13th Mar 2008 07:01
Xaar PLC13 March 2008 FOR IMMEDIATE RELEASE 13 March 2008 Xaar plc FINAL RESULTS FOR 2007 Xaar plc ("Xaar"), the inkjet printing technology group headquartered inCambridge, announces its audited results for the year ended 31 December 2007. Key points: • The results reflect continued growth from Xaar's established, market leading printhead products. • The financial results for the year were: o Turnover was up 13% to £47.9m (2006: £42.2m); o Profit before tax increased 6% to £7.3m (2006: £6.9m) after providing for the early stage losses of the new Huntingdon manufacturing facility (2006: £nil); o Underlying profit before tax (before net Huntingdon costs) increased 35% to £9.3m (2006: £6.9m); o Earnings per share increased 9% to 8.6p (2006: 7.9p); and o Net cash at year end was £13.0m (2006: £12.4m) • 25% increase in proposed annual dividend to 2.5p (2006: 2.0p). • Good progress in commercialising new Platform 3 printhead products with a significant number of 'developer kits' sold to potential OEMs and initial printer product launches by Xaar customers. On outlook, Chairman, Phil Lawler stated: "I believe that Xaar is well positioned to capitalise on the progressive shift from analogue to inkjet technology based printing - a trend which is gathering momentum within specialist and mainstream printing markets. "Xaar's reputation and position in the inkjet market is building. We have the manufacturing capacity and capability, the technical knowledge and a committed and talented team which is now focused on execution and delivery of growth." Contacts Xaar plc: today: 020-7367-8888Ian Dinwoodie, Chief Executive thereafter: 01223-423663Nigel Berry, Group Finance Director & Deputy Chief Executive www.xaar.comAndrew Taylor, Finance Director Designate Bankside Consultants:Steve Liebmann or Andy Harris 020-7367-8883 / 07802-888159 CHAIRMAN'S STATEMENT Introduction I am pleased to report a further year of progress, not just with results butalso, significantly, with the level of interest in our Platform 3 product, theXaar 1001. Xaar has reached an exciting stage in its development. Our main marketscontinued to grow during 2007 and our Platform 1 product range, now firmlyestablished as market leader, is expected to continue to provide a solidfoundation for the business going forward. At the same time, our new Platform 2and Platform 3 products are beginning to enter the end user market as our OEM(Original Equipment Manufacturer) customers complete their developmentactivities and launch new printing machines. These Platform 2 and Platform 3products are more sophisticated than Platform 1 and appeal to printing machinemanufacturers the world over (not just in Asia) in a wider range ofapplications. Consequently our potential market is now much larger. We believe,in line with independent industry analysts, that today less than 10% ofcommercial print world wide is produced using inkjet technology. Whilst thecommercial printing market is conservative with long product life cycles, thisbenefits the longevity of our Platform 1 products. Our aim looking forward is tocontinue to accelerate the commercial adoption of our newer technologies. Results and dividend The results for the year were in line with IFRS compliant market consensus, showing growth in revenue and profits with a continued strong cash flow and sector leading performance at both the gross and net margin levels. While full details are provided within the financial review, it should be noted that the results are struck after providing for the early stage losses of the new Huntingdon plant - a long-term investment in manufacturing capacity for the new Platform 3 product range. Based on its confidence in the future profitability and cash generation of the business, the board has decided to recommend a 25% increase to 2.5p in the dividend per share for the year. With effect from 2008 it is the board's intention, subject to satisfactory performance, to introduce payment of an interim as well as a final dividend. Board 2007 has seen a number of changes to our board. In July Arie Rosenfeld retired as Chairman of the board. His deep knowledge and experience of our industry hasbeen of great benefit to Xaar over the last ten years and we thank him sincerely for this. As stated in the Interim Report, founder and Technical Director Steve Temple retired but remains a consultant to the Company. We are pleased to keep Steve's counsel given his significant experience in inkjet and huge contribution to Xaar over many years. At that time we welcomed Ramon Borrell as Research and Development Director, having previously spent many years in senior roles at Hewlett-Packard's large format printing division. In October Greg Lockett joined the board as Manufacturing Director. Greg has been director of manufacturing at Xaar for the previous four years and this promotion reflects both his excellent work in that earlier role and his expected contribution in the future. In January 2008, Finance Director and Deputy Chief Executive Nigel Berry informed the company of his intention to resign from his position and from the board with effect from 31 March 2008. We thank him warmly for his excellent stewardship of the group's finances and relationships during the past six years during which the group has shown considerable development. We wish him every success for the future. Andrew Taylor, currently Deputy Finance Director and Company Secretary, will join the board as Finance Director on the same date. Andrew has been with the company since 2001 and we are pleased to have such an able replacement. Outlook I believe that Xaar is well positioned to capitalise on the progressive shift from analogue to inkjet technology based printing - a trend which is gathering momentum within specialist and mainstream printing markets. As a provider of printhead technology, I am confident that we have a world leading range of products that is attractive to our OEM customers as they develop new printers which are more functional, more efficient and more flexible. We have proof of this with the continuing success of the Platform 1 family of products which we expect to continue to provide a solid foundation for the group after more than a decade of commercial production, together with recent announcements of new OEM products incorporating our newer Platform 2 and 3 printheads. Xaar's reputation and position in the inkjet market is building. We have the manufacturing capacity and capability, the technical knowledge and a committed and talented team which is now focused on execution and delivery of growth. Phil LawlerChairman12 March 2008 REVIEW OF OPERATIONS Introduction I am pleased to report a solid set of results for 2007 as we continue to buildXaar's business and market presence. The existing core business, which servesthe graphic display and product coding markets, continues to deliver robustreturns whilst our new product developments are creating further opportunitiesin additional markets. These new products will complement the existing businessand are expected to deliver continued growth over the medium term. Xaar ismaintaining its level of investment in research and development with theintention of capturing a significant proportion of the digital printing marketover the longer term. Business Review Xaar's business continues to consist of product sales, royalty income anddevelopment fees. Product sales proportionately dominate our revenue at 95% ofthe total, whilst royalty income has grown to 4% and development fees havefallen to 1% for the reasons described in the financial review. Sales of Platform 1 products, which serve the graphics display and productcoding markets, increased during the year and continued to build theirreputation as proven industrial solutions. This is especially true of the Xaar128 which has become the 'de facto' standard printhead for these markets. ThePlatform 1 offerings are being enhanced regularly, including the successfullaunch of a new variant of the Xaar 126 product during 2007. The Xaar 126-35enables high resolution printing for both solvent and UV ink applications basedon this established small outline printhead. During the year a number ofadditional ink agreements for Platform 1 products were signed. These include theco-branding of locally manufactured inks for both the Chinese and Indiandomestic markets. We also broadened our ink partnership arrangements for theinternational market with agreements concluded with both Fujifilm Sericol andNazdar. During the year a new Platform 1 product has been developed, the Xaar382; this high end product will complement the Xaar 128 by offering highresolution and high productivity performance for grand format printers. Conceptsamples of the product have been well received by existing customers and weexpect to be supplying volume product during the second half of 2008. For both Platform 2 (Xaar 760) and Platform 3 (Xaar 1001) a significant amountof work has been undertaken with our partners to support their activities tobring their finished products to market. This process has taken longer thananticipated, especially for the Xaar 760. Whilst continuing to support ourexisting Platform 2 customers, we have encouraged a number of these developmentaccounts to transfer from the 760 to 1001 to take advantage of the latesttechnology as both products are now available in volume. I am pleased to report that a significant number of developer kits for the Xaar1001 have been shipped during the year, resulting in very positive feedback fromboth existing and new development partners. I am also particularly pleased toreport that a number of digital printing products based on our latest technologyhave entered commercial life during the year. The first two models of commercialwide format printers were launched by Teckwin Development Co. Ltd. and have beenwell received by the market. Nilpeter, the world leader in analogue narrow webpresses, announced its first digital product for the label market. Sales of thismachine, named 'Caslon', will commence during 2008. Additionally EFI, the largeUS printing technology group has launched a digital narrow web label press basedon the Xaar 1001. The EFI Jetrion 4000 press commenced limited shipments at theend of 2007 and will be available in volume from the second quarter 2008.Further launches are expected during the year, particularly at or around'Drupa', the world's largest print and imaging trade show held in late May everyfour years in Dusseldorf, Germany. Whilst the timescale to generate returns fromthese new products has been frustratingly long, we remain confident that thevalue generated from these developments will significantly enhance the financialperformance of the company over time. Commercial Review - Geographic As a supplier of technology to OEM partners, our geographic sales split willreflect where the OEM equipment is manufactured - not necessarily the end userlocation. As the largest centre for manufacturing, Asia continues to be our most importantmarket, generating 58% of total sales in 2007 and growing 17% over last year.Within the Asian region China remains our largest sales country and this markethas continued to develop, both at the OEM and end user level; we continue toestablish new relationships in this dynamic market. I would also highlight thesuccess of our Indian sales operation during the year. Opened in late 2004,sales take-up was slower than initially expected, but over the past year we havestarted to see the benefits of our investment in the area with a substantialincrease in sales. Europe and the Middle East remains our second largest sales area. Sales intothis region were £14.2m being 30% of worldwide revenue. Sales were down 5% on2006 following a poor first half which was commented on in the Interim Report.As stated at that time, no significant changes have occurred in the Europeanmarket and this result is the net effect of certain 'ups' and 'downs' acrossmultiple accounts, together with the reduction in development fees from Agfa asreferred to in the financial review. Sales to the Americas region showed excellent growth, increasing 74% over 2006levels. Sales in the period totalled £5.7m, this being 12% of the group total.This growth came principally from South America where we opened a salesoperation in 2005. Mirroring our experience in India, sales initially weremodest whilst a local OEM base was established. During 2007 we began to see thebenefits of this early groundwork with a substantial increase in the level ofbusiness. Over time we would expect to see continued growth in all regions, with Westernmarkets leading the way initially with the adoption of our newer technologies. Commercial Review - End Markets The graphic arts market continues to be the primary end use of Xaar technologyand, specifically, in the segment of large format advertising. 73% of sales wererelated to this market totalling £34.9m (2006: £31.3m), where industrial inkjetcontinues to displace screen printing as the most economic and flexible processfor both interior and outdoor large format advertising. The new Xaar 382 productis expected to consolidate our leading market share in this application. The packaging market continues to grow for Xaar, albeit our sales in this sectorare presently still dominated by product coding applications. Revenues of £9.0min 2007 represent a 19% increase over 2006; this market represents almost onefifth of our business. While product coding is a small segment of the overallpackaging print market, we expect to see significant growth in revenues over thenext few years from this packaging sector starting with digital label printing,followed by wider aspects of primary packaging. The Xaar 1001 product is our'entry vehicle' into this market and we are pleased to see the Xaar 1001 basedNilpeter Caslon and EFI Jetrion 4000 products already being offered in thismarket. As noted in the Interim Report, whilst there are many potential opportunitiesfor inkjet to become adopted in non-print related areas, the commercial returnsare on a longer timeline. Accordingly we have redirected our businessdevelopment activities toward an acceleration of our entry into the labellingand packaging print markets noted above. However, in the non-printing industrialspace we continue to support a set of developers exploring many possibilitiesincluding applications such as flat panel displays, flexible electronics and 3Dmaterial deposition, to ensure that when real commercial opportunities presentthemselves Xaar is well positioned to take advantage. Sales into this industrialmarket for the year amounted to £1.7m, a 52% increase albeit from a small base,and representing 4% of total sales. Operations Review Following the successful commissioning of the Huntingdon plant in 2006,production of Platform 3 Xaar 1001 products started on schedule in January 2007.The facility has supported numerous partner developments all over the world withdeveloper kits and initial production volumes. The availability of supply offully functional leading technology is critical to our partners' developmentprogrammes and the Huntingdon operation has performed this role superblythroughout the year. From this excellent start we now need to support ourpartners' commercial implementations which will, in turn, generate the volumedemand which will bring the plant into profitability. The Jarfalla plant inSweden continued to perform well throughout the year, supplying the bulk ofproduct sales for the year. Investment in R&D continued at its planned level of £4.8m, representing 10% ofsales. This has supported the development of new products, enhancements toexisting products and the investment in future technologies. This ongoinginvestment will ensure Xaar has a well primed pipeline of new product offerings,targeted at accelerating the growth potential of the company. Priorities for the Future The top priority for 2008 is to accelerate the generation of commercial returnsfrom our new products which we have seeded into the market over the last year.The Xaar 1001 is a key breakthrough in inkjet technology performance -especially in terms of reliability and ease of use; we believe this product is amajor enabling tool to open new business opportunities for Xaar. We look forwardto 2008 with confidence based on our established profitable business and theopportunities in additional markets from our new products. People I would like to thank all our staff worldwide whose efforts, skill anddedication are critical to the successful future of our business. Ian DinwoodieChief Executive12 March 2008 FINANCIAL REVIEW Trading Revenues in the second six months of 2007 were £24.4m (2006: £19.9m), anincrease of 23% over the same period last year and 4% over the first half of2007. Revenues for the full year increased 13% over 2006 to £47.9m (2006:£42.2m). Product sales account for 95% of revenues (2006: 95%) with sales ofPlatform 1 products continuing to grow and to dominate the sales figures.Looking forward, we expect our strategic partners to begin soon introducingproducts based on Platform 2 and Platform 3 printheads and for these products togenerate an increasing proportion of our revenues in 2008 and beyond. Licensee royalties grew 15% to £1.8m (2006: £1.5m) representing 4% of revenueand we expect this growth to continue in the future. Development fees fell to£0.5m (2006: £0.8m) due to the completion of the major part of ourco-development programme with Agfa. We expect development fees to be at asimilar level for 2008 and 2009 but to reduce thereafter. The gross margin for the year was 52% (2006: 57%), reflecting the fixed costs ofthe Huntingdon facility which were in line with previous guidance at £2.5m forthe year (2006: £nil). Gross margin excluding the net impact of the Huntingdonfacility was 58%, an improvement of 1% over the prior year. As productionvolumes at the plant increase we expect its profitability to match that of ourmanufacturing facility in Sweden. Headline operating costs for the year increased only slightly to £17.9m (2006:£17.5m) and include the IFRS (non-cash) charges for share option costs of £1.0m(2006: £0.7m) and amortisation of capitalised R&D of £1.0m (2006: £0.5m). On alike for like cash basis the company reduced its operating costs by £0.4m duringthe year. Over the last two years we have developed and successfully launched our secondand third platforms of products and, as required under IFRS, have capitalisedthe internal development costs associated with those platforms. For the futureit is expected that internal R&D costs will relate mostly to improvements toexisting product platforms and, as such, will not be capitalised. Amortisationof previously capitalised internal R&D costs is already underway and is expectedto complete in 2011. On a fully IFRS compliant basis, profit before tax for the year grew 6% to £7.3m(2006: £6.9m) with basic earnings per share of 8.6p (2006: 7.9p). Excluding thenet impact of Huntingdon, profit before tax would have been £9.3m, an increaseof 35% over 2006. Dividend The directors are recommending an increase in the dividend of 25% to 2.5p pershare (2006: 2.0p). The dividend will be covered 3.4 times. In addition, andsubject to satisfactory performance, it is the intention for 2008 to introducean interim dividend payment. This reflects the board's confidence in futureprofit and cash generation. Foreign currency A majority of the group's revenues in the year (72%) were invoiced in sterling(2006: 47%), with 22% invoiced in US dollars (2006: 47%). This reflects the fullyear effect of our decision in mid 2006 to move most of our Chinese customersfrom US dollar to sterling trading terms. The group continues to have anexposure to the Swedish kronor through its requirement to fund its operations inSweden and manages this exposure using forward currency contracts. Cash and capital expenditure Cash at the end of the year was £13.0m (2006: £12.4m) and is stated after thepayment of dividends of £1.2m (2006: £0.9m) and capital expenditure of £5.7m(2006: £11.1m). With the final stage payments on capital equipment for theHuntingdon facility having been made in early 2007, capital expenditure in 2008and 2009 is expected to be lower than the current year. Change of Director After nearly six years as Finance Director I shall be leaving the company at theend of March 2008 and would like to wish the company, its shareholders and staffevery success for the future. I am pleased to say that my deputy, Andrew Taylor,will succeed me as Finance Director and I offer him my congratulations on hisappointment. Nigel BerryFinance Director12 March 2008 Consolidated income statementfor the year ended 31 December 2007 2007 2006 Notes £'000 £'000------------------------------ ------ -------- ---------Continuing operationsRevenue 2 47,853 42,207Cost of sales (22,925) (18,096)------------------------------ ------ -------- ---------Gross profit 24,928 24,111Distribution costs (4,003) (4,108)Administrative expenses (13,932) (13,426)------------------------------ ------ -------- ---------Operating profit 6,993 6,577Investment income 447 451Finance costs (119) (116)------------------------------ ------ -------- ---------Profit before tax before abortive deal costs andshare-based payments 8,275 7,921Abortive deal costs - (298)Share-based payments (954) (711)------------------------------ ------ -------- ---------Profit before tax 7,321 6,912Tax (1,920) (2,068)------------------------------ ------ -------- ---------Profit for the year attributable to shareholders 5,401 4,844Earnings per share from continuing operationsBasic 3 8.6p 7.9pDiluted 3 8.4p 7.6p------------------------------ ------ -------- --------- Dividends paid in the year amounted to £1,218,000 (2006: £903,000). Consolidated statement of recognised income and expensefor the year ended 31 December 2007 2007 2006 £'000 £'000---------------------------------- --------- ---------Exchange differences on translation of foreign operations (64) (113)Cash flow hedges transferred to income statement - 1,197Tax on items taken directly to equity (746) (415)---------------------------------- --------- ---------Net (loss)/income recognised directly in equity (810) 669Profit for the year 5,401 4,844---------------------------------- --------- ---------Total recognised income and expense for the year 4,591 5,513---------------------------------- --------- --------- Consolidated balance sheetas at 31 December 2007 2007 2006 £'000 £'000--------------------------------- --------- ----------Non-current assetsProperty, plant and equipment 11,849 11,990Goodwill 720 720Other intangible assets 7,294 7,030Investments 2,020 1,931Deferred tax asset 322 1,383--------------------------------- --------- ---------- 22,205 23,054--------------------------------- --------- ----------Current assetsInventories 4,137 3,690Trade and other receivables 8,511 6,135Cash and cash equivalents 13,036 12,438Derivative financial instruments 261 ---------------------------------- --------- ---------- 25,945 22,263--------------------------------- --------- ----------Total assets 48,150 45,317--------------------------------- --------- ----------Current liabilitiesTrade and other payables (6,711) (7,928)Other financial liabilities (198) (185)Current tax liabilities (1,246) (507)Obligations under finance leases (245) (468)Provisions (193) (209)--------------------------------- --------- ---------- (8,593) (9,297)--------------------------------- --------- ----------Net current assets 17,352 12,966Non-current liabilitiesDeferred tax liabilities (1,810) (1,635)Other financial liabilities (651) (865)Obligations under finance leases - (267)--------------------------------- --------- ---------- (2,461) (2,767)--------------------------------- --------- ----------Total liabilities (11,054) (12,064)--------------------------------- --------- ----------Net assets 37,096 33,253--------------------------------- --------- ----------EquityShare capital 6,285 6,201Share premium 10,146 9,669Own shares (4,465) (3,420)Other reserves 4,051 3,097Translation reserve 529 593Retained earnings 20,550 17,113--------------------------------- --------- ----------Equity attributable to shareholders 37,096 33,253--------------------------------- --------- ----------Total equity 37,096 33,253--------------------------------- --------- ---------- Consolidated cash flow statementfor the year ended 31 December 2007 2007 2006 Note £'000 £'000------------------------------- ------ ---------- ----------Net cash from operating activities 4 8,565 9,142Investing activitiesPurchases of property, plant and equipment (3,823) (7,274)Proceeds on disposal of property, plant and - 5equipmentPurchases of trading investments (89) (427)Expenditure on capitalised product development (1,770) (3,420)------------------------------- ------ ---------- ----------Net cash used in investing activities (5,682) (11,116)Financing activitiesDividends paid (1,218) (903)Proceeds from issue of ordinary share capital 561 384New borrowings - 1,050Repayments of borrowings (201) -Repayments of obligations under finance leases (498) (520)Purchase of own shares (1,045) -------------------------------- ------ ---------- ----------Net cash (outflow)/inflow from financing (2,401) 11activities ------ ---------- -----------------------------------------Net increase/(decrease) in cash and cash 482 (1,963)equivalentsEffect of foreign exchange rate changes 116 6Cash and cash equivalents at beginning of year 12,438 14,395------------------------------- ------ ---------- ----------Cash and cash equivalents at end of year 13,036 12,438------------------------------- ------ ---------- ---------- Notes to the consolidated financial statementsfor the year ended 31 December 2007 1.Basis of preparation Information in this final announcement does not constitute statutory accounts ofthe group within the meaning of Section 240 of the Companies Act 1985. Thefinancial information for the year ended 31 December 2007 and the year ended 31December 2006, presented in this final announcement is extracted from, and isconsistent with, that in the group's audited financial statements for the yearended 31 December 2007. The financial statements were approved by the board ofdirectors on 12 March 2008; the auditor's report on these accounts wasunqualified. The financial statements will be delivered to the Registrar ofCompanies following the company's Annual General Meeting. Statutory accounts forthe year ended 31 December 2006, which were prepared under InternationalFinancial Reporting Standards, have been filed with the Registrar of Companies.The auditor's report on those accounts was unqualified and did not contain anystatement under Section 237 of the Companies Act 1985. 2. Business and geographical segments Revenue An analysis of the group's revenue is as follows: 2007 2006 £'000 £'000--------------------------------- --------- ----------Sales of goods 45,612 39,918Development fees 467 748Licence fees and royalties 1,774 1,541---------------------------------- --------- -------- 47,853 42,207Investment income 447 451---------------------------------- --------- -------- 48,300 42,658--------------------------------- --------- --------- Business segments For management reporting purposes, the group's operations are currently analysedaccording to product type. These product groups are the basis on which the groupreports its primary segment information. Principal product groups are as follows: • Printheads and related products • Development fees • Licence fees and royalties Segment information about these product types is presented below. 2007 2006 £'000 £'000---------------------------------- --------- --------RevenuePrintheads and related products 45,612 39,918Development fees 467 748Licence fees and royalties 1,774 1,541---------------------------------- --------- --------Total revenue 47,853 42,207---------------------------------- --------- -------- 2. Business and geographical segments (continued) Business segments (continued) 2007 2006 £'000 £'000---------------------------------- --------- --------ResultPrintheads and related products 17,025 16,198Development fees (79) (442)Licence fees and royalties 1,415 1,247---------------------------------- --------- --------Total segment results 18,361 17,003Unallocated corporate expenses (11,368) (10,426)---------------------------------- --------- --------Profit from operations 6,993 6,577Investment income 447 451Finance costs (119) (116)---------------------------------- --------- --------Profit before tax 7,321 6,912Tax (1,920) (2,068)---------------------------------- --------- --------Profit after tax 5,401 4,844---------------------------------- --------- --------Unallocated corporate expenses relate to administrative expenses which cannot bedirectly attributed to any of the principal product groups. Other information Printheads Licence and related Development fees and products fees royalties Consolidated 2007 2007 2007 2007 £'000 £'000 £'000 £'000------------------ ---------- ---------- --------- ----------Capital additions 3,693 - - 3,693Depreciation and amortisation 2,958 463 58 3,479------------------ ---------- ---------- --------- ----------Balance sheetAssetsSegment assets 28,045 913 594 29,552Unallocated corporate assets 18,598------------------ ---------- ---------- --------- ----------Consolidated total assets 48,150------------------ ---------- ---------- --------- ----------LiabilitiesSegment liabilities (4,886) (782) (89) (5,757)Unallocated corporate (5,297)liabilities ---------- ---------- --------- ----------------------------Consolidated total (11,054)liabilities ---------- ---------- --------- ---------------------------- Printheads Licence and related Development fees and products fees royalties Consolidated 2006 2006 2006 2006 £'000 £'000 £'000 £'000----------------- ---------- ---------- --------- ----------Capital additions 11,147 - - 11,147Depreciation and amortisation 1,531 616 59 2,206----------------- ---------- ---------- --------- ----------Balance sheetAssetsSegment assets 24,440 1,378 635 26,453Unallocated corporate assets 18,864----------------- ---------- ---------- --------- ----------Consolidated total assets 45,317----------------- ---------- ---------- --------- ----------LiabilitiesSegment liabilities (5,781) (1,162) (82) (7,025)Unallocated corporate (5,039)liabilities ---------- ---------- --------- ---------------------------Consolidated total (12,064)liabilities ---------- ---------- --------- ---------------------------Unallocated corporate assets include £594,000 (2006: £449,000) of capitaladditions, and are net of depreciation and amortisation for the year of £743,000(2006: £577,000). 2. Business and geographical segments (continued) Geographical segments The group's operations are located in Asia, Europe and North and South America.The following table provides an analysis of the group's sales by geographicalmarket, which is considered to be the group's secondary segment, irrespectiveof the origin of the goods: 2007 2006 £'000 £'000----------------- ---------- ---------- --------- ----------Asia 27,937 23,937Europe and Middle East 14,235 14,997Americas 5,681 3,273----------------- ---------- ---------- --------- ---------- 47,853 42,207----------------- ---------- ---------- --------- ----------Substantially, all assets and additions to property, plant and equipment andintangible assets are located in Europe and the Middle East. 3. Earnings per ordinary share - basic and diluted The calculation of basic and diluted earnings per share is based on thefollowing data: 2007 2006 £'000 £'000----------------------------------- --------- --------EarningsEarnings for the purposes of basic earnings pershare being net profit attributable to equityholders of the parent 5,401 4,844----------------------------------- --------- --------Number of sharesWeighted average number of ordinary shares for thepurposes of basic earnings per share 62,514,226 61,447,492Effect of dilutive potential ordinary shares:Share options 1,599,424 2,221,595---------------------------------- --------- ---------Weighted average number of ordinary shares for thepurposes of diluted earnings per share 64,113,650 63,669,087---------------------------------- --------- --------- 4 Notes to the cash flow statement 2007 2006 £'000 £'000----------------------------------- --------- ---------Profit before tax 7,321 6,912Adjustments for:Share-based payments 954 711Depreciation of property, plant and equipment 2,895 1,998Amortisation of intangible assets 1,320 785Loss on disposal of property, plant and equipment 12 15(Decrease)/increase in provisions (16) 89----------------------------------- --------- ---------Operating cash flows before movements in working capital 12,486 10,510Increase in inventories (319) (814)(Increase)/decrease in receivables (2,645) 1,944(Decrease)/increase in payables (16) 78----------------------------------- --------- ---------Cash generated by operations 9,506 11,718Income taxes paid (941) (2,576)----------------------------------- --------- ---------Net cash from operating activities 8,565 9,142----------------------------------- --------- ---------Cash and cash equivalents (which are presented as a single class of asset on theface of the balance sheet) comprise cash at bank and other short term highlyliquid investments with a maturity of three months or less. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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