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 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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