Business Update

RNS Number : 7577Z

Xeros Technology Group plc

27 January 2022

 

27 January 2022

Xeros Technology Group plc

Business Update

Xeros Technology Group plc (AIM: XSG, 'the Group', 'the Company', 'Xeros'), the licensor of proprietary solutions improving the sustainability and economics of garments and fabrics, today publishes a business update on the commercialisation of its platform technologies.

Since the update provided at the time of the interim results in September, the Company is pleased to report on the progress which has been made by the Group's partners and licensees. There has been continued disruption in the business development and sales activities of the Group's partners and licensees in India and China as a result of intermittent travel and operational restrictions being placed upon them in response to their local Covid situations. In spite of this, they have continued to make positive progress, as has the Company in its other commercialisation objectives:

· Commercial discussions for XFiltra licensing have commenced following successful tests by the Company's global scale development partners. UK legislation progressing which mandates manufacturers fit microplastic filtration to domestic and commercial washing machines by the beginning of 2025.

· IFB have confirmed that they plan, subject to successful consumer field trials, to enter the Indian domestic washing machine market with Xeros' XTend technology at the end of Q2 this year. This follows on from the successful completion by IFB and Xeros of machine designs and the development of cycles which meet targets for water, chemistry and energy and fabric care improvement.

· Ramsons, supported remotely by the Xeros team, have completed the development of a full suite of denim finishes for Aba Group, a leading Bangladeshi denim manufacturer supplying some of the world's leading denim brands, using XTend technology to address all styles required across the denim industry. Supported by Xeros, Aba now intend to implement denim cycles to serve one of the world's leading apparel brands.

· SeaLion and IFB continue to sell XTend commercial washing machines.

XFiltra

Draft UK legislation published on 24 January 2022[i] has specified that by 1 January 2025, all washing machines sold in the UK must have filters achieving a minimum 90% efficacy in capturing the microplastics emitted from all wash cycles (not just synthetics cycles only). The draft legislation also includes a definition of a microplastic within a size range of between 1 micron and 5 millimetres. These standards being those which XFiltra meets.

Opposite the objective to become the chosen product solution for the industry, the Company's testing programmes with Hanning and a leading global Asian OEM are meeting the above specification with commercial discussions in progress with one of them and shortly to start with the other. Since September, the Company has commenced the negotiation of joint development agreements with three additional major players.

In order to be capable of meeting the deadlines specified in the UK draft legislation, which is consistent with that of France, domestic washing machine manufacturers will need to have machines ready for sale in 2024 with production planning for these commencing in late 2022. The Company expects that OEMs wishing to take a lead in the field will look to have machines for consumers available in 2023.

The launch, by Girbau, of the commercial version of XFiltra has been delayed by the Omicron wave with the expectation that this will now occur later this year.  Traction for XFiltra at this end of the market continues to increase with another commercial laundry OEM in early-stage discussions with the Company regarding XFiltra for a model that they plan to start selling in Q2 2023.

XTend

Domestic Laundry

In September, the Company announced that the impact of Covid in India had led IFB to delay the launch of their Xeros-enabled domestic washing machine. At the time, the Company's estimate was that this would be delayed until late Q2 of this year. This timing has since been confirmed by IFB who plan, subject to successful consumer field trials, to enter the Indian domestic washing machine market with Xeros' XTend technology at the end of Q2 this year.  Further updates will be provided as appropriate.  This follows on from the successful completion by IFB and Xeros of machine manufacture designs and the development of cycles which meet targets for water, chemistry and energy reduction and fabric care improvement.

Denim

The Company's team visited Aba Group, Ramsons' launch customer, in Bangladesh late last year with the easing in travel restrictions.  Aba Group is a leading Bangladeshi denim manufacturer supplying some of the world's leading denim brands.  Prior to that visit however, the Company had been working remotely with Aba and Ramsons (the Group's Indian license partner for XTend enabled denim finishing machines) over the last 4 months to develop denim cycles to meet the entire breadth of a global retailers' denim styles. This has required the specification of a new XOrb which has now been successfully used by Aba on a number of trials for this leading brand with the remainder expected to be completed by the end of February 2022. The Company believes this progress to be very positive and will make further announcements as required.

Discussions have recently commenced to license Xeros' technology in Turkey which is another major production hub for denim. Xeros' plans are supported by the above results and the benefits case which continues to be validated both from an environmental and a financial perspective as well as the successful tests recently completed with three major denim brands.

Commercial Laundry

China continues to experience city-wide, short-notice lockdowns with these impairing SeaLion's supply chain and their ability to sell their products including the XTend commercial laundry machines. Whilst this is a significant hindrance to growth which could continue, since their launch, SeaLion's XTend models are being well received including in the high-performance workwear market.

India's approach to managing the pandemic is different to that of China and the Company believes that IFB's growth in 2022 will be less impaired with their first installations also meeting expectations. Whilst previously delayed, their nationwide launch has now been completed and publicised. [ii][iii]

Financials

As at 31 December 2021 Xeros had cash of £7.8m, in line with previous guidance. This cash position was achieved despite a shortfall in revenue for the year, due to the delays in commercialisation referenced above, with preliminary unaudited results showing revenue of £0.5m for the year ending 31 December 2021. 2021 financial results will be published at a later date and, as usual, this date will be communicated in advance.

Mark Nichols , Chief Executive of Xeros, said:

"The pandemic continues to disrupt and impact people's health and livelihoods across the world. Despite the ongoing challenge, and in alliance with our partners, we continue to commercialize our technologies. The positive ramifications these can deliver to lessen the impact of clothing production and subsequent wear on water consumption and pollution delivers against the growing focus within the apparel industry on how to reduce its footprint.

The evidence, created in 2021, demonstrates that our technology does what it says it does and that we have the capacity to expand its deployment rapidly through our licensing model. Over the last four months engagements with prospective partners increased significantly and our expectation is that we will see additional agreements signed during 2022, with some anticipated in the near term."

Enquiries :

Xeros Technology Group plc Mark Nichols, Chief Executive Officer Paul Denney, Chief Financial Officer	Tel: [phone]
finnCap Limited (Nominated Adviser and Broker) Julian Blunt/Teddy Whiley, Corporate Finance Andrew Burdis/Sunila de Silva, ECM	Tel: [phone]

Notes to Editors

With close to 40 patent families, Xeros' revolutionary platform technologies, XTend™ and XFiltra™ set new standards for performance and sustainability across our clothing's lifecycle. By reducing the consumption of valuable natural resources and preventing microfibre and microplastic pollution, Xeros greatly reduces the impact of our clothes on the planet.

Backed by science, we set new standards for significantly reduced water consumption, lower carbon and effluent emissions, and improved garment care/life at the manufacturing stage and throughout laundry processes, in industry, and in the home. Xeros' technologies deliver a unique combination of unbeatable sustainability outcomes, improving performance whilst reducing costs. 

The manufacture of clothes and their subsequent care consumes vast amounts of our finite, valuable resources. Xeros licenses new technologies to enable us all to consume less, helping to protect the world for our future. 

For more information, please visit -  http://www.xerostech.com/

 

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[i] https://bills.parliament.uk/bills/3077

[ii] https://www.financialexpress.com/industry/ifb-home-appliances-partners-with-xeros-tech-launches-new-washing-machines-for-institutional-buyers/2415669/

[iii] Link to IFB promotional video for XTend commercial laundry machine here

For the avoidance of doubt, the contents of the websites referred to above are not incorporated into and do not form part of this announcement.

 

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