Interim / Quarterly Report • Jun 30, 2011
Interim / Quarterly Report
Open in ViewerOpens in native device viewer
Xaar plc interim report 2011
Xaar plc is the world-leading independent supplier of industrial inkjet printheads.
We offer the widest product range to deliver industrial strength inkjet performance, which in turn provides our customers with the flexibility and choice required to address a diversity of applications.
Visit us online View our website www.xaar.com
| Review of the period | |
|---|---|
| Chairman's statement | 01 |
| Financial statements | |
| Directors' responsibilities statement | 03 |
| Condensed consolidated income statement | 04 |
| Reconciliation of adjusted financial measures | 05 |
| Condensed consolidated statement of | |
| comprehensive income | 06 |
| Condensed consolidated statement of | |
| changes in equity | 07 |
| Condensed consolidated statement of | |
| financial position | 08 |
| Condensed consolidated cash flow statement | 09 |
| Notes to the interim financial information | 10 |
| Independent review report | 15 |
| Directors and advisors | 16 |
Phil Lawler Chairman
During the first half of 2011, revenues have continued to increase and were up 33% compared with H1 2010. The growth over H1 2010 reflects the substantial demand for Platform 3 ("P3") for industrial applications, which has been satisfied through a combination of productivity gains and the completion of the early stages of the capacity expansion programme at our Huntingdon facility. Against the same period, Platform 1 ("P1") sales have fallen, reflecting market maturity and some loss of market share.
The geographic spread of our sales has continued to shift towards continental Europe through the growth in P3. Our increasing exposure to Euro-denominated revenues (37% of H1 sales versus 25% of sales in 2010) is partly mitigated by Euro capital expenditures related to capacity expansion, as well as normal Euro-denominated costs.
Royalty revenue from our licensees has increased slightly (6% over H1 2010).
The group is profitable and growing. Adjusted profit before tax trebled against the same period last year to £4.3m (H1 2010 restated: £1.4m).
The group's net cash reduced as expected during the period as a result of capital investment related to the capacity expansion programme which remains on track to deliver further incremental P3 capacity during the second half of 2011 and first half of 2012.
Revenues for the six months ended 30 June 2011 were £31.6m (H1 2010 restated: £23.8m; H2 2010: £30.9m). Product sales were £28.2m (H1 2010 restated: £20.5m; H2 2010: £26.7m). Royalty revenue was £3.3m (H1 2010: £3.1m; H2 2010: £3.9m). Development income continues to be immaterial.
Adjusted gross margin at 44% has continued to improve (H1 2010 restated: 41%; H2 2010: 43%), reflecting production efficiencies and revenue growth.
Adjusted profit before tax for the period was £4.3m (H1 2010 restated: £1.4m; H2 2010: £4.2m). Reported profit before tax was £4.1m (H1 2010 restated: £1.9m; H2 2010; £3.5m).
continued
After payment of the final dividend for 2010 of £1.1m and £5.2m of capital investment (excluding capitalised development costs), net cash reduced by £1.4m during the period to £20.6m (31 December 2010: £22.0m; 30 June 2010: £8.2m).
The geographic spread of our business, in terms of revenue, is now EMEA 57% (H1 2010 restated: 42%; H2 2010: 48%), Asia 32% (H1 2010 restated: 43%; H2 2010: 39%), and the Americas 11% (H1 2010 restated: 15%; H2 2010: 13%). Whilst we have benefited during the past few years from the majority of sales coming from a high growth region (Asia), this also increased the risks associated with more volatile markets. We have now established reasonable volume in both Asia and EMEA and expect to capitalise on the improved balance that now exists in the business.
Continued success with P3 in industrial applications has enabled us to establish a major market for that product family in EMEA, with potential for other regions. Manufacturing efficiencies and increased shift patterns coupled with the first deliveries of new processing equipment, have all helped to achieve a better than expected P3 revenue in the first half of the year. Platform 2 ("P2") sales remain a small proportion of our business although they increased over the same period last year. As already announced, this product family has been largely superseded by P3 and hence further volume increases are not expected. P1 sales have been disappointing and have declined more quickly than planned. This reflects a number of factors including reduced product replacement orders as older P1 based printers are superseded by newer versions, not always with Xaar printheads. This market is very mature and the P1 product family refreshes have not been as successful or as dominant as we had planned. Royalty revenues have increased over the same period last year, reflecting a switch of P1 market share to some licensees.
Industrial sector growth continues with sales increasing by 132% over H1 2010. Growth in the Packaging sector was a more modest 12% over H1 2010, reflecting the adoption of P3 in one sub sector and maturing market decline of P1 in another. Graphic Arts growth of 1% compared to
with H1 2010, which also represents a decline against H2 2010 sales, is disappointing. Work continues in this area to improve results.
Good progress has been made with the expansion programme which we began in November 2010, with all constituent elements going according to plan. This involves a major development of our facility in Huntingdon, including the construction of a full third clean-room. In addition to the facilities upgrade and expansion, we have ordered a range of high value, sophisticated processing, test and measurement equipment, some of it unique to Xaar.
The successful installation and commissioning of this equipment continues to receive a high degree of focus and attention and is fundamental to our being able to increase P3 manufacturing capacity as planned. Inevitably, such changes are not without their challenges but we are on track and remain confident that this expansion programme will be successfully concluded during 2012 as previously announced.
Aligned with this physical expansion has been a significant increase in employee recruitment. This increase covers many disciplines and we have been successful in attracting the skill sets and calibre of people required. Headcount increases of this size require a great deal of effort, not just in recruitment but also in the resulting organisational expansion, integration and training. We have been successful in this area which continues to receive the appropriate attention.
Progress has been made in improving the management of new product development, manufacturing and integration. This in turn has enabled a refocusing of resource back on to future product versions and technologies that will sustain our growth for the longer term. We continue to manage our patent portfolio closely, and we regularly monitor possible conflicts and competitive activity.
As a result of our formal strategy review, held early this year, we confirmed that our approach remains niche with our commercial focus entirely on a few applications and leading OEMs where we can make the most impact.
Based on the continuing cash generation of the business, an unchanged interim dividend of 1.0p per share will be paid on 23 September 2011 to shareholders on the register at close of business on 26 August 2011.
As previously reported Rob Eckelmann, non-executive and senior independent director, decided to retire from the board at the company's Annual General Meeting in May of this year, and was replaced by David Cheesman. I would like to thank Rob for the benefit of his considerable experience and almost six years of wise counsel. Robin Williams, non-executive director, was appointed Senior Independent Director in May.
Also as previously reported, Phil Eaves, Sales and Marketing Director, has notified the company of his intention to retire in mid 2012. A process is underway to ensure an appropriate successor is in place during the second quarter of 2012.
We continue to live in an economically challenged world where growth is uncertain. For Xaar, the successful expansion of our manufacturing capacity, as planned, will represent a major milestone achieved. Although uncertainties remain, we believe that the market for P3 products will continue to be strong and that our new manufacturing capacity will enable us to capitalise on this demand. Our competitive advantage is the result of supplying a product capable of delivering significant benefits to our customers in selected segments of the inkjet printing market. Although we assume that competition will develop over time, the barriers to entry are high and we believe that our disruptive technology, combined with our management experience, technical skill, talent and resources, will enable us to maintain our competitive edge for a sustained period.
Phil Lawler Chairman 18 august 2011
We confirm that to the best of our knowledge:
(ii) a description of principal risks and uncertainties for the remaining six months of the year.
(c) the interim management report includes a fair review of the information required by DTR 4.2.8R:
By order of the board
Ian Dinwoodie Chief Executive
Alex bevis Finance Director 18 august 2011
04
| Twelve | |||
|---|---|---|---|
| months | months | months | |
| ended | ended | ended | |
| 30 June | 30 June | 31 December | |
| 2010 | |||
| (audited) | |||
| Notes | £'000 | £'000 | £'000 |
| 3 | 31,593 | 23,820 | 54,678 |
| (32,085) | |||
| — | (111) | — | |
| 13,861 | 9,371 | 22,593 | |
| (2,161) | (1,863) | (3,623) | |
| (14,596) | |||
| — | 1,172 | 1,107 | |
| 4,085 | 1,909 | 5,481 | |
| 34 | 14 | 42 | |
| (48) | (50) | (92) | |
| 4,071 | 1,873 | 5,431 | |
| 4 | (1,048) | (449) | (1,442) |
| 3,023 | 1,424 | 3,989 | |
| 5 | 4.3p | 2.3p | 6.3p |
| 5 | 4.1p | 2.2p | 6.1p |
| Six 2011 (reviewed) (17,732) (7,615) |
Six 2010 (reviewed, restated, note 2) (14,338) (6,771) |
Dividends paid in the period amounted to £1,062,000 or 1.5p per share 2010 final dividend (six months to 30 June 2010: £928,000 or 1.5p per share 2009 final dividend; twelve months to 31 December 2010: £1,545,000 or 2.5p per share being 1.5p per share 2009 final dividend and 1.0p per share 2010 interim dividend).
| Six | Six | Twelve | |
|---|---|---|---|
| months | months | months | |
| ended | ended | ended | |
| 30 June | 30 June | 31 December | |
| 2011 (reviewed) |
2010 (reviewed, |
2010 (audited) |
|
| restated, note 2) | |||
| £'000 | £'000 | £'000 | |
| Gross profit | 13,861 | 9,371 | 22,593 |
| Restructuring costs | — | 111 | — |
| Exceptional commercial agreement costs | — | 192 | 271 |
| Gross profit (adjusted) | 13,861 | 9,674 | 22,864 |
| Profit before tax | 4,071 | 1,873 | 5,431 |
| Restructuring costs | (5) | (1,061) | (1,107) |
| Exceptional commercial agreement costs | — | 382 | 461 |
| Exchange differences on intra-group transactions | (353) | 207 | (462) |
| Gain on derivative financial instruments | — | (39) | (39) |
| Share-based payments | 573 | 46 | 1,276 |
| Profit before tax (adjusted) | 4,286 | 1,408 | 5,560 |
| Six | Six | Twelve | |
| months | months | months | |
| ended | ended | ended | |
| 30 June | 30 June | 31 December | |
| 2011 (reviewed) |
2010 (reviewed, |
2010 (audited) |
|
| Per share | restated) Per share |
Per share | |
| Diluted earnings per share | 4.1p | 2.2p | 6.1p |
| Restructuring costs | — | (1.6p) | (1.7p) |
| Exceptional commercial agreement costs | — | 0.6p | 0.7p |
| Exchange differences on intra-group transactions | (0.5p) | 0.3p | (0.7p) |
| Gain on derivative financial instruments | — | (0.1p) | (0.1p) |
| Share-based payment charges | 0.8p | 0.1p | 2.0p |
| Tax effect of adjusting items | (0.1p) | 0.2p | (0.1p) |
| Diluted earnings per share (adjusted) | 4.3p | 1.7p | 6.2p |
This reconciliation is provided to enable a better understanding of the group's results and is not a primary statement.
06
| Total comprehensive income for the period | 2,778 | 1,675 | 3,525 |
|---|---|---|---|
| Other comprehensive income for the period | (245) | 251 | (464) |
| Tax relating to components of other comprehensive income | — | 242 | 14 |
| Gain/(loss) on cash flow hedges | — | 74 | (87) |
| Exchange differences on translation of net investment | (245) | (65) | (391) |
| Profit for the period | 3,023 | 1,424 | 3,989 |
| £'000 | restated) £'000 |
£'000 | |
| 30 June 2011 (reviewed) |
(reviewed, | (audited) | |
| 2010 | 2010 | ||
| 30 June | 31 December | ||
| ended | ended | ended |
Six Six Twelve months months months
| S | hare S capital £'000 |
hare O premium £'000 |
wn O shares £'000 |
ther reserves £'000 |
Hedging and translation R reserves £'000 |
etained earnings T £'000 |
otal £'000 |
|---|---|---|---|---|---|---|---|
| Balance at 1 January 2011 | 7,237 | 23,534 | (4,465) | 4,014 | 440 | 23,516 | 54,276 |
| Profit for the period | — | — | — | — | — | 3,023 | 3,023 |
| Exchange differences on translation of net investment |
— | — | — | — | (245) | — | (245) |
| Total comprehensive income for the period | — | — | — | — | (245) | 3,023 | 2,778 |
| Issue of share capital | 26 | 188 | — | — | — | — | 214 |
| Dividends | — | — | — | — | — | (1,062) | (1,062) |
| Deferred tax benefit on share option gains | — | — | — | — | — | 113 | 113 |
| Credit to equity for equity-settled share-based payments |
— | — | — | 520 | — | — | 520 |
| Balance at 30 June 2011 | 7,263 | 23,722 | (4,465) | 4,534 | 195 | 25,590 | 56,839 |
| Share capital £'000 |
Share premium £'000 |
Own shares £'000 |
Other reserves £'000 |
Hedging and translation reserves £'000 |
Retained earnings £'000 |
Total £'000 |
|
| Balance at 1 January 2010 (as reported in 2010 interim report) Prior period adjustment (note 2) |
6,351 — |
10,525 — |
(4,465) — |
3,140 — |
904 — |
20,769 (761) |
37,224 (761) |
| Balance at 1 January 2010 as restated in 2010 annual report) |
6,351 | 10,525 | (4,465) | 3,140 | 904 | 20,008 | 36,463 |
| Profit for the period | — | — | — | — | — | 1,424 | 1,424 |
| Exchange differences on translation of net investment |
— | — | — | — | (65) | — | (65) |
| Gains on cash flow hedges | — | — | — | — | 74 | — | 74 |
| Tax on items taken directly to equity | — | — | — | — | 13 | — | 13 |
| Tax benefit taken directly to equity | — | — | — | — | — | 229 | 229 |
| Total comprehensive income for the period | — | — | — | — | 22 | 1,653 | 1,675 |
| Dividends | — | — | — | — | — | (928) | (928) |
| Credit to equity for equity-settled share-based payments |
— | — | — | 46 | — | — | 46 |
| Balance at 30 June 2010 (restated) | 6,351 | 10,525 | (4,465) | 3,186 | 926 | 20,733 | 37,256 |
08
| 30 June 2011 |
31 December 2010 |
|
|---|---|---|
| (reviewed) | (audited) | |
| Non-current assets | £'000 | £'000 |
| Goodwill | 720 | 720 |
| Other intangible assets | 4,048 | 4,349 |
| Property, plant and equipment | 20,800 | 17,385 |
| Investments | 1,261 | 1,261 |
| Deferred tax asset | 996 | 995 |
| 27,825 | 24,710 | |
| Current assets | ||
| Inventories | 11,438 | 10,715 |
| Trade and other receivables | 7,887 | 9,301 |
| Current tax asset | — | 381 |
| Cash and cash equivalents | 21,665 | 23,344 |
| 40,990 | 43,741 | |
| Total assets | 68,815 | 68,451 |
| Current liabilities | ||
| Trade and other payables | (8,301) | (10,969) |
| Other financial liabilities | (100) | (217) |
| Current tax liabilities | (776) | — |
| Obligations under finance leases | (271) | (265) |
| Provisions | (770) | (797) |
| (10,218) | (12,248) | |
| Net current assets | 30,772 | 31,493 |
| Non-current liabilities | ||
| Deferred tax liabilities | (693) | (695) |
| Other financial liabilities Obligations under finance leases |
(331) (734) |
(361) (871) |
| Total non-current liabilities | (1,758) | (1,927) |
| Total liabilities | (11,976) | (14,175) |
| Net assets | 56,839 | 54,276 |
| Equity | ||
| Share capital | 7,263 | 7,237 |
| Share premium | 23,722 | 23,534 |
| Own shares | (4,465) | (4,465) |
| Other reserves | 4,534 | 4,014 |
| Hedging and translation reserves | 195 | 440 |
| Retained earnings | 25,590 | 23,516 |
| Equity attributable to shareholders | 56,839 | 54,276 |
| Total equity | 56,839 | 54,276 |
As at As at
| Note | Six months ended 30 June 2011 (reviewed) £'000 |
Six months ended 30 June 2010 (reviewed, restated) £'000 |
Twelve months ended 31 December 2010 (audited) £'000 |
|
|---|---|---|---|---|
| Net cash from operating activities | 6 | 4,687 | 1,004 | 5,524 |
| Investing activities | ||||
| Investment income | 34 | 14 | 42 | |
| Purchases of property, plant and equipment | (5,195) | (2,843) | (6,488) | |
| Proceeds on disposal of property, plant and equipment | — | 1 | 10 | |
| Expenditure on capitalised product development | (220) | (48) | (359) | |
| Net cash used in investing activities | (5,381) | (2,876) | (6,795) | |
| Financing activities | ||||
| Dividends paid | (1,062) | (928) | (1,546) | |
| Loan financing | — | 1,388 | 1,389 | |
| Proceeds from issue of ordinary share capital | 214 | — | 15,025 | |
| Fees for issue of ordinary share capital | — | — | (1,130) | |
| Finance costs | (30) | (81) | (80) | |
| Repayments of borrowings | (248) | (298) | (537) | |
| Net cash (used in)/from financing activities | (1,126) | 81 | 13,121 | |
| Net (decrease)/increase in cash and cash equivalents | (1,820) | (1,791) | 11,850 | |
| Effect of foreign exchange rate changes | 141 | 48 | (27) | |
| Cash and cash equivalents at beginning of period | 23,344 | 11,521 | 11,521 | |
| Cash and cash equivalents at end of period | 21,665 | 9,778 | 23,344 |
These interim financial statements have been prepared in accordance with the accounting policies set out in the group's annual report and accounts 2010 on pages 40 to 45 and were approved by the board of directors on 18 August 2011. The interim financial statements for the six months ended 30 June 2011 have been prepared in accordance with IAS 34 "Interim Financial Reporting" as adopted by the European Union. The interim financial statements do not include all the information and disclosures in the annual financial statements and should be read in conjunction with the group's annual financial statements as at 31 December 2010.
The financial information in these interim financial statements does not constitute statutory financial statements as defined in section 434 of the Companies Act 2006. The group's annual report for the year ended 31 December 2010 has been delivered to the Registrar of Companies and the auditor's report on those financial statements was not qualified and did not contain statements made under section 498(2) or (3) of the Companies Act 2006.
The interim financial statements are unaudited but have been reviewed by the auditor Deloitte LLP. The report of the auditor to the group is set out on page 15.
The accounting policies adopted in the preparation of the interim condensed consolidated financial statements are consistent with those followed in the preparation of the group's annual financial statements for the year ended 31 December 2010.
An outline of the key risks and uncertainties faced by the group was outlined in the 2010 financial statements on page 15, including anticipating technology trends, retaining key staff and successfully executing business growth initiatives. It is anticipated that the risk profile will not significantly change for the remainder of the year. Risk is an inherent part of doing business and the strong cash position of the group along with the underlying profitability of the core business leads the directors to believe that the group is well placed to manage business risks successfully.
The group's forecasts and projections, taking account of reasonably possible changes in trading performance, support the conclusion that there is a reasonable expectation that the company and the group have adequate resources to continue in operational existence for the foreseeable future. Accordingly, the going concern basis of preparation has been adopted in preparing the interim financial statements.
The financial statements for the period 1 January 2010 to 30 June 2010 include a prior period restatement, as also presented in the 2010 annual report, in relation to the recognition of revenue from a distributor. In prior periods revenue (and associated profits) was recognised at the point of receipt of goods by the distributor. The restated financial statements recognise revenue (and associated profits) at the point of resale by the distributor which is when risk and rewards of ownership of inventory has transferred.
Segment results in note 3 reflect this restatement which only impacted printheads and related products.
Outlined below are the corrections made for each financial statement line affected.
| 30 June | 30 June | 30 June | |
|---|---|---|---|
| 2010 | 2010 | 2010 | |
| as reported | adjustment | restated | |
| £'000 | £'000 | £'000 | |
| Revenue | 23,863 | (43) | 23,820 |
| Cost of sales | (14,468) | 130 | (14,338) |
| Restructuring costs | (111) | — | (111) |
| Gross profit | 9,284 | 87 | 9,371 |
| Operating profit | 1,822 | 87 | 1,909 |
| Profit before tax | 1,786 | 87 | 1,873 |
| Tax | (425) | (24) | (449) |
| Profit for the period attributable to shareholders | 1,361 | 63 | 1,424 |
| Earnings per share | |||
| Basic | 2.2p | 2.3p | |
| Diluted | 2.1p | 2.2p |
| 30 June 2010 as reported £'000 |
30 June 2010 adjustment £'000 |
30 June 2010 restated £'000 |
|
|---|---|---|---|
| Profit before tax | 1,786 | 87 | 1,873 |
| Operating cash flows before movements in working capital | 2,472 | 87 | 2,559 |
| Increase in inventories | (452) | (130) | (582) |
| Increase in receivables | (1,223) | (7) | (1,230) |
| Increase in payables | 727 | — | 727 |
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.
Segment information about these product types is presented below:
| Six months |
Six months |
Twelve months |
|
|---|---|---|---|
| ended 30 June 2011 |
ended 30 June 2010 |
ended 31 December 2010 |
|
| (reviewed) | (reviewed, restated) |
(audited) | |
| £'000 | £'000 | £'000 | |
| Revenue | |||
| Printheads and related products | 28,174 | 20,546 | 47,237 |
| Development fees | 81 | 126 | 459 |
| Licence fees and royalties | 3,338 | 3,148 | 6,982 |
| Total revenue | 31,593 | 23,820 | 54,678 |
| Six | Six | Twelve | |
| months | months | months | |
| ended 30 June |
ended 30 June |
ended 31 December |
|
| 2011 | 2010 | 2010 | |
| (reviewed) | (reviewed, restated) |
(audited) | |
| £'000 | £'000 | £'000 | |
| Result | |||
| Printheads and related products | 94 | (861) | (1,029) |
| Development fees | — | 43 | 179 |
| Licence fees and royalties | 3,338 | 2,565 | 5,999 |
| Total segment result | 3,432 | 1,747 | 5,149 |
| Net unallocated corporate income | 653 | 162 | 332 |
| Operating profit | 4,085 | 1,909 | 5,481 |
| Investment income | 34 | 14 | 42 |
| Finance costs | (48) | (50) | (92) |
| Profit before tax | 4,071 | 1,873 | 5,431 |
| Tax | (1,048) | (449) | (1,442) |
| Profit for the period attributable to shareholders | 3,023 | 1,424 | 3,989 |
Unallocated corporate income relates to administrative activities which cannot be directly attributed to any of the principal product groups.
Assets in the printheads and related products segment have increased by £1.3m over the period and assets in the licence fees and royalties segment have increased by £0.8m over the period; there have been no other material movements in segment assets during the period.
The major components of income tax expense in the income statement is as follows:
| Six | Six | Twelve | |
|---|---|---|---|
| months | months | months | |
| ended | ended | ended | |
| 30 June | 30 June | 31 December | |
| 2011 | 2010 | 2010 | |
| (reviewed) | (reviewed, | (audited) | |
| restated) | |||
| £'000 | £'000 | £'000 | |
| Current income tax | |||
| Income tax charge | 938 | 49 | 1,244 |
| Deferred income tax | |||
| Relating to origination and reversal of temporary differences | 110 | 400 | 198 |
| Income tax expense | 1,048 | 449 | 1,442 |
The calculation of basic and diluted earnings per share is based upon the following data:
| Six | Six | Twelve | |
|---|---|---|---|
| months | months | months | |
| ended | ended | ended | |
| 30 June | 30 June | 31 December | |
| 2011 | 2010 | 2010 | |
| (reviewed) | (reviewed, | (audited) | |
| restated) | |||
| £'000 | £'000 | £'000 | |
| Earnings | |||
| Earnings for the purposes of earnings per share being net profit attributable | |||
| to equity holders of the parent | 3,023 | 1,424 | 3,989 |
| Number of shares | |||
| Weighted average number of ordinary shares for the purposes of basic earnings per share | 70,722,976 | 61,797,389 | 63,009,082 |
| Effect of dilutive potential ordinary shares: | |||
| Share options | 3,007,608 | 1,548,756 | 2,311,031 |
| Weighted average number of ordinary shares for the purposes of diluted earnings per share | 73,730,584 | 63,346,145 | 65,320,113 |
| 6. Notes to the cash flow statement | |||
|---|---|---|---|
| Six | Six | Twelve | |
| months | months | months | |
| ended | ended | ended | |
| 30 June 2011 |
30 June 2010 |
31 December 2010 |
|
| (reviewed) | (reviewed, | (audited) | |
| restated, note 2) | |||
| £'000 | £'000 | £'000 | |
| Profit before tax | 4,071 | 1,873 | 5,431 |
| Adjustments for: | |||
| Share-based payments | 520 | 46 | 874 |
| Depreciation of property, plant and equipment | 2,230 | 1,859 | 3,686 |
| Movements on cash flow hedge valuations | — | 47 | (39) |
| Finance costs | 48 | 31 | 92 |
| Amortisation of intangible assets | 521 | 540 | 1,119 |
| Investment income | (34) | — | (42) |
| Foreign exchange losses | (585) | — | (649) |
| Loss on disposal of property, plant and equipment | — | 25 | 25 |
| Decrease in provisions | (27) | (1,862) | (1,209) |
| Operating cash flows before movements in working capital | 6,744 | 2,559 | 9,288 |
| Increase in inventories | (626) | (582) | (3,988) |
| Decrease/(increase) in receivables | 1,407 | (1,230) | (3,621) |
| (Decrease)/increase in payables | (3,041) | 727 | 5,389 |
| Cash generated by operations | 4,484 | 1,474 | 7,068 |
| Income taxes refunded/(paid) | 203 | (470) | (1,544) |
| Net cash from operating activities | 4,687 | 1,004 | 5,524 |
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 interim financial statements cover the period 1 January 2011 to 30 June 2011 and were approved by the board on 18 August 2011.
Further copies of the interim financial statements are available from the company's registered office, 316 Science Park, Cambridge CB4 0XR, and can be accessed on the Xaar plc website, www.xaar.com.
We have been engaged by the company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2011 which comprises the condensed consolidated income statement, reconciliation of adjusted financial measures, condensed consolidated statement of comprehensive income, condensed consolidated statement of financial position, condensed consolidated statement of changes in equity, condensed consolidated cash flow statement and related notes 1 to 7. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.
This report is made solely to the company in accordance with International Standard on Review Engagements (UK and Ireland) 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" 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 it 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.
The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.
As disclosed in note 1, the annual financial statements of the group are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34, "Interim Financial Reporting," as adopted by the European Union.
Our responsibility is to express to the company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.
We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2011 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.
Chartered Accountants and statutory auditor Cambridge, UK 18 August 2011
15
Phil Lawler Chairman
Ian Dinwoodie Chief Executive
Alex Bevis Finance Director and Company Secretary
Phil Eaves Sales and Marketing Director
Ramon Borrell Research and Development Director
Ted Wiggans Operations Director
David Cheesman Non-Executive Director
Robin Williams Senior Independent Director Registered office 316 Science Park Cambridge CB4 0XR
Company Secretary Alex Bevis
Financial advisor and lead broker Singer Capital Markets Limited
One Hanover Street London W1S 1YZ
Deloitte LLP City House 126–130 Hills Road Cambridge CB2 1RY
Clifford Chance LLP 10 Upper Bank Street London E14 5JJ
Mills & Reeve LLP 130 Fenchurch Street London EC3M 5DJ
Bankers Barclays Bank plc 15 Bene't Street Cambridge CB2 3PZ
Registrars Capita Registrars Northern House
Woodsome Park Fenay Bridge Huddersfield HD8 0LA
316 Science Park Cambridge CB4 0XR England
Tel: +44 (0) 1223 423663 Fax: +44 (0) 1223 423590
Email: [email protected] Website: www.xaar.com
Building tools?
Free accounts include 100 API calls/year for testing.
Have a question? We'll get back to you promptly.