REG - Xeros Tech Grp plc - Trading Update

Xeros TechnologyAnnouncement

05/09/2024 07:00

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RNS Number : 9574C  Xeros Technology Group plc  05 September 2024

This announcement contains inside information as stipulated under the market
abuse regulation no. 596/2014 (as incorporated into UK law by virtue of the
European Union (Withdrawal) Act 2018, as amended by virtue of the Market Abuse
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now considered to be in the public domain.

 

5 September 2024

Xeros Technology Group plc

("Xeros", the "Company" or the "Group")

 

Trading Update

 

Xeros Technology Group plc (AIM: XSG), the creator of technologies that reduce
the impact of clothing on the planet, announces the following trading update,
ahead of its Half Yearly Results, which will be published later this month.

 

In a circular to shareholders, published on 8 April 2024, the Group reported
that its Indian domestic laundry licensee, IFB Industries Limited ("IFB"), was
conducting field trials on a 9kg washing machine, ahead of a planned mass
market launch in 2024, delivering first royalty revenues to Xeros in FY24.
While it is pleasing to note that the trials generated positive consumer
feedback, IFB has initiated a further change to the specification of the 9kg
machine, in no way related to Xeros technology, with the Board now expecting
the mass market launch to take place in 2025. This situation has been
compounded by the recent announcement of a change in leadership in the Home
Appliances Division of IFB.

 

In the same circular, mentioned above, we referred to upcoming French
legislation for microfibre filtration in washing machines. The environmental
impact of microplastics is well established and the need for filtration in
both commercial and domestic washing machines continues to be discussed
globally. France was expected to lead the way with legislation, effective 1
January 2025, detailing clear standards and efficacies for new filtration
technologies and driving early adoption.

 

Today, while the filtration legislation is in place in France, the standards
and efficacies pertaining to it remain unclarified. As a result, this is not
expected to drive demand for the Group's XF3 technology in the short term, as
the Board anticipated earlier in the year. The Board is, however, confident
that the market for microfibre filtration in washing machines remains
significant in the medium term and that the licensing agreements it has in
place, including the one with Donlim announced separately today, leave the
Group well placed to generate significant revenues from this developing
market.

 

Financial outlook

 

The impact of these delays is to reduce the Group's revenue expectations for
FY24 and FY25 to £0.5m and £3.8m respectively, and adjusted EBITDA loss to
£4.2m for FY24 and £1.0m for FY25. The Group anticipates cash balances at 31
December 2024 of £2.9m. The Group maintains tight control on costs (SG&A
running at 60% of 2022 levels) and expects to reduce selling, general and
administrative costs further in 2025.

 

Cash at 30 August 2024 was £4.0m, which the Board still expects to be
sufficient to finance operations through to month on month cashflow
break-even, during the latter part of 2025.

 

Commercial progress

 

While the Board is disappointed by these delays and their impact on the
Group's short term financials, the medium term outlook for the company
continues to strengthen.

 

The management team is progressing a number of new licensing agreements with
tier 1 global OEMs, in relation the Group's Care and Filtration technology.
These include three global OEMs, which are in active processes with regards to
its Domestic Care technology, and one global OEM, with regards to Commercial
Care technology. The Board expects to be able to communicate the outcome of
these discussions in the coming months.

 

Furthermore, the Group's newest licensee for its Finish technology, KRM
Tekstil/Yilmak Makina ("Yilmak"), launched a Xeros enabled range of denim
finishing machines at ITM, a leading garment finishing trade show, in July
2024.  Yilmak is working through the initial sales leads, with the
expectation of machines being in full production within the current calendar
year. The company is a tier 1 OEM within the global garment finishing market
and represents a meaningful revenue opportunity for the Group.  Revenue
generation for Xeros from this licensing agreement remains on track to
commence in the current financial year.

 

Enquiries

 

 Xeros Technology Group plc                                        Tel: 0114 269 9656

 Neil Austin, Chief Executive Officer

 Alex Tristram, Finance Director

 Cavendish Capital Markets Limited (Nominated Adviser and Broker)  Tel: 020 7220 0500

 Julian Blunt/Teddy Whiley, Corporate Finance

 Andrew Burdis/Sunila de Silva, ECM

 Rawlings Financial PR Limited                                     Tel: 07715 769078

 Cat Valentine                                                     cat@rfpr.co.uk (mailto:cat@rfpr.co.uk)

 

About Xeros

 

Xeros Technology plc has developed patented and proven, industry-leading
technologies which reduce the environmental impact of how industries make and
care for clothes.

 

The traditional wet processing methods used in industrial and domestic laundry
and garment manufacturing consume billions of litres of fresh water and large
amounts of energy and chemicals, as well as damaging and weakening clothing
fibres and creating rising levels of environmental pollution. It is estimated
that washing machines contribute 35% of the 171 trillion microplastic
particles in the ocean.

 

A range of actors, including consumers, the media NGOs and regulators are
exerting pressure on these industries, with legislative action beginning to be
taken.

 

Xeros' three main technologies, Filtration, Finish, and Care, facilitate
garment manufacturers, industrial laundries, domestic washing machine
manufacturers and consumers, to reduce their environmental impact, whilst also
significantly improving efficiency in the process.

 

Xeros' model is to generate revenue from licensing its technologies,
generating royalties and the sale of consumables. Currently there are eight
agreements in place. The addressable markets in Filtration, Finish and Care
are estimated to be valued at £350m p.a., £132m p.a. and £3bn p.a.
respectively.

 

 

 

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