Trading Statement

Xaar PLC
02 July 2003


FOR IMMEDIATE RELEASE                                            


                                    Xaar plc


                      HALF-YEAR PERIOD-END TRADING UPDATE

                     AND APPOINTMENT OF NEW CHIEF EXECUTIVE


Xaar plc ('Xaar'), the inkjet printing technology group headquartered in
Cambridge, presents an update on current trading at the end of its first
half-year to 30 June 2003.


Following the first quarter issues reported in early April, performance has
improved steadily as the second quarter progressed.


Sales for the first half as a whole were affected by the slow start to the year
but picked up in the second quarter and ended only marginally down on the first
half of last year.


The company is encouraged by the performance to-date of the revised XJ500
printhead. However, the re-launch of the product in Asia, its largest market,
has been hampered by the travel and other restrictions imposed in the region due
to the SARS virus. It is now expected to be the second half of the year before a
significant improvement in the sales of this product is seen. Sales of the XJ128
printhead remain on target with sales of the XJ126 printhead beginning to
benefit from the new sales agreement announced in April.


Manufacturing yields have improved during the second quarter and returned to
target levels in June. The company is also now starting to see the benefits of
the lower build-cost of the revised XJ500 product.


As previously stated, the company expects to report a trading loss for the
half-year. This will now be higher than expected at the time of the April
statement due to slower take-up of the XJ500 and lower production yields prior
to June. Further staff reductions were made across the company during the second
quarter in order to bring costs into line with current trading levels.


The resignation of Jan Fineman as Chief Executive is announced, effective
immediately. Mr Fineman is leaving the company to pursue other interests and the
company wishes him well for the future. Mr Ian Dinwoodie, currently Group
Operations Director has been appointed as Chief Executive and will be
progressing the strategy previously set out in the interim and annual reports
for 2002. Mr Nigel Berry, Group Finance Director will assume the additional role
of Deputy Chief Executive in support of Mr Dinwoodie.


The company expects the second-half of the year to be stronger, as was also the
case in the second-half of 2002. This is based on recent improvements in trading
performance supported by the cost reduction measures announced in this and
earlier statements. An update on the third quarter trading and the outlook for
the full year will be given with the interim results which are expected to be
announced towards the end of September 2003.


Contacts
Xaar plc:                                                         01223-423663
Ian Dinwoodie, Chief Executive                                   www.xaar.co.uk
                                                                ----------------
Nigel Berry, Group Finance Director
& Deputy Chief Executive

Bankside Consultants:
Steve Liebmann                                                   020-7444-4163 /
                                                                  07802-888159







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