27 March 2024
NANOCO
GROUP PLC
("Nanoco", the "Company" or the "Group")
Interim
Results
Fully
funded business with commercial traction investing for a phase of
steady growth
Nanoco Group plc (LSE: NANO), a world leader in the development and manufacture
of cadmium-free quantum dots and other specific nanomaterials
emanating from its technology platform, announces unaudited Interim Results for the half year ended 31
January 2024 ("the Period" or "H1 FY24").
·
Critical milestone of first ever commercial orders
achieved
o Shipment in November 2023 of two first-generation materials
for use in infra-red sensing applications in electronic devices
(cameras and imagers).
·
Continued progress with two global electronics
supply chain customers
o Joint Development Agreement signed in January 2024 with
STMicroelectronics, a global semiconductor leader,
to optimise the performance of a second-generation sensing material
over a two-year period.
o Joint Development Agreement signed in November 2023 with an
important Asian Chemical supplier of materials to global
electronics supply chains over two years to enhance another high
performing sensing material.
·
Second tranche of litigation proceeds
received
o Return of £33m to shareholders via Tender Offer and Share
Buyback now underway.
o Retained funds to be invested in
operational capability, enhancing future growth prospects, and
improving gross margins.
o Nanoco will be debt-free by the end of FY24 and is now fully
funded through to cash breakeven, expected during
CY25.
o Financial resources to defend our IP and leverage that same IP
for value
·
The opportunity ahead
o Successfully transitioned from a speculative R&D first
mover to a financially underpinned, organic growth focused Company,
surrounded by a validated and enforceable IP moat
o Core
sensing and display markets are forecast to experience rapid growth
over the next five years - forecast CAGR of over 40% in
sensing[1] (cameras and imagers) and c. 20%
in display[2]
o Adoption of QD technology in mobile phones for sensors and
small screen micro-LEDs for display should lead to a step change in
addressable markets for Nanoco
Results overview
Operational Summary - investing in
new capabilities and supply chain resilience
·
Building and fit out completed post period end for
new wafer device development and testing facility ('Fab') to
shorten product research cycles by up to c.33% and to support
engagement with new and existing customers.
·
New device team joined post period end, now
commissioning newly arrived equipment.
·
Continued early stage engagement with potential
new display customers.
Financial Summary - Trading in line
with Board expectations for FY24
·
Reported revenue increased to £4.0m (H1 FY23:
£1.6m) driven by recurring IP licence revenue.
o Underlying revenue (excluding Samsung licence revenue) of
£1.0m, (H1 FY23: £1.6m). Decrease reflects timing of
STMicroelectronics agreement being signed towards the end of the
Period.
·
Reported operating profit increased to a profit of
£2.4m (H1 FY23: loss £2.1m) reflecting increased revenue and the FX hedge gain of £2.5m in relation
to the second tranche of litigation proceeds from Samsung, partly
offset by strategic investments.
o Adjusted EBITDA of £0.7m (H1 FY23: LBITDA £1.1m) excludes the
one-off impact of the FX hedge gain and share-based
payments.
·
Investment in operations has increased gross cash
cost base to c. £0.6m per month (H1 FY23: £0.5m).
·
Period end reported cash of £59.3m (£2.5 million
FX hedge benefit received in February 2024).
·
The planned return of capital to shareholders (the
"Return of Value") and repayment of outstanding debt of c. £5
million will leave a cash balance of c. £23 million to support the
commercial business.
Outlook
·
Expansion of our range of services to include
sensing device development work
when Fab is fully commissioned during H2 FY24.
·
FY24 performance expected to be
in line with market expectations[3]
·
Continued progress as a full-service production
company with the goal of becoming cash breakeven during CY25, in
line with previously set out timeframe.
Brian Tenner, Chief Executive
Officer of Nanoco Group plc, said:
"Delivering our first ever
commercial orders was a huge achievement for the whole Nanoco team.
Sales volumes of first generation materials are expected to grow
gradually over time to deliver a cash breakeven position during
CY25. Adoption of the technology in mobile phones would lead to
further significant growth.
"Our current two global customers -
both leading suppliers to the electronics industry - are a
testament to Nanoco's leadership in novel nanomaterials. Our key
display and sensing IP was emphatically validated in the recent
Samsung litigation. The new second generation materials under
development will deliver significant performance improvements to
open up new applications in automotive and dynamic image capture.
All of our materials form part of our 'platform technology', being
adaptable to a wide range of markets, applications and form
factors.
"We are pleased to be returning
£33.0 million of value to shareholders while retaining funds for
the compelling use cases we have previously outlined.
Having spent five years fighting
for financial survival, we have now been able to make some cautious
but important strategic investments in new capabilities and our
resilience as a supply chain partner. These
will accelerate our development plans and commercial progress, as
well as allowing us to self-fund IP licensing efforts. The
combination of a fully funded business with commercial traction is
a strong foundation on which to build."
= Ends
=
Webcast for sell side
analysts
A conference call and webcast for
sell side analysts will be held at 10:00am (UK time) this morning
(27 March 2024):
For further details please contact
Powerscourt at nanoco@powerscourt-group.com.
A recording of the webcast will also
be made available on Nanoco's website later today at
www.nanocotechnologies.com
Investor Meet Company presentation
for investors
There will be a further presentation
for investors via the Investor Meet Company platform on 2 April
2024 at 10:00am. Questions can be submitted in advance via the
Investor Meet Company Dashboard before 5:00pm on 28 March 2024 or
on the day. Investors can sign up to the Investor Meet Company
platform for free and register their interest in events hosted by
Nanoco Group Plc via:
https://www.investormeetcompany.com/nanoco-group-plc/register-investor
Investors who already follow Nanoco
Group Plc on the Investor Meet Company platform will automatically
be invited.
For further information, please
contact:
Nanoco Group PLC:
Brian Tenner, CEO
Liam Gray, CFO & Company
Secretary
|
+44 (0) 1928 761 404
|
Cavendish Capital Markets Limited
(Financial Adviser & Joint Corporate Broker):
Ed Frisby / George Lawson (Corporate
Finance)
Tim Redfern / Charlie Combe
(Corporate Broking)
Jasper Berry (Sales)
|
+44 (0) 20 7220 0500
|
Turner Pope Investments (Joint Corporate
Broker):
Andrew Thacker
James Pope
|
+44 (0) 20 3657 0050
|
Powerscourt (Public
Relations)
Elly Williamson
Ollie Simmonds
Nanoco@powerscourt-group.com
|
+44 (0)7970
246 725
|
FORWARD LOOKING STATEMENTS
This announcement (including
information incorporated by reference in this announcement) and
other information published by Nanoco may contain statements about
Nanoco that are or may be deemed to be forward looking
statements. Such statements are prospective in nature.
All statements other than historical statements of facts may be
forward looking statements. Without limitation, statements
containing the words "targets", "plans", "believes", "expects",
"aims", "intends", "will", "may", "anticipates", "estimates",
"projects" or "considers" or other similar words may be forward
looking statements.
Forward looking statements
inherently contain risks and uncertainties as they relate to events
or circumstances in the future. Important factors such as
business or economic cycles, the terms and conditions of Nanoco's
financing arrangements, tax rates, or increased competition may
cause Nanoco's actual financial results, performance or
achievements to differ materially from any forward looking
statements. Due to such uncertainties and risks, readers are
cautioned not to place undue reliance on such forward looking
statements, which speak only as of the date hereof. Nanoco
disclaims any obligation to update any forward looking or other
statements contained herein, except as required by applicable
law.
About Nanoco Group plc
Nanoco (LSE: NANO) is a nanomaterial
production and licensing company, specialising in the production of
its patented cadmium free quantum dots (CFQD®) and other patented
nanomaterials for use in the electronics industries.
Founded in 2001 and headquartered in
Runcorn, UK, Nanoco continues to build out a world-class,
patent-protected IP portfolio alongside the scaling of the
production for commercial orders.
Nanomaterials are materials with
dimensions typically in the range 1 - 100 nm. Nanomaterials have a
range of useful properties, including optical and electronic.
Quantum dots are a subclass of nanomaterial that have
size-dependent optical and electronic properties. Within the sphere
of quantum dots, the Group exploits different characteristics of
the quantum dots to target different performance criteria that are
attractive to specific markets or end-user applications such as the
Sensor, Electronics and Display markets. Nanoco's CFQD® quantum
dots are free of cadmium and other toxic heavy metals, and can be
tuned to emit light at different wavelengths across the visible and
infrared spectrum, rendering them useful for a wide range of
display applications. Nanoco's HEATWAVE™ quantum dots can be tuned
to absorb light at different wavelengths across the near-infrared
spectrum, rendering them useful for applications including cameras
and image sensors.
Nanoco is listed on the Main Market
of the London Stock Exchange, holds the LSE's Green Economy Mark,
and trades under the ticker symbol NANO. For further information
please visit: www.nanocotechnologies.com
Business Review
Overview - A fully
funded business with commercial traction and exciting growth
opportunities
The key highlight of the six months to 31 January
2024 and indeed the last ten years or more, was the fulfilment of
the first ever commercial production orders for two of our first
generation materials for use in infra-red sensing applications. In
addition, both STMicroelectronics and our Asian Chemical customer
signed multi-year development agreements for higher performing
second generation materials, also for use in sensing applications
(cameras and imagers).
Having spent five years fighting for financial
survival, we have now been able to make some cautious but important
strategic investments in new capabilities and our resilience as a
supply chain partner, while increasing the team to around 50 staff,
just over half the figure from 2018.
First commercial production order in
Company's 20 year history fulfilled for sensing
application
Sensing
In November, we fulfilled our first ever commercial
production orders for two different products from our first
generation materials. This milestone and the status of our direct
customer is a clear endorsement of our technology. We expect
further orders to be fulfilled during this calendar year, depending
on end user adoption and demand. The wide range of potential end
use applications for our materials reflects a key strength of our
materials and the underpinning IP - they are a 'platform
technology' that is applicable to a wide range of markets,
applications and form factors.
During H1 FY24, we signed a two-year joint
development agreement with STMicroelectronics. This is for the
optimisation of a second generation of sensing material that has
different performance characteristics which will allow its use in
previously inaccessible applications such as automotive. We
continue to achieve all development milestones and will be
expanding our range of services to include device development work
when our new facility is fully commissioned during H2 FY24.
We also signed a two-year programme with our Asian
chemical customer, following on from the successful delivery of a
number of smaller consecutive projects over a two-year period. This
programme is also for the development of a different second
generation sensing material.
During the Period, the Group completed two
small but important projects that were part funded by Innovate
UK, the UK's innovation agency. One of
those projects was targeting a third generation sensing material
with the potential for even more advanced performance. The second
of these projects concerns the creation of novel nanomaterials that
are potentially applicable in the field of quantum computing.
Discussions are ongoing regarding further investment in these
areas.
Display
We continue to pursue small scale
development projects with a number of customers in display markets,
covering film opportunities as well as the emerging market interest
in micro-LED. We are working to leverage our validated IP portfolio
to deliver commercial engagement and contracts for the supply of
R&D services and materials for the display market. As reported
previously, we also work on a reactive basis to opportunities in
adjacent markets such as horticultural and lighting
applications.
Operations
During the period, Nanoco has invested in its
infrastructure and capabilities. This includes increasing our
Runcorn operational footprint by approximately 50%. This new space
will be dedicated to a Fab for the testing and development of
devices incorporating our nanomaterials to accelerate product
development and support engagement with new and existing customers.
The extensive equipment for this facility arrived from overseas
locations in early March. Our new device team has been recruited
and will join the business over the coming months with their
initial focus on supporting the commissioning of this equipment in
the new facility.
We are also investing in our quality control
and analytical capabilities, which has the benefit of improving the
data we can capture, but also reduces our reliance on outsourced
and costly services.
IP
Licensing
As previously stated, our primary goals for
Nanoco are the delivery of development, scale up and commercial
production of nanomaterials. Our IP portfolio is primarily used to
support those objectives. However, we will also continue our
efforts to agree appropriate licensing of our technology and IP
where other commercial engagement may not be possible or
appropriate. The fact that Samsung felt the need to agree a licence
over Nanoco IP despite having access to a number of other large
quantum dot IP portfolios reinforces this point.
While the opportunities for licensing in
display markets is currently relatively small due to the dominance
of Samsung, we expect this to grow over time as more devices and
market participants adopt quantum dot technology. We are
ring-fencing a significant sum from the retained funds from the
Samsung litigation to support our efforts to generate value in the
medium term and to continue to defend our IP as
required.
Board
In December 2023 we were pleased to announce
the appointment to the Board of Dr Jalal Bagherli and Dieter May as
new independent non-executive directors, both bringing significant
semi-conductor markets experience. Dieter has now joined the Board
and Jalal will join us in April 2024. In line with good corporate
governance, our Chairman, Dr Christopher Richards, has indicated
that he will stand down from the Board at the next AGM following
nine years of service. A search for a new Chairman will be led by
the Senior Independent Director and the process will start
soon.
Outlook - steady growth on a firm
foundation
Market forecasts for infra-red
sensors[4] and quantum
dot-based display[5] technologies show strong growth over the next five years. This
will create a positive environment in which Nanoco's unique cadmium
free quantum dots and other novel nanomaterials can leverage their
strong performance characteristics into large mass produced
commercial applications.
The continued investment and
development of future generations of sensing materials is a
necessary part of managing our product lifecycle to deliver value
over an extended period of time. The environmental benefits of our
cadmium free products should further add to the appeal of Nanoco
materials.
We are pleased to be returning £33.0
million of value to shareholders and to have retained funds for the
compelling use cases we set out in our recent circular. The
retained funds will accelerate our development plans and commercial
progress, as well as allowing us to self-fund IP licensing efforts.
The combination of a fully funded business with commercial traction
is a strong foundation on which to build.
Brian
Tenner
Chief Executive
Officer
27 March 2024
Financial review
Revenue
Reported revenue in the Period
increased 153% to £4.0m (H1 FY23: £1.6m). The majority of revenue
and its net increase relates to recurring licence revenue, prepaid
as part of the litigation settlement.
Sources of revenue
|
H1 FY24
|
H1 FY23
|
FY23
|
|
£m
|
£m
|
£m
|
Services
|
0.6
/ 13.8%
|
1.1
/ 70.5%
|
1.7
/ 30.0%
|
Material sales
|
0.3
/ 8.6%
|
0.4
/ 26.2%
|
0.8
/ 15.4%
|
Licences
|
3.1
/ 77.6%
|
0.1
/ 3.3%
|
3.1
/ 54.6%
|
Total revenue
|
4.0 /100.0%
|
1.6 /100.0%
|
5.6 /100.0%
|
Excluding the licence revenue,
services continue as the major revenue driver, generated primarily
from two new development agreements signed in the period. The
decrease on H1 FY23 was due to a timing difference between the
completion of the previous development agreements and the
negotiation and start of the new contracts. Material sales
represents shipments of nanomaterials to supply chain partners in
sensing and display markets, including shipments under the first
commercial production orders.
Operating expenses
Operating expenses comprise R&D
and administrative expenses. Gross investment in R&D to support
the ongoing development of our nanomaterials was £0.8m in the
Period (H1 FY23: £0.5m) and administrative expenses were £3.0m (H1
FY23: £2.7m). Following the Samsung
settlement in FY23, we have invested in both additional staff and
facilities to position the Company for future growth.
Other operating income in the Period
was £2.6m (H1 FY23:
£0.1m). The significant increase reflects
the recognition of an unrealised gain of £2.5m on a foreign
exchange hedge that was marked-to-market value at the period-end.
During the Period the group took out a one-off hedge at a rate of
GBP1:USD1.22 against the second tranche of proceeds from the
Samsung agreements totalling $71.75m. Although the cash was
received prior to the end of the Period, the hedge did not mature
until afterwards and hence is reported as unrealised at the period
end.
Operating profit and adjusted
EBITDA
The higher revenue in the Period
directly impacted adjusted operating profit in the Period,
increasing to £0.2m, an improvement of £1.6m. Adjusted EBITDA in
the Period improved to £0.7m.
|
H1 FY24
|
H1 FY23
|
FY23
|
|
£m
|
£m
|
£m
|
Operating profit/(loss)
|
2.4
|
(2.1)
|
15.0
|
Settled litigation costs
|
_
|
0.1
|
49.3
|
Profit on sale of IP
|
_
|
_
|
(68.7)
|
Requisitioned general
meeting
|
_
|
_
|
0.5
|
Fair value gain on derivative
financial instrument
|
(2.5)
|
_
|
_
|
Foreign exchange
|
(0.2)
|
_
|
1.7
|
Share-based payment
charge
|
0.5
|
0.5
|
1.0
|
Employers NI on SBP
|
0.0
|
0.1
|
(0.2)
|
Adjusted operating
profit/(loss)
|
0.2
|
(1.4)
|
(1.4)
|
Depreciation
|
0.4
|
0.2
|
0.6
|
Amortisation
|
0.1
|
0.1
|
0.3
|
Impairment
|
0.0
|
0.0
|
0.1
|
Adjusted EBITDA/(LBITDA)
|
0.7
|
(1.1)
|
(0.4)
|
Management monitor adjusted EBITDA
as an Alternative Performance Measure. The non-cash charges for
share-based payments (including the associated national insurance
charges), depreciation and amortisation are added back to the
operating result to arrive at Adjusted EBTIDA. One off cash
litigation costs, as well as the one off non-cash profit on
revaluing the foreign currency hedge are also excluded from
adjusted EBITDA. These items are excluded to provide users of the
accounts with a clearer understanding of underlying business
performance.
Taxation
The Group incurred a one-off tax
charge in FY23 as the profits exceeded the restriction on the use
of brought forward losses leaving a tax payable of £0.8m. A
deferred tax asset for brought forward losses expected to be
utilised in future years was recognised in FY23 and remains at the
period end. The Korean withholding tax on the Samsung licence
agreement creates a UK tax asset of £4.6m which can be offset
against future tax liabilities (£0.3m of which has been charged
against current period profits).
Net result
The profit after tax for H1 FY24 was
£1.8m (H1 FY23: loss of £2.1m).
Earnings per share
The basic earnings per share was
0.54 pence per share (H1 FY23: loss of 0.64 pence). As at 31
January 2024 there were 324,430,950 ordinary shares in issue (31
July 2023: 322,445,744) including treasury shares.
Cash position and
liquidity
Following the receipt of the
consideration for the Samsung agreements, the Group had a cash
balance at the end of the Period of £59.3m (2023:
£6.0m).
Accounting rules mean that the $US balance is not
translated using the hedged rate but at period end rates. If the
hedged rate had been used the period end balance would have been
£61.8 million. The hedge became effective in February 2024 and the
£2.5 million gain crystallised as cash during the same month.
Expenditure on fixed assets has been
increased as the Group invests in new analytical and device
capabilities.
Working capital
The Group is maintaining its
investment in working capital. This is to ensure that the Group is
seen as a robust part of the supply chain by its major customers.
Our contracts with customers also include mechanisms to give Nanoco
advance notice of significant changes in demand that should be
adequate to ensure that Nanoco has appropriate raw materials on
hand when production needs to be ramped up.
Principal risks
The Directors have considered the principal
risks which may have a material impact on the Group's performance.
The majority of applicable risks throughout the Period remained
materially unchanged as disclosed on pages 34 to 35 of the 2023
Annual Report and Accounts.
Going concern
The interim condensed consolidated financial
statements have been prepared on a going concern basis. In
determining the appropriate basis of preparation of the financial
statements, the Directors are required to consider whether the
Group can continue in operational existence for the foreseeable
future.
For the purposes of assessing whether 'going
concern' is an appropriate basis for preparing the interim
condensed consolidated financial statements, the Directors have
used their detailed forecasts for the period to 31 July 2027 (the
"Forecast Period"). These reflect current and expected business
activities as well as the matters set out in the section above on
Principal risks.
A sensitivity analysis has been performed to
reflect a possible downside scenario that only includes already
contracted revenues for the Forecast Period.
On the basis of the information above and
having made appropriate enquiries, at the time of approving the
interim condensed consolidated financial statements, the Directors
have a reasonable expectation that the Company has access to
adequate resources to continue in operational existence for the
foreseeable future, at least 12 months from the date of the issue
of these interim condensed consolidated financial
statements.
Accordingly, they continue to adopt the going
concern basis in preparing the interim condensed consolidated
financial statements. The financial statements do not reflect any
adjustments that would be required to be made if they were prepared
on a basis other than the going concern basis.
Liam Gray
Chief Financial Officer
27 March 2024
Responsibility statement
The Directors of Nanoco Group plc,
as listed on pages 46 and 47 of the 2023 Annual Report and
Accounts, and Dieter May as notified via RNS on 21 December 2023,
confirm to the best of their knowledge:
a)
the interim condensed consolidated financial statements have
been prepared in accordance with International Accounting Standard
34 Interim Financial Reporting, as required by paragraph 4.2.4 of
the Disclosure Guidance and Transparency Rules
("DTR");
b)
the interim condensed consolidated financial statements,
which have been prepared in accordance with the applicable set of
accounting standards, give a true and fair view of the assets,
liabilities, financial position and profit or loss of the issuer,
or the undertakings included in the consolidation as a whole as
required by DTR 4.2.10;
c)
the interim management report includes a fair review of the
information required by DTR 4.2.7 - an indication of important
events which have occurred during the first six months of the year
and a description of the principal risks and uncertainties for the
remaining six months of the year; and
d)
the interim management report includes a fair review of the
information required by DTR 4.2.8 - the disclosure of related party
transactions occurring during the first six months of the year and
any changes in related party transactions disclosed in the 2023
Annual Report and Accounts.
By order of the Board
Liam
Gray
Chief Financial Officer
27 March 2024
Condensed consolidated statement of comprehensive
income
For
the six months ended 31 January 2024
|
|
H1 FY24
|
H1
FY23
|
FY23
|
|
|
(Unaudited)
|
(Unaudited, Restated)
|
(Audited)
|
|
Notes
|
£'000
|
£'000
|
£'000
|
|
|
|
|
|
Revenue
|
3
|
3,956
|
1,562
|
5,618
|
Cost of sales[6]
|
|
(429)
|
(495)
|
(847)
|
Gross profit
|
|
3,527
|
1,067
|
4,771
|
Other operating income
|
|
|
|
|
Government grants
|
|
131
|
78
|
230
|
Profit on sale of IP
|
|
-
|
-
|
68,687
|
Fair value gain on derivative
financial instrument
|
|
2,476
|
-
|
-
|
Operating expenses
|
|
|
|
|
Research and development
expenses
|
|
(755)
|
(520)
|
(1,295)
|
Administrative expenses
|
|
(3,009)
|
(2,715)
|
(57,401)
|
Operating profit/(loss)
|
|
2,370
|
(2,090)
|
14,992
|
- Before
share-based payments and non-recurring items
|
|
368
|
(1,613)
|
(2,915)
|
- Share-based payments
|
|
(474)
|
(477)
|
(953)
|
- Profit
on sale of IP
|
|
-
|
-
|
68,687
|
- Fair
value gain on derivative financial instrument
|
|
2,476
|
|
|
- Litigation costs
|
|
-
|
-
|
(49,337)
|
- EGM
requisition
|
|
-
|
-
|
(490)
|
Net finance (expense)
|
|
(279)
|
(244)
|
(5,419)
|
Profit/(loss) before taxation
|
|
2,091
|
(2,334)
|
9,573
|
Taxation
|
|
(332)
|
255
|
1,512
|
Profit/(loss) after tax
|
|
1,759
|
(2,079)
|
11,085
|
Other comprehensive income
|
|
|
|
|
(Loss)/profit on exchange rate
translations
|
|
-
|
-
|
-
|
Total comprehensive profit/(loss)
for the year
|
|
1,759
|
(2,079)
|
11,085
|
Profit/(loss) per share:
|
|
|
|
|
Basic earnings / (loss)
|
4
|
0.54p
|
(0.64)p
|
3.44p
|
Diluted earnings / (loss)
|
|
0.51p
|
-
|
3.32p
|
|
|
|
|
|
The profit for the current and
preceding year, and the loss for H1 FY23, arise from the Group's
continuing operations and is attributable
to the equity holders of the Parent Company.
The basic and diluted loss per share
reported in H1 FY23 are the same, as the effect of share options is
anti-dilutive.
Condensed consolidated statement of changes in
equity
For
the six months ended 31 January 2024
|
|
|
Reverse
|
Share-based
|
|
Shares
|
|
|
|
Share
|
Share
|
acquisition
|
payment
|
Merger
|
held
|
Accumulated
|
|
|
capital
|
premium
|
reserve
|
reserve
|
reserve
|
by
EBT
|
loss
|
Total
|
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
At
31 July 2022 (audited)
|
32,244
|
121,145
|
(77,868)
|
4,916
|
(1,242)
|
-
|
(74,715)
|
4,480
|
Loss for the six months to 31
January 2023
|
-
|
-
|
-
|
-
|
-
|
-
|
(2,079)
|
(2,079)
|
Share-based payments
|
-
|
-
|
-
|
477
|
-
|
-
|
-
|
477
|
At
31 January 2023 (unaudited)
|
32,244
|
121,145
|
(77,868)
|
5,393
|
(1,242)
|
-
|
(76,794)
|
2,878
|
Profit for the six months to 31 July
2023
|
-
|
-
|
-
|
-
|
-
|
-
|
13,164
|
13,164
|
Capital reduction
|
-
|
(121,145)
|
-
|
-
|
-
|
-
|
121,145
|
-
|
Issue of capital to EBT on option
exercise
|
199
|
-
|
-
|
(259)
|
-
|
(105)
|
60
|
(105)
|
Share-based payments
|
-
|
-
|
-
|
476
|
-
|
-
|
-
|
476
|
At
31 July 2023 (audited)
|
32,443
|
-
|
(77,868)
|
5,610
|
(1,242)
|
(105)
|
57,575
|
16,413
|
Profit for the six months to 31
January 2024
|
-
|
-
|
-
|
-
|
-
|
-
|
1,759
|
1,759
|
Issue of shares on option
exercise
|
-
|
-
|
-
|
-
|
-
|
105
|
-
|
105
|
Share-based payments
|
-
|
-
|
-
|
474
|
-
|
-
|
-
|
474
|
At
31 January 2024 (unaudited)
|
32,443
|
-
|
(77,868)
|
6,084
|
(1,242)
|
-
|
59,334
|
18,751
|
Condensed consolidated statement of financial
position
As
at 31 January 2024
|
|
31 January
|
31
January
|
31
July
|
|
|
2024
|
2023
|
2023
|
|
|
(Unaudited)
|
(Unaudited)
|
(Audited)
|
|
Notes
|
£'000
|
£'000
|
£'000
|
Assets
|
|
|
|
|
Non-current assets
|
|
|
|
|
Property, plant and
equipment
|
|
1,302
|
232
|
304
|
Right of use assets
|
|
2,442
|
2,018
|
2,075
|
Intangible assets
|
|
903
|
1,470
|
966
|
Deferred tax asset
|
|
2,573
|
-
|
2,573
|
Foreign withholding tax
receivable
|
|
4,003
|
-
|
1,756
|
|
|
11,223
|
3,720
|
7,674
|
Current assets
|
|
|
|
|
Inventories
|
|
451
|
104
|
308
|
Trade and other
receivables
|
|
3,660
|
734
|
33,986
|
Foreign withholding tax
receivable
|
|
593
|
-
|
592
|
Income tax asset
|
|
-
|
254
|
-
|
Cash and cash equivalents
|
|
59,343
|
5,978
|
8,207
|
|
|
64,047
|
7,070
|
43,093
|
Total assets
|
|
75,270
|
10,790
|
50,767
|
|
|
|
|
|
Liabilities
|
|
|
|
|
Current liabilities
|
|
|
|
|
Trade and other payables
|
|
(1,619)
|
(1,625)
|
(2,783)
|
Loans
|
|
(4,257)
|
-
|
(4,004)
|
Lease liabilities
|
6
|
(675)
|
(429)
|
(456)
|
Income tax liability
|
|
(800)
|
-
|
(770)
|
Deferred revenue
|
5
|
(5,934)
|
(105)
|
(6,123)
|
|
|
(13,285)
|
(2,159)
|
(14,136)
|
Non-current liabilities
|
|
|
|
|
Lease liabilities
|
6
|
(1,418)
|
(1,617)
|
(1,415)
|
Provisions
|
|
(659)
|
-
|
(445)
|
Deferred revenue
|
5
|
(40,582)
|
-
|
(17,801)
|
Loans
|
|
(575)
|
(4,136)
|
(557)
|
|
|
(43,234)
|
(5,753)
|
(20,218)
|
Total liabilities
|
|
(56,519)
|
(7,912)
|
(34,354)
|
|
|
|
|
|
Net
assets
|
|
18,751
|
2,878
|
16,413
|
|
|
|
|
|
Capital and reserves
|
|
|
|
|
Share capital
|
|
32,443
|
32,244
|
32,443
|
Share premium
|
|
-
|
121,145
|
-
|
Reverse Acquisition
Reserve
|
|
(77,868)
|
(77,868)
|
(77,868)
|
Share-based payment
reserve
|
|
6,084
|
5,393
|
5,610
|
Merger reserve
|
|
(1,242)
|
(1,242)
|
(1,242)
|
Shares held by EBT
|
|
-
|
-
|
(105)
|
Accumulated profit/(loss)
|
|
59,334
|
(76,794)
|
57,575
|
Total equity
|
|
18,751
|
2,878
|
16,413
|
Approved by the Board and authorised
for issue on 27 March 2024.
Brian
Tenner
Liam Gray
Chief Executive
Officer
Chief Financial Officer
Condensed consolidated cash flow statement
For
the six months ended 31 January 2024
|
|
Six months
to
|
Six months
to
|
Year
to
|
|
|
31 January
|
31
January
|
31
July
|
|
|
2024
|
2023
|
2023
|
|
|
|
|
|
|
|
(Unaudited)
|
(Unaudited)
|
Audited
|
|
|
£'000
|
£'000
|
£'000
|
Profit/(loss) before tax
|
|
2,091
|
(2,334)
|
9,573
|
Adjustments for:
|
|
|
|
|
Net finance expense
|
|
279
|
218
|
5,419
|
Fair value gain on derivative
financial instrument
|
|
(2,476)
|
-
|
-
|
(Profit) / loss on exchange rate
translations
|
|
(183)
|
4
|
1,747
|
Depreciation of tangible fixed
assets
|
|
38
|
35
|
76
|
Depreciation of right of use
asset
|
|
328
|
157
|
555
|
Amortisation of intangible
assets
|
|
97
|
155
|
279
|
Profit on disposal of intangible
assets
|
|
-
|
-
|
(68,687)
|
Impairment of intangible
assets
|
|
20
|
15
|
92
|
Share-based payments
|
|
474
|
477
|
953
|
(Profit) / loss on disposal of
tangible fixed assets
|
|
-
|
-
|
8
|
Changes in working
capital:
|
|
|
|
|
(Increase)/decrease in
inventories
|
|
(143)
|
70
|
(134)
|
Decrease in trade and other
receivables
|
|
32,802
|
930
|
282
|
(Decrease)/increase in trade and
other payables
|
|
(1,060)
|
115
|
970
|
(Decrease)/increase in
provisions
|
|
-
|
(212)
|
(176)
|
Increase/(Decrease) in deferred
revenue
|
|
22,592
|
(499)
|
23,320
|
Cash inflow/(outflow) from operating
activities
|
|
54,859
|
(869)
|
(25,723)
|
Foreign withholding tax
paid
|
|
(2,550)
|
-
|
(2,641)
|
Research and development tax credit
received
|
|
-
|
524
|
524
|
Net
cash inflow/(outflow) from operating activities
|
|
52,309
|
(345)
|
(27,840)
|
|
|
|
|
|
Cash flows from investing activities
|
|
|
|
|
Purchases of tangible fixed
assets
|
|
(1,036)
|
(169)
|
(305)
|
Purchases of intangible fixed
assets
|
|
(54)
|
(24)
|
(76)
|
Proceeds from sale of tangible fixed
assets
|
|
-
|
-
|
15
|
Proceeds from sale of intangible
fixed assets
|
|
-
|
-
|
34,509
|
Interest received
|
|
45
|
-
|
38
|
Net
cash outflow from investing activities
|
|
(1,045)
|
(193)
|
34,181
|
|
|
|
|
|
Cash flows from financing activities
|
|
|
|
|
Proceeds from placing of ordinary
share capital
|
|
-
|
-
|
199
|
Payment of lease liabilities
(capital)
|
|
(259)
|
(216)
|
(463)
|
Payment of lease liabilities
(interest)
|
|
(51)
|
(26)
|
(86)
|
Interest paid
|
|
(2)
|
(1)
|
(4,728)
|
Net
cash outflow from financing activities
|
|
(312)
|
(243)
|
(5,078)
|
|
|
|
|
|
Increase / (Decrease) in cash and cash
equivalents
|
|
50,952
|
(781)
|
1,263
|
Cash and cash equivalents at the
start of the period
|
|
8,207
|
6,762
|
6,762
|
Effects of exchange rate
changes
|
|
184
|
(3)
|
182
|
Cash and cash equivalents at the end of the
period
|
|
59,343
|
5,978
|
8,207
|
Notes to the interim condensed consolidated financial
statements
For the six
months ended 31 January 2024
1.
Corporate
information
Nanoco Group plc (the "Company") has a premium
listing on the Main Market of the London Stock Exchange and is
incorporated and domiciled in the UK. The Group Interim Report and
Accounts for the six months ended 31 January 2024 was authorised
for issue in accordance with a resolution by the Directors on 27
March 2024.
These interim condensed consolidated financial
statements include the financial statements of Nanoco
Group plc and the entities it controls (its
subsidiaries).
These interim condensed consolidated financial
statements are unaudited and do not constitute statutory accounts
of the Group as defined in section 434 of the Companies Act
2006.
2.
Accounting policies
a.
Basis of preparation
These interim condensed consolidated financial
statements have been prepared in accordance with the Disclosure and
Transparency Rules of the Financial Conduct Authority, UK-adopted
IAS 34 Interim Financial Reporting, using the recognition and
measurement principles of UK-adopted IFRS and have been prepared
under the historical cost convention. As required by the Disclosure
Guidance and Transparency Rules of the Financial Conduct Authority
the accounting policies adopted in these condensed
consolidated financial statements are consistent with
those followed in the preparation of the Group's Annual Report and
Accounts for the year to 31 July 2023.
These interim condensed consolidated financial
statements include audited comparatives for the year to 31 July
2023. The 2023 Annual Report and Accounts, which was prepared in
accordance with UK-adopted International Financial Reporting
Standards ("IFRS"), received an unqualified audit opinion and have
been filed with the Registrar of Companies. The financial
statements of the Group for the year ended 31 July 2023 are
available from the Company's registered office, or from the website
www.nanocotechnologies.com.
b.
Presentation of figures
Certain figures contained in this announcement,
including financial information, have been subject to rounding
adjustments. Accordingly, in some cases, the sum or percentage
change of the numbers contained in this announcement may not
conform exactly to the total figure given.
In order to more fairly represent the cost of
sales of the group, we have reclassified certain employee costs
from administrative expenses to cost of sales for the comparative
period. The total impact of the reclassification is an increase in
the cost of sales of £200,000 with an equal and opposite reduction
in administrative expenses. There is no impact on the reported loss
or net assets of this reclassification.
c.
Going concern
The interim condensed consolidated financial
statements have been prepared on a going concern basis as set out
in the Financial Review section.
d. Use of estimates and
judgements
Preparation of the interim condensed
consolidated financial statements requires management to make
judgements, estimates and assumptions affecting the application of
accounting policies and the reporting of assets, liabilities,
income and expenses. Actual results may differ from these
estimates. The significant judgements made by management in
applying the Group's accounting policies and key sources of
estimated uncertainty were the same as those applied to the
consolidated financial statements for the year ended 31 July 2023.
These are summarised below:
Estimates
|
Judgements
|
Period over which to amortise
Samsung licence
|
Revenue recognition
|
Equity-settled share-based
payments
|
Impairment of intellectual
property
|
Deferred tax
|
Capitalisation (or not) of research
and development expenditure
|
|
Going concern
|
3. Segmental information
Operating
segments
At 31 January 2024 and 2023, the
Group operated as one segment, being the research, development and
manufacture of products and services based on high performance
nanoparticles. This is the level at which operating results are
reviewed by the chief operating decision maker (i.e. the Board) to
make decisions about resources, and for which financial information
is available. All revenues have been generated from continuing
operations and are from external customers.
|
|
Six months
to
31 January
2024
|
Six months
to
31
January
2023
|
Year
to
31
July
2023
|
|
|
(Unaudited)
|
(Unaudited)
|
(Audited)
|
|
|
£'000
|
£'000
|
£'000
|
Analysis of revenue - by
type
|
|
|
|
|
Products sold
|
|
341
|
409
|
867
|
Rendering of services
|
|
544
|
1,101
|
1,685
|
Licences
|
|
3,071
|
52
|
3,066
|
|
|
3,956
|
1,562
|
5,618
|
There was a material customer who
generated product and service revenue of £575,000 (2023: one
material customer amounting to £1,215,000). £3,028,000 of the
licence revenue related to the Samsung licence (2023:
nil)
The Group operates in a number of
countries across the world, although all are managed in the UK. The
Group's revenue per country based on the customer's location is as
follows:
|
|
Six months
to
31 January
2024
|
Six months
to
31
January
2023
|
Year
to
31
July
2023
|
|
|
(Unaudited)
|
(Unaudited)
|
(Audited)
|
|
|
£'000
|
£'000
|
£'000
|
Analysis of revenue - by
geography
|
|
|
|
|
South Korea
|
|
3,028
|
-
|
2,963
|
Netherlands
|
|
307
|
954
|
1,423
|
Japan
|
|
292
|
286
|
447
|
France
|
|
267
|
114
|
385
|
Taiwan
|
|
43
|
165
|
323
|
USA
|
|
17
|
34
|
59
|
Belgium
|
|
2
|
-
|
-
|
Canada
|
|
-
|
9
|
9
|
Poland
|
|
-
|
-
|
8
|
UK
|
|
-
|
-
|
1
|
|
|
3,956
|
1,562
|
5,618
|
All the Group's assets are held in
the UK and all of its capital expenditure arises in the UK. The
profit before taxation and attributable to the single segment was
£2,091,000 (2023: £2,334,000 loss).
4. Earnings
per
share
|
|
Six months
to
31 January
2024
|
Six months
to
31
January
2023
|
Year
to
31
July
2023
|
|
|
(Unaudited)
|
(Unaudited)
|
(Audited)
|
|
|
£'000
|
£'000
|
£'000
|
Profit/(loss) for the period
attributable to equity shareholders
|
1,759
|
(2,079)
|
11,085
|
Share-based payments
|
474
|
477
|
953
|
Profit/(loss) for the period before share-based
payments
|
|
2,233
|
(1,602)
|
12,038
|
|
|
|
|
|
Weighted average number of shares
|
|
No.
|
No.
|
No.
|
Ordinary shares in issue
|
|
324,430,950
|
322,445,744
|
322,472,939
|
Options exercisable at the reporting
date
|
|
1,134,244
|
-
|
195,000
|
Options not yet exercisable at the
reporting date
|
|
19,727,115
|
-
|
11,720,600
|
Diluted weighted average number of
shares
|
|
345,292,309
|
-
|
334,388,539
|
Adjusted profit/(loss) per share before share-based payments
(pence)
|
0.69
|
(0.50)
|
3.73
|
Basic profit/(loss) per share (pence)
|
|
0.54
|
(0.64)
|
3.44
|
Diluted adjusted profit/(loss) per share before share-based
payments (pence)
|
|
0.65
|
-
|
3.60
|
Diluted profit/(loss) per share (pence)
|
|
0.51
|
-
|
3.32
|
Diluted loss per share is not
presented for the 6 months to January 2023 as the effect of share
options issued is anti-dilutive. The adjusted loss is presented as
the Board measures underlying business performance which excludes
non-cash IFRS2 charges.
5. Deferred
revenue
|
|
31 January
2024
|
31
January
2023
|
31
July
2023
|
|
|
(Unaudited)
|
(Unaudited)
|
(Audited)
|
|
|
£'000
|
£'000
|
£'000
|
Current
|
|
|
|
|
Upfront licence fees
|
|
5,931
|
95
|
6,123
|
Milestone Payments
|
|
3
|
10
|
-
|
Total
current
|
|
5,934
|
105
|
6,123
|
Non-current
|
|
|
|
|
Upfront licence fees
|
|
40,582
|
-
|
17,801
|
Total
non-current
|
|
40,582
|
-
|
17,801
|
|
|
|
|
|
Total deferred revenue
|
|
46,516
|
105
|
23,924
|
Deferred revenue arises under IFRS
where upfront licence fees are accounted for on a straight-line
basis over the initial term of the contract or where performance
criteria have not been satisfied in the accounting
period.
6. Lease
liabilities
|
|
Six months
to
31 January
2024
|
Six months
to
31
January
2023
|
Year
to
31
July
2023
|
|
|
(Unaudited)
|
(Unaudited)
|
(Audited)
|
|
|
£'000
|
£'000
|
£'000
|
Current
|
|
|
|
Property Leases
|
662
|
429
|
448
|
Equipment leases
|
13
|
-
|
8
|
Non-current
|
|
|
|
|
Property Leases
|
|
1,407
|
1,617
|
1,399
|
Equipment leases
|
|
11
|
-
|
16
|
Total lease liabilities
|
|
2,093
|
2,046
|
1,871
|
7. Post Balance Sheet
Event
In February 2024, Nanoco fully
utilised its open forward currency hedge to retranslate the USD
receipts from Samsung into GBP.
Nanoco also announced the mechanism
for its return of capital, in which up to £30.0 million will be
returned to shareholders through a tender offer, and this will be
voted on at a general meeting of the Company on 28 March 2024. In
addition, up to £3.0 million will be used for an on-market
buyback.
In addition, post period end, Nanoco
repaid the loan notes outstanding to the University of Manchester
(£0.6m).
- Ends -