Trading Update for FY 2006

Xaar PLC
07 December 2006


FOR IMMEDIATE RELEASE                                         7 December 2006

                                    Xaar plc

                TRADING UPDATE FOR YEAR ENDING 31 DECEMBER 2006

Xaar plc ('Xaar' or the 'Company'), the inkjet printing technology group
headquartered in Cambridge, UK, presents an update on its expected performance
for the year ended 31 December 2006.

Ian Dinwoodie, Xaar's Chief Executive said:

'We are pleased that we can now move on from the issues which have affected
performance during the past six months, allowing us to focus our efforts on
driving future growth.'

Results for 2006

Xaar is pleased to report that sales to China have recovered progressively since
the Company's trading update in early August and are now expected to recover
fully by early 2007.

The new logistics arrangements for the Chinese market have been implemented and
are working well with product shipped directly into mainland China for
collection by customers from one of two bonded warehouses. This has created a
robust platform for future sales to the region. As part of the new trading
arrangements, the Company has implemented sterling pricing and invoicing. This
replaces the previous invoicing currency, the US dollar, and has removed the
majority of the Company's US dollar exposure.

The Company's Platform 2 product, the OmniDot, continues to generate interest
and product launches incorporating it are expected during the course of 2007.

Subject to trading for the remainder of December, it is anticipated that the
results for the year will be in line with Directors' expectations.

New production facility

The Company's new Huntingdon production facility, which will manufacture the
Xaar 1001 (HSS) product range, is on target to begin commercial production in
January next year. Interest continues to build in this product range and the
Company expects its test partners to begin commercialising equipment over the
next twelve months.

Initially the fixed costs of the new production facility are expected to be
£2.5m per annum; these costs, and the associated early sales revenues from the
Xaar 1001, will be reflected in the results of the Company for the first time in
2007. Whilst this is expected to have an effect on overall reported margins, the
Directors view the coming year with confidence.

Announcement of preliminary results for 2006

Detailed results for the year to 31 December 2006 are expected to be released on
Thursday 15 March 2007.


Contacts

Xaar plc:                                                        01223-423663
Ian Dinwoodie, Chief Executive
Nigel Berry, Group Finance Director & Deputy
Chief Executive

Bankside Consultants:
Steve Liebmann or Simon Bloomfield               020-7367-8883 / 07802-888159


Notes

1 Nothing in this announcement is intended to constitute a profit forecast or
  estimate or to mean that Xaar's future revenue, profits or earnings per share
  will necessarily match or exceed those for any previous period.

2 This announcement contains statements that are or may be forward-looking with
  respect to the financial condition, results of operations and businesses of
  Xaar. These forward-looking statements include risk and uncertainty because 
  they relate to events and depend on circumstances that will occur in the 
  future. There are a number of factors which could or may cause actual results 
  or developments to differ materially from those expressed or implied by such
  forward-looking statements.




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