Preliminary Results

18 April 2012

Hightex Group plc

 ("Hightex" or "the Group")

Preliminary Unaudited Results for the Year Ended 31 December 2011

Hightex Group plc (AIM: HTIG), a leading systems designer and installer of large area membrane roofs and façades worldwide, announces its preliminary unaudited results for the year ended 31 December 2011.

Financial Overview:

·; Turnover of €19.4 million (2010: €30.2 million)

·; Gross loss of €1.9 million (2010: gross profit of €5.7 million)

·; Pre tax loss of €5.5 million (2010: pre tax profit of €2.0 million)

·; Result per share - loss of 2.54 cents (2010: earnings of 0.78 cents)

·; Cash balances of €2.4 million (2010: €4.0 million)

Operational Highlights:

·; Hightex's technical excellence as a membrane engineering systems provider for global stadiums and its competence on tensile cable systems was further recognised by its award of the contract for the Maracana Stadium in Brazil, representing the third FIFA World cup final venue in a row where Hightex has been the chosen partner.

·; Hightex has taken steps to reduce its costs significantly, whilst maintaining its technical excellence and hiring first class engineers in order to execute complete roof or façade structures, combining cable and membrane engineering in a total system.

·; SolarNext has finalised the work on its thermal cooling technology enabling it to deliver more energy efficient systems than its competitors.

·; Initiated organisationalrestructuring programme that has overseen move to more cost efficient, centralisedand better connected premises in Bernau, Bavaria, a move which has also enabled reductions in staffing costs, communication and other expenses. The UK office will be closed by the end of June 2012, leading to a further reduction in headcount and consequential cost savings.

Charles DesForges, Executive Chairman, commented:

2011 was a disappointing year for Hightex. Whilst the three major projects were completed, demonstrating the innovative, structural engineering capabilities now possessed by Hightex, the Company experienced unforeseen operational and other delays that significantly impacted margins, in addition to which the Group's considerable pipeline of potential projects has been slow to become firm contracts. However we are confident that our restructuring programme, coupled with the global recognition that our recent projects have achieved, leave us well placed to convert the exciting pipeline of opportunities for 2012 and 2013.

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Chairman's statement

Introduction

Hightex continues to work as a global, innovative leader in the systems design and installation of large area architectural tensile polymer membrane roofs and façades by using advanced cable engineering, but in the year ended 31 December 2011 its pioneering and iconic technical achievements were not matched by financial success. The directors are determined to return the Company to profitability and have already taken decisive action to reduce costs and improve radically all aspects of project management.

Commentary of the 2011 results

Revenues for the year were earned from Hightex's innovative work on the roof above the Olympic Stadium in Kiev, Ukraine, and the retractable roof over the National Stadium, Warsaw, Poland. Both of these stadiums will be used for the 2012 UEFA European Nations Soccer Competition, hosted by Poland and Ukraine). Revenues were also earned from the installation of the world's first retractable cushion roof and ETFE façade on the BC Place Stadium, Vancouver, Canada. Revenues were also generated from the widely acclaimed "Leviathan" structure designed by Anish Kapoor and installed at the Grand Palais in Paris and from Hightex's inspection and maintenance business. Aggregate revenues in the year, which are calculated by the percentage of completion method, fell to €19.4 million (2010: €30.2 million).

The gross loss was €1.9 million (2010: gross profit of €5.7 million). In part, this went in line with the fall in revenues and the unforeseen costs in meeting the complex technical challenges encountered during the engineering, fabrication and installation phases of the BC Place contract. In addition the Warsaw project was hampered by delays by third parties during the steel work construction phase from May 2011, which caused Hightex to suffer the additional cost of hiring temporary workers in order to complete the project within the agreed timescale. Whilst the company expects to receive some compensation these have not been recognised in the accounts to 31 December 2011.

In the case of the Kiev stadium project, the delays at Kiev meant that the lifting equipment needed for the "Big Lift" of the cable structure, hired from Hightex's preferred partner, was being used on the delayed Warsaw stadium project, resulting in the Group having to work with a more expensive partner on Kiev. This caused significant additional costs to be incurred during the installation phase.

The BC Place project is, in technical terms, the world's first cable-supported retractable cushion roof and Hightex has received international recognition for this innovation. The fact that it is inflatable allows the air to act as an insulator, which makes this stadium much more energy efficient. This in turn allows the stadium to be used throughout the year as an all round events facility, resulting in higher revenues for the owner of the stadium. However, in meeting the challenges posed by a new design, Hightex incurred higher than estimated material and production costs on the fabrication of this retractable roof and greater freight costs, but it has acquired unequalled technical know-how from this installation. This knowledge and capability will be invaluable in the future, where structures demanding higher degrees of performance can now be designed and built with this acquired experience. There are already indications that new contracts will be won by using this experience.

During the year, selling & distribution costs were reduced by €0.25 million from €1.4 million to €1.2 million and administrative expenses fell by €0.2 million from €1.8 million to €1.6 million.

The result before tax for the full year was a loss of €5.5 million, compared with a profit of €2.0 million in 2010. Expressed in per share terms, the 2011 result amounted to a loss of 2.73 cents, compared with earnings per share of 0.78 cents in 2010. The loss was wholly attributable to the decrease in gross profit from contract revenue, a circumstance which the directors are determined will not happen again and steps to ensure that this is the case have already been taken, as described below.

Shareholders' funds were €8.9 million, compared with €12.2 million at 31 December 2010. In December 2011 the Company announced a placing raising £1.67m with the vast majority of these funds received in 2011. Cash balances as at 31 December 2011 were €2.4 million, compared with €4.0 million as at 31 December 2010.

Solar cooling business

In 2011, the solar cooling business made a loss at the EBIT level of €308,000 (2010: loss of €419,000) despite carrying the cost since July 2011 of its first salesman and an additional engineer. The new salesman was well received by the market and a positive feedback was noted. The engineer will allow the company to offer higher power levels suitable for medium size buildings.

The prospects of the renewable energy sector have improved in Germany, due to better political conditions and SolarNext has now the opportunity to develop its business in 2012/13 and move towards profitability. In addition, a number of promising pilot projects in Middle East and South East Asia have been identified. Their successful execution will create a very positive outlook for the development of solar cooling.

Prospects

Based on its expertise in cable and membrane systems engineering, Hightex has identified a long pipeline of potential projects within its traditional and strategic range of capability and focus - sports stadia, shopping malls, airports and other large area structures. In 2011, and currently in 2012, the Company has sought to benefit from these opportunities and has devoted its energy and resources towards converting this pipeline into actual contract wins in Brazil, the Middle East and Europe.

In October 2011, Hightex announced the award of a significant contract for the Prince Sultan Cultural Centre in Riyadh, Saudi Arabia, pursuant to which Hightex is designing, fabricating and will install the main membrane tent roof system including the complete cable net and steel structure at the Centre. The structure will comprise an outer membrane in PTFE and an inner membrane in PVC, each with an area of 16,000 m2 and an additional area of 1,000 m2 of ETFE cushions. This project is to be completed in early 2013.

In December 2011, Hightex announced that in conjunction with its Brazilian construction partner SEPA, it had been selected to engineer and install the supporting cable system and membrane structure of the roof over the Maracana Stadium in Rio de Janeiro, Brazil where the final of the FIFA 2014 World Cup, hosted by Brazil, will be played. This prestigious project has a value to Hightex substantially in excess of €10 million and the structure is planned to be completed in the first half of 2013. This represents the third FIFA World Cup venue in a row where Hightex has been chosen as the preferred partner.

Hightex continues vigorously to pursue other stadia projects in Brazil related to the 2014 World Cup and, having identified good prospects in the Middle East, in Eastern Europe and in Turkey, is submitting offers for projects to be carried out in 2012 and 2013.

Like many smaller project contracting businesses we have project revenues that are substantial but 'lumpy'. Accordingly we are sensitive to the need to keep base costs under constant review. In consequence, Hightex has taken a number of positive steps to reduce its cost base in both Germany and the UK, which have led to the termination of a number of employment contracts.

It was announced on 12 April 2012 that, following the expiry of its lease, Hightex has vacated its former rented offices and development centre in Rimsting and moved to premises in Bernau, Bavaria. The new building comprises an office facility of 1,750 m2 and a warehouse of 2,000 m2 and allows all of Hightex's sales, design and technical work to be centralised at the new building. Furthermore the new premises offer excellent transport infrastructure, being next to an exit of the Munich - Salzburg motorway.

Two parts of the new property are let to third parties who provide additional income to offset the mortgage costs. Hightex funded the property purchase with a bank loan with a fixed low rate of interest. The decision to pay interest and receive rent on an owned asset rather than to pay rent on leased premises will lead to a saving amounting to approximately half the former cost of renting premises.

Hightex also announced that as a result of this centralisation programme, it was closing its UK office, that the role of Director of Business Development had become redundant and that David Walker had resigned as a Director. It is expected that he will work his notice period of a year by carrying out a range of particular tasks as agreed with the Chief Executive Officer. The Board again thanks David Walker for the work and time he has committed to the Company over many years and regrets that it was not possible to find an alternative role for him in Germany. At the same time, all the five other employees of the UK office are also to leave the company.

Conclusion

As a whole, 2011 was extremely disappointing for the Company and shareholders alike. In consequence the Directors have taken action to reduce costs, while maintaining the Company's core excellence in high quality systems engineering. Whilst precise contract timing remains difficult to predict, the considerable number of clear pipeline opportunities for the Company remains unchanged. New cable and membrane contracts are being actively pursued and we are confident that the vigorous sales efforts which have been made in Brazil, Europe, the Middle East and South East Asia will generate significant contracts, some of which may be announced within the first half of the year.

The Directors believe that the regular cycle of sporting events, demand for improved transport infrastructure, and Hightex's reputation for innovative and iconic engineering excellence provide clear growth opportunities for the Company and look to the future with confidence.

Charles DesForges

Executive Chairman

Consolidated statement of comprehensive income

For the year ended 31 December 2011

Consolidated statement of comprehensive income (continued)

Other comprehensive income

Consolidated statement of financial position

As at 31 December 2011

Consolidated statement of changes in equity

For the year ended 31 December 2011

Consolidated statement of cash flows

For the year ended 31 December 2011

Notes to the financial information

For the year ended 31 December 2011

1 Basis of preparation

The Group financial information is presented in Euros ("€") which, as the Group is expected to transact more of its business in Euros than any other currency, is also the functional currency of the Group.

The financial information has been prepared in accordance with International Financial Reporting Standards ("IFRS"), IFRIC interpretations and with those parts of the Companies Act 2006 applicable to companies preparing their accounts under IFRS, as adopted by the European Union and Companies Act 2006. The financial information has been prepared under the historical cost convention, as modified by revaluations of financial assets and financial liabilities at fair value through the statement of comprehensive income. Details of the accounting policies applied are set out in the financial statements for the year ended 31 December 2010 and have not changed for the year ended 31 December 2011.

The directors do not propose a dividend in respect of the year ended 31 December 2011 (2010: nil).

The preliminary announcement for the year ended 31 December 2011 was approved and authorised for issue by the board of directors on 17 April 2012. The financial information set out in this preliminary announcement does not constitute audited financial statements for the year ended 31 December 2011. The financial information for the year ended 31 December 2010 is derived from the statutory accounts for that year which have been delivered to the Registrar of Companies. The auditors reported on those accounts: their report was unqualified, did not draw attention to any matters by way of emphasis and did not contain a statement under s498 (2) or (3) Companies Act 2006 or equivalent preceding legislation. The financial information for the year ended 31 December 2011 is derived from draft financial statements. The audit of the statutory accounts for the year ended 31 December 2011 is not yet complete. These accounts are expected to be finalised on the basis of the financial information presented by the directors in this preliminary announcement and will be delivered to the Registrar of Companies following the company's annual general meeting.

2. Basis of consolidation

The consolidated financial statements incorporate the financial statements of the Company and its subsidiaries made up to 31 December each year. The results of subsidiaries acquired or disposed of during the year are dealt with in the consolidated income statement from or up to their effective dates of acquisition or disposal respectively. Control is normally evidenced when the Company, or a company which it controls, owns more than 50% of the voting rights of a company's share capital.

All inter-company transactions and balances within the Group are eliminated on consolidation.

3. Business Segments

The Group has adopted IFRS 8 Operating Segments with effect from 1 January 2009. Per IFRS 8 operating segments are based on internal reports about components of the Group, which are regularly reviewed and used by Chief Operating Decision Maker ("CODM") for strategic decision making and resource allocation, in order to allocate resources to the segment and to assess its performance. The CODM is Frank Molter, CEO of the Group. The Group's reportable operating segments are as follows:

i) Membrane Business

ii) Solar Business

The CODM monitors the operating results of each segment for the purpose of performance assessments and making decisions on resource allocation. Performance is based on external and internal revenue generations and profit before tax, which the CODM believes are the most relevant in evaluating the results relative to other entities in the industry.

Information regarding each of the operations of each reportable segment is included below.

4. Share capital

4.1 Issued

By issuing 94,973,338 new shares on 28 December 2011, the Group has received a capital increase of €1,700,018 (GBP 1,424,600) which has been contributed to share capital in the amount of €1,133,345 and Share Premium in the amount of €566,673.

4.2 Share options

As of 31 December 2011 no options were exercisable (2010: none). The share options outstanding at the end of the year expire on 22 September 2019. The weighted average fair value of the share options amounts to 0.02413 pence. The shares are denominated in sterling.

The fair value of the share options granted has been calculated using the bi-nomial option-pricing model individually applied to each category of options granted and modified by the application of a Monte Carlo simulation to reflect the calculated uncertainties of the share pricing triggering the relevant target prices and to adjust the "vesting" period to the theoretical time over which the share price might be expected to achieve the relevant market facing conditions. The inputs into the model were as follows:

The expected volatility represents management's best estimate given the lack of historical information available regarding share price volatility. The management decided to use the volatility of the last 6 months before the statement of financial position date. The share price varied between 7.25 pence and 9.00 pence.

The expected life of the options is based on historical data available at the time of the option issue and is not necessarily indicative of future trends, which may not necessarily be the actual outcome.

The share option scheme is an equity settled plan and fair value is measured at the grant date of the option.

On 31 December 2011 and as at the date of this document, the Company had outstanding warrants to subscribe for 750,000 (2010: 750,000) new ordinary shares as follows:

5. Taxation

Analysis of factors influencing the tax charge:

The rate of taxation on ordinary activities of 27% is derived from the composite rate of tax applicable in Germany, where the majority of the Group's operational activities take place.

6. Earnings per share

(i) Basic and diluted earnings

The basic and diluted earnings per share is calculated by reference to the earnings attributable to ordinary shareholders divided by the number of shares in issues as at 31 December as follows:

(ii) Effect of potential ordinary shares

In accordance with IAS 33 and as the average share price in the year is lower than the exercise price, the share options do not have a dilutive impact on earnings per share for the year ended 31 December 2011.

7. Intangible fixed assets

Movements in the cost, amortisation and net book value of the assets are as follows:

In 2011 the Group capitalised development expenses of €2,000,000 resulting from the development of the technology of the new retractable cushion roof which has been developed for the project B.C. Place Stadium, Vancouver. The Group estimates an increase in sales from this new product, which results from demand in climatic cold or hot regions being triggered by trends and regulations aimed at sustainability and ecologic-energy savings.

Development expenses are being amortised over the estimated useful life which is assessed by management as 8 years.

8. Commitments under operating leases

As at 31 December, the Group had annual commitments under non-cancellable operating leases as follows:

New office premises in Bernau: The Group acquired the new office building and adjacent factory hall in Bernau, Bavaria which came with an heritable building right for its premises. The heritable building right bears a lease of annually €23,000 to the owner of the land. This lease expires on 26 February 2105.

Former office premises in Rimsting: The Group entered into a rental agreement to rent its office premises in Rimsting, Bavaria and paid €82,000 (2010: €82,000) in relation to this agreement during the year ended 31 December 2010. This lease expired on 31 December 2011.

Adjacent factory building in Rimsting: The rental agreement of the adjacent factory building in Rimsting with MK Immobilien expires on 30 September 2012. Since 1 June 2010 the annual rent was agreed at €30,000.

9. Contingent Liabilities

At 31 December, the Group had contingent liabilities under contracted performance, warranty bonds and advance payments as follows:

Included within cash at bank and in hand in the balance sheet is aggregate cash of €1,033,000 (2010: €2,604,000) lodged under the terms of performance, warranty bonds and advance payments. Access to cash balances lodged under the terms of such bonds is restricted.

10. Nature of financial information

These preliminary results will be available from 17 April 2012 on the Company's website www.hightexworld.com. Further copies can be obtained from the registered office at Masters House, 107 Hammersmith Road, London W14 0QH.

The Company anticipates posting its audited report and accounts shortly.