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Xaar PLC (XAR)

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Wednesday 09 April, 2003

Xaar PLC

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



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