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13 January, 2022 - 11:39 By Tony Quested

Xaar revenue 23 per cent up and Science Group posts fresh record

The promise of a substantial increase in revenue for the year to December 31, allied to a strong balance sheet, sent shares in Cambridge inkjet printing company Xaar plc higher following a robust trading update.

Xaar said it ended 2021 strongly with further operational and strategic progress. It said revenue for the year was expected to be around £59 million – an increase of 23 per cent on 2020. 

Organic growth before the effects of the acquisition of FFEI was 12 per cent and Xaar has high hopes for a new line of business following completion of the summer acquisition of print systems and printbar specialist FFEI Limited.

Strong revenue growth and cost management vigilance mean the board expects to report an adjusted profit for the second half of the year, according to CEO John Mills.

He reported that the printhead business performed well with ongoing engagement with new customers and re-engagement with previous clients. Xaar continues to successfully roll out the ImagineX platform and launched two new products in the year; Xaar Nitrox in April and Xaar Irix in September.

Mills said Xaar would continue to strengthen its offering with more products in the pipeline for 2022.

The group retains a strong balance sheet and cash position. Net cash at  December 31 was £25.2m – an improvement of £7.1m in net cash since June 30.

This was primarily driven by the £9.3m initial consideration received for the Xaar 3D divestment and continued strong cash generation in the company’s printhead business.

Mills said: “We ended the year well with an improved second half performance which shows the positive momentum we have in the business. 

“Strong order intake over the last few months gives us confidence of maintaining this momentum into 2022. The investment in working capital gives increased certainty in our ability to maintain supply to our customers throughout the year – a year in which we expect to see further growth.  

“We will continue to invest in capability and capacity to drive expansion and deliver further opportunities to grow the business and accelerate our strategy.”

Another quoted Cambridge business, Science Group plc, says 2021 will be another record with revenue in excess of £80 million and adjusted operating profit anticipated to be in the order of £16m – an increase of more than 45 per cent year-on-year. That’s more than double the record reported in 2019, the year before the pandemic outbreak.

This outstanding performance, delivering a very strong operating margin, has been achieved in a challenging environment due to the ongoing Covid pandemic and global supply chain constraints. 

All the divisions have contributed to this success, with the group overall benefiting from the operational efficiencies resulting from the greater scale following the 2019 Frontier acquisition.

The past year has seen significant corporate activity, including the acquisition of a strategic shareholding in TP Group, a royalty buy-out and the acquisition of Magic Systech. 

Even so, due to the excellent operating cash conversion, enhanced by the group's first equity fund raising in over a decade, at December 31 the group had gross cash of £34.3m and net funds of £19m.

Science Group also signed a new £25m revolving credit facility with its bank in December. The robust balance sheet and undrawn facilities enable the board to continue to explore further corporate development opportunities in the year ahead.

Reflecting this resilient performance and significant earnings growth, the board anticipates recommending a 25 per cent increase, to 5p a share, in the dividend. 

In parallel, the group's profit share and bonus schemes will be sharing the success with the employees and management “whose commitment and dedication throughout the two years of the pandemic have continued to deliver value to Science Group shareholders.”

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