Xeros Tech Regulatory News (XSG)

The information contained in this announcement is restricted and is not for publication, release or distribution in the United States of America, Canada, Australia, Japan or South Africa

25 March 2014

Xeros Technology Group plc

("Xeros" or the "Group")

Admission and First Day of Dealings on AIM

Xeros, the innovative developer of a patented polymer bead cleaning system with multiple identified commercial applications, today announces the admission to trading on AIM of its entire issued ordinary share capital, and the commencement of dealings, at 8.00 a.m. today under the ticker XSG.

Admission and the fundraising are expected to allow the Group to accelerate roll-out in commercial laundry and to fund the research and development process through to commercialisation in other identified applications, not least in domestic laundry.

Summary

· £27.580 million (before expenses) has been raised for the Group through the Placing of 22,422,579 new Ordinary Shares at 123 pence per share.

· The total number of Ordinary Shares in issue at Admission is 65,073,549, giving the Group a market capitalisation of approximately £80.0 million at the Placing Price.

· The proceeds of the Placing are expected to be used for working capital purposes to fund the growth of the commercial laundry business and for incremental research and development to support parallel development of other applications through to commercialisation, not least in domestic laundry.

· Jefferies International Limited is acting as Nominated Adviser and Broker to the Group.

John Samuel, Chairman of Xeros, commented:

"We have been delighted with the investor response to the Placing, which has had strong support from a number of our existing key investors as well as new investors. Joining AIM marks a milestone for Xeros and we look forward to growing the business using the proceeds of the Placing and creating value for all of our stakeholders."

Bill Westwater, CEO of Xeros, commented:

"Xeros's patented reusable and recyclable polymer bead cleaning systems have the potential to transform a number of industries globally. We are excited about the opportunity the Placing and our Admission to AIM brings to help accelerate our roll-out in commercial laundry and fund development through to commercialisation in other identified markets. I am very confident and enthusiastic about our future as we begin the next stage of significant growth as a public company and British university spin-out."

For further information:

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's 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.

Business Model and Strategy

The Directors' objective is to create value through commercialising the Group's patented polymer bead cleaning system across multiple applications. In each of the potential target markets, the Directors see opportunities for the Xeros polymer bead cleaning system to create value across a number of potential revenue streams. The supply of polymer beads is at the core of each application, but there are also other potential revenue streams from detergent formulations, machines and the provision of service and maintenance. In addition, the Directors believe that the potential re-sale of polymer beads after use back into the polymer supply chain, for example to automotive manufacturers, could provide further revenue.

In the commercial laundry market, the Group will seek to 'own' the customer and control each of the potential revenue streams by providing its Xeros Sbeadycare™ service model, comprising an integrated equipment and service package. To implement this service model, Xeros will establish an operational infrastructure that could also support subsequent products and applications. The Directors believe that this will enable the Group to effectively manage the development of the market for its polymer bead cleaning system. Xeros Sbeadycare™ will also enable the Group to build awareness of the product and drive brand recognition.

In other applications of the polymer bead cleaning system, the Group intends to license the production, distribution and marketing of relevant machines and detergents to partners. The Group will continue to supply its polymer beads as a branded ingredient into those application areas. The Directors expect the Group will look to enter into agreements with partners under which the Group will benefit from the expertise, scale and global reach of such potential partners.

Reasons for the Placing and Use of Proceeds

The Directors believe that Admission will assist the Group in its development by:

· providing additional capital investment to fund growth and support the business going forward;

· demonstrating a strong balance sheet to potential customers, industrial partners and suppliers;

· providing a means of incentivising and retaining staff with equity incentives over publicly traded shares;

· raising the Group's corporate profile; and

· allowing wider access to capital should further finance be required.

The net proceeds of the Placing receivable by the Company of approximately £25.793 million are expected to be used as follows:

· working capital requirements to fund the growth of the commercial laundry business; and

· incremental research and development to support parallel development of other applications through to commercialisation, not least in domestic laundry.

Xeros Board of Directors

Bill Westwater (aged 46), Chief Executive Officer

Bill joined Xeros as Chief Executive Officer in November 2008. Bill's earlier career was in international marketing (particularly China) with global corporates including P&G, Royal Dutch Shell and Hutchison Whampoa. Since 2004, Bill has held leadership positions in entrepreneurial SME's, especially in the clean-tech sector.

Chris Hanson (aged 55), Finance Director

Chris joined Xeros as Finance Director in February 2012. Chris has extensive experience as a Finance Director having held that position with a number of private and listed companies. Chris qualified as a Chartered Accountant with KPMG in 1982.

Steve Jenkins (aged 50), Chief Science Officer

Steve is a polymer physicist with over 20 years of experience in new product R&D. He joined Xeros in March 2009. His career to date with various blue chip corporations (including DuPont, INVISTA and ICI) has focused on novel polymer solutions. Over this time he has successfully commercialised new product developments in Europe, USA, India and the Far East. Steve is the author of multiple patents associated with these developments and heads Xeros's Research and Development team.

Non-executive Directors

John Samuel (aged 62), Chairman

John joined Xeros as Chairman in September 2011. John has previously held a number of senior finance positions and was formerly the CEO of the Molnlycke Health Care Group as well as a former partner with Apax Partners LLP. John is also the Non-Executive Chairman at Tissue Regenix Group plc, Frosunda Omsorg AB and Vernacare Group Limited.

Charles Winward (aged 44)

Charles was appointed to the Xeros board in October 2010. Charles is a director of IP Group plc, an investor in Xeros, having joined in April 2007 to manage investments in Top Technology Ventures, IP Group's venture capital fund management subsidiary. Charles previously worked at JPMorgan Chase & Co and as an investment manager at Axiomlab, an AIM-listed early stage investment specialist. Charles is a CFA charterholder, has an MBA from the University of California at Berkeley and a Bachelors' Degree in Mechanical Engineering from the University of Bristol.

Julian Viggars (aged 46)

Julian was appointed to the Xeros board in June 2009. Julian is Head of Technology Investment at Enterprise Ventures, which, through its client funds, is an investor in Xeros. He was previously a Director of BioProjects International plc, an AIM-traded early stage technology fund and an Associate Partner with accountancy firm NCL Smith & Williamson in London.

Maciek Drozdz (aged 40)

Maciek was appointed to the Xeros board in October 2013. Maciek is an investment manager at Entrepreneurs Fund, an investor in Xeros. Before joining Entrepreneurs Fund he was an analyst at Atlas Venture in Munich and an investment director at MCI Bioventures in Poland. Maciek holds an MSc in molecular biology from A. Mickiewicz University, and a PhD from Zentrum fuer Molekulare Biologie in Heidelberg. He also has an MBA from Said Business School in Oxford.

IMPORTANT INFORMATION

This announcement which has been prepared by, and is the sole responsibility of, the Directors of Xeros Technology Group plc has been approved for the purposes of section 21 of the Financial Services and Markets Act 2000 by Jefferies International Limited ("Jefferies"), which is authorised and regulated by the Financial Conduct Authority.

This announcement does not constitute an admission document relating to Xeros and does not constitute, or form part of, any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for, any shares in Xeros in any jurisdiction nor shall it, or any part of it, or the fact of its distribution, form the basis of, or be relied on in connection with or act as any inducement to enter into, any contract therefor.

Recipients of this announcement who are considering acquiring Ordinary Shares following publication of the admission document are reminded that any such acquisition must be made only on the basis of the information contained in the admission document which may be different from the information contained in this announcement.

Jefferies is authorised and regulated by the Financial Conduct Authority in the United Kingdom and is acting exclusively for Xeros and no one else in connection with the Offer and will not regard any other person as their respective client in relation to the Offer and will not be responsible to anyone other than Xeros for providing the protections afforded to its clients or for giving advice in relation to the Offer or the contents of this announcement or any transaction, arrangement or other matter referred to herein.

Apart from the responsibilities and liabilities, if any, which may be imposed on Jefferies by the Financial Services and Markets Act 2000 or the regulatory regime established thereunder, Jefferies accepts no responsibility whatsoever, and makes no representation or warranty, express or implied, in relation to the contents of this announcement, including its accuracy, completeness or for any other statement made or purported to be made by it or on behalf of it, Xeros, the Directors or any other person, in connection with Xeros, the Ordinary Shares or the Offer, and nothing in this announcement shall be relied upon as a promise or representation in this respect, whether as to the past or the future. Jefferies accordingly disclaims all and any liability whatsoever, whether arising in tort, contract or otherwise (save as referred to above), which it might otherwise have in respect of this announcement or any such statement.

The Ordinary Shares have not been, nor will they be, registered under the US Securities Act of 1933, as amended (the "Securities Act") or with any securities regulatory authority of any state or other jurisdiction of the United States or under the applicable securities laws of Australia, Canada, Japan, or South Africa. Subject to certain exceptions, the Ordinary Shares may not be offered or sold in the United States, Australia, Canada, Japan or South Africa or to or for the account or benefit of any national, resident or citizen of Australia, Canada, Japan or South Africa or any person located in the United States. The offer and the distribution of this announcement in other jurisdictions may be restricted by law and the persons into whose possession this announcement comes should inform themselves about, and observe, any such restrictions.

This announcement includes "forward-looking statements". All statements other than statements of historical facts included in this announcement, including, without limitation, those regarding the Group's financial position, business strategy, plans and objectives of management for future operations (including development plans and objectives relating to the Group's products and services) are forward-looking statements.

Forward-looking statements are subject to risks and uncertainties and accordingly the Group's actual future financial results and operational performance may differ materially from the results and performance expressed in, or implied by, the statements. These factors include but are not limited to those described in the formal admission document.

These forward-looking statements speak only as at the date of this announcement. Xeros expressly disclaims any obligation or undertaking to update or revise any forward-looking statements contained herein to reflect actual results or any change in the assumptions, conditions or circumstances on which any such statements are based unless required to do so by the Financial Services and Markets Act 2000, the AIM Rules for Companies or other applicable laws, regulations or rules.

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