(Alliance News) - Shares in Xaar PLC plummeted two-fifths Thursday after its interim results were blighted by the decision to close its thin film business, amid an exodus of senior management.
Shares in Xaar were 40% lower at 41.10 pence in London on Thursday, down 75% over the past year.
For the six months ended June, pretax loss deepened sharply to GBP52.3 million from GBP1.2 million the year prior. This was after revenue sank to GBP22.5 million from GBP35.3 million the year before.
Profit performance was hurt by a GBP39.0 million impairment booked for the closure of its thin film printhead unit.
"It is with considerable reluctance that we have taken the decision to cease all thin film activities in the Printhead business, but without a strategic investment partner it becomes, by ourselves, unaffordable to continue," Xaar Chief Executive Officer Doug Edwards said. " This decision and the associated restructuring, although painful, will result in a substantial improvement in profitability and operating cashflow for the company in the coming year."
Xaar axed its interim dividend, having paid a 1.0 pence per share a year prior.
Excluding one-time royalties and the Xaar 1201 thin film printhead revenue reversal, overall printhead revenue was up 1% on the year prior.
"The increased investment in Xaar 3D positions it well for growth and unlocks value for shareholders," Edwards added. "Product Print Systems is showing good growth and a strong sales pipeline."
Xaar also experienced a number of management changes following the thin film closure and proposed further investment in the firm by Stratasys Ltd.
Earlier in September, Xaar agreed to sell a 20% of its holding in Xaar 3D to Stratasys for USD10 million. In addition, Xaar issued Stratasys with a call option to buy the remaining 55% stake in Xaar 3D it did not already hold for at least USD33 million anytime over the next three years.
Based on the share price of Xaar on Thursday, the firm has a market capitalisation of GBP35.3 million.
Xaar boss Edwards will leave at the end of 2019, with current printhead unit chief John Mills selected as CEO designate to replace him. Edwards will remain available to Xaar until the end of March 2020 in order to "ensure an orderly succession".
Xaar Chair Robin Williams and Chief Financial Officer Shomit Kenkare also announced their intentions to leave the firm. Williams will stand down at the end of March 2020, Kenkare from the end of 2019.
Williams will be replaced as chair by Non-Executive Director Andrew Herbert, who has been in post since 2016.
The search for a replacement for Kenkare has begun.
Non-Executive Director Margaret Rice-Jones will leave the firm at the time of its 2020 annual general meeting, in the past held in May.
Andrew Herbert and Chris Morgan will continue as independent non-executive directors, however.
By Ahren Lester; ahrenlester@alliancenews.com
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Xaar (XAR)