Tuesday, December 12, 2017

News: Xeros to raise £25m as it outlines future plans


Innovative Rotherham company, Xeros, has announced plans to raise a further £25m through the placing of new shares as it aims to accelerate the commercialisation of its patented polymer technology behind the first real revolution in laundry in 60 years.

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.

Admitted to AIM in 2014, Xeros is commercialising the use of the polymer technology in cleaning, leather processing and textile production.

The board at Xeros has announced that it intends to raise £25m before fees and expenses by a placing of 11,111,112 new ordinary shares with existing and new institutional investors at a placing price of 225 pence per Placing Share.

Xeros raised £40m in a share issue at the end of 2015. High profile investors include the IP Group plc, Mercia and Woodfood's patient capital fund.

The previous funding has been used for research and development, IP and patents and technical validation and by the end of November 2017, the company had existing cash resources of £4.2m.


In cleaning, Xeros' Symphony Project is spearheading a move away from the company manufacturing its own machines for the commercial market. Instead, a simple retrofit pedestal can integrate the polymer bead cleaning system into conventional machinery, enabling its water-saving revolution in laundry to be brought to market by leading manufacturers.

Xeros successfully demonstrated a working prototype at the Clean Show in early June and in September, an agreement was signed with a major OEM was signed to conduct "testing and validation" of the technology within one of its commercial washing machines. The agreement allows for commercial discussions to take place upon successful completion of the test and validation.

The board is targeting 2,500 - 3,000 machines using the technology by the end of 2020 and is moving to an indirect business model with income to be generated from the management of the beads themselves, which can be re-used and recycled.

In another billion dollar market, progress is also being made on a domestic washing machine that will demonstrated at the Consumer Electronics Show in Las Vegas in January 2018. It is designed to be incorporated into branded OEMs product lines with very little alteration to the production process.

Xeros expects discussions to follow with the company's medium-term target for 1.5% of annual global domestic washing machines sold to incorporate the polymer 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 cleaning, the polymer technology gently removes unwanted molecules and contaminants from materials; in tanning however, it is highly effective in pushing molecules into hides during leather processing. Following trials which reduced water and effluent by up to 50%, Xeros signed its first major contract with Wollsdorf Leder Schmidt and Co. in Austria, on a ten year basis. More contracts are expected by the end of 2018.

In tanning, where 300 million bovine hides are processed on an annual basis with a value of $55 billion to the tanning industry, the target for Xeros is for 11 million hides per annum being processed by its polymer technology.


Further details are now being revealed on how the polymer beads can be used in textile industry - in the fading and texturing of denim and in the dyeing of cotton garments. The newest sector for Xeros, the team is moving from small scale trials to larger production-scale trials and are seeking commercial partners to assist in evaluating the commercialisation options.

It is estimated that 1.2 billion pairs of denim jeans are manufactured every year and the global retail market value is $60 billion. The global cotton processing industry adds $26 billion of value per annum through the garment finishing process, which includes dyeing.

Mark Nichols, chief executive of Xeros, said: "We have developed unique polymer technologies which substantially reduce water, chemistry and energy usage. Over the last two years we have materially progressed their application in three world-scale markets: cleaning, tanning and textiles.

"Having completed the majority of this development, we are now progressively commercialising six business applications in our chosen markets with major milestones for each targeted in the near term. IP-rich business models with low capital intensity have been designed to provide demonstrable value to commercial partners and investors alike.

"We are delighted to welcome new investors who support our unique proposition and strategy. This fundraise enables us to progress significantly the commercialisation of our technologies and enhancement of shareholder value."

Xeros website

Images: Xeros / Instictif Partners


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