Trading Statement

Xaar PLC
08 January 2004




FOR IMMEDIATE RELEASE                                          8 January 2004



                                    Xaar plc



                            YEAR-END TRADING UPDATE

                      AND NEW AGREEMENT WITH MAJOR PARTNER


Xaar plc ('Xaar'), the inkjet printing technology group headquartered in
Cambridge, presents an update on performance at the end of the year to 31
December 2003 and announces a new five-year joint Research, Development and
Manufacturing agreement with a major partner.





PERFORMANCE IN 2003



Trading has continued to improve during the second half-year and results overall
are in line with expectations.  There were no exceptional costs in the second
half and yields and margins maintained their steady improvement. Sales of all
products progressed satisfactorily.  As a result the business has been cash
generative during the second half with year-end net cash and liquid resources
standing at over £8.0 million (30 June 2003: £5.9 million; 31 December 2002:
£9.9 million).





NEW FIVE-YEAR RESEARCH, DEVELOPMENT AND MANUFACTURING AGREEMENT



Xaar is pleased to announce that it has signed a new five-year Research,
Development and Manufacturing Memorandum of Understanding with a major partner.
The agreement also covers the company's new OmniDot second-generation printhead
referred to in the Interim Report for 2003 which both parties will have the
right to sell into their respective markets.



Printheads developed under the agreement will be manufactured by Xaar at its
plant in Jarfalla, Sweden.  Manufacture of the OmniDot will start in the second
half of 2004 with volume production expected in 2005.



Both parties are now working to finalise detailed agreements and a joint
announcement will be made in due course.





ANNOUNCEMENT OF PRELIMINARY RESULTS FOR 2003



Xaar will announce its full year results for 2003 on 17 March 2004.





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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