Xeros Technology : FINAL RESULTS FOR THE YEAR ENDED 31 JULY 2014

22 October 2014

Xeros Technology Group plc

("Xeros" or the "Group")

FINAL RESULTS FOR THE YEAR ENDED 31 JULY 2014

Xeros Technology Group plc (AIM: XSG), the innovative developer of a patented polymer bead cleaning system with multiple identified commercial applications, today announces its final results for the year ended 31 July 2014.

Operational Highlights

·      37 installed and committed machines in the US and 7 in Europe as at 31 July 2014 with focus on accelerating installations in 2015, and expecting to exceed 80 installed and committed machines by end of calendar year 2014

·      AIM listing in March 2014 supported increased customer and commercial partner engagement

·      Continued development of supply chain and sales infrastructure with new offices in the US and headcount growth to 62 people worldwide as of now

·      Now count four out of the world's top five hotel groups as customers in the US, a priority market for Xeros

·      Machine sales into further channels including retail dry cleaning, fitness centres and the US military

·      Several US utility companies offering substantial financial incentives for customers investing in Xeros machines including Liberty Utilities and, since the year end, National Grid and Columbia Gas

·      Xeros SbeadycareTM Pulse, the Group's proprietary intelligent monitoring system, launched in the period and is proving attractive to customers

·      Patent portfolio strengthened with 5 new patents filed in the period, bringing the total to 33 patent families (covering 33 inventions)

·      Since the year end, awarded a €700,000 Eco-Innovation grant to drive early adoption in Europe

Financial Highlights

·      Group earned income increased 485% to £315k for the year, up from £65k in 2012/13, largely driven by progress in the US

·      Net cash outflow from operations of £7.2m from £3.2m in 2012/13 reflecting continued investment in research & development programmes alongside Commercial Laundry working capital and start-up costs

·      At 31 July 2014, the Group had cash balances (including cash equivalents and investments in the form of term deposits) of £29.5m (2013: £8.5m) and remains debt free

Commenting on the results, John Samuel, Chairman of Xeros Technology Group, said:

"I am delighted with the progress we have made as we announce our first full year results as a listed company, following our successful admission to AIM in March 2014.

"The company continues to make great progress, with particular traction in the US, a priority market for Xeros, where our technology provides a solution to a very real crisis in energy and water consumption, delivering superior results and efficiencies to conventional washing.

"In 2015, we will be focused on extending our installed base in the US with existing and new customers, geographic expansion in Commercial Laundry, product development and continued innovation in bead cleaning. We look forward to providing shareholders with further updates on our progress in due course. "

For further information, please contact:

Further information on the Group can be found on the Company's website:www.xeroscleaning.com

About Xeros

Xeros has developed a patented polymer bead cleaning system with multiple identified potential commercial applications. The Group has targeted the commercial laundry market and has begun the roll-out of 25kg capacity washing machines which exclusively use Xeros' patented polymer bead cleaning system. In trials with customers, this system has been shown to achieve superior cleaning performance as well as material reductions in water, energy and chemical usages compared to conventional commercial laundry methods. The Xeros proprietary polymer bead cleaning system also reduces the carbon footprint of the entire laundry process. In addition to the commercial laundry market, the Group's polymer bead technology has a range of potential applications in other industries including domestic laundry, leather processing, garment finishing and metal cleaning. The Group is currently in various stages of development and preparation for commercialisation of other identified applications, the most advanced of which is domestic laundry.

In May 2014, the Group at the Edison Awards 2014 in San Francisco won Bronze in the Energy/Sustainability category for its virtually waterless commercial laundry system and, on the same evening, the Group was named University Spin-Out of the Year at the New Energy & Cleantech Awards 2014 in London.

CHAIRMAN'S STATEMENT

Overview

This is the Group's first full year results announcement since our successful admission to AIM in March 2014. I am delighted with the progress we have made in the year to 31 July 2014 and believe we are well placed to capitalise upon that progress in the current financial year.

The Technology

The Xeros bead cleaning system replaces the majority of water used in conventional aqueous washing with reusable and recyclable polymer beads. Although it can be applied in a number of industries we have chosen to target laundry as our first market and in commercial laundry we are already demonstrating very significant reductions in the use of water, detergent and energy as well as providing improved cleaning and fabric care.

Commercial Laundry

It was only in June 2013 at the Clean Show in New Orleans that we first launched our 25kg machine. Since then our strategy has been to focus upon On-Premise Laundry ("OPL") in the Hospitality sector. Whilst it takes time to win the endorsement of major hotel chains this has given us time to fine tune both machine performance and our service offering. Even so our customers currently include hotels representing four of the five largest hotel groups in the world. We believe that these early adopters have given us a platform for the future roll out of our system across the hotels in their estates.

We have also opened offices in Manchester New Hampshire and now employ a team of 21 to support the US roll out. This infrastructure, coupled with our Xeros Sbeadycare® service model and the launch of our remote monitoring system ("Sbeadycare Pulse"), means we are well placed to accelerate the number of our machines in the market.

The number of installed and committed machines in the US stood at 37 on 31 July 14 (Europe 7) and we believe the combined total will exceed 80 by the end of the calendar year. Xeros is still at a relatively early stage in its commercial interactions, with actual machine volumes difficult to predict. Whilst this number is below our own estimates at Admission, we have made concerted efforts to secure 'flagship' installs at key hotel chains, which should aid future roll outs, as opposed to simply reacting to ad hoc demand and one off sales. This will come too, as we further build resources. However, the work done now should give us a great platform for accelerated growth in future years - a great achievement from all of our staff both in the UK and US.

During 2015 we intend to apply the lessons learned in the US to the European market and extend our offering to include a 15kg machine and an 8kg machine (where we already have a late stage prototype) aiming for launches in H2 2015.

Domestic Laundry

The publicity generated by our IPO has created interest from a number of potential partners and discussions with a select number of them continue. Unlike Commercial Laundry our strategy here is to engage with partners capable of swift and effective deployment.

To assist in this endeavour we have completed the first stage of extensive consumer research in the US. The results of that research, where a "bead cleaning machine" concept was compared to a leading brand conventional washing machine, were outstanding and we intend to move to in-home machine testing in 2015.

Beyond Laundry

In addition to laundry there are a number of other exciting applications for this technology and we have selected leather processing as our next target. This is a market with a value of $65bn and we have made significant progress with the Institute for Creative Leather Technologies ("ICLT") at our shared facility at the University of Northampton.  Following our ongoing discussions we shall be seeking the support of partners to bring this application to tannery trials in 2015.

Innovation

During the year we have learned much about the performance of our machines and optimisation of cleaning results. We also continue to file patents to protect our Intellectual Property.  Our innovation partnership with BASF is promising and together we are working upon new bead types which will provide multi-dimensional benefits beyond superior cleaning, and further improve fabric care.

The Board

Charles Winward left the Board of Xeros in June 2014 after an involvement of over 4 years.  I would like to thank him for his invaluable support. I am pleased to welcome Dr Richard Ellis to the Board as a Non-Executive Director. Until recently Richard was the Head of Global Research and Development at Reckitt Benckiser Group plc.

Outlook

In the year since we first exhibited our 25kg machine at the Clean Show in New Orleans we have made significant progress. In commercial laundry in the US I believe that we have a growing momentum supported by hard economic evidence of our superiority over conventional machines and utility companies are also beginning to offer incentive payment programs to our customers.

Domestic Laundry is beginning to pick up pace and beyond that we have an exciting programme in leather processing. On admission to AIM we raised £30m and are therefore in a position to finance these projects.

In 2015 we will be focused on extending our installed base in the US with existing and new customers, geographic expansion in Commercial Laundry, product development and continued innovation.

John Samuel

Chairman

21 October 2014

CHIEF EXECUTIVE OFFICER'S REVIEW

Overview

This has been a very positive year for our team and business. Although obviously time consuming in Q1 calendar 2014, our successful IPO funding round clears the way for us to concentrate on growing the business knowing the financial resources are in place to execute our plans. Key new hires have been added to an already experienced team; early customers have become enthusiastic endorsers of our technology; and there seems no better time to introduce ultra-low water cleaning to the world.

The issues of water scarcity and increased cost, particularly in our primary US market, are urgent and a daily feature in news bulletins. This has raised the profile and immediate relevance of water efficiency technologies, such as Xeros, in laundry applications, where efficient water use, combined with superior cleaning performance, presents significant potential benefits to our customers. In 2014, we have seen these benefits being endorsed by big, early adopter Commercial Laundry customers who also benefit from the innovative Xeros Sbeadycare® service model we deliver. This "one-stop-shop" service for all their laundry needs builds our brand as an all-round problem solver not simply as an innovation provider.

We have had several notable highlights this year: our successful admission to AIM in March 2014 raising £30 million before expenses; solid organic growth in our key market, notably Xeros now counts as customers four out of the five largest global hotel brands; confirmation of financial incentive programmes sponsored and funded by  major US utility companies including National Grid, Columbia Gas and Liberty Utilities; machine sales into further channels including  retail dry cleaning, fitness centres and the US military; confirmation of a €700,000 Eco-Innovation grant to drive early adoption in Europe.

The promising progress establishing and validating the Xeros offering in the US Commercial Laundry market, provides a strong foundation from which to further drive our bead cleaning technology in other markets as well as to build a first sustainable revenue stream. Our objective for the year ahead is to fuel this US Commercial Laundry success whilst driving visibility in further geographies and applications that will ensure Xeros polymer beads are sold widely in multiple major markets.

Financial Review

The Group achieved earned income of £315k for the year, which represents an increase of 485% on our 2012/13 income of £65k.  This income growth came mainly from the US business where 14 machines were installed and commissioned during the year.  The embedded future income from the income generating installed base of 17 machines as at 31 July 2014, based on contracted monthly payments, amounts to £870k. 

As previously indicated we expect our cash utilisation to accelerate over the coming years, as we continue to fund our R&D programmes alongside the Commercial Laundry working capital and start-up costs.  The increase in our net cash outflow from operations to £7.2m from £3.1m reflects the start of this acceleration, in line with our expectations.

The Group's cash position was strengthened during the year through our admission to AIM raising £30m before expenses.  At 31 July 2014, the Group had cash balances (including cash equivalents and investments in the form of term deposits) of £29.5m (2013: £8.5m) and remains debt free.  We therefore remain well funded as we continue to develop the business.

Strategy Summary

Our goal is to sell large quantities of high margin Xeros polymer beads across multiple industries. These beads will be recycled to provide additional revenue and promote our overall environment promise. Xeros beads will be bought and consumed by end customers in a variety of bead-consuming machines that will be deployed by the company directly (Commercial Laundry) or by corporate partners already well-established in those industries.  Underlying this goal and deployment strategy is our R&D capability which will continue to optimise bead cleaning performance and design the bead-consuming machines. This R&D capability will include demonstrating the technology in a pilot or demonstration phase, as necessary, to ensure corporate partnership and scale-up.

These strategic pillars have remained consistent since before our IPO but, as with any early stage technology, we realise the importance of remaining flexible in our approach to meet the dynamic demands and changes in the markets we seek to operate in. We keep under constant review the exact nature of our corporate partnering approach and will selectively prioritise the multiple potential market opportunities in order to maximise shareholder return.

Our Technology

Xeros bead cleaning is characterised by replacing the majority of water used in existing conventional washing with reusable and recyclable polymer beads. Through enhanced mechanical action, attraction and absorption the beads provide superior cleaning benefits whilst significantly reducing the consumption of water, energy and chemicals in the process. For instance, in commercial laundries we have proven reductions of up to 80% in water, 50% in energy (often 100% with our ambient temperature programmes) and 50% in detergent dosing.  Our R&D team continues to explore further multi-dimensional benefits through bead innovation and wash methods that go beyond this basic superior cleaning/savings promise. These innovations will begin to come on stream in 2015 to help accelerate adoption in our Commercial Laundry market as well as boost performance by the time we launch in the Domestic Laundry market.

The company filed 5 new patents in the year to 31 July bringing the current total to 33 patent families (covering 33 inventions).  We will continue to build and strengthen this portfolio as part of our strategy to develop layered protection of the overall Xeros bead cleaning system.

We continue to explore various bead re-use and recycling methods with our polymer suppliers sharing our goal to ensure no incremental polymer is produced as a result of our novel cleaning method nor any Xeros beads find their way into the waste stream.  In short, our goal is simply to "borrow polymer" from the supply chain for use in our novel method and then return that polymer back into the supply chain after its end-of-life with Xeros.

Commercial Laundry

We have focused on Commercial Laundry as our initial key market and the US as our first key geography. Our first product, the 25kg capacity machine, is a workhorse size for the OPL customer segment we target there. Xeros Inc, the Group's wholly owned US subsidiary, has developed from being a small exploratory team a year ago  to a team of 21 people targeting customers across the US in the commercial laundry sector, with key hires having significant experience in commercial laundry sales and operations. This team now operates from premises in Manchester, New Hampshire.

Our US sales strategy is to concentrate on large enterprise customers, in particular large hotel chains with potential to roll out the Xeros offering across significant estates. Such potential customers have internal approval processes that can make commitment to adoption of innovative technologies such as Xeros a slow process but in the US we now count as customers four out of the five largest global hotel chains. Since establishing these chains as customers, our focus has been on validating Xeros performance with hotel general managers within select hotel properties in order to build up an internal network of Xeros endorsers within those chains, thus providing a stronger foundation from which our sales team can enable wider roll-out. Two good examples are our installations at Hyatt Regency Hotel, Reston, Virginia owned by Host Hotel & Resorts Inc., a Real Estate Investment Trust (REIT) and at Comfort Inn, Danvers, Massachusetts, part of Choice Hotels International portfolio. Their endorsement of Xeros performance, savings and service look set to facilitate larger hotel property orders in the near term. 

Our "one-stop-shop" Xeros Sbeadycare® service model is also proving attractive to customers. The service provides customers with a single point of contact for all their laundry needs, from operator training and consumables supply through to co-marketing programmes. Customers subscribe to Xeros Sbeadycare® service for a minimum 5 year term which provides an embedded value of recurring income to the company that stretches well beyond a one-off machine sale. This fee-paying service model is supported by our remote monitoring technology, "Sbeadycare Pulse", that calculates the water and energy consumption by machine by wash cycle. This provides both the customer and Xeros with information to calculate the savings compared to a conventional machine to show the immediate value of the Xeros Sbeadycare® service monthly fee. Xeros will continue to drive this service model and develop the Pulse technology alongside it, providing value to customers and the company alike far beyond the traditional machine sales model.

We have also targeted high volume shirt laundry service dry cleaner chains in the US. Our large size 25 kg machine fits well with their larger facilities, and Xeros' cleaning methods resonate as a differentiator for their business on the high street. We intend to heighten our focus on this particular sector in the coming months.

Most recently, we sold our first machine to the US military who will evaluate Xeros technology for a number of classified applications.

Xeros has also seen incoming enquiries from equipment  distributors, several of whom we are now in discussions with regarding  them buying machines upfront in anticipation of demand in their particular regions of focus. Alongside these incoming enquiries, Xeros is now developing its own "forward channel partner" programme, which addresses the challenge of how we scale whilst ensuring the same level of customer satisfaction already achieved.

One further highlight in our US Commercial Laundry was the start of several US utility companies offering substantial financial incentives for customers investing in Xeros machines. The first of these programmes was announced by Liberty Utilities in May.  National Grid and Columbia Gas have recently announced similar programmes. These incentives mean Xeros customers receiving up to $28,000 towards the installed cost of a Xeros machine.

Looking forward, we see substantial opportunity to grow our US Commercial Laundry business having made strong progress with significant customers and potential target customers in the year. We aim to secure further orders from hotel groups; continue to expand Sbeadycare Pulse; secure further utility company incentive programmes; and start to scale up through distributors committed to expanding Xeros in their particular regions of focus.

Xeros will exhibit at the next global commercial laundry expo in June 2015 - Clean 2015. The show will be in Atlanta, one of the most expensive water cities in the US. We expect some key Atlanta hotels to have Xeros installed by then so businesses attending the Show should read about Xeros in their hotel rooms even before they visit our stand at the show.

While our sales efforts to date have primarily focused on the US market, we will look to drive sales in the UK.  All UK customers using Xeros machines have expressed satisfaction with the performance, in particular reduced throwaway linen from superior stain removal.  However, we need additional size machines to the 25 kg size to fit the smaller UK operations of many of our target customers. Developing our product range to include smaller sizes is the focus of our engineering team.  We will prioritise a 15 kg machine for launch in H2 2015 and are in the process of evaluating an 8 kg size for which we already have a late stage prototype.

We have recently been awarded a €700,000 Eco-Innovation grant from the EU to help us deploy both in the UK and beyond. This is particularly to support early stage market penetration of new technology and will assist our expansion in Europe in a similar fashion to the utility company incentives in the US market. We are exploring setting up a test market in Europe in 2015, seeing advantages for introducing Xeros technology given high water costs, demand for greener technology and assisted by Eco-Innovation grant support.

Our plans to develop the China market continue to be explored although our priority is the European market in the short term.

Domestic Laundry

Our deployment strategy in Domestic Laundry is to partner with a major machine manufacturer who will produce and distribute Xeros bead-consuming washing machines, leveraging their existing scale. Since the IPO publicity, we have seen inbound interest from a number of significant parties, both machine manufacturers and detergent companies, and discussions with them continue as we further optimise the technology. 

The most important first corporate partnership for bead innovation and supply is already in place with BASF. We continue to develop "Gen 2" polymer innovation with them and new patent filings are imminent.

This year we have built more machine prototypes for accelerated testing, explored multi-dimensional benefits beyond the core benefit of superior cleaning/savings, and filed further IP.  Most recently, we fielded our own independent research amongst US consumers nationwide. The results were very positive for Xeros compared to a leading US brand conventional washing machines used as a control. This research will further guide our development efforts as well as help frame the significant opportunity for potential partners.

In the next twelve months we aim to finalise our launch partner(s) and move to in-home machine testing, which is the next phase to optimise the machine design and will further confirm US consumer acceptance.

Beyond Laundry

The company has multiple patented opportunities beyond the laundry market. We have chosen to prioritise leather processing in 14/15, where we continue to make good technical progress at our shared research facility at the University of Northampton. Our plan is to secure innovation partners at both ends of the supply chain - big leather consumer brands and tanneries further upstream.

Overall

In summary, we have made significant progress in Commercial Laundry with the majority of the organisation fully focused on this first key market and proving ground for the technology generally. All our early adopter customers are extremely enthusiastic about the benefits they see in their laundries. This, together with the quality of the pipeline we have developed, particularly in hotels, provides a good foundation from which to build. The number of machines installed and committed to install in the USA stood at 37 on 31 July 14 (Europe 7) and we believe the combined total will exceed 80 by the end of the calendar year.

We will continue to invest in the success of the Xeros Sbeadycare® service model, particularly in the US; bead innovation and new machine sizes will come on stream for Commercial Laundry in 2015; Sbeadycare Pulse will be further developed and distributed; and, pending further market investigation, we will look to expand Commercial Laundry into at least one further country, Germany, in 2015.

Domestic Laundry and limited Beyond Laundry applications will be developed through our own innovation pipeline under our control and progress does not rely on early corporate partner commitment.

Such a positive year fuels the team's excitement for the future and motivates us on the road to our ultimate objective - to transform the conventional world of aqueous washing to Xeros bead cleaning.

Bill Westwater

Chief Executive Officer

21 October 2014

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

FOR THE YEAR ENDED 31 JULY 2014

*Adjusted EBITDA comprises loss on ordinary activities before interest, tax, share-based payment expense, non-operating exceptional costs, depreciation and amortisation.

The consolidated statement of profit or loss and other comprehensive income has been prepared using reverse acquisition accounting principles and is presented as if the Group had been in existence throughout the current and prior periods.

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 JULY 2014

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 31 JULY 2014

Approved by the Board of Directors and authorised for issue on 21 October 2014.

CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED 31 JULY 2014

NOTES TO THE FINANCIAL STATEMENTS

1)   BASIS OF PREPARATION

The results for the year ended 31 July 2014 have been extracted from audited accounts which have not yet been delivered to the Registrar of Companies. The Financial Statements set out in this announcement do not constitute statutory accounts for the year ended 31 July 2014. The report of the auditors on the statutory accounts for the year ended 31 July 2014 was unqualified and did not contain a statement under Section 498 of the Companies Act 2006. The Financial Statements for the year ended 31 July 2014 included in this announcement were authorised for issue in accordance with a resolution of the Board of Directors on 21 October 2014.

The Company is a limited liability company incorporated and domiciled in England & Wales and whose shares are quoted on AIM, a market operated by The London Stock Exchange.

The Company's registered office is Unit 14 Evolution, Advanced Manufacturing Park, Whittle Way, Catcliffe, Rotherham, S60 5BL.

2)   SIGNIFICANT ACCOUNTING POLICIES

The Group's financial statements have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union (EU IFRS) as they apply to the financial statements of the Group for the year ended 31 July 2014 and applied in accordance with the Companies Act 2006.

3)   SEGMENTAL REPORTING

The information that is presented to the Chief Executive Officer, who is considered to be the Chief Operating Decision Maker ("CODM"), for the purposes of resource allocation and assessment of performance, is based wholly on the overall activities of the Group. Due to the current size and activities of the Group, there is a high degree of centralisation of activities.  The Directors therefore consider that there is one operating, and hence one reportable segment for the purposes of presenting information under IFRS8; that of "Development and commercialisation of polymer bead cleaning technologies".  There are no differences between the segment results and the consolidated statement of comprehensive income. The assets and liabilities information presented to the CODM is consistent with the consolidated statement of financial position.

The single operating segment includes revenue by category as follows:

During the year ended 31 July 2014 the Group had six customers who generated more than 10 per cent. of total revenue. These customers generated 16%, 14%, 12%, 12%, 10% and 10% of revenue respectively.

During the year ended 31 July 2013 the Group had two customers who generated more than 10 per cent. of total revenue. These customers generated 62% and 34% of revenue respectively.

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)   TAXATION

Tax on loss on ordinary activities

The charge for the year can be reconciled to the loss before tax per the statement of profit or loss and other comprehensive Income as follows:

Factors affecting the current tax charges

The tax assessed for the year varies from the small company rate of corporation tax as explained below:

As at 31 July 2014, the Group had unrecognised deferred tax assets totalling £2,319,000 (31 July 2013: £1,175,000), which primarily relate to losses and the IFRS 2 share based payment charge.  The Group has not recognised this as an asset in the Statement of Financial Position due to the uncertainty in the timing of its crystallisation.

5)   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 year to assume conversion of all dilutive potential ordinary shares.

Adjusted earnings per share has been calculated so as to exclude the effect of non operating exceptional costs including related tax charges and credits. Adjusted earnings used in the calculation of basic and diluted earnings per share reconciles to basic earnings as follows:

The weighted average number of shares in issue throughout the period is as follows:

* The comparative figures are based on the number of shares that would have been in issue had the capital structure of the new parent company always been in place.

The Company has issued employee options over 6,232,589 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 years concerned.

6)   SHARE CAPITAL

As permitted by the provisions of the Companies Act 2006, the Company does not have an upper limit to its authorised share capital.

The Company was incorporated in England and Wales as a private limited company on 10 September 2013 with subscription share capital of one ordinary share of £1 each issued at par, fully paid.

The following is a summary of the changes in the issued share capital of the Company since its incorporation:

(a)      by a special resolution dated 17 March 2014, the Company adopted articles of association providing that the share capital of the Company be comprised of Xeros Ordinary Shares, A Ordinary Shares, B Ordinary Shares, C Ordinary Shares and C1 Ordinary Shares;

(b)      on 17 March 2014, in aggregate 37,756 Xeros Ordinary Shares, 31,490 A Ordinary Shares, 64,144 B Ordinary Shares, 102,881 C Ordinary Shares and 7,825 C1 Ordinary Shares were issued to the shareholders of Xeros Limited, fully paid, in consideration of the acquisition of the entire issued share capital of Xeros Limited;

(c)      on 18 March 2014, 8,148 C1 Ordinary Shares and 3,658 C Ordinary Shares were allotted to EIS investors at a price of £205 per C1 Ordinary Share and C Ordinary Share (which equated to the Placing Price on conversion into Ordinary Shares as described in paragraph (d) below).  The total cash consideration was £2,420,230;

(d)      by a special resolution dated 18 March 2014, conditional upon and with effect from Admission, each Xeros Ordinary Share, A Ordinary Share, B Ordinary Share, C Ordinary Share and C1 Ordinary Share in issue was redesignated as 166.6666667 Ordinary Shares, having the rights set out in the articles of association.

(e)      on 25 March 2014, 22,422,579 Ordinary Shares were allotted at a price of £1.23 per share for total cash consideration of £27,579,772, being the Placing and Admission of the Company onto AIM.

(f)       on 22 May 2014, 100,000 Ordinary Shares were allotted at a price of 10.8 pence per share, for total cash consideration of £10,800, upon the exercise of share options granted in the Company's Unapproved share option scheme.

At 31 July 2014, the Company had only one class of share, being Ordinary Shares of 0.15p each.  Total costs of the above share issues of £1,842,000 have been charged against the share premium account.

7)   MOVEMENT IN RETAINED EARNINGS AND FOREIGN CURRENCY TRANSLATION RESERVE

8)   ANNUAL REPORT & ACCOUNTS

The Group's annual report and accounts for the year ended 31 July 2014 have been published today and will be posted to shareholders shortly. The annual report and accounts will also be available in electronic form onwww.xeroscleaning.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.