Unaudited Results for Six Months To 30 Jun 2013

Hightex Group plc

 ("Hightex" or "the Group")

Unaudited Results for the Six Months Ended 30 June 2013

Hightex Group plc (AIM: HTIG), a leading systems engineering company, which designs, fabricates and installs large area, cable supported lightweight membrane roofs and façades worldwide, announces its unaudited results for the six months ended 30 June 2013.

Financial Overview:

· Turnover of €3.4 million (H1 2012: €7.9 million)

· Gross profit down 55% to €0.5 million (H1 2012: €1.1 million)

· Overheads (actual) down 14% to €1.4 million (H1 2012: €1.6 million) (excluding the change in net currency gains and losses of €189,000)

· Pre-tax loss of €1.5 million (H1 2012: loss of €1.0 million)

· Result per share - loss of 0.53c (H1 2012: loss of 0.35c)

· Net cash balances of €0.7 million (H1 2012: €1.0 million)

Operational Highlights:

· The installation of the roof of the Maracana Stadium in Rio de Janeiro, Brazil was completed in May 2013. Work on the Estadio Beira-Rio in Porto Alegre, Brazil made good progress. These two contracts contributed most of the first half revenues.

· Hightex accounted for further revenues from Natal project of € 0.5 million.

· Hightex is actively pursuing other potential significant contracts, in the United Kingdom, North America and Europe.

Post Balance Sheet Event and Prospects:

· Difficulties in obtaining financial information from its Brazilian joint venture SEPA Hightex Coberturas Ltda. triggered material uncertainty over Brazilian receivables. Directors concluded to not be in a position to issue interim results for the six months period ended 30 June 2013 resulting in a suspension from trading at AIM effective from 26 September 2013.

· Lacking verifiable information, Hightex has accounted for a provision on respective receivables. The provision will be clarified following further discussion with the Company's auditors. The unwelcome consequences of this situation were difficulties in Hightex's working capital. Reference is made to Note 3 "Going Concern" of the interim financial statements.

· On October 2nd 2013 SolarNext announced it had raised €255,000 by way of a short term loan secured over 39.2% of the share capital of SolarNext. In December 2013 Hightex sold 30.6% of SolarNext for €397,000 and the terms of the original short term loan were varied resulting in the transfer to the lenders of 19.6% of the shares in SolarNext. In aggregate, 50.2% of SolarNext was sold to a number of UK investors, including management.

· Closing a loan facility with TCA Global Credit Master Fund, LP for up to USD 10,000,000 in March 2014.

· At operational level all three contracts in Brazil (Maracana Stadium, Estadio Beira-Rio and Natal) have been executed and will be ready for the World cup in 2014.

· Further the construction of the Prince Sultan Cultural Center in Riyadh, Saudi Arabia, had been halted in 2013, however a new contract is now under negotiation.

· Signed contracts to date delivered aggregate revenues of €6.7 million in the second half of 2013. Further significant contracts being pursued are expected to deliver revenues in 2014.

· Because of lower than expected SolarNext revenues in the first half year, and disappointing sales in the second half of 2013 resulting from political uncertainty on the governmental energy policy in Germany, SolarNext incurred a loss in 2013 and aims to achieve profitability in 2014.

· Hightex has submitted a number of offers in response to tender requests for projects where membrane is an essential part of the total structure. The Directors believe that new membrane contracts will be won in the first half of2014.

· It is the Directors' belief that identifying an industrial partner with financial strength would complement the engineering expertise and reputation of Hightex and would be of benefit for the Group.

For further information: 

Chairman's statement

Introduction

On 26 September 2013 Hightex Group plc ("Hightex") announced that it had experienced difficulty in obtaining relevant financial information from its Brazilian joint venture partner SEPA Hightex Coberturas Ltda. In consequence the Directors then believed that there was a material uncertainty over some of the Brazilian receivables, which led them to conclude that they were not in a position to issue interim results for the six months to 30 June 2013 until there was greater certainty in respect of those receivables. As a result of this postponement of this announcement, trading in Hightex's shares was suspended from AIM with effect from 26 September 2013.

Significant events after 1 July 2013

The lack of verifiable information and transparency of the accounts of the Brazilian joint venture, which led to the postponement of the interims announcement, has been resolved by making a provision for specific debts arising in Brazil. The provision be clarified following further discussion with the Company's auditors. Legal advice has been sought as to appropriate action required to resolve this situation for the ultimate benefit of shareholders. The unwelcome consequence for Hightex was the creation of difficulties in its working capital. Hightex has traded judiciously through the subsequent period and is pleased to announce that it has now signed a loan facility with TCA Global Credit Master Fund, LP for up to USD10,000,000. The first USD 1,800,000 has been drawn down. With the aid of this facility, Hightex has restored its sufficiency of working capital for the foreseeable future.

As part of the Company's effort in the second half of 2013 to provide working capital from all possible sources, an interest of 50.2% in the shareholding of SolarNext was sold to a number of UK investors including management.

At the operational level, all of the contracts in Brazil have been executed and the stadia will be ready for the World Cup in June 2014. The Maracana Stadium was completed in May 2013 and used for the Confederations Cup in 2013. The Porto Alegre stadium has already staged a match after the President of Brazil officially opened it in February 2014. The construction of the Saudi Arabian structure in Riyadh, which had been halted in 2013, is now due to be approved under a new design provision and a new contract is under negotiation.

In the light of this announcement, the publication of the delayed interim announcement and the signing of the loan facility agreement, trading in the shares of Hightex is expected to be restored with effect from today, 26 March 2014.

Commentary on 2013 interim results

In the first six months of 2013, Hightex's revenues decreased from €7.9 million to €3.4 million. The stadia of Maracana and of Beira Rio contributed most of the first half revenues.

Work on the Prince Sultan Cultural Centre in Riyadh, Saudi Arabia, suffered a delay as a result of changes in the local construction codes and therefore contributed little to first half revenues.

The 60% fall in revenues resulted in a gross profit €0.5 million(2012 first half: gross profit of €1.1 million). This is mainly explained by the low turnover for the Brazilian stadia of Porto Alegre and Natal in the first half of 2013.

Management responded to the financial pressures by making further reductions in general expenses, these being mainly achieved in the German operating company. These expenses fell to €1.3 millionin the first half of 2013 (2012: €1.6 million).

The result before tax in the first six months was a loss of €1.5 million compared with the loss of €1.0 million in the first six months of 2012. Expressed in per share terms, the result of the first six months of 2013 amounted to a loss of 0.53 cents, compared with a loss per share of 0.35 cents in the first half of 2012.

Shareholders' funds were €6.4 million, compared with €7.7 million at 31 December 2012 and €7.9 million at 30 June 2012. Cash balances as at 30 June 2013 were €0.7 million, compared with €0.9 million as at 31 December 2012 and €1.0 million as at 30 June 2012.

SolarNext

In the first half of 2013 SolarNext revenues were disappointing. The market for thermal cooling did not develop as rapidly as the industry had forecast and it was further adversely affected by the exceptionally cold weather in Europe during the spring of 2013. In the second half of 2013 sales continued at a low level because of political uncertainty on the governmental energy policy in Germany. These factors led to most industrial sectors putting investment plans on hold until the political complexion of the new government became clear. However, in the early weeks of 2014, a major recovery was seen in sales and SolarNext has already taken orders with a higher value than for all of 2013. The new controlling shareholder group is committed to introducing further funds into SolarNext so as to provide working capital to match the expected increase in turnover.

Prospects

Hightex has submitted a number of offers in response to published tenders for projects where the membrane component is an essential part of the total structure. The Directors believe that new contracts will be won in the first half of 2014 and the Company is vigorously pursuing a number of potential contracts, including two stadia and infrastructure projects in the Middle East as well as other identified projects in Europe and Africa. If successful, such contract wins would increase revenues in 2014 and subsequent years, bringing prospects for a return of Group profitability.

The Directors also believe that identifying an industrial partner with greater financial strength would complement the engineering expertise and the reputation of Hightex would be of benefit to the Group, its shareholders and its employees. The Board will also consider if necessary raising further capital from current shareholders.

The Directors and all employees are striving to secure new membrane and cable structure contracts and to drive SolarNext to profitability. 2014 will no doubt be challenging but Hightex's reputation for innovative engineering excellence places the Company in a good position when confidence in and infrastructure investment returns to the global economy.

Charles DesForges

Executive Chairman

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (continued)

CONSOLIDATED STATEMENT OF CASH FLOWS

STATEMENT OF CHANGES IN CONSOLIDATED SHAREHOLDERS' EQUITY (Unaudited)

1. General information

Hightex Group Plc was incorporated on 28 June 2006 under the Companies Act 1985. The Company was registered under the number 5860429. The Company's registered office is located at Masters House, 107 Hammersmith Road, London W14 0QH. The Company is domiciled in the United Kingdom.

The consolidated financial information is presented in Euros (€).

2. Basis of preparation

The next annual financial statements of Hightex Group ('the Group') will be prepared in accordance with International Financial Reporting Standards (IFRS) as adopted for use in the EU applied in accordance with the provisions of the Companies Act 2006.

Accordingly, the interim financial information in this report has been prepared using accounting policies consistent with IFRS. IFRS is subject to amendment and interpretation by the International Accounting Standards Board (IASB) and the International Financial Reporting Interpretations Committee (IFRIC) and there is ongoing process of review and endorsement by the European Commission. The financial information has been prepared on the basis of IFRS that the directors expect to be applicable as at 31 December 2013.

The financial information has been prepared under the historical cost convention. The principal accounting policies set out below have been applied to all periods presented.

The consolidated interim financial information has been prepared assuming that the Group will continue as a going concern. Reference is made to Note 3. "Going Concern" below.

The same accounting policies, presentation and methods of computation have been followed in these unaudited interim financial statements as those which were applied in the preparation of the Group's annual financial statements for the year ended 31 December 2012.

The interim financial information for the six months ended 30 June 2013 was approved by the directors on 24 March 2014.

3. Going concern

Due to difficulties in obtaining relevant financial information from its Brazilian joint venture SEPA Hightex Coberturas Ltda. and material uncertainty over some of the Brazilian receivables Hightex faced difficulties in its working capital due to lack of cash receipts from these projects after the balance sheet date 30 June 2013. In order to restore the going concern assumption the Company has taken the following material measures:

· sale of 50.2% of the shares in SolarNext AG

· signing a loan facility with TCA Global Credit Master Fund, LP for up to USD 10,000,000, of which the first USD 1,800,000 has been drawn down.

Based on the financial forecasts for 2014 and 2015 and the Group's economic prospects the directors of Hightex Group have made the assessment, that these measures provide sufficient working capital in order to overcome the period until Hightex Group is able to earn operating positive cash flows from new projects in 2014. In assessing whether the going concern assumption is appropriate, the directors have taken into account all available information for the foreseeable future; in particular for the twelve months from the date of issue of the interim financial information. This included the nature of the business in which Hightex operates, the contracted revenues for the remainder of 2013, expected contract wins in 2014, as well as the aforementioned financing facilities available to the Group.

4. Taxation

5. Earnings per share

6. Dividend

The directors do not propose the payment of an interim dividend (2012: nil).

7. Contingent liabilities

The group had contingent liabilities of €893,000 (31 December 2012: €529,000) under contracted performance and warranty bonds and advance payments.

8. Post balance sheet events

The following material post balance sheet events have incurred to date:

At operational level all three contracts in Brazil (Maracana Stadium, Estadio Beira-Rio and Natal) have been executed and will be ready for the World cup in 2014.

Difficulties in obtaining financial information from its Brazilian joint venture SEPA Hightex Coberturas Ltda. triggered material uncertainty over Brazilian receivables. Directors concluded to be not in a position to issue interim results for the six months period ended 30 June 2013 resulting in a suspension from trading at AIM effective from 26 September 2013.

Lacking verifiable information Hightex has accounted for a provision on respective Brazilian receivables. The provision will be clarified following further discussion with the Company's auditors. The consequences of this situation were difficulties in Hightex' working capital.

Providing working capital from all possible sources in the second half of 2013 included the sale of 50.2% of the shares in SolarNext AG and signing a loan facility with TCA Global Credit Master Fund, LP for up to USD 10,000,000 in March 2014.