TIDMNANO
RNS Number : 4547B
Nanoco Group PLC
04 April 2017
For immediate release 4 April
2017
NANOCO GROUP PLC
("Nanoco" or the "Company")
Interim results for the six months ended 31 January 2017
Nanoco Group plc (LSE: NANO), a world leader in the development
and manufacture of cadmium-free quantum dots and other
nanomaterials, is pleased to announce its interim results for the
six months ended 31 January 2017.
Highlights
Current trading
-- First commercial sales of Nanoco's products expected in the
remainder of the second half of this financial year
Operational
-- Debuted at CES, the global consumer electronics and consumer
technology tradeshow, demonstrating Hisense, TCL and TPV Philips
televisions containing Nanoco Fine Color Film(TM)
-- Nanoco cadmium-free quantum dot (CFQD(R)) technology being
evaluated in 14 active TV and monitor programmes with nine major
Original Equipment Manufacturers (OEMs)
-- Creation of a robust global supply chain for display and
lighting OEMs - including a ten-fold increase in manufacturing
capacity at Nanoco's Runcorn plant, delivered with little
additional capex
-- On track technology transfer to Merck, which has successfully produced CFQD(R)s in Germany
-- Merck is evaluating plans for its own manufacturing facility
and will continue to purchase product from Nanoco until that
facility is commissioned
-- Merck's own marketing efforts have resulted in a clear
understanding of significant potential for Nanoco's technology
-- Dow is progressing well with initial commercialisation
following the transfer of Nanoco's improved green CFQD(R)
production process
-- Intellectual property portfolio expanded to c.550 (2016:
c.400) patents and patent applications
Financial
-- Although first half results are in line with the Board's
expectation, sales have not yet materialised in the second half and
we are therefore lowering our full year expectations
-- Personnel cost savings of GBP1.1 million per annum following cost cuts in December 2016
-- Cash and cash equivalents of GBP8.3 million plus R&D tax
credit receivable of GBP1.9 million; the Board believes this gives
the Company sufficient headroom under the expected timeframe for
commercial sales to commence and has carried out detailed
contingency planning in event that sales are further delayed
Dr Michael Edelman, Nanoco's Chief Executive Officer, said:
"We have continued to make good progress in our first half. We
were particularly encouraged by the positive feedback and
significant interest shown in Nanoco's CFQD(R) quantum dots at CES
by major display manufacturers, customers, partners and the
financial community.
"In response to growing global interest in our technology, we
and our partners have been making further enhancements to our
manufacturing processes, ensuring the Group is fully prepared to
fulfil commercial orders, which are anticipated in the near
future.
"Nanoco is engaged with more near term commercial opportunities
than at any time in its history, so it is frustrating not to be
able to report significant revenues to date and it is essential
that sales commence as expected. This activity, combined with our
cash position and careful management of our cost base, means we
look forward to the future with confidence."
This announcement contains inside information.
Analyst meeting and webcast details
A meeting for analysts will be held at 10am this morning, 4
April 2017, at the offices of Peel Hunt, Moor House, 120 London
Wall, London, EC2Y 5ET. For further details, please contact MHP on
020 3128 8570.
To listen to a live webcast of the analyst briefing, please log
on to the following web address approximately 5 minutes before the
event:
http://webcasting.brrmedia.co.uk/broadcast/58d925805afb680410263991.
A recording of the webcast will be made available later today on
Nanoco's website, www.nanocogroup.com.
For further information, please contact:
Nanoco Tel: +44 (0) 161 603 7900
Dr Michael Edelman, Chief Executive Officer
David Blain, Chief Financial Officer
Caroline Watson, Investor Relations Manager Tel: + 44 (0) 7799
897357
cwatson@nanocotechnologies.com
Peel Hunt Tel: +44 (0) 20 7418 8900
Adrian Trimmings
George Sellar
MHP Communications Tel: +44 (0) 20 3128 8570
Reg Hoare / Andrew Leach / Giles Robinson / Peter Lambie
nanoco@mhpc.com
Notes for editors:
About Nanoco Group plc
Nanoco is a world leader in the development and production of
cadmium-free quantum dots and other nanomaterials for use in
multiple applications including LCD displays, lighting, solar cells
and bio-imaging. In the display market, Nanoco has non-exclusive
manufacturing and marketing licensing agreements with The Dow
Chemical Company, Merck KGaA and Taiwan's Wah Hong Industrial
Corporation. Nanoco also has a strategy of direct sales in display
and in its other target markets, including lighting.
Nanoco was founded in 2001 and is headquartered in Manchester,
UK. It has production facilities in Runcorn, UK, and a US
subsidiary, Nanoco US Inc, based in Concord, MA. Nanoco also has
business development executives in Japan and Korea. Its technology
is protected worldwide by a large and growing patent estate.
Nanoco is listed on the main market of the London Stock Exchange
and trades under the ticker symbol NANO. For further information
please visit: www.nanocogroup.com.
Business Review
Commercial applications - Display
The march towards commercialisation of our products continues
apace.
In March 2016 Nanoco evolved its go to market strategy in the
display industry from an exclusive licensing model with Dow to a
hybrid model combining multiple non-exclusive licenses with direct
sales of own manufactured product. This was enabled by changing our
contract with Dow and significantly increasing the Company's
manufacturing capacity at our Runcorn, UK, facility through
significant process improvements, but minimal capital
investment.
This strategic change means the Company has created multiple
channels to commercialise its technology in the display market,
thus de-risking the business by broadening the range of
opportunities available. Today the Company is in the strongest
position it has ever been to commercialise its technology and is
working directly with nine display OEMs on 14 distinct TV and
monitor programmes. It is important to the business that this
strategy is successful and sales commence as expected. The Board
has completed detailed contingency plans to address the risk of
delays in sales being achieved.
Nanoco's cadmium-free quantum dots are now being manufactured at
Runcorn, at Dow's large manufacturing plant in Cheonan, South Korea
and, in future, at a Merck facility. All three sites will
manufacture CFQD(R)s, blend the CFQD(R)s into a resin system and
supply the combined CFQD(R) resin system to multiple display
integrators located across Asia. Nanoco, Dow and Merck are all
actively marketing Nanoco technology to the global display
industry.
The establishment of this global manufacturing and supply
network will give the largest display OEMs the confidence to adopt
Nanoco technology with the knowledge that they can procure
quantities of the most up-to-date cadmium-free quantum dot
technology from multiple leading electronic materials suppliers.
This in turn will allow the industry to meet the rapid increase in
demand which is forecasted.
Wah Hong
Wah Hong, a company based in Taiwan and quoted on the Taipei
Exchange, is our partner for production and sale of our Fine Color
Film(TM). We chose to partner with Wah Hong as it is one of the
world's largest manufacturers of optical films and sheets for the
display industry and has a large operational footprint across
China, Taiwan and Southeast Asia. Its industry and supply chain
knowledge and customer contacts are an important resource we have
benefitted from since signing the agreement in July last year.
Under the agreement, Nanoco will supply resins containing
cadmium-free quantum dots from our manufacturing facility in
Runcorn and Wah Hong will incorporate the resin into a film, under
Nanoco's CFQD(R) Fine Color Film(TM) brand, and sell to the display
industry. We will generate revenue from the sale of resin to Wah
Hong and receive a license fee from Wah Hong based on its sales and
two further milestone payments associated with volume of film
sold.
Following an extensive trial sampling programme performed over
recent months with Wah Hong, we are confident that high quality
films can be produced to meet customer requirements. We are
delighted that Wah Hong has brought forward its investment in a
new, wider coating line and this demonstrates its commitment to our
products. Wah Hong's new coating line will enable films large
enough to fit 100 inch TVs to be produced and is on track to
commence production in Q2 2017.
Testimony to the progress achieved since we changed the
commercial strategy is that we attended CES in Las Vegas in January
this year and for the first time demonstrated three developmental
televisions from three leading Chinese display OEMs utilising our
Fine Color Film(TM). The three manufacturers, Hisense (global top
five, fast growing Chinese TV manufacturer with an increasing
global presence), TCL (the third largest TV manufacturer in the
world and America's fasted growing TV brand) and TPV Philips (part
of TPV Vision, the world's leading monitor and LCD TV
manufacturer), all displayed 55 inch, ultra-high definition,
wide-colour gamut LCD televisions at our presentation and marketing
suite. The televisions were well received by the industry, TV
manufacturers, suppliers and media.
Extensive activity alongside Wah Hong is focused on specifying
our film in 14 TV and monitor programmes with nine OEMs. Together,
Wah Hong and Nanoco are currently going through the final stages of
the detailed product approval and supplier audit processes required
before we receive first commercial orders and begin shipping
product. We expect this to deliver our first commercial orders in
the near future.
Merck
Merck KGaA is the leading German science and technology company
focused on healthcare, life sciences and performance materials, and
the manufacturer of approximately 60% of the world's liquid
crystals used in Liquid Crystal Displays. We will generate revenue
from sales made by Merck from licence fees and royalties on Merck
manufactured sales. We have been working closely with Merck since
the licence agreement was signed at the end of July 2016. The
technology transfer from Nanoco to Merck has progressed well and is
largely complete resulting in Merck successfully producing batches
of CFQD(R)s at its Darmstadt, Germany pilot plant.
Merck is evaluating plans for its own manufacturing facility and
will continue to purchase product from Nanoco until that facility
is commissioned. Merck's own marketing efforts have resulted in a
clear understanding of significant potential of Nanoco's
technology.
Dow
Nanoco signed an exclusive license agreement with The Dow
Chemical Company in January 2013 for Dow to manufacture, market and
sell Nanoco heavy metal-free quantum dots into the display market.
Last year Dow and Nanoco agreed to amend the licensing agreement
from exclusive to non-exclusive. Dow sells product under the
TREVISTA(TM) brand. We generate royalty revenue from Dow calculated
as a percentage of Dow's sales of Nanoco CFQD(R)s.
Dow is progressing well with initial commercialisation following
the transfer of Nanoco's improved green CFQD(R) production
process.
Runcorn
Significant improvements in the Company's manufacturing
processes have led to a large increase in manufacturing capacity at
Runcorn. Flexible working practices have been introduced allowing
the plant to work on a 24-hour basis. Runcorn has the capacity to
produce enough CFQD(R)s to supply roughly one million large TVs
operating a 24/7 shift pattern. To handle the increased quantities
tremendous work has gone into improving all of the Company's
systems.
We were pleased to announce in December that the Company had
been awarded ISO 9001:2015 certification for our production and
supply processes which provides reassurance to customers that our
systems are robust.
The plant is now ready to fulfil commercial orders as they
arrive.
Supply chain
With our licensees Dow and Merck and our route to market via our
own manufacturing and agreement with Wah Hong we have built a
robust supply chain to service a significant part of the display
market. Nanoco's cadmium-free quantum dots are now being
manufactured by Dow in its South Korean, Choenan facility as well
as in Runcorn by Nanoco. Merck's own production will come on stream
in the near future. All three companies provide quantum dots in a
resin formulation to a number of partner film coaters. Nanoco works
directly with Taiwan headquartered Wah Hong while Dow and Merck
work with other independent film manufacturers based across
Asia.
Display and lighting OEMs have the reassurance that a robust
global supply chain has been implemented to meet their needs.
Commercial applications - Life Sciences
Nanoco's Life Sciences business continued to make significant
progress in the in-vivo optical imaging, diagnosis and targeted
therapy of cancer. The Company is currently evaluating options to
exploit this important technology.
Despite the favourable optical and physical properties of
quantum dots as biological probes over organic dyes and
radioisotopes, their exploitation in medical applications has been
hindered by toxicity concerns due to the presence of cadmium or
other toxic elements. The Nanoco Life Sciences ("NLS") team has
been making great strides in the development of safe and clinically
acceptable quantum dot nanomaterials based on the Company's heavy
metal-free quantum dot technology.
The team has focused on delineating the underlying challenges
and given full attention to the attributes of safety, consistency
and performance. A novel type of safe, biocompatible and efficient
quantum dot has been developed by Nanoco with a unique functional
coating which renders the dots biocompatible and avoids the danger
posed by cadmium toxicity. This has been confirmed by safety tests
which have so far proved the benign nature of this new type of
quantum dots. We have demonstrated that the new quantum dots are
stable in common biological buffers and can be conjugated to active
ligands and proteins. As a proof of concept, we have used cell
cultures and animal models, and assessed the capability of the new
dots for the detection of breast cancer and the surrounding
lymphatic nodes. We clearly observed superior performance against
currently used organic dyes.
The promising outcome from our efforts may be used to develop
quantum dot probes for the early detection of deadly tumours like
pancreatic and bladder cancers. This, in addition to our burgeoning
relationships with commercial and research institutions at the
cutting edge of the battle against cancer, shows the scope of our
ambition and the value of our technology.
Following our rapid progress, work is being undertaken to
prepare the technology for clinical trials. To date Nanoco's life
sciences efforts have been grant funded. We continue to seek grant
and other funding to enable the development to continue in life
sciences whilst maintaining our focus on our Display business.
Commercial applications - Lighting
The lighting market is worth more than $100 billion in annual
sales and is heavily fragmented into multiple market segments.
Nanoco is focusing on niche lighting applications where our quantum
dots add value to the end user and fit into the Company's current
supply chain. One application which meets these criteria is
horticultural lighting where light can be tuned to match ideal
growing conditions for specific plants, vegetables and flowers.
Nanoco's prototype horticultural lighting product was recognised at
the CES earlier this year when it won a CES Innovation Award.
Emphasis is being given on the development of display products over
lighting products at present to generate sales revenues as soon as
possible.
Commercial applications - Solar
We have developed our printable CIGS based technology to the
point where it now needs to be scaled-up beyond the 5cm x 5cm cells
made in the Company's laboratories. The attractiveness of this
technology is its ability to convert sunlight to electricity at a
very competitive cost.
In order to take the technology to the next level the Company is
seeking an industrialization partner with whom we can work to
develop the business.
Research and development
Continuous innovation through the Company's active research and
development programmes is a core value of Nanoco and the Company
actively protects its intellectual property by filing patents. We
currently have circa 550 patents and patent applications filed
globally.
Notable projects during the period have resulted in significant
improvement in manufacturing processes providing a ten-fold
increase in capacity compared to a year ago.
We have also incorporated a new subsidiary, Nanoco 2D Materials
Limited, to encapsulate our new discoveries in new classes of
quantum materials. This work is at a very early stage and we have
reached agreement with the University of Manchester to carry out
further work to demonstrate the feasibility of this new
technology.
During December 2016 we purchased a group of Kodak patents
relating to electroluminescence which we believe will have an
important role in future developments in display and lighting. This
patent portfolio which contained 35 patents is focused on using
quantum dots in future generations of electroluminescent
displays.
Restriction of Hazardous Substances ("RoHS")
The use of highly toxic cadmium in electronics and electrical
products continues to be regulated in the EU by the RoHS Directive
[2011/65/EU]. This limits cadmium to 0.01% or 100 ppm, ten times
less than mercury or lead due to its greater danger to health and
the environment. Exemption 39, which allows it to be used in
quantum dots ("QDs") for lighting and display products, is time
limited and should have ended in 2014. Despite the commercial
launch of cadmium-free QD televisions in early 2015, the Commission
pressed ahead with an Act to extend Exemption 39 by three years,
but this was overwhelmingly rejected by the European Parliament on
20 May 2015 voting 618 to 33. Regrettably, the Commission insisted
on repeating a full review with its consultant, the Öko-Institut,
instead of terminating the exemption.
The new Öko-Institut report, published in May 2016, proposed a
three-year extension for displays, but none for lighting since no
commercial cadmium QD lighting products exist. The justification
given for displays was based on claimed energy savings for cadmium
QDs compared to cadmium-free QDs and other technologies. However,
this is disputed both technically and legally since:
-- The test used was not independent or to a recognised standard
-- Statutory testing of "real" display products available on the
market shows that cadmium-free QD televisions actually use less
energy
-- The overall safety and environmental benefits were not
properly accounted for as RoHS regulations require
After consultation in September 2016 with Member State
representatives highlighted increasing concern, the Commission
issued a draft Act in February 2017 that reduced the extension for
displays to two years, the minimum possible. However, this is still
being objected to strongly by Nanoco and others. Given the proven
performance and availability of cadmium-free QDs, we believe that
there is a strong case for the Commission to end Exemption 39 now,
which would result in a twelve to 18 month selling-off period of
remaining cadmium based display inventory under RoHS rules. Even if
the Commission puts forward an Act to extend the exemption, this
would have to be ratified by both the EU Council and Parliament,
with a strong possibility that it would be rejected again. Even if
it were passed, it is clear that the exemption must end at some
point in the near future and this will limit the number of display
brands which would be willing to invest in a technology that is
both controversial and of limited life-span.
It should be noted that, although it is an EU standard, RoHS
restrictions are being implemented in similar legislation around
the world. China introduced its own RoHS-2 in 2016, which will be
equivalent when fully implemented. We expect that China and other
major states will quickly follow the lead set by the EU when it
removes the exemption for cadmium QDs.
Financial results
Loss for H1 2017 after exceptional items and taxation was
GBP5.43 million (H1 2016: GBP5.24 million).The increase in revenues
compared to prior year of GBP0.53 million was offset by an increase
in costs resulting in an increase in the operating loss of GBP0.05
million.
Cash, cash equivalents and deposits, at 31 January 2017 were
GBP8.3 million (31 January 2016: GBP18.35 million; 31 July 2016:
GBP14.5 million) and the Company is due to receive an R&D tax
credit of GBP1.9 million in respect of the financial year ended 31
July 2016.
During the period, the Group continued to exercise prudent cash
management and reduced personnel costs by GBP1.1 million per annum,
conserving cash while maintaining operational efficiency. The Board
realises that commencement of commercial sales is vital to the
future of the Group and it has carried out significant contingency
planning as described in detail in the Financial review.
People
Gordon Hall retired as a Non-executive Director of Nanoco on 31
January 2017. We thank Gordon for his valuable contribution to the
Company over his many years of service. As announced in January,
Robin Williams has informed us that he will leave the Board after
three years with the Company in July 2017. Accordingly we are
looking to recruit one additional Non-executive Director to fill
the gap created by these two departures. Following the recruitment
of a new Non-executive Director the Board will then include two
independent Non-executive Directors which the Board considers
appropriate for the size of the Company.
We reduced our staff numbers during December 2016 in order to
conserve our cash balances. This action was considered necessary
for the future of the business, but the decision was not taken
lightly as we are very aware of the impact this has on our staff.
Critical to these cuts was ensuring that the Company's core ability
to deliver against orders and continue to innovate was not
jeopardized.
Outlook
Progress over the last six months has been transformative for
the business. We now have active engagement with nine display OEMs
working on 14 different programs and have developed the
manufacturing capabilities through our own facilities and those
being developed by our partners and supply chain to fulfil the
demand. We look forward to our current activities generating our
first commercial sales.
Dr Christopher Richards Dr Michael Edelman
Chairman Chief Executive Officer
4 April 2017 4 April 2017
Chief Financial Officer's Review
Revenue
Revenues in the six months to 31 January 2017 were GBP0.68
million (H1 2016: GBP0.14 million) and the loss before tax was
GBP6.4 million (H1 2016: loss of GBP6.26 million). Other operating
income was GBP0.14 million (2016: GBP0.15 million). Revenues are
higher than in the prior period due to an increase in material
sales and the release of deferred revenue during the period
relating to the licence agreements signed in July 2016.
Research and development
Gross investment in research and development in 2017 was GBP2.87
million (H1 2016: GBP2.94 million) to support the ongoing
development of CFQD(R) and other nanoparticles.
Administrative expenses
Administrative expenses increased by GBP0.77 million due to
increases in expenditure on travel, professional fees (including
patent maintenance), recruitment costs, marketing fees and costs
associated with the EU cadmium review. A cost reduction programme
was implemented in December 2016 and the benefit of this will
commence in the second half of the current financial year. The
programme will result in a reduction of personnel costs by GBP1.1
million per annum and in addition there will be further overhead
savings from the lower headcount.
Operating loss before tax
Operating loss in H1 2017 was GBP6.43 million (H1 2016: loss of
GBP6.39 million). Interest income decreased to GBP0.04 million (H1
2016: GBP0.13 million) reflecting lower cash balances. As a result,
loss before tax for H1 2017 was GBP6.40 million (H1 2016: loss of
GBP6.26 million).
Taxation
The Group continues to make research and development tax credit
claims on its qualifying expenditure. We also take advantage of the
provision whereby such losses so generated may be surrendered for
cash. The tax credit for the period was GBP0.97 million (H1 2016:
GBP1.02 million). The amount receivable at 31 January 2017 was
GBP2.94 million (H1 2016: GBP2.83 million).
Net result
Loss for H1 2017 after exceptional items and taxation was
GBP5.42 million (H1 2016: loss of GBP5.24 million).
Earnings per share
For H1 2017, basic loss per share was 2.28 pence per share (H1
2016 loss of 2.21 pence per share). As at 31 January 2017 there
were 238,236,828 ordinary shares in issue (31 January 2016:
237,077,578).
Cash position and liquidity
As at 31 January 2017 the Group had short-term deposits, cash
and cash equivalents of GBP8.33 million (31 January 2016: GBP18.3
million). Both cash and costs continue to be prudently and tightly
managed.
During H1 2017, the Group generated a cash outflow from
operations of GBP5.89 million compared with an outflow of GBP5.66
million in H1 2016.
In H1 2017 the Group's total cash outflow in respect of tangible
fixed assets was GBP0.24 million (H1 2016: GBP0.14 million) mainly
comprising the continued investment in scale up of manufacturing
capacity, support for R&D activities and IT improvement
projects. In H1 2017 the Group's total cash outflow in respect of
intangible fixed assets was GBP0.58 million (H1 2016: GBP0.39
million) and related to patent costs.
Balance sheet
At 31 January 2017, the consolidated balance sheet showed total
shareholders' equity of GBP14.1 million (31 January 2016: GBP24.0
million).
Going concern
In assessing whether the going concern basis is an appropriate
basis for preparing the interim Condensed Consolidated Financial
Statements, the Directors have utilised their detailed forecasts
which take into account current and expected business activities,
cash balance of GBP8.3 million as shown in its balance sheet at 31
January 2017, the principal risks and uncertainties the Group faces
and other factors impacting the Group's future performance.
The Group has prepared sales forecasts for the period ending 31
July 2018. The forecasts include low, base and high levels of
sales. These forecasts have been created based on the detailed work
which is ongoing with Wah Hong and nine OEMs covering 14 projects
and management's expectations of revenues from Merck and Dow.
The base case forecast reflects the Board's current
expectations. The key assumptions underpinning the base case sales
forecast are:
-- Sales of commercial quantities of materials produced in
Runcorn commence in May 2017 and monthly quantities sold more than
double by October 2017
-- Dow and Merck commence shipping commercial sales in July 2017
and November 2017 respectively and royalties and milestone payments
are paid to Nanoco quarterly in arrears. Within six months of
commencement each company reaches a stable level of sales
representing a five-fold increase from initial volumes.
-- Cost base grows in line with manufacturing activities
The base case forecast produces a cash flow forecast that
demonstrates that the Company has sufficient cash throughout the
period of the forecast and generates cash during that period.
The Group is in extensive discussions with nine OEMs regarding
14 projects and expects a number of these opportunities to convert
to sales. However the Board acknowledges that there is a risk that
some or all of these projects may not convert to sales during the
forecast period. Accordingly, the Board has identified a worst case
scenario to consider in assessing the going concern status of the
business. The worst case scenario is that no new sales materialise
from any of the Company's licensing partners, which could occur if
the Company's products fail to meet the specifications of the OEMs,
the Company is unable to supply product from Runcorn, the EU
extends the exemption for cadmium products and Dow and Merck fail
to exploit their licence agreements.
In the worst case scenario, the Company's cash resources would
run out in the first quarter of calendar year 2018 if no action to
reduce current costs is taken. Management has identified a series
of mitigating actions, including cost savings and a reorganisation
of its operations that could be undertaken in the event sales do
not materialise. On the basis that no sales have occurred, the
Group would enact its cost reduction plans on a timely basis
including a very significant reduction in its manufacturing
capability and focus on its licensing operations. Sub contract
manufacture would be put in place to satisfy future demand. All of
the cost savings are under the direct control of the Board and the
Board has the ability and intention to make such changes on a
timely basis.
IAS 1 Presentation of Financial Statements requires the
Directors to disclose "material uncertainties related to events or
conditions that may cast significant doubt upon the Company's
ability to continue as a going concern". The Directors consider
that the uncertainty regarding the Company's ability to achieve its
forecast sales revenues within its base case described above meets
the definition of a "material uncertainty". Nevertheless,
considering the mitigating actions that can be made and after
making enquiries and considering the uncertainty described above,
the Directors have a reasonable expectation that the Company has
access to adequate resources to continue in operational existence
for the foreseeable future. Accordingly they continue to adopt the
going concern basis in preparing the 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.
Principal risks
The Directors have considered the principal risks which may have
a material impact on the Group's performance in the second half of
2017. The risks remain as disclosed in pages 22 to 23 of the 2016
Annual Report and Accounts.
Forward-looking statements
The foregoing disclosures contain certain forward-looking
statements. Although Nanoco believes that the expectations
reflected in these forward-looking statements are reasonable, it
can give no assurance that these expectations will materialise.
Because the expectations are subject to risks and uncertainties,
actual results may vary significantly from those expressed or
implied by the forward-looking statements based upon a number of
factors. Nanoco undertakes no obligation to revise or update any
forward statement to reflect events or circumstances after the date
of this Interim Report.
David Blain
Chief Financial Officer
4 April 2017
Responsibility statement
The Directors of Nanoco Group plc, as listed on pages 26 and 27
of the 2016 Annual Report and Accounts, confirm to the best of
their knowledge:
a) The condensed set of financial statements have been prepared
in accordance with International Accounting Standards 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 have 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 2015
Annual Report and Accounts.
By order of the Board
Dr Michael Edelman
Chief Executive Officer
4 April 2017
Condensed Consolidated Statement of Comprehensive Income
For the six months ended 31 January 2017
(Re-presented
- note
4)
Six months Six months Year
to to to
31 January 31 January 31 July
2017 2016 2016
(Unaudited) (Unaudited) (Audited)
Notes GBP'000 GBP'000 GBP'000
------------------------------------------ ------ ------------ -------------- ----------
Revenue 3 676 144 474
Cost of sales (36) (29) (177)
Gross profit/(loss) 640 115 297
Other operating income 4 142 146 284
Operating expenses
Research and development
expenses (2,873) (3,061) (5,995)
Administrative expenses (4,347) (3,586) (7,367)
Operating loss (6,438) (6,386) (12,781)
* Before share-based payments (6,198) (6,273) (12,511)
* Share-based payments (240) (113) (270)
------------------------------------------ ------ ------------ -------------- ----------
Finance income 5 35 130 193
Finance expense 5 - (2) (12)
Loss on ordinary activities
before taxation (6,403) (6,258) (12,600)
Taxation 6 975 1,021 1,993
Loss for the period and
total comprehensive loss
for the period (5,428) (5,237) (10,607)
------------------------------------------ ------ ------------ -------------- ----------
Loss per share:
Basic and diluted loss
for the period 7 (2.28)p (2.21)p (4.47)p
------------------------------------------ ------ ------------ -------------- ----------
Condensed Consolidated Statement of Changes in Equity
For the six months ended 31 January 2017
Issued Share-based
equity payment Merger Revenue
capital reserve reserve reserve Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------------------- -------- ------------ -------- --------- --------
At 1 August 2015
(audited) 58,037 2,445 (1,242) (30,160) 29,100
Loss for the six
months to 31 January
2016 - - - (5,237) (5,237)
Share-based payments - 113 - - 113
At 31 January 2016
(unaudited) 58,037 2,558 (1,242) (35,397) 23,976
--------------------------- -------- ------------ -------- --------- --------
Loss for the six
months to 31 July
2016 - - - (5,370) (5,370)
Share-based payments - 157 - - 157
At 31 July 2016 (audited) 58,057 2,715 (1,242) (40,767) 18,763
--------------------------- -------- ------------ -------- --------- --------
Loss for the six
months to 31 January
2017 - - - (5,428) (5,428)
Shares issued on
exercise of options 545 - - - 545
Share-based payments - 240 - - 240
At 31 January 2017
(unaudited) 58,602 2,955 (1,242) (46,195) 14,120
--------------------------- -------- ------------ -------- --------- --------
Condensed Consolidated Statement of Financial Position
As at 31 January 2017
31 January 31 January 31 July
2017 2016 2016
(Unaudited) (Unaudited) (Audited)
Notes GBP'000 GBP'000 GBP'000
------------------------------- ------ ------------ ------------ ----------
Assets
Non-current assets
Property, plant and equipment 1,106 1,668 1,260
Intangible assets 8 2,820 2,068 2,423
3,926 3,736 3,683
------------------------------- ------ ------------ ------------ ----------
Current assets
Inventories 238 232 208
Trade and other receivables 9 1,013 855 2,045
Income tax asset 2,945 2,825 1,970
Short-term investments
and cash on deposit 5,000 10,000 5,000
Cash and cash equivalents 3,328 8,273 9,511
12,524 22,185 18,734
------------------------------- ------ ------------ ------------ ----------
Total assets 16,450 25,921 22,417
------------------------------- ------ ------------ ------------ ----------
Liabilities
Current liabilities
Trade and other payables 1,526 1,882 2,443
Financial liabilities - 63 32
Deferred revenue 10 207 - 531
1,733 1,945 3,006
------------------------------- ------ ------------ ------------ ----------
Non-current liabilities
Deferred revenue 10 597 - 648
- - 648
------------------------------- ------ ------------ ------------ ----------
Total liabilities 2,329 1,945 3,654
------------------------------- ------ ------------ ------------ ----------
Net assets 14,120 23,976 18,763
------------------------------- ------ ------------ ------------ ----------
Capital and reserves
Issued equity capital 11 58,602 58,057 58,057
Share-based payment reserve 12 2,955 2,558 2,715
Merger reserve (1,242) (1,242) (1,242)
Revenue reserve (46,195) (35,397) (40,767)
------------------------------- ------ ------------ ------------ ----------
Total equity 14,120 23,976 18,763
------------------------------- ------ ------------ ------------ ----------
Approved by the Board and authorised for issue on 4 April
2017
Dr Michael Edelman
Chief Executive Officer
Condensed Consolidated Cash Flow Statement
For the six months ended 31 January 2017
Six months Six months Year
to to to
31 January 31 January 31 July
2017 2016 2016
(Unaudited) (Unaudited) (Audited)
GBP'000 GBP'000 GBP'000
--------------------------------- ------------ ------------ ----------
Loss before tax (6,403) (6,258) (12,600)
Adjustments for:
Net Finance income (35) (128) (181)
Depreciation of tangible
fixed assets 393 533 991
Amortisation of intangible
assets 186 139 298
Share-based payments 240 113 270
Changes in working capital:
Increase in inventories (30) (24) -
Decrease/(increase) in
trade and other receivables 1,054 2 (1,143)
(Decrease)/increase in
trade and other payables (917) (27) 503
(Decrease)/increase in
deferred revenue (375) - 1,179
---------------------------------- ------------ ------------ ----------
Cash outflow from operating
activities (5,887) (5,650) (10,683)
Research and development
tax credit received - - 1,830
Overseas corporation tax
paid - (4) (7)
---------------------------------- ------------ ------------ ----------
Net cash outflow from
operating activities (5,887) (5,654) (8,860)
---------------------------------- ------------ ------------ ----------
Cash flows from investing
activities:
Purchases of tangible
fixed assets (239) (139) (189)
Purchases of intangible
fixed assets (583) (386) (900)
Decrease in cash placed
on deposit - 10,000 15,000
Interest received 13 175 224
---------------------------------- ------------ ------------ ----------
Net cash inflow from investing
activities (809) 9,650 14,135
---------------------------------- ------------ ------------ ----------
Cash flows from financing
activities
Interest paid - (2) (12)
Exercise of share options 545 - -
Loan repayment (32) (32) (63)
---------------------------------- ------------ ------------ ----------
Net cash (outflow)/inflow
from financing activities 513 (34) (75)
---------------------------------- ------------ ------------ ----------
(Decrease)/increase in
cash and cash equivalents (6,183) 3,962 5,200
Cash and cash equivalents
at the start of the period 9,511 4,311 4,311
---------------------------------- ------------ ------------ ----------
Cash and cash equivalents
at the end of the period 3,328 8,273 9,511
Monies placed on short-term
deposit 5,000 10,000 5,000
---------------------------------- ------------ ------------ ----------
Cash, cash equivalents
and deposits at the end
of the period 8,328 18,273 14,511
---------------------------------- ------------ ------------ ----------
Notes to the Condensed Consolidated Financial Statements
For the six months ended 31 January 2017
1. Corporate information
The Interim Report and Accounts of the Group for the six months
ended 31 January 2017 was authorised for issue in accordance with a
resolution of the Directors on 4 April 2017. The Interim Report and
Accounts 2017 is unaudited but has been reviewed by the Auditors as
set out in its report.
Nanoco Group plc (the "Company") has a premium listing on the
main market of the London Stock Exchange and is incorporated and
domiciled in the UK.
These Condensed Consolidated Financial Statements consolidate
those of the Company and its subsidiaries (together referred to as
the "Group").
These Condensed Consolidated Financial Statements are unaudited
and do not constitute statutory accounts of the Group as defined in
section 434 of the Companies Act 2006. The auditor, Ernst &
Young LLP, has carried out a review of the financial information in
accordance with the guidance contained in International Standard on
Review Engagements (UK and Ireland) 2410 - Review of Interim
Financial Information Performed by the Independent Auditor of the
Entity, and their review report is set out at the end of this
report.
The financial information for the year ended 31 July 2016 has
been extracted from the Group's published financial statements for
that year, and a copy of the statutory accounts for that financial
year has been delivered to the Registrar of Companies. The auditors
reported on those accounts and itd report was unqualified, did not
draw attention to any matters by way of emphasis and did not
contain a statement under section 498(2) or (3) of the Companies
Act 2006.
2. Accounting policies
Basis of preparation
The accounting policies adopted in these Condensed Consolidated
Financial Statements are consistent with those followed in the
preparation of the Group's Annual Report and Accounts for the year
to 31 July 2016. This interim condensed financial report includes
audited comparatives for the year to 31 July 2016. The 2016 Annual
Report and Accounts, which are prepared in accordance with
International Financial Reporting Standards ("IFRS") as adopted by
the European Union, received an unqualified audit opinion and has
been filed with the Registrar of Companies. These interim Condensed
Consolidated Financial Statements have been prepared in accordance
with the Disclosure and Transparency Rules of the Financial Conduct
Authority, IAS 34 Interim Financial Reporting as adopted by the
European Union and using the recognition and measurement principles
of IFRSs as adopted by the European Union and have been prepared
under the historical cost convention.
Going concern
In assessing whether the going concern basis is an appropriate
basis for preparing the Condensed Consolidated Financial
Statements, the Directors have utilised their detailed forecasts
which take into account current and expected business activities,
cash balance of GBP8.3 million as shown in its balance sheet at 31
January 2017, the principal risks and uncertainties the Group faces
and other factors impacting the Group's future performance.
The Group has prepared sales forecasts for the period ending 31
July 2018. The forecasts include low, base and high levels of
sales. These forecasts have been created based on the detailed work
which is ongoing with Wah Hong and nine OEMs covering 14 projects
and management's expectations of revenues from Merck and Dow.
The base case forecast reflects the Board's current expectation.
The key assumptions underpinning the base case sales forecast
are:
-- Sales of commercial quantities of materials produced in
Runcorn commence in May 2017 and monthly quantities sold more than
double by October 2017
-- Dow and Merck commence shipping commercial sales in July 2017
and November 2017 respectively and royalties and milestone payments
are paid to Nanoco quarterly in arrears. Within six months of
commencement each company reaches a stable level of sales
representing a five-fold increase from initial volumes.
-- Cost base grows in line with manufacturing activities
The base case forecast produces a cashflow forecast that
demonstrates that the Company has sufficient cash throughout the
period of the forecast and generates cash during that period.
The Group is in extensive discussions with nine OEMs regarding
14 projects and expects a number of these opportunities to convert
to sales. However the Board acknowledges that there is a risk that
some or all of these projects may not convert to sales during the
forecast period. Accordingly, the Board has identified a worst case
scenario to consider in assessing the going concern status of the
business. The worst case scenario is that no new sales materialise
from any of the Company's licensing partners, which could occur if
the Company's products fail to meet the specifications of the OEMs,
the Company is unable to supply product from Runcorn, the EU
extends the exemption on cadmium products and Dow and Merck fail to
exploit their licence agreements.
In the worst case scenario, the Company's cash resources would
run out in the first quarter of calendar year 2018 if no action to
reduce current costs is taken. Management has identified a series
of mitigating actions, including cost savings and a reorganisation
of its operations that could be undertaken in the event sales do
not materialise. On the basis that no sales have occurred, the
Group would enact its cost reduction plans on a timely basis
including a very significant reduction in its manufacturing
capability and focus on its licensing operations. Sub contract
manufacture would be put in place to satisfy future demand. All of
the cost savings are under the direct control of the Board and the
Board has the ability and intention to make such changes on a
timely basis.
IAS 1 Presentation of Financial Statements requires the
Directors to disclose "material uncertainties related to events or
conditions that may cast significant doubt upon the Company's
ability to continue as a going concern". The Directors consider
that the uncertainty regarding the Company's ability to achieve its
forecast sales revenues within its base case described above meets
the definition of a "material uncertainty". Nevertheless,
considering the mitigating actions that can be made and after
making enquiries and considering the uncertainty described above,
the Directors have a reasonable expectation that the Company has
access to adequate resources to continue in operational existence
for the foreseeable future. Accordingly they continue to adopt the
going concern basis in preparing the 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.
Accounting policies
Accounting policies adopted in the preparation of the interim
condensed consolidated financial statements are consistent with
those followed in the preparation of the Group's annual financial
statements for the year ended 31 July 2016.
There are no new, revised or amended standards and
interpretations which are mandatory for the first time for the
financial year ending 31 July 2017 and which have a material impact
on the interim condensed consolidated financial statements. New,
revised or amended standards and interpretations that are not yet
effective have not been early adopted.
Basis of consolidation
These interim condensed consolidated financial statements
include the financial statements of Nanoco Group plc and the
entities it controls (its subsidiaries).
3. Segmental information
Operating segments
The Board has identified that it has one reportable operating
segment being the provision of high performance nanoparticles as
each of the Group's divisions continue to have similar activities,
economic characteristics and future prospects.
. All revenues have been generated from continuing operations
and are from external customers.
(Re-presented
Six months - note Year
to 4) to
Six months
to
31 January 31 January 31 July
2017 2016 2016
(Unaudited) (Unaudited) (Audited)
GBP'000 GBP'000 GBP'000
------------------------ ------------- -------------- ----------
Analysis of revenue
Products sold 196 89 204
Rendering of services 101 55 114
Royalties and licences 379 - 156
------------------------- ------------- -------------- ----------
676 144 474
------------------------ ------------- -------------- ----------
Analysis of operating
loss
------------------------ ------------- -------------- ----------
Loss for the period (6,438) (6,386) (12,781)
------------------------- ------------- -------------- ----------
The timing of the annual submission and subsequent receipt of
the R&D tax credit has a material effect on the cash flow of
the Group. There are no other factors of a seasonal or cyclical
nature affecting the results of the Group.
All the Group's assets are held in the UK and all of its capital
expenditure arises in the UK.
4. Other operating income
(Re-presented)
Six months Six months Year
to to to
31 January 31 January 31 July
2017 2016 2016
(Unaudited) (Unaudited) (Audited)
GBP'000 GBP'000 GBP'000
------------------- ------------- --------------- ----------
Government grants 142 146 284
-------------------- ------------- --------------- ----------
In the period to 31 January 2016 income from government grants
was reported within revenue as rendering of services and costs of
GBP115,000 relating to such services were included in cost of sales
instead of Research and development expenses. We have re-presented
the comparative disclosure in these statements.
5. Finance income and expense
Six months Six months Year
to to to
31 January 31 January 31 July
2017 2016 2016
(Unaudited) (Unaudited) (Audited)
GBP'000 GBP'000 GBP'000
-------------------------- ------------ ------------ ----------
Finance income
Bank interest receivable 35 130 193
Finance expense
Loan interest payable - (2) (12)
--------------------------- ------------ ------------ ----------
35 128 181
-------------------------- ------------ ------------ ----------
6. Taxation
The tax credit is made up as follows:
Six months Six months Year
to to to
31 January 31 January 31 July
2017 2016 2016
(Unaudited) (Unaudited) (Audited)
GBP'000 GBP'000 GBP'000
------------------------------- ------------ ------------ ----------
Current income tax:
UK corporation tax losses - - -
in the year
Research and development
income tax credit receivable (975) (975) (1,970)
Adjustment in respect of
prior years - (50) (30)
Overseas corporation tax - 4 7
-------------------------------- ------------ ------------ ----------
Income tax credit (975) (1,021) (1,993)
-------------------------------- ------------ ------------ ----------
The Group has accumulated losses available to carry forward
against future trading profits of GBP26.3 million (2016: GBP22.1
million).
Deferred tax liabilities/(assets) provided/recognised are as
follows:
Six months Six months Year
to to to
31 January 31 January 31 July
2017 2016 2016
(Unaudited) (Unaudited) (Audited)
GBP'000 GBP'000 GBP'000
-------------------------------- ------------ ------------ ----------
Accelerated capital allowances 138 238 189
Share-based payments (138) (238) (189)
Tax losses - - -
--------------------------------- ------------ ------------ ----------
- - -
-------------------------------- ------------ ------------ ----------
The Group also has deferred tax assets, measured at a standard
rate of 18% (2016: 20%) in respect of share-based payments of
GBP454,000 (2016: GBP307,000) and tax losses of GBP4,728,000 (2016:
GBP3,970,000) which have not been recognised as an asset as it is
not probable that future taxable profits will be available against
which the assets can be utilised.
7. Loss per share
Six months Six months Year
to to to
31 January 31 January 31 July
2017 2016 2016
(Unaudited) (Unaudited) (Audited)
GBP'000 GBP'000 GBP'000
---------------------------------- ------------ ------------ ------------
Loss for the period attributable
to equity shareholders (5,428) (5,237) (10,607)
Share-based payments 240 113 270
----------------------------------- ------------ ------------ ------------
Loss for the period (5,188) (5,124) (10,337)
----------------------------------- ------------ ------------ ------------
Weighted average number
of shares No. No. No.
---------------------------------- ------------ ------------ ------------
Ordinary shares in issue
(1) 238,120,572 236,535,267 237,077,578
----------------------------------- ------------ ------------ ------------
Adjusted loss per share before
share-based payments (pence) (2.18) (2.17) (4.36)
----------------------------------- ------------ ------------ ------------
Basic loss per share (pence) (2.28) (2.21) (4.47)
----------------------------------- ------------ ------------ ------------
(1) Excludes the 12,222 shares held in Treasury.
Diluted loss per share has not been presented above as the
effect of share options issued is anti-dilutive. The adjusted loss
is presented as the Board measures overall performance taking into
account IFRS 2 charges and any material one-off costs incurred in a
reporting period.
No interim dividend has been recommended.
8. Intangible assets
Six months Six months Year
to to to
31 January 31 January 31 July
2017 2016 2016
(Unaudited) (Unaudited) (Audited)
Cost GBP'000 GBP'000 GBP'000
-------------------------------- ------------ ------------ ----------
At the beginning of the period 3,703 2,803 2,803
Additions in the period 583 386 900
--------------------------------- ------------ ------------ ----------
At the end of the period 4,286 3,189 3,703
--------------------------------- ------------ ------------ ----------
Amortisation
--------------------------------- ------------ ------------ ----------
At the beginning of the period 1,280 982 982
Provided in the period 186 139 298
--------------------------------- ------------ ------------ ----------
At the end of the period 1,466 1,121 1,280
--------------------------------- ------------ ------------ ----------
Net book value 2,820 2,068 2,423
--------------------------------- ------------ ------------ ----------
The expenditure on patents is amortised on a straight-line basis
over ten years. Amortisation provided during the period is
recognised in administrative expenses. The Group does not believe
that any of its patents in isolation is material to the
business.
To date the Group has not capitalised any of its development
costs and all such costs are written off as incurred. Careful
judgement by the Directors is applied when deciding whether the
recognition requirements for development costs have been met. This
is necessary as the economic success of any product development is
uncertain until such time as technical viability has been proven
and commercial supply agreements are likely to be achieved.
Judgements are based on the information available at each reporting
date which includes the progress with testing and certification and
progress on, for example, establishment of commercial arrangements
with third parties. In addition, all internal activities related to
research and development of new products are continuously monitored
by the Directors.
9. Trade and other receivables
31 January 31 January 31 July
2017 2016 2016
(Unaudited) (Unaudited) (Audited)
GBP'000 GBP'000 GBP'000
-------------------------------- ------------ ------------ ----------
Trade receivables 94 37 1,455
Prepayments and accrued income 650 642 422
Other receivables 269 176 168
--------------------------------- ------------ ------------ ----------
1,013 855 2,045
--------------------------------- ------------ ------------ ----------
10. Deferred revenue
31 January 31 January 31 July
2017 2016 2016
(Unaudited) (Unaudited) (Audited)
GBP'000 GBP'000 GBP'000
------------- ------------ ------------ ----------
Current 207 - 531
Non-current 597 - 648
-------------- ------------ ------------ ----------
804 - 1,179
------------- ------------ ------------ ----------
Deferred revenue arises under IFRSs where upfront licence fees
are accounted for on a straight-line basis over the initial term of
the contract or where performance criteria have not been satisfied
in the accounting period.
11. Share capital
Reverse
Share Share acquisition
capital premium reserve Total
Number GBP'000 GBP'000 GBP'000 GBP'000
------------------------------ -------------- --------- ---------- ------------ ---------
Allotted, called
up and fully paid
ordinary shares of
10p:
At 31 July 2015,
31 July 2016 and
31 January 2016 (unaudited) 237,077,578 23,708 112,217 (77,868) 58,057
Shares issued on
exercise of options 1,159,250 116 429 - 545
At 31 January 2017 238,236,828 23,824 112,646 (77,868) 58,602
------------------------------ -------------- --------- ---------- ------------ ---------
The retained loss and other equity balances recognised in the
Group financial statements reflect the consolidated retained loss
and other equity balances of Nanoco Tech Limited immediately before
the business combination which was reported in the year ended 31
July 2009. The consolidated results for the period from 1 August
2008 to the date of the acquisition by the Company are those of
Nanoco Tech Limited. However, the equity structure appearing in the
Group financial statements reflects the equity structure of the
legal parent, including the equity instruments issued under the
share for share exchange to effect the transaction. The effect of
using the equity structure of the legal parent gives rise to an
adjustment to the Group's issued equity capital in the form of a
reverse acquisition reserve.
12. Share-based payment reserve
Total
GBP'000
---------------------- --------
At 31 July 2015 2,445
Share-based payments 113
----------------------- --------
At 31 January 2016 2,558
Share-based payments 157
------------------------- --------
At 31 July 2016 2,715
Share-based payments 240
------------------------- --------
At 31 January 2017 2,955
------------------------- --------
The share-based payment reserve accumulates the corresponding
credit entry in respect of share-based payment charges. Movements
in the reserve are disclosed in the Condensed consolidated
statement of changes in equity.
A charge of GBP240,000 has been recognised in the Statement of
comprehensive income for the half year (2016: GBP113,000).
Share option schemes
Full details of the Group's share option schemes are detailed in
note 21 of the 2016 Annual Report.
Shares held in the Employee Benefit Trust ("EBT")
On 2 August 2016, the remaining holder of Jointly Owned shares
exercised their option to convert the holding to sole beneficiary.
As a result, there are no shares held by the EBT
Fair value benefit
The fair value benefit is independently measured using Binomial
or Black-Scholes valuation models where there are non-market
performance conditions and Stochastic (Monte Carlo) models for
options with market based performance conditions taking into
account the terms and conditions upon which the options were
granted.
Grant of options
On 22 November 2016 the Company granted a total of 3,818,149
nil-cost options over ordinary shares in the Company under the
Nanoco Group 2015 Long Term Incentive Plan to the Executive
Directors and all other eligible employees.
The vesting of the options granted under the LTIP is subject to
the achievement of performance conditions based upon share price
growth and revenue targets over the three-year performance period
commencing with Nanoco's 2016/2017 financial year. Ordinarily, the
options will vest (subject to the achievement of the performance
conditions) following the announcement of Nanoco's results for its
2018/2019 financial year and be released to the participants
following the end of a two-year holding period.
In addition, on 22 November 2016, a total of 340,672 nil-cost
options were granted under the Deferred Bonus Plan.
13. Related party transactions
Balances and transactions between the Company and its
subsidiaries, which are related parties, have been eliminated upon
consolidation.
The Company has intercompany loans and accounts with its
subsidiary undertakings, details of which are set out in the 2016
Annual Report and Accounts.
14. Post-balance sheet events
There have been no reportable events from the balance sheet date
to the approval of these interim condensed consolidated financial
statements.
Independent Review Report to Nanoco Group Plc
Introduction
We have been engaged by the Company to review the condensed set
of financial statements in the half-yearly financial report for the
six months ended 31 January 2017 which comprises the Condensed
Consolidated Statement of Comprehensive Income, the Condensed
Consolidated Statement of Changes in Equity, the Condensed
Consolidated Statement of Financial Position, the Condensed
Consolidated Cash Flow Statement and the related notes 1 to 14. We
have read the other information contained in the half yearly
financial report and considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the condensed set of financial statements.
This report is made solely to the Company in accordance with
guidance contained in International Standard on Review Engagements
2410 (UK and Ireland) "Review of Interim Financial Information
Performed by the Independent Auditor of the Entity" issued by the
Auditing Practices Board. To the fullest extent permitted by law,
we do not accept or assume responsibility to anyone other than the
Company, for our work, for this report, or for the conclusions we
have formed.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and
has been approved by, the directors. The directors are responsible
for preparing the half-yearly financial report in accordance with
the Disclosure and Transparency Rules of the United Kingdom's
Financial Conduct Authority.
As disclosed in note 2, the annual financial statements of the
Group are prepared in accordance with IFRS as adopted by the
European Union. The condensed set of financial statements included
in this half-yearly financial report has been prepared in
accordance with International Accounting Standard 34, "Interim
Financial Reporting", as adopted by the European Union.
Our responsibility
Our responsibility is to express to the Company a conclusion on
the condensed set of financial statements in the half-yearly
financial report based on our review.
Scope of review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410, "Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity" issued by the Auditing Practices Board for use in
the United Kingdom. A review of interim financial information
consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures. A review is substantially less in scope than an
audit conducted in accordance with International Standards on
Auditing (UK and Ireland) and consequently does not enable us to
obtain assurance that we would become aware of all significant
matters that might be identified in an audit. Accordingly, we do
not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half-yearly financial report for the six months ended 31
January 2017 is not prepared, in all material respects, in
accordance with International Accounting Standard 34 as adopted by
the European Union.
Emphasis of matter - going concern
In reaching our conclusion, which is not qualified, we have also
considered the adequacy of the disclosures made in note 2 to the
interim financial statements concerning the Company's ability to
continue as a going concern. The conditions described in note 2
indicate the existence of a material uncertainty which may cast
significant doubt about the Company's ability to continue as a
going concern. The condensed set of financial statements in the
half-yearly financial report do not include the adjustments that
would result if the Company was unable to continue as a going
concern.
Ernst & Young LLP
Manchester
4 April 2017
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR UOOURBOASRUR
(END) Dow Jones Newswires
April 04, 2017 02:01 ET (06:01 GMT)
Nanoco (LSE:NANO)
Historical Stock Chart
From Mar 2024 to Apr 2024
Nanoco (LSE:NANO)
Historical Stock Chart
From Apr 2023 to Apr 2024
