22 Jun 2015 13:58
Tex Holdings Plc ("Tex" or the "Company")
CHAIRMAN'S STATEMENT - 22 JUNE 2015
I expect you have had time to read our annual accounts and I will be happy to address any questions you may have in due course.
As a Board we have three key responsibilities, to our shareholders, to our pensioners and to our employees.
If I may address our pension fund first as this is a variant that can cause problems. You will see from the accounts that our pension fund deficit has increased during the year due to the way deficits are valued, whilst our investments have over the year improved. We have looked at methods of eliminating this deficit altogether from our balance sheet by selling our liabilities. The cost of doing this however would be in the region of £6m. The Board have therefore decided to continue to fund the pension fund from earnings, but we must bear in mind that the Trustees take independent advice as to what future contributions are required in order to meet those ongoing liabilities.
Next may I deal with our shareholders and I am sure the reason we are all here is to receive a fair return on our investment. In order to accumulate wealth, a certain degree of risk has to be entertained which, at times can pay off and at other times not. An example of the former is the rental of our 40T hammer to Venezuela which made profits of over £1m. Conversely our ATC subsidiary was involved in a contract in Oman, which cost us an amount of money of similar magnitude.
As a small diversified group of companies, Tex had struggled, for a number of years, to produce satisfactory returns from its plastics companies. Thanks to good management led by Chris Varley, who I am delighted to welcome to the main Board, this division has recently performed well. His successor as head of plastics, Justin Davies, is proving capable. As a Board, we are delighted to have him as MD of the division and wish him every success in the future.
Coming now to our engineering division, BSP has, for many years, been a strong contributor to our group and is a well-respected company worldwide. Our enquiry levels are well up to strength, but level of conversion to actual orders has been slow and this is not without concern. Support for the company is ongoing, although at this time, against a backdrop of an economy that lacks vibrancy in Europe, South America and many parts of the Far East. Your Board is of course alive to mitigation of losses should there be a need to do so.
Tex Engineering has shown signs of a return to profitability in the first half of the year but we are not though out of the woods, we are working on containing overheads in an effort to improve returns.
Eurotex faces a contracting market for Paxman diesel engines which are becoming increasingly obsolescent. The directors are actively looking for other products to introduce into its range of services in order to keep an experienced team of marine engineers in work.
As has been alluded to above, ATC has had a tough ride; it is nevertheless a well-respected company in the supply of air traffic control rooms. On a supply only basis, we are now working on a further order in Oman and looking for other work there too. Risk has been reduced in our modus operandi and the company now faces the prospect of a return to profit this year. Alongside the provision of air traffic control rooms it must be remembered that a small ATC team is also providing the UK's two new aircraft carriers with their flying control rooms. This is high profile work carrying a significant degree of technical proficiency.
QK Honeycomb Products has returned to profit following a period of recovery. Performance has recently been adversely affected by the weak euro currency leading to strong competition from Italy. The promotion of our products should now be strengthened by an addition to our sales team. We are looking for this company to return to being a major contributor to profits.
Finally I would like to mention those who work for Tex, many of whom have worked in the group for much of their lives. We are supported by 464 people, several with families. As a Board we are grateful for their loyalty and their contribution. Job security is something the Board has always been attentive to.
Now for the future of Tex Holdings, there are eminent investment houses in the city who believe that both the present political and economic situation holds the potential to cause severe shocks on the down side, because of this the Company has been content to reduce borrowings substantially. Weighed down by debt we are aware Governments are intent upon reducing their own debt burden through attempting to engineer a degree of inflation. We will endeavour to contain our own debt in order to meet that inflation should it arise.
For the future we will continue to protect our pensioners and support those who work for us. In the meantime we have increased the dividend to our shareholders.
In terms of current trade, caution is our watchword.
A.R.B. BURROWS
Chairman
22nd June 2015