Annual Report • Sep 30, 2010
Annual Report
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for the year ended 30 September 2010
| 02 | Chairman's Statement |
|---|---|
| 04 | Directors' Report |
| 14 | Directors' Remuneration Report |
| 19 | Corporate Governance Report |
| 24 | Independent Auditors' Report |
| 26 | Consolidated Income Statement |
| 26 | Consolidated Statement of Comprehensive Income |
| 27 | Consolidated Statement of Financial Position |
| 28 | Consolidated Statement of Changes in Equity |
| 29 | Consolidated Statement of Cash Flows |
| 30 | Notes to the Consolidated Financial Statements |
| 55 | Parent Company Balance Sheet |
| 56 | Notes to the Parent Company Financial Statements |
| 62 | Five Year Summary |
| 63 | Notice of Annual General Meeting |
67 Directors and Advisors
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Following two years of losses in the aftermath of the global recession, I am pleased to report a return to profitability during this year. Net Profit before Taxation for the year to 30 September 2010 was £606,000 (2009: loss £210,000), achieved on increased Revenues of £15.6 million (2009: £14.1 million). Earnings per share for the year were 3.85p (2009; loss 1.91p).
Net Cash Balances at the year end were relatively unchanged at £3.11 million (2009: £3.10 million) with cash generation over the year restrained partly by the increase in working capital at our South Korean manufacturing operation. Capital Expenditure levels have also increased to £0.50 million this year (2009: £0.26 million) as a result of investment in new IT systems and in new products to be launched in 2010/11.
Reflecting the improved results but acknowledging the still difficult times ahead, the Directors are proposing a final dividend of 1.25p per share (2009: 1.0p). This, when added to the interim dividend paid on 24 June 2010 gives a total for the year of 2.25p (2009: 2.0p). If approved by shareholders at the forthcoming Annual General Meeting, the dividend will be payable on 22 February 2011 to shareholders on the register on 21 January 2011. The ex dividend date is 19 January 2011.
Although trading conditions in many of our markets remain subdued, we are pleased to report a satisfactory outcome to the financial year. Building on the £102,000 Profit before Tax reported at the half year, we have seen steady growth in certain key areas of the business over the second half resulting in the increased profit levels now being reported. The overall increase in Revenue over the year was 11.1%, with a 9.2% improvement in the first half and 12.8% in the second half. Sales of own manufactured products have been boosted by growth at our South Korean subsidiary and now account for 64% of total Group Revenues (2009: 57%). This has contributed towards the improvement in Gross Margin.
Performance within the UK market, from where we derived over 80% of our Revenues (2009: 84%), has been particularly pleasing despite the general disarray in the UK housing market and the low levels of consumer confidence. We have achieved solid growth with our sales of both passive and powered ventilation products, which has helped us to improve efficiencies within our UK manufacturing operation. As expected, the UK residential ventilation market is changing rapidly as many developers realise the benefits of installing energy efficient heat recovery ventilation systems (MVHR). The growth in this market is being driven by the need to meet the upper levels of the Code for Sustainable Homes and will continue to increase as the Zero Carbon Homes initiative drives up building standards to even higher levels. Titon is now recognised as a major player in this fast developing market and was the first to design and launch the compact and efficient MVHR units widely used today. Our Research and Development team has been further enhanced throughout the year in order that we can maintain this market leading position and new additions to our product range will be launched in 2011.
Sales of some of our window and door hardware ranges have fared less well during the year, particularly those products that are sold into the UK commercial aluminium window market. Whilst this market held up strongly at the beginning of the recession it has fallen markedly over the past year as building of schools, hospitals and other commercial buildings stagnates. The expectation is that this market will continue to decline during the current financial year and it may be several years before any real recovery is evident.
Outside the UK, our joint venture in South Korea is now showing the growth that was anticipated. Revenues from our Titon Korea factory increased by 132% over the year to £1.51 million (2009: £0.65 million) and further expansion is planned for the year ahead. As anticipated, this part of our business has operated profitably over the second half of the year. The full year combined result of Titon Korea Ltd and our interest in Browntech Sales Co. Ltd is now at breakeven level (2009: loss of £0.16 million). We will be upgrading and enhancing our product offering during the coming year in order to maintain our market leading position.
Employee numbers have increased from 171 at the beginning of the year to 190 at the 30 September 2010. The rise is largely as a result of a greater number of production operatives at both our UK and our Korean factories in response to increased throughput.
The past few years have been most difficult for all our employees as we have dealt with the severe impact of recession whilst implementing the changes necessary to shape the business for the future. Without the support and determination of our employees we would not be in the position of returning these results. We wish to sincerely thank them all for their contribution.
Mr Ron Brighton, The Managing Director of our UK Manufacturing Division has announced his retirement and will be leaving office at the end of April 2011, following 32 years of service. Ron has been a Titon Holdings Plc Main Board Director since 1997 and we wish to thank him for his loyal contribution to the success of the Company and wish him and his wife a long, healthy and happy retirement.
We are pleased to announce that Mr Kelvin Tabron will be appointed to the Board of the UK operating subsidiary, Titon Hardware Ltd. with effect from 1 January 2011. In the new position as Production Director, Kelvin's role will be to oversee the UK Manufacturing Division following Ron Brighton's refirement.
It is very satisfying to report the steady improvement that has been achieved over the past 18 months, which would appear to signify that difficult times are now behind us. The reality, however, is that the future is still very uncertain. UK Government spending cutbacks are yet to impact fully on the economy and the likely outcome will be a further decline in social housing spending and public building construction. Additionally, the lack of consumer confidence and the difficulty in obtaining mortgage funding will continue to suppress private sector housing activity levels.
Against this backdrop, we will endeavour to maintain our momentum in the UK through greater penetration into the fast growing energy efficient ventilation market. We anticipate being able to sustain the improved results through this and through expansion of our overseas activities.
On behalf of the Board.
J N Anderson Chairman
9 December 2010
The Directors present their report and the Group financial statements for the year ended 30 September 2010.
The principal activities of the Group are the design, manufacture and marketing of ventilation products and window fittings. In the UK the Group markets a comprehensive range of passive and powered ventilation products to house builders, electrical contractors and window manufacturers. In addition to this, it is a leading supplier of window handles, hinges and locking mechanisms to its window-manufacturing customers. Overseas activities are increasingly important for the Group and largely involve the marketing of passive ventilation products worldwide. The Group also has a manufacturing base in South Korea where it has formed a joint venture with its local distributor.
The consolidated income statement is set out on page 26. A summary of the results along with other selected Key Performance Indicators is as follows:
| 2010 £'000 |
2009 £'000 |
|
|---|---|---|
| Revenue | 15,609 | 14,053 |
| Profit / (loss) before tax | 606 | (210) |
| Tax (expense) / credit | (199) | 8 |
| Profit / (loss) for the year after tax | 407 | (202) |
| Revenue per employee | 86 | 80 |
| Profit per employee | 2.2 | (1.1) |
| Cash and cash equivalents | 3,110 | 3.073 |
Comments on the results for the year, including a comprehensive business review are given in the Chairman's Statement.
The Directors recommend the payment of a final ordinary dividend of 1.25p (2009: 1.0p) per ordinary share. This, when taken with the interim dividend of 1.0p (2009: 1.0p) per ordinary share paid on 24 June 2010, gives a total dividend of 2.25p (2009: 2.0p) per ordinary share for the year ended 30 September 2010.
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 2010 | 30 September 2009 | ||
|---|---|---|---|
| Ordinary shares of | Ordinary shares of | ||
| 10p each | 10p each | ||
| J N Anderson | Chairman | 2,237,802 | 2,237,802 |
| D A Ruffell | Chief Executive | 71,000 | 71,000 |
| T N Anderson | Sales & Marketing Director | *192,500 | 192,500 |
| R Brighton | Managing Director (Manufacturing) | 20,000 | 20,000 |
| P W E Fitt | Non-executive Director and Vice Chairman | ||
| N C Howlett | Development & Sustainability Director | 13,750 | 13,750 |
| C S Jarvis | Export Director | 45,000 | 45,000 |
| C J Martin | Supply Chain Director | 63,850 | 63,850 |
| P E O'Sullivan | Non-executive Director |
Details of Directors' share options are given in the Directors' Remuneration Report on page 17.
* On 19 October 2010 Mr T N Anderson inherited 1,250 ordinary shares of 10 pence each in the Company following the death of a relative. Following this transaction, Mr Anderson's beneficial interest in the Company's share capital is 193,750 Ordinary Shares, representing 1.84 percent of the Company's issued Ordinary Share capital.
There were no other changes in Directors' beneficial shareholdings between 30 September 2010 and 16 December 2010.
As at 16 December 2010, the Company had been notified of the following voting interests in its ordinary share capital, disclosable under the Financial Services Authority's Disclosure and Transparency Rules of the following holdings, other than Directors' holdings, of 3 per cent or more in the ordinary share capital of the Company:
| Name | Shares | % |
|---|---|---|
| Discretionary Unit Fund Managers Ltd | 2,065,000 | 19.6 |
| Mr K & Mrs C Ritchie | 967.280 | 9.2 |
| Mrs A Clipsham | 893,579 | 8.5 |
The ordinary share capital at 30 September 2010 consisted of 10,555,650 Titon Holdings Plc shares of 10p each. There were no changes during the year to the Company's ordinary share capital.
Details of the authorised and issued share capital of the Company as at 30 September 2010 are set out in note 18 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 or by writing to the Company Secretary.
There are no restrictions on the voting rights of shares and there are no restrictions in 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 the Model Code whereby Directors of the Company require approval to deal in the Company's shares.
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.
The Directors consider that research and development continues to play an important role in the Group's success as the need to provide increasingly energy efficient ventilation products will be a feature of our market over the coming years.
Investment in research and development amounted to £346,000 during the year (2009: £368,000). Expenditure on internally developed products, capitalised in 2010, amounted to an additional £56,000 (2009: £44,000) - see note 11 of the financial statements.
The Directors consider all the significant risks and uncertainties 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 possible.
The policies that are adopted to identify and manage significant risks are set out in full on page 23 and the major risks are considered below:
Whilst the Group has a diverse range of customers there are certain key customers who account for a significant part of total revenue. Some risk exists that the current performance of the Group may not be maintained if such relationships were not to continue. Nominated Directors therefore continuously monitor key customer accounts. The Group considers it not to be in the interests of shareholders to disclose the names of key customers.
35% of Group revenue (2009: 42%) comprises products purchased from other UK and European manufacturing entities. The ongoing supply of product lines by Maco Door and Window Hardware (UK) Ltd, A/S Peder Nielsen Beslagfabrik, Securistyle Limited, Sobinco S.A. and certain Ventilation Systems component suppliers are important to Group profits and the relationships with key suppliers are handled by a nominated Director.
The market for the supply of Ventilation Systems and Window Hardware remains highly competitive. The Group seeks to manage the risk of losing customers to competition through the development of new products, through the specification of product with end users and through maintaining strong relationships and local representation with key customers.
Worldwide markets for ventilation products are largely determined by regulation. The Group recognises that the bringing forward of amendment to regulation is likely to accelerate and we will, therefore, continue to place a high emphasis on consideration of regulatory developments.
The Group manufactures 64% of the products that it sells. Appropriate levels of inventory, along with duplication of key processes, tooling and component supplies have been established in order to minimise the risks involved by possible disruption to production facilities. In addition the Group has established procedures to minimise the risks of fire and other major disruption.
The Group operates comprehensive BS EN ISO 9001: 2008 procedures in the UK to ensure that product complaints are quickly and effectively dealt with. Monthly meetings are held that include members of the senior management team where both product quality and product complaint issues are discussed and appropriate action recommended. Effective Quality Control systems form part of the BS EN ISO 9001: 2008 procedures and are embedded within the culture of the Group.
The main risks arising from the Group's financial instruments are credit risk, liquidity risk and foreign currency exchange risk. More information regarding the Group's approach to these risks is set out in note 20 to the consolidated financial statements.
The Group's credit risk is primarily attributable to its trade receivables. Exposure to credit risk is generally spread over a large number of customers and the Group adopts stringent procedures to ensure that credit risks are well managed.
The Group's banking facilities are designed to ensure that there are sufficient funds available for current operations and the Group's further development plans.
The Group has certain investments in foreign operations, whose net assets are exposed to foreign currency translational risk. The Group considers the overall translational risk to be small given the nature and overall size of its foreign investments.
As with any manufacturing organisation, health and safety matters represent an increasing area of risk. The Group employs a full time Health and Safety Officer and has an effective structure to support a robust Health and Safety policy.
The Group maintains a comprehensive range of insurance policies covering its employees, assets and other risk areas, which are reviewed on an on-going basis.
The Directors do not consider that there is any significant difference between the market value of freehold land and buildings and their net book value, as shown in the financial statements.
The Group recognises the importance of its employees in achieving its objectives and has contractual arrangements in place to encourage and reward loyalty and to safeguard the interests of the Group.
Employees are provided with information about the Group's activities via the Employee Consultative Committee, other staff meetings and staff notice boards. The Group aims to foster an environment in which employees and management can enjoy a free flow of information and ideas.
The Group is an equal opportunities employer and its policies for recruitment, training, career development and promotion are based on the aptitude and abilities of the individual.
The Group's approach and responsibilities for social and community issues are not covered in this report.
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 his or her employment, the Group will consider providing that employee with such means, including appropriate training, as will enable the employee to continue to carry out his or her job, where it reasonably can, or will attempt to provide an alternative suitable position.
The majority of suppliers to the Group are of a long standing nature with whom mutually acceptable payment terms have been established over the relationship period. Generally payments will be made between 30 and 60 days from the end of the month of delivery. In certain circumstances payment terms will be agreed with suppliers as part of the overall terms of a transaction, and will be adhered to by the Group. The Company does not make any trade purchases.
In respect of the Group, year end trade creditors represent 60 days (2009: 62 days) average purchases.
During the year the Group made various charitable donations amounting to £575 (2009: £50).
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 and accumulated retained earnings. Neither the translation reserve nor the share schemes reserve are considered as capital. There have been no changes in what the Group considers to be capital since 2008/09.
In order to maintain or adjust its working capital at an acceptable level and 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.
The Group recognises the importance of a high commitment to environmental matters and has maintained its ISO 14001: 2004 Environmental Management System throughout the year.
The Group complies with current applicable legislation of the countries in which it operates; and will conduct operations such that:
. emissions to air, releases to water and land filling of wastes do not cause unacceptable environmental impacts and do not offend the community;
As part of its processes the Group's environmental performance is reviewed monthly by senior management and a programme of continuous improvement for the benefit of customers, employees and the environment has been adopted.
The Directors are responsible for keeping adequate accounting records that show and explain the Company's transactions, disclose with reasonable accuracy at any time the financial position of the Company, and enable them to ensure that the financial statements comply with the requirements of the Companies Act 2006, and as regards the Group financial statements, Article 4 of the IAS Regulation.
The Directors are required by the Companies Act 2006 to prepare financial statements for each financial year which give a true and fair view of the state of affairs of the Company and the Group as at the end of the financial year and of the profit or loss of the Group for the financial year. The Directors are required to prepare financial statements for the Group in accordance with Article 4 of the IAS Regulation and have chosen to prepare financial statements for the Company in accordance with UK Generally Accepted Accounting Practice.
In preparing the Group and Company financial statements, the Directors are required to:
They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The Directors are responsible for preparing a Directors' Report and a Directors' Remuneration Report which comply with the requirements of the Companies Act 2006.
The Directors are responsible for ensuring the annual report and financial statements are made available on a website. Financial statements are published on the Group's website 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 Group's website is the responsibility of the Directors. The Directors' responsibility also extends to the ongoing integrity of the financial statements contained therein. The Group's compliance with the Combined Code on Corporate Governance is set out on page 19.
The Directors confirm to the best of their knowledge:
The Directors at the time of approving the Directors' Report are listed on page 5. Having made enquiries of fellow Directors and of the Officers of the Company, each of the Directors confirms that:
The Company has purchased liability insurance cover, which remains 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.
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 16 December 2010. The Board intends to seek shareholder approval to renew the authority at this year's 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. The Board has no current intention to purchase shares as treasury shares.
There have been no events since the balance sheet date that materially affect the position of the Group.
The Group's business activities, together with the factors likely to effect the Group's performance are set out on pages 4, 6 and 7.
The Groups financial position and cash flows are described on pages 2 and 3. In addition, note 20 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 Group has considerable financial resources together with a diverse range of customers, and suppliers, across different geographic areas and markets. As a consequence the Directors believe that the Group is well placed to manage business risks successfully in the current economic climate.
The Directors have reviewed the budgets, projected cash flows and other relevant information for a period of 15 months from the balance sheet date. On the basis of this review the Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. For this reason they believe it is appropriate to continue to adopt the going concern basis in preparing the financial statements.
The Annual General Meeting of Titon Holdings Plc ("the Company") will be held at the Titon Manufacturing Division premises at Falconer Road, Haverhill, Suffolk, CB9 7XU on 16 February 2011 commencing at 10.00 a.m. A Notice convening the Annual General Meeting of the Company for 2011 may be found on page 63 of this document.
At the Annual General Meeting shareholders will be asked, as items of special business to give power to the Directors to allot shares, to give power to the Directors to disapply the pre-emption requirements of section 561 of the Companies Act 2006, to give power to the Directors to make market purchases of ordinary shares in the capital of the Company, subject to certain conditions, to approve the Directors' Remuneration Report. The Notice also sets out details of the ordinary business to be conducted at the Annual General Meeting. Set out below is an explanation of the effect and purpose of the resolutions proposed.
The Directors recommend that the Company adopt the reports of the Directors and the Auditors and the audited accounts of the Company for year ended 30 September 2010.
The Directors' Report was approved by the Board on 16 December 2010 and signed by order of the Board.
The Directors recommend a final dividend of 1.25 pence per ordinary share. Subject to approval by shareholders, the final dividend will be paid on 22 February 2011 to shareholders of the register on 21 January 2011.
Resolution 3 - to re-elect Mr Tyson Neil Anderson as a Director
Resolution 4 - to re-elect Mr Christopher Stuart Jarvis as a Director
Resolution 5 - to re-elect Mr Peter William Edgar Fitt as a Director
The Company's Articles of Association state that one third of the directors shall retire from office at each annual general meeting.
This resolution proposes that BDO LLP should be re-appointed as the Company's Auditors and authorises the Directors to determine their remuneration.
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 Extraordinary Meeting held on 23 March 2010, will expire at the end of this year's Annual General Meeting. Resolution 7 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 £250,000, representing approximately 23.7% of the nominal value of the ordinary shares in issue on 16 December 2010 (excluding treasury shares). The Company does not currently hold any shares in treasury.
The authority conferred by the resolution will expire 15 May 2012 or, if sooner, at the end of next year's 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.
The Companies Act 2006 requires listed companies to put a resolution to shareholders at each annual general meeting to approve the Directors' Remuneration Report, which forms part of the annual report. The vote is advisory in nature.
Resolution 8 in the Notice of Annual General Meeting, which will be proposed as an ordinary resolution, asks shareholders to approve the Remuneration Report, which can be found on pages 14 to 18 of this document.
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 17 February 2010 will expire at the end of this year's Annual General Meeting. Accordingly, resolution 9 in the Notice of Annual General Meeting will be proposed, as a special resolution, to give the Directors power to allot shares without the application of these statutory preemption 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 £50,000 (representing approximately 4.7% of the nominal value of the ordinary shares in issue on 16 December 2010).
The power conferred by this Resolution will expire on 15 May 2012 or, if sooner, at the end of next year's Annual General Meeting.
Resolution 10 in the Notice of Annual General Meeting, which will be proposed as a special resolution, will authorise the Company to make market purchases of up to 1,055,565 ordinary shares. This represents approximately 10% of the Company's ordinary shares in issue on 16 December 2010. 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 15 May 2012 or, if sooner, at the end of next year's Annual General Meeting.
Your Directors are committed to managing the Company's capital effectively. Although the Directors have no plans to make such purchases, buying back the Company's ordinary shares is one of the options they keep under review. Purchases would only be made after considering the effect on earnings per share, and the benefits for shareholders generally.
The Company may hold in treasury any of its own shares that it purchases in accordance with the Companies Act 2006 and the authority conferred by this resolution. This would give the Company the ability to re-issue treasury shares quickly and cost effectively and would provide the Company with greater flexibility in the management of its capital base.
As at 16 December 2010, there were options outstanding over 192,200 ordinary shares which, if exercised at that date, would have represented 1.8 % of the Company's issued ordinary share capital (excluding treasury shares). If the authority given by resolution 9 were to be fully used, these would then represent 2.0 % of the Company's issued ordinary share capital.
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 16 December 2010 and signed by order of the Board:
D A Ruffell Secretary
The Remuneration Committee presents its report to shareholders on Directors' remuneration. Shareholders will be asked to approve the Directors' Remuneration Report and a resolution to that effect will be proposed at the Annual General Meeting on 16 February 2011. The report has been prepared in accordance with the requirements of the Companies Act 2006, the Listing Rules of the UK Listing Authority and the Combined Code appended to the Listing Rules.
The Company's policy on remuneration is determined by its Remuneration Committee. The Committee presently consists of Mr P W E Fitt - a Non-executive Director, Mr J N Anderson - Group Chairman and Mr D A Ruffell - Group Chief Executive. Such persons also comprised the Remuneration Committee during the year and Mr P W E Fitt chairs the Committee.
The Company's policy on remuneration is to offer competitive remuneration packages, which are designed to reward, retain and to motivate the Directors, having regard to the size and complexity of the Group. Other than share option schemes, there are no specific performance related elements included within remuneration, and the Committee will review this policy during the coming year.
The individual components of the remuneration package offered are:
The basic salary of each Executive Director is determined by the Committee, giving due consideration to individual responsibility and performance and to salaries paid to Executive Directors of similar companies in comparable business sectors. Basic salaries are reviewed annually on 1 February.
Benefits paid to Executive Directors comprise taxable non-cash emoluments and include the provision of company cars and private health insurance.
Executive Directors are members of the Company's defined contribution pension scheme in which the Company's contribution is a fixed percentage at 10% of basic salary. Benefits are not pensionable.
In addition, the Executive Directors participate in the Company's Group Life Insurance Scheme which provides a lump sum payment of four times basic salary in the event of death in service.
The Company provides share option schemes for Directors and for other members of staff. The Company grants options at the discretion of the Remuneration Committee.
Options are currently held under two share option schemes; one Inland Revenue approved and the other unapproved in which employees have been invited to participate. Both of these schemes were introduced in February 1998 and the ability to issue further options under these schemes has now expired. Two new share option schemes were approved by Shareholders during the year, from which options have not yet been granted. The exercise of options granted under all of these schemes is dependent upon the growth in the earnings per share of the Company, 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 performance conditions are aimed to align Directors' performance to shareholder value and were selected by the Remuneration Committee on the advice of the Company's solicitors (the performance conditions are detailed in note 25 to the Financial Statements). Actual earnings per share performance will be determined by the Remuneration Committee.
All Executive Directors have service contracts, entered into on 1 August 2010, which are renewed annually and which provide for a 6 month notice period to be given either by the Company or by the Director. All Executive Directors' current contracts expire on 31 July 2011.
Both of the Non-executive Directors have service contracts, that do not contain notice periods and which expire on 31 January 2011. The remuneration for the Company's Non-executive Directors is set by the Board, and consists of fees for their services in connection with their role as Director and, where relevant, for additional services such as chairing Board Committees. They are not eligible for pension scheme membership and do not participate in any of the Company's share option schemes. Professor P E O'Sullivan has a one year contract, entered into on 1 February 2010, to provide consultancy services to a subsidiary company for the sum of £18,175.
The Company's policy on the duration of, and notice periods and termination payments under, Directors' contracts is designed to attract and retain persons of the calibre required by the Company, with due regard being given to the interests of shareholders.
There are no pre-determined special provisions for Executive or Non-executive Directors with regard to compensation in the event of loss of office. The Remuneration Committee considers the circumstances of individual cases of early termination and determines compensation payments accordingly.
The Directors may not directly or indirectly hold any directorship or engage or be interested in any other business other than the Company or any other Group company during the term of their contracts without the previous written consent of the Board.
The following graph shows the Company's 5-year performance, measured by total shareholder return, compared with the equivalent performance of the FTSE All-Share Index.
This graph shows the percentage change in value of £1 invested in the Company on 30 September 2005 (assuming dividends reinvested) compared with the percentage change in value of £1 (assuming dividends reinvested) in the FTSE All-Share Index. The Directors consider the FTSE All-Share Index to be an appropriate choice as the Company is included within it.
The following disclosures on Directors' remuneration and share options have been audited.
The remuneration paid to the Directors during the year was as follows:
| Salary and fees |
Benefits | Total emoluments |
Pension contributions |
||||
|---|---|---|---|---|---|---|---|
| £'000 | £ 000 | 2010 £'000 |
2009 £ 000 |
2010 £'000 |
2009 £'000 |
||
| Executive: | |||||||
| J N Anderson | 70 | 27 | 97 | 96 | 5 | ||
| T N Anderson | 67 | 12 | 79 | 79 | 7 | 6 | |
| R Brighton | 69 | 10 | 79 | 79 | 7 | 7 | |
| N C Howlett | 67 | 5 | 72 | 72 | 6 | 6 | |
| C S Jarvis | 61 | 8 | 69 | 69 | 6 | 6 | |
| C J Martin | 61 | 8 | 69 | 69 | 6 | 6 | |
| D A Ruffell | 88 | 13 | 101 | 101 | 9 | 9 | |
| Non-executive: | |||||||
| $PWE$ Fitt $*$ | 10 | 10 | 10 | ||||
| P E O'Sullivan ** | 21 | 21 | 21 | ||||
| K A Ritchie - resigned 1 July 2009 | $\overline{2}$ | ||||||
| 514 | 83 | 597 | 598 | 41 | 45 |
* Inclusive of £6,000 relating to consultancy fees for 2010 (2009: £4,000)
** Inclusive of £18,175 relating to consultancy fees for 2010 (2009: £18,175)
The remuneration package of each Executive Director includes non-cash benefits comprising the provision of a company car and private health insurance.
The aggregate gains made by Directors on the exercise of share options during 2010 were Enil (2009: Enil).
Details of the interests of Directors who served during the year in options over ordinary shares are as follows:-
| Exercise price per share |
At 1 October 2009 |
At 30 September 2010 |
||
|---|---|---|---|---|
| Number | Number | |||
| T N Anderson | (a) | 103.5p | 10,000 | 10,000 |
| (c) | 91.0p | 3,150 | 3,150 | |
| 13,150 | 13,150 | |||
| R Brighton | (a) | 103.5p | 10,000 | 10,000 |
| 10,000 | 10,000 | |||
| N C Howlett | (a) | 103.5p | 10,000 | 10,000 |
| (b) | 99.0p | 10,000 | 10,000 | |
| 20,000 | 20,000 | |||
| C S Jarvis | (a) | 103.5p | 10,000 | 10,000 |
| (c) | 91.0p | 10,000 | 10,000 | |
| 20,000 | 20,000 | |||
| C J Martin | (a) | 103.5p | 10,000 | 10,000 |
| 10,000 | 10,000 | |||
| D A Ruffell | (a) | 103.5p | 25,000 | 25,000 |
| (c) | 91.0p | 14,000 | 14,000 | |
| 39,000 | 39,000 |
P W E Fitt and P E O'Sullivan had no interests in options over shares during the year.
There have been no changes to the number of share options held by Directors between 30 September 2010 and 16 December 2010.
The options are exercisable between the following dates:
| (a) | 18 January 2005 | and | 18 January 2012 |
|---|---|---|---|
| (b) | 18 May 2008 | and | 18 May 2015 |
| (c) | 18 May 2009 | and | 18 May 2016 |
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 2010 the market price of the Company's shares was 50.5p, and the range during the year was 34.0p to 55.0p.
The Directors' Remuneration Report was approved by the Remuneration Committee on 16 December 2010 and signed on its behalf by:
P W E Fitt Remuneration Committee Chairman
There is a commitment to high standards of corporate governance throughout the Group. The Board confirms that the Company has complied throughout the accounting period with the provisions set out in Section 1 of the June 2008 Combined Code on Corporate Governance except in the following areas:
The Board is accountable to the Company's shareholders for good corporate governance and the statements set out on pages 19 to 23 describe how the principles identified in the Combined Code are applied by the Company.
19
As at 30 September 2010 the Board consisted of the Chairman, the Chief Executive, five other Executive Directors and two Non-executive Directors.
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.
Board meetings take place quarterly with a further meeting to approve the Annual Report and Financial Statements.
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.
The individual attendance by Executive Directors and Non-executive Directors at the Board and principal Board Committee Meetings held during the financial year is shown in the table below.
| Main | Remuneration | Audit | |
|---|---|---|---|
| Board | Committee | Committee | |
| Total meetings held | 5 | 2 | |
| J N Anderson | 5 | 2 | |
| D A Ruffell | 5 | 2 | |
| T N Anderson | 2 | ||
| R Brighton | 5 | $\blacksquare$ | |
| N C Howlett | 5 | ٠ | |
| C S Jarvis | 5 | ۰ | |
| C J Martin | 5 | ||
| PWEFitt | 3 | $\overline{\phantom{a}}$ | |
| P E O'Sullivan | $\overline{c}$ |
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 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 Board as a whole.
Any Director appointed during the year is required, under the provisions of the Combined Code, 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 reelection 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 Combined Code.
The Directors who retire by rotation are Mr T N Anderson, Mr C S Jarvis and Mr P W E Fitt. All three Directors, being eligible, offer themselves for re-election.
Tyson Anderson, aged 42, has been with the Company since 1993 and was elected to the Board of the main operating subsidiary, Titon Hardware Limited, in 1999. Tyson joined the main Board on 1 January 2004 as Marketing Director, was appointed Sales & Marketing Director on 1 February 2007 and has a service contract which expires on 31 July 2011.
Chris Jarvis, aged 60, has been with the Company since its incorporation in 1972. Chris was appointed a Director in October 1974 and Export Director in 1982. He has a service contract which expires on 31 July 2011.
Peter Fitt, aged 64, has been a Non-executive Director of the company since its flotation in 1988. He is a fellow member of the Institute of Chartered Accountants in England and Wales and was the Company's auditor before it became a public company. Mr Fitt also holds Directorship with The Colchester Catalyst Charity. His Non-Executive Director contract for services expires on 31 January 2011.
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 each business day before, and will be available at the place of the Annual General Meeting for fifteen minutes prior to and during the meeting.
The Remuneration Committee, which determines the Company's policy on Directors' remuneration, met twice during the financial year and Mr P W E Fitt, Mr J N Anderson and Mr D A Ruffell attended the meetings.
Full details of Directors' remuneration and a statement of the Company's remuneration policy are set out in the Directors' Remuneration Report on pages 14 to 18.
The Audit Committee reports to the Board on matters concerning the Group's internal financial controls, financial reporting and risk management systems, identifying any matters in respect of which it considers that action or improvement is needed and making recommendations as to the steps to be taken.
The Audit Committee is appointed by the Board for a period of three years and comprises Mr P W E Fitt and Mr D A Ruffell and is chaired by Mr P W E Fitt.
The Audit Committee met once during the financial year and both Mr P W E Fitt and Mr D A Ruffell attended the meeting.
$21$
The Audit Committee terms of reference, established by the Board, are to:
The Board believes that due to the size of the business there is currently no requirement for an internal audit function. This position is reviewed annually.
The Company's auditors, BDO LLP, have been instructed to carry out non-audit work during the year as detailed in note 6 to the financial statements. The non-audit work primarily comprised tax compliance work. The provision of these services represents a low risk to auditor independence which is safeguarded by separation of staff and supervision within BDO LLP.
The Board recognises the importance of communications with shareholders. The Business Review gives a detailed review of the business, and there is regular dialogue with institutional shareholders following the Group's preliminary announcement of the year end results and at the half year.
The Group's results and other announcements are published to 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.
22
The respective responsibilities of the Directors and the auditors in connection with the financial statements are explained on pages 9, 10, 24 and 25.
The Directors acknowledge that they are responsible for establishing and maintaining the Group's system of internal control and reviewing its effectiveness. 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. The Directors confirm that there is an ongoing process for identifying, evaluating and managing the significant risks faced by the Group, which complies with the guidance given by the Turnbull Committee. This has been in place throughout the year and up to the date of approval of the Annual Report. The process is regularly reviewed by the Board.
The key procedures that the Directors have established to provide effective internal control include:
The Directors have, through the Audit Committee, reviewed the effectiveness of the Group's system of internal control by reviewing the procedures noted above and are satisfied that it is appropriate to the size of the business.
The Company has a shareholding in an associate company. Controls within this entity may not be reviewed as part of the Company's formal corporate governance process due to the local delegation of managerial responsibilities, but instead are reviewed as part of the normal internal audit process.
The Corporate Governance Report was approved by the Board on 16 December 2010 and signed on its behalf by:
JN Anderson Chairman
We have audited the financial statements of Titon Holdings Plc for the year ended 30 September 2010 which comprise the consolidated income statement, the consolidated statement of comprehensive income, the consolidated statement of financial position, the consolidated statement of changes in equity, the consolidated statement of cash flows, the parent company balance sheet and the related notes. The financial reporting framework that has been applied in the preparation of the group financial statements is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union. The financial reporting framework that has been applied in preparation of the parent company financial statements is applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice).
This report is made solely to the company's members, as a body, in accordance with Sections 495, 496 and 497 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.
As explained more fully in the statement of directors' responsibilities, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board's (APB's) Ethical Standards for Auditors.
An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the group's and the parent company's circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the directors; and the overall presentation of the financial statements.
In our opinion:
24
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:
Under the Listing Rules we are required to review:
Christopher Pooles (senior statutory auditor) For and on behalf of BDO LLP, statutory auditor
Reading United Kingdom 16 December 2010
BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).
for the year ended 30 September 2010
| 2010 | 2009 | ||
|---|---|---|---|
| Note | £'000 | £'000 | |
| Revenue | 3 | 15,609 | 14,053 |
| Cost of sales | (11, 438) | (10, 993) | |
| Gross profit | 4,171 | 3,060 | |
| Distribution costs | (670) | (625) | |
| Administrative expenses | (2,833) | (2,654) | |
| Operating profit / (loss) | 668 | (219) | |
| Finance income | 5 | 29 | 37 |
| Share of losses from associate | 13 | (91) | (28) |
| Profit / (loss) before tax | 6 | 606 | (210) |
| Income tax (expense) / credit | 7 | (199) | 8 |
| Profit / (loss) for the year attributable to the equity holders of the parent |
407 | (202) | |
| Earnings / (loss) per share - basic | 9 | 3.85p | (1.91p) |
| - diluted | 9 | 3.85p | (1.91p) |
for the year ended 30 September 2010
| 2010 £'000 |
2009 £'000 |
|
|---|---|---|
| Profit / (loss) for the period | 407 | (202) |
| Exchange difference on retranslation of overseas operations |
11 | (14) |
| Total comprehensive income / (expense) for the year attributable to equity holders of the parent |
418 | (216) |
The notes on pages 30 to 54 form part of these financial statements.
at 30 September 2010
| 2010 | 2009 | ||
|---|---|---|---|
| Note | £'000 | £'000 | |
| Assets Property, plant and equipment |
10 | 3,744 | 3,972 |
| Intangible assets | 11 | 214 | 88 |
| Investments in associates | 13 | 94 | 185 |
| Financial assets | 15 | 106 | 103 |
| Total non-current assets | 4,158 | 4,348 | |
| Inventories | 14 | 2,523 | 2,057 |
| Trade and other receivables | 15 | 3,310 | 2,947 |
| Corporation tax | 8 | ||
| Cash and cash equivalents | 19 | 3,110 | 3,096 |
| Total current assets | 8,943 | 8,108 | |
| Total Assets | 13,101 | 12,456 | |
| Liabilities | |||
| Deferred tax | 16 | 449 | 361 |
| Total non-current liabilities | 449 | 361 | |
| Trade and other payables | 17 | 2,522 | 2,266 |
| Bank overdraft | 23 | ||
| Corporation tax | 117 | ||
| Total current liabilities | 2,639 | 2,289 | |
| Total Liabilities | 3,088 | 2,650 | |
| Equity | |||
| Share capital | 18 | 1,056 | 1,056 |
| Share premium reserve | 865 | 865 | |
| Capital redemption reserve | 56 | 56 | |
| Translation reserve | (2) | (13) | |
| Share schemes reserve | 9 | 9 | |
| Retained earnings | 8,029 | 7,833 | |
| Total Equity attributable to equity holders of the parent |
10,013 | 9,806 | |
| Total Liabilities and Equity | 13,101 | 12,456 |
The notes on pages 30 to 54 form part of these financial statements.
These financial statements were approved and authorised for issue by the Board on 16 December 2010 and signed on its behalf by:
J N Anderson Chairman
'/jhe
at 30 September 2010
$\ddot{\phantom{a}}$
| Share Capital |
Share premium reserve |
redemption reserve |
Capital Translation reserve |
reserve | Share Retained schemes earnings |
Total equity |
|
|---|---|---|---|---|---|---|---|
| £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | |
| At 1 October 2008 | 1,056 | 865 | 56 | 1 | 6 | 8,246 | 10,230 |
| Translation differences on overseas operations |
(14) | (14) | |||||
| Loss for the year | (202) | (202) | |||||
| Total Comprehensive expense for the year |
(14) | (202) | (216) | ||||
| Dividends paid | (211) | (211) | |||||
| Share-based payment expense |
3 | 3 | |||||
| At 30 September 2009 | 1,056 | 865 | 56 | (13) | 9 | 7,833 | 9,806 |
| Translation differences on overseas operations |
11 | 11 | |||||
| Profit for the year | 407 | 407 | |||||
| Total Comprehensive income for the year |
11 | 407 | 418 | ||||
| Dividends paid | (211) | (211) | |||||
| At 30 September 2010 | 1,056 | 865 | 56 | (2) | 9 | 8,029 | 10,013 |
The notes on pages 30 to 54 form part of these financial statements.
The following describes the nature and purpose of each reserve within equity:
| Reserve | Description and purpose |
|---|---|
| Share premium | Premium on shares issued in excess of nominal value |
| Capital redemption | Cancellation of 10p ordinary shares |
| Translation reserve | Cumulative gains/losses arising on retranslating the net assets of overseas operations into Sterling |
| Share scheme | Cumulative expense of equity settled share based payments recognised in the consolidated income statement |
| Retained earnings | Cumulative net gains and losses recognised in the consolidated statement and the consolidated statement of income comprehensive income |
for the year ended 30 September 2010
| Note | 2010 £'000 |
2009 £'000 |
|
|---|---|---|---|
| Cash generated from operating activities | |||
| Profit/ (loss) before tax | 606 | (210) | |
| Depreciation of property, plant & equipment | 560 | 616 | |
| Amortisation on intangible assets | 38 | 30 | |
| (Increase) / decrease in inventories | (461) | 437 | |
| (Increase) / decrease in receivables | (360) | 274 | |
| Increase / (decrease) in payables and other current liabilities | 256 | (161) | |
| (Profit) / loss on sale of plant & equipment | (12) | 8 | |
| Share based payment - equity settled | 3 | ||
| Interest received | (29) | (37) | |
| Share of associate loss | 91 | 28 | |
| Cash generated from operations | 689 | 988 | |
| Income taxes refunded/ (paid) | 14 | (11) | |
| Net cash generated from operating activities | 703 | 977 | |
| Cash flows from investing activities | |||
| Purchase of plant & equipment | (332) | (206) | |
| Purchase of intangible assets | (164) | (57) | |
| Proceeds from sale of plant & equipment | 12 | 5 | |
| Interest received | 29 | 37 | |
| Net cash used in investing activities | (455) | (221) | |
| Cash flows from financing activities | |||
| Dividends paid to equity shareholders | (211) | (211) | |
| Net cash used in financing activities | (211) | (211) | |
| Net increase in cash & cash equivalents | 22 | 37 | 545 |
| Cash & cash equivalents at beginning of the year | 3,073 | 2,528 | |
| Cash & cash equivalents at end of the year | 3,110 | 3,073 |
The notes on pages 30 to 54 form part of these financial statements.
at 30 September 2010
The consolidated financial statements of the Group for the year ended 30 September 2010 incorporates Titon Holdings Plc ("the Company") and its subsidiaries (together referred to as "the Group"). Titon Holdings Plc shares are publicly traded on the Official List of the London Stock Exchange.
The nature of the Group's operations and its principal activities are set out in the Directors' Report on page 4.
The consolidated financial statements were authorised for release on 16 December 2010.
The principal accounting policies adopted in the preparation of the consolidated financial statements are set out below. The policies have been consistently applied to all the years presented, unless otherwise stated. These financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs and IFRIC interpretations) as adopted by the European Union and issued by the International Accounting Standards Board (IASB) and with those parts of the Companies Act 2006 applicable to companies preparing their accounts under IFRS.
The Directors have prepared the parent company financial statements in accordance with UK Generally Accepted Accounting Practice (UK GAAP) and these are presented separately on pages 55 $to 61.$
During the period, the following new standards, amendments and interpretations to existing standards were published. None had an impact on the reported result of the Group, other than to disclosures in the case of IFRS 8 and IAS 1.
Standards, interpretations and amendments to existing standards published and effective in the current financial year relevant to the Group:
Standards, interpretations and amendments to existing standards that have been published as mandatory for later accounting periods but are not yet effective and have not been adopted early by the Group. The Group does not currently believe the adoption of these standards or interpretations would have a material impact on the consolidated results or financial position of the Group.
| Effective date (periods beginning) |
|
|---|---|
| • Amendments to IFRS 5 - Non-current assets held for sale and discontinued operations |
1 January 2010 - |
| • Amendments to IAS 7 - Classification of expenditure on unrecognised assets | 1 January 2010 |
| • Amendments to IAS 17 - Classification of leases of land and buildings • IFRS $9$ – Financial Instruments |
1 January 2010 1 January 2013 |
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 2010. Control exists when the Company has the power, directly or indirectly to govern the financial and operating policies of an entity so as to obtain benefits from its activities.
Intragroup balances, and any unrealised gains and losses or income and expenses arising from intragroup transactions, are eliminated in preparing the financial statements.
Where the group has the power to participate in (but not control) the financial and operating policy decisions of another entity, it is classified as an associate. Associates are initially recognised in the consolidated balance sheet at cost.
The group's share of post-acquisition profits and losses is recognised in the consolidated income statement, except that losses in excess of the group's investment in the associate are not recognised unless there is an obligation to make good those losses. Profits and losses arising on transactions between the group and its associates are recognised only to the extent of unrelated investors' interests in the associate. The investor's share in the associate's profits and losses resulting from these transactions is eliminated against the carrying value of the associate. Any premium paid for an associate above the fair value of the group's share of the identifiable assets, liabilities and contingent liabilities acquired is capitalised and included in the carrying amount of the associate. The carrying amount of the investment in associates is subject to impairment in the same way as goodwill arising on a business combination (see accounting policy (h)).
Transactions entered into by group entities in a currency other than the currency of the primary economic environment in which they operate (their "functional currency") are recorded at the rates ruling when the transactions occur. Foreign currency monetary assets and liabilities are translated at the rates ruling at the balance sheet date. Exchange differences arising on the retranslation of unsettled monetary assets and liabilities are recognised immediately in the consolidated income statement.
On consolidation, the results of overseas operations are translated into Sterling, which is the functional and presentational currency of the Company, at rates approximating those ruling when the transactions took place. All assets and liabilities of overseas operations are translated at the rate ruling at the balance sheet date. Exchange differences arising on translating the opening net assets at opening rate and the results of overseas operations at actual rate are recognised directly in equity (the "translation reserve").
Upon disposal of overseas subsidiaries exchange differences arising from the translation of the financial statements of foreign operations are recycled and taken to the consolidated income statement as part of the profit or loss on disposal. The Company has elected, in accordance with IFRS 1, that in respect of all foreign operations, any differences that have arisen before 1 October 2004 have been set to zero. Any gain or loss on the subsequent disposal of those foreign operations would exclude translation differences that arose before the date of transition to IFRS and include only subsequent translation differences.
All sales from the Group's UK business are invoiced in sterling.
Items of property, plant and equipment are stated at cost or deemed cost less accumulated depreciation.
The Group recognises in the carrying amount of an item of property, plant and equipment the cost of replacing part of such an item when that cost is incurred, if it is probable that the future economic benefits embodied within the item will flow to the Group and the cost of the item can be measured reliably. All other costs are recognised in the income statement as incurred.
at 30 September 2010
Freehold land is not depreciated. Depreciation is provided on all other items of property, plant and equipment is to write off the carrying value of items over their expected useful economic lives. It is applied at the following rates:
| Freehold buildings | - 2% per annum straight line |
|---|---|
| Improvements to leasehold property | - 20% per annum straight line (or the lease term, if shorter) |
| Plant and equipment | - 10% to 33.3 % per annum straight line |
| Motor vehicles | – 25% per annum straight line |
The carrying values of tangible fixed assets are reviewed for impairment when events or changes in circumstances indicate the carrying value may not be recoverable (see accounting policy (h)).
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)).
Goodwill arising on acquisitions was set off against reserves in accordance with Accounting Standards applicable at the time of acquisition. For all business combinations occurring prior to 1 October 2004, their accounting treatment was not restated in preparing the Group's opening IFRS balance sheet at 1 October 2004. The Group took advantage of the exemption not to restate acquisitions prior to the date of transition.
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.
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:
Development costs are amortised using the straight line method over their estimated useful lives, which is normally between 3 and 5 years. Development expenditure not satisfying the above criteria and expenditure on the research phase of internal projects are recognised in the consolidated income statement as incurred.
Costs incurred on the acquisition of computer software are capitalised if they meet the recognition criteria of IAS 38. Computer software costs recognised as assets are written off over their estimated useful lives, which is normally between 3 and 7 years.
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.
Amortisation of internally generated development assets is charged to the income statement on a straight-line basis over the remaining estimated useful lives from the date that the products are available for sale to customers. The remaining useful lives of such development assets are assessed with the Directors annually.
Inventories are stated at the lower of cost and net realisable value. Cost is calculated as follows:
| Raw materials | - cost of purchase on first in, first out basis. |
|---|---|
| Work in progress and finished goods | cost of raw materials and labour, together with attributable overheads based on the normal level of activity. |
Net realisable value is based on estimated selling price less further costs to completion and disposal. A charge is made to the income statement for slow moving inventories. The charge is reviewed at each balance sheet date.
Cash and cash equivalents comprise cash balances, bank overdrafts and treasury deposits for cash flow purposes. The Group has no long term borrowings and any available cash surpluses are placed on deposit.
The carrying amount of the Group's assets, other than deferred tax assets, are reviewed at each balance sheet date to determine whether there is any indication of impairment. If any such indication exists, the asset's recoverable amount is estimated. Impairment losses are recognised in the income statement.
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 assets 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.
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.
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 Share Schemes Reserve 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. Details of the inputs to the option pricing model are shown in note 24 to the financial statements.
The fair value of the options are 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.
Provision is made at each balance sheet date for holidays accrued but not taken at the salary of the relevant employee at that date.
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.
Revenue represents the value of goods delivered and accepted by external customers at invoiced amounts, less value added tax, net of customer settlement discounts.
Finance income comprises interest receivable on funds invested.
Tax on the profit or loss for the periods presented comprises current and deferred tax.
Current tax is the expected corporation tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the balance sheet date, and any adjustment to tax payable in respect of previous years.
Deferred tax is provided using the balance sheet liability method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes.
The following temporary differences are not provided for: goodwill not deductible for tax purposes, 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
34
at 30 September 2010
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:
Operating leases represent leasing agreements that do not give rights approximating to ownership. Annual rentals are charged to the income statement on a straight-line basis over the lease term. Lease incentives are recognised as an integral part of the total lease expense.
Dividends are recognised when they become legally payable. In the case of interim dividends to equity shareholders, this is when paid. In the case of final dividends, this is when approved by the shareholders at the AGM.
The Group classifies its financial assets depending on the purpose for which the asset was acquired. The Group holds only one class of financial assets, namely loans and receivables which comprise trade and other receivables and cash and cash equivalents in the balance sheet.
These assets are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They arise principally through the provision of goods and services to customers (trade receivables), but also incorporate other types of contractual monetary asset. They are initially recognised at fair value and subsequently carried at amortised cost.
Impairment provisions are recognised when there is objective evidence (such as significant financial difficulties on the part of the counterparty or default or significant delay in payment) that the group will be unable to collect all of the amounts due under the terms receivable, the amount of such a provision being the difference between the net carrying amount and the present value of the future expected cash flows associated with the impaired receivable. For trade receivables, which are reported net, such provisions are recorded in a separate allowance account with the loss being recognised within distribution expenses in the income statement. On confirmation that the trade receivable will not be collectable, the gross carrying value of the asset is written off against the associated provision.
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.
Cash and cash equivalents includes cash in hand, deposits held at call with banks, other short term highly liquid investments with original maturities of three months or less, such as short term fixed deposits with banks, and bank overdrafts. Bank overdrafts are shown within loans and borrowings in current liabilities on the balance sheet.
The Group classifies its financial liabilities depending on the purpose for which the liability was acquired. The Group holds only one class of financial liabilities, namely trade payables.
Trade payables and other short-term monetary liabilities, which are initially recognised at fair value and subsequently carried at amortised cost.
The consolidated financial statements incorporate the results of business using the purchase method. In the consolidated balance sheet, the acquiree's identifiable assets, liabilities and contingent liabilities are initially recognised at their fair values at the acquisition date. The results of acquired operations are included in the consolidated income statement from the date on which control is obtained.
The Group makes estimates and assumptions regarding the future. Estimates and judgements are continually evaluated based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. In the future, actual experience may differ from these estimates and assumptions. The estimates and assumptions 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.
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).
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.
Investments and property, plant and equipment are reviewed for impairment if events or changes in circumstances indicate that the carrying amount may not be recoverable. When a review for impairment is conducted, the recoverable amount of an asset or a cash-generating unit is determined based on value in-use calculations prepared on the basis of management's assumptions and estimates (see notes 1 (h) and 10 of the Consolidated Financial Statements).
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).
The charge for share-based payment is calculated in accordance with the assumptions described in note 24. The option valuation model used requires highly subjective assumptions to be made including the future volatility of the Company's share price, expected dividend yields, risk-free rate of return and expected staff turnover. The Directors draw upon a variety of external sources to aid in the determination of the appropriate data to use in such calculations.
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 three main business segments which are:
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 not allocated to the business activities for which R&D is specifically performed and it is not therefore reported as a separate operating segment. Research and development expenses are included within the total unallocated expenses figures set out below.
The measurement policies the Group uses for segment reporting under IFRS 8 are the same as those used in its financial statements.
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 below.
| For the year ended 30 September 2010 |
United Kingdom |
South Korea |
All other countries |
Consolidated |
|---|---|---|---|---|
| £'000 | £'000 | £'000 | £'000 | |
| Segment revenue | 12,560 | 1,514 | 1,535 | 15,609 |
| Inter-segment revenue | 197 | 197 | ||
| Total Revenue | 12,560 | 1,514 | 1,732 | 15,806 |
| Depreciation and amortisation | 553 | 5 | 40 | 598 |
| Operating profit - segment result | 2,401 | 80 | 31 | 2,512 |
| Unallocated expenses | (1, 814) | |||
| Losses from associates | (91) | |||
| Finance income | 29 | |||
| Profit before tax | 606 | |||
| Tax expense | (199) | |||
| Profit for the year attributable to the equity holders of the parent |
407 | |||
| Total assets | 11,765 | 1,135 | 201 | 13,101 |
| Total assets include: Investments in associates |
94 | 94 | ||
| Additions to non-current assets (other than financial instruments and deferred tax assets) |
412 | 84 | 496 |
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 2010 |
United Kingdom |
Europe | USA | South East Asia |
Αll Other regions |
Total |
|---|---|---|---|---|---|---|
| Revenues | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 |
| By entities' country of domicile | 13.667 | - | 428 | 1,514 | $\qquad \qquad \blacksquare$ | 15,609 |
| By country from which derived | 12,560 | 1.056 | 428 | 1,557 | 8 | 15,609 |
| Non-current assets | ||||||
| By entities' country of domicile | 4.008 | $\blacksquare$ | 8 | 142 | ۰ | 4,158 |
at 30 September 2010
| For the year ended 30 September 2009 |
United Kingdom |
South Korea |
All other countries |
Consolidated |
|---|---|---|---|---|
| £'000 | £'000 | £'000 | £'000 | |
| Segment revenue | 11,864 | 648 | 1,541 | 14,053 |
| Inter-segment revenue | 177 | 177 | ||
| Total Revenue | 11,864 | 648 | 1,718 | 14,230 |
| Depreciation and amortisation |
615 | 24 | 7 | 646 |
| Operating profit / (loss) - segment result |
1,551 | (132) | 176 | 1,595 |
| Unallocated expenses | (1, 814) | |||
| Losses from associates | (28) | |||
| Finance income | 37 | |||
| Loss before tax | (210) | |||
| Tax credit | 8 | |||
| Loss for the year attributable to the equity holders of the parent |
(202) | |||
| Total assets | 11,552 | 743 | 161 | 12,456 |
| Total assets include: Investments in associates |
185 | 185 | ||
| Additions to non-current assets (other than financial instruments and deferred tax assets). |
234 | 13 | 16 | 263 |
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 2009 |
United Kingdom |
Europe | USA | South East Asia |
All Other regions |
Total |
|---|---|---|---|---|---|---|
| Revenues | £'000 | £'000 | £'000 | £'000 | £'000 | £ 000 |
| By entities' country of domicile | 12,817 | ۰. | 588 | 648 | 14.053 | |
| By country from which derived | 11,864 | 804 | 588 | 788 | 9 | 14,053 |
| Non-current assets | ||||||
| By entities' country of domicile | 4,236 | ٠ | 14 | 98 | 4 3 4 8 | |
| Business segments |
The Group's operations are separated between Group manufactured products and bought in products. The following table provides an analysis of the Group's external revenue by source of products, irrespective of the geographical region of sale.
| 2010 | 2009 | |
|---|---|---|
| £'000 | £'000 | |
| Group manufactured products | 10.025 | 8,077 |
| Bought in products | 5.584 | 5,976 |
| Revenue | 15,609 | 14.053 |
| 2010 | 2009 | ||
|---|---|---|---|
| Staff costs, including Directors, were as follows: | £'000 | £000 | |
| Wages and salaries | 3,869 | 3.865 | |
| Employer's social security costs and similar taxes | 360 | 351 | |
| Defined contribution pension cost | 201 | 206 | |
| Share based payment expense - equity settled | 3 | ||
| 4,430 | 4.425 | ||
| The average monthly number of employees during the year was as follows: |
Number | Number | |
| Manufacturino | 103 | 104 |
| Manufacturing | 103 | 104 |
|---|---|---|
| Sales, marketing and administration | 78 | 72 |
| 181 | 176 | |
Details of Directors' emoluments, pension contributions and interests in share options are given in the Directors' Remuneration Report set out on pages 14 to 18.
| 2010 | 2009 |
|---|---|
| £'000 | £'000 |
| 29 Bank interest receivable on short term deposits |
37 |
at 30 September 2010
| 2010 | 2009 | |
|---|---|---|
| £'000 | £'000 | |
| This is arrived at after charging/(crediting): | ||
| Depreciation of property, plant and equipment | 560 | 616 |
| Amortisation of intangible assets | 38 | 30 |
| Research and development expenditure written off | 346 | 368 |
| Operating lease rentals - land and buildings | 81 | 87 |
| Operating lease rentals - vehicles | ||
| Foreign exchange gains | (30) | (43) |
| Share-based payment expense | 3 | |
| (Profit) / loss on disposal of fixed assets | (12) | 8 |
| Auditors' remuneration: | ||
| - to principal auditors for statutory audit | 40 | 38 |
| - to principal auditors for tax compliance services | 10 | |
| - to principal auditors for other services | 2 | |
| - All other services | 3 | 2 |
| - to secondary auditors for statutory audit of subsidiary |
| Note | 2010 £'000 |
2009 £'000 |
|
|---|---|---|---|
| UK corporation tax expense / (credit) | 117 | (8) | |
| Adjustment in respect of (over) / under provision in prior years | (6) | 6 | |
| Total UK corporation tax | 111 | (2) | |
| Deferred tax - origination and reversal of temporary differences | 16 | 88 | (6) |
| Total tax expense / (credit) | 199 | (8) |
at 30 September 2010
| The charge for the year can be reconciled to the profit / (loss) per the income statement as follows: |
2010 £'000 |
2009 £'000 |
|---|---|---|
| Profit / (loss) before tax Effect of: |
606 | (210) |
| Expected tax charge based on the standard rate of | ||
| corporation tax in the UK of 28% (2009: 21%) | 170 | (44) |
| Additional deduction for R&D expenditure | (44) | (29) |
| Income not taxable | (6) | |
| Expenses not deductible for tax purposes | 12 | 40 |
| Difference in deferred tax rates | 106 | |
| Marginal relief | (5) | |
| (Relieved) / unrelieved tax losses | (22) | 27 |
| Adjustment in respect of IBAs | (6) | (6) |
| Effect of difference in exchange rates | (2) | |
| Adjustments in respect of prior periods | (6) | 6 |
| Total tax expense / (credit) for the year | 199 | (8) |
The effective tax rate for the year is 32.8% (2009: 3.8%)
| 2010 | 2009 | |
|---|---|---|
| £'000 | £'000 | |
| Final 2009 dividend of 1.0 pence (2009: 1.0 pence) per ordinary share paid and proposed during the year relating to the previous year's results |
106 | 106 |
| Interim dividend of 1.0 pence (2009: 1.0 pence) per ordinary share paid during the year |
105 | 105 |
| 211 | 211 |
The Directors are proposing a final dividend of 1.25 pence (2009: 1.0 pence) per share. This will result in a final dividend totalling £132,000 (2009: £106,000), subject to approval by the shareholders at the Annual General Meeting. This dividend has not been accrued at the balance sheet date.
$42$
The calculation of the basic and diluted earnings / (loss) per share is based on the following data:
| 2010 £'000 |
2009 £'000 |
|
|---|---|---|
| Numerator Profit / (loss) for the purposes of basic earnings / (loss) per share being profit / (loss) after tax attributable to members of Titon Holdings Pic |
407 | (202) |
| Denominator Weighted average number of ordinary shares for the purposes of basic Earnings / (loss) per share - at the beginning and end of the year |
Number 10,555,650 |
Number 10,555,650 |
| Earnings / (loss) per share (pence) Basic Diluted |
3.85 D 3.85 p |
(1.91p) (1.91p) |
Certain employee options have not been included in the calculation of diluted EPS because their exercise is contingent on the satisfaction of certain criteria that had not been met at the end of the year. The total number of options in issue is disclosed in the note 24.
at 30 September 2010
| Freehold land and buildings £'000 |
Improvements to leasehold property £'000 |
Plant and equipment £'000 |
Motor vehicles £'000 |
Total £'000 |
|
|---|---|---|---|---|---|
| Cost | |||||
| At 1 October 2008 | 3,449 | 50 | 7,063 | 602 | 11,164 |
| Additions Disposals |
4 | 3 | 183 (793) |
16 (31) |
206 (824) |
| At 1 October 2009 | 3,453 | 53 | 6,453 | 587 | 10,546 |
| Additions Disposals |
3 | 221 (5) |
108 (79) |
332 (84) |
|
| At 30 September 2010 | 3,453 | 56 | 6,669 | 616 | 10,794 |
| Depreciation | |||||
| At 1 October 2008 | 785 | 48 | 5,577 | 359 | 6,769 |
| Charge for the year Disposals |
64 | $\overline{2}$ | 419 (783) |
131 (28) |
616 (811) |
| At 1 October 2009 | 849 | 50 | 5,213 | 462 | 6,574 |
| Charge for the year Disposals |
64 | $\overline{2}$ | 411 (5) |
83 (79) |
560 (84) |
| At 30 September 2010 | 913 | 52 | 5,619 | 466 | 7,050 |
| Net book value At 30 September 2010 |
2,540 | 4 | 1,050 | 150 | 3,744 |
| At 30 September 2009 | 2,604 | 3 | 1,240 | 125 | 3,972 |
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 2010, the Group had entered into contractual commitments for the acquisition of plant and equipment amounting to £61,000 (2009: £92,000).
at 30 September 2010
| Computer software |
Development costs (internally |
Total | |
|---|---|---|---|
| £'000 | generated) £'000 |
£'000 | |
| Cost | |||
| At 1 October 2008 | 191 | 39 | 230 |
| Additions | 13 | 44 | 57 |
| At I October 2009 | 204 108 |
83 56 |
287 164 |
| Additions | |||
| At 30 September 2010 | 312 | 139 | 451 |
| Depreciation | |||
| At 1 October 2008 | 169 | 169 | |
| Charge for the year | 20 | 10 | 30 |
| At 1 October 2009 | 189 | 10 | 199 |
| Charge for the year | 8 | 30 | 38 |
| At 30 September 2010 | 197 | 40 | 237 |
| Net book value | |||
| at 30 September 2010 | 115 | 99 | 214 |
| At 30 September 2009 | 15 | 73 | 88 |
The Group has contractual commitments for computer software costs of Enil (2009 - Enil). All assets have an average useful economic life of 3.5 years (2009: 2.2 years)
A list of the investments in subsidiaries, including the name, country of incorporation and proportion of ownership is given in note 5 to the Parent Company's separate financial statements.
at 30 September 2010
The following entities meet the definition of an associate, the Group considers it has power to exercise significant influence, and have been equity accounted in these consolidated financial statements:
| Name of associate | Country of incorporation |
Proportion of voting rights held at 30 September 2009 and 2010 |
|---|---|---|
| Browntech Sales Co. Ltd | South Korea | 49% |
The remaining 51% shareholding of Browntech Sales Co. Ltd is held by South Korean investors who, through their voting shares, have operational control of the company.
The Group's share of the aggregated amounts relating to associates is as follows:
| 2010 £'000 |
2009 £'000 |
|
|---|---|---|
| Total Assets | 329 | 398 |
| Total Liabilities | 327 | 298 |
| Revenues | 994 | 496 |
| Losses | (91) | (28) |
The investment in the associate at 30 September 2010 includes £197,000 (2009: £197,000) of goodwill.
The associate Browntech Sales Co. Ltd has been included based on audited financial statements drawn up to for the year to 30 September 2010.
Transactions between the associate and the Group are set out in note 25.
| 2010 £'000 |
2009 £'000 |
|
|---|---|---|
| Raw materials and consumables | 727 | 410 |
| Work in progress | 107 | 427 |
| Finished goods and goods for resale | 1,689 | 1,220 |
| 2,523 | 2,057 |
No inventories (2009: Enil) are carried at fair value less costs to sell.
The carrying value of inventory represents cost less appropriate provisions. During the year there was a net credit of £21,000 (2009: net debit £108,000) to the Consolidated Income Statement in relation to the inventory provisions. The movements in the inventory provisions are included within cost of sales in the Consolidated Income Statement.
at 30 September 2010
| 2010 £'000 |
2009 £'000 |
|
|---|---|---|
| Trade receivables | 2,921 | 2.644 |
| Related parties receivables | 263 | 194 |
| Loans to related parties | 106 | 103 |
| Other debtors | 36 | 57 |
| Prepayments and accrued income | 90 | 52 |
| Total trade and other receivables | 3,416 | 3.050 |
| Less: non-current portion - loans to related parties | (103) | |
| Current portion | 3,416 | 2.947 |
The average credit period taken on sale of goods by trade debtors is 64 days (2009: 63 days).
The Directors are confident that the loan to related parties will be repaid and therefore the carrying amount of the loan is approximate to its fair value.
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, 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.
| At the end of the year | 78 | 50 |
|---|---|---|
| Unused amounts reversed | (24) | (33) |
| Receivables written off during the year as uncollectible | (81) | (84) |
| Provision for receivables impairment | 133 | 91 |
| At the beginning of the year | 50 | 76 |
| £'000 | £'000 | |
| follows: | 2010 | 2009 |
| Movement on the provision for impairment of trade receivables are as |
As at 30 September 2010 trade receivables of £1,043,000 (2009: £756,000) were past due but not impaired. These relate to a number of independent customers for whom there is no recent history of default. The ageing analysis of these receivables is as follows:
| 2010 £'000 |
2009 £'000 |
|
|---|---|---|
| Up to 3 months | 1,042 | 755 |
| 3 up to 6 months | 1 | 1 |
| 1,043 | 756 |
As at 30 September 2010 trade receivables of £78,000 (2009: £24,000) were past due and impaired. These relate to a number of customers. The ageing analysis of these receivables is as follows:
| 2010 £'000 |
2009 £'000 |
|
|---|---|---|
| Up to 3 months | 65 | 19 |
| 3 up to 6 months | 10 | 4 |
| 6 up to 12 months | 3 | 4 |
| 78 | 24 |
Deferred tax is calculated in full on temporary differences under the liability method using a tax rate of 27% (2009: 21%). The movement on the deferred tax account is as shown below:
| Accelerated capital allowances |
Other temporary differences |
Total | |
|---|---|---|---|
| £'000 | £'000 | £'000 | |
| At 1 October 2008 Charge / (credit) to the income statement |
375 (1) |
(9) (4) |
366 (5) |
| At 1 October 2009 | 374 | (13) | 361 |
| Charge / (credit) to the income statement | 103 | (15) | 88 |
| At 30 September 2010 | 477 | (28) | 449 |
| 2010 | 2009 | |
|---|---|---|
| £'000 | £'000 | |
| Trade creditors | 1,789 | 1,552 |
| Other creditors | 121 | 99 |
| Other tax and social security taxes | 371 | 376 |
| Accruals | 241 | 239 |
| 2,522 | 2,266 |
Trade creditors and accruals principally comprise amounts outstanding for trade purchases and ongoing costs. Year end trade creditors represent 60 days (2009: 62 days) average purchases.
The Directors consider that the carrying amount of trade payables is approximate to their fair value.
at 30 September 2010
| 2010 | 2009 | |
|---|---|---|
| £'000 | £'000 | |
| Authorised | ||
| 13,600,000 ordinary shares of 10p each | 1.360 | 1,360 |
The movement during the year on the Company's issued and fully paid ordinary shares of 10p each was as follows:
| 2010 | 2010 | 2009 | 2009 | |
|---|---|---|---|---|
| Number | £'000 | Number | £'000 | |
| At the beginning and end of the year | 10,555,650 | 1.056 | 10,555,650 | 1.056 |
Options have been granted over the following number of ordinary shares which were outstanding:
| Date granted | Subscription price |
Number of shares |
Exercisable between | ||
|---|---|---|---|---|---|
| 18.01.02 | 103.5p | 116,300 | 18.01.05 | and | 18.01.12 |
| 21.05.04 | 91.0p | 21,150 | 21.05.07 | and | 21.05.14 |
| 18.05.05 | 99.0p | 16,300 | 18.05.08 | and | 18.05.15 |
| 18.05.06 | 91.0p | 35,300 | 18.05.09 | and | 18.05.16 |
| 16.05.07 | 127.5p | 3,150 | 17.05.10 | and | 17.05.17 |
| At 30 September 2010 | 192,200 | ||||
| At 30 September 2009 | 192,200 |
All share options are granted at market value at the date of grant.
No share options were exercised between 30 September 2010 and 16 December 2010.
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 on page 35 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 at 30 September were:
| 2010 | 2009 | |
|---|---|---|
| Currency | £'000 | £'000 |
| Sterling | 3,054 | 3,022 |
| US Dollar | 24 | 20 |
| Euro | 29 | 5 |
| South Korean Won | 3 | 49 |
| 3,110 | 3,096 | |
The Sterling financial assets had a weighted average interest rate of 0.9% (2009: 1.8%), which was arranged monthly. The remainder comprise bank current accounts.
The Group's floating rate financial liabilities at 30 September 2010 comprise solely of a Sterling bank overdraft in the sum of Enii (2009: £23,000) repayable on demand. This 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.
The group is exposed through its operations to the following financial risks; 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 8, describes 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.
The principal financial instruments used by the Group, from which financial instrument risk arises, are trade receivables, cash at bank, bank overdrafts, trade and other payables and loans to related parties.
at 30 September 2010
The Board has overall responsibility for the determination of the Group's risk management objectives and polices 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 polices 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 below.
Credit risk is the risk of financial loss to the Group if a customer or a 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. Such credit ratings are taken into account by local business practices.
The Group's finance function has established a credit policy under which each new customer is analysed individually for creditworthiness before the Group's standard payment and delivery terms and conditions are offered. The Group's review includes external ratings, when available, and trade references. Purchase limits are established for each customer, which represents the maximum open amount without requiring senior management's approval. These limits are reviewed on a 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 "AA-" rating.
Quantitative discloses of the credit risk exposure in relation to Trade and other receivables, which are neither past due nor impaired, are disclosed in the note 15.
Foreign exchange risk arises because the Group has operations located in various parts of the world whose functional currency is not the same as the functional currency in which the Group companies are operating. Although its global market penetration reduces the Group's operational risk in that, it has diversified into several markets, the Group's net assets arising from such overseas operations are exposed to currency risk resulting in gains or losses on retranslation into Sterling. Only in exceptional circumstances would the Group consider hedging its net investments in overseas operations as generally it does not consider that the reduction in foreign currency exposure warrants the cash flow risk created from such hedging techniques.
Foreign exchange risk also arises when individual Group entities enter into transactions denominated in a currency other than their functional currency. The Group's policy is, where possible, to allow Group entities to settle liabilities denominated in their functional currency (primarily Pound Sterling or US Dollar) 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 the South Korea respectively. 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 their net assets.
All sales from the Group's UK business are invoiced in Sterling. Purchases made by the UK business from four overseas suppliers are invoiced to the Group in the local currency of that supplier.
51
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. To achieve this aim, it seeks to maintain cash balances to meet expected requirements for a period of at least 90 days. The Board receives cash flow projections as well as information regarding cash balances. At the balance sheet date, these projections indicated that the Group expected to have sufficient liquid resources to meet its obligations under all reasonably expected circumstances.
The liquidity risk of each Group entity is managed locally. Each operation has a facility with the Group, the amount of the facility being based on budgets. The budgets are set locally and agreed by the Board in advance, enabling the Group's cash requirements to be anticipated. Where facilities of Group entities need to be increased, approval must be sought from the Board.
The Group leases its headquarters offices in Stanway, Essex on a tenant repairing lease basis. The Group has the option to renew the lease at its expiry in September 2011. The three year tenancy of the factory unit in South Korea ends in February 2012. The Group also leases cars as lessee under noncancellable operating leases with various terms, escalation clauses and renewal rights.
At the year end the Group had total commitments under non-cancellable operating leases, principally in respect of properties, as set out below:
| 2010 | 2009 | |
|---|---|---|
| Operating leases which expire within: | £'000 | £'000 |
| Not later than one year | 86 | 71 |
| Later than one year and not later than five years | 24 | 84 |
The table below provides an analysis of net cash and cash equivalents during the year ended 30 September 2010:
| 2010 | 2009 | |
|---|---|---|
| £'000 | £'000 | |
| Cash available on demand | 130 | 221 |
| Short-term deposits | 2,980 | 2,875 |
| Cash at bank | 3,110 | 3,096 |
| Overdraft | w | (23) |
| 3,110 | 3,073 | |
| Net increase in cash equivalents | 37 | 545 |
| Cash and cash equivalents at beginning of year | 3,073 | 2,528 |
| Cash and cash equivalents at end of year | 3,110 | 3,073 |
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 £23,000 (2009: £nil).
The Group provides share option schemes for Directors and for other members of staff.
There are presently two equity settled share option schemes; one Inland Revenue approved and the other unapproved in which employees may be invited to participate. Both of these schemes were introduced in March 2010. 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.
In accordance with IFRS 2, the fair value of outstanding equity settled share based option awards to employees, which have been granted after 7 November 2002, but not vested as at 1 January 2005, are recognised as an expense to the income statement.
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.
Details of the share options outstanding during the year are as follows:
| 2010 | 2010 | 2009 | 2009 | |
|---|---|---|---|---|
| Number of share options |
Weighted average exercise price (pence) |
Number of share options |
Weighted average exercise price (pence) |
|
| Outstanding at beginning of year | 192,200 | 99.8p | 226,400 | 98.7p |
| Lapsed during the year | ▬ | ۰ | (34, 200) | 92.0 p |
| Outstanding at the end of the year | 192,200 | 99.8p | 192,200 | 99.8p |
There were no share options which met the conditions of exercise, mentioned above, during the year (2009; nil).
The weighted average share price at the date of exercise for share options exercised during the period was nil (2009; nil). The options outstanding at 30 September 2010 had a weighted average price of 99.8p (2009: 99.8p) and a weighted average remaining contractual life of 2.7 years (2009: 3.7 years). In the year to 30 September 2010 no new share options were granted. The aggregate of the estimated fair values of the options granted in the year was Enil (2009: Enil).
53
at 30 September 2010
The Black-Scholes option pricing model has been used for calculating the fair value of the Group's share options. The calculated fair values of the share option awards are adjusted to reflect actual and expected vesting levels.
There were no new share options granted during the year.
Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed in this note.
Key management who hold the authority and responsibility for planning, directing and controlling activities of the Group are comprised solely of the Directors. There were no transactions, agreements or other arrangements, direct or indirect, during the year in which the Directors had any interest. Their remuneration is disclosed in the Remuneration Report on page 16 of this document.
The Non-executive Directors receive a fee for their services to the Titon Holdings Plc Board as disclosed in the Directors' Remuneration Report.
Transactions between subsidiary companies and the associate company, which is a related party, were as follows:
| --------- | Sales of goods | Amount owed by related party |
|||
|---|---|---|---|---|---|
| Year ended 30 September |
Year ended 30 September |
||||
| 2010 £'000 |
2009 £'000 |
2010 £'000 |
2009 £'000 |
||
| Browntech Sales Co. Ltd | 1,514 | 648 | 263 | 194 |
The Group expects trading debts between subsidiaries and associates to be settled on a standard commercial basis. Titon Holdings Plc has provided Browntech Sales Co. Ltd with a £100,000 unsecured loan (see note 11 of the Parent company financial statements).
at 30 September 2010
Company No. 01604952
| Note | 2010 £'000 |
2009 £'000 |
|
|---|---|---|---|
| Fixed assets | |||
| Tangible assets | 4 | 2,591 | 2,605 |
| Investments in subsidiaries | 5 | 550 | 550 |
| Investments in associates | 5 | 225 | 225 |
| 3,366 | 3,380 | ||
| Current assets | |||
| Debtors | 6 | 2,330 | 2,521 |
| Other debtors - due after one year | 11 | 106 | 103 |
| Cash at bank and in hand | 2,980 | 2.875 | |
| 5,416 | 5.499 | ||
| Creditors: amounts falling due within one year | $\overline{7}$ | (113) | (92) |
| Net current assets | 5,303 | 5,407 | |
| Total assets less current liabilities | 8,669 | 8,787 | |
| Capital and reserves | |||
| Called up share capital | 9 | 1,056 | 1,056 |
| Share premium account | 10 | 865 | 865 |
| Capital redemption reserve | 10 | 56 | 56 |
| Profit and loss account | 10 | 6.692 | 6,810 |
| Equity shareholders' funds | 10 | 8,669 | 8,787 |
The notes on pages 56 to 61 form part of these financial statements.
These financial statements were approved and authorised for issue by the Board on 16 December 2010 and signed on its behalf by:
55
J N Anderson Chairman
$\ddot{\phantom{a}}$
made
Titon Holdings Plc (the Company) is incorporated in the United Kingdom under the Companies Act 2006. The address and the registered office are given on page 67.
The separate financial statements of the Company are presented as required by the Companies Act 2006. They have been prepared under the historical cost convention, except for the treatment of certain financial instruments, in accordance with applicable United Kingdom Generally Accepted Accounting Principles (UK GAAP) and law.
The Company has taken advantage of the exemption allowed under FRS 26 'Financial Instruments: Recognition and Measurement', not to restate within the parent company accounts details of financial instruments as these are included within the Group's consolidated financial statements.
Items of property and other fixed assets are stated at cost or deemed cost less accumulated depreciation (see below).
Depreciation is provided to write off the cost, less estimated residual values, of all tangible fixed assets, except freehold land, over their expected useful lives. It is calculated, on a straight line basis, at the following annual rates:
Freehold buildings $-2\%$ Motor vehicles 25%
The carrying values of tangible fixed assets are reviewed for impairment when events or changes in circumstances indicate the carrying value may not be recoverable. If there is any impairment to the value of tangible fixed assets a charge is recognised in the profit and loss account.
Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date where transactions or events have occurred at that date that will result in an obligation to pay more, or a right to pay less or to receive more tax, with the following exception:
Deferred tax assets are recognised only to the extent that the Directors consider that it is more likely than not that there will be suitable taxable profits from which the future reversal of the underlying timing differences can be deducted.
Deferred tax is measured on an undiscounted basis at the tax rates that are expected to apply in the periods in which timing differences reverse, based on tax rates and laws enacted or substantively enacted at the balance sheet date.
The Company provides share option schemes for Directors and for other Group employees.
The fair value of the employee services received in exchange for the grant of options is recognised as an expense to the profit and loss account. The amount expensed to the profit and loss account over the vesting period is determined by reference to the fair value of the options, 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 Company revises its estimates of the number of options awards that are expected to vest. The impact of the revision of original estimates, if any, is recognised in the profit and loss account, with a corresponding adjustment to equity shareholders' funds. No adjustment is made for failure to achieve market vesting conditions.
Disclosures in respect of share-based payments are made in note 25 of the Group Consolidated Financial Statements.
Fixed asset investments are held at cost less any provision for impairment.
As permitted by section 408(3) of the Companies Act 2006 the Company has elected not to present its own profit and loss account for the year. Titon Holdings Plc reported a profit after tax for the financial year ended 30 September 2010 of £93,000 (2009: £112,000).
| £'000 | £'000 |
|---|---|
| 513 | 515 |
| 57 | -57 |
| 41 | 41 |
| 611 | 613 |
| The average monthly number of employees during the year was as follows: |
Number | Number |
|---|---|---|
| 10 |
The Directors' emoluments for the period are disclosed in the Directors' Remuneration Report on page 16 of this document.
57
| Freehold | |||
|---|---|---|---|
| land and | Motor | Total | |
| buildings | vehicles | ||
| £'000 | £'000 | £'000 | |
| Cost At beginning of year |
3,454 | 82 | 3,536 |
| Additions | $\overline{\phantom{a}}$ | 53 | 53 |
| Disposals | (52) | (52) | |
| At end of year | 3,454 | 83 | 3,537 |
| Depreciation | |||
| At beginning of year | 850 | 81 | 931 |
| Charge for Year | 64 | 3 | 67 |
| Disposals | $\blacksquare$ | (52) | (52) |
| At end of year | 914 | 32 | 946 |
| Net book value at 30 September 2010 |
2,540 | 51 | 2,591 |
| At 30 September 2009 | 2,604 | 1 | 2,605 |
Investments comprise 100% direct shareholdings of the ordinary share capital in the following principal subsidiaries, all of which are included in the Consolidated Financial Statements:
| Name of subsidiary | Principal activity | Country of incorporation |
|---|---|---|
| Titon Hardware Limited | Design, manufacture and marketing of window fittings and ventilators |
England |
| Titon Inc. | Distribution of Group products | USA |
| Titon Korea Co. Ltd | Manufacture of window ventilators | South Korea |
For the subsidiaries listed above, the country of operation is the same as the country of incorporation.
| 2010 £'000 |
2009 £'000 |
|
|---|---|---|
| At the beginning and end of the year | 550 | 550 |
The following entities meet the definition of an associate company and have been equity accounted in the consolidated financial statements:
| Name of associate | Principal activity | Country of incorporation and operation |
Proportion of voting rights held at 30 September 2009 and 2010 |
|
|---|---|---|---|---|
| BrownTech Sales Co. Ltd | Marketing of window ventilators |
South Korea | 49% | |
| 2010 £'000 |
2009 £'000 |
|||
| At the beginning and end of the year | 225 | 225 |
| 2010 £'000 |
2009 £'000 |
|
|---|---|---|
| Sundry debtors Amounts owed by subsidiaries |
21 2,309 |
19 2,502 |
| 2,330 | 2,521 |
Amounts owed by subsidiaries are repayable on demand.
| 2010 £'000 |
2009 £'000 |
|
|---|---|---|
| Bank overdraft | $\overline{\phantom{a}}$ | 23 |
| Corporation tax | 26 | $\overline{\phantom{a}}$ |
| Accruals | 87 | 69 |
| 113 | 92 |
Deferred tax is calculated in full on timing differences under the liability method using a tax rate of 27% (2009: 21%). The movement on the deferred tax account is as shown below:
| At 30 September 2010 | (4) |
|---|---|
| Credit to the income statement | 9 |
| At 1 October 2009 | (13) |
| £'000 | |
| allowances | |
| capital | |
| Accelerated |
| 2010 | 2009 | |
|---|---|---|
| £'000 | £'000 | |
| Authorised | ||
| 13,600,000 ordinary shares of 10p each | 1.360 | 1.360 |
The movement during the year on the Company's issued and fully paid ordinary shares of 10p each was as follows:
| 2010 | 2010 | 2009 | 2009 | |
|---|---|---|---|---|
| Number | £'000 | Number | £'000 | |
| At the beginning and end of the year | 10,555,650 | 1.056 | 10,555,650 | 1.056 |
| Share capital £'000 |
Share premium reserve £'000 |
Capital redemption reserve £'000 |
Profit and loss account £'000 |
Total equity £'000 |
|
|---|---|---|---|---|---|
| At 30 September 2009 | 1,056 | 865 | 56 | 6,810 | 8,787 |
| Profit for the year | 93 | 93 | |||
| Dividends paid | (211) | (211) | |||
| At 30 September 2010 | 1,056 | 865 | 56 | 6,692 | 8,669 |
Included within retained earnings is £111,000 of goodwill (2009: £111,000) arising on business combinations in prior years, and prior to the implementation of FRS 10.
The Company provided Browntech Sales Co. Ltd with a £100,000 unsecured loan in September 2008 which is repayable with interest at 3% p.a. within 3 years.
61
| 2010 | 2009 | 2008 | 2007 | 2006 | |
|---|---|---|---|---|---|
| £'000 | £'000 | £'000 | £'000 | £'000 | |
| Results | |||||
| Revenue | 15,609 | 14,053 | 16,375 | 17,285 | 16,600 |
| Gross Profit | 4,171 | 3,060 | 3,572 | 3,803 | 4,161 |
| Operating profit / (loss) | 668 | (219) | (148) | 357 | 782 |
| Finance income | 29 | 37 | 101 | 102 | 112 |
| Share of losses from associate | (91) | (28) | (12) | ||
| Profit / (loss) before tax | 606 | (210) | (59) | 459 | 894 |
| Income tax (expense) / credit | (199) | 8 | (205) | (15) | (219) |
| Profit / (loss) after tax | 407 | (202) | (264) | 444 | 675 |
| Dividends | 211 | 211 | 301 | 749 | 749 |
| Basic earnings / (loss) per share | 3.85p | (1.91p) | (2.50p) | 4.21p | 6.40p |
| Assets Employed | |||||
| Property, plant & equipment | 3,744 | 3.972 | 4,395 | 4,662 | 5,009 |
| Net funds | 3,110 | 3,096 | 2,546 | 1,678 | 2,069 |
| Net current assets | 6,238 | 5.811 | 5,827 | 6,274 | 6,206 |
| Financed by | |||||
| Shareholders' funds : all equity | 10,013 | 9,806 | 10,230 | 10,824 | 11,112 |
The five year summary does not form part of the audited financial statements.
$\varphi$ is $\beta$
If you are in any doubt as to what action to take, you should consult your stockbroker, solicitor, accountant or other appropriate independent professional adviser authorised under the Financial Services and Markets Act 2000. If you have sold or otherwise transferred all of your shares in Titon Holdings Plc, please forward this document and the accompanying documents to the person through whom the sale or transfer was effected, for transmission to the purchaser or transferee.
Notice is hereby given that the Annual General Meeting-of Titon Holdings Plc ("the Company") will be held at the Titon Manufacturing Division premises at Falconer Road, Haverhill, Suffolk, CB9 7XU on 16 February 2011 at 10.00 am for the following purposes:
To resolve as Ordinary Resolutions:
To consider and, if thought fit, to pass the following resolutions, of which Resolutions 7 and 8 will be proposed as an Ordinary Resolution and Resolutions 9 and 10 will be proposed as Special Resolutions.
to allot equity securities (within the meaning of section 560 of the Companies Act 2006) for cash, pursuant to the authority conferred by Resolution 7 as if section 561(1) of the Companies Act 2006 did not apply to such allotment, provided that this power shall expire on 15 May 2012 or, if sooner, the end of the next Annual General Meeting of the Company. This power shall be limited to the allotment of equity securities:
but the Company may, before such expiry, make an offer or agreement which would or might require equity securities to be allotted after this power expires and the Directors may allot equity securities in pursuance of such offer or agreement as if this power had not expired.
This power applies in relation to a sale of shares which is an allotment of equity securities by virtue of section 560(2)(b) of the Companies Act 2006 as if in the first paragraph of this resolution the words "pursuant to the authority conferred by Resolution 7" were omitted.
By order of the Board
D A Ruffell Secretary 16 December 2010 Registered Office International House Peartree Road Stanway Colchester Essex CO3 OJL
To be entitled to attend and vote at the Annual General Meeting (and for the purpose of the $\overline{I}$ . determination by the Company of the votes they may cast), members must be registered in the register of members of the Company at 6.00 p.m. 14 February 2011, (or, in the event of any adjournment, 48 hours before the time of the adjourned meeting). Changes to the register of members after the relevant deadline will be disregarded in determining the right of any person to attend and vote at the Meeting.
Any corporation which is a member can appoint one or more corporate representatives, who 8. 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.
As at 16 December 2010 (being the last business day prior to the publication of this notice) the 9. Company's issued share capital comprised 10,555,650 ordinary shares. Each ordinary share carries the right to one vote on a poll at a general meeting of the Company and, therefore, the total voting rights in the Company as at that date are 10,555,650. As at 16 December 2010 the Company held no ordinary shares as treasury shares.
65
There will be available for inspection at the registered office of the Company during normal 13. business hours on any weekday (excluding Saturdays and public holidays) and at Titon Manufacturing Division premises at Falconer Road, Haverhill, Suffolk, CB9 7XU, for at least 15 minutes prior to and during the Annual General Meeting copies of the service contract of each Executive Director and the letter of appointment of each Non-executive Director.
66
J N Anderson (Chairman) D A Ruffell (Chief Executive) T N Anderson R Brighton N C Howlett C S Jarvis C J Martin Non-executive
P W E Fitt (Vice-Chairman)
P E O'Sullivan
D A Ruffell International House Peartree Road Stanway Colchester Essex CO3 OJL
1604952 (Registered in England & Wales)
www.titonholdings.com
BDO LLP Kings Wharf 20-30 Kings Road Reading RG13EX
Evolution Securities Limited 100 Wood Street London EC2V 7AN
Macfarlanes 10 Norwich Street London EC4A 1BD
Capita Registrars Ltd Northern House Woodsome Park Fenay Bridge Huddersfield HD8 OLA
Barclays Bank Plc Witham Business Centre Witham, Essex CM8 2AT
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