New CEO confident Nanoco has potential to maximise value in trading business

Nanoco, the Runcorn-based tech company, once again facing shareholder unrest, has improved revenues, its unaudited results for the year to July 31, 2024, showed today, although pre-tax profits declined.

Last week the Manchester University spin-out granted a General Meeting for December 13, following a requisition last month from shareholders with a 5.6% stake in the group calling for the appointment of Rhys Summerton and Andre Tonkin, both employees of Milkwood, to its board.

Nanoco non-executive chairman, Christopher Richards, said at the time: “Mr Summerton, on behalf of Milkwood, has previously in dialogue indicated to the board his belief that there is little inherent value in the company and his intention to convert the company into an investment company.”

The board of Nanoco has advised shareholders to reject Milkwood’s proposals.

Today’s results revealed a turnover of £7.874m, up 40% from £5.618m in 2023, and a pre-tax profit of £1.865m, which compares with £9.573m the previous year.

Cash reserves of £20.3m at year end were up from £8.2m the previous year.

During the reporting period the business delivered its first ever commercial production orders for two different first generation materials for use in infra-red sensing materials, and it commenced Joint Development Agreements with two customers on second generation sensing materials, with one of these ending post year end.

In January this year Nanoco received the second tranche of litigation proceeds from Samsung, worth $71.75m, after winning a $150m intellectual property lawsuit last year, It pledged to return between £33m and £40m to its shareholders.

In July Nanoco accounted that it expected its full year revenues would be marginally below consensus forecasts, while Adjusted EBITDA was likely to be towards the lower end of the range of market forecasts.

This was due to the company failing to receive a further production order from a key customer during the 2024 financial year.

In October, Nanoco, said it was putting its trading assets on the block to be sold, following a strategic review. It said it will return surplus cash to shareholders as part of the process.

It appointed CDX Advisors as its financial advisor to review options for achieving the best financial outcome.

CEO, Dmitry Shashkov, who joined the company last month, said: “I joined Nanoco because I saw an organisation with unique IP and inherent value to be realised. Having only been here a short time, my confidence in the value in this business has only been reinforced.

“We have a clear strategy to address our two core markets of Display and Sensing, along with working to define the opportunities outside of these. We have restructured the organisation to minimise cash burn and focus on commercial growth, reducing our gross annual cost base to around £6m. In tandem, we are engaged with CDX to identify and pursue external investors for our operating business.

“Taken together, there is a clear opportunity to maximise value in the trading business and deliver returns to shareholders.”

Christopher Richards, Nanoco’s Chairman, said: “Nanoco is strongly positioned to take advantage of developing markets. We have delivered all development milestones for our sensing customers, and whilst the cancellation of the JDA with the European customer post year end was disappointing, we continue to engage with a variety of customers in a number of different markets.

“The board is determined to deliver shareholder value as rapidly as possible. In light of the plans set out to shareholders, the board has committed to a return of surplus cash to shareholders during the course of FY25.

“Cash will be progressively returned to shareholders as the CDX process progresses and the board gains more certainty on the execution of a potential sale process and clarity in the group’s working capital requirements and the surplus nature of the group’s cash balance. We returned £30m to shareholders through the tender process, and post year end completed the additional £3m share buyback programme.”

He added: “We have increased the industry expertise of the board, with two non-executive appointments during the year, and post year end we have appointed Dmitry Shashkov as CEO.

“As a board we are committed to achieving the best value for shareholders, and the whole team is committed to making Nanoco a highly successful nanomaterials group.”

Nanoco defeated a previous attempt to reconfigure the board in August last year, when more than 80% of its shareholders backed the board.

It followed a general meeting requisition by Tariq Hamoodi who had called on senior management to step down, claiming the company gave misleading information on settlement prospects in its successful litigation with Samsung.

Twelve resolutions were put forward by him at the meeting and were emphatically voted down.