Hightex Group Regulatory News (HTIG)

20 September 2012

Hightex Group plc

 ("Hightex" or "the Group")

Unaudited Results for the Six Months Ended 30 June 2012

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 2012.

Financial Overview:

·; Turnover of €7.9 million (H1 2011: €17.1 million)

·; Gross profit up 31% to €1.1 million (H1 2011: €0.8 million)

·; Pre-tax loss of €1.0 million (H1 2011: loss of €1.3 million)

·; Result per share - loss of 0.35c (H1 2011: loss of 0.71c)

·; Net cash balances of €1.0 million (H1 2011: €1.7 million)

Operational Highlights:

·; The contract for the roof of the Maracana Stadium in Sao Paolo, Brazil is making good progress and contributed substantially to first half revenues (€7.2 million)

·; Work on the Prince Sultan Cultural Center in Riyadh, Saudi Arabia, suffered a delay in the first six months due to a new design required by changes in the construction codes, and contributed little to first half revenues

·; Hightex is vigorously pursuing other potential significant contracts, including two further FIFA 2014 stadia projects in Brazil

Post Balance Sheet Event and Prospects:

·; In August 2012 Hightex was awarded a second Brazilian contract for the roof of the Beira-Rio Stadium in Porto Alegre, Brazil, worth nearly €10 million

·; Signed contracts to date are expected to deliver revenues of €20.7 million in 2012 and, so far, €12.9 million in 2013

Charles DesForges, Executive Chairman, commented:

"We are pleased that we have made progress in the first six months and won a further Brazilian contract in August for the FIFA 2014 World Cup. Our key objective remains to return the Group to profitability and we believe we are making significant progress in this regard. The next six months will no doubt continue to be challenging for the worldwide construction industry. The numerous high profile projects, including the new development of retractable roof systems which allow the more efficient use of stadia that Hightex has completed over the past several years, demonstrate the Company's unique technical excellence, leaving us ideally positioned to benefit as confidence returns to the global economy and the periods for key construction decisions shorten. The growing recognition of the worldwide need for major infrastructure programmes to underpin economic growth leads the Directors to believe that the short to medium term prospects remain encouraging."

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Media enquiries

Chairman's statement

Introduction

Hightex continues to make progress as a global, innovative leader in construction systems, which engineers, designs, fabricates and installs large area, cable supported light weight membrane roofs and façades worldwide. The addition of the capability of designing and installing retractable roof systems has further enhanced the Company's reputation for innovative excellence. Its Directors are determined both to maintain this leading position and exploit its reputation for technical excellence and thus restore the business to profitable growth.

Commentary on 2012 interim results

In the first six months of 2012, Hightex's revenues decreased from €17.1 million to €7.9 million. Three large contracts have dominated the last two years. These related to the roofs of stadia in Kiev and Warsaw and the roof and façade of the BC Place Stadium in Vancouver. Revenues from these three contracts featured significantly in the first half of 2011, but these contracts were completed by the end of 2011. In the first six months of 2012, revenues from work on the roof of the Maracana Stadium in Sao Paolo, Brazil amounted to €7.2 million and therefore contributed the substantial majority of the first half revenues. Work on the Prince Sultan Cultural Center in Riyadh, Saudi Arabia, suffered a delay in the first six months of 2012 due to a new design made necessary through changes in the construction codes and therefore contributed little to first half revenues. The new conceptual design was approved in July and the final design details are expected to be approved later in September, which will allow Hightex to earn revenues from the project in the second half of 2012.

Despite the fall in revenues of more than 50%, gross profit increased by 31% from €0.8 million in the first half of 2011 to €1.1 million in the first half of 2012. This improvement is explained partly by the fact that gross profitability was low in 2011 due to issues experienced during the installation phase of the three large contracts, and partly by the fact that gross margins on new contracts were better in the first six months of 2012.

Operating expenditure has been strictly controlled, leading to an overall reduction. Selling and distribution costs were decreased by €148,000 from €669,000 to €521,000 and administrative expenses were reduced by €264,000 from €1,201,000 to €937,000. These cost reductions were implemented both in Germany, and the UK, where the office was closed with related redundancies arising. Costs will continue to be controlled by management and further improvements in operational efficiencies will be sought.

The result before tax in the first six months was a loss of €1.0 million, which represented an improvement compared with the loss of €1.3 million in the first six months of 2011. Expressed in per share terms, the result of the first six months of 2012 amounted to a loss of 0.35 cents, compared with a loss per share of 0.71 cents in the first half of 2011.

Shareholders' funds were €7.9 million, compared with €8.92 million at 31 December 2011 and €10.8 million at 30 June 2011. Net cash balances as at 30 June 2012 were €1.0 million, compared with €2.2 million as at 31 December 2011 and €1.7 million as at 30 June 2011.

Solar cooling business

On 19 July 2012, Hightex announced that SolarNext, which is now strategically focused on industrial applications with larger scale projects and improved margins, had won a contract for a system with a capacity of 350 KW, the largest unit to be supplied by SolarNext to date. Its contract value, in excess of €250,000, will all be realised in the second half of 2012. It is noteworthy that this one contract is close to the aggregate value of SolarNext's sales in the whole of 2011. In line with this strategy, another two contracts have since been won and the Directors are optimistic that this trajectory of sales growth and higher value projects will continue, leading to improved profitability in the thermal cooling business.

Prospects

Hightex has the advantage of a significant pipeline of potential projects within its strategic markets and traditional range of capability and focus - sports stadia, shopping malls, airports and other large area structures, where light weight construction technology offers significant advantages both during installation and in subsequent use. However the large scale construction projects, for which Hightex is approached to tender, remain exposed to longer than usual decision making cycles as wider economic pressures continue.

Signed contracts to date are expected to deliver revenues of €20.7 million in 2012 and, so far, €12.9 million in 2013. The Directors believe that further revenues can be earned in 2012 provided at least one new contract is won and work is started before the end of the year. Hightex is vigorously pursuing other potential contracts, including two further stadia and infrastructure projects in Brazil, as well as other projects in Europe and the Middle East. If successful, such contract wins will significantly increase revenues in 2013 and beyond.

Conclusion

The six months to 30 June 2012 represent an improvement compared with the first half of 2011, but the loss before tax of €1 million remains a disappointing result. The Directors and all staff are working to secure further membrane contract wins and to return SolarNext to profitability. The next six months will no doubt continue to be challenging, but Hightex's reputation for innovative engineering excellence should place the Company in a good position when confidence returns to the global economy, bringing with it demand for new or refurbished stadia, a greater level of construction activity and a renewed emphasis on infrastructure projects. The Directors believe that the short to medium terms prospects are encouraging and that the long term remains promising as the economic advantages of light weight construction engineering are increasingly recognised.

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 (€), unless otherwise stated.

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 2012.

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. This assessment has been made based on the Group's economic prospects which have been included in the financial forecasts for the years 2012 and 2013. 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 revenue secured to date for 2012 (€20.7m) and 2013 (€12.9m), expected contract wins in 2012 and 2013, as well as the financing facilities available to the Group (please refer to note 2a to the accounts).

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 2011.

The Interim financial information for the six months ended 30 June 2012 was approved by the directors on 19 September 2012.

3. Taxation

4. Earnings per share

5. Dividend

The directors do not propose the payment of an interim dividend (2011: nil).

6. Contingent liabilities

The group had contingent liabilities of €758,000 (31 December 2011: €758,000) under contracted performance and warranty bonds and advance payments.

7. Post balance sheet events

Save for the award of the second Brazilian FIFA 2014 contract, worth nearly €10 million, no post balance sheet events have occurred.

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