There were hints of progress within Xeros’s (XSG) half-year results to June. First, the group – which develops plastic beads and associated technologies for the commercial laundry and tannery industries – reported higher revenues, stemming partly from sales of commercial laundry machines in hotels and lodgings, which were up almost a quarter to £0.66m.
Service income also more than doubled to £1.2m, representing 63 per cent of the overall top line – up from 45 per cent – as Xeros focuses on getting customers to pay to use its polymer-bead technology, rather than its equipment. Encouragingly, post-period-end the group signed its first licensing agreement to provide Xeros technology in branded original equipment manufacturer (OEM) machines. This was with Sea-Lion, a Chinese manufacturer of commercial washing machines, and spans 10 years.
Elsewhere, the high-performance workwear business, Marken – acquired in July 2017 – generated its first revenue of £0.41m and is expected to reach cash profit break-even in 2019.
Still, for house broker Berenberg, domestic laundry is “where the value is”. Xeros is talking to global OEMs about licensing its XDrum technology for domestic use. This market is challenging, but Berenberg reckons it could be worth £2.8bn in annual royalty fees.
Berenberg forecasts operating losses of £23m in 2018 and losses per share of 22p (2017 losses: £31m and 34.9p).
| XEROS TECHNOLOGY (XSG) | ||||
| ORD PRICE: | 43p | MARKET VALUE: | £42.7m | |
| TOUCH: | 42-43.8p | 12-MONTH HIGH: | 321p | LOW: 43p |
| DIVIDEND YIELD: | nil | PE RATIO: | na | |
| NET ASSET VALUE: | 23p | NET CASH: | £10.4m | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2017 | 1.03 | -15.1 | -17.4 | nil |
| 2018 | 1.87 | -13.0 | -13.1 | nil |
| % change | +82 | - | - | - |
| Ex-div: | na | |||
| Payment: | na | |||
