TIDMNANO
RNS Number : 0001Q
Nanoco Group PLC
16 October 2019
16 October 2019
NANOCO GROUP PLC
("Nanoco" or the "Company")
Preliminary Results for the year ended 31 July 2019
Nanoco Group plc (LSE: NANO), a world leader in the development
and manufacture of cadmium-free quantum dots and other specific
nanomaterials emanating from its technology platform, is pleased to
announce its Preliminary Results for the year ended 31 July
2019.
Operational highlights
-- Platform technology strategy implemented - focus on
capabilities in design, development and scale-up of cadmium-free
quantum dots (CFQD(R) quantum dots) and novel nano-materials
-- Significant improvements in dot performance
-- Continued investment in IP portfolio with 745 granted and pending patents (2018: 654)
-- Core R&D, IP and production capabilities retained following display resource pivot
-- Commercial efforts focussed on two attractive, high growth
markets which are summarised below:
Nano-materials (for use in the electronics industry)(1)
o Achieved US Customer milestones, with GBP7.8 million contract
delivering through to December 2019
o Completed new Runcorn manufacturing facility, funded by US
Customer, now in final product validation
o Patented nano-material technology now proven in devices
o Actively engaging with other potential customers in Infrared
(IR) sensing market
Display
o Further deepening of R&D activity into QD-OLED and
micro-LED (Gen 2) and electro-luminescent (Gen 3) displays while
enhancing performance of dots for film based application as it
moves into the mass market (Gen1)
o Significant improvements in key performance characteristics in
Green and Red dots
o Engaged in commercial opportunities in all three generations
of display technology as noted above
Financial highlights
-- Significant increase in billings to GBP9.6 million (2018: GBP6.5 million)
-- Revenue more than doubled to GBP7.1 million (2018: GBP3.3 million)
-- Loss after tax reduced to GBP4.4 million (2018: GBP6.0 million, 2017: GBP9.1 million)
-- Q4 reorganisation following display resource pivot in Q2, now
delivering GBP0.6m of savings in FY20
-- Waiver of GBP4.2m contract liability by US Customer offsets
non-cash costs triggered by completion of current project
-- Cash of GBP7.0 million as at 31 July 2019 (31 January 2019:
GBP6.2 million; 31 July 2018: GBP10.7 million)
o Expect to have c.GBP6.0m cash on hand in December 2019 when US
Customer contract ends
o Further headroom to reduce costs and preserve cash if
commercial revenue streams are delayed
[1] The Group's platform technology is built on nano-materials.
Nano-materials for use in the electronics industry are one subset
of that platform. CFQD(R) quantum dots are another subset.
Dr Christopher Richards, Nanoco's Chairman, commented on the
results:
"Nanoco has delivered a strong performance this year, achieving
our best ever financial results in the Company's history. We pushed
our innovative platform technology into a range of potentially
lucrative commercial applications including IR sensing, while
significantly enhancing the performance of our nano-materials and
actively engaging in development work in all three display
technology generations.
"It was clearly disappointing, for reasons wholly unconnected to
Nanoco's performance or our materials, that the US Customer decided
not to continue the current project contract when it expires in
December 2019. However, we remain confident in the Group's assets,
team and capabilities. Our expected positive cash position of
GBP6.0m following completion of the current contract deliverables
for the US Customer provides us with reasonable headroom to deliver
on new sources of commercial income.
"Our commercial focus going forward will primarily be in the
electronics and display markets. We are already actively engaged
with an encouraging pipeline of potentially attractive
opportunities, all of which can be delivered by our current asset
and cost base. As ever, the Executive team is alert to the impact
of further delays in the realisation of these opportunities and
contingency plans are in place to manage any such delays to our
commercial development.
"There are still challenges and uncertainties to be managed and
the Board remains focused on maximizing shareholder value. Our
expanded platform technology continues to be relevant across a wide
range of market applications and has created a number of commercial
opportunities to pursue. The Board therefore remains confident in
the value inherent in the business."
Analyst meeting and webcast details
To listen to a webcast of the analyst briefing, please log on to
the following web address approximately five minutes before 8.30am
on 16 October 2019:
https://webcasting.brrmedia.co.uk/broadcast/5d8de042cbe3ca44a572df2c
A recording of the webcast will also be made available on
Nanoco's website, www.nanocogroup.com, later today.
A meeting for analysts will be held at 8.30am this morning, 16
October 2019 at the offices of Peel Hunt LLP, Moor House, 120
London Wall, EC2Y 5ET. For further details please contact Peel Hunt
on +44 (0)20 7418 8909
For further information, please contact:
Nanoco Tel: +44 (0) 161 603 7900
Michael Edelman, Chief Executive
Officer
Brian Tenner, Chief Operating and
Financial Officer
Caroline Watson, Investor Relations Tel: + 44 (0) 7799 897357
Manager
cwatson@nanocotechnologies.com
Peel Hunt Tel: +44 (0) 20 7418 8900
Edward Knight / Nick Prowting
MHP Communications Tel: +44 (0) 20 3128 8570
Reg Hoare / Giles Robinson / Pete
Lambie
nanoco@mhpc.com
Notes for editors:
About Nanoco Group plc
Nanoco (LSE: NANO) harnesses the power of nano-materials.
Nano-materials are materials with dimensions typically in the range
1 - 100 nm. Nano-materials have a range of useful properties,
including optical and electronic. Quantum dots are a subclass of
nano-material that have size-dependent optical and electronic
properties. The Group produces quantum dots.
Within the sphere of quantum dots, the Group exploits different
characteristics of the quantum dots to target different performance
criteria that are attractive to specific markets or end-user
applications such as the Display and Electronics markets. One of
the interesting properties of quantum dots is photoluminescence:
the emission of longer wavelength light upon excitation by light of
a shorter wavelength. The colour of light emitted depends on the
particle size. Nanoco's CFQD(R) quantum dots are free of cadmium
and other toxic heavy metals, and can be tuned to emit light at
different wavelengths across the visible and infrared spectrum,
rendering them useful for a wide range of applications including
displays, lighting and biological imaging.
Nanoco has non-exclusive manufacturing and marketing licensing
agreements in display with The Dow Chemical Company, Merck KGaA of
Germany and Wah Hong Industrial Corporation of Taiwan.
Nanoco was founded in 2001 and is headquartered in Manchester,
UK, with a US subsidiary, Nanoco Inc., in Concord, MA. Nanoco
continues to build out a world-class, patent-protected IP portfolio
generated both by its own innovation engine, as well as through
acquisition.
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.
Chairman's statement
The successful delivery of a number of milestones and the new
Runcorn production facility for our US Customer was a source of
great pride for the whole Nanoco team and has driven the strongest
financial results in the Group's history. For the year to 31 July
2019, revenue more than doubled for the second year in a row to
GBP7.1 million (2018: GBP3.3 million), our Adjusted EBITDA loss was
cut 38% to GBP3.8 million (2018: GBP6.2 million) and the second
half saw the business generate a small cash surplus.
It was therefore clearly disappointing that the US Customer
decided, for reasons wholly unconnected to the performance of
Nanoco and our nanomaterials, that the current contract will not be
extended after it expires on 31 December 2019. However, we continue
to operate on a broadly cash neutral basis through to the end of
December 2019, when we expect to have some GBP6.0 million of cash
on hand.
The Group is in active discussions with other potential new
customers for our materials, with a particular emphasis on both the
electronics and display sectors. In addition to these potentially
lucrative commercial opportunities for continued funding of the
Group's operations, the Board is also reviewing other sources of
funding.
Strategy and business activity
Nanoco's platform technology has remained our key strategic
focus during the year (our 'dot only' strategy). We continued to
extend and deepen the commercial relationship with our US Customer
in the electronics industry, which exploits and builds on the
technology platform developed over a number of years. Building on
the absorption characteristics of our quantum dots and leveraging
the outstanding skills of our technical teams, we moved into a
significantly wider field of nanomaterials and delivered all of our
customer's very challenging technical expectations. Though the end
of the current contract is disappointing, the Group is left in a
stronger position in terms of our own know-how and the new,
unencumbered production facility at Runcorn which can be utilised
freely to service other existing and potential customers in the
rapidly growing electronics and infra-red sensing markets.
Our research teams have also significantly improved the emission
performance of our CFQD(R) quantum dots by improving their energy
efficiency and clarity of colour. These performance improvements
are reflected in our growing IP portfolio and increasing specialist
know-how. It is this platform technology, which can be deployed
across a wide range of applications that is key to unlocking the
true value potential of the Group.
In the Display sector, some momentum is starting to build, with
film, QD OLED hybrid and micro-LED screens being actively pursued
by the larger brands of device builders. On film-based systems,
volumes will be greatly aided by the lowering of prices for
televisions featuring quantum dots, meaning this is no longer a
high-end, niche application. Quantum dots on QD OLED hybrid TVs are
likely to appear on the market in 2021/2022 and we are supporting
material pre-qualification work with our licence partners.
Recognising that the Group's core strengths with respect to the
display market are in quantum dots, we have redeployed resources
that were previously working on resin and film, back onto our core
quantum dot technology platform. In addition, we have increased our
engagement with other companies which specialise in resin, film and
ultimately display panels themselves for potential future
partnerships.
In Life Sciences, the Board recognises that this application
requires different capabilities from our core electronic materials
business and we continue to explore a number of strategic options,
including a possible spin-out of this business line.
In the application itself, we have made further progress in
demonstrating the clinical safety of our materials. This will allow
us to move forward with the development of new commercial
applications in several therapeutic areas which we have identified
as most applicable to our technology.
Other market niches continue to be explored.
Financial performance
Revenue in the last financial year more than doubled to GBP7.1
million (2018: GBP3.3 million). The loss before tax benefited
directly from the increased revenue on a relatively fixed cost base
and narrowed to GBP5.5 million (2018: GBP7.4 million). Cash
consumption of GBP4.6 million in the first half was dominated by
the completion of capital spend on the Runcorn production facility
expansion. In the second half the Group delivered a net positive
cash flow of GBP0.8 million and the Group expects to have around
GBP6.0m of cash by the time of the completion of the contract
extension with the US Customer at the end of December 2019.
With the Group still being at a pre-commercial production stage
in its evolution, our financial focus remains firmly fixed on close
management and control of our cost base and cash resources. Cash,
cash equivalents and deposits at the year-end were GBP7.0 million
(31 July 2018: GBP10.7 million; 31 January 2019: GBP6.2 million).
No dividend is proposed for the year (2018: none).
Governance and Board
The Board recognises the value of meeting the highest standards
of corporate governance and will continue to strive to achieve such
standards for the benefit of all stakeholders. During the year, the
Board has overseen the roll out of a number of new or improved
elements of our corporate governance framework, such as a new
electronic platform for delivering more timely information to the
Board and a significantly revised monthly Board information pack
with more targeted, clear strategic KPI's and forward looking
analysis.
We have also recently made a number of changes to the Board
itself. At the end of the last financial year, we decided to
combine the executive roles of COO and CFO. The aim was to provide
enhanced leadership in finance and governance, as well as driving
underlying business operations and performance at a time of
significant change. Brian Tenner was appointed to this role on 20
August 2018. I am pleased to report that the three-person team made
up of the CEO, CTO and COO/CFO has already proven effective in
this, its first year of working together. Keith Wiggins, the former
COO, and David Blain, the former CFO, both left the business during
the first half of the financial year following an orderly
transition and handover and we wish them well.
A number of changes were also made to the Non-Executive
membership of the Board as well as the roles carried out by each
member. Brendan Cummins, Non-Executive Director and Chair of the
Remuneration Committee, stepped down from the Board to focus on
other commitments, particularly in the area of social enterprise.
The Board would like to thank Brendan for his wise counsel and
commitment to the Group over the last four years. We wish him well
in the years ahead.
Dr Alison Fielding took over Brendan's responsibility as Chair
of the Remuneration Committee and also assumed Brendan's
responsibilities as Senior Independent Director. At the same time,
we were pleased to welcome Christopher Batterham to the Board as a
Non-Executive Director, Chair of the Audit Committee and member of
the Remuneration and the Nominations Committees, bringing his
considerable financial and operational experience to the Board.
Employees and shareholders
On behalf of the Board, I would like once again to pay tribute
to Nanoco's employees for their achievements during the year. This
has been an exceptionally busy year which has also seen periods of
uncertainty for staff as we have adjusted our activities to reflect
changes in business focus. The Group's highly skilled team has
responded with remarkable professionalism, flexibility and
dedication. The Board is enormously appreciative of their
contributions and commitment to the Group.
I would also like to thank our shareholders for their continuing
support and look forward to meeting as many as possible at our AGM
to be held on 5 December 2019.
Outlook
The last year has demonstrated the strong merits of our
broad-based platform technology, particularly as we used our deep
technical knowledge and know-how to quickly develop a high
performing material for use in infrared sensors in electronics
applications. This is an attractive and high growth market that the
Group is keen and able to exploit.
The loss of potential future revenue arising from the US
Customer's decision not to continue its current project with Nanoco
past December 2019 presents certain financial challenges for the
business. However, we are actively engaged in discussions with
customers regarding a number of other commercial opportunities in
our focus markets to mitigate this. Our expected positive cash
position of GBP6.0m following completion of the current contract
deliverables for the US Customer provides us with reasonable
headroom to deliver on these new sources of commercial income.
The Group showed a high level of agility and responsiveness in
the past 12 months, in delivering new and improved nanomaterials,
in pivoting our resources to match commercial opportunities and in
fine-tuning our cost base to match the current levels of activity.
That agility will stand us in good stead in the year ahead as we
manage the uncertainty around commercial revenue generating
opportunities and, consequently, our cost base. Contingency plans
are in place in the event of any major shortfall in the balance of
our income and costs.
The Group's core assets, team, and capabilities remain an
attractive investment opportunity. Our expanded platform technology
and production infrastructure allow us to explore a number of new
commercial markets and applications as potential sources of income
in the short-term. The Board therefore remains confident in the
value inherent in the business.
Dr Christopher Richards
Chairman
16 October 2019
Chief Executive Officer's statement
The Group has made strong progress this year in a number of
different areas, delivering our best ever financial results. We
have delivered rapid developments in our platform technology,
building on our solar expertise to develop materials for use in new
end markets for infra-red sensing materials, while at the same time
significantly upgrading the performance of our CFQD(R) quantum dots
for use in display applications. We also increased our IP portfolio
of patents granted and pending to 745; an increase of just over 90
during the period.
Against this background of progress and achievements, it was
disappointing to learn that the US Customer will not be proceeding
to commercialisation of its current programme with Nanoco; a
decision which had nothing to do with the performance of Nanoco as
a supplier or our materials.
While we will continue to deliver services to the US customer
until 31 December 2019, our focus remains on securing further
income with a number of parties in the display sector, on both QDs
in film, QD OLED hybrid and on micro-LEDs for display.
The availability of our new enlarged Runcorn production facility
also allows us to engage with other companies and applications in
the electronics sector that can make use of our infrared wavelength
absorbing dots, particularly around advanced sensing applications
in consumer electronics, automotive, military, and applications in
medical and the Internet of Things ('IoT').
We had GBP7.0 million in cash at the end of the financial year
and expect to have around GBP6.0 million at the end of December
2019 when the current contract with the US Customer expires. We
maintain close control of our cost base and reluctantly had to
reduce our headcount by 20% in Q4 of the financial year. The
restructuring has already been paid back and ongoing benefits are
coming through in our monthly trading figures. The combination of
our financial resources and trading performance gives us headroom
to deliver on the current pipeline of commercial opportunities in
the sectors noted above to create meaningful organic cash flows.
Our medium-term goal remains to achieve a self-sustaining level of
annual cash flows.
Business performance
Electronics
We noted last year that our activities and results for the next
two years would be dominated by our work in the consumer
electronics sector, which has indeed been the case. Building on the
successful delivery of technical milestones in the prior year, we
completed the expansion of the Runcorn production facility during
the year. In January 2019 we then entered into a major contract
extension with the US customer that delivers attractive
service-based revenue and cash flows for the calendar year ending
31 December 2019. The year also saw the start of commissioning and
testing of the newly expanded Runcorn production facility,
dedicated to the production of nano-materials for use in the
electronics sector.
The contract wins with the US Customer were a firm recognition
of both the Group's strong capabilities and our highly skilled and
adaptable professional staff. The Group has taken advantage of our
scale and agility to respond quickly to new commercial
opportunities as they have arisen and where the potential is
significant.
During the year, we successfully achieved a number of key
milestones for our US Customer, earning the contracted milestone
revenues in full. We also delivered a number of additional R&D
milestones under a separate contract for the same customer,
examining a range of different materials for use in electronics
applications.
The table below sets out a summary of the historical financial
information and current status of each contract and associated
extensions with our US Customer.
Contract Time frame and key deliverables Financial implications
-------- ---------------------------------------------------------- ----------------------------------------------------------
First Signed February 2018 covering
contract the period to 31 December * Funding GBP3.4m to pay for Runcorn facility, entitle
2018. d
* Milestone 1: Achieved in full customer to discounted material price for commercial
production materials (now waived); plus
* Milestone 2: Achieved in full
* GBP4.2m earned for delivery of the milestones.
* Milestone 3: Achieved in full
* Complete construction of expanded Runcorn production
facility.
Contract extension signed
January 2019 covering period * Extension valued at just under GBP8.0m, GBP1.2m
to December 2019. revenue deferred until production and the balance
split almost evenly between FY19 and FY20.
* Focus on stress testing and optimising the Runcorn
facility. Any sales of material would be in addition
to these sums.
-------- ---------------------------------------------------------- ----------------------------------------------------------
Second Signed April 2018 covering
contract the period to 30 November * Total contract value of GBP1.1m earned in full in
2018. FY18 and FY19 including all 4 technical milestones.
R&D services contract with
four additional technical
milestones.
-------- ---------------------------------------------------------- ----------------------------------------------------------
The US Customer's subsequent decision not to extend its current
contract with the Group, while disappointing, means that Nanoco's
capabilities and skills garnered from the project can now be used
in speaking to other companies interested in infrared sensing
applications.
Going forward we are likely to be part of an extensive supply
chain in the electronics market, albeit, as announced during the
past year, our own future performance and activities are subject to
changes outside our control. The in depth nature of our
technological insight does mean however that we tend to 'punch
above our weight' in terms of direct engagement with end customers
and their technology teams.
The release of the Group from the contract liability to the US
Customer, and the completion of the Runcorn production facility,
means that the Group can now target other commercial applications
for its IP know-how and materials. We have an installed asset and
staff base capable of addressing those opportunities in infrared
sensing applications, particularly in the electronics, automotive
and more general IoT markets, such as industrial control
systems.
The revenue generating capacity of the new Runcorn facility is
very significant if appropriate commercial orders can be won. We
believe that our deep knowledge of a wide range of material sets
and their applications make Nanoco an attractive partner for a wide
range of participants with whom we are actively engaged in the
rapidly growing infrared sensing market.
Display (CFQD(R) Quantum Dots)
Display remains an important target market for Nanoco. To
improve our competitive proposition, the Company's focus has
shifted over recent months from providing downstream display
products, to providing the highest performing CFQD(R) quantum dots
to multiple film coating, photo-resist and ink producing companies.
Our mission is to work with the companies who are considered by the
display OEMs to be best in class.
We measure CFQD(R) material performance using a number of key
metrics including, but not limited to, Full Width Half Maximum
"FWHM" (the width in nanometres of the emission peak halfway up its
height - narrower is better), quantum yield ("QY") percentage (a
measure of how efficiently the quantum dots absorb blue light and
convert it to red or green light) and stability (how durable the
quantum dot is in any specific application). An example of our
improved performance in the period is a 15% reduction of the
CFQD(R) quantum dots' FWHM while retaining very high quantum yields
and stability.
The integration of quantum dots into TVs is evolving. The first
generation of QD displays use red and green quantum dots in a
resin, which is then coated onto a film and integrated into the
backlight of an LCD display. This dramatically enhances colour
performance and reduces power consumption. The second generation of
QD based displays will integrate red and green quantum dots onto a
blue OLED panel or blue micro-LEDs using ink jet printing or
photo-resist patterning technology. Major display OEMs are
currently converting existing LCD production lines to accommodate
this new hybrid QD-OLED device structure. We anticipate that
displays using second generation technology will enter the market
as early as 2021/22. The third generation of quantum dot display is
electroluminescent red, green and blue quantum dots fabricated into
a display. Nanoco is heavily involved in all three stages of this
quantum dot display evolution.
Two years ago we modified our strategy from a pure licensing
model to a hybrid business model where we have licensed our
technology to three different channel partners while also
developing our own manufacturing capability. We continue to work
closely with our licensee partners DuPont (formerly Dow) and Merck
as well as our film coating partner Wah Hong and have also started
to increase the range of companies with whom we are actively
engaged.
Other sectors including life sciences, lighting and
healthcare
Substantial progress was achieved in the period by our Life
Sciences team. Major gene and animal toxicology studies on our red
biocompatible CFQD(R) quantum dots (Vivodots(TM) nanoparticles)
were concluded with no significant signs of adverse effects even at
high doses. These Good Laboratory Practice ("GLP") compliant
studies lay the ground for further clinical development and
potential regulatory approvals across a variety of medical
applications that the Nanoco Life Sciences team is pursuing. Our
short-term goal is to maximise the performance of targeted
Vivodots(TM) nanoparticles which would allow high quality
visualisation of tumours for enhanced image-guided surgery and
enhanced specificity in cancer diagnostics.
We continue to explore early stage opportunities in
horticultural lighting, working with potential partners in both the
lighting device and horticultural stages of the supply chain. We
also continue our commercial sales relationship with CareWear, a
US-based supplier of therapeutic light patches that accelerate
trauma recovery.
Operations
The highlight of the year was the completion of the new
production facility at Runcorn. This doubles our footprint to
22,000 sq ft and importantly creates very significant
revenue-generating capacity.
The facility is undergoing commissioning and stress testing and
will be production ready in the first half of FY20. Our CFQD(R)
facility has continued to transition new and improved generations
of quantum dots from R&D scale to production scale.
Intellectual property
The Groups Intellectual Property ("IP") has grown to 745 patents
and patent applications; an increase of 91 over the past 12 months.
This IP and a significant range of business process secrets
strongly underpin the Group's valuation while also operating as a
challenging barrier to entry to potential competitors.
Environment/restriction of hazardous substances ("RoHS")
Nanoco is committed to protecting the environment in which our
activities are conducted. This commitment is directly expressed in
our decision to develop our CFQD(R) quantum dot products to be free
of toxic cadmium, which is still widely used by our competitors in
their quantum dot products.
Nanoco has participated actively with regulators concerning the
use of cadmium-based quantum dots in displays and LED light
products. The European Commission (EC) is carrying out a review of
requests to extend the duration and scope of the current RoHS
exemption, which excludes lighting products and limits display
products to 31st October 2019 for display products, after which the
normal RoHS limit of 100ppm will apply. Nanoco has responded to the
consultation to oppose any extensions. Nanoco continues to expect
that regulations in other key markets, including China, will fall
in line with RoHS in future. Our contacts with display companies
indicate that most already accept the need for new display products
to be cadmium-free - especially the world leading brands in
television, computer monitor and laptop displays.
People
Our employees are a key strength. It is their technical skill
and ingenuity which allows the Company to continue to aggressively
innovate and remain at the leading edge of our industry. We
therefore remain committed to ensuring that they have access to the
appropriate resources to keep their skills and experience up to
date. The additional focus this year on our nano-material
opportunity was an example of where we were able to leverage our
scientifically broad-based skill set and technical know-how.
During the fourth quarter of the financial year, we reluctantly
took the decision to reduce our headcount and cost base to match
the activity levels in the business. We reduced our headcount by
just under 20% which is now delivering around GBP0.6m per annum in
cash savings. This was accomplished without reducing significantly
our production and core R&D capabilities.
We made a number of changes to our senior management team during
the year to bring new skills and perspectives to the Group. These
new appointments in the management team support our transition from
the operating processes and systems of an R&D focused business
to those of a commercial production company. Nanoco's leadership
team now includes a newly appointed HR Business Partner and a Group
Financial Controller as well as an internal promotion for the Head
of our Runcorn manufacturing facility.
Outlook
It has been a year of extreme contrasts for the Group. We have
enjoyed great progress and successes in achieving the targets set
for us by customers, in advancing the performance of our materials
and significantly expanding our high quality IP portfolio, not
forgetting the excellent financial results and which included a
cash positive operating position in the second half.
Our challenge now is to re-build momentum in the business
through the conversion of our commercial pipeline. To that end, we
are using our newly developed materials and know-how in the field
of infra-red sensing to engage with other potential customers and
applications in this sector. We have also re-doubled our efforts to
develop new relationships in the display sector with other
potential partners. We remain closely focused on the potential
funding needs of the business in this context and the importance of
continuing to ensure the maximisation of shareholder value.
Having been close to achieving our long term goal of
transitioning from an R&D services business to a fully-fledged
production company, it is a source of great strength that we retain
the know-how, IP portfolio, production capability and highly
capable technical resource in our staff to still achieve that long
term goal. In so doing, I am confident that we can deliver value
for all of our stakeholders.
Dr Michael Edelman
Chief Executive Officer
16 October 2019
Financial review
Revenue and other operating income increased by GBP3.8 million
(112%) to GBP7.3 million (2018: GBP3.5 million). The increase is
largely due to the US customer. Revenue from sale of products and
services rendered accounted for 93.7% (2018: 95.6%) of revenues
with the balance being royalty and licence income. Revenue from the
sale of products was GBP0.2 million (2018: GBP0.2 million).
Cash remains our key focus and constraint, and it is therefore
pleasing to have generated cash in the second half of the year.
With cash outflow for the year of GBP3.7 million, this resulted in
a year-end balance of GBP7.0 million (2018: GBP10.7 million).
Billings, which are considered a key performance indicator for
the Group, have increased by GBP3.1 million to GBP9.6 million
(2018: GBP6.5 million) and are linked to the development and supply
agreement signed in the prior year.
Revenue from royalties and licences do not have a directly
associated cost of sale. Cost of sales increased by GBP0.3 million
to GBP0.7 million (2018: GBP0.4 million) as a result of increased
sales with gross margins remaining robust.
Research and development expenditure was in line with the prior
year at GBP4.0 million. This comprised R&D labour costs of
GBP3.3 million (2018: GBP3.2 million) and material costs, utilities
and other costs totalling GBP0.7 million (2018: GBP0.8 million).
Labour costs represented 84% (2017: 73%) of total R&D costs
with the balance of costs comprising materials and utility
costs.
Total payroll costs in the year were GBP6.0 million (2018:
GBP5.6 million). The increase in total payroll costs is
attributable to the higher average headcount during the financial
year (2019: 92 compared to 2018: 86). In Q3, we began a review of
the cost base of the Group, and implemented a restructuring in Q4
that is now delivering GBP0.6m of annual savings. We are confident
that the new structure will allow a leaner operation through a
reduced cost base without impacting our production and R&D,
core capabilities and customer deliverables.
2019 2018
Highlights GBP million GBP million % change
-------------------------- ------------ ------------ --------
Turnover 7.1 3.3 115%
Adjusted operating loss (5.0) (7.2) (30%)
LBITDA* (3.8) (6.2) (38%)
Net loss (4.4) (6.0) (27%)
Loss per share (1.52) (2.21) (31%)
Billings 9.6 6.5 48%
Cash and cash equivalents 7.0 10.7 (35%)
-------------------------- ------------ ------------ --------
Non-GAAP measures
The non-GAAP measures of adjusted operating loss and adjusted
loss before interest, tax, amortisation and share-based payment
charges ("LBITDA") are provided in order to give a clearer
understanding of the underlying loss for the year that reflects
cash outflow from the business.
The calculation of both Non-GAAP measures is shown in the table
below:
2019 2018
GBPm GBPm
--------------------------- ----- -----
Operating loss (5.5) (7.4)
Share-based payment charge 0.2 0.3
Exceptional costs 0.3 -
--------------------------- ----- -----
Adjusted operating loss* (5.0) (7.1)
--------------------------- ----- -----
Depreciation 0.6 0.5
Amortisation 0.6 0.5
--------------------------- ----- -----
Adjusted LBITDA (3.8) (6.1)
--------------------------- ----- -----
Adjusted LBITDA has decreased by GBP2.4 million to GBP3.8
million (2018: GBP6.2 million). This has been driven by the
improvement in gross profit of GBP3.6 million, offset by the
increase in administrative expenses of GBP1.3 million.
The loss before tax was GBP5.5 million (2018: GBP7.4
million).
Exceptional items
During the year the Group saw a number of exceptional cost and
income items linked to the decision by the US Customer not to
extend the current contract when it expires in December 2019. The
Group also incurred the cost of the restructuring exercise
implemented in the fourth quarter. These items were considered
sufficiently material to require separate disclosure to allow the
reader to understand their input. They are set out in more detail
in Note 7 to the Financial Statements.
Taxation
The tax credit for the year is GBP1.1 million (2018: GBP1.4
million). The tax credit to be claimed, in respect of R&D
spend, is GBP1.1 million (2018: GBP1.4 million). Overseas
corporation tax was GBPnil during the year (2018: GBPnil). There
was no deferred tax credit or charge (2018: GBPnil).
Cash flow and balance sheet
During the year, cash, cash equivalents, deposits and short-term
investments decreased to GBP7.0 million (2018: GBP10.7 million).
The cash outflow of GBP3.7 million compares directly to GBP2.9
million in 2018 when excluding cash raised through the placing of
share capital (net inflow of GBP7.9 million). Cash flow from
operating activities decreased from an outflow of GBP0.3 million in
2018 to an outflow of GBP0.6 million.
Tax credits of GBP1.4 million (2018: GBP1.8 million) were
received during the year.
The Group maintained its capital spend on tangible assets in the
year at GBP2.1 million (2018: GBP2.2 million) as the manufacturing
facility was completed. Expenditure incurred in registering patents
totalled GBP1.0 million (2018: GBP0.8 million) during the year
reflecting the Group's continued focus on developing and
registering intellectual property. Capitalised patent spend is
amortised over 10 years in line with the established Group
accounting policy.
Treasury activities and policies
The Group manages its cash deposits prudently. Cash deposits are
regularly reviewed by the Board and cash forecasts are updated
monthly to ensure that there is sufficient cash available for
foreseeable requirements.
More details on the Group's treasury policies are provided in
note 27 to the financial statements.
Credit risk
The Group only trades with recognised, credit-worthy third
parties. Receivable balances are monitored on an ongoing basis and
any late payments are promptly investigated to ensure that the
Group's exposure to bad debts is not significant.
Foreign exchange management
The Group invoices most of its revenues in Sterling and also has
US Dollar and Euro revenues. The Group is therefore exposed to
movements in those currencies relative to Sterling. The Group will
use forward currency contracts to fix the exchange rate on invoiced
or confirmed foreign currency receipts should the amount become
significant. The Group does not take out forward contracts against
uncertain or forecast income.
There were no open forward contracts as at 31 July 2019 (2018:
none). The Group's net profit and equity are exposed to movements
in the value of Sterling relative to the US Dollar. The indicative
impact of movements in the Sterling exchange rate on profits and
equity based on the retranslation of the closing balance sheet are
summarised in note 27 to the financial statements and were based on
the year-end position.
Significant accounting judgements
Set out below are the key accounting matters and judgements
assessed during the year:
-- revenue recognition and deferred income;
-- carrying values of tangible and intangible assets;
-- going concern;
-- carrying value of Company investment and intercompany receivable balances; and
-- share based payments.
The Audit Committee was closely involved in the above accounting
matters and judgements and further details are set out in the Audit
Committee's report which is included in the Annual Report and
Accounts.
A key area is the assessment of going concern due to the
existence of the material uncertainty regarding management's
ability to implement the necessary cost savings in an appropriate
timely manner should budgeted revenues not be secured.
Nevertheless, considering the mitigating actions that can be
taken and after making enquiries and considering the uncertainty
described above, the Directors have a reasonable expectation that
the Group 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 consolidated financial statements and the Board
concluded that it is appropriate to utilise the going concern
assumption.
Summary
We have undoubtedly experienced a commercial setback during the
financial year. We will therefore continue to manage our costs and
cash flow carefully while assessing other commercial opportunities.
This approach to our cash and cost base reflects an appropriate
level of caution given that there is such uncertainty surrounding
the delivery and timing of future revenues.
The Group has demonstrated its agility and ability to reduce its
costs when needed a number of times over recent years. We are
therefore confident that we have the means and the will to secure
our short term future while pursuing near term commercial
opportunities.
Brian Tenner
Chief Operating Officer and Chief Financial Officer
16 October 2019
Principal risks and uncertainties
In common with all businesses at Nanoco's stage of development,
the Group is exposed to a range of risks, some of which are not
wholly within its control or capable of complete mitigation or
protection through insurance.
Specifically, a number of the Group's products and potential
applications are at a research or development stage and hence it is
not possible to be certain that a particular project or product
will lead to a commercial application. Other products require
further development work to confirm a commercially viable
application.
Equally, a number of products are considered commercially viable
but have yet to see demand for full scale production level
quantities. And finally, as in the case of the US Customer, the
Group is only one part of a long and complex supply chain and the
Group therefore has little visibility of demand other than from
contracts already in place. There are therefore a range of risks
that are associated with the different stages of product
development as well as for the Group as a whole.
The Board has established a process for carrying out a robust
risk assessment which evaluates and manages the principal risks
faced by the Group. The Board reviews the process and a detailed
review of risks was undertaken by the Audit Committee during the
financial year ended 31 July 2019. The Board has also established
an acceptable level of risk (risk appetite) which is used to inform
the scale and urgency of actions required. Where risks are deemed
to be outside management control, efforts are focused on mitigating
any potential impact. Where all practical measures to prevent or
mitigate risks have been taken and a residual element of risk still
remains, these risks are accepted by the Group.
Risks are evaluated with respect to probability of occurrence
and the potential impact if a risk crystallised. Where the Group
has identified risks, these are monitored with controls and action
plans to reduce the probability of a risk crystallising and the
impact of each potential event if it did occur. The residual risk
score, after mitigating controls, is then plotted on a "risk heat
map". The Group's principal risks are discussed in further detail
in the annual report.
Principal over-arching risk
The principal over-arching strategic risk faced by the business
is that the Group exhausts its available funding before achieving
adequate levels of commercial revenues and cash flows to be able to
be self-funding. As described in Note 2(c), the Directors consider
that a material uncertainty exists regarding the Group's ability to
implement the required cost savings within the necessary timeframe,
as indicated in the downside case, should expected revenues not be
secured. The probability of this risk arising in the short term was
initially reduced by the new agreement with a US Company signed in
early 2019. That agreement, when added to other sources of income
and R&D tax credits expected to be received in the year,
created the opportunity for the Group to be broadly cash flow
neutral in the calendar year to 31 December 2019. The new agreement
had also been de-risked in that the income to be earned is
primarily generated by services for the customer and is not
dependent on contingent milestones or other uncertain
deliverables.
However, the natural consequence of having this attractive new
agreement is that the Group was then exposed to a new risk in the
short term of "key customer reliance". This risk then crystallised
in the fourth quarter of the year when the US customer announced
that the current project and contract would not be extended when
they expire in December 2019. The decision by the US customer
significantly increases the risk of not becoming self-funding
before existing cash resources are exhausted.
The Group is therefore actively seeking new and additional
customer relationships to reduce this risk. The Group is also
reviewing a number of strategic options for funding. Commercial
negotiations are ongoing to secure additional revenues to mitigate
the exposure in this area. As set out in the going concern
statement in Note 2(c), management has identified the short term
actions that would need to be taken if no further sales contracts
are agreed.
Directors' responsibility statement
In accordance with the FCA's Disclosure and Transparency Rules,
the Directors listed on the Company's website
(www.nanocotechnologies.com/about-us/board-directors) confirm, to
the best of their knowledge, that:
1. the preliminary results have been prepared in accordance with
IFRS as adopted by the European Union and give a true and fair view
of the assets, liabilities, financial position and profit or loss
of the Group and Company and the undertakings included in the
consolidation taken as a whole; and
2. the foregoing reviews and statements, include a fair review
of the development and performance of the business and the position
of the Group and the undertakings included in the consolidation
taken as a whole, together with a description of the principal
risks and uncertainties faced by the Group.
By order of the Board
Brian Tenner
Chief Operating Officer and Chief Financial Officer
16 October 2019
Consolidated statement of comprehensive income
2019 2018
for the year ended 31 July 2019 Notes GBP'000 GBP'000
------------------------------------------- ----- -------- --------
Revenue 4 7,123 3,315
Cost of sales (665) (432)
------------------------------------------- ----- -------- --------
Gross profit 6,458 2,883
Other operating income 5 204 136
Operating expenses
Research and development expenses (4,385) (3,960)
Administrative expenses (7,760) (6,468)
------------------------------------------- ----- -------- --------
Operating loss 6 (5,483) (7,409)
------------------------------------------- ----- -------- --------
- before exceptional items and share based
payments (4,985) (7,152)
- share-based payments 22 (232) (257)
- net exceptional costs 7 (266) -
------------------------------------------- ----- -------- --------
Finance income 9 12 11
Finance expense 9 (38) (7)
------------------------------------------- ----- -------- --------
Loss before taxation (5,509) (7,405)
Taxation 10 1,151 1,400
------------------------------------------- ----- -------- --------
Loss after taxation (4,358) (6,005)
Other comprehensive income/(loss)
Gain/(loss) on exchange rate translations 14 (13)
------------------------------------------- ----- -------- --------
Total comprehensive loss for the year (4,344) (6,018)
------------------------------------------- ----- -------- --------
Loss per share
Basic and diluted loss for the year 11 (1.52)p (2.21)p
------------------------------------------- ----- -------- --------
The loss for the current and preceding year arises from the
Group's continuing operations and is attributable to the equity
holders of the Parent. The basic and diluted loss per share are the
same as the effect of share options is anti-dilutive.
Consolidated statement of changes in equity
for the year ended 31 July 2019
Issued Reverse Share-based
equity acquisition payment Merger Accumulated
capital reserve reserve reserve losses Total
Group GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------------------- -------- ------------ ----------- -------- ----------- --------
At 1 August 2017 136,477 (77,868) 2,957 (1,242) (49,877) 10,447
Loss for the year - - - - (6,005) (6,005)
Other comprehensive loss - - - - (13) (13)
--------------------------- -------- ------------ ----------- -------- ----------- --------
Total comprehensive loss - - - - (6,018) (6,018)
Issue of share capital on
placing (note 22) 8,578 - - - - 8,578
Costs of placing (629) - - - - (629)
Share-based payments - - 257 - - 257
--------------------------- -------- ------------ ----------- -------- ----------- --------
At 31 July 2018 144,426 (77,868) 3,214 (1,242) (55,895) 12,635
Loss for the year - - - - (4,358) (4,358)
Other comprehensive income - - - - 14 14
--------------------------- -------- ------------ ----------- -------- ----------- --------
Total comprehensive loss - - - - (4,344) (4,344)
Issue of share capital on
exercise of options 27 - (27) - - -
Share-based payments - - 232 - - 232
--------------------------- -------- ------------ ----------- -------- ----------- --------
At 31 July 2019 144,453 (77,868) 3,419 (1,242) (60,239) 8,523
--------------------------- -------- ------------ ----------- -------- ----------- --------
Company statement of changes in equity
for the year ended 31 July 2019
Issued Share-based Capital
equity payment redemption Accumulated
capital reserve reserve loss Total
Company GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------------------------- -------- ----------- ----------- ----------- --------
At 1 August 2017 136,477 2,957 4,402 (25,095) 118,741
Loss and total comprehensive loss
for the year - - - (50,025) (50,025)
Issue of share capital on placing
(note 22) 8,578 - - - 8,578
Costs of placing (629) - - - (629)
Share-based payments - 257 - - 257
----------------------------------- -------- ----------- ----------- ----------- --------
At 31 July 2018 144,426 3,214 4,402 (75,120) 76,922
Loss and total comprehensive loss
for the year - - - (38,278) (38,278)
Issue of share capital on exercise
of options 27 (27) - - -
Share based payments - 232 - - 232
----------------------------------- -------- ----------- ----------- ----------- --------
At 31 July 2019 144,453 3,419 4,402 (113,398) 38,876
----------------------------------- -------- ----------- ----------- ----------- --------
Consolidated and Company statements of financial position
at 31 July 2019
Registered no. 05067291
31 July 31 July 31 July 31 July
2019 2019 2018 2018
Group Company Group Company
Notes GBP'000 GBP'000 GBP'000 GBP'000
---------------------------- ----- -------- --------- -------- --------
Assets
Non-current assets
Tangible fixed assets 12 747 - 2,604 -
Intangible assets 13 3,897 - 3,432 -
Investment in subsidiaries 14 - 39,229 - 66,821
---------------------------- ----- -------- --------- -------- --------
4,644 39,229 6,036 66,821
---------------------------- ----- -------- --------- -------- --------
Current assets
Inventories 15 226 - 217 -
Trade and other receivables 16 1,117 - 1,415 10,508
Income tax asset 1,129 - 1,400 -
Cash and cash equivalents 17 7,005 97 10,729 43
---------------------------- ----- -------- --------- -------- --------
9,477 97 13,761 10,551
---------------------------- ----- -------- --------- -------- --------
Total assets 14,121 39,326 19,797 77,372
---------------------------- ----- -------- --------- -------- --------
Liabilities
Current liabilities
Trade and other payables 18 2,553 - 3,020 -
Provisions 19 797 - - -
Deferred revenue 21 1,462 - 400 -
---------------------------- ----- -------- --------- -------- --------
4,812 - 3,420 -
---------------------------- ----- -------- --------- -------- --------
Non-current liabilities
Financial liabilities 20 433 450 407 450
Deferred revenue 21 353 - 3,335 -
---------------------------- ----- -------- --------- -------- --------
786 450 3,742 450
---------------------------- ----- -------- --------- -------- --------
Total liabilities 5,598 450 7,162 450
---------------------------- ----- -------- --------- -------- --------
Net assets 8,523 38,876 12,635 76,922
---------------------------- ----- -------- --------- -------- --------
Capital and reserves
Issued equity capital 22 144,453 144,453 144,426 144,426
Reverse acquisition reserve 22 (77,868) - (77,868) -
Share-based payment reserve 23 3,419 3,419 3,214 3,214
Merger reserve 24 (1,242) - (1,242) -
Capital redemption reserve 24 - 4,402 - 4,402
Accumulated losses 25 (60,239) (113,398) (55,895) (75,120)
---------------------------- ----- -------- --------- -------- --------
Total equity 8,523 38,876 12,635 76,922
---------------------------- ----- -------- --------- -------- --------
The Parent Company's result for the period ended 31 July 2019
was a loss of GBP38,278,000 (2018: loss of GBP50,025,000). There
was no other comprehensive income in either the current or prior
year.
Approved by the Board and authorised for issue on 16 October
2019.
The notes on pages 15 to 37 form an integral part of these
financial statements.
Dr Michael Edelman Mr Brian Tenner
Director Director
16 October 2019 16 October 2019
Consolidated and Company cash flow statements
for the year ended 31 July 2019
31 July 31 July 31 July 31 July
2019 2019 2018 2018
Group Company Group Company
Notes GBP'000 GBP'000 GBP'000 GBP'000
--------------------------------------- ----- -------- -------- -------- --------
Loss before tax (5,509) (38,278) (7,405) (50,025)
Adjustments for:
Net finance income 8 (26) - (4) -
Loss/(profit) on exchange rate
translations 14 - (13) -
Depreciation of tangible fixed
assets 11 613 - 504 -
Amortisation of intangible assets 12 552 - 476 -
Impairment of intangible assets 12 26 - - -
Impairment of Company investment 14 - 24,006 - -
Impairment of inter-company receivable 16 - 14,272 - 50,000
Share-based payments 23 232 - 257 -
Exceptional items 7 266 - - -
Changes in working capital:
Increase in inventories (9) - (29) -
Decrease/(increase) in trade and
other receivables 298 - (746) -
(Decrease)/increase in trade and
other payables (1,515) - 1,702 -
Increase in provisions 797 - - -
Increase in deferred revenue 2,226 - 3,081 -
--------------------------------------- ----- -------- -------- -------- --------
Cash outflow from operating activities (2,035) - (2,177) (25)
Research and development tax credit
received 1,423 - 1,837 -
Overseas corporation tax paid - - - -
--------------------------------------- ----- -------- -------- -------- --------
Net cash outflow from operating
activities (612) - (340) (25)
--------------------------------------- ----- -------- -------- -------- --------
Cash flow from investing activities
Purchases of tangible fixed assets 11 (2,081) - (2,215) -
Purchases of intangible fixed assets 12 (1,043) - (782) -
Inter-company loans to a subsidiary - - - (12,551)
Inter-company receipt 17 - 54 - -
Interest received 12 - 11 -
--------------------------------------- ----- -------- -------- -------- --------
Net cash (outflow)/inflow from
investing activities (3,112) 54 (2,986) (12,551)
--------------------------------------- ----- -------- -------- -------- --------
Cash flow from financing activities
Proceeds from placing of ordinary
share capital - - 8,578 8,578
Costs of placing - - (629) (629)
Issue of convertible loan note 20 - - 400 -
Loan repayment - - - -
--------------------------------------- ----- -------- -------- -------- --------
Net cash inflow from financing
activities - - 8,349 7,949
--------------------------------------- ----- -------- -------- -------- --------
(Decrease)/increase in cash and
cash equivalents (3,724) 54 5,023 (4,627)
Cash and cash equivalents at the
start of the year 10,729 43 5,706 4,670
--------------------------------------- ----- -------- -------- -------- --------
Cash and cash equivalents at the
end of the year 17 7,005 97 10,729 43
--------------------------------------- ----- -------- -------- -------- --------
Notes to the financial statements
1. Reporting entity
Nanoco Group plc ("the Company"), a public company limited by
shares, is on the premium list of the London Stock Exchange. The
Company is incorporated and domiciled in England, UK. The
registered number is 05067291 and the address of its registered
office is 46 Grafton Street, Manchester M13 9NT.
These Group financial statements consolidate those of the
Company and its subsidiaries (together referred to as the "Group"
and individually as "Group entities") for the year ended 31 July
2019.
The financial statements of Nanoco Group plc and its
subsidiaries ("the Group") for the year ended 31 July 2019 were
authorised for issue by the Board of Directors on 16 October 2019
and the statements of financial position were signed on the Board's
behalf by Dr Michael Edelman and Brian Tenner.
The Company has elected to take the exemption under section 408
of the Companies Act 2006 not to present the Parent Company's
income statement.
The significant accounting policies adopted by the Group are set
out in note 3.
2. Basis of preparation
(a) Statement of compliance
The Group's and Parent Company's financial statements have been
prepared in accordance with International Financial Reporting
Standards as adopted by the European Union ("IFRS") and IFRS
Interpretations Committee ("IFRS IC") interpretations as they apply
to the financial statements of the Group for the year ended 31 July
2019.
(b) Basis of measurement
The Parent Company and Group financial statements have been
prepared on the historical cost basis.
(c) Going concern
All of the following matters are taken into account by the
Directors in forming their assessment of going concern. The Group's
business activities and market conditions, the principal risks and
uncertainties and the Group's financial position are described in
the Financial Review. Furthermore, note 27 summarises the Group's
financial risk management objectives, policies and processes. The
Group funds its day-to-day cash requirements from existing cash
reserves (as is common with businesses at a similar stage of
development, the Group does not currently have access to any debt
facilities).
For the purposes of their going concern assessment and the basis
for the preparation of the 2019 Annual Report, the Directors have
reviewed the same trading and cash flow forecasts and sensitivity
analyses that were used by the Group in the Viability Assessment
noted earlier in this report. The same base case and downside
sensitivities were also used.
The base case represents the Board's current expectations. The
key assumptions underpinning the base case are:
-- the existing agreement with the US Customer runs its course through to December 2019;
-- new commercial contracts are based on the existing pipeline
of opportunities or agreements already under negotiation in display
and IR sensing applications;
-- the Group's variable costs remain in line with manufacturing activities;
-- the overhead base benefits from a full GBP0.6 million of
savings in FY20 following the restructuring exercise in the fourth
quarter; and
-- the installed cost base is capable of supporting significant
increases in revenue above those assumed in the base case so there
is no immediate requirement for short-term increases or new capital
expenditure.
The base case produces a cash flow forecast that demonstrates
that the Group has sufficient cash throughout the period of the
forecast.
However, the Board acknowledges that the base case includes an
element of risk that some or all of these non-contracted projects
may not convert to sales during the forecast period. Accordingly,
the Board has considered the downside scenario in which no revenue,
except that already contracted or under contractual negotiation,
was achieved during the period.
In this scenario, the Group runs out of cash in July 2020 if
management takes no action to adjust the cost base or secure an
alternative source of strategic funding. Management has identified
a series of mitigating actions, including cost savings and a
reorganisation of its operations that could be undertaken in the
event additional sales contracts do not materialise.
These actions would be enough to preserve funding for the two
years of the viability assessment and the 12 months of the going
concern assessment.
On the basis that no new sales beyond those noted above have
occurred, the Group would enact its cost reduction plans on a
timely basis aimed at protecting the core R&D capability of the
business as well as the valuable IP portfolio. Use would be made of
existing licensees in the event of significant demand for our
materials (pending re-establishing our own production capability).
All of the potential 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 Group's ability
to continue as a going concern". The Directors consider that the
delivery of any restructuring of the cost base on a timely basis is
a material uncertainty which may cast significant doubt about the
Group and the Parent Company's ability to continue as a going
concern. Nevertheless, considering the mitigating actions that are
within management's control and can be taken and after making
enquiries and considering the uncertainties 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 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.
(d) Functional and presentational currency
These financial statements are presented in Pounds Sterling,
which is the presentational currency of the Group and the
functional currency of the Company. All financial information
presented has been rounded to the nearest thousand.
(e) Use of estimates and judgements
The preparation of financial statements requires management to
make estimates and judgements that affect the amounts reported for
assets and liabilities as at the reporting date and the amounts
reported for revenues and expenses during the year. The nature of
estimation means that actual amounts could differ from those
estimates. Estimates and judgements used in the preparation of the
financial statements are continually reviewed and revised as
necessary. While every effort is made to ensure that such estimates
and judgements are reasonable, by their nature they are uncertain
and, as such, changes in estimates and judgements may have a
material impact on the financial statements.
In the process of applying the Group's accounting policies,
management has made the following estimates and judgements, which
have the most significant effect on the amounts recognised in the
consolidated financial statements.
Estimates
Equity-settled share-based payments
The determination of share-based payment costs requires: the
selection of an appropriate valuation method; consideration as to
the inputs necessary for the valuation model chosen; and judgement
regarding when and if performance conditions will be met. Inputs
required for this arise from judgements relating to the future
volatility of the share price of Nanoco and comparable companies,
the Company's expected dividend yields, risk-free interest rates
and expected lives of the options. The Directors draw on a variety
of sources to aid in the determination of the appropriate data to
use in such calculations. The share-based payment expense is most
sensitive to vesting assumptions and to the future volatility of
the future share price factor. Further information is included in
note 3.
Impairment of intellectual property and tangible fixed
assets
As the Group has not to date made a profit, the carrying value
of these assets may need to be impaired. Impairment exists where
the carrying value of an asset exceeds its recoverable amount,
which is the higher of its fair value less costs of disposal and
its value in use. The value in use calculation uses cash flows
based on budgets that have been approved by the Directors. The
Directors also use available information to assess whether the fair
value less costs of disposal of the Group's non-current assets,
including intellectual property, is less than their carrying
amount. Furthermore, during the year another extensive review was
undertaken to identify which patents are of no further value to
Nanoco and should be allowed to lapse. As a consequence, patents
with a value of GBP26,000 (2018: GBPnil) have been fully impaired
in these financial statements. 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. The Group does not believe that any of its patents in
isolation are material to the business. Management has adopted the
prudent approach of amortising patent registration costs over a
ten-year period, which is substantially shorter than the life of
the patent. For external patents acquired the same rule is adopted
unless the remaining life of the patent is shorter, in which event
the cost of acquisition is amortised over the remaining life of the
patent.
In light of the decision of the US Customer, and the lack of any
signed or near-term commercial production prospects, the new
production facility has been impaired in the year by GBP3.3 million
(2018: nil).
Impairment of investment and inter-company receivable
Judgement is required to assess the carrying value of the
Company investment and inter-company receivable at each reporting
date. Accounting standards (IAS36, Impairment of Assets) require
investments in subsidiary undertakings (equity and loans) to be
carried at the lower of cost or recoverable value. Recoverable
value is defined as the higher of fair value less costs of disposal
(effectively net sale proceeds) and value in use. Indicators of
potential impairment noted in IAS36 (Para 12), include, but are not
limited to, situations where the carrying amount of the net assets
of the entity are more than its market capitalisation (as was the
case at the year end and continues to be so at the date of these
Financial Statements, prior to any impairment charges) and where
significant changes with an adverse effect on the entity have taken
place during the period (the decision by the US Customer not to
extend the current contract).
As set out in the Viability Statement, the Board has considered
a number of scenarios, being base, downside and worst cases. Given
the uncertainty and risk over future income streams, and the
associated potential impact on the discount rate to be used in the
discounted cash flow, the Board has concluded that the appropriate
valuation basis to use at this time for the total investments by
Nanoco plc in Nanoco Technologies Limited (loans and equity above
and the short term loan as disclosed in Note 16), should be fair
value rather than value in use. For the avoidance of doubt, in the
base case set out in the Viability Report there would be no
impairment required to the assets above.
Consistent with IAS36 and the indicator of impairment noted
above in respect of net assets exceeding market capitalisation,
therefore, the Directors have used the Company's market
capitalisation as at 31 July 2019 as its fair value less costs of
disposal.
The Directors do, however, consider that the current share price
is at a significant discount to the value that could be achieved if
the business was to be sold. This view is by reference to similar
businesses operating in the same markets and with smaller IP
portfolios than Nanoco. The quantum of this provision will be
reviewed at each reporting date.
Taxation
Management judgement is required to determine the amount of tax
assets that can be recognised, based upon the likely timing and
level of future taxable profits together with an assessment of the
effect of future tax planning strategies. Further information is
included in note 10.
Judgements
Research and development
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. Further
information is included in note 3.
Revenue recognition
Judgement is required in reviewing the terms of development
agreements to identify separate components of revenue, if any, that
are consistent with the economic substance of the agreement and in
turn the period over which development revenue should be
recognised. Judgements are required to assess the stage of
completion including, as appropriate, whether and when contractual
milestones have been achieved. Management judgements are similarly
required to determine whether services or rights under licence
agreements have been delivered so as to enable licence revenue to
be recognised. This matter is further complicated where a contract
may have different elements which may result in separate
recognition treatments under IFRS 15. Further information is
included in note 3(d).
Assets held for sale
Judgements are required as to whether assets are still required
within the business and, if not, whether they have a realisable
value outwith the Group. This is particularly pertinent if a
particular line of research and development is not likely to be
commercialised by the Group. If such assets are identified they are
separately identified within the financial statements.
Outlook
The key assumptions concerning the future and other key sources
of estimation uncertainty at the reporting date, which have a
significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities within the next financial year,
are those relating to the estimation of the number of share options
that will ultimately vest (note 23). The Group based its
assumptions and estimates on parameters available when the
consolidated financial statements were prepared. Existing
circumstances and assumptions about future developments, however,
may change due to market changes or circumstances arising that are
beyond the control of the Group. Such changes are reflected in the
assumptions when they occur.
3. Significant accounting policies
The accounting policies set out below are consistent with those
of the previous financial year and are applied consistently by
Group entities.
(a) Basis of consolidation
The Group financial statements consolidate the financial
statements of Nanoco Group plc and the entities it controls (its
subsidiaries) drawn up to 31 July each year.
Subsidiaries are all entities over which the Group has the power
over the investee (i.e. existing rights that give it the current
ability to direct the relevant activities of the investee),
exposure, or rights, to variable returns from its involvement with
the investee and ability to use its power over the investee to
affect its returns. All Nanoco Group plc's subsidiaries are 100%
owned. Subsidiaries are fully consolidated from the date control
passes.
The acquisition method of accounting is used to account for the
acquisition of subsidiaries by the Group. The costs of an
acquisition are measured as the fair value of the assets given,
equity instruments issued and liabilities incurred or assumed at
the date of exchange, plus costs directly attributable to the
acquisition. Identifiable assets acquired and liabilities and
contingent liabilities assumed in a business combination are
initially measured at fair value at acquisition date irrespective
of the extent of any minority interest. The difference between the
cost of acquisition of shares in subsidiaries and the fair value of
the identifiable net assets acquired is capitalised as goodwill and
reviewed annually for impairment. Any deficiency in the cost of
acquisition below the fair value of identifiable net assets
acquired (i.e. discount on acquisition) is recognised directly in
the consolidated statement of comprehensive income.
In the consolidated financial statements, the assets and
liabilities of the foreign operations are translated into sterling
at the exchange rate prevailing at the reporting date. Income and
cash flow statement items for Group entities with a functional
currency other than Sterling are translated into Sterling at
monthly average exchange rates, which approximate to the actual
rates, for the relevant accounting periods. The exchange
differences arising on translation are recognised in other
comprehensive income. See note 3(b).
All intra-group transactions, balances and unrealised gains on
transactions between Group companies are eliminated on
consolidation. Subsidiaries' accounting policies are amended where
necessary to ensure consistency with the policies adopted by the
Group.
(b) Foreign currency transactions
Transactions in foreign currencies are initially recorded in the
functional currency by applying the spot rate ruling at the date of
the transaction. Monetary assets and liabilities denominated in
foreign currencies (including those of the Group's US subsidiary)
are retranslated at the functional currency rate of exchange ruling
at the reporting date. All differences are taken to the
consolidated statement of comprehensive income.
Non-monetary items that are measured in terms of historical cost
in a foreign currency are translated using the exchange rates as at
the dates of the initial transactions. Non-monetary items measured
at fair value in a foreign currency are translated using the
exchange rates at the date when the fair value was determined.
(c) Segmental reporting
An operating segment is a component of an entity that engages in
business activities from which it may earn revenues and incur
expenses, whose operating results are regularly reviewed by the
entity's chief operating decision maker to make decisions about
resources to be allocated to the segment and assess its
performance, and for which discrete financial information is
available. As at the reporting date the Company operated with only
a single segment, being the research, development and manufacture
of products and services based on high performance
nanoparticles.
(d) Revenue recognition
Revenue is recognised to the extent that it is probable that
economic benefits will flow to the Group and the revenue can be
reliably measured. Revenue is measured at the fair value of the
consideration received or receivable for the sale of goods or
services, excluding discounts, rebates, VAT and other sales taxes
or duties.
The Group's revenues to date comprise amounts earned under joint
development agreements, individual project development programmes
and material supply and licence agreements and revenue from the
sale of quantum dot products.
Revenues received in advance of work performed from development
programmes are recognised on a straight-line basis over the period
that the development work is being performed as measured by
contractual milestones. Revenue is not recognised where there is
uncertainty regarding the achievement of such milestones and where
the customer has the right to recoup advance payments.
Cash advances from customers for the funding of capital
equipment are accounted for in accordance with IFRIC 18: Transfer
of assets from Customers where the Company retains control over the
related assets. The advances are taken to deferred revenue where
they are expected to be repaid as a proportion of future revenue
under the contract.
Contractual payments received from licence agreements are
recognised as revenue when goods, services or rights and
entitlements are supplied. Upfront licence fees, where control over
the intellectual property has been retained by the Group, are taken
to income on a straight-line basis over the initial period of the
contract in accordance with the continuing obligations under the
contract.
Revenue from the sale of products is recognised at the point of
transfer of risks and rewards of ownership, which is generally on
shipment of product.
IFRS 15 requires the identification of deliverables in contracts
with customers that qualify as performance obligations. For any
contracts in the financial year, we have used the five step process
identified by IFRS 15 and applied this.
(e) Government grants
Government grants are recognised when it is reasonable to expect
that the grants will be received and that all related conditions
are met, usually on submission of a valid claim for payment.
Government grants of a revenue nature are recognised as other
operating income in the consolidated statement of comprehensive
income.
Government grants relating to capital expenditure are deducted
in arriving at the carrying amount of the asset.
(f) Cost of sales
Cost of sales comprises the labour, materials and power costs
incurred in the generation of revenue from products sold and the
rendering of services.
Revenue from royalties and licences, which comprise payments
from customers to gain preferential treatment in terms of supply or
pricing, do not have an associated cost of sale.
(g) Operating loss
Operating losses are stated after research and development and
administration expenses but before finance charges and
taxation.
(h) Research and development
Research costs are charged in the consolidated statement of
comprehensive income as they are incurred. Development costs will
be capitalised as intangible assets when it is probable that future
economic benefits will flow to the Group. Such intangible assets
will be amortised on a straight-line basis from the point at which
the assets are ready for use over the period of the expected
benefit, and will be reviewed for impairment at each reporting date
based on the circumstances at the reporting date.
The criteria for recognising expenditure as an asset are:
-- it is technically feasible to complete the product;
-- management intends to complete the product and use or sell it;
-- there is an ability to use or sell the product;
-- it can be demonstrated how the product will generate probable future economic benefits;
-- adequate technical, financial and other resources are
available to complete the development, use and sale of the product;
and
-- expenditure attributable to the product can be reliably measured.
Development costs are currently charged against income as
incurred since the criteria for their recognition as an asset are
not met, the exception being the costs of filing and maintenance of
intellectual property as these are considered to generate probable
future economic benefits and are capitalised as intangible assets
(see note 13).
(i) Lease payments
Rentals payable under operating leases, which are leases where
the lessor retains a significant proportion of the risks and
rewards of the underlying asset, are charged in the consolidated
statement of comprehensive income on a straight-line basis over the
expected lease term.
Lease incentives received are recognised as an integral part of
the total lease expense, over the term of the lease.
(j) Finance income and expense
Finance income comprises interest income on funds invested and
changes in the fair value of financial assets at fair value through
the consolidated statement of comprehensive income. Interest income
is recognised as interest accrues using the effective interest rate
method.
Finance expense comprises interest expense on borrowings. All
borrowing costs are recognised using the effective interest
method.
(k) Income tax
Income tax expense comprises current and deferred tax. Income
tax expense is recognised in the consolidated statement of
comprehensive income except to the extent that it relates to items
recognised directly in equity or in other comprehensive income.
Current income tax assets (including research and development
income tax credit) and liabilities for the current and prior
periods are measured at the amount expected to be recovered from,
or paid to, the tax authorities. The tax rates and tax laws used to
compute the amount are those that are enacted or substantively
enacted by the reporting date.
Deferred income tax is recognised on all temporary differences
arising between the tax bases of assets and liabilities and their
carrying amounts in the financial statements with the following
exceptions:
-- where the temporary difference arises from the initial
recognition of goodwill or of an asset or liability in a
transaction that is not a business combination that at the time of
the transaction affects neither accounting nor taxable profit or
loss; and
-- in respect of taxable temporary differences associated with
investments in subsidiaries where the timing of the reversal of the
temporary differences can be controlled and it is probable that the
temporary differences will not reverse in the foreseeable
future.
Deferred income tax assets and liabilities are measured on an
undiscounted basis using the tax rates and tax laws that have been
enacted or substantively enacted by the balance sheet date and
which are expected to apply when the related deferred tax asset is
realised or the deferred tax liability is settled.
Deferred income tax assets are recognised to the extent that it
is probable that future taxable profits will be available against
which differences can be utilised. An asset is not recognised to
the extent that the transfer of economic benefits in the future is
uncertain.
Deferred income tax assets and liabilities are offset only if a
legally enforceable right exists to set off current tax assets
against current tax liabilities, the deferred income taxes relate
to the same taxation authority and that authority permits the Group
to make a single payment.
(l) Property, plant and equipment
Property, plant and equipment assets are recognised initially at
cost. After initial recognition, these assets are carried at cost
less any accumulated depreciation and any accumulated impairment
losses. Cost comprises the aggregate amount paid and the fair value
of any other consideration given to acquire the asset and includes
costs directly attributable to making the asset capable of
operating as intended.
Depreciation is computed by allocating the depreciable amount of
an asset on a systematic basis over its useful life and is applied
separately to each identifiable component.
The following bases and rates are used to depreciate classes of
assets:
Laboratory infrastructure - straight line over remainder of
lease period (two to ten years)
Fixtures and fittings - straight line over five years
Office equipment - straight line over three years
Plant and machinery - straight line over five years
The carrying values of tangible fixed assets are reviewed for
impairment if events or changes in circumstances indicate that the
carrying value may not be recoverable, and are written down
immediately to their recoverable amount. Useful lives and residual
values are reviewed annually and where adjustments are required
these are made prospectively.
A tangible fixed asset item is derecognised on disposal or when
no future economic benefits are expected to arise from the
continued use of the asset. Any gain or loss arising on the
de-recognition of the asset is included in the consolidated
statement of comprehensive income in the period of
de-recognition.
Assets under construction, which principally relate to leasehold
improvements and plant and machinery, are not depreciated until
such time as they are available for use. If there are indications
of impairment in the carrying value, then the recoverable amount is
estimated and compared to the carrying amount. The recoverable
amount is determined as the value that will ultimately be
capitalised as an asset, based upon IAS 16 recognition and
capitalisation criteria.
(m) Intangible assets
Intangible assets acquired either as part of a business
combination or from contractual or other legal rights are
recognised separately from goodwill provided they are separable and
their fair value can be measured reliably. This includes the costs
associated with acquiring and registering patents in respect of
intellectual property rights.
Where consideration for the purchase of an intangible asset
includes contingent consideration, the fair value of the contingent
consideration is included in the cost of the asset.
Where intangible assets recognised have finite lives, after
initial recognition their carrying value is amortised on a
straight-line basis over those lives. The nature of those
intangibles recognised and their estimated useful lives are as
follows:
Patents - straight line over ten years
(n) Impairment of assets
At each reporting date the Group reviews the carrying value of
its plant, equipment and intangible assets to determine whether
there is an indication that these assets have suffered an
impairment loss. If any such indication exists, or when annual
impairment testing for an asset is required, the Company makes an
assessment of the asset's recoverable amount.
An asset's recoverable amount is the higher of an asset's or
cash-generating unit's fair value less costs to sell and its value
in use and is determined for an individual asset, unless the asset
does not generate cash inflows that are largely independent of
those from other assets or groups of assets. Where the carrying
value of an asset exceeds its recoverable amount, the asset is
considered impaired and is written down to its recoverable amount.
In assessing value in use, the estimated future cash flows are
discounted to their present value using a pre-tax discount rate
that reflects current market assessments of the time value of money
and the risks specific to the asset. In determining fair value less
costs of disposal, an appropriate valuation model is used and these
calculations are corroborated by valuation multiples or other
available fair value indicators. Impairment losses on continuing
operations are recognised in the consolidated statement of
comprehensive income in those expense categories consistent with
the function of the impaired asset.
An assessment is made at each reporting date as to whether there
is any indication that previously recognised impairment losses may
no longer exist or may have decreased. If such indication exists,
the recoverable amount is estimated. A previously recognised
impairment loss is reversed only if there has been a change in the
assumptions used to determine the asset's recoverable amount since
the last impairment loss was recognised. If that is the case the
carrying amount of the asset is increased to its recoverable
amount. That increased amount cannot exceed the carrying amount
that would have been determined, net of depreciation, had no
impairment loss been recognised for the asset in prior years. Such
reversal is recognised in the consolidated statement of
comprehensive income unless the asset is carried at a revalued
amount, in which case the reversal is treated as a valuation
increase. After such a reversal the depreciation charge is adjusted
in future periods to allocate the asset's revised carrying amount,
less any residual value, on a systematic basis over its remaining
useful life.
Impairment charges have been posted during the year in relation
to Group tangible assets, Group intangible assets and Company only
investments and intercompany balances. See the relevant note for
more information.
(o) Assets held for sale
Non-current assets are classified as held for sale if their
carrying amounts will be recovered principally through a sale
transaction, rather than through continuing use. They are measured
at the lower of carrying amount and fair value less costs to sell,
which are incremental costs directly attributable to the disposal
of the asset. The carrying value is assessed at each reporting
period.
Property, plant and equipment and intangible assets are not
amortised once classified as held for sale. Assets classified as
held for sale are presented separately as current assets in the
statement of financial position.
(p) Investments in subsidiaries
Investments in subsidiaries are stated in the Company statement
of financial position at cost less provision for any
impairment.
(q) Inventories
Inventories are stated at the lower of cost and net realisable
value. Cost based on latest contractual prices includes all costs
incurred in bringing each product to its present location and
condition. Net realisable value is based on estimated selling price
less any further costs expected to be incurred to disposal.
Provision is made for slow-moving or obsolete items.
(r) Financial instruments
Financial assets and financial liabilities are recognised when
the Group becomes party to the contractual provisions of the
relevant instrument and derecognised when it ceases to be party to
such provisions. Such assets and liabilities are classified as
current if they are expected to be realised or settled within
twelve months after the balance sheet date. Financial assets and
liabilities are initially recognised at fair value and subsequently
measured at either fair value or amortised cost including directly
attributable transaction costs.
The Group has the following categories of financial assets and
liabilities:
Loans and receivables
(i) Trade and other receivables
Trade receivables, which generally have 30 to 60-day terms, are
recognised and carried at the lower of their original invoiced
value and recoverable amount. The time value of money is not
material.
Provision is made when there is objective evidence that the
Group will not be able to recover balances in full. Significant
financial difficulties faced by the customer, probability that the
customer will enter bankruptcy or financial reorganisation and
default in payments are considered indicators that the trade
receivable is impaired. The amount of the provision is the
difference between the asset's carrying amount and the present
value of estimated future cash flows, discounted at the original
effective interest rate. The carrying value of the asset is reduced
through the use of an allowance account, and the amount of the loss
is recognised in the consolidated statement of comprehensive income
within administrative expenses.
When a trade receivable is uncollectable, it is written off
against the allowance account for trade receivables.
(ii) Cash, cash equivalents and short-term investments
Cash and cash equivalents comprise cash at hand and deposits
with maturities of three months or less. Short-term investments
comprise deposits with maturities of more than three months, but no
greater than twelve months.
Financial liabilities at amortised cost
(i) Trade and other payables
Trade and other payables are non-interest bearing and are
initially recognised at fair value. They are subsequently measured
at amortised cost using the effective interest rate method.
(ii) Loans and Convertible loan notes
Obligations for loans and borrowings are measured initially at
fair value and subsequently interest-bearing loans are measured at
fair value. Convertible loan notes are presented as financial
liabilities as rights of the note holder to convert the loan notes
into equity are within the control of the Company.
(s) Share capital
Proceeds on issue of shares are included in shareholders'
equity, net of transaction costs. The carrying amount is not
re-measured in subsequent years.
(t) Shares held by the Employee Benefit Trust ("EBT")
Following the exercise on 2 August 2016 upon which jointly owned
shares were transferred to the sole beneficiary, there are no
further shares held in the EBT. The Trust was closed during the
financial year.
(u) Share-based payments
Equity-settled share-based payment transactions are measured
with reference to the fair value at the date of grant, recognised
on a straight-line basis over the vesting period, based on the
Company's estimate of shares that will eventually vest. Fair value
is measured using a suitable option pricing model.
At each reporting date before vesting, the cumulative expense is
calculated, representing the extent to which the vesting period has
expired and management's best estimate of the achievement or
otherwise of non-market conditions and the number of equity
instruments that will ultimately vest. The movement in cumulative
expense since the previous reporting date is recognised in the
consolidated statement of comprehensive income, with a
corresponding entry in equity.
Where the terms of an equity-settled award are modified or a new
award is designated as replacing a cancelled or settled award, the
cost based on the original award terms continues to be recognised
over the original vesting period. In addition, an expense is
recognised over the remainder of the new vesting period for the
incremental fair value of any modification, based on the difference
between the fair value of the original award and the fair value of
the modified award, both as measured on the date of the
modification. No reduction is recognised if this difference is
negative.
Where awards are granted to the employees of the subsidiary
company, the fair value of the awards at grant date is recorded in
the Company's financial statements as an increase in the value of
the investment with a corresponding increase in equity via the
share-based payment reserve.
(v) Defined contribution pension scheme
The Group operates a defined contribution pension scheme. The
assets of the scheme are held separately from those of the Company
in an independently administered fund. The amounts charged against
profits represent the contributions payable to the scheme in
respect of the accounting period.
(w) Provisions
Provisions are recognised when the Group has a present
obligation (legal or constructive) as a result of a past event, it
is probable that an outflow of resources embodying economic
benefits will be required to settle the obligation and a reliable
estimate can be made of the amount of the obligation. Provision is
not made for future operating losses. Provisions are discounted
where the impact is deemed to be material.
(x) Exceptional items
Items of income and expenditure which are material and
non-recurring are presented separately in the Consolidated
Statement of Total Comprehensive Income. The separate reporting of
exceptional items helps to provide an indication of the underlying
performance of the Group.
(y) New accounting standards and interpretations
The following amendments to IFRSs became mandatory in this
reporting period. The Group has applied the following standards and
amendments for the first time for the reporting period commencing 1
August 2018:
-- IFRS 9 Financial Instruments
-- IFRS 15 Revenue from Contracts with Customers
-- Amendments to IFRS 2 Classification and Measurement of Share-based Payment Transactions
The adoption of these standards did not have a material impact
on the current period or any prior period.
New standards not yet adopted
The IASB has published three new accounting standards relevant
to the Group that will be mandatory in future periods. These
standards have not been early adopted in these consolidated
financial statements. The Group's initial assessment of the future
impact of these new standards is as follows:
IFRS 16 Leases (effective for annual periods beginning on or
after 1 January 2019)
The new leases standard changes the previous lease accounting
model so a lessee will now reflect more assets and liabilities
arising from leases on its balance sheet. This can substantially
affect key financial ratios, including ratios related to debt
covenants or debt-to-equity ratios.
Under the new standard all lease contracts, with limited
exceptions, are recognised in financial statements by way of right
to use assets and corresponding lease liabilities. The Group has
undertaken an assessment of the impact of IFRS 16 and currently
expect that the Group will apply the modified retrospective
approach, which means that the cumulative effect of initially
applying the standard is recognised at the date of initial
application and there is no restatement of comparative information.
Compared with the existing accounting for operating leases,
application of the standard will have a significant impact on the
classification of expenditures and consequently the classification
of cash flow from operating activities, cash flow from investing
activities and cash flow from financing activities. It will also
impact the timing of expenses recognised in the statement of
income. The adoption of the new standard at 1 August 2019 is
expected to have a negligible impact on equity following the
recognition of lease liabilities and right of use and lease assets
totalling approximately GBP1.8m.
4. Segmental information
Operating segments
At 31 July 2019 and 2018 the Group operated as one segment,
being the research, development and manufacture of products and
services based on high performance nanoparticles. This is the level
at which operating results are reviewed by the chief operating
decision maker (i.e. the Chief Executive Officer) to make decisions
about resources, and for which financial information is available.
All revenues have been generated from continuing operations and are
from external customers.
31 July 31 July
2019 2018
GBP'000 GBP'000
----------------------- -------- --------
Analysis of revenue
Products sold 186 168
Rendering of services 6,488 3,000
Royalties and licences 449 147
----------------------- -------- --------
7,123 3,315
----------------------- -------- --------
There was one material customer who generated revenue of
GBP6,461,000 (2018: one material customer amounting to
GBP3,000,000).
The Group operates in four main geographic areas, although all
are managed in the UK. The Group's revenue per geographical segment
based on the customer's location is as follows:
31 July 31 July
2019 2018
GBP'000 GBP'000
---------------------- -------- --------
Revenue
UK 1 9
Europe (excluding UK) 485 42
Asia 141 176
USA 6,496 3,088
---------------------- -------- --------
7,123 3,315
---------------------- -------- --------
All the Group's assets are held in the UK and all of its capital
expenditure arises in the UK. The loss before taxation and
attributable to the single segment was GBP5,509,000 (2018:
GBP7,405,000).
5. Other operating income
31 July 31 July
2019 2018
GBP'000 GBP'000
------------------ -------- --------
Government grants 204 136
------------------ -------- --------
6. Operating loss
31 July 31 July
2019 2018
GBP'000 GBP'000
-------------------------------------------------- -------- --------
Operating loss is stated after charging:
Depreciation of tangible fixed assets (see note
12) 613 504
Amortisation of intangible assets (see note 13) 552 476
Impairment of tangible fixed assets (see note 12) 3,325 -
Impairment of intangible assets (see note 13) 26 -
Staff costs (see note 8) 5,961 5,577
Foreign exchange losses 63 64
Research and development expense* 4,385 3,960
Share-based payments 232 257
Operating lease rentals (see note 26):
Land and buildings 760 867
-------------------------------------------------- -------- --------
* Included within research and development expense are staff
costs totalling GBP3,522,000 (2018: GBP3,076,000) also included in
note 8.
Auditor's remuneration
31 July 31 July
2019 2018
Audit services: GBP'000 GBP'000
------------------------------------------------------ -------- --------
- Fees payable to Company auditor for the audit of
the Parent and the consolidated accounts 50 82
- Auditing the accounts of subsidiaries pursuant to
legislation 26 58
Fees payable to Company auditor for other services:
- Assurance services in connection with the review
of interim results 15 12
- Services relating to corporate finance transactions
not covered above - 25
------------------------------------------------------ -------- --------
Total auditor's remuneration 91 177
------------------------------------------------------ -------- --------
7. Exceptional items
During the financial year, the Group incurred a number of
charges which are considered to be exceptional in nature. These
have been aggregated and disclosed separately in the Consolidated
statement of comprehensive income.
FY 19
Income / (charge) GBP'000
---------------------------------------------------- --------
Customer contract liability waived 4,245
Financial impairment of production facility (3,325)
Onerous lease provision (663)
Provision for contract specific stock (261)
Other US Customer contract liabilities (134)
---------------------------------------------------- --------
Sub-total US Customer net exceptional items (138)
Restructuring cost following display resource pivot (128)
---------------------------------------------------- --------
Total net exceptional items (266)
---------------------------------------------------- --------
During the year, the US Customer confirmed that the project
would not continue beyond the current contract which completes in
December 2019. As a result, the following financial adjustments
have been posted:
- an outstanding contract liability owed by Nanoco Group to the
US Customer has been waived, resulting in an exceptional credit of
GBP4.245m;
- given the lack of any signed or near term commercial prospects
for the new production facility, a tangible asset impairment has
been posted of GBP3.3m;
- linked to the above, an onerous lease provision has been
recognised in relation to the new production facility from the end
of the existing contract with the US Customer to the expiry of the
lease;
- other liabilities or costs incurred in the period relating to
the US Customer are a provision against stock purchased
specifically for the US Customer and other existing non-cancellable
purchase commitments.
Further to the US Customer items above, following the resource
pivot in our display business in the second quarter, we initiated a
restructuring exercise reflecting our dots only focus in display
activities. This exercise completed in the fourth quarter and will
generate GBP0.6m per annum of savings, including in FY20.
8. Staff costs
The Group's cost for employees, including Directors, during the
year were as follows:
31 July 31 July
2019 2018
GBP'000 GBP'000
--------------------------------------------------------- -------- --------
Wages and salaries 5,030 4,587
Social security costs 433 445
Other pension costs 133 288
Share-based payments 232 257
--------------------------------------------------------- -------- --------
5,828 5,577
--------------------------------------------------------- -------- --------
Directors' remuneration (including benefits in kind)
included in the aggregate remuneration above comprised:
Emoluments for qualifying services 1,158 1,015
--------------------------------------------------------- -------- --------
Emoluments for Directors of the Group (excluding social security
costs and long-term incentives, but including benefits in kind)
disclosed above include GBP505,000 paid to the highest paid
Director (2018: GBP312,000). Details of the compensation of key
management personnel are described in note 29.
The Group made contributions to money purchase pension schemes
for three current Directors (2018: four).
Aggregate gains made by Directors during the year following the
exercise of share options and jointly owned EBT shares were
GBP89,000 (2018: GBPnil).
Not included in the costs reported above are share awards to be
made to Directors under the Deferred Bonus Plan amounting to
GBP386,000 (2018: GBPnil) which are included in the Directors'
remuneration report. The awards are recognised in the income
statement by way of a share-based payment charge over the deferral
period as required by IFRS 2.
An analysis of the highest paid Director's remuneration is
included in the Directors' remuneration report.
Then monthly average number of employees during the year
(including Directors) was as follows:
31 July 31 July
2019 2018
Group Number Number
------------------------------------ ------- -------
Directors 7 7
Laboratory and administrative staff 85 79
------------------------------------ ------- -------
92 86
------------------------------------ ------- -------
9. Finance income and expense
31 July 31 July
2019 2018
Group GBP'000 GBP'000
----------------------- -------- --------
Finance income
Interest receivable 12 11
Finance expense
Loan note interest (28) (7)
Other interest payable (10) -
----------------------- -------- --------
(26) 4
----------------------- -------- --------
10. Taxation
The tax credit is made up as follows:
31 July 31 July
2019 2018
Group GBP'000 GBP'000
------------------------------------------------------ -------- --------
Current income tax
Research and development income tax credit receivable (1,128) (1,400)
Adjustment in respect of prior years (23) -
Overseas corporation tax - -
------------------------------------------------------ -------- --------
(1,151) (1,400)
Deferred tax
Charge for the year - -
------------------------------------------------------ -------- --------
Total income tax credit (1,151) (1,400)
------------------------------------------------------ -------- --------
The adjustments in respect of prior years relate to research and
development income tax credits. The research and development income
tax for the year ended 31 July 2018 was submitted in January 2019
and the repayment was received in April 2019. The income tax
receivable shown in the statement of financial position is the
R&D tax credit receivable reported above.
The tax assessed for the year varies from the standard rate of
corporation tax as explained below:
31 July 31 July
2019 2018
Group GBP'000 GBP'000
------------------------------------------------------- -------- --------
Loss before taxation (5,509) (7,405)
------------------------------------------------------- -------- --------
Tax at standard rate of 19% (2018: 19%) (1,047) (1,407)
Effects of:
Expenses not deductible for tax purposes 16 3
Capital allowances in excess of depreciation 243 (62)
Additional deduction for research and development
expenditure (1,022) (1,037)
Surrender of research and development relief for
repayable tax credit 1,446 1,839
Research and development tax credit receivable (1,128) (1,400)
Share options exercised (CTA 2009 Pt 12 deduction) (26) -
Losses and share-based payment charges carried forward
not recognised in deferred tax 390 669
Adjustment in respect of rate changes - (5)
Adjustment in respect of prior years (23) -
------------------------------------------------------- -------- --------
Tax credit in income statement (1,151) (1,400)
------------------------------------------------------- -------- --------
The Group has accumulated losses available to carry forward
against future trading profits of 32.6 million (2018: GBP32.2
million).
Deferred tax liabilities/(assets) provided/(recognised) at a
standard rate of 17% (2018: 17%) are as follows:
31 July 31 July
2019 2018
GBP'000 GBP'000
------------------------------- -------- --------
Accelerated capital allowances 480 407
Tax losses (480) (407)
------------------------------- -------- --------
- -
------------------------------- -------- --------
The Group also has deferred tax assets, measured at a standard
rate of 17% (2018: 17%), in respect of share-based payments of
GBP8,000 (2018: GBP23,000) and tax losses of GBP5,486,000 (2018:
GBP5,486,000) which have not been recognised as an asset as it is
not yet probable that future taxable profits will be available
against which the assets can be utilised.
11. Earnings per share
31 July 31 July
2019 2018
Group GBP'000 GBP'000
---------------------------------------------------- ----------- -----------
Loss for the financial year attributable to equity
shareholders (4,344) (6,005)
Share-based payments 232 257
---------------------------------------------------- ----------- -----------
Loss for the financial year before share-based
payments (4,112) (5,748)
---------------------------------------------------- ----------- -----------
Weighted average number of shares
Ordinary shares in issue 286,025,561 271,964,590
---------------------------------------------------- ----------- -----------
Adjusted loss per share before share-based payments
(pence) (1.44) (2.11)
---------------------------------------------------- ----------- -----------
Basic loss per share (pence) (1.52) (2.21)
---------------------------------------------------- ----------- -----------
Diluted loss per share has not been presented above as the
effect of share options issued is anti-dilutive.
12. Tangible fixed assets
Office
Assets equipment, Plant
under Laboratory fixtures and
construction infrastructure and fittings machinery Total
Group GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------- ------------- --------------- ------------- ---------- --------
Cost
At 1 August 2017 - 2,655 395 4,770 7,820
Additions 1,391 748 44 32 2,215
Reclassified from assets
held for
sale - - - 203 203
------------------------- ------------- --------------- ------------- ---------- --------
At 31 July 2018 1,391 3,403 439 5,005 10,238
Additions 1,882 - 113 86 2,081
Transfers (3,273) - - 3,273 -
------------------------- ------------- --------------- ------------- ---------- --------
At 31 July 2019 - 3,403 552 8,364 12,319
------------------------- ------------- --------------- ------------- ---------- --------
Accumulated Depreciation
At 1 August 2017 - 2,614 263 4,078 6,955
Provided during the year - 12 66 426 504
Reclassified from assets
held for
sale - - - 175 175
------------------------- ------------- --------------- ------------- ---------- --------
At 31 July 2018 - 2,626 329 4,679 7,634
Provided during the year - 82 77 454 613
Impairment - 664 - 2,661 3,325
------------------------- ------------- --------------- ------------- ---------- --------
At 31 July 2019 - 3,372 406 7,794 11,572
------------------------- ------------- --------------- ------------- ---------- --------
Net book value
At 31 July 2019 - 31 146 570 747
------------------------- ------------- --------------- ------------- ---------- --------
At 31 July 2018 1,391 777 110 326 2,604
------------------------- ------------- --------------- ------------- ---------- --------
The aggregate original cost of tangible assets now fully
depreciated but considered to be still in use is GBP7,777,000
(2018: GBP6,790,000). Assets under construction (plant and
machinery) in prior year relate to the expansion of our Runcorn
facility and these assets commenced depreciation in the current
year.
During the year, the Group posted an impairment charge against
the new facility in Runcorn due to the lack of firm customer orders
(GBP3,325,000, 2018: GBPnil).
13. Intangible assets
Patents
Group GBP'000
--------------------------------------- --------
Cost
At 1 August 2017 4,291
Additions 782
Reclassified from assets held for sale 597
--------------------------------------- --------
At 31 July 2018 5,670
Additions 1,043
--------------------------------------- --------
At 31 July 2019 6,713
--------------------------------------- --------
Amortisation
At 1 August 2017 1,672
Provided during the year 476
Impairment charge -
Reclassified from assets held for sale 90
--------------------------------------- --------
At 31 July 2018 2,238
Provided during the year 552
Impairment charge 26
--------------------------------------- --------
At 31 July 2019 2,816
--------------------------------------- --------
Net book value
At 31 July 2019 3,897
--------------------------------------- --------
At 31 July 2018 3,432
--------------------------------------- --------
Contingent consideration of $150,000 is payable in respect of a
purchase of patents made during a previous period. The amount is
payable if the Group reaches a revenue target in a future reporting
period. The addition is recorded above at the Directors' estimate
of fair value of the consideration payable.
Intangible assets are 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 are material to the business. The aggregate
original cost of intangible assets now fully depreciated but
considered to be still in use is GBP556,000 (2018: GBP471,000).
During the year an extensive review was undertaken to identify
which patents are of no further value to Nanoco and should be
allowed to lapse. Two patent families were identified. As a
consequence, patents with a value of GBP26,000 (2018: GBPNil) have
been fully impaired in these financial statements. The impairment
charge is recognised within administrative expenses.
14. Investment in subsidiaries
Shares Loan
Shares impairment Loans impairment Total
Company GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------------------------- -------- ----------- -------- ----------- --------
At 1 August 2017 63,235 - 23,615 (20,286) 66,564
Increase in respect of share-based
payments - - 257 - 257
----------------------------------- -------- ----------- -------- ----------- --------
At 31 July 2018 63,235 - 23,872 (20,286) 66,821
Increase in respect of share-based
payments - - 232 - 232
Cash transfer - - 71 - 71
Impairment - (24,006) - (3,889) (27,895)
----------------------------------- -------- ----------- -------- ----------- --------
At 31 July 2019 63,235 (24,006) 24,175 (24,175) 39,229
----------------------------------- -------- ----------- -------- ----------- --------
By subsidiary
----------------------------- ----------------- ------ -------- --------
Nanoco Tech Limited 63,235 (24,006) - - 39,229
Nanoco Life Sciences Limited - - 20,286 (20,286) -
Nanoco Technologies Limited - - 3,889 (3,889) -
------------------------------ ------ -------- ------ -------- ------
At 31 July 2019 63,235 (24,006) 24,175 (24,175) 39,229
------------------------------ ------ -------- ------ -------- ------
Accounting standards (IAS36, Impairment of Assets) require
investments in subsidiary undertakings (equity and loans) to be
carried at the lower of cost or recoverable value. Recoverable
value is defined as the higher of fair value less costs of disposal
(effectively net sale proceeds) and value in use. Indicators of
potential impairment noted in IAS36 (Para 12), include, but are not
limited to, situations where the carrying amount of the net assets
of the entity are more than its market capitalisation (as was the
case at the year end and continues to be so at the date of these
Financial Statements) and where significant changes with an adverse
effect on the entity have taken place during the period (the
decision by the US Customer not to extend the current
contract).
As set out in the Viability Statement, the Board has considered
a number of scenarios, being base, downside and worst cases. Given
the uncertainty and risk over future income streams, and the
associated potential impact on the discount rate to be used in the
discounted cash flow, the Board has concluded that the appropriate
valuation basis to use at this time for the total investments by
Nanoco plc in Nanoco Technologies Limited (loans and equity above
and the short term loan as disclosed in Note 16), should be fair
value rather than value in use. For the avoidance of doubt, in the
base case set out in the Viability Report there would be no
impairment required to the assets above.
Consistent with IAS36 and the indicator of impairment noted
above in respect of net assets exceeding market capitalisation, the
Directors have used the Company's market capitalisation as at 31
July 2019 as its fair value less costs of disposal. This has
resulted in an impairment of GBP27,895k in relation to the
investments (2018: GBPnil) and an impairment of GBP10,383k in
relation to the inter-company short-term loan disclosed in note 16
(2018: GBP50,000k).
The Directors do, however, consider that the current share price
is at a significant discount to the value of its IP, by reference
to similar businesses operating in the same markets and with
smaller IP portfolios than Nanoco.
Loans to subsidiary undertakings carry no interest and are
repayable on demand. Further information in relation to these loans
is given in note 28.
Share of issued ordinary
share capital
-------------------------------------
31 July 31 July
Subsidiary undertakings Country of incorporation Principal activity 2019 2018
------------------------ -------------------------- ----------------------------- ------- -------
Nanoco Life Sciences England and
Limited Wales Research and development 100% 100%
England and
Nanoco Tech Limited Wales Holding company 100% 100%
Nanoco Technologies England and Manufacture and development
Limited* Wales of nanoparticles 100% 100%
Nanoco 2D Materials England and
Limited Wales Research and development 100% 100%
Nanoco US Inc.** USA Management services 100% 100%
------------------------ -------------------------- ----------------------------- ------- -------
All subsidiaries incorporated in England and Wales are
registered at 46 Grafton Street, Manchester M13 9NT. Nanoco US Inc.
is registered at 33 Bradford Street, Concord, MA 01742.
With the exception of the two companies footnoted below all
other shareholdings are owned by Nanoco Group plc.
* Share capital is owned by Nanoco Tech Limited.
** Nanoco US Inc. is a wholly owned subsidiary of Nanoco Tech
Limited. It was formed in July 2013 primarily in order to provide
the services of US-located staff to the rest of the Group.
15. Inventories
31 July 31 July 31 July 31 July
2019 2019 2018 2018
Group Company Group Company
GBP'000 GBP'000 GBP'000 GBP'000
---------------------------------------------- -------- -------- -------- --------
Raw materials, finished goods and consumables 226 - 217 -
---------------------------------------------- -------- -------- -------- --------
A total of GBP316,000 (2018: GBP144,000) was included in cost of
sales with respect to the cost of inventory expensed during the
year.
16. Trade and other receivables
31 July 31 July 31 July 31 July
2019 2019 2018 2018
Group Company Group Company
. GBP'000 GBP'000 GBP'000 GBP'000
-------------------------------------------- -------- -------- -------- --------
Trade receivables 202 - 290 -
Prepayments and accrued income 383 - 435 -
Inter-company short-term loan to subsidiary - 60,383 - 60,508
Less impairment provision - (60,383) - (50,000)
Other receivables 532 - 690 -
-------------------------------------------- -------- -------- -------- --------
1,117 - 1,415 10,508
-------------------------------------------- -------- -------- -------- --------
The impairment of the short term loan is explained in Note 14.
The quantum of this provision will be reviewed at each reporting
date.
Trade receivables are non-interest bearing and are generally due
and paid within 30 to 60 days. The Directors consider that the
carrying amount of trade and other receivables approximates to
their fair value and that no impairment is required at the
reporting date. Therefore there is no provision for impairment at
the balance sheet date (2018: GBPnil).
Trade receivables are denominated in the following currency:
31 July 31 July 31 July 31 July
2019 2019 2018 2018
Group Company Group Company
GBP'000 GBP'000 GBP'000 GBP'000
----------- -------- -------- -------- --------
US Dollars 158 - 10 -
Euros - - - -
Sterling 44 - 280 -
----------- -------- -------- -------- --------
202 - 290 -
----------- -------- -------- -------- --------
At 31 July the analysis of trade receivables that were past due
but not impaired was as follows:
Past
Past due
due but not
Due but not impaired
Not but not impaired 120 to
yet due impaired >90 days 150 days Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----- -------- --------- --------- --------- --------
2019 133 69 - - 202
----- -------- --------- --------- --------- --------
2018 279 11 - - 290
----- -------- --------- --------- --------- --------
17. Cash and cash equivalents
31 July 31 July 31 July 31 July
2019 2019 2018 2018
Group Company Group Company
GBP'000 GBP'000 GBP'000 GBP'000
-------------------------- -------- -------- -------- --------
Cash and cash equivalents 7,005 97 10,729 43
-------------------------- -------- -------- -------- --------
Under IAS 7, cash held on long-term deposits (being deposits
with original maturity of greater than three months and no more
than twelve months) that cannot readily be converted into cash must
be classified as a short-term investment. There were no such
deposits at 31 July 2019 (2018: same).
An analysis of cash, cash equivalents and deposits by
denominated currency is given in note 27.
18. Trade and other payables
31 July 31 July 31 July 31 July
2019 2019 2018 2018
Group Company Group Company
GBP'000 GBP'000 GBP'000 GBP'000
--------------- -------- -------- -------- --------
Current
Trade payables 1,764 - 2,016 -
Other payables 101 - 126 -
Accruals 688 - 878 -
--------------- -------- -------- -------- --------
2,553 - 3,020 -
--------------- -------- -------- -------- --------
The Directors consider that the carrying amount of trade and
other payables approximates to their fair value. The average credit
period taken is 38 days (2018: 41 days).
19. Provisions
31 July 31 July 31 July 31 July
2019 2019 2018 2018
Group Company Group Company
GBP'000 GBP'000 GBP'000 GBP'000
------------------------ -------- -------- -------- --------
Current
Onerous lease provision 663 - - -
Other commitments 134 - - -
------------------------ -------- -------- -------- --------
797 - - -
------------------------ -------- -------- -------- --------
Provisions relate to the contract with the US Customer. Details
are included in note 7.
20. Financial liabilities
31 July 31 July 31 July 31 July
2019 2019 2018 2018
Group Company Group Company
GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------ -------- -------- -------- --------
Non-current
Long-term loan from subsidiary - 450 - 450
Convertible Series A Loan note 2028 400 - 400 -
Accrued interest 33 - 7 -
------------------------------------ -------- -------- -------- --------
433 450 407 450
------------------------------------ -------- -------- -------- --------
The loan note issued by Nanoco 2D Materials Limited is
unsecured, bears a fixed interest at 6.5% pa and is fully repayable
with accrued interest in 2028 unless options to convert into shares
of that company have been exercised. The note holders have a right
to convert the loan note into shares of the subsidiary in certain
circumstances but these are within the control of the Company.
Interest is not charged on inter-company loans (2018: no
interest).
There have been no changes in liabilities arising from financing
activities other than described in this note.
21. Deferred revenue
31 July 31 July 31 July 31 July
2019 2019 2018 2018
Group Company Group Company
GBP'000 GBP'000 GBP'000 GBP'000
--------------------- -------- -------- -------- --------
Current
Upfront licence fees 103 - 102 -
Milestone payments 1,359 - 298 -
--------------------- -------- -------- -------- --------
1,462 - 400 -
--------------------- -------- -------- -------- --------
Non-current
Upfront licence fees 353 - 450 -
Contract liabilities - - 2,885 -
--------------------- -------- -------- -------- --------
353 - 3,335 -
--------------------- -------- -------- -------- --------
1,815 - 3,735 -
--------------------- -------- -------- -------- --------
Deferred revenue arises under IFRS 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. The contract liability balance in prior
year related to the US Customer. This has since been waived.
22. Issued equity capital
Reverse
Share Share acquisition
capital premium reserve Total
Group Number GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------- ----------- -------- -------- ------------ --------
Allotted, called up and fully
paid ordinary shares of 10p
At 1 August 2017 238,291,328 23,829 112,648 (77,868) 58,609
Shares issued on placing 47,655,821 4,766 3,812 - 8,578
Costs of placing - - (629) - (629)
------------------------------------- ----------- -------- -------- ------------ --------
At 31 July 2018 285,947,149 28,595 115,831 (77,868) 66,558
------------------------------------- ----------- -------- -------- ------------ --------
Shares issued on exercise of options 272,097 27 - - 27
------------------------------------- ----------- -------- -------- ------------ --------
At 31 July 2019 286,219,246 28,622 115,831 (77,868) 66,585
------------------------------------- ----------- -------- -------- ------------ --------
The balances classified as share capital and share premium
include the total net proceeds (nominal value and share premium
respectively) on issue of the Company's equity share capital,
comprising ordinary shares.
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.
Shares issued on placing
On 15 December 2017, 47,655,821 shares were issued at 18 pence
each.
Share Share
capital premium Total
Company Number GBP'000 GBP'000 GBP'000
------------------------------------- ----------- -------- -------- --------
Allotted, called up and fully paid
ordinary shares of 10p
At 1 August 2017 238,291,328 23,829 112,648 136,477
Shares issued on placing 47,655,821 4,766 3,812 8,578
Costs of placing - - (629) (629)
------------------------------------- ----------- -------- -------- --------
At 31 July 2018 285,947,149 28,595 115,831 144,426
Shares issued on exercise of options 272,097 27 - 27
------------------------------------- ----------- -------- -------- --------
At 31 July 2019 286,219,246 28,622 115,831 144,453
------------------------------------- ----------- -------- -------- --------
23. Share-based payment reserve
Group and Company GBP'000
---------------------------------------------------- -------
At 1 August 2017 2,957
Share-based payments 257
---------------------------------------------------- -------
At 31 July 2018 3,214
Issue of share capital on exercise of share options (27)
---------------------------------------------------- -------
Share-based payments 232
---------------------------------------------------- -------
At 31 July 2019 3,419
---------------------------------------------------- -------
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 consolidated statement of
changes in equity.
A charge of GBP232,000 has been recognised in the statement of
comprehensive income for the year (2018: charge of GBP257,000).
Share option schemes
The Group operates the following share option schemes, all of
which are operated as Enterprise Management Incentive ("EMI")
schemes insofar as the share options being issued meet the EMI
criteria as defined by HM Revenue & Customs. Share options
issued that do not meet EMI criteria are issued as unapproved share
options, but are subject to the same exercise performance
conditions.
Nanoco Group plc Long Term Incentive Plan ("LTIP")
Grant in November 2011
Share options were granted to staff and Executive Directors on
25 November 2011. The options granted to Executive Directors were
subject to commercial targets being achieved. The exercise price
was set at 50 pence, being the average closing share price on the
day preceding the issue of the share options. The fair value
benefit is measured using a binomial model, taking into account the
terms and conditions upon which the share options were issued.
Share options issued to staff vest over a three-year period from
the date of grant and are exercisable until the tenth anniversary
of the award, but are not subject to performance conditions.
Grant in October 2012
Share options were granted to staff and Executive Directors on
22 October 2012. The options granted to Executive Directors were
subject to commercial targets being achieved. The exercise price
was set at 57 pence, being the average closing share price on the
day preceding the issue of the share options. The fair value
benefit is measured using a binomial model, taking into account the
terms and conditions upon which the share options were issued.
Share options issued to staff vest over a three-year period from
the date of grant and are exercisable until the tenth anniversary
of the award, but are not subject to performance conditions.
Grant in May 2014
Share options were granted to certain staff on 23 May 2014. The
exercise price was set at 89 pence, being the average closing share
price on the day preceding the issue of the share options. The fair
value benefit is measured using a binomial model, taking into
account the terms and conditions upon which the share options were
issued. The options vest at the end of three years from the date of
grant and are exercisable until the tenth anniversary of the award.
The awards are not subject to performance conditions. Vesting of
the award is subject to the employee remaining a full-time member
of staff at the point of vesting. No options were granted to
Executive Directors.
Grant in October 2014
Share options were granted to an Executive Director on 14
October 2014. The exercise price was set at 10 pence, being the
nominal value of the share. The fair value benefit is measured
using a binomial model, taking into account the terms and
conditions upon which the share options were issued. The options
vest at the end of three years from the date of grant and are
exercisable until the tenth anniversary of the award. The awards
are subject to performance conditions which were amended during the
year so as to be in line with the 2015 LTIP scheme. As a result of
the modification, the fair value of the award was reduced. However,
in accordance with IFRS 2 no change was made to the charge in the
financial statements. Vesting of the award is subject to the
employee remaining a full-time member of staff at the point of
vesting.
Nanoco Group plc 2015 Long Term Incentive Plan ("LTIP")
Grant in December 2015
Following approval of the new scheme at the 2015 AGM, share
options were granted to four Executive Directors at nil cost. The
fair value benefit is measured using a stochastic model, taking
into account the terms and conditions upon which the share options
were issued. The options vest at the end of the three-year
performance period subject to meeting the performance criteria and
are exercisable after a two-year holding period until the tenth
anniversary of the award.
Grant in April 2016
Share options were granted to an employee on 12 April 2016 at
nil cost. The fair value benefit is measured using a stochastic
model, taking into account the terms and conditions upon which the
share options were issued. The options vest at the end of a
three-year performance period subject to meeting performance
criteria and are exercisable until the tenth anniversary of the
award.
Grant in November 2016
Options were granted to the Executive Directors and all eligible
staff on 22 November 2016 at nil cost. The fair value benefit is
measured using a stochastic model, taking into account the terms
and conditions upon which the share options were issued and are
subject to a two-year holding period. The options vest at the end
of a three-year performance period subject to meeting performance
criteria and are exercisable until the tenth anniversary of the
award.
Grant in December 2017
Options were granted to the Executive Directors and certain
eligible staff on 6 December 2017 at nil cost. The fair value
benefit is measured using a stochastic model, taking into account
the terms and conditions upon which the share options were issued
and are subject to a two-year holding period. The options vest at
the end of a three-year performance period subject to meeting
performance criteria and are exercisable until the tenth
anniversary of the award.
Grant in November 2018
Options were granted to the Executive Directors and certain
eligible staff on 6 November 2018 at nil cost. The fair value
benefit is measured using a stochastic model, taking into account
the terms and conditions upon which the share options were issued
and are subject to a two-year holding period. The options vest at
the end of a three-year performance period subject to meeting
performance criteria and are exercisable until the tenth
anniversary of the award.
Other awards
Share options are awarded to management and key staff as a
mechanism for attracting and retaining key members of staff. The
options are issued at either market price on the day preceding
grant or, in the event of abnormal price movements, at an average
market price for the week preceding grant date. On 14 October 2015,
unapproved options were granted to a member of staff with an
exercise price of 56.5 pence. These options vest over a three-year
period from the date of grant with performance conditions and are
exercisable until the tenth anniversary of the award. Vesting of
the award is subject to the employee remaining a full-time member
of staff at the point of vesting. The fair value benefit is
measured using a binomial valuation model, taking into account the
terms and conditions upon which the share options were issued.
Deferred Bonus Plan ("DBP")
On 22 November 2016, awards in the form of nil-cost options were
granted to the Executive Directors in respect of 50% of their
bonuses for the year ended 31 July 2016 which are delivered in the
form of a share award under the Deferred Bonus Plan. The awards
vested during FY19, after the required two year holding period.
Shares held in the Employee Benefit Trust ("EBT")
The Group historically operated a jointly owned EBT share
scheme. This was closed during the financial year.
The following tables illustrate the number and weighted average
exercise prices of, and movements in, share options during the
year.
2019 total 2018 total
Group and Company Number Number
--------------------------- ----------- -----------
Outstanding at 1 August 17,253,479 16,136,316
Granted during the year 4,693,566 3,787,608
Exercised during the year (274,096) -
Forfeited/cancelled/lapsed (3,522,644) (2,670,445)
--------------------------- ----------- -----------
Outstanding at 31 July 18,150,305 17,253,479
--------------------------- ----------- -----------
Exercisable at 31 July 7,647,247 10,076,620
--------------------------- ----------- -----------
Weighted average exercise price of options
2019 2018
Group and Company Pence Pence
-------------------------- ------ ------
Outstanding at 1 August 35.9 38.6
Granted during the year - -
Exercised during the year - -
Forfeited/cancelled - -
-------------------------- ------ ------
Outstanding at 31 July 24.5 35.9
-------------------------- ------ ------
The weighted average exercise price of options granted during
the year to 31 July 2019 was nil (2018: nil). The range of exercise
prices for options outstanding at the end of the year was nil-110
pence (2018: nil-110 pence).
For the share options outstanding as at 31 July 2019, the
weighted average remaining contractual life is 5.83 years (2018:
6.0 years). The aggregate fair value of options issued in the year
was GBP0.9m (2018: GBP0.5m)
The following table lists the inputs to the models used for the
years ended 31 July 2019 and 31 July 2018.
Market Non-market
performance-linked performance-linked
grants grants
---------------------- ---------------------
Group and Company 2019 2018 2019 2018
-------------------------------- ---------- ---------- ------- ------------
Expected volatility 63% 62% N/A 62%
Risk-free interest rate 0.82% 0.52% N/A 0.52%
Expected life of options (years
average) 3 3 N/A 3
Weighted average exercise price Nil nil N/A nil
Weighted average share price at
date of grant 44p 26p N/A 26p
Model used Stochastic Stochastic N/A Binomial
-------------------------------- ---------- ---------- ------- ------------
The expected life of the options is based on historical data and
is not necessarily indicative of exercise patterns that may occur.
The expected volatility reflects the assumption that the historical
volatility is indicative of future trends, which may also not
necessarily be the actual outcome.
Certain awards are subject to a holding period after vesting. A
Finnerty model has been used to determine a discount for the lack
of marketability of the shares.
24. Merger reserve and capital redemption reserve
Merger reserve
Group GBP'000
------------------------------------------------ -------
At 1 August 2017, 31 July 2018 and 31 July 2019 (1,242)
------------------------------------------------ -------
The merger reserve arises under section 612 of the Companies Act
2006 on the shares issued by Nanoco Tech Limited to acquire Nanoco
Technologies Limited as part of a simple Group reorganisation on 27
June 2007.
Capital redemption reserve
Company GBP'000
------------------------------------------------ -------
At 1 August 2017, 31 July 2018 and 31 July 2019 4,402
------------------------------------------------ -------
The capital redemption reserve arises from the off-market
purchase of deferred shares on 4 May 2005 and their subsequent
cancellation.
25. Movement in accumulated losses
Foreign
Profit currency Total
& translation Treasury retained
loss reserve shares earnings
Group GBP'000 GBP'000 GBP'000 GBP'000
---------------------------- -------- ------------ -------- ---------
At 1 August 2017 (49,857) - (20) (49,877)
Loss for the year (6,005) - - (6,005)
Other comprehensive expense - (13) - (13)
---------------------------- -------- ------------ -------- ---------
At 31 July 2018 (55,862) (13) (20) (55,895)
Loss for the year (4,358) - - (4,358)
Other comprehensive income - 14 - 14
---------------------------- -------- ------------ -------- ---------
At 31 July 2019 60,220 1 (20) (60,239)
---------------------------- -------- ------------ -------- ---------
Profit & loss represents the cumulative loss attributable to
the equity holders of the Parent Company.
Historically, treasury shares included the value of Nanoco Group
plc shares issued as jointly owned equity shares and held by the
Nanoco Group-sponsored EBT jointly with a number of the Group's
employees. At 31 July 2019 no shares in the Company were held by
the EBT (2018: nil). In addition there are 12,222 (2018: 12,222)
treasury shares not held by the EBT.
Total
Retained Treasury revenue
deficit shares reserve
Company GBP'000 GBP'000 GBP'000
------------------ --------- -------- ---------
At 1 August 2017 (25,075) (20) (25,095)
Loss for the year (50,025) - (50,025)
------------------ --------- -------- ---------
At 31 July 2018 (75,100) (20) (75,120)
Loss for the year (38,278) - (38,278)
------------------ --------- -------- ---------
At 31 July 2019 (113,378) (20) (113,398)
------------------ --------- -------- ---------
26. Commitments
Operating lease commitments
The Group leases premises under non-cancellable operating lease
agreements. The future aggregate minimum lease and service charge
payments under non-cancellable operating leases are as follows:
31 July 31 July
2019 2018
Group Group
GBP'000 GBP'000
-------------------------------------------- -------- --------
Land and buildings:
Not later than one year 798 988
After one year but not more than five years 1,156 2,027
After five years - -
-------------------------------------------- -------- --------
1,954 3,015
-------------------------------------------- -------- --------
Capital commitments
At 31 July 2019, the group had capital commitments amounting to
nil in respect of orders placed for capital expenditure (2018:
GBP1,940,000).
27. Financial risk management
Overview
This note presents information about the Group's exposure to
various kinds of financial risks, the Group's objectives, policies
and processes for measuring and managing risk, and the Group's
management of capital.
The Board of Directors has overall responsibility for the
establishment and oversight of the Group's risk management
framework. The Executive Directors report regularly to the Board on
Group risk management.
Capital risk management
The Company reviews its forecast capital requirements on a
half-yearly basis to ensure that entities in the Group will be able
to continue as a going concern while maximising the return to
stakeholders.
The capital structure of the Group consists of equity
attributable to equity holders of the Parent, comprising issued
share capital, reserves and retained earnings as disclosed in notes
22 to 25 and in the Group statement of changes in equity. At 31
July 2019 total equity was GBP8,523,000 (2018: GBP12,635,000).
The Company is not subject to externally imposed capital
requirements.
Liquidity risk
The Group's approach to managing liquidity is to ensure that, as
far as possible, it will always have sufficient liquidity to meet
its liabilities when due, under both normal and stressed
conditions, without incurring unacceptable losses or risking damage
to the Group's reputation.
The Group manages all of its external bank relationships
centrally in accordance with defined treasury policies. The
policies include the minimum acceptable credit rating of
relationship banks and financial transaction authority limits. Any
material change to the Group's principal banking facility requires
Board approval. The Group seeks to mitigate the risk of bank
failure by ensuring that it maintains relationships with a number
of investment-grade banks.
At the reporting date the Group was cash positive with no
outstanding borrowings.
Categorisation of financial instruments
Financial
liabilities Loans
Loans at and
and amortised receivables
receivables cost Group Company
Financial assets/(liabilities) GBP'000 GBP'000 GBP'000 GBP'000
--------------------------------------------- ------------ ------------ -------- ------------
31 July 2019
Trade receivables 202 - 202 -
Other receivables 915 - 915 -
Inter-company short-term loan to subsidiary - - - 60,383
Less impairment provision - - - (60,383)
Trade and other payables - (2,553) (2,292) -
Provisions - (797) (1,058) -
Loan notes and accrued interest - (433) (433) -
Inter-company long-term loan from subsidiary - - - (450)
--------------------------------------------- ------------ ------------ -------- ------------
1,117 (3,783) (2,666) (450)
--------------------------------------------- ------------ ------------ -------- ------------
Financial
liabilities Loans
Loans at and
and amortised receivables
receivables cost Group Company
Financial assets/(liabilities) GBP'000 GBP'000 GBP'000 GBP'000
--------------------------------------------- ------------ ------------ -------- ------------
31 July 2018
Trade receivables 290 - 290 -
Other receivables 75 - 75 -
Inter-company short-term loan to subsidiary - - - 60,508
Less impairment provision - - - (50,000)
Trade and other payables - (3,020) (3,020) -
Loan notes and accrued interest - (407) (407) -
Inter-company long-term loan from subsidiary - - - (450)
--------------------------------------------- ------------ ------------ -------- ------------
365 (3,427) (3,062) 10,058
--------------------------------------------- ------------ ------------ -------- ------------
The values disclosed in the above table are carrying values. The
Board considers that the carrying amount of financial assets and
liabilities approximates to their fair value.
The main risks arising from the Group's financial instruments
are credit risk and foreign currency risk. The Board of Directors
reviews and agrees policies for managing each of these risks which
are summarised below.
Credit risk
The Group's principal financial assets are cash, cash
equivalents and deposits. The Group seeks to limit the level of
credit risk on the cash balances by only depositing surplus liquid
funds with multiple counterparty banks that have investment-grade
credit ratings.
The Group trades only with recognised, creditworthy third
parties. Receivable balances are monitored on an ongoing basis with
the result that the Group's exposure to bad debts is not
significant. The Group's maximum exposure is the carrying amount as
disclosed in note 16, which was neither past due nor impaired. All
trade receivables are ultimately overseen by the Chief Financial
Officer and are managed on a day-to-day basis by the UK credit
control team. Credit limits are set as deemed appropriate for the
customer.
The maximum exposure to credit risk in relation to cash, cash
equivalents and deposits is the carrying value at the balance sheet
date.
Foreign currency risk
The Group is exposed to currency risk on sales and purchases
that are denominated in a currency other than the respective
functional currency of the Company. These are primarily US Dollars
("USD") and Euros. Transactions outside of these currencies are
limited.
Almost all of the Company's revenue is denominated in USD. The
Group purchases some raw materials, certain services and some
assets in USD which partly offsets its USD revenue, thereby
reducing net foreign exchange exposure.
The Group may use forward exchange contracts as an economic
hedge against currency risk, where cash flow can be judged with
reasonable certainty. Foreign exchange swaps and options may be
used to hedge foreign currency receipts in the event that the
timing of the receipt is less certain. There were no open forward
contracts as at 31 July 2019 or at 31 July 2018.
The split of Group assets between Sterling and other currencies
at the year end is analysed as follows (Company assets are all in
Sterling):
31 July 2019 31 July 2018
-------------------------------------- --------------------------------------
GBP EUR USD Total GBP EUR USD Total
Group GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------ -------- -------- -------- -------- -------- -------- -------- --------
Cash and cash
equivalents 6,552 342 111 7,005 10,686 17 26 10,729
Trade receivables 44 - 158 202 280 - 10 290
Trade payables (887) (3) (874) (1,764) (1,571) (79) (366) (2,016)
------------------ -------- -------- -------- -------- -------- -------- -------- --------
5,709 339 (605) 5,443 5,199 (62) (330) 9,003
------------------ -------- -------- -------- -------- -------- -------- -------- --------
All other categories of assets and liabilities in the Statement
of financial position are denominated in Sterling.
Sensitivity analysis to movement in exchange rates
The following table demonstrates the sensitivity to a reasonably
possible change in the Sterling rate against other currencies used
within the business, with all other variables held constant, of the
Group's loss before tax (due to foreign exchange translation of
monetary assets and liabilities) and the Group's equity.
Impact Impact
on loss on loss
before before
tax tax
and Group and Group
equity equity
2019 2018
Increase/(decrease) GBP'000 GBP'000
------------------- ---------- ----------
10% (47) (54)
5% (22) (28)
(5)% 20 31
(10)% 39 65
------------------- ---------- ----------
Interest rate risk
As the Group has no significant borrowings the risk is limited
to the reduction of interest received on cash surpluses held at
bank which receive a floating rate of interest. The principal
impact to the Group is to interest-bearing cash and cash equivalent
balances held, which are as set out below:
31 July 2019 31 July 2018
---------------------------- ----------------------------
Fixed Floating Fixed Floating
rate rate Total rate rate Total
Group GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------------------- -------- -------- -------- -------- -------- --------
Cash and cash equivalents - 7,005 7,005 - 10,729 10,729
Loan notes (400) - (400) (400) - (400)
-------------------------- -------- -------- -------- -------- -------- --------
Company
--------------------------
Cash and cash equivalents -97 97 -43 43
--------------------------
The exposure to interest rate movements is immaterial.
Maturity profile
Set out below is the maturity profile of the Group's financial
liabilities at 31 July 2019 and 31 July 2018 based on contractual
undiscounted payments, including contractual interest.
Greater
Less One to than
than five five
one year years years Total
2019 GBP'000 GBP'000 GBP'000 GBP'000
---------------------------------------- --------- -------- -------- --------
Financial liabilities
Trade and other payables 2,553 - - 2,553
Convertible loan (including contractual
interest) - - 433 433
---------------------------------------- --------- -------- -------- --------
2,553 - 433 2,986e
---------------------------------------- --------- -------- -------- --------
Greater
Less One to than
than five five
one year years years Total
2018 GBP'000 GBP'000 GBP'000 GBP'000
---------------------------------------- --------- -------- -------- --------
Financial liabilities
Trade and other payables 3,020 - - 3,020
Convertible loan (including contractual
interest) - - 407 407
---------------------------------------- --------- -------- -------- --------
3,020 - 407 3,427
---------------------------------------- --------- -------- -------- --------
Trade and other payables are due within three months.
The Directors consider that the carrying amount of the financial
liabilities approximates to their fair value.
As all financial assets are expected to mature within the next
twelve months, an aged analysis of financial assets has not been
presented.
The Company's financial liability, a long-term loan from a
subsidiary undertaking, is due after more than five years.
28. Related party transactions
The Group
There were no sales to, purchases from or, at the year end,
balances with any related party.
The Company
The following table summarises inter-company balances at the
year end between Nanoco Group plc and subsidiary entities:
31 July 31 July
2019 2018
Notes GBP'000 GBP'000
------------------------------------------------ ----- -------- --------
Long-term loans owed to Nanoco Group plc by
Nanoco Life Sciences Limited 20,286 20,286
Nanoco Technologies Limited* 3,889 3,586
------------------------------------------------ ----- -------- --------
14 24,175 23,872
Less provision against debt owed by Nanoco Life
Sciences Limited 14 (24,175) (20,286)
------------------------------------------------ ----- -------- --------
- 3,586
------------------------------------------------ ----- -------- --------
Short-term loan owed to Nanoco Group plc by
Nanoco Technologies Limited** 16 60,383 60,508
Less impairment provision 16 (60,383) (50,000)
------------------------------------------------ ----- -------- --------
- 10,508
------------------------------------------------ ----- -------- --------
Long-term loan owed by Nanoco Group plc to
Nanoco Tech Limited 18 (450) (450)
------------------------------------------------ ----- -------- --------
* The movement in the long-term loan due from Nanoco
Technologies Limited relates to the recharge in respect of the
expense for share-based payments for staff working for Nanoco
Technologies Limited and is included in investments.
** The movement in the short-term loan due from Nanoco
Technologies Limited relates to transfers of cash balances between
the entities for the purposes of investing short-term funds and the
funding of trading losses.
There are no formal terms of repayment in place for these loans
and it has been confirmed by the Directors that the long-term loans
will not be recalled within the next twelve months.
None of the loans are interest bearing.
29. Compensation of key management personnel (including
Directors)
2019 2018
GBP'000 GBP'000
----------------------------- -------- --------
Short-term employee benefits 1,771 1,242
Pension costs 53 77
Benefits in kind - -
Share-based payments 232 243
----------------------------- -------- --------
2,056 1,562
----------------------------- -------- --------
The key management team comprises the Directors and four members
of staff (2018: three) who are not Directors of the Company. The
staff members of the team are the Supply Chain and Compliance
Director, the Group Financial Controller, the HR Business Partner
and the Production and Process Research Manager.
== Ends ==
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR LELLFKBFBFBL
(END) Dow Jones Newswires
October 16, 2019 02:00 ET (06:00 GMT)
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