Xaar Regulatory News (XAR)

Xaar plc

INTERIM MANAGEMENT STATEMENT

Xaar plc ("Xaar" or "the Group"), the inkjet printing technology group headquartered in Cambridge, is providing an Interim Management Statement covering trading from 1 January 2010 to 31 March 2010.

Trading and margins for the first quarter of the year were in line with the Board's expectations. Sales of Platform 1 ("P1") products have shown more stability than seen in recent periods and the increased demand for Platform 3 ("P3") products, first reported for the fourth quarter of last year, has continued. During Q1 2010, P3 demand continued to grow; the company is investing to increase output from the Huntingdon plant by mid-year.

The increase in P3 sales continues to be driven by volume sales into the industrial and packaging markets. We continue to work with our customers in these and other end markets to deliver levels of performance to allow them to move their printing machinery products to volume launch. We are still incurring some additional costs associated with new product introductions; however these are expected to reduce later this year as previously stated.

The consolidation of the Group's manufacturing facilities into a single plant in Huntingdon, England continues to progress according to schedule with the costs and benefits of the project remaining in line with the original plan.

The Group's balance sheet is strong with net cash at 31 March 2010 of £9.2m (31 December 2009: £11.1m).

The Board is encouraged by the rate of adoption of the Group's P3 products in new markets and remains satisfied with the relative stability of P1 sales in Xaar's traditional markets. The Board is now looking forward to volume sales of both P3 and new P1 products across a wider range of customers and end markets together with the reduction of new product support costs.

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