Sells majority of US Hydrofinity customer base

RNS Number : 3231I

Xeros Technology Group plc

08 August 2019

 

8 August 2019

Xeros Technology Group plc 

Xeros sells majority of US Hydrofinity customer base

Xeros Technology Group plc (AIM: XSG, 'Xeros', 'the Group'), the developer and provider of water saving and effluent reduction technologies with multiple commercial and domestic applications, has signed two agreements to sell the majority of its Hydrofinity US commercial laundry customer portfolio of leased machines to Eastern Laundry Systems ('ELS') and Wash IQ ('WIQ'), previously known as Viking Services.

Hydrofinity will receive an up-front payment of $109,000 in cash and on-going license fees for the provision of XOrbs^TM to ELS and WIQ. The proceeds from the transaction will fund on-going Hydrofinity working capital.

In 2018, these lease contracts generated an adjusted gross loss[1] of $376,000. The commercial washing machines and associated lease contracts had no value on the Group's balance sheet, the value having been written down during 2018 following the invention and patenting of Xeros' new XDrum^TM design for commercial washing machines.

164 commercial washing machines installed with Hydrofinity customers and their corresponding lease contracts have been sold to ELS and WIQ. As previously announced in November 2018, ELS already held exclusive rights to take over the servicing of Hydrofinity customers in nine states across the East Coast of the United States. Since December 2018, WIQ held the same exclusive rights for servicing of Hydrofinity customers in California and Arizona.

This agreement reflects the Hydrofinity strategy to reduce its physical presence in markets and to move to a full licensing model. The Group expects further sales of smaller portfolios to similar regional distributors in the US over the coming months.

Mark Nichols, CEO of Xeros commented: 

"As part of our strategy to implement a licensing model for all our applications, we completed the transfer of sales and service to our channel partners in the US earlier this year in order to improve customer service and reduce our costs.

"This sale of the majority of our existing Hydrofinity lease agreements in the US to channel partners means we will be paid ongoing fees for the use of XOrbs by customers, providing a high margin return on our technology without any physical involvement in the supply chain.

"The approach is consistent with our license agreements signed with the largest commercial laundry equipment companies in China and India." 

ENDS

 Enquiries: 

Xeros Technology Group plc  Mark Nichols, Chief Executive Officer  Paul Denney, Chief Financial Officer	Tel: [phone]
Jefferies International Limited (Nominated Adviser and Joint Broker)  Simon Hardy / Will Soutar	Tel: [phone]
Berenberg (Joint Broker)  Chris Bowman / Ben Wright / Laure Fine	Tel: [phone]
Instinctif Partners (Financial PR)  Adrian Duffield / Kay Larsen / Chantal Woolcock	Tel: [phone]

Notes to Editors 

About Xeros

Xeros Technology Group plc (LN: XSG) is a platform technology company that is reinventing water intensive industrial and commercial processes.

Xeros uses its patented XOrb^TM technologies to significantly reduce the amount of water used in a number of major applications with the remaining water becoming far more efficient in either affixing or removing molecules from substrates such as fabrics and garments. The result being significant improvements in economic, operational, product and sustainability outcomes.

Xeros applies its technology in multiple commercial and domestic markets and has signed multiple agreements across to license its products in major economies.

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

About ELS

ELS, based in Taunton, Massachusetts is a large full-service distributor of commercial laundry equipment, parts and chemistry to both the on-premise laundry and laundromat markets.

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

About Wash IQ

Wash IQ, formerly known as Viking Services, based in Sacramento California are a commercial and industrial laundry equipment and service supplier. They cover California with reach into Arizona and specialise in laundry solution and chemistry supply.

For more information, please visit - http://washiq.net/

 

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[1] Adjusted gross profit defined in 2018 Annual Report and Accounts as gross profit/loss before exceptional cost of sales items

 

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