Half-year Results

Strong operational progress and continued industry impact

Xeros Technology Group plc (AIM:XSG), the creator of technologies that reduce the impact of clothing on the planet, announces its unaudited interim results for the six months ended 30 June 2026. The results show good operational progress and continued industry impact.

Highlights

Neil Austin CEO said:

"The Group has made good operational progress. Our external microplastic pollution filter (XF3), is now on sale in Germany through MediaMarkt; our denim processing partner, Yilmak, which is the world's largest denim processing machine manufacturer, has facilitated strategic machine placements across key denim manufacturing hubs; the breakthrough agreement for our Xeros laundry care washing machine with one of the world's largest washing machine brands continues to progress well.

"Whilst we have a few months delay in activation, we also have firmer foundations for growth with additional placements in Denim Finishing and distributors for XF3 lined up.

"The Board and I remain excited by the interest levels in, and potential for, Xeros's Technology."

Investor Presentation

An online investor Q&A session will be hosted by the management later today at 3pm. The session will be held on the Investor Meet Company ("IMC") platform. Registered investors, who follow Xeros on IMC, should have automatically been invited, everyone else should register at:

CEO STATEMENT

I am pleased to report that the Group has made good operational progress in the first half of the year, the six-month period ended 30 June 2026, on its principle goal of establishing high-quality distribution of its technology in key markets.

Our external microplastic pollution filter, (XF3), is now on sale in Germany through MediaMarkt (Europe's largest consumer electronics retailer), with three further distribution agreements with some of the largest players in key global markets set to be confirmed in H2. Our denim processing partner, Yilmak, which is the world's largest denim processing machine manufacturer, has fulfilled our combined principal goal of seeking initial manufacturing placements in the key denim hubs of Pakistan, Bangladesh, Egypt & Turkey. This has now been surpassed with placements in Sri Lanka and India currently being fulfilled. The breakthrough 'product launch agreement' for our Xeros laundry care technology with one of the world's largest washing machine brands continues to progress well, and two further top 10 OEMs remain in technical verification with conversion to a launch agreement anticipated within the next six to nine months.

However, this progress has not been without its challenges; the washing machine and larger major appliances industry is suffering historic low levels of business primarily driven by wider macro-economic issues. Traditional leaders within this space are also coming under increasing threat from new market entrants from Southeast Asia. In response, the Group has managed to broaden its distribution opportunities but we now expect some slippage of early-stage revenues from the current year into 2027.

Equally, to respond to the threat and opportunity of powerful new entrants into the market, the Board has decided to initiate an additional go-to-market strategy for its Laundry Care technology, which will simplify and accelerate the development process for a Xeros enabled washing machine, offering flexibility to work with new industry entrants as well as traditional washing machine OEMs.

The Board and I remain excited and very encouraged by the interest levels in, and potential for, Xeros's Technology.

Business update

Microplastic Pollution Filter (XF1 - Domestic, XF2 - Commercial, XF3 - External)

Microplastics and the damage they cause to human health and the environment remain a focus for legislators around the world. With 35% of microplastics in the ocean coming from washing machines, we believe that legislation to integrate filters within new washing machines will be universal within the next 10 years.

We are delighted to announce that MediaMarkt, Europe's largest consumer electronics ("CE") retailer, has this week launched XF3, branded with its in-house brand of Koenic in store and online. The XF3 units are cobranded as Xeros. The shipment for Russell Hobbs, which encountered some unexpected delays, has now been completed and product should be in store in the coming period.

The further interest which we reported in April has progressed and I am pleased to report that we have agreed commercial details and final testing with two further partners: one is the Nordics largest CE retailer, and the other is North America's largest CE distributor able to reach all major US retailer chains as well as over 2,000 independent stores.

In addition, we have now completed lifetime testing and agreed commercial details with the world's largest washing machine manufacturing group.

Launch plans are currently being finalised with all three and I am hopeful of initial orders from all of these within the current year.

Discussions also continue with Guangdong Welly Electrical Appliance Co. LTD ("Welly") a key supplier to the fast-moving Chinese appliance industry to develop a branded washing machine with Xeros' integrated microplastic filter.

The global legislative landscape continues to trend towards the mandatory adoption of microplastic filtration devices on washing machines. We contribute to the recognition and standardisation of microplastic capture through our work with the IEC (International Electrotechnical Commission). A successful XF3 launch will provide a proof of concept, fuelling the long-term adoption of our filtration technology and deepen our partnerships with key OEMs and brands.

Denim Finishing (XFN1 - Denim, XFN2 - Washing)

Xeros' patented denim finishing technology, XFN, provides garment producers and brands with a way of finishing their denim in a cheaper, more sustainable way - reducing the water and chemistry required to finish denim and removing the need for pumice. Xeros' technology is licensed by two of the world's leading garment finishing technology producers, Yilmak Makina, in Turkey, and Ramsons, in India.

Our partnership with Yilmak Makina, the world's leading manufacturer of denim processing machines, continues to make strides with growing interest from denim processors for their Xeros enabled machine. Since the start of the year machines have now been placed in Turkey, Egypt, Pakistan and Bangladesh, with further machines ordered for Sri Lanka and India, and two further sites in Pakistan have requested machines for bulk testing.

Yilmak is confident that multiple orders will follow in the next six months, which will seed the market for significant growth in 2027 and beyond.

These installations provide real-world proof points of the benefits of Xeros' technology and feed into the discussions we are having with a number of leading garment retail brands, who have shown interest in a possible brand partnership, that would see their jeans marketed as having been made using Xeros' pumice free technology.

Laundry Care (XC1 - Domestic, XC2 - Commercial)

Xeros' Laundry Care System uses reusable polymer spheres, known as XOrbs, to gently increase mechanical action, improve chemical efficiency, wash performance and protect clothing from harsh fabric on fabric contact during the laundering process. This means that the life of clothing can be extended by up to 100% using Xeros technology, whilst also reducing water and detergents. The interest shown in our technology by the laundry industry is huge, as consumers press producers to provide solutions that don't damage clothes.

The breakthrough product launch agreement for our Xeros enabled washing machine signed with one of the world's largest washing machine brands, continues to progress well.

Two of the three other companies currently in technical verification are getting closer to a launch agreement, although we now anticipate that these will not occur in the current year; we anticipate conversion in early 2027. One is a European top 10 OEM and the other is one of the world's largest washing machine manufacturers.

As mentioned earlier the domestic laundry industry is currently undergoing a challenging period, with global geopolitical headwinds filtering down to markets and causing OEMs to reevaluate their market positioning. That said the core fabric care benefits of our technology remains of salient interest to these brands and indeed consumers at large.

In response to these challenges the business has been working on an additional route to market, which will see Xeros take greater ownership and responsibility for the creation of a fully functioning washing platform. This would not compete with the bespoke developments that we are currently involved with - as brands will always want this option - but it would remove technical integration costs and the subsequent delays that can occur as a result. In addition, it would open a new opportunity and revenue stream by adding brands that have a desire to enter the washing machine market but do not currently have a product. Increasingly we are seeing new entrants to the industry in Southeast Asia.

Project named 'WM2.0' has begun negotiations ahead of the anticipated appointment of one or two Original Design Manufacturers ("ODMs") in China. We see this as an extension of the model successfully introduced with XF3, whereby brands can buy, to sell under their own brand to consumers, a product developed by Xeros and its ODM partner.

Well versed in the building of washing machines to order for global brands, the ODMs will work with Xeros to deliver a range of XOrb enabled washing machines ready for market. This new process will effectively reduce development and capital expense barriers for potential new entrant consumer brands, who could simply add their branding to the finished good. The project has six timed milestones to deliver product to market in 2028. Initial costs of the project are limited to engineering time and some development costs. Orders from customers are expected prior to any production costs.

Initial indications from current and new washing machine market entrants and the expected value chain, verified though ODM discussions, suggest a revenue opportunity for Xeros of GBP£25m.

Strategy

Our strategy is to become an IP-rich, capital-light licensor of proprietary technology solutions to multiple scale industries, all of which deploy the same Xeros core technologies. To date, our focus has been on Denim Manufacture, Commercial and Domestic laundry.

Over the last three years we have built an impressive pipeline of global players interested in taking our technologies to market at scale. With a pure licence model the timing of agreements sits firmly with the licensee, but delays, while frustrating, should not distract from this important achievement, nor the potential of our business once the technology is adopted at scale. It is anticipated that project WM2.0 will help to mitigate against pure licensee delays.

Outlook

The operational progress of the Group was very strong over 2025 and that has continued into the current year. We have experienced delays in execution, at the customer end, partly due to wider appliance industry headwinds, which will see revenue we had anticipated recognising in the current year, likely to slip into 2027. However, the breadth of distribution, particularly in microplastic filtration and denim finish, is greater than anticipated providing stronger foundations in 2027.

Allied to that, there is huge excitement across the business in what the WM2.0 project can deliver in laundry care to complement the bespoke product launch agreements either currently in place or anticipated with the major washing machine OEMs.

Neil Austin

CEO

FINANCIAL REVIEW

Group revenue was generated as follows:

The Group financial results for the six months ended 30 June 2026 reflect revenue increases from all the Group's areas of technology alongside a stable cost base. The Group's microfibre filter and denim finishing technology is now or imminently in the hands of end users and we anticipate that this will provide an ongoing revenue base for the Group. The Group recorded a 6.6% reduction in operating loss to £1.6m (H1 2025: £1.7m)

Licensing income represents royalties from licence partners for the sale of Xeros enable technology, which has risen against the previous year as a result of increased sales made by licence partners. Service income represents payments from customers for services provided, including for technology fees and integration services. The Group expects that future revenues will be comprised mostly of licensing revenue and revenue from the sale of goods, as it supplies XOrbs to customers.

Gross profit for the six months ended 30 June 2026 increased by 62% to £0.08m (2025: £0.05m).

Administrative expenses decreased by 1.6% to £1.8m (H1 2025: £1.8m), driven by further close management of the Group's cost base. Headcount fell slightly against the previous year, with 21 employees as of 31 August 2026 (2025: 23). The Group's adjusted EBITDA loss remained static at £1.6m (H1 2025: £1.6m).

Adjusted EBITDA is considered one of the key financial performance measures of the Group as it reflects the true nature of our continuing trading activities. Adjusted EBITDA is defined as the loss on ordinary activities before interest, tax, share-based payment expense, non-operating exceptional costs, depreciation and amortisation.

The Group decreased its operating loss to £1.7m (H1 2025: £1.8m), a decrease of 6.6%. The loss per share was 0.19p (2025: loss 0.33p).

Net cash outflow from operations increased by 31.3% to £2.1m (H1 2025: £1.6m), reflecting working capital outflows in respect of 2025. The Group had existing cash resources (including cash on deposit) as at 30 June 2026 of £3.5m (2025: £1.2m) and remains debt free. Cash at the end of August was £2.8m

Overall cash utilisation for the first half of the year is line with the Board's expectations. The Board considers that the Group's cost base will be stable for the second half of the year, with the anticipated cost base including sufficient scope for the initial work on the WM2.0 project. The directors expect cash utilisation to remain at around this level as the Group moves into full commercialisation with licence partners.

Alex Tristram

Finance Director

Consolidated statement of profit or loss and other comprehensive income

For the six months ended 30 June 2026

*Adjusted EBITDA comprises loss on ordinary activities before interest, tax, share-based payment expense, depreciation and amortisation.

Consolidated statement of changes in equity

For the six months ended 30 June 2026

Notes to the interim financial information

for the six months ended 30 June 2026

General information

The principal activity of Xeros Technology Group plc ("the Company") and its subsidiary companies (together "Xeros" or the "Group") is the development and licensing of platform technologies which transform the sustainability and economics of clothing and fabrics during their manufacture and over their lifetime of use.

Xeros Technology Group plc is domiciled in the UK and incorporated in England and Wales (registered number 8684474), and its registered office address is Unit 2 Evolution, Advanced Manufacturing Park, Whittle Way, Catcliffe, Rotherham, S60 5BL. The Company's principal activity is that of a holding company.

The interim financial information was approved for issue on 8 September 2026.

Basis of preparation

The interim financial information has been prepared under the historical cost convention and in accordance with the recognition and measurement principles of UK-adopted International Accounting Standards ("IFRSs").

The interim financial information has been prepared on a going concern basis and is presented in Sterling to the nearest £'000.

The accounting policies used in the interim financial information are consistent with those used in the prior year.

The following adopted IFRSs have been issued but have not been applied by the Group in this financial information. Their adoption is not expected to have a material effect on the financial information unless otherwise indicated:

Further IFRS standards or interpretations may be issued that could apply to the Group's financial statements for the year ending 31 December 2026. If any such amendments, new standards or interpretations are issued then these may require the financial information provided in this report to be changed. The Group will continue to review its accounting policies in light of emerging industry consensus on the practical application of IFRS.

The preparation of financial information in conformity with the recognition and measurement requirements of IFRS requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Although these estimates are based on management's best knowledge of the amount, event or actions, actual events ultimately may differ from those estimates.

The interim financial information does not include all financial risk management information and disclosures required in annual financial statements. There have been no significant changes in any risk or risk management policies since 31 December 2025. The principal risks and uncertainties are materially unchanged and are as disclosed in the Annual Report for the year ended 31 December 2025.

The interim financial information for the six months ended 30 June 2026 and for the six months ended 30 June 2025 does not constitute statutory financial statements as defined in Section 434 of the Companies Act 2006 and is neither reviewed nor audited. The comparative figures for the year ended 31 December 2025 are not the Group's consolidated statutory accounts for that financial year. Those accounts have been reported on by the Group's auditor and delivered to the Registrar of Companies. The report of the auditor was (i) unmodified, (ii) did not contain a statement under Sections 498(2) or 498(3) of the Companies Act 2006.

The half year condensed consolidated financial statements do not include all of the information and disclosures required for full annual financial statements and should be read in conjunction with the group's annual financial statements as at 31 December 2025, which have been prepared in accordance with UK adopted International Accounting Standards (IFRS).

IAS 34 'Interim financial reporting' is not applicable to these half-year condensed consolidated financial statements and has therefore not been applied.

Taxation

The Group accounts for Research and Development tax credits where there is certainty regarding HMRC approval. There is no certainty regarding the claim for the year ended 31 December 2025 and as such no relevant credit or asset is recognised.

Trade and other receivables

Contractual payment terms with the Group's customers are typically 30 to 60 days. The Directors believe that the carrying value of trade and other receivables represents their fair value. In determining the recoverability of trade receivables the Directors consider and change in the credit quality of the receivable from the date credit was granted up to the reporting date.

Trade and other payables

Loss per share

Basic loss per share is calculated by dividing the loss attributable to equity holders by the weighted average number of shares in issue during the period. The Group was loss-making for the 6-month periods ended 30 June 2026 and 30 June 2025 and also for the year ended 31 December 2025. Therefore, the dilutive effect of share options has not been taken account of in the calculation of diluted earnings per share, since this would decrease the loss per share reported for each of the periods reported.

The calculation of basic and diluted loss per ordinary share is based on the loss for the period, as set out below. Calculations of loss per share are calculated to two decimal places.

Leases

The Group has a lease for office buildings and associated warehousing and operational space. With the exception of short-term leases and leases of low-value underlying assets, each lease is reflected on the statement of financial position as a right-of-use asset and a lease liability. The Group classifies its right-of-use-assets in a manner consistent with its property, plant and equipment.

Each lease generally imposes and restriction that, unless there is a contractual right for the Group to sublet the asset to another party, the right-of-use-asset can only be used by the Group. Leases are either non-cancellable or may only be cancelled by incurring a substantive termination fee. The Group is prohibited from selling of pledging the underlying leased assets as security. For leases over office buildings and warehousing and operations space, the Group must keep those properties in a good state of repair and return the properties in their original condition at the end of the lease. Further, the Group must insure items of property, plant and equipment and incur maintenance fees on such items in accordance with the lease contracts.

The table below describes the nature of the Group's leasing activities by type of right-of-use asset recognised on the statement of financial position:

Right-of-use assets

Additional information on the right-of-use assets by class is as follows:

Land and buildings £'000

Lease liabilities

Lease liabilities are presented in the statement of financial position as follows:

Seasonality

The Group experiences no material variations due to seasonality.

Availability of interim statement

This interim statement will be available on Xeros' website at www.xerostech.com