2021
£’000
72
163
235
77
Titon Holdings Plc I 2022 Annual Report Notes to the Consolidated Financial Statements (continued)
at 30 September 2022
21 - Financial instruments – risk management (continued)
The effect of a 10% weakening of the Euro and the US Dollar against Sterling at the reporting date of 30 September 2022 on
these denominated trade and other receivables, trade and other payables and cash balances carried at that date would, had
all other variables held constant, have resulted in a decrease in pre-tax profit for the year and decrease of net assets of £9,000
(2021: decrease in liability of £21,000). A 10% strengthening in the exchange rate would, on the same basis, have increased
pre-tax profit and increased net assets by £10,000 (2021: increase of £23,000).
22 - 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
£37,000 (2021: £40,000).
23 - Share-based payments
Equity settled share option schemes
The Group provides share option schemes for Directors and for other members of staff.
There are presently three equity settled share option schemes; one HMRC approved and one unapproved in which employees
may be invited to participate, which were both introduced in March 2010. The third scheme was introduced in July 2021
and an additional tranche was introduced in July 2022 and is HMRC registered. The exercise of options granted under these
schemes is dependent upon the growth in the earnings per share of the Group, over any three consecutive financial years
following the date of grant, exceeding the growth in the retail price index over the same period by at least 9 per cent.
The vesting period of all share option schemes is three years. If the options remain unexercised after a period of ten years
from the date of grant, or on an employee leaving the Group, the options expire.
In the year to 30 September 2022 150,000 shares were granted (2021: 260,000).
Details of the share options granted and exercised during the year and the assumptions used in the Black-Scholes model for
each share-based payment are as follows:
Date of share option grant
09/06/2011
15/01/2014
30/01/2021
15/07/2021
01/07/2022
Number of
share options
Exercise price (pence)
48.0
58.0
156.5
138.5
95.0
Number of share options granted
initially
Number of share options
outstanding at 01/10/20
259,950
320,000
205,000
260,000
150,000
10,000
200,000
205,000
-
Share options granted
-
-
Share options exercised
(10,000)
(50,000)
-
-
260,000
-
Number of share options
outstanding at 30/09/21
Share options lapsed
Share options exercised
Number of share options
outstanding at 30/09/22
The inputs to the Black-Scholes
pricing model are:
Expected volatility %
Expected option life (years)
Risk free rate %
Expected dividend yield %
-
-
-
-
111
6
2.50
5
150,000
205,000
260,000
(10,000)
(73,000)
(170,000)
150,000
(103,000)
(75,000)
-
-
-
(75,000)
65,000
132,000
90,000
150,000
437,000
116
6
2.18
5
88
6
1.13
3
97
6
0.46
3
97
6
0.46
3
-
-
-
-
415,000
260,000
(60,000)
615,000
During the year no additional share options, included in the table above, met the conditions of exercise (2021: 207,000).
At the end of the financial year 64,000 share options met the conditions of exercise and have a weighted average exercise
price of 58p (2021: 207,000 at 57.5p). The 437,000. share options outstanding at 30 September 2022 had a weighted average
price of 1.134p (2021: 615,000 at 124.9p) and a weighted average remaining contractual life of 7.13 years (2021: 6.8 years).
78
Titon Holdings Plc I 2022 Annual Report
Notes to the Consolidated Financial Statements (continued)
at 30 September 2022
23 - Share-based payments (continued)
The share price at 30 September 2022 was 81.0p (2021: 115.0p). The average market price during the year was 95.0p (2021:
96.8p).
The Group uses a Black-Scholes pricing model to determine the annual fair value charge for its share-based payments.
Expected volatility is based on historical volatility over the last six years’ data of the Company. The calculated fair values of the
share option awards are adjusted to reflect actual and expected vesting levels.
In accordance with IFRS 2, the fair value of equity-settled share-based payments to employees is determined at the date of
grant and is expensed on a straight-line basis over the vesting period on the Group’s estimate of shares that will eventually
vest. A charge of £23,000 was recognised in respect of share options in the year (2021: £34,000) of which £7,000 (2021:
£11,000) was the charge made in respect of key management personnel.
24 - Related party transactions
Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and
are not disclosed in this note.
Related party transactions are made on terms equivalent to those that prevail in arm’s length transactions only where such
terms can be substantiated.
During the year the Company recharged management service fees and rent to other wholly owned Group members totalling
£777,000 (2021: £739,000). See Note 15 for the related party balances at 30 September 2022.
Titon Korea Co. Ltd., the Company’s 51% owned subsidiary, paid a dividend during the year to its shareholders amounting to
£nil (2021: £798,000). Of this amount, £nil (2021: £407,000) before withholding tax, was paid to the Company with the other
£nil (2021: £391,000) being paid to the non-controlling interests.
Transactions for the year between the Group companies and the associate company, which is a related party, were as follows:
Browntech Sales Co. Ltd
Sales of goods
2022
£’000
3,037
2021
£’000
3,577
Amount owed by
related party
2022
£’000
180
2021
£’000
310
Trading debts between subsidiaries and BTS are created only when the ultimate customer has accepted the successful
inclusion of our products into buildings.
There have been no transactions between the Company and BTS during the year.
Key management who hold the authority and responsibility for planning, directing and controlling activities of the Group are
comprised solely of the Directors. Aside from compensation arrangements including share options, there were no transactions,
agreements or other arrangements, direct or indirect, during the year in which the Directors had any interest, The Directors’
remuneration is disclosed in the Remuneration Report on page 31 of this document.
Remuneration paid to key management personnel during the year was as follows:
Short term benefits
Post-employment benefits
Share based payments
2022
£’000
835
75
7
917
2021
£’000
897
55
4
956
The Non-executive Directors received fees for their services to the Titon Holdings Plc Board as disclosed in the Directors’
Remuneration Report.
25 - Events after the reporting date
There have been no events after the reporting date that materially affect the position of the Group.
26 - Exceptional items
One off cost of living bonus to all employees
Restructuring costs
Administrative costs - exceptional
2022
£’000
89
260
349
2021
£’000
-
-
-
79
Titon Holdings Plc I 2022 Annual Report
Five Year Summary
Summarised consolidated results
Revenue
Gross profit
Operating (loss) / profit
Share of profit / (loss) from associate
(Loss) / profit before tax
Income tax credit / (expense)
(Loss) / profit after tax
Dividends
2022
£’000
2021
£’000
2020
£’000
2019
£’000
2018
£’000
22,087
23,412
20,652
27,157
29,774
5,817
(1,119)
173
(953)
410
(543)
502
7,350
1,119
(28)
1,075
(72)
1,003
390
5,654
(39)
83
18
104
122
332
8,198
1,629
329
8,604
2,016
741
1,970
2,770
(186)
(315)
1,784
2,455
526
489
Basic (loss) / earnings per share
(3.89p)
9.24p
0.52p
12.84p
18.21p
Assets Employed
Property, plant & equipment
3,321
Net cash and cash equivalents
Net current assets
1,726
7,588
3,476
4,794
9,313
3,469
5,572
3,799
4,587
9,138
10,112
3,655
3,415
9,838
Financed by
Shareholders’ funds: all equity
15,646
16,414
15,943
16,262
15,421
The five year summary does not form part of the audited financial statements and is not an IFRS statement.
80
Titon Holdings Plc I 2022 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 22 March 2023 at 10.00 a.m. for the following purposes:
To consider and, if thought fit, to pass the following resolutions, of which Resolutions 1 to 13 will be proposed as Ordinary
Resolutions and Resolution 14 will be proposed as a Special Resolution.
Explanatory notes in respect of the resolutions are set out on pages 27 to 29 of the Directors’ Report which accompanies this
Notice.
Please note you will not receive a form of proxy for the 2023 AGM in the post. Instead, you can vote online at www.signalshares.
com. To register you will need your Investor Code, which can be found on your share certificate. You may also request a hard
copy proxy form directly from our Registrars, Link Group, on 0371 664 0300. For full details on proxy voting please see the
notes below, which accompany this Notice of Annual General Meeting.
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
To receive and adopt the reports of the Directors and the Auditors and the audited accounts of the Company for the
year ended 30 September 2022.
To declare a final dividend of 0.5p per ordinary share payable to shareholders on the Company’s register of members
at close of business on 10 February 2023 payable on 31 March 2023.
To re-elect Mr Tyson Anderson who retires from the Board as a Director of the Company.
To re-elect Mr Keith Ritchie, who retires from the Board as a Director of the Company.
To re-elect Mr Nicholas Howlett, who retires from the Board as a Director of the Company.
To re-elect Mr Paul Hooper, who retires from the Board as a Director of the Company.
To re-elect Mr Jeff Ward, who retires from the Board as a Director of the Company.
To re-elect Miss Alexandra French, who retires from the Board as a Director of the Company.
To re-elect Ms Carolyn Isom, who retires from the Board as a Director of the Company.
To re-appoint MacIntyre Hudson LLP as Auditors of the Company and to authorise the Directors to determine their
remuneration.
That the Directors’ Remuneration Report set out on pages 30 to 33 of the Annual Report and Financial Statements
for the year ended 30 September 2022 a new Executive Management Bonus Structure, details of which are
contained in the Directors’ Remuneration Report, be approved.
That in place of all existing authorities, the Directors be generally and unconditionally authorised pursuant to section
551 of the Companies Act 2006 to exercise all the powers of the Company to allot shares in the Company and to
grant rights to subscribe for, or to convert any security into, shares in the Company (“Relevant Securities”), up to
a maximum aggregate nominal amount of £270,000 (representing approximately 24% of the nominal value of the
ordinary shares in issue on 25 January 2023) for a period expiring (unless previously revoked, varied or renewed)
on 22 June 2024 or, if sooner, at the end of the 2024 Annual General Meeting of the Company, but in each case the
Company may, before such expiry, make an offer or agreement which would or might require Relevant Securities to
be allotted after this authority expires and the Directors may allot Relevant Securities in pursuance of such offer or
agreement as if this authority had not expired.
That subject to the passing of Resolution 12 above and in place of all existing powers, the Directors be generally
empowered pursuant to section 570 and 573 of the Companies Act 2006 to allot equity securities (within the
meaning of section 560 of the Companies Act 2006) for cash, pursuant to the authority conferred by Resolution 12
as if section 561(1) of the Companies Act 2006 did not apply to such allotment, provided that this power shall expire
on 22 June 2024 or, if sooner, the end of the 2024 Annual General Meeting of the Company. This power shall be
limited to the allotment of equity securities:
13.1 in connection with an offer of equity securities (including, without limitation, under a rights issue, open offer or similar
arrangement) in favour of holders of ordinary shares in the capital of the Company in proportion (as nearly as may
be practicable) to their existing holdings of ordinary shares but subject to such exclusions or other arrangements as
the Directors deem necessary or expedient in relation to fractional entitlements or any legal, regulatory or practical
problems under the laws of any territory, or the requirements of any regulatory body or stock exchange; and
81
Titon Holdings Plc I 2022 Annual Report
Notice of Annual General Meeting (continued)
13.2
otherwise than pursuant to paragraph 13.1 up to an aggregate nominal amount of £160,000 (representing
approximately 14.3% of the nominal value of the ordinary shares in issue on 25 January 2023);
but the Company may, before such expiry, make an offer or agreement which would or might require equity
securities to be allotted after this power expires and the Directors may allot equity securities in pursuance of such
offer or agreement as if this power had not expired.
This power applies in relation to a sale of shares which is an allotment of equity securities by virtue of section
560(3) of the Companies Act 2006 as if in the first paragraph of this resolution the words “pursuant to the authority
conferred by Resolution 12” were omitted.
14.
That the Company be generally authorised pursuant to section 701 of the Companies Act 2006 to make market
purchases (within the meaning of section 693(4) of the Companies Act 2006) of its ordinary shares of 10p each on
such terms and in such manner as the Directors shall determine, provided that:
14.1 the maximum number of ordinary shares hereby authorised to be purchased is 1,121,875 (representing
approximately 10% of the nominal value of the ordinary shares in issue on 25 January 2023);
14.2 the maximum price which may be paid for each ordinary share shall be the higher of (i) 5% above the average of
the middle market quotations for an ordinary share (as derived from the AIM Appendix to the Stock Exchange Daily
Official List) for the five business days immediately before the day on which the purchase is made (in each case
exclusive of expenses); and (ii) the higher of the price of the last independent trade and the current independent bid
on the trading venue where the purchase is carried out (exclusive of expenses);
14.3 the minimum price which may be paid for each ordinary share shall be 10p; and
14.4 this authority (unless previously revoked, varied or renewed) shall expire on 22 June 2024 or, if sooner, the end of the
2024 Annual General Meeting of the Company except in relation to the purchase of ordinary shares the contract for
which was concluded before such date and which will or may be executed wholly or partly after such date.
By order of the Board
C Isom
Secretary
Registered Office:
25 January 2023 Colchester Business Park
894 The Crescent
Colchester
Essex
CO4 9YQ
82
Titon Holdings Plc I 2022 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
20 March 2023. It should be accompanied by the power of attorney or other authority (if any) under which it is signed
or a notarially certified copy of such power or authority:
●
●
●
●
via www.signalshares.com by logging in and selecting the ‘Proxy Voting’ link. If you have not previously registered,
you will first be asked to register as a new user, for which you will require your investor code (which can be found
on your share certificate and dividend confirmation), family name and postcode (if resident in the UK);
if your shares are held electronically via CREST, the proxy appointment may be lodged using the CREST Proxy
Voting Service in accordance with note 7 below; and
in hard copy form by post, by courier or by hand to the Company’s registrars, Link Group, PXS 1, Central Square,
29 Wellington Street, Leeds, LS1 4DL;
unless otherwise indicated on the Form of Proxy, CREST voting or any other electronic voting channel instruction,
the proxy will vote as they think fit or, at their discretion withhold from voting.
Nominated persons
4.
Any person to whom this notice is sent who is a person nominated under section 146 of the Companies Act 2006 to
enjoy information rights (a “Nominated Person”) may, under an agreement between him or her and the member by
whom he or she was nominated, have a right to be appointed (or to have someone else appointed) as a proxy for the
Annual General Meeting. If a Nominated Person has no such proxy appointment right or does not wish to exercise it,
he or she may, under any such agreement, have a right to give instructions to the member as to the exercise of voting
rights.
5.
The statement of the rights of members in relation to the appointment of proxies in notes 1, 2 and 3 above does not
apply to Nominated Persons. The rights described in those notes can only be exercised by members of the Company.
CREST
6.
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.
83
Titon Holdings Plc I 2022 Annual Report
Notice of Annual General Meeting (continued)
9.
The Company may treat as invalid a CREST Proxy Instruction in the circumstances set out in Regulation 35(5)(a) of the
Uncertificated Securities Regulations 2001 (as amended).
Entitlement to Attend
10.
Entitlement to attend and vote at the meeting (and the number of votes which may be cast at the meeting), will be
determined by reference to the Company’s register of members at close of business on 20 March 2023, or, if the
meeting is adjourned, 48 hours before the time fixed for the adjourned meeting (ignoring for these purposes non-
working days). In each case, changes to the register after such time will be disregarded.
Corporate representatives
11.
Any corporation which is a member can appoint one or more corporate representatives, who may exercise on its behalf
all of its powers as a member provided that they do not do so in relation to the same shares.
Total voting rights
12.
Holders of ordinary shares are entitled to attend and vote at general meetings of the Company. The total number of
issued ordinary shares in the Company on 25 January 2023, which is the latest practicable date before the publication
of this document, is 11,218,750. On a vote by show of hands, every member who is present has one vote and every
proxy present who has been duly appointed by a member entitled to vote has one vote. On a poll vote, every member
who is present in person or by proxy has one vote for every ordinary share of which they are the holder.
Publication on website
13.
Under section 527 of the Companies Act 2006, members meeting the threshold requirements set out in that section
have the right to require the Company to publish on a website a statement setting out any matter relating to: (i) the
audit of the Company’s accounts (including the auditor’s report and the conduct of the audit) that are to be laid before
the Annual General Meeting; or (ii) any circumstance connected with an auditor of the Company ceasing to hold office
since the previous meeting at which annual accounts and reports were laid in accordance with section 437 of the
Companies Act 2006. The Company may not require the members requesting any such website publication to pay
its expenses in complying with sections 527 or 528 of the Companies Act 2006. Where the Company is required to
place a statement on a website under section 527 of the Companies Act 2006, it must forward the statement to the
Company’s auditor not later than the time when it makes the statement available on the website. The business which
may be dealt with at the Annual General Meeting includes any statement that the Company has been required under
section 527 of the Companies Act 2006 to publish on a website.
14.
A copy of this notice, and other information required by section 311A of the Companies Act 2006, can be found on the
website at www.titon.com/uk/investors/.
15. Any member attending the meeting has the right to ask questions. The Company must cause to be answered any
such question relating to the business being dealt with at the meeting but no such answer need be given if (a) to do so
would interfere unduly with the preparation for the meeting or involve the disclosure of confidential information, (b)
the answer has already been given on a website in the form of an answer to a question, or (c) it is undesirable in the
interests of the Company or the good order of the meeting that the question be answered.
Documents available for inspection
16.
Copies of the service contract of each Executive Director and the letter of appointment of each Non-executive Director
will be available for inspection at the registered office of the Company during normal business hours on any weekday
(excluding Saturdays and public holidays) and at Falconer Road, Haverhill, CB9 7XU, for at least 15 minutes prior to and
during the Annual General Meeting.
Communications
17.
Members who have general enquiries about the meeting should use the following means of communication. No other
means of communication will be accepted. You may:
●
call the Link shareholders’ helpline on 0371 664 0300 Calls are charged at the standard geographic rate and will
vary by provider. Calls outside the United Kingdom will be charged at the applicable international rate. We are
open between 09:00 - 17:30, Monday to Friday excluding public holidays in England and Wales; or
● write to Link Group, Link Group, PXS 1, Central Square, 29 Wellington Street, Leeds, LS1 4DL.
18.
You may not use any electronic address provided in this notice of Annual General Meeting for communicating with the
Company for any purposes other than those expressly stated.
84
Titon Holdings Plc I 2022 Annual Report
Directors and Advisers
DIRECTORS
Executive
A C French (Chief Executive) - (appointed 3 May 2022)
C V Isom (Chief Financial Officer) - (appointed 22 December 2021)
Non-executive
K A Ritchie (Group Non-Executive Chair)
T N Anderson (Deputy Chair)
N C Howlett
G P Hooper (appointed 1 April 2022)
J Ward (appointed 1 April 2022)
SECRETARY AND REGISTERED OFFICE
C V Isom
894 The Crescent
Colchester Business Park
Colchester
Essex
CO4 9YQ
COMPANY REGISTRATION NUMBER
1604952 (Registered in England & Wales)
WEBSITE
WWW.TITON.COM/UK/INVESTORS/
AUDITOR
MHA Macintyre Hudson
6th Floor, 2 London Wall Place
London
EC2Y 5AU
NOMINATED ADVISER
Shore Capital and Corporate Ltd
Cassini House
57-58 St. James’s Street
London
SW1A 1LD
BROKER
Shore Capital Stockbrokers Ltd
Cassini House
57-58 St. James’s Street
London
SW1A 1LD
REGISTRARS AND TRANSFER OFFICE
Link Group
10th Floor
Central Square
29 Wellington Street
Leeds
LS1 4DL
85
Titon Holdings Plc I 2022 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/