XAAR PLC: final result for 2007

Cambridge, (PresseBox) - CHAIRMAN'S STATEMENT

Introduction

I am pleased to report a further year of progress, not just with results but also, significantly, with the level of interest in our Platform 3 product, the Xaar 1001.

Xaar has reached an exciting stage in its development. Our main markets continued to grow during 2007 and our Platform 1 product range, now firmly established as market leader, is expected to continue to provide a solid foundation for the business going forward. At the same time, our new Platform 2 and Platform 3 products are beginning to enter the end user market as our OEM (Original Equipment Manufacturer) customers complete their development activities and launch new printing machines. These Platform 2 and Platform 3 products are more sophisticated than Platform 1 and appeal to printing machine manufacturers the world over (not just in Asia) in a wider range of applications. Consequently our potential market is now much larger. We believe, in line with independent industry analysts, that today less than 10% of commercial print world wide is produced using inkjet technology. Whilst the commercial printing market is conservative with long product life cycles, this benefits the longevity of our Platform 1 products. Our aim looking forward is to continue to accelerate the commercial adoption of our newer technologies.

Results and dividend

The results for the year were in line with IFRS compliant market consensus, showing growth in revenue and profits with a continued strong cash flow and sector leading performance at both the gross and net margin levels. While full details are provided within the financial review, it should be noted that the results are struck after providing for the early stage losses of the new Huntingdon plant - a long-term investment in manufacturing capacity for the new Platform 3 product range.

Based on its confidence in the future profitability and cash generation of the business, the board has decided to recommend a 25% increase to 2.5p in the dividend per share for the year. 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

I believe that Xaar is well positioned to capitalise on the progressive shift from analogue to inkjet technology based printing - a trend which is gathering momentum within specialist and mainstream printing markets. As a provider of printhead technology, I am confident that we have a world leading range of products that is attractive to our OEM customers as they develop new printers which are more functional, more efficient and more flexible. We have proof of this with the continuing success of the Platform 1 family of products which we expect to continue to provide a solid foundation for the group after more than a decade of commercial production, together with recent announcements of new OEM products incorporating our newer Platform 2 and 3 printheads.

Xaar's reputation and position in the inkjet market is building. We have the manufacturing capacity and capability, the technical knowledge and a committed and talented team which is now focused on execution and delivery of growth.

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