29 November 2023

XAAR plc 

TRADING UPDATE

Xaar plc ("Xaar", "the Group" or "the Company"), the leading inkjet printing technology group, today provides a trading update.

PROFIT AHEAD OF EXPECTATIONS FOR 2023

·    Through disciplined cost management, a favourable product mix and new customer product launches the Group is expected to deliver an adjusted profit before tax of between £2.5 million and £3 million, which is ahead of Board expectations.

·    Trading conditions have become more challenging in H2 2023 due to the wider economic environment. As a result, 2023 full year revenues are expected to be between £70 million and £72 million.

2024 OUTLOOK

·    The Board anticipates that weaker demand during Q4 2023 will continue into 2024, and together with delays in some customer product launches, will result in lower revenue and adjusted profit in 2024 than previously anticipated. We are optimistic and remain focused on delivering significant opportunities in our customer pipeline.

·    In 2024 the Group also faces the full effect of increased input costs. The lower than previously expected revenue growth in 2024 will not be sufficient to fully absorb the additional costs, which will impact Gross Margin.

·    The Group continues to implement initiatives designed to improve operating efficiencies throughout the organisation and to reduce operating costs, whilst continuing to deliver on our strategic plan.

·    The Board remains confident in the medium-term outlook as our opportunities continue to strengthen and further product launches are expected in 2024. This provides confidence in delivering our mid-term growth plans, whilst ensuring a balance between targeted investment and expected returns in the short term.

BALANCE SHEET

The Group remains well capitalised with a strong balance sheet and with a net cash position of £3.7 million as at 28 November 2023 which is in line with management expectations. The Group also has an undrawn revolving credit facility of £5m.

John Mills, Chief Executive Officer, commented:

"Whilst the external trading environment is challenging, we remain focused on the delivery of our strategy and taking advantage of the significant opportunities we have that will drive profitable growth. Our products continue to generate strong interest from customers, demonstrating our leadership in printing highly viscous fluids with all the performance and sustainability benefits they deliver.

"Due to the current geo-political and macro conditions, bringing these products to market is taking longer than expected, however, we are optimistic about the future, and we are well placed to benefit as trading conditions improve."

This announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) 596/2014 as it forms part of UK domestic law by virtue of the European Union (Withdrawal) Act 2018 ("MAR"), and is disclosed in accordance with the Company's obligations under Article 17 of MAR.

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