City round up: Nanoco; Sanderson Design; James Fisher

There are three upbeat trading updates from three very different regional businesses on the London Stock Market this morning.

Nanoco

Nanoco expects to receive the second and final tranche of litigation proceeds (net $71.75m) from Korean electronics giant Samsung after settling a long running legal dispute last year. 

Some of the capital will be distributed to shareholders, in line with previous commitments, in the range of £33.0-40.0m but the board also wants to invest in commercial opportunities and further expanding R&D activities through to the self-financing position that is expected during CY25.

Revenue and adjusted EBITDA remain in line with the Board’s expectations, the company said.

Brian Tenner, Chief Executive Officer of Nanoco, said: “With the second tranche of litigation proceeds received, Nanoco will soon be able to make the promised return of capital to shareholders. The retained proceeds will then allow us to face the future on a fully funded basis, enabling careful strategic investment in R&D and expanded device capabilities and building on the commercial products that we have already delivered to market. The Group is well placed at the forefront of quantum dot technology to generate increases in shareholder value in the medium term. We look forward to announcing further progress, including the opening of our new fab.”

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Luxury furnishings business Sanderson Design Group said strong growth from licensing activities and in North America have continued through the second half, mitigating the challenging conditions in the UK which persisted throughout the year.

Group sales for the year were 3.1% below the prior year at approximately £108.5 million (FY2023: £112.0m) in reported currency, down 3.0% in constant currency. High-margin licensing contributed more than £10 million of Group sales for the first time at £10.9 million (FY2023: £6.5m). Licensing has become an important strategic pillar for the Group, complementing the Group’s brands and manufacturing activities and driving profitability.

Underlying profits for the financial year ended 31 January 2024 are expected to be approximately £12m (FY2023: £12.6m), reflecting the strong contribution from licensing along with the impact of trading conditions in the UK, the Group’s largest market.

The Group’s balance sheet remains strong with net cash of approximately £16.2 million at 31 January 2024 (FY2023: £15.4m; H1 FY24: £15.9m).

Third-party manufacturing, at £18.9 million, was down 14.5% (FY2023: £22.1m) against a strong comparator in FY2023, which included restocking post-Covid, and reflects a return to more normalised inventory requirements. Digital printing continues to grow at Standfast & Barracks in Lancaster and at Anstey, where, in light of the current consumer environment and the reduced resource requirement of digital printing, a review of the cost base is ongoing.

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Jean Vernet

Marine business James Fisher reported to the market that underlying trading in the second half was resilient and in line with market expectations as it makes progress with its transformation during the period, focusing on operational improvements and simplification.

The company ceased operations at Subtech Europe, which generated c.£40m of revenue in 2023. This business was incurring losses over a number of years because of increased competition and lower utilisation given the seasonality of the North Sea operations.

Further progress has been made on the Group’s transformation projects that will strengthen organisational and operational capabilities. Ongoing costs of restructuring and refinancing together with costs of business closures mean that non-underlying cash costs for the second half are likely to be at a similar level to those reported in the first half of the year.

The group has reduced its borrowings to £140m, from £147m at 30 June 2023, though it was only at £133m in 31 December 2022, which reflects the additional financing and restructuring costs incurred in the year.

Jean Vernet, Chief Executive Officer, commented: “With the steps we have taken to improve our operational and financial performance, I am encouraged by the progress across the three divisions.  We are building the foundations for recovery and are seeing the benefits of the operational improvements being implemented. We remain fully committed to our ongoing portfolio simplification, which should further strengthen our balance sheet, as well as the investment in capability that will provide a platform for sustainable growth.”