TIDMNANO
RNS Number : 3394K
Nanoco Group PLC
10 April 2018
10 April 2018
NANOCO GROUP PLC
("Nanoco", the "Company" or the "Group")
Half-year Results
Encouraging progress in commercialisation, supported by a
strengthened balance sheet
Nanoco Group plc (LSE: NANO), a world leader in the development
and manufacture of cadmium-free quantum dots ("CFQDs") and other
nano-materials, is pleased to announce its unaudited half-year
results for the six months ended 31 January 2018.
Operational highlights
-- Further encouraging progress in commercial traction
-- Successful CES in Las Vegas where Nanoco demonstrated
high-end TVs and monitors, generating several important leads
-- Exhibition of TVs by AUO containing Nanoco's CFQD(R) Fine
Color Film(TM) at leading industry show Touch Taiwan
-- Commercial Supply and License Agreement with a US corporation
in the field of medical devices under the brand name CareWear(R)
(as announced 8 September 2017)
-- Other markets in specialised horticultural lighting and life
sciences now showing encouraging progress
-- First toxicology studies performed on our biological quantum
dots indicated no evidence of mutagenicity when evaluated by the
widely used Ames test - an important initial safety test
-- The Group now benefits from c.600 patents and patent applications
Momentum in current trading
-- New Material Development and Supply Agreement announced
post-half-year end, with a large US-listed corporation for advanced
electronic devices, including capex funding for the expansion of
Nanoco's Runcorn facility (as announced 8 February 2018)
-- Encouraged by the increasing number of Nanoco-equipped
display products moving through to commercial production with
customers in Asia
-- Materials shipped from the first commercial orders received
in 2017 have been utilised in the detailed and lengthy testing
process prior to volume production and we expect first products to
be in the market during 2018
Financial highlights
-- Balance sheet strengthened with the net proceeds of GBP8.0
million following placing in November 2017
-- Revenue and other operating income for the six months was
GBP0.26 million (H1 2017: GBP0.82 million) and the loss after tax
was GBP4.20 million (H1 2017: GBP5.43 million)
-- Cash and cash on deposit at 31 January 2018 was GBP8.74
million (31 July 2017: GBP5.71 million; 31 January 2017: GBP8.33
million)
-- Additional cash resources are receivable in relation to
accrued R&D tax credits and the upfront milestone payment and
capex funding from our new US partner
Dr Michael Edelman, Nanoco's Chief Executive Officer, said: "The
first half of the financial year has seen encouraging progress for
Nanoco, underlining the strength and breadth of Nanoco's know-how
and the relevance of our intellectual property and technology
across a wide range of different end markets and applications.
"The announcement post-period end of a new contract with a large
US-listed corporation for the scale-up and volume production of
novel nano-particles is a testament to the significant momentum we
are seeing as a Group. Demand for our technology in display is
gaining traction, while in our other markets of lighting and life
sciences commercial developments are also progressing well.
"We continue to keep a tight control on costs while further
commercialising our technology to take advantage of large and
growing market opportunities, supported by our successful
fundraising in November 2017 and the cash receivable from our
newest partner.
"I am excited about the Group's prospects and remain very
confident about the relevance of our technology across a broad
spectrum of end markets, as well as our ability to execute and
deliver current orders and future sales."
Analyst meeting and webcast details
To listen to a live webcast of the analyst briefing, please log
on to the following web address approximately five minutes before
8:30am on 10 April 2018:
http://webcasting.brrmedia.co.uk/broadcast/5aa7fac9b424831035fdd156
A recording of the webcast will also be made available on
Nanoco's website, www.nanocogroup.com, later today.
A meeting for analysts will be held at 8:30am this morning, 10
April 2018, at the offices of MHP Communications, 6 Agar Street,
London WC2N 4HN. For further details please contact MHP
Communications on 0203 128 8570.
For further information, please contact:
Nanoco Tel: +44 (0) 161 603
7900
Michael Edelman, Chief
Executive Officer
David Blain, Chief Financial
Officer
Caroline Watson, Investor Tel: + 44 (0) 7799
Relations Manager 897357
cwatson@nanocotechnologies.com
Peel Hunt Tel: +44 (0) 20 7418
8900
Adrian Trimmings
George Sellar
MHP Communications Tel: +44 (0) 20 3128
8570
Reg Hoare/Giles Robinson/Pete
Lambie
nanoco@mhpc.com
Notes for editors:
About Nanoco Group plc
Nanoco (LSE: NANO) harnesses the power of nano-technology to
create a brighter, more sustainable future. Based on breakthrough
science, Nanoco's proprietary manufacturing process enables the
large-scale production of its cadmium-free CFQD(R) quantum dots for
multiple applications including LCD display, lighting, healthcare,
nano-materials and solar.
Nanoco has non-exclusive manufacturing and marketing licensing
agreements in display with The Dow Chemical Company, Merck KGaA of
Germany and Wah Hong Industrial Corporation of Taiwan.
Nanoco was founded in 2001 and is headquartered in Manchester,
UK, with a US subsidiary, Nanoco Inc., in Concord, MA. Nanoco
continues to build out a world-class, patent-protected IP portfolio
generated both by its own innovation engine, as well as through
acquisition.
Nanoco is listed on the Main Market of the London Stock Exchange
and trades under the ticker symbol NANO. For further information
please visit: www.nanocogroup.com.
Business review
Overview
Whilst our reported revenues are lower than the previous period,
the first half of the new financial year has seen improved
commercial performance across the Group with further traction in
Display and the negotiation of a contract with a new US partner
which will be reflected through the income statement in future
periods.
In Display, our own production and route to market via our
partner Wah Hong is starting to see commercial traction. We
delivered successful demonstrations of our technology at one of the
leading display industry shows, Touch Taiwan, in September 2017 as
well as at CES in Las Vegas in January of this year. Initial
monitor products featuring our technology are expected to launch in
2018, with the anticipation that TV orders will follow
thereafter.
Other markets in specialised lighting and life sciences are now
showing progress. In September, the Life Sciences division
announced a Commercial Supply and License Agreement with a US
corporation in the field of medical devices under the brand name
CareWear(R). Meanwhile, the Specialised Lighting division continues
to make encouraging progress in the horticulture market, in
particular through vertical farming applications, alongside its
recent Commercial Supply and License Agreement signed with the
Sports Turf Research Institute, announced in December 2017.
While we had previously indicated that the Solar division was to
be divested, the Board has recently decided to retain this
intellectual property ("IP") within the Group as it is now proving
important in other related markets. We believe that this is in the
best interests for all shareholders and the future direction of the
business. Consideration will be given to licensing the assets for
use in the solar field.
Furthermore, since the period end, in February 2018 we were
pleased to announce a significant new Material Development and
Supply Agreement with a large US-listed corporation for advanced
electronic devices, which opens up the nano-materials vertical for
the Group and demonstrates our ability to be able to scale and
manufacture materials for a wide variety of applications.
Display market
The display market for CFQDs continues to grow, driven by the
increasing consumer and manufacturer appetite for enhanced colour
and brightness, alongside the growing penetration of
ultra-high-definition ("UHD") TVs in the market. IHS Technology
("IHS") forecasts 26 million displays will be quantum dot ("QD")
equipped by 2021, with more than 90% of the market cadmium free,
demonstrating the scale of this opportunity. Samsung, with its QLED
brand, is leading the field in display. Other than Samsung, the
market for QD displays is still in its infancy, although the
introduction of UHD TV and media-centric monitor products is
beginning to drive growth in the markets.
The European Commission announced legislation, which passed into
law in October 2017, banning the use of cadmium in displays from 31
October 2019, which we expect to accelerate the shift to CFQDs.
Several major Taiwanese and Chinese display and TV manufacturers
are now actively seeking CFQD solutions, where Nanoco continues to
have a competitive lead.
Commercialisation
Nanoco's cadmium-free CFQD(R) quantum dots are manufactured at
Nanoco's Runcorn facility and at Dow's large manufacturing plant in
Cheonan, South Korea, while Merck is also evaluating its
manufacturing plans. These sites will manufacture CFQDs, blend them
into a resin system and supply the combined CFQD resin system to
multiple display integrators located across Asia. Nanoco and our
licensees are already actively marketing Nanoco technology to the
global display industry.
Commercialisation - Runcorn
Runcorn now has the capacity to produce enough CFQDs to supply
approximately 1 million large TVs per annum. Further capacity can
be achieved with limited capital expenditure and will be brought
online as demand increases. Alongside this, the Material
Development and Supply Agreement with a large US-listed corporation
announced after the period end includes additional funding for the
further expansion of Nanoco's Runcorn facility to scale up and mass
produce novel nano-particles for advanced electronic devices.
This expansion plan is already underway, after Nanoco reached an
agreement on 19 March 2018 to take over 10,000 sq ft of additional
space in The Heath Business and Technical Park in Runcorn, for
state-of-the-art laboratories, offices and storage capacity.
Commercialisation - Wah Hong
Wah Hong, which is quoted on the Taipei Exchange, is our partner
for the production and sale of our CFQD(R) Fine Color Film(TM) . We
chose to partner with Wah Hong as it is one of the world's largest
manufacturers of optical films and sheets for the display industry
and has a large operational footprint across China, Taiwan and
Southeast Asia. Under the agreement, Nanoco will supply resins
containing CFQDs from our manufacturing facility in Runcorn and Wah
Hong will incorporate the resin into a film, under Nanoco's CFQD(R)
Fine Color Film(TM) brand, and sell to the display industry. We
will generate revenue from the sale of resin to Wah Hong and
receive a licence fee from Wah Hong based on its sales and two
further milestone payments dependent on the volume of film
sold.
In September 2017, CFQD(R) Fine Color Film(TM) from Nanoco/Wah
Hong was used by AUO, a leading Taiwanese display manufacturer
listed on the New York Stock Exchange, to demonstrate next
generation 8k and 4k UHD TVs at Touch Taiwan. For the second year,
Nanoco also had its own suite at CES in Las Vegas in January 2018,
demonstrating TVs and monitors containing our technology to an
array of potential customers, industry players and the financial
community.
At CES we also launched the next generation of Nanoco CFQD(R)
Fine Color Film(TM). This new film delivers outstanding levels of
brightness and colour performance, as the industry progresses on
the roadmap to DCI-P3 and BT.2020 standards, and away from
cadmium-based solutions. Several important leads for both monitors
and TVs were generated at CES.
In conjunction with our partner Wah Hong, we continue to develop
an active pipeline of sales opportunities. The Group's key
short-term focus is on TV and monitor projects with near-term
potential and we are encouraged by the increasing number of
Nanoco-equipped display products moving through to commercial
production with customers in Asia. Materials shipped from the first
commercial orders received in 2017 have been utilised in the
detailed and lengthy testing process prior to mass production and
we expect the first products to be in the market during 2018.
Commercialisation - Dow
Dow has a non-exclusive licence to manufacture, market and sell
Nanoco's heavy-metal-free quantum dots into the display market. Dow
sells product under the TREVISTA(TM) brand, manufactured in its
facility in South Korea. We generate royalty revenue from Dow
calculated as a percentage of Dow's sales of Nanoco cadmium-free
CFQD(R) quantum dots.
While this licencing agreement has, to date, performed below
expectations, Dow continues to make progress in commercial
engagements with a variety of customers.
Commercialisation - Merck
Merck is the leading German science and technology company
focused on healthcare, life sciences and performance materials, and
the manufacturer of approximately 60% of the world's liquid
crystals used in liquid crystal displays. Nanoco expects to
generate revenue from sales made by Merck from licence fees and
royalties on Merck manufactured sales.
Nanoco completed the transfer of its technology to Merck during
2017. Merck has successfully produced pilot plant scale quantities
of CFQDs at its facility in Darmstadt, Germany, and is working
closely with potential customers on new applications to use quantum
dots directly in the display stack. While Merck has no
manufacturing facility of its own, we expect it to continue using
quantum dots made by Nanoco. Merck is actively engaged with its
potential customers on various CFQD application projects and sells
under the Livilux(R) brand.
Commercialisation - nano-materials
Nano-material research and development is a core competency of
Nanoco. Our ability to design and develop new nano-particles and
the capability to scale up and manufacture these nano-materials in
commercial quantities is unique to Nanoco.
Under the Material Development and Supply Agreement announced in
February 2018, Nanoco will scale up and mass produce novel
nano-particles for advanced electronic devices and supply them from
our production facility in Runcorn, UK. In preparation for the
quantity of materials needed for these markets, our new US-listed
partner (which cannot be named for confidentiality reasons) will
fund the capital expenditure required to expand Nanoco's Runcorn
facility. This process is already underway, with an agreement now
in place to take over 10,000 sq ft of additional space in The Heath
Business and Technical Park, Runcorn, which will include
laboratories, offices and additional storage capacity.
The commercial terms of the agreement with our new US-listed
partner also include payments for success-based milestones, and
commercial supply of materials, both of which will have a
beneficial impact on Nanoco's cash flows. Based on current
timelines, commercial supply is anticipated to begin in early
2019.
Commercialisation - staying ahead of the technology curve
We continue to relentlessly research, develop and pursue new
partnerships to ensure that our technology remains relevant and
that Nanoco continues to be at the forefront of next generation
products. To that end, we are working on a new generation of
electroluminescent quantum dots which will compete directly with
OLED materials for a new generation of display products.
We already have an exciting partnership with Kyulux, where
Nanoco's cadmium-free CFQD(R) quantum dots are combined with
Kyulux's hyperfluorescent thermally activated delayed fluorescence
("TADF") technology to create future generation hybrid OLED/QLED
display technology with superior qualities to existing products in
the display market.
We also have a novel 2D material development programme in
partnership with the University of Manchester's National Graphene
Institute to develop and commercialise future generations of
materials in collaboration with Nobel Laureate Professor Kostya
Novoselov.
The Group now benefits from c.600 patents and patent
applications.
Other markets
Nanoco continued to develop its other target markets of life
sciences and specialised lighting. Whilst we previously indicated
that our Solar division was to be divested, the Board has recently
decided to retain this IP within the Group as it is now proving
important in other related markets. We believe it is in the best
interests for all shareholders and the future direction of the
business. Accordingly, at 31 January 2018, the Group's Solar assets
have been reclassified as fixed assets.
Other markets - life sciences
Nanoco Life Sciences ("NLS") is led by Dr Imad Nassani, who
joined Nanoco in 2009 and is one of the pioneers of the use of
quantum dots in the sector. Quantum dots have favourable optical
and physical properties compared with organic dyes and
radioisotopes, but their use in medical applications has been
hindered due to the presence of cadmium. Because Nanoco's quantum
dots are cadmium free, they can be used in the human body in, for
example, cancer diagnosis and surgical imaging.
The initial focus of the division is on illumination of
cancerous tumours to facilitate their surgical removal and then,
with further development, cancer diagnosis. The NLS team has made
great strides in the development of safe and clinically acceptable
quantum dot nano-materials based on the Company's heavy-metal-free
quantum dot technology.
The promising progress may lead to the development of quantum
dot probes for the early detection of aggressive tumours such as
those in pancreatic and bladder cancers. This, in addition to our
burgeoning relationships with commercial and research institutions
at the cutting edge of the battle against cancer, demonstrates the
scope of our ambition and the value of our technology.
We are now working to prepare the technology for clinical
trials, and have already started toxicology studies with a global
contract research organisation ("CRO"). First toxicology studies
performed at the CRO on our biological quantum dots (Vivodot(TM)630
nano-particles) indicated no evidence of mutagenicity when
evaluated by the widely used Ames test. This is an important
stepping stone for confirming the safety of our biological dots in
medical applications. More safety studies are ongoing as required
by regulatory guidelines.
We are also working with the MIT Sloan Business School
consulting programme with a remit to produce a business plan to
spin NLS out of Nanoco.
In September 2017, we announced that we had signed a Commercial
Supply and License Agreement with a US corporation in the field of
medical devices, under the brand name CareWear(R). The product is a
wearable therapeutic light patch using printed LEDs and CFQD film
to treat pain and accelerate recovery from soft tissue injury.
Nanoco supplies the CFQD film product through the same route to
market as used for display.
Other markets - specialised lighting
Nanoco's cadmium-free CFQD(R) quantum dots can tune the colour
of light emitted by LEDs such that any particular shade of light
can be produced by tailoring the wavelength. This ability to
fine-tune the colour of light has very broad applications, such as
the use of LEDs in homes and offices, as well as in specific, niche
applications where a particular wavelength of light is
required.
Nanoco's commercial strategy in lighting is to focus on niche
lighting applications which take advantage of quantum dots' unique
properties. Lighting products for the horticulture, specifically
vertical farming, and photodynamic therapy industries are being
developed with partners and continue to make headway in line with
management's expectations.
In December 2017, the division signed a Commercial Supply and
License Agreement with STRI Group, the world's leading consultancy
for design, research and management of natural and synthetic sports
turf surfaces, which is developing CFQD enabled lighting systems to
enhance seed germination and speed up the growth of turf for
sporting venues and stadia fields.
Restriction of Hazardous Substances ("RoHS")
In October 2017, as part of the RoHS Directive, the European
Commission passed legislation to prohibit cadmium in TVs and
displays sold in Europe from 31 October 2019. Cadmium in lighting
products was prohibited immediately, although they are not
commercially available. This was a much needed decision which
provided market certainty as to the end date for cadmium to be used
in TVs and other display products such as monitors. The RoHS
Directive recognises cadmium as the most hazardous heavy metal. We
believe that this legislation should accelerate the move from
cadmium to cadmium-free quantum dots in TVs and displays and we are
already seeing increased interest in our technology from the
industry following the European Commission's announcement.
Previously the lack of a decision on the future of cadmium led to
stronger than anticipated competition from non-CFQD solutions.
Financial performance
Revenues and other operating income for the six months to 31
January 2018 were GBP0.26 million (2017: GBP0.82 million) and the
loss before tax was GBP4.8 million (2017: loss before tax of
GBP6.40 million).
The Group continued to exercise careful cost control during the
period. Cash, cash equivalents and deposits at 31 January 2018 was
GBP8.74 million (31 July 2017: GBP5.71 million; 31 January 2017:
GBP8.33 million). Cash balances have benefitted from the equity
rise in November 2017 of GBP8.0 million net of expenses.
A further GBP1.84 million due in the second half from HMRC in
the form of an accrued R&D tax credit refund and the upfront
cash receivable from our new US-listed partner will further
strengthen Nanoco's cash position and puts us on a strong footing
for the opportunities ahead.
No dividend is proposed for the year (2017: GBPnil).
Outlook
The first half of the financial year has seen encouraging
developments for Nanoco, underlining the strength and breadth of
Nanoco's know-how and the relevance of our intellectual property
and technology across a wide range of different end markets and
applications. The announcement post-period end of a new contract
with a large US-listed corporation for the scale-up and mass
production of novel nano-particles is a testament to the
significant momentum we are seeing as a Group.
Nanoco continues to make solid progress in the commercialisation
of CFQDs in the display industry and expects displays containing
Nanoco product to be in the market during 2018. In addition, we
anticipate further progress in the current period from the healthy
pipeline of opportunities we are currently pursuing, while our
other markets of life sciences and lighting are starting to
demonstrate their potential.
The Board remains confident that the relevance and opportunity
for our technology in display and in new developing verticals, as
well as in lighting and life sciences, remains exciting and that
the Company continues to have a competitive lead in this
technology.
Dr Christopher Richards Dr Michael Edelman
Chairman Chief Executive Officer
10 April 2018 10 April 2018
Chief Financial Officer's review
Revenue
Revenues in the six months to 31 January 2018 were GBP0.20
million (H1 2017: GBP0.68 million) and the loss before tax was
GBP4.84 million (H1 2017: loss of GBP6.40 million). Other operating
income was GBP0.06 million (H1 2017: GBP0.14 million). Revenues
were lower than in the prior period due to the release of all of
the deferred revenue during the prior period relating to one of the
licence agreements signed in July 2016. The benefits arising from
the new commercial agreements signed during the period are expected
to make a positive impact on future revenues.
Operating expenses
Operating expenses comprise research and development and
administrative expenses. Gross investment in research and
development in 2018 was GBP1.89 million (H1 2017: GBP2.87 million)
to support the ongoing development of CFQD(R) and other
nano-particles. Administrative expenses were GBP3.14 million (H1
2017: GBP4.35 million).
Operating expenses decreased compared to the previous year by
GBP2.19 million primarily due to the cost reduction programme
implemented in December 2016 and ongoing cost reduction measures
during the period. The main savings were achieved in staff costs
(GBP1.19 million) and research and development materials (GBP0.36
million). Other savings achieved across the business totalled
GBP0.64 million.
Operating loss before tax
Operating loss in H1 2018 was GBP4.84 million (H1 2017: loss of
GBP6.44 million). Interest income decreased to GBPnil (H1 2017:
GBP0.04 million) reflecting lower cash balances placed on term
deposit. As a result, loss before tax for H1 2018 was GBP4.84
million (H1 2017: loss of GBP6.40 million).
Taxation
The Group continues to make research and development tax credit
claims on its qualifying expenditure. We also take advantage of the
provision whereby such losses so generated may be surrendered for
cash. The tax credit for the period is GBP0.63 million (H1 2017:
GBP0.98 million). The amount receivable at 31 January 2018 was
GBP2.47 million (H1 2017: GBP2.95 million).
Net result
Loss for H1 2018 after exceptional items and taxation was
GBP4.21 million (H1 2017: loss of GBP5.43 million).
Earnings per share
For H1 2018, basic loss per share was 1.63 pence per share (H1
2017: loss of 2.28 pence per share). As at 31 January 2018 there
were 285,947,149 ordinary shares in issue (31 January 2017:
238,236,828).
Cash position and liquidity
As at 31 January 2018 the Group had short-term deposits, cash
and cash equivalents of GBP8.74 million (31 January 2017: GBP8.33
million). Both cash and costs continue to be prudently and tightly
managed.
During H1 2018, the Group generated a cash outflow from
operations of GBP4.54 million compared with an outflow of GBP5.89
million in H1 2017.
In the first half, 2018 the Group's total cash outflow in
respect of tangible fixed assets was GBP0.01 million (H1 2017:
GBP0.24 million) reflecting the cost controls in place during the
period. In H1 2018 the Group's total cash outflow in respect of
intangible fixed assets was GBP0.38 million (H1 2017: GBP0.58
million) and related to patent costs. The issue of new shares in
November 2017 increased cash by GBP8.00 million and this gave an
overall increase in cash and cash equivalents during H1 2018 of
GBP3.04 million (2017: outflow of GBP6.18 million).
The Directors continue to adopt the going concern basis of
accounting in preparing the financial statements. See note 2 for
further details.
Balance sheet
At 31 January 2018, the consolidated balance sheet showed total
shareholders' equity of GBP14.32 million (31 January 2017: GBP14.12
million).
Principal risks
The Directors have considered the principal risks which may have
a material impact on the Group's performance in the second half of
2018. The risks remain as disclosed in pages 18 to 19 of the 2017
Annual Report and Accounts although the risk assessment of cash
flow has significantly reduced following the Placing and additional
operational and strategic risks have been added in relation to the
new agreement with our US partner:
Risk description Potential causes Mitigation
and impact
Strategic
High dependence Revenues with the Grow other areas
on one customer new US partner of business - Display,
could become the Lighting, 2D and
major part of our Life Sciences
revenues which
could lead to over-reliance
on that partner
Operational
Insufficient Ramp-up with the Detailed recruitment
resource for new US partner plan and close monitoring
all areas could result in of all projects
of the business other areas of to ensure all areas
the business having of the business
insufficient resource are adequately resourced
which could delay
revenues
Forward-looking statements
The foregoing disclosures contain certain forward-looking
statements. Although Nanoco believes that the expectations
reflected in these forward-looking statements are reasonable, it
can give no assurance that these expectations will materialise.
Because the expectations are subject to risks and uncertainties,
actual results may vary significantly from those expressed or
implied by the forward-looking statements based upon a number of
factors. Nanoco undertakes no obligation to revise or update any
forward statement to reflect events or circumstances after the date
of this Interim Report.
David Blain
Chief Financial Officer
10 April 2018
Responsibility statement
The Directors of Nanoco Group plc, as listed on pages 32 and 33
of the 2017 Annual Report and Accounts, confirm to the best of
their knowledge:
a) the condensed set of financial statements has been prepared
in accordance with International Accounting Standard 34 Interim
Financial Reporting, as required by paragraph 4.2.4 of the
Disclosure and Transparency Rules ("DTR");
b) the condensed set of financial statements, which has been
prepared in accordance with the applicable set of accounting
standards, gives 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 2017
Annual Report and Accounts.
By order of the Board
Dr Michael Edelman
Chief Executive Officer
10 April 2018
Condensed consolidated statement of comprehensive income
For the six months ended 31 January 2018
Six months Six months Year
to to to
31 January 31 January 31 July
2018 2017 2017
(Unaudited) (Unaudited) (Audited)
Notes GBP'000 GBP'000 GBP'000
------------------------------------------ ------ ------------ ------------ ----------
Revenue 3 196 676 1,326
Cost of sales (59) (36) (257)
Gross profit 137 640 1,069
Other operating income 4 59 142 281
Operating expenses
Research and development
expenses (1,888) (2,873) (5,508)
Administrative expenses (3,143) (4,347) (6,784)
Operating loss (4,835) (6,438) (10,942)
* Before share-based payments (4,710) (6,198) (10,700)
* Share-based payments (125) (240) (242)
------------------------------------------ ------ ------------ ------------ ----------
Finance income 5 - 35 44
Loss before taxation (4,835) (6,403) (10,898)
Taxation 6 630 975 1,788
Loss for the period and
total comprehensive loss
for the period (4,205) (5,428) (9,110)
------------------------------------------ ------ ------------ ------------ ----------
Loss per share:
Basic and diluted loss
for the period 7 (1.63)p (2.28)p (3.82)p
------------------------------------------ ------ ------------ ------------ ----------
Condensed consolidated statement of changes in equity
For the six months ended 31 January 2018
Issued Share-based
equity payment Merger Revenue
capital reserve reserve reserve Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------------------- -------- ------------ -------- --------- --------
At 1 August 2016
(audited) 58,057 2,715 (1,242) (40,767) 18,763
Loss for the six
months to 31 January
2017 - - - (5,428) (5,428)
Shares issued on
exercise of options 545 - - - 545
Share-based payments - 240 - - 240
At 31 January 2017
(unaudited) 58,602 2,955 (1,242) (46,195) 14,120
Loss for the six
months to 31 July
2017 - - - (3,682) (3,682)
Shares issued on
exercise of options 7 - - - 7
Share-based payments - 2 - - 2
At 31 July 2017 (audited) 58,609 2, 957 (1,242) (49,877) 10,447
Loss for the six
months to 31 January
2018 - - - (4,205) (4,205)
Shares issued on
placing 8,577 - - - 8,577
Less: costs of placing (621) - - - (621)
Share-based payments - 125 - - 125
At 31 January 2018
(unaudited) 66,565 3,082 (1,242) (54,082) 14,323
--------------------------- -------- ------------ -------- --------- --------
Condensed consolidated statement of financial position
As at 31 January 2018
31 January 31 January 31 July
2018 2017 2017
(Unaudited) (Unaudited) (Audited)
Notes GBP'000 GBP'000 GBP'000
------------------------------- ------ ------------ ------------ ----------
Assets
Non-current assets
Property, plant and equipment 634 1,106 865
Intangible assets 8 3,234 2,820 2,619
3,868 3,926 3,484
------------------------------- ------ ------------ ------------ ----------
Current assets
Inventories 132 238 188
Trade and other receivables 10 925 1,013 669
Income tax asset 2,467 2,945 1,837
Short-term investments - 5,000 -
and cash on deposit
Cash and cash equivalents 8,744 3,328 5,706
12,268 12,524 8,400
------------------------------- ------ ------------ ------------ ----------
Assets held for sale 9 - - 535
------------------------------- ------ ------------ ------------ ----------
Total assets 16,136 16,450 12,419
------------------------------- ------ ------------ ------------ ----------
Liabilities
Current liabilities
Trade and other payables 1,210 1,526 1,318
Deferred revenue 11 102 207 102
1,312 1,733 1,420
------------------------------- ------ ------------ ------------ ----------
Non-current liabilities
Deferred revenue 11 501 597 552
501 597 552
------------------------------- ------ ------------ ------------ ----------
Total liabilities 1,813 2,329 1,972
------------------------------- ------ ------------ ------------ ----------
Net assets 14,323 14,120 10,447
------------------------------- ------ ------------ ------------ ----------
Capital and reserves
Issued equity capital 12 66,565 58,602 58,609
Share-based payment reserve 13 3,082 2,955 2,957
Merger reserve (1,242) (1,242) (1,242)
Revenue reserve (54,082) (46,195) (49,877)
------------------------------- ------ ------------ ------------ ----------
Total equity 14,323 14,120 10,447
------------------------------- ------ ------------ ------------ ----------
Approved by the Board and authorised for issue on 10 April
2018.
Dr Michael Edelman
Chief Executive Officer
Condensed consolidated cash flow statement
For the six months ended 31 January 2018
Six months Six months Year
to to to
31 January 31 January 31 July
2018 2017 2017
(Unaudited) (Unaudited) (Audited)
GBP'000 GBP'000 GBP'000
--------------------------------- ------------ ------------ ----------
Loss before tax (4,835) (6,403) (10,898)
Adjustments for:
Net finance income - (35) (44)
Depreciation of tangible
fixed assets 266 393 741
Amortisation of intangible
assets 268 186 482
Share-based payments 125 240 242
Changes in working capital:
Decrease/(increase) in
inventories 56 (30) 20
(Increase)/decrease in
trade and other receivables (256) 1,054 1,365
Decrease in trade and
other payables (108) (917) (1,125)
Decrease in deferred revenue (51) (375) (525)
---------------------------------- ------------ ------------ ----------
Cash outflow from operating
activities (4,535) (5,887) (9,742)
Research and development
tax credit received - - 2,000
Overseas corporation tax
paid - - (79)
---------------------------------- ------------ ------------ ----------
Net cash outflow from
operating activities (4,535) (5,887) (7,821)
---------------------------------- ------------ ------------ ----------
Cash flows from investing
activities
Purchases of tangible
fixed assets (7) (239) (374)
Purchases of intangible
fixed assets (376) (583) (1,185)
Decrease in cash placed
on deposit - - 5,000
Interest received - 13 55
---------------------------------- ------------ ------------ ----------
Net cash (outflow)/inflow
from investing activities (383) (809) 3,496
---------------------------------- ------------ ------------ ----------
Cash flows from financing
activities
Proceeds from issues of
ordinary share capital 8,577 545 552
Less: costs of placing (621) - -
Loan repayment - (32) (32)
---------------------------------- ------------ ------------ ----------
Net cash inflow from financing
activities 7,956 513 520
---------------------------------- ------------ ------------ ----------
Increase/(decrease) in
cash and cash equivalents 3,038 (6,183) (3,805)
Cash and cash equivalents
at the start of the period 5,706 9,511 9,511
---------------------------------- ------------ ------------ ----------
Cash and cash equivalents
at the end of the period 8,744 3,328 5,706
Monies placed on short-term - 5,000 -
deposit
--------------------------------- ------------ ------------ ----------
Cash, cash equivalents
and deposits at the end
of the period 8,744 8,328 5,706
---------------------------------- ------------ ------------ ----------
Notes to the condensed consolidated financial statements
For the six months ended 31 January 2018
1. Corporate information
The Interim Report and Accounts of the Group for the six months
ended 31 January 2018 was authorised for issue in accordance with a
resolution of the Directors on 10 April 2018.
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.
These condensed consolidated financial statements consolidate
those of the Company and its subsidiaries (together referred to as
the "Group").
These 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. The auditor, Ernst &
Young LLP, has carried out a review of the financial information in
accordance with the guidance contained in International Standard on
Review Engagements (UK and Ireland) 2410 Review of Interim
Financial Information Performed by the Independent Auditor of the
Entity, and its review report is set out at the end of this
report.
2. Accounting policies
Basis of preparation
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 2017. This interim condensed financial report includes
audited comparatives for the year to 31 July 2017. The 2017 Annual
Report and Accounts, which are prepared in accordance with
International Financial Reporting Standards ("IFRS") as adopted by
the European Union, received an unqualified audit opinion and has
been filed with the Registrar of Companies. These interim condensed
consolidated financial statements have been prepared in accordance
with the Disclosure and Transparency Rules of the Financial Conduct
Authority, IAS 34 Interim Financial Reporting as adopted by the
European Union and using the recognition and measurement principles
of IFRSs as adopted by the European Union and have been prepared
under the historical cost convention.
Going concern
In assessing whether the going concern basis is an appropriate
basis for preparing the financial statements, the Directors have
utilised their detailed forecasts for the period to 31 July 2019
which take into account the Company and Group's current and
expected business activities including the impact of the new
partnership with a large undisclosed US corporation, the cash
balance of GBP8.7 million as shown in the Group consolidated
balance sheet at 31 January 2018, the principal risks and
uncertainties it faces and other factors impacting its future
performance.
The key assumptions underpinning the assessment during the
period cover the following areas:
-- commercialisation of CFQD(R) products and other
nano-particles through existing contractual arrangements;
-- ability to manufacture and supply sufficient CFQD(R) products
and other nano-particles to meet partner demand;
-- continued investment in research and development;
-- success-based milestone funding provided by the Material
Development and Supply Agreement announced in February 2018 and the
costs expected to be incurred in meeting those milestones; and
-- continued tight control of costs within the business.
Sensitivity analysis has been performed to reflect possible
downside scenarios in accordance with the Group's principal risks
and uncertainties referred to in the Chief Financial Officer's
review. Taking into account only contracted revenues for the
forecast period up to 31 July 2019 and other related milestone
payments under the new agreement announced in February 2018, the
Company and the Group have sufficient resources to continue in
operational existence for the foreseeable future.
At the time of approving the financial statements, the Directors
have a reasonable expectation that the Company has adequate
resources to continue in operational existence for the foreseeable
future. Thus they continue to adopt the going concern basis of
accounting in preparing the financial statements.
Accounting policies
Accounting policies adopted in the preparation of the interim
condensed consolidated financial statements are consistent with
those followed in the preparation of the Group's annual financial
statements for the year ended 31 July 2017.
The IASB has published three new accounting standards relevant
to the Group that will be mandatory in future periods. These
standards have not been early adopted in these condensed
consolidated financial statements:
-- IFRS 9 Financial Instruments (effective for annual periods
beginning on or after 1 January 2018);
-- IFRS 15 Revenue from Contracts with Customers (effective for
annual periods beginning on or after 1 January 2018); and
-- IFRS 16 Leases (effective for annual periods beginning on or after 1 January 2019).
As the Group does not have any complex financial instruments,
IFRS 9 is not expected to impact on reported performance.
Detailed reviews of revenue arrangements are underway and will
continue into 2017/18 as we finalise our assessment of the impact
of IFRS 15. Key matters arising from the assessment relate to the
identification of performance obligations and determining when they
are satisfied.
Based on work to date we expect that one contract will be
impacted by IFRS 15 in that an upfront licence fee, currently
recognised over the life of the agreement (seven and a half years)
under IAS 18, will be recognised over time, based on the number of
units of product sold, under IFRS 15 thereby deferring revenues and
profits recognised under IAS 18 in the early years of the
agreement. We continue to work on other agreements but we do not
expect them to be significantly impacted by the implementation of
IFRS 15.
Upon initial implementation of IFRS 16 the Group expects to
recognise certain assets and liabilities in respect of lease
arrangements. At 31 January 2018, the future aggregate minimum
lease payments under non-cancellable operating leases was GBP2.4
million.
Basis of consolidation
These interim condensed consolidated financial statements
include the financial statements of Nanoco Group plc and the
entities it controls (its subsidiaries).
3. Segmental information
Operating segments
The Board has identified that it has one reportable operating
segment being the provision of high-performance nano-particles as
each of the Group's divisions continues to have similar activities,
economic characteristics and future prospects.
All revenues have been generated from continuing operations and
are from external customers.
Six months Six months Year
to to to
31 January 31 January 31 July
2018 2017 2017
(Unaudited) (Unaudited) (Audited)
GBP'000 GBP'000 GBP'000
------------------------- ------------- ------------- ----------
Analysis of revenue
Products sold 130 196 470
Rendering of services 1 101 241
Royalties and licences 65 379 615
-------------------------- ------------- ------------- ----------
196 676 1,326
------------------------- ------------- ------------- ----------
Analysis of loss before
tax
------------------------- ------------- ------------- ----------
Loss before tax for the
period (4,835) (6,403) (10,898)
-------------------------- ------------- ------------- ----------
The timing of the annual submission and subsequent receipt of
the R&D tax credit has a material effect on the cash flow of
the Group. There are no other factors of a seasonal or cyclical
nature affecting the results of the Group.
All the Group's assets are held in the UK and all of its capital
expenditure arises in the UK.
4. Other operating income
Six months
Six months to Year
to to
31 January 31 January 31 July
2018 2017 2017
(Unaudited) (Unaudited) (Audited)
GBP'000 GBP'000 GBP'000
-------------------------- ------------- ------------ ----------
Government grants 59 142 213
Other income - insurance
proceeds - - 68
--------------------------- ------------- ------------ ----------
59 142 281
-------------------------- ------------- ------------ ----------
5. Finance income and expense
Six months Six months Year
to to to
31 January 31 January 31 July
2018 2017 2017
(Unaudited) (Unaudited) (Audited)
GBP'000 GBP'000 GBP'000
-------------------------- ------------- ------------ ----------
Finance income
Bank interest receivable - 35 44
- 35 44
---------------------------------------- ------------ ----------
6. Taxation
The tax credit is made up as follows:
Six months Six months Year
to to to
31 January 31 January 31 July
2018 2017 2017
(Unaudited) (Unaudited) (Audited)
GBP'000 GBP'000 GBP'000
------------------------------- ------------ ------------ ----------
Current income tax
Research and development
income tax credit receivable (630) (975) (1,837)
Adjustment in respect of
prior years - - (30)
Overseas corporation tax - - 79
-------------------------------- ------------ ------------ ----------
Income tax credit (630) (975) (1,788)
-------------------------------- ------------ ------------ ----------
The Group has accumulated losses available to carry forward
against future trading profits of GBP31.7 million (2017: GBP26.3
million).
Deferred tax liabilities/(assets) provided/(recognised) are as
follows:
Six months Six months Year
to to to
31 January 31 January 31 July
2018 2017 2017
(Unaudited) (Unaudited) (Audited)
GBP'000 GBP'000 GBP'000
-------------------------------- ------------ ------------ ----------
Accelerated capital allowances 54 138 83
Share-based payments - (138) -
Tax losses (54) - (83)
--------------------------------- ------------ ------------ ----------
- - -
-------------------------------- ------------ ------------ ----------
The Group also has deferred tax assets, measured at a standard
rate of 17% (2017: 18%) in respect of share-based payments of
GBP178,000 (2017: GBP454,000) and tax losses of GBP5,386,000 (2017:
GBP4,728,000) which have not been recognised as an asset as it is
not probable that future taxable profits will be available against
which the assets can be utilised.
7. Loss per share
Six months Six months Year
to to to
31 January 31 January 31 July
2018 2017 2017
(Unaudited) (Unaudited) (Audited)
GBP'000 GBP'000 GBP'000
---------------------------------- ------------ ------------ ------------
Loss for the period attributable
to equity shareholders (4,205) (5,428) (9,110)
Share-based payments 125 240 242
----------------------------------- ------------ ------------ ------------
Adjusted loss for the
period (4,080) (5,188) (8,868)
----------------------------------- ------------ ------------ ------------
Weighted average number
of shares No. No. No.
---------------------------------- ------------ ------------ ------------
Ordinary shares in issue(1) 258,331,009 238,120,572 238,180,510
----------------------------------- ------------ ------------ ------------
Adjusted loss per share before
share-based payments (pence) (1.58) (2.18) (3.72)
----------------------------------- ------------ ------------ ------------
Basic loss per share (pence) (1.63) (2.28) (3.82)
----------------------------------- ------------ ------------ ------------
(1) Excludes the 12,222 shares held in Treasury.
Diluted loss per share has not been presented above as the
effect of share options issued is anti-dilutive. The adjusted loss
is presented as the Board measures overall performance taking into
account IFRS 2 charges and any material one-off costs incurred in a
reporting period.
No interim dividend has been recommended.
8. Intangible assets
Six months Six months Year
to to to
31 January 31 January 31 July
2018 2017 2017
(Unaudited) (Unaudited) (Audited)
Cost GBP'000 GBP'000 GBP'000
-------------------------------- ------------ ------------ ----------
At the beginning of the period 4,291 3,703 3,703
Additions in the period 376 583 1,185
Reclassified from/(to) assets
held for sale (note 9) 597 - (597)
--------------------------------- ------------ ------------ ----------
At the end of the period 5,264 4,286 4,291
--------------------------------- ------------ ------------ ----------
Amortisation
--------------------------------- ------------ ------------ ----------
At the beginning of the period 1,672 1,280 1,280
Provided in the period 268 186 405
Impairment charge - - 77
Reclassified from/(to) assets
held for sale (note 9) 90 - (90)
--------------------------------- ------------ ------------ ----------
At the end of the period 2,030 1,466 1,672
--------------------------------- ------------ ------------ ----------
Net book value 3,234 2,820 2,619
--------------------------------- ------------ ------------ ----------
The expenditure on patents is amortised on a straight-line basis
over ten years. Amortisation provided during the period is
recognised in administrative expenses. The Group does not believe
that any of its patents in isolation are material to the
business.
To date the Group has not capitalised any of its development
costs and all such costs are written off as incurred. Careful
judgement by the Directors is applied when deciding whether the
recognition requirements for development costs have been met. This
is necessary as the economic success of any product development is
uncertain until such time as technical viability has been proven
and commercial supply agreements are likely to be achieved.
Judgements are based on the information available at each reporting
date which includes the progress with testing and certification and
progress on, for example, establishment of commercial arrangements
with third parties. In addition, all internal activities related to
research and development of new products are continuously monitored
by the Directors.
Contingent consideration of $150,000 is payable in respect of a
purchase of patents made during the year ended 31 July 2017. The
amount is payable if the Group reaches a revenue target in a future
reporting period. The addition is recorded above at the Directors'
estimate of fair value of the consideration payable.
During the year ended 31 July 2017 an extensive review was
undertaken to identify which patents are of no further value to
Nanoco and should be allowed to lapse. As a consequence, patents
with a value of GBP77,000 were fully impaired. This charge was
recognised within administrative expenses.
9. Assets held for sale
31 January 31 January 31 July
2018 2017 2017
(Unaudited) (Unaudited) (Audited)
GBP'000 GBP'000 GBP'000
----------------------- ------------- ------------- ----------
Plant and machinery - - 28
Intellectual property - - 507
- - 535
------------------------ ------------- ------------- ----------
At 31 July 2017, these assets represented those held for sale
following the Board's decision to dispose of the equipment and
intellectual property arising from the Group's studies on solar
power. However, the Board has recently decided to retain the assets
and, accordingly, has reclassified the Solar assets as fixed
assets.
All assets are held by the one operating segment.
10. Trade and other receivables
31 January 31 January 31 July
2018 2017 2017
(Unaudited) (Unaudited) (Audited)
GBP'000 GBP'000 GBP'000
-------------------------------- ------------ ------------ ----------
Trade receivables 101 94 111
Prepayments and accrued income 492 650 329
Other receivables 332 269 229
--------------------------------- ------------ ------------ ----------
925 1,013 669
--------------------------------- ------------ ------------ ----------
11. Deferred revenue
31 January 31 January 31 July
2018 2017 2017
(Unaudited) (Unaudited) (Audited)
GBP'000 GBP'000 GBP'000
------------- ------------ ------------ ----------
Current 102 207 102
Non-current 501 597 552
-------------- ------------ ------------ ----------
603 804 654
------------- ------------ ------------ ----------
Deferred revenue arises under IFRSs 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.
12. Share capital
Reverse
Share Share acquisition
capital premium reserve Total
Number GBP'000 GBP'000 GBP'000 GBP'000
--------------------------- ------------ -------- -------- ------------ --------
Allotted, called-up
and fully paid ordinary
shares of 10p:
At 31 July 2016 (audited) 237,077,578 23,708 112,217 (77,868) 58,057
Shares issued on
exercise of options 1,159,250 116 429 - 545
--------------------------- ------------ -------- -------- ------------ --------
At 31 January 2017
(unaudited) 238,236,828 23,824 112,646 (77,868) 58,602
Shares issued on
exercise of options 54,500 5 2 - 7
--------------------------- ------------ -------- -------- ------------ --------
At 31 July 2017 (audited) 238,291,328 23,829 112,648 (77,868) 58,609
Shares issued on
placing 47,655,821 4,765 3,812 - 8,577
Less: costs of placing - - (621) - (621)
--------------------------- ------------ -------- -------- ------------ --------
At 31 January 2018
(unaudited) 285,947,149 28,594 115,839 (77,868) 66,565
--------------------------- ------------ -------- -------- ------------ --------
The retained loss and other equity balances recognised in the
Group financial statements reflect the consolidated retained loss
and other equity balances of Nanoco Tech Limited immediately before
the business combination which was reported in the year ended 31
July 2009. The consolidated results for the period from 1 August
2008 to the date of the acquisition by the Company are those of
Nanoco Tech Limited. However, the equity structure appearing in the
Group financial statements reflects the equity structure of the
legal parent, including the equity instruments issued under the
share for share exchange to effect the transaction. The effect of
using the equity structure of the legal parent gives rise to an
adjustment to the Group's issued equity capital in the form of a
reverse acquisition reserve.
Following shareholder approval at a general meeting held on 14
November 2017, 47,655,821 shares were issued on 15 November 2017 as
a result of a placing of shares at 18 pence each raising cash of
GBP8.0 million net of expenses.
13. Share-based payment reserve
Total
GBP'000
-------------------------------- --------
At 31 July 2016 (audited) 2,715
Share-based payments 240
--------------------------------- --------
At 31 January 2017 (unaudited) 2,955
Share-based payments 2
----------------------------------- --------
At 31 July 2017 (audited) 2,957
Share-based payments 125
----------------------------------- --------
At 31 January 2018 (unaudited) 3,082
----------------------------------- --------
The share-based payment reserve accumulates the corresponding
credit entry in respect of share-based payment charges. Movements
in the reserve are disclosed in the condensed consolidated
statement of changes in equity.
A charge of GBP125,000 has been recognised in the statement of
comprehensive income for the half year (2017: GBP240,000).
Share option schemes
Full details of the Group's share option schemes are detailed in
note 21 of the 2017 Annual Report.
Shares held in the Employee Benefit Trust ("EBT")
On 2 August 2016, the remaining holder of jointly owned shares
exercised their option to convert the holding to sole beneficiary.
As a result, there are no shares held by the EBT.
Fair value benefit
The fair value benefit is independently measured using Binomial
or Black-Scholes valuation models where there are non-market
performance conditions and Stochastic (Monte Carlo) models for
options with market-based performance conditions taking into
account the terms and conditions upon which the options were
granted.
Grant of options
On 6 December 2017 the Company granted a total of 3,787,608
nil-cost options over ordinary shares in the Company under the
Nanoco Group 2015 Long Term Incentive Plan ("LTIP") to the
Executive Directors and other eligible employees.
The vesting of the options granted under the LTIP is subject to
the achievement of performance conditions based upon share price
growth and revenue targets over the three-year performance period
commencing with Nanoco's 2017/2018 financial year. Ordinarily, the
options will vest (subject to the achievement of the performance
conditions) following the announcement of Nanoco's results for its
2019/2020 financial year and be released to the participants
following the end of a two-year holding period.
14. Related party transactions
Balances and transactions between the Company and its
subsidiaries, which are related parties, have been eliminated upon
consolidation.
The Company has intercompany loans and accounts with its
subsidiary undertakings, details of which are set out in the 2017
Annual Report and Accounts.
15. Post-balance sheet events
On 8 February 2018, the Group announced it had signed a Material
Development and Supply Agreement with a large, undisclosed
US-listed corporation (the "Partner").
Under this agreement, Nanoco will scale up and mass produce
novel nano-particles for advanced electronic devices and supply
them from its state-of-the-art production facility in Runcorn, UK.
In preparation for the quantity of materials needed for these
markets, the partner will fund the capital expenditure required to
expand Nanoco's Runcorn facility. The commercial terms of the
agreement include payments for success-based milestones and
commercial supply of materials, both of which will strengthen
Nanoco's balance sheet. Based on the current timelines, commercial
supply is anticipated to begin early 2019. In March 2018, Nanoco
signed a new lease to expand its Runcorn facilities. This lease has
a minimum term expiring in December 2020 and increases its future
aggregate minimum lease payments by GBP0.6 million.
Independent review report to Nanoco Group plc
Introduction
We have been engaged by the Company to review the condensed set
of financial statements in the half-yearly financial report for the
six months ended 31 January 2018 which comprises the condensed
consolidated statement of comprehensive income, the condensed
consolidated statement of changes in equity, the condensed
consolidated statement of financial position, the condensed
consolidated cash flow statement and the related notes 1 to 15. We
have read the other information contained in the half-yearly
financial report and considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the condensed set of financial statements.
This report is made solely to the Company in accordance with
guidance contained in International Standard on Review Engagements
2410 (UK and Ireland) "Review of Interim Financial Information
Performed by the Independent Auditor of the Entity" issued by the
Auditing Practices Board. To the fullest extent permitted by law,
we do not accept or assume responsibility to anyone other than the
Company, for our work, for this report, or for the conclusions we
have formed.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and
has been approved by, the directors. The directors are responsible
for preparing the half-yearly financial report in accordance with
the Disclosure and Transparency Rules of the United Kingdom's
Financial Conduct Authority.
As disclosed in note 2, the annual financial statements of the
Group are prepared in accordance with IFRS as adopted by the
European Union. The condensed set of financial statements included
in this half-yearly financial report has been prepared in
accordance with International Accounting Standard 34 "Interim
Financial Reporting", as adopted by the European Union.
Our responsibility
Our responsibility is to express to the Company a conclusion on
the condensed set of financial statements in the half-yearly
financial report based on our review.
Scope of review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410 "Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity" issued by the Auditing Practices Board for use in
the United Kingdom. A review of interim financial information
consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures. A review is substantially less in scope than an
audit conducted in accordance with International Standards on
Auditing (UK and Ireland) and consequently does not enable us to
obtain assurance that we would become aware of all significant
matters that might be identified in an audit. Accordingly, we do
not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half-yearly financial report for the six months ended 31
January 2018 is not prepared, in all material respects, in
accordance with International Accounting Standard 34 as adopted by
the European Union.
Ernst & Young LLP
Manchester
10 April 2018
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR SSSFWUFASEFL
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