Hightex Group Regulatory News (HTIG)

28 Sep 2006 07:00

Hightex Group PLC28 September 2006 HIGHTEX GROUP PLC INTERIM FINANCIAL INFORMATION FOR THE SIX MONTHS ENDED 30 JUNE 2006 CHAIRMAN'S STATEMENT Results and AIM Admission Hightex Group plc was admitted to trading on AIM on 6 September 2006 and theBoard is pleased that the company has passed this important milestone. The financial information set out in this report in relation to the six monthsended 30 June 2006 covers the period before the Hightex and SolarNext businesseswere acquired by Hightex Group plc. The financial information presents theresults for Hightex International AG ('HTI') and its now wholly owned operatingsubsidiaries and of SolarNext AG ('SolarNext') and is presented on a combinedbasis, in accordance with the presentation of the financial information on thebusiness included in the company's AIM admission document. Turnover reached €3.9million in the first six months and gross profit amountedto €1.1million. After charging all expenses including approximately €100,000 ofdevelopment expenditure on the solar business (SolarNext), the loss before taxamounted to €894,000 and the loss after tax €541,000. The deficit per share inHTI actually in issue during the six month period amounted to €0.97, which isequivalent to a deficit per share in Hightex Group plc at the date of admissionto AIM of €0.004. The internal re-structuring of the group of companies of which Hightex Groupplc is now the holding company, the fund raising of €2.5m (before expenses)which closed in March 2006, together with the AIM Admission process have allimpacted on the ability of senior management to focus on generating additionalrevenue and resulted in one-off costs during the first six months of the year. Overall, however, as stated in the AIM Admission document dated 4 August 2006,these results were in line with expectation. Since 30 June Company has made goodoperational progress. Operations Polymer Membrane business The membrane business designs, produces and installs polymer membrane structuresfor use by architects and structural engineers. Recent projects include theroofs on the new Grandstand at Royal Ascot Racecourse, the passenger concoursesat the new Bangkok International Airport in Thailand, the Clarke Quay CanopyStreet in Singapore and the Pavilion at the Serpentine Gallery in KensingtonGardens, London. As a private company, Hightex was historically restricted in the scale of itspotential business by a lack of financial resources. To remedy this restriction,Hightex International AG first raised €2.5m (before expenses) through a privateplacing which closed in March 2006. This fundraising is reflected in thisfinancial information. In addition, the process of Admission to AIM brought a further £3.5m (beforeexpenses) through the reverse acquisition of West 175 Media Group Inc, a cashshell with approximately £2m, and a placing of £1.5m. These transactions are notreflected in this financial information as they took place after the balancesheet date. At the present time, Hightex Group has cash resources amounting to approximately€5.8 m. With these increased cash resources now available to the Group, Hightex intendsto recruit additional salesmen and project managers and to establish a programmeof marketing activity. Hightex is delighted to announce that it has appointed Dave Capezzuto as head ofsales of Hightex Americas LLC, the Company's wholly owned US subsidiary. Dave,an American citizen, was previously Vice President, Sales and Marketing, Americaof the principal competitor of Hightex. His appointment is the first step in theestablishment of Hightex's business in the USA, a territory with significantpotential for Hightex. The Group has recently won its first major contract in Australia, to design andinstall the roof at the new Gold Coast Stadium in Brisbane for a total value of€4.2 million. It has also recently won contracts at the Munich Technology Centreand the Sheik Khalifa Sports City in Bahrain to a total value of €1.5 m. Othercommercial leads are being actively pursued. SolarNext SolarNext owns and is negotiating to acquire additional solar intellectualproperty ("IP") which is chiefly focussed on applications in the generation ofsolar energy; solar cooling; the prevention of heat from entering homes, officesand other structures; and the desalination of water. SolarNext has close linkswith the Fraunhofer Institute for Solar Energy Systems in Freiburg, Germany,which has a staff of more than 400 and is the largest solar energy researchinstitute in Europe. The first project to be commercialised is solar cooling. On 1 September 2006 DrUli Jakob joined the Company as Head of the Solar Cooling Division and SolarNextwill install its first solar cooling module in an existing office building inBavaria in October 2006. The Company intends to bid for the first public tenderfor a solar greenhouse facility in Germany in December 2006. Development of asolar desalination prototype is continuing with a view to commercialisation in2007. Conclusion The Board views 2006 as a transitional year during which it has sought to answera number of structural and financial issues, in order to shape itself to pushthe Group to the next stage of its development. They believe that Hightex isnow well placed to take advantage of the opportunities in its polymer membranebusiness for sporting stadia and other structures throughout the world, toaccelerate the pace of growth and to develop the SolarNext business. Charles DesForges Chairman 28 September 2006 COMBINED INCOME STATEMENTS Notes 6 Months 6 Months 12 Months 30 June 30 June 31 Dec 2006 2005 2005 •'000 •'000 •'000 Turnover 3,878 5,230 11,760 Cost of sales (2,737) (3,371) (7,085) ______ ______ ______Gross margin 1,141 1,859 4,675 Salaries and related expenses (959) (1,041) (2,005)Other operating expenses (1,000) (979) (1,710)Depreciation and amortisation (83) (69) (160) ______ ______ ______Operating (deficit)/ surplus (901) (230) 800 Net interest 4 7 8 (95) ______ ______ ______Net (deficit)/surplus before taxation (894) (222) 705 Taxation 5 353 89 (58) ______ ______ ______Retained (deficit)/surplus after taxation (541) (133) 647 ______ ______ ______ (Deficit)surplus per share The combined presentation represents the (deficit)/surplus attributable toequity shareholders as follows: Deficit)/surplus per share in HTI in issuein the period 6 •(0.97) •(0.26) €1.24 ______ ______ ______ Deficit)/surplus per share in HightexGroup plc on admission to AIM 6 •(0.004) •(0.001) €0.005 ______ ______ ______ With the exception of exchange differences arising on combination, the HTI Grouphad no recognized gains or losses other than the profit for the period. Changesin combined shareholders' equity are set out in the statement below. All of the amounts above relate to continuing activities. COMBINED BALANCE SHEETS 30 June 30 June 31 Dec Notes 2006 2005 2005 •'000 •'000 •,000Current assets Cash and cash equivalents 3,881 2,963 1,567Inventories and work in progress 44 106 991Accounts receivable 2,030 3,887 3,422 ______ ______ ______Total current assets 5,955 6,956 5,980 Fixed assets Intangible fixed assets 296 37 104Property, plant and equipment (net) 367 402 419 ______ ______ ______Total non-current assets 663 439 523 ______ ______ ______Total assets 6,618 7,395 6,503 ______ ______ ______ Current liabilities Trade accounts payable 771 2,038 1,399Accrued liabilities and deferred income 1,093 3,453 1,531Other accounts payable 3,318 1,082 1,695 ______ ______ ______Total current liabilities 5,182 6,573 4,625 Non-current liabilities Finance lease obligations 1 4 28Other non-current liabilities 84 317 294 ______ ______ ______Total non-current liabilities 85 321 322 Shareholders' equityShare capital 6 443 135 399Share premium account 342 40 40Retained earnings 566 326 1,117 ______ ______ ______Total shareholders' equity 1,351 501 1,556 ______ ______ ______Total liabilities and shareholder' equity 6,618 7,395 6,503 ______ ______ ______ COMBINED STATEMENT OF CASH FLOWS Notes 6 Months 6 Months 12 Months 30 June 30 June 31 Dec 2006 2005 2005 •'000 •'000 •'000Cash flows from operating activitiesNet operating income (541) (133) 647Adjustments for:Depreciation and amortisation 83 69 129 ______ ______ ______Net operating income before working capitalchanges (458) (64) 776Changes in working capital:Decrease/(increase) in inventories 947 873 (124)Decrease/(increase) in accounts receivable 1,393 (2,897) (2,318)(Decrease)/increase in accounts payable (1,591) 2,940 284 ______ ______ ______Net cash used in operating activities 291 852 (1,382)Cash flows from investing activities Acquisition of intangible assets 223 - 75Acquisition of plant and equipment - 147 216 Net cash used in investing activities (223) (1470 (291) ______ ______ ______Cash flows before financing 68 705 (1,673) Cash flows from financing activities Issue of shares for cash 346 - 264Issue of 5% Secured Guaranteed Convertible LoanNotes 2011 1,833 - -Movements in shareholders' loans 43 49 719Changes in finance leases 24 7 55 ______ ______ ______Net cash provided by financing activities 2,246 56 1,038 ______ ______ ______ Net increase/(decrease) in cash and cashequivalents 2,314 761 (635) ______ ______ ______Cash and cash equivalents, beginning ofperiod/year 1,567 2,202 2,202 ______ ______ ______Cash and cash equivalents, end of period/year 3,881 2,963 1,567 ______ ______ ______ STATEMENT OF CHANGES IN COMBINED SHAREHOLDERS' EQUITY Combined share Share premium Retained capital account earnings Total _______________________________________________________________ •'000 •'000 •'000 •'000Balances at 1 January 2005 399 40 1,117 1,556 Net deficit for the period - - (541) (541)Exchange differences on combination - - (10) (10)Shares issued by HTI 44 302 - 346 _______________________________________________________________Balances at 30 June 2006 443 342 566 1,351 _______________________________________________________________ The combined share capital and shareholders' equity represents the aggregate ofthe issued share capital and shareholder's equity of the entities comprising theHTI Group and SolarNext in the six months ended 30 June 2006 as set out in Notes1 and 3 and on the basis of combination set out in Note 2. On 28 March 2006, HTI completed a placing of 70,000 new shares of 1 Swiss Franceach for aggregate consideration, before issue costs, of €667,000. Also on 28 March 2006 HTI completed a placing of €1,833,333 5% SecuredGuaranteed Convertible Loan Notes due 2011, which converted before the admissionto trading on AIM of Hightex Group plc into shares in HTI and converted againinto ordinary shares in Hightex Group plc on admission to AIM. On 9 June 2006 HTI issued warrants to subscribe for 13,125 shares at €9.523809per share, those warrants to convert into warrants over 1,128,750 ordinaryshares in Hightex Group plc on admission to AIM. NOTES TO THE INTERIM FINANCIAL INFORMATION 1. Business of the Hightex International AG ('HTI') Group and SolarNext Hightex Group plc ('the Company') is the newly formed holding company for theHTI Group and SolarNext. HTI is a private company registered in the Canton of Thurgau in Switzerland.HTI is itself a recently formed holding company for a number of entities whichdid not, in the six months ended 30 June 2006, form a legal group of companiesbut which were under common management and control throughout that period.These entities, which are listed in Note 3 below, are referred to as 'the HTIGroup'. SolarNext, a sister company, was also under common management andcontrol and is accounted for in this financial information as part of the HTIGroup. The HTI Group is engaged in the design, supply and assembly of polymer membranestructures and materials for use by architects. Polymer membrane materials areused by architects in the building and construction industries because they areflexible and lightweight yet durable and proof against sunlight and weather.Because of their flexibility and low weight, architects are able to designbuildings and other structures that not only look attractive but are pleasantand functional due to the transparent and translucent nature of these materials. In addition, HTI or SolarNext, a sister company also under common management andcontrol and accounted for in this financial information as part of the HTIGroup, has also acquired licences and other rights to solar IP from a variety ofsources including the Fraunhofer Institute for Solar Energy Systems in Freiburg. In the period prior to 4 August 2006 a re-organisation of the HTI Group tookplace in which HTI acquired the entire issued share capital of each of HightexGmbH, Hightex Engineering GmbH and Hightex Limited. On 6 September 2006 theacquisition of the entire issued share capital of HTI and SolarNext by HightexGroup plc became effective, on the admission to trading on AIM of the issuedshare capital of Hightex Group plc. 2. Basis of presentation and significant accounting policies The entities comprising the HTI Group have previously prepared financialinformation under UK and German generally accepted accounting principles andIFRS. This financial information is presented on a combined basis. It has beenprepared and presented in accordance with International Financial ReportingStandards ('IFRS') and in accordance with the accounting policies of theCompany. This basis of presentation is consistent with that adopted in relationto the HTI Group and SolarNext in the AIM admission document of Hightex Groupplc, which acquired the HTI Group and SolarNext after the balance sheet date, on6 September 2006. 3. List of principal entities Principal entities included in the combined financial information are as follows 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 structuresHightex Engineering GmbH Germany 100% Design and engineering of membrane structuresSolarNext AG Germany 100% Ownership an exploitation of related technologiesformerly Sun Affairs AG)Hightex Limited UK 100% Installation and assembly of membrane structuresMetal System Sp Poland 50% Provision of steel structures and componentsz.o.o. 4. Interest 30 June 30 June 31 Dec 2006 2005 2005 •'000 •'000 •'000Interest/receivables on bank andother deposits 7 18 38Interest/payables on bank andother borrowings - 10 133 _____ _____ _____ 7 8 (95) _____ _____ _____ 5. Taxation 30 June 30 June 31 Dec 2006 2005 2005 •'000 •'000 •'000Provision for deferred taxation - - (19)Current taxation credit 353 89 (39) _____ _____ _____Corporate taxation credit/(charge) 353 89 (58) _____ _____ _____ 6. Share capital and (deficit)/surplus per share Analysis of combined issued share capital: 30 June 30 June 31 Dec 2006 2005 2005 •'000 •'000 •'000Hightex International AG 308 - 264Hightex GmbH 60 60 60Hightex Engineering GmbH 25 25 25Hightex Limited - - -SolarNext AG (formerly Sun Affairs AG) 50 50 50 _____ _____ _____ 443 135 399 _____ _____ _____ (Deficit)/surplus per share is calculated by dividing the deficit or surplusattributable to equity shareholders in the period ended 30 June 2006 by theweighted average number of shares in issue in the period. The deficit attributable to equity shareholders in the period ended 30 June 2006was €541,000 (30 June 2005: €133,000) and the surplus attributable to equityshareholders in the year ended 31 December 2005 was €647,000. The weightedaverage number of shares in HTI in issue in the period ended 30 June 2006 was556,740 (30 June 2005: 520,000 and 31 December 2005: 520,000). Information in relation to the (deficit)/surplus per share attributable to thenumber of shares in Hightex Group plc on admission to AIM is provided forillustrative purposes only. 7. Movement in net funds 30 June 30 June 31 Dec 2006 2005 2005 •'000 •'000 •'000Loans from shareholders (1,014) (301) (971)5% Secured Guaranteed Convertible Loan Notes 2011 (1,833) - -Cash and cash equivalents 3,881 2,963 1,567Bank overdrafts - (4) (37)Finance leases (31) (7) (55) _____ _____ _____Net funds 1,003 2,651 504 At start of year 504 1,945 1,945 _____ _____ _____Movement in net funds 499 706 (1,441) _____ _____ _____ 8. Post balance sheet events The acquisition by Hightex Group plc of the entire issued share capital of HTI,and indirectly of its investments in the entire issued share capital of each ofHightex GmbH, Hightex Engineering GmbH and Hightex Limited, and of SolarNextbecame effective on the admission to AIM of Hightex Group plc on 6 September2006. 9. 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 HTIGroup or SolarNext for the period ended 30 June 2006. Neither HightexInternational AG nor of Hightex GmbH, Hightex Engineering GmbH or SolarNext arerequired to prepare of file statutory financial statements in the UK and havenot done so. Hightex Limited is required to prepare of file statutory financialstatements in the UK but has in the past taken advantage of the small companiesexemption from the requirement for an audit. The first statutory financialstatements of Hightex Group plc will in respect of the period ending 31 December2006. These interim results are being circulated to shareholders in Hightex Group plc.Further copies can be obtained from the registered office at Masters House,107 Hammersmith Road, London W14 0QH. The DirectorsHightex Group plcMasters House107 Hammersmith RoadLondonW14 0QH 28 September 2006 Dear Sirs Independent Review Report by MRI Moores Rowland LLP to the shareholders ofHightex Group plc Introduction We have been instructed by the directors of Highex Group plc to review thefinancial information on the Hightex International AG ('HTI') Group, includingSolarNext AG ('SolarNext'), for the six months ended 30 June 2006 set out onpages 3 to 10 and we have read the other information contained in the interimreport for any apparent misstatements or material inconsistencies with thefinancial information. 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 AIM admissiondocument except where changes, and the reason for them, 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 financial information in respect of the HTI Group,including SolarNext, as presented for the six months ended 30 June 2006. MRI Moores Rowland LLP Chartered Accountants Registered Auditor This information is provided by RNS The company news service from the London Stock Exchange