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Xaar PLC (XAR)

  Print          Annual reports

Tuesday 19 March, 2013

Xaar PLC

Final Results

RNS Number : 2922A
Xaar PLC
19 March 2013
 



19 March 2013

Xaar plc

 

FINAL RESULTS FOR 2012

 

Xaar plc ("Xaar", the "Group" or the "Company"), the inkjet technology Group headquartered in Cambridge, announces its results for the year ended 31 December 2012.

 

Key points:

 

·     The record results achieved in 2012 were driven by the continuing success of Xaar's disruptive technology, particularly in the digital decoration of ceramic tiles.

·     The Group has more than doubled revenue over a three year period with growth in excess of 25% for each year.

·     The growth in sales in 2012 was supported by the successful completion of a £22m capacity expansion programme at Xaar's Huntingdon facility.  Further capacity will now be added during 2013 to support the demand for Platform 3 products in ceramics and other applications.

·     Xaar invested £8m in R&D during 2012 (9% of revenue), including a 50% growth in R&D staff, to support the Group's plans for product and technology development.

·     The financial highlights were:

o   Revenue was up 26% to £86.3m (2011: £68.7m);

o   Gross margin improved to 47% (2011: 44%);

o   Adjusted* profit before tax was up 74% to £18.4m (2011: £10.6m);

o   Reported profit before tax was £15.7m (2011: £9.1m);

o   Adjusted* diluted earnings per share up 88% to 20.1p (2011: 10.7p);

o   Reported diluted earnings per share at 16.9p (2011: 10.4p); and

o   Net cash** at 31 December 2012 was £28.9m (31 December 2011: £17.4m).

            *   Before share-based payment charges, exchange differences relating to the Swedish operations, gain or loss on derivative financial instruments and impairment of trade investments (see the reconciliation of adjusted financial measures)

            ** Cash and cash equivalents, treasury deposits less borrowings

 

·     A final dividend of 3 pence is recommended, which would increase the total dividend for 2012 by 33% to 4 pence (2011: 3 pence). 

 

Commenting on the results, Chairman, Phil Lawler stated:

"During the twelve months ended 31 December 2012, our patented inkjet technology demonstrated its market leadership and is now dominant in the digital decoration of ceramic tiles around the world.  Our results for the year also benefited from the successful implementation of our investment in expanding manufacturing capacity."

Ian Dinwoodie, CEO, added:

"During 2013, in response to demand for Platform 3 ("P3") products in ceramics and other applications, we will expand the P3 manufacturing capacity further than previously announced, and release more products in support of our strategic objectives.  This should underpin Xaar's growth prospects for both the short and the medium term. Platform 4 ("P4") research and development spending will accelerate over this period, positioning the Company to deliver further growth over the longer term horizon."

 

 

 

Contacts

 

Xaar plc:

Today: 020-7367-8888

Ian Dinwoodie, Chief Executive

Thereafter: 01223-423663

Alex Bevis, Finance Director

www.xaar.com



N+1 Singer:

020-7496-3000

Shaun Dobson




Bankside Consultants:


Simon Bloomfield

020-7367-8888 or 07771 758517


 

 



 

Chairman's Statement

 

Introduction

I am pleased to report on another year of strong financial performance by Xaar.  During the twelve months ended 31 December 2012, our patented inkjet technology demonstrated its market leadership and is now dominant in the digital decoration of ceramic tiles around the world.  Our results for the year also benefited from the successful implementation of our investment in expanding manufacturing capacity, enabling us to fulfil strong demand for our products, achieve high revenue growth, and improve profitability and cash flow through operational gearing.

 

These factors translated into record results for the Company during 2012 with revenue growth of 26% and adjusted profit before tax up 74% which followed a 90% increase in 2011. Adjusted diluted earnings per share increased by 88% to 20.1 pence in 2012 (2011: 10.7 pence). Our balance sheet continues to be consistently strong with net cash (cash and cash equivalents, treasury deposits less borrowings) of almost £29 million at 31 December 2012.

 

Business developments

During the last three years our P3 technology has enabled us to build an industry leadership position in ceramic tile decoration, where the market shift to this new printing process has been rapid by normal print industry measures, and which has been the largest contributor to our growth in 2012. 

 

A year ago I referred to the geographic shift in our sales to Europe from Asia as we benefited from the conversion to digital decoration in European tile manufacture. Whilst that success continues we are now making substantial progress in supplying the ceramic industry in China where almost half of the world's ceramic tiles are manufactured.  We are also starting to address other geographic markets including Latin America, India and Turkey.

 

Whilst we currently derive the majority of revenue from ceramics, we are seeking opportunities for P3 products in other markets.  During 2012 we made significant progress in the decorative laminate segment, which includes flooring, cladding and furniture-based applications. We expect to continue to develop this market which, although not forecast to convert at the same high rate as seen in the ceramics market, still presents a very interesting growth opportunity. P3 sales into the packaging segment continue to grow at a modest rate and we remain confident that we can increase our share of primary label printing.

 

During the second half of 2012 we arrested the decline in our sales into the graphic arts market, recording a modest increase over the first half. We are planning a new P3 product which we believe will improve our competitive position in this mature but significant market, where Xaar has long-standing brand awareness.

 

Continuing growth in demand for P3 products will result in additional investment in 2013 to further increase the manufacturing capacity of our world-class manufacturing facility at Huntingdon. In order to support this growth we continue to hire, and have increased total worldwide headcount by 18% in 2012 to in excess of 550 people. This level of personnel increase places additional challenges on any business and I am pleased to report that, as the result of improved processes and capability, we managed the recent growth in staff effectively.

 

Research and Development (R&D)

As a leading technology company, R&D is key to our future success. Sustaining a strong financial performance has allowed us to increase our investment in R&D, which accounted for 9% of sales for the year, by 23%.

 

As already reported in the interim report, in order to accommodate the increased R&D headcount we have taken further office and lab space adjacent to our head office on the Cambridge Science Park. This investment provides the additional space and improved working environment necessary for R&D to deliver the new technology and new products which will enable our continued growth.

 

The current focus of our research effort is on Platform 4 (P4), our next-generation technology and product range which we anticipate will open up new markets. If successful, P4 will provide more disruption to traditional analogue printing markets and sustain Xaar's success.

 

As our technology continues to develop, our substantial knowledge and experience in addressing the considerable technical and processing challenges will remain a major barrier to entry for potential competitors.

 

Dividend

Xaar continues to enjoy financial strength and further increased net cash resources during 2012. The Board expects the cash generation of the business to continue and has decided to recommend a final dividend of 3 pence which, together with the 1 pence interim dividend paid on 21 September 2012, equals 4 pence for the year, a 33% increase over the total dividend paid in 2011.

 

Corporate Governance

The Group continues to comply fully with the UK Corporate Governance Code 2010. Xaar's strategy undergoes a detailed review twice every year when the Board takes additional dedicated days to consider and debate the future direction and aspirations of the Group. The Board, its executives, chairman and non-executives are all evaluated annually against specific and relevant performance criteria.

 

Board

Other than the previously reported appointment of Richard Barham and retirement of Phil Eaves as Sales and Marketing Directors in March 2012, there have been no other changes to the Board membership. Board meetings are supported by detailed papers and minutes. Attendance by all members is excellent and I take this opportunity to thank them for their continuing professionalism, commitment and results.

 

 

Phil Lawler

Chairman

19 March 2013

 



OPERATIONS REVIEW

 

Introduction

I am delighted to report that the growth momentum generated over the past few years has been sustained in 2012. Strong revenue growth was again delivered by Platform 3 (P3) products being supplied into the ceramic tile decoration market.

 

The P3 capacity expansion programme at the Huntingdon plant successfully completed three months ahead of schedule, allowing increasing output to match the growing demand for this range of products.

 

Once again revenue grew strongly and has now doubled over the last three years. As a result of this growth, coupled with improvements in operating efficiencies, adjusted profit before tax for the year (see the reconciliation of adjusted financial measures) increased by 74% to £18.4 million (2011: £10.6 million).

 

Business review

Total revenue for 2012 of £86.3 million (2011: £68.7 million) comprised product sales, commissions and fees of £80.1 million (2011: £61.5 million), representing 93% of turnover (2011: 90%) and royalties of £6.2 million (2011: £7.2 million), representing 7% of turnover (2011: 10%). The 26% growth in total revenue comprises 30% growth in product sales, commissions and fees, and a 14% decline in royalties.

 

Gross margin continued the positive trend seen in recent years, improving from 46.0% for the first half of 2012 to 48.6% for the second half. For the year overall, gross margin increased to 47.4% (2011: 44.2%).

 

The successful introduction of the Xaar 1001 GS12, our first P3 product specifically optimised for ceramic tile decoration, in the third quarter, together with the development of the Chinese ceramics market (the largest ceramic market in the world), boosted demand for P3 products which required a doubling of the daily production output rate over the year. The digitalisation of the ceramic decoration market progressed as anticipated during 2012, as the substantial benefits of digital inkjet printing over traditional analogue processes have now established the digital solution as the desired standard method of manufacture.  Competition in this field is growing, but to date we have been successful in maintaining our dominant market share through the superiority of our technology and products, combined with a competitive pricing strategy. Progress in the primary label market and the decorative laminate market continues, and both applications now generate material revenues for the Company. We remain excited about the prospects in these markets although, as previously stated, these markets are expected to convert from analogue to digital process at a more modest rate than the ceramics market.

 

As expected, given the maturity of the wide-format Graphic Arts market and intense competition, Platform 1 (P1) sales continued to fall in 2012.  The second half of 2012 showed some more encouraging signs and we expect to benefit from the launch of the Xaar 501 planned for the fourth quarter of 2013, with revenues anticipated from 2014 onwards.

 

Royalties from our legacy licensing business in Asia declined by 14% in the year to £6.2 million (2011: £7.2 million).  It is particularly pleasing to see a significant progression in both gross margin and operating profit despite this decrease.

 

Commercial review

 

Geographic

As a supplier of technology to OEM partners, our geographic sales split reflects where our products are integrated into the manufacturing equipment, which is not necessarily the end-user location.

 

In 2012, Europe, Middle East and Africa (EMEA) remained the Company's largest sales region, and hit the £50.0 million milestone for the first time in the Company's history (2011: £42.0 million) representing 19% growth over the previous year. The primary growth application in Europe was ceramic tile decoration through OEM partners located in Spain and Italy. Outside of ceramics, primary label and decorative laminate applications continued to grow albeit on a smaller scale. For 2012 the EMEA region represented 58% of total revenue, compared to 61% in the previous year, although we continue to see European OEMs innovate with digital inkjet technology in a wide range of applications.

 

During the year, the digitalisation of the Chinese ceramic tile market strongly accelerated which was the major contributor to the 55% increase in our Asian business. Total sales in Asia increased to £30.0 million (2011: £19.3 million) representing 35% (2011: 28%) of total revenues. With over 40% of the world's ceramic tile production located in China, this market is clearly very important to Xaar, and it is encouraging that the effort expended in this market over the past few years is now being rewarded.

 

Total sales to the Americas in 2012 were £6.3 million, a decline of 15% versus the £7.4 million in 2011. A lower level of activity was recorded in both North and South America. Ceramics manufacturers in the Americas are supplied by European OEMs with revenues included in those reported for EMEA. As previously stated, we would expect the Americas to remain the smallest geographic region for Xaar due to the distribution of printing equipment manufacturers which tends to be localised in Asia and Europe.

 

I am pleased to confirm that the previously announced transition, from our Shanghai-based representative office to our new Hong Kong-based office, completed smoothly during 2012, incurring minimal transition cost and no business interruption.

 

End markets

Industrial markets (i.e. for the decoration of physical end products) continue to be the largest end application for Xaar's technology. Business in these markets grew by 74% over 2011, generating sales of £55.0 million (2011: £31.7 million) and for the first time accounting for over half of total turnover at 64% (2011: 46%). The conversion of ceramic tile decoration from analogue to digital processes continues at a strong pace and this application dominates this revenue stream. Developments in the decorative laminate market have accelerated during the year, and revenues from this second industrial application have become more significant as a consequence.

 

Sales into the packaging market were 3% higher compared to the previous year at £12.0 million (2011: £11.7 million) and represent 14% (2011: 17%) of total sales. Some years ago Coding and Marking was the only significant segment of the packaging market addressed by our technology. Following the successful introduction of P3 products, growth in labels and other packaging applications now means that 45% of packaging revenue comes from non outer case coding segments.

 

Sales into the Graphic Arts market continued their recent decline and totalled £13.1 million for the year (2011: £18.1 million) representing 15% of total sales (2011: 26%). The second half of the year saw the first increase in revenue for some time in this sector. Whilst this is a positive development, a significant change is not expected until the planned release of the Xaar 501 towards the end of 2013.

 

Operations review

The P3 capacity expansion plan was flawlessly executed over the last two years, being completed three months ahead of schedule and almost 10% below budget. The success of this programme allowed incremental customer demand to be fulfilled as the year progressed. Unit output from the Huntingdon plant more than doubled from the start to the end of the year, and the monthly output rate in the fourth quarter of 2012 was significantly higher than the entire output in 2009. Further capacity will be added during 2013 as a result of the strong and increasing demand for P3 products.

 

The increase in volume throughput and operational improvements achieved were key to our success in improving gross margins during a year of planned volume price reductions.

 

As anticipated, spending on Research and Development (R&D) increased to £8.0 million in 2012, a 23% increase over the £6.5 million spent in 2011. This spend has been primarily on new P3 product developments and P4 research. The first P4 physical test structures were completed before the end of 2012 as expected. Investment in R&D headcount and facilities has accelerated during the year. Additional space on the Cambridge Science Park has been secured and re-developed to provide roughly twice the space previously occupied. R&D headcount increased by 50% during 2012 and will increase further in 2013.

 

Total headcount at year end was 556, an increase of 18% in the year. Systems and processes have either been up-scaled or replaced in order to manage this rate of expansion effectively.

 

People

There is a strong sense of pride within the growing community of people working to build Xaar as a successful business and I would like to thank all of them for their efforts during another year of significant progress for the Company.

 

Outlook

Xaar remains a focused technology leader operating in very large, but highly segmented markets.  The transition from analogue to digital printing processes continues to provide a significant growth opportunity which is expected to continue for many years into the future. Our challenges remain: to maximise the opportunity in the markets where we are already operating; to expand our existing inkjet technology into new markets; and to develop new technology to enable a wider industrial inkjet revolution.

 

During 2013, in response to demand for P3 products in ceramics and other applications we will expand the P3 manufacturing capacity further than previously announced, and we will release products in support of our strategic objectives, which should underpin the Company's growth prospects for both the short and the medium term. P4 research and development spending will accelerate over this period positioning the Company to deliver further growth over the longer term.

 

 

Ian Dinwoodie

Chief Executive

19 March 2013



FINANCIAL REVIEW

 

Trading

Revenue increased by 26% in 2012 to £86.3 million (2011: £68.7 million), matching the growth rate achieved in 2011.  Xaar has now delivered three consecutive years of annual revenue growth at 26% or higher (2010 grew by 32% versus 2009).  This growth has been predominantly driven by the success of Xaar's technology in transforming the decoration of ceramic tiles from an analogue process to a digital inkjet solution.

 

The growth in sales has been made possible through a £22 million capacity expansion programme at the Huntingdon manufacturing facility, which began in 2010 and was completed in the first half of 2012.  This programme delivered a tenfold increase in the production output of Xaar 1001, the Group's world-leading product in the industrial segment.  Following the completion of the expansion programme in the first half of the year, revenue grew strongly in the second half and was up 28% on the first six months.

 

The majority of Xaar's revenue is generated by product sales, commissions and fees (£80.1 million or 93% of total sales in 2012), with 7% of revenue in 2012 derived from licensee royalty income.

 

Continued success in the ceramics market resulted in a 74% growth in sales for the industrial segment from £31.7 million in 2011 to £55.0 million in 2012.  Sales in the packaging segment were relatively stable at £12.0 million (2011: £11.7 million), while the graphic arts segment reduced by 28% from £18.1 million in 2011 to £13.1 million in 2012.  Actions taken on product development and commercial arrangements helped to reverse the trend in graphic arts sales during the year, with sales in the second half of the year increasing over the first six months.

 

Gross margin increased to 47.4% in 2012 (2011: 44.2%).  The increase reflects the leverage of higher sales volumes over the fixed elements of manufacturing costs, and production efficiency improvements achieved during the year.  As a result, gross profit grew by 35%, ahead of the 26% growth in revenue, from £30.4 million in 2011 to £40.9 million in 2012.

 

Adjusted operating expenditure for the year, excluding exceptional items, was up 14% on 2011 to £22.7 million for 2012.  This increase mainly relates to the increased investment in R&D, where headcount grew 50% in the year.  R&D expenditure increased by 23% to £8.0 million.

 

Net exchange adjustments in the year within operating expenditure were neutral.  A significant proportion of revenue (almost 40% in 2012) is generated in Euros.  This exchange risk is managed using a combination of forward contracts and by the regular transfer of any excess Euros into Sterling.

 

Adjustments to financial measures in the year of £2.7 million (2011: £1.4 million) include share-based payment charges of £1.5 million (2011: £1.3 million), foreign exchange gains associated with operating the Swedish plant of £0.3 million (2011: a loss of £0.3 million) and impairment of trade investments of £1.4 million (2011: £nil). The impairment charge related to the previously announced decision, made in June 2012, to fully impair the book value of a minority stake in an inkjet solutions provider.  The impairment resulted in a one-off non-cash charge which has been excluded in the calculation of adjusted profit before tax.

 

Net interest income of £0.2 million was recorded in 2012 (2011: £nil), with interest income on cash and treasury deposits exceeding interest charges on a remaining finance lease. 

 

The growth in revenue and gross margin resulted in a 74% increase in adjusted profit before tax for the year (see the reconciliation of adjusted financial measures) to £18.4 million (2011: £10.6 million).  Adjusted profit before tax is the normal measure used by management for tracking the underlying profitability of the Group.

 

The tax charge on adjusted profit before tax was £3.4 million (2011: £2.6 million), representing an effective tax rate of 19% (2011: 25%).  This tax charge is the product of the UK and Sweden corporation tax rates (24.5% and 26.3% respectively) reduced by the impact of R&D tax credits. The Group expects to benefit from future changes in UK tax legislation, including the patent box scheme.

 

The tax charge on unadjusted profit before tax was £3.1 million (2011: £1.5 million) representing an effective tax rate of 20% (2011: 16%).  The low rate in 2011 was mainly the result of the release of a provision that was no longer required.

 

Adjusted profit after tax for 2012 (see note 2) was £15.0 million, up 90% from the £7.9 million recorded in 2011. 

 

Adjusted diluted earnings per share increased 88% to 20.1 pence in 2012 (2011: 10.7 pence).

 

Financial position

The strong financial performance in 2012 drove an increase in net cash (cash and treasury deposits less financing arrangements) of £11.5 million to £28.9 million at 31 December 2012.  The increase in net cash is below the £15.0 million figure for adjusted profit after tax, mainly due to a growth in working capital which increased by £4 million during 2012, including a £1.4 million increase in inventory, reflecting the higher level of trading. Total cash outflow relating to intangible and tangible assets was £7.8 million in the year, compared to a total amortisation and depreciation charge of £7.4 million.

 

Dividend

The Board will recommend a final dividend of 3 pence for 2012 at the forthcoming Annual General Meeting, giving a total dividend for the year of 4 pence (2011: 3 pence). An interim dividend of 1 pence was paid during the year (2011: 1 pence). Subject to approval by shareholders at the Annual General Meeting, the final dividend will be paid on 21 June 2013 to shareholders on the register on 24 May 2013.

 

Annual General Meeting

The Annual General Meeting will be held at 9.30am on Thursday 16 May 2013 at 316 Science Park, Cambridge, CB4 0XR.

 

Alex Bevis

Finance Director & Company Secretary

19 March 2013

 

 

 

 

CONSOLIDATED INCOME STATEMENT




FOR THE YEAR ENDED 31 DECEMBER 2012




 




 

 

2012

2011

 

Notes

£'000

£'000

Revenue

 

86,304

68,706

Cost of sales

 

(45,356)

(38,327)

Gross profit

 

40,948

30,379

Research and development expenses

 

(8,032)

(6,498)

Sales and marketing expenses

 

(5,346)

(4,606)

General and administrative expenses

 

(12,022)

(10,347)

Restructuring costs

 

-

169

Operating profit

 

15,548

9,097

Investment income

 

186

91

Finance costs

 

(33)

(62)

Profit before tax

 

15,701

9,126

Tax

 

(3,073)

(1,450)

Profit for the year attributable to shareholders

 

12,628

7,676

Earnings per share

 

 

 

Basic

2

17.5p

10.8p

Diluted

2

16.9p

10.4p

 

 

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

 

 

FOR THE YEAR ENDED 31 DECEMBER 2012

 

 

 

2012

2011

 

£'000

£'000

Profit for the year attributable to shareholders

12,628

7,676

Items that may be reclassified subsequently to profit and loss:

 

 

Exchange differences on retranslation of net investment

(150)

67

Other comprehensive (loss)/income for the year

(150)

67

Total comprehensive income for the year

12,478

7,743

 

 

 

 

 



 

RECONCILIATION OF ADJUSTED FINANCIAL MEASURES

 

 

FOR THE YEAR ENDED 31 DECEMBER 2012

 

 

 

2012

2011

 

£'000

£'000

 

 

 

Profit before tax

15,701

9,126

Share-based payment charges

1,542

1,274

Exchange differences relating to the Swedish operations

(262)

335

Loss on derivative financial instruments

4

-

Impairment of trade investments and associated loans

1,401

-

Release of accrued restructuring costs

-

(169)

Adjusted profit before tax

18,386

10,566

 

 

 

 

2012

2011

 

Pence per

share

Pence per

share

Diluted earnings per share

16.9

10.4

Share-based payment charges

2.1

1.7

Exchange differences relating to the Swedish operations

(0.3)

0.4

Loss on derivative financial instruments

-

-

Impairment of trade investments and associated loans

1.9

-

Release of accrued restructuring costs

-

(0.2)

Tax effect of adjusting items

(0.5)

(0.5)

Tax provision release

-

(1.1)

Adjusted diluted earnings per share

20.1

10.7

 

Share-based payment charges include the IFRS 2 charge for the period and the movement on the National Insurance provision on the outstanding potential share option gains.

Exchange differences relating to the Swedish operations represent exchange gains or losses recorded in the consolidated income statement as a result of operating in Sweden.

Loss on derivative financial instruments relates to unrealised losses on foreign exchange forward contracts.

The charge for the impairment of trade investments and associated loans relates to a minority stake in an inkjet solutions provider and a convertible loan.  The full value of these investments has been recognised as an impairment loss in the income statement in the period, within administrative expenses.

The restructuring costs released relate to the aborted closure of the Swedish manufacturing plant. 

 

 

 

 

 



 

CONSOLIDATED STATEMENT OF FINANCIAL POSITION



AS AT 31 DECEMBER 2012



 

2012

2011

 

 £'000

 £'000

 

 

 

Non-current assets

 

 

Goodwill

720

720

Other intangible assets

4,015

4,408

Property, plant and equipment

26,704

27,558

Investments

-

1,261

Deferred tax asset

946

835

 

32,385

34,782

Current assets

 

 

Inventories

13,203

11,756

Trade and other receivables

12,487

9,375

Current tax asset

654

465

Treasury deposits

4,000

-

Cash and cash equivalents

25,446

18,274

 

55,790

39,870

Total assets

88,175

74,652

Current liabilities

 

 

Trade and other payables

(10,399)

(9,945)

Other financial liabilities

(655)

(61)

Current tax liabilities

(854)

(642)

Obligations under finance leases

-

(277)

Provisions

(1,629)

(991)

Derivative financial instruments

(4)

-

 

(13,541)

(11,916)

Net current assets

42,249

27,954

Non-current liabilities

 

 

Deferred tax liabilities

(286)

(484)

Other financial liabilities

(229)

(289)

Obligations under finance leases

-

(594)

Total non-current liabilities

(515)

(1,367)

Total liabilities

(14,056)

(13,283)

Net assets

74,119

61,369

Equity

 

 

Share capital

7,474

7,280

Share premium

24,406

23,727

Own shares

(4,215)

(4,465)

Other reserves

6,507

5,149

Translation reserve

357

507

Retained earnings

39,590

29,171

Equity attributable to shareholders

74,119

61,369

Total equity

74,119

61,369

 

 

 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY 


FOR THE YEAR ENDED 31 DECEMBER 2012








 








 

Share

Share

Own

Other

Translation

Retained


 

capital

premium

shares

reserves

reserve

earnings

Total

 

£'000

£'000

£'000

£'000

£'000

£'000

£'000

Balance at 1 January 2011

7,237

23,534

(4,465)

4,014

440

23,516

54,276

Profit for the year

 -

  -

 -

 -

     -

7,676

7,676

Exchange differences on retranslation of net investment

   -

 -

-

-

67

-

67

Total comprehensive income for the period

    -

  -

-

  -

 67

7,676

7,743

Issue of share capital

43

193

-

-

     -

  (18)

218

Dividends

       -

-

   -

-

-

(1,773)

(1,773)

Deferred tax on share option gains

    -

 -

 -

     -

      -

(230)

(230)

Credit to equity for equity-settled share-based payments

    -

-

 -

1,135

      -

   -

1,135

Balance at 1 January 2012

7,280

23,727

(4,465)

5,149

507

29,171

61,369

Profit for the year

-

-

-

-

-

12,628

12,628

Exchange differences on retranslation of net investment

-

-

-

-

(150)

-

(150)

Total comprehensive income for the period

-

-

-

-

(150)

12,628

12,478

Issue of share capital

194

679

-

-

-

(90)

783

Own shares sold in the period

-

-

250

-

-

-

250

Dividends

-

-

-

-

-

(2,174)

(2,174)

Deferred tax on share option gains

-

-

-

-

-

55

55

Credit to equity for equity-settled share-based payments

-

-

-

1,358

-

-

1,358

Balance at 31 December 2012

7,474

24,406

(4,215)

6,507

357

39,590

74,119



 

 

CONSOLIDATED CASH FLOW STATEMENT




FOR THE YEAR ENDED 31 DECEMBER 2012




 

 

2012

2011

 

Notes

£'000

£'000

Net cash from operating activities

3

19,896

12,787

Investing activities

 

 

 

Investment income

 

186

91

Purchases of property, plant and equipment

 

(7,541)

(14,438)

Proceeds on disposal of property, plant and equipment

 

560

         2

Expenditure on capitalised product development and software

 

(345)

 (1,272)

Net cash used in investing activities

 

(7,140)

(15,617)

Financing activities

 

 

 

Dividends paid

 

(2,174)

(1,773)

Treasury deposits

 

(4,000)

-

Proceeds from the sale of ordinary share capital

 

250

-

Proceeds from issue of ordinary share capital

 

783

218

Finance costs

 

(35)

(54)

Repayments of borrowings

 

(277)

(482)

Net cash used in financing activities

 

(5,453)

(2,091)

Net increase/(decrease) in cash and cash equivalents

 

7,303

(4,921)

Effect of foreign exchange rate changes on cash balances

 

(131)

(149)

Cash and cash equivalents at beginning of year

 

18,274

23,344

Cash and cash equivalents at end of year

 

25,446

18,274

 

 



Notes to the consolidated financial information

for the year ended 31 December 2012

 

 

1.         Basis of preparation

 

The financial information set out above does not constitute the company's statutory accounts for the years ended 31 December 2011 or 2012, but is derived from those accounts. Statutory accounts for 2011 have been delivered to the Registrar of Companies and those for 2012 will be delivered following the company's annual general meeting. The auditor has reported on those accounts; their reports were unqualified, did not draw attention to any matters by way of emphasis without qualifying their report and did not contain statements under s498(2) or (3) Companies Act 2006.

 

While the financial information included in this preliminary announcement has been prepared in accordance with the recognition and measurement criteria of International Financial Reporting Standards (IFRSs), this announcement does not itself contain sufficient information to comply with International Financial Reporting Standards.  The company expects to publish full financial statements that comply with IFRSs in April 2013.

 

2.         Earnings per ordinary share - basic and diluted

 

The calculation of basic and diluted earnings per share is based on the following data:

 

 

2012

2011

 

£'000

£'000

 

 

 

Earnings

 

 

Earnings for the purposes of basic earnings per share being net profit attributable to equity holders of the parent

12,628

7,676

Number of shares

 

 

Weighted average number of ordinary shares for the purposes of basic earnings per share

72,151,589

70,878,697

Effect of dilutive potential ordinary shares:

 

 

Share options

2,414,068

3,015,999

Weighted average number of ordinary shares for the purposes of diluted earnings per share

74,565,657

73,894,696

 

 

 

 

2012

2011

 

Pence per

share

Pence per

share

Basic

17.5

10.8

Diluted

16.9

10.4

 

The weighted average number of ordinary shares for the purposes of basic earnings per share is calculated after the exclusion of ordinary shares in Xaar plc held by Xaar Trustee Ltd and the Xaar plc ESOP trust.

 

Share options granted over 477,752 shares (2011: 344,312) have not been included in the diluted earnings per share calculation because they are anti-dilutive at the period end.

 

The performance conditions for LTIP awards granted over nil shares (2011: 231,457) and share options granted over 35,191 shares (2011: 229,793) have not been met in the current financial period and therefore the dilutive effect of the number of shares which would have been issued at the period end has not been included in the diluted earnings per share calculation.

 

Adjusted earnings per share

This adjusted earnings per share information is considered to provide a fairer representation of the Group's trading performance year on year, as it removes items which, in the Board's opinion, do not reflect the underlying performance of the Group.

 

The calculation of adjusted EPS excluding restructuring costs, exceptional commercial agreement costs, exchange differences relating to the Swedish operations, share-based payment charges, and the gain or loss on derivative financial instruments is based on earnings of:

 

 

2012

2011

 

£'000

£'000

 

 

 

Earnings for the purposes of basic earnings per share being net profit attributable to equity holders of the parent

12,628

7,676

Share-based payment charges

1,542

1,274

Exchange differences relating to the Swedish operations

(262)

  335

Loss on derivative financial instruments

4

     -

Impairment of trade investments and associated loans

1,401

    -

Release of accrued restructuring costs

-

 (169)

Tax effect of adjusting items

(349)

(382)

Tax provision release

-

(812)

Adjusted profit after tax

14,964

7,922

 

 

The denominators used are the same as those detailed above for both basic and diluted earnings per share.

 

Share-based payment charges include the IFRS 2 charge for the period of £1,358,000 (2011: £1,135,000) and the movement on the National Insurance provision on the outstanding potential share option gains.

 

Adjusted earnings per share is earnings per share excluding share-based payment charges, exchange differences relating to the Swedish operations, the gain or loss on derivative financial instruments, impairment of trade investments and associated loans, and release of accrued restructuring costs:

 

 

2012

2011

 

Pence per

share

Pence per

share

Adjusted basic

20.7

11.2

Adjusted diluted

20.1

10.7

 



 

3.         Notes to the cash flow statement

 

 

2012

2011

 

 £'000

 £'000

 

 

 

Profit before tax

15,701

9,126

Adjustments for:

 

 

Share-based payments

1,542

1,274

Depreciation of property, plant and equipment

6,648

4,660

Amortisation of intangible assets

738

1,315

Impairment of trade investments and associated loans

1,401

-

Investment income

(186)

(91)

Finance costs

33

62

Foreign exchange (gains)/losses

(275)

313

Loss on forward contracts

4

-

Loss/(profit) on disposal of property, plant and equipment

661

(9)

Increase in provisions

639

194

Operating cash flows before movements in working capital

26,906

16,844

Increase in inventories

(1,436)

(1,079)

Increase in receivables

(3,111)

(88)

Increase/(decrease) in payables

840

(1,654)

Cash generated by operations

23,199

14,023

Income taxes paid

(3,303)

(1,236)

Net cash from operating activities

19,896

12,787

 

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.  The carrying amount of these assets is approximately equal to their fair value.

 

 

4.         Going concern

 

The Group has considerable financial resources and a diverse and global customer base. As a consequence, the directors believe that the Group is well placed to manage its business risks successfully despite the continuing uncertain economic outlook. 

 

After making enquiries, the directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future, based on the Group's forecasts and projections, taking account of reasonably possible changes in trading performance. For this reason, they continue to adopt the going concern basis in preparing the financial information.

 

 


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