Xaar chairman Arie Rosenfeld said although the second half of the year was likely to be profitable, this was unlikely to offset the companys trading losses incurred in the first half of the year.

He said the ink-jet technology group was therefore anticipating a trading loss for the overall year.

The interim results for the six months to 30 June 2003 showed turnover at 13.6m, a fall of 3% on the same period last year.

Pre-tax losses totalled 2.1m, a reversal of last years 417,000 profit.

A non-trading foreign exchange gain of 1.2m was included within the groups pre-tax result. Prior to this the companys operating loss was 3.3m.

Despite the results, performance improved steadily through the second quarter, and the company said it was encouraged by the recovering interest in its XJ500 printhead, especially within the Asian markets.

Xaar chief executive Jan Fineman resigned in July when the firm revealed that it would report greater losses than predicted, although Fineman said his exit was not linked to the poor results. He was replaced by Ian Dinwoodie.

Xaar shares fell by 6p, or 16.4%, to 30.5p after the results were announced.