Proposed Share Capital Reorganisation

9 November 2020

Xeros Technology Group plc

Proposed Share Capital Reorganisation

Xeros Technology Group plc (AIM: XSG, 'the Group', 'Xeros'),  the developer and licensor of platform technologies which transform the sustainability and economics of clothing and fabrics during their lifetime, today announces a proposed share capital reorganisation ("Capital Reorganisation") of the existing ordinary share capital of the Company.

The effect of the proposed Capital Reorganisation will be to reduce the number of issued ordinary shares of 0.15 pence each in the Company ("Ordinary Shares") by a multiple of 100 (the "Consolidation"), which is expected to increase the trading price of the resulting ordinary share proportionally.

The Board considers the Capital Reorganisation to be in the best interests of the Company and its  shareholders as a whole  ("Shareholders"), as it believes that the Capital Reorganisation should improve the market liquidity of and trading activity in the Company's shares. The Directors believe that the existing share capital structure is no longer appropriate, as the high number of shares in issue combined with the relatively low price per share is thought to result in excess volatility and reduced liquidity in the Company's shares. By proceeding with the Capital Reorganisation, The Directors anticipate that the Capital Reorganisation should improve the liquidity and the marketability of the Company's shares with institutional investors in the UK and overseas.

As it is proposed that all existing ordinary shares held in the Company be consolidated, the proportion of the issued ordinary share capital of the Company held by each Shareholder immediately before and after the Capital Reorganisation will remain relatively unchanged, other than for changes that may arise from the rounding for fractional entitlements.

Implementation of the Capital Reorganisation requires the approval of Shareholders.  This approval is being sought at a General Meeting of the Company ("GM"), which is scheduled to be held at 10:00 a.m. on 25 November 2020 at the offices of Squire Patton Boggs (UK) LLP at Premier Place, 2 & A Half Devonshire Square, London, EC2M 4UJ at which the resolution necessary to give effect to the Capital Reorganisation will be put to Shareholders.

A circular ("Circular") containing the notice of GM, which provides details of the Capital Reorganisation, and Form of Proxy, is to be posted to Shareholders today. The Circular and notice of GM will also be made available at the Company's website for the purposes of AIM Rule 26,  www.xerostech.com.

Further details in relation to the Share Consolidation

As at 6 November 2020 (being the latest practicable date prior to the publication of this announcement), the Company had 1,994,088,097 Ordinary Shares in issue ("Existing Ordinary Shares"), with each share having a mid-market price at the close of business on such date (as derived from the Daily Official List) of 1.465 pence per share.

The Capital Reorganisation will consist of the following steps:

·    the Company intends to issue 3 further Ordinary Shares prior to the Record Date, so as to ensure that the total number of Ordinary Shares in issue immediately prior to completion of the Capital Reorganisation is exactly divisible by 100. The additional Ordinary Shares will be issued on 25 November 2020 at a subscription price per Ordinary Share of 1.465 pence (being the closing middle market price of an Ordinary Share on 6 November 2020, being the latest practicable date prior to publication of this announcement). As a result of this admission the number of existing Ordinary Shares in issue immediately prior to the GM will be 1,994,088,100.

·    the Consolidation of every 100 Existing Ordinary Shares of 0.15 pence each into one New Ordinary Share of 15 pence each ("New Ordinary Shares").

The Capital Reorganisation is anticipated to become effective at 6 p.m. on 25 November 2020. The New Ordinary Shares arising on implementation of the Capital Reorganisation will have the same rights as the Existing Ordinary Shares, including in respect of voting rights, entitlement to dividends and other rights. The issued share capital of the Company immediately following the Capital Reorganisation is expected to comprise 19,940,881 New Ordinary Shares, which will be equal to the number of Existing Ordinary Shares immediately prior to the Capital Reorganisation divided by 100.

To reflect the Capital Reorganisation, the Board is proposing to reduce the number of shares that are subject to outstanding options ("Options") by a multiple of 100 and increase the option exercise price by the same multiple. This includes those shares which have been applied for under the Company's block admission ("Block Admission"). This would apply to any new Options that are issued after the date of this announcement and prior to the Record Date. Any fractional entitlement to shares will be rounded down. The overall amount payable by an Option holder looking to exercise his or her Option after the Capital Reorganisation will remain the same and the proportion of the issued share capital over which an Option is subsisting will also remain the same. 

Application will be made for the New Ordinary Shares to be admitted to trading on AIM.  Dealings in the Existing Ordinary Shares will cease at close of business on the date of the GM and dealings in the New Ordinary Shares are expected to commence the following business day.

Effect of the Capital Reorganisation

For purely illustrative purposes, examples of the effects of the Capital Reorganisation (should shareholders at the GM approve it) are set out below:

The example below shows a holding of Existing Ordinary Shares which will be subject to a fractional entitlement, the value of which will depend on the market value of the New Ordinary Shares at the time of sale.

Further details on fractional entitlements to New Ordinary Shares is set out in the Circular to be sent to Shareholders today.

Expected timetable of principal events

Statistics relating to the Capital Reorganisation

Effect of COVID-19 regulations on the General Meeting

In light of the Covid-19 restrictions on gatherings, the Company strongly encourages all Shareholders to submit their Form of Proxy, appointing the Chairman of the GM as proxy. Voting on the resolutions will be by way of a poll rather than a show of hands. A poll ensures that the votes of Shareholders who are unable to attend the GM, but who have appointed proxies, are taken into account in the final voting results. Given the current restrictions on attendance in person, Shareholders are encouraged to appoint the chair of the meeting as their proxy rather than a named person who will not be permitted to attend the physical meeting. Shareholders are further asked to appoint the chair of the meeting as their proxy electronically where possible.

Shareholders will find accompanying the Circular, a Form of Proxy, for use in connection with the  GM. The Form of Proxy should be completed and returned in accordance with the instructions thereon so as to be received by the Company's Registrar Agents, Neville Registrars, as soon as possible and in any event not later 10:00 a.m. on 23 November 2020.

Recommendation

The Directors consider that the Capital Reorganisation is in the best interests of the Company and its Shareholders as a whole. Accordingly, the Directors unanimously recommend that Shareholders vote in favour of the Resolutions to be proposed at the GM, as they intend to do in respect of their aggregate interests of 46,200,000 Existing Ordinary Shares (representing approximately 2.32 per cent. of the Existing Ordinary Shares).

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