Xaar has decided to cease activities in the “Thin Film” business at a cost of £39m which is expected to result in £8m of annual savings; also the company Board announces succession planning and Board changes to align with recent business developments to ensure the appropriate management and cost structure for the company development.
The news was released as the company posted its interim report for the six months ended 30 June 2019, which showed a £2.6m gross loss for the period. The company recorded a 36% fall in first half revenues to 30 June 2019, which resulted in a loss before tax of £15m compared with a profit of £3.2m last year.
Xaar has taken an impairment charge of £39m as a result of the decision to cease all “Thin Film” activities.
The company chairman Robin Williams said: “Xaar has continued to experience trading losses in the first half of the year, albeit with some stability in the bulk printhead business and good progress at EPS and 3D. We are not generating sufficient cash to fund a development program of the scale of our Thin Film activities, which are still not close to commercial levels of revenue. Since March we have engaged in a thorough advisor-led process to identify a partner who will provide the scale and funding that this technology requires, being the final step in our strategic review of the printhead business. Despite interest from a number of parties and recognition that the technology has potential, we have not received a deliverable proposal that either shares or acquires this activity in a way that brings the cost of development down to a level which Xaar can sustain within its cash flows. In the absence of additional external investment the board has reluctantly decided to cease Thin Film activities and will consult with employees, customers and suppliers to implement the restructuring and reduce the Xaar headcount accordingly.”
Doug Edwards, CEO (after five years with the company) informed the Board of his wish to leave to explore opportunities back in the USA.
Xaar has appointed John Mills as CEO. John joined Xaar in August 2019 as head of the Printhead Business Unit, and will continue until 31 December 2019 in this role while at the same time preparing for the CEO role. John Mills has extensive experience in the digital print market, having worked at Domino Printing Sciences (1994 to 2001) and most recently was CEO of Inca Digital for five years to October 2018. Doug will hand over his CEO role to John on 31 December 2019 but will remain available to the Company until 31 March 2020 to ensure an orderly succession.
Robin Williams, Chairman (who has been a Board member for over nine years), as recommended by the UK Corporate Governance Code, will provide continuity while the new CEO becomes established over the first part of 2020, but will step down from the Board following the announcement of the preliminary results for the year at the end of March 2020.
Andrew Herbert, who has been Non-Executive on the Board since June 2016, has been appointed as new Chairman on Robin’s retirement from the Board and will accordingly lead the Nomination Committee process for the recruitment of an additional Non-Executive Director to join the Board in due course.
Shomit Kenkare has resigned his role as Chief Financial Officer (CFO) and accordingly will leave the Company on 31 December 2019.
Margaret Rice-Jones, Senior Independent Director, has indicated that she will not seek re-election at the 2020 AGM and so will leave the Board at that time.