Germany-based washing machine pumps and drives manufacturer Hanning has signed a ten-year global licence to manufacture and sell the XFilter washing machine filter technology developed by Xeros Technology Group (LON: XSG). This is in anticipation of legislation related to microfibres. The Xeros share price has doubled on the news.
XFilter enables microfibres and microplastics released during washing to be captured and safely disposed of. The built-in filters should last the life of the washing machine. This type of technology will be required in France from 2025 and other countries are likely to follow suit.
In today’s announcements the spelling XFilter is used, when previously it was called XFiltra. It is unclear whether the name has been changed.
Textiles testing institute Hohenstein has tested XFilter and verified that it can capture more than 99% of microplastics. Xeros already has a development agreement with a large Asian washing machine manufacturer and these tests were undertaken with this client.
Xeros will receive an undisclosed royalty on every filter that is manufactured by Hanning. The licence deal will not generate any revenues until late 2023, though.
Hanning is estimated to supply components for 8.5 million washing machines each year – around one-third of those made in Europe. This could Xeros has a current cost base of around £7m, so even a small royalty on a proportion of the Hanning-supplied washing machines could generate significant revenues.
Funding
There was £6.2m in the bank at the end of February 2022 and Xeros continues to lose money. Although management said that there was enough money to get Xeros into the first quarter of next year, there may be additional cash required earlier than that. A sustained share price rise may make it difficult to resist a fundraising in the next few months.
In March 2021, a placing and open offer at 240p a share raised £9m. The current share price is 63.5p, up 31p, and it has been even higher during the day.
Xeros joined AIM in March 2014 at 123p a share, but there was a subsequent one-for-100 share consolidation, so the comparative price is 1230p. The current share price has fallen more than 99% from that level.