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Xaar PLC (XAR)

  Print      Mail a friend       Annual reports

Thursday 13 March, 2008

Xaar PLC

Final Results

Xaar PLC
13 March 2008

FOR IMMEDIATE RELEASE                                              13 March 2008

                                    Xaar plc

                             FINAL RESULTS FOR 2007

Xaar plc ('Xaar'), the inkjet printing technology group headquartered in
Cambridge, announces its audited results for the year ended 31 December 2007.

Key points:

• The results reflect continued growth from Xaar's established, market
  leading printhead products.

• The financial results for the year were:

  o   Turnover was up 13% to £47.9m (2006: £42.2m);

  o   Profit before tax increased 6% to £7.3m (2006: £6.9m) after providing for
      the early stage losses of the new Huntingdon manufacturing facility (2006:

  o   Underlying profit before tax (before net Huntingdon costs) increased 35% to
      £9.3m (2006: £6.9m);

  o   Earnings per share increased 9% to 8.6p (2006: 7.9p); and

  o   Net cash at year end was £13.0m (2006: £12.4m)

• 25% increase in proposed annual dividend to 2.5p (2006: 2.0p).

• Good progress in commercialising new Platform 3 printhead products with
  a significant number of 'developer kits' sold to potential OEMs and initial
  printer product launches by Xaar customers.

On outlook, Chairman, Phil Lawler stated:

'I believe that Xaar is well positioned to capitalise on the progressive shift 
from analogue to inkjet technology based printing - a trend which is gathering 
momentum within specialist and mainstream printing markets.

'Xaar's reputation and position in the inkjet market is building. We have the 
manufacturing capacity and capability, the technical knowledge and a committed 
and talented team which is now focused on execution and delivery of growth.'


Xaar plc:                                                  today:  020-7367-8888
Ian Dinwoodie, Chief Executive                        thereafter:   01223-423663
Nigel Berry, Group Finance Director & Deputy Chief Executive
Andrew Taylor, Finance Director Designate

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



I am pleased to report a further year of progress, not just with results but
also, significantly, with the level of interest in our Platform 3 product, the
Xaar 1001.

Xaar has reached an exciting stage in its development. Our main markets
continued to grow during 2007 and our Platform 1 product range, now firmly
established as market leader, is expected to continue to provide a solid
foundation for the business going forward. At the same time, our new Platform 2
and Platform 3 products are beginning to enter the end user market as our OEM
(Original Equipment Manufacturer) customers complete their development
activities and launch new printing machines. These Platform 2 and Platform 3
products are more sophisticated than Platform 1 and appeal to printing machine
manufacturers the world over (not just in Asia) in a wider range of
applications. Consequently our potential market is now much larger. We believe,
in line with independent industry analysts, that today less than 10% of
commercial print world wide is produced using inkjet technology. Whilst the
commercial printing market is conservative with long product life cycles, this
benefits the longevity of our Platform 1 products. Our aim looking forward is to
continue to accelerate the commercial adoption of our newer technologies.

Results and dividend

The results for the year were in line with IFRS compliant market consensus, 
showing growth in revenue and profits with a continued strong cash flow and 
sector leading performance at both the gross and net margin levels.  While full 
details are provided within the financial review, it should be noted that the 
results are struck after providing for the early stage losses of the new 
Huntingdon plant - a long-term investment in manufacturing capacity for the new 
Platform 3 product range.

Based on its confidence in the future profitability and cash generation of the 
business, the board has decided to recommend a 25% increase to 2.5p in the 
dividend per share for the year.  With effect from 2008 it is the board's 
intention, subject to satisfactory performance, to introduce payment of an 
interim as well as a final dividend.


2007 has seen a number of changes to our board.  In July Arie Rosenfeld retired 
as Chairman of the board.  His deep knowledge and experience of our industry has
been of great benefit to Xaar over the last ten years and we thank him 
sincerely for this.

As stated in the Interim Report, founder and Technical Director Steve Temple 
retired but remains a consultant to the Company. We are pleased to keep Steve's 
counsel given his significant experience in inkjet and huge contribution to 
Xaar over many years. At that time we welcomed Ramon Borrell as Research and 
Development Director, having previously spent many years in senior roles at 
Hewlett-Packard's large format printing division.

In October Greg Lockett joined the board as Manufacturing Director. Greg has 
been director of manufacturing at Xaar for the previous four years and this 
promotion reflects both his excellent work in that earlier role and his expected 
contribution in the future.

In January 2008, Finance Director and Deputy Chief Executive Nigel Berry 
informed the company of his intention to resign from his position and from the 
board with effect from 31 March 2008. We thank him warmly for his excellent 
stewardship of the group's finances and relationships during the past six years 
during which the group has shown considerable development.  We wish him every 
success for the future. Andrew Taylor, currently Deputy Finance Director and 
Company Secretary, will join the board as Finance Director on the same date. 
Andrew has been with the company since 2001 and we are pleased to have such an 
able replacement.


I believe that Xaar is well positioned to capitalise on the progressive shift 
from analogue to inkjet technology based printing - a trend which is gathering 
momentum within specialist and mainstream printing markets.  As a provider of 
printhead technology, I am confident that we have a world leading range of 
products that is attractive to our OEM customers as they develop new printers 
which are more functional, more efficient and more flexible.  We have proof of 
this with the continuing success of the Platform 1 family of products which we 
expect to continue to provide a solid foundation for the group after more than 
a decade of commercial production, together with recent announcements of new 
OEM products incorporating our newer Platform 2 and 3 printheads.

Xaar's reputation and position in the inkjet market is building. We have the 
manufacturing capacity and capability, the technical knowledge and a committed 
and talented team which is now focused on execution and delivery of growth.

Phil Lawler
12 March 2008



I am pleased to report a solid set of results for 2007 as we continue to build
Xaar's business and market presence. The existing core business, which serves
the graphic display and product coding markets, continues to deliver robust
returns whilst our new product developments are creating further opportunities
in additional markets. These new products will complement the existing business
and are expected to deliver continued growth over the medium term. Xaar is
maintaining its level of investment in research and development with the
intention of capturing a significant proportion of the digital printing market
over the longer term.

Business Review

Xaar's business continues to consist of product sales, royalty income and
development fees. Product sales proportionately dominate our revenue at 95% of
the total, whilst royalty income has grown to 4% and development fees have
fallen to 1% for the reasons described in the financial review.

Sales of Platform 1 products, which serve the graphics display and product
coding markets, increased during the year and continued to build their
reputation as proven industrial solutions. This is especially true of the Xaar
128 which has become the 'de facto' standard printhead for these markets. The
Platform 1 offerings are being enhanced regularly, including the successful
launch of a new variant of the Xaar 126 product during 2007. The Xaar 126-35
enables high resolution printing for both solvent and UV ink applications based
on this established small outline printhead. During the year a number of
additional ink agreements for Platform 1 products were signed. These include the
co-branding of locally manufactured inks for both the Chinese and Indian
domestic markets. We also broadened our ink partnership arrangements for the
international market with agreements concluded with both Fujifilm Sericol and
Nazdar. During the year a new Platform 1 product has been developed, the Xaar
382; this high end product will complement the Xaar 128 by offering high
resolution and high productivity performance for grand format printers. Concept
samples of the product have been well received by existing customers and we
expect to be supplying volume product during the second half of 2008.

For both Platform 2 (Xaar 760) and Platform 3 (Xaar 1001) a significant amount
of work has been undertaken with our partners to support their activities to
bring their finished products to market. This process has taken longer than
anticipated, especially for the Xaar 760. Whilst continuing to support our
existing Platform 2 customers, we have encouraged a number of these development
accounts to transfer from the 760 to 1001 to take advantage of the latest
technology as both products are now available in volume.

I am pleased to report that a significant number of developer kits for the Xaar
1001 have been shipped during the year, resulting in very positive feedback from
both existing and new development partners. I am also particularly pleased to
report that a number of digital printing products based on our latest technology
have entered commercial life during the year. The first two models of commercial
wide format printers were launched by Teckwin Development Co. Ltd. and have been
well received by the market. Nilpeter, the world leader in analogue narrow web
presses, announced its first digital product for the label market. Sales of this
machine, named 'Caslon', will commence during 2008. Additionally EFI, the large
US printing technology group has launched a digital narrow web label press based
on the Xaar 1001. The EFI Jetrion 4000 press commenced limited shipments at the
end of 2007 and will be available in volume from the second quarter 2008.
Further launches are expected during the year, particularly at or around
'Drupa', the world's largest print and imaging trade show held in late May every
four years in Dusseldorf, Germany. Whilst the timescale to generate returns from
these new products has been frustratingly long, we remain confident that the
value generated from these developments will significantly enhance the financial
performance of the company over time.

Commercial Review - Geographic

As a supplier of technology to OEM partners, our geographic sales split will
reflect where the OEM equipment is manufactured - not necessarily the end user

As the largest centre for manufacturing, Asia continues to be our most important
market, generating 58% of total sales in 2007 and growing 17% over last year.
Within the Asian region China remains our largest sales country and this market
has continued to develop, both at the OEM and end user level; we continue to
establish new relationships in this dynamic market. I would also highlight the
success of our Indian sales operation during the year. Opened in late 2004,
sales take-up was slower than initially expected, but over the past year we have
started to see the benefits of our investment in the area with a substantial
increase in sales.

Europe and the Middle East remains our second largest sales area. Sales into
this region were £14.2m being 30% of worldwide revenue. Sales were down 5% on
2006 following a poor first half which was commented on in the Interim Report.
As stated at that time, no significant changes have occurred in the European
market and this result is the net effect of certain 'ups' and 'downs' across
multiple accounts, together with the reduction in development fees from Agfa as
referred to in the financial review.

Sales to the Americas region showed excellent growth, increasing 74% over 2006
levels. Sales in the period totalled £5.7m, this being 12% of the group total.
This growth came principally from South America where we opened a sales
operation in 2005. Mirroring our experience in India, sales initially were
modest whilst a local OEM base was established. During 2007 we began to see the
benefits of this early groundwork with a substantial increase in the level of

Over time we would expect to see continued growth in all regions, with Western
markets leading the way initially with the adoption of our newer technologies.

Commercial Review - End Markets

The graphic arts market continues to be the primary end use of Xaar technology
and, specifically, in the segment of large format advertising. 73% of sales were
related to this market totalling £34.9m (2006: £31.3m), where industrial inkjet
continues to displace screen printing as the most economic and flexible process
for both interior and outdoor large format advertising. The new Xaar 382 product
is expected to consolidate our leading market share in this application.

The packaging market continues to grow for Xaar, albeit our sales in this sector
are presently still dominated by product coding applications. Revenues of £9.0m
in 2007 represent a 19% increase over 2006; this market represents almost one
fifth of our business. While product coding is a small segment of the overall
packaging print market, we expect to see significant growth in revenues over the
next few years from this packaging sector starting with digital label printing,
followed by wider aspects of primary packaging. The Xaar 1001 product is our
'entry vehicle' into this market and we are pleased to see the Xaar 1001 based
Nilpeter Caslon and EFI Jetrion 4000 products already being offered in this

As noted in the Interim Report, whilst there are many potential opportunities
for inkjet to become adopted in non-print related areas, the commercial returns
are on a longer timeline. Accordingly we have redirected our business
development activities toward an acceleration of our entry into the labelling
and packaging print markets noted above. However, in the non-printing industrial
space we continue to support a set of developers exploring many possibilities
including applications such as flat panel displays, flexible electronics and 3D
material deposition, to ensure that when real commercial opportunities present
themselves Xaar is well positioned to take advantage. Sales into this industrial
market for the year amounted to £1.7m, a 52% increase albeit from a small base,
and representing 4% of total sales.

Operations Review

Following the successful commissioning of the Huntingdon plant in 2006,
production of Platform 3 Xaar 1001 products started on schedule in January 2007.
The facility has supported numerous partner developments all over the world with
developer kits and initial production volumes. The availability of supply of
fully functional leading technology is critical to our partners' development
programmes and the Huntingdon operation has performed this role superbly
throughout the year. From this excellent start we now need to support our
partners' commercial implementations which will, in turn, generate the volume
demand which will bring the plant into profitability. The Jarfalla plant in
Sweden continued to perform well throughout the year, supplying the bulk of
product sales for the year.

Investment in R&D continued at its planned level of £4.8m, representing 10% of
sales. This has supported the development of new products, enhancements to
existing products and the investment in future technologies. This ongoing
investment will ensure Xaar has a well primed pipeline of new product offerings,
targeted at accelerating the growth potential of the company.

Priorities for the Future

The top priority for 2008 is to accelerate the generation of commercial returns
from our new products which we have seeded into the market over the last year.
The Xaar 1001 is a key breakthrough in inkjet technology performance -
especially in terms of reliability and ease of use; we believe this product is a
major enabling tool to open new business opportunities for Xaar. We look forward
to 2008 with confidence based on our established profitable business and the
opportunities in additional markets from our new products.


I would like to thank all our staff worldwide whose efforts, skill and
dedication are critical to the successful future of our business.

Ian Dinwoodie
Chief Executive
12 March 2008



Revenues in the second six months of 2007 were £24.4m (2006: £19.9m), an
increase of 23% over the same period last year and 4% over the first half of
2007. Revenues for the full year increased 13% over 2006 to £47.9m (2006:
£42.2m). Product sales account for 95% of revenues (2006: 95%) with sales of
Platform 1 products continuing to grow and to dominate the sales figures.
Looking forward, we expect our strategic partners to begin soon introducing
products based on Platform 2 and Platform 3 printheads and for these products to
generate an increasing proportion of our revenues in 2008 and beyond.

Licensee royalties grew 15% to £1.8m (2006: £1.5m) representing 4% of revenue
and we expect this growth to continue in the future. Development fees fell to
£0.5m (2006: £0.8m) due to the completion of the major part of our
co-development programme with Agfa. We expect development fees to be at a
similar level for 2008 and 2009 but to reduce thereafter.

The gross margin for the year was 52% (2006: 57%), reflecting the fixed costs of
the Huntingdon facility which were in line with previous guidance at £2.5m for
the year (2006: £nil). Gross margin excluding the net impact of the Huntingdon
facility was 58%, an improvement of 1% over the prior year. As production
volumes at the plant increase we expect its profitability to match that of our
manufacturing facility in Sweden.

Headline operating costs for the year increased only slightly to £17.9m (2006:
£17.5m) and include the IFRS (non-cash) charges for share option costs of £1.0m
(2006: £0.7m) and amortisation of capitalised R&D of £1.0m (2006: £0.5m). On a
like for like cash basis the company reduced its operating costs by £0.4m during
the year.

Over the last two years we have developed and successfully launched our second
and third platforms of products and, as required under IFRS, have capitalised
the internal development costs associated with those platforms. For the future
it is expected that internal R&D costs will relate mostly to improvements to
existing product platforms and, as such, will not be capitalised. Amortisation
of previously capitalised internal R&D costs is already underway and is expected
to complete in 2011.

On a fully IFRS compliant basis, profit before tax for the year grew 6% to £7.3m
(2006: £6.9m) with basic earnings per share of 8.6p (2006: 7.9p). Excluding the
net impact of Huntingdon, profit before tax would have been £9.3m, an increase
of 35% over 2006.


The directors are recommending an increase in the dividend of 25% to 2.5p per
share (2006: 2.0p). The dividend will be covered 3.4 times. In addition, and
subject to satisfactory performance, it is the intention for 2008 to introduce
an interim dividend payment. This reflects the board's confidence in future
profit and cash generation.

Foreign currency

A majority of the group's revenues in the year (72%) were invoiced in sterling
(2006: 47%), with 22% invoiced in US dollars (2006: 47%). This reflects the full
year effect of our decision in mid 2006 to move most of our Chinese customers
from US dollar to sterling trading terms. The group continues to have an
exposure to the Swedish kronor through its requirement to fund its operations in
Sweden and manages this exposure using forward currency contracts.

Cash and capital expenditure

Cash at the end of the year was £13.0m (2006: £12.4m) and is stated after the
payment of dividends of £1.2m (2006: £0.9m) and capital expenditure of £5.7m
(2006: £11.1m). With the final stage payments on capital equipment for the
Huntingdon facility having been made in early 2007, capital expenditure in 2008
and 2009 is expected to be lower than the current year.

Change of Director

After nearly six years as Finance Director I shall be leaving the company at the
end of March 2008 and would like to wish the company, its shareholders and staff
every success for the future. I am pleased to say that my deputy, Andrew Taylor,
will succeed me as Finance Director and I offer him my congratulations on his

Nigel Berry
Finance Director
12 March 2008

Consolidated income statement
for the year ended 31 December 2007

                                                              2007        2006
                                                   Notes     £'000       £'000
------------------------------                    ------    --------   ---------
Continuing operations
Revenue                                               2     47,853      42,207
Cost of sales                                              (22,925)    (18,096)
------------------------------                     ------   --------   ---------
Gross profit                                                24,928      24,111
Distribution costs                                          (4,003)     (4,108)
Administrative expenses                                    (13,932)    (13,426)
------------------------------                     ------   --------   ---------
Operating profit                                             6,993       6,577
Investment income                                              447         451
Finance costs                                                 (119)       (116)
------------------------------                     ------   --------   ---------
Profit before tax before abortive deal costs and
share-based payments                                         8,275       7,921
Abortive deal costs                                                -      (298)
Share-based payments                                          (954)       (711)
------------------------------                     ------   --------   ---------
Profit before tax                                            7,321       6,912
Tax                                                         (1,920)     (2,068)
------------------------------                     ------   --------   ---------
Profit for the year attributable to shareholders             5,401       4,844
Earnings per share from continuing operations
Basic                                                 3        8.6p        7.9p
Diluted                                               3        8.4p        7.6p
------------------------------                     ------   --------   ---------

Dividends paid in the year amounted to £1,218,000 (2006: £903,000).

Consolidated statement of recognised income and expense
for the year ended 31 December 2007

                                                               2007       2006
                                                              £'000      £'000
----------------------------------                          ---------  ---------
Exchange differences on translation of foreign operations       (64)      (113)
Cash flow hedges transferred to income statement                    -    1,197
Tax on items taken directly to equity                          (746)      (415)
----------------------------------                          ---------  ---------
Net (loss)/income recognised directly in equity                (810)       669
Profit for the year                                           5,401      4,844
----------------------------------                          ---------  ---------
Total recognised income and expense for the year              4,591      5,513
----------------------------------                          ---------  ---------

Consolidated balance sheet
as at 31 December 2007

                                                         2007             2006
                                                        £'000            £'000
---------------------------------                     ---------       ----------
Non-current assets
Property, plant and equipment                          11,849           11,990
Goodwill                                                  720              720
Other intangible assets                                 7,294            7,030
Investments                                             2,020            1,931
Deferred tax asset                                        322            1,383
---------------------------------                     ---------       ----------
                                                       22,205           23,054
---------------------------------                     ---------       ----------
Current assets
Inventories                                             4,137            3,690
Trade and other receivables                             8,511            6,135
Cash and cash equivalents                              13,036           12,438
Derivative financial instruments                          261                  -
---------------------------------                     ---------       ----------
                                                       25,945           22,263
---------------------------------                     ---------       ----------
Total assets                                           48,150           45,317
---------------------------------                     ---------       ----------
Current liabilities
Trade and other payables                               (6,711)          (7,928)
Other financial liabilities                              (198)            (185)
Current tax liabilities                                (1,246)            (507)
Obligations under finance leases                         (245)            (468)
Provisions                                               (193)            (209)
---------------------------------                     ---------       ----------
                                                       (8,593)          (9,297)
---------------------------------                     ---------       ----------
Net current assets                                     17,352           12,966
Non-current liabilities
Deferred tax liabilities                               (1,810)          (1,635)
Other financial liabilities                              (651)            (865)
Obligations under finance leases                             -            (267)
---------------------------------                     ---------       ----------
                                                       (2,461)          (2,767)
---------------------------------                     ---------       ----------
Total liabilities                                     (11,054)         (12,064)
---------------------------------                     ---------       ----------
Net assets                                             37,096           33,253
---------------------------------                     ---------       ----------
Share capital                                           6,285            6,201
Share premium                                          10,146            9,669
Own shares                                             (4,465)          (3,420)
Other reserves                                          4,051            3,097
Translation reserve                                       529              593
Retained earnings                                      20,550           17,113
---------------------------------                     ---------       ----------
Equity attributable to shareholders                    37,096           33,253
---------------------------------                     ---------       ----------
Total equity                                           37,096           33,253
---------------------------------                     ---------       ----------

Consolidated cash flow statement
for the year ended 31 December 2007

                                                              2007        2006
                                                  Note       £'000       £'000
-------------------------------                  ------   ----------  ----------
Net cash from operating activities                   4       8,565       9,142
Investing activities
Purchases of property, plant and equipment                  (3,823)     (7,274)
Proceeds on disposal of property, plant and                        -         5
Purchases of trading investments                               (89)       (427)
Expenditure on capitalised product development              (1,770)     (3,420)
-------------------------------                   ------  ----------  ----------
Net cash used in investing activities                       (5,682)    (11,116)
Financing activities
Dividends paid                                              (1,218)       (903)
Proceeds from issue of ordinary share capital                  561         384
New borrowings                                                     -     1,050
Repayments of borrowings                                      (201)            -
Repayments of obligations under finance leases                (498)       (520)
Purchase of own shares                                      (1,045)            -
-------------------------------                   ------  ----------  ----------
Net cash (outflow)/inflow from financing                    (2,401)         11
activities                                        ------  ----------  ----------
Net increase/(decrease) in cash and cash                       482      (1,963)
Effect of foreign exchange rate changes                        116           6
Cash and cash equivalents at beginning of year              12,438      14,395
-------------------------------                   ------  ----------  ----------
Cash and cash equivalents at end of year                    13,036      12,438
-------------------------------                   ------  ----------  ----------

Notes to the consolidated financial statements
for the year ended 31 December 2007

1.Basis of preparation

Information in this final announcement does not constitute statutory accounts of
the group within the meaning of Section 240 of the Companies Act 1985. The
financial information for the year ended 31 December 2007 and the year ended 31
December 2006, presented in this final announcement is extracted from, and is
consistent with, that in the group's audited financial statements for the year
ended 31 December 2007. The financial statements were approved by the board of
directors on 12 March 2008; the auditor's report on these accounts was
unqualified. The financial statements will be delivered to the Registrar of
Companies following the company's Annual General Meeting. Statutory accounts for
the year ended 31 December 2006, which were prepared under International
Financial Reporting Standards, have been filed with the Registrar of Companies.
The auditor's report on those accounts was unqualified and did not contain any
statement under Section 237 of the Companies Act 1985.

2. Business and geographical segments


An analysis of the group's revenue is as follows:
                                                              2007        2006
                                                             £'000       £'000
---------------------------------                        ---------    ----------
Sales of goods                                              45,612      39,918
Development fees                                               467         748
Licence fees and royalties                                   1,774       1,541
----------------------------------                         ---------    --------
                                                            47,853      42,207
Investment income                                              447         451
----------------------------------                         ---------    --------
                                                            48,300      42,658
---------------------------------                          ---------   ---------

Business segments

For management reporting purposes, the group's operations are currently analysed
according to product type. These product groups are the basis on which the group
reports its primary segment information.

Principal product groups are as follows:
   • Printheads and related products
   • Development fees
   • Licence fees and royalties

Segment information about these product types is presented below.

                                                            2007          2006
                                                           £'000         £'000
----------------------------------                       ---------      --------
Printheads and related products                           45,612        39,918
Development fees                                             467           748
Licence fees and royalties                                 1,774         1,541
----------------------------------                       ---------      --------
Total revenue                                             47,853        42,207
----------------------------------                       ---------      --------

2. Business and geographical segments (continued)

Business segments (continued)
                                                           2007           2006
                                                          £'000          £'000
----------------------------------                      ---------       --------
Printheads and related products                          17,025         16,198
Development fees                                            (79)          (442)
Licence fees and royalties                                1,415          1,247
----------------------------------                      ---------       --------
Total segment results                                    18,361         17,003
Unallocated corporate expenses                          (11,368)       (10,426)
----------------------------------                      ---------       --------
Profit from operations                                    6,993          6,577
Investment income                                           447            451
Finance costs                                              (119)          (116)
----------------------------------                      ---------       --------
Profit before tax                                         7,321          6,912
Tax                                                      (1,920)        (2,068)
----------------------------------                      ---------       --------
Profit after tax                                          5,401          4,844
----------------------------------                      ---------       --------
Unallocated corporate expenses relate to administrative expenses which cannot be
directly attributed to any of the principal product groups.

Other information
                                Printheads                 Licence
                               and related  Development   fees and
                                  products         fees  royalties  Consolidated
                                    2007         2007       2007          2007
                                   £'000        £'000      £'000         £'000
------------------              ----------   ----------  ---------    ----------
Capital additions                  3,693              -          -       3,693
Depreciation and amortisation      2,958          463         58         3,479
------------------              ----------   ----------  ---------    ----------
Balance sheet
Segment assets                    28,045          913        594        29,552
Unallocated corporate assets                                            18,598
------------------              ----------   ----------  ---------    ----------
Consolidated total assets                                               48,150
------------------              ----------   ----------  ---------    ----------
Segment liabilities               (4,886)        (782)       (89)       (5,757)
Unallocated corporate                                                   (5,297)
liabilities                     ----------   ----------  ---------    ----------
Consolidated total                                                     (11,054)
liabilities                     ----------   ----------  ---------    ----------

                                Printheads                 Licence
                               and related  Development   fees and
                                  products         fees  royalties  Consolidated
                                    2006         2006       2006          2006
                                   £'000        £'000      £'000         £'000
-----------------               ----------   ----------  ---------    ----------
Capital additions                 11,147              -          -      11,147
Depreciation and amortisation      1,531          616         59         2,206
-----------------               ----------   ----------  ---------    ----------
Balance sheet
Segment assets                    24,440        1,378        635        26,453
Unallocated corporate assets                                            18,864
-----------------               ----------   ----------  ---------    ----------
Consolidated total assets                                               45,317
-----------------               ----------   ----------  ---------    ----------
Segment liabilities               (5,781)      (1,162)       (82)       (7,025)
Unallocated corporate                                                   (5,039)
liabilities                     ----------   ----------  ---------    ----------
Consolidated total                                                     (12,064)
liabilities                     ----------   ----------  ---------    ----------
Unallocated corporate assets include £594,000 (2006: £449,000) of capital
additions, and are net of depreciation and amortisation for the year of £743,000
(2006: £577,000).

2. Business and geographical segments (continued)

Geographical segments

The group's operations are located in Asia, Europe and North and South America.
The following table provides an analysis of the group's sales by geographical
market, which is considered to be the group's secondary segment, irrespective
of the origin of the goods:
                                                          2007           2006
                                                         £'000          £'000
-----------------        ----------     ----------     ---------     ----------
Asia                                                    27,937         23,937
Europe and Middle East                                  14,235         14,997
Americas                                                 5,681          3,273
-----------------        ----------     ----------     ---------     ----------
                                                        47,853         42,207
-----------------        ----------     ----------     ---------     ----------
Substantially, all assets and additions to property, plant and equipment and
intangible assets are located in Europe and the Middle East.

3. Earnings per ordinary share - basic and diluted

The calculation of basic and diluted earnings per share is based on the
following data:
                                                           2007          2006
                                                          £'000         £'000
-----------------------------------                     ---------      --------
Earnings for the purposes of basic earnings per
share being net profit attributable to equity
holders of the parent                                     5,401         4,844
-----------------------------------                     ---------      --------
Number of shares
Weighted average number of ordinary shares for the
purposes of basic earnings per share                 62,514,226    61,447,492
Effect of dilutive potential ordinary shares:
Share options                                         1,599,424     2,221,595
----------------------------------                      ---------     ---------
Weighted average number of ordinary shares for the
purposes of diluted earnings per share               64,113,650    63,669,087
----------------------------------                      ---------     ---------

4 Notes to the cash flow statement

                                                               2007       2006
                                                              £'000      £'000
-----------------------------------                         ---------  ---------
Profit before tax                                             7,321      6,912
Adjustments for:
Share-based payments                                            954        711
Depreciation of property, plant and equipment                 2,895      1,998
Amortisation of intangible assets                             1,320        785
Loss on disposal of property, plant and equipment                12         15
(Decrease)/increase in provisions                               (16)        89
-----------------------------------                         ---------  ---------
Operating cash flows before movements in working capital     12,486     10,510
Increase in inventories                                        (319)      (814)
(Increase)/decrease in receivables                           (2,645)     1,944
(Decrease)/increase in payables                                 (16)        78
-----------------------------------                         ---------  ---------
Cash generated by operations                                  9,506     11,718
Income taxes paid                                              (941)    (2,576)
-----------------------------------                         ---------  ---------
Net cash from operating activities                            8,565      9,142
-----------------------------------                         ---------  ---------
Cash and cash equivalents (which are presented as a single class of asset on the
face of the balance sheet) comprise cash at bank and other short term highly
liquid investments with a maturity of three months or less.

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

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