ANNUAL REPORT &
FINANCIAL STATEMENTS
2023
Titon Holdings Plc
Annual Report and Financial Statements
for the year ended 30 September 2023
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 ..................................................................................47
Consolidated Statement of Comprehensive Income .................................................47
Consolidated Statement of Financial Position ...........................................................48
Company Statement of Financial Position ..................................................................49
Consolidated Statement of Changes in Equity ...........................................................50
Company Statement of Changes in Equity ..................................................................51
Group and Company Statement of Cash Flows ..........................................................52
Notes to the Consolidated Financial Statements .......................................................53
Five Year Summary .........................................................................................................83
Notice of Annual General Meeting ...............................................................................84
Directors and Advisers ...................................................................................................88
1
Titon Holdings Plc I 2023 Annual Report Chairman’s Statement
I would like to start by expressing my thanks to my fellow Titon Board members for the warm welcome they have given me since
joining the Board this month. Additionally, on behalf of the entire Board, I extend our sincere thanks to Keith Ritchie for his commitment
and robust support to Titon throughout his tenure of eleven years as Chair. I will be spending time getting up to speed on our people,
products and markets over the next few months. I look forward to meeting as many shareholders as possible at the Annual General
Meeting in March.
Profit and loss
In the year ended 30 September 2023, the Group’s net revenue
(which excludes inter-segment activity) increased by 1.1% to
£22.3m (2022: £22.1m).
The Group’s gross margin increased marginally from 26.4% in
2022 to 26.5% in 2023. We suffered an underlying operating
loss in the period before exceptional items of £537,000 (2022:
£770,000); including exceptional items the operating loss was
£576,000 (2022: £1,119,000). Underlying EBITDA1 improved
to £431,000 (2022: £143,000) and including exceptional items
EBITDA was £392,000 (2022: loss £206,000).
Net finance interest cost amounted to £14,000 (2022: £7,000).
The share of profits from the Group’s South Korean associate,
Browntech Sales Co. Limited (“BTS”), fell from a profit of
£173,000 in 2022 to a loss of £241,000 in 2023 due to the very
challenging market conditions and the continued slow transition
to mechanical ventilation in South Korea in the period. As a result
of the operating loss in the UK, including exceptional items the
Group loss before tax was £839,000 (2022 loss before tax:
£953,000).
Basic statutory loss per share for the year was 6.01 pence (2022:
loss of 3.89 pence).
An interim dividend of 0.5 pence per share was paid in the year
to 30 September 2023 and the Directors are proposing a final
dividend of 0.5 pence per share (2022: 0.5 pence). The total
dividend for the year will therefore be 1.0 pence per share (2022:
2.0 pence). If approved by shareholders at the forthcoming
Annual General Meeting on 26 March 2024, the dividend will be
payable on 5 April 2024 to shareholders on the register at 23
February 2024. The ex-dividend date is 22 February 2024.
Statements of financial position and cash flows
The Group benefits from a strong balance sheet with no bank
borrowings. Net assets,
interests,
reduced to £14.76m at 30 September 2023 (2022: £16.0m), with
net cash at £2.2m (2022: £1.7m), which is equivalent to 15.2% of
net assets (2022: 10.8%).
including non-controlling
Cash generated from operations before working capital changes
was £0.3m (2022: £0.07m cash used). Inventory levels at the
year-end decreased by 6.6% or £0.4m on 2022. This reflected
the hard work undertaken by the supply chain team to reduce
stock levels, albeit more work is required in this respect in 2024.
Together with a £1.3m decrease in receivables, cash generated
from operations improved to an inflow of £0.9m in the year (2022:
outflow of £1.8m). A continuing focus and business imperative
for the current financial year is to improve the underlying
performance of the business and reduce stock levels to augment
our net cash position and return the business to profitability.
Capital expenditure in the year was £0.64m (2022: £0.67m)
and the Group paid dividends in 2023 in respect of 2022 to the
shareholders of Titon Holdings Plc of £0.11m (2022: £0.50m).
During the year, we received a dividend of £0.29m from our
associate company in South Korea, BTS.
The overall effect has been a net increase in the Group’s cash
reserves in the period of £0.51m (2022: decrease of £3.07m). Net
current assets at 30 September 2023 were £7.9m (2022: £7.6m)
with a Quick Ratio2 of 1.4 (2022: 1.2).
Segment analysis
The Directors look initially at geographical areas to evaluate the
Group’s performance and then consider product segmentation at
the secondary level.
UK and Europe
UK and Europe contributes 85.0% of our overall business revenue
(2022: 83.8%). As was noted in the Interim Report, the business
environment has been challenging throughout the financial
year with a weaker housing market, impacting demand for our
products. However, performance in the UK and Europe in the
second half of the year surpassed expectations, due to managing
our cost base and achieving improved margins.
I am pleased to report that the cost increases that we suffered
during FY22 have abated and we have been able to pass on
price increases to customers so that our margins have been
maintained for Titon manufactured products and increased for
bought in products.
Revenue from the Hardware division, comprising sales of our
background ventilators plus window and door hardware, was
lower in the year by 8% as the effect of the ending of our supplier
relationship with Sobinco was fully recognised. We are continuing
to develop new and existing branded supplier partnerships, but
this has not offset the impact of the loss.
In our Ventilation Systems division, revenues from mechanical
ventilation products rose by 17% overall as we improved our
supply chain and processes. Sales in the UK were up by 3%, with
the Titon FireSafe® Air Brick range continuing to be popular
with customers. Ventilation Systems sales in mainland Europe
were up 71% as our supply chains improved. We thank all our
customers for their patience during the year.
Titon continues to invest in research and development which,
in turn, yields a continuing number of new products for both
the Ventilation Systems and Hardware divisions. We have
recently
launched new Mechanical Ventilation with Heat
Recovery Products, the HRV4 and HRV4.25 to address specific
opportunities in the market and we are delighted that the
HRV4.25 recently won the Domestic Ventilation Product of the
Year at the Energy Savings Awards 2023.
South Korea
In South Korea, the Group’s subsidiary, Titon Korea (51% owned),
manufactures natural window ventilation products. In the 2023
interim results statement we noted that trading conditions
would remain difficult and that losses would continue due to
a slowdown in the housing marketing activity which continued
in the second half. These factors have resulted in a reduction in
revenue to £0.5m (2022: £3.0m) and the contribution to Group
loss before tax further increased to a loss of £404,000 (2022:
loss of £209,000).
The Group’s associate company (49% owned), BTS, which
principally distributes Titon Korea’s natural ventilation products,
was similarly impacted by the downturn experienced by Titon
Korea. The loss recognised in respect of associates (which is all in
respect of BTS) in 2023 was £241,000 (2022: profit £173,000).
Taking Titon Korea and BTS together, South Korea made a
negative contribution of £0.64m to the Group’s loss before tax
for the year (2022: loss £0.04m).
United States
Our US operations represent the smallest geographical segment
and results improved in the period. Sales in the year increased
by 59% to £0.84m (2022: £0.53m) as the market improved in the
period. Titon Inc. made a statutory profit before tax of £69,000
in the full year (2022: loss of £26,000) and contributed a margin
to our UK manufacturing business.
Board
As we noted in the Interim Report, Alexandra French stepped
down from her role as Chief Executive and left the Board with
immediate effect in April 2023. We immediately commenced a
recruitment process, and the Board was pleased to announce in
November the appointment of Tom Carpenter, as our new Chief
Executive. Tom is currently serving his notice period with his
current employer and will join Titon in late April 2024.
As announced on 29 November Keith Ritchie announced
his decision to retire and step down as Non-Executive Chair
with immediate effect and as a Non-Executive Director on 28
February 2024. He stepped back from executive responsibilities
in October 2022 after ten years at Titon. The Board wishes
to express its sincere gratitude and thanks to Keith for his
significant commitment, service and contribution to Titon over
the last eleven years and wish him well when he retires from the
Board. Paul Hooper replaced Keith as Chair on an interim basis
pending the appointment of a permanent replacement and I took
over the Chair role following my appointment to the Board on 2
January 2024.
I would like to thank all of my fellow directors for their efforts
in the year and their contributions to Titon, in what has been
another challenging year.
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Titon Holdings Plc I 2023 Annual ReportTiton Holdings Plc I 2023 Annual Report Chairman’s Statement (continued)
Employees
I offer my sincere thanks to all our employees for their hard
work and skills they have shown, particularly in the difficult
trading conditions we have seen during the year. I would also
like to welcome all our new colleagues to Titon and thank them
for the enthusiastic manner in which they have tackled the
challenges we face. My colleagues on the Board also recognise
the contribution that all our employees have made and thank
them for their efforts and dedication.
Investors
We note the presence of Rockwood Strategic PLC, a company
managed by Harwood Capital LLP, as a 27% shareholder in Titon
and look forward to driving returns for all shareholders.
Shore Capital, our Nominated Adviser and Broker, has continued
to write research coverage on Titon during the year and we also
thank them for their sound financial advice during the year. We
welcome all contributions from shareholders and look forward to
meeting them at the Annual General Meeting in March.
Current Trading and Outlook
UK and Europe
Sales in the first quarter of the current financial year to 30
September 2024 (“FY24”) in UK and Europe are lower than the
comparative quarter in FY23 and our expectations, reflecting the
slowdown in the new build market. However, the effect of the
lower sales on the overall performance has been mitigated by
achieving a higher margin and through managing overheads and
operating profit was in line with our expectations for the quarter.
We enter 2024 with the Office for Budget Responsibility
forecasting very low growth in UK GDP of 0.7% for 2024 due to
the squeeze on real wages, the reduction in levels of government
support and higher interest rates. In the housing markets the
Construction Products Association is forecasting total housing
expenditure including repairs, maintenance and improvements
to be flat in 2024 against 2023 with only a 3.2% improvement
in 2025.
In 2023, we identified a number of business imperatives that
we wanted to deliver during the year and we report on progress
against them in the Strategic Report. We also started work on a
review of the business strategy so that we can plan and steer
the growth of the business in the medium term and enable
the Group to return to sustained profitability. This will be a
key task for our new Chief Executive when he starts at Titon,
working alongside our Senior Leadership Team. We still believe
that here are significant opportunities for Titon as the key role
that ventilation provides for indoor air quality and public health
becomes more appreciated.
South Korea
In South Korea, The Bank of Korea forecasts GDP growth for
2023 will be 1.4%, and for 2024 is projected to increase to 2.1%
due to the easing of sluggishness of exports. However, they note
that consumption recovery has been slow, which weighs heavily
on the construction sector.
Sales in South Korea in Q1 FY24 were in line with our expectations.
Titon Korea is expected to remain loss-making in FY24 due to the
continuing challenging conditions in that market, and the Group
is taking steps to progress its plan to streamline the Korean
corporate structure and operations.
Outlook
The outlook for the global economy in 2024 is difficult to predict,
with many macro issues continuing alongside a weak economy,
which is constraining consumers, leading to a reduced demand
for replacement windows and doors. Therefore, for our UK and
European markets we expect that the business environment will
remain challenging for us in 2024 and we remain in a transitionary
period in South Korea. Despite these challenges, we continue to
have a strong balance sheet, talented employees, a high-quality
range of products and a good pipeline of new products that give
us confidence in our medium-term future.
On behalf of the Board.
J Brooke
Chair
24 January 2024
Notes:
(Non IFRS GAAP measures)
1 EBITDA is measured as operating profit before net finance costs, tax,
depreciation and amortisation. Underlying EBITDA is EBITDA adjusted
for exceptional items such as restructuring costs, as shown in note 26.
2 The Quick Ratio measures liquidity and is calculated as follows:
Current Assets-less-Stocks divided by Current Liabilities.
4
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Titon Holdings Plc I 2023 Annual ReportTiton Holdings Plc I 2023 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 Carolyn Isom, Chief Financial Officer
“Whilst it has been another challenging year, I have been inspired by the dedication and commitment of our employees here
at Titon. We have had to manage another period without a Chief Executive, but the strength of our senior leadership team has
shone through, and we very much look forward to welcoming Tom Carpenter into the team in April 2024. We believe he is a
great fit for Titon and will bring the leadership required to continue to build on the foundations already in place.
At the beginning of the year, we reported that we had identified several business imperatives that we would focus on in the
UK, and I am pleased that we have made significant progress in most areas. We have revised the business imperatives for the
coming year, and we are now starting our strategic planning process, aiming to have a 3–5-year strategy by the end of FY24.
Following resolution of the issues we previously encountered both with the implementation of our new ERP system and the
worldwide supply chain constraints, we are pleased we have been able to return to providing the service levels historically
enjoyed by our loyal customer base, and manufacture and deliver our high-quality products on time. We continue to develop
award winning products as we look to grow our market share in the ventilation market.
The senior leadership team and I would like to wish Keith Ritchie all the best in his retirement from March 2024. He has
provided a great deal of support and continuity through some challenging times at Titon, and he will be missed by all in the
UK and in Korea.”
Summary
Revenue increase of 1.1% to £22.3m (2022: £22.1m)
Group loss before tax of £839,000 (2022 loss before tax: £953,000)
Group underlying loss before tax of £800,000 (2022: underlying loss of £604,000)
Loss per share of 6.01 pence (2022: loss of 3.89 pence)
Year-end net cash balances of £2.2m (2022: £1.7m)
Total dividend for the year of 1.0 pence per share (2022: 2.0 pence per share)
Overview
In evaluating the performance of the business, the Directors initially review geographical areas and then consider product
group segmentation at the secondary level.
The Titon Group performance is monitored across three geographical segments of UK and Europe, South Korea and United
States. Within these segments, the principal business activities are design, manufacture, marketing and sales:
●
natural ventilation (background ventilators) and hardware products for the window and door fabricator markets in the
UK, Europe and the USA;
● mechanical ventilation products for the new build residential markets in the UK and Europe; and
●
natural and mechanical ventilation products for the new build, re-build and refurbishment residential market in South
Korea.
The first two activities above are carried out by Titon Hardware Limited and Titon Inc. (in the US), both wholly owned
subsidiaries. Titon is one of the leaders in the window background ventilator market in the UK, background ventilators being
used extensively in the new build and refurbishment sectors. The third activity is carried out by Titon Korea Co. Ltd (“Titon
Korea”), a 51% owned subsidiary, which designs and manufactures products and Browntech Sales Co. Limited (“BTS”), a 49%
owned associate company, which markets and sells these products to customers.
Titon’s strategy is to grow both the natural ventilation and mechanical ventilation businesses by market growth, market
penetration and development of new products.
Chief Financial Officer’s Review
The principal activities of the Group have not changed during the year and consist of the design, manufacture and marketing
of ventilation products and door and window fittings.
The Consolidated Income Statement is set out on page 47. A summary of the results along with other selected Key Performance
Indicators (“KPIs”) is as follows:
Revenue
Loss before tax
Tax (expense) / credit
Loss after tax
Revenue per employee
Loss after tax per employee
Year-end net cash and cash equivalents
2023
£’000
22,334
(839)
(86)
(925)
111
(4.5)
2,238
2022
£’000
22,087
(953)
410
(543)
108
(2.6)
1,726
Group Revenue has increased by 1.1% to £22.3m (2022: £22.1m) and the Group has posted an underlying loss before tax
(excluding exceptional items) of £0.8m (2022: underlying loss before tax of £0.6m) and a Group loss before tax including
exceptional items of £0.84m (2022: loss before tax £0.95m). A full review of the Group’s performance during the year is given
in the Chair’s Statement.
While the loss before tax was only marginally improved on last year, there have been some significant improvements in
particular entities. The loss before tax for the year in FY22 included £0.9m relating to UK, Europe and America compared to
a much improved £0.19m in FY23. However, business performance in South Korea remains below previous levels due to a
slowing in the housing construction market and an ongoing change in product requirements. The combined loss before tax in
FY23 for both Korean entities, was £0.65m against a small loss of £0.03m in FY22.
Our trading in UK and Europe was affected for part of the year as we sought to catch up on production arrears caused by
unforeseen operational impacts associated with the implementation of a new internal ERP system. In H2 these issues were
resolved, and we resumed business as usual. We also previously reported that we were being severely affected by worldwide
supply chain issues with component shortages and that eased this year. We have continued to manage our margins that have
been affected by increased material prices, energy and labour costs.
Organisational structure
We have continued to strengthen our senior leadership team and we were successful in our recruitment for a Commercial
Director. This role leads sales, marketing and customer service for UK and Europe across both the Hardware and Ventilation
Systems divisions and will play a vital role in setting our business strategy and assisting us in hitting its financial targets in
FY24.
We look forward to the arrival of Tom Carpenter, our new Chief Executive, in April 2024 to complete our senior leadership
team.
O N T
I N U OUS IMPROVEMENT
CUSTOMER
• Grow customer revenue and margin
• Improve customer experience
• Customer acquisition
C
PEOPLE
ENVIRONMENTAL
HEALTH &
SAFETY
T
N
E
M
E
V
O
R
P
M
I
S
U
O
U
DELIVERY
• Quality
• Plan Adherence
• Cash/Inventory
N
I
T
N
O
C
C
O
N
T
I
N
U
O
U
S IM
INNOVATION
• Technical Leadership
• Products
• Process
PROVEMENT
Goals and strategy
We seek to provide high quality ventilation
systems and we are passionate to improve
indoor air quality to ensure our customers
feel safe, feel secure and breathe easy.
During 2024, we will be working on a review
of the Group’s strategy that will clearly
outline how we are going to advance and
grow the organisation to deliver value both
to shareholders and to society. However, in
the meantime the senior leadership team has
defined a refined set of business imperatives
that will guide us through the year and ensure
that we stabilise the business and also
position the Group for growth.
Our business imperatives are the crucial
things that we must achieve this year. They
are closely interlinked and complement one
another. Each imperative will be regularly
monitored through a defined set of financial
and operational KPIs.
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Titon Holdings Plc I 2023 Annual ReportTiton Holdings Plc I 2023 Annual Report
Strategic Report (continued)
Our Business Imperative
What are we doing to achieve it?
Environmental Health & Safety
• ensure the health, safety and
wellbeing of all our employees
• establishing Incident Rate tracking and
reporting
•
IOSH training for all senior members
of staff and first line managers and
supervisors
• EHS SharePoint live for Risk
assessments, EHS training matrices and
EHS resources
•
revised and updated EHS compliance
dashboard
People
• enhance the employee experience
•
• create an environment where
everyone can bring their best to
work
•
recognise effort, contribution and
achievement
implementing a people strategy integral
to the overall business strategy
• producing development plans for all
staff to prepare for succession and skill
enhancement
•
introducing a transparent pay, reward
and recognition structure
• enhancing non-financial benefits and
wellbeing initiatives
Customer
• grow revenue and margin
• developing the commercial strategy
•
improve customer experience
•
implementing the new CRM system
• win new business
• growing our sales pipeline
•
implementing a consistent pricing
strategy for all areas of the business
Delivery
Innovation
• deliver quality products and
processes
• deliver on time and in full
•
•
•
reduce inventory to generate cash
introducing non-conformance reporting
process, linked to CRM
removing / reducing slow moving and
obsolete inventory
•
introducing demand forecasting
• scheduling achievement targets in all
areas of production
• provide technical leadership
• develop innovative products
•
improve business processes
•
launching several key new products to
the market in FY24
• developing the product strategy
• driving efficiency through product
rationalisation
• standardising particular product ranges
Business model
Within its main geographical classifications of the UK and Europe, South Korea, North America and All Other Countries, the
Group operates in two divisions:
i.
ii.
the natural ventilation and Window & Door Hardware division, in which Titon has operated since its formation 50 years
ago in 1972 which includes South Korea. This activity accounted for 55% of Group revenue in 2023 (2022: 62%); and
the mechanical Ventilation Systems division, which the Group entered 15 years ago in 2007 and which accounted for 45%
of revenue in 2023 (2022: 38%). See Business Segmentation information on page 61.
The Group generally organises its sales and marketing activities into these divisions with manufacturing and all other services
supporting them both on a shared basis. The executive leadership team manage both divisions.
In the UK, the Group has a direct sales force for each division and aims to win specifications for its products through its
dealings with developers/housebuilders, architects, building services engineers and local authorities. Where a project isn’t
specified, Titon aims to sell directly to its wide customer base of electrical contractors, installers and window fabricators.
Titon operates in a wide range of export markets and has made sales to a significant number of countries from the UK during
this year. Our policy for exporting, in respect of both Window & Door Hardware and Ventilation Systems, is to appoint local
distributors and to support them in specifying and building the Titon brand. Within the Ventilation Systems division, the Group
also supplies OEM (Original Equipment Manufacturer) products for its customers and continues to target a significant increase
in its activities in continental Europe.
In South Korea, Titon Korea makes almost all its sales to BTS which sells products onward to its customers in the residential
construction sector. Titon entered the South Korean market in 2008.
The Group also has a wholly owned subsidiary, Titon Inc., based in Indiana in the USA. Sales into this market accounted for 4%
of Group revenues during the year (2022: 2%).
The Group manufactures products in the UK and in South Korea. Production in South Korea is entirely for the South Korean
market, whilst products manufactured in the UK are sold domestically and exported. Products manufactured in the UK factory
account for 71% (2022: 61%) of overall Group turnover and products manufactured in South Korea account for 11% (2022:
18%). The remaining 18% (2022: 21%) of revenue is obtained by the sale of products bought-in from third party manufacturers.
These bought-in products tend to be complementary to and are generally sold alongside our own manufactured lines.
Research and Development
Research and Development continues to play an important role in the Group’s success as we look forward to innovation in
our products, processes and business model. Maintaining quality, predicting trends, diversifying offerings and generating
intellectual capital remain in focus ensuring the business stays competitive. At the same time we are very aware of the
need to keep in step with challenges concerning cost, technological evolution and regulatory change. Beyond this is R&D’s
contribution to long-term viability where we will foster a culture of innovation and learning by attracting talent, growing our
industry leadership and promote a mindset driving economic growth. Improvement to our business processes will continue in
2024 as we identify opportunities to introduce efficiencies, better manage risk and increase value in what we deliver.
Stage 0
Feasibility
Stage 1
Scoping
Stage 2
Design
Stage 3
Development
Stage 4
Production
Stage 5
Launch
Investment in research and development was £467,000 during the year (2022: £629,000), amounting to 2% of sales (2022:
3%). We saw an increase in spend in the prior year due to increased testing costs as we approved and released alternative
components during worldwide supply chain shortages.
Design, development and launching of new products is a significant contributor to the success of the Group. Over the last
5 years the Group has successfully developed and launched many new products and product variants which have made a
substantial contribution to our revenue, both in securing new business and in maintaining existing business through product
evolution. Our approach is driven by customer, market and regulatory needs.
During 2024, we will be launching several key new products to the market that will deliver growth across both our Hardware
and Ventilation Systems divisions for the UK and Europe.
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Titon Holdings Plc I 2023 Annual ReportTiton Holdings Plc I 2023 Annual Report Strategic Report (continued)
These are some of our recent development and new product highlights:
Added to the range of Titon FireSafe® Air Brick in 2023 is the Titon FireSafe®
100m Round Push Through Wall Kit. Winner of the Ancillary Product of the Year
at the prestigious HRV Awards 2023. This product extends the Titon range
of FireSafe airbricks introducing a new kit ideal for residential applications in
social housing, new build and refurbishment. Developed to work with Titon’s
energy efficient constant flow Ultimate® dMEV fan.
The Titon Ultimate® dMEV launched in 2021 achieved the accolade of ‘Highly
Commended’ at the recent Energy Saving Awards for Domestic Product of the
Year. We developed this product to meet new June 2022 building regulations
Part F and comply with new strict test procedures from Building Research
Establishment (BRE). The Titon Ultimate® 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 2023 we have developed an upgraded version, the
Ultimate dMEV “I” which replaces the original unit. This adds new features
demanded by the UK market and others aimed at success in Europe.
2023 has seen the launch and first sales of Hexalok, a lock for sliding doors and
the first door lock developed by Titon in-house. It features six locking points
for added security in the increasingly popular aluminium residential sliding
door market and has been designed to replace business products, formerly
bought in, at a more competitive price point.
The Window and Door Hardware R&D team also completed work on the
Terminus security multi-point lock for aluminium windows, again a growing
sector of the residential window market. Close work with target customers
ensured immediate orders for the product.
Work continued within our partnership with Roto, one of the largest hardware
brands in the world, and we have customised their tilt and turn hardware range
and have a Titon centric offering to suit the UK target aluminium systems
company and fabricator audience. First sales have been realised and we have
budgeted to increase those in FY24. The added benefit of our relationship with
Roto is that it will in the future give us access to their portfolio of products for
all window and door types.
We have developed new advanced control systems,
including Wi-Fi
connectivity and control of MVHR units using a mobile phone App (Android
and Apple). Our industry standard MODBUS interface also allows interfacing
with Building Control Systems (BMS), enabling building owners to monitor the
entire site for maintenance and fault detection purposes.
In 2023 we have seen new Titon HRV and dMEV products added to those
already supported by the mobile phone App.
During 2023, our popular range of MVHR units were upgraded with the
introduction of models HRV4 and HRV4.25. These are compact units which
offer cutting edge performance, high airflow coupled with extremely low
Specific Fans Power and high efficiency heat exchange capabilities. These
support connectivity via the Titon App and to facilitate installation into complex
whole-house systems, a MODBUS interface is now provided as an option.
We are developing units for the Ventilation Systems MVHR range capable of a
constant flow operation which will allow the unit to maintain a set airflow even
when filters become partially blocked or the duct system changed. This is an
emerging requirement, already common in European territories, for which we
expect demand to increase.
An addition to the HRV range, employing the HRV4.25 unit, is the HRV Cool
Plus product. Today our homes are built to be energy efficient in winter
months with increased levels of insulation and air tightness. However recent
changes to the UK weather and increased summer temperatures can give rise
to overheating in modern properties. The HRV Cool Plus is mounted above the
main HRV unit and provides up to 1.8kW of cooling as a means of combating
overheating.
During the year we have developed and patented a self-regulating background
ventilator called the Active Vent and we are currently working on our launch
plan. This vent can respond to an increase in outside air pressure and maintain
a constant airflow into the property.
10
11
Titon Holdings Plc I 2023 Annual ReportTiton Holdings Plc I 2023 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
Purchases
Net cash
Working capital
Top 25 products reviewed weekly (at divisional management levels and operating segments)
Top 25 customers (at divisional management levels and operating segments). Sales by individual
area sales managers reviewed weekly
Top 25 suppliers and delivery performance reviewed monthly
Reviewed monthly by Board and by senior management
Inventory, average debtor days and average creditor days reviewed monthly by Board and senior
management
Graphical representations of some of these KPIs and other financial performance measures for the years ended 30 September
are as follows:
Revenue
£22.3m
Operating loss
£0.537m
Underlying loss before tax
£800k
1.97
27.2
20.7
23.4
22.1
22.3
1.63
1.12
1.08
0.02
-0.04
-0.54
-0.77
-0.6
-0.8
2019
2020
2021
2022
2023
2019
2020
2021
2022
2023
2019
2020
2021
2022
2023
Dividend paid
1.0p
4.75
4.50
12.84
Earnings per share
(6.01p)
9.24
Net cash & cash equivalents
£2.238m
5.57
4.79
4.58
2.00
2.00
0.52
1.00
-3.89
-6.01
2.24
1.73
2019
2020
2021
2022
2023
2019
2020
2021
2022
2023
2019
2020
2021
2022
2023
2022/23 performance
The financial results for the year are shown above and are discussed throughout the Annual Report. The significant outcomes
for the year are as follows:
●
●
●
●
●
●
The backlog of orders caused by the implementation of the new ERP system in FY22 in UK and Europe were cleared in
H1, and we returned to delivering on time, in full.
Significant improvement in working capital including stock levels and cash generation, reflecting the investment in people
and processes.
Continued development of the ERP system to deliver further improvements to business processes.
Recruitment was completed for key new leadership roles in Operations, Commercial, and Research and Development. We
also strengthened our external sales team in several key areas to increase our market presence.
Development up to launch for several new key products including the HRV4 and HRV4.25, the Titon FireSafe® 100m
Round Push Through Wall Kit and the Hexalock door lock product.
In the UK sales of background ventilators were marginally up on the prior year. However, sales of bought in hardware
products fell by 26% as our supplier agreement with Sobinco came to an end following its decision to sell its range direct
to customers, rather than through Titon. However, we have developed a successful partnership with European window
and door hardware company Roto to sell their products in the UK and we expect to continue to see our window and door
hardware sales improve next year as a result of this.
● With supply chain constraints lifting, we saw sales of Ventilation System products and services in the UK increase by 17%
in the period against prior year. Sales to continental Europe and the rest of the world were also up by 71%.
●
●
Sales to Titon Inc. in the US were 58% above the prior year as their market conditions improved.
Sales in Korea of natural ventilation products were 18% below the prior year due to a continued slowdown in residential
new build construction. The market transition to marketing and selling mechanical ventilation products alongside natural
ventilation products is taking longer than originally anticipated.
● We have continued to enhance leaner, more efficient processes for some of our manufacturing activities to increase
output to support future growth. We have made further improvements in our Sales Inventory and Operations Planning
(SIOP) process to create a longer-term, forward-looking plan that will enable us to achieve our business goals.
● We have continued to put considerable attention on improving our culture and focus on health and safety with positive
results and this including strengthening our Environment, Health and Safety team.
●
Employee numbers decreased during the period from 209 in September 2022 to 183 in September 2023. In Korea we
saw a small reduction in people to align with the continued market contraction and a bigger reduction in the UK as we
experienced a slowdown in demand, after clearing our backlog.
2023/24 activities
The focus for 2023/2024 is to return to profit through delivery of the business imperatives outlined in the goals and strategy
section on pages 7 to 9. We have set budgets for all regions and divisions of our Group which reflect our view of market
conditions: the continued positive impact from the revisions of building regulations and associated standards and our internal
growth ambitions. Specific initiatives for the current fiscal year include:
●
●
●
Continuing delivery of all business imperatives.
Develop our Group strategy which will include a committed focus on ESG.
Increase our penetration into the residential mechanical ventilation market in the UK through increased sales to new and
existing customers.
● We will respond and work within our industry trade bodies to the proposed Future New Homes Standard and the
Home Energy Modelling (the proposed replacement for SAP). The proposed revised building regulations and associated
standards published in December 2023 for the UK drive towards increasingly more airtight dwellings for energy efficiency.
●
●
●
●
The recently launched award-winning HRV4.25 and HRV4 MVHR units were developed to meet the performance levels
required by the new regulations and we have already seen strong demand for these products. In addition, we are currently
launching an MVHR cooler unit in response to the emphasis on the prevention of overheating in dwellings in the current
regulatory framework.
Refine our strategy for the social housing market with existing products, where there is now a more robust analysis when
property upgrades are undertaken, driving an improvement in quality of the ventilation product installed, ideally meeting
the same standard as new build dwellings.
Increase our natural ventilation sales in the UK where the revised building regulations and associated standards
now require background ventilators to be fitted in replacement windows in many more applications. Previous capital
investment and operational efficiency improvements are now being utilised to gain growth in the relevant sectors.
Increase market share of Titon branded hardware, particularly our new door lock, advanced door cylinder and friction
hinges, and further develop the new supplier relationship with Roto in the UK.
12
13
Titon Holdings Plc I 2023 Annual ReportTiton Holdings Plc I 2023 Annual Report Strategic Report (continued)
●
●
Continue to drive efficiencies and improved customer service throughout our UK operations through the implementation
of lean principles and practices.
In accordance with Statutory Instrument 2008/410 the Group presents the following information in respect of its CO2
emissions during the period.
Streamline the corporate structure and operations of the Korean business.
Environmental Social and Governance Report
Titon prepared its first separate report on Environmental, Social and Governance (ESG) last year. ESG reporting remains
increasingly important for investors and we also want to continue demonstrating that we recognise our own responsibilities
to the environment. In 2019 we publicly committed to becoming a net zero company by 2050.
The UK Government introduced regulations in April 2022 that require climate-related financial disclosures to be made for
publicly quoted companies, large private companies and LLPs. For companies quoted on AIM this applies if the business has
more than 500 employees, so Titon is not currently required to make these disclosures but again, the direction of travel is clear
and supports our intentions. We intend to disclose as much as possible of our climate related activities.
We asked the question in last year’s Annual Report about how Titon makes the world a better place and the provision of
fresh, clean air really answers this question comprehensively. Nothing has changed this belief in 2023, indeed the incidences
of poorly ventilated housing, especially in the social housing and private rental markets means that good ventilation is even
more necessary than before.
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.
During the financial year Titon joined forces with a Carbon Partner, Auditel, to deliver our objective of becoming Carbon Neutral
while on our longer-term journey to reaching Net Zero. This will be initially a three-year programme to calculate our Scope 1,
2 and 3 emissions, which will be increasingly necessary to meet customer requests, and will also focus on additional actions
we can take to reduce those emissions. We look forward to working with our supply chain to reduce the Scope 3 emissions as
they will form the largest part of our overall emissions.
As part of its processes, the Group’s environmental performance is reviewed regularly by senior management and a
programme of continuous improvement for the benefit of customers, employees and the environment has been adopted. We
remain focussed on reducing our energy usage and maintain detailed records of each area’s gas and electricity consumption
with the aim of taking prompt action if any unexplained increase is observed. Based on the latest energy figures available, our
UK electricity usage decreased by 5% in 2023 against 2022 whilst UK gas usage increased by 1%. UK motor vehicle fuel usage
has decreased by 9% over 2022.
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
2023
tCO2e
532
216
748
40.9
2022
tCO2e
535
235
770
45.6
These sources fall within our consolidated financial reporting. We do not have responsibility for any emission sources outside
of our consolidated financial reporting, including those of our Associate Company.
We have used the GHG Protocol Corporate Accounting and Reporting Standard (revised edition), data gathered to fulfil our
requirements under the CRC Energy Efficiency scheme, and emission factors from UK Government’s GHG Conversion Factors
for Company Reporting 2022.
We have taken action over recent years to reduce our environmental footprint and will continue to do so. Actions we have
already taken include:
●
An investment of over £150,000 in solar panels, which are installed on the roof of our Haverhill factory. These panels
continue to generated over 125 Mwh of electricity per year, which we use in the factory or sell back to the National Grid;
●
●
●
●
Installation of LED lighting throughout the Colchester Office and the Haverhill factory.
Replacing all diesel cars in the company car fleet with electric vehicles, wherever possible, when they come up for
renewal. We have EV charging points installed at both the Colchester office and Haverhill site.
Replacement of older fixed asset plant and machinery with new, more efficient units, for example our Amada Press which
we purchased in April 2021.
Installation of a reverse osmosis plant in our paint facility, which has reduced the usage of caustic soda and hydrochloric
acid by 50%, with an added health and safety benefit.
● We have an ongoing initiative to reduce single use packaging for raw material supplies and have replaced our own plastic
packaging with either cardboard or recycled plastic, wherever possible.
● We targeted to reduce waste to landfill from the Haverhill production site by 50% by end 2023 which we achieved, and we
have set the same target for 2024, with a further goal of zero waste to landfill in subsequent years.
We apply the waste hierarchy, as laid down in law, and which forms part of our ISO 14001:2015 certification. The basic
principles are “Reduce, Reuse and Recycle” and are incorporated in the Titon Recycling Policy under which we aim to reduce
waste in all our packaging, products and processes.
We will continue to take all actions that reduce our energy, water and waste usage. We will also look to report our environmental
footprint using a third-party reporting mechanism.
Social Pillar
The Group has various published policies relating to the Social pillar. These are communicated through our Intranet,
noticeboards and the Employee Handbook. Our comprehensive Employee Handbook published in 2021 includes all of our
employment policies, a summary of the Health and Safety policy, our Diversity Policy, our Safeguarding and IT Security and our
Environmental policies. The chapter entitled “Valuing Diversity and Respect at Work” covers the following matters:
●
Equal Opportunities Policy: Titon is committed to encouraging equality and diversity among our workforce. Our objective
is to create a working environment in which there is no unlawful discrimination and where all decisions are based on
merit. The policy applies to all employees, workers, agency workers, contractors and job applicants and covers all of the
nine protected characteristics set out in the Equality Act 2010.
●
●
Bullying and Harassment Policy: we are committed to providing a working environment free from bullying and
harassment and this policy covers both at work and out of the workplace, including work trips, work-related events and
social functions. It also includes all employees, agency, casual workers and independent contractors.
Grievance Policy: every employee has the right to raise a grievance if they have a genuine complaint about their job, work
or terms and conditions of employment and the policy principles are written down in the Handbook.
14
15
Titon Holdings Plc I 2023 Annual ReportTiton Holdings Plc I 2023 Annual Report Strategic Report (continued)
●
Disciplinary Policy: the policy sets out the process for dealing with disciplinary and performance issues and to ensure that
any matters are dealt with fairly and consistently.
● Whistleblowing Policy: Titon is committed to the highest possible standards of ethical, moral and legal business conduct.
The policy aims to provide a route for employees to raise any concerns they may have on matters that could have a
serious impact on Titon such as incorrect financial reporting, unlawful actions or serious improper conduct.
The Safeguarding and IT Security Policy includes the policies on Anti-corruption and Modern Slavery and Human Trafficking.
Under the Anti-Corruption Policy the Titon Group lists a number of fundamental principles and values which it believes are
the foundation of sound and fair business practice and which are important to uphold. It is the Titon policy to comply with all
laws, rules and regulations governing anti-bribery and corruption in all countries in which Titon operates. As a UK company
Titon is also bound by English law which covers our conduct both in the UK and abroad. The penalties for breaching this law
are significant both for the individuals involved and the Company and we take our legal obligations very seriously.
Titon is committed to the principles of the Modern Slavery Act 2015 and the abolition of modern slavery and human trafficking.
We do not enter into business with any organisation which knowingly supports or is found to be involved in slavery, servitude
and forced or compulsory labour. Due to the nature of our business, we have assessed that we have a low risk of modern
slavery in our business and supply chains. Our supply chains are limited, and we procure goods and services from a restricted
range of UK and overseas suppliers. We will continue to embed these principles through our procurement and employment
policies and practices.
Employee Gender breakdown
As at the end of the financial year the analysis by gender of employees, was as follows:
Directors
Senior Managers
Other
Total
2023
Male
5
6
111
122
2023
Female
1
2
58
61
2023
Total
6
8
169
183
2022
Male
5
6
121
132
2022
Female
2
2
73
77
2022
Total
7
8
194
209
We continue to support a number of local and national charities throughout the year. Our colleagues in Colchester and Haverhill
also carry out a number of charity collections during the year.
We are committed to respecting human rights across our business operations and aim to comply with all local and international
legislation and standards.
Corporate Governance Pillar
We have presented our Corporate Governance position for many years, firstly under the UK Corporate Governance Code when
we were quoted on the Main Market of the London Stock Exchange and since 2020 under the Quoted Companies Alliance
(QCA) code after we moved to AIM. Please see page 34 of this Report for the detailed Corporate Governance Report. Our
website also contains more details of the governance disclosure including how we apply the 10 principles identified by the
QCA Code.
In summary, I am confident that we have applied the 10 principles identified by the QCA Code throughout the accounting
period in question. There is a new QCA code for 2024 and we will apply this to our own governance in the current period.
Health and safety
Health and safety is a top priority for the Group and we expect all employees to take responsibility for keeping themselves
and each other safe. It is critical as a manufacturing business that our employees operate in a safe environment and that
our Health and Safety culture, policies and practices are as good as they can be. We are always looking to improve them and
importantly adhere to them. We continually review and update our Health and Safety policies and have a dedicated Health
and Safety Manager role in the business. During 2023, we continued to put increased focus on hazard spotting, reporting
and resolution by all employees in order to further improve the safety of our work environment. We are pleased to witness
significant improvements in this area. The Group has also developed a Health and Safety roadmap that allows us to track and
manage our health and safety compliance, training and priority projects.
The approach to health and safety management for the Group is as follows:
Board of Directors
Overall responsibility for setting policy and performance, promoting excellence in EHS as a personal
and organisational core value and role modelling the expected behaviours.
Senior leadership team
Meets weekly to review statistics, every reported incident and the status of the EHS roadmap. The
Chief Executive, Chief Financial Officer and all executive directors attend. Also promotes excellence in
EHS and shows the expected behaviours.
Local management
Meets daily to review health and safety incidents and issues. Responsible for setting expectations,
following the rules set, managing EHS risks and promptly addressing EHS incidents and issues,
including non-compliance.
All employees
Have the responsibility to look after the health and safety of themselves and others by proactive
hazard reporting and resolution, prompt reporting of all incidents and cooperating with instruction and
training.
Health and Safety Manager
Responsible for driving a positive health and safety culture, supporting resolution of day-to-day issues,
leading on incident investigation and implementing lessons learned, and implementation of changes to
policy.
Health and Safety Committee
Is represented by operational team members across all departments and is chaired by the Operations
Director with support from the Health and Safety Manager. The committee meets monthly to discuss
and address operational health and safety issues. Minutes are produced and distributed along with an
action plan.
The accident statistics for our UK operations are as follows:
●
●
January to December 2022
January to December 2023
51 reported accidents, 0 RIDDOR reported
54 reported accidents, 0 RIDDOR reported
Compared to 2022, we have seen a similar number of accidents reported in 2023, and the vast majority of these have been
minor. Our continued focus on a ‘safety first’ culture means we actively encourage the reporting of all incidents, no matter how
minor, so that we can track trends and root causes, which are reviewed monthly by our internal health and safety committee
and representatives. We also have a robust hazard reporting process in place where anyone can identify a hazard and, where
possible resolve it. During 2023 over 700 individual hazards (risks) were reported with over 80% resolved immediately, with
the remainder escalated for resolution by a capable person. The group is very pleased to see that our safety culture continues
to improve, that all incidents are properly reported and investigated, and that hazard reporting and resolution will help prevent
the occurrence of more serious incidents.
RIDDOR is the Reporting of Injuries, Diseases and Dangerous Occurrences Regulations 2013. These Regulations require
employers, the self-employed and those in control of premises to report specified workplace incidents. As at 31 December
2023, we had reached 1,871 days without a RIDDOR report being required, which is a reflection of the minor severity rating
of our incidents.
16
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Titon Holdings Plc I 2023 Annual ReportTiton Holdings Plc I 2023 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 2023, the Board of Directors consider that they have, individually and collectively,
acted in a way they consider, in good faith, would be most likely to promote the success of the Company for the benefit of
its shareholders as a whole, having regard to a number of broader matters including the likely consequence of decisions for
the long term and the Company’s wider relationships. In doing so, the Board holds regard to the matters contained in section
172(1) (a)-(f) of the Companies Act 2006.
The Directors fulfil their duties by ensuring that there is a strong governance structure in place across the Group’s operations,
backed up by robust processes.
The strategy for the Group is regularly monitored by the Board during the year. In respect of major matters discussed at board
level, the likely impact on all stakeholders are carefully considered and where possible, decisions are carefully explained and
discussed with affected stakeholders before actions are implemented to engender the necessary support.
The Group’s key stakeholders and why and how we engage with them are set out below:
Stakeholder Group
Why do we engage with them?
How does the Board engage with them?
Shareholders
The Board needs to know investors’ views
so they can be considered when making
strategic and governance decisions.
We have regular dialogue with institutional
Investors and individual shareholders in order to
develop an understanding of their views.
We aim to provide fair, balanced and
understandable information about the
business to enable informed investment
decisions to be made.
Employees
Employee engagement is critical to our
success. We aim to create a diverse and
inclusive workplace where employees can
reach their full potential. This ensures we
can retain and develop talented people.
We have the highest regard for the health,
safety and wellbeing of our employees.
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 use Investor Meet Company to present our
interim and final results presentations each year.
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
2024.
We continue to make every effort to protect our
employees.
Customers
Suppliers
Community/ Environment
Our strategy of attaining sustainable
growth in profit and building goodwill in
our brands will only be achieved through
an understanding of the needs of our
customers and the markets we serve.
Our suppliers make an important
contribution to our business success.
Engaging with our supply chain means that
we can ensure security of supply and speed
to market. Carefully selected high-quality
suppliers ensure we deliver market leading
innovative products to meet our customers’
expectations.
The Board has a full understanding of the
importance of good community relations.
We aim to contribute positively to the
communities and environment in which we
operate.
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 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
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.
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.
We participate in industry bodies and working
groups and our directors chair ventilation groups
within the trade associations.
We attend All-Party Parliamentary Groups and
plenary sessions.
We participate in and respond to industry and
government consultations.
Application of s.172 during the year
We have continued to comply with the requirements under s.172. Key decisions made included:
●
●
●
●
●
●
Recruited a new Chief Executive to the Board of Directors.
Recruited our Commercial Director, a key role to the ongoing success of the business.
Continued the process to restructure the operations in Korea.
Performed our first Investor Meet presentation to shareholders for our interim results.
Initiated a ‘Strategy on a Page’ session with a third party to start planning for producing our business strategy.
Appointed an external consultant to work with us to achieve our net zero ambitions.
18
19
Titon Holdings Plc I 2023 Annual ReportTiton Holdings Plc I 2023 Annual Report Potential Impact
Mitigations
Reliance on key customers and suppliers
Parts of the Group’s business are
dependent on key customers and key
suppliers.
Failure to manage relationships with key
customers and suppliers could lead to a loss
of business affecting the financial results of
the Group.
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.
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.
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.
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 has an annual building insurance
review where actions are raised and
subsequently cleared internally, providing
evidence to the insurer.
The Group gets a fire risk assessment
carried out by an external party every 2
years (last completed 6 September 2023)
and annually internally and actions/
suggestions raised are reviewed and
actioned accordingly.
A fire suppression system is installed in
relevant manufacturing areas.
Visits take place by the local fire service to
review and provide feedback on fire safety
systems and practices.
Risk
Potential Impact
Mitigations
Business disruption (continued)
The Group implemented multifactor
authentication for relevant employees.
The Group has implemented a Cyber
Security training and awareness
programme for all employees.
The Group’s strategy is to maintain
essential systems in the Cloud.
The Group has an email security gateway
system in place.
The Group has a register of Titon owned
tooling held at sub-contractors.
The Group looks to review sub-contractor
insurance and business continuity policies.
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.
The risk of international trade sanctions or
interruption of supply due to geopolitical
uncertainty, such as the Russian invasion of
Ukraine and supply interruptions in China.
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.
Increased risk of obsolescence.
The Group holds weekly Sales Inventory and
Operations Planning reviews.
The Group has a policy of dual sourcing key
components where possible.
Delays in supplying customers and
additional administrative costs.
The Group ensures robust supplier
relationship management.
Prices may increase which could impact our
sales and profitability.
The Group can implement customer
agreements to incorporate specification
changes if required.
The Group will obtain supplier declarations
and compliance information when required.
Recruitment and retention of key staff
The Group is dependent on the continued
employment and performance of its senior
management and other skilled personnel.
Loss of any key staff without adequate and
timely replacement could disrupt 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 2024.
The Group aims to provide competitive
remuneration packages and bonus schemes
to retain and motivate key staff.
20
21
Titon Holdings Plc I 2023 Annual ReportTiton Holdings Plc I 2023 Annual Report
Strategic Report (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.
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.
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 a predicted low growth
economy.
The Group closely monitors trends in the
industry using a wide range of external
data including the Construction Products
Association’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 2023/24
suggest limited growth.
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.
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.
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 24 January 2024 and signed on its behalf by:
C V Isom
Chief Financial Officer
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
23
Titon Holdings Plc I 2023 Annual ReportTiton Holdings Plc I 2023 Annual Report Directors’ Report
The Directors present their report and the Group and Company financial statements for the year ended 30 September
2023.
The Directors of Titon Holdings Plc throughout the financial year or subsequent to the year-end are listed on page 32.
A detailed commentary on the results for the year and discussion of future developments is given in the Chair’s Statement
on pages 2 to 4 and an explanation of the Group’s business strategy is included within the Strategic Report on pages 6
to 14.
The Group’s compliance with the QCA Code is set out in the report on page 34.
Substantial shareholders
As at 30 September 2023, the Company was aware of the following voting interests in its ordinary share capital, other than
Directors’ holdings, of 3 per cent or more in the ordinary share capital of the Company:
Name
Harwood Capital LLP
J N Anderson
P E Anderson
R Anderson
D J Barry
Shares
3,040,000
868,902
868,900
593,750
561,500
%
27.03
7.74
7.74
5.28
4.99
Share capital
The total issued ordinary share capital at 30 September 2023 consisted of 11,228,750 Titon Holdings Plc shares of 10p each.
10,000 new ordinary shares were issued during the year to satisfy share option exercises.
Details of the authorised and issued share capital of the Company as at 30 September 2023 are set out in note 19 of the Notes
to the Financial Statements.
All of the Company’s shares are ranked equally and the rights and obligations attaching to the Company’s shares are set out
in the Company’s Articles of Association, copies of which can be obtained from Companies House in England and Wales and
on the Company’s website at www.titon.com/uk/investors/.
There are no restrictions on the voting rights of shares and there are no restrictions on their transfer other than:
●
●
certain restrictions as may from time to time be imposed by laws and regulations (for example insider trading laws); and
pursuant to Article 19(11) of ‘UK MAR’ (the EU Market Abuse Regulation as amended by the Market Abuse Exit Regulations
2020) whereby Directors of the Company require approval to deal in the Company’s shares (see https://www.fca.org.uk/
markets/market-abuse/regulation).
Additionally, the Company is not aware of any agreements between shareholders of the Company that may result in
restrictions on the transfer of ordinary shares or voting rights.
Proposed dividends
The Directors recommend the payment of a final ordinary dividend of 0.5 pence (2022: 0.5 pence). An interim dividend of 0.5
pence per share was paid during the year (2022: 1.5 pence) so the total dividend for the year ended 30 September 2023 is 1.0
pence per share (2022: 2.0 pence). Titon operates a dividend reinvestment programme for shareholders, details of which are
available from our registrars, Link Group.
Research and development
The Directors consider that research and development continues to play an important role in the Group’s success, as the need
to provide increasingly energy efficient ventilation products remains a feature of our market over the coming years. Further
details on our research and development activities can be found in the Strategic Report.
Investment in research and development during the year amounted to £658,000 (2022: £759,000), of which £467,000 (2022:
£629,000) was expensed to the income statement and £191,000 (2022: £130,000) was capitalised as shown in note 11.
Financial risk management
The Directors assess the financial risks facing the business and spend appropriate time considering them. The Group has a
system of risk management, which identifies these items and seeks ways of mitigating such risks as far as is possible. The
Report on Risk Management set out on pages 20 to 23 includes information on financial risk and also see note 21 to the
Financial Statements.
Employees
The Group recognises the importance of its employees in achieving its objectives and has contractual arrangements in place
to encourage and reward loyalty and to safeguard the interests of the Group.
Employees are provided with information about the Group’s activities via consultation with employees, other staff meetings
and staff notice boards. The Group aims to foster an environment in which employees and management can enjoy a free flow
of information and ideas.
The Group is an equal opportunities employer and its policies for recruitment, training, career development and promotion
are based on the aptitude and abilities of the individual. All 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 50). The translation reserve is not
considered as capital. In order to maintain or adjust its working capital at an acceptable level and to meet strategic investment
needs, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders or sell assets.
The Group does not seek to maintain any particular debt to capital ratio but will consider investment opportunities on their
merits and fund them in the most effective manner.
Environmental issues
An explanation of how the Group deals with its environmental responsibilities is included within the Strategic Report, under
the heading Environmental Social and Governance.
Directors’ responsibilities
The Directors are responsible for preparing the annual report and the financial statements in accordance with applicable law
and regulations.
Company law requires the Directors to prepare financial statements for each financial year. The Directors have elected to
prepare the Group and Company financial statements in accordance with International Financial Reporting Standards and
International Financial Reporting Standards adopted in the United Kingdom (“UK adopted IFRS”). Under company law the
Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state
of affairs of the Group and Company and of the profit or loss for the Group for that period.
In preparing these financial statements, the Directors are required to:
Select suitable accounting policies and then apply them consistently.
●
● Make judgements and accounting estimates that are reasonable and prudent.
●
State whether they have been prepared in accordance with IFRSs, subject to any material departures disclosed and
explained in the financial statements.
●
●
●
Prepare the financial statements on the going concern basis unless it is inappropriate to presume that the group and
parent company will continue in business; and
Prepare a Directors’ Report, a Strategic Report and Directors’ Remuneration Report which comply with the requirements
of the Companies Act 2006.
Prepare financial statements in accordance with the rules of the London Stock Exchange for companies trading securities
on AIM.
24
25
Titon Holdings Plc I 2023 Annual ReportTiton Holdings Plc I 2023 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 24 January 2024 and the Board intends to seek shareholder approval to
renew the authority at the forthcoming Annual General Meeting.
In accordance with the Companies (Acquisition of Own Shares) (Treasury Shares) Regulations 2003, companies are permitted
to hold purchased shares rather than cancelling them. At 30 September 2023 and 24 January 2024 the Company held nil
shares in treasury. The Company may use this power in the future depending on market conditions and the financial position
of the Company.
Events after the reporting date
There have been no events after the reporting date that materially affect the position of the Group.
Auditors
MHA have expressed their willingness to continue in office and a resolution to reappoint them will be proposed the Annual
General Meeting.
Going concern
The Group’s business activities, its financial position, together with the factors likely to affect the Group’s performance,
are set out in the Strategic Report. In addition, note 21 to the financial statements includes the Group’s risk management
objectives and policies, managing its financial risk and its exposures to credit risk, foreign exchange risk and liquidity risk.
The financial statements have been prepared on a going concern basis. In adopting the going concern basis the Directors have
considered all of the above factors, including the principal risks set out on pages 20 to 23. Under the worst-case scenario
considered, which is severe and considered highly unlikely, the Group remains liquid for a period of 12 months from the date
of reporting and the Directors therefore believe, at the time of approving the financial statements that the Group is well
placed to manage its business risks successfully and remains a going concern. The key facts and assumptions in reaching this
determination are summarised below.
The financial position remains robust with cash of £2.2m available to the Group and no debt and therefore no bank covenants
in place. Our base case scenario has been prepared using forecasts from each of our operating companies, with each
considering both the challenges and opportunities they are facing because of various market forecasts. Due to the strength
of the Group’s balance sheet and market outlook, the Directors believe there is no material uncertainty around going concern.
To this end a reverse stress test scenario has also been modelled, with the most extreme conditions being considered. 50%
of budgeted revenue was removed for all operating companies within the Group from 1 March 2024 to 31 January 2025 with
all overheads being reduced accordingly. All discretionary expenditure was reduced or removed such as capital expenditure
and dividends. The result of this scenario is that we remain cash positive within 12 months of the signing date. This extreme
scenario excludes all other resources we would have at our disposal as means of raising further cash, such as:
●
the Group owns the freehold interest in our Haverhill site which had a fair value of £5.4 million in September 2022. This
could be used as collateral to borrow funds from our bank in the form of a mortgage;
●
●
●
●
●
the Group has significant fixed assets that would have a second-hand market value that could be realised;
a rights issue could be made;
the Group has a large stock balance that could be sold on if there was reduced production;
salary costs could be reduced by virtue of either restructuring or through pay reductions;
BTS, our associate Company, has £1.9m of cash which could be paid to shareholders in the form of a dividend.
Annual General Meeting
The Annual General Meeting of Titon Holdings Plc (“the Company”) will be held at the Company’s premises at Falconer
Road, Haverhill, CB9 7XU on 26 March 2024 commencing at 10.00 a.m. A Notice convening the Annual General Meeting of
the Company for the year ended 30 September 2023 may be found on page 84 of this document.
Shareholders are being asked to vote on various items of ordinary business, being Resolutions 1 to 11 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 financial year ended 30 September 2023.
The Directors’ Report was approved by the Board on 24 January 2024 and signed by order of the Board.
Resolution 2 - to declare a final dividend
The Directors recommend a final dividend of 0.5 pence per ordinary share. Subject to approval by shareholders, the final
dividend will be paid on 5 April 2024 to shareholders whose name appear on the Company’s register at close of business on
23 February 2024.
Resolution 3 - to re-elect Mr James Brooke as a Director
The Deputy Chair confirms that since his appointment 2 January 2024, Mr Brooke has shown to be effective and
demonstrates commitment in his role.
Resolution 4 - to re-elect Mr Tyson Anderson as a Director
The Chair confirms that following performance evaluation Mr Anderson continues to be effective and demonstrates
commitment in his role.
Resolution 5 - to re-elect Mr Nicholas Howlett as a Director
The Chair confirms that following performance evaluation Mr Howlett continues to be effective and demonstrates
commitment in his role.
Resolution 6 - to re-elect Mr Paul Hooper as a Director
The Chair confirms that following performance evaluation Mr Hooper continues to be effective and demonstrates
commitment in his role.
Resolution 7 - to re-elect Mr Jeff Ward as a Director
The Chair confirms that following performance evaluation Mr Ward continues to be effective and demonstrates
commitment in his role.
26
27
Titon Holdings Plc I 2023 Annual ReportTiton Holdings Plc I 2023 Annual Report Recommendation
The Directors believe that the resolutions which are to be proposed at the Annual General Meeting are in the best interests
of the Company and its shareholders as a whole and recommend that all shareholders vote in favour of them, as each of the
Directors intends to do, in respect of his or her beneficial holding.
The Directors’ Report was approved by the Board on 24 January 2024 and signed on its behalf by:
C V Isom
Company Secretary
Directors’ Report (continued)
Resolution 8 - to re-appoint MHA as auditors
This resolution proposes that MHA should be re-appointed as the Company’s Auditors and authorises the Audit Committee
to determine their remuneration.
Resolution 9 – to approve the Directors’ Remuneration Report
Resolution 9 in the Notice of Annual General Meeting, which will be proposed as an Ordinary Resolution, is to receive and
approve the Directors’ Remuneration Report as set out on pages 30 to 33.
Resolution 10 – authority to allot shares
The Companies Act 2006 prevents directors of a public company from allotting unissued shares, other than pursuant to an
employee share scheme, without the authority of shareholders in general meeting. In certain circumstances this could be
unduly restrictive. The Directors’ existing authority to allot shares, which was granted at the Annual General Meeting held on
22 March 2023, will expire at the forthcoming Annual General Meeting.
Resolution 10 in the notice of Annual General Meeting will be proposed, as an Ordinary Resolution, to authorise the
Directors to allot ordinary shares in the capital of the Company up to a maximum nominal amount of £270,000, representing
approximately 24% of the nominal value of the ordinary shares in issue on 24 January 2024.
The authority conferred by the resolution will expire on 26 June 2025 or, if sooner, at the 2025 Annual General Meeting.
The Directors have no present plans to allot unissued shares other than on the exercise of share options under the Company’s
employee share option schemes. However, the Directors believe it to be in the best interests of the Company that they should
continue to have this authority so that such allotments can take place to finance appropriate business opportunities that may
arise.
Resolution 11 - to disapply pre-emption rights
Unless they are given an appropriate authority by shareholders, if the Directors wish to allot any of the unissued shares for
cash or grant rights over shares or sell treasury shares for cash (other than pursuant to an employee share scheme) they
must first offer them to existing shareholders in proportion to their existing holdings. These are known as pre-emption rights.
The existing disapplication of these statutory pre-emption rights, which was granted at the Annual General Meeting held on
22 March 2023 will expire at the forthcoming Annual General Meeting. Accordingly, Resolution 11 in the Notice of Annual
General Meeting will be proposed, as a Special Resolution, to give the Directors power to allot shares or sell treasury shares
without the application of these statutory pre-emption rights: first, in relation to offers of equity securities by way of rights
issue, open offer or similar arrangements; and second, in relation to the allotment of equity securities for cash up to a
maximum aggregate nominal amount of £112,488 (representing approximately 10.0% of the nominal value of the ordinary
shares in issue on 24 January 2024). The power conferred by this Resolution will expire on 26 June 2025 or, if sooner, at the
2025 Annual General Meeting.
In addition, there is one item of special business, being Resolution 12, as listed below.
Resolution 12 - Company’s authority to purchase its own shares
Resolution 12 in the Notice of Annual General Meeting, which will be proposed as a Special Resolution, will authorise
the Company to make market purchases of up to 1,122,875 ordinary shares. This represents approximately 10% of the
Company’s ordinary shares in issue on 24 January 2024. The maximum price per share that may be paid shall be the higher of:
(i) 5% above the average of the middle market quotations for an ordinary share for the five business days immediately before
the day on which the purchase is made (exclusive of expenses); and (ii) the higher of the price of the last independent trade
and the highest current independent bid on the trading venue where the purchase is carried out (exclusive of expenses). The
minimum price shall not be less than 10p per share. The authority conferred by this resolution will expire on 26 June 2025 or,
if sooner, at the 2025 Annual General Meeting.
Your Directors are committed to managing the Company’s capital effectively and although they have no plans to make such
purchases, buying back the Company’s ordinary shares is one of the options they keep under review. Purchases would only
be made after considering the effect on earnings per share and the benefits for shareholders generally.
The Company may hold in treasury any of its own shares that it purchases in accordance with the Companies Act 2006 and
the authority conferred by this resolution. This would give the Company the ability to re-issue treasury shares quickly and
cost effectively and would provide the Company with greater flexibility in the management of its capital base. The Company
does not currently hold any shares in treasury.
As at 24 January 2024 there were options outstanding over 207,000 ordinary shares which, if exercised at that date, would
have represented 1.8% of the Company’s issued ordinary share capital. If the authority given by Resolution 12 was to be fully
used, these would then represent 2.0% of the Company’s issued ordinary share capital.
28
29
Titon Holdings Plc I 2023 Annual ReportTiton Holdings Plc I 2023 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 2023.
Directors’ remuneration
The remuneration paid to the Directors during the year, together with a comparison of the previous year, is as follows:
There has been no change to the Directors’ Remuneration Policy during the period and there have been no significant changes
in individual Director’s levels of remuneration during the year, except as a result of the performance related elements, which
are linked to the amount by which the Group’s results exceeds budget. For this period no payments were made in respect of
performance related elements.
Details of the Directors’ Remuneration Policy are shown on the Group’s website in the Corporate Governance section. The
Directors’ Remuneration Policy was approved in its entirety at the 2018 Annual General Meeting. An Ordinary Resolution will
be put to shareholders at the forthcoming Annual General Meeting to be held on 26 March 2024, to receive and adopt the
Directors’ Remuneration Report.
The Directors’ interests in the ordinary share capital of the Company at the year-end are reported below on page 32.
Remuneration Committee
The Committee presently consists of the Chair, Mr J Ward, Mr G P Hooper, Mr N Howlett and Mr K A Ritchie, all Non-executive
Directors. The Committee has been established by the Board to set Remuneration Policy and to deal with all matters relating
to Directors’ Remuneration and reporting thereon. It has clear Terms of Reference established by the Board.
Directors’ remuneration compared to certain other distributions are as follows:
Directors’ remuneration
Other employee remuneration
Dividend payments to shareholders
2023
2022
Percentage
change
£’000
576
6,450
112
£’000
831
6,179
502
(30.7%)
4.4%
(75.9%)
Year
ended
30 September
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
Executive Directors:
C V Isom
A C French (d)
M J Norris (e)
T D Gearey (f)
Non-executive Directors:
T N Anderson (g)
N C Howlett
G P Hooper (h)
J Ward (h)
K A Ritchie (i)
K Sargeant (j)
B Ratzke (j)
J N Anderson (k)
Totals
Salary
and
fees
(a) (b)
£’000
105
112
139
76
-
61
-
84
89
97
56
63
40
20
40
20
70
160
-
13
-
13
-
21
539
740
Benefits
in
kind
Short term
performance
related
remuneration
Pension
benefits
Total
(c)
£’000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
£’000
1
-
-
-
-
-
-
8
1
-
-
-
-
-
-
-
1
7
-
-
-
-
-
-
3
16
£’000
18
15
£’000
124
127
2
5
-
5
-
37
9
8
5
5
-
-
-
-
-
-
-
-
-
-
-
-
34
75
141
81
-
66
-
129
99
105
61
68
40
20
40
20
71
167
-
13
-
13
-
21
576
831
30
31
Titon Holdings Plc I 2023 Annual ReportTiton Holdings Plc I 2023 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) The remuneration package of each Executive Director includes non-cash benefits, which for C V Isom also included the
provision of a company car. The aggregate gains made by Directors on the exercise of share options during 2023 were
£nil (2022: £11,220).
(c)
In accordance with the proposals adopted by shareholders, performance related remuneration is not due for this period
to Executive Directors.
(d) A C French joined the Board on 3 May 2022 and left the Board on 6 April 2023.
(e) M J Norris joined the Board on 12 July 2021 and left the Board on 8 February 2022.
(f) T D Gearey was a beneficiary of an agreement with the Company relating to his departure from the Company on 6
April 2022 entitling him to a payment of £30,000 which is included in salary above as well as payment in lieu of notice
amounting to £46,000.
(g) T N Anderson was an Executive Director on the Board until 31 August 2022. From 1 September he moved to a Non-
executive Director position on the Board and took on the role as Deputy Chair. The salary reflected above represents the
salary he received for his director position in Titon Hardware Ltd. The remuneration he receives for his Non-executive
Chair role is £1.
(h) G P Hooper and J Ward both joined the Board on 1 April 2022.
(i) K A Ritchie moved from Executive Chair to Non-executive Chair from 1 October 2022.
(j) B Ratzke and K Sargeant both left the Board on 7 December 2021.
(k)
J N Anderson left the Board on 31 March 2022 and now receives £5,000 per annum for advisory services provided.
Directors and their interests in shares
The Directors of the Company during the year and at the year-end and their beneficial interests in the ordinary share capital
were as follows:
30 September 2023
Ordinary shares of
10p each
30 September 2022
Ordinary shares of
10p each
K A Ritchie*
Non-executive Director
1,031,381
1,031,381
A C French
Chief Executive Officer (joined 3 May 2022, left 6 April 2023)
C V Isom
Chief Financial Officer
T N Anderson
Deputy Chair
N C Howlett*
Non-executive Director
G P Hooper
Non-executive Director
J Ward
Non-executive Director
-
-
-
63,500
35,498
-
12,738
-
693,750
63,500
35,498
-
There were no other changes in Directors’ beneficial shareholdings between 30 September 2023 and 24 January 2024.
* Includes spouses’ holdings
Share options
Details of the interests of Directors, who served during the year, in options over ordinary shares are as follows:
Exercise
price
per share
58.0p
At 1
October
2022
Number
25,000
138.5p
50,000
95.0p
150,000
T N Anderson
C V Isom
A C French
(a)
(b)
(c)
Granted
during
the year
Exercised
during
the year
Lapsed
during the
year
At
30 September
2023
Number
Number
Number
-
-
-
-
-
-
Number
25,000
50,000
-
-
150,000
-
The share options in respect of AC French lapsed when she left the Company in April 2023. No other Directors had interests
in options over shares during the year.
Between 30 September 2023 and 24 January 2024, the share options held by T N Anderson have lapsed. There were no other
changes in this period.
Share options
Share options are exercisable between the following dates:
(a)
(b)
(c)
15 January 2017 and
and
15 July 2024
and
15 June 2025
15 January 2024
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 2023 the market price of the Company’s shares was 80p. The range during the year was 68p to 87p.
Approval
The Directors’ Remuneration Report was approved by the Remuneration Committee on 24 January 2024 and signed on its
behalf by:
J Ward
Remuneration Committee Chair
32
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Titon Holdings Plc I 2023 Annual ReportTiton Holdings Plc I 2023 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. 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. We note that the QCA code has been updated and will be applying the new Code going forward.
J Brooke
Chair
Compliance with QCA Code
The Board is accountable to the Company’s shareholders for good corporate governance and the Company’s website sets
out how the 10 principles identified in the QCA Code are applied by the Company. Titon’s business approach is based on
openness and high levels of accountability and there is a commitment to high standards of corporate governance throughout
the Group. With an international presence, the Group acts in accordance with the national laws of the various countries in
which it operates and encourages the highest standards of business practice and procedure.
The Board is confident that the goals and strategy that we have set for our business have been followed during the year under
review. We have continued to treat our employees fairly, to invest in research and development and to communicate openly
and honestly with our shareholders, to highlight three of our specific goals.
The Board seeks to instil a healthy corporate culture in all of its dealings with its stakeholders and believes that Titon is
regarded by those stakeholders in a positive light and will meet its obligations in a fair and transparent way.
Please see the Audit and Risk Committee Report for a description of the main features of the internal control process and the
risk management system in relation to the financial reporting process adopted by the Group. The disclosure of information on
significant shareholdings in the Company is shown in the Directors’ Report.
The Directors consider that the Annual Report and Financial Statements taken as a whole are fair, balanced and understandable
and provide the information necessary for shareholders to assess the Group’s performance, business model and strategy.
The Group consolidated accounts are prepared by the Group Finance Manager and are reviewed by the Chief Financial Officer.
The review includes a detailed inspection of the accounts of all the constituent companies that comprise the Group along with
the relevant consolidation adjustments and journals.
Composition and operation of the Board of Directors
As at 30 September 2023 the Board consisted of the Non-executive Chair, the Chief Financial Officer, and four Non-executive
Directors.
The Board as a whole comprises a wealth of skills and experience from the wide range of activities undertaken by its individual
members, as follows:
Keith Ritchie joined the Company in 2012, having had a 25-year career in the City of London. He is a member of the Institute
of Chartered Accountants in England and Wales and has extensive experience of finance, legal, tax and commercial matters.
He is also a Non-executive director of Beama Ltd, the trade association for the electro-technical manufacturers association
and is Chair of the Ventilation Group, within Beama Ltd. As a result of these different activities, he continues to utilise the skills
gained over his working career. Keith announced his intention to resign from the Board with effect from 28 February 2024.
Tyson Anderson has been with the Company since 1993, when he joined the Marketing team and was elected to the board
of Titon Hardware Limited in 1999. Tyson joined the Board on 1 January 2004 as Marketing Director, was appointed Sales
& Marketing Director on 1 February 2007 and now acts as Business Projects Director in Titon Hardware Limited. Tyson was
appointed as a Non-executive Director and Deputy Chair in April 2022. In his role as Deputy Chair he has a service contract
which terminates at the 2024 Annual General Meeting unless he is re-elected.
Carolyn Isom joined Titon in December 2019 as Finance Director of Titon Hardware and was appointed to the Titon Holdings
Board as CFO in December 2021. She is ACCA qualified and has worked for a number of companies in the construction sector.
Nicholas Howlett joined Titon in 1991 and has held a number of positions within the Group since then. He was appointed to
the Board in 2002 and became a Non-executive Director with effect from 1 October 2017. He has a service contract which
terminates at the 2024 Annual General Meeting unless he is re-elected. Nick has carried out many roles for Titon, including
Production Director at the Haverhill factory, head of Research & Development and then Managing Director of Ventilation
Systems in the UK and Europe. Nick works closely with UK trade associations involved in the ventilation industry and on the
impact of building regulations and other Government laws both for Titon and the wider industry. Nick also is a Non-executive
Director of the Federation of Environmental Trade Associations and the Chair of the Residential Ventilation Association.
Jeff Ward joined the Board of Titon on 1 April 2022. Jeff is currently CEO of Guardian Fall, one of the largest independent
height safety companies in the world. He was previously CEO of Centurion Safety Products from December 2015 until July
2020 and before then held a number of leadership roles in hardware and safety businesses where he was responsible for a
range of activities, including sales, marketing, supply chain and strategy. Jeff holds an MBA from Warwick Business School and
also serves as a Director of the British Safety Industry Federation. Jeff has a service contract which terminates at the 2024
Annual General Meeting unless he is re-elected;
Paul Hooper joined the Board of Titon on 1 April 2022. Paul is currently Chief Executive of The Alumasc Group plc, a position he
has held since April 2003. Alumasc is a UK-based supplier of sustainable building products and solutions. He joined Alumasc
in April 2001 as Group Managing Director. His earlier career included a first Managing Director role with BTR plc in 1992. He
subsequently joined Williams Holdings plc in Special Operations, implementing acquisitions in Europe and North America,
prior to joining Rexam PLC as a Divisional Managing Director with responsibility for operations in Europe and South East Asia.
Paul holds an MBA from Cranfield School of Management. Paul has a service contract which terminates at the 2024 Annual
General Meeting unless he is re-elected;
James Brooke was appointed to the Board on 2 January 2024 and is Non-executive Chair. For the past 25 years, Jamie has
worked in quoted fund management and private equity, originally starting out with 3i Plc. Most recently he worked with
Hanover Investors and, prior to this, he spent twelve years with the Volantis team under the umbrellas of Lombard Odier,
Henderson and Gartmore. Jamie is currently a Non-Executive Director at Flowtech Fluidpower Plc, Chapel Down Group Plc,
Oryx International Growth Fund Plc, Triple Point Venture VCT Plc and Kelso Group Holdings Plc. He is also a member of the
Investment Advisory Group to Rockwood Strategic Plc. He trained as an ACA with Deloitte.
All Executive Directors are subject to annual appraisals of their performance and membership of relevant board committees,
as appropriate, during the financial year. This takes the form of a review of the targets and objectives for the period, a meeting
with the appraiser and the setting of targets and objectives for the current year. It also includes a process whereby a failure
to meet the targets is discussed and changes are agreed to improve performance. A continuing failure to meet targets or
performance could lead ultimately to dismissal. The Non-executive Directors also provide feedback and appraisal of the
Executive Directors on an ad hoc basis, and this is included in the appraisals of the relevant individuals.
The Non-executive Chair has a range of responsibilities to perform including, inter alia, the proper functioning of the Board of
Directors and over-seeing the strategic development of the Company and Group. The Chief Executive (the position is currently
vacant) has a specific range of responsibilities including setting the strategic development of the Group, the day-to-day
management of the Group and implementing the strategy agreed by the Board. The five current Non-executive Directors
provide a range of skills and wide experience to the Group alongside the necessary independence, as required under principle
5, as follows:
1. Mr N C Howlett is deemed to be independent for the purposes of the Code. He provides industry advice, on a part time
basis to the Group and is a recognised figure through his involvement in various trade bodies.
2. Mr T N Anderson is not deemed to be independent as he has an existing service contract with a Group subsidiary.
3. Mr G P Hooper is deemed to be independent for the purposes of the Code as he has no previous links with the Group.
Mr G P Hooper was nominated as the Senior Independent Director of the Board in December 2023.
4. Mr J Ward is deemed to be independent for the purposes of the Code as he has no previous links with the Group.
5. Mr K A Ritchie is not deemed to be independent due to his previous service and role as an executive director of the Group
and his significant shareholding.
6. Mr J Brooke is deemed to be independent for the purposes of the Code as he has no previous links with the Group.
The Board has a schedule of matters specifically reserved to it for decision including major capital expenditure decisions,
business acquisitions and disposals and the setting of treasury policy. This also includes matters such as material financial
commitments, commencing or settling major litigation and appointments to main and subsidiary company boards. The
Executive Directors are involved with day-to-day matters arising and the size of the Group allows the Board to have rapid
access to any issues which arise in dealings with stakeholders.
Scheduled Board meetings in 2023 took place monthly with further ad hoc meetings arranged as necessary. To enable the
Board to function effectively and Directors to discharge their responsibilities, full and timely access is given to all relevant
information. In the case of Board meetings, this consists of comprehensive management reporting information and discussion
documents regarding specific matters. All directors commit sufficient time to the Group to discharge their responsibilities: the
executive directors on a full-time basis, the Non-executive Directors, as required by the needs of the business.
34
35
Titon Holdings Plc I 2023 Annual ReportTiton Holdings Plc I 2023 Annual Report
Nominations Committee
The Nominations Committee is responsible for proposing candidates as Directors of Titon Holdings Plc for endorsement by
the Board. The selection of suitable candidates will be based on the suitability of the person for the position regardless of
age, ethnicity or gender. Candidates may be either internal or external and executive search consultants may be used in the
process. The Nominations Committee was active during the year while recruiting the new Chief Executive. The Nominations
Committee at 30 September 2023 comprised the Chair, Mr N C Howlett, Mr J Ward, Mr K A Ritchie and Mr G P Hooper.
Communications with shareholders
The Board recognises the importance of communications with shareholders. The Strategic Report on pages 6 to 23 gives
a detailed review of the business, and there is regular dialogue with institutional shareholders at the time of the Group’s
preliminary announcement of the year end results and at the half year. The main contact with shareholders is through the
Chair or Chief Executive.
The Group’s results and other announcements are published on the London Stock Exchange RNS service and on the Company’s
website.
The Board uses the Annual General Meeting to communicate with private and institutional investors and welcomes their
participation.
The Corporate Governance Report was approved by the Board on 24 January 2024 and signed on its behalf by:
J Brooke
Chair
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.
Total meetings held
K A Ritchie
T N Anderson
C V Isom
A C French
N C Howlett
G P Hooper
J Ward
Main
Board
Remuneration
Committee
Audit
Committee
Nominations
Committee
13
13
11
13
8
13
12
11
1
1
-
-
-
1
-
-
2
2
-
2
-
-
2
-
1
1
-
-
-
1
1
1
There is an agreed procedure for Directors to take independent professional advice if necessary and at the Company’s expense.
This is in addition to the access which every Director has to the Company Secretary. The Company Secretary is charged by the
Board with ensuring that Board procedures are followed.
When new members are appointed to the Board, they are provided with advice from the Company Secretary in respect of their
role and duties as a public company director. Furthermore, all Directors have ongoing access to the Company Secretary for
advice during the course of their appointment.
Appointments to the Board of both Executive and Non-executive Directors are considered by the Nominations Committee for
endorsement by the Board as a whole.
Any Director appointed during the year is required, under the provisions of the Company’s Articles of Association, to retire and
seek election by the shareholders at the next Annual General Meeting. The Articles of Association also require that one third
of the Directors retire by rotation each year and seek re-election at the Annual General Meeting. The Directors required to
retire are those in office longest since their previous re-election and in practice this means that each Director retires at least
every three years, in accordance with the requirements of the Code. It is the Company’s practice that all of the Non-executive
Directors will seek re-election at each Annual General Meeting.
All of the Non-executive Directors retire at the next Annual General Meeting and being eligible, offer themselves for re-election
other than Mr K A Ritchie.
A statement of Directors’ interests and copies of their service contracts are available for inspection during usual business
hours at the registered office of the Company, on any weekday (excluding public holidays), and will be available at the place of
the Annual General Meeting for at least fifteen minutes prior to and during the meeting.
The Remuneration Committee
The Remuneration Committee Report is set out on pages 30 to 33. The Remuneration Committee’s terms of reference,
established by the Board, are to:
●
●
●
●
determine and to keep under review the Group’s policy on remuneration;
determine the basic salaries and non-cash emoluments payable to all Executive Directors, including Executive Directors
of subsidiary Group companies, giving due consideration to individual responsibility and performance and to salaries paid
to Executive Directors of similar companies in comparable business sectors;
select the performance targets for the Executive Directors’ bonus arrangements;
select the performance conditions relating to the Group’s Share Option Schemes. Such performance conditions to be
aimed to align Directors’ interests to shareholder value;
● make recommendations to the Board of Directors on other matters relating to remuneration in the Group; and
●
prepare an annual report on remuneration to the Company’s shareholders for approval by the Board for submission to
a vote of shareholders at the Company’s Annual General Meeting and to advise the Board if it believes that, in any year,
there are particular matters relating to remuneration which should be put to the Company’s shareholders.
36
37
Titon Holdings Plc I 2023 Annual ReportTiton Holdings Plc I 2023 Annual Report
Audit Committee Report
The Audit and Risk Committee reports to the Board on matters concerning the Group’s internal financial controls, financial
reporting and risk management systems, identifying any matters in respect of which it considers that action or improvement
is needed and making recommendations as to the steps to be taken.
Composition of the Audit and Risk Committee
The Audit and Risk Committee is appointed by the Board for a period of three years and comprised the Chair, Mr K A Ritchie
ACA who has financial reporting experience and Mr G P Hooper, who has extensive accounting experience from his career and
position as Chief Executive of The Alumasc Group Plc. I confirm that the Titon Audit and Risk Committee continues to have
competence relevant to the sector in which the Company operates.
Role of the Audit and Risk Committee
The Audit and Risk Committee operates within defined terms of reference and its main functions are:
●
●
●
to consider whether there is a need for the Group to have its own internal audit function;
to monitor the internal financial control and risk management systems on which the Group is reliant;
to monitor the integrity of the Group’s financial statements and formal announcements relating to the Group’s financial
performance, reviewing significant financial reporting judgements contained in them;
●
●
●
●
to review arrangements by which staff may, in confidence, raise concerns about possible improprieties in matters of
financial reporting or any other matter;
to meet the independent Auditor of the Group to review their proposed audit programme of work and the subsequent
Audit Report and to assess the effectiveness of the audit process and the levels of fees paid in respect of both audit and
non-audit work;
to make recommendations to the Board in relation to the appointment, re-appointment or removal of the Auditor, and to
negotiate their remuneration and terms of engagement on audit and non-audit work; and
to monitor and review annually the external Auditor’s independence, objectivity, effectiveness, resources and qualification.
Review of financial statements and risks identified
Financial statements issued by the Company need to be fair, balanced, and understandable. The Committee reviews the
Annual Report as a whole and makes recommendations to the Board. The Committee has advised the Board that, in its
opinion, the Annual Report and Financial Statements are fair, balanced and understandable and provides the information
necessary for shareholders to assess the Company’s position and performance, business model and strategy. The Company’s
unaudited interim results are also reviewed by the Committee prior to their publication.
The Committee assesses annually whether it is appropriate to prepare the Group’s financial statements on a going concern
basis and makes its recommendation to the Board. The Board’s conclusions are set out in the Directors’ Report.. The Committee
has been fully involved in all of the financial forecasting that has been performed and the cash management steps which have
been taken and has made a recommendation to the Board that the Group should continue to prepare the financial statements
on a going concern basis.
In planning its own work, and reviewing the audit plan of the Auditors, the Committee takes account of the most significant
issues and risks, both operational and financial, likely to impact on the Group’s financial statements.
The Committee considers that the timing of revenue recognition is a significant area of risk to accurate financial reporting
and ensures that necessary credit note provisions and warranty provisions are made. In relation to activities in South Korea,
revenues are only recognised once the third-party customer has accepted the successful installation of either the first fix or
the second fix products into buildings rather than the delivery of such product from our factory.
The carrying value of the Group’s assets is an area where the Committee places great emphasis. In particular, calculating the
carrying value for the Group’s inventory is a vital factor as the Group has a wide range of product lines that may fluctuate
regularly in terms of their sales volumes. Consequently, every product line is assessed at the year-end to ensure that accurate
provisions for obsolescence are made.
A significant risk considered by the Committee is the Group’s investment in its South Korean business and in particular the
accuracy of accounting information. The Committee manage this risk through senior management making regular trips to
South Korea combined with the receipt of detailed monthly management accounts from South Korea.
Internal audit
The Board believes that due to the size of the business there is currently no requirement for an internal audit function. This
matter is reviewed annually.
Internal control
The respective responsibilities of the Directors in connection with the financial statements are set out on pages 25 and 26,
and those of the Auditors are detailed in the Independent Auditor’s Report on page 40.
The Committee is responsible for ensuring that suitable internal controls systems to prevent and detect fraud and error are
designed and is also responsible for reviewing the effectiveness of such controls. The Board confirms that there is an ongoing
process for identifying, evaluating and managing the significant risks faced by the Group in line with the FRC’s Guidance on
Risk Management, Internal Control and Related Financial and Business Reporting, published in September 2014 and the FRC’s
Guidance on Audit Committees published in April 2016. This process has been in place for the year under review and up to
the date of approval of this report and accords with the guidance. In particular, the Committee has reviewed and updated the
process for identifying and evaluating the significant risks affecting the Group and policies by which these risks are managed.
The risks of any failure of such controls are identified in a Risk Matrix (set out in the Risk Management Report on pages 20 to
23) which is regularly reviewed by the Board and which identifies the likelihood and severity of the impact of such risks and
the controls in place to mitigate the probability of such risks occurring.
Internal control systems are designed to meet the Group’s particular needs and the risks to which it is exposed. They do not
eliminate the risk of failure to achieve business objectives. The following are the key components which the Group has in place
to provide effective internal control:
●
●
●
●
an appropriate control environment through the definition of the organisation structure and authority levels;
the identification of the major business risks facing the Group and the development of appropriate procedures and
controls to manage these risks;
a comprehensive budgeting and reporting system with monthly results compared with budgets and with previous years;
and
the principal aspects of the Group’s internal control processes used in preparing the Group’s consolidated accounts include
second reviews of consolidation workings and Board review of the composition of the Group’s financial information.
The Directors acknowledge that they are responsible for establishing and maintaining the Group’s system of internal control
and risk management and reviewing their effectiveness, which they have done during the year. Internal control systems
are designed to meet the particular needs of the Group and the risks to which it is exposed and by their nature can provide
reasonable but not absolute assurance against material misstatement or loss. Appropriate risk monitoring systems have
been in place throughout the year and up to the date of approval of the Annual Report and have been regularly reviewed by
the Board. The Report on Risk Management sets out the principal risks identified by the Directors, the potential impact and
the mitigation measures which apply. No significant weaknesses have been identified in this report by the Directors during
the year.
The Company has a shareholding in an associate company. Controls within this entity are not reviewed as part of the
Company’s formal review processes due to the local delegation of managerial responsibilities, but instead are reviewed as
part of regular management process.
External audit process
The Audit Committee meets at least twice a year with the Auditor, who provides a planning report in advance of the annual
audit and a report on the annual audit. The Committee has an opportunity to question and challenge the Auditor in respect
of each of these reports. No significant deficiencies were noted by the Auditor in respect of the period ended 30 September
2023. The Committee also discussed the basis of preparation of the going concern opinion and the key audit matters with the
Auditor.
After each audit, the Committee reviews the audit process and considers its effectiveness.
Auditor assessment and independence
The Group’s external auditor is MHA.
The Committee reviewed MHA’s independence policies and procedures including quality assurance procedures and it was
confirmed that those policies and procedures were fit for purpose. Accordingly, the Committee recommends that MHA should
be reappointed as the Group’s auditor for the next financial year and a resolution to that effect will be proposed at the 2024
Annual General Meeting.
The fees for audit services provided by MHA for 2023 were £143,000 (2022: £143,000). The Committee discussed the non-
audit services provided by MHA during the year. The cost of non-audit services provided by the Auditor for the financial year
ended 30 September 2023 was £1,000 (2022: £1,000).
K A Ritchie
Audit and Risk Committee Chair
24 January 2024
38
39
Titon Holdings Plc I 2023 Annual ReportTiton Holdings Plc I 2023 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 in relation to UK legal, professional and regulatory
responsibilities and reporting obligations to the members of Titon Holdings Plc. For the purposes of the table on pages 41 to
43 that sets out the key audit matters and how our audit addressed the key audit matters, the terms “we” and “our” refer to
MHA. The Group financial statements, as defined below, consolidate the accounts of Titon Holdings plc and its subsidiaries
(the “Group”). The “Parent Company” is defined as Titon Holdings Plc, as an individual entity. The relevant legislation governing
the Company is the United Kingdom Companies Act 2006 (“Companies Act 2006”).
Opinion
We have audited the financial statements for Titon Holdings Plc, for the year ended 30 September 2023.
the Consolidated Statement of Comprehensive Income
the Consolidated Income Statement
the Consolidated Statement of Financial Position
The financial statements that we have audited comprise:
●
●
●
●
●
●
●
●
the Group and Company statement of Cash Flows
the Consolidated Statement of Changes in Equity
the Company Statement of Changes in Equity
the Company Statement of Financial Position
Notes 1 to 26 to the consolidated financial statements, including significant accounting polices
The financial reporting framework that has been applied in the preparation of the group and parent company’s financial
statements is applicable law and International Financial Reporting Standards and Interpretations (collectively “IFRSs’”) as
adopted in the United Kingdom (“UK-adopted IFRS”).
In our opinion the financial statements:
●
●
●
give a true and fair view of the state of the Group’s and the Parent Company’s affairs as at 30 September 2023 and of
the Group’s loss for the year then ended;
have been properly prepared in accordance with International Financial Reporting Standards and Interpretations
(collectively “IFRSs’”) as adopted in the United Kingdom (“UK-adopted IFRS”); and
have been prepared in accordance with the requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our
responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial
Statements section of our report. We are independent of the Group in accordance with the ethical requirements that are
relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard as applied to listed entities,
and we have fulfilled our ethical responsibilities in accordance with those requirements. We believe that the audit evidence we
have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the Directors’ use of the going concern basis of accounting in the
preparation of the financial statements is appropriate.
Our evaluation of the Directors’ assessment of the Group’s and the Parent Company’s ability to continue to adopt the going
concern basis of accounting included:
●
●
●
●
●
●
The consideration of inherent risks to the Group’s and parent Company’s operations and specifically its business model.
The evaluation of how those risks might impact on the Group’s available financial resources.
Review of the mathematical accuracy of the cashflow forecast model prepared by management and corroboration of key
data inputs to supporting documentation for consistency of assumptions used with our knowledge obtained during the
audit.
Liquidity considerations including examination of cash flow projections at Group and Parent Company level.
The evaluation of the base case scenarios and stress scenarios, in respect of the Group and the Parent Company, and the
respective sensitivities and rationale.
Viability assessments at Group and Parent Company levels, including consideration of reserve levels and business plans.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that,
individually or collectively, may cast significant doubt on the Group’s ability to continue as a going concern for a period of at
least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant
sections of this report.
Overview of our audit approach
Scope
Materiality
Group
Parent
Company
Our audit was scoped by obtaining an understanding of the Group, including the Parent Company, and
its environment, including the Group’s system of internal control, and assessing the risks of material
misstatement in the financial statements. We also addressed the risk of management override of
internal controls, including assessing whether there was evidence of bias by the directors that may
have represented a risk of material misstatement.
We, and our component auditors acting on specific group instructions, undertook full scope audits on
the complete financial information of one component.
2023
£224k
£131k
2022
£221k
1% (2022: 1%) of group revenue
£137k
2% (2022: 2%) of net assets
Key audit matters
Recurring
• Revenue Recognition
• Inventory Valuation
• Management Override of Controls
Key Audit Matters
Key Audit Matters are those matters that, in our professional judgement, were of most significance in our audit of the financial
statements of the current period and include the most significant assessed risks of material misstatement (whether or not
due to fraud) that we identified. These matters included those matters which had the greatest effect on: the overall audit
strategy; the allocation of resources in the audit; and directing the efforts of the engagement team. These matters were
addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do
not provide a separate opinion on these matters.
Revenue Recognition
Key audit matter
description
How the scope of our audit
responded to the key audit
matter
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.
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.
40
41
Titon Holdings Plc I 2023 Annual ReportTiton Holdings Plc I 2023 Annual Report Independent Auditor’s Report (continued)
Key observations
communicated to the
Group’s Audit Committee
We are satisfied, based on the results of the testing performed, that the recognition criteria employed
by management is materially consistent with the requirements of IFRS15. It is noted that adjustments
are made at group level to ensure income is correctly recognised in light of IFRS15, these consolidation
adjustments have been confirmed as accurate.
Inventory Valuation
Key audit matter
description
How the scope of our audit
responded to the key audit
matter
The inventory held by the Group is a key material area to the financial statements and accounts for a large
amount of the Group’s current assets. Due to the nature of the Group’s operations, the inventory balance is
inherently linked to both the purchases and the sales cycles.
The Group uses a standard costing model to determine the value of inventory. This carries a risk of material
misstatement due to the use of key management judgements in respect of overhead and labour recovery
rates.
We consider inventory to be a key audit matter due to its significant importance to the Group’s operations
and its linkage to multiple areas of the financial statements.
Our audit work included, but was not restricted to the following:
●
●
●
●
we have reviewed the inventory listing and stock physically present in the warehouses for any slow-
moving or obsolete inventory items which require write off or providing for and then also reviewed and
considered the appropriateness of the provision made by management, as well as reperforming the
calculations made by management;
we have performed substantive testing for a sample of inventory items held at the year end to the
original purchase invoice and also to post year end sales to ensure inventory is held at the lower of cost
and net realisable value in the financial statements;
we have obtained and reviewed managements calculations and key judgements regarding the standard
costing model used and assessed the appropriateness of the costs included. We have also sample
tested payroll and overhead costs back to source invoices and documentation to confirm the accuracy
of the figures used;
we have reviewed the audit working papers completed by the component auditor to ensure that the
work performed on overseas subsidiaries sufficiently addresses the risk at group level.
Key observations
communicated to the
Group’s Audit Committee
Based on the outcome of our procedures we identified no material issues with the valuation of inventory or
the provisions for slow moving, damaged or obsolete goods.
Management Override of Controls
Key audit
matter
description
In accordance with ISA 240 (UK) management override is presumed to be a significant risk. The ability to override
controls puts management in a unique position to perpetrate or conceal the effects of fraud. This may take a number
of forms such as falsifying accounting entries in order to conceal misappropriation of assets or other manipulation of
accounting entries intended to result in the production of financial statements which give a misleading view of the
entity’s financial position or performance.
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.
No issues have been identified from the audit procedures performed over management override of controls
How the scope
of our audit
responded to
the key audit
matter
Key
observations
communicated
to the
Group’s Audit
Committee
Our application of materiality
Our definition of materiality considers the value of error or omission on the financial statements that, individually or in
aggregate, would change or influence the economic decision of a reasonably knowledgeable user of those financial statements.
Misstatements below these levels will not necessarily be evaluated as immaterial as we also take account of the nature of
identified misstatements, and the particular circumstances of their occurrence, when evaluating their effect on the financial
statements as a whole. Materiality is used in planning the scope of our work, executing that work and evaluating the results.
Materiality in respect of the Group was set at £226,000 (2022: £221,000) which was determined on the basis of 1% (2021: 1%)
of the Group’s total revenue. Group’s total revenue was deemed to be the appropriate benchmark for the calculation of Group
materiality as this is the main measure by which the users of the financial statements assess the financial performance and
success of the Group and is a Key Performance Indicator identified by management.
Materiality in respect of the Parent Company was set at £131,000 (2022: £137,000), determined on the basis of 2% (2022:
2%) of the Parent Company’s Net assets. Net assets was deemed to be the appropriate benchmark for the calculation of
materiality in respect of the Parent Company as this is a key area of the financial statements because this is the metric by
which the performance and risk exposure of the Group and Parent Company is principally assessed. In our opinion this is
therefore the benchmark with which the users of the financial statements are principally concerned.
Performance materiality is the application of materiality at the individual account or balance level, set at an amount to reduce,
to an appropriately low level, the probability that the aggregate of uncorrected and undetected misstatements exceeds
materiality for the financial statements as a whole.
Performance materiality for the Group was set at £156,800 (2022: £132,600) and at £91,700 (2022: £82,800) for the Parent
Company which represents 70% (2022: 60%) of the above materiality levels.
The determination of performance materiality reflects our assessment of the risk of undetected errors existing, the nature of
the systems and controls and the level of misstatements arising in previous audits.
We agreed to report any corrected or uncorrected adjustments exceeding £11,200 and £6,550 in respect of the Group and
Parent Company respectively to the Audit Committee as well as differences below this threshold that in our view warranted
reporting on qualitative grounds.
Overview of the scope of the Group and Parent Company audits
Our assessment of audit risk, evaluation of materiality and our determination of performance materiality sets our audit
scope for each company within the Group. Taken together, this enables us to form an opinion on the consolidated financial
statements. This assessment takes into account the size, risk profile, organisation / distribution and effectiveness of group-
wide controls, changes in the business environment and other factors such as recent internal audit results when assessing
the level of work to be performed at each component.
42
43
Titon Holdings Plc I 2023 Annual ReportTiton Holdings Plc I 2023 Annual Report Independent Auditor’s Report (continued)
In assessing the risk of material misstatement to the consolidated financial statements, and to ensure we had adequate
quantitative and qualitative coverage of significant accounts in the consolidated financial statements, of the 5 components
of the Group, we identified 2 components in the UK and audited by the Group audit team, being Titon Holdings Plc and Titon
Hardware Ltd, a further 2 components based in South Korea and audited by component auditors in the local market, being
Titon Korea Co. Ltd and Browntech Sales Co. and the other component being Titon Inc. based in the USA.
Full scope audits - Of the 5 components selected, audits of the complete financial information of 4 components were
undertaken, these entities were selected based upon their size or risk characteristics.
Specified procedures -
Number of components
Revenue
Total assets
Loss before tax
Full scope audit
Specific procedures
Total
4
1
5
99%
1%
100%
100%
0%
100%
91%
9%
100%
The Group Engagement Team (‘GET’) maintained oversight of the group audit specifically through communication with the
component auditors in South Korea. This was achieved through the issuance of detailed group audit instructions, regular
communications and a visit to the component auditor and group operations in South Korea which allowed for detailed review
and discussion of key audit risks and the work performed to address these.
The final component auditor and group reporting were then reviewed and considered to ensure consistency with previous
discussions and audit work performed.
The control environment
We evaluated the design and implementation of those internal controls of the Group, including the Parent Company, which are
relevant to our audit, such as those relating to the financial reporting cycle. We also tested operating effectiveness and placed
reliance on certain controls over stock cycle, revenue, purchase, and payroll controls.
Climate-related risks
In planning our audit and gaining an understanding of the Group and Parent Company, we considered the potential impact
of climate-related risks on the business and its financial statements. We have agreed with managements’ assessment that
climate-related risks are not material to these financial statements.
Reporting on other information
The other information comprises the information included in the annual report other than the financial statements and our
auditor’s report thereon. The Directors are responsible for the other information contained within the annual report. Our
opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated
in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial statements, or our
knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material
inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material
misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a
material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Strategic report and directors report
In our opinion, based on the work undertaken in the course of the audit:
●
●
the information given in the strategic report and the directors’ report for the financial year for which the financial
statements are prepared is consistent with the financial statements; and
the strategic report and the directors’ report have been prepared in accordance with applicable legal requirements.
In the light of the knowledge and understanding of the Group and the Parent Company and their environment obtained in the
course of the audit, we have not identified material misstatements in the Strategic Report or the Directors’ Report.
In the light of the knowledge and understanding of the Company and its environment obtained in the course of the audit, we
have not identified material misstatements in the Strategic Report or the Directors’ Report.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to
report to you if, in our opinion:
●
adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been
received by branches not visited by us; or
the parent company financial statements are not in agreement with the accounting records and returns; or
●
●
certain disclosures of directors’ remuneration specified by law are not made; or
● we have not received all the information and explanations we require for our audit.
Responsibilities of Directors
As explained more fully in the Directors’ responsibilities statement, as set out on pages 28 to 29, the Directors are responsible
for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal
control as the Directors determine is necessary to enable the preparation of financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the financial statements, the Directors are responsible for assessing the Group’s and the Parent Company’s
ability to continue as a going concern, disclosing as applicable, matters related to going concern and using the going concern
basis of accounting unless the Directors either intend to liquidate the Group or the Parent Company or to cease operations, or
have no realistic alternative but to do so.
Auditor responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance
is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a
material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in aggregate, they could reasonably
be expected to influence the economic decisions of users taken on the basis of these financial statements.
A further description of our responsibilities for the financial statements is located on the FRC’s website at: www.frc.org.uk/
auditorsresponsibilities . This description forms part of our auditor’s report.
Extent to which the audit was considered capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with
our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud.
These audit procedures were designed to provide reasonable assurance that the financial statements were free from fraud or
error. The risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from
error and detecting irregularities that result from fraud is inherently more difficult than detecting those that result from error,
as fraud may involve collusion, deliberate concealment, forgery or intentional misrepresentations. Also, the further removed
non-compliance with laws and regulations is from events and transactions reflected in the financial statements, the less likely
we would become aware of it.
Identifying and assessing potential risks arising from irregularities, including fraud
The extent of the procedures undertaken to identify and assess the risks of material misstatement in respect of irregularities,
including fraud, included the following:
● We considered the nature of the industry and sector the control environment, business performance including
remuneration policies and the Group’s, including the Parent Company’s, own risk assessment that irregularities might
occur as a result of fraud or error. From our sector experience and through discussion with the directors, we obtained
an understanding of the legal and regulatory frameworks applicable to the Group focusing on laws and regulations that
could reasonably be expected to have a direct material effect on the financial statements, such as provisions of the
Companies Act 2006 and UK tax legislation.
● We enquired of the directors and management including the audit committee concerning the Group’s and the Parent
Company’s policies and procedures relating to:
-
-
-
identifying, evaluating and complying with the laws and regulations and whether they were aware of any
instances of non-compliance;
detecting and responding to the risks of fraud and whether they had any knowledge of actual or
suspected fraud; and
the internal controls established to mitigate risks related to fraud or non-compliance with laws and
regulations.
44
45
Titon Holdings Plc I 2023 Annual ReportTiton Holdings Plc I 2023 Annual Report
Independent Auditor’s Report (continued)
Consolidated Income Statement
for the year ended 30 September 2023
● We assessed the susceptibility of the financial statements to material misstatement, including how fraud might occur
by evaluating management’s incentives and opportunities for manipulation of the financial statements. This included
utilising the spectrum of inherent risk and an evaluation of the risk of management override of controls. We determined
that the principal risks were related to posting inappropriate journal entries to increase revenue or reduce costs, creating
fictitious transactions to hide losses or to improve financial performance, and management bias in accounting estimates.
Audit response to risks identified
In respect of the above procedures:
● we corroborated the results of our enquiries through our review of the minutes of the Group’s and the Parent Company’s
Board and audit committee meetings.
Revenue
Cost of sales
Gross profit
Distribution costs
Administrative expenses
Exceptional items
●
audit procedures performed by the engagement team in connection with the risks identified included:
Research and development expenses
-
-
-
-
-
-
reviewing financial statement disclosures and testing to supporting documentation to assess compliance
with applicable laws and regulations expected to have a direct impact on the financial statements.
testing journal entries, including those processed late for financial statements preparation, those posted
by infrequent or unexpected users, those posted to unusual account combinations;
evaluating the business rationale of significant transactions outside the normal course of business, and
reviewing accounting estimates for bias;
enquiry of management around actual and potential litigation and claims.
challenging the assumptions and judgements made by management in its significant accounting
estimates; and
obtaining confirmations from third parties to confirm existence of a sample of balances.
● we communicated relevant laws and regulations and potential fraud risks to all engagement team members, including
experts, and the component auditors and remained alert to any indications of fraud or non-compliance with laws and
regulations throughout the audit.
Use of our report
This report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies
Act 2006. Our audit work has been undertaken so that we might state to the Company’s members those matters we are
required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not
accept or assume responsibility to anyone other than the Company and the Company’s members as a body, for our audit work,
for this report, or for the opinions we have formed.
Andrew Moyser FCA FCCA (Senior Statutory Auditor)
For and on behalf of MHA, Statutory Auditor
London
24 January 2024
MHA is the trading name of MacIntyre Hudson LLP, a limited liability partnership in England and Wales (registered number
OC312313)
Note
3
26
5
5
13
6
7
9
9
2023
£’000
2022
£’000
22,334
22,087
(16,413)
(16,270)
5,921
(1,546)
(4,471)
(39)
(467)
26
(576)
5
(27)
(241)
(839)
(86)
(925)
(686)
(239)
(925)
5,817
(1,393)
(4,586)
(349)
(629)
21
(1,119)
9
(16)
173
(953)
410
(543)
(436)
(107)
(543)
(6.01p)
(6.01p)
(3.89p)
(3.89p)
2023
£’000
(925)
(83)
(1,008)
(775)
(233)
(1,008)
2022
£’000
(543)
112
(431)
(333)
(98)
(431)
Other income
Operating loss
Finance income
Finance expense
Share of post-tax (loss) / profit from associate
Loss before tax
Income tax (expense) / credit
Loss after income tax
Attributable to:
Equity holders of the parent
Non-controlling interest
Loss for the year
Loss per share attributed to equity holders of the parent:
Basic
Diluted
Consolidated Statement of Comprehensive Income
for the year ended 30 September 2023
Loss 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 53 to 82 form part of these financial statements.
46
47
Titon Holdings Plc I 2023 Annual ReportTiton Holdings Plc I 2023 Annual Report
Consolidated Statement of Financial Position
at 30 September 2023
Company Statement of Financial Position
at 30 September 2023
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
Foreign exchange reserve
Retained earnings
Total Equity attributable to equity holders of the parent
Non-controlling Interest
Total Equity
Total Liabilities and Equity
Note
10
10
11
13
16
14
15
20
18
17
18
19
19
2023
£’000
3,183
565
926
2,295
264
7,233
6,139
3,754
2,238
2022
£’000
3,321
553
915
2,909
697
8,395
6,571
4,920
1,726
12,131
13,217
19,364
21,612
426
426
3,968
206
4,174
4,600
1,123
1,096
56
109
12,320
14,704
378
378
5,051
232
5,283
5,661
1,122
1,091
56
198
13,179
15,646
60
305
14,764
15,951
19,364
21,612
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
Trade and other payables
Total current liabilities
Total Liabilities
Equity
Share capital
Share premium account
Capital redemption reserve
Retained earnings
Total Equity
Total Liabilities and Equity
Note
2023
£’000
2022
£’000
10
12
13
16
15
20
17
19
19
1,709
1,773
554
225
7
554
225
4
2,495
2,556
4,815
94
4,909
7,404
107
107
107
1,123
1,096
56
5,022
7,297
7,404
4,769
4
4,773
7,329
135
135
135
1,122
1,091
56
4,925
7,194
7,329
As permitted by section 408(3) of the Companies Act 2006 the Company has elected not to present its own
Statement of Profit and Loss for the year. Titon Holdings Plc reported a profit before tax for the financial year
ended 30 September 2023 of £281,000 (2022: £35,000). The notes on pages 53 to 82 form part of these
financial statements.
These financial statements were approved and authorised for issue by the Board on 24 January 2024 and
signed on its behalf by:
The notes on pages 53 to 82 form part of these financial statements.
These financial statements were approved and authorised for issue by the Board on 24 January 2024 and signed on its
behalf by:
J Brooke
Chair
J Brooke
Chair
48
49
Titon Holdings Plc I 2023 Annual ReportTiton Holdings Plc I 2023 Annual Report
Consolidated Statement of Changes in Equity
at 30 September 2023
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 2021
1,119
1,077
56
96
(27)
14,093
16,414
403
16,817
Share
capital
£’000
Share
premium
reserve
£’000
Capital
redemption
reserve
£’000
Treasury
shares
Retained
earnings
£’000
£’000
1
103
9
112
At 30 September 2021
1,119
1,077
56
(27)
5,090
(436)
(436)
(107)
(543)
Profit for the year
(435)
(333)
(98)
(431)
Total Comprehensive Income for the year
Translation differences on
overseas operations
Loss for the year
Total Comprehensive Income
for the year
Dividends paid
Share-based payment
expense
Exercise of share options
Transfer of treasury shares
-
-
-
-
-
3
-
-
-
-
-
-
14
-
-
-
-
-
-
-
-
At 30 September 2022
1,122
1,091
56
Translation differences on
overseas operations
Loss for the year
Total Comprehensive Income
for the year
Dividends paid
Share-based payment
expense
Exercise of share options
Other
-
-
-
-
-
1
-
-
-
-
-
-
5
-
-
-
-
-
-
-
-
At 30 September 2023
1,123
1,096
56
102
-
102
-
-
-
198
(89)
-
(89)
-
-
-
-
109
-
-
-
-
-
-
27
-
-
-
-
-
-
-
-
-
(502)
(502)
23
-
-
23
17
27
-
-
-
-
(502)
23
17
27
13,179
15,646
305
15,951
-
(89)
6
(83)
(673)
(673)
(252)
(925)
(673)
(762)
(245)
(1,008)
(112)
(112)
(72)
(72)
-
(2)
6
(2)
-
-
-
1
(112)
(72)
6
(1)
12,320
14,704
60
14,764
The notes on pages 53 to 82 form part of these financial statements.
The following describes the nature and purpose of each reserve within equity:
Reserve
Description and purpose
Share capital
Nominal value of the issued share capital of the Company
Share premium
Premium on shares issued in excess of nominal value
Total
Equity
£’000
7,315
314
314
23
314
314
23
(502)
(502)
-
-
17
27
-
-
-
-
3
-
-
-
-
-
14
-
-
-
-
-
-
-
-
-
-
-
-
27
Share-based payment expense
Dividends paid
Exercise of Share options
Transfer of Treasury shares
At 30 September 2022
1,122
1,091
56
-
4,925
7,194
Profit for the year
Total Comprehensive Income for the year
Share-based payment expense
Dividends paid
Exercise of Share options
-
-
-
-
1
-
-
-
-
5
-
-
-
-
-
At 30 September 2023
1,123
1,096
56
The notes on pages 53 to 82 form part of these financial statements.
-
-
-
-
-
-
281
281
281
281
(72)
(72)
(112)
(112)
-
6
5,022
7,297
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
Capital redemption
Amounts transferred from share capital on redemption of issued shares
Treasury shares
Weighted average cost of own shares held in Treasury
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
Retained earnings
All other net gains and losses and transactions with owners (e.g. dividends) not recognised
elsewhere
50
51
Titon Holdings Plc I 2023 Annual ReportTiton Holdings Plc I 2023 Annual Report Group and Company Statement of Cash Flows
for the year ended 30 September 2023
Notes to the Consolidated Financial Statements
at 30 September 2023
Group
Company
2023
£’000
Note
2022
£’000
2023
£’000
2022
£’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
Dividend received from Associate
Finance income
Finance costs
Share of associate’s post-tax loss / (profit)
Decrease / (increase) in inventories
Decrease / (increase) in receivables
(Decrease) / increase in payables and other current liabilities
Cash generated by / (used in) operations
Income taxes received
10
10
11
23
5
5
13
(839)
533
240
195
(25)
(72)
(5)
27
241
295
431
1,288
(1,082)
932
220
(953)
518
232
298
(19)
23
(9)
16
(173)
(67)
(1,529)
(696)
498
(1,794)
-
Net cash generated by / (used in) operating activities
1,152
(1,794)
Cash flows from investing activities
Purchase of plant & equipment
Purchase of intangible assets
Proceeds from sale of plant & equipment
Finance income
Dividends received from associate company
Net cash (used in) / generated by investing activities
Cash flows from financing activities
Dividends paid to equity shareholders of the parent
Payment of lease liability
Finance costs
Exercise of share options
Net cash used in financing activities
Net increase in cash
Effect of exchange rate changes
Cash at beginning of the year
Cash and Cash Equivalents at end of the year
10
11
(433)
(205)
58
5
5
8
18
5
23
290
(285)
(112)
(243)
(27)
5
(377)
490
22
1,726
2,238
(386)
(288)
44
9
-
(621)
(502)
(226)
(16)
44
(700)
(3,115)
47
4,794
1,726
The notes on pages 53 to 82 form part of these financial statements.
278
64
-
-
(11)
(72)
(291)
(1)
-
-
(33)
-
(45)
(27)
(105)
-
(105)
-
-
11
1
290
302
35
64
-
-
-
23
(1)
-
-
121
-
(952)
(32)
(863)
-
(863)
-
-
-
1
-
1
(112)
(502)
-
-
5
(107)
90
-
4
94
-
-
44
(458)
(1,320)
-
1,324
4
General information
The consolidated financial statements of the Group for the year ended 30 September 2023 incorporates Titon Holdings Plc
(“the Company”) and its subsidiaries (together referred to as “the Group”).
Titon Holdings Plc shares are publicly traded on the AIM market of the London Stock Exchange. The nature of the Group’s
operations and its principal activities are set out in the Strategic Report on page 8. The consolidated financial statements were
authorised for release on 24 January 2024.
1 - Summary of significant accounting policies
(a) Basis of preparation
Statement of compliance
The Group and Parent Company financial statements have been prepared in accordance with International Financial Reporting
Standards and Interpretations (collectively “IFRSs’”) as adopted in the United Kingdom (“UK-adopted IFRS”).
The principal accounting policies adopted in the preparation of the financial statements are set out below. The policies have
been consistently applied to all the years presented, unless otherwise stated.
The consolidated financial statements are presented in GBP, which is the functional currency of the Parent and all values are
rounded to the nearest thousand (£000), except as otherwise indicated.
The preparation of financial statements in compliance with adopted IFRS requires the use of certain critical accounting
estimates. It also requires Group management to exercise judgement in applying the Group’s accounting policies. The areas
where significant judgements and estimates have been made in preparing the financial statements and their effect are
disclosed in note 2.
There were no new or amended standards that were required to be adopted by the Group in these financial statements. The
Group does not expect any standards issued by the IASB, but not yet effective, to have a material impact on the group.
Going concern
The financial statements have been prepared on a going concern basis. In adopting the going concern basis the Directors have
considered potential worst-case scenarios that could have a material impact on the business and from its other principal risks
set out on pages 20 to 23. Under the worst-case scenario considered, which is severe and considered highly unlikely, the
Group remains liquid for a period of more than 12 months from the date of reporting and the Directors therefore believe, at the
time of approving the financial statements that the Group is well placed to manage its business risks successfully and remains
a going concern. The key facts and assumptions in reaching this determination are detailed on pages 26 to 27.
Use of judgement and estimates
In the application of the Group’s accounting policies, management is required to make judgements, estimates and assumptions
about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and
underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period
in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if
the revision affects both current and future periods. The key assumptions concerning the future and other key sources of
estimation uncertainty at the reporting date that have a significant risk of causing a material adjustment to the carrying
amounts of the assets and liabilities within the next financial year are described under the relevant notes.
(b) Basis of consolidation
Subsidiaries
The Group’s consolidated financial statements incorporate the financial statements of the Company (Titon Holdings Plc) and
the entities controlled by the Company (its subsidiaries) made up to 30 September 2023. Control exists when the Company
is exposed to, or has rights to, variable returns from its involvement with the subsidiary and has the ability to affect those
returns through its power over the subsidiary.
Intragroup balances, and any unrealised gains and losses or income and expenses arising from intragroup transactions, are
eliminated in preparing the financial statements.
Non-controlling interests
A non-controlling interest is the equity in a subsidiary not attributable, directly or indirectly, to a parent. Non-controlling
interests at the end of reporting period represent the non-controlling shareholders’ portion of the fair values of the identifiable
assets and liabilities of the subsidiary at the acquisition date and the non-controlling interests’ portion of movements in
equity since the date of the combination. Non-controlling interest is presented within equity, separately from the parent’s
shareholders’ equity.
Losses within a subsidiary are attributed to the non-controlling interest even if that results in deficit balance.
52
53
Titon Holdings Plc I 2023 Annual ReportTiton Holdings Plc I 2023 Annual Report
Notes to the Consolidated Financial Statements (continued)
at 30 September 2023
1 - Summary of significant accounting policies (continued)
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 acquisition method. In the Consolidated
Statement of Financial Position, the Group’s identifiable assets, liabilities and contingent liabilities are initially recognised at
their fair values at the acquisition date. The Group’s share of the results of acquired operations are included in the consolidated
income statement from the date on which control is obtained.
(c) Foreign currency
Transactions entered into by group entities in a currency other than the currency of the primary economic environment in
which they operate (their “functional currency”) are recorded at the rates ruling when the transactions occur. Foreign currency
monetary assets and liabilities are translated at the rates ruling at the reporting date. Exchange differences arising on the
retranslation of unsettled monetary assets and liabilities are recognised immediately in the consolidated profit or loss.
On consolidation, the results of overseas operations are translated into Sterling, which is the presentational currency of the
Parent and Group, at rates approximating those ruling when the transactions took place. All assets and liabilities of overseas
operations are translated at the rate ruling at the reporting date. Exchange differences arising on translating the opening net
assets at opening rate and the results of overseas operations at actual rate are recognised directly in other comprehensive
income.
Upon disposal of all overseas operations, exchange differences arising from the translation of the financial statements of
foreign operations are recycled and taken to the consolidated profit or loss as part of the profit or loss on disposal. The
Company has elected, in accordance with IFRS 1, that in respect of all foreign operations, any differences that have arisen
before 1 October 2004 have been set to zero. Any gain or loss on the subsequent disposal of those foreign operations would
exclude translation differences that arose before the date of transition to IFRS and include only subsequent translation
differences.
More than 89% (2022: 92%) of sales from the Group’s UK business are invoiced in Sterling.
(d) Property, plant and equipment
Items of property, plant and equipment are stated at cost less accumulated depreciation and impairment losses.
Cost includes the original purchase price of the asset and the costs attributable to bringing the asset to its working condition
for intended use. All other repairs and maintenance costs are recognised in the income statement as incurred.
Freehold land is not depreciated. Depreciation is provided on all other items of property, plant and equipment to write down
the cost to their residual values over the estimated useful lives. It is applied at the following rates:
Freehold buildings
- 2% per annum straight line
Improvements to leasehold property - 10% to 20% per annum straight line (or the lease term, is shorter
Plant and equipment
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
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
55
Titon Holdings Plc I 2023 Annual ReportTiton Holdings Plc I 2023 Annual Report Notes to the Consolidated Financial Statements (continued)
at 30 September 2023
1 - Summary of significant accounting policies (continued)
1 - Summary of significant accounting policies (continued)
(f) Inventories
Inventories are stated at the lower of cost and net realisable value, using the FIFO method. Cost is calculated as follows:
Raw materials and Bought In finished goods
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 reporting date.
(g) Cash and cash equivalents
Cash and cash equivalents comprise cash balances, deposits held at call with banks, other short term highly liquid investments
with original maturities of twelve months or less from inception. The Group has no long-term borrowings and any available
cash surpluses are placed on deposit.
(h) Impairment
The carrying amount of the Group’s assets, other than deferred tax assets, are reviewed at each balance sheet date to
determine whether there is any indication of impairment. If any such indication exists, the asset’s recoverable amount is
estimated. Impairment losses are recognised in profit or loss.
The recoverable amount of an asset is the greater of its fair value less costs to sell and its value in use. The value in use is
determined as the net present value of future cash flows expected to be derived from the asset, discounted using a pre-
tax discount rate, with the individual cash generating units cash flow forecast risks adjusted. The cash generating units are
determined as being the individual trading entities.
Reversals of impairment
Other than in respect of goodwill, an impairment loss is reversed if there has been a change in the estimates used to determine
the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed
the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been
recognised.
(i) Employee benefits
Share-based payment transactions
The Company provides share option schemes for Directors and for other members of staff.
In accordance with IFRS 2 – Share-based Payments, the fair value of the employee services received in exchange for the grant
of options is recognised as an expense to the income statement over the vesting period of the option and the corresponding
credit recognised to the Retained Earnings within equity. The Black-Scholes option pricing model has been used for calculating
the fair value of the Group’s share options. The Directors believe that this model is the most suitable for calculating the fair
value of the equity-based share options.
The fair value of the options is determined excluding the impact of any non-market vesting conditions. Non-market vesting
conditions are included in assumptions about the number of options that are expected to vest. At each balance sheet date the
Group revises its estimates of the number of option awards that are expected to vest. The impact of the revision of original
estimates, if any, is recognised in the income statement, with a corresponding adjustment to equity. No adjustment is made
for failure to achieve market vesting conditions providing all other vesting conditions are met.
Pension costs
The Group operates a defined contribution pension scheme. The assets of the scheme are held separately from those of the
Group in independently administered funds. Contributions to the pension scheme are charged to the income statement in the
year in which they become payable.
Accrued holiday pay
Provision is made at each balance sheet date for holidays accrued but not taken at the salary of the relevant employee at that
date.
(j) Provisions
A provision is recognised in the balance sheet when the Group has a present legal or constructive obligation as a result of a
past event, and it is probable that an outflow of economic benefits will be required to settle the obligation. They are discounted
at a pre-tax rate reflecting current market assessments of the time value of money and risks specific to the liability.
Provisions are not disclosed separately but are included in notes 15 and 17.
(k) Revenue
Revenue is derived principally from the sale of goods and is measured at the fair value of consideration, which is the price at
the date of the transaction, after deducting discounts, settlement discounts, rebates and is net of value added tax. The Group
has concluded that it is the principal in its revenue arrangements as it has control of those goods before transferring them to
the customer.
Sale of goods arises from sales of products to third parties and related parties. Revenue from the sale of goods is recognised
when the control of the goods is transferred to the buyer. This occurs when the goods are transferred to the customer in
accordance with the terms of the trade contract. Before a contract is entered into, customers are assessed using a credit
reference agency before credit is granted and where sufficient credit cannot be granted, payment is required in advance of
the goods being delivered and is held under other creditors until the goods are delivered and the revenue is then recognised.
Some goods sold by the group include warranties which require the group to either replace or mend a defective product
during the warranty period if the goods fail to comply with agreed upon specifications. In accordance with IFRS 15, such
warranties are not accounted for as separate performance obligations and hence no revenue is attached to them. Instead, a
provision is made for the costs of satisfying the warranties in accordance with IAS 37 Provisions, Contingent Liabilities and
Contingent Assets. Extended warranties are not offered to customers. The warranty provision is included in other creditors
and is calculated as a percentage of applicable sales over a 3 year period.
The nature of business practice at its South Korean subsidiary means that the Group recognises revenue there over time, this
being at first fix and second fix stages. As invoicing for both first fix and second fix components usually takes place at the first
fix stage, the revenue on the second fix products is deferred in the Financial Statements until the point that those second fix
products are accepted by the customer.
(l) Finance income
Finance income comprises interest receivable on funds invested.
(m) Corporation and deferred taxes
Tax on the profit or loss for the periods presented comprises current and deferred tax.
Current tax
Current tax is the expected corporation tax payable on the taxable income for the year, using rates and laws enacted or
substantively enacted at the balance sheet date, and any adjustment to tax payable in respect of previous years.
Deferred tax
Deferred tax is provided using the balance sheet liability method, using rates and laws enacted or substantively enacted at the
balance sheet date, providing for temporary differences between the carrying amounts of assets and liabilities for financial
and reporting purposes and the amounts used for taxation purposes.
Temporary differences are not provided on goodwill that is not deductible for tax purposes or on the initial recognition of
assets or liabilities that affect neither accounting nor taxable profit, to the extent that they will probably not reverse in the
foreseeable future. The amount of deferred tax provided is based on the expected manner of realisation or settlement of the
carrying amount of assets and liabilities, using tax rates enacted or substantively enacted at the balance sheet date.
A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against
which the asset can be utilised. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax
benefit will be realised.
Deferred tax assets and liabilities are offset when the Group has a legally enforceable right to offset current tax assets and
liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority on either:
●
●
the same taxable group company; or
different Group entities which intend either to settle current tax assets and liabilities on a net basis, or to realise the
assets and settle the liabilities simultaneously, in each future period in which significant amounts of deferred tax assets
or liabilities are expected to be settled or recovered.
56
57
Titon Holdings Plc I 2023 Annual ReportTiton Holdings Plc I 2023 Annual Report Notes to the Consolidated Financial Statements (continued)
at 30 September 2023
1 - Summary of significant accounting policies (continued)
(n) Leased assets
All leases are accounted for by recognising a right-of-use asset and a lease liability except for:
●
●
leases of low value assets; and
leases with a duration of twelve months or less.
Lease liabilities are measured at the present value of the contractual payments due to the lessor over the lease term, with
the discount rate determined by reference to the rate inherent in the lease unless (as is typically the case) this is not readily
determinable, in which case the Group’s incremental borrowing rate on commencement of the lease is used. Variable lease
payments are only included in the measurement of the lease liability if they depend on an index or rate. In such cases, the
initial measurement of the lease liability assumes the variable element will remain unchanged throughout the lease term.
Other variable lease payments are expensed in the period to which they relate. On initial recognition, the carrying value of the
lease liability also includes:
●
●
●
Amounts expected to be payable under any residual value guarantee;
The exercise price of any purchase option granted in favour of the Group if it is reasonably certain to assess that option;
Any penalties payable for terminating the lease, if the term of the lease has been estimated on the basis of termination
option being exercised.
Right-of-use assets are initially measured at the amount of the lease liability, reduced for any lease incentives received, and
increased for:
●
●
●
Lease payments made at or before commencement of the lease;
Initial direct costs incurred; and
The amount of any provision recognised where the Group is contractually required to dismantle, remove or restore the
leased asset (typically leasehold dilapidations – see Note 18).
Subsequent to initial measurement lease liabilities increase as a result of interest charged at a constant rate on the balance
outstanding and are reduced for lease payments made. Right-of-use assets are depreciated on a straight-line basis over the
remaining term of the lease or over the remaining estimated useful life of the asset if, rarely, this is judged to be shorter than
the lease term.
When the Group revises its estimate of the term of any lease (because, for example, it re-assesses the probability of a lessee
extension or termination option being exercised), it adjusts the carrying amount of the lease liability to reflect the payments
to make over the revised term, which are discounted at the same discount rate that applied on lease commencement. The
carrying value of lease liabilities is similarly revised when the variable element of future lease payments dependent on a rate
or index is revised. In both cases an equivalent adjustment is made to the carrying value of the right-of-use asset, with the
revised carrying amount being amortised over the remaining (revised) lease term.
(o) Dividends
Dividends are recognised when they become legally payable. In the case of interim dividends to equity shareholders, this is
when paid. In the case of final dividends, this is when approved by the shareholders at the Annual General Meeting.
(p) Financial assets
The Group’s financial assets include cash and cash equivalents and trade receivables. All financial assets are recognised when
the Group becomes party of the contractual provisions if the instrument.
Trade receivables are recognised and carried at amortised cost less expected credit loss. IFRS 9 requires the Group to
recognise expected credit losses (‘ECL’) whereby expected losses as well as incurred losses are provided for. The Group
applies the simplified approach, using a provision matrix, when determining ECL provisions for trade receivables. In making
the assessment of credit risk and estimating ECL provisions, the Group uses reasonable and supportable information about
past events, current conditions and forecasts of future events and economic conditions.
From time to time, the Group elects to renegotiate the terms of trade receivables due from customers with which it has
previously had a good trading history. Such renegotiations will lead to changes in the timing of payments rather than changes
to the amounts owed, and if the revised present value of cash flows is not significantly different from the carrying amount,
no impairment is recorded.
Cash and cash equivalents Cash and cash equivalents comprise cash balances, deposits held at call with banks, other short
term highly liquid investments with original maturities of twelve months or less from inception.
(q) Financial liabilities
The Group holds only one class of financial liabilities, namely trade payables. Trade payables and other short-term monetary
liabilities are initially recognised at fair value and subsequently carried at amortised cost.
(r) Treasury shares
Consideration paid or received for the purchase or sale of treasury shares is recognised directly in Equity - see page 53. The
cost of treasury shares held is presented as a separate item (“Treasury shares”). Any excess of the consideration received on
the sale of treasury shares over the weighted average cost of the shares sold is reflected in share premium.
(s) Exceptional items
Material items of income or expense that are deemed exceptional due to their size or incidence, such a restructuring costs, are
disclosed separately in the Consolidated Income Statement.
2 - Critical accounting estimates and judgements
The Group makes estimates and judgements regarding the future. Estimates and judgements are continually evaluated based
on historical experience and other factors, including expectations of future events that are believed to be reasonable under the
circumstances. In the future, actual experience may differ from these estimates and assumptions.
The judgements and estimates that have a significant risk of causing a material adjustment to the carrying amounts of assets
and liabilities within the next financial year are discussed below.
Estimates
Valuation of inventory
The Group reviews its inventory on a regular basis and, where appropriate, makes provision for slow moving and obsolete
stock based on estimates of future sales activity. The estimate of the future sales activity will be based on both historical
experience and expected outcomes based on knowledge of the markets in which the Group operates (see note 14 of the
Consolidated Financial Statements). The Group also calculates an amount representing wages and overheads for direct labour
and includes an estimate of this amount in the valuation of inventory.
Revenue recognition
The timing of revenue recognition is a significant area of risk to accurate financial reporting and the Group also ensures that
accurate estimates of credit note provisions and warranty provisions are made.
Depreciation of property, plant and equipment and right-of-use assets
Depreciation is provided so as to write down the assets to their residual values over their estimated useful lives as set out in
note 1 (d). The selection of these estimated lives requires the exercise of management judgement.
Useful lives of intangible assets
Intangible assets are amortised over their useful lives. Useful lives are based on the management’s estimates of the period
that the assets will generate revenue, which are periodically reviewed for continued appropriateness. Changes to estimates
can result in significant variations in the carrying value and amounts charged to the consolidated income statement in specific
periods (see notes 1 (e) and 11 of the Consolidated Financial Statements).
Expected credit losses and financial asset impairment
Expected credit losses are assessed under IFRS 9 using reasonable information about past events and current conditions and
forecasts of future events. Asset impairment considers the likely returns from financial assets owned by the Group and their
recoverability, based on market values and management’s judgement of any other relevant factors.
Judgements
Recognition of deferred tax asset
The extent to which deferred taxation assets can be recognised is based on an assessment of the probability that future taxable
income will be available against which the deductible temporary differences and taxation loss carry – forward amounts can be
utilised. The deferred tax asset of £264,000 (2022: £697,000) has been recognised on the basis that the Group is forecasting
sufficient levels of profits in future periods.
Impairment
The Group reviews all other non-financial assets for impairment, which requires management judgements and estimates.
These judgements and estimates are reviewed on an annual basis. The Directors conclude that there are no major sources of
estimation uncertainty in relation to these assets that have a material adjustment to the carrying values.
58
59
Titon Holdings Plc I 2023 Annual ReportTiton Holdings Plc I 2023 Annual Report Notes to the Consolidated Financial Statements (continued)
at 30 September 2023
3 - Revenue and segmental information
3 - Revenue and segmental information (continued)
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 total assets for the segments represent the consolidated total assets attributable to these reporting segments. Parent
company results and consolidation adjustments reconciling the segmental results and total assets to the consolidated
financial statements, are included within the United Kingdom segment figures stated in the remainder of this note 3.
Operating segment
For the year ended
30 September 2023
Segment revenue
Inter-segment revenue
Total Revenue
Segment profit/(loss)
Tax expense
Loss for the year
Depreciation and amortisation
Total assets
Total assets include:
Investments in associates
United
Kingdom
£’000
15,781
(400)
15,381
(247)
869
15,521
2,295
South
Korea
£’000
2,488
-
2,488
(645)
99
3,599
-
North
America
£’000
842
-
842
164
-
243
-
1
All other
countries
Consolidated
£’000
3,623
-
3,623
(111)
-
-
-
-
£’000
22,734
(400)
22,334
(839)
(86)
(925)
968
19,363
2,295
672
The measurement policies the Group uses for segment reporting under IFRS 8 are the same as those used in its financial
statements.
Additions to non-current assets (other than financial
instruments and deferred tax assets)
701
(30)
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
2023
£’000
396
(396)
270
270
2022
£’000
443
(443)
396
396
The deferred revenue noted above is the Group’s only contract liability and is shown within Other Payables.
The Group has no material contract assets.
The South Korea Segment loss includes the Group’s share of the losses from Browntech Sales Co. Ltd., (BTS), the Group’s
associate undertaking in South Korea, of £241,000.
Sales to BTS of £4.038m represented 18% of Group Revenue (2022: £4.71m – 21%). There are no other concentrations of
revenue of 10% or more during the year (see Note 24 - Related party transactions).
IFRS 8 requires entity wide disclosures to be made about the regions in which it earns its revenues and holds its non-current
assets which are shown below.
For the year ended
30 September 2023
Revenues
By entities’ country of domicile
By country from which derived
Non-current assets
United
Kingdom
£’000
19,004
15,381
Europe
USA and
Canada
£’000
£’000
-
3,623
842
842
South
Korea
£’000
2,488
2,488
By entities’ country of domicile
4,683
-
24
2,526
All other
regions
£’000
-
-
-
Total
£’000
22,334
22,334
7,233
60
61
Titon Holdings Plc I 2023 Annual ReportTiton Holdings Plc I 2023 Annual Report
Notes to the Consolidated Financial Statements (continued)
at 30 September 2023
3 - Revenue and segmental information (continued)
4 - Directors and employees
Operating segment
For the year ended
30 September 2022
Segment revenue
Inter-segment revenue
Total Revenue
Segment profit/(loss)
Tax credit
Loss for the year
United
Kingdom
South
Korea
North
America
All other
countries
Consolidated
£’000
16,497
(288)
16,209
(651)
£’000
3,037
-
3,037
(37)
£’000
538
-
538
160
-
178
-
-
£’000
2,303
-
2,303
(425)
-
-
-
-
£’000
22,375
(288)
22,087
(953)
410
(543)
962
21,690
2,910
674
Depreciation and amortisation
920
42
Total assets
Total assets include:
Investments in associates
Additions to non-current assets (other than financial
instruments and deferred tax assets)
17,021
4,491
2,910
671
-
3
The South Korea Segment loss includes the Group’s share of the losses from Browntech Sales Co. Ltd., (BTS), the Group’s
associate undertaking in South Korea, of £173,000.
Sales to BTS of £4.71m represented 21% of Group Revenue (2021: £3.58m – 15%). There are no other concentrations of
revenue of 10% or more during the year (see Note 24 - Related party transactions).
IFRS 8 requires entity wide disclosures to be made about the regions in which it earns its revenues and holds its non-current
assets which are shown below.
For the year ended
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
5,354
-
46
3,061
All other
regions
£’000
-
-
-
Total
£’000
22,087
22,087
8,461
Information about the Group’s products
Within geographical segments the Directors also monitor the revenue performance of the Group within its two identified
business streams. The Group’s operations are separated between background ventilators and window and door hardware
products and mechanical ventilation products. The following table provides an analysis of the Group’s external revenue,
irrespective of the geographical region of sale.
Trickle ventilation and window and door hardware products
Mechanical ventilation products
Revenue
2023
£’000
12,501
9,833
2022
£’000
13,586
8,501
22,334
22,087
Staff costs, including Directors, were as follows:
Wages and salaries
Employer’s social security costs and similar taxes
Defined contribution pension cost
Share based payment expense – equity settled
The average monthly number of employees
during the year was as follows:
Manufacturing
Sales, marketing and administration
Group
2023
£’000
6,534
718
512
(72)
2022
£’000
6,384
664
564
38
7,692
7,650
Company
2023
£’000
293
37
2
-
332
2022
£’000
363
56
10
-
429
Group
2023
Company
2022
2023
2022
Number
Number
Number
Number
142
60
202
137
72
209
-
4
4
-
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
2023
£’000
5
Group
2023
£’000
27
2022
£’000
9
2022
£’000
16
Company
2023
£’000
1
Company
2023
£’000
-
2022
£’000
1
2022
£’000
-
62
63
Titon Holdings Plc I 2023 Annual ReportTiton Holdings Plc I 2023 Annual Report 8 - Dividends
Final 2022 dividend of 0.50 pence (2021: 3.00 pence) per ordinary share proposed and paid during the
year relating to the previous year’s results
Interim dividend of 0.50 pence (2022: 1.50 pence) per ordinary share paid during the year
2023
£’000
56
56
112
2022
£’000
335
167
502
The Directors are proposing a final dividend of 0.5 pence (2022: 0.5 pence) per share. This will result in a final dividend totalling
£56,244 (2022: £56,094), subject to approval by the shareholders at the Annual General Meeting. This dividend has not been
accrued at the balance sheet date.
9 - Loss per ordinary share
The calculation of the basic and diluted earnings per share is based on the following data:
Numerator
Loss for the purposes of basic earnings per share being
loss after tax attributable to members of Titon Holdings Plc
Denominator
Weighted average number of ordinary shares for the purposes of basic loss per share
Effect of dilutive potential ordinary shares: share options
2023
£’000
2022
£’000
(673)
(436)
Number
Number
11,205,723
11,196,627
10,829
18,173
Weighted average number of ordinary shares for the purposes of diluted earnings per share
11,216,552
11,214,800
Loss per share (pence)
Basic
Diluted
The total number of options in issue is also disclosed in note 23.
(6.01p)
(6.01p)
(3.89p)
(3.89p)
Notes to the Consolidated Financial Statements (continued)
at 30 September 2023
6 - Loss before tax
This is arrived at after charging/(crediting):
Depreciation of property, plant & equipment
Depreciation of right-of-use assets
Amortisation of intangible assets
Research and development expenditure written off
Short term rentals - vehicles and plant & equipment
Foreign exchange loss / (gain)
Share-based payment (credit) / 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 credit / (expense)
Adjustment in respect of prior years
Deferred tax:
Origination and reversal of temporary differences Note 16
Adjustment in respect of prior year
Income tax (expense) / credit
The charge for the year can be reconciled to the profit
per the income statement as follows:
Loss before tax
Effect of:
Expected tax credit based on the standard rate of
Corporation tax in the UK of 25% (2022: 19%)
Additional deduction for R&D expenditure
Adjustment in respect of prior years
Expenses deductible for tax purposes
Difference in overseas tax rates
Impact of deferred tax assets not recognised
Other adjustments
Income tax (expense) /credit
2023
£’000
533
240
194
467
18
55
(72)
(25)
20
110
13
1
2023
£’000
121
220
341
(150)
(277)
(86)
2023
£’000
2022
£’000
518
232
298
629
53
(109)
38
(19)
20
110
13
-
2022
£’000
-
-
-
410
-
410
2022
£’000
(839)
(953)
185
42
(57)
(44)
(15)
(144)
(53)
(86)
(181)
189
33
7
-
384
(22)
410
The tax rate in the United Kingdom, being the economic environment in which the Company conducts its business was 19%
until 31 March 2023, at which point the rate increased to 25%. A hybrid rate of 22% therefore applies to the year ended 30
September 2023.
64
65
Titon Holdings Plc I 2023 Annual ReportTiton Holdings Plc I 2023 Annual Report
Notes to the Consolidated Financial Statements (continued)
at 30 September 2023
10 - Property, plant and equipment
10 - Property, plant and equipment (continued)
Group
Cost
At 1 October 2021
Additions
Disposals
At 1 October 2022
Additions
Disposals
Foreign exchange revaluation
At 30 September 2023
Depreciation
At 1 October 2021
Charge for the year
Disposals
Foreign exchange revaluation
At 1 October 2022
Charge for the year
Disposals
Foreign exchange revaluation
At 30 September 2023
Net book value at 30 September 2023
At 30 September 2022
At 1 October 2021
Freehold
land and
buildings
Improvements
to leasehold
property
Plant and
equipment
Motor
vehicles
£’000
3,455
-
-
3,455
-
-
-
3,455
1,618
64
-
-
1,682
64
-
-
1,746
1,709
1,773
1,837
£’000
191
-
-
191
-
-
(1)
190
130
(19)
-
(1)
110
25
-
(1)
134
56
81
61
£’000
8.512
339
(40)
8,811
392
(23)
(22)
9,158
6,980
430
(28)
-
7,382
428
(23)
(16)
7,771
1,387
1,429
1,532
£’000
288
47
(66)
269
41
(134)
-
176
242
43
(54)
-
231
16
(102)
-
145
31
38
46
Total
£’000
12,446
386
(106)
12,726
433
(157)
(23)
12,979
8,970
518
(82)
(1)
9,405
533
(125)
(17)
9,796
3,183
3,321
3,476
The Directors are not aware of any events or changes in circumstances during the year which would have a significant impact
on the carrying value of the Group’s property, plant and equipment at the balance sheet date.
At 30 September 2023, the Group had entered into contractual commitments for the acquisition of plant and equipment
amounting to £53,000 (2022: £83,000).
Group: right-of-use assets
Leasehold
property
Plant and
equipment
Motor
vehicles
Total
Cost
At 1 October 2021
Additions
Disposals
At 1 October 2022
Additions
Disposals
Foreign exchange revaluation
At 30 September 2023
Depreciation
At 1 October 2021
Charge for the year
Disposals
Foreign exchange revaluation
At 1 October 2022
Charge for the year
Disposals
Foreign exchange revaluation
At 30 September 2023
Net book value at 30 September 2023
At 30 September 2022
£’000
£’000
£’000
550
85
(85)
550
-
-
(3)
547
137
115
(85)
(1)
166
67
-
44
277
270
384
25
47
-
72
186
-
-
258
9
10
-
-
19
35
-
-
54
204
53
370
106
(40)
436
69
(64)
(5)
436
253
107
(40)
-
320
138
(64)
(49)
345
91
116
£’000
945
238
(125)
1,058
255
(64)
(8)
1,241
399
232
(125)
(1)
505
240
(64)
(5)
676
565
553
At 30 September 2023, the Group had entered into contractual commitments for the acquisition of motor vehicles under
finance leases amounting to £48,000 (2022: £119,000).
66
67
Titon Holdings Plc I 2023 Annual ReportTiton Holdings Plc I 2023 Annual Report Notes to the Consolidated Financial Statements (continued)
at 30 September 2023
10 - Property, plant and equipment (continued)
11 - Intangible assets
Company
The Company has no right-of-use assets (2022: £nil)
Company: property and motor vehicles
Cost
At 1 October 2021
Additions
At 1 October 2022
Disposals
At 30 September 2023
Depreciation
At 1 October 2021
Charge for the year
At 1 October 2022
Charge for the year
Disposals
At 30 September 2023
Net book value at 30 September 2023
At 30 September 2022
At 1 October 2021
Freehold
land and
buildings
£’000
3,455
-
3,455
-
3,455
1,619
63
1,682
64
-
1,746
1,709
1,773
1,836
Motor
vehicles
£’000
27
-
27
(27)
-
27
-
27
-
(27)
-
-
-
-
Total
£’000
3,482
-
3,482
-
3,455
1,646
63
1,709
64
(27)
1,746
1,709
1,773
1,836
Group
Cost
At 1 October 2021
Additions
At 1 October 2022
Additions
At 30 September 2023
Amortisation
At 1 October 2021
Charge for the year
At 1 October 2022
Charge for the year
At 30 September 2023
Net book value at 30 September 2023
At 30 September 2022
At 1 October 2021
Computer
software
Development
costs
(internally
generated)
Goodwill
Assets under
development
Patents
Total
£’000
805
595
1,400
14
1,414
698
148
846
45
891
523
554
107
£’000
1,234
130
1,364
191
1,555
937
149
1,086
148
1,234
321
278
297
£’000
78
-
78
-
78
-
-
-
-
-
78
78
78
£’000
439
(439)
-
-
-
-
-
-
-
-
-
-
439
£’000
256
2
258
-
258
252
1
253
1
254
4
5
4
£’000
2,812
288
3,100
205
3,305
1,887
298
2,185
194
2,379
926
915
925
All assets have an average useful life of 3.1 years (2022: 3.6 years) except for Goodwill which has an indefinite useful life.
The Directors are not aware of any events or changes in circumstances during the year which would have a significant impact
on the carrying value of the Group’s intangible assets at the balance sheet date.
Company
The Company has no intangible assets (2022: £nil).
68
69
Titon Holdings Plc I 2023 Annual ReportTiton Holdings Plc I 2023 Annual Report
Notes to the Consolidated Financial Statements (continued)
at 30 September 2023
12 - Investments in subsidiaries
13 - Investments in associates (continued)
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
2022 and 2023
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
2023
£’000
554
2022
£’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:
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 BTS is held by South Korean investors who, through their voting shares, have operational
control of the company.
Company Investment
At 30 September
2023
£’000
225
2022
£’000
225
The aggregated amounts relating to BTS are as follows:
As at 30 September
Current assets
Non-current assets
Total Assets
Current liabilities
Non-current liabilities
Total Liabilities
Net Assets
Group 49% share of Net Assets
Group investment in Goodwill
Group share of investment
For the year ended 30 September
Revenue
(Loss) / profit after tax
2023
£’000
3,404
1,242
4,646
222
325
547
4,099
2,098
197
2,295
2023
£’000
4,038
(241)
2022
£’000
5,760
470
6,230
546
148
694
5,536
2,712
197
2,909
2022
£’000
4,714
173
BTS has been included based on audited financial statements drawn up for the year to 30 September 2023. Transactions
between it and the Group are set out in note 24.
The Group’s investment in BTS at 30 September 2023 includes £197,000 (2022: £197,000) of goodwill.
14 - Inventories
Group
2023
£’000
3,087
40
3,012
6,139
2022
£’000
2,733
176
3,662
6,571
The carrying value of inventory represents cost less appropriate write down. During the year there was a net debit of £48,197
(2022: net debit of £151,706) to the Consolidated Income Statement in relation to the inventory provisions. The movements in
the inventory write-down are included within cost of sales in the Consolidated Income Statement. The amount of inventories
recognised as an expense during the year is £16,413,000 (2022: £16,270,000).
Company
The Company had no inventories at 30 September 2023 (2022: £nil).
Name of associate
Principal activity
Country of
incorporation
Address
Proportion of voting
rights held at
30 September
2022 and 2023
Raw materials and consumables
Work in progress
Finished goods and goods for resale
70
71
Titon Holdings Plc I 2023 Annual ReportTiton Holdings Plc I 2023 Annual Report Notes to the Consolidated Financial Statements (continued)
at 30 September 2023
15 - Trade and other receivables
15 - Trade and other receivables (continued)
Group
Company
Group
Movements on the provision for impairment of trade and related party
receivables are as follows:
At the beginning of the year
Impairment allowance
Receivables written off during the year as uncollectible
Unused amounts reversed
At the end of the year
2023
£’000
209
102
(71)
(66)
174
2022
£’000
86
209
(29)
(57)
209
16 - Deferred tax
Group
Deferred tax is calculated in full on temporary differences under the liability method using a tax rate of 25% (2022: 25.0%). The
movement on the deferred tax account is as shown below:
Total
deferred
tax at 1
October
2022
Effect
of rate
change on
opening
balances
Foreign
exchange
movement
Credited /
(expensed)
to Income
Statement
Total
deferred
tax at 30
September
2023
Asset
2023
UK
Asset
2023
Non-UK
£’000
£’000
£’000
-
2
(14)
27
553
129
697
-
-
-
-
-
(4)
(4)
-
-
-
-
(1)
(1)
£’000
(403)
(2)
77
(27)
27
(100)
(428)
£’000
(403)
£’000
(403)
-
63
-
580
24
264
-
63
-
580
-
240
£’000
-
-
-
-
-
24
24
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
At 30 September 2023, a deferred tax asset of £175k was not recognised in relation to the losses carried forward by Titon
Korea. At 30 September 2022, a deferred tax asset of £384k was not recognised, in respect of further losses of £1,537k in
the UK, at the substantively enacted rate of 25%. The UK deferred tax asset has been recognised in full at 30 September 2023.
Trade receivables
Less: Impairment Allowance
Trade receivables - net
Related parties receivables
Less: provision for impairment
Related parties receivables (See Note 24)
Other receivables
Current tax debtor
Prepayments and accrued income
Total trade and other receivables
2023
£’000
3,247
(174)
3,073
42
-
42
183
121
335
2022
£’000
4,566
(209)
4,357
180
-
180
214
-
169
2023
£’000
1
-
1
4,811
-
4,811
-
-
3
2022
£’000
1
-
1
4,768
-
4,768
-
-
-
3,754
4,920
4,815
4,769
Other than the amounts due from related parties there were no significant concentrations of credit risk at either 30 September
2023 or 30 September 2022.
The average credit period taken on sale of goods by the Group’s trade debtors is 51 days (2022: 58 days).
Trade receivables included in the Statement of Financial Position are stated net of expected credit loss (ECL) provisions which
have been calculated using a provision matrix grouping trade receivables on the basis of their shared credit risk characteristics.
An analysis of the provision held against trade debtors is set out below:
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
2023
£’000
2023
£’000
Group
2022
£’000
2022
£’000
Gross trade
and related
party
receivables
Impairment
Allowance
(ECL)
Gross trade
and related
party
receivables
Impairment
Allowance
(ECL)
1,978
965
157
146
-
(24)
(25)
(37)
(88)
-
3,058
1,047
259
173
-
(29)
(56)
(53)
(71)
-
3,246
(174)
4,537
(209)
Of the £174,000 ECL provision, £nil (2022: £nil) relates to amounts due from the Group’s associate. See note 13.
The main factors considered in determining the level of the loss provisions set are external customer credit ratings information,
prevailing market and economic conditions and the historic levels of losses experienced by the Group.
There are no indications as at 30 September 2023 that the debtors will not meet their payment obligations in respect of
the amount of trade and related party receivables recognised in the balance sheet that are overdue and unprovided. The
proportion of trade debtors at 30 September 2023 that are overdue for payment is 42% (2022: 33%).
The carrying amount of a financial asset is reduced by the impairment loss directly for all financial assets with the exception
of trade receivables, where the carrying amount is reduced through the use of a provision account. When a trade receivable is
considered uncollectible, based on its age and likely recoverability, it is written off against the provision account. Subsequent
recoveries of amounts previously written off are credited against the provision account. Changes in the carrying amount of the
provision account are recognised in the income statement.
72
73
Titon Holdings Plc I 2023 Annual ReportTiton Holdings Plc I 2023 Annual Report Notes to the Consolidated Financial Statements (continued)
at 30 September 2023
16 - Deferred tax (continued)
17 - Trade and other payables - current
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
Asset
2022
UK
Asset
2022
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
Company
Deferred tax is calculated in full on temporary differences under the liability method using a tax rate of 25% (2022: 25%). The
movement on the deferred tax account is as shown below:
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
Total deferred
tax at 1
October 2022
Effect of
rate change
on opening
balances
Credited /
(expensed)
to Income
Statement
£’000
£’000
£’000
-
4
4
-
-
-
-
-
-
3
3
Total
deferred
tax at 30
September
2023
£’000
-
4
3
7
Total deferred
tax at 1
October 2021
Effect of
rate change
on opening
balances
Credited /
(expensed)
to Income
Statement
Total
deferred
tax at 30
September
2022
£’000
(303)
22
7
(274)
£’000
£’000
£’000
-
-
-
-
303
(18)
(7)
278
-
4
-
4
74
Trade payables
Other payables
Other tax and social security taxes
Accruals and deferred income
Group
2023
£’000
2,045
803
378
742
3,968
2022
£’000
3,121
722
286
922
5,051
Company
2023
£’000
29
-
-
78
107
2022
£’000
(4)
-
-
139
135
Group trade payables and accruals principally comprise amounts outstanding for trade purchases and ongoing costs. Year-
end Group trade creditors represent 46 days (2022: 52 days) average purchases. The contractual maturities of these liabilities
are from 30 days up to approximately 60 days.
The Directors consider that the carrying amount of trade payables is approximate to their fair value.
18 - Leases
Nature of leasing activities (in the capacity as lessee)
The group leases a number of properties in the jurisdictions from which it operates. In some jurisdictions it is customary for
lease contracts to provide for payments to increase each year by inflation and in others to be reset periodically to market
rental rates. In some jurisdictions the periodic rent for property leases is fixed over the lease term.
The group also leases certain items of plant and equipment. In some contracts for services with distributors, those contracts
contain a lease of vehicles. Leases of plant, equipment and vehicles comprise only fixed payments over the lease terms.
The group sometimes negotiates break clauses in its property leases. On a case-by-case basis, the group will consider
whether the absence of a break clause would expose the group to excessive risk. Typically factors considered in deciding to
negotiate a break clause include:
the length of the lease term;
●
●
● 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 2023 the carrying amounts of lease liabilities are not reduced by the amount of payments that would be
avoided from exercising break clauses as there are no break clauses available. Lease liabilities are initially measured at the
present value of future lease payments, discounted using the Group’s incremental borrowing rate.
Right-of-Use Assets
At 1 October 2022
Additions
Amortisation
Foreign exchange revaluation
At 30 September 2023
Lease Liabilities
At 1 October 2022
Additions
Interest expense
Lease payments
Foreign exchange revaluation
At 30 September 2023
Freehold land
and buildings
Plant and
equipment
Motor
vehicles
£’000
384
-
(67)
(47)
270
£’000
£’000
116
69
(138)
44
91
53
186
(35)
-
204
£’000
610
270
27
(270)
(5)
632
Total
£’000
553
255
(240)
(3)
565
75
Titon Holdings Plc I 2023 Annual ReportTiton Holdings Plc I 2023 Annual Report
Between 1
and 2 years
Between 2
and 5 years
Notes to the Consolidated Financial Statements (continued)
at 30 September 2023
Up to
1 year
£’000
232
206
18 - Leases (continued)
Lease liabilities
At 30 September 2022
At 30 September 2023
Lease expense
Short term lease expense
Low value lease expense
Aggregate undiscounted commitments for short term leases
19 - Share capital
Authorised
13,600,000 ordinary shares of 10p each
£’000
145
175
2023
£’000
1,360
Each share has equal voting and dividend rights.
The Company’s issued and fully paid ordinary shares of 10p during the year is:
At the beginning of the year
Share options exercised during the year
2023
Number
11,218,750
10,000
Over
5 years
£’000
-
55
Total
£’000
610
632
2022
Number
11,193,750
25,000
2022
£’000
1,119
3
£’000
233
196
2023
£’000
18
-
-
18
2022
£’000
1,360
2023
£’000
1,122
1
At the end of the year
11,228,750
1,123
11,218,750
1,122
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
2023
£’000
1,091
5
1,096
2022
Number
50,000
(50,000)
-
2022
£’000
1,077
14
1,091
2022
£’000
27
(27)
-
2023
Number
2023
£’000
-
-
-
-
-
-
Treasury shares held by the Group were acquired in July 2014 and were disposed of during 2022 to satisfy an exercise of share
options.
19 - Share capital (continued)
Share options
Options have been granted over the following number of ordinary shares which were outstanding:
Date granted
Exercise price
15.01.14
30.01.18
15.07.21
58.0p
156.5p
138.5p
At 30 September 2023
At 30 September 2022
Number of
shares
45,000
72,000
90,000
207,000
437,000
Exercisable between
15.01.17
30.01.21
and
and
15.01.24
30.01.28
15.07.24
And
15.07.31
20,000 share options were exercised between 30 September 2023 and 24 January 2024.
20 - Cash and cash equivalents
Financial assets
The Group has floating rate financial assets which comprise treasury deposits, cash to finance its operations together with
the retained profits generated by operating companies (refer to the ‘Financial Assets’ note 1(p) on page 58 for further details).
The Group has no long-term borrowings and any available cash surpluses are placed on deposit. The Group uses cash on
deposit to manage short term liquidity risks which may arise.
The Group’s floating rate financial assets (see below) at 30 September were:
Currency
Sterling
US Dollar
Euro
South Korean Won
Group
2023
£’000
1,905
223
78
32
2022
£’000
1,374
82
196
74
2,238
1,726
Company
2023
£’000
94
-
-
-
94
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
2023
£’000
2,238
2022
£’000
1,726
Company
2023
£’000
94
The Group had no floating term deposits at 30 September 2023 (2022: £1m).
2022
£’000
4
-
-
-
4
2022
£’000
4
Financial liabilities
The Group had no floating rate financial liabilities at 30 September 2023 (2022: £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.
76
77
Titon Holdings Plc I 2023 Annual ReportTiton Holdings Plc I 2023 Annual Report Notes to the Consolidated Financial Statements (continued)
at 30 September 2023
21 - Financial instruments – risk management
21 - Financial instruments – risk management (continued)
The Group is exposed through its operations to credit risk, foreign exchange risk and liquidity risk.
In common with other businesses, the Group is exposed to risks that arise from its use of financial instruments. This note,
read in conjunction with the ‘Capital Management’ section of the Directors’ Report on page 25, and the Report on Risk
Management on pages 20 to 23 describe the Group’s objectives, policies and processes for managing those risks. Further
quantitative information in respect of these risks is presented throughout these financial statements.
There have been no substantive changes in the Group’s exposure to financial instrument risks, its objectives, policies and
processes for managing those risks from previous periods unless otherwise stated in this note.
General objectives, policies and processes
The Board has overall responsibility for the determination of the Group’s risk management objectives and policies and, whilst
retaining ultimate responsibility for them, it has delegated the authority for designing and operating processes that ensure
the effective implementation of the objectives and policies to the Group’s finance function. The Audit Committee reviews and
reports to the Board on the effectiveness of policies and processes put in place.
The overall objective of the Board is to set policies that seek to reduce risk as far as possible without unduly affecting the
Group’s competitiveness and flexibility. Further details regarding these policies are set out on pages 41 to 43.
Principal financial instruments
The principal financial instruments used by the Group, from which financial instrument risks arise are trade receivables, cash
at bank, bank overdrafts, trade and other payables and loans to related parties (see Notes 15, 17 and 20).
Credit risk
Credit risk is the risk of financial loss to the Group if a customer, associate company or counterparty to a financial instrument
fails to meet its contractual obligations. The Group is mainly exposed to credit risk from credit sales. It is Group policy,
implemented locally, to assess the credit risk of new customers before entering contracts along with local business practices.
The Group is not reliant on any key customers.
The Group’s finance function has established a credit policy under which each new customer is analysed individually for
creditworthiness before the Group’s standard payment and delivery terms and conditions are offered. The Group’s review
includes external ratings, when available, and trade references. Purchase limits are established for each customer, which
represents the maximum open amount without requiring senior management’s approval. These limits are reviewed on an
on-going basis. Customers that fail to meet the Group’s benchmark creditworthiness may transact with the Group on a
prepayment basis.
Credit risk also arises from cash and cash equivalents and deposits with banks. The Group has cash and cash equivalents with
banks with a minimum long term “A” rating.
Foreign exchange risk also arises when individual Group entities enter into transactions denominated in a currency other than
their functional currency.
The Group’s policy is, where possible, to allow Group entities to settle liabilities denominated in their functional currency
(primarily Sterling, US Dollar or South Korean Won) with the cash generated from their own operations in that currency. Where
Group entities have liabilities denominated in a currency other than their functional currency (and have insufficient reserves of
that currency to settle them) cash already denominated in that currency will, where possible, be transferred from elsewhere
within the Group.
The Group has two overseas subsidiaries in the USA and South Korea. Their revenues and expenses, other than those incurred
with the UK business, are primarily denominated in their functional currency. The Board does not believe that there are any
significant risks arising from the movements in exchange rates with these companies due to the insignificance to the Group
of Titon Inc.’s net assets and the long-term nature of the Group’s investment in Titon Korea.
The UK businesses make purchases from approximately twenty overseas suppliers who invoice in the local currency of that
supplier. This, in addition to the Euro and US Dollar cash balances held in the UK and the 10% (2022: 7%) of sales from the UK
businesses not invoiced in Sterling, gives rise to foreign currency exposure which is detailed in the table below.
As of 30 September the Group’s UK net exposure to foreign exchange risk was as follows:
Net foreign currency financial assets / (liabilities)
Euro
US Dollar
Total net exposure
2023
£’000
(176)
469
293
2022
£’000
(587)
686
99
The effect of a 10% weakening of the Euro and the US Dollar against Sterling at the reporting date of 30 September 2023 on
these denominated trade and other receivables, trade and other payables and cash balances carried at that date would, had all
other variables held constant, have resulted in a decrease in pre-tax profit for the year and decrease of net assets of £27,000
(2022: decrease in liability of £9,000). A 10% strengthening in the exchange rate would, on the same basis, have increased
pre-tax profit and increased net assets by £29,000 (2022: increase of £10,000).
Quantitative disclosures of the credit risk exposure in relation to Trade and other receivables are provided in note 15.
22 - Pension
Liquidity risk
Liquidity risk arises from the Group’s management of working capital in that the Group may encounter difficulty in meeting its
financial obligations as they fall due. The Group’s policy is to ensure that it will always have sufficient cash to allow it to meet
its liabilities when they become due (see Note 17). To achieve this aim, it seeks to maintain cash balances to meet expected
requirements for a period of 90 days or longer. The Board receives cash flow projections as well as information regarding cash
balances. At the reporting date, these projections indicated that the Group expected to have sufficient liquid resources to meet
its obligations under all reasonably expected circumstances.
The liquidity risk of each Group entity is managed locally. Each operation has a facility with the Group, the amount of the
facility being based on budgets. The budgets are set locally and agreed by the Board in advance, enabling the Group’s cash
requirements to be anticipated. Where facilities of Group entities need to be increased, approval must be sought from the
Board.
Foreign exchange risk
Foreign exchange risk arises because the Group has operations located in various parts of the world whose functional currency
is not the same as the functional currency in which the Group companies are operating. Although its global market penetration
reduces the Group’s operational risk in that it has diversified into several markets, the Group’s net assets arising from such
overseas operations are exposed to currency risk resulting in gains or losses on retranslation into Sterling. Only in exceptional
circumstances would the Group consider hedging its net investments in overseas operations as generally it does not consider
that the reduction in foreign currency exposure warrants the cash flow risk created from such hedging techniques.
The Group operates a defined contribution pension scheme. The assets of the scheme are held separately from those of the
Group in independently administered funds. The pension cost charge represents contributions payable by the Group to these
funds during the year (see note 4). The unpaid contributions outstanding at the year end, included in accruals (note 17) are
£37,000 (2022: £37,000).
23 - Share-based payments
Equity settled share option schemes
The Group provides share option schemes for Directors and for other members of staff.
There are presently three equity settled share option schemes; one HMRC approved and one unapproved in which employees
may be invited to participate, which were both introduced in March 2010. The third scheme was introduced in July 2021
and an additional tranche was introduced in July 2022 and is HMRC registered. The exercise of options granted under these
schemes is dependent upon the growth in the earnings per share of the Group, over any three consecutive financial years
following the date of grant, exceeding the growth in the retail price index over the same period by at least 9 per cent.
The vesting period of all share option schemes is three years. If the options remain unexercised after a period of ten years
from the date of grant, or on an employee leaving the Group, the options expire.
In the year to 30 September 2023 there were no share options granted (2022: 150,000).
78
79
Titon Holdings Plc I 2023 Annual ReportTiton Holdings Plc I 2023 Annual Report Notes to the Consolidated Financial Statements (continued)
at 30 September 2023
23 - Share-based payments (continued)
24 - Related party transactions
Share options lapsed
(10,000)
(60,000)
(150,000)
(220,000)
Browntech Sales Co. Ltd
Details of the share options granted and exercised during the year and the assumptions used in the Black-Scholes model for
each share-based payment are as follows:
Date of share option grant
15/01/14
30/01/21
15/07/21
01/07/22
Number
of share
options
Exercise price (pence)
58.0
156.5
138.5
95.0
Number of share options granted
initially
Number of share options
outstanding at 01/10/21
320,000
205,000
260,000
150,000
150,000
205,000
260,000
-
615,000
Share options lapsed
(10,000)
(73,000)
(170,000)
150,000
(103,000)
Share options exercised
(75,000)
-
-
-
(75,000)
Number of share options
outstanding at 30/09/22
65,000
132,000
90,000
150,000
437,000
Share options exercised
Number of share options
outstanding at 30/09/23
The inputs to the Black-Scholes
pricing model are:
Expected volatility %
Expected option life (years)
Risk free rate %
Expected dividend yield %
-
-
(10,000)
-
45,000
72,000
90,000
111
6
2.50
5
116
6
2.18
5
88
6
1.13
3
-
-
97
6
0.46
3
(10,000)
207,000
97
6
0.46
3
During the year no additional share options, included in the table above, met the conditions of exercise (2022: nil).
At the end of the financial year 45,000 share options met the conditions of exercise and have a weighted average exercise
price of 58p (2022: 64,000 at 58p). The 207,000 share options outstanding at 30 September 2023 had a weighted average
exercise price of £1.273 (2022: 437,000 at £1.134) and a weighted average remaining contractual life of 5.46 years (2022:
7.13 years).
The share price at 30 September 2023 was 80.0p (2022: 81.0p). The average market price during the year was 76.4p (2022:
95.0p).
The Group uses a Black-Scholes pricing model to determine the annual fair value charge for its share-based payments.
Expected volatility is based on historical volatility over the last six years’ data of the Company. The calculated fair values of the
share option awards are adjusted to reflect actual and expected vesting levels.
In accordance with IFRS 2, the fair value of equity-settled share-based payments to employees is determined at the date of
grant and is expensed on a straight-line basis over the vesting period on the Group’s estimate of shares that will eventually
vest. A credit of £72,000 was recognised in respect of share options in the year (2022: charge £23,000) of which £11,000
(2022: £7,000) was the charge made in respect of key management personnel.
Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and
are not disclosed in this note.
Related party transactions are made on terms equivalent to those that prevail in arm’s length transactions only where such
terms can be substantiated.
During the year the Company recharged management service fees and rent to other wholly owned Group members totalling
£590,000 (2022: £777,000). See Note 15 for the related party balances at 30 September 2023.
Titon Korea Co. Ltd, the Company’s 51% owned subsidiary, paid a dividend during the year to its shareholders amounting to
£nil (2022: £nil). Of this amount, £nil (2022: £nil) before withholding tax, was paid to the Company with the other £nil (2022:
£nil) being paid to non-controlling interests.
Transactions for the year between the Group companies and the associate company, which is a related party, were as follows:
Sales of goods
2023
£’000
2,488
2022
£’000
3,037
Amount owed (to)/ by
related party
2023
£’000
42
2022
£’000
180
Trading debts between subsidiaries and BTS are created only when the ultimate customer has accepted the successful
inclusion of our products into buildings.
Browntech Sales Co. Ltd, the Company’s 49% owned associate, paid a dividend during the year to the Company amounting to
£291,012 (2022: £nil).
Key management who hold the authority and responsibility for planning, directing and controlling activities of the Group are
comprised solely of the Directors. Aside from compensation arrangements including share options, there were no transactions,
agreements or other arrangements, direct or indirect, during the year in which the Directors had any interest, The Directors’
remuneration is disclosed in the Remuneration Report on page 31 of this document.
Remuneration paid to key management personnel during the year was as follows:
Short term benefits
Post-employment benefits
Share based payments
2023
£’000
604
34
11
649
2022
£’000
835
75
7
917
The Non-executive Directors received fees for their services to the Titon Holdings Plc Board as disclosed in the Directors’
Remuneration Report.
25 - Events after the reporting date
There have been no events after the reporting date that materially affect the position of the Group.
80
81
Titon Holdings Plc I 2023 Annual ReportTiton Holdings Plc I 2023 Annual Report
Notes to the Consolidated Financial Statements (continued)
at 30 September 2023
26 - Exceptional items
One off cost of living bonus to all employees
Restructuring costs
Administrative costs - exceptional
2023
£’000
-
39
39
2022
£’000
89
260
349
Five Year Summary
Summarised consolidated results
Revenue
Gross profit
2023
£’000
2022
£’000
2021
£’000
2020
£’000
2019
£’000
22,334
22,087
23,412
20,652
27,157
5,921
5,817
Operating (loss) / profit
Share of profit / (loss) from associate
(Loss) / profit before tax
Income tax (expense) / credit
(Loss) / profit after tax
Dividends
(576)
(240)
(839)
(86)
(925)
112
(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
1,970
(186)
1,784
526
Basic (loss) / earnings per share
(6.01p)
(3.89p)
9.24p
0.52p
12.84p
Assets Employed
Property, plant & equipment
3,183
Net cash and cash equivalents
Net current assets
2,238
7,531
3,321
1,726
7,934
3,476
4,794
9,313
3,469
5,572
3,799
4,587
9,138
10,112
Financed by
Shareholders’ funds: all equity
14,703
15,707
16,414
15,943
16,262
The five year summary does not form part of the audited financial statements and is not an IFRS statement.
82
83
Titon Holdings Plc I 2023 Annual ReportTiton Holdings Plc I 2023 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 are
resident in the United Kingdom or, if you reside elsewhere, another appropriately authorised financial adviser. If you
recently have sold or otherwise transferred all of your shares in Titon Holdings Plc, please forward this document and the
accompanying documents as soon as possible to the purchaser or transferee or to the person through whom the sale or
transfer was effected, for transmission to the purchaser or transferee who now holds the shares.
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 26 March 2024 at 10.00 a.m. for the following purposes:
●
To consider and, if thought fit, to pass the resolutions set out in this notice (the “Resolutions”), of which Resolutions 1 to
11 will be proposed as Ordinary Resolutions and Resolution 12 will be proposed as a Special Resolution.
Explanatory notes in respect of the Resolutions are set out on pages 27 to 28 of the Directors’ Report which accompanies
this Notice.
Please note you will not receive a form of proxy for the 2024 Annual General Meeting 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 the Company’s Registrars, Link Group, via email at shareholderenquiries@
linkgroup.co.uk or on 0371 664 0300. Alternatively, you can vote via CREST or Proxymity. For full details on proxy voting
please see the explanatory notes below, which accompany this Notice of Annual General Meeting.
Resolutions:
1.
2.
3.
4.
5.
6.
7.
8.
9.
To receive and adopt the reports of the Directors and the Auditors and the audited accounts of the Company for the
financial year ended 30 September 2023.
To declare a final dividend for the financial year ended 30 September 2023 of 0.5p per ordinary share to be paid on 5
April 2024 to shareholders whose names appear on the Company’s register of members at close of business on 23
February 2024.
To re-elect Mr James Brooke who retires from the Board as a Director of the Company.
To re-elect Mr Tyson Anderson, 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-appoint MHA as Auditors of the Company, to hold office form the conclusion of this Annual General Meeting until
the conclusion of the next Annual General Meeting at which accounts are laid before the Company.
That the Directors’ Remuneration Report set out on pages 30 to 33 of the Annual Report and Financial Statements for
the financial year ended 30 September 2023 be approved.
10. That 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 (“Relevant Securities”) and to grant rights to
subscribe for, or to convert any security into, shares in the Company (“Rights”), up to a maximum aggregate nominal
amount of £270,000 (representing approximately 24% of the aggregate nominal value of the ordinary shares in issue
in the capital of the Company on 24 January 2024) provided that this authority shall expire (unless previously revoked,
varied or renewed by the Company) on 26 June 2025 or, if sooner, at the end of the 2025 Annual General Meeting of the
Company, save that the Company may, before such expiry, make an offer or agreement which would or might require
Relevant Securities to be allotted and/or Rights to be granted after this authority expires and the Directors may allot
Relevant Securities and/or grant Rights in pursuance of such offer or agreement as if this authority had not expired. This
authority revokes and replaces all unexercised authorities previously granted to the Directors but without prejudice to
any allotment of Relevant Securities and/or grant of Rights already made or offered or agreed to be made pursuant to
such authorities.
11. That subject to the passing of Resolution 10 above, 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 10 as if section 561(1) of the Companies Act 2006
did not apply to such allotment, provided that this power shall expire on 26 June 2025 or, if sooner, the end of the 2025
Annual General Meeting of the Company, save that 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 shall be limited to the
allotment of equity securities:
11.1 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
11.2 otherwise than pursuant to paragraph 11.1 up to an aggregate nominal amount of £160,000 (representing approximately
14.2% of the nominal value of the ordinary shares in issue on 24 January 2024);
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
10” were omitted.
12. 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:
12.1 the maximum number of ordinary shares hereby authorised to be purchased is 1,124,875 ordinary shares of 10p each
in the capital of the Company (representing approximately 10% of the issued ordinary share capital of the Company on
24 January 2024);
12.2 the maximum price (excluding expenses) which may be paid for each ordinary share shall be the higher of (i) an amount
equal to 5% above the average of the middle market quotations for an ordinary share in the Company (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) an amount equal to 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);
12.3 the minimum price (excluding expenses) which may be paid for each ordinary share shall be 10p; and
12.4 this authority (unless previously revoked, varied or renewed) shall expire on 26 June 2025 or, if sooner, the end of the
2025 Annual General Meeting of the Company provided that the Company may, before such expiry, make a contract to
purchase its own ordinary shares which would or might be executed wholly or partly after such expiry, and the Company
may make a purchase of its own ordinary shares in pursuance of such contract as if the authority hereby conferred had
not expired.
By order of the Board
C V Isom
Secretary
Registered Office:
24 January 2024 Colchester Business Park
894 The Crescent
Colchester
Essex
CO4 9YQ
84
85
Titon Holdings Plc I 2023 Annual ReportTiton Holdings Plc I 2023 Annual Report
Notice of Annual General Meeting (continued)
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 the Company’s Registrars, Link Group, via email at
shareholderenquiries@linkgroup.co.uk or 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.
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 Friday 22
March 2024. 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 notes 6 - 7 below;
if you are an institutional investor, you may also be able to appoint a proxy electronically via the Proxymity platform
in accordance with note 10; and
in hard copy form (if requested from Link Group) 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, Proxymity 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 and Proxymity
6.
CREST members who wish to appoint a proxy or proxies through the CREST electronic proxy appointment service may
do so by using the procedures described in the CREST Manual. CREST personal members or other CREST sponsored
members and those CREST members who have appointed a voting service provider(s), should refer to their CREST
sponsor or voting service provider(s), who will be able to take the appropriate action on their behalf.
7.
8.
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 & International 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 Annual General 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 UK
& International Ltd does not make available special procedures in CREST for any particular messages. Normal system
timings and limitations will therefore apply in relation to the input of CREST Proxy Instructions. It is the responsibility of
the CREST member concerned to take (or, if the CREST member is a CREST personal member or sponsored member or
has appointed a voting service provider(s) to procure that his CREST sponsor or voting service provider(s) take(s)) such
action as shall be necessary to ensure that a message is transmitted by means of the CREST system by any particular
time. In this connection, CREST members and, where applicable, their CREST sponsors or voting service providers are
referred, in particular, to those sections of the CREST Manual concerning practical limitations of the CREST system and
timings.
9.
The Company may treat as invalid a CREST Proxy Instruction in the circumstances set out in Regulation 35(5)(a) of the
Uncertificated Securities Regulations 2001 (as amended).
10.
If you are an institutional investor you may also be able to appoint a proxy electronically via the Proxymity platform,
a process which has been agreed by the Company and approved by the Registrar. For further information regarding
Proxymity, please go to www.proxymity.io. Your proxy must be lodged by 10.00 a.m. on 22 March 2024 in order to
be considered valid or, if the Annual General Meeting is adjourned, by the time which is 48 hours before the time of
the adjourned meeting. Before you can appoint a proxy via this process you will need to have agreed to Proxymity’s
associated terms and conditions. It is important that you read these carefully as you will be bound by them and they will
govern the electronic appointment of your proxy. An electronic proxy appointment via the Proxymity platform may be
revoked completely by sending an authenticated message via the platform instructing the removal of your proxy vote.
Entitlement to Attend
11. Entitlement to attend and vote at the Annual General 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 24 March
2024, 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
12. 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
13. 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 24 January 2024, which is the latest practicable date before the publication of
this document, is 11,248,750. 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
14. 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
15. 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/.
16. Any member attending the Annual General 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
17. 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
18. Members who have general enquiries about the Annual General Meeting should use the following means of
communication. No other means of communication will be accepted. You may:
●
●
email at shareholderenquiries@linkgroup.co.uk;
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. Lines 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.
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.
86
87
Titon Holdings Plc I 2023 Annual ReportTiton Holdings Plc I 2023 Annual Report Directors and Advisers
DIRECTORS
Executive
C V Isom (Chief Financial Officer)
Non-executive
J Brooke (Group Non-Executive Chair, appointed 2 January 2024)
T N Anderson (Deputy Chair)
N C Howlett
G P Hooper
J Ward
K A Ritchie
SECRETARY AND REGISTERED OFFICE
C V Isom
894 The Crescent
Colchester Business Park
Colchester
Essex
CO4 9YQ
COMPANY REGISTRATION NUMBER
1604952 (Registered in England & Wales)
WEBSITE
WWW.TITON.COM/UK/INVESTORS/
AUDITOR
MHA
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
88
89
Titon Holdings Plc I 2023 Annual ReportTiton Holdings Plc I 2023 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/