Tech firm, Nanoco, will consider acquisition offers for its trading business, the second time it’s put itself on the market – although last time it was for the company in its entirety.
The Runcorn-based manufacturer of nano materials has completed a strategic review, following an unnamed European customer’s decision to move away from quantum-dot enabled infra-red sensors.
Only last month, the Manchester University spin-out predicted that it would break-even by 2025, following the delivery of a major Asian order.
This report considered its position, strategic direction and capital allocation policy – “balancing the twin objectives of preserving existing value and maximising future potential returns.”
It concluded that it has “commercial potential and inherent value.” It believes that there are “significant” organic commercial applications for its technology which will generate value over time. This is because there is a growing market interest in quantum dot (“QD”) technology in display and sensing markets.
It added that the value of its technology and IP was also growing strongly, because there are now more sectors using QD displays and the number of QD-enabled units is also on the rise.
“This market environment is now sufficiently meaningful to enable Nanoco to bring forward plans to seek commercial licence revenue over the Company’s robust and validated IP portfolio,” it stated.
In addition there are an increasing number of third parties using Nanoco’s IP.
It added:
“The Board is confident that the Group can succeed in pursuing these commercial objectives with the appropriate investment of money and time.”
As a result, the company has appointed a Financial Adviser (CDX) to review options “for achieving the best financial outcome.”
Adding:
“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.”
CDX will review options for the company’s business and assets, including the potential for a sale of the trading business (including IP).
Nanoco stated that the process would be “undertaken at pace” and that steps were already being taken to “rationalise” its cost base. That will include reducing headcount, reducing the size of the Board and reducing non-critical operating costs across the Group.
Directors will also agree to defer payment of at least 50% of their fees until either the end of the financial year (31 July 2025) or a potential sale of the trading business – whichever comes first.
This is set to reduce its costs by £2.6m – 34%.
“Following our review, the Board continues to believe in the inherent value and commercial potential of our technology, IP and trading business,” stated Chris Richards, Non-Executive Chairman of Nanoco.
“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.”
