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TEX HOLDINGS PLC

INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the 6 months ended 30 June 2020

TEX HOLDINGS PLC

INDEX

TEX HOLDINGS PLC

CHAIRMAN'S STATEMENT

The business overall has been adversely impacted by the COVID-19 situation. As such, the board and senior management team have taken swift and timely action to mitigate the impact caused by the pandemic. The business has made use of the Government furlough scheme and has managed costs tightly in all areas. It is expected that the results of these measures will provide a solid base for recovery and growth in 2021 although cashflow continues to be critical.

The Plastics Division is trading at approximately 70% of expected levels which is thanks to the increase in business from the medical and hygiene sectors compensating for the slowdown in other orders. With lockdown restrictions easing, business has started showing signs of recovery. The cost control initiatives previously announced have been implemented.

Tex Engineering is having a difficult year and a root and branch review is being made of the cost and pricing structures to provide a more efficient, lean and profitable operation. The orders are improving with June intake recovering to pre COVID-19 levels, with certain capital plant sales secured. The prospect of future investment in major infrastructure projects gives grounds for cautious optimism.

Eurotex trading during the first half of the year has been better than budgeted levels with orders being received from a number of sovereign navies. Work continues on the River class vessels and the maintenance periods scheduled during lockdown are now confirmed for the second half of the year.

The A.T.C. division continues to progress current contracts to supply major international customers with seven Visual Control Rooms which are in the final stages of completing the structural calculations and design. Upon receipt of site-specific information and client design approval, manufacturing will commence. Contracts are ongoing in support of the Queen Elizabeth Class aircraft carriers. The division is also working on a number of additional tenders to supply specialist glass and Visual Control Rooms.

BSP started 2020 with a strong order book and continued to gain good traction with order intake in Q1, which has resulted in us completing the first half of the year slightly ahead of budgeted sales despite the challenges of the pandemic. Cash collection has been strong throughout the period and the second half of the year is expected to be in line with budgeted levels.

G&M TEX has experienced a slowdown in orders, however the orders for generators on six crab fishing vessels are expected to be placed in Q3. The project for Colchester NHS Trust, whilst delayed, is now expected to complete testing in July with installation in August. Generally, the experience has been that orders will still materialise but at a slower rate than pre-pandemic expectations. 

QK Honeycomb Products has been the one Group company hardest hit by COVID-19. During the 1st quarter of the year trading was at above budgeted levels. However, due to COVID-19, the majority of QK's regular customers suspended production, resulting in a significant drop in demand during the 2nd quarter. The easing of government lockdown restrictions has seen a gradual return of some customers, although normal operations are not anticipated to resume until late August, after the annual summer shutdown period. The main customer base - the 'leisure vehicle manufacturers' - are reporting positive news from their dealers, advising a surge of interest from new and existing customers as people consider the 'staycation' holiday.

As a Group, 2020 is no longer a year of planned growth, but a year to review and consolidate the businesses, minimise costs wherever possible and put measures in place to use COVID-19 as a catalyst for change. This will build a far more lean and agile business for when the recovery eventually materialises. In light of the current uncertainties around COVID-19, the global economy and Brexit, the Board has decided it needs additional working capital and has approached the major shareholder for further funding.

The Board is not proposing to pay an interim dividend (2019: £Nil).

G.C. Gray

Chairman

12th August 2020

TEX HOLDINGS PLC

RESPONSIBILITY STATEMENT

In respect of the interim financial report

We confirm that to the best of our knowledge:

· the interim condensed consolidated financial statements have been prepared in accordance with IAS 34 "Interim Financial Reporting" as adopted by the EU;

· the interim management report includes a fair review of the information required by Disclosure and Transparency Rules ("DTR") 4.2.7R (indication of the important events during the first six months and description of principal risks and uncertainties for the remaining six months of the year); and

· the interim management report includes a fair review of the information required by DTR 4.2.8R (disclosure of related parties' transactions and changes therein).

G. C. Gray

Chairman

12th August 2020

TEX HOLDINGS PLC

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

TEX HOLDINGS PLC

CONSOLIDATED BALANCE SHEET

TEX HOLDINGS PLC

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

TEX HOLDINGS PLC

CONSOLIDATED STATEMENT OF CASH FLOWS

TEX HOLDINGS PLC

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. Basis of preparation

The condensed consolidated financial statements have been prepared using accounting policies consistent with International Financial Reporting Standards as adopted by EU and in accordance with International Accounting Standard (IAS) 34 Interim Financial Reporting. The condensed consolidated financial statements have not been audited or reviewed.

They do not include all disclosures that would otherwise be required in a complete set of financial statements and should be read in conjunction with the 2019 annual report.

The comparative figures for the financial year ended 31st December 2019 are the statutory financial statements for that financial year. Those financial statements have been reported on by the Company's auditors and delivered to the Registrar of Companies. The report of the auditors was (i) a disclaimer of opinion, (ii) did include a reference to any matters to which the auditors drew attention by way of emphasis, and (iii) did contain a statement under section 498 (2) or (3) of the Companies Act 2006.

2. Significant accounting policies

The condensed consolidated financial statements have been prepared under the historical cost convention.

The same accounting policies, presentation and methods of computation are followed in these condensed consolidated financial statements as were applied in the preparation of the Group's consolidated financial statements for the year ended 31st December 2019.

3. Segment information

The following is an analysis of the revenue and results for the period analysed by business segment, the Group's primary basis of segmentation.

TEX HOLDINGS PLC

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

3. Segment information (continued)

Segment information about the Group's continuing operations is presented below.

4. Taxation

Interim period corporation tax is accrued based on the estimated average annual effective income tax rate of 19% (6 months ended 30th June 2019: 19%). We have not put in corporation tax assets into the balance sheet as we do not believe that we will receive refunds in relation to corporation tax. Losses will be utilised within the Group.

5. Earnings per share

Basic earnings per share of (21.5p) (2019: (5.5p)) is based on the following data.

TEX HOLDINGS PLC

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

6. Dividends

During the interim period, no dividends were paid (2019: £Nil).

7. Property, plant and equipment

During the period, the Group spent £474,000 on additions.

It also disposed of certain machinery and equipment with a carrying value of £7,000 for proceeds of £19,000.

8. Related party transactions

The Company has a related party relationship with its subsidiaries and directors.

ARB Burrows has an interest in Edward Le Bas Properties Limited through which the Group rents properties at normal commercial rates. Transactions during the period ended 30th June 2020 that require disclosure are detailed below:

Rentals paid £308,000 (30th June 2019: £257,000)

Other property related expenditure £84,000 (30th June 2019: £93,000)

Trade payables £30,943 (30th June 2019: £14,692)

Rental of machinery £64,104 (30th June 2019: £Nil)

ARB Burrows has an interest in IS&G Steel Stockholders Limited through which the Group purchases steel. Transactions during the period ended 30th June 2019 that require disclosure are detailed below:

Purchases £54,137 (30th June 2019: £139,274)

Trade payables £2,566 (30th June 2019: £63,074)

ARB Burrows has an interest in Le Bas Investment Trust Limited through which the Group has borrowed a short-term loan. Transactions during the period ended 31st December 2019 that require disclosure are detailed below:

Interest (3.75%) £13,556 (31st December 2018: £4,675)

Loan balance £Nil (31st December 2018: £1,300,000)

ARB Burrows has an interest in Edward Le Bas Properties Limited through which the Group has borrowed a term loan. Transactions during the period ended 31st December 2019 that require disclosure are detailed below:

Interest (8.00%) £52,165 (31st December 2018: £Nil)

Loan organisation fees £2,166 (31st December 2018: £Nil)

Loan balance £7,000,000 (31st December 2018: £Nil)

ARB Burrows is a trustee and a beneficiary of the Pension and Assurance Scheme of Edward Le Bas Limited, which is a substantial shareholder in the Company.

All intra-group related party transactions and outstanding balances are eliminated in the preparation of the consolidated financial statements of the Group and therefore in accordance with IAS 24 related party disclosures are not disclosed.

TEX HOLDINGS PLC

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

9. Significant events and transactions

The World Health Organisation declared coronavirus and COVID-19 a global health emergency on 30th January 2020. Since then, Tex Holdings plc has experienced significant disruption to its operations in the following respects:

Closure or partial closure of some of the Group's factories;

Disruptions in the supply of inventory from major suppliers; and

Decreased demand for certain products.

The significant events and transactions that have occurred since 31st December 2019 relate to the effects of the global pandemic on the Tex Holdings plc interim consolidated financial statements for the six months ended 30th June 2020 and are summarised as follows.

(a) Decrease in sales and cash flows

As disclosed in Note 3, most revenue streams have experienced significant reductions since the pandemic's effects became widespread.

(b) Government grants

Tex Holdings plc applied for various government support programs introduced in response to the global pandemic. Included in profit or loss is £688k of government grants obtained relating to supporting the payroll of Tex Holdings plc employees. Tex Holdings plc had to commit to spending the assistance on payroll expenses.

10. Approval of interim financial statements

The interim financial statements were approved by the Board of Directors on 12th August 2020.