According to Agfa Imaging Solutions vice president Jan Van Daele, the two companies have been working intensely for the past two years.

We have been working together for the last four years but it has been very intense in the last two. The public announcement is a sign that the partnership has reached a certain point of maturity, he said.

The formal agreement covers a five-year period and both parties have co-operated in the development and manufacture of a new range of high specification print heads.

The technology will be previewed at Drupa and the print heads will be made at Xaars plant in Jarfalla, Sweden, which has had a 1.6m (2.5m) boost from Agfa. Xaar will sell the print heads under its OmniDot brand (PrintWeek, 15 January).

We expect to launch new products with this technology next year, added Van Daele.

He also said that Agfa would continue to focus on the packaging and industrial printing sectors, although there may be secondary development of the technology for commercial and newspaper sectors.

Xaar has reported a strong turnaround following robust trading in the second half of last year.

The Cambridge ink-jet developer had sales of 29.9m for the 12 months to 31 December 2003, marginally down from the previous year at 30.9m.

Although pre-tax profits were down 55% at 400,000, the firm recovered from a disastrous first half after posting an operating loss of 3.3m.

Comparison of headline full year results for 2003 with those for 2002 clearly mask what has been achieved in the group. A heavily loss-making first half contrasted with a profitable and cash generative second half, said Xaar chief executive Ian Dinwoodie.

He added that changes implemented were typical of the growing pains of technology companies. By the end of 2003, Xaar had a workforce of 223, a 27% reduction from 2002.

Xaar Chief executive Ian Dinwoodie bought 54,443 shares in the firm last week.

Story by Philip Chadwick