18 September 2024

 

Xaar plc

 

2024 INTERIM RESULTS

 

RESILIENT PERFORMANCE AGAINST A DIFFICULT MARKET BACKDROP

 

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 2024.

 

Financial Summary:     

 

	H1 2024	H1 2023	Change
Revenue	£28.6m	£34.5m	(17%)
Gross profit	£10.1m	£13.8m	(27%)
Gross margin %	35%	40%	(5%)
Gross R&D investment	£2.4m	£2.6m	(8%)
Adjusted EBITDA1	£1.0m	£3.5m	(71%)
Adjusted (loss)/profit before tax	(£0.7m)	£1.8m	(139%)
Loss before tax	(£2.8m)	(£1.8m)	(56%)
Loss for the period after tax	(£2.6m)	(£1.3m)	(100%)
Basic loss per share	(3.3p)	(1.7p)
Net cash at the period end2	£6.8m	£6.2m	10%

 

Financial highlights

·      Revenue of £28.6 million (H1 2023: £34.5 million) reflects the expected ongoing decline of the legacy ceramics market, order delays and EPS weakness

·      Excluding ceramics, the printhead business delivered new market revenue growth of 26%

·      Gross margin of 35% (H1 2023: 40%) due to increased energy costs and reduced overhead absorption

·      Adjusted (loss) before tax for the period of (£0.7) million (H1 2023: profit £1.8 million)

·      R&D investment of £2.4 million (H1 2023: £2.6 million) reflecting investment in product development

·      Group remains well capitalised, with net cash of £6.8 million, up 10%, driven by disciplined cash management

 

Strategic and operational highlights

·      Successful commercialisation of new products, with OEM launches in textiles, corrugate, battery coating and wax markets

·      Customer product launches in last five years have created annualised revenue in excess of £20 million delivering compound annual growth rate of 26%

·      Strong pipeline of opportunities with a number of key projects expected to deliver in 2025

·      Operational efficiency programme continuing, resulting in a £3.4 million (24%) reduction in operating expenses while retaining key capabilities

 

Outlook

·      Trading conditions are consistent with those reported at the FY results

·      We are pleased with customer engagement and expect more OEM product launches during the second half of the year

·      Our differentiated technology and growing pipeline of customer projects positions us for growth despite challenging end markets

·      Market uncertainty persists although expectations for the full year remain unchanged

 

John Mills, Chief Executive Officer, commented:

"We remain confident in our strategy which is increasingly demonstrating the unique capabilities of our printhead technology. Our pipeline of opportunities has increased in quality in both existing and new application areas and increasing numbers of OEM's are engaged in, or actively planning, new product launches incorporating Xaar printheads. Newly developed high viscosity inks enable us to fully utilise the unique technology of our printheads, and whilst the legacy ceramics market is challenging, masking our success in new market sectors, we have enhanced our customer integration capabilities and are already seeing the benefit in accelerated OEM project launches in other target markets.

 

We continue to focus on the elements of the business that are within our control, enhancing our technology, supporting customer adoption of our printheads, managing our cost base and strengthening our cash position demonstrating the benefits that Xaar's unique capabilities can deliver to customers. We remain convinced of our ability to maximise the substantial opportunity we have."

 

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 in person and via webcast and conference call at 09:15 today. For further details, please contact Xaar@teneo.com

 

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 3.

2 - Net cash includes cash, cash equivalents and treasury deposits, net of invoice discounting facility.

 

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.

 

About Xaar plc

 

Xaar is an inkjet innovator, providing printheads and technologies for OEM and UDI customers worldwide.

 

By helping customers lay down precise volumes of inks and fluids with absolute pin-point accuracy, time after time, Xaar's inkjet printheads and technologies meet the needs of numerous markets. Covering graphics, labelling, direct-to-shape, packaging, product decoration, ceramic tile and glass decoration, textiles, 3D, décor, and outer case coding applications - as well as printing with specialist functional fluids for advanced manufacturing techniques.

 

Collaboration is at the very core of its business. Xaar works as a trusted partner from sites in Europe and China, providing expert insights and technical support every step of the way.

 

With over 30 years' experience, around 200 patents registered or pending, and major ongoing R&D investment, Xaar's digital printhead and precision jetting technologies create infinite opportunities for today's sustainable manufacturing innovation.

Group Chief Executive's review

 

Positioned for growth with market leading technology  

 

We have delivered a solid financial performance in the first half of 2024 against a tough market backdrop. We have successfully progressed our product development strategy and continue to control what we can control both in positioning the business for growth in a number of new market areas, and in demonstrating disciplined cash management. Despite our strategic progress, results have been impacted by OEM product launch delays, continued weakness in the ceramics market, and a reduction in major project business in EPS. Importantly, we remain confident in our strategy and the long-term opportunity for the Group.

 

Our business model centres on the sale of highly differentiated printheads, combined with a vertically integrated commercial offering. Our technology enables customers to access the benefits of high viscosity inks through enhanced print functionality and lower financial and environmental cost, including reduced energy costs and lower water usage. We also provide a wide range of components such as inks, ink supply systems and print engines, as well as comprehensive customer support, to better enable the integration of Xaar technology in OEM products. Over the last five years, we have launched a wide range of new products with further additions planned in the current year and beyond.

 

We have a strong pipeline of OEMs in the process of developing machines that will incorporate our printheads. We now have 22 customers with machines/projects in development, including a number of OEMs in new application areas. Since 2019, new product launches have created annualised revenue in excess of £20 million and delivered a compound annual growth rate of 26%. This progress has been masked by a worse than expected cyclical deterioration in the ceramics market.

 

Resilient trading in tough market conditions

 

Group Revenue in the first half reduced by 17% to £28.6 million (H1 2023: £34.5 million) with weakness in the ceramics market, delays in customer launches and a lack of major projects in EPS. The gross margin declined to 35% (H1 2023: 40%) due to decreased overhead absorption rates, significantly higher energy costs and, within EPS, a one-time design change for a leading customer, and customer specific cost increases.

 

R&D investment at £2.4 million (H1 2023: £2.6 million) was 8.4% of H1 revenue (H1 2023: 7.5% of revenue).  An increased proportion of this investment was deployed to support our OEM product launches which will continue to be a priority.

Operating expenses continue to be proactively managed across all business units with a £3.4 million (24%) reduction on H1 2023. Adjusted loss before tax of £(0.7) million was as anticipated and arose from the lower revenue and its impact on the Group's profitability.

We remain well capitalised and ended the half with net cash of £6.8 million through disciplined cash management.

 

 

Stronger alignment with customers to take greater control of growth

 

During FY23 we introduced Project Hubble to improve our operations, providing focus around commercial strategic opportunities, operational efficiency, organisational effectiveness and customer integration.

 

We have put three key initiatives in place to ensure we maximise our commercial strategic opportunities. The first is to diversify our geographic exposure by targeting OEMs in Europe and USA, which along with our established strategy of having a compelling product in each target market, will build further resilience into our business.

 

The second initiative is to develop relationships with our end customers, in partnership with our OEMs, allowing us to have a clearer picture of the decisions that drive the adoption timing of their new systems with Xaar technology. The feedback from both end customers and OEMs is that they continue to appreciate this increased involvement.

 

The final initiative is to ensure a seamless integration of our printheads into our OEM customers' new systems and to better support them as they on-board our technology. Although the high viscosity and high pigment loading capabilities that give Xaar printheads their unique benefits are compelling, we recognise that the integration into the system can be challenging and that the capabilities of OEMs vary materially. To mitigate these challenges, we have developed a complete turnkey solution of ink system, ink, waveform, print modes and all the other parameters associated with a complete product. This has helped OEMs manage system integration issues and enabled a better understanding of the unique characteristics of Xaar printheads.

We have trialled this enhanced approach over the past nine months through close collaboration with a leading customer throughout their product development cycle. The result was to significantly reduce integration issues and accelerate both successful product installation and OEM product launch. Not only does this approach improve the depth of relationships with OEMs, but it enables us to develop market ready solutions that we can sell to the wider market.

One element for future success is the ability to produce full colour print samples and demonstrate the printheads working in the target application as part of an integrated system. Demonstrating not only the printheads capability but also a fully integrated solution will benefit the sales process and also help closer engagement with OEM's.

 

 

Product developments enhancing our market-leading offering

 

The market opportunity for our highly differentiated printheads remains significant, but we have recognised the need to offer a complementary broader range of components such as inks, ink supply systems and print engines. Enhancing the range of products and support we can offer customers is enabling us to respond more rapidly to market needs and deliver the full functionality and performance our OEM partners require.

 

During the first half, we launched two new printheads, the Xaar eX and Nitrox eX, specifically designed for coating the new generation of batteries used in electric vehicles (EVs) and energy storage systems. The launch marks Xaar as the first inkjet company to enter the battery coating sector with a printhead specifically for this application, setting a new benchmark in this technology.

We have also adapted the Xaar 2002 to create a variant that is capable of running at a temperature in excess of 100°C. The printhead enables higher quality wax to be used in specific applications, such as jewellery manufacturing, which along with the higher resolution and smaller drop size, gives a significantly higher quality product.

Further enhancing our product range, a full set of ultra-high viscosity and highly pigmented inks have now been developed by our ink partners for OEMs to use in conjunction with the Aquinox printhead, ensuring a substantial competitive advantage in the corrugated and textiles market. Higher pigment content means more colour per drop, achieving the same colour density with fewer drops, lowering cost and increasing productivity. Higher viscosity means less water in the ink which reduces the amount of energy needed to dry the substrate and allows for an increase in print speed.

These inks are the first in a series of developments to ensure that we have a qualified high viscosity ink across all of our target markets. The availability of validated inks will enable our OEMs to make more rapid progress in their product developments.

Underpinning our existing product range, our printhead development platform "ImagineX" is continuing to provide enhancements to the current portfolio, helping to further strengthen our technological leadership and enable adoption in new market areas markets. Our continued investment in R&D supports our approach and we will continue to focus on further supporting our customers to enable successful product launches.

 

 

Significant market opportunity

Our technology and strategy have expanded our market opportunity and positioned us favourably with a compelling product in four of our five target markets, more than tripling the total addressable market of the Group compared to 2018, and significantly broadening the breadth of the opportunities in our pipeline. Completion of new products for the Wide Format Graphics and Labels markets in due course will enable access to an overall future addressable market of £1 billion across all our target markets. Key developments include:  

·      CERAMICS: Global ceramics leader System are on track to launch their new printer with Xaar 720dpi printheads in the second half of this year, after successful Beta installation in May. Meanwhile, OEM partner NKT has increased its market share with the same printhead. Our success in re-engaging with market leaders in the Ceramics sector means we are well positioned to gain market share once demand returns to more normal levels. 

·      CODING & MARKING: A recent product launch from Videojet has enabled further revenue growth in the US. Public endorsement of Xaar's printheads from industry leader KBA Kammann, alongside our significant technical breakthrough in the ultra-high-speed, high-quality printing of 1D and 2D barcodes, are the main reasons for growing interest in our printheads.

·      3D PRINTING: 3D printing continues to provide opportunities across several technologies and markets. We expect a major global supplier of desktop 3D systems to launch their full colour inkjet machines with Xaar printheads by early 2025 after OEM re-designs have caused earlier delays.

·      3D WAX PRINTING: 3D wax printing, specifically for the jewellery market, remains an exciting opportunity. Flashforge launched their first product using Xaar printheads, the Waxjet 510, in Q2 and a higher volume second product with 3 printheads is being launched in Q4. These developments have prompted wider market interest for our products in this area. Overall, despite OEM product delays encountered in 2023, we are confident this market provides a significant opportunity.

·      ADVANCED MANUFACTURING: Advanced Manufacturing remains an exciting market for Xaar as our technology enables manufacturers to transition from analogue to digital, with digital inkjet printing replacing other coating methods including screen printing and spray. Many of these applications are extremely well suited to Xaar's printhead characteristics and features, namely its ability to print highly viscous liquids, printing in any orientation rather than purely vertically, printing on curved surfaces and the Through Flow architecture minimising ink blockages. Given we are not displacing incumbent printheads, the size of the opportunity is not bound by the current scope of existing digital print markets. EV batteries, in particular, offer a large-scale opportunity. Production of the coating solution, which passed the required tests in 2023, entered pre-production during the first half. The first production machine, using Xaar printheads, was installed for one of the top six global battery manufacturers in May, with a further two machines being due for installation in the second half.

·      PACKING & TEXTILES: Through Xaar Aquinox, we are starting to grow our market share in the Packaging and Textiles industry, albeit from a low base. Delays caused by a lack of commercially available aqueous inks have been remedied with the successful launch of suitable inks for textiles, with the corrugate aqueous inks launching soon. This opens up a sizeable market, and we expect our unique capability to deliver high contrast, full colour print directly, to be an attractive and cost effective solution. 

·      WIDE FORMAT GRAPHICS: Wide Format Graphics and Labels is the largest single industrial print market, and we remain confident that this market remains open to Xaar although it is not a current area of focus.

 

 

Significant environmental benefits of our products

Delivering products which offer significant environmental benefits is a key element of our product strategy. We are dedicated to helping customers reduce their power consumption and water. Digital inkjet printing is inherently more sustainable compared to traditional analogue printing with a smaller carbon footprint. It uses less energy and prevents excessive waste due to the ability to print short runs or direct-to-shape.

 

Compared to analogue alternatives, digital has a huge impact in reducing energy consumption (by up to 55%), water consumption (by up to 60%) and CO2 emissions (by up to 95%). Furthermore, jetting high viscosity fluids brings additional sustainability benefits as they are proven to use less water and less energy than using standard viscosity fluids. The cost savings and environmental benefits are perhaps best highlighted through our relationship with Axalta, a leading global coatings company. Axalta are using Xaar technology in their Nextjet next generation sustainable digital paint product, which replaces traditional spray painting in the automotive industry. This allows for precise paint placement eliminates masking and reduces labour, energy and waste while increasing productivity and efficiency rates.

 

Xaar's actuator technology consumes less energy than competitor alternatives, and our industrial printheads are known for their extended lifespan. We use a continuous improvement methodology, and we have adopted a manufacturing ethos of 'reduce, reuse and recycle'. Environmental best practice and our investment in sustainable manufacturing and operational efficiencies remain key areas of business focus. Publication of our inaugural Sustainability Report highlights the transformative progress made towards the objectives set out in the company's Sustainability Roadmap.

 

We have verified our sustainable impact through the commissioning of an independent research study led by senior academics at Swansea University. The researchers examined the end user benefits of using the Xaar Aquinox printhead and cyan water-based inks from Nazdar and concluded that it enables customers to halve the ink used, meaning transport costs and process energy costs can also be reduced.

 

 

Outlook

The first half of 2024 has seen trading conditions consistent with those reported in March, with customers choosing to delay capital expenditure due to the macroeconomic conditions. Despite the success of our product development strategy, closer customer engagement and the popularity of the products, revenue from customers in new sectors has been offset by the significant decline of our ceramics business, masking the underlying progress that we have made. Global volume production of ceramic tiles has fallen by over 50% since peaking in 2020/21, most significantly in China which is by far the largest producer worldwide. Indications are that these market conditions will remain for a period before growth is restored in the medium term.

This has made our task of delivering overall revenue growth more difficult as there is an inevitable time lag between product launches in new sectors and sales growth as volumes ramp up. The result is slower overall progress in revenues for Xaar. Despite this, we expect further OEM product launches during the second half of the year and our high-quality pipeline of opportunities in new markets and in new applications means we remain optimistic about future growth prospects for the Group. We believe that in most cases there are strong economic drivers as to why customers should choose Xaar, and our priority is to make it as easy as possible for them to make that choice. As sales volumes improve and energy costs stabilise, we expect gross margins to improve in the medium term. We remain cautious on providing precise timing given the current market backdrop and uncertainty caused by economic and geopolitical effects.

Although market uncertainty persists, expectations for the full year remain unchanged.

 

 

Business Performance

Revenue

 

Group revenue growth

£m	H1 2024	H1 2023	Var	Var %
Printhead	16.5	17.6	(1.1)	-6%
EPS	7.5	10.7	(3.2)	-30%
FFEI	3.3	4.8	(1.5)	-31%
Megnajet	1.3	1.4	(0.1)	-7%
Total Revenue	28.6	34.5	(5.9)	-17%

 

Revenue for the Group was £28.6 million (H1 2023: £34.5 million). for the first half of the year, representing a year-on-year decline of £5.9 million. These results have been achieved in a difficult trading environment with rising costs and elevated interest rates continuing to impact capital equipment sales globally.

 

Printhead business unit revenue declined by £1.1 million driven by a £3.4 million reduction in ceramic and glass sales. Other markets within our Printhead business delivered revenue growth of 26%, a positive dynamic for when legacy product sales stabilise. EPS revenue fell 30% to £7.5 million largely due to slowdown in capital equipment purchases. Notably, there was a delay in shipping two multi-pass machines in June 2024, the issues of which have since been resolved resulting in the machines shipping in July 2024.

 

Printhead

 

Printhead Revenue by Sector 

£m	H1 2024	H1 2023	Var	Var %
Ceramics & glass	4.6	8.0	(3.4)	-43%
3D printing & AVM	3.2	2.6	0.6	23%
C&M & DTS	6.0	5.1	0.9	18%
Packaging & textiles	0.4	0.2	0.2	100%
WFG & labels	2.4	1.7	0.7	41%
Total Revenue	16.5	17.6	(1.1)	-6%

 

Xaar offers a wide range of industrial inkjet printheads which are designed and produced to meet the customer-driven requirements for a range of manufacturing applications such as ceramic tile decoration, graphics, décor, labels and packaging as well as 3D printing and additive manufacturing.

 

Printhead revenue in EMEA was £8.6 million (H1 2023: £11.1 million), reflecting the decline in ceramics, while revenue in the Americas rose 22% to £4.7 million on the back of our strategic focus on geographic diversification. Performance in Asia, and China in particular, has benefitted from new product launches with revenue increasing 23% year-on-year. 3D printing and Additive Manufacturing (AVM) continue to grow, reflecting our overall customer strategy and enhanced product portfolio. Overall, we have retained market share, and new business wins continue to mitigate declines in the legacy ceramics business and delays in customer launches utilising the 200X and Aquinox printheads.

 

EPS

 

EPS manufactures a range of highly customised product print systems printing all kinds of industrial and promotional objects such as medical equipment, automotive parts, tools, apparel, appliances, sports equipment and toys.

 

Revenue from the EPS business fell by £3.2 million to £7.5 million (H1 2023: £10.7 million). This has been driven by a decrease in digital inkjet machines sales of 37% impacted by two multi-pass machines not shipping in June. The pad printing revenue stream has also fallen, which we expect to recover during H2 2024.

 

FFEI and Megnajet

 

FFEI develops high performance digital imaging solutions - from digital inkjet label presses to digital pathology scanners.  Its inkjet products - print engines - use Xaar printheads. Megnajet specialises in the design and manufacture of industrial fluid management systems for digital inkjet and are the most integrated and compact ink systems in the market today.

 

FFEI revenue was £3.3 million (H1 2023: £4.8 million). The reduction results from exiting the non-core Life Science business which was considered to be non-core strategically. Revenue excluding Life Science business grew by 3%, year-on-year.  Megnajet delivered £1.3 million of revenue, in line with the prior year and overall, we remain pleased with the performance of this business as we increased the customer base by 15%.

 

Gross profit

 

Gross profit decreased by £3.7 million to £10.1 million (H1 2023: £13.8 million) with the gross margin at 35% (H1 2023: 40%), driven by reduced sales volumes, decreased overhead absorption rates and significantly higher energy costs. As revenues grow and energy costs stabilise, we expect gross margins to improve in the medium term. Within EPS, a one-time design change for a leading customer and customer specific cost increases added to the pressure on gross margin from a fall in volumes. Gross margin for FFEI was flat year-on-year when accounting for the £2.0 million one off gain from the sale of IP assets in the first half of 2023 while Megnajet successfully grew its margin 9% due to improved pricing outcomes and operational efficiency improvements.

 

Research & Development

 

Gross R&D was £2.4m in the first half, up 0.9% as a percentage of revenue compared to the first half of 2023. On an absolute basis the reduction was £0.2m. We are continuing to invest in the business and have remained within a ratio of R&D investment/revenue of 8-10%.

 

Operating Expenses

 

While we have continued to face inflationary headwinds in areas such as labour and travel costs, we have been successful in our efforts to manage expenses across the business. The sales and marketing expense for the period was £2.5 million (H1 2023: £3.2 million) reflecting the continued focus on cost management. General and administrative expenses decreased to £6.0 million from £10.3 million in H1 2023. This reduction reflects the difficult decision taken in 2023 to reduce headcount together with a clear focus on reducing discretionary spend across the business. FFEI printbar manufacturing transitioned to Huntington during H1 2024 capturing further cost efficiencies and synergies.

 

Profit for the period

 

Adjusted loss before tax was £(0.7) million. During the comparative period in 2023 Adjusted profit before tax was  £1.8 million, aided by a one-off gain due to the sale of non-core IP assets of £2.0 million.

 

The loss for H1 2024 was driven by the Printhead business with an Adjusted loss before tax of £(1.6) million, albeit an improvement on the £(2.2) million reported in the prior period. This improvement was driven by the reduction in operating expenditure offsetting the gross margin decrease in the period.

 

In calculating the adjusted profit before tax, we have adjusted for fair value losses on financial assets of £0.2 million (H1 2023: £0.5 million) alongside restructuring costs of £0.4 million (H1 2023: £1.0 million), foreign exchange gains on intra-group loans of £43,000 (H1 2023: loss (£0.4) million), share-based payments of £0.8 million (H1 2023: £1.3 million) and amortisation of acquired intangible assets of £0.8 million (H1 2023: £0.5 million). After taking these into account, the loss before tax was £(2.8) million.

The adjusted EBITDA in the period was £1.0 million (H1 2023: £3.5 million).

 

Balance sheet

 

The Group retains a strong balance sheet, with a net cash position at 30 June 2024 of £6.8 million.

 

The Group remains focused on managing working capital efficiently. Inventory has increased by £0.2 million to £31.3 million whilst trade and other receivables have decreased by £1.0 million. Following discussion with the Board, the proactive decision was taken to keep inventory levels broadly flat at current demand levels to allow us to respond rapidly to future demand growth. Our medium term aim remains to reduce inventory levels further as demand becomes more stable.

 

The Group has a Revolving Credit Facility (RCF) of £5 million in place with our lead bank, HSBC, to ensure we have adequate resources to invest in the business and our operational capability when required. To date, this has remained undrawn.

Cash flow

 

Net cash on hand was £6.8 million was an increase on both H1 2023 and full year 2023 closing positions (H1 23: £6.2 million, FY 2023: £5.7 million) reflective of the Group's balance sheet resilience and ongoing focus on careful liquidity management.  Despite challenging trading conditions resulting in a six-month Group loss before tax of £2.8 million, adjusting for the impact of non-cash items returns a £0.9m positive operating cashflow before movements in working capital.  The outcome of targeted liquidity management activities, as we continue to manage KPIs in our direct control, is an improvement in working capital driving cash inflows of £2.9 million and, therefore, £3.9 million cash generated from operations in the period.

 

Other than finance leases, the largest cash outflow outside of operating activities has been the payment of the Group's deferred consideration obligations arising from the acquisitions of FFEI and Megnajet, amounting to £1.4 million in the first half of the year.  All acquisition related liabilities will be settled by the end of the year and without these downwards pressures we have confidence in delivering further net cash inflows during the remainder of the year.  Borrowings against receivables balances increased £0.5 million from 31st December 2023 to £1.9 million (2023: £1.4 million), resulting in net cash inflows of £1.1 million.

 

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 H1 2024.

 

John Mills Chief Executive Officer	Ian Tichias Chief Financial Officer
17 September 2024

 

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:

•  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

•  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

17 September 2024

 

INDEPENDENT REVIEW REPORT TO XAAR PLC

Conclusion

We have been engaged by the Group to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2024 which comprise the Condensed Consolidated Income Statement, the Condensed Consolidated Statement of Comprehensive Income, the Condensed Consolidated Statement of Financial Position, the Condensed Consolidated Statement of Cash Flows, the Condensed Consolidated Statement of Changes in Equity, and related notes. 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.

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 2024 is not prepared, in all material respects, in accordance with UK adopted International Accounting Standard 34 and the Disclosure Guidance and Transparency Rules of the United Kingdom's Financial Conduct Authority.

Basis for conclusion

We conducted our review in accordance with International Standard on Review Engagements (UK) 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity, issued for use in the United Kingdom. A review of interim financial information consists of making enquiries, 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 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.

As disclosed in note 1, the annual financial statements of the Group are prepared in accordance with UK-adopted IASs. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with IAS 34 Interim Financial Reporting.

Conclusions relating to going concern

Based on our review procedures, which are less extensive than those performed in an audit as described in the 'Basis for conclusion' section of this report, nothing has come to our attention to suggest that management have inappropriately adopted the going concern basis of accounting or that management have identified material uncertainties relating to going concern that are not appropriately disclosed.

This conclusion is based on the review procedures performed in accordance with ISRE (UK) 2410, however future events or conditions may cause the Group to cease to continue as a going concern.

Responsibilities of directors

 

The directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure Guidance and Transparency Rules of the United Kingdom's Financial Conduct Authority.

In preparing the half-yearly financial report, the directors are responsible for assessing the Group's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so.

Auditor's responsibilities for the review of financial information

In reviewing the half-year report, we are responsible for expressing to the Group a conclusion on the condensed set of financial statements in the half-yearly financial report. Our conclusion, including our conclusions relating to going concern, are based on procedures that are less extensive than audit procedures, as described in the Basis for conclusion paragraph of this report.

Use of our report

This report is made solely to the company's directors, as a body, in accordance with the terms of our engagement letter dated 16 July 2024. Our review has been undertaken so that we might state to the company's directors those matters we have agreed to state to them in a reviewer's 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 and the company's directors as a body, for our work, for this report, or for the conclusions we have formed.

                                                                                                         

Daniel Hutson

Statutory Auditor

PKF Littlejohn LLP, 15 Westferry Circus, Canary Wharf, London

17 September 2024      

CONDENSED CONSOLIDATED INCOME STATEMENT

FOR THE SIX MONTHS ENDED 30 JUNE 2024