Nanoco lowers financial forecasts due to absence of anticipated new order

Runcorn tech company, Nanoco Group, said it expects its full year revenues will be marginally below consensus forecasts, while Adjusted EBITDA is likely to be towards the lower end of the range of market forecasts.

This is due to the University of Manchester spin-out failing to receive a further production order from a key customer during the 2024 financial year.

The consensus revenue forecast for Nanoco is £8.35m, while the Adjusted EBITDA analyst forecasts range from £0.5m to £1.5m. The group expects to announce its full year results on October 22, 2024.

The company develops materials used in the manufacture of monitors and TV screens and technologies for medical imaging and the early diagnosis of cancer.

In January this year, a Joint Development Agreement was signed with STMicroelectronics, a global semiconductor leader, to optimise the performance of a second-generation sensing material over a two-year period.

This followed a 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.

Nanoco also returned £33m to shareholders from its $150m intellectual property litigation payout from electronics giant Samsung last year, and a share buyback programme was commenced.

In a trading update for its financial year ending July 31, 2024, today, the group said it continues to deliver all milestones in its two-year Joint Development Agreements (JDAs) for second generation sensing materials with ST Microelectronics and the Asian chemical company.

The new Device Fab is now fully operational and sample devices have been shipped. However, following customer dialogue, the group no longer expects to receive a further production order for its validated first generation sensing products during FY24.

Nanoco said it is working with its customer to understand the range of possible outcomes and any potential impact on Nanoco beyond the end of the financial year. The group expects to issue a further update with the full year results in October.

The group continues with some small-scale commercial engagements for customers interested in display materials, although no new anchor customer has been signed at this time.

Nanoco said it continues to commit retained funds to expand its business development activities as set out in its planned use of retained funds from the Samsung litigation.

The impact of the delayed demand on the group’s aim of becoming cash breakeven during calendar year 2025 will depend on the duration of the delay in new orders and subsequent speed of ramp up in demand for its technology, it said. It added that it still expects its cash reserves to be approximately £20m on July 31, 2024.

It said it remains committed to completing the return of capital through its £3m broker-managed share buyback programme, with £1.3m having been returned to date.

Chief executive, Brian Tenner, said: “We continue to work hard across a range of products, customers and market sectors to deliver the adoption of quantum dot technology.

“The number of potential applications continues to grow strongly. The majority of our income generating staff remain engaged in paid for development work on new products in sensing and display applications.

“By investing across a broad range of business development opportunities, we aim to further reduce any dependency on a single customer and to deliver increases in shareholder value in the medium term.”