2023 Interim Results

 

19 September 2023

 

Xaar plc

 

2023 INTERIM RESULTS

 

STRATEGIC PROGRESS WITH PERFORMANCE ON TRACK

 

Xaar plc ("Xaar", the "Group" or the "Company"), the leading inkjet printing technology group, today announces its unaudited interim results for the six months ended 30 June 2023.

 

Financial Summary:     

 

	H1 2023	H1 2022	Change
Continuing Operations
Revenue	£34.5m	£36.6m	-6%
Gross profit	£13.8m	£14.5m	-5%
Gross margin %	40%	40%
Gross R&D investment	£2.6m	£3.3m	-21%
Adjusted EBITDA1	£3.5m	£3.0m	17%
Adjusted profit before tax1	£1.8m	£1.4m	29%
Loss before tax	(£1.8m)	(£0.3m)
Loss/profit for the period after tax	(£1.3m)	£0.7m
Basic (loss)/earnings per share	(1.7p)	0.9p
Total Operations
Loss before tax	(£1.8m)	(£0.6m)
(Loss)/profit after tax	(£1.3m)	£0.4m
Basic (loss)/earnings per share	(1.7p)	0.5p
Net cash at the period end2	£7.3m	£12.7m	-42.5%

 

1 - EBITDA is calculated as statutory operating profit before depreciation, amortisation and impairment of property, plant and equipment, intangible assets and goodwill. Adjusted EBITDA is calculated as EBITDA excluding other adjusting items as defined as follows. Adjusted Measures exclude the impact of share-based payment charges, exchange differences relating to intra-group transactions, gain on derivative financial instruments, restructuring and transaction expenses, research and development expenditure credit, fair value loss or gains on financial assets at FVPL, amortisation of acquired intangibles, and discontinued operations as reconciled in note 2.

2 - Net cash at 30 June includes cash, cash equivalents and treasury deposits.

Figures and percentages included in this report are subject to rounding adjustments arising from conversion to £millions from actual figures. Accordingly, figures shown for the same category presented in different tables may vary slightly, and figures shown as totals in certain tables may not be an arithmetic aggregation of the figures that precede them.

 

Financial highlights

·      Revenue of £34.5 million in line with expectations

·      Group adjusted profit before tax for the period year up 29% to £1.8 million

·      Gross margin of 40% is in line with H1 2022, driven by targeted favourable sales mix and cost management offsetting the factory upgrade investment

·      R&D spend of £2.6 million, equating to 8% of Group Revenue, underscores the continued investment on the product roadmap, with a focus on the ImagineX platform

·      Robust balance sheet with net cash of £7.3 million (2022: £12.7 million) following planned investment in working capital to ensure customer demand is met

 

Strategic and operational highlights

·      Increasing number of customers developing products, with additional product launches expected in H2 2023 and expected recovery in key markets

·      Commercial partnership with Quantica announced on 5 July 2023 enhances the Group's leading position in jetting highly viscous fluids

·      Phase 1 of factory efficiency programme completed on time and within budget

·      Product Print Systems business ("EPS") delivered a strong performance in the period with both revenue and margin growth

·      Sustainability roadmap embedded within the business with clear strategy to reach 'net zero' by 2030

 

 

John Mills, Chief Executive Officer, commented:

 

"We remain focused on the successful delivery of our strategy and taking advantage of the significant opportunities that will drive profitable growth. We have seen continued positive momentum across the business, with increased visibility over customer product launches and a robust pipeline.

Our products, especially Aquinox, are generating strong interest from existing and new customers, underlining our leadership in printing highly viscous fluids.

Phase 1 of our factory efficiency programme has been successfully completed on time and within budget positioning us to deliver increased efficiency and capacity, whilst realising significant cost savings.

Whilst being mindful of the external environment, we remain optimistic about the future with encouraging signs of recovery in key markets and the business in good shape to make further progress and to deliver a full year performance in line with our expectations. With a substantial market opportunity and the progress made, we remain well positioned to realise our exciting potential."

 

 

Contacts:

 

Xaar plc
Ian Tichias, Chief Financial Officer	+44 (0) 1223 423 663
John Mills, Chief Executive Officer
Teneo	+44 (0) 207 353 4200
Giles Kernick Olivia Lucas

 

A presentation for analysts and investors will be held via webcast and conference call at 09:00 today. For further details, please contact Xaar@teneo.com

 

 

 

 

Significant strategic progress

 

Xaar has delivered a good performance in the last six months in line with our expectations. We continue to execute our strategy of delivering compelling products in each of our market segments and remain focused on the significant opportunities that will drive profitable growth.

 

This strategy is now delivering with our products, especially Aquinox, generating strong interest from both existing and new customers underlining our leadership in jetting highly viscous fluids which, alongside other advantages, provide significant sustainability benefits, as well as reducing our customers' time to market.

 

Our positive momentum has continued during the reporting period. We have seen an increase in the number of customers adopting Xaar technology and we now have clearer visibility of their product launches, which will drive performance in the second half of this year and beyond.

 

Phase 1 of our factory upgrade has been successfully completed on time and within budget, positioning us to deliver increased efficiency and capacity, whilst realising significant cost savings. Further phases of development, expected to start in early 2025, will see increased modernisation of our manufacturing facilities leading to greater efficiencies and scale potential.

We have seen continued good performance from EPS, Megnajet and FFEI, with EPS especially continuing to drive excellent revenue and profit growth. As part of our decision to strategically withdraw from the Life Science part of FFEI, we sold non-core IP assets delivering a profit of £2.0 million.  

 

Continued strong trading - in line with expectations

 

We have delivered performance in H1 2023 in line with management expectations, further demonstrating the operational and strategic progress across the Group. The Group has increased resilience with performance driven by all elements of the business, and an ongoing focus on cost control and careful cash management.

Revenue for the period was £34.5 million representing a decrease of 6% against H1 2022.

The Printhead business has a clear customer-focussed commercial strategy, and we are pleased to have grown our customer base and maintained our market share. The economic challenges globally, particularly rising interest rates, have directly impacted capital equipment purchases by some customers in the period. The performance also reflects the tough comparative period in Q1 2022 where demand in China was high prior to the implementation of COVID related restrictions.

Revenue for the Printhead business was relatively flat compared to H2 of last year and we are now seeing encouraging signs of recovery, with the lifting of restrictions in China along with an increase in customer product launches that incorporate Xaar's technology, which we expect to drive demand for printheads.

We have been able to demonstrate the strength of our technology in market sectors beyond Ceramics, especially the key growth area of 3D printing, and continue to see strong customer engagement where we have a competitive advantage by enabling customers to reduce their own development times.

EPS delivered an excellent performance. Revenue increased 16%, against the equivalent period of 2022, with growth across all its product lines, driven by digital inkjet single pass machines. We have increased customer engagement with a strong sales pipeline which is driving revenue growth, higher gross margins, and strong profitability.

FFEI and Megnajet, continue to perform well. These businesses provide us with an expanded product range enabling real traction and opportunity in the printbar and print engine markets, along with fluid management systems.

Our plan has been to focus on products that support our core strategy. As a result, we are considering options to withdraw from the non-core Life Sciences part of the FFEI business, and the sale of IP in this area is part of this process. We delivered a one-off profit of £2.0 million through this sale which helped offset the one-off impact of Phase 1 of our factory re-organisation at Huntingdon completed in Q1.

Gross margin was maintained at 40% despite inflationary cost pressures and the closing of the Huntingdon factory for two months to complete Phase 1 of the operational re-organisation. This was driven by an increase in Printhead of 3 ppts to 44% helped by a favourable sales mix, and EPS which increased Gross Margin to 40% from 39% in the comparative period.

Group Adjusted EBITDA grew from £3.0 million to £3.5 million driven by a positive adjusted EBITDA in each of our businesses (EPS adjusted EBITDA of £1.7 million (H1 2022: £1.2 million), FFEI adjusted EBITDA of £2.3 million (H1 2022: £0.5 million), and Megnajet adjusted EBITDA of £0.4 million (H1 2022: £0.3 million)) other than Printhead which, due to the fall in revenue and the Q1 closure of the factory, posted negative adjusted EBITDA of £0.9 million (H1 2022: positive £0.9 million). 

Group adjusted profit before tax for H1 2023 was £1.8 million, an increase when compared to H1 2022 (£1.4 million) and H2 2022 (£1.4 million).

 

Strong balance sheet and operational investment

The Group retains a strong balance sheet and cash position. Net cash at 30 June 2023 was £7.3 million, representing a net outflow of £1.2 million in the period.

During this period we invested £3.2 million in inventory allowing the Printhead business to increase its holding of finished goods. This systematic approach over the last 12 months gives us confidence that we can deliver on customer demands for the remainder of the year and into 2024. We believe that we are winning business through the advantage of offering shorter lead times than our competition which ensures we are well placed to capitalise on the commercial opportunities we have.

In addition, we have invested £1.1 million (H1 2022: £1.5 million) in operational upgrades along with the factory upgrade completed in March 2023.

R&D investment in innovation is critical to the ongoing success of the business, and we will continue to invest in our R&D capabilities across the Group to ensure our technology remains market leading. During H1 2023 we invested £2.6 million (H1 2022: £3.3 million). The continued strong cash generation across the business and prudent cash management has enabled us to make these investments. We will maintain our disciplined approach to balance sheet management, and it remains a key priority to allow for further investment in the business focussing on operational capability.

In June 2023 we successfully agreed a Revolving Credit Facility (RCF) of £5 million with our lead bank, HSBC, which allows for accelerated investment in the business and our operational capability.

 

Operational improvements driving greater efficiency and increased capacity   

Operational improvements have been made by investing in our manufacturing facilities to increase efficiency and lower costs. The first phase of this programme has now been completed and the Huntingdon factory re-organisation was completed in early 2023 on time and under budget.

This will enable us to operate more efficiently, increase capacity and yields whilst crucially generating significant cost savings, especially in reducing our energy consumption. Accordingly, this investment will deliver a rapid return and payback in less than a year.

As a result of this investment, we will increase capability and capacity enabling us to take advantage of the opportunities which we expect to drive our future growth.

This is the first phase of our efficiency upgrade programme, and we plan to invest a further £10-15 million over the next three to four years which we intend to fund through operational cash generation. The next phase of investment is expected to take place in early 2025, depending on business needs, which will result in more modern, efficient, and environmentally beneficial manufacturing facilities across the business.

 

Significant market opportunity

We have a strong proposition across our five key market sectors. Our digital inkjet technologies provide compelling propositions to transform print processes across a wide range of applications, and we can supply our customers with the products they need to develop their printers. This means we have significant opportunities for complementary revenue, incremental to printhead sales, where we can shorten our customers' product development time to market.

The medium and long-term opportunity for the business remains significant. Whilst we already have good market share in core, mature markets such as Ceramics and Coding & Marking, further growth opportunities exist because of our market leading technologies and clear competitive advantage.

During 2023 we have made the most significant progress in 3D printing, where our ability to print high viscosity fluids is transforming the industry. The 3D printing sector is experiencing a greater level of customer product launches, thereby providing greater revenue potential opportunity for our products than previously expected.

Historically Xaar has almost exclusively operated in the B2B (Business to Business) area across our product ranges and applications, however there is an emerging opportunity for 3D printing in the B2C (Business to Consumer) sector where we can facilitate growth.

We are partnering with established system providers for our Xaar Irix printhead to enable a new generation of full colour, inkjet-based desktop 3D printing systems that are higher resolution and more flexible than the existing technologies. We anticipate this new generation of 3D printers to be launched over the next six to twelve months.

We have seen increased customer engagement as our printhead product range has expanded and our ability to offer a broader solution to customers with fluid management systems and printbars, as evidenced by the increasing number of customers developing machines with our products. Both our current product offering and our products in development will help drive our success in meeting this customer demand.

This is demonstrated with the high level of customer interest and adoption of Aquinox, our new water-based fluid printhead with an increased number of development kits sold in the period. We expect to see customer product launches incorporating Aquinox during H2 this year.

By providing an integrated solution for customers whereby they can access more of the printing ecosystem, we help our customers take advantage of the inkjet opportunity and working with Xaar means a higher chance of success by being faster to market, and therefore, making our customers' investment more profitable. Ultimately this will help us in our overriding strategy to sell more printheads and gives the business increased resilience over volatility in any given market.

 

Product development and increased capability

The market opportunity for Xaar printheads is significant. We have a unique roadmap of product development to ensure we offer an increasingly vertically integrated commercial strategy to capitalise on this market opportunity.

Our Xaar 2002 printhead has double the resolution of our competitors giving the ability for very high-quality print and incorporates our key technologies which enable printing of very challenging fluids in harsh production environments.

The Xaar Irix remains the flagship product in the Coding and Marking and Direct-to-Shape sectors. It delivers increased throw distance whilst maintaining print quality and along with our Xaar 50X printheads means we are maintaining our position in Coding and Marking and have several opportunities in the Direct-to-Shape market.

The recently launched Aquinox printhead is positioned to drive adoption in Packaging and Textiles markets. The response to the product has been exceptional due to its ability to print high viscosity water-based inks. This gives customers the opportunity to use less energy, with a higher throughput, and more vibrant colours and we expect the first product launches of textile printers to happen in H2 2023.

The already successful ImagineX platform will deliver improved features over the next few years which will provide significant enhancements to the current portfolio, including: 

·      substantially improved speed and throughput (frequencies up to 150kHz, equivalent to a threefold increase in speed compared to current products),

·      increased throw distance to improve image quality on curved surfaces,

·      increased robustness to improve the life of the printhead and maintain image quality,

·      higher viscosities enabling a broader range of fluids to be printed (above 100cP), and

·      higher resolutions (up to 1440 dpi).

 

These features will help strengthen our position in markets where we are already well represented and will drive improved adoption in several markets where we are currently not participating. 

 

The enhancements in our product roadmap support our customers with a clear path to upgrade their products and maintain their product differentiation.

 

 

Continued commitment to sustainability

We continue to make significant progress on ESG and the Group's Sustainability Roadmap. The Board remains committed to the business becoming carbon net zero by 2030.

We are passionate about delivering solutions and products for our customers that are cleaner and better for the environment. Our products are well placed to deliver significant benefits commercially and environmentally for our customers through reductions in power consumption and water usage.

We also seek to have a wider positive impact on society by understanding and prioritising employee needs, doing business responsibly, and reaching out to our local communities. All our UK sites have now moved to 100% renewable energy. All printhead product packaging is fully recyclable. Our Apprentice Programme is well developed across the business, and we continue to support activities promoting STEM (Science, Technology, Engineering and Maths) subjects amongst young people as well as several sponsorship programmes supporting university students and industry placements.

Digital inkjet printing is inherently more sustainable compared to traditional analogue printing with a smaller carbon footprint. It reduces and prevents excessive waste and uses less energy due to the ability to print short runs or direct-to-shape. With Ultra High Viscosity Technology and TF Technology ink recirculation, Xaar printheads are capable of printing very viscous fluids which, in the textiles sector for example, results in a reduction in energy used in intensive drying processes. We are passionate about continuing further adoption and understanding of the environmental benefits our products can bring to customers.

 

Outlook

While remaining vigilant to broader macroeconomic conditions, the Board remains confident of delivering full year results in line with its expectations.

 

Despite the lifting of COVID related restrictions in China, sales volumes in the Printhead business continue to be affected, but we expect market conditions in the sectors in which we operate to improve during H2 2023 and this, coupled with increased customer product launches, will drive higher demand for Xaar printheads.

 

We have maintained our policy of increased investment in inventory during 2022 and 2023 to ensure the Group is well placed to capitalise on our targeted opportunities and satisfy customer demand.

 

There is positive momentum in the business with strong customer interest and customer engagement. Our strategy to diversify across a range of market sectors means further customer product launches are expected in 2024 providing confidence in delivering our medium-term growth plans.

 

Business Performance

 

Revenue

Group revenue growth

£m	H1 2023	H1 2022	Var %	H2 2022	Var %
Printhead	17.6	20.7	-15%	18.3	-4%
EPS	10.7	9.2	+16%	10.4	+3%
FFEI	4.8	6.1	-21%	5.5	-13%
Organic growth H1 2023 vs H1 2022	33.1	36.0	-8%	34.2	-3%
Megnajet	1.4	0.6	+133%	2.0	-30%
Total Revenue	34.5	36.6	-6%	36.2	-5%

 

Revenue for the Group was £34.5 million for the first half of the year, representing a year-on-year decline of £2.1 million (H1 2022: £36.6 million).

 

These results have been achieved in a difficult trading environment. Restrictions arising from COVID-19 in China have now been lifted, however, there has been an ongoing impact on Printhead revenue. This together with rising costs and interest rates have impacted capital equipment sales globally. Printhead business unit revenue declined £3.1 million when compared to the same period last year. Q1 2022 revenue included a strong business performance from sales in China, driving this variance. When compared to H2, Printhead revenue is close to flat, despite the weak demand generally for capital goods which is a strong indicator of the progress the business has made with customer engagement. EPS revenue increased 16% when compared to H1 2022 and 3% to H2 2022, demonstrating continued excellent progress.

 

Printhead

Printhead Revenue by Sector 

£m	H1 2023	H1 2022	Var %	H2 2022	Var %
Ceramics & Glass	8.0	9.8	-18%	7.1	+12%
C&M & DTS	5.1	6.9	-26%	5.8	-13%
WFG & Labels	1.7	1.8	0%	3.0	-40%
3D Printing & AVM	2.6	1.9	+37%	2.0	30%
Packaging & Textile	0.2	0.1	+100%	0.4	-50%
Royalties, Commissions & Fees	-	0.2	-100%	-	-
Total	17.6	20.7	-15%	18.3	-4%

 

Printhead revenue for the half year decreased £3.1 million to £17.6 million (H1 2022: £20.7 million), representing the current economic challenges and a strong comparative reporting period in 2022 due to greater sales in China.

 

Printhead revenue in EMEA was £11.1 million compared to £11.2 million in H1 2022, although this is an increase compared to £9.5 million in H2 2022 which is pleasing and reflects on our customer engagement across our market sectors, whilst revenue in the Americas fell. Performance in Asia, and China in particular, has been impacted by COVID-19 restrictions. Restrictions were not implemented in China until Q2 2022, and before then we saw strong Printhead revenue. Although restrictions are now lifted, the economic challenges faced in China are impacting sales of printheads, and we have seen orders from our customers delayed as their own product development times are taking longer. This has particularly impacted revenue in the Ceramics sector (albeit with a recovery in revenue when compared to H2 2022), and Coding & Marking (C&M). Whilst this is disappointing, the underlying market demand remains, we have retained market share, and we are confident in the medium term of returning to the previous growth levels. The number of customer product launches in the coming 12 months is increasing which drives this confidence.

 

3D printing and Additive Manufacturing (AVM) has seen consistent growth which is pleasing as this reflects our overall customer strategy and enhanced product portfolio. 

 

EPS

EPS Revenue by Sector

£m	H1 2023	H1 2022	Var %	H2 2022	Var %
Digital Inkjet	7.3	5.7	+28%	6.7	+9%
Pad Printing	3.0	3.3	-9%	3.4	-12%
Other	0.4	0.2	+100%	0.3	+33%
Total	10.7	9.2	+16%	10.4	+3%

 

Revenue from the EPS business increased by £1.5 million to £10.7 million (H1 2022: £9.2 million).

 

This has been driven by digital inkjet machines sales with growth of 28%, which is particularly pleasing as this is the core focus for the business and will drive increased profitability. As our focus has been on the core profitable single pass digital machines, we have seen some decrease in revenue from the pad printing stream, which we would expect to recover during H2 2023. We see a strengthening pipeline and order book and we are well placed to deliver further growth for the full year in 2023.

 

FFEI and Megnajet

FFEI revenue was £4.8 million which compares to £6.1 million in H1 2022. This results from a focus on the core activities - that of print systems - which was the driver for the acquisition. Accordingly, the non-core activities of the business have seen reduced revenue and we have stated that in time we will exit the Life Science aspect of the business. We are pleased with the growth of Megnajet which has delivered £0.8 million increase (133%), and on a like-for like basis delivered a £0.4 million increase (Megnajet was consolidated in March 2022). We have seen a change in stock levels for some customers which has contributed to the decrease compared to H2 2022.

 

 

Gross profit

 

Gross profit for the period decreased by £0.7 million to £13.8 million (H1 2022: £14.5 million) with the gross margin remaining at 40% (H1 2022: 40%). We have successfully mitigated overhead cost increases, together with impact on profit from the factory shutdown, to increase the Printhead business unit's gross margin which grew to 44% from 41% (although due to the revenue reduction gross profit reduced from £8.5 million from £7.9 million). We were able to do this through a combination of sales price increases and improving utilisation of the factory, as throughput was increased during the period resulting in better overhead cost recovery, supporting gross margin gains.

 

Gross profit for the EPS business increased to £4.3 million in the period from £3.6 million with gross margin growing year-on-year (H1 2023: 40%, H1 2022: 39%). This reflects the focus we have taken on modernising the business and adopting a modular approach to designing and building machines with a focus on single pass digital machines.

 

Gross profit for H1 2023 for the FFEI business was £1.3 million (H1 2022: £2 million), and for the Megnajet business was £0.4 million (H1 2022: £0.3 million).

 

 

Research & Development

 

Gross R&D spend of £2.6 million was down £0.7 million in H1 2023 (H1 2022: £3.3 million). On a like-for-like basis the reduction was £0.3m. The reduction in the period comes from reduced spend in FFEI in addition to an internal reallocation of costs between General & Administrative costs and other areas of the business. We are continuing to invest in the business and will maintain the ratio of R&D investment/revenue of 8-10%.

 

 

Operating Expenses

 

Sales and marketing spend for the period was £3.2 million (H1 2022: £3.7 million). This decrease reflects the strong focus on cost management that we have across the business.  

 

General and administrative expenses increased to £10.3 million from £6.0 million in H1 2022. On a like-for-like basis, the increase was £3.1 million. The difference in variance relates to an internal reclassification of costs of £1.2 million (moving costs from General & Administrative expenses) made in H1 2022 that were not made in H1 2023.

 

Of the £3.1m increase in General and administrative expenses, £1.1m are operational cost increases in the business as we have continued to increase and strengthen our capability and experience across the business, most notably in our R&D, Finance and Human Resources functions. This improved operational capability also includes further and continued investment in infrastructure such as IT, manufacturing, and supply chain management.

 

Exceptional G&A costs (costs adjusted for adjusted profit before tax) have increased £2.0 million principally due to an increase in the share-based payments charge (IFRS 2) (£0.8 million increase) and £1.2m lower foreign exchange losses on intra group transactions.

 

Other exceptional costs include £1.0m restructuring costs (of which £0.8m relates to the factory efficiency programme) and £0.5m reduction in the fair value of the contingent consideration receivable due to foreign exchange movements.

 

Profit for the period

 

The adjusted profit before tax was £1.8 million in 2023 (H1 2022: £1.4 million).

 

The adjusted profit of the Printhead business decreased from a £0.4 million loss in H1 2022 to a £2.2 million loss in H1 2023 driven by the reduction in revenue in the period. The EPS business moved from an adjusted £1.1 million profit in 2022 to a £1.5 million profit in H1 2023 due to the increased trading performance. FFEI contributed an adjusted profit before tax of £2.1 million in the period, and Megnajet £0.4 million.

 

In calculating the adjusted profit before tax, we have adjusted for fair value losses on financial assets of £0.5 million alongside restructuring costs of £1.0 million, foreign exchange losses on intra-group loans of £0.4 million, share-based payments of £1.3 million and amortisation of acquired intangible assets of £0.5 million.

The adjusted EBITDA in the period was £3.5 million (H1 2022: £3.0 million). This was aided by the one-off profit arising from the sale of non-core IP.

 

The total unadjusted loss for the period before tax was £1.8 million (H1 2022: £0.3m). Loss after tax was £1.3 million (H1 2022: profit of £0.4 million).

 

Balance sheet

The Group retains a strong balance sheet and a net cash position at 30 June 2023 of £7.3 million. This represents a reduction of £1.2 million in net cash since 31 December 2022, which has been driven by planned capital investment and working capital investment.

Non-current assets decreased slightly from £52.0 million at 31 December 2022, to £50.0 million in the first half of the year. Property, plant, and equipment decreased by £0.6 million, driven primarily by the depreciation of assets (£1.4 million), and £1.0 million of capital additions. Goodwill and intangible assets increased by £0.8 million which primarily related to foreign currency exchange movements and the purchase of intangible assets. The fair value of the non-current financial asset at fair value through profit or loss which represents deferred contingent consideration decreased by £0.7 million.

Current assets decreased by £1.7 million. Inventory value has increased by £3.1 million, £1.7 million of which relates to an increase in inventory held by the Printhead business. Trade and other receivables decreased by £0.1 million. The fair value of the current financial asset at fair value through profit or loss decreased by £0.4 million.

Current liabilities increased by £0.9 million due mainly to the change in current lease liability.

The Group maintains a strong disciplined focus on cash, and this has continued through H1 2023. During H1 2023 investing activities saw cash inflow of £1.7 million. As a result of the continued managed investment in inventory, working capital saw an outflow of £2.9 million. Maintenance capital additions were £1.2 million in the period which together with the inventory investment was funded by the IP sale proceeds of £2.3 million and £0.6 million of cash earnout received on the sale of 3D Limited to Stratasys.

 

The business has a clear plan and strategy which the strong balance sheet and cash position will support. Currently we are focussing investment on internal opportunities to ensure we have the operational capacity and efficiency to meet future demand, alongside investment in our product roadmap development.

 

Dividend

The Board regularly reviews capital allocation and believes that prioritising investment to enable profitable growth for the business is currently the most appropriate use of capital, therefore, no interim dividend has been declared for 2023.

 

 

John Mills Chief Executive Officer	Ian Tichias Chief Financial Officer
19 September 2023

 

Directors' responsibilities statement

We confirm that to the best of our knowledge:

·      the condensed set of financial statements has been prepared in accordance with International Accounting Standard 34 - Interim Financial Reporting as adopted by the UK

·      the interim management report includes a fair review of the information required by:

o  DTR 4.2.7R of the Disclosure Guidance and Transparency Rules, being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements; and a description of the principal risks and uncertainties for the remaining six months of the year; and

o  DTR 4.2.8R of the Disclosure Guidance and Transparency Rules, being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the entity during that period; and any changes in the related party transactions described in the last annual report that could do so.

 

By Order of the Board

 

John Mills

Chief Executive Officer

19 September 2023

 

 

 

CONDENSED CONSOLIDATED INCOME STATEMENT
FOR THE SIX MONTHS ENDED 30 JUNE 2023
		Six months ended		Six months ended	Twelve months ended
		30 June 2023		30 June 2022	31 December 2022
		(unaudited)		(unaudited)	(audited)
	Notes	£'000		£'000	£'000
Revenue	3	34,515		36,608	72,782
Cost of sales		(20,693)		(22,118)	(44,138)
Gross profit		13,822		14,490	28,644
Research and development expenses		(2,617)		(3,319)	(6,718)
Research and development expenditure credit		-		79	379
Sales and marketing expenses		(3,213)		(3,665)	(6,669)
General and administrative expenses		(10,280)		(5,954)	(14,050)
Impairment losses of financial assets		(38)		(46)	(28)
Restructuring and transaction expenses	2	(978)		(226)	(450)
Fair value loss on financial assets at FVPL	10	(514)		(1,469)	(8)
Other income	4	2,201		-	139
Operating (loss)/profit		(1,617)		(110)	1,239
Investment income	5	37		22	38
Finance costs	5	(235)		(213)	(453)
(Loss)/profit before tax		(1,815)		(301)	824
Income tax credit	6	467		990	967
(Loss)/ profit for the period from continuing operations		(1,348)		689	1,791
Loss from discontinued operations after tax	12	-		(338)	(159)
(Loss)/profit for the period		(1,348)		351	1,632
(Loss)/earnings per share - Total
Basic	7	(1.7p)		0.5p	2.1p
Diluted	7	(1.7p)		0.4p	2.0p
(Loss)/earnings per share - Continuing operations
Basic	7	(1.7p)		0.9p	2.3p
Diluted	7	(1.7p)		0.9p	2.2p

 

No dividends were paid in the current or prior period.

 

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE SIX MONTHS ENDED 30 JUNE 2023
		Six months ended	Six months ended	Twelve months ended
		30 June 2023	30 June 2022	31 December 2022
		(unaudited)	(unaudited)	(audited)
		£'000	£'000	£'000
(Loss)/profit for the period attributable to shareholders		(1,348)	351	1,632
Exchange differences on translation of net investment		(315)	623	617
Other comprehensive (expense)/income for the period		(315)	623	617
Total comprehensive (expense)/income for the period		(1,663)	974	2,249

 

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2023
		As at	As at
		30 June 2023	31 December 2022
	Notes	(unaudited)	(audited)
Non-current assets
Goodwill	9	6,903	7,163
Other intangible assets		8,184	8,681
Property, plant and equipment		15,536	16,104
Right of use asset		8,367	8,068
Financial asset at fair value through profit or loss	10	10,438	11,089
Deferred tax asset		389	726
Other non-current assets		136	136
		49,953	51,967
Current assets
Inventories		32,168	29,148
Trade and other receivables		11,397	11,527
Current tax asset		1,182	735
Financial asset at fair value through profit or loss	10	104	517
Cash and cash equivalents		7,303	8,546
		52,154	50,473
Total assets		102,107	102,440
Current liabilities
Trade and other payables		(14,006)	(14,862)
Provisions		(430)	(405)
Contract liabilities		(4,090)	(3,799)
Borrowings and financial liabilities	10	(1,060)	(379)
Lease liabilities		(1,823)	(1,032)
		(21,409)	(20,477)
Net current assets		30,745	29,996
Non-current liabilities
Lease liabilities		(7,315)	(7,800)
Provisions		(300)	(300)
Other financial liabilities		(1,740)	(2,094)
		(9,355)	(10,194)
Total liabilities		(30,764)	(30,671)
Net assets		71,343	71,769
Equity
Share capital		7,858	7,844
Share premium		29,443	29,427
Own shares		(566)	(775)
Translation reserves		1,313	1,628
Other reserves		24,563	23,379
Retained earnings		8,732	10,266
Total equity		71,343	71,769