Hightex Group Regulatory News (HTIG)

2 Apr 2007 07:02

Hightex Group PLC02 April 2007 Hightex Group PLC ("the Company") Preliminary Audited Results for the Period Ended 31 December 2006 Hightex Group plc ('Hightex' or 'the Company') is the holding company for agroup of companies engaged in: • the design, production and installation of polymer membrane tensile structures; and • the exploitation of intellectual property assets in the field of solar energy and related areas The Company's principal operating subsidiary, Hightex International AG ('HTI')and its subsidiary undertakings are involved in the design, production andinstallation of polymer membrane structures for use by architects and structuralengineers. Recent completed projects include the roofs on the new Grandstand atRoyal Ascot Racecourse and the passenger concourses at the new BangkokInternational Airport, Thailand. The Company's intellectual property subsidiary, SolarNext AG ('SolarNext'), ownsand is negotiating to acquire additional intellectual property rights which arechiefly focussed on applications in the generation of solar energy, solarcooling, the prevention of heat from entering homes, offices and otherstructures, and the desalination of water. SolarNext has close links with theFraunhofer Institute for Solar Energy Systems in Freiburg, Germany, which has astaff of more than 400 and is the largest solar energy research institute inEurope. KEY POINTS: o 2006 a transitional year of internal restructuring and the AIM admission process.o Audited consolidated results reflect merely the four month period after the acquisitions.o Turnover was €3.8 million; the gross profit was €1.95 million and after charging approximately €353,000 of development expenditure on SolarNext, the loss before taxation was €1.15 million.o On a pro forma basis and assuming that the Hightex Group had been in existence (as it is presently constituted) on 1 January 2006, full year turnover was €8.4 million, the gross profit was €3.5 million and the loss before tax €2 million.o Revenues lower than expected due to delay in starting work on the installation of the roof at the new Robina Gold Coast Stadium in Brisbane for a total value of €4.2 million and delays in the definitive award of a contract for a stadium in a city in northern Europe for which the consortium (of which Hightex formed part) won the tender.o Signed contracts for membrane business to date will deliver revenues greater than the entire pro forma revenues of 2006. The chief contracts in this category include the Robina Gold Coast Stadium in Brisbane, the MTZ Munchner Technologiezentrum, the 11M Monument in Madrid and the start of work on the retractable roof above the Centre Court at Wimbledon.o Dave Capezzuto who joined from a competitor and was appointed to the new post of head of sales in the Company's new USA subsidiary, has developed several leads and the board look forward to announcing in due course the first significant contract in the USA.o The solar business has signed a Letter of Intent to secure a licence for the joint development and exclusive supply of a thin, flexible photovoltaic component, which is extremely light and capable of being incorporated into an overall membrane structure.o During 2007, the executive team will be devoting all its resources to growing the Hightex businesses, free from the time constraints of any internal re-organisation and from the fund raising process. COMMENT: Charles DesForges, Chairman, said: "The membrane business has made a good startto the current financial year and the board is working diligently to build thesolar business. The directors look forward to making significant progress in2007." For further information please contact:Charles DesForges (Chairman) 07799 626 238Frank Molter (Finance Director) 0049 1729 651 464Jeff Keating (Teather & Greenwood) 020 7426 9000David Lynch (Teather & Greenwood) 020 7426 9000 Chairman's Statement The audited results for the Company cover the four month period from 6 Septemberto 31 December 2006. On 6 September, the entire issued share capital of theCompany was admitted to AIM and the Company completed the acquisition of theHightex businesses, chiefly Hightex International (HTI) AG and SolarNext AG. The audited consolidated results reflect merely the four month period after theacquisitions. Turnover was €3.8 million; the gross profit was €1.95 million and,after charging approximately €353,000 of development expenditure on SolarNext,the loss before taxation was €1.15 million. On a pro forma basis and assuming that the Hightex Group had been in existence(as it is presently constituted) on 1 January 2006, full year turnover was €8.4million, the gross profit was €3.5 million and the loss before tax €2 million,after charging approximately €353,000 of development expenditure on SolarNext.The pro forma level of sales is lower than had been anticipated. In part this isdue to a delay in starting work on the Company's first major contract inAustralia, the design and installation of the roof at the new Robina Gold CoastStadium in Brisbane for a total value of €4.2 million (most of the revenue fromwhich will fall into 2007) and delays in the definitive award of a contract fora stadium in a city in northern Europe for which the consortium (of whichHightex formed part) won the tender. The board views 2006 as being a transitional year, The internal re-structuringof the companies of which Hightex Group plc is now the holding company, the fundraising of €2.5m (before expenses) which closed in March 2006, together with thesubsequent AIM Admission process all impacted on the ability and availability ofsenior management to focus on generating additional revenue. The prospects for 2007 look much more encouraging. On the membrane business,signed contracts to date will deliver revenues greater than the entire pro formarevenues of 2006. The chief contracts in this category include the Robina GoldCoast Stadium in Brisbane, the MTZ Munchner Technologiezentrum, the 11M Monumentin Madrid and the start of work on the retractable roof above the Centre Courtat Wimbledon. Part of the proceeds of the placing in September 2006 has been deployed in thehire of further salesmen and engineers, including Dave Capezzuto who joined froma competitor and was appointed to the new post of head of sales in the Company'snew USA subsidiary. He has developed several leads and the board look forward toannouncing in due course the first significant contract in the USA. Hightex is actively pursuing several major new contracts including, amongothers, new stadia for the FIFA 2010 World Cup in South Africa and it will bebidding for a variety of structures for the 2012 London Olympics. The list ofpotential projects identified by the executive team as being within theCompany's capability and capacity, with construction schedules stretching from2007 to 2009, and located mainly in Europe, the USA and Asia, exceeds €100million. These are being vigorously pursued. The solar business has been slower to develop than anticipated, but the Companyhas signed a Letter of Intent to secure a licence for the joint development andexclusive supply of a thin, flexible photovoltaic component, which is extremelylight and capable of being incorporated into an overall membrane structure. TheCompany is already negotiating a contract to construct a roof over a new andremote sawmill, which would incorporate this membrane, thus allowing the sawmillto generate its own power. The directors believe that this membrane would be asignificant contribution to the creation of the Company's Intelligent Buildingdivision. The Company's first solar cooling system has been successfullyinstalled in Germany. The Company has also reached an agreement with a party in relation to a previouscontract which has resulted in the payment by that party to Hightex ofapproximately €1,040,000. This sum represents an increase to both profit beforetaxation and to the group's cash resources and will be accounted for wholly inthe accounts for the year ending 31 December 2007. During 2007, the executive team will be devoting all its resources to growingthe Hightex businesses, free from the time constraints of any internalre-organisation and from the fund raising process. The membrane business hasmade a good start to the current financial year and the board is workingdiligently to build the solar business. The directors look forward to makingsignificant progress in 2007. Charles DesForgesNon-Executive Chairman Finance Report The Company came into existence on 6 September 2006, the day it was admitted toAIM when it completed the acquisition of its present subsidiaries. The Company'smaiden financial report has been presented on a different basis from thefinancial information on the underlying Hightex businesses which was containedin the Company's AIM admission document and in the interim financial informationpublished in respect of the period prior to the acquisition of those businesses. Basis of presentation The financial information set out in the Company's AIM Admission document and,subsequently in its interim statements for the six months ended 30 June 2006,related to the period before the Company acquired HTI and SolarNext businesses.That financial information was prepared on the basis of presenting the resultsfor HTI and its now wholly owned operating subsidiaries and of SolarNext on acombined basis, as though they had been owned with effect from 1 January 2006.The financial statements of the Company for the period from 6 September 2006 to31 December 2006 have been prepared on a consolidated basis and reflect onlyfour months of trading of the Group as it is now constituted. The pro formaresults of the newly constituted Group, presented as if the date of allacquisitions in the year ended 31 December 2006 had been 1 January 2006, are setout in the Business Combinations table in Note 6. For comparison purposes, theresults are reproduced below: 6 months ended 6 months ended Full year 4 months 30 June 2006 31 Dec 2006 ended 31 Dec 2006 31 Dec 2006 (Unaudited) (Pro forma) (Pro forma) (Audited) •'000 •'000 •'000 •'000 Turnover 3,878 4,568 8,446 3,790Cost of sales (2,737) (2,178) (4,915) (1,838)Gross profit 1,141 2,390 3,531 1,952Salaries and related expenses (959) (1,161) (2,120) (947)Other operating expenses (1,000) (2,146) (3,146) (1,969)Depreciation and amortisation (83) (159) (242) (136)Operating deficit (901) (1,076) (1,977) (1,100)Net interest 7 (87) (80) (46)Net deficit before taxation (894) (1,163) (2,057) (1,146)Taxation 353 131 484 249Deficit after taxation butbefore minority interests (541) (1,032) (1,573) (897)Minority interests - (37) (37) (53)Retained deficit after taxation (541) (1,069) (1,610) (950) Results Turnover reached €8.4 million in the 12 months ended 31 December, of which €3.8million is included in the consolidated financial statements as postacquisition. Gross profit in the full year amounted to €3.53million, of which€1.95 million is included in the consolidated financial statements as postacquisition. After charging approximately €353,000 of development expenditure onthe solar business (SolarNext), the loss before tax amounted to €2.0 million forthe full year to 31 December, of which €1.15 million is included in theconsolidated financial statements as post acquisition. Cash resources As family owned enterprises before their acquisition by the Company, the Hightexbusinesses were restricted in the scale of their potential operations by a lackof financial resources. To remedy this restriction, HTI first raised €2.5mthrough a private placing which closed in March 2006. Secondly, the transactions at the time of Admission to AIM brought a further€4.4m (net) through the merger with West 175 Media Group Inc, a cash shell withapproximately €3.0m, and a placing by the Company of €2.2m at the time of theacquisition of HTI and admission to AIM, less costs of the placing and admissionof approximately €850,000. At 31 December 2006 the Group had cash resources amounting to approximately €5.3million. Included in those cash resources were amounts of approximately €2.3million, which are lodged as security for performance bonds and warrantiesrelating to the integrity of membrane structures. Such amounts are releasedover varying time periods, as specified in individual construction contracts.Amounts so lodged represent a drain on the group's available free workingcapital resources and the Board is currently and actively seeking to replacethese cash deposits with alternative security arrangements involving the use ofinsurance products and/or specific bank finance. Frank MolterFinance Director GROUP INCOME STATEMENTFOR THE PERIOD ENDED 31 DECEMBER 2006 2006 Notes •'000Continuing operations Revenue 4 3,790Cost of sales (1,838) Gross profit 1,952 Salaries and related expenses (947)Other operating expenses (1,969)Depreciation and amortisation (136) Operating loss (1,100) Interest and other income 69Finance costs (115) Loss on ordinary activities before tax (1,146) Income tax credit 249 Loss after tax and before minorities (897) Minority interest (53) Loss from continuing operations and attributable to equity holders (950) Loss per share (cents):Basic and diluted 7c (0.79) GROUP STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITYFOR THE PERIOD ENDED 31 DECEMBER 2006 Share Share Retained capital Premium earnings Total •'000 •'000 •'000 •'000 Balance at 28 June 2006 - - - - Loss for the period - - (950) (950)Currency translation differences - - (41) (41)Total recognised income and expenses for the year - - (991) (991) Issue of shares 1,775 12,845 - 14,620 Costs of issue of shares - (1,088) - (1,088) Balance at 31 December 2006 1,775 11,757 (991) 12,541 GROUP BALANCE SHEETAS AT 31 DECEMBER 2006 2006 Notes •'000Assets Non-current assetsGoodwill 6 6,627Other intangibles 65Property, plant and equipment 768Deferred tax asset 143 7,603Current assetsCash at bank and in hand 5,305Inventories 143Trade and other receivables 3,638 9,086 Total assets 16,689 Equity and liabilities Current liabilities Trade payables 1,329Accrued liabilities and deferred income 1,358Other accounts payable 1,009 3,696 Non-current liabilitiesAccrued liabilities and deferred income 187Other accounts payable 67 254 Total liabilities 3,950 Capital and reservesShare capital 7 1,775Share Premium 11,757Retained earnings (991)Minorities 198 Total equity 12,739 Total equity and liabilities 16,689 GROUP CASH FLOW STATEMENTFOR THE PERIOD ENDED 31 DECEMBER 2006 2006 •'000 Cash flows from operating activities Notes Operating loss for the period (1,100) Adjustments for:(Profit)/loss on disposal 4Depreciation 127Amortisation and impairment of intangibles 59 Operating cash flows before movements in working capital (910) Decrease/(increase) inventories (143)(Increase)/decrease in receivables 903Increase/(decrease) in payables 595 Cash generated from operating activities 445 Interest paid (115)Income tax paid (23) Net cash generated from operating activities 307 Cash flows from investing activities Acquisition of subsidiary, net of cash acquired 4,307Acquisition of property, plant and equipment (468)Interest received 69 Net cash used in investing activities 3,908 Cash flows from financing activities Proceeds from issuance of shares 2,178Costs of issue of shares (1,088) Net cash from financing activities 1,090 Net decrease in cash and cash equivalents Cash at bank and in hand at the beginning of the period - Cash at bank and in hand at the end of the period 5,305 Cash at bank and in hand comprises: 3 2,997Cash and cash equivalents 2,308 Cash lodged under performance and warranty bonds 5,305 1. Corporate information Hightex Group plc was incorporated in England on 28 June 2006. Since that datethe Company acquired its interests in its subsidiaries such that the Company isnow the holding company for the Group. The principal activity of the Group isthe design, supply and assembly of polymer membrane structures for use inengineering and construction of technically advanced buildings. The Company's principal subsidiary, Hightex International AG ('HTI') is aprivate company registered in the Canton of Thurgau in Switzerland. HTI is therecently formed holding company for a number of entities which were acquired byHTI during 2006. In addition, SolarNext AG, a private company incorporated in Traunstein,Germany, has acquired, and will acquire further, licences and other rights tosolar IP from a variety of sources including the Fraunhofer Institute for SolarEnergy Systems in Freiburg, Germany. Hightex Americas LLC, a limited liability company formed and registered in thestate of Delaware, USA, was formed to effect the statutory merger with West 175Media Group Inc described in note 6. 2. Basis of presentation The financial information set out in this announcement does not constitute theCompany's statutory accounts for the period ended 31 December 2006. Theauditors have reported on the 2006 accounts; their report was unqualified anddid not contain a statement under section 237 (2) or (3) of the Companies Act1985. The financial information contained in this preliminary announcement has beenprepared using accounting policies and practices consistent with those used inpreparing the statutory accounts. The Company's statutory accounts have beenpresented on a different basis from the financial information on the underlyingHightex businesses which was contained in the admission document issued inrelation to the admission of Hightex Group plc to the AIM Market of the LondonStock Exchange on 6th September 2006. In that document financial information onthe Hightex companies was presented on a combined basis in accordance withStandards of Investment Reporting issued by the Auditing Practices Board in theUnited Kingdom. The consolidated financial information of the Group has been prepared forthe four month period from 6 September 2006 to 31 December 2006 on the basisthat the current Group structure has only been in place through this period. The financial information has been prepared under the historical costconvention, and in accordance with applicable International Financial ReportingStandards (IFRS). A summary of the significant accounting policies, which havebeen applied consistently, are set out below. The consolidated financial information is presented in Euros because theGroup is expected to transact more of its business in Euros than any othercurrency. The directors approved this preliminary announcement for issue on 30 March 2007. 3. Accounting Policies Basis of consolidation The consolidated financial statements incorporate the financial statements ofthe Company and its subsidiaries made up to 31 December each year. The resultsof subsidiaries acquired or disposed of during the year are dealt with in theconsolidated income statement from or up to their effective dates of acquisitionor disposal respectively. All inter-company transactions and balances within the group are eliminated onconsolidation. Control is normally evidenced when the Company, or a company which itcontrols, owns more than 50% of the voting rights of a company's share capital.A list of the Group's principal subsidiaries is set out in note 5. Going concern The financial information has been prepared assuming the Group will continue asa going concern. Under the going concern assumption, an entity is ordinarilyviewed as continuing in business for the foreseeable future with neither theintention nor the necessity of liquidation, ceasing trading or seekingprotection from creditors pursuant to laws or regulations. In assessing whetherthe going concern assumption is appropriate, management takes into account allavailable information for the foreseeable future, in particular for the twelvemonths from the date of approval of the financial statements. Use of estimates The preparation of the financial information in conformity with International Financial Reporting Standards requires management to make estimates and assumptions that affect reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the year end date and thereported amounts of revenues and expenses during the reported period. Actualresults could differ from those estimates. The principal areas in whichjudgement is applied are as follows: • Recoverability of trade receivables;• Assessment of the percentage of completion of construction projects;• Valuations of provisions; and• Useful lives of intangible fixed assets Foreign currency translation The reporting currency of the Company and the Group is the Euro. Gains andlosses that arise from the effect of exchange rate changes on balancesdenominated in currencies other than the reporting currency are included in theincome statement as incurred. Cash and cash equivalents All highly liquid investments purchased with an original maturity of threemonths or less are considered to be cash equivalents. Revenue recognition Revenue represents the invoiced value, net of sales taxes, of goods soldand services provided to customers. Revenues on long-term construction contracts are recognised according tothe percentage of completion method. Revenue is recognised on a pro-rata basisaccording to the work performed and the degree of completion of the contract.Where the value of the work performed on a contract exceeds the aggregate ofpayments received on account from customers, the resulting balance is includedin inventories. Where the aggregate of payments received on account fromcustomers exceeds the value of work performed on a contract, the resultingbalance is included in creditors. To date, the Group has recognised €2,281,000 in relation to long-termcontracts, and at the balance sheet date €1,376,000 has been recognised asincome from contracts yet to be fully completed. Goodwill on consolidation Goodwill arising on the acquisition of a subsidiary or jointly controlled entityrepresents the excess of the cost of acquisition over the Group's interest inthe net fair value of the identifiable assets, liabilities and contingentliabilities of the subsidiary or jointly controlled entity recognised at thedate of acquisition. Goodwill is initially recognised as an asset at cost and issubsequently measured at cost less any accumulated impairment losses. For the purpose of impairment testing, goodwill is allocated to each of theGroup's cash-generating units expected to benefit from synergies of thecombination. Cash-generating units to which goodwill has been allocated aretested for impairment annually, or more frequently when there is an indicationthat the unit may be impaired. If the recoverable amount of the cash-generatingunit is less than the carrying amount of the unit, the impairment loss isallocated first to reduce the carrying amount of any goodwill allocated to theunit and then to the other assets of the unit pro-rata on the basis of carryingamount of each asset in the unit. An impairment loss recognised for goodwill isnot reversed in a subsequent period. Other intangible assets - computer software Computer software is measured initially at purchase or production cost and isamortised on a straight-line basis over its estimated useful life, which iscurrently estimated to be 3 - 5 years. Impairment of tangible and intangible assets excluding goodwill At each balance sheet date, the Group reviews the carrying amounts of itstangible and intangible assets to determine whether there is any indication thatthose assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimatedin order to determine the extent of the impairment loss (if any). Where it isnot possible to estimate the recoverable amount of an individual asset, theGroup estimates the recoverable amount of the cash-generating unit to which theasset belongs. The recoverable amount is the higher of fair value less costs to sell and valuein use. In assessing value in use, the estimated future cash flows arediscounted to their present value using a pre-tax discount rate that reflectsthe current market assessments of the time value of money and the risks specificto the asset. If the recoverable amount of an asset (or cash-generating unit) isestimated to be less than its carrying amount, the carrying amount of the asset(cash-generating unit) is reduced to its recoverable amount. An impairment lossis recognised immediately in profit or loss, unless the relevant asset iscarried at a re-valued amount, in which case the impairment loss is treated as arevaluation decrease. Where an impairment loss subsequently reverses, the carrying amount of the asset(cash-generating unit) is increased to the revised estimate of its recoverableamount, but so that the increased carrying amount does not exceed the carryingamount that would have been determined had no impairment loss been recognisedfor the asset (cash-generating unit) in prior years. A reversal of an impairmentloss is recognised immediately in profit or loss, unless the relevant asset isre-valued amount, in which case the reversal of the impairment loss is treatedas a revaluation increase. Property, plant and equipment Property, plant and equipment are stated at cost and are depreciated on astraight-line basis over their estimated useful lives set out below: Technical equipment, plant and machinery 3 - 10 yearsOther equipment, fixtures and fittings 3 - 10 years An impairment review is undertaken where there are indicators of impairment.Maintenance and repairs are charged to expenses when incurred. Research and development expenditure Research and development costs are expensed as incurred, except fordevelopment costs, which are deferred as intangible assets when the Group candemonstrate all of the following: • The technical feasibility of completing the intangible asset so that it will be available for use or sale;• Its intention and ability to use or sell the intangible asset;• The existence of a market for the output of the intangible asset or the intangible asset itself;• The availability of adequate technical resources to complete the development;• The availability of adequate financial and other resources to complete the development and to use or sell the intangible asset; and• Its ability to reliably measure the expenditure attributable to the intangible asset during its development; Deferred development costs are originally recorded at cost, which includes: • Expenditure on materials and services used or consumed in generating the intangible asset;• The salaries, wages and other employment related costs of personnel directly engaged in generating the asset; and• Any expenditure that is directly attributable to generating the asset, such as the amortisation of patents used to generate the asset. Capitalised development costs have a finite useful life and as such, areamortised on a straight-line basis over the estimated revenue earning period ofthe relevant product. Inventories Inventories are valued on a first in, first out basis at the lower of costand net realisable value. Cost includes all expenditure incurred during thenormal course of business in bringing in stocks to their present location andcondition, including in the case of work-in-progress and finished goods anappropriate proportion of production overheads. Net realisable value is based onthe estimated useful selling price less further costs expected to be incurred tocompletion and subsequent disposal. Fair value of financial instruments Due to their short maturities, carrying amounts of certain of the Group'sfinancial instruments, including cash and cash equivalents, accounts receivable,accounts payable, and accrued expenses, approximate fair value, based onborrowing rates currently available to the Group. Deferred Taxation Deferred tax assets and liabilities are determined based on differencesbetween financial reporting and tax bases of assets and liabilities, and aremeasured using the enacted tax rates and laws that will be in effect when thedifferences are expected to reverse. Valuation allowances are only recorded fordeferred tax assets that are more likely than not to be realised. Deferred tax assets are recognised only to the extent that future taxableprofit will be available such that realisation of the related tax benefit ismore likely than not. Financial assets Sales and purchases are accounted for at trade date. Investments includedas financial assets are valued at fair value and are held as available for sale.Any impairment will be charged to income and expenditure account on recognition.Accounts receivable and other assets are valued at acquisition cost after takingaccount of the risk of default in arriving at those valuations. Leases Lease agreements under which the Group is lessee are classified as financeleases, as the terms of the lease transfer substantially all the risks andrewards of ownership to the lessee. All other leases are classified as operatingleases. Assets held under finance lease are recognised as assets of the Group attheir fair value at the date of acquisition or, if lower, at the present valueof the minimum lease payments. The corresponding liability to the lessor isincluded in the balance sheet as a finance lease obligation. Lease payments areapportioned between finance charges and reduction of the lease obligation so asto achieve a constant rate of interest on the remaining balance of theliability. Finance charges are charged directly against the statement ofoperations. Assets held under finance leases are depreciated at the shorter of thelease term and their useful economic lives. Borrowing costs Borrowing costs are charged as expenses in the income statement in theperiod in which they are incurred, except to the extent that they arecapitalised as being directly attributable to the acquisition, construction orproduction of an asset which necessarily takes a substantial period of time toget ready for its intended use or sale. The capitalisation of borrowing costs as part of the cost of a qualifyingasset commences when expenditure for the asset is being incurred, borrowingcosts are being incurred and activities that are necessary to prepare the assetfor its intended use or sale are in progress. Capitalisation of borrowing costsis suspended or ceases when substantially all the activities necessary toprepare the qualifying asset for its intended use or sale are interrupted orcomplete. Share based payments The Company's employee share schemes allow the Group's employees to acquireshares in the Company. The fair value of options granted is recognised as anemployee expense with a corresponding increase in equity. The fair value ismeasured at grant date and spread over the period during which the employeesbecome unconditionally entitled to the options. At each balance sheet date, theCompany revises its estimates of the number of options that are expected tobecome exercisable. It recognises the impact of the revision of originalestimates in employee expense and in a corresponding adjustment to equity overthe remaining vesting period. 4. Business and Geographical Segments For business purposes, the Group is currently organised into just onesignificant operating division - design, supply and fit of membrane structures.A second division, the exploitation of solar intellectual property rights ("Solar") is in development but has not reached significant revenue stage to dateand so is not included as a separate division. This single division is the basis on which Group reports its primary informationby geographic segment as follows: Europe Asia USA Australasia Total •'000 •'000 •'000 •'000 •'000 Revenue 2,255 398 - 1,137 3,790Carrying amount of segment assets 6,386 - 2,780 896 10,062Carrying amount of segment liabilities (3,240) - (30) (680) (3,950)Additions to plant and equipment 344 - - - 344Additions to intangible assets 122 - - - 124 Segment assets and intangible assets exclude goodwill. Additions to goodwill onconsolidation in the period were €6,627,000 in aggregate and relate entirely tooperations in Europe. 5. Principal subsidiaries The company holds more than 20% of the share capital of the followingcompanies: Company Country of registration orSubsidiary undertakings incorporation Shares held Hightex International (HTI) AG Switzerland 100%Hightex GmbH Germany 100%Hightex Engineering GmbH Germany 100%SolarNext AG Germany 100%Hightex Limited UK 100%Hightex Structures Pty. Ltd. South Africa 100%Hightex Pty. Ltd. Australia 100%Metal System Sp z.o.o Poland 50% 6. Investments in subsidiary companies and business combinations On 6 September 2006, Hightex Group plc acquired 100 percent of the sharecapital of Hightex International (HTI) AG for a consideration of the issue of64,454,862 ordinary shares of 1p each credited as fully paid. The fair value ofthe consideration, net assets of HTI on acquisition and goodwill arising onconsolidation have been provisionally estimated as follows: Fair value •'000 Cash and cash equivalents 1,466Trade and other receivables 4,385Trade and other payables: including accruals and taxes (2,696)Long term liabilities (395)Property, plant & equipment 555Minority interests (145)Net assets acquired by the company 3,170 Debt acquired on acquisition Fair value of the consideration 9,571Cash paid -Goodwill arising on acquisition 6,401 On 6 September 2006, Hightex Americas LLC - a wholly owned subsidiary of HightexGroup plc formed for the purpose - completed a statutory merger under the lawsof the State of California and the state of Delaware with West 175 Media GroupInc ('West'), an AIM listed company with no trade. The effect of the merger, asa result of which the merged entities fused and West ceased to exist, was thatthe shareholders in West exchanged their shareholdings in that company for39,195,747 new ordinary shares and up to a further 1,434,561 further newordinary shares in Hightex Group plc. The directors consider that the substanceof the US statutory merger was that it was a group re-organisation and nogoodwill has therefore been recognised in relation to the transaction. The fairvalue of both the consideration and the net assets acquired in this transactionhas therefore been provisionally estimated as €2,821,000 as follows: Acquiree's carrying value before Fair value combination adjustments Fair value •'000 •'000 •'000 Cash at bank 2,821 - 2,821Net assets acquired by the company 2,821 Debt acquired on acquisition - Consideration 2,821Cash paid -Goodwill arising on acquisition - On 6 September 2006, Hightex Group plc acquired 100 percent of the sharecapital of SolarNext AG for a consideration of €1 payable at signing and afurther consideration of €50,000 payable according to the profits of SolarNextto 31 December 2008. The fair value of the consideration, net assets ofSolarNext on acquisition and goodwill arising on consolidation have beenprovisionally estimated as follows: Acquiree's carrying value before Fair value combination adjustments Fair value •'000 •'000 •'000 Cash at bank 20 - 20Trade and other receivables 27 - 27Trade and other payables: including accruals and taxes (223) - (223)Net liabilities acquired by the company (176) - (176) Debt acquired on acquisition - Consideration 50Cash paid -Goodwill arising on acquisition 226 If all of the above acquisitions had been completed on 1 January 2006, thetrading activity of the group would have been as follows: •'000 Turnover 8,446Cost of sales (4,915)Gross margin 3,531Salaries and related expenses (2,120)Other operating expenses (3,146)Depreciation and amortisation (242)Operating deficit (1,977)Net interest (80)Net deficit before taxation (2,057)Taxation 484Deficit after taxation but before minority interests (1,573)Minority interests (37)Retained deficit after taxation (1,610) 7. Share capital and loss per share a) Share capital Group Company 2006 2006 • ' 000 • '000 Authorised:170,000,000 Ordinary shares of 1p each 2,524 2,524 Issued:119,541,217 Ordinary shares of 1p each 1,775 1,775 b) Warrants On 31 December 2006 and as at the date of this document, the Company hadoutstanding warrants to subscribe for 8,928,750 new ordinary shares as follows: Exercise price Number of warrants per share Expiry date Issued in connection with the Placing of March 2006 1,128,750 €0.1107419 1 Dec 2010 Issued in connection with the Placing of September 2006 7,800,000 £0.11 6 Sept 2008 The warrants are exercisable at any time before their respective expiry dates.RAB Special Situations (Master) Fund Limited holds a warrant to subscribe for5,000,000 ordinary shares out of the 7,800,000 noted in the table above. c) Loss per share (i) Basic Basic loss per share is calculated by dividing the loss attributable to equityholders of the Company by the weighted average number of ordinary shares inissue during the period: Profit attributable to equity holders of the company €950,000 Weighted average number of ordinary shares in issue 119,541,217 Basic loss per share (0.79) cents (ii) Diluted Diluted loss per share is calculated by adjusting the weighted average number ofordinary shares in issue to assume conversion of all potential dilutive ordinaryshares during the period. However, no potential ordinary shares are considereddilutive, as loss per share would decrease had the warrants in issue beenexercised. This information is provided by RNS The company news service from the London Stock Exchange