REG - Xeros Tech Grp plc - 2023 Interim Results
27/09/2023 07:00
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RNS Number : 7419N Xeros Technology Group plc 27 September 2023
27 September 2023
Xeros Technology Group plc
('Xeros' or the 'Company' or the 'Group')
2023 INTERIM RESULTS
Sharper commercial focus driving momentum
Xeros Technology Group plc (AIM: XSG), the creator of technologies that reduce
the impact of clothing on the planet, today announces its unaudited interim
results for the six months ended 30 June 2023, which show momentum building in
all areas of the business.
Operational highlights
· Significant progress in all areas of the business with commercial momentum
building:
Filtration (estimated addressable market £350m p.a.)
- Xeros now has multiple licensing agreements in place with approved
manufacturers for XFilter technology, covering all major global washing
machine brands
- New external in-line filter, XF³, launched successfully at IFA, the world's
largest consumer electronics and home appliances trade show in Berlin
- Legislation driving adoption of microplastic filtration technologies for
washing machines
- First revenues expected in FY24
Finish (estimated addressable market £132m p.a.)
- New licensing agreement signed with global garment-finishing machine
specialists, Yilmak, and distributor, KRM, to provide denim processing
technology, to minimise water, chemical, and energy usage in the industry
- Revenue streams from both licensing agreement and ongoing supply of
consumables - XOrb product
- Revenues expected FY23
Care (estimated addressable market £3bn p.a.)
- IFB Appliances' new domestic 9kg washing machine, featuring Xeros technology
to save water and prolong garment life, in progress for launch in India
- Progress with IFB and Indian Railways on commercial laundry partnership
- IFB / Xeros appoint 'Ecoprod' as new distributor for the UK
· Awareness of Xeros' technologies is building, following successful launches at
the two preeminent industry trade shows, alongside ongoing leadership in
engagement with global legislators
· Meaningful conversations with four of the ten largest global domestic laundry
OEMs and ongoing engagement with another four of the top ten
Key financials
· Revenue of £0.1m (H1 22: £0.04m) - increasing momentum towards revenue
generation in Filtration
· Administrative expenses at £2.6m down from £4.2m in same period last year
· Significant reductions in costs with net cash outflow from operations reduced
to £2.9m (H1 22: £3.9m) with cash at 31 August 2023 of £2.6m
Outlook
· Commercial momentum gathering in target markets
· New licensing agreements and progress made with pre-existing partnerships
place us in a strong position to deliver the successful commercialisation of
our technologies
· Month on month EBITDA and cash breakeven expected during the second half of
FY24
Neil Austin, CEO said:
"Increasing climate awareness and conducive legislation is creating a
groundswell of opportunity for Xeros' technologies. During the Period, the
Group has signed three significant licensing agreements taking our total to
eight across all technology platforms, as well as widening its product
portfolio within filtration."
Enquiries
Xeros Technology Group plc Tel: 0114 269 9656
Neil Austin, Chief Executive Officer
Alex Tristram, Director of Finance
Cavendish Capital Markets Limited (Nominated Adviser and Broker) Tel: 020 7220 0570
Julian Blunt/Teddy Whiley, Corporate Finance
Andrew Burdis/Sunila de Silva, ECM
Belvedere PR xeros@belvederepr.com (mailto:xeros@belvederepr.com)
Cat Valentine Mob: 07715 769 078
Keeley Clarke Mob: 07967 816 525
About Xeros
Xeros Technology plc has developed patented and proven, industry-leading
technologies which reduce the environmental impact of how industries make and
care for clothes.
The traditional wet processing methods used in industrial and domestic laundry
and garment manufacturing consume billions of litres of fresh water and large
amounts of energy and chemicals, as well as damaging and weakening clothing
fibres and creating rising levels of environmental pollution. It is estimated
that washing machines contribute 35% of the 171 trillion microplastic
particles in the ocean.
A range of actors, including consumers, the media NGOs and regulators are
exerting pressure on these industries, with legislative action beginning to be
taken.
Xeros' three main technologies, Filtration, Finish, and Care, facilitate
garment manufacturers, industrial laundries, domestic washing machine
manufacturers and consumers, to reduce their environmental impact, whilst also
significantly improving efficiency in the process.
Xeros' model is to generate revenue from licensing its technologies,
generating royalties and the sale of consumables. Currently there are 8
agreements in place. The addressable markets in Filtration, Finish and Care
are estimated to be valued at £350m p.a., £132m p.a. and £3bn p.a.
respectively.
CEO Statement
I am pleased to report on the significant operational and commercial progress
the Group has made in the six months to 30 June 2023.
The macro environment for our technologies continues to strengthen in
synchronicity with our commercialisation goals. Global businesses are coming
under increasing pressure to improve their environmental practices, and
governments are introducing new regulations and legislation to protect against
further ecological damage and meet their global obligations.
In the Period under review, the Group signed new licensing agreements in
Filtration and Finish with the biggest brands in their respective markets,
which leave Xeros in prime position to capitalise on demand for its
micro-plastics filtration technology and to lead the world on the delivery of
ecological garment processing technology in denim.
When I joined Xeros just over a year ago, I did so because the Group's
technologies were not only the right ones ecologically for the planet but the
right ones economically. Our technologies actually reduce lifetime costs for
the major appliance and garment processing industries.
It is pleasing to note that our environmental contribution was recognised in
the Period, when we were awarded the much-prized B-Corp accreditation. The
application of this globally recognised standard sets us apart. Xeros is the
first in its peer group to receive the accolade and only the second AIM listed
company to reach this standard.
The new management team, which has been put in place since I joined, has
focused on the singular goal of building commercial partnerships, by promoting
the benefits of our technologies to the leading garment processing businesses
globally, which can deliver solutions at scale. Internally, there is a real
sense of momentum gathering and we look forward to the next 12 months with
increasing confidence in our technologies and strategy.
Summary of the results
As part of a sharpening of focus on commercial progression, it was important
to review costs within the business. To this end, we reduced our rate of cash
burn by £1m in the Period, while still making significant progress on key
licensing agreements. We take a prudent and efficient approach, maintaining a
keen eye on costs throughout the business and will remain focused on ensuring
sufficient liquidity in the Group at all times.
At the time of our fundraising in September 2022, we stated that we
anticipated month on month EBITDA and cash breakeven during 2024 and stated
that further clarity would emerge during the course of 2023. We believe the
commercial progress made during the past 12 months and the significant
inflection points expected to be achieved during the second half of our
financial year ended 31 December 2024 support this view and our guidance
remains unchanged.
Business update
Filtration
Even on an eco-setting, washing our clothes release 700,000 microfibres with
every wash. Those tiny fibres can have a lasting impact. They end up in our
oceans, in our food chain and in our water supply. Our filtration technology,
XFilter, can be integrated into a washing machine for the home or built at a
large scale for industry. It removes 99% of micro plastics from wastewater
during a washing machine cycle.
In the Period, we signed two further licensing agreements with major European
component manufacturers. These complement the Hanning agreement, signed in
June 2022, for the licensed manufacture of Xeros' XF1 technology. We now have
multiple approved manufacturing options for all of the major global washing
machine brands, capable of delivering 99 million units per annum.
The legislative environment, which supports the take up of our Filtration
technology, continues to advance. There have been further developments on
legislative landscape in the Period, with the mandated French deadline of 2025
set to be complemented by movements, most notably, in the EU, the UK and
California.
Post the Period end, we launched a new external filtration product, called
XF³, for the domestic market. This is an 'outside-of-machine' microplastic
filtration device, which can be retrofitted to the existing domestic install
base. The device debuted at IFA Berlin, which is the largest OEM exhibition in
the world. The feedback from our customer base was excellent with clear
recognition of the product's ideal combination of price, efficacy, and
flexibility on positioning. XF³ is the first product to come from our Gen 2
XFilter platform, which is set to deliver new propositions for the commercial
laundry and Industrial manufacturing sectors in future years.
Care
Our care technology uses XOrbs, reusable polymer spheres, to wash and care for
clothes. The technology is scalable for domestic washes to heavy industrial
use. It is designed to save tens of millions of litres of water every year,
use half the energy and chemicals of traditional laundry processes and prolong
the life of fabrics.
IFB Appliances' new mass 9kg washing machine platform featuring Xeros
technology continues to progress for full scale launch for domestic consumers
across India. IFB is also continuing progress with Indian Railways commercial
laundry partnership.
Leading environmental solutions provider, Ecoprod, has been appointed as a UK
distributor for Xeros enabled products. Ecoprod offers water management
solutions to several thousand facilities in five major industries -
healthcare, hotels, the care market, laundry companies and sports clubs.
Finish
Making one pair of jeans can use up to 10 years' worth of drinking water for
one person. Chemicals used in the process escape with wastewater polluting our
planet. Today, jeans are still made using pumice stone, which constantly needs
replacing and creates chemically contaminated sludge. Our XFN1 technology
(https://www.xerostech.com/xfn1/) uses patented reusable XOrbs as a pumice
alternative and reduces water and chemistry use by up to 50%.
The new Xeros-enabled denim processing machine was launched by our new partner
Yilmak at ITMA, the foremost global garment manufacturer trade show, in June
2023. We signed a licensing agreement with Yilmak Makina / KRM, one of the
World's largest and best respected garment finishing manufacturers and
distributors respectively, in the Period. This complements our existing
licensing agreement with Ramsons, based in India. Trials of our technology
with multiple manufacturers are underway, making samples and jeans for a
number of high-street denim brands.
In denim finishing, Xeros has established its technology in centres of
excellence in Turkey, Bangladesh and the UK for regional partner engagement in
live production environment.
Multiple fashion brand collaborations using Xeros technology are expected to
develop further in the forthcoming period.
Strategy
Our technology provides cost-effective solutions for garment manufacture and
clothing care within the $2.5 trillion fashion industry and the $55 billion
domestic washing machine market. Our annual addressable markets in Filtration,
Finish and Care are estimated to be £350 million, £132 million and £3
billion respectively.
Our strategy to become an IP-rich, capital-light licensor of proprietary
technology solutions to multiple scale industries, all of which deploy the
same Xeros core technologies remains. We identify and select partners across
the globe with significant market share, who are able to demonstrate a
strategic intent to deliver increased levels of sustainability, empowering
them to scale our innovations.
Our technologies are already in application in major global industries through
eight licensing and partner agreements, covering commercial and home laundry,
the cleaning of specialist workwear, and garment manufacture. So far, our
technology has saved millions of litres of water and is proven to
significantly increase the life of clothes and fabrics. The implementation of
our technologies delivers major improvements in economic, operational, product
and environmental outcomes.
Drivers for growth
As the climate emergency continues to unfold, consumer sentiment and demand
for responsible products have never been stronger, creating an urgency for
manufacturers to react. A recent McKinsey report stated: "The overall trend
... was clear ... products that made ESG-related claims grew faster than those
that didn't."
The realisation of the impact of clothing on the climate is strong and
growing. Garment production is a high energy and water consumer, whilst also
polluting air and water supplies during the textile creation processes. "Fast
fashion" is synonymous with landfill problems and throw-away society, and
narrative has shifted towards sustainability and ethics, with a focus on slow
fashion, circular economy, transparency, and supply chain traceability. The
rental and second-hand fashion markets have grown and are predicted to make up
a significant percentage of apparel sales in the future.
Xeros is actively involved with lobbying governments and supporting NGOs
lobbying for change in the UK, EU and US. Last year we led the co-creation of
a letter sent to the UK Environment Secretary demanding legislation for
filtration in washing machines. This led to a direct discussion with the
Minister and the Department of Environment, Food and Rural Affairs and Xeros
continues to support a UK private members' bill on this topic. This year we
have provided evidence to coincide with the EU's recommendations, currently
scheduled to be published in Q4 2023, on 'Measures to Reduce the Impact of
Microplastic Pollution on the Environment'. This evidence is also being used
to support a bill in California to mandate microfibre filtration technology in
washing machines, and was introduced in February 2023 and has reached the desk
of Governor Gavin Newsom for approval. Xeros is working closely with the NGO 5
Gyres, who co-authored the bill, to support the filtration effectiveness and
standards.
In addition, United Nations Environment Program is attempting to bring about a
global plastics treaty (initial draft published Sept '23) in which: 'Nations
should aim for the prevention, progressive reduction and elimination of
plastic pollution throughout the lifecycle of plastic. Their approaches should
be comprehensive and cover all parts of the lifecycle.' which refers to the
limitation of microplastic pollution.
Xeros continues to be recognised for leading filtration standards as
highlighted by a Washington Post article earlier this year that referenced the
University of Plymouth study concluding that XFilter is the most effective
microfibre capture system for the global laundry industry.
With France having established a precedent by mandating a deadline of 1
January 2025 for a microfibre capture requirement for all washing machines,
the rest of the EU, the UK and California are expected to follow suit. The
Xeros view is that with XFilter partnerships in place, we are well-positioned
to respond to an imminent need for five of the leading global washing machine
markets.
In addition to specific washing machine filtration legislation, there are a
number of other policies that highlight an accelerating trend towards
lower-impact goods and services, including extended producer responsibility,
consumer protection laws and environmental labeling.
Sales pipeline
The Company's goal is mass implementation of its three technologies and we
have a clear strategy in place to help us achieve this.
We are currently in active discussion with a number of retail brands, garment
manufacturers and OEMs, all of which have the potential to lead to further
agreements. Most recently, our engagement with major domestic appliance
washing machine brands has escalated with active engagement with four of the
10 leading global brands on both the Care and Filtration technologies.
We have plans to launch a domestic application in both Care (XC1) and
Filtration (XF(1) and XF(3)) for the major markets in Europe and Asia with
several brands in the next 24-36 month period.
Our manufacturing partnerships with Yilmak and Ramsons provide the platform
for the technology to permeate the market and our extensive engagement and
testing with multiple apparel brands creates awareness and demand for the
technology within the industry. The expectation is that several of these
brands will prescribe that the Xeros Finish technology can be used for the
production of their core fashion ranges in the next 12-24 months.
Outlook
We are buoyed internally by the momentum gathering in our markets. This,
combined with the new licensing agreements and progress made with pre-existing
partnerships place us in a strong position to deliver the successful
commercialisation of our technologies. The Group expects month on month EBITDA
and cash breakeven during the second half of our financial year to 2024.
Neil Austin
CEO
Financial review
Group revenue was generated as follows:
Unaudited Unaudited 12 months ended
6 months to 6 months to
30 June 30 June 31 December
2023 2022 2022
£'000 £'000 £'000
Licensing income 11 12 82
Service income 44 27 64
Sale of goods 57 - 18
Other revenue 1 1 -
Total revenue 113 40 164
The Group financial results for the six months ended 30 June 2023 reflect the
reduction in costs over the previous 12 months, alongside the periodic nature
of the Group's contracts with licensing partners, and remain in line with
Board expectations, reflecting Xeros' status as pre-revenue in its volume
markets pending the final stages of commercialisation. The Group recorded a
25.9% decrease in net cash outflow from operations to £2.9m in the period (H1
2022: £3.9m). In the period the Group recorded an adjusted EBITDA loss on
continuing operations of £2.6m (2022: loss £3.9m), a decrease of 32.2%.
Licensing income represents royalties from licence partners for the sale of
XDrum machines and revenue to Xeros for the sale of XOrbs, which has remained
broadly static against the previous period. Service income and machine sales
represents payments from existing Xeros customers in the UK and Europe. The
Group expects that future revenues will be comprised mostly of licensing
revenue and revenue from the sale of goods, as it supplies XOrbs to customers.
Gross profit for the six months ended 30 June 2023 rose to £0.1m (2022:
£0.0m) due to increased contribution from service income and the sale of
goods.
Administrative expenses decreased by 32.9% to £2.8m (2022: £4.2m) reflecting
a reduction in headcount alongside the timing of the Group's major costs.
Headcount fell in comparison with the previous year, with 32 employees as of
31 August 2023 (2022: 42).
Adjusted EBITDA is considered one of the key financial performance measures of
the Group as it reflects the true nature of our continuing trading activities.
Adjusted EBITDA is defined as the loss on ordinary activities before interest,
tax, share-based payment expense, non-operating exceptional costs,
depreciation and amortisation.
The Group decreased its operating loss to £2.7m (2022: £4.2m), a decrease of
35.0%. The loss per share was 1.81p (2022: loss 17.51p).
Net cash outflow from operations decreased to £2.9m (H1 2022: £3.9m), a
decrease of 25.8% in line with the decrease in adjusted EBITDA in the period,
with a small working capital outflow over the prior period. The Group had
existing cash resources (including cash on deposit) as at 30 June 2023 of
£3.5m (2022: £3.8m) and remains debt free. Group cash as at 31 August 2023
is £2.6m.
Overall cash utilisation remains in line with the Board's expectations at
below £0.5m per month. The directors expect cash utilisation to remain at the
current level until such time as higher licensing revenue is generated from
our licence partners and the Board will remain vigilant to ensure adequate
liquidity in the business until such time as the Group becomes cash generative
which, as stated above, we now believe will occur during the second half of
our financial year to 31 December 2024.
Alex Tristram
Director of Finance
Consolidated statement of profit or loss and other comprehensive income
For the six months ended 30 June 2023
Unaudited Unaudited
Six months Six months 12 months
ended ended ended
30 June 30 June 31 December
2023 2022 2022
Note £'000 £'000 £'000
Revenue 113 40 164
Cost of sales (28) (43) (80)
_______ _______ _______
Gross profit/(loss) 85 (3) 84
Administrative expenses (2,791) (4,160) (7,518)
Adjusted EBITDA* (2,642) (3,899) (7,368)
Share based payment expense 9 (184) 79
Depreciation of tangible fixed assets (73) (80) (145)
Operating loss (2,706) (4,163) (7,434)
Finance income - 9 16
Finance expense (19) (10) (30)
_______ _______ _______
Loss before taxation (2,725) (4,164) (7,448)
Taxation 3 (1) (1) 515
_______ _______ _______
Loss after tax (2,726) (4,165) (6,933)
_______ _______ _______
Other comprehensive loss
Items that are or maybe reclassified to profit or loss:
Foreign currency translation differences - foreign operations 9 (6) (3)
___ ____ __ _____ _______
Total comprehensive expense for the period (2,717) (4,171) (6,936)
___ ____ ____ _ __ _______
Loss per ordinary share
Basic and diluted on loss from continuing operations 6 (1.81)p (17.51)p (14.29)p
_______ _______ _______
*Adjusted EBITDA comprises loss on ordinary activities before interest, tax,
share-based payment expense, depreciation and amortisation.
Consolidated statement of changes in equity
For the six months ended 30 June 2023
Share Share Deferred Merger reserve Warrant reserve Foreign Retained Total
capital premium share currency earnings
capital translation deficit
reserve
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
At 1 January 2022 3,568 121,018 - 15,443 - (2,206) (130,761) 7,062
Loss for the year - - - - - - (6,933) (6,933)
Other comprehensive expense - - - - - (3) - (3)
Loss and total comprehensive expense for the period - - - - - (3) (6,933) (6,936)
Transactions with Owners recorded directly in equity:
Change in nominal value of ordinary shares (3,544) - 3,544 - - - - -
Issue of shares following placing and open offer 127 6,234 - - - - - 6,361
Costs of share issues - (539) - - - - - (539)
Warrant expense - 947 - (947) - - -
Share based payment expense - - - - - - (79) (79)
Total contributions by and distributions to owners (3,417) 6,642 3,544 - (947) - (79) 5,743
At 31 December 2022 151 127,660 3,544 15,443 (947) (2,209) (137,773) 5,869
At 1 January 2022 3,568 121,018 - 15,443 - (2,206) (130,761) 7,062
Loss for the period - - - - - - (4,165) (4,165)
Other comprehensive expense - - - - - (6) - (6)
Loss and total comprehensive expense for the period - - - - (6) (4,165) (4,171)
Transactions with Owners recorded directly in equity: -
Share based payment expense - - - - - - 184 184
Total contributions by and distributions to owners - - - - - - 184 184
At 30 June 2022 3,568 121,018 - 15,443 - (2,212) (134,742) 3,075
Balance at 1 January 2023 151 127,660 3,544 15,443 (947) (2,209) (137,773) 5,869
Loss for the period - - - - - - (2,726) (2,726)
Other comprehensive expense - - - - - 9 - 9
Loss and total comprehensive income for the period - - - - 9 (2,726) (2,717)
Transactions with Owners recorded directly in equity:
Share based payment expense - - - - - - (9) (9)
Total contributions by and distributions to owners - - - - - (9) (9)
At 30 June 2023 151 127,660 3,544 15,443 (947) (2,200) (140,508) 3,143
Consolidated statement of financial position
As at 30 June 2023
Unaudited Unaudited
30 June 30 June 31 December
2023 2022 2022
£'000 £'000 £'000
Assets
Non-current assets
Property, plant and equipment 934 834 821
Trade and other receivables - 17 6
934 851 827
Current assets
Inventories 162 111 164
Trade and other receivables 262 363 387
Cash on deposit 4 970 4
Cash and cash equivalents 3,494 2,840 6,465
3,922 4,284 7,020
Total assets 4,856 5,135 7,847
Liabilities
Non-current liabilities
Right of use liabilities (689) (653) (624)
Deferred tax (38) (38) (38)
(727) (691) (662)
Current liabilities
Trade and other payables (986) (1,369) (1,316)
(986) (1,369) (1,316)
Total liabilities (1,713) (2,060) (1,978)
Net assets 3,143 3,075 5,869
Equity
Share capital 151 3,568 151
Share premium 127,660 121,018 127,660
Deferred share capital 3,544 - 3,544
Merger reserve 15,443 15,443 15,443
Foreign currency translation reserve (2,200) (2,212) (2,209)
Accumulated losses (140,508) (134,742) (137,773)
Warrant reserve (947) - (947)
Total equity 3,143 3,075 5,869
Consolidated statement of cash flows
For the six months ended 30 June 2023
Unaudited Unaudited
6 months to 6 months to 12 months to
30 June 30 June 31 December
2023 2022 2022
£'000 £'000 £'000
Operating activities
Loss before tax (2,725) (4,164) (7,448)
Adjustment for non-cash items:
Depreciation of property, plant and equipment 73 80 145
Share based (credit)/expense (9) 184 (79)
(Increase)/decrease in inventories 2 (3) (56)
(Increase)/decrease in trade and other receivables 130 (3) (15)
Increase/(decrease) in trade and other payables (379) 5 (46)
Finance income - (9) (16)
Finance expense 19 10 30
Cash used in operations (2,889) (3,900) (7,485)
Tax (payments)/receipts (1) (1) 515
Net cash outflow used in operations (2,890) (3,901) (6,970)
Investing activities
Finance income - 9 15
Finance expense (19) (10) (30)
Cash withdrawn from/(placed on) deposit - 4,353 5,319
Purchases of property, plant and equipment (38) (12) (63)
Net cash inflow/(outflow) from investing activities (57) 4,340 5,241
Financing activities
Proceeds from issue of share capital, net of costs - - 5,821
Payment of lease liabilities (31) (86) (113)
Net cash (outflow)/inflow from financing activities (31) (86) 5,708
Increase/(decrease) in cash and cash equivalents (2,978) 353 3,979
Cash and cash equivalents at start of year 6,465 2,483 2,483
Effect of exchange rate fluctuations on cash held 7 4 3
Cash and cash equivalents at end of the period 3,494 2,840 6,465
Notes to the interim financial information
for the six months ended 30 June 2023
1. General information
The principal activity of Xeros Technology Group plc ("the Company") and its
subsidiary companies (together "Xeros" or the "Group") is the development and
licensing of platform technologies which transform the sustainability and
economics of clothing and fabrics during their manufacture and over their
lifetime of use.
Xeros Technology Group plc is domiciled in the UK and incorporated in England
and Wales (registered number 8684474), and its registered office address is
Unit 2 Evolution, Advanced Manufacturing Park, Whittle Way, Catcliffe,
Rotherham, S60 5BL. The Company's principal activity is that of a holding
company.
The interim financial information was approved for issue on 27 September 2023.
2. Basis of preparation
The interim financial information has been prepared under the historical cost
convention and in accordance with the recognition and measurement principles
of UK-adopted International Accounting Standards ("IFRSs").
The interim financial information has been prepared on a going concern basis
and is presented in Sterling to the nearest £'000.
The accounting policies used in the interim financial information are
consistent with those used in the prior year.
The following adopted IFRSs have been issued but have not been applied by the
Group in this financial information. Their adoption is not expected to have a
material effect on the financial information unless otherwise indicated:
· Amendments to IAS 21, The Effects of Changes in Foreign Exchange Rates,
effective 1 January 2025
· Amendments to IAS 7, Statements of Cashflows and IFRS 7, Financial
Instruments, Disclosures, effective 1 January 2024
· Amendments to IAS 1, Presentation of Financial Statements, effective 1 January
2024
· Amendments to IFRS 16, Leases, effective 1 January 2024
Further IFRS standards or interpretations may be issued that could apply to
the Group's financial statements for the year ending 31 December 2023. If any
such amendments, new standards or interpretations are issued then these may
require the financial information provided in this report to be changed. The
Group will continue to review its accounting policies in light of emerging
industry consensus on the practical application of IFRS.
The preparation of financial information in conformity with the recognition
and measurement requirements of IFRS requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities at the
date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Although these estimates are based on
management's best knowledge of the amount, event or actions, actual events
ultimately may differ from those estimates.
The interim financial information does not include all financial risk
management information and disclosures required in annual financial
statements. There have been no significant changes in any risk or risk
management policies since 31 December 2022. The principal risks and
uncertainties are materially unchanged and are as disclosed in the Annual
Report for the year ended 31 December 2022.
The interim financial information for the six months ended 30 June 2023 and
for the six months ended 30 June 2022 does not constitute statutory financial
statements as defined in Section 434 of the Companies Act 2006 and is neither
reviewed nor audited. The comparative figures for the year ended 31 December
2022 are not the Group's consolidated statutory accounts for that financial
year. Those accounts have been reported on by the Group's auditor and
delivered to the Registrar of Companies. The report of the auditor was (i)
unmodified, (ii) did not contain a statement under Sections 498(2) or 498(3)
of the Companies Act 2006. The report did contain an emphasis of matter
paragraph in relation to a material uncertainty in respect of the going
concern status of the Group as at 31 December 2022. The circumstances that
gave rise to this emphasis of matter paragraph are unchanged as at the date of
this report.
The half year condensed consolidated financial statements do not include all
of the information and disclosures required for full annual financial
statements and should be read in conjunction with the group's annual financial
statements as at 31 December 2022, which have been prepared in accordance with
UK adopted International Accounting Standards (IFRS).
IAS 34 'Interim financial reporting' is not applicable to these half year
condensed consolidated financial statements and has therefore not been
applied.
3. Taxation
Unaudited Unaudited
6 months to 6 months to Year ended
30 June 30 June 31 December
2023 2022 2022
£'000 £'000 £'000
Current tax:
UK tax credits received in respect of prior periods - - (517)
Foreign taxes paid 1 1 2
Total tax charge/(credit) 1 1 (515)
The Group accounts for Research and Development tax credits where there is
certainty regarding HMRC approval. There is no certainty regarding the claim
for the year ended 31 December 2022 and as such no relevant credit or asset is
recognised.
4. Trade and other receivables
Unaudited Unaudited
30 June 30 June 31 December
2023 2022 2022
£'000 £'000 £'000
Due within 12 months:
Trade receivables 4 54 24
Other receivables 40 65 134
Prepayments and accrued income 218 244 229
262 363 387
Due after more than 12 months
Other receivables - 17 6
There is no material difference between the lease receivable amounts as in
other receivables noted above and the minimum lease payments or gross
investments in the lease as defined by IFRS 16.
The minimum lease payment is receivables as follows:
Unaudited Unaudited
30 June 30 June 31 December
2023 2022 2022
£'000 £'000 £'000
Not later than one year 17 27 25
Later than one year not later than five years - 17 6
17 44 31
Contractual payment terms with the Group's customers are typically 30 to 60
days. The Directors believe that the carrying value of trade and other
receivables represents their fair value. In determining the recoverability of
trade receivables the Directors consider and change in the credit quality of
the receivable from the date credit was granted up to the reporting date.
5. Trade and other payables
Unaudited Unaudited
30 June 30 June 31 December
2023 2022 2022
£'000 £'000 £'000
Trade payables 211 368 528
Taxes and social security 115 120 98
Other creditors 26 34 33
Accruals and deferred income 554 793 600
Right of use liabilities 769 707 57
1,675 2,022 1,316
Current 986 1,369 1,316
Non-current 689 653 624
1,675 2,022 1,940
6. Loss per share
Basic loss per share is calculated by dividing the loss attributable to equity
holders by the weighted average number of shares in issue during the period.
The Group was loss-making for the 6-month periods ended 30 June 2023 and 30
June 2022 and also for the year ended 31 December 2022. Therefore, the
dilutive effect of share options has not been taken account of in the
calculation of diluted earnings per share, since this would decrease the loss
per share reported for each of the periods reported.
The calculation of basic and diluted loss per ordinary share is based on the
loss for the period, as set out below. Calculations of loss per share are
calculated to two decimal places.
Unaudited Unaudited
6 months to 6 months to Year ended
30 June 30 June 31 December
2023 2022 2022
£'000 £'000 £'000
Total loss attributable to the equity holders of the parent (2,726) (4,165) (6,933)
Unaudited Unaudited
6 months to 6 months to Year ended
30 June 30 June 31 December
2023 2022 2022
£'000 £'000 £'000
Issued ordinary shares at the start of the period 150,982,535 23,784,483 23,784,483
Effect of shares issued for cash 2,412 - 24,742,166
Weighted average number of shares at the end of the period 150,984,947 23,784,483 48,526,649
Unaudited Unaudited
6 months to 6 months to Year ended
30 June 30 June 31 December
2023 2022 2022
Basic and diluted on loss for the period (1.81)p (17.51)p (14.29)p
7. Leases
The Group has leases for office buildings and associated warehousing and
operational space. With the exception of short-term leases and leases of
low-value underlying assets, each lease is reflected on the statement of
financial position as a right-of-use asset and a lease liability. The Group
classifies its right-of-use-assets in a manner consistent with its property,
plant and equipment.
Each lease generally imposes and restriction that, unless there is a
contractual right for the Group to sublet the asset to another party, the
right-of-use-asset can only be used by the Group. Leases are either
non-cancellable or may only be cancelled by incurring a substantive
termination fee. The Group is prohibited from selling of pledging the
underlying leased assets as security. For leases over office buildings and
warehousing and operations space, the Group must keep those properties in a
good state of repair and return the properties in their original condition at
the end of the lease. Further, the Group must insure items of property, plant
and equipment and incur maintenance fees on such items in accordance with the
lease contracts.
The table below describes the nature of the Group's leasing activities by type
of right-of-use asset recognised on the statement of financial position:
No. of right-of-use assets leased Remaining range Average remaining No. of leases with termination options
of term lease term
Land and buildings 2 57 -104 months 81 months 2
Right-of-use assets
Additional information on the right-of-use assets by class is as follows:
Land and buildings
£'000
Balance as at 31 December 2021 14
Additions in the period 775
Depreciation charged in the period (34)
Balance as at 30 June 2022 755
Depreciation charged in the period (37)
Balance as at 31 December 2022 718
Additions in the period 154
Depreciation charged in the period (64)
Balance as at 30 June 2023 808
Lease liabilities
Lease liabilities are presented in the statement of financial position as
follows:
Unaudited Unaudited
30 June 30 June 31 December
2023 2022 2022
£'000 £'000 £'000
Current 80 54 57
Non-current 689 653 624
769 707 681
8. Seasonality
The Group experiences no material variations due to seasonality.
9. Availability of interim statement
This interim statement will be available on Xeros' website at
www.xerostech.com (http://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.
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