Nanoco organic growth runway underpinned by firm financial footing

Nanoco Group plc (LON:NANO), a world leader in the development and manufacture of cadmium-free quantum dots and other specific nanomaterials emanating from its technology platform, has announced unaudited Interim Results for the half year ended 31 January 2023.

A fully underpinned organic business with significant growth opportunities

·    Final validation underway for commercial production materials, with orders anticipated by the end of 2023

·    Significant forecast growth in core markets, with increasing end user applications in Sensing and increasing QD market share in Display

·    Litigation proceeds underpin commercial business, with Nanoco on a firm financial footing to plan for the longer term

·    Litigation validated the Group’s core IP, with further potential monetisation initiatives ongoing

Operational Summary – good organic progress

·    Nearing full production validation of two nano-materials for European Electronics Customer

·    Facility and staffing levels being prepared for potential production orders

·    Delivered development milestones for Asian Chemical company, new agreements being discussed

·    Other early-stage engagements with customers in display with materials on test

IP Monetisation – first tranche proceeds received

·    Previously announced IP sale and license agreements: gross proceeds of £124.3m ($150.0m) with net proceeds after costs of £71.4m (c.$90.0m)

·    Payments received as a lump sum in two equal tranches (March 2023 and February 2024)

·    Nanoco core patents validated by Patent Trial and Appeal Board (‘PTAB’)

·    Retained Special Adviser to support internal team evaluating opportunities to pursue further monetisation of the Company’s IP

Financial Summary – enhanced financial position

·    Revenue increased 45% to £1.6m (H1 FY22: £1.1m) in line with the Board’s expectations

·    Adjusted LBITDA £1.1m (H1 FY22: loss £1.1m) in line with the Board’s expectations, includes strategic investment in additional capability and impact of recent inflationary cost increases

·    Results in H2 reflect the significant benefit of the IP sale and the license agreement

·    Payment and use of proceeds from sale of IP and license agreement:

o  First tranche of £62.1m received in March 2023 with majority used to pay funder and advisors

o  Second tranche due in March 2024 (~£62.1m[1]) will be wholly for Nanoco

·    Period end net cash of £6.0m with monthly net cash burn of c.£0.1m per month, prior to receipt of  proceeds from sale of IP and license agreement post period end

Brian Tenner, Chief Executive Officer of Nanoco Group plc, said:

“We are closer to commercial production than at any time in our 20 year history, with orders anticipated by the end of 2023. Our organic growth runway is now underpinned by a firm financial footing following the monetisation of the Group’s IP portfolio as a result of the outcome of the lawsuit.

“The litigation process also allowed us to successfully validate Nanoco’s IP and, combined with the work we have done to right-size the Group’s cost base over the last few years, Nanoco is now positioned as an agile player with validated IP operating in attractive and growing core end markets of Sensing and Display. It also allows us to proactively pursue new licensing opportunities with other companies employing certain quantum dot technologies, accompanied by the financial wherewithal not to be bullied by other potentially infringing parties, no matter what size.

“Overall Nanoco is in a strong position, has an encouraging outlook and looks to the future with confidence.”

Webcast for sell side analysts

A conference call and webcast for sell side analysts will be held at 10:00am (UK time) this morning (28 March 2023):

For further details please contact MHP Communications on 0203 128 8990 or at

A recording of the webcast will also be made available on Nanoco’s website, later today.

Business Review

Overview – A fully underpinned organic business with significant growth opportunities

Our commercial business remains our primary focus and we continued to make steady positive progress throughout the Period. We are closer to commercial production than at any time in our 20 year history, with orders anticipated by the end of CY23, whilst the proceeds from the Samsung litigation underpin our commercial business, with Nanoco on a firm financial footing to plan for the longer term.

Final validation underway for commercial production materials, with orders anticipated by the end of 2023


We continued our progress to final validation of production ready materials for our European customer project for sensing applications. We are now aiming to have two fully validated sensing materials by the end of FY23 (compared to previous expectations of one validated material). Discussions are ongoing with regard to next steps on other new development materials.

We have delivered all of the technical milestones for our important European electronics customer and we are now reinforcing our place in the supply chain with equipment upgrades and increased raw material stocks. We are also investing in additional front line researchers, production chemists and direct support staff as activity levels increase across all parts of the business. This will not only allow us to capture the opportunities that will flow from having production validated materials but also to invest in developing new materials in sensing, display and other potential applications.

We have also made solid progress on a new material for our Asian Chemical Company customer. While that project is approximately two to three years earlier in the development cycle, it also has the potential to require significant volumes of our materials as demand grows for affordable high performance sensors. We are currently reviewing options to accelerate the programme and to deepen our collaboration, while continuing to deliver small quantities of development materials for device testing.

The Group is also currently working on two projects that are part funded by grants from Innovate UK, the UK’s innovation agency. One of those projects is targeting a third generation sensing material with the potential for even more advanced performance. The second of these projects concerns the creation of novel nano-materials that are potentially applicable in the field of quantum computing.


We continue to pursue small scale development projects with a number of customers in display including having material on test. As reported previously, we work on a reactive basis to opportunities in adjacent markets such as horticultural and lighting applications.

Runcorn relocation

During the Period we completed the exit from the ground floor of our Manchester facility. We have now successfully relocated our whole team into our Runcorn facility. The CFQD side of the facility has now been taken out of mothball and is almost fully recommissioned. That part of the facility is also now host to our R&D activities. This was made possible by the strategic decision to focus our activities on a ‘dot only’ strategy, which freed up a significant amount of laboratory space that had been devoted to non-core activities.

We have retained our full capability following the move from Manchester, with only a very small number of staff not being able to make the transition. With a step up in activity levels across the business we have started a cautious campaign of recruitment to expand our front line production and R&D teams with additional direct support staff as required. This also reflects our continued momentum towards final production validation of two materials before the end of FY23 and potential commercial production orders in the current calendar year (CY23). The financial benefits of exiting the Manchester facility are being used to offset recent inflationary cost increases and will largely fund the activity driven increases in headcount we are putting in place.

We forecast significant growth in core markets, with increasing end user applications in Sensing and increasing QD market share in Display


The size of any first production orders will depend on the end user customer application. As with any new technology, initial demand may be modest in scale before expanding into a broader range of customers, applications and devices. Independent market researchers Yole (Image Sensors Europe 2023) estimate 6.1% compound annual growth rate for CMOS Image Sensors in the six years to 2028, with an increasing share of that market for 3D sensors and multi-spectral cameras where the performance of these devices can be significantly enhanced by the integration of quantum dots.


Display materials remains a key focus for Nanoco and we forecast increased share in the QD display market. The current market for flat panel televisions is approximately 250 million units per annum. Displays containing quantum dots are estimated to have accounted for around 6% of this market in 2022 (or 15 million TV’s). Approximately 90% of the QD TVs sold today are cadmium free[2], reflecting Samsung’s market dominance. Within the QD TV market, the number of cadmium based units is expected to fall significantly, reflecting toxicity and environmental concerns (RoHS).

The QD share of the total TV market is estimated to rise to around 35% by 2030 (in excess of 100 million units) with Samsung’s share expected to decline over the same period2. The combination of cadmium free systems taking a larger share of the overall market, together with a fall in Samsung’s relative share, is expected to create an opportunity for Nanoco as both a manufacturer of cadmium free quantum dots and as the owner of a validated IP portfolio fundamental to the manufacture of cadmium free quantum dots at an industrial scale. The need for access to Nanoco’s IP portfolio will grow over time in line with the number of cadmium free display products being sold in the market.

Proceeds from litigation underpin commercial business, with Nanoco on a firm financial footing to plan for the longer term

Nanoco began litigation against Samsung for the alleged infringement of our IP back in February 2020 with the Company valued at under £60.0m. Due to the likely significant cost of the litigation (legal fees and expenses anticipated to be in excess of $10.0m) and the limited resources at our disposal, Nanoco ran a competitive tender process and obtained independent offers of litigation funding from four different providers of non-recourse litigation funding. Following the tender process, GLS Capital was appointed as the litigation funding partner based on a combination of superior commercial terms and the knowledge and experience of the GLS team. The terms of that agreement, whilst confidential, meant no funding risk was borne by Nanoco with a multiple of invested capital being paid to GLS Capital only if the litigation provided a return to the Company, and, unlike traditional financing, with no return of capital if the litigation was unsuccessful.

Nearly three years later, in early January 2023, Nanoco and Samsung mutually agreed to stay the trial in Marshall, Texas to give 30 days to finalise commercial agreements. That period of negotiation resulted in two agreements that were signed on 3 February 2023. The agreements brought to an end three years of litigation activity in a number of jurisdictions. The financial impact of the agreements is set out in the notes to these Interim Financial Statements.

As noted previously, the IP sale of 118 non-core patents has little impact on Nanoco’s current or planned commercial activities, particularly as the sale agreement includes a license back to Nanoco to be able to continue using those same patents. The IP license is a global perpetual royalty free license, reflecting the upfront nature of the payment received. As a non-exclusive license it also does not impede Nanoco’s current or planned commercial activities.

As previously announced, in deciding what to do with the second tranche of proceeds in February 2024, the Board will balance any investment needs of Nanoco’s growing organic business with a firm intention to deliver a material return of capital to shareholders.

Successful outcome to litigation validates the Group’s core IP, with further potential monetisation initiatives ongoing

As a UK-based business specialising in the design, scale up and manufacture of novel nano-materials, we will continue to take steps to protect our platform technology and our IP portfolio.

Following the validation of our IP by the Patent Trial and Appeal Board and the subsequent licensing of our remaining patent portfolio by Samsung, the Group is confident in the potential applicability of our IP to other participants in the cadmium free quantum dot display market. At present that market is dominated by Samsung but as QD TVs capture a larger share of the total flat panel TV market, and as more market participants create or expand their market presence, the economic case for enforcement of our IP will grow in the medium term.

The group will explore opportunities to encourage market participants to take a license over Nanoco’s IP as an alternative to potentially costly future litigation. We have retained a Special Adviser for the next steps in our IP licensing strategy and are reviewing potential IP licensing partners, alongside our internal business team who are evaluating potential value opportunities.

Background to sale of IP and licensing agreements

In assessing whether or not to agree to the proposed IP sale and license agreements, the Board took extensive advice and carefully considered the balance of potential risks and rewards that could be expected if the litigation had continued.

Against the possible benefits of continuing the litigation, the Board weighed the possible downside risks which included the risk of losing at trial, winning at trial with an award based on either Samsung’s damages model or on Nanoco’s own ‘low case’ damages model (sometimes referred to in public court papers as the ‘Dow’ approach, which was considerably lower than the settlement value agreed). The Board believes that winning with Nanoco’s ‘high case’ damages model would inevitably have led to an appeals process potentially lasting a number of years with the risks of losing on appeal, a re-trial, or a re-trial of damages only and possibly resulting in a lower damages award. The Board also considered the incremental funding costs of an extended litigation process and the potentially significant impact of the time value of money.

Any settlement process invariably involves an element of compromise to remove risks. Having weighed up the risks and rewards of continuing the litigation, the Board concluded that it was in the best interests of all stakeholders to accept the proposed commercial agreements.

Outlook – well positioned to deliver

We continue to make strong and steady progress in delivering new nanomaterials for our customers. We are nearing the final pre-production validation step for two of our materials and anticipate potential commercial production orders by the end of CY23, bringing us closer to commercial production than at any time in our 20 year history. We continue to develop new materials and engage with new customers in the sensing and display fields of use, to ensure we build up a wide customer and product base.

The litigation process allowed us to successfully validate Nanoco’s IP and, combined with the work we have done to right size the Group’s cost base over the last few years, we have now positioned Nanoco as an agile player with validated IP operating in the attractive and growing core end markets of Sensing and Display.

Market forecasts for infra-red sensors and quantum dot based technologies show strong positive growth for the next five years. That will create an environment where Nanoco’s unique cadmium free quantum dots and other novel nano-materials can leverage their strong performance characteristics into large mass produced commercial applications.

By successfully delivering the transformational outcome to the Samsung litigation, the business is now able to plan for the longer term on a firm financial footing. The resulting cash flows will allow us to invest in the commercial business while exploring opportunities to generate further value from our IP.

Overall Nanoco is in a strong position, has an encouraging outlook and looks to the future with confidence.

Dr Christopher Richards                                                                Brian Tenner

Chairman                                                                                             Chief Executive Officer

28 March 2023                                                                                   28 March 2023

Financial review


Revenue in the Period increased 45% to £1.6m (H1 2022: £1.1m). The majority of revenue relates to development work on sensing materials throughout the Period.

Sources of revenueH1 FY23H1 FY22FY22
Services1.1 /   70.5%0.7 /   63.1%1.6 /   64.1%
Material sales0.4 /   26.2%0.3 /   32.0%0.8 /   31.7%
Licence & royalties0.1 /     3.3%0.1 /     4.9%0.1 /     4.2%
Total revenue1.6 /100.0%1.1 /100.0%2.5 /100.0%

Services continue as the major revenue driver, generated primarily from one important electronics customer in the current and prior year. Material sales represents continued shipments of nano-materials to supply chain partners in sensing and display markets.

Operating expenses

Operating expenses comprise R&D and administrative expenses. Gross investment in R&D to support the ongoing development of our nano-materials was £0.9m in the Period (H1 FY22: £1.0m) and administrative expenses were £2.5m (H1 FY22: £2.3m).

With the exit from both floors of the Manchester facility completing in November 2022, we have generated gross annual savings of £0.7m. These savings have been used to offset recent inflationary cost increases and will also fund the expansion in headcount driven by increased activity levels across the business and in the run up to potential commercial production orders at the end of CY23.

Other operating income in the Period was £0.1m (H1 FY22: £0.2m).

Operating loss and Adjusted LBITDA

The combination of higher revenue and the continued focus on cost control led to an 18% improvement in our adjusted operating loss in the Period to £1.4m, an improvement of £0.3m. Adjusted LBITDA in the Period stayed broadly in line with prior year.

H1 FY23H1 FY22FY22
Operating (loss)(2.1)(2.1)(4.8)
Share-based payment charge0.50.40.6
Litigation costs0.1
Employers NI on SBP0.10.3
Adjusted operating loss(1.4)(1.7)(3.9)
Adjusted* LBITDA(1.1)(1.1)(2.1)

Management monitor Adjusted* LBITDA as it is a close approximation for operating cash flow which is considered a KPI at a time when the Group is closely managing its cash resources. The non-cash charges for share based payments (including the associated national insurance charges), depreciation and amortisation and one off litigation costs are added back to the operating result to arrive at Adjusted LBTIDA. These are therefore excluded to provide users of the accounts with a clearer understanding of underlying business performance.

Sale of IP and IP license with Samsung

As previously announced, both contracts were signed shortly after the Period end. In accordance with the requirements of IAS10, Events After the Reporting Period, these contracts have had no impact on the financial results or position in the Period but have been taken into account in the assessment of the going concern basis for preparation of these Interim Condensed Consolidated Financial Statements. Note 7 sets out the expected financial impact of the two contracts on the second half of FY23 and reporting periods arising thereafter as a non-adjusting post balance sheet event.


The Group continues to make R&D tax credit claims on qualifying expenditure. The tax credit for the Period is estimated at £0.3m (H1 2022: £0.3m). The amount receivable at 31 January 2023 was £0.3m (H1 FY22: £1.0m), with the amount receivable at 31 July 2022 (£0.5m) being received in January 2023.

The Group is reviewing with its tax advisers its historical practice of surrendering tax losses for a cash refund as the proceeds from the contracts with Samsung may change the optimal approach to the Group’s tax affairs, alongside the potential to benefit from the UK’s Patent Box tax regime.

Net result

The loss after tax for H1 FY23 was £2.1m (H1 FY22: loss of £2.1m).

Earnings per share

The basic loss per share was 0.64 pence per share (H1 FY22: loss of 0.67 pence). As at 31 January 2023 there were 322,445,744 ordinary shares in issue (31 July 2022: 322,445,744) including treasury shares.

Cash position and liquidity

During H1 FY23, the Group generated a significantly improved net cash outflow of £0.8m, being less than half the outflow in the comparative period (H1 FY22: £2.0m) to leave a cash balance of £6.0m.

Expenditure on fixed assets has been increased as the Group reinforces its production capabilities. Expenditure on new patents has remained subdued but is likely to increase as new materials are developed.

Working capital

The Group is maintaining its investment in working capital in preparation for potential commercial production orders by the end of CY23. This is to ensure that the Group is seen as a robust part of the supply chain by its major customers. Our contracts with customers also include mechanisms to give Nanoco advance notice of significant changes in demand that should be adequate to ensure that Nanoco has appropriate raw materials on hand when production needs to be ramped up.


The UK’s Brexit deal with the European Union removes the threat of tariffs on chemicals exports (our primary export) and other impacts on additional administrative tasks have continued to be minimal.

Principal risks

The Directors have considered the principal risks which may have a material impact on the Group’s performance. The majority of applicable risks throughout the Period remained as disclosed on pages 27 to 29 of the 2022 Annual Report and Accounts.

However, as a result of the contracts signed with Samsung shortly after the period end, the profile of two of the Group’s principal risks has changed significantly. The principal overarching risk that the Group would exhaust its financial resources before becoming self-financing through its commercial operations has now been wholly mitigated as a result of the cash flow received from Samsung after the Period end and the expected cash flow in February 2024. The second principal risk of an adverse outcome to the litigation with Samsung has now been eliminated.

Going concern

The interim condensed consolidated financial statements have been prepared on a going concern basis. In determining the appropriate basis of preparation of the financial statements, the Directors are required to consider whether the Group can continue in operational existence for the foreseeable future.

For the purposes of assessing whether ‘going concern’ is an appropriate basis for preparing the interim condensed consolidated financial statements, the Directors have used their detailed forecasts for the period to 31 July 2023 and summary forecasts for the following financial year (the ‘forecast period’). These reflect current and expected business activities and the expected net cash flows that will result from the sale of IP and license agreement with Samsung as well as the matters set out in the section above on Principal risks.

A sensitivity analysis has been performed to reflect a possible downside scenario that only includes already contracted revenues for the forecast period.

On the basis of the information above and having made appropriate enquiries, at the time of approving the interim condensed consolidated financial statements, the Directors have a reasonable expectation that the Company has access to adequate resources to continue in operational existence for the foreseeable future, that is, at least 12 months from the date of the issue of these interim condensed consolidated financial statements.

Accordingly, they continue to adopt the going concern basis in preparing the interim condensed consolidated financial statements. The financial statements do not reflect any adjustments that would be required to be made if they were prepared on a basis other than the going concern basis.

Liam Gray

Chief Financial Officer

28 March 2023

Responsibility statement

The Directors of Nanoco Group plc, as listed on pages 40 and 41 of the 2022 Annual Report and Accounts, confirm to the best of their knowledge:

a)    the condensed set of financial statements has been prepared in accordance with International Accounting Standard 34 Interim Financial Reporting, as required by paragraph 4.2.4 of the Disclosure and Transparency Rules (“DTR”);

b)    the condensed set of financial statements, which has been prepared in accordance with the applicable set of accounting standards, gives a true and fair view of the assets, liabilities, financial position and profit or loss of the issuer, or the undertakings included in the consolidation as a whole as required by DTR 4.2.10;

c)    the interim management report includes a fair review of the information required by DTR 4.2.7 – an indication of important events which have occurred during the first six months of the year and a description of the principal risks and uncertainties for the remaining six months of the year; and

d)    the interim management report includes a fair review of the information required by DTR 4.2.8 – the disclosure of related party transactions occurring during the first six months of the year and any changes in related party transactions disclosed in the 2022 Annual Report and Accounts.

By order of the Board

Liam Gray

Chief Financial Officer

28 March 2023

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