22 June 2022

Xeros Technology Group plc

('Xeros' or the 'Company' or the 'Group')

2021 Preliminary Results

Xeros Technology Group plc (AIM: XSG), the creator of technologies that reduce the impact of clothing on the planet, today publishes its preliminary results for the 12 months ended 31 December 2021.

Highlights

·    First license of XFilter to leading domestic washing machine component supplier.

·    Domestic machine technology planned for launch by leading Indian manufacturer in Q4 2022.

·    Denim Finish technology trialled by multiple major retail brands.

·    New Xeros brand identity and marketing programme launched to drive growth.

·    Cash burn rate remains at planned levels of £0.5m per month.

·      XFilter Technology Platform

o Licensing agreement signed in June with Hanning, a leading component supplier to multiple major domestic washing OEMs.

o Independent test results of XFilter's efficacy by Hohenstein, a German textile research and testing institute, in June 2022 confirmed an industry leading capture rate of 99%.

o Test and trial agreement signed in July 2021 with a large Asian domestic washing machine OEM on track and soon to commence commercial discussions.

·      XOrb/XDrum Technology platform:

o Denim Finishing trials successfully completed with three major European retail brands fully validating our sustainability and financial benefits. First denim jeans made with Xeros technology sold to consumers.

o Following successful machine and cycles design, IFB planning entry into the Indian domestic laundry market in Q4 2022.

o Sealion and IFB launched their commercial laundry machine models in China and India respectively. Covid significantly impacting the level of customer demand.

·    Financial:

o Revenue increased by 23.1% to £0.5m (2020: £0.4m).

o Adjusted EBITDA¹ loss reduced by 7.1% to £6.3m (2020: loss £6.8m).

o Administrative expenses reduced by 4.8% to £7.2m (2020: £7.6m).

o Net cash outflow from operations reduced by 8.3% to £5.8m (2020: £6.3m). Cash at 31 May 2022 £4.3m.

Klaas de Boer, Chairman of Xeros, said:

"This has been a year of significant progress in embedding Xeros' technologies into product lines of key licensing partners laying a strong foundation for future growth. The transformation of the Xeros brand and the supporting marketing programme are key to accelerating the commercialisation of our transformational technologies."

1 Adjusted EBITDA is defined as loss on ordinary activities before interest, tax, share-based payment expense, depreciation and amortisation

Enquiries: 

Notes to Editors

POWERED BY SCIENCE, XEROS CREATE TECHNOLOGIES ENGINEERED FOR THE FUTURE

Born out of textile research and advancing new standards of performance and responsibility, Xeros' technologies revolutionise the way we make and clean our clothes, conserving water and preventing waste. Designed to impact industries and people on a global scale, Xeros transforms the performance, impact and economics of the fashion and washing machine industry.

Xeros enables the scaling of its innovations and impact by licencing its intellectual property to partners across the globe. Their work has, to date, created 38 patent families.

Xeros' technologies are already in use in major global industries, including commercial and home laundry and garment manufacture. So far, these technologies have saved millions of litres of water and could prevent billions of microfibres from ending in our oceans.

TO THE POWER OF CHANGE 

xerostech.com

Chairman's Statement

In Amazon's 2000 Annual Report, Jeff Bezos mused about the total disconnect between the progress of Amazon's business and the trajectory of its share price. Today I observe the same at Xeros. Amazon's share price was down 80% YoY, whereas the business had made very significant progress on all main metrics. Today, Xeros' shares are showing a similar trend, yet the Company has made tremendous progress over the past 12 months. The analogy with Amazon is, however, far from perfect. Amazon was able to communicate quantifiable financial and commercial metrics, whereas, in the case of Xeros, most of the progress, although substantial, is less quantifiable, and we are not in a position to communicate specifics (yet).

Long term trends do remain very favourable for Xeros. France has legislated for mandatory in-machine filtration devices from 2025 and in the UK similar legislation is in preparation. Expectation is that the EU and the US (led by California) will follow. In parallel, the unsustainable ecological footprint of the fashion/apparel industry is coming under increasing public scrutiny. And finally, the shift towards ESG investing will continue in spite of issues around greenwashing.

The nearer term external environment, however, remains out of our control, very challenging and unpredictable: Covid continues to disrupt operations in China, there is a major war going on in Europe, supply chains remain stretched, and we have rampant inflation. In 2021, Xeros' partners in India and China continued to suffer significant delays in their efforts to commercialise Xeros' technology, with very little ability for Xeros to support those partners on the ground. This has negatively impacted our pathway to profitability.

For me personally, the main commercial highlights over the past 12 months were:

-       IFB launching in commercial laundry

-       Signing of first XFilter licensing deal with Hanning

-       Continued progress with IFB towards their domestic laundry launch in 2022, with much better visibility of their timelines

-   Start of commercial use of Xeros' denim finishing technology by 2 suppliers in Bangladesh serving 2 different global high street brands

I also want to highlight the refresh of Xeros' purpose, brand and positioning, which we undertook to strengthen our external presence and visibility to help widen and accelerate the market adoption of our portfolio of solutions. This work has also re-energised the entire company internally following the challenges resulting from Covid.

In addition to ongoing commercial execution, two important areas of focus for the board in 2022 are funding and company leadership. As is clear from our announcement on 31 March 2022, the Company will require further financing before the anticipated breakeven in 2024. The Board decided not to initiate a fundraise immediately following that announcement, as it wanted to provide more evidence regarding the path to profitability. As it relates to leadership, in March 2022, our CEO Mark Nichols announced his desire to transition to a portfolio career, after six and a half years at the helm of Xeros. The Board is extremely grateful for Mark's leadership, under which the Company transitioned to a licensing business model and created the XFilter platform, for his ongoing commitment to the business and for the amount of notice provided, which should give ample time to attract a suitable successor to guarantee a seamless transition.

Finally, a thank you to all our staff, management, Directors, shareholders and commercial partners for supporting us during two challenging years dominated by Covid. Your support has been and will remain critical to bring these important solutions to market at scale.

Klaas de Boer

Chairman

Chief Executive's Statement

2021 was a year of mixed fortunes for Xeros with Covid related lockdowns delaying the commercial progress of our existing licensees in contrast with the rapid development of prospective licenses of our filtration technology. Encouragingly, our South Asian partners are now free of lockdowns but not so our Chinese partner. Both regions continue to suffer major supply chain shortages and long lead times. Thus, our licensing revenues are behind where we planned them to be but importantly our prospects are unchanged in terms of achieving wide geographic take-up of all our technologies. Technologies which improve the cost and environmental sustainability performance of the apparel industry which is one of the most resource consuming and polluting industries in the world.

The voices of stakeholders, including consumers, to reduce the impact of our clothing on our planet have continued to grow louder. Demands for reduced water usage, lower energy consumption and less microplastic pollution from the manufacture and cleaning of clothes have increased to the point that these secular trends are now mainstream with brands conspicuous if they are not genuinely making improvements.  COP26 gave further impetus to calls to action for every enterprise to become accountable with hard measures.

A key theme for Xeros over recent years has been learning how to navigate and then convert the significant global enterprises that will ultimately be the drivers of widespread adoption of our technology. Whether we are addressing the very largest apparel retailers or the very largest washing machine manufacturers in the world, the challenges of how our team of 45 people can educate, influence and change the behaviour of some of the world's largest companies is one that we have wrestled with. We have seen very clearly that it takes time, patience and resilience on our part but ultimately the clear evidence of the benefits of our technology does win through and we have made strong progress in the level of engagement with these organisations during the year.

In 2021, Xeros raised £9.0m, before expenses, from strategic and financial investors with the funds applied to winning and executing license contracts for our two platform technologies, XTend (the combination of XOrbs used in an XDrum) and XFilter. During 2021 and the first half of 2022, the business has invested in a new visual identity to boldly reflect the clear and compelling purpose of the Company and why we do what we do. This new visual identity is embodied in the new style Annual Report and allows us to confidently present ourselves to the outside world. Multiple stakeholders, including apparel brands, washing machine manufacturers, garment finishing machine manufacturers, environmental activists, government regulators and, above all, consumers, will be able to get a clear picture of the solutions brought to the world by Xeros' technologies and to increasingly demand them.

These solutions are now presented under three product names:

Care (XC): this covers Xeros' XTend cleaning technologies in domestic and commercial laundry markets and highlights the emphasis on garment and fabric life extension brought by our technology.

Finish (XFN): this covers Xeros' XTend garment finishing technology as currently used in the denim finishing market.

Filter (XF): this covers Xeros' XFilter filtration technology used to capture over 90% of microfibre pollution from laundry processes.

Business Review - Care

Commercial Laundry

The Commercial Laundry market has traditionally been the proving ground of our Care technology platform, and we initially targeted India and China as the territories for its deployment, given that both countries have a great need and receptivity for water saving technology. Whilst the evidence and the environmental, performance and economic benefits have been verified both by independent testing agencies and by initial customers, the Covid pandemic had a major impact on the near-term sales of our licensees in the year.

Xeros addresses the commercial laundry market though two channels; firstly, through OEM license partners manufacturing and selling XC machines directly to their customers in nominated territories (i.e. India and China) and secondly, in other parts of the world, through licensed distributors who sell XC machines purchased from our OEM license partners. Xeros sells XOrbs to OEM license partners and licensed distributors.

 As regards our OEM license partners, both Jiangsu SeaLion Technology Developments Company ("SeaLion") in China and IFB Industries Limited ("IFB") in India have launched two sizes of XC machines in their markets with plans to add a third to each of their ranges. The market segments they plan to address include hospitality, which will likely continue to be impacted by Covid until travel returns to previous levels in their respective countries. Their response is to address other sectors offering high growth opportunities including the performance workwear market, industrial linen launderers and dry cleaners. The current and additional machine sizes address these opportunities directly.

In February 2022, Georges SA ("Georges") in France renewed their contract with us to purchase commercial laundry machines from IFB and XOrbs from us. IFB XC machines are now working in a number of their sites with additional machine orders expected to meet the requirements of SNCF. Georges services the nationwide fleet of SNCF's workwear along with contracts with Air France and other large French workwear garment users.

During the remainder of 2022, we plan to initiate further licensing discussions in the commercial laundry market on a selective geographic basis.

Domestic Laundry

We address the domestic laundry market using a scaled down version of the same XC technologies used in the commercial laundry market. Whilst the 100 million domestic machines sold each year are used far less often than industrial equivalents, consumers have very high expectations in terms of their ease of use, performance and increasingly, their environmental impact. In addition to reducing the water, energy and detergent used in the washing of clothes, studies have demonstrated that Xeros' Care laundry technology also makes them "look better and last longer". This enables consumers to extend the life of their garments, allowing consumers to choose to reduce the environmental impact of buying new clothes.

Our first license partner for this application is IFB in India, the second largest domestic washing machine company in India by sales volume, with over 500 consumer appliance stores across the country as well as its own online operation. Prior to Covid, IFB had planned to commence selling XC front-loading washing machines in 2021. IFB's plans are now that this will occur in Q4 of 2022. Prior to this market launch, IFB will place an order for XOrbs with Xeros to meet their market entry needs with. BASF will produce these in Germany in Q3.

A successful launch in India of our domestic XC technology will be a pivotal moment for Xeros, not just in giving a clear line of sight to a significant future revenue stream but, as importantly, it will be key to unlocking wider adoption by the industry and we continue our engagement with other major manufacturers with a view to increasing the number of licenses for this application in the course of 2023.

Business Review - Finish

Denim Finishing

The denim market is of global scale with 1.2 billion pairs of jeans manufactured each year, with many different finishes required to meet consumer demand. Each pair of jeans exacts a heavy toll in terms of high levels of water consumption with many still made using pumice stone, which has a significant environmental impact during the manufacturing process. Xeros' solution simplifies the finishing process by completing all finishing steps within one machine eradicating the use of pumice and using less chemistry and water with a commensurate reduction in effluent. Our solution thereby meets the secular trends of this industry to make the manufacturing process of these garments greener, quicker and cheaper.

Since our last Annual Report was published, the Xeros team has been working with our OEM license partner, Ramsons Garment Finishing Equipments PVT Ltd ("Ramsons") and Aba Group, a manufacturer of denim jeans for some of the world's largest retail brands, based in Bangladesh. This work, much of it conducted remotely during Covid lockdowns, has seen the team successfully complete a series of trials of Xeros' technology in "real world" production environments.

In early 2022, Xeros and Ramsons extended these trials to a number of other leading denim manufacturers in Bangladesh, and, to date, Xeros' technology has successfully been used in the production of jeans for two of the world's largest retail brands, with these jeans deemed to have been manufactured at sufficiently high quality to be sold to consumers by the retail brands. These trials not only validated the quality of denim finishing for retail brands but also validated all our stated resource and cost reductions. Currently, Xeros is producing denim samples for a third major global retailer. Whilst not yet significant in terms of volumes, there are now denim jeans manufactured with Xeros' Finish technology being sold to consumers.

Our main focus now is to work with the major brands, across their production, sustainability and procurement teams, to elicit a positive brand endorsement of our technology with the end goal of a brand advocating the use of Xeros Finish technology across their supply chains. The investment in our brand and messaging is clearly aimed at raising awareness of our solutions across the apparel industry.

With this market validation of our technology, our intention is to initiate discussions for additional license contracts during 2022 and beyond as part of our ambition to eradicate all pumice from denim manufacturing.

Leather Tanning

An additional application of this technology is found in the leather tanning market. In 2019 Xeros spun off the leather tanning business to the then management team, operating under the Qualus brand. Since 2019, the Qualus team have successfully attracted external investment to their business and are now operating in Mexico, Brazil, India and markets in Asia with initial revenues flowing. Under the terms of the original sale of the business in 2019, Xeros will receive royalty income based on Qualus' revenue from 2022 and, whilst not expected to be material in the short term, it is encouraging to see this application of our technology making progress through adoption in a scale industry.

Business Review - Filtration

XFilter Technology Platform

The world now understands and is reacting to the threat caused by microfibres entering the world's rivers and oceans, with its largest source being the washing of clothes at home. Our proprietary XFilter product design is over 90% efficient in collecting synthetic and natural fibres from all sizes of machines with the resultant filtride disposed of easily and simply into commercial or household solid waste, thereby removing them from water-borne waste which ultimately ends up in rivers and oceans.

Since January 2021, Xeros has achieved a number of major milestones towards fulfilling its ambition for XFilter to become the microfibre filtration technology of choice for the washing machine industry. The first milestone was the completion in the middle of the year of a product design which meets consumer performance requirements in terms of efficiency, cost and usability. This design has been used to engage with multiple parties with the result that in July 2021, Xeros signed a Testing and Trials agreement with one of the world's largest domestic washing machine manufacturers headquartered in Asia. The contractual programme of work with this manufacturer is progressing as planned. As part of this programme, Hohenstein, a highly respected testing institute for the textile industry, has accredited Xeros' filtration device, XFilter, with the highest level of performance, capturing over 99% of microplastics released in a wash cycle.

Also in July 2021, a Co-operation Agreement was signed with Hanning Elektro-Werke GmbH & Co. KG ("Hanning") who are a major supplier of machine parts to the appliance industry. Progress under this agreement led to the signature our first Technology Licensing agreement in June 2022 whereby Hanning will market, produce and sell XFilter units on a global, non-exclusive basis to washing machine manufacturers. Hanning will pay Xeros a royalty for each unit sold. Xeros is also engaged with a number of additional large brands with a view to their adoption of XFilter within their washing machines.

In June 2021, Xeros signed a license agreement for its commercial washing machine version of the XFilter technology with Girbau S.A. under which they will pay a royalty per device for sales on an exclusive basis in territories including Europe and North America and with non-exclusive rights for certain other territories. We anticipate their entering the markets with XFilter products in mid-2023 with products manufactured for them by a licensed third party.

In parallel to these activities, our filtration scientists have been working closely with the UK government advising on microfibres, their filtration in laundry environments and appropriate standards for their capture from effluent streams. Legislation is expected to be put in place for the mandatory fitting of filters within domestic and commercial machines sold in the UK from the beginning of 2025, the same timescale as French legislation.

Intellectual Property

The IP-rich and asset-light commercialisation business model is founded upon a strong and defendable patent portfolio which provides freedom to operate and protection for us and for our license partners. Our technologies are protected by close to 40 patent families which are in application or have been granted with key patent lives extending through mid to late 2030s. Our policy is to file patents in countries with large potential markets and where we believe we can successfully defend our intellectual property. In overall terms, our core patents are filed in countries which represent 90% of global GDP. During 2021, the majority of new patent filing activities were in the area of XFilter, the design of which has been enhanced significantly to cover methods of integration within washing machines. We also filed a limited number of patents to protect a position in areas of future potential interest which are consistent with our business mission to reduce the impact of clothing on our planet.

In order to have the financial capacity to defend its patent portfolio, Xeros carries significant levels of patent defence and litigation insurance.

Outlook

2021 was a year in which our license and development partners made continued progress in spite of the ongoing impacts of the Covid pandemic in their countries. In June 2022 we achieved a notable landmark with our XFilter technology being licensed for the first time into the domestic washing machine market. With the evidence from our licensing of both our Care and Filtration platforms, Xeros plans to increase the number of license agreements in countries with great need of the benefits that our intellectual property bestows.

The £9.0m funds raised in an oversubscribed placing and open offer in March 2021 continue to be applied to winning additional contracts in each of our application areas with the expectation that a number of new agreements will be signed in 2022. Our marketing investment will amplify the reach of our proposition and accelerate new license agreements.

Whilst it is difficult to predict with certainty the timeframe to cash breakeven due to the nature of our business model whereby our revenue is effectively entirely in the hands of third parties, we estimate that with existing and targeted contracts, Xeros will achieve EBITDA profitability and cash breakeven in 2024. Key to this is the assumption that the impact of Covid, especially in South Asia, is significantly below that experienced in 2020 and 2021.

As of 31 May 2022, the Group held cash of £4.3m. In our trading update published on 31 March 2022 we stated that we expect to require further investment to fund the business through to cash breakeven and the board is currently working on plans to achieve this investment.

Mark Nichols

Chief Executive Officer

Financial review

Group revenue was generated as follows:

The financial results in 2021 reflect the first full year of operating as a pure-play licensing business, having completed the disposal of directly operated businesses in 2020. Whilst the impact of Covid restrictions in India and China adversely affected the ability of our license partners to sell commercial laundry and denim finishing machines incorporating the Group's technology, license partner sales were made in the second half of the year, driving revenue growth and margin increase.

Future revenue growth is dependent on the pace of commercial adoption of products incorporating the Group's technology platforms in their respective markets. The Group's licensing business model does not require administrative expenses to increase in line with revenue growth, thereby creating future operating leverage to drive the business to profitability as revenue increases in future years. The Group's current view is that licensing partners will generate sufficient revenue to deliver Group profitability in 2024.

Further information on these financial results is provided below.

Group revenue increased by 23.1% to £0.5m in the year ended 31 December 2021 (2020: £0.4m). With the implementation of the Group's licensing model, the revenue mix is changing with revenue now derived from two principal sources:

•           Licensing revenue: reflecting royalty payments from license partners and up-front fees for access to Group intellectual property.

•           Sale of goods: reflecting sales of XOrbs to license partners and sales of machines in Europe on behalf of license partners.

The Group continues to receive service revenue related to the retained estate of commercial laundry machines in the UK and Europe. As the licensing model grows, this service revenue is expected to become a smaller part of the overall revenue mix.

Licensing revenue in the period was £0.1m (2020: £0.1m), a growth of 113.8%; revenue from sale of goods was £0.2m in the period (2020: £0.0m), a growth of 1,837.5%. With the change in revenue mix, service revenue in the period was £0.2m (2020: £0.3m), a reduction of 39.5%.

The change in revenue mix towards licensing drove an increase in gross profit in the period to £0.3m (2020: £0.0m), resulting in a gross margin of 59.3% (2020: -12.7%).

The Group reduced its adjusted EBITDA loss by 7.1% to £6.3m (2020: loss £6.8m).

Gross profit/loss and adjusted EBITDA are considered the key financial performance measures of the Group as they reflect the true nature of our trading activities. Adjusted EBITDA is defined as the loss on ordinary activities before interest, tax, share-based payment expense, depreciation and amortisation.

Administrative expenses, reduced by 4.8% to £7.2m (2020: £7.6m). This reflects a 16.7% reduction in headcount during the year with the average number of operational staff in the year to 31 December 2021 falling to 40 (2020: 48).

The Group reported an operating loss of £6.9m (2020: loss £7.6m), a reduction of 9.1%. The loss per share was 28.11p (2020: loss 44.88p).

Net cash outflow from operations reduced to £5.8m (2020: £6.3m) from a combination of reduced cash used in operations, £6.3m (2020: £6.9m) and the receipt of £0.5m R&D tax credits from HMRC relating to 2020. Cash utilisation was in line with the Board's expectations.

The Group had existing cash resources, including cash on deposit, as at 31 December 2021 of £7.8m (2020: £5.2m) and remains debt free. Group cash as at 31 May 2022 was £4.3m. The Going Concern statement below draws attention to the Directors' views on the uncertainty of future funding and the key assumptions behind the preparation of these accounts on a going concern basis.

Paul Denney

Chief Financial Officer

Unaudited consolidated statement of profit or loss and other comprehensive income

For the year ended 31 December 2021

Unaudited consolidated statement of changes in equity

For the year ended 31 December 2021

Unaudited consolidated statement of financial position

As at 31 December 2020

Unaudited consolidated statement of cash flows

For the year ended 31 December 2021

Unaudited notes to the consolidated financial statements

For the year ended 31 December 2021

1) BASIS OF PREPARATION

The financial information set out in this preliminary announcement of final results has been prepared in accordance with the recognition and measurement principles of UK-adopted International Accounting Standards and in accordance with the AIM rules. The principal accounting policies of the Group have remained unchanged from those set out in the Group's 2020 annual report.

The financial information has been prepared under the historical cost convention and is presented in Sterling, rounded to the nearest thousand.

The financial information contained in this preliminary announcement does not constitute the Group's statutory accounts for the year ended 31 December 2021. The statutory accounts for the year ended 31 December 2021 will be finalised on the basis of the financial information presented by the Directors in these preliminary results and will be delivered to the Registrar of Companies, and made available on the Company's website for the purposes of the AIM Rules for Companies, following the Annual General Meeting of Xeros Technology Group plc.

The auditors' report on the Annual Report and Financial Statements for the year ended 31 December 2020 was unqualified, did not draw attention to any matters by way of emphasis, and did not contain a statement under 498(2) or 498(3) of the Companies Act 2006.

The preparation of financial statements in conformity with UK-adopted International Accounting Standards requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income, and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

In preparing the financial information, management are required to make accounting assumptions and estimates. The assumptions and estimation methods are consistent with those applied to the annual report and financial statements for the year ended 31 December 2020. Additionally, the principal risks and uncertainties that may have a material impact on activities and results of the Group remain materially unchanged from those described in that annual report.

Business combinations and basis of consolidation

Subsidiaries are all entities (including structured entities) over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group and are deconsolidated from the date control ceases.

Inter-company transactions, balances and unrealised gains and losses on transactions between Group companies are eliminated.

Where the acquisition is treated as a business combination, the purchase method of accounting is used to account for the acquisition of subsidiaries by the Group.

The cost of an acquisition is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange.  Acquisition costs are expensed as incurred.  Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date.  The excess of the cost of acquisition over the fair value of the Group's share of the identifiable net assets acquired is recorded as goodwill.  If the cost of the acquisition is less than the fair value of net assets of the subsidiary acquired, the difference is recognised directly in the income statement.

All intra-group balances and transactions, including unrealised profits arising from intra-group transactions, are eliminated fully on consolidation.

Going Concern

As at 31 December 2021, the Group had £2.5m of cash and £5.3m of cash on deposit. Given the Group's stage of development, it continues to incur operating cash outflows. The Directors believe that the current levels of cash held provide the Group with sufficient cash to meet its obligations as they fall due for at least twelve months following the date of this report, with some changes to discretionary expenditure or the proceeds of a potential fundraise, if necessary. However, given the current commercial position of the Group the Directors acknowledge that the Group's current cash position does not provide certainty beyond this point and may not, with the current rates of cash outflow, provide the Group with the resources to reach the point at which cash generated from customer contracts covers the cost base of the Group.

The Directors consider that they have options in place that may allow them to reach this breakeven point. These include signing potential commercial agreements and the possibility of raising further investor funding. Given that these options are not certain at this stage, the Directors consider the Group's current funding position indicates a material uncertainty exists that may cast significant doubt as to the Group's ability to continue as a going concern. Without some form of action, most likely in the form of a fundraise, the Group's cash will run out prior to the completion of commercialisation and, therefore, cash breakeven. The Directors also believe, however, that they have sufficient options in place in order to allow the Group to continue trading in the short and medium term. Therefore, after making enquiries and considering the uncertainties as described above, the Directors have a reasonable expectation that the Group has and will have adequate resources to continue in operational existence for the foreseeable future. For these reasons, they continue to adopt the going basis of accounting in preparing this financial information.

2) SIGNIFICANT ACCOUNTING POLICIES

The principal accounting policies applied are set out below.

REVENUE RECOGNITION

Licence revenue

When the Group receives payments in the form of upfront payments or technology fees, the Group assesses those payments against the contacts in accordance with the provisions of IFRS15, and allocates the revenue against the performance obligations accordingly.

Where licence revenue is based on sales of equipment by the licensee, the Group recognises revenue at the time of that sale.

Sale of goods

Where the Group sells either equipment or consumables to a customer directly, revenue is recognised when the product in question is delivered to the customer, and, if required, any installation or setup of the equipment has been performed.

Service contracts

Where the Group has a service contract in place, revenue is recognised in line with the profile of the delivery of the service to the customer on an outputs basis.

Linked contracts

When the Group sells equipment, services and consumables in a package under a single contract, the Group assess the contract against the five steps of IFRS15. This process includes the assessment of the performance obligations within the contract and the allocation of contract revenue across these performance obligations once identified. Revenue is allocated according to the value of consideration expected to be received for the transfer of the relevant goods or services to the customer. This consideration is calculated on an inputs basis using cost data and an appropriate margin.

Revenue is shown net of Value Added Tax or Sales Tax as appropriate.

The difference between the amount of income recognised and the amount invoiced on a particular contract is included in the statement of financial position as deferred income. Amounts included in deferred income due within one year are expected to be recognised within one year and are included within current liabilities.

FOREIGN CURRENCIES

The individual financial statements of each group entity are presented in the currency of the primary economic environment in which the entity operates (its functional currency). For the purposes of the consolidated financial statements, the results and the financial position of each group entity are expressed in pounds sterling, which is the functional currency of the Company and the presentational currency for the consolidated financial statements.

In preparing the financial statements of the individual entities, transactions in currencies other than the entity's functional currency (foreign currencies) are recorded at the rates of exchange prevailing at the dates of the transactions. At each balance sheet date, monetary items denominated in foreign currencies are retranslated at the rates prevailing at the balance sheet date. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing at the date when the fair value was determined.

Non-monetary items that are measured in terms of historical cost in foreign currency are not retranslated.

The assets and liabilities of foreign operations are translated using exchange rates at the balance sheet date. The components of shareholders' equity are started at historical value. An average exchange rate for the period is used to translate the results and cash flows of foreign operations.

Exchange differences arising on translating the results and net assets of foreign operations are taken to the translation reserve in equity until the disposal of the investment. The gain or loss in the statement of profit or loss and other comprehensive income on the disposal of foreign operations includes the release of the translation reserve relating to the operation that is being sold.

EXCEPTIONAL ITEMS

One-off items with a material effect on results are disclosed separately on the face of the Consolidated Statement of Profit and Loss and Other Comprehensive Income. The Directors apply judgement in assessing the particular items which, by virtue of their scale and nature, should be classified as exceptional items. The Directors consider that separate disclosure of these items is relevant to an understanding of the Group's financial performance.

RESEARCH AND DEVELOPMENT

Expenditure on research activities is recognised as an expense in the period in which it is incurred. Development costs are only capitalised when the related products meet the recognition criteria of an internally generated intangible asset, the key criteria being as follows:

·      it is probable that the future economic benefits that are attributable to the asset will flow to the Group;

·      the project is technically and commercially feasible;

·      the Group intends to and has sufficient resources to complete the project;

·      the Group has the ability to use or sell the asset; and

·      the cost of the asset can be measured reliably.

Such intangible assets are amortised on a straight-line basis from the point at which the assets are ready for use over the period of the expected benefit and are reviewed for an indication of impairment at each reporting date. Other development costs are charged against profit or loss as incurred since the criteria for their recognition as an asset are not met.

The costs of an internally generated intangible asset comprise all directly attributable costs necessary to create, produce and prepare the asset to be capable of operating in the manner intended by management.  Directly attributable costs include employee costs incurred on technical development, testing and certification, materials consumed and any relevant third-party cost. The costs of internally generated developments are recognised as intangible assets and are subsequently measured in the same way as externally acquired intangible assets. However, until completion of the development project, the assets are subject to impairment testing only.

No development costs to date have been capitalised as intangible assets as it was deemed that the probability of future economic benefit was uncertain at the time the costs were incurred.

LEASES

As a lessee

Where the Group enters a new contract, the Group considers whether this contract is, or contains, a lease. A lease is defined as "a contract, or part of a contract, that conveys the right to use an asset for a period of time in exchange for consideration". To apply this definition, the Group assesses whether the contract meets three key evaluations, which are whether:

·      the contract contains an identified asset, which is either explicitly identified in the contract or implicitly specified by being identified at the time the asset is made available to the Group;

·      the Group has the right to obtain substantially all of the economic benefits from use of the identified asset throughout the period of use, considering its rights within the defined scope of the contract; and

·      the Group has the right to direct the use of the identified asset throughout the period of use.

Measurement and recognition of leases as a lessee

At the lease commencement date, the Group recognises a right-of-use asset and a lease liability in the statement of financial position. The right-of-use asset is measured at cost, which is made up of the initial measurement of the lease liability, any initial direct costs incurred by the Group, an estimate of any costs to dismantle and remove the asset at the end of the lease, and any lease payments made in advance of the lease commencement date (net of any incentives received).

The Group depreciates the right-of-use assets on a straight-line basis from the lease commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The Group also assesses the right-of-use asset for impairment when such indicators exist.

At the lease commencement date, the Group measures the lease liability at the present value of the lease payments unpaid at that date, discounted using the interest rate implicit in the lease if that rate is readily available, of the Group's incremental borrowing rate.

Lease payments included in the measurement of the lease liability are made up of fixed payments, variable payments based on an index or rate, amounts expected to be payable under a residual guarantee and payments arising from options reasonably certain to be exercised.

Subsequent to initial measurement, the liability will be reduced for payments made and increased for interest. It is remeasured to reflect any reassessment or modification, or if there are changes in in-substance fixed payments.

When the lease liability is remeasured, the corresponding adjustment is reflected in the right-of-use asset, or profit and loss if the right-of-use asset is already reduced to zero.

The Group has elected to account for short-term leases and leases of low-value assets using the practical expedients. Instead of recognising a right-of-use asset and lease liability, the payments in relation to these are recognised as an expense in profit or loss on a straight-line basis over the lease term.

On the statement of financial position, right-of-use assets are shown separately and are included in property, plant and equipment notes for disclosure purposes. Lease liabilities are shown separately.

As a lessor

If the Group transfers substantially all the risks and benefits of ownership of the asset, a receivable is recognised for the initial direct costs of the lease and the present value of the minimum lease payments. As payments fall due, finance income is recognised in the income statement so as to achieve a constant rate of return on the remaining net investment in the lease.

INTANGIBLE ASSETS AND GOODWILL

Recognition and measurement

Goodwill arising on the acquisition of subsidiaries is measured at cost less accumulated impairment losses.

Other intangible assets, including customer relationships and brands, that are acquired by the Group and have finite useful lives are measured at cost less accumulated amortisation and any accumulated impairment losses.

Amortisation

Amortisation is calculated to write off the cost of intangible assets less their estimated residual values using the straight-line method over their estimated useful lives and is generally recognised in profit or loss. Goodwill is not amortised. The estimated useful lives for current and comparative periods are as follows:

·      Customer lists   -          5 years

·      Brands             -          5 years

·      Software          -          3 years

Amortisation methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate. Assets considered to have indefinite useful economic lives, such as goodwill, are tested annually for impairment.

PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment is stated at cost less accumulated depreciation and any impairment losses. Cost includes the original purchase price of the asset and the costs attributable to bringing the asset to its working condition for its intended use. Depreciation is charged so as to write off the costs of assets over their estimated useful lives, on the following basis:

Leasehold improvements            - over the term of the lease on a straight-line basis

Plant and machinery                   - 20% on cost on a straight-line basis

Fixtures and fittings                    - 20% on cost on a straight-line basis

Computer equipment                  - 33% on cost on a straight-line basis

Vehicles                                    - 20% on cost on a straight-line basis

The gain or loss arising from the disposal of an asset is determined as the difference between the sales proceeds and the carrying amount of the asset, and is recognised in the statement of profit or loss and other comprehensive income.

IMPAIRMENT OF NON-CURRENT ASSETS

For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). As a result, some assets are tested individually for impairment and some are tested at cash-generating unit level. Goodwill is allocated to those cash-generating units that are expected to benefit from synergies of the related business combination and represent the lowest level at which management monitors goodwill. Cash-generating units to which goodwill has been allocated are tested for impairment at least annually. All other individual assets or cash-generating units are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the assets or cash-generating unit's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of fair value, reflecting market conditions less costs to sell, and value in use based on an internal discounted cash flow evaluation.

INVENTORIES

Inventories are valued at the lower of cost and net realisable value. Cost incurred in bringing each product to its present location and condition is accounted for as follows:

Raw materials, work in progress and finished goods - Purchase cost on a first-in, first-out basis.

Net realisable value is the estimated selling price in the ordinary course of business.

CASH ON DEPOSIT

Bank deposits where maturity is greater than three months from the date of investment, the Group cannot access the funds prior to the maturity date and the Group is not relying on the funds to meet its short-term operating requirements are disclosed as cash on deposit.

SHARE BASED PAYMENTS

Certain employees and consultants (including Directors and senior executives) of the Group receive remuneration in the form of share-based payment transactions, whereby employees render services as consideration for equity instruments ("equity-settled transactions"). This policy applies to all schemes, including the Deferred Annual Bonus scheme open to certain management personnel.

The cost of equity-settled transactions with employees is measured by reference to the fair value at the date on which they are granted. The fair value is determined by using an appropriate pricing model. The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the period in which the performance and/or service conditions are fulfilled, ending on the date on which the relevant employees become fully entitled to the award ("the vesting date"). The cumulative expense recognised for equity-settled transactions at each reporting date until the vesting date reflects the extent to which the vesting period has expired and the Group's best estimate of the number of equity instruments that will ultimately vest. The profit or loss charge or credit for a period represents the movement in cumulative expense recognised as at the beginning and end of that period.

No expense is recognised for awards that do not ultimately vest, except for awards where vesting is conditional upon a market condition, which are treated as vesting irrespective of whether or not the market condition is satisfied, provided that all other performance and/or service conditions are satisfied. Where the terms of an equity-settled award are modified, the minimum expense recognised is the expense as if the terms had not been modified. An additional expense is recognised for any modification, which increases the total fair value of the share-based payment arrangement or is otherwise beneficial to the employee as measured at the date of modification.

Where an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation and any expense not yet recognised for the award is recognised immediately. However, if a new award is substituted for the cancelled award and designated as a replacement award on the date that it is granted, the cancelled and new awards are treated as if they were a modification of the original award, as described in the previous paragraph. The dilutive effect of outstanding options is reflected as additional share dilution in the computation of earnings per share.

FURLOUGH CREDITS

Where the Group has claimed a credit in respect of employees furloughed in accordance with the relevant government support schemes, the credit is recognised in the statement of profit or loss and other comprehensive income in the period to which the credit relates and is netted off against staff costs.

FINANCIAL ASSETS AND LIABILITIES

Financial assets and financial liabilities are recognised in the consolidated statement of financial position when the Group becomes party to the contractual provisions of the instrument. Financial assets are de-recognised when the contractual rights to the cash flows from the financial asset expire or when the contractual rights to those assets are transferred. Financial liabilities are de-recognised when the obligation specified in the contract is discharged, cancelled or expired.

Financial assets, other than those designated and effective as hedging instruments, are classified into the following categories:

·      amortised cost

·      fair value through profit or loss (FVTPL)

·      fair value through other comprehensive income (FVOCI)

In the periods presented, the Group does not have any financial assets categorised as FVTPL or FVOCI.

After initial recognition, these are measured at amortised cost using the effective interest rate method. Discounting is omitted where the effect is immaterial. All of the Group's financial assets and financial liabilities fall into this category.

Trade receivables

Trade receivables are recognised initially at fair value and subsequently measured at amortised cost less expected credit losses. Appropriate provisions for estimated irrecoverable amounts are recognised in the statement of profit or loss and other comprehensive income when there is objective evidence that the assets are impaired.

Cash and cash equivalents

Cash and cash equivalents comprise cash on hand, demand deposits, and other short-term highly liquid investments that are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value.

Equity instruments

An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by the Group are recorded at the proceeds received, net of direct issue costs.

Trade and other payables

Trade payables are initially measured at their fair value and are subsequently measured at their amortised cost using the effective interest rate method; this method allocates interest expense over the relevant period by applying the "effective interest rate" to the carrying amount of the liability.

Impairment of financial assets

The Group accounts for impairment of financial assets using the expected credit loss model as required by IFRS 9. The Group considers a broad range of information when assessing credit risk and measuring expected credit losses, including past events, current conditions, reasonable and supportable forecasts that affect the expected collectability of the future cash flows of the instrument.

TAXATION

The tax expense/(credit) represents the sum of the tax currently payable or recoverable and the movement in deferred tax assets and liabilities.

Current tax is based upon taxable profit/(loss) for the year. Taxable profit/(loss) differs from net profit/(loss) as reported in the statement of profit or loss and other comprehensive income because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible.

The Group's liability for current tax is calculated by using tax rates that have been enacted or substantively enacted by the reporting date.

Credit is taken in the accounting period for research and development tax credits, which have been claimed from HM Revenue and Customs, in respect of qualifying research and development costs incurred. Research and development tax credits are recognised on an accruals basis with reference to the level of certainty regarding acceptance of the claims by HMRC. The Group accounts for R&D tax credits as an investment tax credit accounted for on a flow through basis - R&D tax credits, while investment tax credits, are not considered to be substantially different from other tax credits and they are recognised when the conditions required to receive the credit are met and they are claimed on the Group's tax return.

Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled based upon tax rates that have been enacted or substantively enacted by the reporting date. Deferred tax is charged or credited in the statement of profit or loss and other comprehensive income, except when it relates to items credited or charged directly to equity, in which case the deferred tax is also dealt with in equity.

Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit and is accounted for using the liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available, against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the profit nor the accounting period.

The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

DISPOSAL GROUPS AND DISCONTINUED OPERATIONS

Non-current assets (or disposal groups) are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use and a sale is considered highly probable. They are measured at the lower of their carrying amount and fair value less costs to sell, except for assets such as deferred tax assets, assets arising from employee benefits, financial assets and investment property that are carried at fair value and contractual rights under insurance contracts, which are specifically exempt from this requirement.

An impairment loss is recognised for any initial or subsequent write-down of the asset (or disposal group) to fair value less costs to sell. A gain is recognised for any subsequent increases in fair value less costs to sell of an asset (or disposal group), but not in excess of any cumulative impairment loss previously recognised. A gain or loss not previously recognised by the date of the sale of the noncurrent asset (or disposal group) is recognised at the date of derecognition.

Non-current assets (including those that are part of a disposal group) are not depreciated or amortised while they are classified as held for sale. Interest and other expenses attributable to the liabilities of a disposal group classified as held for sale continue to be recognised.

Non-current assets classified as held for sale and the assets of a disposal group classified as held for sale are presented separately from the other assets in the balance sheet. The liabilities of a disposal group classified as held for sale are presented separately from other liabilities in the balance sheet.

A discontinued operation is a component of the entity that has been disposed of or is classified as held for sale and that represents a separate major line of business or geographical area of operations, is part of a single co-ordinated plan to dispose of such a line of business or area of operations, or is a subsidiary acquired exclusively with a view to resale. The results of discontinued operations are presented separately in the statement of profit or loss.

CRITICAL ACCOUNTING ESTIMATES AND AREAS OF JUDGEMENT

Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Actual results may differ from these estimates. The estimates and assumptions that have the most significant effects on the carrying amounts of the assets and liabilities in the financial information are discussed below. The point listed below is considered to be an area of judgement.

Research and development costs

Careful judgement by the Directors is applied when deciding whether the recognition requirements for capitalising development costs have been met.  This is necessary as the economic success of any product development is uncertain and may be subject to future technical problems.  Judgements are based on the information available at each reporting date which includes the progress with testing and certification and progress on, for example, establishment of commercial arrangements with third parties. Specifically, the Directors consider production scale evidence of commercial operation of the Group's technology. In addition, all internal activities related to research and development of new products are continuously monitored by the Directors.  To date, no development costs have been capitalised.

ACCOUNTING STANDARDS AND INTERPRETATIONS NOT APPLIED

At the date of authorisation of these financial statements, the following IFRSs, IASs and Interpretations were in issue but not yet effective. Their adoption is not expected to have a material effect on the financial statements unless otherwise indicated:

3) SEGMENTAL REPORTING

The financial information by segment detailed below is frequently reviewed by the Chief Executive Officer, who has been identified as the Chief Operating Decision Maker ("CODM"). The Group's transition to a licencing organisation has led to a change to how the results of the Group are reviewed internally. The results are no longer split by segment but are reviewed in terms of the type of revenue. As such, the analysis below does not split the Group's results into separate operating segments and instead reports results as one single segment.

An analysis of revenues by type is set out below:

The Group's largest customer was responsible for 19% of Group revenue in the year to 31 December 2021.

During the year ended 31 December 2020 the Group's largest customer was responsible for 19% of Group revenue.

An analysis of revenues by geographic location of customers is set out below:

An analysis of non-current assets by location is set out below:

4)  LOSS FROM OPERATIONS

5) EXPENSES BY NATURE

The administrative expenses charge by nature is as follows:

6) TAXATION

Tax on loss on ordinary activities

The credit for the year/period 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 main company rate of corporation tax as explained below:

The Group accounts for Research and Development tax credits where there is certainty regarding HMRC approval. The Group has received a tax credit in respect of the year ended 31 December 2020. There is no certainty regarding the claim for the year ended 31 December 2021 and as such no relevant credit or asset is recognised.

7) 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.

The weighted average number of shares in issue throughout the period is as follows. The 2020 calculation assumes the 100:1 share consolidation performed in the year ended 31 December 2020 was in place throughout that year.

The Company has issued employee options over 2,087,895 (31 December 2020: 1,447,324) 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.

8)  SHARE CAPITAL

The Group undertook a share capital reorganisation exercise during the year ended 31 December 2020, reducing the number of shares in issue by a factor of 100 and increasing the nominal value of the share by an equivalent factor.

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 2021:

(a)     3,749,919 ordinary shares of 15p per share were allotted at a price of 240p per share, for total cash consideration of £9,000,000 upon the placing and open offer of the Company's shares in March 2021.

(b)     58,474 ordinary shares of 15p per share were allotted at a price of 70p per share, upon the exercise of share options granted in the Company's share option schemes.

At 31 December 2021, the Company had only one class of share, being ordinary shares of 15p each.

The Group's Share Capital reserve represents the nominal value of the shares in issue. The Group's Share Premium Reserve represents the premium the Group received on issue if its shares. The Merger Reserve arose on the combination of companies within the Group prior to the flotation on AIM.

9)  RELATED PARTY TRANSACTIONS

During the year, the Group entered into transactions, in the ordinary course of business, with other related parties. Those transactions with directors are disclosed below. Transactions entered into, along with trading balances outstanding at each period end with other related parties, are as follows:

Note: IP Group plc provide the services of David Baynes, who is a director of the Company, and invoice the Group for related fees. David Baynes is a Director of both the Company and of IP Group plc.

Terms and conditions of transactions with related parties

Purchases between related parties are made on an arm's length basis.  Outstanding balances are unsecured, interest free and cash settlement is expected within 60 days of invoice. 

Transactions with Key Management Personnel

The Company's key management personnel comprise only the Directors of the Company.  During the period, the Company entered into the following transactions in which the Directors had an interest:

Directors' remuneration:

Remuneration received by the Directors from the Company is set out below. Further detail is provided within the Directors' Remuneration Report:

*In addition, certain directors hold share options in the Company for which a fair value share based charge of £153,000 has been recognised in the consolidated statement of profit or loss and other comprehensive income (year ended 31 December 2020: £155,000).

The highest paid Director in the year received a total remuneration of £335,000 (year ended 31 December 2020: £364,000). During the year ended 31 December 2021, the Company entered into numerous transactions with its subsidiary companies which net off on consolidation - these have not been shown above.

10)  EVENTS OCCURING AFTER THE REPORTING PERIOD

Board changes

In March 2022, it was announced that the Group CEO, Mark Nichols, will stand down during 2022. Mark will remain with the business until 30 September 2022 to oversee the Group's ongoing commercialisation process and has committed to a comprehensive and orderly handover to his successor, for whom a search process is underway.

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.