FOR IMMEDIATE RELEASE
THIS ANNOUNCEMENT CONTAINS INSIDE
INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF THE MARKET ABUSE
REGULATION (596/2014/EU) AS THE SAME HAS BEEN RETAINED IN UK LAW AS
AMENDED BY THE MARKET ABUSE (AMENDMENT) (EU EXIT) REGULATIONS (SI
2019/310) ("UK MAR").
3 October 2024
Nanoco Group
PLC
("Nanoco", the "Group", or the "Company")
Conclusions of Board's
strategic review
Intention to return surplus
cash to shareholders
Nanoco, a world leader in the
development and manufacture of cadmium-free quantum dots and other
specific nanomaterials emanating from its technology platform,
announces the conclusions of a strategic review undertaken by the
Board following the European customer's decision to change its
strategic focus away from QD enabled infra-red sensors. The Board
has considered the Company's position, strategic direction and
capital allocation policy, balancing the twin objectives of
preserving existing value and maximising future potential
returns.
The key points of the review and the
Board's conclusions are set out below:
1. The Company has commercial
potential and inherent value
The Board is strongly of the view
that there are significant organic commercial applications for
Nanoco's technology across a range of markets that will generate
value for the business over time. Initial applications are likely
to be in various niche markets that can deliver meaningful revenue
for Nanoco in the short to medium term growing into mass market
applications over time. The current collaboration with the Asian
customer specifically targets mass market applications for a
leading global sensing company. This assessment is based on growing
market interest and participation in quantum dot ("QD") technology
in display and sensing markets. It also draws on direct customer
feedback, independent expert technical analysis and the Company's
own extensive knowledge.
The potential value in Nanoco's
technology and intellectual property ("IP") is also growing
strongly in line with previous independent market forecasts. There
are now more market participants using QD display applications, the
absolute number of QD enabled units is growing, and significant
investments are being made by global players in micro-LED and
electro-luminescent devices enabled by QDs. This market environment
is now sufficiently meaningful to enable Nanoco to bring forward
plans to seek commercial licence revenue over the Company's robust
and validated IP portfolio.
After further investigation, Nanoco
is confident that a growing number of third parties are using the
Company's IP. As a business actually using its IP in its own
operations, Nanoco is much more strongly placed to both
successfully enforce that IP and also to achieve a better outcome
than other non-practising entities. With our financial resources
and experience in protecting our IP, the Company is now in a
stronger position to take advantage of the growing market for QD
displays.
Pursuing these commercial and
licence opportunities will require investment and the maintenance
of our unique team and asset base. The Board is confident that the
Group can succeed in pursuing these commercial objectives with the
appropriate investment of money and time.
2. Appointment of Financial Adviser to review
options for achieving the best financial outcome
The Group's trading business clearly
remains in the scale-up phase of business growth with a number of
proven materials and validated IP. The Board believes that it is
now prudent to consider if this growth and investment would be best
led in a different ownership setting than allowed for as the sole
business of a listed company. The Board is highly confident in the
potential of the business. A balance needs to be struck, in the
interests of all of its shareholders, between supporting this
growth and prudence with regard to risk, to preserve cash and to
take a highly disciplined approach to investment.
The Board has therefore concluded
that it is in the Company's best interests to appoint advisers to
review the options for the Company's business and assets, including
the potential for a sale of the trading business (including IP).
The Board has appointed CDX Advisors LLC ("CDX") as its financial
adviser. Work with CDX has commenced with a view to achieving the
best possible financial outcome and to secure the long term future
of the Group's IP and operations. The Board reasserts that whilst
this process will be undertaken at pace, the Group's considerable
financial resources mean that the trading business will continue to
be supported to grow and not compromise its potential.
With this in mind, steps are already
being taken to rationalise the Company's cost base. This includes
reducing headcount, reducing the size of the Board during FY25
without compromising appropriate corporate governance standards,
and by reducing non-critical operating costs across the
Group.
Furthermore, immediately following
the release of the Company's FY24 preliminary results, each of the
non-executive directors will enter into agreements with the Company
under which they will agree to defer payment of at least 50% of
their director fees until the earlier of the end of the financial
year (31 July 2025) or a potential sale of the trading business,
with the accrued liability being satisfied at such time by ordinary
shares of 10.0 pence each ("Ordinary Shares") to be issued by the
Company or transferred out of the Company's employee benefit
trust.
Once complete, these measures will
reduce the Group's annualised cash cost base by £2.6m (or 34%) on a
like for like basis compared to the Q4 FY24 run-rate, with an
associated, one-off, cash restructuring cost of just over
£0.1m.
3. The Board will adopt a
progressive return of surplus cash during FY25
The Board is determined to deliver
shareholder value as rapidly as possible. In light of the plans set
out above, the Board believes that it is now appropriate to commit
to a return of surplus cash to shareholders during the course of
FY25, and intends to return an initial sum of cash via a capital
return following the release of the FY24 report and accounts.
The timing and size of further
returns of surplus cash will be contingent on the completion of the
right-sizing noted above, working capital needs, and progress on
the execution of a potential sale process.
Chris Richards, Non-Executive Chairman of Nanoco,
said:
"Following our review, the Board continues to believe in the
inherent value and commercial potential of our technology, IP and
trading business. We have concluded that it is in the Company's
best interests to appoint CDX Advisors to review the options for
the Company's trading business, IP and other assets, including the
potential for a sale of the trading business and
assets.
"The Board is determined to deliver shareholder value as
rapidly as possible. The Board is therefore committed to a return
of surplus cash to shareholders over the current financial year as
and when it is prudent and advisable to do so."
For
further information, please contact:
Nanoco Group plc:
Christopher Richards,
Chairman
+44 (0)1928 761 404
Brian Tenner, CEO
Liam Gray, CFO & Company
Secretary
Cavendish Capital Markets Limited (Financial Adviser and
Corporate Broker):
Ed Frisby / George Lawson (Corporate
Finance)
+44 (0) 20 7220 0500
Tim Redfern / Charlie Combe
(Corporate Broking)
Jasper Berry (Sales)
CDX
Advisors (Financial Adviser):
Steven Foland
+1 415 425 2224
Steve Month
Patrick Foley
Sodali & Co (Public
Relations)
+44 (0)79 3535 1934
Elly Williamson
Pete Lambie
Nanoco@sodali.com
The person responsible for arranging
for the release of this announcement on behalf of Nanoco is Liam
Gray, Chief Financial Officer.
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
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 its existing scaled up
production facilities 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