Xeros Technology Group (LSE:XSG) — Preliminary Results

0:01 Good morning, ladies and gentlemen, and welcome to the XEROS TECHNOLOGY GROUP PLC Investor Presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged. They can be submitted at any time via the Q and A tab that's situated on the right hand corner of your screen. Please just simply type in your questions and press send.

0:21 The company may not be in a position to answer every question it receives during the meeting itself. However, the company will review all questions submitted today and publish responses where it's appropriate to do so and these will be available, via your investor meet company dashboard. Before we begin, if I may, I would like to submit the following poll. And if you could give that your kind attention, I'm sure the company would be most grateful. And I'd now like to hand you over to CEO, Neil Austin. Good morning, sir.

0:47 Good morning. Good morning, Chuck. Good morning, everybody. You're very welcome. Yeah. Just to introduce myself for those of you that I haven't met yet, I'm Neil Austin. So I'm the chief exec of XEROS Technologies in. Joining me today is Alex. Morning. Yes. So I'm a director of finance here at XEROS. I've been in the institute slightly short term than Neil, but about five, six weeks at the moment. Yeah. Super. So today, we'll just take you through a kind of presentation which will highlight initially some very basic information about who we are

1:18 as a business, some of the kind of highlights really over the last eight months in particular since I've been in situ, and then we'll go further into some of the more technical details. So some of you may already know of it. It's just so that we can offer a kind of full update on who we are as a business for all audience. Okay? So without further ado, just to kinda clarify what what we do. So so XEROS is, a licensing business. So if we follow the text on the right hand side, we are a licensing business. We are very much in the business of sustainability. We're a green tech company, and we offer proprietary tech solutions specifically for two industries. Those industries being the laundry and the apparel industries. And our aim very much within those technologies is to offer, savings. Savings in terms of water, serving savings in terms of energy, savings in terms of the, chemical pollutants as well, which we use. And we're also now moving into a space of trying to consider, filtration, filtration in particular of microfibers.

2:19 The illustration that you see on the left hand side is a good example of our tech in action. So this is the CARE XC one technology. On the left hand side, you have a, an example of a woollen jumper, which is, something I'm sure everybody will be familiar with that after a couple of washes, we start to see fiber loss and damage. There's killing. There's shrinkage. However, by using the XSG one technology that the XEROS offers, you will have, something that came towards in the right hand side. So a much better preservation of the dye, maintain softness and maintain shape. So really trying to make the item of clothing look as good as it was in the first day of its its purchase. Just to talk a little bit more about the technologies that we have available. So working left to right, we have, our filtration technology, as I said, which we call XF, XF filtration.

3:15 There's a little schematic there. It's a filtration device primarily for use within washing machines. The middle technology is our finished technology, XFM, and that's probably the longest standing of the technologies that the XEROS has. And it's using two key elements. One is a XDrum. So you can see the schematic of that, which is a harvesting tool attached to the drum of a rotating locker machine or finishing machine, and that applied with XORs nine one beads is what helps us deliver those settings that we talked about before in terms of energy and water. Third technology is care, the XC technology. So you can see from the visual there that it's it's it's a very similar technology to that which we use on finish, albeit it's a scaled down version so that we use within a a laundry facility, whether that is a domestic facility or indeed a commercial facility.

4:16 Just to highlight why we have specifically targeted those technologies. If we look at this visual, this is effectively the life cycle of a garment. So any garment you might choose to to imagine starts its life in fiber production, so raw material production and the processing and sorting thereof, all the way through to its end of life, which, unfortunately, nearly always ends up in terms of landfill or waste to energy. Now the bar charts that you can see within that represent the climate impacts across that total life. And the two elements of it which generate the largest proportion of that climate impact are the textile production and specifically the bleaching diamond finishing of that garment and then the the use of the care of that garment itself, which, as you can see, is a 24%.

5:11 And within the box, as you can see, that's squarely why we have our finished technology to target the the finishing side of textile production, and we have our filtration and care technology to target the consumption side of it as well. Okay. So just to dive into a couple of highlights First of all, need for business. These will probably make a little bit more sense as we explain the the technology further on. First is on the filtration side of the business. We have got gathered quite significant momentum on that in the last period. So some of you will be aware that we signed a license agreement with a large European based component manufacturer called Hanning based in Germany. I'm pleased to say that in the last few months, we have managed to add to those licensing agreements with two further European based component manufacturers.

6:05 Really strong validation of the fact that the XEROS filtration technology is clearly one to have. Also in line with that, we're seeing a growing legislative agenda moving forward. Some of you will be aware that I've spoken to us before of France having been the first country to legislate, and I'll talk further, through the presentation about how other countries are coming with that as well. On the Finnish side of the technology, we already have licensing partners in place. So the focus very much over the the last twelve months in particular has been about trying to create that brand endorsement. So the apparel brands, the retailers, which ultimately are being targeted and and rightly asked to improve their approach to their supply chain when it comes to responsibility and, green approaches are very engaged with us.

7:01 We have a number of those, high street retailers visiting us in our XTC headquarters in Sheffield. And one of them, a major Western European brand, has actually progressed to the extent that we have put a machine in in one of their preferred manufacturers. We have run initial production trials, and the initial results are very compelling. So really good growth and really good progression on our side of the business too. On the car side of the business, so this is the this is the laundry side of the business. We made some really good progress in December. The first of those, something which the company holds very dear is that we managed for the first time to get that technology into the hands of consumers.

7:47 So XEROS as a business has had a commercial laundry proposal in place for a number of years. But for the first time in December, we managed to, in partnership with IFB, our Indian manufacturing partner, We managed to put a crossover product, an 11 k g seven professional product into the hands of high net worth individuals within India. So a really a really fundamental shift forward for us as a business. Also in December, on the other side of it, on a a very large scale machine, a 90 kg platform, we also started a trial with one of the world's largest employers, which being Indian Railways. So this is with a view to eventually moving to a point where Indian Railways will be able to use XEROS technology, parts of the IFP across their sites within within the subcontinent.

8:38 Final bit is, firstly, as I've said in the introduction, new CEO. So I joined in August of last year. My background, for those that don't know you don't know me, is strongly in terms of consumer electronics, particularly within the appliances business. I worked for many years for the World Cup Corporation, within The UK for the Glen Dimplex Group as well. And lastly, before joining XSGRIX, I was part of the management team at, Strix PLC, so another aim listed, B2B company. Since I've been in, I've also made some changes to the business, not the extent Alex stepping up to to FD role. Okay. In terms of the investment case, I mean, we feel as though we've got our business model very much very much toned down. So the first piece is that we have our proprietary technology.

9:27 So as we go through each of the technologies in more detail, you'll see we offer significant savings versus industry standards today, whether that be in water consumption, energy consumption, or the chemistry that's used within that as well. And to protect that, we have a very strong, pacing portfolio. So 38 pacing families are currently in place today. Our business model, as I said, is, well defined now. So we have a high margin licensing business model. We aren't in the business of manufacturing. We're in the business of creating technology, which is market leading and then licensing those to partners to to tech market. And as I said before, we we have licensing partners in place, whether that be, IFB on the care side of the business, whether that be Ramsons and other Indian company on the finished denim side of the business or whether that be Hamming on the filtration side of the business as well.

10:21 Key question which we also have to ask ourselves is the technology may be good, but actually, does the market want it? Whether that be the water at our energy savings or whether it be the microfiber filtration offering that we have today, we are very much in a place where demand from people at home, consumers is crying out for this. And in addition to that, not only are people crying out for this, but we're seeing a move in terms of the legislative environment as well. So just to repeat myself, France being the first country to legislate on microfiber filtration, stipulating that from 01/01/2025, every single washing machine which is manufactured and sold in that country has to have a microfiber capture device. And as we come on to that, I'll clarify how we're moving forward with some of these other major major regions as well.

11:12 Just quick one in terms of financials. So I think, again, a number of you will know we we conducted fundraise in September, so fully subscribed, bringing £6,000,000 into business. We have had a cash burn of 500,000. That's now being reduced, but, when Alex gets to his section, he can talk more to that. Okay. So if we just jump into the technologies, to give you a bit of a better idea. So filtration being the first one. So microfibers, are an issue. I think everybody, that picks up newspaper today is fully aware of that. But if we think about it in three different tranches, so they have an impact, first and foremost, at a human level. So the microplastic exposures for every single person globally within within, one year is quite significant. So whether that's through inhalation and ingestion, we are, taking thousands of microplastics into our system every single year, so whether we choose to or not.

12:10 From a business perspective as well, there is a significant cost associated with production, particularly if we just take plastic bottles as one example. So production, as an example, 2019, the plastic is estimated to have produced 3,700,000,000,000 worth of cost, and that cost is not in terms of the production of use of that. 90% of it is actually in terms of the disposal of that of that plastic. And then just in terms of the plan three impact, something that we at XEROS feel very passionately about. Unfortunately, it's growing. So in 2005, there were estimated to be about 17,000,000,000,000 microplastics in terms of pollution within that year. In the last eighteen years, that has grown tenfold.

12:55 So in 2023, the expectation is that will reach 171,000,000,000,000 microplastics, which are being shed. Unfortunately, the estimates are that that will grow further. So a fundamental problem which needs to be addressed. In terms of how we are doing that in our own modest way to begin with, we have our first, technology, which is the X filter. So on the left hand side, you can see a render of of of how it works. It's effectively a rotating filtration device. It fits inside a domestic washing machine. So there is an envelope of space that we've identified, which the filter can fit into, and it has an incredible, like, rate of efficacy. 99%, indeed, over 99% of microplastics are captured by our technology.

13:47 In terms of the opportunity today, so on the left hand side, you can see some of the work that we're doing particularly with NGOs. So we are a tech provider, but we feel passionately about this. It's not enough for us to be able to produce that tech and find those licensing partners. We are working hard in terms of raising awareness. We're a small fish within a big boat, which is why we're partnering some of the big names within this space. But we are trying to influence and indeed are being successful in terms of influencing that from a legislative perspective. So just this just this week on Monday, we issued a further white paper, which is specifically targeting the e commission with a view to highlighting to them that the most immediate and obvious opportunity to capture microplastics from laundering is an in machine solution.

14:38 In terms of the opportunity, tomorrow, so if I just start from the on the right hand side, as I highlighted, there is legislation which is already in place mandated for, France in 2025. We've been actively supporting, as I said, initiatives by the EU. Also, at the same time, we've been supporting our private members build within The UK. So there's been two readings of that, and there will be a further reading this year. So we're actively supporting that. And more recently, very exciting for us is that we've been asked to support industry experts, a reading of a bill in the California State Legislature as well, which is scheduled to come within the next couple of months. California, of its own, is 11,000,000 washing machine market.

15:25 So the view is that if we can influence that, again, we've got another considerable opportunity to to capture significant amount of microflipers and filtration. Just light touch on the left hand side, we're not satisfied to stop there. For sure, we're focused on the commercialization of our our tech, but we're also thinking about the next piece. So as well as looking at versions two and three of the current XSfilter product, we're also thinking about how we can target the factory microfiber solution as well. So we're actually proactively being approached by a number of manufacturers and the number of apparel brands about how we can come up with a solution. So that's an r and d initiative at this moment in time, but watch this space. Okay. Just to elaborate a little bit on what those three licensing agreements I talked about before mean for us and our ability. So with those three licensing agreements, we have now got access to the brands that you can see on the right hand side. So pretty much all of the major brands globally, whether that be a higher mid air, Whirlpool, LG, Samsung, or even with the in Europe with BSH and Electrolux, we can now access that with three component manufacturers we've got. So of the hundred, hundred and twenty million washing machines that are being produced on an annual basis, we are we are pretty much there in terms of being able to get our tech into that.

16:46 Okay. Moving on to finish. So when we talk about finish, we're talking about finish of of of garments in terms of production and manufacturing of those garments. Unfortunately, from human impact, there are still a lot of chemicals which are being used within that process. Those lead to, quite significant impact for those people involved, whether that's allergic reactions or or indeed respiratory disease. So we're very much trying to find a way that we can reduce the amount of chemicals or toxic materials that are being used within that production. In terms of the scale of that business, the apparel industry is, in fact, the third largest manufacturing sector after automobile automobile and tech. So huge numbers. $2,400,000,000 globally is the value of our industry. 75,000,000 people are live and operating within that that industry.

17:37 And even in the first area that we are targeting, which is the manufacturer of denim, there are 1,200,000,000 pairs of jeans made every single year. So significant opportunity for us to be able to make a difference. And in terms of making a difference, just to highlight some of those planetary impacts, so it's a very water intensive industry. So 79,000,000,000,000 liters of water are used every single year in terms of the manufacturing of our technology has the means to be able to dramatically reduce that. So we'll move on to the specifics of what the product is.

18:11 So as I said, the manufacturing of genes is very water intensive. It's it's equivalent to ten years of drinking water per person. As a highlight for the chemicals that we use in that process are escaping out into to the planet today. Our technology primarily reduces water. So by introducing exomes, which are nylon bead into the medium whenever the clothes are being processed and finished, we can reduce the amount of water necessary to get the same desired look and effect that the Hashtag brands are asking for. This reduction in water then naturally reduces the amount of energy, which is being used as well. And also, as I've said before, we are able to use less chemistry as well to get the same effect. So fantastic in terms of planetary savings, but also fantastic savings in terms of monetary as well for the stakeholders in that industry.

19:04 In terms of that opportunity, so I I talked before about the fact that we have manufacturing partners in place already, albeit we are obviously continuing to to have conversations about how we can expand that. But very much the focus, as I said before, has been about how we can work with retailers. So retailers will be the ones that will decide and say, I want my garments, which I'm gonna sell to consumers to to be manufactured in this in this manner. The amount of inbound that we have, the amount of high street retailers that we have within our office on a regular basis is incredible. There's definitely something here that they want in terms of how we can offer that. And as I said before, we are at a very advanced stages with one brand in particular, European brand, about how we can make sure that that solution is offered to them in totality.

19:53 Okay. If we, again, click on to the opportunity tomorrow. So as I said, denim manufacturers first area that we have targeted, but, actually, there are other garments that we could, we could target and we could benefit in terms of water consumption. So any garment which is manufactured will go through a final wash process. They'll file a wash process against extremely water intensive. So we have started to run trials and are clear that our technology can offer significant water setting within that. So in some cases, to 80% of water that is currently used in the finishing process could be reduced using the XEROS technology to give a sense of the scale of that. If our XEROS XSORT technology was used, 50 liters of water would be would be safe for every pair of jeans at 60,000,000,000 liters in the gene manufacturing industry alone or the equivalent of the entire water consumption of the country at Malta.

20:54 Okay. If I move on to care, as the last technologies for care technology, we're thinking about. Yes. We offer water savings and thus the energy savings as well before. But what we're also seeing is that there is a significant garment life extension as well, and this is really important. The reality is the, impact of fast fashion, which everybody is aware of, is that people are buying a lot more clothes today than they were previously. So 60% more clothes are being purchased, this year expected than just fifteen years ago. And the sad reality is that 73% of those clothes end up in landfill or deep incinerated. I mean, and equally from a business impact, there's huge, huge cost. Even if we just look at The UK, that is a £140,000,000 worth of, clothing, which is incinerated or moved to landfill every single year.

21:46 So, again, big numbers that we can we can target. So as I said, the, technology is similar to finish, so it's using a harvesting, XEROS in conjunction with the exorbs and nylon beams within the within the rotating drum. So another example similar to the to the woolen jumper, which we saw at the beginning of the presentation. So this denture, you can see that through the use of the care technology, the wrinkling, the patchy dye, the the the stress on the garment as well as the reduction in size is all significantly minimized by the use of our technology. Just to give you some live examples of the opportunity today. So we have had a long standing relationship with very successful, industrial, laundry service in France called George.

22:40 They have contracts for the likes of Air France and SNCS, so significant players within the French, industry.

22:48 And they're longtime supporters and users of the XEROS TECH. So if we take one of the XEROS enabled washing machines that George uses today, 25 kt washing machine, run on average 14 cycles a day, and that is saving George £10,000 a year and 2,000,000 liters of water. So significant impacts are already being seen by the use of XEROS technology. If we think about tomorrow, as we talked before, it's great that our tech is used within commercial environments. We continue to look for further opportunities to support George and IFP to be able to grow. But we really want to get this technology into the hands of domestic homes, and we're moving ever closer. So we started in December with the semi professional crossover machine, but we're moving to a situation where within this year, the expectation is that we will be able to launch a mass market machine, rather IFE. We'll launch with XEROS TECH, a mass market machine, which we'll be able to use by that huge population.

23:53 Again, a little schematic to help you understand. All domestic washing machines were zero equipped, that would save the equivalent amount of water as is used by the entire countries of Switzerland into it. So significant savings that we can offer. Okay. And that I will hand over to Alex just to run you through some of top line on financials. Hi there. Thanks, Neil. Yeah. So as as you all know, we released our annual results for the year end of 2022 early this week. So just to give you some of the key key points on the on the financials on that. So we did we did take a little step back on revenue last year. That's mostly as a result of just the timing of these contracts and and and working through the payments from our from our from our partners around the world. So we expect to to see that pick up a little bit in 2023.

24:43 From a administrative expenses point of view, again, we spent a little bit more in 2022 than we did in the previous year, but I think that was probably the the right thing to do for a number of reasons. So as Neil mentioned, he arrived in in August last year. We we underwent an exercise internally to just make sure we have the right team in place and the right right people in place around the world, and there was a small restructuring exercise that enabled us to bring bring our cash burn down from what was roughly 500,000 a month from the last year down to what we expect this year to be below $4.50 and then lower as we move on from that. In addition, obviously, as as we saw the world open back up, particularly our our partners in in in further flowing parts of the world like India, we were able to get out and see them in a in a more more regular basis. That's really important for us to have our our teams have those relationships with those people to allow us to make the commercial progress that we know needs to happen. So we did spend a little bit more on travel in 2022, but that's purely as a result of it returning to the levels that we would expect to see on a regular basis.

25:48 Our IP is, as as Neil says, is a key part of what we do. It's it's the the kind of cornerstone of our ability to to generate revenue as we go forward from our licensing business. So where appropriate, we need to spend the right money to get that IP in the right place and the the life cycles of our of our patents are such that we have slightly more expensive years in in in some cases than than others, and that was the case again in 2022. So just to reiterate on on on cash,

26:14 we expect that to be on an annual basis below £450,000 a month in this year, which is which is positive progress from from where we were last year. We still still believe that based on the contracts we have in place and our and our and our knowledge, what we're what we're doing over the next couple of years. We expect that by the end of twenty twenty four, we could be month on month EBITDA and cash breakeven, which is a which would be a really, really good step forward for us if we can we can do those. So the you may have seen the guidance that that that comes out from from our broker, FinCap. The revenue numbers have come down from from where they were previously. That's a reflection of well, a couple of things, really. So as Neil mentioned, we we we've got our domestic partner, IFP. For a number of good reasons, that that launch has been delayed slightly so that we can really take advantage of the new platform that IFB are have been preparing internally for some time. So we expect that launch to be later part of this year, which has meant there's some not perfect revenue there. That said, the kind of progress that we've been able to make with our with our license partners in filtration and and the progress that we're seeing globally in terms of the legislative progress that that that that that's being made there, we really see that over the medium term, there's a significant opportunity for us in in filtration. And while some of the headline revenue numbers might be smaller, the margins on filtration are are really good for us because it's a real pure play licensing. So Yeah.

27:38 We see some real cause for optimism when when we when we look at the those those areas as we move forward.

27:47 So these are just some headlines on the numbers that we have put out recently. So go the process will go in detail through the through the profit loss account. Our our cash utilization was, like I said, slightly higher than we were where we were in 2021, but for the reasons that I outlined earlier and saying, we think those are the, you know, the right things to have done.

28:09 We're always pretty successful in our claim of tax credits. So we're a we're a hard and r and d business. The work we do is genuinely innovative. Really, really cutting edge stuff, and it's nice to have HMRC's validation on that as well as the work that we do with our commercial partners. The just wanted to mention on here. So that's that's a that's my most recent share register. We're that we do have a a long standing and supportive investor base, so we've got some some real support of the technology and the business there that have been with us for some time. Just to I mean, just to highlight as well. So some of you may not be aware of the entrepreneurs fund, which at cornered the last round of investment for us, has been a long standing significant investor for a number of years now. We should read the family, which is also the owner of the C and A business as well. So the retail business in in in Europe, they obviously support us. They have a strategic adviser to support.

29:12 And equally, they are close enough to see that the the the question for banking is real and as well as with us, I think, as far as I that's why they continue to back us. So a significant investor for us, not just from a cash perspective, but also from a belief in the tech that we offer as well. So if I just hand back to Neil to to to kinda wrap up things. Okay. So, yeah. I mean, we we kinda covered off the top lines in terms of who we are as a business, but just to really just to really run those points through, you know, we generally have market leading technology. We wouldn't offer it if we if we didn't do it so we can make a significant difference. So that that is the case when it comes to the water and the energy savings that we offer both in terms of the finish and the care technology.

30:00 And for sure, when it comes to the filtration technology, we we have market leading and third party verified efficacy rates that that nobody else is able to to to get close. So on the microfiber side, it's being tested by a third party institute, the Holmstine Institute in Germany, and indeed, the University of Plymouth a couple of years ago to have an investigation into microfiber capture in laundry. And I'm pleased to say that the XSGOLD device came came top of that pilot, and, actually, we've seen that being highlighted again in The US as California has started again to make noises about wanting to legislate in in line with that. Marketing tech, we have some great people. So, again, when we say we have experts in the field, we are a tight team because we're we're obviously an r and d business, but we have some of the brightest minds, I can say that I've ever encountered both from a scientific and an engineering perspective.

30:57 Just to highlight as well in terms of the model. So because we are licensing, it means that, really, the tight team that we have today in the cost base, which we feel is appropriate to be able to progress the business, has no has no need to be able to grow exponentially as those licenses the licenses that we have in place start to reach maturity. We we have the right team. When revenues come through, those will be purely through license. We don't need to manufacture. We don't need to hold stocks. That's a a really great place for us to move. Just on to those commercial agreements as well, in particular, in the last couple of years, so think credit to to my predecessors and and certainly the progress that I've seen under my stewardship over the last eight months. We've really started to to get to a very good place in terms of those commercial agreements. So just to reconfirm, three licensing agreements when it comes to filter, strong partnerships when it comes to to care, and indeed to to to finish.

31:54 Fourth piece is, as I said earlier, really important. So it's great if we've got technology, which theoretically adds some sort of value. Do do people really want that? My my background group primarily in appliances at consumer goods tells me that that's always the first thing that we've got to be able to talk to. And as I said, whether it talks about, microplastics or its water and energy savings, everybody squarely understands that this is something the planet needs and that they have to be able to introduce their supply chain. And then, yeah, just to close off, as we've mentioned a couple of times already, IP is very important to us. After our our staffing cost, it's the second largest area of investment that we put into the business. Have a very strong portfolio in place, which protects us and ensures that those licensing agreements are are are locked solid.

32:46 So, yeah, I think I think that's us in terms of the the presentation. And so I'll maybe hand back to Jake. Neil, Alex, that's great. And thank you very much indeed for your presentation this morning. Ladies and gentlemen, please do continue to submit your questions just by using the q and a tab that's situated on the top right hand corner of your screen. But just while the team take a few moments to review those questions that were submitted already, I would like to remind you that a recording of this presentation along with a copy of the slides and the published q and a can be accessed

33:18 via your investor dashboard. Alex, Neil, we did receive a number of pre submitted questions ahead of today's event. As you can see there in the q and a tab, we've also received a number of questions throughout your presentation this morning as well. So firstly, thank you to all of those on the call for taking the time to submit their questions. But perhaps, guys, if we may address those that were presubmitted first, and then we'll look to take those that have come in, this morning. The first question that we have here reads as follows. If an OEM wants to sell a washing machine with a microfiber filter, what options exist other than buying a component with a XEROS license? Among these options, what advantages are there in choosing the component with the XEROS license?

34:02 Yeah. It's it's a really, really good question. It's a key question. And, I mean, we've we've done some good due diligence on this. So and, clearly, we're not the only player within this space. Everybody knows that microplastics is an issue, and in particular, we're aware of the shedding through laundry and of course, as being a particular area that needs to be addressed. There are competitive solutions out there. In terms of an end machine solution, there is actually one in market today. So under the GROUP PLC brand, which is owned by the our Telet Group in Turkey. There is a microfiber, capture device, which, consumer can can can buy today. We're pleased that, obviously, that development has happened because, we we really do wanna see solutions for this problem out there. The only challenge that I would say with that, however, is the fact that it it has a tendency to block, and indeed, this this is a problem that a lot of the competitive solutions have at this moment in time. So what I mean by that is that there are different characteristics to the fibers of man made and organic materials.

35:15 If someone only did a man made material, a

35:19 synthetic wash, then theoretically, a mesh filter, which is what we see on our GROUP design, it is reasonably effective, but that happens very rarely. I I think if we we consider our own our own circumstances, I I I never do a synthetic wash. There's always a mixture of matte and and and organic fibers. Those organic fibers, of course, do clog the filter. And what that means is that even within one wash, quite quickly, the filtration device will no longer be efficient. It will block. On that grounding device that's currently at market today, they have access to bypass system, which means that as soon as the filter blocks, the water effectively bypasses it. So it means that your washing machine still works, which is great, but, unfortunately, it's not capturing any microplastics whatsoever.

36:09 We have found a solution to that insofar as we have a additional power source, which is feeding into our filtration device, which enables it to spin spinning, enables it to stop blocking. And, therefore, it it it it can go anywhere between 10 to 20 washes without even needing to be an update as well. So that's the only in machine device which is currently available. There are a number of out of machine devices as well, which are also available, which do have a pretty good capture rate. Unfortunately, they are, again, a cartridge solution. So as soon as the cartridge will block, which it will do over over a period of time, they need to be sent away back to the manufacturer, and the manufacturer will send the replacement. So kind of contrary to the sustainability element that we feel is really, really appropriate and actually quite expensive as well.

37:03 We're part of them. We're we're we're obviously pleased with solutions around the market, but we are very confident that the the XEROS solution is is the the best the best and and, actually, in in some cases, the most cost effective over the lifetime of the machine. And, again, I would just I would point to the university employment study, which which leads to second question. Perfect. Thank you very much for that. The next question that we have here asks, what is your net monthly cash burn at the moment? Yeah. Yeah. A a good question and and and what we get get asked relatively frequently. So as I mentioned in the presentation earlier, we it was about running about 500,000 a a year 500,000 a month, sorry, when over over the course of 2022. We have taken steps since since Neil's arrival to to bring that down, and we expect that to be below $4.50 for for 2022 2023 and then lower still as we move forward, purely as a result of the timing of some of work we're doing. So that's on kind of basis.

38:04 So that's that's where we see it going in in 2023. Perfect. Thank you very much. Perhaps just turning to the next question here. In the recent regulations against microplastics, I don't see clear minimum specifications for the filters. The market might look very different depending on the minimum efficacy required for the filters as per the regulations, say, 75% efficacy versus 95% efficacy. Yeah. I mean, it's it's it it it's a key question. So, you know, our our perspective upon this is that if there is a technology which is in the market, which is viable from a cost perspective, it's actually preferable from an environmental perspective in terms of it's it's it's one piece which lasts the lifetime of the machine, then then that clearly should should should be the solution.

39:03 We don't operate within a a vacuum within a bubble. So there are there are competitors out there at the same time. This is why we are proactively getting involved and have successfully proactively gotten involved in terms of legislation. So we influence the the decision of France to legislate to say that from 01/01/2025, there would be a need for washing machines to have microfiber filtration. As I said before, we are actively working with the private members bill in The UK so that, again, this piece can be legislated, in line with what we feel are the appropriate levels of efficacy. We're doing the same whether it be California. So we are a tech company, but we also wanna make sure that the solutions that the world arrives upon are the best possible ones and okay. For for for now, we see XEROS technology is the best one.

39:54 So, yeah, I I I think we are active in all of the right areas, and we're certainly getting a number of interest, a number of support from significant NGOs in particular, highlighting the opportunity that exists with our tech. And, sorry, just to add to that. From what I can see and what what kind of feedback we're getting, the the the efficacy of the XEROS solution is not the only advantage. You know, it's consumer friendly, and it's and it's cost effective as well. So the fact that it's so good might actually be an added bonus for the for the the for the OEMs that end up adopting. Yeah. Thank you very much. And just turning on to the next question, could you please talk to volumes slash g two m ramp with IFB?

40:43 In a manner of speaking. I mean, what what can what can say is that IFB are one of the largest brands in the Indian market, largest domestic brand. They do volumes to the tune of around 800,800 units per annum. They have a very progressive and a very aggressive approach in terms of wanting to actually grow that market share as well. So they see a particular niche opportunity, which is in the more premium segment, and that is to specifically combat competition that they have from the the Korean company, Samsung and LG. So 800,000 is their current current numbers. They are targeting to grow that to a million units.

41:28 Some of that will be just a natural organic growth of what is a burgeoning middle class market, particularly within India, which I think, again, everybody's aware of. But for sure, they want to take market share as well from from, in particular, Samsung and LG. In terms of what the share will be of the XEROS technology, it will be the more premium product. Of course, it will because it's it's sort of the most efficient and the most effective. The specific volumes will be very difficult to to understand, and we're going through the right levels of due diligence. So part of the reasons why there has been a slight delay in terms of the launch is actually because I'd be in conjunction with XEROS to make the decision that the technology should go on to their new platforms. Their new platform will be most advanced in terms of the user interface and the aesthetics of the machine, which again will give the best possible chance of success within within the market.

42:23 Once that product launches later this year, different price points, different marketing messages will obviously be be be used so that they can maximize what the volumes will be. In truth, nobody knows exactly, but I can only point to the fact a huge domestic market, a huge share of that market, they already have an an install base of somewhere between 20 to 30,000 points of sale for their products there as well. So it's a significant opportunity. And again, what what's the space? We'll all have a better idea once the product has launched there this year. Perfect. Thank you very much for that. And just turning on to the next pretty submitted question that we have here. How are you provoking volume uptake across these licensing agreements?

43:13 Yes. I I'm I'm presuming that's probably specifically about the microfiber filtration. So we we talked before about how we have looked to make efficiencies within the business, and we've we've been able to do that in terms of most effectively using the resource that we've got. But that doesn't mean that we haven't invested into the business at the same time. So actually on the commercial side of the business, that's where we have had more investment and equally in terms of the marketing and commerce as well. So we have more sales commercial resource, and those sales commercial resource, again, work very effectively hand in hand and to a certain degree directly with the with the brands. So we're thinking about the volume uptake. We are working closely with the the final decision makers being the OEMs, and we're working very closely with three licensing partners that we have in place so that we can make sure that the XEROS technology is the one which is prescribed by the by the OEMs. So, yeah, we're not we're not sitting on our hands even though we are an IP business. We are proactively prospecting and pursuing some of the preexisting things that we have to commercial maturity.

44:28 Thank you very much for that. The next question that we have here, talks to The UK legislation, and asks, when will The UK legislation, host the second sitting? I think the latest that we've heard this week is that that's looking likely to be November of this year. Having said that, that doesn't mean that nothing's gonna happen until November of this year. Clearly, although The UK is no longer part of the EU, the white paper that we have published and indeed the recommendations of the European Commission will issue, we presume will have a direct impact upon what The UK decides to do. The UK, politically, is a separate entity, but from a commercial perspective, the, major brands will view The UK as just part of the EMEA region. Therefore, how they decide to proceed in terms of their microfiber solutions for France, Germany, Spain, Italy, the major European markets will almost inevitably be exactly the same as it is for The UK. So it isn't that legislation isn't important for The UK, but by the EU and France having already moved, there's a logic which suggests that, obviously, The UK will will will follow suit.

45:39 And the second piece within that to say is that it doesn't actually require an active law for The UK, part from from the UK parliament to decide that there should be, microfiber solution should be included in washing machines. It's actually within the power of Diafra or whatever it's called. These days, it's within the power of the the departments to be able to mandate this anywhere. This is very much about raising awareness of it and pushing that to action. Perfect. Thank you very much. And perhaps, a couple of final presubmitted questions that we have here. The first one of those being, what's been the biggest challenge, to the business since completing the fundraising? Yes. It's it's it's a good question. Mean, on a personal level, it's been, it's been an interesting one because as I said, I joined the business just before we we conducted the fund branch last year.

46:31 And, actually, my my exercise has been very much about trying to undertake due diligence, if you like, on on the opportunities that we have open to us. The biggest challenge, if I'm being honest, is prioritizing the opportunities that we have. And and what I mean by that is that my assumption before joining the business was there would be one clear winner, whether that would be filtration, whether it would be care, or whether it would be the finish up of the business, that would obviously be the one which was most likely to deliver the significant opportunities. The reality is that we're able to make significant progress. We have a very good position on all three of those technologies. So it's a very nice challenge to be able to have, but it's yeah. It is it's definitely that one, which is we we have we have almost an a massive riches of opportunity. So that's that's that's probably the challenge that helps I deal with on a daily basis.

47:26 Perfect. Thank you very much. And the final pre submitted question that we have here, I know you've talked to cash burn already, but perhaps if there's anything further to add here. The question reads, in your preliminary results for 2022 published on April 18, you state that cash utilization, by which I assume you mean cash burn, is expected to be £450,000 a month in 2023. However, your cash balance reduced from 6,500,000 at the beginning of twenty twenty three to 4,500,000 by the end of March, which indicates an average monthly cash burn of £666,000. What makes you confident that you can avoid the necessity to raise more funds by the end of this year even if you reduce your rate of cash burn?

48:12 See, I should probably just pick on that one. So while while the the obviously, the math's in that correct yeah. In that question is correct, we have had 2,000,000 outflow in the first three months of the year. The call first quarter of year is always our biggest month, and that's for a number of reasons. We have some of our bigger kind of annual bills come through in that month. We have some some some of our staff costs come through in that month. And, also, to the timing of our our receipts from HRC are such that they don't tend to come through in the first quarter of the year. So it's it's not representative of of kind of the annual flow of cash for the business and certainly where we expect to be by the end of the year. So I wouldn't kind of read anything into that beyond beyond the the the statements that we've made in the sense that we think 450,000 per month for this year is a is a is a is a valid one. And that's the that's that's the assumption that we've worked on. So that's that's yeah. Just just to highlight that we are some of our working capital can be a little bit lumpy, and that means that we've we've spent a little bit more than we will in setting up the year in the first quarter. K. Absolutely.

49:21 No. Alex, thank you very much for that. And as you can see in the q and a tab, we have also received a number of questions throughout your presentation. And perhaps we have maybe touched on on a couple of those throughout the presubmitted ones. But if there's anything further to add on those, please feel free to address those, and I'll pick up from you at the end. Yes. So I think just just kinda reading through this, so there's there's kind of some things which are clearly sort of presenting themselves. Maybe just elaborate a little bit more in terms of the microfiber filtration piece in particular about what we would expect in terms of next steps in the future and so on. From a European perspective, because we have three to three components supplies in a very good place. So the the the reason why it's good to have three as opposed to just one is because, obviously, it gives us the opportunity to be able to offer two sources of supply to the OEMs themselves, which they're always more comfortable with.

50:19 So from a European perspective, I think we're in a good place in terms of that partnership perspective. And, in case I said, from a sales outreach perspective, we're now working hand in hand with them. So the the key kind of next steps will be within the next twelve months or thereabouts will be securing, securing those licensing deals. I'm sorry. But securing those filler material deals with the OEM brands. As we've shared with a couple of people, there is a high probability that those will not be announceable because there'll obviously be confidential agreements. Clearly, if somebody has the XEROS technology within that washing machine, they probably won't want their competitors to know that that's the case until it's actually launched to market. But those will be the key areas that we focus on. In terms of the other things that we'll do specific to microfiber. So we touched on the fact that California, in particular, will be the next kind of non European area that we think is probably gonna legislate and one one will presume that the rest of The US will follow suit.

51:20 So we would expect that probably not within the next twelve months, possibly twelve to eighteen months, we will secure licensing partnerships specific to that region. Now we can reach them with the three that we've already got. But having worked within the industry, I know that the request on the circuit will be that it will be a local supply, most likely in Mexico, supply of componentry for that market. So that will be the next area that we focus on. And we're also looking specifically at China as well. So China market, obviously, has opened up again in the last in the last few months. We have partnerships already in place there, but I think, again, slightly in the next twelve to eighteen months, China APAC generally will be another region, which we will target with the, with the filtration side of the business. So there could be some more licensing deals just to answer the specific question on that, but but we'll see.

52:14 I think I think largely that that that probably covers the probably covers the majority of them. There's a number of questions which we probably won't get the chance to answer everything, but, largely, I think we've covered it in this. Do want me to let us know? No. I think that's that's what we've got. Neil. Alex, perfect. And thank you very much indeed for being so generous of your time then addressing all of those questions that came in from investors. And, of course, if there are any further questions that do come through, we'll make these available to you immediately after the presentation has ended just for you to review to then add any additional responses, of course, where it's appropriate to do so. And we'll publish all those responses out on the investor meet company platform. But, Neil, just before really looking to redirect those on the call to provide you with their feedback, which I know is particularly important to yourself and the company.

53:01 If I could please just ask you for a few closing comments to wrap up with, that'd be great. Yeah. Thank thank you, Jeremy. And, again, I would just thank everybody for taking the time to to to listen today to to learn and learn more about the company. The the the one thing which I would like to say, it's quite a personal statement for me, but I I made a decision in the in the in the summer of last year to to to give XEROS a go to to decide to join the business. At that time, I very clearly saw that there was opportunity. I I think I I referenced in this in the in the annual report. I saw that there was opportunity in terms of maturity of the technology, the demand driven by the market, and I saw that there was opportunity for me on a personal level with my personal experience and background to be able to add value. I I just wanna make it clear, and I want to really send a message to everybody that I I feel more confident, ever more confident now than I did, before I joined the business and even within the first few months of the business. I I see things, and I I know things which give me a great level of confidence.

53:59 Sometimes things take a little bit more time than we want them because we're a licensing business. We can't always directly influence it in a way that maybe, I I would like us to. But I definitely see that there's significant potential for this business, and I I I one, I'm extremely pleased that I've made the decision to join the business, and feel very confident with the outlook for the future. Neil, that's great. And Alex as well, thank you once again for updating investors this morning. Could I please ask investors not to close this session? It shall now be automatically redirected for the opportunity to provide your feedback in order the management team can better understand your views and expectations. This will only take a few moments to complete, but I'm sure will be greatly valued by the company. On behalf of the management team of XEROS TECHNOLOGY GROUP PLC, we would like to thank you for attending today's presentation.

54:48 That now concludes today's session. So good morning to you all. Thank you very much. Thank you.