Hightex Group Regulatory News (HTIG)

28 Sep 2007 07:02

Hightex Group PLC28 September 2007 HIGHTEX GROUP PLC INTERIM FINANCIAL INFORMATIONFOR THE SIX MONTHS ENDED 30 JUNE 2007 CHAIRMAN'S STATEMENT RESULTS OVERVIEW Hightex designs, produces and installs polymer membrane tensile structures(lightweight roofs and building envelopes) for sports and commercial projectsworldwide. SolarNext is chiefly focused on applications in the solar generationof energy and also on solar cooling in order to enable the cleaner provision ofair conditioning. The first half of 2007 has seen the Hightex Group make further progress indeveloping its businesses. Revenues have increased by 46% with the unauditedconsolidated results for the six month period to 30 June 2007 showing a turnoverof €5.7 million, compared with combined €3.9 million for the first six months of2006. The loss before taxation for the period was €437,000, compared with a combinedloss before taxation of €894,000 in the first half of 2006. The Hightex Group was not created until 6 September 2006, when the companyacquired all the underlying Hightex businesses. The combined financialinformation for the six months ended 30 June 2006 therefore relates to the timebefore Hightex Group plc was incorporated, but has been previously reported onthat basis as if the Hightex Group had been formed throughout the comparativeperiod. Further details of comparative financial information are set out in note2 to the interim report. The deficit per share for the period was •(0.0030) (combined 2006: •(0.0079)). CASH FLOW In the half year ended 30 June 2007, the Group had an operating cash outflow of€166,000 (2006: cash inflow of €110,000). The net cash outflow amounted to€810,000 (2006: cash inflow of €2,314,000), the balance of the cash outflowbeing principally due to net capital expenditure from cash resources of €358,000and the repayment of shareholder loans of €286,000. The cash inflow in the firsthalf of 2006 arose as the net proceeds from equity fund-raisings by theconstituent parts of the Group in that period. OPERATIONS POLYMER MEMBRANE BUSINESS The Hightex membrane business designs, produces and installs polymer membranestructures for a diversity of projects ranging from roof systems for sportsstadia to transparent enclosures for leisure centres. Recent projects includethe Skilled Stadium at Robina, the Gold Coast in Brisbane, Australia; Miroiteriein Lausanne; Aquapark Sopot in Poland; Oasis in Ireland; a bus terminal in theCzech Republic; projects in Horseferry Road, London and at Chessington in theUK; and the Munich Technology Centre in Germany. The intention of the board is immediately to establish two well-focussedoperations in South Africa and the Americas, in addition to its existingoperations in Europe, to which management resources can be devoted and expandedand then to create a permanent presence in South East Asia and Australasia. Hightex continues to increase its project volume in the supply of transparentETFE roof systems for leisure and commercial buildings and in the last sixmonths has secured more than €1.5 million of new contracts in Europe. Inaddition, Hightex has recently received a Letter of Intent for the installationof an ETFE Roof on a very substantial project in Lisbon, Portugal. Hightex isworking on the transition from this status to a signed contract, and willannounce further details at such time. Hightex is actively pursuing projectopportunities for the 2012 London Olympics, and is working to support and workwithin the design teams by bringing its specialist knowledge to help createfuture projects in which to participate. In South Africa, Hightex is forming a joint venture company with Circle CapitalVentures (Pty) Ltd, with whom it has submitted tenders for the membrane roof andfacades on some of the new football stadia to be built in connection with theFIFA World Cup in 2010. In the Americas, Hightex has already been awarded three design and engineeringcontracts with a total value in excess of US$1 million, which it is hopeful maylead to significant contracts. One of these contracts concerns a marine research centre, which it is proposedwill combine Hightex's architectural membrane systems with SolarNext's coolingtechnology and flexible membrane solar cells, to create a fully sustainableclean energy building. In the US, SolarNext and Hightex are about to complete a futuristic buildingwith a translucent membrane cushion roof showcasing a new technology developedby SolarNext which combines exceptional high thermal insulation properties withhigh light transmission. The first six months of 2007 has been a period focused both on growing Hightex'spresence in its core markets and on marketing to secure new contracts. It is ourhope and expectation that we will be in a position to announce the successfulconversion of a number of promising proposals, currently under considerationinto firm contracts in the near future. SOLAR BUSINESS The solar business has been slower to develop than anticipated, but the Companyhas generated modest initial revenue from engineering consulting for a verylarge international retailer. More significantly, SolarNext is developing solar cooling kits. After havingfinalised the testing with the absorption chiller "chillii(R) PSC 10", the firstfive units made were all sold in August 2007 with minimal marketing and salessupport. Two additional customers have placed orders for another three units ofthis absorption machine. The adsorption chiller "chillii(R) STC 6" was shown atINTERSOLAR 2007 in Freiburg: it is expected that the testing stage will becompleted at the end of October. In a further development, the Company has developed an innovative system controlpanel, which is able to control the heating system, the warm water system andthe cooling system of a building. So far as the Company is aware, this productis unique. It is expected that the first prototype of this system will bedelivered in October and the first mini series will be produced in December thisyear. This system not only allows one control panel to run the whole heating andcooling system but also reduces the cost of a solar cooling kit considerably. The Company absorption and adsorption solar cooling kits can be adapted todifferent market conditions and applications without any need for redesign fordifferent applications or climate conditions. On 16 July, Hightex announced that it had signed an agreement with VHFTechnologies SA for the exclusive system co-development of a flexiblephotovoltaic ETFE membrane for intelligent building envelopes, known as FlexcellTM. It is expected that the first Flexcell product installation will becompleted during October 2007 and that it will then be demonstrated to thebuilding and clean energy market. CONCLUSION The businesses of the Group have made reasonable progress in the period and weare encouraged by the improved results compared to 2006. The nature of both themembrane and the solar business is such that considerable developmentexpenditure is required to build up a pipeline of substantial and smallerprojects which provide critical mass. The loss before taxation for the firsthalf year of €437,000 is stated after charging a deficit of €430,000 incurred onthe solar business. For the membrane business we have seen a very encouragingstart to 2007 but, whilst welcome when they are signed, a reliance on larger,long term contracts is not without its difficulties. A change in thespecification and delay in the timing of one specific larger contract, combinedwith the aforementioned investment in the solar business, is likely to result inthe Company making a small loss for the full year, although at a much improvedlevel compared to 2006. The Directors believe that good progress has been made in developing themembrane business in its three principal geographical areas of activity and thatthe company is working to realise the excellent potential of the SolarNextbusiness, not only in solar cooling products but also in applying the Flexcellphotovoltaic membrane to some of its roofs for sporting stadia and otherstructures throughout the world. The Group is therefore now well positioned todrive significant additional growth in the coming months and looks forward tobeing able to provide shareholders with additional updates. Charles DesForges Chairman 27 September 2007 For further information please contact: Charles DesForges (Chairman) 07799 626 238Frank Molter (Finance Director) 0049 1729 651 464 Sindre Ottesen/Thilo Hoffmann 020 7426 9000(Landsbanki Securities (UK) Limited) CONSOLIDATED INCOME STATEMENTS Notes 6 Months Period ended 30 June 31 Dec 2007 2006 (Unaudited) (Audited) •'000 •'000 Turnover 5,735 3,790Cost of sales (3,202) (1,838) Gross margin 2,533 1,952Salaries and related expenses (1,215) (947) Other operating expenses (1,666) (1,969)Depreciation and amortisation (158) (136)Operating deficit (506) (1,100)Net interest 4 69 (46)Net deficit before taxation (437) (1,146) Taxation 5 110 249 Loss after tax and before minorities (327) (897)Minority interest (29) (53) Loss from continuing operations andattributable to equity holders (356) (950) (Deficit)/surplus per shareDeficit per share in Hightex Group plc 6 •(0.0030) •(0.0079) With the exception of exchange differences arising on combination, the Group hadno recognized gains or losses other than the deficit for the period. Changes incombined shareholders' equity are set out in the statement below. As described in note 2, the income statements set out above have been preparedin accordance with the basis of preparation adopted in the audited financialstatements of the Company for the period from incorporation on 28 June 2006 to31 December 2006 and incorporated the trading results of the Hightex Group forthe approximately four month period from the date of acquisition on 6 September2006. The company has previously published financial information in relation tothe period prior to the formation of the Group on a combined basis and furthercomparative financial information on this basis is included in note 2. CONSOLIDATED BALANCE SHEETS Notes 30 June 31 Dec 2007 2006 (Unaudited) (Audited) •'000 •'000Current assets Cash and cash equivalents 4,495 5,305Inventories and work in progress 103 143Accounts receivable 3,964 3,638 Total current assets 8,562 9,086Non-current assetsGoodwill 6,627 6,627Intangible fixed assets 77 65Property, plant and equipment (net) 974 768Deferred tax assets 371 143 Total non-current assets 8,049 7,603 Total assets 16,611 16,689 Current liabilitiesTrade accounts payable 1,023 1,329Accrued liabilities and deferred income 2,244 1,358Other accounts payable 786 1,009 Total current liabilities 4,053 3,696Non-current liabilitiesAccrued liabilities and deferred income 193 187Other non-current liabilities 91 67 Total non-current liabilities 284 254Shareholders' equityShare capital 6 1,775 1,775Share premium account 6 11,757 11,757Retained earnings (1,485) (991)Minorities 227 198 Total shareholders' equity 12,274 12,739 Total liabilities and shareholders' equity 16,611 16,689 CONSOLIDATED STATEMENT OF CASH FLOWS 6 Months Period ended 30 June 31 Dec 2007 2006 (Unaudited) (Audited) •'000 •'000 Cash flows from operating activities Operating loss for the period: (506) (1,100) Adjustments for: Loss on disposal - 4 Depreciation and amortisation 141 186 Net operating income before working capital changes (365) (910) Changes in working capital:Decrease/(increase) in inventories 40 (143)Decrease/(increase) in accounts receivable (327) 903Increase in accounts payable 486 260 Net cash (used in)/generated from operating activities (166) 110Interest paid (18) (115)Income tax paid (34) (23) Net cash used in operating activities (218) (28) Cash flows from investing activities Acquisition of subsidiary, net of cash acquired - 4,307 Acquisition of property, plant and equipment (358) (468)Interest received 87 69 Net cash (used in)/generated from investing activities (271) 3,908Cash flows before financing (489) 3,880 Cash flows from financing activitiesIssue of shares for cash - 2,178Costs of issue of shares - (1,088)Movements in shareholders' loans (286) 263Changes in finance leases 75 72Exchange difference (110) - Net cash provided by financing activities (321) 1,425Net increase/(decrease) in cash and cash equivalents (810) 5,305Cash and cash equivalents, beginning of period 5,305 -Cash and cash equivalents, end of period 4,495 5,305 Cash at bank and in hand comprises: Cash and cash equivalents 1,860 2,997Cash lodged under performance and warranty bonds 2,635 2,308 4,495 5,305 STATEMENT OF CHANGES IN CONSOLIDATED SHAREHOLDERS' EQUITY Combined share Share premium Retained capital account earnings Total •'000 •'000 •'000 •'000 Balances at 28 June 2006 - - - - Net deficit for the period - - (950) (950)Exchange differences - - (41) (41)Issue of shares 1,775 12,845 - 14,620Costs of issue of shares - (1,088) - (1,088) Balances at 31 December 2006 1,775 11,757 (991) 12,541 Net deficit for the period - - (356) (356)Exchange differences - - (138) (138) Balances at 30 June 2007 1,775 11,757 (1,485) 12,047 1. Business of the Hightex Group plc Hightex Group plc is the holding company for the Group. The principal activityof the Group is the design, supply and assembly of polymer membrane structuresfor use in engineering and construction of technically advanced buildings. The Company's principal subsidiary, Hightex International AG ('HTI') is theholding company for a number of companies which were acquired by HTI during2006, including Hightex Americas LLC. The HTI sub-group undertakes the polymermembrane business. The business of SolarNext AG is the exploitation of solar energy for solarcooling and other applications, including the design and implementation ofactive technology (photovoltaics and thermal applications) in the area of foiland membrane structures. 2. Basis of presentation and significant accounting policies The financial information has been prepared in accordance with applicableInternational Financial Reporting Standards ('IFRS'). The financial information set out in this interim financial report is unauditedand does not constitute the Company's statutory accounts for the six monthperiod ended 30 June 2007. The accounting policies and practices used in preparing the financialinformation contained in this interim report are consistent with those used inpreparing the statutory financial statements of the Company for the period ended31 December 2006. The statutory financial statements of the Company for theperiod ended 31 December 2006 covered the period from incorporation of theCompany and included the consolidated results of the Company's subsidiaryundertakings for the period from 6 September 2006 (when the Hightex Group wascreated) to 31 December 2006. This is a different basis from that used in the preparation of the financialinformation contained in the document issued in relation to the admission of theCompany to the AIM Market of the London Stock Exchange on 6th September 2006 andin the previously published financial information covering the six months ended30 June 2006. The financial information on the underlying Hightex businesses contained in theCompany's AIM Admission document and the interim financial report covering thesix months ended 30 June 2006 related to the period before the Company acquiredthe HTI and SolarNext businesses, and were drawn up on a combined basis as ifthe Group had been in existence throughout that period. This was permitted bythe Standards of Investment Reporting issued by the Auditing Practices Board inthe United Kingdom. For comparison purposes, results for the current period and the previouslypublished results are reproduced below. 6 Months 6 Months 12 Months 30 June 30 June 31 Dec 2007 2006 2006 A B CNote (Unaudited (Unaudited (Unaudited consolidated) combined) combined) •'000 •'000 •'000 Turnover 5,735 3,878 8,446Cost of sales (3,202) (2,737) (4,915) Gross margin 2,533 1,141 3,531Salaries and related expenses (1,215) (959) (2,120)Other operating expenses (1,666) (1,000) (3,146)Depreciation and amortisation (158) (83) (242) Operating (deficit)/ surplus (506) (901) (1,977)Net interest 69 7 (80) Net (deficit)/surplus before taxation (437) (894) (2,057)Taxation 110 353 484 Loss after tax and before minorities (327) (541) (1,573) Minority interest (29) - (37) Loss from continuing operations andattributable to equity holders (356) (541) (1,610) Notes A. The financial information in column A is consolidated financialinformation because the Group existed in its current structure throughout thesix months ended 30 June 2007. B. The financial information in column B in relation to the six monthsended 30 June 2006 was prepared on a combined basis as if the Group had beenformed on 1 January 2006. C. The financial information in column C in relation to the year ended 30June 2006 was prepared on a combined basis as if the Group had been formed on 1January 2006. 3. List of principal entities Principal entities included in the consolidated financial information are asfollows: Name of Company Country Holding Nature of business Hightex International AG Switzerland 100% Holding CompanyHightex GmbH Germany 100% Design, consultancy, supply, installation and construction of membrane structuresSolarNext AG Germany 100% Ownership an exploitation of solar and related technologiesHightex Limited UK 100% Installation and assembly of membrane structuresHightex Structures Pty Ltd South Africa 100% Design, consultancy, supply, installation and construction of membrane structuresHightex Pty Ltd Australia 100% Design, consultancy, supply, installation and construction of membrane structuresHightex Americas LLC United States 100% Design, consultancy, supply, installation and construction of membrane structuresMetal System Sp z.o.o. Poland 60% Provision of steel structures and components 4. Interest 30 June 31 Dec 2007 2006 •'000 •'000 Interest/receivables on bank and other deposits 87 69 Interest/payables on bank and other borrowings (18) (115) 69 (46) 5. Taxation 30 June 31 Dec 2007 2006 •'000 •'000 Deferred taxation 210 272 Current taxation (100) (23) Corporate taxation credit/(charge) 110 249 6. Share capital and (deficit)/surplus per share a) Share capital 2007 2006 • '000 • '000Authorised:170,000,000 Ordinary shares of 1p each 2,524 2,524 Issued:119,652,582 Ordinary shares of 1p each 1,775 1,775 b) Share options and warrants On 30 June 2007 and as at the date of this document, the Company had outstandingwarrants 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 Admission to AIM 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, which is included within the 7,800,000 noted in thetable above. c) Deficit 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: Deficit attributable to equity holders of the company (• 356,000) Weighted average number of ordinary shares in issue 119,652,582 Basic loss per share (0.30) • cent (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. 7. Movement in net funds 30 June 31 Dec 2007 2006 (Unaudited) (Audited) •'000 •'000 Loans from shareholders (483) -Cash and cash equivalents 4,495 5,305Finance leases (212) - Net funds 3,800 5,305At start of year 5,305 - Movement in net funds 1,505 5,305 8. Nature of financial information The financial information set out above does not represent statutory financialstatements for Hightex Group plc or for any of the entities comprising the Groupfor the six month period ended 30 June 2007. The results for the period ended31 December 2006 do not comprise statutory financial statements for the purposeof S240 Companies Act 1985 and have been extracted from the Group's publishedfinancial statements for that period, which have been filed with the Registrarof Companies and contain an unqualified Audit Report. The Interim Report for thesix months ended 30 June 2007 was approved by the Directors on 27 September2007. The next statutory financial statements of Hightex Group plc will coverthe year ending 31 December 2007. These interim results will be circulated to shareholders in Hightex Group plc.Further copies can be obtained from the registered office at Masters House, 107Hammersmith Road, London W14 0QH and on the Company's website atwww.hightexworld.com. INDEPENDENT REVIEW REPORT BY MAZARS LLP TO THE SHAREHOLDERS OF HIGHTEX GROUP PLC The DirectorsHightex Group plcMasters House107 Hammersmith RoadLondon W14 0QH 27 September 2007 Dear Sirs Independent Review Report by Mazars LLP to the shareholders of Hightex Group plc Introduction We have been instructed by the directors of Hightex Group plc to review theunaudited financial information for the six months ended 30 June 2007, whichcomprise the consolidated income statement, the consolidated balance sheet, theconsolidated statement of cash flows, the consolidated statement of changes inequity and related notes, and we have read the other information contained inthe interim report for any apparent misstatements or material inconsistencieswith the financial information. This report is made solely to the company, in accordance with guidance containedin Bulletin 1999/4 "Review of interim financial information" issued by theAuditing Practices Board. To the fullest extent permitted by law we do notaccept or assume responsibility to anyone other than the company, for all work,for this report, or for the conclusions we have formed. Directors' responsibilities The interim report, including the financial information contained therein, isthe responsibility of, and has been approved by the directors. The Listing Rulesof the Financial Services Authority as applicable to AIM listed companiesrequire that the accounting policies and presentation applied to the interimfigures should be consistent with those applied in preparing the precedingfinancial statements of the Company except where changes, and the reason forthem, are disclosed. Review work performed We conducted our review in accordance with guidance contained in Bulletin 1999/4issued by the Auditing Practices Board. A review consists principally of makingenquiries of management and applying analytical procedures to the financialinformation and underlying financial data, and based thereon, assessing whetherthe accounting policies and presentation have been consistently applied unlessotherwise disclosed. A review excludes audit procedures such as tests ofcontrols and verification of assets, liabilities and transactions. It issubstantially less in scope than an audit performed in accordance with AuditingStandards and therefore provides a lower level of assurance than an audit.Accordingly we do not express an audit opinion on the financial information. Review conclusion On the basis of our review we are not aware of any material modifications thatshould be made to the unaudited financial information as presented for the sixmonths ended 30 June 2007. Mazars LLPChartered Accountants3 Sheldon SquareLondon W2 6PS This information is provided by RNS The company news service from the London Stock Exchange