Year end trading update

Xaar PLC
10 January 2008


FOR IMMEDIATE RELEASE                                         10 January 2008

                                    Xaar plc

                            FULL YEAR TRADING UPDATE

Xaar plc ('Xaar'), the inkjet printing technology group headquartered in 
Cambridge, presents an update on performance for the year to 31 December 2007.

Trading

Revenue for the year is expected to be approximately £47.9m, an increase of 13% 
over the prior year. Growth in the company's existing Platform 1 products was 
solid whilst interest in the latest Platform 3 product, the Xaar1001, continues 
to grow.

Profit before tax for the year was approximately £7.3m (31 December 2006: £6.9m)
which was in line with the IFRS compliant market consensus figure.

Profit for the year is stated after charging amortisation of capitalised R&D of 
£1.0m (31 December 2006: £0.5m), the cost of share options of £0.9m (31 December
2006: £0.7m) and the fixed cost of the new Huntingdon facility which was within 
expectations at £2.5m (31 December 2006: £nil). Before the cost of the 
Huntingdon operation, profit before tax for the year increased by 42% over the 
prior year.

As previously noted, take-up of Platform 2 products remains slower than 
originally expected but the company was pleased to see the recent launch of the 
Teckstorm and Teckthunder wide format printers from Teckwin Development Co. Ltd.
based on the Xaar 760; other wide format printers incorporating the Xaar 760 are
expected to be launched in the coming months.

There are now a significant number of evaluation kits for the Platform 3, Xaar 
1001, on test with existing and potential customers and several equipment 
launches incorporating the printhead are expected in 2008. Drupa, the industry's
premier printing trade exhibition held every four years in Germany, will take 
place in May 2008; equipment launches are often timed to coincide with the show.

Importantly, these equipment launches are expected to be in new markets for Xaar
as the company presses home its technology advantage by leading the move of 
inkjet printing into mainstream commercial printing applications. One machine 
which has already been announced is the 'Caslon' narrow web label press from 
Nilpeter, the world's leading manufacturer of this type of press. A second 
narrow web label press from a large US printing technology group is due to be 
announced shortly. Commercial sales of both of these machines are expected to 
begin in the first half of 2008.

Cash

Cash at the end of December was approximately £13.0m (31 December 2006: £12.4m, 
30 June 2007: £10.0m). This reflects the payment of the final dividend for 2006 
of £1.2m and capital expenditure on tangible and intangible assets of 
approximately £5.4m.

Dividend

It is the Board's intention to recommend payment of a final dividend for the 
year of 2.5p, representing an increase of 25% over the final dividend for 2006. 
This increase reflects the Board's confidence in the future profitability and 
cash generation of the business.

With effect from 2008 it is the Board's intention, subject to satisfactory 
performance, to introduce payment of an interim as well as a final dividend.

Outlook

The Board remains confident about the prospects for 2008 and beyond. After 
several years of rapid growth, third party forecasts now suggest that demand in 
the company's core graphic arts market will mature to a steady annual percentage 
growth rate in high single figures. Meanwhile, forecasts for the newer Platform 
2 and Platform 3 products suggest demand will build as the year progresses.

Announcement of final results

The detailed results for 2007 will be announced in accordance with Xaar's normal
timetable on 13 March 2008.



                                      Ends



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 or Simon Bloomfield               020-7367-8883 / 07802-888159




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