Financial Express (Holdings) Limited (“we”, “our”, “us” and derivatives) are committed to protecting and respecting your privacy. This Privacy Policy, together with our Terms of Use, sets out the basis on which any personal data that we collect from you, or that you provide to us, will be processed by us relating to your use of any of the below websites (“sites”).

  • FEAnalytics.com
  • FEInvest.net
  • FETransmission.com
  • Investegate.co.uk
  • Trustnet.hk
  • Trustnetoffshore.com
  • Trustnetmiddleeast.com

For the purposes of the Data Protection Act 1998, the data controller is Trustnet Limited of 2nd Floor, Golden House, 30 Great Pulteney Street, London, W1F 9NN. Our nominated representative for the purpose of this Act is Kirsty Witter.

WHAT INFORMATION DO WE COLLECT ABOUT YOU?

We collect information about you when you register with us or use any of our websites / services. Part of the registration process may include entering personal details & details of your investments.

We may collect information about your computer, including where available your operating system, browser version, domain name and IP address and details of the website that you came from, in order to improve this site.

You confirm that all information you supply is accurate.

COOKIES

In order to provide personalised services to and analyse site traffic, we may use a cookie file which is stored on your browser or the hard drive of your computer. Some of the cookies we use are essential for the sites to operate and may be used to deliver you different content, depending on the type of investor you are.

You can block cookies by activating the setting on your browser which allows you to refuse the setting of all or some cookies. However, if you use your browser settings to block all cookies (including essential cookies) you may not be able to access all or part of our sites. Unless you have adjusted your browser setting so that it will refuse cookies, our system will issue cookies as soon as you visit our sites.

HOW WE USE INFORMATION

We store and use information you provide as follows:

  • to present content effectively;
  • to provide you with information, products or services that you request from us or which may interest you, tailored to your specific interests, where you have consented to be contacted for such purposes;
  • to carry out our obligations arising from any contracts between you and us;
  • to enable you to participate in interactive features of our service, when you choose to do so;
  • to notify you about changes to our service;
  • to improve our content by tracking group information that describes the habits, usage, patterns and demographics of our customers.

We may also send you emails to provide information and keep you up to date with developments on our sites. It is our policy to have instructions on how to unsubscribe so that you will not receive any future e-mails. You can change your e-mail address at any time.

In order to provide support on the usage of our tools, our support team need access to all information provided in relation to the tool.

We will not disclose your name, email address or postal address or any data that could identify you to any third party without first receiving your permission.

However, you agree that we may disclose to any regulatory authority to which we are subject and to any investment exchange on which we may deal or to its related clearing house (or to investigators, inspectors or agents appointed by them), or to any person empowered to require such information by or under any legal enactment, any information they may request or require relating to you, or if relevant, any of your clients.

You agree that we may pass on information obtained under Money Laundering legislation as we consider necessary to comply with reporting requirements under such legislation.

ACCESS TO YOUR INFORMATION AND CORRECTION

We want to ensure that the personal information we hold about you is accurate and up to date. You may ask us to correct or remove information that is inaccurate.

You have the right under data protection legislation to access information held about you. If you wish to receive a copy of any personal information we hold, please write to us at 3rd Floor, Hollywood House, Church Street East, Woking, GU21 6HJ. Any access request may be subject to a fee of £10 to meet our costs in providing you with details of the information we hold about you.

WHERE WE STORE YOUR PERSONAL DATA

The data that we collect from you may be transferred to, and stored at, a destination outside the European Economic Area (“EEA”). It may be processed by staff operating outside the EEA who work for us or for one of our suppliers. Such staff may be engaged in, amongst other things, the provision of support services. By submitting your personal data, you agree to this transfer, storing and processing. We will take all steps reasonably necessary, including the use of encryption, to ensure that your data is treated securely and in accordance with this privacy policy.

Unfortunately, the transmission of information via the internet is not completely secure. Although we will do our best to protect your personal data, we cannot guarantee the security of your data transmitted to our sites; any transmission is at your own risk. You will not hold us responsible for any breach of security unless we have been negligent or in wilful default.

CHANGES TO OUR PRIVACY POLICY

Any changes we make to our privacy policy in the future will be posted on this page and, where appropriate, notified to you by e-mail.

OTHER WEBSITES

Our sites contain links to other websites. If you follow a link to any of these websites, please note that these websites have their own privacy policies and that we do not accept any responsibility or liability for these policies. Please check these policies before you submit any personal data to these websites.

CONTACT

If you want more information or have any questions or comments relating to our privacy policy please email publishing@financialexpress.net in the first instance.

 Information  X 
Enter a valid email address

Xaar PLC (XAR)

  Print      Mail a friend       Annual reports

Wednesday 14 September, 2005

Xaar PLC

Interim Results

Xaar PLC
14 September 2005




FOR IMMEDIATE RELEASE                                       14 September 2005

                                    Xaar plc

              SHARP PROFITS INCREASE FOR 6 MONTHS TO 30 JUNE 2005

Xaar plc ('Xaar'), the inkjet printing technology group headquartered in
Cambridge, has announced its unaudited results for the six months ended 30 June
2005.


KEY POINTS:

• The results show continued strong growth in sales, profit and cash.

• To provide for future sales growth and the launch of new products, Xaar
  is to invest £10m in a major new manufacturing plant to be established in the
  UK.

• The financial results (reported under IFRS) were:

  o Turnover was up 19% to £19.8m (2004: £16.6m);

  o Profit from operations* jumped by 86% to £4.6m (2004: £2.5m);

  o Margin from operations* improved to 23% (2004: 14%);

  o Profit before tax was £3.5m (2004: £1.3m);

  o Earnings per share* were 5.6p (2004: 3.0p);

  o Net cash and liquid resources at 30 June 2005 increased to £17.5m
    (2004: £9.9m); and

  o The net effect of adopting IFRS was to increase profit before tax by
    £0.3m (2004: £0.1m).

  * stated before non-trading foreign exchange movements on inter-company loan:
    loss of £1.3m (2004: loss of £1.3m)

• Increased sales were achieved in each principal territory and industry
  segment.

• Although an interim dividend is not being paid (2004: nil), a final
  dividend for the year is expected to be declared (2004: 1p).

• Successful launch of Xaar's new OmniDot product range with equipment
  from Agfa already commercialised.

• Business development is yielding initial development revenues from new
  markets.

• A minority investment has been made in integration partner, Xennia
  Technology.

• Robert Eckelmann, formerly with Intel, has been appointed as a
  non-executive director.


On outlook, Chairman, Arie Rosenfeld stated:

'All of our core markets met or exceeded expectations during the period and the
board expects to achieve a satisfactory result for the year as a whole.'



Contacts

Xaar plc:                                                 today: 020-7367-8888
Ian Dinwoodie, Chief Executive                        Thereafter: 01223-423663
Nigel Berry, Group Finance Director                             www.xaar.co.uk
    & Deputy Chief Executive  

Bankside Consultants:
Steve Liebmann                                    020-7367-8883 / 07802-888159


                              CHAIRMAN'S STATEMENT
Introduction

I am pleased to report another six months of strong growth and profitability for
the group, together with the important commercial launch of our new OmniDot
range of printheads and the announcement of plans to add a new production
facility in the UK.

Results and Finance

For the first time the results have been prepared under International Financial
Reporting Standards (IFRS) as required by EU legislation for most listed
European companies with reporting periods starting on or after 1 January 2005.

Under IFRS, total group revenue was £19.8 million (2004: £16.6 million) for the
period, an increase of 19% over the same period last year.  Included in revenue
is the sale of printheads and inks valued at £18.4 million (2004: £15.7
million), licensee royalties of £0.8 million (2004: £0.6 million) and
development fees of £0.6 million (2004: £0.3 million).

The profit from operations (as defined by IFRS, i.e. profit before net interest,
exchange rate movement on the inter-company loan, tax and dividends) for the
period was £4.6 million (2004: £2.5 million).  The exchange rate movement on the
inter-company loan between the UK and Sweden resulted in a book loss of £1.3
million (2004: £1.3 million loss).  After accounting for this movement, profit
before tax was £3.5 million (2004: £1.3 million) and the tax charge for the
period was £1.1 million (2004: £0.4 million).  Earnings per share, excluding
translation movements on the inter-company loan, were 5.6p (2004: 3.0p) and
including currency translation movements on the inter-company loan were 4.1p
(2004: 1.5p).

The results were previously reported under UK Generally Accepted Accounting
Principles (UK GAAP), which was also the basis of the trading update issued in
July of this year.  A financial reconciliation and further explanation of the
differences between the IFRS and UK GAAP results can be found in note 4 to the
interim statement.  The net effect of the change to IFRS reporting on profit
before tax for the period was to increase it by £0.3 million.  For the 2004
comparative there was an increase of £0.1 million.

Cash generation in the period was again strong with cash at the half-year
standing at £17.5 million (2004: £9.9 million).  This is after providing for
capital investment in tangible assets of £1.3 million, trade investments of £0.2
million and an increase in working capital of £0.6 million.  Outstanding
liabilities under finance leases were £1.5 million (2004: £1.4 million).

Business Review

Printheads and related products

Sales improved for all Xaar's printhead products in all market sectors.  Our
industry-standard XJ128 and XJ128 Plus printheads continue to dominate the wide
format graphic arts market where they are primarily used to print outdoor
advertising media and other outdoor signage.  The XJ500 continues to find
success in both the wide format graphics market and the secondary packaging
market, where coding directly onto external packaging is eliminating the need
for pre-printed barcode labels. Sales of the OmniDot 318 (formerly Leopard)
printhead also continued to grow.

Sales to Asia were up 20% on the same period last year, with sales to Europe up
by 16% and sales to the US up by 25%.  Our new office in India, opened in late
2004, is starting to develop direct sales to this market and we have recently
taken on our first full time sales person in South America, based in Sao Paulo,
Brazil.

The major new product news from the first half was the successful commercial
launch of the greyscale OmniDot 760, which made its debut in a commercial
printing product in May at the FESPA tradeshow in Munich, Germany.  The OmniDot
was co-developed with Agfa, who demonstrated it at the show in both a grand
format graphics printer, the Anapurna 100, and a revolutionary new digital
press, the M-Press, which is the most advanced product of its type yet built.
The M-Press in particular generated tremendous interest from potential end users
and Agfa is due to begin deliveries later this year.

Xaar's own version of the OmniDot 760 printhead has been supplied in
evaluation-kit form to both existing and new customers and we would expect
equipment based on the new printhead to be in the market towards the end of
2006.  The smaller and variable drop size offered by the OmniDot allows much
higher resolution printing which, in turn, opens up the indoor advertising and
fine art market to Xaar.  This will add an incremental layer of sales to those
generated by our existing product portfolio. The OmniDot range will also include
a binary version (the OM 380) which will fill the space between the XJ128 and
XJ500 printheads in both the wide format and coding markets.

Looking further ahead, we have also shipped early test kits of our next new
printhead platform, currently referred to as the HSS.  This printhead has a
patented recirculating ink system giving it the ability to self-recover from
blocked nozzles.  This makes it inherently much more reliable than conventional
inkjet printheads.  The recirculating principle also allows a much wider range
of fluids to be used in the printhead; we believe these features will not only
open up new areas of traditional printing to inkjet, but will also take inkjet
into new industrial processes where patterns and images are today produced by
wasteful subtractive processes rather than by direct printing.

New Markets

Our business development activities generated initial revenues during the period
and continue to gather pace.  We are actively involved in a range of projects
covering printed electronics, packaging, electronic displays and biotech.  These
projects include: the printing of etch masks for the manufacture of printed
circuit boards, where we expect to see commercial equipment released later in
the year; the printing of aerosol and beverage cans; the repair of LCD screens
and other deposition related processes within the manufacture of electronic
displays, and the use of inkjet in textile printing for which we have OmniDot
evaluation kits on trial in the field.

In each of these areas we work very closely with our approved integration
partners whose skill in applying our technology to each customer's particular
application is very important.

Xennia Technology Ltd.

We recently made a minority investment in Xennia Technology Ltd., one of our
approved integration partners.  As a result we now own 10% of the company with
an option to increase this to 12.5%.  The investment is intended to strengthen
further our relationship with Xennia and it is not currently our intention to
increase our stake beyond that of a minority shareholder.

Where appropriate, it is our intention to make other small trade investments if
these can speed adoption of our technology into existing and new markets.

Technology Revenues

Royalties from licensees increased during the period compared to both the first
and second half of 2004.  This growth comes primarily from Toshiba TEC, Konica
Minolta, Toyo Ink, Seiko Instruments, and Brother. Our licensees use Xaar
technology across a range of markets including graphic arts, document printing
and mailing.

New Production Facility

With the launch of the OmniDot range, manufactured in our production facility in
Sweden for both ourselves and Agfa, it is likely that the Swedish plant will
become fully utilised in the short to medium term.  In order to provide capacity
for the introduction of the HSS product range, as well as to provide further
capacity for existing products, we have decided to add a second production
facility in the vicinity of our Cambridge headquarters.  We have identified
several possible leasehold buildings and expect to finalise negotiations on one
of these sites by the end of the year.  Initial equipment and fit-out costs for
the new facility are expected to be around £7.0 million and the total commitment
including working capital is likely to be in the order of £10.0 million.
Commercial volume production of the first model in the HSS printhead range is
scheduled to begin by the end of 2006.  The investment in the new facility will
be met from the group's existing cash reserves.

Board

We are delighted to have appointed Mr Robert Eckelmann as a non-executive
director with effect from 1 October 2005.  Mr Eckelmann, 49, has a strong
background in the electronics industry; having launched Intel's Asian business,
he later became VP and General Manager for the whole of Intel's EMEA region.

Dividend

As previously stated, due to the administrative time and cost involved in making
a dividend payment it is not the group's intention to pay an interim dividend
but, subject to a satisfactory second half performance, it is our intention to
declare a dividend for the full year.

Outlook

All of our core markets met or exceeded expectations during the period and the
board expects to achieve a satisfactory result for the year as a whole.

Arie Rosenfeld
Chairman
14 September 2005



CONSOLIDATED INCOME STATEMENT
FOR THE SIX MONTHS ENDED 30 JUNE 2005
                                     -----------    ----------     -----------
                           Notes     6 months to    6 months to   12 months to
                                         30 June        30 June    31 December
                                            2005           2004           2004
                                     (unaudited)    (unaudited)    (unaudited)
                                           £'000          £'000          £'000
                                     -----------    ----------     -----------

Continuing operations

Revenue                         1         19,849         16,589         34,812
Cost of sales                             (7,944)        (7,305)       (15,078)
                                       -----------    -----------    -----------
Gross profit                              11,905          9,284         19,734

Other operating expenses                  (7,260)        (6,793)       (13,440)
(net)
                                       -----------    -----------    -----------
Profit from operations                     4,645          2,491          6,294

Investment income                            252             97            306
Finance costs                                (34)           (67)          (100)
Foreign exchange loss on
intercompany loan                         (1,340)        (1,250)          (231)
                                       -----------    -----------    -----------
Profit before taxation                     3,523          1,271          6,269

Tax                                       (1,057)          (359)        (1,658)
                                       -----------    -----------    -----------
Profit for the period from
continuing operations                      2,466            912          4,611

Dividend                                    (604)             -              -
                                       -----------    -----------    -----------
Profit for the period                      1,862            912          4,611
                                       -----------    -----------    -----------

Earnings per share -            2            4.1p           1.5p           7.7p
basic
Earnings per share -            2            3.9p           1.5p           7.5p
diluted





Consolidated statement of recognised income and expense
for the six months ended 30 June 2005

                                    -----------    ----------     -----------
                                    6 months to    6 months to   12 months to
                                        30 June        30 June    31 December
                                           2005           2004           2004
                                    (unaudited)    (unaudited)    (unaudited)
                                          £'000          £'000          £'000
                                    -----------    ----------     -----------
Exchange differences on translation
of foreign operations                        678            746           (136)
                                       -----------     ----------    -----------
Net income recognised directly in
equity                                       678            746           (136)

Profit for the period                      1,862            912          4,611
                                       -----------     ----------    -----------
Total recognised income and expense
for the period attributable to
shareholders                              2,540          1,658          4,475
                                       -----------     ----------    -----------


CONSOLIDATED BALANCE SHEET
AS AT 30 JUNE 2005

                                     -----------    ----------     -----------
                                           As at          As at          As at
                                         30 June        30 June    31 December
                                            2005           2004           2004
                                     (unaudited)    (unaudited)    (unaudited)
                                           £'000          £'000          £'000
                                     -----------    ----------     -----------

Non-current assets
Goodwill                                     771            771            771
Other intangible assets                    3,228          2,147          2,958
Tangible assets                            5,546          5,241          5,623
Investments                                  234              -              -
                                       -----------    -----------    -----------
                                           9,779          8,159          9,352

Current assets
Inventories                                2,086          2,226          2,485
Trade and other receivables                6,535          6,323          6,771
Short term investments                         -          2,945            900
Cash and cash equivalents                 17,523          6,946         14,416
                                       -----------    -----------    -----------
                                          26,144         18,440         24,572
                                       -----------    -----------    -----------
Total assets                              35,923         26,599         33,924


Current liabilities
Amounts falling due in one year          (11,039)        (5,812)        (9,258)

Short-term provisions                       (134)          (496)          (134)
                                       -----------    -----------    -----------
                                         (11,173)        (6,308)        (9,392)

                                       -----------    -----------    -----------
Net current assets                        14,971         12,132         15,180

Non-current liabilities

Obligations under finance leases            (889)        (1,446)        (1,278)
                                       -----------    -----------    -----------
Total liabilities                        (12,062)        (7,754)       (10,670)
                                       -----------    -----------    -----------
Net assets                                23,861         18,845         23,254
                                       -----------    -----------    -----------

Equity
Share capital                              6,057          6,004          6,013
Share premium                              9,001          8,648          8,713
Own shares                                   (20)           (20)           (20)
Other reserves                             2,104          1,229          1,884
Hedging and translation reserves            (595)           746          1,212
Retained earnings                          7,314          2,238          5,452
                                       -----------    -----------    -----------
Equity attributable to
shareholders                              23,861         18,845         23,254

                                       -----------    -----------    -----------
Total equity                              23,861         18,845         23,254
                                       -----------    -----------    -----------

CASH FLOW STATEMENT
FOR THE SIX MONTHS ENDED 30 JUNE 2005

                                       -----------    ----------     -----------
                                       6 months to    6 months to   12 months to
                                           30 June        30 June    31 December
                                              2005           2004           2004
                                       (unaudited)    (unaudited)    (unaudited)
                                             £'000          £'000          £'000
                                       -----------    ----------     -----------

Net cash from operating activities              4,807       3,338       10,224
 
Investing activities
Interest received                                 253          79          308
Purchases of property, plant and 
equipment                                      (1,252)       (635)      (1,748)
Proceeds on disposal of property, plant
and equipment                                       -           -            9
Acquisition of investments in associates         (234)          -            -
Expenditure on product development               (469)       (830)      (1,583)
                                            -----------  ----------  -----------
Net cash used in investing activities          (1,702)     (1,386)      (3,014)

Financing activities
Dividends paid                                   (604)          -            -
Proceeds from issue of ordinary share
capital                                           333         105          179
Repayments of obligations under finance
leases                                           (285)       (318)        (623)
                                            -----------  ----------  -----------
Net cash used in financing activities            (556)       (213)        (444)
                                            -----------  ----------  -----------
Net increase in cash and cash
equivalents                                     2,549       1,739        6,766

Cash and cash equivalents at beginning of
period                                         15,316       8,458        8,458

Effect of foreign exchange rates                 (342)       (306)          92
                                            -----------  ----------  -----------
Cash and cash equivalents at end of
period                                         17,523       9,891       15,316
                                            -----------  ----------  -----------





NOTES TO THE INTERIM FINANCIAL INFORMATION


1. Segmental analysis


The segmental analysis of turnover is:

                                       ----------   ----------   -----------
                                         6 months     6 months     12 months
                                               to           to            to
                                          30 June      30 June   31 December
                                             2005         2004          2004
                                        £'Million    £'Million     £'Million
                                        ----------   ----------   -----------
                                                                  
Geographic:  Europe & Middle East             6.5          5.6          11.3

             Americas                         2.0          1.6           3.8
             Asia                            11.3          9.4          19.7
             ----------------            ----------   ----------   -----------
             Total                           19.8         16.6          34.8
             ----------------            ----------   ----------   -----------

Industry     Graphic arts                    14.5         12.3          25.6
segment:     Packaging printing               3.1          2.9           6.6
             Industrial printing              0.8          0.5           0.9
             Development fees                 0.6          0.3           0.6
             Licence fees and                 0.8          0.6           1.1
             royalties  
             ----------------            ----------   ----------   -----------
              Total                           19.8         16.6          34.8
             ----------------            ----------   ----------   -----------



2. Earnings per ordinary share - basic and diluted

The calculation of earnings per share is based upon the profit for the period
after taxation and on the weighted average number of ordinary shares in issue
during the period.  For basic earnings per share, this is 60,367,096 (30 June
2004: 60,003,648, 31 December 2004: 60,043,056) and for diluted earnings per
share, this is 63,196,060 (30 June 2004: 61,260,066, 31 December 2004:
61,746,960), the only difference being in relation to movements in share
options.


Adjusted earnings per share

                                     6 months to    6 months to   12 months to
                                         30 June        30 June    31 December
                                            2005           2004           2004
                                      (unaudited)    (unaudited)    (unaudited)
                                            £'000         £'000          £'000
Earnings per share excluding                 5.6p          3.0p           7.9p
foreign exchange loss on
intercompany loan - basic
Earnings per share excluding                 5.4p          2.9p           7.7p
foreign exchange loss on
intercompany loan - diluted


Basic earnings per share excluding foreign exchange loss on the intercompany
loan is based on earnings of:

                                     -----------    -----------    -----------
                                     6 months to    6 months to   12 months to
                                         30 June        30 June    31 December
                                            2005           2004           2004
                                     (unaudited)    (unaudited)    (unaudited)
                                           £'000          £'000          £'000
                                     -----------    -----------    -----------
Profit for the period from
continuing operations
                                           2,466            912          4,611
Foreign exchange loss on the
intercompany loan
                                           1,340          1,250            231
Tax effect of loss on intercompany          (402)          (375)           (69)
loan
                                     -----------    -----------    -----------
Retained earnings for the financial
period excluding foreign exchange
loss on the intercompany loan              3,404          1,787          4,773
                                     -----------    -----------    -----------


3. Financial information

These interim financial statements do not constitute statutory financial
statements within the meaning of section 240 of the Companies Act 1985.  The
results for the year ended 31 December 2004 have been extracted from the
statutory financial statements, which have been filed with the Registrar of
Companies and upon which the auditors reported without qualification.

4. Reconciliation between IFRS and UK GAAP

The key changes made to the group's UK GAAP results to comply with IFRS are:


   •Capitalisation of certain product development costs and deferral of
    associated third party contributions towards those development costs.


Under UK GAAP, capitalisation of product development expenditure was optional
and the group did not capitalise these costs.  To comply with IFRS, costs
associated with development of the OmniDot product range in 2003 and 2004, and
the HSS product range in 2004 and 2005 have now been capitalised.  These costs
will be amortised over a three year period on the basis of unit shipments
beginning in the year in which the products are first commercially sold.  This
will be 2005 for the OmniDot range and potentially late 2006 or early 2007 for
the HSS range.


In tandem with capitalising development costs for the OmniDot products, we are
also obliged to defer recognition of the contributions received towards those
costs from Agfa, our co-development partner.  Such deferred revenues will be
released in parallel with amortisation of the capitalised development costs for
this product.


   •Expensing of share options.


The group has expensed the cost of share options issued to executives and
employees in accordance with the methodology set out by IFRS2.


   •Amortisation of goodwill arising on acquisition of the group's Swedish
    operations in 1999 and Vivid Print Innovations in 2003.

Under UK GAAP, such goodwill was being amortised through the profit and loss
account over a ten year period.  Under IAS38, the fair value of such balance
sheet assets must be assessed on an annual basis by the group's directors, with
any permanent change in fair value taken through the profit and loss account.
The directors do not consider there has been any change in the fair value of
these items during 2004, or in the first half of 2005.  As a result,
amortisation previously charged in the 2004 results has been written back to
profit, and no charge has been made in the first half of the current year.


Reconciliations between IFRS results and UK GAAP results for the major financial
headings are shown below.

                                     -----------    -----------    -----------
Profit before tax                    6 months to    6 months to   12 months to
                                         30 June        30 June    31 December
                                            2005           2004           2004
                                     (unaudited)    (unaudited)    (unaudited)
                                           £'000          £'000          £'000
                                     -----------    -----------    -----------

Profit before tax under IFRS               3,523          1,271          6,269

Capitalisation of R&D (net) (note           (461)           (78)          (456)
1)
Cost of share options (note 2)               220             74            244
Amortisation of goodwill (note 3)            (71)           (72)          (143)
                                       -----------    -----------    -----------
                                            (312)           (76)          (355)
                                       -----------    -----------    -----------
Profit before tax under UK GAAP            3,211          1,195          5,914

Foreign exchange loss on inter             1,340          1,250            231
company loan
                                       -----------    -----------    -----------
Trading profit under UK GAAP               4,551          2,445          6,145


1.    Where the company's R&D programmes meet the criteria set out in IAS38, the
costs have been capitalised as an intangible asset and amortised as appropriate.


2.    Share options granted after 7 November 2002 that have not vested are
measured, in accordance with IFRS2, at their fair value as determined by the
Black Scholes option pricing model.  The fair value of these options is written
off over the vesting period of the individual option.

3.    Under IAS38 goodwill is held at its 31 December 2003 value unless there is
impairment to its value.


Net assets

                                     -----------    -----------    -----------
                                           As at          As at          As at
                                         30 June        30 June    31 December
                                            2005           2004           2004
                                     (unaudited)    (unaudited)    (unaudited)
                                           £'000          £'000          £'000
                                     -----------    -----------    -----------

Net assets (IFRS)                         23,861         18,845         23,254

Non-current asset adjustments (note       (2,738)        (1,426)        (2,250)
1)
Current asset adjustments (note 2)           318              -         (1,030)

Current liabilities adjustments            2,719          1,262          1,025
(notes 2,3)

Net assets (UK GAAP)                      24,160         18,681         20,999


1.    Where the company's R&D programmes meet the criteria set out in IAS38, the
costs have been capitalised as an intangible asset.  The cost of R&D programmes
capitalised at 30 June 2005 is £2,524k (30 June 2004: £1,354k, 31 December 2004:
£2,107k).


2.    Under IAS39 where hedge accounting is adopted, any movement in the
valuation of financial instruments is shown on the face of the balance sheet
with the effect of this movement being recognised in the hedging and translation
reserve.  The effect of these movements at 30 June 2005 is a liability of
£1,137k (30 June 2004: nil, 31 December 2004: asset of £1,348k).

3.    Income received in relation to the company's R&D programmes that directly
relates to the intangible assets booked under IAS38 is held as deferred income
and amortised in accordance with the amortisation profile for the associated
intangible asset.  Deferred income at 30 June 2005 is £1,593k (30 June 2004:
£1,262k, 31 December 2004: £1,637k).



Shareholders' equity
                                          -----------  ----------  -----------
                                                As at       As at        As at
                                              30 June     30 June  31 December
                                                 2005        2004         2004
                                           (unaudited) unaudited)   (unaudited)
                                                 £'000      £'000        £'000 
                                           -----------  ---------   ----------

Total equity (IFRS)                             23,861      18,845      23,254

Retained earnings adjustments                     (838)       (164)       (907)
Valuation of financial instruments (hedging      1,137           -      (1,348)
and translation reserve) (note 1)

Total equity (UK GAAP)                          24,160      18,681      20,999


1.    Under IAS39 where hedge accounting is adopted, any movement in the
valuation of financial instruments is taken to the hedging and translation
reserve.


INDEPENDENT REVIEW REPORT TO XAAR PLC

Introduction

We have been instructed by the company to review the financial information for
the six months ended 30 June 2005 which comprises the profit and loss account,
the balance sheets, the cash flow statement and related notes 1 to 4.  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.

This report is made solely to the company in accordance with Bulletin 1999/4
issued by the Auditing Practices Board.  Our work has been undertaken so that we
might state to the company those matters we are required to state to them in an
independent review report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to anyone other than
the company, for our review work, for this report, or for the conclusions we
have formed.

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 which require that the accounting
policies and presentation applied to the interim figures are consistent with
those applied in preparing the preceding annual accounts except where any
changes, and the reasons for them, are disclosed.

International Financial Reporting Standards

As disclosed in note 4, the next annual financial statements of the group will
be prepared in accordance with International Financial Reporting Standards as
adopted for use in the EU.  Accordingly, the interim report has been prepared in
accordance with the recognition and measurement criteria of IFRS and the
disclosure requirements of the Listing Rules.

Review work performed

We conducted our review in accordance with the guidance contained in Bulletin
1999/4 issued by the Auditing Practices Board for use in the United Kingdom.  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 International Standards on Auditing (UK and
Ireland) 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 2005.

Deloitte & Touche LLP
Chartered Accountants
Cambridge
England
13 September 2005

Notes: A review does not provide assurance on the maintenance and integrity of
the website, including controls used to achieve this, and in particular on
whether any changes may have occurred to the financial information since first
published.  These matters are the responsibility of the directors but no control
procedures can provide absolute assurance in this area.

Legislation in the United Kingdom governing the preparation and dissemination of
financial information differs from legislation in other jurisdictions.






                      This information is provided by RNS
            The company news service from the London Stock Exchange
  ND
IR SFWEFDSISEEU