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Nanoco Group – interims, what’s the “encouraging progress in commercialisation”?

By Steve Moore | Tuesday 10 April 2018

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.

Self-styled “a world leader in the development and manufacture of cadmium-free quantum dots and other nano-materials”, Nanoco Group (NANO) has announced results for its half-year ended 31st January 2018, emphasising “encouraging progress in commercialisation, supported by a strengthened balance sheet”. Hmmm, let’s see how encouraging progress is...

“In Display, our own production and route to market via our partner Wah Hong is starting to see commercial traction… Initial monitor products featuring our technology are expected to launch in 2018, with the anticipation that TV orders will follow thereafter” and “in February 2018 we were pleased to announce a significant new Material Development and Supply Agreement with a large US-listed corporation for advanced electronic devices, which opens up the nano-materials vertical for the group”. Overall, “the board remains confident that the relevance and opportunity for our technology in display and in new developing verticals, as well as in lighting and life sciences, remains exciting”.

However, product launches, “the anticipation” of orders, the signing of a ‘material development and supply agreement’ and board confidence are all far from proven commercialisation - it is admitted, for instance, that a licencing agreement with Dow Chemical “has, to date, performed below expectations”.

The “strengthened balance sheet” re. cash was by £3 million, to £8.7 million. However, “revenue and other operating income for the six months was £0.26 million (H1 2017: £0.82 million) and the loss after tax was £4.20 million (H1 2017: £5.43 million)” (“a world leader”, you say?!) – the cash position following a net £8 million of new equity.

The company argues “a further £1.84 million due in the second half from HMRC in the form of an accrued R&D tax credit refund and the upfront cash receivable from our new US-listed partner will further strengthen Nanoco's cash position and puts us on a strong footing for the opportunities ahead”. However, the track record means I’d want to see much firmer commercialisation progress before considering a more positive stance than avoid.

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