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Xeros Technology Group plc (AIM: XSG, 'Xeros', 'the Group'), the developer and provider of water saving and filtration technologies with multiple commercial and domestic applications, today publishes its unaudited preliminary results for the 12 months ended 31 December 2019.

Highlights

• Implementation of licensing model with reduced cash burn rate
• Acceleration in number of licensing contracts
• First step in microplastic filtration market
• Demand for Xeros' products will endure beyond impacts of Covid-19 but some delays

 

• Implementation of licensing model
  • Organisation of 50 personnel dedicated to licensing at 31st March 2020
  • Exited majority of direct operations
  • Cash burn run-rate down from average of £2.2m per month in 2018 to £1.3m per month in 2019 and now to £0.6m per month in March 2020
  • All applications now being commercialised with licensing contracts or being developed under joint development agreements with leading industry players

 

• Acceleration in number of licensing contracts
  • Additional commercial laundry contract with major OEM in India
  • First contract in domestic laundry with India's leading manufacturer and joint development agreement with one of China's largest brands
  • First contract in apparel market with leading equipment manufacturer in South Asia
  • 2020 being the year for contract implementation ahead of high margin revenue growth in 2021 and beyond

 

• First step in microplastic filtration market
  • Joint development agreement with leading global commercial laundry equipment provider
  • Development of domestic washing machine filter completed ahead of European regulations

 

• Demand for Xeros' products will endure beyond impacts of Covid-19
  • Secular trends for sustainability will continue to increase after impacts of Covid-19
  • End markets for Xeros' products meet human needs - clothing and its cleaning
  • Xeros' current contracts are in countries which account for 37% of the world's population¹
  • Xeros' patents are protected through mid to late 2030s

 

• Financial
  • Revenue decreased by 32.5% to £1.8m (2018: £2.7m) with move to licensing model and exit from direct operations. First license income received
  • Adjusted EBITDA² loss reduced by 24.2% to £14.4m (2018: loss £19.0m)
  • Administrative expenses down 25.6% - with further reductions in 2020
  • Post-tax earnings loss reduced by 29.9% to £20.6m (2018: loss £29.4m)
  • Net cash outflow from operations reduced by 29.9% to £15.5m (2018: £22.1m). Cash at 31 March 2020 £3.1m

 

• Announcement today of equity placing of £5.7m to further strengthen balance sheet

 

• The statutory accounts for the year ended 31 December 2019 will be finalised based on the information presented in this preliminary announcement

Mark Nichols , Chief Executive of Xeros, said:

"Improving the sustainability of the clothes we wear and the fabrics we use is no longer an option, it is an imperative. Regulators are increasingly demanding that supply chains reduce the lifetime environmental impact of the products they manufacture and sell. These are demands that Xeros meet by providing major reductions in the consumption of water, energy and chemistry, and the subsequent emissions produced.

"The license agreements we have signed with leading OEMs in 2019 and since the beginning of this year have validated the substantial benefits our proprietary products deliver. We intend to work with our partners during the rest of the year to provide a platform for high margin growth. Also, we intend to expand selectively on a geographic basis in each of our chosen applications.

"We will do so from our reduced cost base with the announcement of today's equity placing enabling us to so during the course of the next two years."

¹  United Nations World Population Prospects 2019

² Adjusted EBITDA is defined as loss on ordinary activities before interest, tax, share-based payment expense, exceptional costs, depreciation and amortisation

Enquiries

Xeros Technology Group plc	Tel: 0114 321 6328
Mark Nichols, Chief Executive Officer Paul Denney, Chief Financial Officer
finnCap Limited (Nominated Adviser, Broker)	Tel: 020 7220 0570
Julian Blunt / Teddy Whiley, Corporate Finance Andrew Burdis/ Sunila de Silva, ECM