Highway Capital Regulatory News (HWC)

HIGHWAY CAPITAL PLC

AUDITED RESULTS FOR THE YEAR ENDED 29 FEBRUARY 2012

CHAIRMAN'S STATEMENT

Results for 12 months ended 28 February 2013 show a loss before tax of £116,493 (2012: £93,105 loss).

The company had cash in the bank and in hand of £54,721 at the balance sheet date. The board does not consider it appropriate to declare a dividend. During the year the underlying costs associated with maintaining the listing have remained in line with prior years, however additional professional costs have been incurred in relation to the corporate changes described below and these are reflected in the final figures.

The board has continued to explore opportunities to increase shareholders' value, unfortunately, as I have previously indicated, any proposed acquisition has needed the support of both major shareholders as they each hold in excess of 25% of the shares, and none has yet proved suitable to both.

This continuing structural situation has resulted in the cash resources of the company being increasingly depleted and during the year the board decided to investigate injecting additional equity capital into the company. During these discussions an issue regarding the company's listing category arose. The company's listing category was premium (commercial company) and it was drawn to the attention of the board that the company was not therefore compliant with one of the continuing obligations required of companies falling within this listing category by virtue of the company not currently carrying on an independent business as required by Listing Rule 6.1.4(3) and Listing Rule 9.2.2A.The alternatives available to the board were to transfer the company to a standard listing or to cancel its listing completely. After careful consideration, the board concluded that it would be appropriate to transfer the company's listing category on the Official List to a standard listing.

The alternative of cancelling the company's listing would have, in the opinion of the board, resulted in an inability to raise further capital and complete an acquisition, resulting in liquidation of the company immediately upon cancellation of the listing, which would be unlikely to generate any value for shareholders.

To that end, on 20 May 2013, the company called a general meeting to seek shareholder approval for this change to a standard listing. Under the listing rules, the proposed transfer required the company to obtain the prior approval of a resolution for such transfer from not less than 75 per cent. of shareholders who vote in person or by proxy at a general meeting. Therefore, the resolution proposed at the general meeting to approve the proposed transfer was a special resolution. The meeting, held on 12 June 2013, approved this change and as the date of transfer to a standard listing must not be less than 20 business days after the resolution is passed, it is anticipated that the date of transfer will be 11 July 2013. Once this transfer is effected the board intends to seek approval for additional equity capital to be injected into the company.

In order to ensure adequate resources until this transfer is completed the company called a further general meeting on 21 June 2013 to seek shareholder approval, by way of an ordinary resolution for the company to be permitted to borrow up to £150,000 and this resolution was approved.

Following the passing of this resolution, the board entered into discussions with Mr M Szytko, who agreed to make a loan to the company of £150,000 on normal commercial terms.

Having effected the above changes, the board believes that not only will it be able to continue its search for an acquisition to generate a significant increase in shareholder value, but also that it will reduce the costs associated with maintaining its listing. We will continue to work with both major shareholders to identify an acceptable target and will inform you of any developments.

D M D A Wheatley

Chairman

28 June 2013

DIRECTORS' RESPONSIBILITY STATEMENT

Company law requires the directors to prepare accounts for each financial year which give a true and fair view of the state of affairs of the company and of the profit or loss for that period. In preparing those accounts, the directors are required to:

- select suitable accounting policies and then apply them consistently;

- make judgements and estimates that are reasonable and prudent;

- follow applicable accounting standards, subject to any material departures disclosed and explained in

the accounts; and

- prepare the accounts on the going concern basis unless it is inappropriate to presume that the company

will continue in business.

The directors are responsible for maintaining proper accounting records which disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the accounts comply with the Companies Act 2006. They are responsible for the system of internal control, and for taking such steps as are reasonably open to them to safeguard the assets of the company and to prevent and detect fraud and other irregularities. The directors are also responsible for ensuring that all information relevant to the audit has been made available to the auditors.

Under applicable law and regulations, the directors are also responsible for preparing a directors' report, directors' remuneration report and corporate governance statement that comply with that law and those regulations.

The directors confirm that, to the best of their knowledge and belief:

- the accounts in this document, prepared in accordance with applicable UK law and accounting

standards, give a true and fair view of the assets, liabilities, financial position and loss of the company; and

- the business review and management report in the directors' report includes a fair review of the

development and performance of the business and the position of the company, together with a description of the principal risks and uncertainties that it faces.

PROFIT AND LOSS ACCOUNT

YEAR ENDED 28 FEBRUARY 2013

Continuing operations

There are no acquired or discontinued operations in the above two financial periods. Total recognised gains and losses

The company has no recognised gains or losses other than the profit or loss for the above two financial periods.

RECONCILIATION OF EQUITY SHAREHOLDERS' FUNDS

BALANCE SHEET

AT 28 FEBRUARY 2013

CASH FLOW STATEMENT

YEAR ENDED 28 FEBRUARY 2013

NOTES TO THE ACCOUNTS

YEAR ENDED 28 FEBRUARY 2013

1. Accounting policies

Basis of accounting

The accounts have been prepared under the historical cost convention and in accordance with applicable accounting standards.

Highway Capital plc does not prepare consolidated accounts and the directors have therefore continued to prepare its accounts in accordance with UK rather than international accounting standards, as permitted under EC Regulation 1606/2002.

Going concern

The company is a "cash shell", and, apart from a small amount of interest receivable, currently has no income stream. Until a suitable trading business is acquired, it is therefore dependent on its cash reserves to fund ongoing costs. At the date of approval of the accounts the company has agreed the additional funding that it considers necessary to enable it to be able to continue to meet its liabilities as they fall due, but the funds have not yet been received.

After reviewing the company's budget for 2013/2014 and its medium term plans, the directors have a reasonable expectation that, following the £150,000 loan to the company that Mr M Szytko, a director and shareholder of the company, has agreed to provide on normal commercial terms, the company will have adequate resources to continue in operational existence for the foreseeable future. The company has received written confirmation that the full amount of the loan will be received shortly after the date of approval of the accounts. For this reason, they continue to adopt the going concern basis in preparing the accounts.

The accounts do not include any adjustments that would result if the company were unable to continue as a going concern.

Consolidation

At 28 February 2013, Highway Capital plc was a stand-alone company and is therefore not required to prepare consolidated accounts.

Depreciation

Depreciation is provided on all fixed assets at rates calculated to write off the cost of each asset on a straight line basis over its expected useful life.

Stocks and work-in-progress

Stocks and work-in-progress are stated at the lower of cost and net realisable value.

Deferred taxation

Deferred tax is provided in full at appropriate rates in respect of taxation deferred by timing differences between the treatment of certain items for taxation and accounting purposes, if those timing differences are not permanent and have originated but not reversed by the balance sheet date. The deferred tax balance has not been discounted.

Finance leases and hire purchase commitments

Assets obtained under finance leases and hire purchase contracts are capitalised in the balance sheet and depreciated over their useful economic lives.

The interest element is charged to profit and loss account on a straight line basis over the period of the finance leases or hire purchase contracts.

Rentals paid under operating leases are charged to income on a straight line basis over the lease period.

Foreign currencies

Profit and loss account transactions denominated in foreign currencies are translated into sterling and recorded at the rate of exchange ruling at the date of the transaction.

Monetary assets and liabilities denominated in foreign currencies are retranslated at the rate of exchange ruling at the balance sheet date.

All differences are taken to the profit and loss account.

Turnover

Turnover represents management fees receivable.

Information relating to directors' emoluments is included in the directors' remuneration report on pages 7 and 8 of the full accounts.

The company has estimated losses of £1,012,000 (2012: £896,000) that may be available for carry forward against future profits, and estimated capital losses of £1,460,000 (2012: £1,460,000) that may be available for carry forward against future chargeable gains. No deferred tax asset has been recognised in the accounts in respect of these unrelieved losses.

6. Dividends

2013 2012

Interim paid nil per share (2012: nil) £- £-

7. Loss per share

The loss per ordinary share calculation has been based on the loss attributable to ordinary shareholders of £116,493 (2012: loss £93,105), divided by 7,945,638 (2012: 7,945,638), being the weighted average number of ordinary shares in issue during the year. The basic and the diluted loss per ordinary share are the same.

There are no discontinued operations in either period and, therefore, the basic and the diluted loss per ordinary share from continuing operations are the same as the basic and the diluted loss per ordinary share.

8. Investments

The company currently has no investments.

The company had no bank loans or overdrafts existing at the beginning or end of the year.

13. Deferred taxation

The estimated deferred tax asset not recognised in the accounts, based on a 23% rate of tax, amounts to £568,000 (2012: based on a 24% rate of tax £565,000). Of this amount, £335,000 may be recoverable by the company against future chargeable gains, and £233,000 may be recoverable against future profits.

There were no related party transactions in the year.

16. Post balance sheet events

Since the year end date the shareholders have passed the following resolutions:

a) to change the company's status from a premium to a standard listed company, which will take effect from 11 July 2013, and

b) to permit the company to borrow up to £150,000.

The company has agreed with Mr M Szytko, a director and shareholder, that he will make a loan of £150,000 to the company on normal commercial terms, to ensure that the company has adequate resources prior to seeking shareholder approval for additional equity capital to be injected into the company.

17. Reconciliation of movements on reserves

Share Profit

Premium and Loss

Account Account

At 1 March 2012 295,437 (336,832)

Retained loss for the year - (116,493)

At 28 February 2013 £295,437 £(453,325)

18 Other financial commitments

At 28 February 2013 the company had no commitments for the year ending 28 February 2014 under non-cancellable operating leases.

19. Financial instruments

The Company's financial instruments comprise cash, trade debtors and trade creditors that arise directly from its operations. The Company's policy has been, and continues to be, that no speculative trading in financial derivatives shall be undertaken.

20. Financial assets

The cash is held in bank current and premium accounts and on treasury deposit, which receive varying rates of interest that is recognised on a receivable basis. All financial assets and liabilities are denominated in Sterling.

Fair value of financial assets and liabilities

The fair value of financial assets and liabilities, calculated by discounting expected future cash flows at prevailing interest rates, is not materially different from their book value, and is as follows:

Hedging

The Company makes no use of forward currency contracts, other financial derivatives or hedging. Interest rate risk

The Company does not have an interest rate policy in isolation but regularly reviews the interest rates being received on deposits.

Liquidity risk

The principal policy of the Company in managing liquidity risk is to align the anticipated timing of expenditure with the availability of its cash balances.

21. Cash flow statement

(a) Net cash outflow from operating activities

(c) Reconciliation of net cash flow to movement in net funds/(debt)