Shares of Rotherham-based Xeros Technology Group plc fell about 35% on Thursday after it published a trading update saying it is no longer likely to reach month on month EBITDA profitability and cash breakeven in the first quarter of 2023, as previously guided.
The board of Xeros now expects this to be reached in 2024.
Xeros is a developer of laundry technology that reduces water use.
“In the 27 January 2022 business update the group referenced positive progress on a number of fronts with the group’s development partners and licensees, notwithstanding the ongoing impact of the Covid pandemic in their various home territories,” said Xeros.
“Since that update, India has come out of its third wave and is operating near normal but China has been experiencing a significant increase in major lockdowns.
“The board is continuously reviewing the group’s forward projections in light of these uncertain circumstances.
“Whilst the board’s view of the overall prospects of the group remains unchanged, the board has come to the view that the group is no longer likely to reach month on month EBITDA profitability and cash breakeven in the first quarter of 2023, as previously guided.
“The board now expects this to be reached in 2024.
“As at 28th February the group’s cash balance was £6.2m.
“These funds are sufficient to fund the delivery of major growth milestones through the remainder of 2022 and into the first quarter of 2023.
“The board is actively evaluating several funding options to secure the remaining investment required.
“Since the January business update, commercial discussions with major international organisations for the licensing of the XFiltra filtration technology have progressed in line with expectations and the company is currently in detailed commercial negotiations which it expects to conclude in the near term.
“The group continues to see increasing levels of commercial interest in XFiltra as a result of the combined impetus of legislative developments for microfibre filtration devices in washing machines and growing consumer awareness of the microfibre pollution issue.
“The group expects to receive XFiltra revenues from late 2023 onwards.
“Also, since the January business update, Xeros’ senior management team has travelled to India and Bangladesh to review the progress and growth plans of both IFB and Ramsons.
“Both license partners stated strong prospects for increasing orders in commercial laundry and denim finishing applications respectively.
“Having launched in commercial laundry, IFB and Xeros senior management teams have reviewed and agreed detailed plans for consumer acceptance field trials of their Xeros enabled domestic washing machines, which are due to commence in April.
“Market entry for these washing machines is planned to be early Q3.
“IFB continue to show a high degree of commitment towards a successful launch.
“In the denim finishing market, supported on the ground by Ramsons and Xeros, Aba continues to work on completing machine cycles for a leading global denim brand as previously communicated.
“This has extended beyond the February date, as previously advised, pending Xeros’ physical support which is now being provided in Dhaka.
“In addition to this work Ramsons has recently sold Xeros XDrum machines to a further three denim manufacturers in Bangladesh.
“These manufacturers also produce denim jeans for globally recognised brands.
“During the course of this year, the group expects to be able to announce endorsements from major denim brands about the benefits of the Xeros technology in terms of pumice replacement and water and energy savings.
“Xeros’ ambition remains the full elimination of the use of pumice stone from the denim finishing process.
“In comparison with the progress made in India, the continuing lockdowns noted above in China have reduced significantly SeaLion’s ability to commercialise our commercial laundry technology.
“The group will publish 2021 financial results at a later date and, as usual, this date will be communicated in advance.”
Xeros CEO Mark Nichols said: “Since our update in January, with the exception of China, the levels of activity by our existing partners have continued to be strong as has our engagement with prospective licensees.
“Our expectations are that multiple agreements will be signed this year with some fairly near term.
“This is against a background of increasing levels of interest from global brands in our ability to help them meet their major global environmental imperatives.”