Nanoco to consider offers for trading assets following strategic review
Runcorn-based Nanoco, is putting its trading assets on the block to be sold, following a strategic review, it announced this morning (October 3).
The listed company, which develops materials used in the manufacture of monitors and TV screens and technologies for medical imaging and the early diagnosis of cancer, said it will also return surplus cash to shareholders as part of the process.
In August it slashed its revenue forecast for the financial year to July 31, 2025, by 25% after a key customer pulled out of a commercial partnership, which resulted in the board instituting its review.
Today, the board said it strongly believes there are significant organic commercial applications for Nanoco’s technology across a range of markets that will generate value for the business over time.
It said the potential value in its technology and intellectual property (IP) is also growing strongly in line with previous independent market forecasts.
Therefore, it has appointed CDX Advisors as its financial advisor to review options for achieving the best financial outcome.
In a statement to the stock exchange today, Nanoco said: “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).”
Nanoco revealed that steps are already being taken to rationalise the company’s cost base, including 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.
Following the release of the FY24 preliminary results, each of the non-executive directors will enter into agreements 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 (July 31, 2025) or a potential sale of the trading business.
It said, once complete, these measures will reduce the group’s annualised cash cost base by £2.6m, or 34%, on a like for like basis.
The board said it will also adopt a progressive return of surplus cash during FY25.
It intends to return an initial sum of cash via a capital return following the release of the FY24 report and accounts.
It said the timing and size of further returns of surplus cash will depend on the completion of the right-sizing outlined today, 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.”