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Nanoco switches tack with non-exclusive Dow deal

The nanomaterials company plans to secure new partners and sell directly into the display market
April 13, 2016

Non-recurring milestone payments and shipment delays at partner Dow Chemical ripped into sales at Nanoco (NANO) in the first half, widening its adjusted operating loss by more than half to £6.3m. More positively, the producer of cadmium-free quantum dots and other nanomaterials revealed a revised game plan, following the recent conversion of its licensing agreement with Dow to non-exclusive. Management hopes to compensate for a lower royalty rate and no performance-based income by recruiting additional partners and selling directly to the display market.

IC TIP: Hold at 43.3p

Nanoco prepared for its new strategy by boosting manufacturing capacity at its Runcorn facility in Cheshire. It also made progress in the lighting market, launching four product lines and penning another joint-development deal with Osram. Moreover, it formed a life sciences division to tap into the healthcare imaging market. And technological advances mean its solar ink can now convert 17 per cent of light into electricity.

Broker Stifel expects a pre-tax loss of £10.4m in the year to July, giving a loss per share of 4p (from losses of £10.3m and 4.1p in FY2015).

NANOCO (NANO)
ORD PRICE:43.3pMARKET VALUE:£103m
TOUCH:43-43.5p12-MONTH HIGH:116pLOW: 35p
DIVIDEND YIELD:nilPE RATIO:na
NET ASSET VALUE:10pNET CASH:£18.3m*

Half-year to 31 JanTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
20151.6-4.1-1.5nil
20160.3-6.3-2.2nil
% change-82---

*Excludes £1.9m in R&D tax credit expected in April 2016