Thursday, May 9, 2019

News: Revenues up at Xeros


Revenue has increased by 62% at Xeros Technology Group plc, but more funding will need to be secured if the innovative Rotherham firm is to revolutionise domestic laundry and continue to save water across the globe.

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 and its latest financial results discuss the progress on moving to a IP rich and asset light business model.

For the 12 months to December 31 2018, revenues were £3.5m, a 62% increase on the previous year. Adjusted losses reduced to £20.9m from £28.7m. Writedowns were made on leased equipment that uses previous versions of the technology.

The firm's cost base is due to rapidly reduce as the development phase nears completion and there is cash for 2020 but the board said it expects to raise further equity to "finish the year with a strong balance sheet as our commercialisation gathers momentum." The latest round of funding secured £15.8m during a share placing in December.

In the future, the majority of Xeros' revenue will be derived from high margin licensing agreements. The strategy sees the licensing of technologies to market incumbents and receiving a proportion of the value created by means of royalties. Recent highlights include exclusive licensing agreements signed with largest OEMs in China and India to manufacture and sell machines incorporating Xeros technology.

The first royalty revenues are expected in 2019 for the Chinese commercial laundry deal and in 2021 for the Indian deal after product development and testing milestones are successfully achieved.


Climate change, population growth and urbanisation are putting water resources under increased stress and Xeros is poised to capitalise whilst solving a global issue. Xeros' technologies reduce water consumption and effluent production by up to 80%, reduce chemistry used in processes by up to 50% whilst also cutting energy consumption in cleaning applications by up to 50%.

The Xeros tech can also save water in the tanning industry and, having entered the market itself, Xeros signed a deal which will see a Mexican producer convert its re-tanning operations in order to use Xeros' technologies. Xeros said it continues to consider opportunities to attract third party finance into its tanning operation (known as Qualus) with the ultimate objective of being a licensor of its technology into this industry rather than being itself a market incumbent.

In textiles, Xeros said it had developed the application of its technology to wool, cotton and denim garment finishing. Tests have now been successfully completed at its technology centre on the AMP for three major Chinese garment manufacturers during which experts successfully matched product outcomes in multiple garment types using significantly less water and chemistry. Discussions are ongoing with a number of manufacturers, with the objective of moving to scale trials later in 2019 ahead of commercialisation.

Mark Nichols, chief executive of Xeros, said: "Having completed the lion's share of our development our disruptive water saving technologies are now firmly on a path to commercialisation under an IP rich and asset light business model in global scale industries.

"We see the demand for our technology increasing as environmental and societal pressures continue to put intense strain on finite water resources - both in terms of pricing and consumption. Manufacturers, consumers and regulators are increasingly demanding that supply chains improve their sustainability credentials with a particular focus on reducing water usage. Demands that we can help meet.

"We have achieved a number of major inflection points with others expected to follow in 2019, each of which have the capacity to generate significant value. As we end the development phase, our cost base will continue to decline ahead of the implementation of the contracts we have won which are expected to generate high margin royalty revenues."

Xeros website

Images: Xeros / LEFARC


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