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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Xeros Technology Group Plc | LSE:XSG | London | Ordinary Share | GB00BMGYBJ57 | ORD 0.1P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| -0.025 | -1.79% | 1.375 | 1.30 | 1.45 | 1.40 | 1.30 | 1.40 | 2,234,263 | 13:23:32 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Industrial Patterns | 164k | -6.93M | -0.0459 | -0.30 | 2.07M |
From Apr 2019 to Apr 2024
TIDMXSG
RNS Number : 7928C
Xeros Technology Group plc
20 April 2017
20 April 2017
Xeros Technology Group plc
Executing strategy
Xeros Technology Group plc (AIM:XSG, 'the Group', 'Xeros'), the developer and provider of polymer based technologies with multiple commercial applications, today publishes its final results for the 17 months ended 31 December 2016.
Group highlights
-- Proven platform technology to be commercialised across three global scale industries: cleaning, tanning and textiles
-- Meaningful discussions with commercial development partners underway across divisions -- Strengthened operational structure aligned to commercialising applications -- Seven new patents filed since the beginning of 2017 -- Group earned income increased to GBP2.5m (year ended 31 July 2015: GBP480,000) -- Cash resources on 31 March 2017 of GBP23.6m
Cleaning Technologies
-- 140 Commercial Laundry machines commissioned (year ended 31 July 2015: 48) -- Total machine estate and order backlog totalling 438 at the end of March 2017
-- 'Symphony Project' launched to share Xeros' technology on an 'open source' basis for incorporation within any brand of commercial laundry machine - see separate release
-- Multiple successful customer trials in high added value performance workwear market
-- Fourth prototype in development which targets simple changes for the incorporation of Xeros' technology within any domestic washing machine.
Tanning Technologies
-- Successful completion of multiple scale trials in retanning and dyeing -- Heads of terms signed with Wollsdorf Leder, a leading European tannery -- Scale trials planned with four additional European tanneries
Textile Technologies
-- Laboratory scale testing has demonstrated that Xeros technology can deliver quantum benefits in garment manufacture and colouration
-- Intellectual property filed and in development to underpin opportunity
Mark Nichols, Chief Executive of Xeros, said:
"Over the past 17 months, we have achieved major milestones in our technology development and its commercialisation. We now have strong evidence that we have the capacity to deliver sustainability, performance and economic benefits across three world scale industries: cleaning, tanning and textiles.
"Technical validation and increasing market endorsement show that we possess a platform technology that can transform these industries.
"The long-term value of our technology in each of the selected markets is substantial, given their scale, the environmental and economic pressures on them, and the quantum of the improvements we deliver in these areas. These benefits are now increasingly being recognised and we are in active discussions with a number of partners with the objective of further accelerating our commercial development.
"Our scope and strategy is now fixed. 2017 will be a year of execution, in which we significantly progress the commercialisation of our highly disruptive, innovative technology."
Enquiries:
Xeros Technology Group plc Tel: 0114 321 Mark Nichols, Chief Executive 6328 Officer Paul Denney, Chief Financial Officer Jefferies International Limited Tel: 020 7029 (Nominated Adviser and Joint Broker) 8000 Simon Hardy / Harry Nicholas Berenberg (Joint Broker) Tel: 020 3207 Chris Bowman / Ben Wright / Amritha 7800 Murali Instinctif Partners (Financial Tel: 020 7457 PR) 2020 Adrian Duffield / Helen Tarbet / James Gray
Notes to Editors
Xeros Technology Group plc (LN: XSG) is a platform technology company that is reinventing water intensive industrial and commercial processes by reducing water and chemistry usage with its polymer technologies. Its patented technologies have the capacity to provide material economic, operational and sustainability improvements that are unattainable with traditional processes. The Group is currently exploiting its intellectual property in three areas: Cleaning Technologies, Tanning Technologies and Textile Technologies. Xeros has a number of agreements in place with such international organisations as BASF, Hilton and Wollsdorf Leder.
For more information, please visit - http://www.xerostech.com/
Operating Review
Cleaning Technologies
Commercial Laundry
Our objective within the Commercial Laundry market is to establish and then progressively build a profitable position in the "On Premise" hotel segment in the US and beyond. Initially, we will do this with our own brand of washing machines but over time we seek to supplement these with those of other third party manufacturers which incorporate our proprietary technology.
Our model is based on Xeros and branded manufacturers supplying machines directly to approved 'Forward Channel Partners' who have responsibility for their installation, commissioning and the delivery of lifetime services and consumables to customers under our proprietary Sbeadycare(R) programme.
The total number of commissioned machines grew by 140 during the period commencing 1(st) August 2015 to a total of 212 at the end of December 2016 and by 195 to 267 at the end of March 2017. In addition, there were installations awaiting commissioning of 74 machines and letters of agreements for further installations of 97 machines at the end of March 2017. This growth in demand has been supported by an increasing body of evidence that Xeros' technology delivers sustainability, performance and economic benefits.
These figures compare to an estimated market size of 10,000 machines installed annually in the hotel "On Premise" Laundry segment in the US. We therefore see significant opportunity for growth, given the benefits and competitive differentiation that our technology delivers.
Additional measures taken to increase penetration of the market included completing the development of our smaller 16kg machine as a complement to our 25kg washing machine, with the first units being delivered to customers in the US in late 2016.
We announced two new add-on products: SbeadyCare(R) Xtend and Assure which are designed to reduce linen replacement and compliance related costs for hotels by leveraging new polymer technology and our information technology respectively.
Having market tested our commercial offers against the needs of different types of customers, we added an operating lease package called "Excel" to complement our capital leasing ("Complete") and outright machine purchase ("Perform") propositions. We now believe we have a suite of offerings that comprehensively addresses the spectrum of customer requirements both financially and contractually.
We took a number of actions to increase the capacity of our supply chain to meet market demand. To serve the western US and Central America, we opened a regional office in Corona, California to complement our established sales, warehousing and training facilities located on the East Coast of the United States. Over time, this facility will reduce supply chain related expenses and serve as a hub for sales support and operations activities in the region.
We integrated all Commercial Laundry engineering in the US into our new Engineering Centre located in Seekonk, Massachusetts. In doing so we have accelerated acceptance and life testing of our new 16kg machine. Additionally, we have developed engineering solutions to advance our strategy of making Xeros' technology increasingly compatible with a wider range of commercial laundry washing machines.
Whilst our early market penetration in the US was necessarily geographically diverse to promote ourselves as a new market entrant, we have since started to concentrate our efforts towards defined areas where we can create network density. We continue to upgrade our Forward Channel Partners in these areas and we now have five "Platinum" members on the East and West coasts of the United States who are qualified to sell, commission and service our installations.
As previously announced, we reduced the installation and commissioning rates in Q4 2016 in order to work on improving our commissioning capacity to meet demand. The above improvements have been instrumental in significantly increasing the rate at which we can now commission machines; achieving a commissioning rate of 31 machines in March 2017 with high levels of customer satisfaction being recorded. We intend to broadly maintain these rates during 2017 with a further increase supported by additional fully certified FCP's later in the year.
Outside of North America, we have continued to expand using Forward Channel Partners. Post period end, we signed Heads of Terms with Richard Jay Pty Ltd who will serve three major metropolitan markets in Australia where drought conditions are experienced on a regular basis. We also entered the Spanish market with installations in the Canary Islands where two thirds of the population of 1.7 million people and 5 million annual tourists rely on desalinated water.
By the end of April 2017, 16 of our customers in the Americas will have joined our "Million Gallons Saved Club", providing further evidence of the benefits our technology delivers to customers and the environment. Also by the end of April 2017, we estimate that our technology will have saved approximately 300 million litres of water on a global basis and an equivalent amount of effluent.
Our enterprise sales team secured Approved Supplier Status with Hilton Americas Supply Management which represents over 4,300 hotels across Canada, the USA and South America. We are now in discussions with other hotel chains with a view to achieving a similar status with them.
Through our Symphony Project, announced on 20 April 2017, we are making freely available to all machine manufacturers a relatively simple means of incorporating our technology at the end of their production lines. In so doing, we are enabling them to sell their products into the market place and to receive a share of the long-term savings that Xeros' technology generates. We anticipate greatly accelerating the adoption rate of our technology. Under this model, our targeted gross contribution for a 100-month Sbeadycare(R) contract for a 25kg machine is expected to be approximately $47,000.
Our total machine installation target remains one per working hour in 2020. Our ambition is that this demand will be met by commercial laundry machine manufacturers selling their Xeros enabled machines to certified Forward Channel Partners who in turn deliver our differentiated Sbeadycare(R) proposition. This strategy is expected to enable Xeros to make a financial return on its intellectual property and know-how with relatively low capital intensity.
High Performance Workwear
We have trialed our cleaning technology in 12 separate installations in the High Performance Workwear market, which covers personal protective clothing including that used by emergency services and other regulated end markets. Results indicated that we have the potential to become the de facto standard for cleaning high-value and often life-protecting workwear.
There is little additional technical development and cost required for Xeros to enter this market which spans many sub-segments including petrochemicals and the armed services, all of which are becoming increasingly aware of the adverse and potentially dangerous effects of incorrectly or insufficiently cleaned workwear. Each of the sub-segments can be addressed with our existing machine technology using bespoke cleaning cycles developed by our in-house specialists downloaded onto machines from our databases.
The market size for the cleaning of high performance workwear is extremely large. In the firefighting segment alone, there are over one million registered firefighters in the US and over 50,000 fire houses with increasingly prescriptive maintenance and cleaning regimes for their gear.
We are currently refining our business model and plans to enter this market and once our proposition is proven to an appropriate degree, we will seek to work with partners to generate a return on our intellectual property and know how.
Consumer Cleaning
Similar to high performance workwear, we have established that we have a highly differentiated technology for cleaning and extending the life of a number of high value, but hard to clean garments owned by consumers.
Following extensive market research and process design, we have evaluated an internet-enabled on-demand outsourcing approach as the best model to bring our technology to this market. We have designed and are now ready to test our proposition within a limited number of zip codes in the US for a single garment type.
Given the nature of this model, we believe that we should partner from the outset with businesses and investors experienced in this type of service model and we are currently profiling suitable partners.
We continue to actively work on bringing Xeros' technology to the home and we have developed three further domestic washing machine prototypes. The latest design is planned to be very simple to manufacture, service and operate. As a result, we believe that it has the potential to substantially reduce the barriers to bringing the sustainability and economic benefits of Xeros' technology to the consumer cleaning market.
Smart Xeros Machines
We have continued to develop the "smart" features in all our machine designs. In our Commercial Laundry business, we have continuous data flows which enable remote management and ongoing performance improvement in each of the constituents in our value chain. We now have a relatively low financial investment compared with the value that is being created.
Our "Gateway" communication hubs, which we install in each of our customers' laundries are now transmitting multiple data points from each cycle. The data collected resides centrally in our Cloud storage and is configured into actionable information which is made available online to customers to improve their operations.
We believe our approach to information technology is unique within the broader industry and represents another sustainable competitive advantage for all our cleaning applications.
In overall terms, it has been a period of great progress for Cleaning Technologies. Commercial Laundry is now becoming established and we have a business model and routes to market which we believe will support profitable revenues. We have taken the first steps towards working with major industry incumbents to participate in our value chain with the objective of accelerating growth whilst reducing our capital intensity. Our entry into the High Performance Workwear market represents another global scale opportunity where Xeros has the potential to become the de facto cleaning standard. Finally, we have plans to serve the consumer market, through an outsourced model in the first instance, and, in due course, through placing Xeros technology in the home.
Tanning Technologies
In Cleaning Technologies, our polymer technology gently removes unwanted molecules and contaminants from materials. In contrast, our tanning technology is highly effective in pushing molecules into hides during leather processing. As in Cleaning Technologies, deployment of Xeros' technology and processes substantially reduces water, chemistry and effluent.
There are significant growth opportunities in the leather industry. A number of tanneries are becoming output-constrained due to shortages of water and legal limits on effluent emissions. Xeros is uniquely positioned to help address these issues and expand capacity in those tanneries.
Whilst the polymers are different, the process within which they are used, via deployment in rotating drums, is similar - albeit on a significantly larger scale. Our Cleaning Technologies currently use 30kg to 50kg of polymer in a cycle whereas Tanning Technologies may use as much as five tonnes.
We have chosen to focus initially on the Retanning and Dyeing stage in the tanning process, which uses large volumes of water to apply specialty chemicals. In due course, we believe we can also move upstream to the Tanning stage which typically uses proportionately more water to apply bulk chemicals.
We conducted six production scale trials in Retanning and Dyeing during the period, during which over 1,000 hides were processed. The trials were conducted with our development partner, Wollsdorf Leder Schmidt & Co. Ges.m.b.h. in Austria. Strong evidence was produced to show that Xeros' technology is effective in reducing water, chemistry and effluent in the production process without impacting the quality of the leather produced.
We have since signed heads of terms with Wollsdorf Leder to convert their Retanning and Dyeing operations to incorporate Xeros' technology and are currently determining the final engineering and commissioning requirements before entering into a binding contract.
Our business model for this industry is one of sharing gains with customers under 10 year contracts with the capital required to add Xeros' technology into the production process, paid for by the tannery from their share of the savings generated.
The size of the global bovine segment is estimated to be 300 million hides per annum. Our ambition is to achieve a percentage market share in the high teens by 2022 with typical chemistry savings of between 10% and 15% per hide for the Retanning and Dyeing stage.
We have also successfully conducted further first stage trials in Retanning and Dyeing with four other European tanneries who address the auto, shoe and garment markets. Each have indicated that they wish to proceed with scale trials. We plan to complete these trials by mid-2017 and to establish suitable commercial arrangements; thereafter, we intend to extend our presence in Europe and, in due course, the Americas.
The design of the system which delivers this technology is materially complete and Xeros has engaged with leading equipment suppliers to the tanning industry to provide key components of a Polymer Management System to include storage, transportation and cleaning of the polymers after each cycle.
We have been granted patents for our Tanning and Dyeing process in Europe and have made similar applications in all territories with major leather processing industries.
We strengthened our management team in Tanning Technologies which is exclusively focused on its successful commercialisation. We will continue to add more resource as we look to scale this exciting application.
Textile Technologies
In mid-2016, we extensively evaluated major water-intensive markets and identified garment and fabric manufacturing as market sectors with significant potential. 22.7 million tonnes of natural fibres are processed annually for the clothing and textiles industries which are seeking to improve their environmental performance without compromising on cost or quality. We see this as a substantial opportunity, and the research we have conducted so far supports this view.
Xeros' technology has the capacity to deliver water, chemistry and energy reductions with commensurate improvements in effluent whilst improving performance outcomes in a number of textile applications. In so doing, we believe we have the ability to support manufacturers, brands and retailers in delivering their sustainability objectives without compromising cost or quality.
We anticipate significant intellectual property being created in this area and have filed four patent applications to date with further filings anticipated.
Polymer Technologies
Our polymer technology is protected by extensive patent approvals and our R&D team is constantly developing and evolving our Intellectual Property.
Our Generation One polymers cover the optimal shape, size and density of the polymers used in each application. During the period, we supplemented these with Generation Two, which incorporate performance enhancing additives.
For our cleaning applications, both Generations One and Two were developed in a partnership with BASF with whom we signed a five year supply agreement in November 2016.
We are now actively developing Generation Three polymers which use novel surface effects to deliver further reductions in chemistry, or performance improvements for the markets we are addressing. We anticipate these improvements being introduced in a two to three-year timeframe.
All our novel polymer and engineering developments are underpinned by Intellectual Property and we have further increased our coverage and at the end of March 2017 we have a total of 48 patent families "pending" or "granted" to protect our portfolio, with more anticipated to follow. A number of the patent filings have the benefit of significantly extending the time horizon of our protection.
To deliver our development goals, we increased our polymer science team to eight people by the end of the period. The team is directly aligned to the three application areas and their successful commercialisation. As at the end of March 2017, our development teams possessed a total of 12 PhDs.
Summary and Outlook
Over the past 17 months, we have achieved major milestones in our technology development and its commercialisation. We now have strong evidence that we have the capacity to deliver sustainability, performance and economic benefits across three world scale industries: cleaning, tanning and textiles.
Technical validation and increasing market endorsement show that we possess a platform technology that can transform these industries.
The long-term value of our technology in each of the selected markets is substantial, given their scale, the environmental and economic pressures on them, and the quantum of the improvements we deliver in these areas. These benefits are now increasingly being recognised and we are in active discussions with a number of partners with the objective of further accelerating our commercial development.
Our scope and strategy is now fixed. 2017 will be a year of execution, in which we significantly progress the commercialisation of our highly disruptive, innovative technology.
Financial review
Group earned income was generated as follows:
Hot Features
Premium
17-month
period ended Year
ended
31 December 31 July
2016 2015
GBP'000 GBP'000
Machine sales 1,540 289
Service income 837 177
Consumables 16 -
Lease interest income 73 14
___ ___ _______
Total earned income 2,466 480
Group earned income increased to GBP2,466,000 in the 17-month period ended 31 December 2016 when compared to the prior year (year ended 31 July 2015: GBP480,000).
Notably both machine sales income and service income from the installed base of Commercial Laundry machines have increased significantly. Machine sales income has increased to more than five times the income generated in the year to 31 July 2015 and service income has increased to more than four times the income generated in the prior year.
The point at which revenue and costs from machine sales can be recognised is dependent on the completion of a number of stages. These include the installation of the machine, commissioning of the machine, acceptance of the machine by the customer, completion of utility incentive formalities, where applicable, and then, in the case of lease sales, finalisation of the lease agreement. The Group does not recognise revenue and costs from a machine sale until all of these aspects are complete.
The number of machines installed in the period are as follows:
17 month Year
period ended ended
31 December 31 July
2016 2015
No. No.
Machines sold - revenue and
costs taken to P&L statement 76 16
Machines commissioned and
generating service revenue,
but machine sale revenues
and costs not yet recognised 64 32
Machines installed but not
yet commissioned 70 34
Machines installed in the
period 210 82
As at 31 December 2016, contracted future revenues amount to GBP3.8m (31 July 2015: GBP1.6m) and average contract length is 59 months (31 July 2015: 74 months). As the Group's commercial activities have expanded this average contract period reflects normal trading terms.
Gross profit was GBP290,000 compared to GBP67,000 in the year ended 31 July 2015. Adjusted gross margin, defined as gross profit plus lease interest income, was GBP363,000 (15%) compared to GBP81,000 (17%) in the year ended 31 July 2015. Adjusted gross margin and adjusted EBITDA are considered the key financial performance measures of the Group as they reflect the true nature our continuing trading activities.
The Group has continued to invest in its R&D programme. The Group spent GBP7.6m on R&D including staff and patent costs (year ended 31 July 2015: GBP3.6m) alongside the Commercial Laundry working capital and start-up costs, in line with the Board's expectations. Total administrative expenses (which include the R&D expenses detailed above) increased to GBP22.6m in the period (year ended 31 July 2015: GBP11.1m). This reflects the expanded headcount and increased commercial activities of the Group during the period. The figure of GBP22.6m also includes a foreign exchange gain of GBP3.8m resulting from movements in the US dollar rate during the period. This has resulted in an Adjusted EBITDA loss of GBP20.7m (year ended 31 July 2015: loss GBP9.9m). Adjusted EBITDA is defined as the loss on ordinary activities before interest, tax, share-based payment expense, non-operating exceptional costs, depreciation and amortisation. Non-operating exceptional costs are the professional advisory costs related to the November 2015 fundraising.
The recent strength of the US$ means that working capital and operating costs in the US Commercial Laundry business are proportionally more expensive when translated into Sterling, the Group's functional currency. However, a strong US$ will benefit the Group financial statements as the US business grows to generate cash and become profitable.
The Group reported an operating loss of GBP22.4m (year ended 31 July 2015: loss GBP10.9m). The loss per share was 25.04p (year ended 31 July 2015: loss 15.62p).
The Group expects cash utilisation to continue to accelerate over the coming years, as we continue to fund our R&D programmes alongside the roll-out in Commercial Laundry. The increase in net cash outflow from operations to GBP26.4m (year ended 31 July 2015: GBP11.8m) reflects these activities and was in line with the Board's expectations.
The Group had existing cash resources as at 31 December 2016 of GBP28.9 million, comprised of cash and cash equivalents of GBP19.0m and investments of GBP9.9m (31 July 2015: GBP17.5m, comprised of cash and cash equivalents of GBP15.9m and investments of GBP1.5m) and remains debt free.
The Group has tax losses of approximately GBP42.4m to offset against future taxable profits (31 July 2015: GBP19.8m).
Accounting reference date change
As previously reported in the financial statements for the prior period, the Group has changed its accounting reference date to 31 December. Consequently, these financial statements have been prepared for the 17-month period ended 31 December 2016. The comparative figures are presented for the year ended 31 July 2015.
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
17 months Year
ended ended
31 December 31 July
2016 2015
Notes GBP000 GBP000
----------------------------------- ------ ------------ ---------
Earned income 2,466 480
Less: lease interest income (73) (14)
----------------------------------- ------ ------------ ---------
REVENUE 2,393 466
Cost of sales (2,103) (399)
----------------------------------- ------ ------------ ---------
GROSS PROFIT 290 67
Lease interest income 73 14
Adjusted gross margin* 363 81
----------------------------------- ------ ------------ ---------
Administrative expenses (22,640) (11,102)
Other operating income - 174
Adjusted EBITDA* (20,659) (9,868)
Share based payment expense (1,232) (916)
Non operating exceptional
costs (87) -
Depreciation of tangible
fixed assets (372) (77)
----------------------------------- ------ ------------ ---------
OPERATING LOSS (22,350) (10,861)
Finance income 1,225 192
LOSS BEFORE TAXATION (21,125) (10,669)
Taxation 5 886 464 ----------------------------------- ------ ------------ --------- LOSS AFTER TAX (20,239) (10,205) ----------------------------------- ------ ------------ --------- OTHER COMPREHENSIVE INCOME: Items that are or may be reclassified to profit or loss: Foreign currency translation differences - foreign operations (1,720) 16 ----------------------------------- ------ ------------ --------- TOTAL COMPREHENSIVE EXPENSE FOR THE PERIOD (21,959) (10,189) ----------------------------------- ------ ------------ --------- LOSS PER SHARE Basic and diluted on loss from continuing operations 6 (25.04)p (15.62)p ----------------------------------- ------ ------------ ---------
* Adjusted gross margin comprises gross profit plus lease interest income
* Adjusted EBITDA comprises loss on ordinary activities before interest, tax, share-based payment expense, non-operating exceptional costs, depreciation and amortisation.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Foreign
currency Retained
Share Share Merger translation earnings
capital premium reserve reserve deficit Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
At 31 July 2014 98 28,132 15,443 (38) (13,137) 30,498
----------------------- --------- --------- --------- ------------- ---------- ---------
Loss for the
year - - - - (10,205) (10,205)
Other comprehensive
expense - - - 16 - 16
----------------------- --------- --------- --------- ------------- ---------- ---------
Loss and total
comprehensive
expense for the
year - - - 16 (10,205) (10,189)
Transactions
with owners,
recorded directly
in equity:
Issue of shares - 46 - - - 46
Share based payment
expense - - - - 916 916
----------------------- --------- --------- --------- ------------- ---------- ---------
Total contributions
by and distributions
to owners - 46 - - 916 962
----------------------- --------- --------- --------- ------------- ---------- ---------
At 31 July 2015 98 28,178 15,443 (22) (22,426) 21,271
----------------------- --------- --------- --------- ------------- ---------- ---------
Loss for the
period - - - - (20,239) (20,239)
Other comprehensive
expense - - - (1,720) - (1,720)
----------------------- --------- --------- --------- ------------- ---------- ---------
Loss and total
comprehensive
expense for the
period - - - (1,720) (20,239) (21,959)
Transactions
with owners,
recorded directly
in equity:
Issue of shares 27 39,973 - - - 40,000
Exercise of share
options 4 281 - - - 285
Costs of share
issues - (2,152) - - - (2,152)
Share based payment
expense - - - - 1,232 1,232
----------------------- --------- --------- --------- ------------- ---------- ---------
Total contributions
by and
distributions
to owners 31 38,102 - - 1,232 39,365
----------------------- --------- --------- --------- ------------- ---------- ---------
At 31 December
2016 129 66,280 15,443 (1,742) (41,433) 38,677
----------------------- --------- --------- --------- ------------- ---------- ---------
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
At At
31 December 31 July
2016 2015
Notes GBP000 GBP000
---------------------------------- ------ ------------ ---------
ASSETS
Non-current assets
Property, plant and equipment 1,588 577
Trade and other receivables 1,656 363
---------------------------------- ------ ------------ ---------
TOTAL NON-CURRENT ASSETS 3,244 940
---------------------------------- ------ ------------ ---------
Current assets
Inventories 7,005 2,909
Derivative financial instruments 705 -
Trade and other receivables 1,830 578
Current tax asset - 477
Investments - bank deposits 9,959 1,539
Cash and cash equivalents 18,975 15,913
---------------------------------- ------ ------------ ---------
TOTAL CURRENT ASSETS 38,474 21,416
---------------------------------- ------ ------------ ---------
TOTAL ASSETS 41,718 22,356
---------------------------------- ------ ------------ ---------
LIABILITIES
Non-current liabilities
Deferred tax (39) (22)
TOTAL NON-CURRENT LIABILITIES (39) (22)
---------------------------------- ------ ------------ ---------
Current liabilities
Trade and other payables (3,002) (1,063)
TOTAL CURRENT LIABILITIES (3,002) (1,063)
---------------------------------- ------ ------------ ---------
TOTAL LIABILITIES (3,041) (1,085)
---------------------------------- ------ ------------ ---------
NET ASSETS 38,677 21,271
---------------------------------- ------ ------------ ---------
EQUITY
Share capital 7 129 98
Share premium 66,280 28,178
Merger reserve 15,443 15,443
Foreign currency translation
reserve (1,742) (22)
Accumulated losses (41,433) (22,426)
---------------------------------- ------ ------------ ---------
TOTAL EQUITY 38,677 21,271
---------------------------------- ------ ------------ ---------
CONSOLIDATED STATEMENT OF CASH FLOWS 17 months Year
ended ended
31 December 31 July
2016 2015
Notes GBP000 GBP000
---------------------------------------------------------- ------- ------------ ---------
Operating activities
Loss before tax (21,125) (10,669)
Adjustment for non-cash items:
Depreciation of property, plant and equipment 372 77
Share based payment 1,232 916
Increase in inventories (3,957) (2,110)
Increase in trade and other receivables (2,424) (90)
(Decrease)/increase in trade and other payables (663) 288
Finance income (1,225) (192)
Cash used in operations (27,790) (11,780)
Tax receipts/(payments) 1,380 (8)
Net cash outflow from operations (26,410) (11,788)
------------------------------------------------------------------- ------------ ---------
INVESTING ACTIVITIES
Finance income 520 192
Cash placed on deposits with more than 3 months maturity (8,420) (13)
Purchases of property, plant and equipment (811) (532)
------------------------------------------------------------------- ------------ ---------
Net cash outflow from investing activities (8,711) (353)
------------------------------------------------------------------- ------------ ---------
FINANCING ACTIVITIES
Proceeds from issue of share capital, net of costs 38,133 46
Net cash inflow from financing activities 38,133 46
------------------------------------------------------------------- ------------ ---------
Increase/(decrease) in cash and cash equivalents 3,012 (12,095)
Cash and cash equivalents at start of year 15,913 27,999 Effect of exchange rate fluctuations on cash held 50 9 CASH AND CASH EQUIVALENTS AT OF PERIOD/YEAR 18,975 15,913 ------------------------------------------------------------------- ------------ ---------
NOTES TO THE FINANCAIL STATEMENTS
1) BASIS OF PREPARATION
This financial information does not constitute the company's statutory accounts for the period ended 31 December 2016 or the year ended 31 July 2015 but is derived from those accounts. Statutory accounts for 2015 have been delivered to the registrar of companies, and those for the period ended 31 December 2016 will be delivered in due course. The auditor has reported on those accounts; their reports were (i) unqualified, (ii) did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying their report and (iii) did not contain a statement under section 498 (2) or (3) of the Companies Act 2006.
The Financial Statements for the period ended 31 December 2016 included in this announcement were authorised for issue in accordance with a resolution of the Board of Directors on 19 April 2017. The level of rounding for financial information is the nearest thousand pounds.
The Company is a limited liability company incorporated and domiciled in England & Wales and whose shares are quoted on AIM, a market operated by The London Stock Exchange.
The Company's registered office is Unit 2 Evolution, Advanced Manufacturing Park, Whittle Way, Catcliffe, Rotherham, S60 5BL.
Going Concern
At this stage in its development the company is reliant on equity share funding. When making their going concern assessment the directors assess available and committed funds against all non-discretionary expenditure, and related cash flows, as forecast for the period ended 30 April 2018. These forecasts indicate that the company is able to settle its liabilities as they fall due in the forecast period.
Accordingly the directors consider that this should enable the company to continue in operational existence for the foreseeable future and the directors believe that it remains appropriate to prepare the financial statements on a going concern basis.
2) SIGNIFICANT ACCOUNTING POLICIES
The consolidated financial statements have been prepared under the historical cost convention in accordance with International Financial Reporting Standards as adopted by the European Union (EU IFRS).
3) SEGMENTAL REPORTING
The information that is presented to the Chief Executive Officer, who is considered to be the Chief Operating Decision Maker ("CODM"), for the purposes of resource allocation and assessment of performance, is based wholly on the overall activities of the Group. Due to the current size and activities of the Group, there is a high degree of centralisation of activities. The Directors therefore consider that there is one operating, and hence one reportable segment for the purposes of presenting information under IFRS8; that of "Development and commercialisation of polymer bead cleaning technologies". There are no differences between the segment results and the consolidated statement of comprehensive income. The assets and liabilities information presented to the CODM is consistent with the consolidated statement of financial position.
The single operating segment includes revenue by category as follows:
17 months Year
ended ended
31 December 31 July
2016 2015
GBP000 GBP000
----------------------- ------------ --------
Sale of goods 1,556 289
Rendering of services 837 177
2,393 466
----------------------- ------------ --------
During the 17-month period ended 31 December 2016 the Group had two customers who individually generated more than 10 per cent. of revenue. Those customers accounted for 19% and 13% of revenue respectively.
During the year ended 31 July 2015 the Group had no customers who individually generated more than 10 per cent. of total revenue.
An analysis of revenues by geographic location of customers is set out below:
17 months Year
ended ended
31 December 31 July
2016 2015
GBP000 GBP000
--------------- ------------ --------
Europe 259 88
North America 2,134 378
2,393 466
--------------- ------------ --------
An analysis of non-current assets by location is set out below:
17 months Year
ended ended
31 December 31 July
2016 2015
GBP000 GBP000
--------------- ------------ --------
Europe 722 517
North America 2,522 423
3,244 940
--------------- ------------ --------
4) LOSS FROM OPERATIONS
17 months Year
ended ended
31 December 31 July
2016 2015
GBP000 GBP000
------------------------------------------------------------- ------------ --------
Loss from operations is stated
after crediting:
Grant income 410 74
Foreign exchange gains 3,848 174
------------------------------------------------------------- ------------ --------
Loss from operations is stated
after charging to
administrative expenses:
Depreciation of plant and
equipment (see note 11) 372 77
Operating lease rentals -
land and buildings 270 104
Staff costs (excluding share
based payment charge) 10,525 4,334
Research and development 3,067 1,401
------------------------------------------------------------- ------------ --------
Auditors remuneration:
* Audit of these financial statements 12 8
* Audit of financial statements of subsidiaries of the
company 12 12
* all other services 29 6
Total auditor's remuneration 53 26
------------------------------------------------------------- ------------ --------
Other services in the current period related to interim review work, tax advice and advice in respect of the group's overseas subsidiary.
5) TAXATION
Tax on loss on ordinary activities
17 months Year
ended ended
31 December 31 July
2016 2015
GBP000 GBP000
---------------------------------------------------------- ------------ --------
Current tax:
UK Tax credits received in respect of prior periods (923) (477)
Foreign taxes paid 20 8
---------------------------------------------------------- ------------ --------
(903) (469)
Deferred tax:
Origination and reversal of temporary timing differences 17 5
---------------------------------------------------------- ------------ --------
Tax credit on loss on ordinary activities (886) (464)
---------------------------------------------------------- ------------ --------
The credit for the period/year can be reconciled to the loss before tax per the statement of profit or loss and other comprehensive Income as follows:
Factors affecting the current tax charges
The tax assessed for the year varies from the small company rate of corporation tax as explained below:
17 months Year
ended ended
31 December 31 July
2016 2015
GBP000 GBP000
--------------------------------------------------------------------------------------------- ------------ ---------
The tax assessed for the period varies from the main company rate of corporation tax as
explained
below:
Loss on ordinary activities before tax (21,125) (10,669)
--------------------------------------------------------------------------------------------- ------------ ---------
Tax at the standard rate of corporation tax 20% (2015: 20%) (4,225) (2,134) Effects of: Expenses not deductible for tax purposes 291 202 Research and development tax credits receivable (923) (477) Unutilised tax losses for which no deferred tax asset is recognised 5,130 1,937 Employee share acquisition adjustment (1,172) - Foreign taxes paid 20 8 Change in tax rates (7) - --------------------------------------------------------------------------------------------- ------------ --------- Tax credit for the period/year (886) (464) --------------------------------------------------------------------------------------------- ------------ ---------
In the year ended 31 July 2015, the group had an amount of GBP477,000 receivable from HM Revenue and Customs in respect of Research and Development tax credits. This was included as a current tax asset in the Consolidated Statement of Financial Position on the basis that HMRC had agreed that this amount was payable and it was received shortly after the period end. The group accounts for Research and Development tax credits where there is certainty regarding HMRC approval and, as no claims have yet been made for the period to 31 December 2016, the group has not recognised a debtor for any amounts that may be receivable for this period.
6) LOSS PER SHARE (BASIC AND DILUTED)
Basic loss per share is calculated by dividing the loss attributable to equity holders of the parent by the weighted average number of ordinary shares in issue during the year. Diluted loss per share is calculated by adjusting the weighted average number of ordinary shares in issue during the period to assume conversion of all dilutive potential ordinary shares.
17 months Year
ended ended
31 December 31 July
2016 2015
GBP000 GBP000
--------------------------------------------------------------------- ------------ -----------
Total loss attributable to the equity holders of the parent (20,239) (10,205)
--------------------------------------------------------------------- ------------ -----------
No. No.
Weighted average number of ordinary shares in issue during the year 80,839,504 65,336,459
--------------------------------------------------------------------- ------------ -----------
Loss per share
Basic and diluted on loss for the year (25.04)p (15.62)p
--------------------------------------------------------------------- ------------ -----------
Adjusted earnings per share has been calculated so as to exclude the effect of non-operating exceptional costs including related tax charges and credits. Adjusted earnings used in the calculation of basic and diluted earnings per share reconciles to basic earnings as follows:
Basic earnings (20,239) (10,205) Non-operating exceptional costs 87 - --------------------------------- --------- --------- Adjusted earnings (20,152) (10,205) --------------------------------- --------- --------- Adjusted loss per share Basic and diluted on loss for the year (24.93)p (15.62)p ---------------------------------------- --------- ---------
The weighted average number of shares in issue throughout the period is as follows:
17 months Year
ended ended
31 December 31 July
2016 2015
--------------------------------------------------- ------------ -----------
Issued ordinary shares at 1 August 65,504,879 65,173,549
Effect of shares issued for cash 15,334,625 162,910
Weighted average number of shares at 31 December/
31 July 80,839,504 65,336,459
--------------------------------------------------- ------------ -----------
The Company has issued employee options over 6,687,763 (31 July 2015: 7,368,901) ordinary shares which are potentially dilutive. There is however, no dilutive effect of these issued options as there is a loss for each of the periods concerned.
7) SHARE CAPITAL
Share Share Merger
capital premium reserve Total
Number GBP000 GBP000 GBP000 GBP000
--------------------- ----------- --------- --------- --------- --------
Total Ordinary
shares of 0.15p
each as at 31
July 2014 65,173,549 98 28,132 15,443 43,673
--------------------- ----------- --------- --------- --------- --------
Issue of ordinary
shares on exercise
of share options 331,330 - 46 - 46
Total Ordinary
shares of 0.15p
each as at 31
July 2015 65,504,879 98 28,178 15,443 43,719
--------------------- ----------- --------- --------- --------- --------
Issue of ordinary
shares following
placing 17,777,778 27 39,973 - 40,000
Issue of ordinary
shares on exercise
of share options 2,739,254 4 281 - 285
Costs of share
issues - - (2,152) - (2,152)
--------------------- ----------- --------- --------- --------- --------
Total Ordinary
shares of 0.15p
each as at 31
December 2016 86,021,911 129 66,280 15,443 81,852
--------------------- ----------- --------- --------- --------- --------
As permitted by the provisions of the Companies Act 2006, the Company does not have an upper limit to its authorised share capital.
The following is a summary of the changes in the issued share capital of the Company during the period ended 31 December 2016:
(a) 666,499 Ordinary Shares were allotted at a price of 10.8 pence per share, for total cash consideration of GBP71,982, upon the exercise of share options granted in the Company's EMI share option scheme.
(b) 588,500 Ordinary Shares were allotted at a price of 12.0 pence per share, for total cash consideration of GBP70,620, upon the exercise of share options granted in the Company's EMI and Unapproved share option schemes.
(c) 874,499 Ordinary Shares were allotted at a price of 16.2 pence per share, for total cash consideration of GBP141,669, upon the exercise of share options granted in the Company's EMI share option scheme.
(d) 609,756 Ordinary Shares were allotted at a price of 0.15 pence per share, for total cash consideration of GBP915, upon the exercise of share options granted in the Company's Unapproved share option scheme.
(e) 17,777,778 Ordinary Shares were allotted at a price of 225 pence per share, for total cash consideration of GBP40,000,000 (before costs) following a placing of shares.
At 31 December 2016, the Company had only one class of share, being Ordinary Shares of 0.15p each.
8) ANNUAL REPORT AND ACCOUNTS
The Group's annual report and accounts for the period ended 31 December 2016 have been published today and will be posted to shareholders shortly. The annual report and accounts will also be available in electronic form on www.xerostech.com
Forward-looking statements
This announcement may include certain forward-looking statements, beliefs or opinions, including statements with respect to Xeros' business, financial condition and results of operations. These forward-looking statements can be identified by the use of forward-looking terminology, including the terms "believes", "estimates", "plans", "anticipates", "targets", "aims", "continues", "expects", "intends", "hopes", "may", "will", "would", "could" or "should" or, in each case, their negative or other various or comparable terminology. These statements are made by the Xeros Directors in good faith based on the information available to them at the date of this announcement and reflect the Xeros Directors' beliefs and expectations. By their nature these statements involve risk and uncertainty because they relate to events and depend on circumstances that may or may not occur in the future. A number of factors could cause actual results and developments to differ materially from those expressed or implied by the forward-looking statements, including, without limitation, developments in the global economy, changes in government policies, spending and procurement methodologies, and failure in health, safety or environmental policies.
No representation or warranty is made that any of these statements or forecasts will come to pass or that any forecast results will be achieved. Forward-looking statements speak only as at the date of this announcement and Xeros and its advisers expressly disclaim any obligations or undertaking to release any update of, or revisions to, any forward-looking statements in this announcement. No statement in the announcement is intended to be, or intended to be construed as, a profit forecast or to be interpreted to mean that earnings per Xeros share for the current or future financial years will necessarily match or exceed the historical earnings. As a result, you are cautioned not to place any undue reliance on such forward-looking statements.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR UKOKRBNASAAR
(END) Dow Jones Newswires
April 20, 2017 02:00 ET (06:00 GMT)
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