20 Jun 2016 15:22
CHAIRMAN'S STATEMENT - 20TH JUNE 2016
I hope you have all received our annual accounts and in due course I will be happy to answer any questions you may wish to raise.
To bring you up to date with our trading activities, I will, as always, start with the good news.
• Tex Engineering, after many years in the doldrums, continues to grow its sales and at last is starting to produce a better figure on the bottom line. We hope this will continue for the rest of the year.
• QK Honeycomb Products is trading ahead of budget and if it can keep up its level of order intake we are hoping it can produce some good results through to the end of the year. In the past this company has produced some very satisfactory results, but of late suffered from low volumes. If it can build its order book it could become one of our major earners in the years to come.
• At the AGM last year we were asked as to whether we had any acquisitions in mind and I am delighted that G&M Tex has joined the group, contributing to our earnings in the last year and they will benefit from group representation. It should be a major addition to our company.
• Eurotex has suffered from some long lead times on its conversion from enquiries to orders. A number of decisions are awaited, which should put the company in a far better position in the coming year, but overseas politics may delay our return to profit. We continue to search for new products.
• As one of our late Prime Ministers, Harold Macmillan, said exporting is fun. His experience I feel was somewhat doubtful and I fear the Middle East failed to come into the territory he was referring to. Tex ATC, which has in the past suffered from a major difficult contract in Oman, is in the middle of completing a further contract in that country, taken on a very different basis, which is at present on line to perform as we would wish. A further contract in Oman is taking time to be signed, but we continue to be hopeful. We have some interesting enquiries from new territories, which we are following up, especially the new Indian aircraft carrier where we have been invited to quote for.
• BSP has suffered from a lack of orders in the world of civil engineering. The Middle East, South America, USA and Europe have all suffered from lack of confidence, terrorism and politics. We continue with a substantial level of enquiries, but our level of conversion has fallen substantially.
• For a number of years we have received strong results from Plastics at Barnstaple, but we have struggled to obtain good results at Derby. I am pleased to report that our management at Derby have managed to improve our results however Barnstaple is being pressurized on margins, lower volume and some machine breakdowns. We are improving this with further investment, but must be prepared for further costs over the next few years and with customers demanding cost reductions. We also face substantial increases in cost due to the minimum wage, but the directors are exploring ways to improve automation.
In the event of a Brexit we are warned by our Chancellor of rough times ahead. We have put in place a borrowing facility to steer us through any stormy waters to come. We have signed up a term loan, repayable over 5 years, of £2m and short term facilities of £2.5m to cover any possible increase in trade.
We continue to make progress with the pension fund. The deficit has reduced by £1.1m our investments have performed in line with the market or better, but the method of valuing pension fund deficits has improved our position somewhat.
As a group we have a responsibility to our employees, our pensioners and, of course, our shareholders. We work hard to make sure our pensioners receive their well-earned pensions, we receive great support from our employees and we appreciate their hard work at the same time we do our best to maximize our earnings for shareholders.
A.R.B. BURROWS
Chairman
20th June 2016