LONDON: Nanoco Group plc (LSE: NANO), a pioneer in the development of cadmium-free quantum dots and nanomaterials, has announced its unaudited interim results for the half-year ending 31 January 2024, marking significant achievements and financial growth.

Commercial Breakthrough: The company has reached a critical milestone by securing its first-ever commercial orders. In November 2023, Nanoco shipped two first-generation materials designed for infrared sensing applications in electronic devices, such as cameras and imagers, signaling a strong entry into the market.

Strategic Alliances: Nanoco’s progress is further underscored by its continued collaboration with two major players in the global electronics supply chain. A Joint Development Agreement was signed with STMicroelectronics in January 2024 to enhance the performance of a second-generation sensing material.

Additionally, an agreement with a key Asian chemical supplier was established in November 2023 to improve another high-performing sensing material.

Financial Highlights: The company has received the second tranche of litigation proceeds, enabling a return of £33 million to shareholders through a Tender Offer and Share Buyback. Nanoco’s strategic financial management positions it to be debt-free by the end of FY24, with sufficient funding to reach cash breakeven anticipated during CY25.

Future Outlook: Nanoco has successfully transitioned from a speculative R&D entity to a financially stable company focused on organic growth, supported by a robust IP portfolio. The core markets of sensing and display are projected to grow rapidly, with a forecasted CAGR of over 40% in sensing and approximately 20% in display.

The adoption of quantum dot technology in mobile phones and micro-LEDs is expected to significantly expand Nanoco’s addressable markets.

Operational Developments: Post-period, Nanoco completed the construction of a new wafer device development and testing facility to accelerate product research and foster customer engagement. A new device team is now commissioning the equipment, and the company is engaging with potential new display customers.

Financial Performance: Nanoco reported a revenue increase to £4.0 million, driven by recurring IP licence revenue, with an operating profit of £2.4 million. The company’s investment in operations has raised the gross cash cost base to approximately £0.6 million per month.

With a reported cash balance of £59.3 million, including a £2.5 million FX hedge benefit, Nanoco is well-positioned to execute its Return of Value to shareholders and maintain a robust cash balance to support its commercial endeavors.

Looking Ahead: Nanoco anticipates expanding its service range to include sensing device development once the new facility is fully operational in H2 FY24. The company’s performance for FY24 is expected to align with market expectations, as it continues to progress as a full-service production company.

Brian Tenner, Chief Executive Officer of Nanoco Group plc, said: “Delivering our first ever commercial orders was a huge achievement for the whole Nanoco team. Sales volumes of first generation materials are expected to grow gradually over time to deliver a cash breakeven position during CY25. Adoption of the technology in mobile phones would lead to further significant growth.

“Our current two global customers – both leading suppliers to the electronics industry – are a testament to Nanoco’s leadership in novel nanomaterials. Our key display and sensing IP was emphatically validated in the recent Samsung litigation.

The new second generation materials under development will deliver significant performance improvements to open up new applications in automotive and dynamic image capture. All of our materials form part of our ‘platform technology’, being adaptable to a wide range of markets, applications and form factors.

“We are pleased to be returning £33.0 million of value to shareholders while retaining funds for the compelling use cases we have previously outlined. Having spent five years fighting for financial survival, we have now been able to make some cautious but important strategic investments in new capabilities and our resilience as a supply chain partner.

These will accelerate our development plans and commercial progress, as well as allowing us to self-fund IP licensing efforts. The combination of a fully funded business with commercial traction is a strong foundation on which to build.”