Xeros to slash jobs and issue a share plan to raise cash

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Xeros Technology Group has announced a share issue plan to raise up to £10m and is intending to slash its headcount going forward.

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The Rotherham-based business which specialises in water-saving technologies said it planned to exit direct sales business by the end of 2019.

Staff numbers will be cut to 60 by early next year.

Xeros also said that it would reduce its cash burn rate to around £600,000 per month in the first quarter of 2020, with further reductions planned.

Chief executive Mark Nichols said: "The business case for our technologies continues to increase as the scarcity and pricing of water rises with consumption progressively outstripping availability in many parts of the world.

"With our technologies now proven and much simplified, following the introduction of the XDrumTM, global scale OEMs are now licensing or testing our products with a view to long term licensing.

"It has been a challenging journey to this point, given the maturity and size of the industry players we have to convince to adopt our technology. However, we have now reached an inflection point in the implementation of our strategy to become an asset light IP rich licensing business.

"Our focus for the rest of the year is to complete our exit from all direct sales businesses, win further licensing contracts and implement those already awarded. Our cost base has and will continue to move down to that required for a successful high margin licensing business.

"Switching to high margin licensing turnover over the next two years against a backdrop of a low-cost licensing organisation provides us with a line of sight to cash breakeven."

An issue price for the share plan has yet to be detailed

Cash reserves at the end of July were £5.2m and were expected to fund the business through to early 2020.

It added that it was on course to have a pure-play licensing organisation in place by end 2019 with a Q1 2020 monthly cash burn run rate of £0.6m. Down from an average monthly cash burn of £2.2m in 2018.