RNS Number:0671O
Xaar PLC
19 July 2000
MEETINGS TODAY
Analyst at 9:30am - Press at 11:15am
Venue: Buchanan Communications, 107 Cheapside
London, EC2V 6DN
Please call Lisa Baderoon on 020 7466 5000
if you are able to attend.
INTERIM RESULTS FOR THE SIX MONTHS TO 30 JUNE 2000
- RECORD TURNOVER AND A PROFIT
Xaar plc ('Xaar'), the ink jet printing technology group
headquartered in Cambridge, has announced its unaudited
interim results for the six months ended 30 June 2000.
Key points :
- Record turnover and a profit reflect the excellent progress
made during the first half of the year.
- Turnover doubled to #10.8m (1999 : #5.4m).
- Profit before tax turned round sharply to #0.7m (1999 : loss
of #0.4m).
- A good balance in revenue profile was achieved between
technology income and manufacturing turnover.
- As a result of strong operating cashflow, cash balances at
the end of the half year increased by #2.9m to #7.1m (#4.2m
at 31 December 1999).
- Major new licence was signed during the first half with
Sharp Corporation of Japan.
- Highly successful exhibition at Drupa, the major printing
industry show held every four years, with Xaar's digital
printing technology incorporated in products on display on
the stands of many customers, partners and licensees.
- Sales of XaarJet manufactured print heads and inks nearly
doubled on a like-for-like basis compared to the first half
of last year.
- Good progress was made in the development of next-generation
wide array printing technology together with partners, Agfa,
Kyocera and DuPont.
- On outlook, Chairman, Arie Rosenfeld commented :
'We see an enormous range of opportunities for Xaar's
technology - and there was solid evidence of this in the
number of applications using our technology which were on
show at the Drupa printing exhibition in May.
We have built on the real momentum created in 1999 and we
continue to look to the future with enthusiasm and
confidence.'
Graham Wylie, Chief Executive or Jonathan Lowe,
Finance Director at Xaar on 020-7466-5000 today or
01223-423663 thereafter
Lisa Baderoon at Buchanan Communications on 020-7466-5000
CHAIRMAN'S STATEMENT
Introduction
I am pleased to report that Xaar has made further excellent
progress in the first six months of the current year. We
achieved record revenues and a profit for the period and
concluded a major new licence deal with Sharp Corporation of
Japan.
Results and Finance
Turnover for the period was #10.8m (1999 : #5.4m) which
resulted in a profit before tax of #0.7m (1999 : loss before
tax #0.4m). The revenue profile showed a good balance
between technology revenues (licences and royalties) and
trading revenues (printhead and ink sales). Cashflow was
strong in the period with operating cash generated of #3.3m;
cash balances at 30 June 2000 stood at #7.1m compared with
#4.2m at 31 December 1999. Capital expenditure of #0.6m was
in line with our plans.
Business Review
The world's largest printing tradeshow, Drupa 2000, was held
in Germany in May and proved a resounding success for Xaar.
Many of our customers, partners and licensees exhibited
digital printing systems containing Xaar technology covering a
wide range of printing applications. The show is held once
every four years and it was widely agreed that the 2000 show
marked a key milestone in the transition from analogue
printing to digital printing. Xaar is recognised as one of
the leaders of this movement.
Xaar Technology is the division responsible for technology
development and licensing. A major licence was signed with
Sharp Corporation of Japan who are one of the world's leading
consumer electronics and imaging companies. We also saw a
number of product launches from licensees in the period.
Royalties were modest for the period; however with recent
product launches and strong licensing activity over the last
twelve months we remain confident that royalties will grow
significantly in the future.
XaarJet is the printhead and ink business based in Cambridge
and Sweden. High performance printheads and inks are sold to
a range of OEM customers and end users as the key enabling
components of digital printing systems. This business has
made excellent progress ever since we acquired the Swedish
operation in March 1999. XaarJet sales have nearly doubled on
a like-for-like basis since the corresponding period in 1999
and the business was profitable for the first time on a
combined basis. Work remains to be done to improve yields in
the UK and to strengthen the ink business but we are pleased
with the progress made in the last six months.
Xaar Digital deals with the technical development and
commercial exploitation of our next generation wide-printing
technology. We work with our partners Agfa, Kyocera and
DuPont on this development which will eventually take digital
ink-jet printing into new areas of commercial printing. The
technical challenge that is being undertaken is considerable
and there have been some technical delays over the past few
months. However we remain as firmly committed as ever to
developing the next generation of Xaar technology for wide
array printing and we are working even more closely and
effectively with our partners to ensure that the development
programmes will be successful.
Intellectual Property
We have continued to expand our patent portfolio including a
number of important patent applications in the field of wide
printing. Our total patent portfolio has increased to over
520 patents and patent applications.
Board Changes
After many years of continuity on the Board, there have been
two recent resignations; Bob Hook, one of our non-executive
directors and a previous chairman, has decided to concentrate
on his many other business interests. Mark Shepherd has
decided to move on to a fresh challenge, having been involved
with Xaar since the earliest days. We wish them both well.
No immediate replacements are planned.
Outlook
There are enormous opportunities for Xaar's technology in a
wide range of consumer, office, industrial and commercial
applications requiring a high speed digital printing solution.
This was evidenced by the number of applications utilising the
technology at Drupa in May. We will continue to develop and
to exploit these opportunities in the way best suited to each
market segment; technology licensing for consumer and office
products; manufacture and sale of high performance printheads
and inks for industrial applications; and joint collaborations
with leading global corporations for next generation
commercial applications.
Our technology revenues remain by their nature less
predictable than our trading revenues. However our proprietary
technology is the firm platform on which all our business
opportunities are built and we remain totally committed to the
continued development of Xaar's technology to meet the needs
of our customers and partners in the years ahead.
In the first six months of this year we have built on the real
momentum created in 1999 and we continue to look to the future
with enthusiasm and confidence.
Arie Rosenfeld
Chairman
19 July 2000
CONSOLIDATED PROFIT AND LOSS ACCOUNT
FOR THE SIX MONTHS ENDED 30 JUNE 2000
Notes 6 months 6 months 12 months
to to to
30 June 30 June 31
2000 1999 December
(un- (un- 1999
audited) audited) (audited)
#'000 #'000 #'000
Turnover 10,755 5,400 15,064
Cost of sales (5,098) (2,498) (6,957)
--------- -------- ---------
Gross profit 5,657 2,902 8,107
Other operating expenses
(net) 3 (5,041) (3,412) (7,781)
--------- -------- ---------
Operating profit/(loss) 616 (510) 326
Interest receivable
(net) 83 154 216
--------- -------- ---------
Profit/(loss) on
ordinary activities
before taxation 699 (356) 542
Tax on profit/(loss) on
ordinary activities (347) (131) (338)
--------- -------- ---------
Retained profit/(loss)
for the financial period 352 (487) 204
===== ===== =====
Earnings/(loss) per
share - basic 1 0.6p (0.9p) 0.4p
Earnings/(loss) per
share - diluted 0.6p - 0.4p
===== ===== =====
Consolidated statement of total recognised gains and losses
6 months 6 months 12 months
to to to
30 June 30 June 31
2000 1999 December
(un- (un- 1999
audited) audited) (audited)
#'000 #'000 #'000
Retained profit/(loss) for
the financial period 352 (487) 204
Gain/(loss) on foreign
currency translation 117 (5) (80)
--------- -------- ---------
Total recognised gains and
losses relating to the
period 469 (492) 124
===== ===== =====
CONSOLIDATED BALANCE SHEET
AS AT 30 JUNE 2000
As at As at As at
30 June 30 June 31
2000 1999 December
(un- (un- 1999
audited) audited) (audited)
#'000 #'000 #'000
Fixed assets
Goodwill 1,203 1,341 1,272
Tangible assets 4,513 4,875 4,789
Investments 20 20 20
-------- ------- --------
5,736 6,236 6,081
Current assets
Stocks 995 835 842
Debtors 4,315 3,120 5,709
Cash and liquid resources 7,141 5,665 4,217
-------- ------- --------
12,451 9,620 10,768
Creditors: amounts falling due
within one year (4,281) (3,564) (3,682)
-------- ------- --------
Net current assets 8,170 6,056 7,086
-------- ------- --------
Total assets less current
liabilities 13,906 12,292 13,167
Creditors: amounts falling due
after more than one year (232) (351) (415)
-------- ------- --------
Net assets 13,674 11,941 12,752
===== ===== =====
Capital and reserves
Called-up share capital 5,697 5,439 5,568
Share premium account 10,408 10,114 10,116
Other reserves 1,042 946 1,010
Accumulated deficit (3,473) (4,558) (3,942)
-------- ------- --------
Shareholders' funds - all
equity 13,674 11,941 12,752
===== ===== =====
CONSOLIDATED CASH FLOW STATEMENT
FOR THE SIX MONTHS ENDED 30 JUNE 2000
6 months 6 months 12 months
to to to
30 June 30 June 31
2000 1999 December
(unau- (unau- 1999
dited) dited) (audited)
#'000 #'000 #'000
Net cash inflow/(outflow) from
operating activities 3,333 (1,050) (2,210)
-------- ------- --------
Returns on investments and
servicing of finance 76 206 275
Capital expenditure and
financial investment (634) (330) (581)
Acquisitions (net of cash
acquired) - (2,942) (2,942)
-------- ------- --------
Cash inflow/(outflow) before
management of liquid resources
and financing 2,775 (4,116) (5,458)
-------- ------- --------
Management of liquid resources (2,040) 4,093 5,728
Financing 80 1,042 960
-------- ------- --------
Increase in cash in the period 815 1,019 1,230
===== ===== =====
Cash and liquid resources comprise:
As at As at As at
30 June 30 June 31
2000 1999 December
(unau- (unau- 1999
dited) dited) (audited)
#'000 #'000 #'000
Cash at bank and in hand 2,116 1,045 1,232
Treasury deposits 5,025 4,620 2,985
--------- ------- --------
7,141 5,665 4,217
===== ===== =====
Notes to the interim financial information
1. Earnings/(loss) per ordinary share - basic and diluted
The calculation of earnings/(loss) per share is based on
the profit/(loss) for the period after taxation and on
the weighted average number of ordinary shares in issue
during the period of 56,572,163 (1999: 52,963,518) in
respect of basic earnings/(loss) per share, and
60,591,331 in respect of diluted earnings per share (the
only difference being in relation to exercises of share
options). Due to the loss incurred in 1999 no share
options were deemed to be dilutive.
2. Comparative figures
The comparative figures for the financial year ended 31
December 1999 do not constitute statutory accounts for
that financial year within the meaning of section 240 of
the Companies Act 1985. These figures have been
extracted from the audited accounts for that year, which
have been delivered to the Registrar of Companies. The
report of the auditors was unqualified and did not
contain a statement under section 237(2) or (3) of the
Companies Act 1985.
3. Other operating expenses (net)
In June 2000 the pension provider in Sweden confirmed to
XaarJet AB that a contribution surplus of some #700,000
would be returned to the company in two portions:
#143,000 by way of a cash payment, with the remainder to
be offset against future pension contributions.
Accordingly, net other operating expenses for the period
include a one-off credit of #143,000, with the remaining
surplus to be credited as and when future contributions
are reduced.
Independent Review Report to Xaar plc
Introduction
We have been instructed by the company to review the financial
information and we have read the other information contained
in the interim report and considered whether it contains any
apparent misstatements or material inconsistencies with the
financial information.
Directors' responsibilities
The interim report, including the financial information
contained therein, is the responsibility of, and has been
approved by, the directors. The directors are responsible
for preparing the interim report in accordance with the
Listing Rules of the Financial Services Authority and
applicable United Kingdom accounting standards. The Listing
Rules require that the accounting policies and presentation
applied to the interim figures should be consistent with those
applied in preparing the preceding annual accounts except
where any changes, and the reasons for them, are disclosed.
Review work performed
We conducted our review in accordance with guidance contained
in Bulletin 1999/4 issued in the United Kingdom by the
Auditing Practices Board and with our profession's ethical
guidance. A review consists principally of making enquiries of
group management and applying analytical procedures to the
financial information and underlying financial data and, based
thereon, assessing whether the accounting policies and
presentation have been consistently applied unless otherwise
disclosed. A review excludes audit procedures such as tests of
controls and verification of assets, liabilities and
transactions. It is substantially less in scope than an audit
performed in accordance with Auditing Standards 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 that should be made to the financial
information as presented for the six months ended 30 June
2000.
Arthur Andersen
Chartered Accountants
Betjeman House
104 Hills Road
Cambridge
CB2 1LH
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