Xaar views coming year with confidence

7/12/2006

Xaar plc, the inkjet printing technology group headquartered in Cambridge, presents an update on its expected performance for the year ended 31 December 2006.

Ian Dinwoodie, Xaar's Chief Executive said: 'We are pleased that we can now move on from the issues which have affected performance during the past six months, allowing us to focus our efforts on driving future growth.'

Results for 2006

Xaar is pleased to report that sales to China have recovered progressively since the Company's trading update in early August and are now expected to recover fully by early 2007.

The new logistics arrangements for the Chinese market have been implemented and are working well with product shipped directly into mainland China for collection by customers from one of two bonded warehouses. This has created a robust platform for future sales to the region. As part of the new trading arrangements, the Company has implemented sterling pricing and invoicing. This replaces the previous invoicing currency, the US dollar, and has removed the majority of the Company's US dollar exposure.

The Company's Platform 2 product, the OmniDot, continues to generate interest and product launches incorporating it are expected during the course of 2007.

Subject to trading for the remainder of December, it is anticipated that the results for the year will be in line with Directors' expectations.

New production facility

The Company's new Huntingdon production facility, which will manufacture the Xaar 1001 (HSS) product range, is on target to begin commercial production in January next year. Interest continues to build in this product range and the Company expects its test partners to begin commercialising equipment over the next twelve months.

Initially the fixed costs of the new production facility are expected to be 2.5m per annum; these costs, and the associated early sales revenues from the Xaar 1001, will be reflected in the results of the Company for the first time in 2007. Whilst this is expected to have an effect on overall reported margins, the Directors view the coming year with confidence.

Announcement of preliminary results for 2006

Detailed results for the year to 31 December 2006 are expected to be released on Thursday 15 March 2007.



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