Pre-tax profits were up to 3.5m compared to 1.2m in the same period in 2004.

The Cambridge-based firm said that the boost was due to improved sales for its printhead products in all sectors. Turnover rose 19% to 19.8m.

"Most of our sales have come the industry standard XJ128 and XJ128 Plus," said Xaar chief executive Ian Dinwoodie.

In addition the firm is also planning to build a new 10m factory in East Anglia creating 30 jobs. It has identified several possible sites and is likely to finalise negotiations by the end of the year.

The facility will provide extra capacity for its expansion into new markets. According to Dinwoodie, it will help develop Xaar's HSS product range for sheetfed and web-fed digital printing.

Xaar has also invested 1m in a 10% stake in industrial ink-jet R&D firm Xennia Technology. The ink-jet printing group has taken the option of increasing its Xennia stake by 2.5% at the same price.

"Where appropriate, it is our intention to make other small trade investments if these can speed adoption of our technology into existing and new markets," said Xaar chairman Arie Rosenfeld.

Story by Philip Chadwick