Xeros narrows losses as licensees delay launch plans
By Josh White
Date: Wednesday 23 Sep 2020
(Sharecast News) - Clothing and fabrics technology company Xeros announced a 59.8% reduction in its adjusted EBITDA loss in its first half on Wednesday, to £3.0m, as it confirmed its licensees had delayed some market launch plans.
The AIM-traded firm said its net cash outflow from operations reduced by 55.4% year-on-year for the six months ended 30 June, to £4.1m, with the company having cash of £6.2m as at 31 August.
Operationally, it said its licensed products were close to market entry, with its India and China licensees of its commercial laundry technology planning market launches in the first quarter of 2021.
It said its India licensee of the garment finishing technology was planning a market launch in also in the first quarter of 2021, with the planned market entry timing by the India licensee of its domestic laundry technology unchanged, in mid-2021.
During the period, it noted that its microfibre filtration technology was judged as "vastly superior" to existing products, with a University of Plymouth study of domestic washing machine filtration solutions published in July evaluating its 'XFiltra' technology as "significantly more effective" than all other devices.
A joint development agreement was signed in March with an unnamed "leading global laundry equipment" original equipment manufacturer to develop a filtration product for its commercial washing machines.
Xeros said its transition to a 'pure-play' licensing model and organisation was now fully implemented, having completed the exit from direct businesses with sale of Marken in June.
The company's cash burn run rate was down to less than £0.5m per month, the board said, and it delivered headcount reductions in line with its plans from 64 in December 2019 to 45 in August 2020.
It also announced its intention to consolidate shares on Wednesday, to reduce the number of shares in issue.
"Covid-19 has inevitably caused some delays in our licensees' programmes," said chief executive officer Mark Nichols.
"Whilst we cannot rule out further disruption, our licensees are planning to place 'XDrum' machines with affirmation customers in both commercial laundry and garment finishing markets in the fourth quarter of this year ahead of full market launches early next.
"Our licensee's plans for entering the domestic washing machine market in India in mid-2021 remain unchanged."
Nichols said that, following successful market penetration with those first contracts, the company's plans were to extend the geographic reach of its licence portfolio.
"The domestic version of 'XFiltra' has now been independently judged as the leading solution for the abatement of the largest source of primary microplastic pollution which is created by the washing of our clothes at home.
"Our expectation is for our design to be licensed well in advance of European legislation deadlines, currently set at 2025.
"Our joint development programme with a world leading commercial laundry equipment company to create an industrial size filtration product is on track for completion at the end of the year."
Nichols added that the implementation of the firm's current and future licence contracts would deliver "major improvements" in the sustainability of clothing and fabrics during their manufacture, including reductions in water, chemistry, energy, effluent and cost.
"Extending the useful life of these essential items in the hands of consumers and businesses adds to the preservation of precious resources and furthers the protection of the environment."
At 0932 BST, shares in Xeros Technology Group were down 5.13% at 1.26p.
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