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Xaar Records Record Revenue and Profit for First Half of 2001

Press release from the issuing company

Cambridge, England; July 18, 2001 - Xaar plc (London Stock Exchange: XAR), a world leader in ink jet printing technology, today announced record revenues and profit for the six months ended June 30, 2001, due in large part to sales of Xaar's printheads and inks, which helped the company to nearly triple profits before taxes compared to the first half of last year. The record results and progress in technology development are keeping Xaar on course toward its goal of becoming a leading player in the global digital printing and imaging industry. Revenues for the six months increased 14% to £12.3 million (about $17.4 million) from £10.8 million (about $15.3 million) for the corresponding period in 2000. Profit before tax nearly tripled to £2.0m (about $2.8m) in 2001, compared with the £0.7m (about $1m) from 2000, allowing the basic earnings per share to increase to 2.7 pence (about $0.04) from 0.6 pence (about $0.01) in 2000. Additionally, strong operating cash flow in the half year resulted in an increase in net cash to £8.8m (about $12.4m) from £8.0m (about $11.3m) on December 31, 2000. Xaar said the results reflect the growing importance of the manufacture and sale of printheads and inks, which generated revenue of £9.0m (about $12.7m) compared to £7.0m (about $9.9m) in the first half of 2000. Technology licensing, development fees and royalty income contributed £3.3m (about $4.7m) compared with the £3.8m (about $5.4m) in the corresponding period of 2000. During the first half, Xaar signed SunJet, a division of Sun Chemicals, as an ink development partner, and Xaar opened a Hong Kong office to support XaarJet business in Asia. The company also noted that its development of page-wide array technology continued during the first half with the demonstration of color printing capabilities and that it plans to start low volume in-house production in early 2002. Of Xaar's 6-month performance, Chairman Arie Rosenfeld commented, "Although world economic conditions have created a difficult trading environment for many businesses, especially in the US and Japan, our growth was not impacted by these adverse conditions during the first half of 2001. In this environment there are no certainties and demand is difficult to predict beyond the immediate future. However, XaarJet has a solid order book for Q3 and we continue to have license discussions with potential licensees, although fees from this business remain unpredictable by their nature. We approach the next six months with a strong determination to achieve our goals for continued growth of the business."

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