Thursday, April 19, 2018

News: Xeros at a pivotal point in commercialisation

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The board of innovative Rotherham company, Xeros, believes that it is at a pivotal point in the commercialisation of its technologies as it reports its financial results for the year ending December 2017.

Based on the Advanced Manufacturing Park (AMP), Xeros is a Leeds University spin-out that has developed a patented system using a unique method of special polymer beads rather than the usual large amounts of fresh water to clean clothes.

The AIM-listed firm is targeting commercial laundry and domestic laundry as well as the tanning industry and textile manufacturing.

Income at Xeros has increased to £2.3m but adjusted EBITDA (earnings before tax) was a loss of £28.7m as it continues to spend on R&D and commercialisation.

An oversubscribed share placing raised a further £25m in 2017 as it aims to accelerate commercialisation. The company is debt free and expects to raise further funds from investors in 2018.

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The financial report provides an update on the company's target sectors.

The first target sector was commercial laundry where the use of Xeros technology can reduce water consumption in places like hotels which can cut costs by up to 50%.

During 2017, Xeros initiated a plan to transition to a business model whereby manufacturers incorporate and sell its proprietary technology in exchange for royalties. Called the "Symphony project," Xeros is currently working with two major OEM's on the testing and validation of the technology inside their own branded machines. The objective being to have these companies marketing, selling and servicing machines incorporating Xeros' technology through their own well-established channels.

Xeros is also signing up "Forward Channel Partners" in areas where water scarcity is a big issue such as Australia, UAE and South Africa, who will market, sell and provide the full set of services for Xeros enabled machines.

The total number of machines commissioned and generating revenue grew by 169 during the year to a total of 381 at the end of December 2017. The target is that by the end of 2020, a machine will be commissioned every working hour incorporating Xeros' technology with each providing a royalty to Xeros.

Progress has also been made in the revenue-generating sector of performance workwear as Xeros acquires companies in the US as it aims to create a nation-wide network to serve the US firefighter market.

In domestic laundry, Xeros was at the Consumer Electronics Show (CES) in January 2018 to launch its technology. The company said that it has now "entered into structured discussions with a number of major OEMs with the objective of licensing our technology."

Globally 119 million washing machines are sold annually with a retail market value of $70 billion per annum. Xeros is targeting an average royalty of 4% of the retail price of a machine.

In tanning technologies, the business model is one of sharing gains with customers under long-term contracts. Following successful trials, a start date is awaited for implementing engineering solutions in Wollsdorf, Xeros' first major contract which will see the conversion of its re-tanning operations in Austria to use Xeros' patented polymer beads.

Xeros has been targeting retanning and dyeing stages which use large volumes of water to apply specialty chemicals. It is also set to move upstream to the tanning stages of the process which typically uses proportionately more water to apply bulk chemicals. The target is to be applying its technology to up to 20% of the tanning market by the end of 2022.

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In the latest target sector, textiles, Xeros has demonstrated how its technology has the capacity to deliver water, chemistry, energy and effluent reductions which at least match performance outcomes in its other selected applications. Looking at denim finishing and garment dying, scale trials and development agreements with major manufacturers are expected soon.

The polymer science team in Rotherham continues to work on developing "Generation Three" polymers and the firm now has 48 "pending" or "granted" patent families, an increase of seven on the previous year.

The company states that the development of cleaning and tanning technologies were materially completed during 2017 and the focus is on their commercialisation. It said that it has a clear strategy to achieve "commercial inflection points" in 2018 which will allow future monetisation of each of its businesses.

Mark Nichols, chief executive of Xeros, said: "Xeros is now providing a unique, proven technological solution in a world increasingly threatened by the environmental challenges of water scarcity and pollution.

"We now have two businesses with turnover, other applications with near term inflection points and are engaged with some of the leading market incumbents in each of our cleaning and tanning applications. We also expect to be in discussion with major garment producers in the near term for our textile applications.

"For the majority of our applications, our plans are to implement IP-rich, capital-light business models with market incumbents.

"With our resources now aligned specifically to business opportunity, we are working our way through major commercialisation milestones.

"We are now at a pivotal point in the commercialisation of our technologies."

Xeros website

Images: Xeros

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