Trading update & company day

23 May 2007

XL TechGroup ( AIM: XLT), the systematic architect and builder of an ongoing stream of high value new companies, today provides a trading update on each of its portfolio companies. This update is in advance of the imminent announcement of the Company's 2006 final results.

XL TechGroup also announces that it is today hosting a company day event in London to showcase its value creation methodology and to demonstrate the disruptive technologies of its portfolio companies that meet global unmet market needs.

Senior executives from each company created by XL TechGroup to date; namely AgCert International plc (www.agcert.com), TyraTech LLC (www.tyratech.com), DxTech LLC (www.dxtech.com), PetroAlgae LLC (www.petroalgae.com), QuoNova LLC (www.quonova.com) and GenXL LLC (www.gnxl.com), will be making presentations throughout the day. No new material information will be disclosed and any comments on current or future trading and financial performance will be wholly consistent with publicly available information, including today's trading update.

Copies of the relevant presentations will be available from 5.00pm UK time today on the Company's website - www.xltechgroup.com

Dr John Scott, CEO of XL TechGroup, said: “ We are confident that XL TechGroup is now reaching a clear inflexion point in the potential valuation profile of the group. We anticipate strong news flow from all of our companies over the next 12 months, which should provide much greater visibility to their prospects, and we expect to have launched the next of our new companies within this timeframe.

We are also excited about the event we are hosting today in London which will enable each of our portfolio companies to outline in detail the global unmet market needs they are targeting, as well as the disruptive solutions they are utilising to address these needs. ”

- Ends -

 

AgCert International plc (“AgCert”) – 23.2% OWNED BY XL TechGroup*
* as at 30 April 2007

At the time of its IPO in May 2005, AgCert's business model was focused on the construction of modified animal waste management systems using biodigesters to capture and combust methane on animal farms. While this strategy resulted in AgCert being entitled to receive the majority of the resulting offsets, it also means that the company incurred all or most of the financial and regulatory risk. Since then, there have been some regulatory factors that have challenged AgCert's ability to implement its original business model. These include a change to the method of calculating offset production which has significantly reduced achievable biodigester yields, as well as delays in the issuance of credits caused by the continually evolving regulatory framework that governs this still young industry.

AgCert has also faced a number of other challenges to its original business model, the main ones being higher than anticipated raw material and operating costs, substandard construction work in some instances, and varying biodigester efficiency levels. The combined effect of these operational and regulatory problems was an increasing likelihood of a shortfall against credit delivery obligations, particularly in 2007, as a result of which AgCert successfully renegotiated a number of contracts, producing a much improved profitability and risk profile for the business.

Despite the challenges mentioned above, AgCert still made considerable progress in 2006 and this has continued into 2007.

	IPO (May 2005)	31 March 2007
Sites completed (gen. offsets)	26	661
Forward sales	€74m	>€160m
CERs issued	No	Yes
LOAs	1	84
Registered projects	0	63
Accredited DOEs	No	Yes
Verticals entered	Swine	Swine, dairy, palm oil, fuel switching
Joint ventures	No	Yes

 

Nevertheless, in light of increased costs and reduced yield expectations, AgCert's board and management have conducted a comprehensive review of its business and have announced an improved strategy that will achieve at least the same emission reduction delivery programme as previously anticipated but with a significantly reduced capital funding requirement.

The key elements of AgCert's improved strategy are:

(1) to complete to the highest standard all biodigesters that have been already started

(2) to continue improving the efficiency levels of existing biodigesters

(3) to reduce operating expenses by over 35% by the end of 2007

(4) to develop a dedicated project consultancy offering based on AgCert's extensive experience of the complex regulatory environment that surrounds the industry

(5) to pursue additional joint venture opportunities like the AES Agriverde partnership which leverages the partner's capital alongside AgCert's existing biodigester technology

(6) to introduce new lower cost animal waste management technologies

(7) expand into other agricultural sectors such as forestry

AgCert has already made progress on a number of its improved strategic initiatives, including negotiations with a number of large industrial emitters to design and register projects to generate credits. AgCert is targeting projects capable of generating 5-20 million credits per annum, and will receive without charge a fixed proportion of the credits as compensation. AgCert has also agreed a number of letters of intent in relation to new consultancy and other projects in keeping with the improved strategy outlined above.

To fund the implementation of the improved strategy, AgCert is proposing to raise £20.5 million (£18.7 million after expenses) by way of a placing of 51.18 million new ordinary shares at 40 pence per share which has been fully underwritten by Nomura Code Securities and Hoare Govett. AgCert is also proposing to capitalise approximately €14.6 million of debt owed to three major shareholders, including £2.73 million owed to XL TechGroup. The capitalisation at 40 pence per share would result in the issue of an additional 24.95 million new ordinary shares, including 6,822,429 to XL TechGroup. Completion of this capitalisation will result in XL TechGroup owning 46,043,394 shares in AgCert, representing 18.79% of the issued share capital.

It is also proposed that XL TechGroup will provide AgCert with a credit facility of up to €5 million, available in the second quarter of 2008 for certain, defined working capital needs and convertible into new ordinary shares of AgCert. Subject to shareholder approval of the funding and debt recapitalisation proposals at an AgCert EGM on 24 May 2007, the improved strategy will enable AgCert to deliver at least the same emission reduction delivery programme as previously anticipated, but with a significantly reduced capital funding requirement and will provide the company with financing through to self sufficiency.

As a result of the improved strategy, and without allowing for any additional credits from forestry related projects, AgCert expects to create 2.3 million credits in 2007, 6.8 million in 2008, and 9.8 million in 2009. These levels significantly exceed the contractual delivery requirements of AgCert during these years, which total 12.6 million credits, and the excess credits will be sold at considerably higher prevailing market prices.

During 2006, AgCert also announced the establishment of AES Agriverde, an important joint venture with AES Corporation, the global power company. This agreement is a clear validation of AgCert's technology, as demonstrated by AES's plans to invest US$300 million over a five year period, as well as their investment of approximately €40 million for a 10% stake. AgCert receives 20% of the credits generated by AES Agriverde without having to contribute any capital, and has an option to purchase a further 30% of the credits generated by contributing capital to the joint venture.

In March 2007, AgCert announced that it had received an approach from an unnamed party in relation to a possible offer for the entire issued share capital. AgCert has since advised that the subsequent discussions have been terminated. As founder and one of the leading shareholders, XL TechGroup is pleased with this conclusion because, despite the challenges that the company has faced over the last year, we continue to have confidence that AgCert will deliver the value that we anticipated when it was started.

TyraTech LLC (“TyraTech”) – 59.3% owned by XL TechGroup*
* as at 30 April 2007

TyraTech was founded by XL TechGroup in May 2004 as a product of our business model to create and grow new, innovative businesses in response to unmet market needs. TyraTech develops and commercialises efficacious proprietary insecticide and parasiticide products which incorporate unique blends of natural, plant oil derived active ingredients. TyraTech's product pipeline addresses a diversity of pesticide market opportunities in human and animal treatments; domestic, commercial and hospitality facilities, as well as farms and fields.

TyraTech's proprietary development platform enables rapid characterisation of potent mixtures of plant oil derived pesticides (insecticides and parasiticides). Natural plant oils are already known to have various degrees of pesticidal activity, but historically have not been as effective as synthetic-chemical based products. The TyraTech development platform overcomes this performance limitation with its proprietary blends of individual oil compounds that are specifically selected for their synergistic ability to simultaneously activate multiple insect neurological and olfactory receptors that are not found in vertebrates. TyraTech is developing natural pesticide products to be directly used in, on and around humans and animals, as well as in the food chain. TyraTech has filed numerous patent applications, to protect both its development platform and the blends of plant oils generated by that platform.

TyraTech plans to produce proprietary products that will target certain insecticide and parasite markets that currently generate over US$23 billion in annual worldwide sales, including agricultural and horticultural applications, consumer applications, professional pest control applications, governmental uses, and human and animal healthcare applications. We also believe there is approximately US$8 billion in additional, new market opportunities that can be addressed by TyraTech solutions, for example via a prophylactic solution to treat animal parasites, as well as multiple fungicidal and other applications. TyraTech's products are intended to address increasing consumer, industry and governmental demand for naturally derived insecticide and parasite products that are safer but work as effectively as many of the toxic chemicals that have been historically used in this industry.

TyraTech intends to generate revenue via its own product sales, partnership milestone payments, fees and royalties, and through the sales of proprietary active ingredients to its partners. TyraTech has over 24 products in active development and plans to launch, or make available to its partners for launch, 6 of these within approximately the next 12 months. With the breadth of market segments, TyraTech has developed multiple routes to market for its products, including major multi-national partners, its own direct sales and regional distributors.

Partnership agreements, which include commercial distribution and co-development relationships, have so far been signed with The Scotts Company LLC (“Scotts”), Arysta LifeScience North America Corp. (“Arysta”), Syngenta Crop Protection AG (“Syngenta”), and Kraft Foods Holdings, Inc. (“Kraft Foods”). These multi-national partners are well positioned in the areas of consumer products, agriculture, professional pest control and food products and, through them, TyraTech gains access to high quality resources in product development, regulatory affairs, marketing planning and logistics.

Scotts

In March 2006 TyraTech signed an option agreement with Scotts, a US$3.1 billion multinational company, for exclusive rights to negotiate a license for a selected consumer product application, with rights of first refusal for other pesticide applications. The agreement included an upfront option fee, option extension fees, and product sales royalties paid to TyraTech for licensed products. Scotts has recently extended its option in order to broaden the scope of negotiations for a license. This agreement supports Scotts' goal to create a naturally derived product line.

Arysta

TyraTech signed a global licensing and co-development agreement in June 2006 with the North American subsidiary of Arysta LifeScience Corporation, a Tokyo-based agrichemical and life sciences company, whereby Arysta has an exclusive license to market certain TyraTech products for specific horticultural markets. The agreement provides for exclusivity fees, milestone payments and royalties paid to TyraTech. Field testing for the lead product has been underway since late 2006, when the first exclusivity payment was received from Arysta, with trials continuing into 2007. The first milestone is expected from Arysta in 2007.

Syngenta

In July 2006 TyraTech signed a multi-territory agreement with Syngenta, a global agricultural chemical and seed company based in Basel, Switzerland which includes exclusive and non-exclusive rights in the professional pest control operator and the vector control market segments. The agreement provides for exclusivity fees, milestone payments and royalties. TyraTech received the first exclusivity fee in the first half of 2007, and expects to receive its initial milestone payment from Syngenta in the first half of 2007, with first revenues as early as 2008.

Kraft Foods

In December 2006, TyraTech signed a worldwide exclusive co-development agreement with Kraft Foods, a US$34 billion leader in the consumer food products sector. The agreement covers human parasitic prevention applications of TyraTech technology to be delivered in food products. With an active development program in place, involving over 50 Kraft people around the world, Kraft and TyraTech are moving to advance both the technical validation and lead market qualification process. Together with TyraTech and XL TechGroup personnel, Kraft has already had government level meetings in five leading emerging market countries to start gathering the information needed to determine market entry priorities.

The agreement includes exclusivity fees, milestone payments, and royalties. The first exclusivity payment was received in 2006 and represented a significant commitment by Kraft. Completion of the activities for the receipt of the first milestone payment is expected in late 2007, with subsequent milestones to be determined at that time. This partnership represents not only a novel technological solution to the vast problem of human parasitic infestation (over 2 billion people infested), but also utilizes a unique business channel (i.e. food) that can reach the affected populations.

While therapeutic options for treatment of intestinal parasites exist, many of them have major problems due to the toxicity of the treatments and they therefore cannot be used frequently enough to prevent re-infestation. The TyraTech prophylactic approach however, is designed to be safe enough to use in food every day. This not only opens a distribution channel (food) more readily available to the developing world customer, but also great expands the size of the market.

Direct Sales and Distributors

TyraTech also intends to sell products and active ingredients via its direct sales force and agreements with distributors. The strategy for direct sales will target opportunities for near term revenue, particularly targeted at the food and hospitality industries as well as through government-led programs, and territories and applications that are not covered through partners. TyraTech has an initial sales and marketing group that is actively establishing the lead customers for its institutional products, and is expecting niche market revenues as early as late 2007.

Institutional Direct Sales

TyraTech's natural insecticidal products will be aimed at hotels and motels, food service organisations (including restaurants and food processors), cruise ships, prisons, schools and hospitals, and any other establishments which do not use professional pest control companies on a regular basis. By virtue of their improved safety profile, TyraTech's products are designed to be used by all employees without special training or licensing, and can be used in and around food preparation areas. Several of TyraTech's leading products are available in EPA exempt formulations (25B 4A) which only require registration with local state authorities. These US registrations take between approximately two weeks and six months to be completed and represent nominal registration costs.

TyraTech India

This wholly owned subsidiary has entered into a non-exclusive distribution agreement with a local Indian company to distribute mosquito repellent and insecticide, and market these products to the government sector in India. TyraTech India is working closely with the National Institute for Malaria Research in India to carry out efficacy studies and obtain full registrations for active ingredients and vector (disease bearing insects and parasites) control products. TyraTech has successfully completed early studies conducted by the Indian Armed Forces and the State Government of Assam. TyraTech is exploring the potential sale of its products for mosquito repellent and vector control through Indian state and local governments, military and health departments.

Terra Quest

TyraTech is actively pursuing sales through the Mexican government for head lice treatments, as well as insect control and vector control, through a supply and distribution agreement with Terra Quest. TyraTech intends to generate revenue through sales of product to Terra Quest for local formulation and participation in government head-lice eradication programs and vector control programs.

2007 Events

Since the start of 2007, TyraTech has appointed Dr. Douglas Armstrong, Ph.D. as CEO and Keith Bigsby as CFO, and has retained Nomura Code and Jefferies International as advisors. Most recently, we have announced that TyraTech intends to proceed with a placing of its common shares and to seek admission of its share capital to trading on AIM, with dealings expected to commence in the second quarter of 2007. The proceeds of the placing will be used to build operations that facilitate the development and commercialisation of TyraTech's product portfolio, in particular: the launch of new products; the enhancement of TyraTech's product support operations; and additional research to develop higher margins and even more targeted products. Some of the funds will be used to repay loans provided by XL TechGroup.

DxTech LLC (“DxTech”) – 84.1% owned by XL TechGroup*
* as at 30 April 2007

DxTech was created by XL TechGroup in July 2005 to address the unmet need for real time distributed diagnostics. DxTech is developing a unique diagnostics platform that replaces the most common blood-based diagnostics that include clinical chemistry and immunochemistry, haematology and coagulation tests currently performed at reference laboratories.

The basic elements of the system are a disposable sample transfer device, a closed disposable cartridge containing all the necessary materials to perform a panel of assays, a low cost reader with embedded firmware and a central server that monitors system quality control and collects and stores data from remote readers. The reader is networked through the DxTech V-Lab and ultimately integrated with electronic health records and claims processing. In addition to direct revenue from individual tests, the powerful V-Lab server also offers the added benefits of a range of reporting options, data mining, and automatic reimbursement capabilities that save time and improve accuracy.

Importantly, the DxTech reader and disposable tests are intended for use primarily at the physician's office. The total US diagnostic testing market was worth approximately US$48 billion in 2006, while sales of tests in the DxTech routine testing segment eligible for distributed diagnostics approached US$30 billion. [Source: Washington G2 Report, Laboratory Industry 2006]

Clinical diagnostics play a crucial role in the majority of diagnostic decisions made by the doctor. However, the centralisation of laboratories has removed the doctor's ability to have the critical test results to aid and confirm patient diagnosis on a real time basis. Even today, with the best central laboratory technology available, a doctor practicing outside of the hospital setting can wait several days or longer for important test information, while anxious patients wait. The DxTech solution produces accurate results while the patient is in the doctor's office, significantly reducing the need and cost of follow up visits. Therefore, in a major market shift aimed at driving adoption in the USA, testing revenue will shift from central laboratories to physician sites, creating an entirely new revenue stream for the doctors and, more importantly, increasing the efficiency of patient management.

The distributed diagnostic technology is also important for developing world markets. In these geographies, central reference laboratory infrastructures are often non-existent outside major cities. DxTech's distributed diagnostics approach eliminates the requirements for physical infrastructure, highly skilled labour and large capital investments needed in central laboratories. The DxTech system, therefore, is deployable virtually anywhere, with results viewable and interpretable by health care providers at remote locations in real time. Due to the significant opportunities within large sized markets, DxTech has decided to make wider Asia its first target area for commercialisation, and discussions are underway with a number of potential partners.

The DxTech fully-integrated, POC (“point-of-care”) device is based on proprietary electrochemical sensor technology that has unparalleled sensitivity and dynamic range. The DxTech platform is designed to meet or exceed performance as established by US reference laboratories, provide a complete solution from sample collection through claims processing, be CLIA (“Clinical Laboratory Improvement Amendments”) waived, and hit a price point that is expected to provide strong gross margin in the US market and be appropriate in developing countries.

The DxTech R&D team, in conjunction with technology partners in the USA, UK and Germany, has made substantial progress since the beginning of 2006. Several integrated fluidics breadboard systems have been developed which is allowing DxTech to move efficiently from R&D to final product. Sensor and assay development has progressed to a disposable flow cell that mimics the anticipated performance of the system. Preliminary assay performance data using the automated breadboard / quality control system and a modular fluidics cartridge for the challenging, sensitive TSH and Free T4 assays have already produced results which match or beat the gold standard test results of reference laboratories. DxTech now expects to develop cartridges and assays for more routine tests which will open up additional markets, both globally and in application areas such as pharmaceutical testing, care homes and storefront.

PetroAlgae LLC (“PetroAlgae”) – 94.4% owned by XL TechGroup*
* as at 30 April 2007

Each year the United States and the European Union together consume over 100 billion gallons of diesel and home heating fuel. Large, rapidly growing economies in China and India will soon rival their Western counterparts. The petroleum oil needed to produce this fuel is largely imported, with supply and pricing dictated by global events. As worldwide consumption increases at a rate exceeding the growth of production, upward pricing pressure will continue. Beyond the economic issues associated with petroleum, there are also significant environmental challenges. Petroleum fuels are non-renewable, produce many pollutants, and release large quantities of additional carbon dioxide into the atmosphere when burned. The need for an alternative to petroleum oil is a huge unmet market need.

To meet this need, PetroAlgae is commercialising proprietary, environmentally-friendly algae developed by a world-class research team at Arizona State University (ASU). PetroAlgae has global exclusivity in all fields of use for the ASU algal library. The algae are not genetically modified, but have been selectively bred over 10 years for specific traits like rapid growth and extremely high oil yields. Algae oil is similar to vegetable oil and is suitable for many applications including biodiesel production. Biodiesel produced from algae oil is essentially carbon-neutral because the algae consume carbon dioxide through their life cycle process.

The algae grow in modular bioreactor systems which can be built and operated cost-effectively on a massive commercial scale. The systems can be harvested daily, producing 200 times more oil per acre than traditional biofuel crops like soybeans. This is the equivalent of being able to grow enough feedstock oil to meet the entire US and EU needs for diesel fuel on less than 2% of the arable land in those regions. However, algae farms do not need to be sited on arable land, so there is no competition with food crops such as soybeans and corn which are used as ethanol feedstock. Also, algae farms can be constructed and be operating at capacity in a matter of months compared to palm or jatropha plantations that can take years to reach full production.

A four acre optimisation site in Florida was completed in February 2007 and algae are currently growing in situ. This site is now being used to enable PetroAlgae to test multiple growing and processing variables in order to characterize growing parameters and maximise the oil yield, whilst also validating engineering processes and the commercial, scaleable nature of the modular production technology. Given the lack of large quantities of low cost suppliers of biofuel feedstock, the demand for algal oil is both large and immediate.

While this work is going on, the next stage has already started, namely the identification of a number of sites where initial pilot manufacturing will be located. There are ongoing discussions with a number of potential partners, in the USA with biodiesel refiners which have production capacities of at least 500 million gallons per annum, and elsewhere with leading local industrial groups in Asia, South & Central America.

PetroAlgae's business development plan addresses multiple markets, with the initial thrust aimed at global commodity markets such as biodiesel. A second, more disruptive part of the business development plan is aimed at smaller, but still significant and potentially higher margin areas where there is strong demand for more specialized, high performance oils in applications such as medicines, cosmetics and food products. PetroAlgae is actively building relationships with potential regional acquirers, licensees, strategic joint venture partners, and customers.

QuoNova LLC (“QuoNova”) – 90.0% owned by XL TechGroup*
* as at 30 April 2007

QuoNova was established in December 2006 and is commercialising a novel Quorum Sensing Blocker (“QSB”) technology which affects signalling between bacteria and thereby reduces bacterial growth and colonisation (biofilm) without the use of environmentally damaging biocides . QuoNova's breakthrough technology offers approaches to bacterial control which will avoid resistance development and toxicity, and in addition opens completely new application avenues in a broad range of high value markets.

There are multiple unmet needs in different applications where bacterial biofilm is a problem. QuoNova's business plan addresses multiple markets, such as treatments for lung infections, medical device coatings, oral and ophthalmological care products, domestic or industrial cleaners, anti-fouling paints, agrochemicals and large scale industrial applications in the water and petroleum industries. Estimates of market sizes generated from multiple industrial sources are currently at least US$16.5 billion for therapeutic and medical device applications, and about US$11 billion for consumer and industrial applications.

Quorum sensing is a communication system used by bacteria to signal to each other when to settle, colonise and produce the products needed to create biofilms. The same signalling mechanism also influences the release of toxins and virulence factors which together protect bacteria from the body's defence systems or antibiotics. Also, biofilms cause deposits ranging from invisibles to slimes and sludges in consumer and industrial environments, which act to attract colonisation by further organisms, and cause further infection, disruption of operating processes or corrosion.

QuoNova acquired its intellectual property relating to proprietary QSB compounds from 4SC AG, a drug discovery and development company based in Germany. In addition to this broad patent and patent application portfolio, QuoNova has obtained an exclusive license from 4SC to software and related intellectual property useful for the creation and development of additional compounds in the field of quorum sensing or biofilm inhibitors and activators. In return, 4SC has received a 10% equity interest in QuoNova and will receive payments totalling US$2 million spread over a four year period. 4SC will additionally receive funding under agreements whereby 4SC will continue to provide research and development activities on behalf of QuoNova directed towards compound optimisation and support.

Proof-of-concept for the technology has already been established, and commercialisation is envisaged within two years for the most advanced applications. Discussions with a number of potential development partners and end users are already well advanced.

GenXL LLC (“GenXL”) – 42.7% owned by XL TechGroup*
* as at 30 April 2007

Since it was formed in June 2006, GenXL has made significant progress. This joint venture now has 10 staff and total funding of US$4.0 million, which has been committed equally by its founders, XL TechGroup and GEN3 Partners Inc. The founders' original equity stakes of 50% each have been reduced to 42.7% each following the allocation of shares to GenXL management and staff.

GenXL was created to capture the value of those prospects that do not fully meet XL TechGroup's company building criteria but still demonstrate considerable potential worth . Over and above XL TechGroup's core business model, GenXL reviews a significant flow of opportunities from both XL TechGroup and GEN3 in order to generate new companies, standalone product lines and technology licensing opportunities or an appropriate mix of these. GenXL is also able to introduce external funding to its opportunities, including venture capital and private equity.

GenXL announced its first company development agreement in March 2007. EnGen LLC, which is 45% owned by GenXL, is exploiting a unique platform technology that has a range of potential supercapacitor battery applications across various sectors where there are clear unmet market needs. For example, t he transportation market requires a cost-effective combination of the energy density of a rechargeable battery, with the power density and cycle life of supercapacitors. The consumer electronics market needs to extend lithium-ion battery life, either by changing their chemical composition or by coupling them with a supercapacitor, while supercapacitors in industrial applications could increase a lead acid battery's life and power reliability by working in conjunction.

GenXL has a number of opportunities currently going through the review process which may lead to selection for investment. Outlines of the opportunities or technologies in the current pipeline of possibilities are as follows:

• the use of a slow release implant for the kinetic re-profiling of pharmaceuticals providing patentable new drug combinations
• a nano-coated carbon polymer technology that can be utilised in wound healing by allowing for the elimination / minimisation of surface scars on skin
• a therapeutic and diagnostic medical device system for the treatment of neuro-muscular disease and injury
• an ionic liquid technology which provides a versatile and creative alternative to many industrial chemicals, from solvents to lubricants to gas and energy storage
• the tactile identification of pathologies of biological tissues, including in colon cancer detection where it may increase the accuracy of endoscopic inspection and allow express cytodiagnosis
• a portable device and a method for diagnostics of cardiovascular diseases based on endothelial function examination.
• a device intended for defining the ovulation moment in a menstrual cycle by the analysis of the cationic structure of a woman's saliva

Pipeline of Possible Opportunities

XL TechGroup's pipeline includes technologies that have been matched with unmet needs to create potential opportunities, from which our next new companies might be selected. However, it is very important to note that, while XL TechGroup has exclusive rights to most of the technologies described, the nature of our rigorous selection process means that only a few of these opportunities will ever be chosen for development and scaling as new companies by XL TechGroup. Some of the opportunities that do not meet all of XL TechGroup's selection criteria may be transferred to GenXL for commercialisation.

The pipeline is continuously evolving as new opportunities are added, and as previous opportunities are eliminated. The following list represents a snapshot of the current possibilities.

• a technology that leverages genetically modified organisms to produce spider silk proteins in commercially valuable quantities
• an economical catalytic process to split low-cost methane into high-value, high-purity graphitised carbon and pure hydrogen
• a designer micro-organism that efficiently produces isoprene, a direct replacement for gasoline and propane
• a group of antiviral compounds active against viral diseases such as HIV, bird flu, and SARS that are derived from natural sources (fungus, seaweed, animal mucus)
• a novel approach to the use of human collagen as a scaffold for the growth of tissues such as muscle
• a technology that provides a repair scaffold for bone trauma that is displaced by the patient's own new bone tissue
• a water-based, non-toxic “green” paint base that contains no organic solvents, and yet adheres strongly to plastics, metals, etc.
• a novel technology for non-invasively imaging, for the first time, of unstable vulnerable plaque in the coronary arteries
• a new approach to causing existing cancer therapeutics to “stick” highly preferentially to certain tumour types, thereby enhancing the specificity of the relevant drugs
• an offshoot of a novel cancer vaccine technology which is adapted as a peripheral blood diagnostic to screen for early cancer detection
• a moisture barrier technology which provides controlled separation of wet and dry food products
• a unique proprietary platform which enables rapid screening of molecules which target AMP kinase for treatment of metabolic diseases such as obesity and type 2 diabetes

Summary & Outlook

Our strategy continues to be to launch one-to-two new companies each year which we believe in each case will achieve realisable valuations of at least US$400 million within four years of being started. We may decide to list a company sooner in this process, as we are currently doing with TyraTech, but we will retain at the very least a significant minority stake in all our companies from TyraTech onwards until such time as we feel it is appropriate to exit. When we do decide to exit, we will retain some of the proceeds to continue funding our ever growing portfolio of companies and we intend to distribute the balance in each case to our shareholders.

In line with this strategy, the following significant developments have occurred since the beginning of 2006:

• AgCert has proposed raising new money, has put an improved portfolio diversification strategy in place, and we firmly believe it is able to deliver at least the same value that we anticipated when the company was started
• TyraTech has signed co-development and other agreements with a number of leading global companies, from some of which it has already received fees and will continue to receive fees, is preparing for the release of its lead products through its partners and its own direct sales activity, and is proceeding with a listing on AIM
• PetroAlgae has initiated the first steps towards demonstrating significant scale capability, and is already building relationships with potential regional acquirers, licensees, strategic joint venture partners, and customers
• DxTech is beating reference laboratory gold standards on some of the most sensitive tests, and is in advanced discussions with a number of potential commercialisation partners in Asia
• QuoNova, our newest company, has started discussions with a number of potential development partners and end users, and commercialisation is envisaged within two years for its most advanced applications
• GenXL has announced its first company investment deal, and we look forward to a steady flow of news, leading towards the creation of additional value beyond our core business
• Thanks to our growing network of discovery and technology partners, our pipeline of opportunities is as strong as ever and includes several that could be particularly exciting if they meet all our stringent selection criteria

As a result of all these developments, as well as the further progress that we anticipate at all our companies during 2007, we believe that XL TechGroup is now reaching a clear inflexion point in the potential valuation profile of the Group. We anticipate a number of important developments at DxTech and PetroAlgae over the next 12 months, which should provide much greater visibility to their prospects. We should also have launched the next of our new companies within this timeframe. In addition, we look forward to news from TyraTech of its progress across the various markets it is targeting, and we will update shareholders on all important developments at QuoNova and GenXL.

For further information:

XL TechGroup Inc.
John Scott / Harold Gubnitsky	Tel: +44 (0) 20 7398 7720 (today only)
hgubnitsky@xltg.com
Chris Munden, Director of Investor Relations	Tel: +44 (0) 20 7398 7720
cmunden@xltg.com
Nomura Code Securities
Richard Potts, Corporate Finance	Tel: +44 (0) 20 7776 1200
	www.codesecurities.com

XL TechGroup media enquiries:

Abchurch Communications
Heather Salmond / Gareth Mead	Tel: +44 (0) 20 7398 7700
heather.salmond@abchurch-group.com	www.abchurch-group.com

 

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