Trading Statement

Xaar PLC 09 April 2003 FOR IMMEDIATE RELEASE 9 April 2003 Xaar plc TRADING UPDATE AND NEW ORDER Xaar plc ('Xaar'), the inkjet printing technology group headquartered in Cambridge, presents an update on current trading and announces a new sales agreement relating to the XJ126. Sales into Xaar's Asian markets have been slower than expected during the first quarter of the year, largely due to the customer acceptance process for the revised XJ500 product introduced at the beginning of the year. In the interests of sustaining good customer relationships, the company has taken a commercial decision selectively to replace without charge customer stocks of older XJ500 heads with the revised model. It is intended to fully provide for all units of the older XJ500 product replaced in this way. Although this is likely to cost the company £0.6m in the first half of the year, it is expected to clear the way for new orders of the revised product, feedback on which remains positive. Additionally, a quality control issue in the Swedish plant adversely affected the equivalent of one month's production, affecting primarily the XJ500 product. The problem, which was unrelated to the warranty issue seen at the end of last year, has now been rectified and did not affect product shipped to customers. The cost of scrapped product amounted to approximately £0.6m and will also be reflected in the results for the first half-year. Sales of the XJ128, which accounts for the majority of the Company's printhead sales remain in line with expectations. Xaar is pleased to report it has reached heads of agreement with one of its larger Chinese customers conferring certain exclusive rights to use of its XJ126 printhead for a category of the wide format printer market. In return, the agreement is expected to generate annual sales worth over £3.0 million. The agreement is effective from April 2003 for an initial term of twelve months with volume shipments expected to commence in the second-half of the year. As a result of the factors set out above, Xaar now expects results for the year to 31 December 2003 to be heavily second-half weighted, with a loss reported for the six months to 30 June 2003 on turnover similar to the first half of 2002. Continuing uncertainty in the global economy makes it difficult at the current time to predict precisely when higher levels of customer confidence will return. The company will give a further update at the end of June. Contacts Xaar plc: 01223-423663 Jan Fineman, Chief Executive www.xaar.co.uk Nigel Berry, Finance Director Bankside Consultants: Steve Liebmann 020-7444-4163 / 07802-888159 This information is provided by RNS The company news service from the London Stock Exchange

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Xaar (XAR)
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