Tech firm Nanoco preparing for commercial production

Runcorn-based tech group, Nanoco, is gearing up for commercial production by the end of the year, and is considering further legal action against potential infringement of its intellectual property (IP).

In a trading update for the year ending July 31, 2023, the University of Manchester spin-out which develops materials used in the manufacture of monitors and TV screens, said it is now closer to commercial production than at any time in its 20-year history.

It is also in the strongest financial position since its inception with its core markets of sensing and display forecast to experience rapid growth.

During the reporting period it said it made significant progress with its two global electronics supply chain customers.

It has completed a major work package for its European electronics customer for two materials now in final validation and awaiting a final response from the customer.

A fifth short term work package is also under way with its major Asian chemical customer, having successfully delivered all technical milestones in four others during financial years 2023 and 2022.

Nanoco is also in ongoing discussions with both major customers on longer and deeper collaborations.

During the year the company has successfully completed the consolidation of all its operations into the group’s Runcorn production site.

It is undergoing expansion of its workforce and organic investment in preparation for a commercial production order expected by the end of calendar year 2023.

And it said the company and its advisers are actively working to pursue potential infringers of the group’s IP.

In February this year Nanoco won a long-running legal battle with South Korean electronics giant, Samsung, over infringements of its IP. It was awarded $150m, which it is using to return £40m to shareholders and towards its capital expenditure.

During the case the company identified other possible infringements in Germany and China, and its team of advisers is now considering potential legal action.

Today’s update revealed unaudited revenues of £5.6m, which are more than double the 2022 level, and in line with the board’s expectations.

Underlying adjusted EBITDA also remains in line with the board’s expectations.

Nanoco had an unaudited cash position at July 31, 2023, of £8.2m, an increase of £2.2m since January 31, 2023.

Its gross fixed cash cost base was circa £0.5m per month before revenue, other operating income and tax impacts – an increase of just over £0.1m per month following investment in new staff capacity and inflationary cost increases in the second half of fiscal year 2023.

Next Monday (August 14), Nanoco will hold a general meeting requested by shareholder, Tariq Hamoodi, who has called on senior management to step down, claiming the company gave misleading information on settlement prospects in its IP litigation with Samsung.

The company has so far received support from two investors – Glass Lewis and Institutional Shareholder Services – and is calling on all shareholders to vote against the bid to appoint new management, which it says is not in the best interests of the company or its shareholders.

Following today’s update, chief executive, Brian Tenner, said: “Over the last year we have made significant progress, taking Nanoco to its current inflection point.

“Consistent feedback from the European customer supports the expectation of commercial production by the end of this calendar year. This transition from an R&D first mover to a commercial producer of scale is underpinned by the litigation proceeds and our validated IP for which we are actively pursuing further monetisation opportunities.”

Non-executive chairman, Dr Christopher Richards, said: “Nanoco’s experienced board are firmly focused on delivering value for all shareholders.

“The litigation proceeds allow us to drive the organic business forward while underpinning our firm commitment to return up to £40m of cash to shareholders in early 2024.

“In addition to last year’s commercial progress, we committed to assess the option to appoint a further non-executive director to the board, based on business needs. A search process for a new independent non-executive director with strong electronics sector commercial experience is well under way.”

The company expects to announce its final results for the year ended July 31, 2023, in the second half of October 2023.