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Annual Report
and Accounts 2024
Nanoco is a market leader in the
research, development, licensing
and large scale manufacture of novel
nanomaterials for use in a wide range
of commercial applications
About us
Our platform technology is used to design and
manufacture bespoke nanomaterials. This means
that they can be custom made for our customers
and specific end-use applications.
Our leading-edge R&D team exploits both the
emissive and absorptive properties of the materials
we design. These are critical properties in electronics
markets for sensing, imaging and display uses.
Our CFQD
®
quantum dots are free of the toxic
cadmium which many of our competitors and display
manufacturers still use today despite the ban in
European RoHS legislation.
Nanoco Group plc – Annual Report and Accounts 2024
001
Revenue
£7.9 m
+40%
Adjusted EBITDA
1
£1.2 m
+175%
1 See page 31 for reconciliation.
Billings
2
£61.0 m
-3%
2 See page 30 for reconciliation.
Cash
£20.3m
+147%
Our year in brief
Strategic report
Contents
2024 put Nanoco on a firm financial and operational footing with a series of targeted investments in new capabilities
while returning significant capital to shareholders.
| Fulfilled first ever commercial production orders for two
different first generation materials for use in infra-red
sensing applications.
| Commenced two-year Joint Development Agreement
(“JDA”) with ST Microelectronics to optimise the performance
of a second generation sensing material. Post year end, this
programme has been cancelled by the customer. However,
Nanoco will continue to invest resources in this material.
| Commenced two-year JDA with Asian chemical customer
to optimise another different second generation
sensing material.
| Completed major investment and fit out of new device and
analytical testing facility at our Runcorn base in Cheshire, UK.
| All operations accredited to ISO 14001 Environmental
Management Systems, a key customer requirement.
| Post year end, we have brought in an experienced CEO,
and during the year, appointed two new independent
Non-Executives with significant experience in consumer
electronics markets.
| Second and final tranche of litigation proceeds (net £58.8 million)
received from Samsung after settling last year on a no-fault
basis for the alleged infringement of the group’s IP, including
a net foreign exchange gain of £1.8 million compared to
spot rates on the date of receipt.
| Completed tender offer at a 25.1% premium to the closing
mid-market price per ordinary share on the day before the
tender was announced to return £30.0 million to shareholders
following receipt of the second tranche of the litigation proceeds.
| Commenced broker managed market buy-back to return
a further £3.0 million to shareholders, completed post
year end.
For more on Nanoco, visit our new website:
www.nanocotechnologies.com
Strategic report
Our year in brief 001
Nanoco at a glance 002
Chairman’s statement 005
Operational Review 009
Our markets 016
Leveraging our IP 018
Revenue streams 020
Section 172(1) statement 021
Our business model 024
Our strategy 026
Our key performance indicators 028
Financial review 030
Principal risks and uncertainties 033
Viability statement 036
Sustainability report 038
TCFD disclosure 2024 048
Corporate governance
Board of Directors 050
Corporate governance statement 052
Nominations Committee report 062
Audit Committee report 065
Remuneration Committee report 070
Directors’ remuneration report 073
Directors’ report 089
Statement of Directors’
responsibilities in respect
of the financial statements 092
Financial statements
Independent auditors’ report to
the members of Nanoco Group plc 093
Consolidated statement
of comprehensive income 098
Consolidated statement of changes
in equity 099
Company statement of changes
in equity 099
Group and Company statements
of financial position 100
Group and Company
cash flow statements 101
Notes to the financial statements 102
Investor information 132
Strategic report
Nanoco Group plc – Annual Report and Accounts 2024
002
We design, develop, scale
up and manufacture novel
nanomaterials for use in a wide
range of potential applications
Our core competencies
| We custom design bespoke
nanomaterials to exploit
emission, absorption and
other properties
| Our materials can be
used in a wide variety of
commercial applications
| Continuous expansion of
our portfolio of materials
| Scale up capability
to move from laboratory
to industrial scale
| ISO-certified, low cost
in-house production
facilities in Runcorn, UK
World-class talent
| At 31 July 2024,
47 employees, of whom
10 are inventors
| 13 staff with PhDs
| 4 nationalities of staff:
British, German, Indian
and Italian
Respected globally
| International partnerships
with global players from US
to Europe to Asia
| R&D, scale up and twin
production facilities all
located in Runcorn, UK
| Customers operate in
multi-billion dollar markets
with a wide range of
applications for our materials
1 Source – Infinity Business Insights Global Quantum Dot Market, Forecast to 2030.
Nanoco at a glance
Why invest in Nanoco?
Platform technology gives access to a wide range of large and rapidly growing end markets with our focus currently on consumer
electronics, Internet of Things, automotive and multiple display devices.
QD materials market valued at
$10.5 bn
1
by 2030
IP enabling QD displays
Large and defensible IP portfolio
366
patents granted or pending
Significant manufacturing scale
500 m+
devices per annum can be enabled
through our production capacity
Display
$13.1bn
addressable market by c.2030
| CFQD
®
film
| QD on micro-LED
| Electro-luminescence
SWIR imaging
$2.9bn
addressable market by c.2030
| Consumer electronics
| Automotive applications
| Internet of Things
World’s leading display
company has taken
a licence over Nanoco IP
Nanoco Group plc – Annual Report and Accounts 2024
003
What are nanomaterials
and what is a quantum dot?
Nanomaterials are any material that has a dimension or structure measured at the
nanoscale, typically 10,000 to 100,000 times narrower than human hair (1–100 nm).
Nanomaterials have unique optical, electrical and mechanical properties often not
accessible in the bulk material. This can enhance properties such as light absorption,
emission, strength, reactivity and conductivity.
Quantum dots are a subclass of nanomaterials whose optical and electronic
properties depend on their size, shape and composition.
10
-12
m
Cosmic rays
Visible light Infra-red
Gamma rays X-rays IR Microwaves Radar Radio Broadcast
Long wavelengthsShort wavelengths
UV
10
-9
m 10
-6
m 10
-3
m 1 m 10
3
m
1 km1 m1 mm 1,000 nm 1 nm
400 nm 600 nm 800 nm 1,000 nm 1,200 nm 1,400 nm 1,600 nm 1,800 nm
Display applications
(400–800 nm)
In the visible region, the emissive
properties of QDs have revolutionised
the display industry. The efficiency
and nature of quantum dots leads
to ultra-pure colour emission. This
leads to enhanced display and
lighting applications.
NIR
(800–1,000 nm)
Quantum dots can both emit and
absorb very pure light, the latter of
which can be exploited for sensors.
Traditionally, very expensive InGaAs
sensors have been used. QDs can
be combined with cheap silicon
CMOS image sensors to extend the
spectral range of silicon. In the NIR,
applications include facial
recognition and night vision.
SWIR
(1,000–2,000 nm)
Beyond the NIR, by selecting the correct size of
quantum dots, the spectral range of CMOS image
sensors can be extended into the SWIR at a much
lower cost than InGaAs detectors. Potential
applications in this region are wide ranging, with
the ability to see through water vapour and fog
enabling LiDAR, while skin penetration in the SWIR
is being explored for security applications such
as anti-spoofing, as well as the development
of novel optical diagnostic techniques.
Nanoco Group plc – Annual Report and Accounts 2024
004
Our core markets of sensing
and display are forecast to
experience rapid growth
Sensing
Yole Intelligence forecasts growth in SWIR
imaging from $322 million in 2022 to $2.9 billion in
2028. This is expected to be driven by emerging
markets in consumer electronics and automotive.
The CMOS imaging sensor market is forecast
to increase from revenues of $21.3 billion in 2022
to $28.8 billion in 2028.
Display
Infinity business insights estimates
the quantum dot display market was
valued at $3.2 billion in 2022 and is
projected to reach $13.1 billion by 2030,
at a CAGR of 19.9%.
$2.9bn
SWIR camera market
forecast for 2028
$13.1bn
Quantum dot display market
forecast for 2030
$28.8 bn
CMOS imaging sensor market
forecast for 2028
Nanoco Group plc – Annual Report and Accounts 2024
005
Chairman’s statement
Overview
This has been another important year
for Nanoco. We delivered our first ever
commercial production orders while
commencing significant new development
projects with two global electronics players.
The receipt of the second tranche of the
Samsung litigation proceeds has allowed
us to make a significant return of capital
to shareholders while retaining sufficient
cash to secure the group’s
medium-term future.
Our European customer’s decision after
the year end to focus on other larger
short-term opportunities was clearly
disappointing. This decision came after
our technology had been proven and
there remain meaningful, albeit smaller,
commercial opportunities for Nanoco
to pursue directly in the short to medium
term. We have announced a reduction
in our staffing levels and plans to
progressively reduce the size and cost
of the Board to match our new
activity levels.
Our focus now is on the prudent use of
those retained funds to drive forward our
efforts to commercialise our technology
across a wider range of customers and
potential applications in our chosen
markets of sensing and display. The
expansion of our Runcorn facility to
create our new device fab is one such
investment that will rapidly accelerate
new product development and enhance
customer outreach. We are also significantly
increasing our future-focused business
development spend.
Commercial strategy
The Board has a clear vision for Nanoco’s
trading business. Underpinned by our IP,
we aspire to be the “go-to” manufacturer
of quantum dots for a variety of
applications and markets. By focusing on
our core competencies, we play to our
key strengths while ensuring that we
understand enough about the full
device stacks to be a credible and
trusted supply chain partner to some
of the world’s largest companies. Our
sensing materials can provide significant
improvements over existing technologies
at a competitive price point while our
display materials offer performance and
clear environmental benefits over highly
toxic, cadmium-based quantum dots.
We will continue to add to our IP assets
– the value of which was amply proven
in the litigation with Samsung – and to
defend it vigorously.
Group strategy to realise value
This commercial strategy goes hand in
hand with the Board’s strategy for the
group to deliver value for shareholders,
which was outlined to shareholders on
3 October 2024.
The Board is strongly of the view that
there are significant organic commercial
applications for Nanoco’s technology
across a range of markets that will
generate value for the business
over time.
Summary
| Fulfilled first ever commercial
production orders for two different
first generation materials for use
in infra-red sensing applications.
| Commenced two-year Joint
Development Agreements (“JDA”)
with the Asian chemical customer
to optimise the performance of
second generation sensing materials.
| Completed fit out of new device
and analytical testing facility at
our Runcorn base in Cheshire, UK.
| Second and final tranche of
litigation proceeds (net £58.8 million)
received from Samsung, including
a net foreign exchange gain of
£1.8 million compared to spot rates
on the date of translation.
| Completed £30.0 million tender
offer. Started £3 million buy-back.
Post year end
| Completed £3 million broker
managed buy-back.
| Post-year-end restructure
underway following contract
termination by European customer.
| Outlined new strategy to minimise
costs, divest the group’s operating
business and return surplus cash
to shareholders.
| Appointed Dmitry Shashkov as
Chief Executive Officer to lead new
strategy and deliver value from
operating business.
A clear strategy to
maximise value and
deliver returns to
shareholders
Dr Christopher Richards
Chairman
Strategic report
Nanoco Group plc – Annual Report and Accounts 2024
006
Group strategy to realise value
(continued)
Pursuing these commercial and licence
opportunities will require investment and
the maintenance of critical technology
and commercial capabilities. The Board
is confident that the group can succeed
in pursuing these commercial objectives
with the appropriate investment of money
and time. The Board believes that it is
now prudent to consider if this growth
and investment would be best led in a
different ownership setting than allowed
for as the sole business of a listed group.
The Board has concluded that it is in the
group’s best interests to appoint advisers
to review the options for the group’s
business and assets, including the
potential for a sale of the trading
business (including IP).
With this in mind, post period end, we
took steps to rationalise the group’s cost
base. This includes reducing headcount,
reducing the cost and size of the Board
during FY25 and reducing non-critical
operating costs across the group.
Once complete, these measures will
reduce the group’s annualised cash
cost base by £2.6 million (or 34%) on
a like-for-like basis compared to the
Q4 FY24 run rate, with an associated,
one-off, cash restructuring cost of
just over £0.1 million.
The Board is determined to deliver
shareholder value as rapidly as possible.
In light of the plans set out above, the
Board believes that it is now appropriate
to make plans to return surplus cash to
shareholders during the course of FY25.
The timing and size of further returns
of surplus cash will be contingent on
the completion of the right-sizing noted
above, working capital needs and
progress on the execution of a potential
sale process.
Our people
Nanoco benefits from an exceptional
group of staff, who have come to
Runcorn from many countries to build
our exceptional technology capability.
Our staff are focused on delivering the
focused tasks we set for them. We are
repaying that commitment by further
investments in learning and
development opportunities.
This was recognised when Nanoco was
featured in the prestigious Sunday Times
Best Places to Work 2024 award in the
Small Organisations category.
Sustainability and ESG strategy
The Board is committed to the promotion
and achievement of environmental, social
and governance objectives within the
context of a small, listed group. During
the year, we achieved the important
milestone of ISO 14001 Environmental
Management Systems accreditation,
a key criterion from our customers.
We are now pursuing accreditation to
ISO 45001 Occupational Health and
Safety Management Systems. We have
also appointed an ESG steering committee
represented at Board level by Liam Gray,
our CFO.
Governance
We remain committed to the highest
standards of corporate governance
and we comply with all of the provisions
of the UK Corporate Governance Code
as outlined on page 57.
Return of capital
We have now completed the promised
£33.0 million return of capital to shareholders.
This represents just under half of the total
equity raised by the Company since its
founding in 2001. This has resulted in the
cancellation of just over 128 million shares
(40% of the equity in issue prior to the
return of capital). A further 13.8 million
shares are held in the Employee Benefit
Trust to meet future obligations arising
from the group’s employee share plans,
mitigating any future dilution.
As outlined above, the Board is
determined to deliver shareholder value
as rapidly as possible. The timing and
size of further returns of surplus cash will
be contingent on the completion of the
right-sizing noted above, working capital
needs, progress on the execution of a
potential sale process and the
availability of distributable reserves.
Board and Annual General Meeting
We have further strengthened the
Board with the addition in the second
half of the year of two new Independent
Non-Executive Directors, Dieter May and
Dr Jalal Bagherli. Dieter and Jalal add
significant experience in the group’s
key target markets of industrial and
consumer electronics markets.
In July 2024, CEO Brian Tenner advised
the Board of his intention to leave the
group to pursue new opportunities.
Chairman’s statement continued
We are increasing our
pipeline of commercial
engagements to a
broader range of
potential customers.”
Nanoco Group plc – Annual Report and Accounts 2024
007
Brian led the group through a period
of significant change that delivered a
multi disciplinary team based in Runcorn,
a successful outcome to the Samsung
litigation and financial stability.
As outlined above, Dmitry Shashkov took
up the post of CEO post period end.
And finally, after nine years with Nanoco,
I will not be putting myself forward for
re-election at the upcoming AGM. Dr Jalal
Bagherli has agreed to take over the role
of Chairperson from the next AGM.
Requisitioned General Meeting
Ahead of the Annual General Meeting to
be held in January 2025, the Company
has received a requisition from The
Milkwood Fund to appoint two of their
representatives to the Nanoco Board of
Directors. This general meeting is to be
held at 11.30 am on 13 December 2024,
and further details are included on the
Nanoco website. The Nanoco Board do
not believe this is in the interest of all
shareholders, and firmly believe
shareholders should vote against both
resolutions. It is a point of deep frustration
that we find ourselves once again having
to defend shareholders’ cash against an
activist acting in their own interests.
Dividends
No dividend is proposed for the year
(2023: none).
Outlook
The Board is highly confident in the
inherent value and commercial potential
of our technology, IP and trading business.
A balance needs to be struck, in the interests
of all of its shareholders, between supporting
this growth and prudence with regard to
risk, to preserve cash and to take a highly
disciplined approach to investment.
We have concluded that it is in the
group’s best interests to appoint CDX
Advisors to review the options for the
group’s trading business, IP and other
assets, including the potential for a sale
of these assets.
While this process will be undertaken at
pace, the group’s considerable financial
resources mean that the trading business
will continue to be supported to grow
and not compromise its potential.
Dr Christopher Richards
Chairman
21 November 2024
Our industrial capacity positions us
well to benefit from any widespread
adoption of quantum dots in
commercial applications whilst our
validated IP creates a strong barrier
to entry to the industry.”
Nanoco Group plc – Annual Report and Accounts 2024
008
Our investment in our
device R&D facility has
enabled quicker feedback
on product development
At Nanoco, we are prototyping
QD-based short wavelength infra-red
(“SWIR”) sensors using tools capable of
handling 200 mm wafers. It is currently
feasible to fabricate SWIR sensors on
ROIC CMOS wafers within one month
for prototyping purposes.
QD-based image sensors offer several
advantageous and unique features.
One key benefit is the customisable
wavelength response, achieved by
selecting specific quantum dot sizes
and material systems. These sensors
also support monolithic integration,
as the direct processing onto the CMOS
wafer surface eliminates the need for
hybridisation, reducing both cost and
complexity. Additionally, the pixel
dimensions and density are scalable,
with the primary limitations being set by
the resolution of the underlying CMOS
process, allowing for flexible adaptation
to various imaging needs.
The device facility is equipped with a
range of advanced tools for thin film
deposition and device fabrication.
The facility includes thin film deposition
systems capable of handling substrates
up to 200 mm, allowing for versatile
material deposition across various
substrate sizes. Among the key tools
is an Atomic Layer Deposition (“ALD”)
system, which provides atomic-level
control for thin film coating, essential for
achieving precise, conformal layers in
advanced devices. The facility houses
both thermal and e-beam evaporators,
supporting material deposition for
multiple applications, ensuring flexibility
in the fabrication process. A specialised
glove box, equipped with a spin coater,
is designed for quantum dot (“QD”) ink
formulation, enabling contamination-free
processing on substrates up to 200 mm
in size. This setup is crucial for handling
sensitive materials in a controlled
environment. Electrical characterisation
is performed using a manual probe
system for IV testing, which is integrated
with an LED and heater, enabling detailed
IV characterisation of devices under
varying thermal and lighting conditions,
also accommodating substrates up
to 200 mm. To ensure the quality and
uniformity of thin films, the facility is
equipped with an advanced ellipsometer,
which provides accurate thickness
measurements and optical characterisations.
This comprehensive setup supports
the development and optimisation of
cutting-edge devices, ensuring high
quality output across various stages
of fabrication.
Synthesis of quantum dot
Nanoco capability
Standard CMOS
fabrication of
image sensor Read
Out Integrated
Circuit (“ROICs”)
Image sensor
packaging and
camera assembly
Al
2
O
3
by ALD
Device lab
Device fabrication
equipment
TEM image of QDs
AZO (TCO) by ALD
ZnO by ALD
MoOx by thermal
evaporation
Fabrication of photo sensor
layers on CMOS wafer
Encapsulation
Top contact
Hole transporting layer (“HTL”)
QD (depending on wavelength)
Electron transporting layer (“ETL”)
Si ROIC (CMOS) provided by customer
SWIR stack on Si CMOS ROIC
Nanoco Group plc – Annual Report and Accounts 2024
009
Operational Review
The Nanoco team worked throughout the
year to develop novel nanomaterials for
use in sensing and display applications
for a number of customers. We met every
technical specification required as part
of the work programmes that commenced
H1 FY24 and are looking at other
opportunities to apply our technology.
We have continued to invest in our
capabilities with our new device team
and facility, and this allows us to
understand more about the impact of
changes to our quantum dot chemistry
on sensors. This shortened feedback
loop will reduce the time required to
develop new products in generation
2 and generation 3 infra-red sensing
materials. The associated ability to
demonstrate device performance to
potential customers will significantly
strengthen our commercial outreach.
The case for the use of quantum dots
in new generations of displays and the
multitude of potential infra-red sensing
applications continues to grow. This
remains true in sensing despite the
setback in the European customer
deciding to focus their own efforts away
from QD-enabled CMOS sensors. Growing
investment by major players in display
technology development and M&A
activity in both sectors reinforces this
growing commercial interest.
The case for the use of quantum
dots in new generations of displays
and the multitude of potential
infra-red sensing applications
continues to grow
Business performance
Electronics
We successfully delivered two sensing
materials for low volume commercial
production with our European customer
in H1 FY24. Critically, this is the first time
in our history that we have had a product
in commercial production. The subsequent
decision by the European customer to
withdraw from the QD CMOS sensing market
was no reflection on the effectiveness of
Nanoco’s technology but instead reflected
their own commercial focus on larger
short-term business priorities.
There remain a number of other routes
to market for Nanoco’s first generation
sensing materials in a range of niche
markets that are attractive to a group
of our size and scale. As previously
announced, the size of the next production
orders for our first generation materials
is likely to be modest in scale, enabling
potentially a few million devices. This is
typical of many new technologies initial
use cases and is expected to grow over
time if and when end users adopt the
technology. Some initial market feedback
indicates reluctance among some
electronics companies to incorporate
lead-based products in their supply
chains. This is not true of all potential
customers and markets so first generation
materials still have a viable
commercial future.
This situation does, however, emphasise
the importance of the development
programmes that Nanoco is delivering
for lead-free materials. These new materials
should also result in significantly higher
performance (speed, response times)
and the ability to be used in more
demanding applications such as
automotive where first generation
materials struggle to meet the required
operating temperature.
Turning to those second generation
sensing products, prior to the termination
of the JDA with the European electronics
customer, we had achieved all development
milestones as part of our two-year
development project. This now includes
the incorporation of quantum dots onto
silicon wafers within Nanoco’s device
facility. We intend to self-fund the final
development steps to get this material
ready for scale up because of its exceptional
performance. We also achieved all
technical milestones for our major
Asian chemical customer as part of our
two-year development programme for
a different second generation material
for use in infra-red sensing. We have
also fulfilled some smaller orders for
this customer of different materials.
Christopher Richards
Chairman
Strategic report
Nanoco Group plc – Annual Report and Accounts 2024
010
As shown in the infographic on page 15,
our offering of nanomaterials for use in
sensing applications continues to progress
from a single customer/single product
offering in early 2018 to a position today
where we are engaged with multiple
customers and are working with many
distinct materials and wavelength
combinations. The infographic also
shows the advancing position of a
number of materials as they move
through the steps from development
towards final validation – the last step
before commercial production orders
are placed.
Display (CFQD® quantum dots)
Display materials remain a key focus for
Nanoco. Our analysis divides the market
into existing display technologies and
nascent display technologies. The former
includes QD film (whether the QDs are in
a barrier film sandwich or an extruded
product) and QD-OLED. Independent
market research continues to support
Business performance continued
Electronics continued
We are adapting our approach to
commercial business development by
engaging with a wider range of smaller
players in the sensing markets. We retain
the capacity to service mass market
applications and are supplementing that
with a service offering for smaller but still
attractive niche markets. Adoption of our
technology in smaller niche markets will
provide valuable proof points on the
journey towards our overarching goal
of mass market adoption in consumer
electronics applications. Visibility on the
size and ramp up in any demand for our
materials is inevitably limited, as is the
case for any new material awaiting
mass market adoption.
a growing share of quantum dot
technology in these early generation
display technologies where consumer
and environmental concerns mean that
cadmium-free solutions are sometimes
preferred (source: Omdia, TDR).
In early generation QD displays, the
opportunity for Nanoco primarily relates
to licensing opportunities as opposed to
commercial supply. These displays are of
lower commercial supply interest for two
primary reasons: firstly cadmium-based
solutions continue to dominate the
market despite the impending RoHS
limits and secondly because of the
strategy pursued by a number of market
participants in commoditising what
should be a premium product in mass
markets (ultimately leading to their
own financial difficulties). For Nanoco,
interest in supply agreements for early
generation displays is now focused on
niche applications where quality, IP
protection and a lack of toxicity can
attract premium pricing.
Operational Review continued
The graphics below show a sample of the wide range of potential
applications for NIR and SWIR technologies in electronics supply chains.
Quality control ADAS Fog/smog Iris recognitionAgriculture Surveillance
We delivered all of the
challenging technical
milestones set by our
customers for our high
performing nanomaterials.”
Consumer device use of
cameras and imagers
Consumer device
use of imagers
$650m
$
322m
$
2,900m
2022 2028
Consumer device
use of imagers
$97 m
Nanoco Group plc – Annual Report and Accounts 2024
011
The nascent display technologies which
have now been demonstrated at
various
trade shows and which are attracting
significant investment include the use of
quantum dots in micro-LED devices and
in electro-luminescent devices. The
application of quantum dots to micro-LEDs
for small screen devices, such as smart
watches or phones, is an area of growing
focus for a number of companies. In such
applications, the volume of quantum
dots, as a ratio to the area covered, is
significantly higher than in a film for a
television. So, while the end devices may
be smaller, this is partly compensated
for by the higher concentration required.
The group has completed some initial
development work and is supplying
the resultant material to a number of
customers, including a global capital
equipment manufacturer.
These nascent technologies are of much
greater potential interest to Nanoco for a
number of reasons:
| our IP is equally relevant to the
production of quantum dots for
these technologies;
| the density of active material required
is much higher (more quantum dots);
| the quantum dots in these
applications are eliminating other
layers needed in the stacks in the first
generation technologies – meaning
the value add is much higher allowing
a premium price for an IP backed
premium product; and
| the likely timeline to commercialisation
of these new display technologies fits
strongly with RoHS requirements,
which should reduce the temptation
to detour via cadmium-based systems.
Our routes to revenue generation are
therefore still threefold in display:
| development services for new materials;
| supply of consistent high quality
materials from our Runcorn facility
which can be easily expanded; and
| the licensing of our IP that protects
our unique scale up process for the
mass market production of cadmium-
free nanomaterials.
In the post-year-end restructuring
necessitated by the end of the sensing
project with our European customer, we
are being careful to maintain these core
capabilities to service the display markets
and retain our potential revenue sources.
We will continue to adopt a dual approach
to commercial exploitation of our display
materials, whether through licensing or
material supply from our own
manufacturing capability.
Market developments
The Board recognises that the adoption
of nanomaterial technology has taken
longer than expected for both Nanoco
and its competitors, creating commercial
challenges for Nanoco and leading to
terminal financial distress for other market
participants. Development cycles tend to
be long because the whole supply chain
often needs to be re-engineered on top
of developing new materials with every
Addressable display market for Nanoco CFQD® and IP
set to rise from ~6% to ~34% of the total TV market
400
350
300
250
200
150
100
50
0
Millions of TVs
2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
Non-QD Samsung QD TVs Other QD TVs
step of the process subject to stringent
testing. One of the advantages of the
sensing and display materials that
Nanoco specialises in is that the material
represents an extra layer in a pre-existing
material stack or is actually removing
cost from existing supply chains (and
hence adding value).
Our small scale allows us to be much
more agile and responsive to our customers
when compared to our competitors. The
in-depth nature of our technological
insight also means that we do tend to
“punch above our weight” in terms of
direct engagement with very large end
customers and their technology teams.
Reaching final product validation for
two novel nanomaterials within six years
demonstrates Nanoco’s clear ability to
meet the exacting standards of consumer
electronics applications in a relatively
short timeframe. Of course, the downside
to this situation is that our small scale
and position in the supply chain mean
that we are inevitably exposed to customer
concentration risk and have lower visibility
of demand that we would like. We leverage
our expertise and IP in negotiating
commercial terms to mitigate some
of these supply chain risks.
Strategic report
Nanoco Group plc – Annual Report and Accounts 2024
012
Operations
We have invested significantly in our
capabilities in the year, with the new
device facility costing £1.2 million, with
the vast majority of the second-hand
equipment being heavily discounted
from cost “as new”. As mentioned
previously, this strategic investment
significantly reduces the duration of the
feedback loop on the impact of changes
in our chemistry on the devices. A process
which used to take circa three months
now takes one week. This is critical as
long-term success in developing new
materials is driven by the number of
new reactions and recipes that can
be run in a period of time. This new
capability can be applied to various
generations of our technology, and
we have complete freedom to operate
the facility with any customer.
During the year, and in line with our
investment in our quality management
systems, we implemented electronic
batch recording and line side systems
to match our position in important
electronics supply chains. This, along
with some other improvements, has
ensured we can meet and have been
accredited to ISO 14001 Environmental
Management Systems. This again
demonstrates Nanoco’s position
as a robust supply chain partner for
electronic materials. This certification is
often a fundamental requirement of our
electronics customers before they will
even consider signing a supply contract.
Leveraging intellectual property
We continue to proactively manage
our IP portfolio to maximise value and
protect our core competencies while
carefully managing our IP maintenance
spend. We finished the year with 366
patents and patents pending (2023: 375).
Our annual IP maintenance spend is
approximately £0.2 million, which is a
significant reduction from the figure of
approximately £0.4 million in 2020.
We continue to preserve trade secrets
and have targeted our financial resources
on strategic areas such as infra-red
sensing where there is a strong overlap
with our pre-existing IP. These are also
areas with clear future commercial
opportunities and benefits to be had
from holding high quality patents.
As we explained last year, to drive
licensing value from an IP portfolio, any
business needs firstly a “commanding IP
portfolio” and secondly, a “deep and
impacted market.” Our success in generating
an IP licence with Samsung shows that
we already have the first of these. The
market for devices containing cadmium-
free quantum dots is growing in line with
the low end of external market forecasts.
However, new technologies using
quantum dots, such as micro-LED and
electro-luminescence, are attracting
significant investment and if successful
in their own right will lead to an increase
in demand for cadmium-free materials.
Until such time as the market becomes
attractive enough to pursue such
opportunities, we will continue to
proactively engage with parties who
would benefit from sourcing material
from Nanoco or having a licence over
our IP. It is a frustrating but unavoidable
fact that the economics of IP enforcement
and licensing programmes strongly
favour the infringer and not the patent
holder. Even when it is clear that a
company is likely to be infringing our IP,
the cost of legal action is often prohibitive,
especially when the likely infringer is a
small competitor.
People and community
Our employees make Nanoco and have
provided great service to our customers
throughout the year by delivering high
quality materials on time and achieving
challenging milestones and deliverables
in our development work.
Our Employee Voice Committee (“EVC”)
has been very active throughout the year
to support the group and all staff on
matters of physical and mental wellbeing,
relaying concerns to the Board and
helping with our CSR activities. The EVC
was instrumental in choosing Emmaus as
our charity of choice for the forthcoming
year. Emmaus is a charity local to Runcorn
that focuses on supporting the homeless.
We continue to invest in our LEAN
programme, with all staff trained on LEAN
techniques to improve problem solving
and quality control processes. All staff
remain actively engaged on health and
safety, with initiatives to improve our
working environment and reduce the
overall risk environment. We will continue
to invest in further training and development
for all staff as part of their career
development and our staff retention
aims. This includes general management
training that feeds into succession planning.
Operational Review continued
We continue
to strengthen our
operational capabilities
to assure our critical
place in complex global
supply chains for
electronic devices.”
Nanoco Group plc – Annual Report and Accounts 2024
013
We have awarded a general cost of
living increase for all staff for FY25 of 3%
of salary (excluding the Executive Directors
who are receiving 2.5%). In FY24, we
implemented a workplace health
programme for all staff that has an
equivalent cost of 1% of salary. We also
completed a further benchmarking
exercise post year end, and we believe
that all staff are now paid around
median salaries or higher. All staff are
also eligible to participate in the group’s
Deferred Bonus Plan and Long Term
Incentive Plan.
We will review other benefits options and
further potential improvements to pension
contributions as our financial situation
improves and when the group becomes
self-financing in its organic operations.
Post-year-end events and
our response
We announced on 30 August that our
European customer had decided to focus
their priorities away from QD-enabled
CMOS sensors and hence will not be
placing any further orders for first
generation sensing materials and have
cancelled the development project for
second generation sensing materials.
The group continues to negotiate the
final commercial compensation payable
as a result of these actions, including the
fate of potentially surplus customer assets.
Nanoco now has complete freedom
to operate with respect to all materials
developed with the European customer
(first and second generation). Nanoco
is also now focusing directly on niche
market opportunities that were too small
to be of interest to our European customer
but which can be meaningful for Nanoco.
This will inevitably require an expansion
of a “fabless” supply chain for Nanoco
and efforts are already underway to
replicate the previous supply chain.
Strategic report
Nanoco Group plc – Annual Report and Accounts 2024
014
The Board has therefore appointed
advisers (CDX Advisors LLC (“CDX”)) to
review the options for the group’s trading
business and assets (which include our IP),
including a potential sale. To be clear,
this is not a proposed sale of the whole
group. Work with CDX has commenced
with a view to achieving the best
possible financial outcome and to secure
the long-term future of the group’s IP and
operations. This process will be
undertaken at pace and the group’s
considerable financial resources mean
that the trading business will continue to
be supported to grow and not
compromise its potential.
The Board is highly confident in the
potential of the business. A balance
needs to be struck, in the interests of all
of its shareholders, between supporting
this growth and prudence with regard
to risk, to preserve cash and to take a
highly disciplined approach to
investment. A successful outcome to the
current activities to secure the long-term
future of the trading business is intended
to lead to a further return of capital
to shareholders.
Dr Christopher Richards
Chairman
21 November 2024
Operational Review continued
Post-year-end events and our
response continued
The lower activity levels that have
resulted from the termination of the
development agreement with the European
customer have necessitated a review of
our staffing levels and costs. We regrettably
had to announce a consultation on the
restructuring of the business that has
seen twelve valued and trusted, highly
skilled employees leave the business
(27% of our workforce). A summary of
the actions being taken includes:
| a reduction of approximately 27% of
employees in the operating business;
| a planned reduction in the size of the
Board over FY25;
| all Non-Executive Directors have
agreed to defer at least 50% of their
salaries until the earlier of either
31 July 2025, their cessation as
Directors, or a sale transaction
of the underlying business;
| a switch of all Executive Director
potential bonuses to being paid in
options rather than cash;
| mothballing of equipment and, where
possible, facilities to reduce the holding
costs of critical capabilities; and
| a reduction in activity-based costs
consequent with the reduction in
activity levels.
The result of these actions is that the Q4
FY25 cash cost run rate is expected to be
approximately £2.6 million (34%) below
the equivalent Q4 run rate in FY24.
Outlook
The Board is strongly of the view that
there are significant organic commercial
applications for Nanoco’s technology
across a range of markets that will
generate value for the business over
time. Initial applications are likely to be
in various niche markets that can deliver
meaningful revenue for Nanoco in the
short to medium term growing into mass
market applications over time. The current
collaboration with the Asian customer
specifically targets mass market applications
for a leading global sensing company.
This assessment is based on growing
market interest and participation in
quantum dot technology in display and
sensing markets. It also draws on direct
customer feedback, independent expert
technical analysis and the group’s own
extensive knowledge.
The vast majority of long-term investors
in the group are, like the Board, believers
in the long-term inevitability of the adoption
of quantum dots across a very broad range
of commercial electronics applications.
With validated products for sensing and
display applications, a robust and valuable
IP portfolio, leading-edge skills and
capabilities in our talented staff and
complex assets, and growing commercial
interest in QD technology, it would be
economic terrorism to abandon all of
those valuable foundations.
That being said, the group’s trading
business clearly remains in the scale up
phase of business growth and is exposed
to what can appear as binary decisions
by a concentrated customer base of
global players. The Board therefore
believes that it is now prudent to consider
if the growth and investment in the
trading business and IP assets would be
best led in a different ownership setting
than allowed for as the sole business of
a listed group given also the costs of the
Company’s listing.
Nanoco Group plc – Annual Report and Accounts 2024
015
Investment in new material sets this
year has increased our customer
reach for new applications leading
to new R&D service income
< 1.0 µm
NIR
Development
Material
Wavelength
July 2023
Optimisation
Scale up
Validation
Production
1.0-1.3 µm 1.3-1.5 µm
SWIR
> 1.5 µm
NIR SWIR
A B C A B C A AB BC C
Sensing goals: one material in production, a second validated
2 1 1
1
1 1
1 1
1
1 1 1
Continued development of our sensing portfolio
Strategic report
Nanoco Group plc – Annual Report and Accounts 2024
016
Significant potential for revenue
generation from multiple
commercial markets
Our markets
Independent market researcher Yole Group estimates 6.1%
compound annual growth rate for complementary metal oxide
semiconductor (“CMOS”) image sensors in the period to 2028 to
reach approximately $30 billion
1
. During the same period, they
forecast an increasing share of that market for 3D sensors
and multi-spectral cameras where the performance of these
devices can be significantly enhanced by the integration
of quantum dots.
QD-enhanced CMOS sensors operating at short wave
infra-red (“SWIR”) wavelengths are the most viable alternative
to extremely expensive indium gallium arsenide (“InGaAs”)
sensors for use in consumer electronics. According to Yole
2
,
“Quantum dots appear to be the most well-positioned
technology for potential integration in consumer devices”.
Yole predicts the adoption of SWIR technologies in high end
mobile phones during 2026 and penetration to higher volume
phones in 2028, helped by under-display capability (equivalent
to 86% CAGR between 2026 and 2028 to reach $2.1 billion for
3D sensing modules). This research is consistent with Nanoco’s
view that initial use cases in 2024 will be for low volume applications
outside mobile phones. Nanoco’s existing Runcorn production
facility has capacity to produce sensing materials for hundreds
of millions of CMOS sensors. The group’s position in the supply
chain has contractual protection to mitigate the risk of a
competitor becoming a major supplier to our European customer.
1 “Yole” – Image Sensors Europe 2023.
2 “Yole” – SWIR Imaging 2023, Market Technology Report.
Applications
Market forecast
Cameras and modules
Key
Defence, aerospace
and research
Industry
Medical
Consumer
Automotive
Source: Yole
Face/iris
recognition
Quality control
systems
Agricultural
drones
Wearable
diagnostics
$395m
+32%
CAGR 23-28
$19m
+41%
CAGR 26-28
$7m
+5%
CAGR 23-28
$6m
$2,074m
+86%
CAGR 26-28
ADAS Security and
surveillance
2
0
2
8
$
2
,
9
0
0
m
2
0
2
3
$
3
5
5
m
$405m
+10%
CAGR 23-28
$251m$99m
Sensing markets
Nanoco Group plc – Annual Report and Accounts 2024
017
The current market for flat panel TVs is approximately
250 million units per annum and is forecast to grow by
a modest 1% per annum to 2030.
During the same period, the market share for displays
containing quantum dots is forecast to grow from around
20 million TVs (8% of the market in 2023) to around 37 million
TVs by 2030 (14% of the forecast market). Based on a combination
of market research and group estimates, the group estimates
that approximately 60% of the QD TVs sold today (excluding
Samsung TVs) are using cadmium technology. Within the QD
TV market, the market research suggests that the number of
cadmium-based units is expected to fall over time, reflecting
toxicity and environmental concerns (“RoHS”) in various
territories.
Samsung’s relative share of the market is also forecast to
decline over the same period. As a result of this combination
of factors, the sale of QD TV’s without cadmium by companies
other than Samsung is expected to double by 2030. At the
same time, new display technologies (such as micro-LED
(“uLED”) and electro-luminescence (“QD-EL”)) are forecast
to make significant use of quantum dots in a number of new
applications beyond large scale TVs such as monitors,
smart watches, tablets and smart phones.
Applications
TV HeadsetsTablets Monitors Phones Smart watch
Display markets
Evolution of the flat panel TV market Other QD display devices
400
350
300
250
200
150
100
50
0
800
700
600
500
400
300
200
100
0
Millions of TVs Millions of units
2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
Non-QD Samsung QD TVs Other QD TVs Monitor Laptop Tablet/phablet Other
Strategic report
Nanoco Group plc – Annual Report and Accounts 2024
018
25
20
15
10
5
0
Number of
claims
1
46
Retained
Sold
Time to expiry (years)
Retained litigation claims
PTAB validated four
retained patents
Remaining patent lives
Delivering value from our
IP requires two things:
1. Commanding patent portfolio
1 53 106 159 212 265 318 375
Settlement
$150 m
Leveraging Our IP
Strong case for enforcement
As a UK-based business specialising in
the design, scale up and manufacture
of novel nanomaterials, we will continue
to take steps to protect our platform
technology and our IP portfolio. Following
the validation of all 46 claims in the four
retained patents by the Patent Trial and
Appeal Board and the subsequent licensing
of our remaining patent portfolio by
Samsung, the group is confident in the
applicability of our IP to other participants
in the cadmium-free quantum dot
display market.
Leveraging Samsung litigation
The experience gained by the Nanoco
team during the Samsung litigation,
combined with our retained experts, is
a strong platform for delivering further
value from our IP portfolio and ensuring
that income is for the benefit of Nanoco
and its shareholders.
The $150 million agreement with
Samsung to settle the litigation also sets
a precedent for future discussions with
potential infringers.
Expert working group
Nanoco continues to monitor the market
for potential infringement of its IP.
Our expert team is made up of internal
staff and external advisers.
We have analysed a range of consumer
devices available in the market to focus
on devices and manufacturers most likely
to be infringing our IP. We continue to
analyse further devices and review
market data for potential other infringers.
Key: Lawsuit Lawsuit reserve Other
Nanoco Group plc – Annual Report and Accounts 2024
019
Number of TVs examined
Value to pursue (today)
Probability
Initial engagement,
seek collaboration
Monitor activity
Direct engagement
in near term
Initial engagement,
await volume growth
80
70
60
50
40
30
20
10
0
16
14
12
10
8
6
4
2
0
100%
80%
60%
40%
20%
0%
Year
QD Co
Tear downs
Cadmium
Film Co
No QDs
Panel Co
Cadmium-free
Brand
Retailer
Forecast QD TV market Analysis of potentially infringing products
Infringement heat map
Value chain analysis
2. Deep and impacted market
20 21 22 23 24 25 26 27 28 29 30
Summary
Nanoco is focused on maximising value
from its IP portfolio. Whilst we have
already
settled with the largest manufacturer
of
cadmium-free quantum dot televisions,
as the market develops there will be more
opportunity for licensing or potential
litigation. This will be a gradual process
as market adoption of cadmium-free
quantum dots in displays continues to
be slower than expected.
We will also continue to build our IP
portfolio to ensure future technological
developments are protected.
As QD TVs and other devices capture
a larger share of the total flat panel TV
market and as more market participants
build market presence, we see an
opportunity to generate income by
licensing our IP.
Millions of TVs Gross “value” to each player
Strategic report
Nanoco Group plc – Annual Report and Accounts 2024
020
Revenue streams
Products
Our Runcorn facility has the capacity to
make high volumes of CFQD
®
quantum
dots and HEATWAVE
®
nanomaterials for
IR sensing applications. The revenue
generation capacity can be easily
scaled by adding additional shifts with
the overall potential return on the asset
base being attractive and benefiting
strongly from operational leverage if
extra shifts and volumes are added.
Revenue potential: HIGH.
Royalties
As well as the ability to make and sell
materials directly to our customers, the
agreements with our channel partners
allow them to manufacture or distribute
our materials themselves and then pay a
royalty on the value of their sales to their
customers. This revenue stream has the
potential for high leverage since it is not
constrained by manufacturing scale and
also has minimal costs associated with
incremental sales via this channel.
Success in the Samsung litigation has
increased the potential of this income
stream. Revenue potential: MEDIUM.
Services
Our highly skilled R&D and scale up
teams are able to design, develop and
scale new materials for customer-specific
applications. We are able to charge
customers for professional services when
we carry out these sorts of development
activities for them, with rewards often
linked to achieving technical milestones
or outcomes. The last two financial years
have seen significant revenue generated
in this area. Revenue potential: LOW.
Licences
When a channel partner initially acquires
a right of access to, or use of, Nanoco
technology and IP, it typically pays a
one-off licence fee. These fees reflect
the costs already previously incurred by
Nanoco in developing its technology and
IP and hence represent a return on those
historical investments. Success in the
Samsung litigation has increased the
potential of this income stream. Revenue
potential: LOW.
All revenue streams can contribute
to our growth
Products
Our
revenue
Royalties
Licences
Services
Key
Low – < £5 million per annum
Medium – < £10 million per annum
High – > £10 million per annum
Nanoco Group plc – Annual Report and Accounts 2024
021
Case study
Delivery of milestones in customer SoWs
Background
Nanoco has continued to achieve all milestones in
the customer statement of works (“SoWs”).
s.172 factors considered:
| Long-term consequences: Investment in, and
development of, new quantum dot technologies.
| Interests of the Company employees: Our staff are
developing the ideas which are leading to breakthroughs
in this area.
| Impact on customers: Achievement of their targets helps
aid adoption of the technology in the wider market.
Case study
Return of capital to shareholders
Background
The Company decided to return up to £33 million to shareholders
of the Company through a tender offer and subsequent
share buy-back.
s.172 factors considered:
| Long-term consequences: The cash resources required
for the Company to continue to operate.
| Interests of shareholders: The Company retained enough
cash to see it through to break even, whilst also returning
excess cash to shareholders.
| Impact on customers: Customers have increased faith
in the financial security of Nanoco as a supplier.
| Impact on suppliers: Suppliers can offer improved terms
to Nanoco due to the financial security provided.
Section 172(1) statement
How we engage with
our stakeholders
Section 172(1) report
In line with section 172(1) of the Companies Act 2006, the
Directors of the Company must act in a way which they
consider, in good faith, would most likely promote the success
of the Company for the benefit of its members as a whole, and
in doing so must have regard to a number of other key matters.
Likely long-term consequences of decisions (s.172(1)(a))
Given the nature of the business, the Board takes a medium-term
approach to its decision making to ensure that the Company is
able to deliver its strategy of creating value for all of its stakeholders.
Risk management is also key to understanding the likely
consequences of actions.
The Board plays a key role in reviewing the Company’s
approach to risk, including an assessment of its emerging
and principal risks. See pages 33 to 35 of the Strategic report
for a description of the identified risks and how these are being
controlled or mitigated. Given the group’s finances, the Board
has been continually reviewing the Company’s current and
forecast financial position. This year, the Directors selected a
four-year timeframe over which to assess the viability of the
Company. The Viability statement can be found on pages 36 and
37 of the Strategic report.
Maintaining a reputation for high standards of business
conduct (s.172(1)(e))
The Company has in place a Code of Conduct which acts as
a guide for employees to do the right thing. The Company also
has well-embedded policies in place which assist with ensuring
high standards of conduct, including with respect to the
following key areas: health, safety and environment; whistleblowing;
anti-bribery and corruption; human rights; and modern slavery.
The environmental, social and governance (“ESG”) disclosures
section of the Directors’ report, from pages 38 to 49, provides
further insight into measures put in place by the Board to assist
with maintaining a reputation for high business conduct standards.
Acting fairly between members of the Company (s.172(1)(f))
The Directors also have regard to the need to act fairly between
members of the Company, aiming to understand their views
and act in their best interests. The ownership of the Company
follows a “one share, one vote” structure, which assists with
promoting parity in shareholder rights. The Board ensures
that there is fair and equal dissemination of information to all
shareholders and has a dedicated Investors section on the
Company’s website which is available to all shareholders.
This provides easy access to RNS announcements and reports
and publications. All members are invited to attend the Annual
General Meetings of the Company, offering an opportunity for
members of any size shareholding to have a conversation with,
and ask questions to, each of the Directors. For any Annual
General Meetings where in-person attendance is not possible,
all shareholders will be offered the opportunity to submit
questions to the Board ahead of the meeting with answers
being made available to them.
Having regard to specific stakeholder groups (s.172(1)(b)
to s.172(1)(d))
The table which follows on the next page seeks to provide
insight into how the Board carries out its duty under this section.
Strategic report
Nanoco Group plc – Annual Report and Accounts 2024
022
Strategic report
Section 172(1) statement continued
Having regard to specific stakeholder groups (s.172(1)(b) to s.172(1)(d)) continued
Why we engage How we engage and respond Impact of engagement Engagement during the year
Shareholders
| To enable shareholders to understand
Nanoco’s strategic aims and results
| To help shareholders to understand
management’s aims, responsibilities
and incentive structures
| To help shareholders to understand our
commitment to our staff, communities
and the wider environment
| We build relationships with our investors
through our investor relations activities
| In our Annual Reports, we update all
stakeholders on our strategic progress
and explain any financial implications
| We consider investor feedback and what
impact this may have on the business
| We aim to create long-term investor value
through growing from an R&D services
business to a commercially viable niche
production company
| The successful conclusion to the Samsung
litigation provides a means to return capital
to shareholders in the short term
| We engaged openly with shareholders through briefings, subsequent
Q&A sessions and general meetings
| We expanded engagement in Investor Meet Company presentations
| We ensured an open forum at the general meetings held during the year
| Following consultation and feedback from shareholders, we committed to
a return of capital which was completed post year end
Employees
| To ensure employees feel valued for
their contributions
| To empower our employees
| To enhance our employees through
training and progression
| We communicate key decisions and
collaborate through our Employee Voice
Committee, which includes a Director,
| A director, Liam Grey, was appointed from the
workforce and communicates the views of
employees to the Board.
| We give them the tools to work effectively
| We encourage our employees to provide
solutions to problems
| Our employees feel empowered to achieve
solutions to problems
| Our employees feel more valued and
aligned to the business
| We improve as our employees improve
| We were awarded a Sunday Times Best Places to Work 2024 award
following a poll of our employees
| We held a number of all-Company days to explain our Company strategy
to employees
| We set our employee targets in line with corporate goals
| Following feedback from employees, we reviewed our employee value
proposition to ensure it aligned with what employees most valued
Customers
| To ensure we can provide the best service
and products possible to meet the
customers’ needs
| To protect our customers’ technology
| To ensure we are complying with
regulatory requirements
| We ensure open and constant communication
with customers to ensure our products and
services are world leading
| We welcome feedback from customers
and work collaboratively to achieve our
customers’ goals
| We build strong relationships with
customers, who believe in the capabilities
of our platform technology and our
employee expertise
| Our customers trust us to be able
to meet their requirements to create
world-leading products
| Through the year, we collected feedback and actively engaged in weekly
technical updates to aid development and collaboration
| We openly discussed any logistical challenges due to import/export
regulations, helping customers with their own compliance goals
| We discussed technical specifications with a wider remit of customers
to ensure our materials could meet the market demands
Suppliers
| To develop long-term, collaborative partnerships
for key, difficult-to-source materials
| To mitigate the risk of not being able to
succeed commercially
| To comply with regulatory requirements
| We create close, collaborative working
relationships with key suppliers to ensure
clear communication, active issue resolution
and effective qualification of products
| We encourage open engagement to
ensure compliance with the relevant
regulatory requirements
| This helps us to attain best value from our
supply chain and mitigates the risk of a
breakdown in process negatively impacting
the business
| Through regulatory checks, we ensure our
suppliers are complying with regulatory
requirements, e.g. payment of minimum wage
| We performed audits on suppliers to ensure their compliance
with legislation
| We engaged with a number of suppliers on the qualities of our raw
materials and considered their impact on our products for our customers
| We maintained dialogue on the availability of raw materials and took
action when there was a risk that this could be compromised
| We have begun conversations on the scope 3 impact of our raw materials
Regulators
| To ensure compliance with regulatory requirements
| To protect our staff and communities
| To ensure best practice
| We review our operations periodically
to ensure compliance with regulations
| We actively maintain standards through
external reviews (e.g. ISO 9001 accreditation)
| Compliance with regulatory requirements
enables the business to operate in a safe
manner, protecting our employees and
wider communities
| We were re-certified to ISO 9001 and achieved ISO 14001 during
the financial year
| We constantly reviewed operating procedures to ensure best practice
| We monitored changes to European RoHS regulations to remove exposure
to toxic cadmium from EU customers
Community
| To make a meaningful contribution to
the community
| To create a positive working culture
| To attract and retain talent
| Our Employee Voice Committee (“EVC”) looks
at ways in which we can help the community
| We invite both members and non-members
to ask questions at our general meetings
| Our EVC looks at ways in which we can have
a positive impact on the local community
| Being involved with the local community
improves morale across the employees and
improves external perceptions of Nanoco
as a company
| We held a number of Company events, organised by the EVC,
which benefited the communities
| Provided matched fundraising
| Introduced a sponsored charity and have started arranging
fundraising events
| Allowed employees to donate blood during work time
Environment
| To improve our ESG credentials
| To mitigate environmental damage
from business activities
| We have engaged an external party to review
our materiality assessment
| We are reviewing our ESG strategy
| Looking at ways of reducing our
environmental footprint
| Ensuring we recycle as much waste as possible
| Engaging with our landlord to make facilities
more environmentally friendly
| To reduce carbon emissions as a result of
business activity
| To ensure waste is recycled where possible
| To improve our impact on the environment
| We have looked at purchasing raw materials in bulk to reduce emissions
from deliveries
| We discussed a number of ESG projects with landlords (such as installation
of electric car charging points)
| We have implemented a process to consolidate waste to reduce emissions
from deliveries and excess packaging
Nanoco Group plc – Annual Report and Accounts 2024
023
Having regard to specific stakeholder groups (s.172(1)(b) to s.172(1)(d)) continued
Why we engage How we engage and respond Impact of engagement Engagement during the year
Shareholders
| To enable shareholders to understand
Nanoco’s strategic aims and results
| To help shareholders to understand
management’s aims, responsibilities
and incentive structures
| To help shareholders to understand our
commitment to our staff, communities
and the wider environment
| We build relationships with our investors
through our investor relations activities
| In our Annual Reports, we update all
stakeholders on our strategic progress
and explain any financial implications
| We consider investor feedback and what
impact this may have on the business
| We aim to create long-term investor value
through growing from an R&D services
business to a commercially viable niche
production company
| The successful conclusion to the Samsung
litigation provides a means to return capital
to shareholders in the short term
| We engaged openly with shareholders through briefings, subsequent
Q&A sessions and general meetings
| We expanded engagement in Investor Meet Company presentations
| We ensured an open forum at the general meetings held during the year
| Following consultation and feedback from shareholders, we committed to
a return of capital which was completed post year end
Employees
| To ensure employees feel valued for
their contributions
| To empower our employees
| To enhance our employees through
training and progression
| We communicate key decisions and
collaborate through our Employee Voice
Committee, which includes a Director,
| A director, Liam Grey, was appointed from the
workforce and communicates the views of
employees to the Board.
| We give them the tools to work effectively
| We encourage our employees to provide
solutions to problems
| Our employees feel empowered to achieve
solutions to problems
| Our employees feel more valued and
aligned to the business
| We improve as our employees improve
| We were awarded a Sunday Times Best Places to Work 2024 award
following a poll of our employees
| We held a number of all-Company days to explain our Company strategy
to employees
| We set our employee targets in line with corporate goals
| Following feedback from employees, we reviewed our employee value
proposition to ensure it aligned with what employees most valued
Customers
| To ensure we can provide the best service
and products possible to meet the
customers’ needs
| To protect our customers’ technology
| To ensure we are complying with
regulatory requirements
| We ensure open and constant communication
with customers to ensure our products and
services are world leading
| We welcome feedback from customers
and work collaboratively to achieve our
customers’ goals
| We build strong relationships with
customers, who believe in the capabilities
of our platform technology and our
employee expertise
| Our customers trust us to be able
to meet their requirements to create
world-leading products
| Through the year, we collected feedback and actively engaged in weekly
technical updates to aid development and collaboration
| We openly discussed any logistical challenges due to import/export
regulations, helping customers with their own compliance goals
| We discussed technical specifications with a wider remit of customers
to ensure our materials could meet the market demands
Suppliers
| To develop long-term, collaborative partnerships
for key, difficult-to-source materials
| To mitigate the risk of not being able to
succeed commercially
| To comply with regulatory requirements
| We create close, collaborative working
relationships with key suppliers to ensure
clear communication, active issue resolution
and effective qualification of products
| We encourage open engagement to
ensure compliance with the relevant
regulatory requirements
| This helps us to attain best value from our
supply chain and mitigates the risk of a
breakdown in process negatively impacting
the business
| Through regulatory checks, we ensure our
suppliers are complying with regulatory
requirements, e.g. payment of minimum wage
| We performed audits on suppliers to ensure their compliance
with legislation
| We engaged with a number of suppliers on the qualities of our raw
materials and considered their impact on our products for our customers
| We maintained dialogue on the availability of raw materials and took
action when there was a risk that this could be compromised
| We have begun conversations on the scope 3 impact of our raw materials
Regulators
| To ensure compliance with regulatory requirements
| To protect our staff and communities
| To ensure best practice
| We review our operations periodically
to ensure compliance with regulations
| We actively maintain standards through
external reviews (e.g. ISO 9001 accreditation)
| Compliance with regulatory requirements
enables the business to operate in a safe
manner, protecting our employees and
wider communities
| We were re-certified to ISO 9001 and achieved ISO 14001 during
the financial year
| We constantly reviewed operating procedures to ensure best practice
| We monitored changes to European RoHS regulations to remove exposure
to toxic cadmium from EU customers
Community
| To make a meaningful contribution to
the community
| To create a positive working culture
| To attract and retain talent
| Our Employee Voice Committee (“EVC”) looks
at ways in which we can help the community
| We invite both members and non-members
to ask questions at our general meetings
| Our EVC looks at ways in which we can have
a positive impact on the local community
| Being involved with the local community
improves morale across the employees and
improves external perceptions of Nanoco
as a company
| We held a number of Company events, organised by the EVC,
which benefited the communities
| Provided matched fundraising
| Introduced a sponsored charity and have started arranging
fundraising events
| Allowed employees to donate blood during work time
Environment
| To improve our ESG credentials
| To mitigate environmental damage
from business activities
| We have engaged an external party to review
our materiality assessment
| We are reviewing our ESG strategy
| Looking at ways of reducing our
environmental footprint
| Ensuring we recycle as much waste as possible
| Engaging with our landlord to make facilities
more environmentally friendly
| To reduce carbon emissions as a result of
business activity
| To ensure waste is recycled where possible
| To improve our impact on the environment
| We have looked at purchasing raw materials in bulk to reduce emissions
from deliveries
| We discussed a number of ESG projects with landlords (such as installation
of electric car charging points)
| We have implemented a process to consolidate waste to reduce emissions
from deliveries and excess packaging
Strategic report
Nanoco Group plc – Annual Report and Accounts 2024
024
Our platform technology
is the basis for our growth
and commercialisation
is the ultimate goal for
all stakeholders
Our business model
E
X
P
E
R
T
I
S
E
A
G
I
L
I
T
Y
INTELLECTUAL
PROPERTY
P
L
A
T
F
O
R
M
T
E
C
H
N
O
L
O
G
Y
O
P
E
R
A
T
I
O
N
S
E
M
P
L
O
Y
E
E
S
Intellectual
property
Deep IP portfolio,
a key investment
proposition
Platform
technology
High performing
nanomaterials
Expertise
Our platform and people
deliver novel solutions to
new application challenges
Agility
Broad skill set and agile
team structures enable rapid
resource pivot to alternative
commercial opportunities
Partners and customers
Major channel partners with
global reach to multiple markets
and applications
Employees
Highly skilled staff with extensive
technical knowledge and
flexible skill sets
Operations
Installed an asset base capable
of generating significant
revenue in multiple markets
A
N
D
C
U
S
T
O
M
E
R
S
P
A
R
T
N
E
R
L
I
C
E
N
S
E
E
S
Nanoco Group plc – Annual Report and Accounts 2024
025
About our business model
Our business model has a number of key
strengths. It also enjoys a diverse range
of potential income streams. This was
amply demonstrated over the last two
years where services income featured
strongly compared to previous years.
Our overarching medium-term goal is
to maximise our revenue from direct
product sales.
Intellectual property (“IP”)
IP and process technology know-how are
foundational assets for the group and a
key strength. Our technology is heavily
patented to secure its use for the group.
New IP is continually generated through
our R&D activities and all potential patents
are reviewed by our internal Patent Review
Board for commercial value before being
filed. We continue to strengthen our IP
position by patenting technology we
believe will have real commercial value
in the future.
It is worth noting that on top of our formal
IP portfolio, we also have significant
know-how around our methods and
processes. We tend to hold this information
as commercial secrets rather than as
formally registered IP.
Platform technology
Our nanomaterials have a wide range of
electronic properties, usually opto-electrical
in nature. These include absorption of
different forms of energy and its emission
and potentially its conversion to a different
form of energy (electricity to light, for
example) or a different variety of the
same energy (blue light to green light,
for example).
One specific class of our materials is our
CFQD
®
quantum dots that avoid the use
of toxic cadmium in display applications.
The same absence of toxic chemicals
means we can also develop dots that
can be applied in life sciences applications
for use in the human body, although this
is not currently something the group is
working on.
Expertise and agility
We take advantage of our extensive
technical expertise and agile workforce
to be able to respond to complex and
challenging customer requirements. We
can also do this much faster than many
of our competitors. Whilst development
cycles may take a number of years, we
believe our expertise in these areas
means we can solve technical challenges
quickly to develop and scale up novel,
new nanomaterials.
Employees
Our staff are highly skilled in a number of
specialist areas. There are 13 employees
with PhDs and other postgraduate
qualifications. In R&D, our expertise
ranges from chemistry to physics. Staff
are also adept at taking lab scale processes
and scaling them up to industrial production
scale. We also have strong process
improvement and yield optimisation skills
that improve both production volumes
and our input costs. We further invest in
our employees through training to ensure
they are developing their capabilities further.
Production capacity
Our Runcorn production facility has two
distinct production labs. One is focused
on CFQD
®
quantum dots for use in display.
The other facility is focused on nanomaterials
for use in infra-red sensing applications.
In combination, they create an extensive
revenue-generating capacity for the
group through direct product sales to
our customers. The nature of the facilities
means they also deliver strong operational
leverage if additional volumes are added
with additional shifts, and we continue to
identify ways to improve our efficiencies.
Operator assessing the performance of raw materials.
Strategic report
Nanoco Group plc – Annual Report and Accounts 2024
026
Our strategy
Growth
KPIs
| Revenue
| EBITDA
| Billings
Risks
| Strategic
| Operational
| Financial
Objective
| To become a full service
production company
| To become self-sustaining financially
How
| Own manufacture and direct
supply to customers
| Non-exclusive technology licensing
| Professional services
| Royalty income
Future focus
| Converting current opportunities
into revenues with a strong
emphasis on nanomaterials
| Exploring opportunities with a
number of potential customers
1
We are expanding
our “dot only” strategy
to a “dot plus”
strategy that will
continue to deliver
world-class
nanomaterials for
our customers while
also developing
our knowledge and
understanding of the
interaction of our
materials with the
devices into which
they are placed.
Our IP and staff
ensure we continue
to be at the forefront
of quantum dot
advancements.
Nanoco Group plc – Annual Report and Accounts 2024
027
KPIs
| Year-end cash
| Investment in R&D
| Portfolio of patents and
patents pending
Risks
| Strategic
| Compliance
KPIs
| Investment in R&D
| Portfolio of patents and
patents pending
Risks
| Strategic
Objective
| To maintain our
competitive advantage
| To continue investing for future
product pipeline
Objective
| To utilise our core IP to generate
future revenue streams
How
| Continuing to create and
patent new IP with clear
short to medium-term
commercial opportunities
| Continuing to develop in-house
manufacturing capabilities
How
| Assisting licensees in maximising
their manufacturing opportunities
| Potential litigation against
infringers of our IP
Future focus
| Continuing to invest in R&D in
order to remain at the forefront
of this technology
| Exploring ways to open up new
market opportunities
Future focus
| Giving partners the best
performing dots
| Identifying companies which
may be infringing our IP
Investment IP monetisation
2 3
Strategic report
Nanoco Group plc – Annual Report and Accounts 2024
028
Strategy link
1
2
3
Strategy link
1
3
2024
1.2
2023
(0.4)
2022
(2.3)
2021
(2.8)
2020
(2.9)
2024
20.3
2023
8.2
2022
6.8
2021
3.8
2020
5.2
2024
7.9
2023
5.6
2022
2.5
2021
2.1
2020
3.9
We have made strong progress in
safeguarding the future of the group
and delivering value to shareholders
in the medium term
Our key performance indicators
Measurement
Cash and cash equivalents.
This reflects the cash reserves of
the business and the resources it
has to invest.
Why it is important
The business operates on a cash
consuming basis and this KPI indicates
the duration of funding available.
What it means
In combination with the group’s
operating plans and budgets,
the current balance underpins
the Directors’ going concern
and viability statements.
Measurement
The value of goods and services
recognised as income in accordance
with IFRS 15 Revenue from Contracts
with Customers. Grant income of
£0.1 million (2023: £0.2 million) is also
important and included under other
operating income.
Why it is important
Revenue (and its change year on year)
shows the speed with which the
business is growing or contracting.
What it means
In combination with gross margins and
overheads, it shows whether the group
is getting closer to the targeted break
even position.
Measurement
Operating profit excluding exceptional
items, share-based payment charges,
depreciation and amortisation.
Why it is important
Increasing EBITDA is a critical
medium-term goal as it demonstrates
progress towards the organic business
being self-funding.
What it means
The group’s EBITDA, excluding licence
revenue, is a very good proxy for its
organic cash flows and shows how
close the group is to being self-financing.
1 Calculation provided on page 31.
Strategy link
1
Year-end cash
£ million
Revenue
£ million
Adjusted EBITDA
£ million
£20.3m
+147%
£7.9 m
+40%
£1.2 m
1
+175%
Nanoco Group plc – Annual Report and Accounts 2024
029
Strategy link
1
Strategy link
2
3
Strategy link
2
3
2024
61.0
2023
63.0
2022
2.7
2021
1.7
2020
2.5
Measurement
The value of invoices raised during the
year for goods and services delivered
or to be delivered to customers
including those relating to the sale
of IP (excluding VAT).
Why it is important
Billings are a useful indicator of
current cash generation.
What it means
Billings are a leading indicator of cash
generation in the year. An element of
the billings to Samsung will be
deferred and the income recognised
over future periods.
Impact of Samsung settlement
Billings to Samsung in the year totalled
$75 million USD (£59.3 million GBP).
1 Calculation provided on page 30.
Measurement
The sum of all costs incurred in
research and development ("R&D")
activities. This includes salary costs
and other direct R&D costs.
Why it is important
Nanoco prides itself on the scale and
quality of its R&D efforts – which feed
its IP portfolio and also commercial
opportunity pipeline as it develops
new materials for potential new
markets and applications.
What it means
R&D spend is a leading indicator
of new product development.
It also impacts potential
customer pipelines.
Measurement
The group’s IP lawyers report
monthly on patents granted or filed
in the respective patent offices in
various countries.
Why it is important
Our IP portfolio is a key strength
of Nanoco and a strong reason
to invest. It supports our efforts
to monetise our investments in R&D.
What it means
The overall quality of our IP portfolio
continues to improve. We continue
to proactively review the portfolio for
relevance and value. As our business
focus changes, this can lead to a
decision to allow no longer relevant
IP to lapse.
Billings
£ million
Investment in R&D
£ million
Portfolio of patents and patents pending
Number of patents
£61.0 m
1
-3%
£1.6m
2
-10%
366
-2%
Key
Strategy link
1
Growth
2
Investment
3
IP monetisation
2024
1.6
2023
1.8
2022
1.8
2021
2.2
2020
3.1
2024
366
2023
375
2022
503
2021
559
2020
731
Strategic report
Nanoco Group plc – Annual Report and Accounts 2024
030
Financial review
Revenue increased by £2.3 million to
£7.9 million (2023: £5.6 million). The
increase is due to the licence agreement
signed with Samsung which contributed
£6.0 million, with the remaining revenue
largely related to the ongoing project
with the European electronics customer.
Excluding Samsung licence income,
revenue declined by 29% due primarily to
timing differences in the start and end of
a number of development projects.
The sale of products and services
rendered accounted for 23% (2023: 45%)
of revenue, with the balance being
licence income. Revenue from services
has decreased from £1.7 million to
£1.4 million due to the time gap prior
to the current development agreements
being started. Revenue from the sale
of products, including development
products, was £0.4 million (2023: £0.9 million).
Summary
| Revenue increased by 40% to
£7.9 million (2023: £5.6 million),
driven by the licence income from
Samsung. Excluding Samsung
licence income, revenue declined
by 29% due primarily to timing
differences in the start and end of
a number of development projects.
| The gain on a foreign exchange
forward contract on the second
tranche of the Samsung litigation
proceeds generated a one-off
gain of £1.8 million in the year, in
addition to a £0.3 million gain on
the cash which was held in USD
before utilising the forward contract.
| Adjusted EBITDA has increased
to £1.2 million (2023: £0.4 million
loss), reflecting the additional
revenue in the period.
| Completed tender offer at a 25.1%
premium to the closing mid-market
price per ordinary share on the day
before the tender was announced
to return £30.0 million to shareholders
following the receipt of litigation
proceeds noted above.
| Commenced broker managed
market buy-back to return a further
£3.0 million to shareholders,
completed post year end.
| £5.1 million of loans were repaid in
the year, leaving the group debt free.
Financially underpinned group
with growth opportunities
Liam Gray
Chief Financial Officer
Highlights
2024
£ million
2023
£ million % change
Revenue 7.9 5.6 40%
Other operating income 0.1 0.2 (38%)
Adjusted EBITDA 1.2 (0.4) 175%
Net (loss)/profit (1.3) 11.1 (92%)
(Loss)/profit per share (p) (0.43) 3.44 (91%)
Billings 61.0 63.0 (3%)
Cash and cash equivalents 20.3 8.2 147%
Non-GAAP measures
Billings, including those to Samsung, decreased by £2.0 million to £61.0 million
(2023: £63.0 million). Excluding the impact of any Samsung related billings, billings
were £1.8 million, which was in line with revenue.
Billings reconciliation
2024
£ million
2023
£ million
Revenue 7.9 5.6
Movement in deferred income 19.6 23.3
Movement in accrued income 33.1 34.5
FX movement between billing and recognition 0.4 (0.4)
Billings 61.0 63.0
The movement in deferred income reflects the second tranche of the payment
less licence income in the period. Other operating income generated £0.1 million
(2023: £0.2 million) related to grant income for two projects with Innovate UK which
were successfully completed during the year. An additional £1.8 million gain
related to the foreign currency contract on the second tranche of the Samsung
litigation proceeds.
Nanoco Group plc – Annual Report and Accounts 2024
031
The non-GAAP measure of adjusted earnings/(loss) before interest, tax, depreciation,
amortisation, share-based payment charges and exceptional items (“EBITDA”) is
provided in order to give a clearer understanding of the underlying profit for the
year that more closely reflects the recurring operational earnings of the business.
The calculation of these non-GAAP measures is shown in the table below:
2024
£ million
2023
£ million
Operating profit 1.7 15.0
Settled litigation costs — 49.3
Profit on sale of IP — (68.7)
Gain on derivative financial instrument (1.8) —
Requisitioned general meeting — 0.5
Foreign exchange (0.9) 1.7
Share-based payment charge 1.0 1.0
Employer’s NI on SBP 0.0 (0.2)
Depreciation 0.8 0.6
Amortisation
1
0.4 0.4
Adjusted EBITDA 1.2 (0.4)
1 Includes impairment of intangible assets (2024: £0.2 million, 2023: £0.1 million).
Finance income and expense
During the year, the group generated
finance income of £0.8 million on the
group’s cash deposits, earned primarily
in the six months following receipt of the
second tranche of the Samsung litigation
proceeds. The finance expense in the
year of £0.7 million (2023: £5.5 million)
included £0.5 million of interest on loans
which were repaid in the year with the
balance being the inherent interest
charge on finance leases under IFRS 16.
The profit before tax was £1.9 million
(2023: £9.6 million profit).
Taxation
The tax charge for the year was
£3.1 million (2023: £1.5 million credit).
This comprises a UK corporation tax
charge of £nil (2023: £1.0 million) and
an overseas corporation tax charge of
£0.6 million (2023: £0.3 million), offset by
an R&D tax credit of £0.2 million (2023:
£0.3 million) and the derecognition of
deferred tax assets of £0.2 million
(2023: £2.5 million recognition). In addition,
the Group incurred withholding tax in
Korea of £2.6 million in the year, of which
£1.8 million has been recognised as
an asset as it can be offset against
future profits.
The group has £30.0 million of
accumulated losses to offset against
future profits (2023: £30.8 million).
Cash flow and balance sheet
During the year, cash, cash equivalents,
deposits and short-term investments
increased to £20.3 million (2023: £8.2 million)
caused by a net cash inflow of £12.1 million
(2023: £1.4 million inflow). The increase
reflects the £58.8 million Samsung receipt,
offset by £33.0 million returned to
shareholders via the tender and buy-back,
£5.1 million of loan repayments, £1.5 million
investment in new facilities and £7.1 million
operating cash outflow. Interest on cash
deposits of £0.8 million was received in
the year. Tax payments of £0.8 million
(2023: £0.5 million receipt) were made
during the year.
Expenditure incurred in registering patents
totalled £0.1 million (2023: £0.1 million).
Capitalised patent spend is amortised
over ten years in line with the established
group accounting policy.
IP impairment charges during the year
were £0.1 million (2023: £0.1 million).
This reflects the rationalisation of the
patent portfolio in prior years to ensure
the remaining patents are commercially
and technologically viable in the short
to medium term.
Expenditure on tangible fixed assets
increased to £1.5 million (2023: £0.3 million)
as the group invested in its new
device facility.
During the year, the group repaid all of
its outstanding loans totalling £5.1 million,
leaving the group debt free.
Capital reduction
At the end of the prior year, the group
carried out a capital reduction that was
approved by the High Court in England
to eliminate the share premium and
capital redemptions reserves. This
increased the group’s distributable
reserves and allowed the return of
capital below to take place.
Return of capital
In April 2024, the Company completed
a tender offer at 24 pence, a 25.1% premium
to the closing mid-market price per ordinary
share on the day before the tender was
announced, to return £30.0 million to
shareholders. Of the 125 million shares
acquired by the Company via the tender
offer, 90% were subsequently cancelled
with the remainder being held by the
Employee Benefit Trust for use in the
future to satisfy employee share options
granted under the Nanoco Long Term
Incentive Plan and the Deferred
Bonus Plan.
Immediately following the tender offer,
the Company commenced a broker
managed on-market buy-back to return
a further £3.0 million to shareholders.
As at 31 July 2024, £2.0 million had been
returned via this mechanism, which led
to the purchase and subsequent
cancellation of a further 10.9 million
shares. The remainder of the buy-back
was completed post year end. The
Company’s outstanding share capital
was 202,571,497 shares as at 31 July 2024
and 194,608,038 on completion of the
on-market buy-back on 29 October 2024.
The group incurred fees and taxes on
the tender offer and buy-back totalling
£1.0 million, the cost of which was charged
directly to reserves.
Strategic report
Nanoco Group plc – Annual Report and Accounts 2024
032
Foreign exchange management
The group invoices most of its revenues in
US Dollars. The group is therefore exposed
to movements 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
and more predictable.
The second tranche of the litigation
proceeds was received in January 2024
(gross $75 million, net $71.75 million after
$3.25 million withholding tax paid at
source). The group took out a one-off
hedge at a rate of GBP1:USD1.22, which
meant the net cash receipt of $71.75 million
was converted to £58.8 million. This was a
£1.8 million gain over the prevailing rate in
February 2024 when the hedge was utilised.
There were no open forward contracts as
at 31 July 2024 (2023: none). The indicative
impact of movements in the Sterling
exchange rate on the group’s net profits
and equity based on the retranslation of
the closing balance sheet is summarised
in note 27 to the financial statements.
Credit risk
The group only trades with recognised,
creditworthy third parties. Credit risk is
increased by the concentration of
receivables to a small number of
customers. 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.
Treasury activities and policies
The group manages its cash deposits
prudently. Cash balances 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.
Going concern
Following the receipts from Samsung
and the return of capital to shareholders,
the group retains a cash balance of
£20.3 million at 31 July 2024. Given the
remaining cash balance, our low cost
base, and the identified commercial
opportunities, the Directors have a
reasonable expectation that the group
has access to adequate resources to
continue in operational existence for
the foreseeable future. Any future return
of surplus cash will take into account the
on-going viability of the group.
Accordingly, the Board concluded that
it remains appropriate to continue to
adopt the going concern basis in
preparing the consolidated financial
statements. Further detail is included in
the going concern statement on page 37.
Macroeconomic factors
We continue to see inflationary pressures
on raw materials. We attempt to mitigate
these by regularly reviewing suppliers
where possible, negotiating with new
suppliers and trying to achieve volume
breaks. We will continue to review market
conditions and assess the impact on
all stakeholders.
Summary
Nanoco is now financially underpinned
with a stable cost base and IP that has
been validated by the US PTAB and we
have commercial opportunities in large
and growing markets. We look forward
to updating shareholders on progress
against our strategic objectives in
due course.
Liam Gray
Chief Financial Officer
21 November 2024
Financial review continued
Nanoco Group plc – Annual Report and Accounts 2024
033
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 our control or capable of
complete mitigation or protection
through insurance.
Specifically, a number of the group’s
products and potential applications are
at an early stage in their development,
or still being validated by customers, 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.
The technology, particularly in the sensing
division, is still in its infancy and has yet to
see end market adoption in higher
volume applications.
Equally, a number of products are
considered commercially viable but
have yet to see demand for full scale
production. It is also the case that the
group is often only one part of a long
and complex supply chain for new
product applications.
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.
Risk management process
The group has established a process
for carrying out a robust risk assessment
that evaluates and manages the principal
risks faced by the group. A detailed
review of individual risks was undertaken
initially by the leadership team and then
reviewed by the Board during the financial
year ended 31 July 2024. That review also
incorporated climate-related risks, as
required by TCFD reporting. The Board
has also established an acceptable level
of risk (risk appetite) that informs the
scale and urgency of actions required.
Where risks are deemed to be outside of
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
the 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
shown on the heat map below and
are discussed in further detail in the
pages following.
Principal overarching risk
The historical principal overarching
strategic risk faced by the business was
that the group exhausted its available
funding before achieving a self-financing
level of commercial revenue. This risk has
significantly mitigated in the short
to medium term following the proceeds
from the Samsung litigation settlement.
The underlying risk relating to market
adoption of Nanoco’s technology
remains but has been shifted further
out in time due to the improved cash
position noted above.
Other principal risks
Risks are broadly categorised as
strategic, operational, financial or
compliance. The table overleaf focuses
on those risks that the Directors believe
are the most important currently faced
by the business. Other risks may be
unknown at present and some that are
currently rated as low risk could become
more material risks in the future. The
group’s risk management process
tracks risks as they evolve and change.
Managing risk is key to the delivery
of the group’s strategic objectives
Principal risks and uncertainties
Likelihood and impact of principal risks
1 2 3 4 5 6 7 8 9 10
10
9
8
7
6
5
4
3
2
1
Impact
Probability
FY23 FY24
C
H
G
A
B B
F
F
C
D
E
H
A
E
D
Strategic report
Nanoco Group plc – Annual Report and Accounts 2024
034
Likelihood and impact of principal risks continued
Risk description Potential causes and impact Mitigation Change
Link to
strategy
Strategic
A
Lack of market
adoption of
technology
Responsibility:
CEO/CTO
Market fails to commercially adopt
technology incorporating the
group’s nanomaterials.
The group targets a wide range
of potential applications in the
sensing industry.
Work with industry leaders
to differentiate products from
current offerings.
Make products commercially competitive.
De-risk Nanoco as a supply
chain partner.
Maintain capacity to scale to meet
demand from very large customers.
First commercial order has
been shipped, but no further
first-generation material orders.
Expanded range of materials
addressing more potential
market applications.
One of our customers cancelling
the second generation project
may delay market adoption of the
technology.
However, continued investment in
this area by our customers and
other companies (e.g. Onsemi).
1
B
Competing
technology in
sensing applications
Responsibility:
CEO/CTO
A different competing technology
achieves commercialisation in
sensors ahead of Nanoco (whether
QD or another technology).
The group works with a number
of market-leading companies in
this area.
The R&D leaders in the group stay
abreast of advancements to
understand their implications.
The group’s technology enjoys a very
significant cost advantage
over competitor products.
The European customer cancelling
the project on second generation
materials may delay market
adoption and allow a competing
technology to advance.
1
C
Competing
technology in
display applications
Responsibility:
CEO/CTO
A different competing technology
(either QD or another) reduces
the quantum dot share of TVs in
the market.
The group licenses its technology
to the market leader in this area
and will be discussing further
licensing opportunities.
The R&D leaders in the group stay
abreast of advancements to
understand their implications.
Nanoco’s cadmium-free solutions
deliver clear environmental benefits.
Prominence of micro-LED and
introduction of EL displays at
recent conferences – different
technology to Nanoco.
1
3
D
Customer
concentration risk
Responsibility:
CEO/CTO
Reliance on a small number of key
customers exposes the group to risk of
delays in the customers’ own supply
chains over which the group can exert
limited influence (one customer was
66% of revenue excluding licences in
FY24). These delays can then have a
knock-on adverse effect on the group’s
expected revenue streams.
Commercial strategy in the medium
term is to dilute customer concentration
risk by selling into various markets,
through various channels and to a
range of customers.
Continue to work with new customers to
develop commercial offerings.
Same core significant customers
as in prior years.
This risk has increased post
year end following the
cancellation of the project
with the European customer.
1
3
Principal risks and uncertainties continued
Key
Risk change Strategy
Up
1
Growth
Neutral
2
Investment
Down
3
IP monetisation
Nanoco Group plc – Annual Report and Accounts 2024
035
Risk description Potential causes and impact Mitigation Change
Link to
strategy
Operational
E
Loss of key
personnel
Responsibility:
CFO
While the group maintains a high level
of protected documented IP, our staff
remain a critical asset with significant
levels of technical and sector know-how.
Loss of key personnel would have an
adverse impact on the group’s
development and commercialisation.
The group offers rewarding careers that
allow staff to develop new skills while
pursuing interesting research ideas.
The group reviews remuneration
to ensure that appropriate reward
packages accompany the fulfilling
work environment.
Post-employment obligations
and protected IP expose potential
competitors to the threat of litigation.
Continued investment in
infrastructure and focus on
remuneration and benefits.
Cancellation of project with
European customer may create
further uncertainty amongst staff.
Staff turnover in line with industry.
1
2
Financial
F
Lack of adequate
resources to sustain
the group until
it becomes
self-sustaining
Responsibility:
CFO
Revenues from own product sales,
services rendered and licensee
royalties do not materialise as planned.
The group is unable to carry out its
operations and hence cannot deliver
on medium-term or strategic goals.
Cash will continue to be
prudently managed.
Focus on revenue-generating activities
without abandoning worthwhile and
focused R&D work.
Cost reduction actions identified
if necessary.
Retention of a portion of the
litigation proceeds.
Delays in commercialisation of
first and second generation of
material may result in the group
being loss making for an
extended period.
1
2
Compliance
G
Major
environmental,
health and safety
(“EHS”) issue
Responsibility:
CEO
Failure to follow existing procedures or
a new unforeseen risk could result in
injury to staff, equipment, reputation
and finances and potential loss of
operating licences.
Extensive and ongoing efforts to
continuously improve procedures.
Renewed leadership focus on the “tone
at the top” and cultural change.
Continuous training of staff in risks and
how to mitigate risks.
Continued focus on EHS including
incentivisation of staff.
1
2
Governance
H
Shareholder
relations
Responsibility:
CEO/CFO
Shareholder activism has an impact on
a number of stakeholders, including, but
not limited to, customers, suppliers and
employees, and also has significant
financial and non-financial implications.
Continued engagement
with shareholders.
Focus on the commercial business
being successful.
Open and transparent communication
with stakeholders.
Delays in commercialisation
and decline in share price may
increase shareholder activism.
1
2
The Executive team manages a greater number of more detailed risks on an ongoing basis, none of which are considered of
strategic importance to the group. The Board reviews the detailed risk register annually to ensure that all strategic risks are being
appropriately considered at the Board level while business as usual (“BAU”) risks are actively managed by the Executives.
Strategic report
Nanoco Group plc – Annual Report and Accounts 2024
036
The litigation settlement provided
Nanoco with sufficient resources to
continue to deliver on its strategy
for the foreseeable future
Viability statement
In accordance with the provisions in
the UK Corporate Governance Code
(Provision 31 of the 2018 UK Corporate
Governance Code), the Directors have
assessed the viability of the group’s
business model and determined that a
four-year period is a suitable period to
be utilised, which is in line with the prior
year. A four-year period is considered
appropriate given the increased financial
stability of the group. However, it should
still be emphasised that the early stage
of development and evolving nature
of the markets for the group’s products
mean that forecasting time horizons
with any degree of certainty remains
relatively short.
The Directors’ assessment has been
made with reference to the current
position of the group and the group’s
current strategy and principal risks
as described on page 33 in this
Strategic report.
While inflationary pressures have
weakened over the last year, the group
remains vigilant in monitoring input costs,
particularly employee costs which represent
approximately 54% of the group’s cost base.
Changes during the year
We continue to see progress with our
customers in sensing. Both the European
electronics customer and the Asian
chemical customer signed long-term
collaboration agreements to continue
development work in this area. In addition,
Nanoco shipped its first ever commercial
production orders.
We have continued to add other
customers in the year in both sensing
and display, although these are
currently relatively small and early
stage engagements.
After the year end the European
electronics customer terminated its
collaboration agreement and confirmed
it would place no further production orders.
The viability assessment process
In assessing the viability of the group,
the Directors have utilised their forecasts
for the period to 31 October 2028, which
take into account the group’s current
and expected business activities and
commercial opportunity pipeline, the
current cash resources (£20.3 million as
at 31 July 2024), the contracted
receivables, the contracted revenue and
prospects for FY25, and any liabilities as
they fall due. These inputs form the basis
of a conservative base case with the
main assumptions shown below in the
section on going concern. The events
between the 31 July 2024 and the signing
date as described in the strategic report,
including the loss of the European
customer and the subsequent
restructuring, were factored into
the viability forecasts.
The base case assumptions were then
flexed to create a “severe but plausible”
downside stress test. This includes the
assumption that commercial production
is delayed by a year and that no new
development engagements are started
for two years. The group remains viable
in this scenario with significant cash
reserves. Given the cash resources of the
group, in all scenarios, all outstanding
liabilities are settled.
Any future distribution of surplus cash
will take into consideration the viability
of the group and sufficient cash will be
retained to ensure viability for the full
assessment period.
Nanoco Group plc – Annual Report and Accounts 2024
037
Conclusion
As a result of the assessment outlined
above, the Directors have confirmed
that they have a reasonable expectation
that the group will remain viable and
able to continue in operation and meet
liabilities as they fall due over the
four-year period of their assessment.
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 are set out on
pages 9 to 27;
| the principal risks and uncertainties
are shown on pages 33 to 35;
| the group’s financial position is
described in the Financial review on
pages 30 to 32; and
| note 27 to the accounts summarises
the group’s financial risk management
objectives, policies and processes.
For the purposes of their going
concern assessment and the basis for
the preparation of the 2024 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
as noted above, with the going concern
assessment covering the period to
November 2025. The same base case
and downside sensitivities were also used.
The base case represents the Board’s
current expectations. Assumptions in
the base case are:
| reduced revenue in FY25 following the
loss of the European electronics customer;
| new services revenue will be
generated from CY25;
| ramp up of product sales from FY26
moving to larger scale in FY27;
| other companies pay to access
Nanoco’s technology in the future;
| reduction in headcount and
overheads to reflect reduced
short-term revenue expectations;
| costs associated with being a listed
entity and other costs reflect the
current inflationary environment; and
| the reduced 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 downside case then flexes those
assumptions as follows:
| a full-year delay in small scale
commercial production revenues
(into FY26); and
| no new service customers until FY27.
Both cases above produce cash flow
statements that demonstrate that the
group has sufficient cash throughout the
period of the going concern forecast.
Going concern conclusion
Considering the current financial resources
and monthly cash costs of the group,
and after making appropriate enquiries,
the Directors have a reasonable expectation
that the group has access to adequate
resources to continue in operational
existence for the foreseeable future.
Accordingly, the Directors 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.
Strategic report
Nanoco Group plc – Annual Report and Accounts 2024
038
Nanoco recognises that
sustainability is core to building
a business for the long term and
the achievement of our strategy
Sustainability report
Our progress in the year
As a business, we have made significant
progress in our environmental, social and
governance ("ESG") approach during the
year and are developing a better
appreciation of ESG risk management
and performance. We are in the early
phases of taking a more strategic
Highlights:
| Formation of cross-functional
ESG committee
| ISO 14001 implementation
| Completion of Nanoco’s first
materiality assessment and
development of a new ESG strategy
| Sunday Times Best Places to Work
2024-Small Organisations
approach to managing and tracking our
environmental and social performance,
whilst developing the frameworks and
reporting systems to be able to monitor
key metrics and putting in place the
building blocks which will underpin our
strategy and reporting.
At the start of the year, a new ESG steering
committee with Board representation
from the CFO was established with the
aim of increasing our understanding of
the risks and opportunities for the
business posed by ESG issues. This has
helped to identify the areas that are most
significant to the business and implement
an ESG strategy, aligned with the core
business strategy to address those
significant risks and opportunities. Liam
Gray, CFO, said “the ESG committee
highlights our
commitment to sustainability.
The committee
will help drive
improvements, identify risks and
opportunities and set targets to ensure
Nanoco is consistently improving on its
ESG credentials.”
A key milestone for Nanoco’s ESG
progress in the year has been the
implementation and certification of
ISO 14001 Environmental Management
Systems. This project involved teams
from across the business from shop floor
to Directors and included a thorough
assessment of the environmental
aspects and impacts of the business
and identification of associated risks
and opportunities. A new management
system was then implemented to address
those areas and a new environmental
policy was published. The project resulted
in a successful certification in May 2024
and forms a basis for ongoing improvements,
with annual re-certification audits
performed by an external assessor.
In order to better understand our key ESG
issues we commissioned an externally
facilitated materiality assessment which
included insights from industry intelligence
research, comparison with peers and
engagement with key stakeholders. This
provided us with valuable insight into
the
issues most important to our stakeholders
and resulted in a double materiality
matrix which assessed each issue
against its significance to stakeholders
and the business’s exposure to risks
and opportunities.
We used this assessment to create the
pillars of our ESG strategy and set both
short-term and long-term objectives
aligned with the overall strategy of the
group. These pillars will form the basis
of our ESG roadmap for the coming
years and are discussed in detail in the
following pages. The pillars are linked to
the UN’s Sustainable Development Goals
to highlight Nanoco’s commitment to
having a positive impact on wider society.
10
9
8
7
6
5
4
3
2
1
0
Exposure/impact on the business
Significance to stakeholders
Climate
adaption,
resilience and
transition
GHG emissions
Supply chain
management
Energy
management
Air emissions
Water and
effluents
Labour practices and
human rights
Opportunities
in clean tech
Anti-bribery
and corruption
Diversity, equity
and inclusion
Product design and
lifecycle management
Talent attraction, retention
and development
Employee engagement
Waste
Community
impact
Biodiversity
Product safety and quality
Privacy and data
security
Employee
wellbeing
Employee health and safety
Intellectual property
protection and
competitive behaviour
Materials sourcing
Environmental Social Governance
Nanoco Group plc – Annual Report and Accounts 2024
039
Our ESG strategy
Future-forward
chemistry
Investing in
people
Innovation
protection
Product design and
lifecycle management
Transition to less harmful chemicals
(CFQD
®
) (PbS-InAs-InSb)
Employee health and safety
Implement ISO 45001
IP protection
Build know-how and internal
skill levels to bring device and
analysis in house
Enhance IP portfolio
Product safety and quality
ISO 14001 implementation
ISO 9001 maintain compliance
Employee engagement
Improve employee satisfaction
based on survey results
Privacy and data security
Achieve and maintain a secure
score of 80 points over a rolling
six-month period
Material sourcing
Review provenance of core materials
and suppliers
Talent attraction, retention
and development
New people promise including
values and reward
25% of employees receive
development training
Waste
Reduce waste by 30% by 2030
Review all air pollutants
and their impact
GHG emissions
Achieve net zero by 2050
Strategic report
Nanoco Group plc – Annual Report and Accounts 2024
040
Sustainability continued
Future-forward chemistry
The first pillar of our sustainability strategy
is preparing the group for a long-term
future in an increasingly environmentally
focused world. This pillar covers the ESG
impact of our products and processes
across the full lifecycle, including product
design, material sourcing, waste and
other emissions.
Product design and
lifecycle management
Integrating considerations such as energy
efficiency and possible materials used in
production of products and services into
the business's decision-making processes.
Why it’s important: Issues will arise if
Nanoco acts too slowly in integrating
environmental considerations of
products into its buying decisions
and product development.
Where we are: Nanoco’s products
are inputs into consumer goods and
macroeconomic pressures driven by
climate-related hazards could impact
the future revenues of the business. The
group also acknowledges the potential
reputational consequences of failing
to meet the climate expectations of
stakeholders as the world transitions to
a low carbon economy. In consideration
of climate-related opportunities, Nanoco’s
product portfolio has potential to support
the energy transition.
Nanoco’s CFQD
®
display products are
notably free of toxic cadmium, which reduces
emissions associated with managing the
disposal of toxic waste and removes a
dangerous chemical from the supply
chain for QD televisions. In May 2024,
the European Commission published
a new Delegated Directive to amend
Exemption 39 of the RoHS Directive
that allows the use of cadmium in
certain display applications. To reflect
the advancement in Cadmium-free QD
technology,
the existing Exemption 39(a),
which permitted
the use of cadmium
selenide-based QDs in display
applications and was relied on by a
number of manufacturers of QD display
films, will expire on 21 November 2025.
A new Exemption 39(b) has been added
to allow the use of cadmium in LED
semiconductor chips for display and
projection applications (< 5 m per
mm
2
of LED chip surface area with a
maximum amount per device of 1 mg)
until 31 December 2027. This represents
a significant tightening of the use of
cadmium in displays, which after the
expiry of Exemption 39(a) will be limited
to “on-chip” technology until the end
of 2027.
HEATWAVE
®
QD sensing products sit in
the energy efficiency and low environmental
impact arena and, as such, will enable
customer companies to increase the
uptake of their products while reducing
their impact on the environment.
The first generation of HEATWAVE
®
QDs
contains lead, which, as a heavy metal
with the potential to cause environmental
harm, is coming under increased external
scrutiny, reducing the likelihood that those
products will see adoption in a consumer
mass market. The second generation
currently being developed is lead free
and will combine improved performance
with reduced potential for harm.
What next: Nanoco will continue work on
the development of its second generation
of lead-free HEATWAVE
®
QDs and adapting
its CFQD
®
products for new markets. The
group is also investigating a third generation
HEATWAVE
®
product, again working
towards combining improved performance
with a reduction in the risk of harms. In
addition, Nanoco will conduct a full review
during FY25 of all materials used in the
business against key harms registers in
the UK, Europe and the US in order to
identify further areas where use of
potentially harmful chemicals can be
reduced whilst maintaining or improving
the quality of Nanoco products.
Product safety and quality
Business exposure to possible recalls or
product safety concerns and the quality
management efforts in manufacturing.
Why it’s important: There is the potential
for product defects or failures that could
harm users to damage the group's
reputation and result in legal liabilities.
Where we are: Nanoco has a
well-established quality management
system and has held ISO 9001 Quality
Management Systems certification since
2016. In addition to this, Nanoco has
implemented a new environmental
management system during the year
and achieved ISO 14001 Environmental
Management Systems certification in
May 2024.
What next: Nanoco is currently working
on the implementation of an improved
health and safety management system
and expects to achieve accreditation
for ISO 45001 Occupational Health and
Safety Management Systems during
FY25, as discussed in greater detail in
the health and safety section below.
Following this all three management
systems will be integrated into a single
management system which will embed
quality, environment and health and
safety into everything we do.
Material sourcing
The ability to manage potential material
shortages, supply disruptions, price
volatility and reputational risks, which
is made more difficult by the fact that
commonly sourced materials come from
supply chains that often lack transparency.
Why it’s important: Issues may arise
when Nanoco is reliant on critical
materials which may have few or no
available substitutes and are therefore
vulnerable to many shocks, which could
lead to the inability to source materials.
There is also an environmental risk from
the provenance of raw materials and the
associated reputational risk that may result.
Where we are: Nanoco purchases the
majority of its raw materials from large,
reputable multi-national suppliers and
has historically relied on those primary
suppliers to manage their own supply
chains while also holding sufficient levels
of material stocks to mitigate any short
or medium-term disruption to supply.
However, the international nature of the
supply chains makes them vulnerable to
interruption from environmental, social
or political disruption around the world.
As part of the implementation of ISO
14001 during FY24, Nanoco has begun
to include environmental factors in its
supplier assessments and audits in order
to mitigate the environmental risks
associated with its raw materials.
What next: During FY25 Nanoco will
conduct a review of the supply chain for
each of its core raw materials to ensure
a full understanding of the environmental,
social and governance risks associated
with those supplies. The risks identified
from that review will be managed in line
with our risk management procedures
and any required mitigating actions
performed. In future years, the review will
be extended to supplies of other materials
and services in order of their criticality to
the business. Future plans also include
embedding environmental considerations
such as energy efficiency, reusability,
supply chain emissions and lifecycle
impact into all purchasing decisions
but this is still at an early stage.
Nanoco Group plc – Annual Report and Accounts 2024
041
Waste
The management of waste and
potential environmental contamination
and toxic or carcinogenic waste arising
from operations.
Why it’s important: Risks will arise if Nanoco
is unable to manage operational waste
and any toxic waste in line with regulation
and stakeholder/societal expectations.
2030 target
2024
2023
Risk change
Recycled
Net unrecycled
Where we are: During the year, the
group generated 10.6 tonnes of waste
(2023: 10.8 tonnes) and recycled
5.0 tonnes of this (2023: 5.0 tonnes).
Net unrecycled waste was 5.6 tonnes
(2023: 5.8 tonnes); however, even
unrecycled waste is incinerated with
energy recovery and therefore doesn’t
go direct to landfill. The group engages
a specialist
contractor to incinerate batches of chemicals
and dispose of other materials no longer
required. All waste contractors are assessed
to ensure the waste hierarchy approach
is applied to all of our materials handled
and that their operations and systems
are compliant with the relevant legislation.
Audits are performed every three years
in line with our duty of care as a
waste producer.
What next: Nanoco has set the
ambitious target of reducing its waste
production by 30% by 2030. As the group
is expected to be in a rapid growth
phase during this period, level of waste
will be measured both as a gross figure
and in relation to employee numbers and
against revenue (excluding licence
income). FY24 will be used as the
baseline for this target.
The initial focus for reduction in waste will
be via process improvements by minimising
quality failures and maximising yields.
During FY25, the group will conduct
further assessments of any waste being
produced, including emissions to air, and
look to implement a plan to minimise or
mitigate these.
Nanoco's future
management system
will embed quality,
environment and
health and safety
into everything we do."
2023
tonnes
2024
tonnes
2030
target
tonnes
Gross waste 10.8 10.6 7.4
Waste per employee 0.28 0.23 0.16
Waste per £ million revenue 4.23 5.83 4.08
Greenhouse gas (“GHG”) emissions
Mitigating climate change by understanding,
managing and reducing direct and
indirect GHG emissions in line with
global ambitions.
Why it’s important: Risks will arise if Nanoco
is unable to understand, manage and
reduce direct and indirect GHG emissions
in line with national/global ambitions, the
rising expectations of stakeholders and
increased regulation.
Where we are: Under the Companies Act
2006 (Strategic and Directors’ Reports)
Regulations 2013, the group is required
to state the annual quantity of emissions
in tonnes of carbon dioxide equivalent
from activities for which the business is
responsible, including the combustion
of fuel and the operation of its facilities,
and resulting from the purchase of electricity,
heat, steam or cooling by the business
for its own use. This data has been
included in our Annual Report since 2016
and forms the baseline for our carbon
reduction targets.
As the group’s UK facility is in a
multi-occupancy site, we place reliance
upon the landlord to provide the data
needed to determine emissions.
Our laboratories require continuous
negative pressure environments and,
consequently, it is challenging to set
realistic reduction targets in the
consumption of electricity.
Our gas consumption is used for heating
the facility and site costs are shared
between tenants on the basis of area of
occupancy. In the absence of significant
amounts of revenue from the sale of
commercial products, the emissions
of the business primarily arise from the
activities of its research and administration
facilities rather than from revenue related
production operations.
Strategic report
Nanoco Group plc – Annual Report and Accounts 2024
042
Sustainability continued
Data notes
Reporting period 1 August 2023 to 31 July 2024
Boundary Operational control
Reporting method The Greenhouse Gas (“GHG”) Protocol Corporate Accounting and Reporting Standard
Emissions factor source Department for Energy Security and Net Zero 2024
Data changes and restatements None
2024 tCO
2
e
2024 tCO
2
e 2023 tCO
2
e
Electricity
Natural gas
Total
2023 tCO
2
e
Change
Change
-81%
-100%
-48%
Scope 2
Scope 3
Whole portfolio carbon generation (energy use)
2024
2023
0.31 3
Change
-90%
Intensity (tCO
2
e/average number of employees)
2024
2023
Change
-83%
Energy consumption used to calculate emissions
(MWh)
—
11
8
25 129
Air travel
-77%
46
14 75
69 398
Future-forward chemistry
continued
Greenhouse gas (“GHG”) emissions
continued
Reported scope 3 emission currrently
only include air travel; no other transport
emissions are considered to be under
operational control.
Our emissions, based on appropriate
conversion factors published by the
Department for Energy Security and Net
Zero, for the current year are shown in the
charts below.
What next: Due to Nanoco’s current
reliance on both our landlord and the
wider national electricity generation
landscape to determine the GHG impact
of our energy use, we have set our initial
net zero target for 2050 in line with the
UK national target from the Climate
Change Act 2008. The group hopes to
be more ambitious with its target in the
future as it gains a more in-depth
understanding of its GHG emissions and
opportunities for improvement. The first
step on Nanoco’s path to net zero is to
conduct a detailed review of all sources
of indirect emissions within its operations;
relevant additional scope 3 categories
will be included in the report next year.
Once the full GHG emissions profile is
understood, the group will be able to
identify opportunities for reductions in
emissions and create a full roadmap to
achieve its net zero ambitions.
Nanoco Group plc – Annual Report and Accounts 2024
043
Investing in people
Nanoco considers its employees to be
one of the biggest assets of the group
and the wellbeing of its employees is the
most direct impact that the group has on
the society in which it operates. As such
investing in its people is a core pillar of
the group’s ESG strategy.
Employee health and safety
Ensuring protection of employee health
and safety through the use of strict
protocols and standards to embed a
culture of zero harm.
Why it’s important: Failing to manage
these areas properly can lead to serious
consequences for Nanoco, especially if
regulations aren't followed or if the local
community is negatively affected.
Where we are: Nanoco recognises that
providing a safe, secure and healthy
working environment is essential and
contributes to productivity and improved
performance. The health, safety and
welfare of all of our employees, contractors
and visitors are taken seriously across
the entire organisation, with ultimate
responsibility lying with the CEO. Health
and safety performance is a standing
item on each Board and Executive team
agenda and is also discussed within
departmental meetings. The group’s
health and safety policy is reviewed
annually. In addition, there is an
Environmental, Health and Safety (“EHS”)
Committee to oversee the implementation
of policy and involve staff in generating
improvement plans.
There are various improvement and
reporting systems in place to monitor
the performance of the group’s health
and safety management system.
These initiatives include:
i) reporting all incidents (including near
misses) with appropriate ownership,
root cause analysis and action
tracking systems;
ii) communication of relevant topics
and incidents via weekly toolbox
talks to all departments;
iii) monthly and quarterly leadership
safety and observation audits with
the focus on immediate action
resolution by the Executive or
senior manager leading the audit;
iv) monthly departmental audits with
assigned action tracking processes
in place to address issues;
v) monthly health and safety reports
issued across the organisation to
communicate performance against
annual metrics and progress on key
improvement initiatives and projects;
vi) annual health checks for staff,
including tests for chemical
exposure where required; and
vii) annual occupational chemical
exposure tests using fixed and
personal monitors.
A risk assessment programme is in place
to identify and mitigate the risks from our
operations. These assessments include
but are not limited to:
i) the storage, handling and processing
of hazardous substances;
ii) fire safety and emergency evacuation;
iii) use of mechanical and electrical
equipment; and
iv) other workplace operations involving
manual handling and ergonomic
risks, working at height and other
hazards identified as part of the
EHS improvement programme.
All risk assessments are documented
and actions assigned and reviewed
according to the defined frequency.
All research and development functions
are actively encouraged to, wherever
possible, eliminate or reduce the levels
of hazardous substances used in our
products and processes. All relevant
chemical legislation and regulatory
frameworks are used to assess the
suitability of a substance prior to use
as part of the risk assessment process.
Standard operating procedures are
documented and regularly reviewed.
The group’s robust EHS control environment
is evidenced by there being no externally
reportable incident in any category in
the last five years.
All controlled documents are reviewed
and approved via the electronic document
management system. A health and
safety induction programme is in place
for all new staff and visitors/contractors
performing work on our premises. Staff
are trained in standard operating
procedures, hazard awareness, generic
workplace health and safety risks and
behavioural safety expectations applicable
to their role within the group.
A cross-functional employee health and
safety team meets on a monthly basis
with representation from all areas of
the group, including the Executive team.
Effective inputs and outputs from the
team are designed to facilitate a greater
focus on health and safety and to
actively encourage discussions within
respective groups.
What next: Nanoco is committed to the
continuous improvement of the health
and safety management system. As part
of this commitment, Nanoco is in the
process of implementing ISO 45001
Occupational Health and Safety
Management Systems, which we are
expecting to be certified during FY25.
Employee engagement
The relationship between management
and employees, the strength of worker
protections and their employee
engagement efforts.
Why it’s important: Issues will arise if
Nanoco is unable to keep employees
satisfied in their roles and responsibilities
due to lack of communication and
engagement. We believe that building
a positive partnership between strategic
management and the wider workforce is
crucial to Nanoco’s success. Our people
are our best problem solvers and possess
the insight into how we can make
Nanoco a top organisation to work for.
Where we are: Aligning the entire Nanoco
organisation to ensure that we focus on
what is important to achieve our goals is
critical to our success. In order to help us
navigate the exciting opportunities in
front of us, it is crucial that as Nanoco
employees and managers we make
conscious, careful and informed choices
about how we allocate our time and
energy – as individuals and members
of teams.
Nanoco is committed to a policy of
engaging employees in the activities
and growth of the group. Human
resources and senior management
review communication channels via the
use of employee surveys and plan
communication activities to ensure
employees are fully informed of current
business strategy and financial results
or corporate news.
Corporate communication is key to the
engagement of our workforce. We have
focused on improving the look, feel and
content of group-wide electronic
communications in order to make
these more engaging to employees.
Strategic report
Nanoco Group plc – Annual Report and Accounts 2024
044
Sustainability continued
Gender diversity and gender pay gap
Scientific research is a sector challenged
by a lack of gender diversity, but we feel
that we have an opportunity to challenge
this status quo. Nanoco believes in being
an inclusive and diverse organisation
where everyone is able to reach their full
potential. The challenge in our organisation
and across Great Britain is to eliminate
any gender pay gap; we therefore
voluntarily analysed gender pay gap
data as at 31 July 2024. We can use
these results to assess the levels of
gender equality in our workplace and
the balance of male and female
employees at different levels.
At the snapshot date of 31 July 2024,
Nanoco employed 47 employees (2023:
43) in the UK, of whom 21% were female
(2023: 26%). Employees work across a
variety of roles in research and
production environments.
Overall, female representation across
the quartile pay bands corresponds fairly
closely to the percentage of female to
male employees overall.
The median gender pay gap for all
Nanoco employees excluding Directors is
-24% (2023: 0%). This means that for every
£1.00 the median man earns at Nanoco,
the median woman earns £1.24. The
national average pay gap in 2024 for all
UK employees is 7.7%  in favour of men
compared to Nanoco’s, which is in favour
of women. In research and development,
the national average gender pay gap is
13.0% in favour of men, again compared
to Nanoco’s parity.
1 Source – Gender pay gap in the UK: 2023
– Office for National Statistics.
Gender diversity at Nanoco (at 31 July 2024)
All
employees
2%
21%
77%
Board of
Directors
13%
88% 67%
Senior
team
33%
Key
Female
Male
Non-binary
Female
Male
Key
36%
27%
18%
18%
64%
73%
82%
82%
Upper quartile
Lower middle quartile
Lower quartile
Upper middle quartile
Proportion of males and females
in each income quartile
Gender pay gap
Mean hourly
earnings
Median hourly
earnings
£23.82
Total
1
£22.66
Male
1
£27.32
Female
1
£22.66
Total
1
£19.78
Male
1
£24.47
Female
1
1 Excluding Directors.
Nanoco Group plc – Annual Report and Accounts 2024
045
Investing in people continued
Employee engagement continued
Communication channels at Nanoco
include all-company meetings, leadership
meetings and senior team meetings,
where managers are expected to
cascade the information to their teams.
Communication media used includes the
group intranet, all-group email briefings
and online meeting software. Our line
managers hold regular team meetings,
cross-functional working group meetings
and management one-to-one updates
with their team members.
In 2019, we established the Employee
Voice Committee, which gives employee
representatives a forum to raise concerns
and communicate directly with Board
members. During the year, the EVC has
organised a number of work-based
events, such as Cryptex challenge team
building, a scavenger hunt at Chester
Zoo, a group bake off and a picnic in
the park.
A meaningful employee voice will support
us as an organisation undergoing
change and responding to industry
changes. A direct link with the Board also
enables our Board members to better
understand the diverse nature of the
group, allowing them to execute their
roles more effectively.
The effectiveness of our employee
engagement was highlighted when
Nanoco was included in the Sunday
Times Best Places to Work list for 2024.
This was a great achievement and
highlights the positive relationship
between the group and its employees.
What next: Nanoco will maintain its
overall position as one of the best
places
to work and ahead of the industry
average.
The ambition is to continuously
improve employee engagement by
working with staff and addressing
feedback positively. This will be
measured using the employee survey.
Employees with disabilities
It is Nanoco’s policy that people with
disabilities, including job applicants and
employees, should be able to participate
in all of Nanoco’s activities fully on an
equal basis with people who are not
disabled. Nanoco strives to promote an
environment free from discrimination,
harassment and victimisation.
Nanoco has a disability inclusion policy
that states that Nanoco will not, on the
grounds of a person’s disability, or for a
reason relating to a person’s disability,
treat that person less favourably than it
treats, or would treat, others to whom
the same reason does not or would not
apply, unless genuinely justified.
At the point of appointment, Nanoco
obtains occupational health advice as
to reasonable adjustments. For disabled
employees we put together a “Reasonable
Adjustment Action Plan” to support
employees with disabilities or health
conditions by removing or minimising
workplace barriers. These plans are
reviewed collaboratively between
managers and employees to ensure
that they remain relevant. Culturally,
we believe that it is important to offer
adjustments in a proactive manner
where appropriate rather than waiting
for our employees to request these.
Nanoco currently employs one person
with a disability with a series of
reasonable adjustments in place to
support this important member of staff.
62%
Employee survey response
rate (May 2024)
82%
Average engagement
score
11%
Above "tech industry"
average
-6
↑
Excellent!
Percentage point difference in average score between majority and minority groups
250,000 have taken the "Workplace Happiness Survey" in 26 industries
(powered by WorkL Sunday Times) 70,000 organisations have participated
Employee survey data highlights
-100 -50 -20 20 50 100
Majority Minority
Strategic report
Nanoco Group plc – Annual Report and Accounts 2024
046
Sustainability continued
Investing in people continued
Talent attraction, retention
and development
Technology businesses and those that
require specialist skills face competition
and challenges in recruiting qualified
employees, and compensation for such
employees is a significant cost
component for the industry.
Why it’s important: An inability to
attract and retain talent can hinder the
group’s competitive advantage and
long-term growth.
Where we are: Recruiting technical
specialists has always been key to
Nanoco’s success. In a highly competitive
market, this means that we strive to offer
a competitive benefits package and an
attractive workplace culture to ensure
that we attract and retain the best of
the
best. The number of long-serving
employees
demonstrates Nanoco’s
ability to retain top talent; out of
44 employees at 31 July 2024
(excluding Directors), 20% had over
ten years’ length of service and a
further 25% had between five and
ten years’ service.
Nanoco is committed to diversity, equity
and inclusion in all aspects of its business
in order to access the best talent and
allow all employees to perform at the
best of their abilities. See page 44
to read about the importance of the
issue to the business and what we are
doing to make continuous progress.
During the year, Nanoco is proud to
have become a Living Wage Employer,
ensuring that all our employees earn
a wage which is enough to live on.
In November 2023, Nanoco introduced
a health insurance scheme open to all
employees to enhance the ongoing
wellbeing of our staff.
Nanoco, as part of its wellbeing strategy,
puts particular focus on mental health.
It does so through a variety of means
including events such as Mental Health
Awareness Week, mindfulness sessions
and charity events to raise awareness of
the support available to those that suffer
from mental health issues. We encourage
an open door policy where employees
are able to disclose and receive support
for any mental health issues they may
face. Nanoco also has two employees
who are trained in mental health first aid.
The employee assistance programme,
as part of the wellbeing policy, provides
caring and compassionate support to
help people cope and build resilience.
Both telephone counselling and
face-to-face counselling are available
to all employees through the programme.
This support aims to reduce absence
and improve wellbeing by addressing
issues head on and reducing their impact.
What next: Nanoco is committed
to maintaining its accreditation as a
Living Wage Employer and rewarding
all its employees on a competitive basis.
The group is also committed to the
continual development of its employees
and as such has a target of funding
25% of its employees to undertake
developmental training above and
beyond what is required for the
conduct of their existing roles.
Employees undertaking
developmental training
56%
Diversity at Nanoco
The group’s employees are from many
different backgrounds, including five
different nationalities: British, German,
Indian, Italian and Hungarian.
In addition, group employees come
from a range of business backgrounds,
not purely research and development.
Indeed, of the Board members,
previous roles and responsibilities
include those in the supply of chemicals
and the engineering, electronics, life
sciences and fast-moving consumer
goods industries.
Nanoco will appoint, train, develop,
reward and promote on the basis of
merit and ability. Nanoco’s equal
opportunities policy states that
employees will not receive less
favourable treatment or consideration
on the grounds of age; disability;
gender or gender reassignment;
marriage and civil partnership status;
pregnancy and maternity; race;
religion or belief; sex; sexual orientation;
or part-time status, nor will they be
disadvantaged by any conditions of
employment that cannot be justified
as necessary on operational grounds
relevant to the performance of the job.
The group’s equal opportunities policy
is reviewed annually and is available
to employees on the group intranet.
A copy can be obtained upon request
from the Company Secretary.
Nationalities represented
by our employees
5
Employee
length
of service
20%
55%
25%
0-4 years
5-10 years
>10 years
Key
Nanoco Group plc – Annual Report and Accounts 2024
047
Nanoco believes that investing in people goes beyond its direct
employees and is therefore proud to announce that Nanoco has
now partnered with Emmaus Merseyside as its affiliate charity.
We will be working with them over the coming months to
help raise awareness of the struggles of homelessness within
our local community and they will be our primary fundraiser
for the upcoming Three Peaks Challenge in October 2024.
They have many volunteering opportunities at their
superstore over in Seaforth as well as their community
garden and home base.
They are completely self-sufficient thanks to their thriving
superstore and all money generated from their social
enterprise is re-invested to support formerly homeless people
living within their community. There are 28 companions who
are currently housed by Emmaus Merseyside who help out
within their community building, garden, superstore or out on
their delivery vans.
Innovation protection
IP protection
While intellectual property ("IP") protection
is inherent to the business model of
entities in the semiconductor industry,
entities’ IP practices can be a contentious
societal issue.
Why it’s important: IP protection, on
the one hand, is an important driver of
innovation; on the other hand, some
entities may also acquire and enforce
patents and other IP protection in efforts
to restrict competition, particularly if they
are dominant market players.
Where we are: All employees at Nanoco
receive training on the importance and
correct approach to all types of intellectual
property to ensure its proper use and
protection. During FY24, the group ran IP
refresher training for all staff to promote
good practice. Regular meetings are
held between the IP team and the R&D
teams to ensure all potential IP is identified,
assessed and documented in line with
the correct procedures.
What next: Following the creation of the
device fab and new analytical testing
lab, Nanoco is bringing a number of
processes and analysis in house that
was previously outsourced. This will build
on our internal know-how and skills and
allow the development of new internally
generated IP which can then be protected.
Further work will be conducted to ensure
all IP is protected at the appropriate level
according to its nature and value to
the business.
Privacy and data security
The protection and security of both
personal information and confidential
or proprietary information that aren’t
covered by patents.
Why it’s important: Establishing strong
frameworks is vital to prevent mishandling
of this information, considering the
significant fines for GDPR violations and
the potential repercussions of divulging
group secrets.
Where we are: Nanoco aims to demonstrate
and promote high standards of honest
and ethical conduct throughout the
group. Formal policies and procedures
are reviewed annually and the policies
listed below are available on the group
intranet or upon request from the
Company Secretary. All group employees
are required to adhere to specified codes
of conduct, policies and procedures,
including, but not limited to, the:
| anti-bribery and corruption policy;
| whistleblowing policy; and
| equal opportunities policy.
All Nanoco employees are required to
complete annual training in the areas
of cyber security, GDPR and information
security to ensure they remain up to
date and alert to the signs of fraud and
unethical practices. IT security metrics
are monitored on a monthly basis.
What next: Nanoco will maintain its data
security via ongoing regular training of
employees and monitoring of performance.
The IT systems will be managed on the
basis of continual improvement to ensure
the group remains secure against
evolving threats.
Summary
Nanoco is developing its strategic
approach to ESG and is committed
to continued progress.
On behalf of the Board
Dr Christopher Richards
Chairman
21 November 2024
Strategic report
Nanoco Group plc – Annual Report and Accounts 2024
048
TCFD disclosure 2024
As a company listed on the main market
of the London Stock Exchange
, Nanoco
is obliged to make climate-related
financial disclosures consistent with the
TCFD framework in line with UK Listing
Rule 6.6.6R(8). Despite being a small
organisation with only 47 employees
at year end (excluding Non-Executive
Directors) and turnover of c.£7.9 million,
the business has made progress towards
meeting its TCFD obligations, although
more work is required for the group to
be fully aligned with the TCFD
recommendations at this time.
Governance
The Board takes responsibility for the
oversight of all strategic risks facing
the business. ESG issues, including the
risks associated with climate change,
currently fall within the remit of the ESG
steering committee. The ESG steering
committee is a cross-functional group
with representation at Board level from
the CFO. The CFO ultimately takes
responsibility for reporting any relevant
environmental or climate-related risks
to the Board and its Committees and
keeps the Board abreast of developments
in reporting and performance requirements.
ESG matters are currently discussed ad
hoc but will be included as a standing
item on the Board agenda and reported
to the Board every six months going forward.
Board members have relevant capabilities
related to climate risks and opportunities,
including significant experience navigating
energy markets. The Board acknowledges
it can improve upon its broader ESG skill
set and knowledge base, which will be
considered by the Nominations Committee
as part of any future appointments.
Training is also occurring at Board level
on ESG matters to improve the existing
skill set. Read more about the Board’s
roles and responsibilities on pages 38
to 49.
The leadership team is responsible for
the day-to-day management of operational
risks. To support oversight of operational
risks, the leadership team maintains a risk
register of identifiable risks to the business.
Within this register, the potential impact
of climate change is currently highlighted
as a macroeconomic risk factor. However,
no specific significant risks were identified
relating to climate-related factors. If any
risks are identified in the future, these will
be added to the risk register. Read more
about our approach to governing and
managing risks on page 33.
Strategy
Nanoco has developed a new ESG strategy
during FY24 which incorporates the
climate-related risks and opportunities
for the group; see pages 38 to 47. As the
strategy is new and is in the process of
being fully implemented, the group has
not yet conducted a review of the
resilience of its strategy, taking into
consideration different climate-related
scenarios, including a 2°C or lower
scenario, and is therefore not yet
compliant with this disclosure of the
TCFD requirements.
Risk management
Climate-related risks are reviewed under
the environmental management system
which has been accredited in the year as
compliant with ISO 14001. Under the EMS,
all environmental aspects and impacts
of the group were reviewed, risks and
opportunities associated with those
aspects were identified and objectives
were implemented to manage those
risks. Environmental risks are reviewed
on a regular basis by the ESG steering
committee, including reviews of new or
changing legislation and changes within
the business, its markets or supply chains.
As part of the group risk management
process, all potential risks are assessed
according to the probability of the risk
occurring and the potential impact should
the risk be realised. These include risks
related to current and emerging regulations.
Nanoco incorporated potential ESG risks
to the register, which included a robust
assessment of the group’s exposure to
climate-related risks. Read more about
the group’s approach to risk management
on page 33.
Metrics and targets
Nanoco monitors and reports environmental
performance indicators including waste
and energy efficiency metrics. The group’s
greenhouse gas emissions, including its
scope 3 emissions related to business
travel, can be viewed on page 42.
Nanoco Group plc – Annual Report and Accounts 2024
049
4 TCFD pillars 11 TCFD recommended disclosures Description and reference
Governance
| Describe the Board’s oversight of climate-related risks
and opportunities.
Key risks and responsibilities –
page 48, Corporate governance
– page 52. Summarised left
C
| Describe management’s role in assessing and managing
climate-related risks and opportunities.
Key risks and responsibilities –
Summarised left
C
Strategy | Describe the climate-related risks and opportunities the
organisation has identified over the short, medium, and
long term.
Sustainability report above C
| Describe the impact of climate-related risks and opportunities
on the organisation’s business, strategy and financial planning.
Sustainability report above C
| Describe the resilience of the organisation’s strategy, taking into
consideration different climate-related scenarios, including a
2°C or lower scenario.
To be further developed in 2025
Risk
management
| Describe the organisation’s processes for identifying and
assessing climate-related risks.
Key risks and responsibilities –
Summarised left
C
| Describe the organisation’s processes for managing
climate-related risks.
Key risks and responsibilities –
Summarised left
C
| Describe how processes for identifying, assessing and
managing climate-related risks are integrated into the
organisation’s overall risk management.
Key risks and responsibilities –
Summarised left
C
Metrics and
targets
| Disclose the metrics used by the organisation to assess
climate-related risks and opportunities in line with its strategy
and risk management process.
Sustainability report above C
| Disclose scope 1, scope 2 and, if appropriate, scope 3
greenhouse gas ("GHG") emissions and the related risks.
Sustainability report above C
| Describe the targets used by the organisation to manage
climate-related risks and opportunities and performance
against targets.
Sustainability report above C
C
Compliant with TCFD recommendation
Strategic report approval
The Strategic report on pages 5 to 49 incorporates:
| Chairman’s statement
| Operational review
| Our business model
| Our strategy
| Our key performance indicators
Dr Christopher Richards
Chairman
21 November 2024
| Principal risks and uncertainties
| Viability statement
| Sustainability report
| TCFD disclosure
Nanoco Group plc – Annual Report and Accounts 2024
050
Corporate governance
We have strengthened our Board
of Directors during the year and post
year end, with appointments of Directors
with key industry knowledge
Board of Directors
Chris was appointed Chairman of
Nanoco Group plc in May 2016, having
joined the Board as a Non-Executive
Director in November 2015.
Skills and experience
Chris is the former Chief Executive
Officer of Arysta LifeScience, a
Japan-based agrochemical business
which grew rapidly under his leadership
,
with sales growing above $1.6 billion.
After stepping
down as CEO in 2010,
he became Arysta LifeScience’s
Non-Executive Chairman until the
sale of the business in 2015 to
Platform Specialty Products.
After gaining his DPhil from the
University of Oxford in Biological
Science, Chris worked as a research
scientist for four years. He began his
executive career in 1983 in the Plant
Protection division at Imperial
Chemical Industries plc, which later
became Syngenta. For 20 years,
he has lived in various countries
including Colombia and Japan
and led international marketing
and commercial functions.
Other roles
Chris currently holds a number
of non-executive roles at quoted
and private businesses. He is the
Non-Executive Chairman of Plant
Health Care plc (AIM: PHC) and a
Non-Executive Director of Origin
Enterprises plc (AIM: OGN).
Liam was appointed to the Board in
November 2021. He originally joined
the group as Group Financial
Controller in March 2019, before
becoming Finance Director and
then subsequently joining the Board.
Skills and experience
Liam started his career at KPMG LLP,
where he qualified as a Chartered
Accountant working primarily in
audit on both large and medium-sized
public and private companies.
After six years at KPMG LLP, he
moved to Renold plc (LSE: RNO),
initially as Group Financial Controller
before moving into the European
division as Commercial Finance
Manager. He holds an Accountancy
degree from the University of Liverpool.
Other roles
None.
Dmitry was appointed Chief
Executive
Officer in October 2024.
Skills and experience
Dmitry has over 20 years of
experience managing businesses in
the electronics and biomedical
fields, with technical expertise in
metals and other advanced
materials as well as significant
exposure to semiconductors, flat
panel displays (“FPD”), photovoltaic
(“PV”), light emitting diode (“LED”),
and medical device industries.
Most recently, Dmitry was the CEO
of the CPS Group of companies
(later part of Exyte) from 2020 to
2024, which was focused on
high-tech equipment for
semiconductors and life science
facilities. Under his leadership, the
revenues of the business tripled and
the profitability increased four-fold,
before it was successfully sold to a
strategic investor.
Dmitry started his career with
management consultancy McKinsey
and Company, where he advised
clients in the pharmaceutical,
chemical and telecommunications
industries.
Dmitry holds a PhD in Materials
Science and Engineering from
Northwestern University and a BS/
MSE degree in Physics of Metals from
the Moscow Institute of Steel and Alloys.
Other roles
Dmitry is a board member of
QuesTek Innovations LLC.
Nanoco’s technology team is led by
Nigel, who is a Co-Founder of
Nanoco and inventor of Nanoco’s key
quantum dot scale up technology. In
2000, he moved to Manchester
where he co-founded Nanoco
Technologies in 2001.
Skills and experience
Nigel has co-authored over 70
academic papers and is an inventor
on 150 patents and pending
applications. He has a passion for,
and experience in, taking research
work from the academic bench
through to full commercialisation.
Nigel graduated from Newcastle
University in 1991 and chose to
remain at Newcastle to pursue
a PhD in the field of main group
organometallics.
After graduation in 1994, he
undertook a postdoctoral fellowship
at St Andrews University, Scotland, in
the field of precursor design for
metalorganic vapour phase epitaxy
(“MOVPE”) growth and synthesis of
nanoparticles using chemical vapour
deposition (“CVD”) techniques. In
1996, he won a Japan Society for the
Promotion of Science (“JSPS”)
fellowship and spent the following
year working at Tokyo University of
Agriculture and
Technology, Japan. In
1998, he becam
e a Research Fellow
at Georgia Institute of Technology,
US, working on the design and
evaluation of precursors used in
MOVPE.
Other roles
None.
Dr Christopher Richards
Non-Executive Chairman
N
R
Liam Gray
Chief Financial Officer and
Company Secretary
Dmitry Shashkov
Chief Executive Officer
Dr Nigel Pickett
Chief Technology Officer
Nanoco Group plc – Annual Report and Accounts 2024
051
A
Audit Committee
N
Nominations Committee
R
Remuneration Committee
Chair
Key
Alison was appointed to the Board
in April 2017.
Skills and experience
Alison is an experienced entrepreneur
and Non-Executive Director, with
significant expertise in strategy
development and implementation
for start-ups, AIM/Main Market-listed
and not-for-profit organisations. Her
early career included Zeneca plc
and McKinsey & Company. She
co-founded Techtran Group, which
was acquired by IP Group in 2005.
Alison spent 13 years with IP Group
plc as Chief Technology Officer,
Chief Operating Officer and latterly
Director of Strategy and IP Impact.
Alison holds an MBA from Manchester
Business School, a PhD in Organic
Chemistry and a first-class degree
in Chemistry from the University of
Glasgow and an MSc in Mindfulness
from the University of Aberdeen.
Other roles
Alison is currently a Non-Executive
Director of Maven Income and
Growth VCT PLC and a Non-Executive
Director of Thomas Swan & Co. Limited.
Chris was appointed to the Board
in April 2019.
Skills and experience
Chris has considerable financial and
operational experience and became
the Finance Director of Unipalm
Group plc, from 1996 to 2001. He
then went on to become CFO of
Searchspace Group Limited from
2001 until 2005. Chris then went on
to hold a number of non-executive
roles across a range of companies
with a technology focus in many cases.
Chris holds a Natural Sciences
degree from Cambridge University.
He then qualified as a Chartered
Accountant with Arthur Andersen
LLP in 1979 where he spent his
early career.
Other roles
Chris is currently Chairman of Racing
Digital Ltd and Send Technology Ltd,
both of which are private companies.
Dieter was appointed to the Board
in February 2024.
Skills and experience
Dieter was Chairman and CEO
of Osram Opto Semiconductors
GmbH, one of the world’s leading
optoelectronic components
companies, participating in
electronics applications such as
facial and iris recognition, health
monitoring, vehicle navigation and
virtual and augmented reality as
well as uLED displays. As CEO,
Dieter developed relationships with
leading companies throughout the
sector. His earlier career spanned
Senior Vice President positions in
semiconductor technologies
(Infineon), and connected devices
and digital consumer services in
both mobile consumer products
(Nokia) and automotive (BMW).
Other roles
Dieter is currently a Non-Executive
Director of Nordic Semiconductor ASA.
Jalal was appointed to the Board in
April 2024.
Skills and experience
Jalal is Co-Chair of the UK
Semiconductor Advisory Panel,
representing the views of the UK
semiconductor industry. He was the
CEO of Dialog Semiconductor plc
(“Dialog”) from 2005 until the
successful sale of the company
to Japan’s Renasas in 2021. Under
Jalal’s leadership, Dialog became
a world leader in mobile power
management and connectivity
products, selling to most of the
major companies in the consumer
electronics and mobile phone
sector. His earlier career included
roles as CEO of Alphamosaic and
before that at Sony Semiconductor
and Devices Europe as Vice President
and Managing Director.
Other roles
Jalal is currently a Director of a
number of private businesses.
Dr Alison Fielding
Non-Executive Senior
Independent Director
A
N
R
Chris Batterham
Non-Executive
Director
A
N
R
Dieter May
Non-Executive
Director
N
R
Jalal Bagherli
Non-Executive
Director
A
N
R
Corporate governance
Nanoco Group plc – Annual Report and Accounts 2024
052
Corporate governance statement
The group strives for best
practice to ensure it can be
flexible and responsive to
business change and
additional challenges
that arise
I am pleased to present the Corporate
governance report for the year ended
31 July 2024. This section of the Annual
Report describes our corporate governance
structures and processes and their
application throughout the year ended
31 July 2024.
The Board’s view on
corporate governance
The UK Corporate Governance Code
embodies core principles of accountability,
transparency, probity and a focus on
long-term success. The Board firmly
believes that a company governed in
accordance with these principles is
more likely to be successful and that
this is all the more important in times
of significant uncertainty.
The Board and its Committees play a
central role in the group’s governance by
providing an external and independent
perspective on matters material to Nanoco’s
stakeholders, and by seeking to ensure
that effective internal controls and risk
management processes are in place.
The Board also promotes a culture of
good governance throughout the group
by creating an environment of openness,
transparency and accountability.
The members of the Board bring a wide
range of skills and experience to the
group as set out on pages 50 and 51.
The diverse skill set allows the Board to
appropriately challenge and lead the
group’s strategy.
Board focus during the year
Agreeing strategic priorities with
the Executive Directors
The Board has devoted considerable
time to strategic discussion in the current
year. The group continues to expand its
commercial offering beyond cadmium-
free quantum dots (“CFQD
®
”) into a range
of dot-based nanomaterials for sensing.
Our customers continue to invest in these
areas with Nanoco, and have reported
pleasing results, with Nanoco’s materials
being described as “world class”. The
group continues to invest in
improvements in existing products and
expansion into other materials.
Board succession
Dmitry Shashkov was appointed on 22
October 2024 as CEO, replacing Brian
Tenner, who had previously announced
his intention to stand down.
The Board also announced during the
year that it had appointed two new
Non-Executive Directors.
In addition, Dr Christopher Richards, given
he has nearly completed nine years as a
Non-Executive Director, will not be
standing for re-election at the next AGM
and resolutions will be proposed for Dr
Jalal Bagherli to become Chairman.
Strong corporate governance
The Board is committed to ensuring that
a strong governance framework operates
throughout the group, recognising that
good corporate governance is a vital
component to support management in
its delivery of our strategic objectives
and to operate a sustainable business
for the benefit of all stakeholders.
Monitor performance
The Board reviews performance of the
business on a monthly basis through
formal communications from the Executive
Directors. The Board provides oversight
and challenges to the Executive Directors
to ensure robust decisions are made.
Learn and improve
The Board is committed to continual
development. During the year, updates
on corporate governance and legal
developments were provided by corporate
lawyers. The Board intends to carry out
further training on accounting
developments and ESG issues.
Overall management of risk and change
within the group
The rapidly evolving challenges brought
about by Brexit, the Ukraine crisis and the
cost of living crisis, against a background
of other macroeconomic factors, have
required active real-time engagement
between all members of the Board.
These focus areas were in addition to
the normal ongoing responsibilities for
approving the annual operating and
capital expenditure budgets and any
material changes to them.
Dr Christopher Richards
Chairman
Nanoco Group plc – Annual Report and Accounts 2024
053
Male
Female
1
7
Gender
2
6
White
Ethnic minority
Ethnicity
A typical Board agenda
Each full Board meeting is structured
around a standard agenda of standing
items that then includes a number of
additional specific focus items for that
month’s meeting. These focus items are
either recurring items (such as risk
management) or are in response to
emerging issues in our markets,
regulation or the business itself. An
example of an agenda taken from the
July 2024 meeting is shown below:
| minutes and matters arising from
previous meetings (standing item);
| CEO report on business performance
(standing item);
| CEO report on progress and customer
deliverables (standing item);
| CFO report on financial performance
and rolling forecasts (standing item);
| CTO report on technical and IP
matters (standing item);
| Company Secretary report on
governance issues and any material
litigation (standing item);
| reports from Committee Chairs (Audit,
Nominations, Remuneration and EHS)
(standing item); and
| any other business (standing item).
Certain key senior management members
are invited to give presentations at Board
and Committee meetings where appropriate.
Other areas, including the review of the
group risk register, the strategic plan, the
annual budget, contentious matters and
succession planning, etc. are reviewed by
the Board during each year at intervals
commensurate with their importance.
Executives
Non-Executives
5
3
Board
composition
0-5
5-10
>10
2
5
1
Tenure
(years)
Attendance Board
Audit
Committee
Nominations
Committee
Remuneration
Committee
Number of meetings 10 5 3 4
Executive Directors
Brian Tenner
1 1
1
Dr Nigel Pickett — —
Liam Gray
1
—
Non-Executive Directors
Dr Christopher Richards
Dr Alison Fielding
Chris Batterham
Dieter May
2
—
Dr Jalal Bagherli
3
The Non-Executive Directors met five times during the year
without any Executive Directors present.
1 Executive Directors attended these meetings by invitation and are not
members of these Committees.
2 Dieter May was appointed to the Board on 1 February 2024.
3 Jalal Bagherli was appointed to the Board on 5 April 2024.
Corporate governance
Nanoco Group plc – Annual Report and Accounts 2024
054
Corporate governance statement continued
My role as Chairman
The structure of the Board, its Committees
and their respective responsibilities are
summarised on pages 55 and 56. My key
focus is to ensure that Nanoco has an
effective Board which is collectively
responsible for the long-term success
of the group. One of my most important
jobs is to ensure that the Board and its
Committees have the right balance of
skills, experience and knowledge suitable
for Nanoco’s evolving strategy and
growth aspirations as we progress
through a new phase of our development.
Board and Committee evaluation
Regular and appropriate Board and
Committee evaluation is vital to improving
Board effectiveness. This year, given the
changes to Board personnel which have
been communicated, it was felt that an
evaluation would be best conducted
once all recruitment had been completed.
Therefore, Board and Committee evaluations
have been postponed until FY25.
Shareholder engagement activities
Engagement with shareholders remains
an important activity for the Board.
The group maintained its more formal
calendar of engagement with shareholders
and potential investors.
Longer-term viability statement
The Board utilised the forecast for the
next four years to assess the group’s
long-term viability. This reflects the
strong financial underpinning of the
group. Further details are provided on
pages 36 and 37.
Statement of compliance
with the Code
I am pleased to confirm that the
Company adopts the 2018 UK Corporate
Governance Code (the “Code”), and
Board confirms, throughout the year
ended 31 July 2024, the Company has
applied the principles and complied with
the provisions of the Code, except
Provisions 21 and 22 on Board evaluation
as discussed above.
Dr Christopher Richards
Chairman
21 November 2024
A typical Board agenda continued
Number
of Board
members
Percentage
of the Board
Number
of senior
positions on
the Board
Number
in executive
management
Percentage
of executive
management
Men 7 88% 6 3 100%
Women 1 12% 1 0 0%
Number
of Board
members
Percentage
of the Board
Number
of senior
positions on
the Board
Number
in executive
management
Percentage
of executive
management
White European 6 75% 6 2 67%
Other ethnic group 2 25% 2 1 33%
The data in this table is sourced directly from the individuals concerned and based on their self-identification.
Nanoco Group plc – Annual Report and Accounts 2024
055
Leadership team
The leadership team currently represents the group’s most senior business and operational Executives. It is responsible
for assisting the Chief Executive in the performance of his duties including:
| developing the annual operating plan;
| monitoring the performance of the different divisions
of the group against the plan;
| carrying out a formal risk review process;
| reviewing the group’s policies and procedures;
| prioritisation and allocation of resources; and
| overseeing the day-to-day running of the Company.
Remuneration
Committee
Responsible for determining
the overall remuneration of the
Executive Directors and the
remuneration of senior
managers within the broader
institutional context of
remuneration practice.
Nominations
Committee
Responsible for considering the
Board’s structure, size, composition
and succession planning.
Audit
Committee
Primary function is to assist the
Board in fulfilling its financial and risk
responsibilities. It also reviews
financial reporting and the internal
controls in place and the
external audit process.
Chief Executive
Has responsibility for managing the business and overseeing the implementation
of the strategy agreed by the Board.
Board Committees
Support the Board in its work with specific areas of review and oversight objectives
and risk management. They ensure the right group structure is in place to deliver
long-term value to shareholders and other stakeholders.
Board
The Board provides leadership
and is responsible for the overall
management of Nanoco, its strategy,
governance, long-term objectives
and risk management.
It ensures the right group structure
is in place to deliver long-term
value to shareholders and
other stakeholders.
Governance framework
The different parts of the group’s
governance framework are shown below,
with a description of how they operate
and the linkages between them.
Corporate governance
Nanoco Group plc – Annual Report and Accounts 2024
056
Board composition and division of responsibilities
Role profiles are in place for the Chairman, Chief Executive Officer and other Directors, which clearly set out the duties of each role.
Role Responsibilities
Chairman of the Board
(Dr Christopher Richards)
Is responsible for the running of the Board and promoting a culture of openness and debate.
The Chairman, in conjunction with the CEO and other Board members, plans the agendas,
which are issued with the supporting Board papers in advance of the Board meetings. These
supporting papers provide appropriate information to enable the Board to discharge its duties
which include monitoring, assessing and challenging the executive management of the group.
Chief Executive Officer
(Brian Tenner)
Together with the senior management team, is responsible for the day-to-day running of the
group and regularly provides performance reports to the Board. The role of CEO is separate
from that of the Chairman to ensure that no one individual has unfettered powers of decision
making. The CEO works directly through the leadership team (CTO, CFO and Operations Director).
Chief Financial Officer
(Liam Gray)
Works closely with the CEO and CTO to support them in the delivery of their roles. Key objectives
are to ensure the smooth running of many of the back office functions. Includes responsibility
for all financial matters including costings and plant efficiencies as well as commercial margins.
Chief Technical Officer
(Dr Nigel Pickett)
Responsible for all research and development activities of the group. Includes stewardship of
the group’s IP portfolio, new additions and maintenance. Takes leadership position on critical
new research areas.
Senior Independent Director
(Dr Alison Fielding)
Provides a sounding board for the Chairman and serves as an intermediary for other Directors,
employees and shareholders when necessary. The main responsibility is to be available to the
shareholders should they have concerns that they have been unable to resolve through normal
channels or when such channels would be inappropriate.
Other Non-Executive Directors
(Chris Batterham, Dieter May,
Dr Jalal Bagherli)
Maintain an ongoing dialogue with the Executive Directors which includes constructive
challenge of performance and the group’s strategy.
Company Secretary
(Liam Gray)
Ensures good information flows within the Board and its Committees and between senior
management and Non-Executive Directors. The Company Secretary is responsible for
facilitating the induction of new Directors and assisting with their professional development
as required. All Directors have access to the advice and services of the Company Secretary
to enable them to discharge their duties as Directors. The Company Secretary is responsible
for ensuring that Board procedures are complied with and for advising the Board through the
Chairman on governance matters. The appointment and removal of the Company Secretary
is a matter for the Board as a whole.
Experience of the Board
The members of the Board bring a wide range of skills and experience to the group. This diverse skill set allows the Board to
appropriately challenge and lead the group’s strategy.
The chart below summarises its key areas of significant experience.
Name
Strategy
development Chemical
Human
resources
Corporate
governance
Financial
management M&A ESG
Dr Christopher Richards
— —
Dr Nigel Pickett
— — — — —
Brian Tenner
—
Liam Gray
— —
Dr Alison Fielding
—
Chris Batterham
— — —
Dieter May
— — — —
Dr Jalal Bagherli
— —
Dr Christopher Richards
Chairman
21 November 2024
Corporate governance statement continued
Nanoco Group plc – Annual Report and Accounts 2024
057
Compliance with the UK Corporate Governance Code 2018
The below provides a guide to the most relevant explanations for how the Company has complied with each principle.
Board leadership and Company purpose
Page reference
A. An effective and entrepreneurial Board promotes the long-term sustainable success of the
Company, generating value for shareholders and contributing to wider society.
38-56
B. Purpose, values and strategy are set and align with culture, which is promoted by the Board. 50-56
C. Resources allow the Company to meet its objectives and measure performance. A framework
of controls enables assessment and management of risk.
28-37
D. Engagement with shareholders and stakeholders is effective and encourages their participation. 21-23 and 38-56
E. Oversight of workforce policies and practices ensures consistency with values and supports
long-term sustainable success. The workforce is able to raise matters of concern.
38-56
Division of responsibilities
Page reference
F. The Chair is objective and leads an effective Board with constructive relations. 50-61
G. The Board comprises an appropriate combination of Non-Executive and Executive Directors,
with a clear division of responsibilities.
50-54
H. Non-Executive Directors commit appropriate time in line with their role. 50-88
I. The Company Secretary and the correct policies, processes, information, time and resources
support Board functioning.
50-61
Composition, succession and evaluation
Page reference
J. There is a procedure for Board appointments and succession plans for Board and senior
management which recognise merit and promote diversity.
62-64
K. There is a combination of skills, experience and knowledge across the Board and its
Committees. Tenure and membership are regularly considered.
50-54
L. Annual evaluation of the Board and Directors considers overall composition, diversity,
effectiveness and contribution.
54
Audit, risk and internal control
Page reference
M. Policies and procedures ensure the independence and effectiveness of internal and external
audit functions. The Board satisfies itself of the integrity of financial and narrative statements.
65-69
N. A fair, balanced and understandable assessment of the Company’s position and prospects
is presented.
5-37
O. Procedures manage and oversee risk, the internal control framework and the extent of
principal risks the Company is willing to take to achieve its long-term strategic objectives.
33-35
Remuneration
Page reference
P. Remuneration policies and practices are designed to support strategy and promote long-term
sustainable success, with Executive remuneration aligned to Company purpose, values and
strategic delivery.
70-88
Q. A transparent and formal procedure is used to develop policy and agree Executive and senior
management remuneration.
70-88
R. Independent judgement and discretion are exercised over remuneration outcomes taking
account of the relevant wider context.
70-88
The Code is published by the Financial Reporting Council, a full copy of which can be viewed on its website, www.frc.org.uk.
Corporate governance
Nanoco Group plc – Annual Report and Accounts 2024
058
This section of the Corporate governance
report contains the group’s other reporting
disclosures on corporate governance
required by the Companies Act 2006, the
UK Corporate Governance Code 2018
(the “Code”) and the UKLA’s Disclosure
and Transparency Rule 7 including the
required statement of compliance. A
copy of the Code is publicly available
at www.frc.org.uk.
Disclosure and Transparency Rule 7
This statement complies with sub-sections
2.1, 2.2(i), 2.3(i), 2.5, 2.7 and 2.10 of Rule 7 of
the UK Listing Authority Disclosure Rules.
The information required to be disclosed
by sub-section 2.6 of Rule 7 is shown in
the Statement of Directors’ responsibilities
on page 92 and is incorporated in this
section by reference.
The Board
The group is controlled through its Board
of Directors. The Board’s main responsibilities
and those of its various sub-Committees
are set out on pages 55 and 56.
To enable it to discharge its key
responsibilities as set out above, the
Board receives appropriate and timely
information prior to each meeting.
A formal agenda is set by each Chair
and Committee papers are distributed
several days before meetings take place.
Any Director may challenge group proposals
,
and decisions are taken democratically
after discussion. Any Director who feels
that any concern remains unresolved
after discussion may ask for that concern
to be noted in the minutes of the meeting.
Specific actions arising from meetings
are agreed by the Board and then
appropriately followed up.
The terms of reference of the
Committees are publicly available
at www.nanocotechnologies.com.
The same pages of the Annual Report
show the key officers and the division
of responsibilities and duties between
each role holder.
The Directors
There is a formal, rigorous and transparent
procedure for the appointment of new
Directors to the Board, which is led by
the Nominations Committee.
All Directors are then subject to election
by the shareholders at the next general
meeting following appointment to the
Board. In accordance with best practice,
they are then subject to annual re-election
thereafter. The contracts of all
Directors are
available for inspection by shareholders
at the AGM.
The Chairman has sufficient time to
devote to his duties as Chairman and
this has been demonstrated by his active
participation in the group’s activities.
The Non-Executive Directors constructively
challenge and help develop proposals
on strategy and bring strong, independent
judgement, knowledge and experience
to the Board’s deliberations.
The Directors are given access to
independent professional advice at
the group’s expense when the Directors
deem it is necessary in order for them
to carry out their responsibilities.
The Board composition is partially
compliant with Listing Rules LR 6.6.6R(9)
and LR 14.3.33R(1), namely that at least
one of our senior Board positions is a
woman (Dr Alison Fielding is our Senior
Independent Director) and at least one
member of the Board is from a minority
ethnic background.
We are not currently compliant with the
requirement to have at least 40% female
representation at Board level. The Company
operates a fair, equitable system for
selecting members for the Board taking
into consideration the skills and expertise
needed for the role. There were limited
female candidates with the requisite skills
needed to fill the vacancies in the year.
Nanoco remains committed to diversity
on the Board, and will consider our
commitment to diversity when making
future appointments
The group maintains, for its Directors and
officers, liability insurance for any claims
against them in that capacity.
Donations
During the year the group made no
political or charitable donations.
Independence and conflicts
of interest
The group has effective procedures in
place to deal with potential conflicts of
interest. The Board is aware of the other
commitments of its Directors and changes
to these commitments are reported to
the Board. The Companies Act 2006
requires Directors to avoid situations
where they have, or could have, a direct
or indirect interest that conflicts or
potentially conflicts with the interests
of the group.
Directors are required to declare in
advance of a Board meeting whether
any of the business to be discussed in
that meeting gives rise to a conflict or
potential conflict. That Director will then
be excluded from the relevant discussions
unless agreed otherwise by the Directors
of the group in the limited circumstances
specified in the Articles of Association.
They will not be counted in the quorum or
permitted to vote on any issue in which
they have an interest.
The Board considers its independent
Non-Executive Directors to be independent
in character and judgement. No
Non-Executive Director has been an
employee of the group; has had a material
business relationship with the group;
receives remuneration other than a
Director’s fee; has close family ties with
any of the group’s advisers, Directors or
senior employees; or holds
cross-directorships.
Professional development
On appointment, each Director takes
part in an induction programme in which
they receive comprehensive information
about the group; the role of the Board
and the matters reserved for its decision;
the terms of reference and membership
of the Board and Committees and the
powers delegated to those Committees;
the group’s corporate governance
practices and procedures, including the
powers reserved to the group’s most
senior Executives; and the group’s latest
financial information. Throughout their
period in office, the Directors are updated
on the group’s business, the competitive
environment in which it operates, corporate
social responsibility matters and other
changes affecting the group and the
industry it operates in as a whole.
Corporate governance statement continued
Nanoco Group plc – Annual Report and Accounts 2024
059
The group acknowledges the importance
of developing the skills of the Directors to
run an effective Board. To assist in this,
Directors are given the opportunity to
attend relevant courses and seminars to
acquire additional skills and experience
to enhance their contribution to the
ongoing progress of the group. All of the
Directors are given briefings on trends
and developments in corporate governance.
Performance evaluation
The Board has established a formal
process for the annual evaluation of the
performance of the Directors. This
evaluation is based on a performance
evaluation questionnaire completed by
each Director. The Chairman’s performance
is reviewed annually by the Non-Executive
Directors and led by the Senior Independent
Director, Dr Alison Fielding. The evaluation
of the Chief Executive Officer is performed
by the Chairman and the evaluation of
the other Executive Directors is performed
by the Chief Executive Officer.
Directors’ dealings in the
group’s shares
The group has adopted a model code
for Directors’ dealings in securities of
the group which is appropriate for a
company quoted on the Main Market of
the London Stock Exchange. The Directors
comply with the rules relating to Directors’
dealings and also take all reasonable
steps to ensure compliance by the
group’s “applicable employees”
as defined in the rules. The Directors’
interests in the ordinary share capital
and in options over such shares of the
Company are shown in the Directors’
remuneration report on pages 73 to 88.
Investor communications
Nanoco recognises the importance of
good and timely communication. Its
primary communication channel is the
internet. All press releases are published
on the Company’s website shortly after
they are issued via the regulatory news
service in the United Kingdom. In addition,
a broad range of other relevant information
is available on the group’s website.
The group also endeavours to ensure
that all published information is capable
of being readily understood on a standalone
basis without the need for a one-to-one
meeting. This is an extension of the “fair,
balanced and understandable”
requirement inherent in the Annual
Report and Accounts.
Investor engagement
Meetings with analysts and institutional
shareholders are held following the interim
and final results and on an ad hoc basis.
These are usually attended by the Chief
Executive Officer and Chief Financial
Officer. There are times when other
members of the Board, such as the
Chairman or CTO, also attend these
meetings. Following feedback from
shareholders, the group plans for the
CTO to attend more shareholder meetings
going forward.
Engagement during the year Number
One-to-one meetings 23
Conference calls 5
Investor conferences 4
The group takes care to ensure that
meetings with shareholders or potential
investors are structured around
information that is already available to
all shareholders on an equal footing.
Feedback from these meetings and
regular market updates are prepared
by the group’s broker and are shared
with the Board.
The Chairman and other Non-Executive
Directors are available to shareholders to
discuss strategy and governance issues
at a shareholder’s request, and attend
general meetings to meet shareholders
where possible.
The Chairman and
other Non-Executive
Directors are available
to shareholders to
discuss strategy and
governance issues at
a shareholder’s request.”
Corporate governance
Nanoco Group plc – Annual Report and Accounts 2024
060
Shareholder analysis
Shareholders at 31 July 2024 are analysed as follows:
Territory Shares %
UK 180,782,854 89%
Europe (ex. UK) 5,318,200 3%
North America 13,002,308 6%
Asia 3,435,494 2%
Rest of World 32,641 0%
Total 202,571,497 100%
Type of holder Shares %
Retail investors 160,589,835 79%
Hedge funds 11,480,406 6%
Directors 10,314,015 5%
Corporate 9,569,875 5%
Pension funds 7,382,586 4%
Trading 2,581,771 1%
Other 653,009 0%
Total 202,571,497 100%
Investment style Shares %
Retail 155,957,609 77%
Hybrid 11,679,891 6%
Directors 10,314,015 5%
Hedge funds 6,488,626 3%
Value and growth 5,111,088 3%
Corporate 9,569,875 5%
Trading 2,581,771 1%
GARP 710,422 0%
Pending 148,000 0%
Growth 10,200 0%
Total 202,571,497 100%
89%
11%
UK shares
(%)
79%
21%
Retail
shares
(%)
95%
5%
Directors’
shares
(%)
Corporate governance statement continued
Nanoco Group plc – Annual Report and Accounts 2024
061
Annual General Meeting (“AGM”)
At the AGM, separate resolutions will
be proposed for each substantially
different issue. The outcome of the
voting on AGM resolutions is disclosed
by means of an announcement on the
London Stock Exchange.
All shareholders are encouraged to attend
the AGM and talk to the Directors there.
All Directors, including the Chairs of the
Audit, Remuneration and Nominations
Committees, are available at the meeting
to answer questions.
Shareholders not attending the AGM
can contact the group via email at
info@nanocotechnologies.com.
The table below shows the different
resolutions proposed at the 2023 AGM,
the proportions of possible votes that
were cast and the proportions in
favour of and against each resolution
(resolutions 1 to 11 were passed as
ordinary resolutions and resolutions 12
to 15 were passed as special resolutions).
The Board takes steps to ensure that the
views of major shareholders are considered
through regular contact. As appropriate,
the Board takes due note of their views
insofar as these are relevant to the
group’s overall approach to corporate
governance. This is achieved, as noted
previously, through feedback from
meetings with significant shareholders
and feedback from the group’s brokers.
Votes for Votes against Votes withheld
No. Resolution Votes
% of total
votes cast
% of total
voting rights
2
Votes
% of total
votes cast
% of total
voting rights
2
Votes
% of total
voting rights
2
1 To receive the Annual Report
and Accounts 97,927,988 99.5% 30.2% 453,803 0.5% 0.1% 331,345 0.1%
2 To appoint the auditors 95,764,079 99.1% 29.5% 893,662 0.9% 0.3% 2,055,395 0.6%
3 Authority to agree the auditors’ fee 97,033,029 98.6% 29.9% 1,337,299 1.4% 0.4% 342,808 0.1%
4 To re-elect Dr Christopher Richards 94,253,617 95.8% 29.1% 4,116,832 4.2% 1.3% 342,687 0.1%
5 To re-elect Brian Tenner 96,737,252 98.3% 29.8% 1,633,197 1.7% 0.5% 342,687 0.1%
6 To re-elect Dr Nigel Pickett 97,854,060 99.5% 30.2% 517,804 0.5% 0.2% 341,272 0.1%
7 To re-elect Dr Alison Fielding 97,803,916 99.4% 30.1% 560,948 0.6% 0.2% 348,272 0.1%
8 To re-elect Christopher Batterham 95,234,371 96.8% 29.4% 3,130,493 3.2% 1.0% 348,272 0.1%
9 To re-elect Liam Gray 95,218,406 96.8% 29.4% 3,152,043 3.2% 1.0% 342,687 0.1%
10 Approval of Directors’
remuneration report 94,761,337 96.3% 29.2% 3,663,316 3.7% 1.1% 288,483 0.1%
11 Authority to issue and allot new
ordinary shares 97,635,430 99.2% 30.1% 753,227 0.8% 0.2% 324,479 0.1%
12
1
Disapplication of pre-emption rights 93,300,081 97.4% 28.8% 2,516,415 2.6% 0.8% 2,896,640 0.9%
13
1
Disapplication of pre-emption rights
on acquisition or investment 93,334,933 97.4% 28.8% 2,511,769 2.6% 0.8% 2,866,434 0.9%
14
1
Authority to make purchases of
own shares 97,720,811 99.3% 30.1% 704,731 0.7% 0.2% 287,594 0.1%
15
1
Reduced notice of general meetings 97,777,004 99.4% 30.1% 607,637 0.6% 0.2% 328,495 0.1%
1 Proposed as special resolutions.
2 Excluding treasury shares.
Corporate governance
Nanoco Group plc – Annual Report and Accounts 2024
062
Nominations Committee report
We are pleased to have
bolstered the skills and
experience of the Board
in the past financial year
The Board has a wide variety of skills
and experience that has served us well
in recent years. As mentioned in the prior
year, we were looking to add industry
experience to the Board, and are pleased
to have achieved this with the appointments
of Dieter and Jalal in the financial year.
Following the announcement that Brian
Tenner intended to step down as CEO,
we appointed Dmitry Shashkov on 22
October 2024. Dmitry brings a wealth of
industry experience to the position.
And finally, after nearly nine years with
Nanoco, I will step down from my position
at the upcoming AGM, and it will be
proposed that Dr Jalal Bagherli replace
me as Chairman.
Roles and responsibilities
The Committee is primarily responsible
for assisting the Board in ensuring the
appropriate composition of the Board
and any Committees of the Board to
match Nanoco’s stage of evolution. This
includes considering new appointments
and potential succession plans. The
Committee evaluates the balance of
skills, knowledge and experience and
the size, structure and composition of
the Board and Committees of the Board.
This extends to reviewing appointments
of additional and replacement Directors
and Committee members by making
appropriate recommendations to the
Board on such matters by reference to
the parameters set out below:
Board mix
of skills and
experience
Recruitment
to Board and
Committees
Diverse Board
and employees
Strong
governance
Supporting
value creation
Members
| Dr Christopher Richards (Chair)
| Dr Alison Fielding
| Chris Batterham
| Dieter May
| Dr Jalal Bagherli
Estimated allocation of time in FY24
Performance evaluation
Succession planning
Recruitment
Governance
10%10%
20%
60%
Estimated
allocation of
time in FY24
Dr Christopher Richards
Nominations Committee Chair
Nanoco Group plc – Annual Report and Accounts 2024
063
Governance
The responsibilities of the Committee
were expanded a number of years ago
to include a focus on continuous
improvement in governance. The
Committee’s terms of reference
therefore include:
| reviewing and considering the
Company’s procedures and controls
for ensuring compliance with:
| the UK Corporate Governance Code;
| the FCA Disclosure Guidance and
Transparency Rules, the Market
Abuse Regulation, and any other
applicable rules and regulations
that apply to the group; and
| the timely and accurate disclosure
of all information that is required to
be disclosed in order to satisfy the
Company’s legal and regulatory
obligations under the Corporate
Governance Requirements;
| recommending any proposed
changes in the management of
corporate governance to the Board;
| reporting on such compliance to
the Board;
| reviewing potential conflicts of interest
involving Directors and determining
whether such Director or Directors
may vote on any issue as to which
there may be a conflict; and
| reviewing any related party
transactions, with appropriate input
from advisers, determining whether
such transactions are appropriate
for the Company to undertake and
advising the Board accordingly.
Committee membership
In accordance with the UK Corporate
Governance Code, the Nominations
Committee consists only of Non-Executive
Directors. I have chaired the Committee
since my appointment as a Non-Executive
Director in November 2015 and thereafter
having been made Chairman of the Board
in May 2016. The Board considers it is
appropriate for me to chair the Nominations
Committee in order to achieve a balance
with the Audit and Remuneration
Committees, which are each chaired by
other Non-Executive Directors.
The Committee’s other members are
Dr Alison Fielding, Chris Batterham, Dieter
May and Dr Jalal Bagherli. All members
of the Committee are considered to have
experience and competence relevant
to the duties and responsibilities of
the Committee.
Summary biographies of all members of
the Committee are detailed on pages 50
and 51.
Meeting frequency
and attendance
The terms of reference of the Committee
require at least two meetings per year.
When specific issues or changes need to
be addressed, such as the appointment
of a new Board member, the Committee
meets on additional occasions. The
Committee met three times during the
financial year and was attended as
shown in the table below:
Committee member
Meetings/
attended
Dr Christopher Richards
(Chair) 3/3
Chris Batterham 3/3
Dr Alison Fielding 3/3
Dieter May 1/3
Dr Jalal Bagherli 1/3
As well as the members of the Committee,
the Chief Executive Officer may be invited
to attend, where there are no perceived
conflicts of interest. On matters of
remuneration of new appointees,
the Chair works closely with the
Remuneration Committee.
Meetings of the Nominations Committee
are either scheduled around existing
Board meetings or on an ad hoc basis,
for example during a recruitment process.
The Committee Chair provides the Board
with a full briefing on all relevant matters.
The Chairman would not chair this
Committee should it be considering the
appointment of a new Chairman. The
Senior Independent Director would chair
the Committee in this situation.
Board structure and activities during
the year
We were successful in attracting two
Non-Executive Directors to join Nanoco,
both of whom have long and deep
industry knowledge and experience.
As was announced towards the end of
the year, Brian Tenner, CEO, announced
his intention to resign from Nanoco. On 22
October 2024, Nanoco announced that
it had appointed Dmitry Shashkov as
CEO.
Succession planning
The Chairman will have been with the
Company for nine years in November
2024. In line with good corporate
governance, the decision has been taken
for Dr Christopher Richards to step down
from the Nanoco Board of Directors, and
a resolution will be proposed for Dr Jalal
Bagherli to become Chairman.
Corporate governance
Nanoco Group plc – Annual Report and Accounts 2024
064
Meeting frequency and
attendance continued
Employee engagement
The Employee Voice Committee (“EVC”)
was established in 2020 as an employee
representative body which would aim to
formally meet with a designated member
of the Board at least twice a year. Liam
Gray, CFO, took responsibility for formal
engagement with the EVC, and took
part in two of its meetings during the
year. The EVC gave valuable feedback
on employee concerns and issues, which
has supported management initiatives
to improve morale and employee
engagement. Examples included holding
“all-Company meetings”, giving more
attention to mental health awareness,
and considering alternative forms of
reward and recognition.
Diversity
The group has always aimed to employ
the right person for the right job, irrespective
of sex, gender, race or disability. When
recruiting at Board level, the Nominations
Committee requires that any executive
search firms used by the group have signed
up to its industry’s voluntary code of
conduct (prepared in response to the
Davies Review of Women on Boards).
The group follows a policy of appointing
talented people on merit at every level
and does not have a specific target for
numbers of female Directors or
employees. This reflects a market for
industry skills that unfortunately still
attracts more male candidates than
female. The Board will also ensure that
its own development in this area is
consistent with its strategic objectives
and enhances Board effectiveness.
Other aspects of diversity in the group
are commented on in the sustainability
section on pages 38 to 47.
Review of the Nominations
Committee’s effectiveness
Given the changes in Board and
Committee composition, the decision
was made to move a formal Committee
evaluation into FY25. However, I am
satisfied that the degree of rigour and
challenge applied in performing the
Committee’s responsibilities is
appropriate and effective and continues
to improve.
Dr Christopher Richards
Nominations Committee Chair
21 November 2024
Nominations Committee report continued
The Committee is
primarily responsible for
assisting the Board in
ensuring the appropriate
composition of the Board
and any Committees
of the Board to match
Nanoco’s stage
of evolution.”
Nanoco Group plc – Annual Report and Accounts 2024
065
Audit Committee report
Overview
The Audit Committee provides oversight
of the group’s financial and narrative
reporting statements, monitors the
effectiveness of systems of internal
control and risk management processes,
and monitors the integrity of the group’s
external audit processes.
The Audit Committee monitors internal
and external risk factors on behalf of
the Board. These are maintained in the
group’s risk register. The status and
assessment of matters in the risk register
also inform the drafting of the Viability
statement. The Committee does not just
respond to external factors but also
supports and challenges management
to anticipate future risks and opportunities.
Committee membership
The composition of the Committee
currently comprises me, Chris Batterham
(Chair), Dr Alison Fielding and Dr Jalal
Bagherli. In accordance with the provisions
of the Code, the Committee is made up
of independent Non-Executive Directors.
The Board considers that I have recent
and relevant financial experience to act
as Chair of
the Committee, by virtue of
being a qualified
Chartered Accountant
with extensive relevant experience as a
former CFO and finance director of a
number of private and public companies.
All members of the Committee are
considered to have experience and
competence relevant to the material
science sector.
Summary biographies of all members of
the Committee are detailed on pages 50
and 51.
Meeting frequency
and attendance
The terms of reference of the Committee
require at least four meetings per year.
The Committee met five times during the
financial year. As well as the members of
the Committee, the meetings are usually
attended on an invitational basis by the
Chairman, the Chief Executive Officer
and the Chief Financial Officer. The
external auditors attend each meeting
unless the business of the meeting does
not need them to be present. The
Committee also has meetings with the
external auditors without the Executive
Directors being present. Attendance of
each member is set out below:
Committee member
Meetings/
attended
Chris Batterham (Chair) 5/5
Dr Alison Fielding 5/5
Dr Jalal Bagherli 2/5
Meetings of the Audit Committee are
scheduled to occur in the run up to key
events in the group’s reporting calendar.
Each meeting precedes a Board meeting
to allow the Committee Chair to fully
brief the Board on all relevant matters.
The Committee has a pre-determined
series of subjects and issues to be
reviewed each year. These are then
supplemented by additional review
of emerging issues or changes in the
financial reporting or governance
regimes. In this way, the Committee
ensures that key recurring themes
are regularly reviewed while
Chris Batterham
Audit Committee Chair
To provide oversight of
financial reporting and
disclosures and to ensure
an appropriate risk
management framework
is in place as the group
develops and grows
Members
| Chris Batterham (Chair)
| Dr Alison Fielding
| Dr Jalal Bagherli
Estimated allocation of time in FY24
5%
20%
50%
Succession planning
Accounting matters
Risk management
Internal controls
Financial reporting
10%
15%
Estimated
allocation
of time in
FY24
maintaining the flexibility to adapt
to changing circumstances.
In addition to the scheduled Committee
meetings, the members of the Committee
meet and discuss emerging issues for the
business with the CEO and CFO to ensure
that the work of the Committee remains
appropriately focused on the risks and
needs of the business.
Continuous improvements in the quality,
relevance and timeliness of information
being provided to the Committee and
the Board as a whole ensure that similar
gains are also made in the quality review,
challenge and scrutiny by the Committee.
Corporate governance
Nanoco Group plc – Annual Report and Accounts 2024
066
Audit Committee
responsibilities
The key areas of focus for the
Audit Committee are set out below.
This includes specific duties of
the Committee in each area, how
it operates and any changes and
improvements made over time.
The subjects referred to are a mix
of annually recurring areas and also
specific issues that have arisen or
been reviewed during the last year.
Financial reporting
The primary objective is to ensure that
internal and external financial information
is robust, relevant, reliable and a firm
basis for decision making by management
and external stakeholders alike. These
activities are typically carried on
throughout the year. They lend themselves
to a “continuous improvement” mindset
that means we are always looking to
do better.
Our responsibilities in this area include:
| reviewing and monitoring the
integrity of the group’s annual
and interim financial statements;
| ensuring the appropriateness of
accounting policies;
| reviewing and challenging the critical
judgements and estimates used in
financial reporting. This includes
assessing any potential impact of
accounting judgements and estimates
on Executive remuneration;
| ensuring that the financial
information being provided internally
to the Board and to management is
as robust as that reported externally
and evolves to meet the changing
needs of the business;
| ensuring the group remains up to
date with developments in accounting
and reporting requirements; and
| advising the Board on whether or
not the financial statements, when
taken as a whole, are fair, balanced
and understandable. In simple terms,
this means that shareholders receive
adequate information to assess the
group’s strategy, business model,
risks and performance.
External audit
The primary objective in this area is to
ensure that the group is subject to an
appropriately robust, risk-focused
external audit from a qualified and
independent firm of auditors.
Further responsibilities in this area include:
| advising the Board on the appointment
of the external auditors;
| reviewing and monitoring the
performance of the external
auditors, which includes the
planning and effective execution
of the external audit process itself;
| setting the audit and non-audit fees
of the auditors to avoid any potential
conflicts of interest with executive
management (non-audit fees are
set out in note 6 to the financial
statements); and
| controlling the award of non-audit
work to the external auditors to ensure
that there is no actual or perceived
threat to their independence.
Internal control and
risk management
Our internal control and risk management
processes are a fundamental part of
the overarching framework used to
safeguard the assets of the business
and to ensure that investments represent
an appropriate balance of risk and
return. We work to ensure that these
are as good as they can be for our
business scale.
Our responsibilities in this area include:
| continual monitoring of the
appropriateness and effectiveness
of internal controls (including whether
an internal audit function is required);
| review of lessons learnt and
management remediation plans for
any shortcomings or improvement
plans to internal control processes;
| review of progress and commitment
to addressing control improvement
opportunities identified by the
external auditors;
| review and challenge of the models
and assumptions underlying the
going concern and viability statements;
| continual focus on cash and
cash forecasting;
| oversight of whistleblowing and
fraud detection and prevention
mechanisms; and
| ongoing review of the group’s
risk management processes
and systems, including a
substantive review and challenge
of management’s assessment
of key risks.
The Audit Committee also assists the
Board in ensuring the overall corporate
governance framework is appropriate
by giving due consideration to laws
and regulations, the provisions of the
UK Corporate Governance Code and
the requirements of the Listing Rules.
Audit Committee report continued
Audit
Committee
Internal control
and risk
management
External
audit
Financial
reporting
Nanoco Group plc – Annual Report and Accounts 2024
067
Financial reporting
Our approach to materiality
The financial statements must present
a true and fair view of the performance
and financial position of the group. They
must also present a fair, balanced and
understandable view. These are both
aimed at ensuring that a user of the
accounts can gain an accurate picture
of the underlying performance and
position of the business. To achieve this,
all material matters need to be addressed.
Material matters are those that are
considered by the Directors to be
sufficiently specific and have a large
enough real or potential impact that
they would be likely to influence the
decisions of a reader of the accounts.
The Directors take a range of quantitative
and qualitative matters into account in
assessing whether or not a matter is
deemed to be material. These include
the absolute size of a potential adjustment
by reference to the overall income
statement or the financial position
statement and also by reference to an
individual component of the financial
statements. Qualitative judgements
include whether an issue would reverse
or materially alter a trend (such as
turning a profit into a loss, or growth
into a decline).
In this way, the Directors aim to make
sure as wide a range of issues as possible
are considered without over-burdening
the reader of the financial statements
with insignificant or immaterial matters.
The Committee discharged its obligations
in response to the financial year as follows:
Significant issues considered during the
year in respect of the financial statements
The Committee assessed the following
matters in respect of financial reporting
and in the preparation of the Interim Report
and the Annual Report and Accounts:
| continuing appropriateness of the
group’s accounting policies;
| continuous development in the quality
and transparency of the group’s
external reporting;
| a review of key judgements and
estimates made by management
(see table below); and
| considering if the financial statements,
when taken as a whole, are fair,
balanced and understandable.
Significant accounting matters
and areas of significant
management judgement
The Committee, together with the
Board, considered what the significant
accounting matters and areas of
management judgement in relation
to the financial statements were and
how these would be addressed.
Each item is considered in further
detail below.
Revenue recognition and deferred
income (recurring item)
The Committee reviewed the revenue
recognition policies and management
judgements made in the preparation of
the financial statements. Where revenue
relates to the sale of products, revenue is
recognised on the transfer of risks and
rewards of ownership. For services to
customers, revenue is recognised on
a time and material basis for delivery
of services.
A major two-year work package that
was signed in January 2024 with ST
Microelectronics was the most material
source of revenue in the year from
services and material sales, and was
ongoing at year end. Deliverables were
all accounted for on the basis noted
above regarding sales of materials or
service revenue in line with the
requirements of IFRS 15.
A further two-year work package was
signed in November 2023 with its Asian
chemical customer and was ongoing at
year end. Deliverables were all accounted
for on the basis noted above regarding
sales of materials or service revenue in
line with the requirements of IFRS 15.
Other new sources of revenue earned in
the year were derived from the sale of
goods or the performance of short-term
professional services work. A low level of
judgement was required in assessing
these contracts under IFRS 15.
The Committee concluded that the
judgements and estimates made by
management in respect of revenue
recognition and, if relevant, the treatment
of deferred income and contract liabilities
were reasonable and appropriately
disclosed in the financial statements.
Share buy-back
The Board committed to returning
capital to shareholders upon receipt of
the second tranche of cash from Samsung.
This was achieved via a £30 million
tender offer and a subsequent £3 million
broker managed on-market buy-back
which was on going at 31 July 2024. 90%
of shares purchased in the tender offer
and 100% of shares purchased in the
buy-back have been cancelled and the
remainder are held in the Employee
Benefit Trust.
Key item Judgement or estimate? Materiality Uncertainty
Revenue recognition Judgement High Medium
Impairment assessment of the valuation of
investments
Estimate High (Parent Company
only)
High
Going concern Judgement and estimate Medium Low
Share buy-back Judgement Low Low
Corporate governance
Nanoco Group plc – Annual Report and Accounts 2024
068
Significant accounting matters
and areas of significant
management judgement continued
Going concern (recurring item)
The Committee considered the use of
the going concern basis for preparing
the financial statements. This is currently
an annual recurring activity given the
ongoing losses incurred by the business
in advance of generating full scale
production levels of commercial revenues.
Taking into account the group’s cash
resources and the projected cash cost
base, and the assessment by management
and the Committee of the material
potential risks identified in the group’s risk
register and any mitigating actions and
controls as shown on pages 33 to 35, the
Committee concluded that the group
has adequate financial resources to
adopt the going concern basis for the
preparation of the financial statements.
Given the nature of the risks that the
group faces while its activities are at a
pre-commercial stage, the Committee
continues to recommend that the Annual
Report and Accounts maintains a relatively
high level of disclosure of these matters
in the financial statements – as set out in
the sections on risk, viability and going
concern on pages 36 to 37.
Impairment assessment of the valuation
of investments
Having identified potential impairment
indicators per IAS 36, the Committee
considered the potential impairment of
the investment in the main trading
subsidiary, Nanoco Technologies Limited.
As part of this process, Grant Thornton
LLP were commissioned to produce a
valuation which was largely focused on
the potential outcome of litigation as a
result of infringement of our IP. After
reviewing their underlying assumptions,
the Committee agreed that a reversal of
the previous impairment would be
proposed.
Cost of sales
As the group moved into a pre-production
and then full production phase, the
accounting policies for cost of sales were
reviewed to ensure they are appropriate
for a manufacturing as well as an R&D
service company.
Treasury
Due to the significantly higher cash
balances in the group this year, the
treasury policy was reviewed. This led to
a £1.8 million gain from safeguarding the
Samsung receivable via use of an FX
hedge. The group also engaged a
second banking partner to ensure the
cash deposits are as risk free as possible
while also securing a good return, resulting
in £0.8 million interest income in the year.
Financial reporting on a fair,
balanced and understandable
(“FBU”) basis
The Committee reviewed the Interim and
Annual Report and Accounts. As part of
that review process, the members of the
Committee were provided with a draft of
the full Annual Report, enabling them to
ensure that the performance reported
therein was consistent with the Committee’s
knowledge gained from regular reviews
of the monthly management accounts
and Board discussions of issues arising
and business performance throughout
the year.
The Committee also assessed whether
the narrative description of the group’s
activities and performance was consistent
with its own understanding obtained
through Board and Audit Committee
meetings and other interactions it had
with management.
The CFO advised the Committee of the
findings of independent readers of the
draft Annual Report and Accounts.
These reviews are carried out by Nanoco
senior managers who have not been
closely involved in drafting the Annual
Report. Their knowledge of the business
allows them to form an opinion if the
document conveys a fair, balanced
and understandable view of business
performance in the current year. The
Committee members themselves also
perform this function by reference to
the matters discussed at the regular
Board meetings.
Drawing on this knowledge of the group’s
activities and its own industry knowledge
and experience, supplemented by advice
received from external advisers during
the drafting process, the Committee
determined that the Annual Report
and Accounts is fair, balanced and
understandable and this finding was
confirmed by the Board.
External audit
External audit plan
The Committee reviewed the proposed
audit plan. The Committee was satisfied
that the areas of audit risk highlighted by
Forvis Mazars were appropriate and
included all material matters. The
Committee subsequently reviewed the
actual audit report by Forvis Mazars to
ensure that it aligned closely with those
risks and the planned audit work.
Safeguarding auditors’ independence
The independence of the external
auditors is essential to the provision of
an objective opinion on the true and fair
view presented in the financial statements.
The Committee reviews the policies and
status of the independence of the
external auditors consistent with the
ethical standards published by the
Auditing Practices Board.
Auditors’ independence and objectivity
are also safeguarded by limiting the
nature and value of non-audit services
performed by the external auditors (see
later section). The group has a policy of
not recruiting senior employees of the
external auditors who have worked on
the audit in the past two years. The
group works with the external auditors
to achieve the rotation of the lead
engagement partner at least every
five years.
The current external audit firm and the
current lead engagement partner are in
their third year of providing external
audit services to the group.
The external auditors are also required
periodically to assess whether, in their
professional opinion, they are independent
and those views are shared with the
Audit Committee. The Committee has
authority to take independent advice as
it deems appropriate in order to resolve
issues on auditors’ independence. No
such advice has to date been required.
For the current year, the Committee has
concluded that the external auditors
remain independent and objective for
the purposes of their role.
Audit Committee report continued
Nanoco Group plc – Annual Report and Accounts 2024
069
Non-audit services provided
by the external auditors
The Audit Committee will only approve
the provision of non-audit services by the
external auditors where they are permissible
and do not represent a threat (by their
nature or scale) to this requirement for
independence. The aim is to ensure that
no material risk is taken of the auditors
both advising on and auditing the same
information in the financial statements.
The Audit Committee’s approval is
required for any fees for non-audit work
paid to the auditors in excess of £10,000
in any financial year. However, the group
recognises that it can receive particular
benefit from certain non-audit services
provided by the external auditors due
to their technical skills and detailed
understanding of the group’s business
and hence some non-audit work is allowed.
Non-audit fees of £100,000 were paid to
the external auditors for the working
capital report, required in connection
with the tender offer which was
completed in April 2024.
Separate external firms are engaged for
taxation and Directors’ remuneration advice.
Internal controls and
risk management
The Board has overall responsibility for
the group’s system of internal controls as
one critical part of the overall corporate
governance framework. This includes
reviewing the effectiveness of these
controls and the processes in place for
risk management. In accordance with
the 2018 UK Corporate Governance
Code issued by the Financial Reporting
Council, there is an ongoing process for
identifying, evaluating and managing
the significant risks faced by the group.
This process was introduced during 2015
and is summarised on pages 33 to 35.
The role of the Executive Directors is to
implement the Board’s policies on risk
and control and to provide assurance
on compliance with these policies.
The processes and procedures in place
are designed to manage rather than
eliminate risk and operate within the
Board’s defined risk appetite. They
therefore can only provide a reasonable
and not absolute assurance against
material misstatement or loss.
Executive Directors have a close involvement
with all day-to-day operations. They also
meet with staff on a regular basis to
identify and review business risks, the
controls needed to minimise those risks
and the effectiveness of controls in
place. Business risks are monitored and
discussed on a regular basis at meetings
of the leadership and senior management
teams. The principal risks faced by the
group and other aspects of how they are
individually assessed and managed are
set out below and on pages 33 to 35.
Internal controls
Key features of the internal control
system are summarised below:
(i) annual budgets and rolling
forecasts are reviewed and
approved by the Board;
(ii) monthly management accounts
are reviewed and challenged by
comparison to the budget;
(iii) written operational, accounting and
employment policies are in place;
(iv) the Board actively identifies and
evaluates the risks inherent in the
business and ensures that appropriate
controls and procedures are in place
to manage these risks;
(v) expenditure approval limits and
approval processes are in place
to cover all major commitments;
(vi) quality assurance processes are
overseen and audited by the internal
quality assurance department, with
a particular focus on non-financial
processes and procedures which
drive financial performance; and
(vii) compliance with control procedures
is monitored by the Audit Committee
through its internal reviews and external
audit findings and its reviews
of exceptions.
The Committee considers that the need
for an internal audit function is not currently
warranted due to the size and complexity
of the business but will reconsider this
need not less than annually.
Due to the small size of the business
there is minimal impact on the work of
external auditors.
Whistleblowing and confidential
reporting procedures
The group operates a confidential
reporting and whistleblowing procedure.
The policy aims to support the stewardship
of the group’s assets and the integrity of
the financial statements as well as
The Board has overall
responsibility for the
group’s system of internal
controls as one critical
part of the overall
corporate governance
framework.”
protecting staff welfare. The procedure
is reviewed annually by the Committee to
ensure that it remains fit for purpose. No
reports of whistleblowing were received
during the year. Staff are regularly
reminded of the whistleblowing process
as part of ongoing engagement with
staff on compliance issues such as
anti-bribery training.
Internal accountability
The Board has overall responsibility for
the group’s system of risk management
and internal control. The Audit Committee
reviews the effectiveness of the system
at least annually on behalf of the Board
and, having carried out this review, the
Committee continues to believe that the
system is effective in safeguarding
shareholders’ interests and the group’s
assets. There are some improvement
areas, such as more regular reviews of
internal controls, in addition to reviewing
policies and procedures, and these will
be implemented in FY24. The Board
agreed with this conclusion.
Review of the Audit
Committee’s effectiveness
Given the changes in Board and
Committee composition in the year and
post year end, the review of the
Committee’s effectiveness will take place
in FY25. However, I am satisfied that the
degree of rigour and challenge applied
in performing the Committee’s
responsibilities is appropriate and
effective and continues to improve.
Chris Batterham
Audit Committee Chair
21 November 2024
Corporate governance
Nanoco Group plc – Annual Report and Accounts 2024
070
Members
| Dr Alison Fielding (Chair)
| Chris Batterham
| Dr Christopher Richards
| Dieter May
| Dr Jalal Bagherli
Estimated allocation of time in 2024
Remuneration Committee report
Dear shareholder
I am pleased to present our Directors’
remuneration report for the year ended
31 July 2024. The Committee’s report
seeks to deliver an appropriate balance
between the required regulatory disclosures,
commercial sensitivities and the context
for our approach and decisions.
This report is presented in three parts:
(1) Chair’s introduction setting out an
overview of FY24 and prospective
matters for FY25;
(2) the Directors’ remuneration policy for
which approval will be sought at the
2024 AGM; and
(3) the Annual report on remuneration,
which sets out the actual
remuneration earned by Directors
over the year ended 31 July 2024.
This Directors’ remuneration report for
the year ended 31 July 2024 complies
with the requirements of the Listing
Rules of the Financial Conduct Authority,
Schedule 8 of the Large and Medium-
sized Companies and Groups (Accounts
and Reports) Regulations 2008 and the
provisions of the UK Corporate Governance
Code (July 2018). The Regulations require
the auditors to report to the Company’s
members on certain parts of the Directors’
remuneration report and to state whether,
in their opinion, those parts of the report
have been properly prepared in accordance
with the accounting regulations. Items
that are audited throughout this report
are clearly marked as audited in the
heading of the section.
Remuneration and its
strategic context
Our remuneration policy seeks to ensure
a clear link between Executive Directors’
pay, the delivery of the group’s strategy
to be a sustainable production company
and enhancement of shareholder value.
The Remuneration Committee seeks to
ensure that the Directors’ remuneration
arrangements continue to be aligned
to the calibre of individuals, to the
strategic direction of the group and
to our stakeholder philosophy.
The Committee has always shown
leadership in restraint of Executive and
Board remuneration, reflecting the stage
of development of the business. Nanoco
Executives have relatively low base salaries
compared to benchmarks and minimal
benefits in kind. Short-term incentives
reflect challenging annual targets and
have typically preserved Nanoco’s cash
by being paid in Deferred Bonus Plan
options that create further clear alignment
with shareholders’ interests. Long-term
incentives are linked directly to shareholder
value in the form of options with stretching
share price and revenue targets.
Board changes
Post year end, on 22 October 2024,
Brian Tenner stepped down from his
position as CEO and from the Board,
and was replaced by Dmitry Shashkov.
The payments associated with his
ceasing to hold office are disclosed
in the relevant section of this report.
15%
Performance evaluation
Employee engagement
Diversity
Governance
Reward and targets
15%
10%
5%
55%
Dr Alison Fielding
Remuneration Committee Chair
Ensuring our Executives
are paid fairly and
incentivised to
deliver success
Estimated
allocation
of time in
FY24
Nanoco Group plc – Annual Report and Accounts 2024
071
The Committee agreed a remuneration
package to recruit Dmitry which reflected
his calibre and experiences. A summary
of his remuneration arrangements is set
out below:
Base salary: £310,000
Pension: 7.5% of base salary
Bonus: Up to 125% of salary
LTIP: Participation in the shareholder
approved LTIP scheme, as further
described in this report
During the year, Dr Jalal Bagherli and
Mr Dieter May were appointed as
independent Non-Executive Directors,
adding significant relevant industry
experience and networks that the Board
can draw upon. Non-Executive Director
fees were increased as a result of the
recruitment process during the year to
£50,000 to reflect external market rates.
However, there is no cost of living
increase. The second increase in the
Chairman’s underlying fees that was
agreed in 2019 to reflect comparative
rates of pay will remain on hold.
On 3 October 2024, the group
announced the results of its strategic
review undertaken by the Board following
the European customer’s decision to
change its strategic focus away from QD
enabled infra-red sensors. In addition to
steps already being taken to rationalise
the Company’s cost base, it committed
to reducing the size of the Board during
FY25 without compromising appropriate
corporate governance standards.
Furthermore, immediately following the
release of the Company’s FY24 preliminary
results, each of the Non-Executive
Directors will enter into agreements with
the Company under which they will agree
to defer payment of at least 50% of their
Director fees until the earlier of the end
of the financial year (31 July 2025), their
cessation as Directors, or a potential sale
of the trading business, with the accrued
liability being satisfied at such time by
ordinary shares of 10.0 pence each.
2024 incentive outcomes
Annual bonus
Considering the performance delivered
in 2024 and reflecting that 80% of the
bonus is based on financial KPIs, the
Committee determined that no bonus
was due to be paid. A detailed description
of performance against the targets is set
out on page 82.
Long Term Incentive Plan: 2021 outcome
The long-term options, granted to the
Executive team in 2021, lapsed as at
31 July 2024 with nil value.
In assessing whether the outcomes
generated by the annual bonus and LTIP
scorecards were fair in the context of
broader performance, the Committee
took into account the commercial
progress, the underlying financial
performance of the group and the
wider stakeholder experience (including,
but not limited to, the shareholder
experience). After due consideration,
the Committee felt that the formulaic
outcome was an appropriate reflection
of performance delivered. It has, therefore,
not exercised discretion in relation to
incentive outcomes during the year.
Wider workforce
Nanoco’s workforce is critical to its success.
As a responsible business, our aim is to
pay our staff at the median level for
comparable national roles, and we perform
benchmarking exercises to review this.
We are also a Living Wage Employer.
We have recognised the challenges
faced by our employees with rising cost
of living and have increased base salaries
by 3%.
All staff participate in the Company
bonus scheme, which resulted in payments
of up to £3,000 per employee, pro-rated
for start of employment, part-time hours
and the achievement of various health
and safety and cost saving targets.
Remuneration commencing
1 August 2024
Our Directors’ remuneration policy was
last approved at the 2021 AGM. In line
with the usual timetable, approval for
a new policy will be sought at the 2024
AGM. Given the changes in Board previously
communicated and the conclusion of the
strategic review, the new policy is broadly
rolled forward from the version approved
at the 2021 AGM with minor changes to
the text to aid its operation and reflect
the passage of time. Our current intention
is that the policy will be further reviewed
in FY25, with a new policy presented for
shareholder approval at the AGM in 2025.
Our approach to the implementation of
the policy for FY25 is detailed in the table
on the following page. Linked to the
roll-forward of the policy, we will also
be asking shareholders to approve the
extension for ten years of the Long Term
Our remuneration
packages aim to
reflect the calibre of
our Executives, maintain
close alignment to
shareholder value and
support the commitment
to our strategic priorities.“
Incentive Plan and Deferred Bonus Plan
at the 2024 AGM – originally approved at
the 2015 AGM and due to expire in 2025.
Brian Tenner stepped down from the
Board on 22 October 2024. Details of
changes in Mr Tenner’s remuneration
arrangements have been included in the
statement on the Company’s website,
and further information will be included in
the FY25 Directors’ Remuneration Report
as required.
Corporate governance
Nanoco Group plc – Annual Report and Accounts 2024
072
Remuneration at a glance
Purpose and link to strategy Key features Planned for FY25 Actual in FY24
Salary Basis to recruit and retain
talent necessary to deliver
the business strategy.
Reviewed annually.
Considers the role, responsibility
and experience of the individual,
corporate and individual
performance and market
comparators by size and
complexity, and other
Nanoco salary increases.
Dmitry Shashkov was
appointed on a salary
of £310,000.
Each other Executive Director
will receive 2.5% cost of living
increase. The rest of the
workforce will receive 3%.
The three Executives received
a cost of living increase of 3%
versus 5% for the wider workforce.
Benefits and
pensions
Provide a market-competitive
benefits and pensions
package and promote the
wellbeing of employees.
Pension contributions equal to
those for all staff.
Unchanged. 7.5% of salary.
Life assurance. Unchanged. Eight times salary for Executives,
four times salary for other staff.
Workplace health programme. Unchanged. Implemented. Same as all staff.
Annual bonus Incentivises delivery of
annual key financial and
strategic goals that support
the enhancement of
shareholder value.
Target opportunity is 75% of salary
and maximum is 125% of salary.
Performance measures are a mix
of challenging financial and
personal strategic targets.
Up to 100% of earned bonus can be
paid in Deferred Bonus Plan options.
Subject to malus and
clawback provisions.
Maximum opportunity remains
125% of salary for CEO, CTO
and CFO. Brian Tenner will not
be eligible for a bonus for FY25.
Financial targets 80% of
maximum and personal
strategic targets 20%
of maximum.
No bonus earned.
LTIP To reflect stakeholder
philosophy, provide a
long-term retention
mechanism and align
with shareholders.
Awards of up to 150% of salary,
or up to 250% of salary in
exceptional circumstances
such as on recruitment.
Three-year performance period.
Performance measures
reviewed annually.
Subject to malus and
clawback provisions.
Awards of up to 150% of salary
for the CTO and CFO and,
having regard to his
recruitment, an award of up to
250% of salary in the case of
the CEO. For all Executive
Directors, the final quantum
will be determined at grant
having regard to the relevant
circumstances at that time.
Performance measures for
the three-year period ending
31 July 2027 will be set when
the awards are granted, with
further information included in
the regulatory announcement
at that time.
25% of the award will vest at
threshold, increasing on a
straight-line basis to 60% for
target and then to 100% for
stretch. There is nil vesting
below the threshold level.
LTIP awards made in 2021
lapsed with nil value as share
price targets were not achieved.
Shareholding
requirement
To align Directors to
shareholder interests.
Minimum shareholding
requirement for all Executives
200% of salary.
Unchanged. Unchanged.
Post employment To further align Directors to
shareholder interests.
To retain up to 200% of salary in
shareholdings for one year post
employment. Reduces to 100%
of salary in second year.
Unchanged. Unchanged.
Recovery
provisions
To ensure recovery of
Deferred Bonus Plan awards
if required.
Possible in the event of material
misstatement, material misconduct
or a material corporate failure.
Unchanged. Unchanged.
As a Committee, we believe that ongoing dialogue with our major shareholders is of key importance. Should you have any
queries or feedback in relation to the Directors’ remuneration report, please contact me through the Company Secretary.
Dr Alison Fielding
Remuneration Committee Chair
21 November 2024
Remuneration Committee report continued
Nanoco Group plc – Annual Report and Accounts 2024
073
Directors’ remuneration report
Directors’ remuneration policy
This part of the report sets out the group’s forward-looking Directors’ remuneration policy that will be presented for approval by
shareholders at the 2024 AGM and, if approved, will apply to payments made after that date. Given the previously communicated
changes to the Board, the new Policy is broadly rolled forward from the version approved at the 2021 AGM with minor changes
to the text to aid its operation and reflect the passage of time. Our current intention is that the Policy will be further reviewed in
FY25, with a new Policy presented for shareholder approval at the AGM in 2025. The Directors’ remuneration policy is not audited.
Element and purpose Operation Maximum opportunity Performance measures
Base salary
Core element of fixed remuneration
that provides the basis to recruit
and retain talent necessary to
deliver the business strategy.
Normally reviewed annually and applied
from 1 August (or at other times if
required).
Consideration is given to the following:
| the role, responsibility and
experience of the individual;
| corporate and individual performance;
| market comparators by size and
complexity; and
| other Nanoco salary increases.
No maximum. Annual increase normally
in line with the wider workforce. Potential
further increases:
| on promotion or changes in scope or
responsibility;
| taking into account an individual’s
performance in a role;
| where there has been a change in
market practice; or
| if there is a change in the size and/or
complexity of the business.
N/A
Benefits
Provide a market-competitive
benefits package and promote
the wellbeing of employees.
The group provides life assurance of
eight times salary, for all Executives and
a workplace health programme
in which
all employees can participate.
Directors are reimbursed for out-of-pocket
expenses incurred wholly and necessarily
on group business.
Benefits are reviewed periodically,
taking individual circumstances into
consideration. Benefits provided may
include, for example, medical insurance,
relocation expenses, expatriate
allowances and travel expenses.
No absolute maximum. The value
of benefits is set at a level which the
Committee considers to be appropriately
positioned, taking into account relevant
market factors based on the nature and
location of the role, the level of benefits
provided to other employees in the
group and individual circumstances.
N/A
Retirement benefits
Provide market-competitive
post-employment benefits to
recruit and retain Directors of the
calibre required for the business.
The group currently operates a salary
sacrifice pension arrangement under
which employees may elect to sacrifice
salary and the group pays an amount
equal to the amount of the salary
sacrifice, together with the employer
National Insurance saved, into a private
pension scheme.
Executive Directors are also eligible
to participate in the group’s defined
contribution scheme (or other appropriate
pension plan). In appropriate circumstances
,
Executive Directors are permitted to
take an equal cash supplement (not
counted towards bonus or LTIP opportunity)
in respect of some or all of the pension
contributions otherwise payable.
Executive pension contributions are set
at the same percentage of salary as all
other staff (currently 7.5% of salary).
An overall contribution limit of up to
10% of base salary (in addition to the
amount of any salary sacrifice and
employer NIC saved) may be applied.
N/A
Corporate governance
Nanoco Group plc – Annual Report and Accounts 2024
074
Directors’ remuneration report continued
Element and purpose Operation Maximum opportunity Performance measures
Annual bonus
Rewards and incentivises the
achievement of annual objectives
which are aligned with key financial
and strategic goals that support the
enhancement of shareholder value.
Performance targets are set annually
and pay-out levels are determined after
the year end following the Committee’s
assessment of actual performance
against set targets.
Up to 100% of any bonus earned can be
paid in deferred shares or options under
the Deferred Bonus Plan (“DBP”) that will
vest after two years.
Deferred share option awards may
incorporate the right to receive (in cash
or shares) the value of the dividends
that would have been paid on vested
shares; this may assume the reinvestment
of dividends into shares on such terms
as the Committee determines.
Personal bonus element is ordinarily only
payable if at least one financial target
is achieved.
Maximum annual bonus opportunity
is 125% of salary. The percentage of
maximum bonus payable for the
different levels of performance
would be no greater than:
Below threshold 0%
Threshold 25%
On target 60%
Maximum 100%
On-target performance pays out at
60% (and not 50%) as the Committee
includes an element of stretch when
setting targets.
Stretching performance
targets are set each year,
reflecting the group strategy.
Ordinarily, at least 80% will
be subject to achievement
of financial and/or corporate
measures and the balance
will be based on challenging
personal objectives.
The Committee retains
discretion to apply different
weightings in relevant
circumstances and to
override formulaic outturns
where circumstances require.
Long Term Incentive Plan (“LTIP”)
To reflect stakeholder philosophy,
provide a longer-term retention
mechanism and provide alignment
with shareholders.
Under the LTIP, awards of conditional
shares, restricted stock or nil-cost
options (or similar cash equivalent) can
be made with vesting, dependent on
the achievement of performance
conditions, normally over a three-year
performance period.
There will be no retesting of performance
after the end of the performance period.
Vested awards are normally subject
to a two-year holding period following
the end of the performance period.
LTIP awards may incorporate the right
to receive (in cash or shares) the value
of the dividends that would have been
paid on the shares that vest; this may
assume the reinvestment of dividends
into shares on such terms as the
Committee determines.
The maximum value of shares over
which an individual can be granted an
award in respect of a financial year is
normally 150% of base salary, although
this limit may be increased to 250% of
base salary in exceptional circumstances.
The percentage of maximum awards for
the different levels of performance
would be no greater than:
Below threshold 0%
Threshold 25%
On target 60%
Maximum 100%
On-target performance pays out at
60% (and not 50%) as the Committee
includes an element of stretch when
setting targets.
Vesting of LTIP awards
is subject to meeting
performance targets set
by the Committee.
Performance targets are
reviewed regularly to ensure
relevance. Targets are based
on financial measures which
link to creating shareholder
value (such as share price,
revenue and EPS) and/or
the achievement of
strategic milestones.
The targets and their
weightings may vary each
year based on group
strategic priorities. The
Committee retains discretion
to override formulaic outturns
where circumstances require.
Shareholding requirement
To align Directors to
shareholder interests.
In service requirement
Shareholding of at least 200% of base
salary. 50% of vested shares under the
DBP or LTIP (post tax) are to be retained
until the shareholding requirement has
been met.
Post employment shareholding
requirement
Executive Directors, upon ceasing
employment with the Company, are
required to retain their shareholdings,
up to 200% of salary, for one year post
employment. This reduces to 100% of
salary in the second year post employment.
Shares will be subject to this requirement
only if they are acquired from employee
share plan awards granted on or after
1 August 2021.
The Remuneration Committee may vary
or disapply the in-service and/or the
post-employment requirement in
appropriate circumstances.
N/A
N/A
N/A
N/A
Directors’ remuneration policy continued
Nanoco Group plc – Annual Report and Accounts 2024
075
Directors’ remuneration policy continued
Notes to the policy table
Application of clawback and malus to
variable remuneration
Under the Deferred Bonus Plan (“DBP”),
during the two-year deferral period, the
Committee has the right to reduce any
deferred bonus awards which have not
yet been released in the event of a
material misstatement of the group’s
financial results, material misconduct on
the part of the participant, a material
corporate failure as determined by the
Board, a material failure of risk management
by the group, or in the event of serious
reputational damage (i.e. a malus provision).
For up to two years following the payment
of a cash bonus award, the Committee
may also require the repayment of some
or all of the award in these circumstances
(i.e. a clawback provision). Awards under
the 2015 LTIP may be reduced, cancelled
or have additional conditions imposed
on them at any time prior to the end of
the holding period in the same
circumstances as outlined above in
relation to the bonus.
Explanation of performance
measures chosen
Selected performance measures for the
annual bonus and LTIP awards reflect the
group’s strategy. Stretching performance
targets are set each year by the Committee
taking into account a number of
different factors.
Annual bonus
Ordinarily, at least 80% of the potential
maximum annual bonus will be subject
to achievement of a combination of
financial and corporate measures, with
the remainder based on challenging
personal objectives. The Committee will
disclose the metrics and performance
against these on a retrospective basis
to the extent that these are not commercially
sensitive. The personal bonus element is
ordinarily only payable if at least one
financial target is achieved.
LTIP
The Committee intends to review each
year the performance metrics for future
awards taking into account the business
priorities and strategy at that time.
Targets will be based on financial
measures which link to creating
shareholder value (such as share price,
revenue and EPS) and/or the
achievement of strategic milestones.
The Committee also retains the
discretion to adjust or set different
performance measures or targets where
it considers it appropriate to do so (for
example, to reflect a change in strategy,
a material acquisition and/or a
divestment of a group business or a
change in prevailing market conditions)
and to assess performance on a fair and
consistent basis from year to year.
Operation of the LTIP and DBP
The LTIP and DBP are operated by the
Committee in accordance with their
respective rules. These include the ability
to adjust the number of shares subject
to awards in the event of a variation of
share capital, demerger, delisting,
special dividend, rights issue or other
event which may, in the opinion of the
Company, affect the current or future
value of shares. The “market value” of a
share for the purposes of determining
the number of shares subject to the LTIP
or DBP award will be the average share
price over the three dealing days
following the announcement of results
preceding the grant date. The Committee
can determine that an alternative basis
should apply but this would still be by
reference to market prices such as the
average price over the three-day period
leading up to an award at a different
date. All members of staff are eligible
to participate in both schemes.
Early vesting of awards
As described on pages 78 and 79,
awards under the DBP and LTIP may
vest earlier than anticipated in “good
leaver” circumstances.
On a change of control of the Company
or other relevant corporate event (such
as a demerger, delisting, special dividend
or other event which may affect the value
of an award), the extent to which unvested
awards will vest will be determined in
accordance with the rules of the
relevant plan.
Awards under the DBP will vest in full in
the event of a takeover, merger or other
relevant corporate event.
Awards under the LTIP may vest early
on a takeover, merger or other relevant
corporate event. The Committee will
determine the level of vesting, taking
into account the extent to which the
performance conditions are satisfied and
the perceived value created as a result
of such an event. Such vesting would
ordinarily be on a time pro-rata basis,
although the Committee has discretion
not to apply time pro-rating.
How the Executive Directors’
remuneration policy relates
to the group
The remuneration policy summarised
previously provides an overview of the
structure that operates for the Executive
Directors. The same broad structure also
operates for the members of the senior
management team and all other members
of staff with varying levels of participation
in the LTIP depending on seniority. Staff
other than Executives can choose to take
some or all of their annual bonus as a
participation in the DBP with a 50%
uplift in the number of options on the
value deferred.
Corporate governance
Nanoco Group plc – Annual Report and Accounts 2024
076
Directors’ remuneration policy continued
Remuneration outcomes in different performance scenarios
The charts below set out an illustration of the remuneration policy for FY25. The charts provide an illustration of the proportion
of total remuneration made up of each component of the remuneration policy and the potential value of each component.
Five scenarios have been illustrated for each of Dmitry Shashkov, Dr Nigel Pickett and Liam Gray. In the case of Dmitry Shashkov,
in each scenario his fixed remuneration and annual bonus is pro-rated to reflect the date on which he joined the company.
Below threshold
performance
Fixed remuneration
No annual bonus pay-out
No vesting under the LTIP
Threshold performance
Fixed remuneration
25% annual bonus pay-out (31.25% of salary)
25% vesting under the LTIP (62.5% of salary in the case of Dmitry Shashkov, 37.50% of salary in the
case of each other Executive Director)
Target performance
Fixed remuneration
60% annual bonus pay-out (75% of salary)
60% vesting under the LTIP (150% of salary in the case of Dmitry Shashkov, 90% of salary in the case
of each other Executive Director)
Maximum performance
Fixed remuneration
100% annual bonus pay-out (125% of salary)
100% vesting under the LTIP (250% of salary in the case of Dmitry Shashkov, 150% of salary in the case
of each other Executive Director)
Maximum + 50% share
price increase
Fixed remuneration
100% annual bonus pay-out (125% of salary)
100% vesting under the LTIP (250% of salary in the case of Dmitry Shashkov, 150% of salary in the case
of each other Executive Director) plus an assumed 50% increase in share price from grant date
800k
600k
400k
200k
0
Dr Nigel Pickett £Dmitry Shashkov £ Liam Gray £
Below threshold
performance
Threshold
performance
Target
performance
Maximum
performance
Maximum + 50%
share price increase
1,200k
900k
600k
300k
0
1,800k
1,350k
900k
450k
0
Below threshold
performance
Below threshold
performance
Threshold
performance
Threshold
performance
Target
performance
Target
performance
Maximum
performance
Maximum
performance
Maximum + 50%
share price increase
Maximum + 50%
share price increase
Key:
Fixed pay Pension Annual bonus LTIP
£838,323
£1,334,967
£236,054
£258,910
£386,621
£527,924
£597, 415
£904,544
£1,002,578
£1,722,467
£168,786
£276,499
£427, 297
£599,637
£717,142
93%
93%
93% 57% 37% 26% 22%
57%
46%
37%
27%
26%
18%
22%
14%
7%
7%
7% 4% 3% 2% 2%
33% 27%
49%
39%
18%
27%
33%
21%
4%
3%
18%
14%
27%
20%
33%
51%
21%
37%
3%
2%
2%
1%
33%
23%
39%
58%
49%
67%
27%
17%
2%
1%
Directors’ remuneration report continued
Nanoco Group plc – Annual Report and Accounts 2024
077
Directors’ remuneration policy continued
Remuneration outcomes in different performance scenarios continued
Fixed pay currently comprises the following elements from 1 August 2024:
Current
base salary Benefits
1
Pension
2
Total
Chief Executive Officer – Dmitry Shashkov £310,000 £621 £23,250 £333,871
Chief Technical Officer – Dr Nigel Pickett £219,007 £621 £16,426 £236,054
Chief Financial Officer – Liam Gray £156,673 £362 £11,751 £168,786
1 No benefits are currently provided to the Executive Directors other than the group health wellbeing programme that was implemented in FY24, the value
of which is included above, and under the group life assurance scheme, the value of which in the case of the Executive Directors cannot be identified. For
illustrative purposes, Dmitry Shashkov’s benefits figure is assumed to be the same as Dr Nigel Pickett’s.
2 Based on 7.5% employer pension contribution/cash supplement in lieu of pension which applies for the year ended 31 July 2024 (2023: 7.5%).
3 In the case of Dmitry Shaskov, the full-year values in the table above are pro-rated for the purposes of the remuneration outcome charts to reflect the
date on which he joined the company.
With the exception of the final scenario (which assumes a 50% increase in share price from grant date of LTIPs), the values
illustrated assume a constant share price from the time of grant of LTIPs and do not take into account share price fluctuation or
dividend equivalents that may be received under the share plans. The ultimate amounts received by the Directors may be higher
or lower than the amounts illustrated above.
Remuneration policy for Non-Executive Directors
Purpose and link to strategy Operation Other items
To enable the group to
attract and retain Non-
Executive Directors of the
required calibre by offering
market-competitive rates.
The Chairman’s fee is determined by the
Committee and those of other Non-Executive
Directors by the Board.
Fees take into account several factors, including the
size and complexity of the business, fees paid at
companies of a similar size and complexity, and the
expected time commitment and contribution for the
role. Additional fees may be paid for additional time
commitments and/or responsibilities.
Overall fees paid to Non-Executive Directors will
remain within the limits set by the Company’s
Articles of Association from time to time or as
otherwise approved by shareholder.
Non-Executive Directors are provided
with Directors’ and officers’ insurance
and indemnity protection and are eligible
to be reimbursed for any reasonable
hotel and travelling expenses and other
reasonable expenses incurred in the
performance of their duties.
The Non-Executive Directors do not
participate in the group’s annual bonus,
share plans or pension schemes.
Remuneration policy on recruitment
When hiring a new Executive Director, the Committee will seek to align the remuneration package with the above policy. When
determining appropriate remuneration arrangements, the Committee may include other elements of pay which it considers are
appropriate and necessary in the circumstances. However, this discretion is capped and is subject to the limits referred to below:
| base salary will be set at a level appropriate to the role and the experience of the appointee. We may agree future increases
up to a market rate, in line with increased experience and/or responsibilities, subject to good performance;
| benefits and pension contributions will only be provided in line with the above policy;
| the Committee will not offer non-performance related incentive payments (for example a “guaranteed sign-on bonus”);
| other elements may be included in the following circumstances:
| an interim appointment being made to fill an Executive Director role on a short-term basis;
| if exceptional circumstances require the Chairman or a Non-Executive Director to take on a short-term Executive function;
| if an Executive Director is recruited at a time in the year when it would be inappropriate to provide a bonus or long-term
incentive award for that year as there would not be sufficient time to assess performance. Subject to the limit on variable
remuneration set out below, the quantum in respect of the months employed during the year may be transferred to the
subsequent year so that reward is provided on a fair and appropriate basis; and
| if the Director will be required to relocate in order to take up the position, it is the group’s policy to allow reasonable
relocation, travel and subsistence payments. Any such payments will be at the discretion of the Committee;
Corporate governance
Nanoco Group plc – Annual Report and Accounts 2024
078
Directors’ remuneration policy continued
Remuneration policy on recruitment continued
| the Committee may also alter the performance measures, performance period and vesting period of the annual bonus or LTIP
if the Committee determines that the circumstances of the recruitment merit such alteration. The rationale for any such
alterations will be clearly explained in the next Directors’ remuneration report; and
| the maximum level of variable remuneration which may be granted (excluding “buyout” awards as referred to below) is 375%
of salary, in line with the policy set out on pages 73 and 74.
The Committee may make payments or awards in respect of hiring an employee to “buy out” remuneration arrangements forfeited
on leaving a previous employment or engagement. In doing so, the Committee will take account of relevant factors, including
any performance conditions attached to the forfeited arrangements and the time over which they would have vested or been
paid. The Committee will generally seek to structure buyout awards or payments on a comparable basis to the remuneration
arrangements forfeited. Any such payments or awards are excluded from the maximum level of variable remuneration referred to
previously. “Buyout” awards will ordinarily be granted on the basis that they are subject to forfeiture or “clawback” in the event of
departure within twelve months of joining the group, although the Committee will retain discretion not to apply forfeiture or
clawback in appropriate circumstances.
Any share awards referred to in this section will be granted as far as possible under the group’s existing share plans. If necessary,
and subject to the limits referred to above, recruitment awards may be granted outside of these plans.
Where a position is filled internally, any ongoing remuneration obligations or outstanding variable pay elements shall be allowed
to continue in accordance with their terms.
Fees payable to a newly appointed Chairman or Non-Executive Director will be in line with the policy in place at the time of
appointment and based on current market rates of pay for equivalent roles.
External appointments
The group recognises that Executive Directors may be invited to become Non-Executive Directors of other companies and
that this can help broaden the skills and experience of a Director. Subject to the approval of the Board, Executive Directors are
normally permitted to accept external appointments and may retain fees for such appointments where no significant actual or
potential conflict of interest arises and provided that the Director is able to maintain his time commitment to the group. There are
currently no such appointments.
Payment for loss of office
The group’s policy is that Executive Directors’ service contracts should be capable of termination on not more than six months’
notice. This policy was implemented during FY21 with notice periods being shortened by agreement with the continuing Executives.
The duration of Directors’ service contracts is disclosed on page 88. The principles on which the determination of payments for
loss of office will be approached are set out below:
Element Policy
Payment in lieu
of notice
The group has discretion to make a payment in lieu of notice which would include base salary and benefits
for the unexpired period of notice, up to a maximum of six months’ notice.
Annual bonus At the Committee’s discretion, on an individual basis, any annual bonus award will be dependent on a
number of factors, such as the circumstances of departure and their contribution to the business during
the period. Any bonus will normally be pro-rated for time and will be paid at the usual time (although the
Committee retains discretion to pay the annual bonus award earlier in appropriate circumstances). Any such
bonus can, at the discretion of the Committee, be paid wholly in cash.
DBP Determined in accordance with the rules of the DBP.
Unvested awards will normally lapse on cessation of employment. However, at the Committee’s discretion,
if a participant is deemed to be a “good leaver” (such as leaving due to death, ill health, injury, disability,
redundancy or the sale of his employer), the Committee shall determine whether any unvested award will
vest at cessation or at the normal vesting date. In either case, the extent of vesting will be determined by
the Committee, taking into account, unless the Committee determines otherwise, the period of time elapsed
from the date of grant to the date of cessation relative to the deferral period. Awards may then be exercised
during such period as the Committee determines.
Awards (in the form of nil-cost options) which have vested but remain unexercised at the date of cessation
may be exercised if a participant is a good leaver at the discretion of the Committee. Awards may then be
exercised for such period as the Committee determines.
Directors’ remuneration report continued
Nanoco Group plc – Annual Report and Accounts 2024
079
Element Policy
LTIP Determined in accordance with the rules of the shareholder-approved LTIP.
Unvested awards will normally lapse on cessation of employment. However, if a participant is deemed to be a
good leaver, the Committee shall determine whether the award is released on the normal release date or the
date of cessation (or on some other date). The extent of vesting will be determined by the Committee taking
into account the extent to which the performance condition is satisfied and, unless the Committee
determines otherwise, the period of time elapsed from the date of grant to the date of cessation relative
to the performance period. Awards may then be exercised during such period as the Committee determines.
If a participant leaves for any reason (other than summary dismissal) after an award has vested but before it
has been released (i.e. during the holding period), his award will ordinarily continue to the normal release date
when it will be released to the extent it vested. The Committee retains discretion to release awards when the
participant leaves. If the participant is summarily dismissed, their award will lapse. Awards (in the form of
nil-cost options) which have vested and been released but remain unexercised at the date of cessation may
be exercised if a participant is deemed to be a good leaver. Awards may then be exercised for such period
as the Committee determines.
Mitigation The Committee’s practice is that if an Executive Director’s employment is terminated, any compensation
payment will be calculated in accordance with normal legal principles including the application of mitigation
to the extent appropriate to the circumstances of the termination.
Other payments In appropriate circumstances, payments may also be made in respect of accrued holiday, outplacement
and legal fees.
Where a buyout award has been made, the leaver provisions would be determined at the time of the award.
The Committee reserves the right to make additional exit payments where such payments are made in good faith in discharge
of an existing legal obligation (or by way of damages for breach of such an obligation) or by way of settlement or compromise
of any claim arising in connection with the termination of a Director’s office or employment.
Where the Committee retains discretion, it will be used to provide flexibility in certain situations, taking into account the particular
circumstances of the Director’s departure and performance.
There is no entitlement to any compensation in the event of Non-Executive Directors’ fixed-term agreements not being renewed
or the agreement terminating earlier.
Consideration of employees’ pay
The Committee generally considers pay and employment conditions elsewhere in the group when considering the Directors’
remuneration. When considering base salary increases, the Committee reviews overall levels of base pay increases offered to
other employees. Employees are not actively consulted on Directors’ remuneration. Employee share ownership is fundamental
to the group’s culture and is reflected in the universal participation in both of our share incentive plans.
Existing contractual arrangements
The Committee retains discretion to make any remuneration payment and/or payment for loss of office outside the policy in this report:
| where the terms of the payment were agreed before the policy came into effect, provided that they are in line with the
Directors’ remuneration policy approved at the 2021 AGM;
| where the terms of the payment were agreed at a time when the relevant individual was not a Director of the Company and, in
the opinion of the Committee, the payment was not in consideration of the individual becoming a Director of the Company; and
| to satisfy contractual commitments under legacy remuneration arrangements.
For these purposes, “payments” includes the satisfaction of awards of variable remuneration and, in relation to an award over
shares, the terms of the payment are agreed at the time the award is granted.
Consultation with shareholders
The Committee considers shareholder feedback received on remuneration matters, as well as any additional comments received
during any other meetings with shareholders. The Committee consulted with major shareholders in respect of the changes to the
remuneration policy that was approved at the 2021 AGM.
Directors’ remuneration policy continued
Payment for loss of office continued
Corporate governance
Nanoco Group plc – Annual Report and Accounts 2024
080
Annual report on remuneration
This report sets out details of the amounts earned by Directors during FY24 and provides details as to how the Committee intends
to implement the policy during FY25. This part of the report will be subject to an advisory shareholder vote at the 2024 AGM.
This report contains unaudited information except where stated that it is audited.
Remuneration Committee
The Committee comprises Dr Alison Fielding, who is Chair of the Committee, Chris Batterham, Dr Christopher Richards, Dieter May
(from 1 February 2024) and Dr Jalal Bagherli (from 5 April 2024), each of whom is considered to be independent. The Committee
may invite anyone it deems appropriate to attend and advise at meetings, including the Chief Executive Officer, the Chief Financial
Officer and the Chief Technology Officer, although no Director is present when their own remuneration is being discussed. The
Committee is responsible for establishing a formal and transparent procedure for developing policy on Executive remuneration
and for setting the remuneration of the Directors and certain senior management, as well as reviewing the performance of the
Executive Directors of the Company. The terms of reference of the Remuneration Committee can be found in the Investors section
of the group’s website.
The Committee met four times during the year; its meetings are minuted and its recommendations are presented to the Board.
Advisers to the Committee
The Chief Executive Officer is consulted on the remuneration of those who report directly to him and also of other senior
Executives. No Executive Director or employee is present or takes part in discussions in respect of matters relating directly
to their own remuneration. During the year, the Committee was assisted in its work by the following external consultants:
Adviser Details of appointment Services provided by the adviser Fees paid for remuneration advice Other services in FY24
Deloitte LLP
(“Deloitte”)
Appointed by the
Remuneration
Committee in
June 2015.
Various advice on
Executive remuneration.
The fees for advice provided to
the Committee during the
financial year were £8,875
(2023: £4,600).
Charged on a time/cost basis or
fixed fee depending on project.
Advice to management in
relation to the Directors’
remuneration report and
the Company’s employee
share schemes.
Deloitte is a member of the Remuneration Consultants Group and, as such, voluntarily operates under its Code of Conduct in
relation to Executive remuneration consulting in the UK. The Remuneration Committee took into account the Code of Conduct
when reviewing the appointment of Deloitte. The Committee is satisfied that the remuneration advice provided by Deloitte is
objective and independent.
Directors’ remuneration report continued
Nanoco Group plc – Annual Report and Accounts 2024
081
Annual report on remuneration continued
Single total figure of remuneration for 2024 (audited information)
The remuneration of the Directors who served on the Board of Nanoco Group plc during the year to 31 July 2024 is as follows
(footnotes for both tables are below the second table):
Base salary
and fees 
£’000
Benefits
in kind 
£’000
Annual bonus
in cash
£’000
Annual bonus
in shares
£’000
Long-term
incentives
£’000
Pension 
£’000
Total 2024
£’000
Total fixed
remuneration
£’000
Total variable
remuneration
£’000
Executive Directors
Brian Tenner 300 1 — — — 22 323 323 —
Dr Nigel Pickett 214 1 — — — 17 232 232 —
Liam Gray 153 1 — — — 13 167 167 —
Total Executive Directors 667 3 — — — 52 722 722 —
Non-Executive Directors
Dr Christopher Richards 100 — — — — — 100 100 —
Dr Alison Fielding 50 — — — — — 50 50 —
Chris Batterham 50 — — — — — 50 50 —
Dieter May 25 — — — — — 25 25 —
Dr Jalal Bagherli
6
16 — — — — — 16 16 —
Total Non-Executive
Directors 241 — — — — — 241 241 —
Total 908 3 — — — 52 963 963 —
The remuneration of the Directors who served on the Board of Nanoco Group plc during the year to 31 July 2023 was as follows:
Base salary
and fees
£’000
Benefits
in kind
£’000
Annual bonus
in cash
£’000
Annual bonus
in shares
£’000
Long-term
incentives
£’000
Pension
£’000
Total 2023
£’000
Total fixed
remuneration
£’000
Total variable
remuneration
£’000
Executive Directors
Brian Tenner 292 — 228 118 — 22 660 314 346
Dr Nigel Pickett 207 — 168 87 — 16 478 223 255
Liam Gray 148 — 117 60 — 11 336 159 177
Total Executive Directors 647 — 513 265 — 49 1,474 696 778
Non-Executive Directors
Dr Christopher Richards 100 — — — — — 100 100 —
Dr Alison Fielding 46 — — — — — 46 46 —
Chris Batterham 46 — — — — — 46 46 —
Henry Turcan
7
8 — — — — — 8 8 —
Total Non-Executive
Directors 200 — — — — — 200 200 —
Total 847 — 513 265 — 49 1,674 896 778
1 If less than a year was served, salary or fees are from the date of appointment or to the date of retirement. The Executive Directors’ salaries are shown
before any salary sacrifice pension contributions.
2 The benefits provided to the Executive Directors are individual memberships of the employee private healthcare scheme. Executive Directors also receive
life cover which is contained within a policy covering all employees such that it is not possible to identify the proportion of the premium in respect of
Directors either individually or as a whole.
3 The pension figure represents the cash value of Company pension contributions and/or cash in lieu of pension contributions. This does not include the
amount of the salary sacrifice paid as a pension but does include the employer National Insurance saved that is paid into a private pension scheme.
4 Dr Alison Fielding and Chris Batterham received a fee increase from 1 February 2024 to £55,000.
5 Dieter May was appointed to the Board on 1 February 2024 on an annualised fee of £50,000. The figure above in FY24 discloses his fee between the date
of his appointment and 31 July 2024.
6 Dr Jalal Bagherli was appointed to the Board on 5 April 2024 on an annualised fee of £50,000. The figure above in FY24 discloses his fee between the
date of his appointment and 31 July 2024.
7 Henry Turcan was a representative of the shareholder Lombard Odier Asset Management, and Nanoco paid £nil (2023: £8,000) for these services direct
to Lombard Odier Asset Management. Henry Turcan resigned from the Board on 12 September 2022.
Corporate governance
Nanoco Group plc – Annual Report and Accounts 2024
082
Annual report on remuneration continued
Individual elements of remuneration for the year ended 31 July 2024
Base salary
Executive Directors’ base salaries for FY24 were set as disclosed in the FY23 Directors’ remuneration report taking into account
in the case of each Executive Director the 3% inflationary increase. Accordingly, the salaries were set as: Brian Tenner, £300,245
(2023: £291,500); Dr Nigel Pickett, £213,665 (2023: £207,442); and Liam Gray, £152,852 (2023: £148,400).
Annual bonus
For the year ended 31 July 2024, the maximum bonus for Dr Nigel Pickett, Brian Tenner and Liam Gray was 125% of salary. The
annual bonuses comprise two elements: financial corporate objectives (80% of award or 100% of salary) and personal objectives
(20% of award or 25% of salary). Bonuses for personal objectives are only payable if at least one financial corporate objective
is achieved.
Threshold financial target performance was not achieved during the year on either financial metric and hence no bonuses were
due. Performance against financial and personal targets is shown in the tables below with the financial and corporate measures
and their weighting as a percentage of maximum award for the year ended 31 July 2024:
Measure and weighting as a
percentage of maximum award Threshold performance level Maximum performance level Performance achieved
Bonus earned as a
percentage of maximum award
Revenue and other operating
income (60%) £8.6m £9.6m £7.9m 0%
Adjusted EBITDA (20%) £2.3m £2.9m £1.2m 0%
The Committee concluded that for the assessment of the financial metrics, the performance achieved should be taken from the
statutory accounts.
The personal objectives and amounts payable in respect of Brian Tenner, Dr Nigel Pickett and Liam Gray are set out in the table
below. Specific bonus targets have not been disclosed by the Committee where they are considered to be commercially
sensitive. The current stage of the group’s development means certain retrospective information could still give competitors
insight into the strategic plans of the business, which is not in the interest of shareholders.
Director Measure
Weighting
(% of maximum
bonus opportunity)
Achievement
(% of maximum
bonus opportunity)
Brian Tenner Financial and corporate measures 80 —
Personal objectives 20 —
Create in-house device capability Achieved
Commercial production Partial
New long-term JDA contracts with existing customers Achieved
Win additional Tier 1 JDA None
Dr Nigel Pickett Financial and corporate measures 80 —
Personal objectives 20 —
Deliver additional grant funding None
Focused expansion of IP portfolio Partial
Win additional Tier 1 JDA None
Deliver all JDA milestones Achieved
Liam Gray Financial and corporate measures 80 —
Personal objectives 20 —
Develop and implement a comprehensive ESG strategy Partial
Lead and deliver tax efficient return of capital project Achieved
Develop and implement a comprehensive HR strategy None
Outperform budgeted costs and cash forecast Partial
Notwithstanding the achievements in respect of personal objectives, no bonuses are payable because the threshold level of
financial performance was not achieved.
Directors’ remuneration report continued
Nanoco Group plc – Annual Report and Accounts 2024
083
Annual report on remuneration continued
Individual elements of remuneration for the year ended 31 July 2024 continued
Annual bonus continued
DBPs granted in respect of the FY21 annual bonus plan vested in full during the year. No long-term incentives vested during the
year ended 31 July 2024. The threshold level of performance for the LTIP awards granted in November and December 2021 and
which vested by reference to performance to the end of FY24 was not achieved, and the awards have lapsed.
LTIP awards granted in FY24
Awards to the Executive Directors made on 23 January 2024 were as follows:
Director Type of award
Percentage
of salary
1
% Number of options
Face value at
grant date
1
£’000
Face value at grant
less exercise price
£’000
Performance period
Years
Brian Tenner Share award 150% 2,255,220 450 450 3
Dr Nigel Pickett Share award 150% 1,604,897 320 320 3
Liam Gray Share award 150% 1,148,112 229 229 3
LTIP granted 23 January 2024 Threshold target Maximum target
Share price (average for three months to 31 July 2026) £0.28 £0.36
Revenue
2
Confidential Confidential
Vesting ratio 25% 100%
1 The face value of the awards is calculated based on a share price of £0.1997, being the share price used to determine the number of shares under award,
as described in the announcement of 23 January 2024.
2 Given the group is entering a new stage in its development, the Directors consider that the revenue targets are commercially sensitive and hence are not
being disclosed at this time. However, in order to maintain transparency, the targets will be disclosed at the same time as the actual outcome is
assessed following the end of the performance period.
Payments made to former Directors and payments for loss of office during the year (audited information)
No payments for loss of office were made during the year.
During the year, Brian Tenner notified the Company of his intention to step down as CEO. Details of his remuneration
arrangements, in line with section 430(2B) of the Companies Act 2006 are available to view on the Company’s website.
Corporate governance
Nanoco Group plc – Annual Report and Accounts 2024
084
Annual report on remuneration continued
Statement of Directors’ shareholding and share interests (audited information)
Directors’ interests in share options to acquire ordinary shares of ten pence in the Company, including options held under the
Deferred Bonus Plan, were as follows:
Share options Date granted
Exercise
price
At
1 August 2023
Exercised
during
the year Lapsed
Granted
during
the year
At
31 July
2024
Dr Nigel Pickett 9 Nov 2021
3
Nil 399,929 (399,929) — — —
9 Nov 2021
2
Nil 927,488 — (927,488) — —
1 Dec 2021
2
Nil 463,744 — (463,744) — —
27 Oct 2022
2
Nil 848,780 — — — 848,780
27 Oct 2022
3
Nil 501,421 — — — 501,421
23 Jan 2024
2
Nil — — — 1,604,897 1,604,897
23 Jan 2024
3
Nil — — — 424,667 424,667
Brian Tenner 9 Nov 2021
3
Nil 452,555 (452,555) — — —
9 Nov 2021
2
Nil 1,184,834 — (1,184,834) — —
1 Dec 2021
2
Nil 592,417 — (592,417) — —
27 Oct 2022
2,4
Nil 1,192,716 — — — 1,192,716
27 Oct 2022
3
Nil 649,072 — — — 649,072
23 Jan 2024
2,4
Nil — — — 2,255,220 2,255,220
23 Jan 2024
3
Nil — — — 577,736 577,736
Liam Gray 9 Nov 2021
3
Nil 35,157 (35,157) — — —
9 Nov 2021
2
Nil 533,175 — (533,175) — —
1 Dec 2021
2
Nil 266,588 — (266,588) — —
27 Oct 2022
2
Nil 607,201 — — — 607,201
27 Oct 2022
3
Nil 253,161 — — — 253,161
23 Jan 2024
2
Nil — — — 1,148,112 1,148,112
23 Jan 2024
3
Nil — — — 294,894 294,894
2 Unvested share options still subject to performance conditions.
3 Deferred Bonus Plan awards.
4 197,156 options issued on 27 October 2022 and 1,124,452 options issued on 23 January 2024 will lapse on Brian’s departure from the business as
announced on 25 July 2024.
Director shareholdings
In order to align the interests of Executive Directors with those of shareholders and to demonstrate the Executive Directors’
ongoing personal financial commitment to the business, Executive Directors are expected to build up a shareholding equivalent
to 200% of annual salary for all Executive Directors. Executive Directors are required to retain at least 50% of any post-tax shares
that vest under any share incentive plans until this shareholding is reached.
Dr Nigel Pickett holds shares substantially in excess of the shareholding guideline (c.594% of salary using the three-month
average closing share price to the end of July 2024). Brian Tenner has a holding of 79% of salary (or 111% assuming 50% of Deferred
Bonus Plan awards are retained until the minimum shareholding is achieved). Liam Gray, having joined the Board in November
2021, is building up a holding which currently stands at 16% of salary (47% assuming 50% of all Deferred Bonus Plan awards are
retained until the minimum shareholding is achieved). Non-Executive Directors are not subject to the shareholding requirement.
Directors’ remuneration report continued
Nanoco Group plc – Annual Report and Accounts 2024
085
Annual report on remuneration continued
Director shareholdings continued
Directors’ interests in the shares of the Company, including family and beneficial interests, at 31 July 2024 were:
Ordinary shares of 10p each
31 July
2024
Number
31 July
2024
%
31 July
2023
Number
31 July
2023
%
Current Directors
Dr Christopher Richards 941,751 0.46 841,996 0.26
Dr Nigel Pickett 7,450,694 3.68 11,770,911 3.63
Brian Tenner 1,482,583 0.73 1,157,834 0.36
Liam Gray 142,001 0.07 48,931 0.02
Dr Alison Fielding 172,015 0.08 279,697 0.09
Chris Batterham 124,971 0.06 194,111 0.06
Dieter May — — — —
Dr Jalal Bagherli — — — —
Total for current Directors 10,314,015 5.09 14,293,480 4.42
None of the Directors in office as at 31 July 2024 had any interests at that date in shares of any other group company.
There were no changes in Directors’ shareholdings between 31 July 2024 and the publishing date of these accounts.
The market price for Nanoco shares as at 31 July 2024 was 14.9 pence per share; the highest and lowest prices during the year
were 24.0 pence and 13.1 pence respectively.
Details of share options are set out in note 24 to the financial statements.
Unaudited information
Historical comparative TSR performance graph
The performance graph below shows the Company’s total shareholder return (“TSR”) against the FTSE SmallCap over the period
from 1 August 2014 to 31 July 2024. In the opinion of the Board, the FTSE SmallCap is the most appropriate index against which
the TSR of the Company should be measured because it represents a broad equity market index.
Total shareholder return
The graph shows the percentage return of an investment in the Company’s shares on 1 August 2014 compared with
the percentage return of an investment notionally invested in the FTSE SmallCap index.
Corporate governance
Nanoco Group plc – Annual Report and Accounts 2024
086
Annual report on remuneration continued
Unaudited information continued
Ten-year view of CEO remuneration
CEO remuneration 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Total remuneration
(£’000)
1
635 406 327 312 505 323 298
2
503 660 323
Annual bonus
(% of max vesting) 56 40 — — 52 — 43 75 95 —
LTIP (% of max vesting) 100 — — — — — — — — —
1 The previous CEO’s (Dr Michael Edelman) remuneration was paid in US Dollars but reported in Sterling in this table for the years 2015 to 2020. The
exchange rate used for this purpose varied during the year.
2 Brian Tenner was appointed CEO on 1 September 2020, having previously been CFO and COO. There was no change in Brian Tenner’s remuneration at
that time to reflect the change in position with the proposed increase being made in two deferred tranches on 1 August 2021 and 1 August 2022. Having
regard to the proportion of 2021 for which Brian Tenner was CEO, his remuneration as a Director for the full year is included for that year, and the
remuneration of Dr Michael Edelman for the part of the year when he was CEO is not included.
Percentage change in the remuneration of the Board
The table below shows the percentage change in each Director’s salary, benefits and annual bonus between the current and
previous financial year, and the average percentage change in the same remuneration over the same period in respect of the
employees of the Company on a full-time equivalent basis. The average employee change has been calculated by reference
to the mean of employee pay, excluding new starters in the year.
Average
employee
Brian
Tenner
Dr Nigel
Pickett
Liam
Gray
2
Dr Christopher
Richards
Dr Alison
Fielding
Chris
Batterham
Salary/fees
1
FY24 5% 3% 3% 3% 0% 9% 9%
FY23 9% 17% 6% 70% 0% 0% 0%
FY22 4% 31% 16% N/A 30% 30% 30%
FY21 7% (8%) (9%) N/A (13%) (13%) (13%)
FY20 1% 1% (2%) N/A (2%) (1%) (1%)
Taxable benefits FY24 100% 100% 100% 100% N/A N/A N/A
FY23 N/A N/A N/A N/A N/A N/A N/A
FY22 N/A N/A N/A N/A N/A N/A N/A
FY21 N/A N/A N/A N/A N/A N/A N/A
FY20 N/A N/A N/A N/A N/A N/A N/A
Annual bonus FY24 (29%) (100%) (100%) (100%) N/A N/A N/A
FY23 27% 48% 38% 108% N/A N/A N/A
FY22 0% 100% 100% N/A N/A N/A N/A
FY21 100% 0% 0% N/A N/A N/A N/A
FY20 0% (100%) (100%) N/A N/A N/A N/A
1 The Non-Executive Directors’ fees were reduced by 35% between 1 April 2020 and 31 March 2021, and deferred by 35% with effect from 1 April 2021.
This deferral was repaid in July 2022.
2 The increases in salary and bonus for Liam Gray for FY23 are calculated by reference to the increase between the values included in the single total
figure of remuneration for FY22 and FY23. Therefore, those increases reflect that for FY22 the relevant values related to a part-year only.
3 An employee healthcare plan was implemented in FY24 and is available to all staff including Executive Directors.
The data above is distorted by a number of factors including joining dates, changes in roles and salary and by pay cuts taken
by Directors as part of Company actions to manage the Covid-19 pandemic. From April 2020, some but not all staff had 20% pay
cuts for six months. Executive Directors and other members of the leadership team had 20% pay cuts for a full twelve months.
The increases in Executive pay in FY22 are therefore primarily or wholly the result of the end of the temporary Covid-19 pandemic
pay cut.
Directors’ remuneration report continued
Nanoco Group plc – Annual Report and Accounts 2024
087
Annual report on remuneration continued
Unaudited information continued
Relative importance of spend on pay
The following table sets out the percentage change in returns to shareholders and the overall expenditure on pay
(across the whole group).
Year ended
31 July 2024
£’000
Year ended
31 July 2023
£’000 % change
Return to shareholders 32,000 — 100%
Overall expenditure on pay 3,396 3,225 5%
Average headcount 50 42 19%
Implementation of policy for the year commencing 1 August 2024
Base salary
Base salaries are reviewed annually with effect from 1 August. For the year commencing 1 August 2024, the workforce had an
increase of 3%. Each of the Executive Directors in office as at 1 August 2024 had an increase of 2.5%.
2024 2023 % change
Chief Executive Officer - Dmitry Shashkov (appointed 22 October 2024) £310,000 — N/A
Former Chief Executive Officer – Brian Tenner £307,751 £300,245 2.5%
Chief Technical Officer – Dr Nigel Pickett £219,007 £213,665 2.5%
Chief Financial Officer – Liam Gray £156,673 £152,852 2.5%
Changes to Non-Executive Directors’ fees
Non-Executive Directors’ base fees were increased during the year to £50,000 (2023: £41,000).
2024 2023
Chairman fee £100,000 £100,000
NED base fee £50,000 £41,000
Chair of Committee fee £5,000 £5,000
Pension
The Company operates a salary sacrifice pension arrangement. For the year commencing 1 August 2024, employer pension
contributions above the amount of any salary sacrifice (and the associated employer National Insurance contribution savings)
have remained at 7.5% of salary for the whole workforce, including the Executive Directors.
Annual bonus
For FY25, the maximum annual bonus potential will remain at 125% of base salary for Executive Directors. Brian Tenner will not be
eligible for a bonus in FY25. Up to the full amount of any such bonus earned can be paid as deferred shares under the DBP
vesting after two years with any balance paid in cash. This reflects our stakeholder philosophy, provides a longer-term retention
mechanism and provides alignment with shareholders.
Consistent with the FY23 annual bonus, performance will be assessed on the basis of a balanced scorecard approach in respect
of performance measures. The balance between corporate financial objectives (80%) and personal objectives (20%) will be
unchanged. The corporate financial measures for FY24 will include annual revenue and adjusted EBITDA weighted 60%:20%
respectively. Any personal bonus is only payable if at least one of the financial targets is achieved. The Committee will disclose
the metrics and performance against these on a retrospective basis to the extent that these are not commercially sensitive.
Clawback will apply to any cash bonus paid and malus provisions to any unvested deferred bonus award.
LTIP
The Committee intends to make awards of up to 150% of salary to the CTO and CFO after the announcement of the group’s
full-year results for the year ended 31 July 2024 (subject to market conditions at the time of award). No award will be made to the
former CEO. Dmitry Shashkov will be granted an exceptional award of up to 250% of salary. The Committee will agree targets if
and when any LTIP awards are made during FY25. All awards will continue to be in line with the approved remuneration policy.
This will include a two-year post-vesting holding period.
Corporate governance
Nanoco Group plc – Annual Report and Accounts 2024
088
Annual report on remuneration continued
Unaudited information continued
Statement of voting
The group is committed to ongoing dialogue with its shareholders and takes an active interest in trying to ensure that as many
shareholders as possible submit their votes in time for any shareholder meetings. The following table sets out the actual voting
in respect of the resolutions to approve the Directors’ remuneration policy at the Company’s Annual General Meeting held on
30 November 2021 and to approve the Directors’ remuneration report at the Company’s Annual General Meeting held on
7 December 2023.
Resolution
Votes
for % for
Votes
against % against
Votes
withheld
To approve the Directors’ remuneration policy 138,307,164 99.0% 1,451,931 1.0% 178,488
Resolution
Votes
for % for
Votes
against % against
Votes
withheld
To approve the Directors’ remuneration report 94,761,337 96.3% 3,663,316 3.7% 288,483
Directors’ contracts
It is the group’s policy that Executive Directors should have contracts with an indefinite term, providing for six months’ notice.
Date of contract Date of appointment Notice from the Company Notice from Director
Brian Tenner 20 August 2018 20 August 2018 6 months 6 months
Dr Nigel Pickett 27 June 2006 27 June 2006 6 months 6 months
Liam Gray 8 November 2021 8 November 2021 6 months 6 months
All Directors will offer themselves for re-election at each AGM in accordance with the UK Corporate Governance Code. Service
contracts are available for inspection at the registered office of the Company.
Date of letter of appointment Date of appointment Unexpired term of contract on 31 July 2024
Dr Christopher Richards (Chairman) 28 October 2015 11 November 2015 ~4 months
Dr Alison Fielding 20 March 2017 20 April 2017 ~9 months
Chris Batterham 12 March 2019 1 April 2019 ~8 months
Dieter May 21 December 2023 1 February 2024 1 February 2027
Dr Jalal Bagherli 21 December 2023 5 April 2024 5 April 2027
Non-Executive Directors
All Non-Executive Directors are appointed for an initial three-year term and then on a rolling annual term.
Non-Executive Directors’ appointments may be terminated on not less than three months’ notice from either party.
On behalf of the Board
Dr Alison Fielding
Remuneration Committee Chair
21 November 2024
Directors’ remuneration report continued
Nanoco Group plc – Annual Report and Accounts 2024
089
Directors’ report
The Directors present their report and
the audited financial statements for the
group and Parent Company for the year
ended 31 July 2024.
Financial instruments
Details of the group’s financial risk
management objectives and policies
are disclosed in notes 3 and 27 to the
financial statements.
Research and development
The principal activity of the group is
research and development with the goal
to transition to a commercial production
company, a review of which is included in
the Chairman’s statement and
Operational review on pages 5 to 7 and 9
to 14 respectively.
Total research and development
spend was £1.6 million (2023: £1.8 million).
No development expenditure was
capitalised in the year (2023: £nil) for
the reasons provided in note 3(h) to
the accounts.
Dividends
The Directors do not recommend
payment of an ordinary dividend
(2023: £nil).
Disclosures reported elsewhere in the Annual Report
The strategic review of the business of the Company and its subsidiaries is given on
pages 5 to 49. Certain information required for disclosure in this report is provided in
other appropriate sections of this Annual Report. These are set out in the table below:
Disclosure requirement Pages
Financial results and dividends 30-32
Board and Committee meetings and Directors’ attendance 53
Directors’ biographical details and date of appointment 50-51
Corporate governance 52-54
Approach to risk management and principal risks 33-35
Research and development activities 29
Directors’ remuneration 73-88
Greenhouse gas emissions, employee engagement, disability, gender and human rights 38-47
Statement on disclosure to the external auditors 92
Statement of Directors’ responsibilities 92
Future developments 7 and 14
Going concern statement 37
Disclosures on financial instruments (note 27 to the consolidated financial statements) 126-129
The disclosures are, accordingly, incorporated into this report by reference.
Requirements of the Listing Rules
The following table provides references to where the information required
by the Listing Rule 6.6.1R is disclosed:
Listing Rule requirement Location
Information required in relation to the publication
of unaudited financial information
Not applicable
Details of any long-term incentive schemes Remuneration report
Directors who held office during the year and their
interests in shares and share options in the group
Remuneration report
Arrangements where a Director has waived historical
or future emoluments from the Company
Remuneration report on
Chairman’s fees
Details of business relationships with suppliers,
customers and others
Strategic report
Details of any non-pre-emptive issues of equity
for cash
Not applicable
Details of any non-pre-emptive issues of equity
for cash by any unlisted major subsidiary
No such share allotments
Details of UK Parent participation in a placing
by a listed subsidiary
No such share participations
Details of any contract of significance in which
a Director is or was materially interested
No such contracts
Details of rules regarding the appointment
and replacement of Directors
Remuneration report
Contracts of significance between the Company
(or a subsidiary) and a controlling shareholder
No such contracts
Details of a waiver of dividends by a shareholder No such waivers
Board statement in respect of relationship
agreement with the controlling shareholder
No such agreements
Corporate governance
Nanoco Group plc – Annual Report and Accounts 2024
090
Acquisition of the Company’s
own shares
In April 2024 the company completed
a tender offer at 24 pence, to return
£30.0 million to shareholders. Of the 125
million shares acquired by the company
via the tender offer, 90% were
subsequently cancelled with the
remainder being held by the Employee
Benefit Trust
Immediately following the tender offer,
the company commenced a broker
managed on-market buy-back to return
a further £3.0 million to shareholders. As
at 31 July 2024 £2.0 million had been
returned via this mechanism which led
to the purchase and subsequent
cancellation of a further 10.9 million
shares. The remainder of the buy-back
was completed post year end.
Share capital and funding
As at 31 July 2024, share capital comprised
202.6 million ordinary shares of 10 pence
each (2023: 324.4 million). There is only
one class of share and all shares are fully
paid. Full details of the group’s and
Company’s share capital movements
during the year are given in note 22 to
the financial statements.
Pursuant to the general provisions of
the Articles of Association and prevailing
legislation, there are no specific restrictions
on the size of a holding. The Directors are
not aware of any restrictions on the transfer
of ordinary shares in the Company other
than certain restrictions which may from
time to time be imposed by law and
regulations, e.g. insider trading laws,
and pursuant to the Listing Rules of the
Financial Conduct Authority whereby
certain employees of the Company
require prior approval from the Company
to deal in the Company’s securities.
The Company is not aware of any
agreements between shareholders that
may result in restrictions on voting rights
and the transfer of securities.
Details of shares under option are provided
in note 24 to the financial statements.
Foreign branches
The group has just one foreign location,
a subsidiary in the US, which provides
management services to the
UK business.
Directors’ report continued
Directors and their interests
The Directors who held office throughout the year and their interests are shown in
the Remuneration report. As at 31 July 2024, none of the Directors had any interests
in shares of any other group company.
No Director had an interest in any contract that was significant in relation to the
group’s business at any time during the year.
Directors are formally subject to re-election at intervals of not more than three years
but voluntarily submit themselves for re-election each year.
In the case of each Director in office at the date the Directors’ report is approved:
| so far as the Director is aware, there is no relevant audit information of which the
group and Company’s auditors are unaware; and
| they have taken all the steps that they ought to have taken as a Director in order
to make themselves aware of any relevant audit information and to establish that
the group and Company’s auditors are aware of that information.
Directors’ indemnity insurance
The group has maintained insurance in the form of a qualifying third party indemnity
provision throughout the year for its Directors and Officers against the consequences
of actions brought against them in relation to their duties for the group. This provision
was in force through the financial year and remains in force as at the date of
approval of the financial statements.
Substantial shareholders
The Company is aware that the following had an interest in 3% or more of the issued
ordinary share capital of the Company at 31 July 2024:
Substantial shareholders
Number
of ordinary
shares at
31 July 2024
% of
issued
share
capital
Hargreaves Lansdown Asset Management 47,996,367 23.69
Interactive Investor 23,535,981 11.62
Employee Benefit Trust (“EBT”) 13,762,222 6.79
Lombard Odier Investment Managers 11,679,891 5.77
Barclays Smart Investor 10,438,496 5.15
HSDL, stockbrokers 9,008,668 4.45
Dr Nigel Pickett 7,450,694 3.68
AJ Bell, stockbrokers 7,197,466 3.55
Cable Car Capital 6,488,626 3.20
Post year end, on 24th September 2024, Nanoco were notified that Milkwood Capital
Limited had increased their shareholding to 16,000,000 ordinary shares (8.2% of
issued share capital). There were no other notifiable changes.
Donations
No political donations were made in the year (2023: £nil). Charitable donations of
£100 were made in the year (2023: £nil).
Compliance with the UK Corporate Governance Code
The statements of compliance with the principles of the UK Corporate
Governance Code published by the FRC in 2018 are set out on page 57.
Nanoco Group plc – Annual Report and Accounts 2024
091
Additional information for
shareholders
With regard to the appointment and
replacement of Directors, the Company
is governed by its Articles of Association,
the UK Corporate Governance Code
2018, the Companies Act 2006 and
related legislation.
The Articles themselves may be
amended by special resolution of the
shareholders. The Articles provide that
Directors may be appointed by an
ordinary resolution of the Company’s
members or by a resolution of the
Directors, provided that, in the latter
instance, a Director appointed in this
way retires and stands for election at
the first Annual General Meeting
following his appointment.
The Articles also provide that at every
Annual General Meeting at least one-third
of the Directors retire by rotation and set
out the circumstances in which and how
they may be re-elected. All Directors
retire annually and are proposed for
re-election at the AGM. The Company’s
members may remove a Director by
passing an ordinary resolution of which
special notice has been given. The office
of a Director shall be vacated in any of
the following events: (a) if (but in the case
of a Director holding any executive office
subject to the terms of any contract of
service between him and the Company)
notification in writing, signed by the
Director or otherwise authenticated in
such manner as the other Directors may
accept, is received by the Company
from the Director that he is resigning or
retiring from office as a Director, and
such resignation or retirement has taken
effect in accordance with its terms, or if
he shall in writing offer to resign or retire
and the Directors shall resolve to accept
such offer; (b) if he becomes bankrupt or
has a receiving order made against him
or makes any arrangement or composition
with his creditors generally in satisfaction
of his debts or shall apply to the court for
an interim order under section 253 of the
Insolvency Act 1986; (c) if a registered
medical practitioner who is treating the
Director gives a written opinion to the
Company stating that he has become
physically or mentally incapable of acting
as a Director and may remain so for more
than three months; (d) if he is absent from
meetings of the Directors for six successive
months without leave, and his alternate
Director (if any) shall not during such
period have attended in his stead, and
the Directors resolve that his office be
vacated; (e) if he shall be removed from
office by notice in writing served upon
him signed by all his co-Directors, but
so that if he holds an appointment to
an executive office which automatically
determines, as a result, such removal
shall be deemed an act of the Company
and shall have effect without prejudice
to any claim for damages for breach of
any contract of service between him and
the Company; or (f) if he ceases to be a
Director by virtue of any provision of the
Companies Act or becomes prohibited
by law from being a Director.
The powers of the Directors are determined
by applicable legislation and the Company’s
Articles of Association. As provided in
those Articles, the Directors may exercise
all the Company’s powers provided that
the Articles or applicable legislation do
not stipulate that any such powers must
be exercised by the Company’s members.
The Directors have been authorised to
issue and allot ordinary shares, pursuant
to the Articles, and have authority to
make market purchases of shares. These
powers are referred to shareholders at
each Annual General Meeting for renewal.
Any shares purchased may be cancelled
or held as treasury shares.
Employment policies
The group is committed to ensuring the
health and safety of its employees in the
workplace. This includes the provision
of regular medical checks.
The group supports the employment
of disabled people where possible
through recruitment, by retention of those
who become disabled and generally
through training, career development
and promotion.
The group is committed to keeping
employees as fully informed as possible
with regard to the group’s performance
and prospects and seeks their views,
wherever possible, on matters which
affect them as employees.
Independent auditors
Forvis Mazars LLP were appointed in 2022
following an external tender process.
Forvis Mazars LLP have indicated their
willingness to continue in office.
Ordinary resolutions to re-appoint
Mazars LLP as auditors and to authorise
the Directors to agree their audit fee will
be proposed at the forthcoming Annual
General Meeting.
Annual General Meeting notice
The Annual General Meeting of the
Company will be held on 21 January
2025, at the Company’s headquarters at
The Conference Centre, The Heath
Business and Technical Park, Runcorn
WA7 4QX. Shareholders will have the
option to attend in person or through
teleconference, with the teleconference
details to be provided. The notice
convening the AGM, together with an
explanation of the resolutions to be
proposed at the meeting, will be sent
to shareholders separately from
this document.
Post-balance sheet events
Post year end, the Group completed the
£3 million share buyback.
On 22 October 2024, the Group
appointed Dmitry Shashkov as CEO,
replacing Brian Tenner.
The Group also received a requisition for
a general meeting from Milkwood Capital
Limited, requesting that two of their
representatives are appointed to the
Board. Nanoco does not believe this is in
the best interests of all shareholders.
On behalf of the Board
Dr Christopher Richards
Chairman
21 November 2024
Corporate governance
Nanoco Group plc – Annual Report and Accounts 2024
092
Statement of Directors’ responsibilities in respect of the financial statements
The Directors are responsible for
preparing the Annual Report and
Accounts 2024 and the financial
statements in accordance with
applicable law and regulation.
Company law requires the Directors
to prepare financial statements for
each financial year. Under that law
the Directors have prepared the group
and the Company financial statements
in accordance with International
Accounting Standards in conformity
with the requirements of the Companies
Act 2006. Additionally, the Financial
Conduct Authority’s Disclosure Guidance
and Transparency Rules require the
Directors to prepare the group financial
statements in accordance with UK
adopted International Financial
Reporting Standards.
The Company has also prepared
financial statements in accordance
with UK adopted International Financial
Reporting Standards.
Under company law, Directors must not
approve the financial statements unless
they are satisfied that they give a true
and fair view of the state of affairs of
the group and Company and of the
profit or loss of the group for that period.
In preparing the financial statements,
the Directors are required to:
| select suitable accounting policies
and then apply them consistently;
| state whether applicable International
Accounting Standards in conformity
with the requirements of the Companies
Act 2006 and UK adopted International
Financial Reporting Standards have
been followed, subject to any material
departures disclosed and explained in
the financial statements;
| make judgements and accounting
estimates that are reasonable and
prudent; and
| prepare the financial statements on
the going concern basis unless it is
inappropriate to presume that the
group and Company will continue
in business.
The Directors are responsible for
safeguarding the assets of the group
and Company and hence for taking
reasonable steps for the prevention and
detection of fraud and other irregularities.
The Directors are also responsible for
keeping adequate accounting records
that are sufficient to show and explain the
group’s and Company’s transactions and
disclose with reasonable accuracy at any
time the financial position of the group
and Company and enable them to ensure
that the financial statements and the
Directors’ remuneration report comply
with the Companies Act 2006.
Directors’ confirmations
The Directors consider that the Annual
Report and Accounts 2024, taken as a
whole, is fair, balanced and
understandable and provides the
information necessary for shareholders
to assess the group’s and Company’s
position and performance, business
model and strategy.
Each of the Directors, whose names
and functions are listed in the Corporate
governance report, confirm that, to the
best of their knowledge:
| the group and Company financial
statements, which have been
prepared in accordance with
International Accounting Standards
in conformity with the requirements
of the Companies Act 2006 and
UK adopted International Financial
Reporting Standards, give a true
and fair view of the assets, liabilities
and financial position of the group
and Company, and of the profit of
the group; and
| the Directors’ report includes a fair
review of the development and
performance of the business and the
position of the group and Company,
together with a description of the
principal risks and uncertainties that
they face.
By order of the Board
Dr Christopher Richards
Chairman
21 November 2024
Nanoco Group plc – Annual Report and Accounts 2024
093
Financial statements
Opinion
We have audited the financial
statements of Nanoco Group Plc (the
‘Parent Company’) and its subsidiaries
(the ‘group’) for the year ended 31 July 2024
which comprise of the Consolidated
statement of comprehensive income,
Consolidated statement of changes in
equity, Company statement of changes
in equity, Group and Company statements
of financial position, Group and Company
cash flow statements, and notes to the
financial statements, including material
accounting policy information.
The financial reporting framework that
has been applied in their preparation
is applicable law and UK-adopted
international accounting standards and,
as regards the parent company financial
statements, as applied in accordance
with the provisions of the Companies
Act 2006.
In our opinion, the financial statements:
| give a true and fair view of the
state of the group’s and of the parent
company’s affairs as at 31 July 2024
and of the group’s loss for the year
then ended;
| have been properly prepared
in accordance with UK-adopted
international accounting standards
and, as regards the parent company
financial statements, as applied in
accordance with the provisions of
the Companies Act 2006; and
| have been prepared in accordance
with the requirements of the
Companies Act 2006.
Basis for opinion
We conducted our audit in accordance
with International Standards on Auditing
(UK) (ISAs (UK)) and applicable law. Our
responsibilities under those standards
are further described in the “Auditor’s
responsibilities for the audit of the
financial statements” section of our
report. We are independent of the group
and the parent company in accordance
with the ethical requirements that are
relevant to our audit of the financial
statements in the UK, including the FRC’s
Ethical Standard as applied to listed
entities and public interest entities and
we have fulfilled our other ethical
responsibilities in accordance with these
requirements. We believe that the audit
evidence we have obtained is sufficient
and appropriate to provide a basis for
our opinion.
Conclusions relating to going
concern
In auditing the financial statements,
we have concluded that the directors’
use of the going concern basis of
accounting in the preparation of the
financial statements is appropriate.
Our audit procedures to evaluate
the directors’ assessment of the group’s
and the parent company’s ability to
continue to adopt the going concern
basis of accounting included but were
not limited to:
| Undertaking an initial assessment
at the planning stage of the audit to
identify events or conditions that may
cast significant doubt on the group’s
and the parent company’s ability to
continue as a going concern;
| Obtaining an understanding of
the relevant controls relating to the
directors’ going concern assessment;
| Making enquiries of the directors to
understand the period of assessment
considered by them, the assumptions
they considered and the implication
of those when assessing the group’s
and the parent company’s future
financial performance
| Challenging the appropriateness of
the directors’ key assumptions in their
cash flow forecasts, as described in
note 2c, by reviewing supporting and
contradictory evidence in relation to
these key assumptions and assessing
the directors’ consideration of severe
but plausible scenarios. This included
assessing the viability of mitigating
actions within the directors’ control;
| Testing the accuracy and functionality
of the model used to prepare the
directors’ forecasts;
| Assessing the historical accuracy of
forecasts prepared by the directors;
| Considering the consistency of the
directors’ forecasts with other areas
of the financial statements and
our audit;
| Considering events that have
occurred post the balance sheet date
and its impact on the key assumptions
and forecasts used in assessing going
concern; and
| Evaluating the appropriateness of the
directors’ disclosures in the financial
statements on going concern
Independent auditors’ report to the members of Nanoco Group plc
Based on the work we have performed,
we have not identified any material
uncertainties relating to events or
conditions that, individually or
collectively, may cast significant doubt
on the group’s and the parent company’s
ability to continue as a going concern for
a period of at least twelve months from
when the financial statements are
authorised for issue.
Our responsibilities and the
responsibilities of the directors with
respect to going concern are described
in the relevant sections of this report.
In relation to Nanoco Group Plc’s
reporting on how it has applied the UK
Corporate Governance Code, we have
nothing material to add or draw
attention to in relation to the directors’
statement in the financial statements
about whether the director’s considered
it appropriate to adopt the going
concern basis of accounting.
Key audit matters
Key audit matters are those matters
that, in our professional judgement,
were of most significance in our audit
of the financial statements of the current
period and include the most significant
assessed risks of material misstatement
(whether or not due to fraud) we
identified, including those which had
the greatest effect on: the overall audit
strategy; the allocation of resources in
the audit; and directing the efforts of the
engagement team. These matters were
addressed in the context of our audit of
the financial statements as a whole, and
in forming our opinion thereon, and we
do not provide a separate opinion on
these matters.
We summarise below the key audit
matters in forming our opinion above,
together with an overview of the principal
audit procedures performed to address
each matter and our key observations
arising from those procedures.
These matters, together with our findings,
were communicated to those charged
with governance through our Audit
Completion Report and follow up letter
to the Audit Committee.
Financial statements
Nanoco Group plc – Annual Report and Accounts 2024
094
Key audit matters continued
Key Audit Matter How our scope addressed this matter
Impairment of Investment in subsidiaries
(parent company)
Refer to page 104 (key sources of estimation
uncertainty) and page 108 (accounting policy)
and pages 108 and 119 of the financial
disclosures.
The accounting for Investment in subsidiaries is
a Key Audit Matter as the determination of the
recoverable value for the impairment
assessment of the investment in subsidiaries
involves significant management judgement
and estimation.
The Investments in subsidiaries as at 31 July
2024 is £46.5m (2023: £41.6m) which is significant
to the financial statement of the parent
company. This asset represents 66% of the
parent company’s total assets at 31 July 2024
(2023: 44%).
The valuation of the Investments in subsidiaries
is based on the value-in-use calculation which
represents the recoverable amount being
higher than the fair value less cost to sell.
Management’s assessment was performed with
the assistance of a third-party valuation’s
expert. Based on the value-in-use calculated of
£46.5m, a reversal of previously recognised
impairment charge of £3.8m was recognised.
The value-in-use calculation is subjective due
to the inherent uncertainty involved in
estimating and discounting future cashflows.
The key assumptions used in the calculation
included the forecasted cashflows, the strategic
operating period and the discount rate of 18.5%
(2023: 19.7%). Estimation uncertainty relating to
the valuation of the investment in subsidiaries
has increased due to historical impairment
recognised and the loss in the year which
constitutes an indicator of impairment.
The financial statements (note 2), disclose the
relevant information regarding the method
adopted by management in calculating the
value-in-use and the key assumptions relevant
to this calculation.
Our audit procedures included, but were not limited to:
| Obtaining an understanding of the parent company’s processes and
controls to address the risk associated with impairment of investment in
subsidiaries and assessing the design and implementation of the
relevant controls;
| Performing the following procedures over management value-in-use calculation:
| Assessing the Company’s process regarding impairment assessment by
engaging our internal valuation experts to assist in assessing and
challenging the appropriateness of the discounted cashflow models
including the independent assessment of the underlying assumptions
relating to the:
- discount rate
- strategic operating period
- other entity specific factors incorporated into the valuations;
| Assessing the appropriateness of the discounted cashflow models based
on the applicable accounting standards: IAS 36 Impairment of assets;
| Assessing the competency and objectivity of management’s expert used
in the calculation of the recoverable amount by performing procedures
such as the review of the engagement terms stipulated between the
engagement letter with the expert;
| Confirming the mathematical accuracy of the impairment models and
agreeing the relevant data with the latest budgets, actual past results
and other supporting documents;
| Assessing the appropriateness of sensitivity analysis and evaluated
whether any reasonably foreseeable change in assumptions could lead
to impairment or material change in the valuation of the investments;
| Ensuring that the carrying amount of the Investment in the subsidiaries
has been accurately compared to its value-in-use calculation to
determine the necessary impairment reversal;
| Performing a stand back review by considering relevant internal and external
factors including disconfirming information in our assessment of the
appropriateness of the methodology used in management’s calculation;
| Evaluating the adequacy of the disclosures made in the financial statements
and ensuring they comply with the disclosure requirements of IAS 36
Impairment of Assets.
Our observations
Based on our audit procedures, we are satisfied that the carrying value of the
investment in subsidiaries and the disclosures within the financial statement
are appropriate.
Independent auditors’ report to the members of Nanoco Group plc continued
Nanoco Group plc – Annual Report and Accounts 2024
095
Our application of materiality and an overview of the scope of our audit
The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for materiality.
These, together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent
of our audit procedures on the individual financial statement line items and disclosures and in evaluating the effect of misstatements,
both individually and on the financial statements as a whole. Based on our professional judgement, we determined materiality
for the financial statements as a whole as follows:
Group materiality Parent company materiality
Overall materiality £306,000 £300,000
How we determined it We determined overall materiality for the
group using a benchmark of approximately
1% total assets.
This was determined at 1% of total assets capped at
an amount lower than the group materiality.
Rationale for
benchmark applied
We have considered total assets to be the key
metric for determining materiality given the group’s
focus on continued growth through its intangible
asset portfolio. Therefore, this is considered most
relevant measure of the underlying position of both
the group.
Nanoco Group Plc is a holding entity and therefore not
profit or revenue focused. Total assets is deemed to be
the most appropriate benchmark for the users of the
financial statements.
Performance
materiality
Performance materiality is set to reduce to an
appropriately low level the probability that the
aggregate of uncorrected and undetected
misstatements in the financial statements
exceeds materiality for the financial statements
as a whole.
We set performance materiality at £214,000,
which represents 70% of overall materiality.
Performance materiality is set to reduce to an
appropriately low level the probability that the
aggregate of uncorrected and undetected
misstatements in the financial statements exceeds
materiality for the financial statements as a whole.
Based on our risk assessments, together with our
assessment of the company’s overall control
environment, we set performance materiality at
£210,000, which represents 70% of overall materiality.
Reporting threshold We agreed with the directors that we would report
to them misstatements identified during our audit
above £9,000 as well as misstatements below that
amount that, in our view, warranted reporting for
qualitative reasons.
We agreed with the directors that we would report
to them misstatements identified during our audit
above £9,000 as well as misstatements below that
amount that, in our view, warranted reporting for
qualitative reasons.
As part of designing our audit, we assessed the risk of material misstatement in the financial statements, whether due to fraud or
error, and then designed and performed audit procedures responsive to those risks. In particular, we looked at where the
directors made subjective judgements, such as assumptions on significant accounting estimates.
We tailored the scope of our audit to ensure that we performed sufficient work to be able to give an opinion on the financial
statements as a whole. We used the outputs of our risk assessment, our understanding of the group and the parent company,
their environment, controls, and critical business processes, to consider qualitative factors to ensure that we obtained sufficient
coverage across all financial statement line items.
Our group audit scope included an audit of the group and the parent company financial statements. Based on our risk
assessment, Nanoco Group Plc, Nanoco Technologies Limited and Nanoco 2D materials Limited were subject to full scope audit
performed by the group audit team. Nanoco Employee Trust was subject to audit procedures over account balances and/or
disclosures as the component was not deemed individually financially significant enough to require a full scope audit for group
reporting purposes. The remaining two components, Nanoco Tech Limited and Nanoco Life Services limited were subject to
analytical procedures and review of financial information at group level. The audit of the component financial information was
performed by the same group engagement team under the group engagement partner’s direct supervision.
At the parent company level, the group audit team also tested the consolidation process and carried out analytical procedures
to confirm our conclusion that there were no significant risks of material misstatement of the aggregated financial information.
Other information
The other information comprises the information included in the annual report other than the financial statements and our
auditor’s report thereon. The directors are responsible for the other information. Our opinion on the financial statements does not
cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of
assurance conclusion thereon.
Financial statements
Nanoco Group plc – Annual Report and Accounts 2024
096
Other information continued
Our responsibility is to read the other
information and, in doing so, consider
whether the other information is
materially inconsistent with the financial
statements or our knowledge obtained in
the course of audit or otherwise appears
to be materially misstated. If we identify
such material inconsistencies or
apparent material misstatements, we are
required to determine whether this gives
rise to a material misstatement in the
financial statements themselves. If,
based on the work we have performed,
we conclude that there is a material
misstatement of this other information,
we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters
prescribed by the Companies Act
2006
In our opinion, the part of the directors’
remuneration report to be audited has
been properly prepared in accordance
with the Companies Act 2006.
In our opinion, based on the work
undertaken in the course of the audit:
| the information given in the strategic
report and the directors’ report for the
financial year for which the financial
statements are prepared is consistent
with the financial statements and
those reports have been prepared
in accordance with applicable
legal requirements;
| the information about internal control
and risk management systems in
relation to financial reporting
processes and about share capital
structures, given in compliance with
rules 7.2.5 and 7.2.6 in the Disclosure
Guidance and Transparency Rules
sourcebook made by the Financial
Conduct Authority (the FCA Rules),
is consistent with the financial
statements and has been prepared
in accordance with applicable legal
requirements; and
| information about the parent
company’s corporate governance
code and practices and about its
administrative, management and
supervisory bodies and their
committees complies with rules 7.2.2,
7.2.3 and 7.2.7 of the FCA Rules.
Matters on which we are required
to report by exception
In light of the knowledge and
understanding of the group and the
parent company and their environment
obtained in the course of the audit, we
have not identified material
misstatements in the:
| strategic report or the directors’
report; or
| information about internal control and
risk management systems in relation
to financial reporting processes and
about share capital structures, given
in compliance with rules 7.2.5 and 7.2.6
of the FCA Rules.
We have nothing to report in respect of
the following matters in relation to which
the Companies Act 2006 requires us to
report to you if, in our opinion:
| adequate accounting records have
not been kept by the parent company,
or returns adequate for our audit have
not been received from branches not
visited by us; or
| the parent company financial
statements and the part of the
directors’ remuneration report to be
audited are not in agreement with the
accounting records and returns; or
| certain disclosures of directors’
remuneration specified by law are not
made; or
| we have not received all the
information and explanations we
require for our audit; or
| a corporate governance statement
has not been prepared by the parent
company.
Corporate governance statement
The Listing Rules require us to review the
directors’ statement in relation to going
concern, longer-term viability and that
part of the Corporate Governance
Statement relating to Nanoco Group
Plc’s compliance with the provisions
of the UK Corporate Governance
Statement specified for our review.
Based on the work undertaken as part
of our audit, we have concluded that
each of the following elements of the
Corporate Governance Statement is
materially consistent with the financial
statements or our knowledge obtained
during the audit:
| Directors’ statement with regards
the appropriateness of adopting the
going concern basis of accounting
and any material uncertainties
identified, set out on page 37;
| Directors’ explanation as to its
assessment of the entity’s prospects,
the period this assessment covers and
why they period is appropriate, set out
on page 37;
| Directors’ statement on fair, balanced
and understandable, set out on pages 5
to 37;
| Board’s confirmation that it has
carried out a robust assessment of the
e-merging and principal risks, set out
on page 33;
| The section of the annual report that
describes the review of effectiveness
of risk management and internal
control systems, set out on pages 33 to
35; and;
| The section describing the work of the
audit committee, set out on page 65.
Responsibilities of Directors
As explained more fully in the directors’
responsibilities statement set out on
page 92, the directors are responsible
for the preparation of the financial
statements and for being satisfied that
they give a true and fair view, and for
such internal control as the directors
determine is necessary to enable the
preparation of financial statements that
are free from material misstatement,
whether due to fraud or error.
In preparing the financial statements,
the directors are responsible for assessing
the group’s and the parent company’s
ability to continue as a going concern,
disclosing, as applicable, matters related
to going concern and using the going
concern basis of accounting unless the
directors either intend to liquidate the
group or the parent company or to
cease operations, or have no realistic
alternative but to do so.
Auditor’s responsibilities for the
audit of the financial statements
Our objectives are to obtain reasonable
assurance about whether the financial
statements as a whole are free from
material misstatement, whether due to
fraud or error, and to issue an auditor’s
report that includes our opinion.
Reasonable assurance is a high level
of assurance but is not a guarantee that
an audit conducted in accordance with
ISAs (UK) will always detect a material
misstatement when it exists. Misstatements
Independent auditors’ report to the members of Nanoco Group plc continued
Nanoco Group plc – Annual Report and Accounts 2024
097
can arise from fraud or error and are
considered material if, individually or in
the aggregate, they could reasonably
be expected to influence the economic
decisions of users taken on the basis of
these financial statements.
The extent to which our procedures
are capable of detecting irregularities,
including fraud is detailed below.
Irregularities, including fraud, are
instances of non-compliance with laws
and regulations. We design procedures
in line with our responsibilities, outlined
above, to detect material misstatements
in respect of irregularities, including fraud.
Based on our understanding of the
group and the parent company and
their industry, we considered that
non-compliance with the following laws
and regulations might have a material
effect on the financial statements:
employment regulations, health and
safety regulations, anti-money
laundering regulations, compliance
with the Data Protection Act, Patent
regulations and compliance with
London Stock Exchange rules for
premium listed companies.
To help us identify instances of
non-compliance with these laws
and regulations, and in identifying
and assessing the risks of material
misstatement in respect to non-
compliance, our procedures included,
but were not limited to:
| Gaining an understanding of the legal
and regulatory framework applicable
to the group and the parent company,
the industry in which they operate,
and the structure of the group, and
considering the risk of acts by the
group and the parent company which
were contrary to the applicable laws
and regulations, including fraud;
| Inquiring of the directors,
management and, where appropriate,
those charged with governance, as to
whether the group and the parent
company is in compliance with laws
and regulations, and discussing their
policies and procedures regarding
compliance with laws and regulations;
| Inspecting correspondence with
relevant licensing or regulatory
authorities including Patent
regulations within countries in which
the group operates;
| Reviewing minutes of directors’
meetings in the year; and
| Discussing amongst the engagement
team the laws and regulations listed
above, and remaining alert to any
indications of non-compliance.
We also considered those laws and
regulations that have a direct effect
on the preparation of the financial
statements, such as tax legislation,
pension legislation, the Companies
Act 2006 and listing rules.
In addition, we evaluated the directors’
and management’s incentives and
opportunities for fraudulent manipulation
of the financial statements, including the
risk of management override of controls,
and determined that the principal risks
related to posting manual journal entries
to manipulate financial performance,
management bias through judgements
and assumptions in significant accounting
estimates, in particular in relation to the
estimate of the recoverable amount of
the investment in subsidiaries held in the
parent company, revenue recognition
(which we pinpointed to the occurrence
of service revenue and significant
one-off or unusual transactions).
Our procedures in relation to fraud
included but were not limited to:
| Making enquiries of the directors and
management on whether they had
knowledge of any actual, suspected
or alleged fraud;
| Gaining an understanding of the
internal controls established to
mitigate risks related to fraud;
| Discussing amongst the engagement
team the risks of fraud;
| Addressing the risks of fraud through
management override of controls by
performing journal entry testing; and
| Seeking disconfirming evidence by
obtaining external records to assess
management assumptions against;
| Incorporating an element of
unpredictability in the selection of the
nature timing, and extent of audit
procedures performed.
The primary responsibility for the prevention
and detection of irregularities, including
fraud, rests with both those charged with
governance and management. As with
any audit, there remained a risk of
non-detection of irregularities, as these
may involve collusion, forgery, intentional
omissions, misrepresentations or the
override of internal controls.
The risks of material misstatement that
had the greatest effect on our audit are
discussed in the “Key audit matters”
section of this report.
A further description of our
responsibilities is available on the
Financial Reporting Council’s website
at www.frc.org.uk/auditorsresponsibilities.
This description forms part of our
auditor’s report.
Other matters which we are
required to address
Following the recommendation of the
audit committee, we were appointed by
The Board of Directors on 21 June 2022
to audit the financial statements for the
year ending 31 July 2022 and subsequent
financial periods. The period of total
uninterrupted engagement is 3 years,
covering the years ending 31 July 2022
to 31 July 2024.
The non-audit services prohibited by
the FRC’s Ethical Standard were not
provided to the group or the parent
company and we remain independent
of the group and the parent company
in conducting our audit.
Our audit opinion is consistent with our
additional report to the audit committee.
Use of the audit report
This report is made solely to the
company’s members as a body in
accordance with Chapter 3 of Part 16 of
the Companies Act 2006. Our audit work
has been undertaken so that we might
state to the company’s members those
matters we are required to state to them
in an auditor’s report and for no other
purpose. To the fullest extent permitted
by law, we do not accept or assume
responsibility to anyone other than the
company and the company’s members
as a body for our audit work, for this report,
or for the opinions we have formed.
As required by the Financial Conduct
Authority Disclosure Guidance and
Transparency Rules, these financial
statements will form part of the
electronic reporting format prepared
annual financial report filed on the
National Storage Mechanism of the
Financial Conduct Authority. This
auditor’s report provides no assurance
over whether the annual financial report
will be prepared using the correct
electronic reporting format.
Valerie Levi (Senior Statutory Auditor)
for and on behalf of Forvis Mazars LLP
Chartered Accountants and Statutory
Auditor
1 St Peter’s Square Manchester M2 3DE
21 November 2024
Financial statements
Nanoco Group plc – Annual Report and Accounts 2024
098

|  | 2024 | 2023
| Notes | £’000 | £’000
Revenue | 4 | 7, 8 7 4 | 5 , 61 8
Cost of sales |  | (1, 211) | (8 47)
Gross profit |  | 6,663 | 4 ,7 71
Other operating income |  |  |
Government grants | 5 | 142 | 230
Profit on sale of IP | 6 | — | 68,687
Gain on derivative financial instrument | 6 | 1, 814 | —
Operating expenses |  |  |
Research and development expenses | 6 | (853) | (1 ,295)
Administrative expenses |  | (6, 05 9) | (5 7, 4 0 1)
Operating profit | 6 | 1 ,707 | 1 4 ,9 9 2
– Before share-based payments and non-recurring items |  | 850 | (2 ,9 1 5)
– Share-based payments | 24 | (957) | (9 53)
– Profit on sale of IP | 6 | — | 68,687
– Gain on derivative financial instrument |  | 1, 814 | —
– Litigation costs | 6 | — | (4 9, 3 3 7)
– EGM requisition |  | — | (49 0)
Finance income | 8 | 835 | 38
Finance expense | 8 | (677) | (5 ,457)
Profit before taxation |  | 1,865 | 9, 5 7 3
Taxation | 9 | (3 ,11 8) | 1, 512
(Loss)/profit after taxation |  | (1, 25 3) | 11 ,085
Other comprehensive income |  | — | —
Total comprehensive (loss)/profit for the year |  | (1, 25 3) | 11 ,085
(Loss)/profit per share |  |  |
Basic (loss)/profit per share for the year | 10 | (0. 4 3p) | 3.44p
Diluted (loss)/profit per share for the year | 10 | (0. 4 3p) | 3. 32p

The loss for the current year and profit for the prior year arise from the group’s continuing operations and are attributable to the
equity holders of the Parent.
The notes on pages 102 to 131 form an integral part of these financial statements.
Consolidated statement of comprehensive income
for the year ended 31 July 2024
Nanoco Group plc – Annual Report and Accounts 2024
099

|  |  |  |  |  | Share- |  |  | (Accumulated |
|  |  |  | Capital | Reverse | based |  | Shares | losses)/ |
|  | Share | Share | redemption | acquisition | payment | Merger | held | retained |
|  | capital | premium | reserve | reserve | reserve | reserve | by EBT | earnings | Total
Group | Notes | £’000 | £’000 | £’000 | £’000 | £’000 | £’000 | £’000 | £’000 | £’000
At 1 August 2022 |  | 32, 24 4 | 1 2 1 ,14 5 | — | (77 ,868) | 4 ,9 1 6 | (1 , 242) | — | (7 4,715) | 4, 480
Profit for the year |  | — | — | — | — | — | — | — | 11,0 85 | 11,0 85
Other comprehensive income |  | — | — | — | — | — | — | — | — | —
Total comprehensive profit |  | — | — | — | — | — | — | — | 11,0 85 | 11,0 85
Capital reduction | 22 | — | (12 1 ,14 5) | — | — | — | — | — | 1 2 1,1 4 5 | —
Issue of capital to EBT |  |  |  |  |  |  |  |  |  |
on option exercise |  | 199 | — | — | — | (2 59) | — | (1 05) | 60 | (10 5)
Share-based payments | 24 | — | — | — | — | 953 | — | — | — | 953
At 31 July 2023 |  | 32, 44 3 | — | — | (77 ,868) | 5 , 61 0 | (1, 242) | (1 05) | 57 ,575 | 1 6 , 41 3
Loss for the year |  | — | — | — | — | — | — | — | (1, 25 3) | (1, 253)
Other comprehensive income |  | — | — | — | — | — | — | — | — | —
Total comprehensive loss |  | — | — | — | — | — | — | — | (1, 25 3) | (1 , 253)
Share buy-back | 22, 26 | (1 2, 186) | — | 12, 186 | — | — | — | (3, 3 48) | (2 9, 6 8 3) | (33 ,031)
Issue of capital to EBT |  |  |  |  |  |  |  |  |  |
on option exercise |  | — | — | — | — | (207) | — | 105 | 5 | (9 7)
Transfer of expired options | 24 | — | — | — | — | (4 ,78 8) | — | — | 4 ,788 | —
Share-based payments | 24 | — | — | — | — | 957 | — | — | — | 957
At 31 July 2024 |  | 20, 2 57 | — | 1 2 ,1 8 6 | (77 ,868) | 1, 572 | (1, 242) | (3, 34 8) | 31,4 32 | (17 ,011)

Company statement of changes in equity
for the year ended 31 July 2024
Company Notes
Share
capital
£’000
Share
premium
£’000
Share-
based
payment
reserve
£’000
Capital
redemption
reserve
£’000
Treasury
shares
£’000
(Accumulated
losses)/
retained
earnings
£’000
Total
£’000
At 1 August 2022 32,244 121,145 4,916 4,402 (20) (120,298) 42,389
Profit for the year and total comprehensive profit
for the year — — — — — 46,182 46,182
Capital reduction — (121,145) — (4,402) — 125,547 —
Issue of capital to EBT on option exercise 24 199 — (259) — — 60 —
Share-based payments 24 — — 953 — — — 953
At 31 July 2023 32,443 — 5,610 — (20) 51,491 89,524
Profit for the year and total comprehensive income
for the year — — — — — 8,807 8,807
Share buy-back 22, 26 (12,186) — — 12,186 (8) (29,703) (29,711)
Issue of capital to EBT on option exercise 24, 26 — — (207) — — 7 (200)
Transfer of expired options 24 — — (4,788) — — 4,788 —
Share-based payments 24 — — 957 — — — 957
At 31 July 2024 20,257 — 1,572 12,186 (28) 35,390 69,377
Consolidated statement of changes in equity
for the year ended 31 July 2024
Financial statements
Nanoco Group plc – Annual Report and Accounts 2024
100

|  | 31 July 2024 | 31 July 2024 | 31 July 2023 | 31 July 2023
|  | Group | Company | Group | Company
| Notes | £’000 | £’000 | £’000 | £’000
Assets |  |  |  |  |
Non-current assets |  |  |  |  |
Tangible fixed assets | 11 | 1,651 | — | 304 | —
Right of use assets | 12 | 2 ,1 8 8 | — | 2 ,075 | —
Intangible assets | 13 | 745 | — | 966 | —
Deferred tax assets | 9 | 2, 350 | — | 2,5 73 | —
Foreign withholding tax receivable | 9 | 1, 664 | — | 1,75 6 | —
Investment in subsidiaries | 14 | — | 46,473 | — | 41,700
|  | 8,598 | 46,473 | 7, 6 7 4 | 41,700
Current assets |  |  |  |  |
Inventories | 15 | 305 | — | 308 | —
Trade and other receivables | 16 | 1,083 | 3,518 | 3 3 ,9 8 6 | 52,876
Foreign withholding tax receivable | 9 | 1 49 | — | 592 | —
Income tax receivable | 9 | 235 | — | — | —
Cash and cash equivalents | 17 | 2 0,2 93 | 20,164 | 8 , 2 07 | 105
|  | 22,065 | 23,682 | 4 3,0 93 | 52,981
Total assets |  | 30, 6 63 | 70,155 | 5 0 , 767 | 94,681
Liabilities |  |  |  |  |
Current liabilities |  |  |  |  |
Trade and other payables | 18 | (1, 578) | (778) | (2,78 3) | (1,153)
Loans | 19 | — | — | (4, 0 04) | (4,004)
Lease liabilities | 21 | (6 21) | — | (4 5 6) | —
Income tax liability | 9 | — | — | (7 70) | —
Deferred revenue | 20 | (5,9 3 4) | — | (6 ,12 3) | —
|  | (8, 133) | (778) | (1 4 ,13 6) | (5,157)
Non-current liabilities |  |  |  |  |
Loans | 19 | — | — | (55 7) | —
Lease liabilities | 21 | (1 ,2 88) | — | (1 , 41 5) | —
Provisions | 23 | (659) | — | (44 5) | —
Deferred revenue | 20 | (3 7, 5 9 4) | — | (1 7, 8 0 1) | —
|  | (3 9, 5 4 1) | — | (20, 218) | —
Total liabilities |  | (4 7, 6 7 4) | (778) | (3 4, 3 54) | (5,157)
Net (liabilities)/assets |  | (17 ,011) | 69,377 | 1 6 , 41 3 | 89,524
Capital and reserves |  |  |  |  |
Share capital | 22 | 2 0, 257 | 20,257 | 32, 4 43 | 32,443
Capital redemption reserve | 22 | 12 ,1 8 6 | 12,186 | — | —
Reverse acquisition reserve | 22 | (77 ,868) | — | (77 ,868) | —
Share-based payment reserve | 24 | 1, 572 | 1,572 | 5 , 61 0 | 5,610
Merger reserve | 25 | (1, 24 2) | — | (1, 242) | —
Shares held by EBT | 26 | (3, 34 8) | (28) | (1 0 5) | —
Retained earnings | 26 | 31, 432 | 35,390 | 57 ,575 | 51,471
Total equity |  | (17 ,011) | 69,377 | 1 6 , 41 3 | 89,524

The Parent Company’s result for the year ended 31 July 2024 was a profit of £8,807,000 (2023: profit of £46,182,000). There was no
other comprehensive income in either the current or prior year.
The notes on pages 102 to 131 form an integral part of these financial statements. The financial statements on pages 98 to 131
were approved by the Board of Directors on 21 November 2024 and signed on its behalf by:
Dr Christopher Richards Liam Gray
Chairman Chief Financial Officer
21 November 2024 21 November 2024
Group and Company statements of financial position
at 31 July 2024
Registered no. 05067291
Nanoco Group plc – Annual Report and Accounts 2024
101

|  | 31 July 2024 | 31 July 2024 | 31 July 2023 | 31 July 2023
|  | Group | Company | Group | Company
| Notes | £’000 | £’000 | £’000 | £’000
Profit before tax |  | 1,865 | 8,807 | 9, 5 7 3 | 46,182
Adjustments for: |  |  |  |  |
Net finance (income)/expense | 8 | (15 8) | (275) | 5 , 41 9 | 5,337
(Profit)/loss on exchange rate translations |  | (852) | (350) | 1 , 747 | (10)
Depreciation of tangible fixed assets | 11 | 117 | — | 76 | —
Depreciation of right of use assets | 12 | 698 | — | 555 | —
Amortisation of intangible assets | 13 | 224 | — | 279 | —
Profit on disposal of intangible assets | 6 | — | — | (68, 687) | —
Impairment of intangible assets | 13 | 132 | — | 92 | —
Reversal of previous impairment of investment |  | — | (3,816) | — | —
Share-based payments | 24 | 957 | — | 95 3 | —
Loss on disposal of tangible fixed assets | 11 | 2 | — | 8 | —
Increase/(decrease) in inventory provision |  | 93 | — | (15) | —
Decrease in receivables provision |  | — | (2,993) | — | (52,323)
Changes in working capital: |  |  |  |  |
Increase in inventories |  | (90) | — | (11 9) | —
Decrease/(increase) in trade and other receivables |  | 33, 459 | 55,148 | 282 | (378)
(Decrease)/increase in trade and other payables |  | (1 , 20 9) | (380) | 970 | 316
Decrease in provisions |  | — | — | (1 76) | —
Increase in deferred revenue |  | 1 9, 6 0 4 | — | 23 ,320 | —
Cash inflow/(outflow) from operating activities |  | 54,842 | 56,141 | (25,72 3) | (876)
Foreign withholding tax paid |  | (2 , 56 6) | — | (2 , 6 41) | —
Tax paid |  | (797) | — | — | —
Research and development tax credit received |  | — | — | 524 | —
Net cash inflow/(outflow) from operating activities |  | 51 , 47 9 | 56,141 | (2 7, 8 4 0) | (876)
Cash flow from investing activities |  |  |  |  |
Purchases of tangible fixed assets | 11 | (1 , 46 6) | — | (3 05) | —
Purchases of intangible fixed assets | 13 | (135) | — | (76) | —
Proceeds from sale of tangible fixed assets |  | — | — | 15 | —
Proceeds from sale of intangible fixed assets |  | — | — | 3 4,509 | —
Interest received | 8 | 785 | 722 | 38 | —
Net cash (outflow)/inflow from investing activities |  | (816) | 722 | 3 4 ,1 8 1 | —
Cash flow from financing activities |  |  |  |  |
Proceeds from placing of ordinary share capital |  | — | — | 19 9 | 199
Purchase of shares to satisfy options |  | (97) | — | — | —
Return of capital to shareholders |  | (32,000) | (32,000) | — | —
Fees on return of capital to shareholders |  | (1,027) | (654) | — | —
Repayment of loan - capital |  | (3, 5 50) | (3,150) | — | —
Repayment of loan - interest |  | (1, 528) | (1,350) | — | —
Payment of lease liabilities (capital) |  | (55 8) | — | (4 63) | —
Payment of lease liabilities (interest) |  | (103) | — | (8 6) | —
Interest paid |  | (57) | — | (4 ,7 28) | (4,725)
Net cash outflow from financing activities |  | (3 8 ,9 2 0) | (37,154) | (5 ,078) | (4,526)
Increase/(decrease) in cash and cash equivalents |  | 11 , 74 3 | 19,709 | 1 ,26 3 | (5,402)
Cash and cash equivalents at the start of the year |  | 8, 207 | 105 | 6 ,76 2 | 5,497
Effects of exchange rate changes |  | 343 | 350 | 1 82 | 10
Cash and cash equivalents at the end of the year | 17 | 2 0,2 93 | 20,164 | 8 , 2 07 | 105

The notes on pages 102 to 131 form an integral part of these financial statements.
Group and Company cash flow statements
for the year ended 31 July 2024
Financial statements
Nanoco Group plc – Annual Report and Accounts 2024
102
1. Reporting entity
Nanoco Group plc (the “Company”), a public company limited by shares, is on the equity shares (commercial companies) 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 Science Centre, The Heath Business and Technical Park, Runcorn WA7 4QX. The Company is
registered in England.
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 2024.
The financial statements of the group for the year ended 31 July 2024 were authorised for issue by the Board of Directors on
21 November 2024 and the statements of financial position were signed on the Board’s behalf by Dr Christopher Richards and
Liam Gray.
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 Accounting
Standards in conformity with the requirements of the Companies Act 2006 and UK-adopted IFRSs as issued by the International
Accounting Standards Board for the year ended 31 July 2024.
(b) Basis of measurement
The Parent Company and group financial statements have been prepared on the historical cost basis, except for the revaluation
of financial assets classified as “fair value through other comprehensive income” or “fair value through profit or loss”, which are
reported in accordance with the accounting policies below.
(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 are set out on pages 9 to 27; the principal risks and uncertainties are shown on pages
33 to 35, and; the group’s financial position is described in the Financial review on pages 30 to 32. Furthermore, note 27
summarises the group’s financial risk management objectives, policies and processes.
The key factor in the group’s going concern assessment is the strength of the balance sheet at 31 July 2014 with £20.3 million of
cash reserves and all external loans having been repaid during the year. There are sufficient cash reserves to support the group’s
cost base throughout the going concern period in any of its forecast scenarios. Any future distribution of surplus cash will take
into consideration the viability of the group and sufficient cash will be retained to ensure viability.
For the purposes of their going concern assessment and the basis for the preparation of the 2024 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 described on page 36, with the going concern assessment covering the period to November 2025. The same base
case and downside sensitivities were also used.
The base case represents the Board’s current expectations. Assumptions in the base case are:
| reduced revenue in FY25 following the loss of the European electronics customer;
| new services revenue will be generated from 2025;
| ramp up of product sales from FY26 moving to larger scale in FY27;
| other companies pay to access Nanoco’s technology in the future;
| reduction in headcount and overheads to reflect reduced short-term revenue expectations;
| costs associated with being a listed entity and other costs reflect the current inflationary environment; and
| the reduced 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 downside case then flexes those assumptions as follows:
| a full-year delay in small scale commercial production revenues (into FY26); and
| no new service customers until FY27.
Notes to the financial statements
Nanoco Group plc – Annual Report and Accounts 2024
103
2. Basis of preparation continued
(c) Going concern continued
Both cases above produce cash flow statements that demonstrate that the group has sufficient cash throughout the period
of the forecast, being a period to November 2025.
Accordingly, the Directors 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
Samsung licence of IP
Following the judgement over the method of revenue recognition of the Samsung contract described below, it was determined
that the appropriate period for revenue recognition was the average remaining life of the relevant IP of 8.8 years. The average
remaining life of the IP is a significant estimate and is reviewed each year. A sensitivity analysis is included in note 6.
Equity-settled share-based payments
The group has historically issued LTIPs to incentivise employees. 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, 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 non-market vesting assumptions. Further information is included in note 24.
Deferred tax
The group recognises deferred tax assets only to the extent that it is probable that future taxable profits, feasible tax planning
strategies and deferred tax liabilities will be available against which the tax losses can be utilised. Estimation of the level of future
taxable profits is therefore required in order to determine the appropriate carrying value of the deferred tax asset. Future profits
are based on sensitised management forecasts for the following three years which is the period over which the profits are
considered to be probable. The period over which forecast profits are considered to be probable is a key assumption and as
such a sensitivity analysis has been performed in note 9. The Company has recognised £2.4 million of deferred tax assets in the
year (2023: £2.6 million) which represents the proportion of accumulated losses that are expected to be utilised in the medium term.
Recoverability of investment
An estimate is required to assess the carrying value of the Company’s investments at each reporting date.
Indicators of potential impairment noted in IAS 36 (paragraph 12) include, but are not limited to, situations where the carrying amount of
the net assets of the entity is more than its market value and where significant changes with an adverse effect on the entity have taken
place during the year. The return of capital in the year and the associated decrease in market value are considered to be indications
of impairment. Given the main trading entity is Nanoco Technologies Limited (owned by Nanoco Tech Limited), this holds the majority of
the value for the investment. Where indicators of impairment have been identified, the group estimated the recoverable amount
based on the value in use of the underlying business.
The computation uses cash flows based on the most recently approved financial budgets and strategic forecasts covering a period of
5 years and further projections taking the analysis out into perpetuity.
Financial statements
Nanoco Group plc – Annual Report and Accounts 2024
104
2. Basis of preparation continued
(e) Use of estimates and judgements continued
Key assumptions for the value in use computations are those regarding:
• Forecasted cash inflows/income based on strategic income streams and associated related costs;
• Strategic operating period ; and
• The discount rate.
The values assigned to the variables that underpin the Group’s expectations of future operating performance were determined based
on historical performance and the Group’s expectations with regard to future strategic forecasts. The strategic operating period used
is the five years to 31 July 2029. The forecast cash flows are discounted at a pre-tax rate of 18.5% (2023: 19.7%). The discount rate is
derived from a calculation using the capital asset pricing model to calculate cost of equity utilising available market data. The
discount rate is compared to the published discount rates of comparable businesses and relevant industry data prior to being
adopted. Based on the base case VIU calculated, a reversal of previous impairment losses was identified, leaving a carrying value of
£46.5 million (2023: £41.7 million). See note 14 for more detail.
Judgements
Revenue recognition
Judgement is required in reviewing the terms of development agreements to identify separate components of revenue, if any,
that are distinct and in turn the period over which development revenue should be recognised. 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).
Samsung licence of IP
Judgement is required in reviewing the terms of the licence agreement with Samsung as to whether the associated revenue
should be recognised at a point in time or over time, and if over time, over what period. The Directors reviewed the contract
in detail and analysed the terms against the specific requirements of IFRS 15 in relation to licences. They concluded that the
group had an ongoing performance obligation in regard to the licence and therefore the revenue should be recognised over time.
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(h).
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 of Nanoco Group plc’s subsidiaries are 100% owned. Subsidiaries
are fully consolidated from the date control passes. During the prior year, the group established an Employee Benefit Trust (“EBT”)
for the purpose of awarding shares to employees on exercise of options under the share-based compensation schemes. Although
the EBT is an independent legal entity and not owned by the group, it is reliant on funding from the group and acts at its request;
as such, it is deemed to be controlled by the group and is consolidated into the group accounts.
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.
Notes to the financial statements continued
Nanoco Group plc – Annual Report and Accounts 2024
105
3. Significant accounting policies continued
(a) Basis of consolidation continued
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 comprises the fair value of the sale of products and services to external customers, net of value added tax or other sales
taxes or duties, rebates, discounts and returns. Revenue is recognised according to the five-step model set out in IFRS 15 as follows:
1. identify the contract(s) with a customer;
2. identify the performance obligations in the contract;
3. determine the transaction price;
4. allocate the transaction price to the performance obligations in the contract; and
5. recognise revenue when (or as) the entity satisfied a performance obligation.
Products sold
Revenue from the sale of products is recognised at the point of transfer of control, which is generally on shipment or delivery
of the product. This is dependent on the delivery terms agreed with the customer. At this stage the group has completed its
performance obligations. The supply and delivery of products are not deemed to be separable performance obligations as
the customer is obliged to make use of the group’s delivery arrangements in most cases. Invoices are raised at the point of
shipment and payment terms are usually 30 days.
Rendering of services
Revenues from development programmes are recognised over time as the customer simultaneously receives and consumes the
benefit of the performance obligation as the group performs the service. Where revenue is recognised over time the group uses
an input method whereby cost is used to measure progress and costs are incurred evenly throughout the period. Under the
development contracts, the customer pays in accordance with a pre-arranged payment schedule, usually quarterly. If the
amount of revenue recognised at a point in time is different from the cash received then the difference is held on the balance
sheet as a contract asset or liability, Some contracts include clauses for compensation on early termination, such compensation
is only recognised at the point the clause is triggered.
Licences
Licences grant customers access to the group’s technology over a set length of time. Therefore, revenue related to the granting
of a licence is recognised over the same period of time. The length of time to which the licence, and therefore the revenue, relates
varies by customer and agreement. Where payments for licences are received upfront, the value is held as deferred revenue until
it is recognised. Payment terms for licences are specific to the individual contracts based on the agreed terms.
Financial statements
Nanoco Group plc – Annual Report and Accounts 2024
106
3. Significant accounting policies continued
(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 of an expense nature are recognised as a credit to administrative expenses 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 materials, direct labour, duty, freight, and employee and employee-associated costs incurred in
the generation of revenue from products sold and research and development services supplied.
Revenue from royalties and licences, which comprises payments from customers to gain preferential treatment in terms of supply
or pricing, does not have an associated cost of sale.
(g) Contract assets and contract liabilities
When either party to a contract has performed, the contract balance is presented in the statement of financial position as
accrued income or deferred revenue depending on the relationship between the completion of the performance obligations and
the customer’s payment. Accrued income represents consideration earned through the completion of performance obligation, or
part performance where revenue is recognised over time, that is not yet due for payment. Deferred revenue represents advanced
consideration received from customers for which the corresponding performance obligation has not been performed or is only
part performed where revenue is recognised over time.
(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 intellectual property as these are considered to generate probable future economic
benefit and are capitalised as intangible assets (see note 13).
(i) 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 and lease liabilities. All borrowing costs are recognised using
the effective interest method.
(j) 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.
Notes to the financial statements continued
Nanoco Group plc – Annual Report and Accounts 2024
107
3. Significant accounting policies continued
(j) Income tax continued
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 at 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.
(k) 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 five years or the remainder of the lease period (if shorter)
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 derecognition of the asset is included in the consolidated statement
of comprehensive income in the period of derecognition.
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.
(l) 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
Financial statements
Nanoco Group plc – Annual Report and Accounts 2024
108
3. Significant accounting policies continued
(m) Impairment of non-financial 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 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 group reviews the potential markets for the asset and
considers the possibility of short to medium-term commercial success being derived from 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 intangible assets. See the relevant note for more information.
(n) Investments in subsidiaries
Investments in subsidiaries are stated in the Company statement of financial position at cost less provision for any impairment.
The long-term loans to subsidiaries form part of the investment in subsidiaries balance.
(o) 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.
(p) 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 amortised cost and subsequently measured at amortised cost including directly attributable
transaction costs.
The group has the following categories of financial assets and liabilities:
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.
For trade receivables and contract assets, the group applies the IFRS 9 simplified approach in calculating ECLs. Therefore, the
group does not track changes in credit risk but instead recognises a loss allowance based on lifetime ECLs at each reporting
date. The group has established a provision matrix that is based on shared credit risk characteristics, its historical credit loss
experience and days past due, adjusted for forward-looking factors specific to the debtors and the economic environment.
The amount of the provision is recognised in the balance sheet within trade receivables. Movements in the provision are
recognised in the profit and loss account in administrative expenses.
The loss allowances for inter-company financial assets are based on assumptions on risk of non-payment. The Company
recognises an allowance for expected credit loss based on the difference between contractual cashflows and the cash flows
that the Company expects to receive.
(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.
Notes to the financial statements continued
Nanoco Group plc – Annual Report and Accounts 2024
109
3. Significant accounting policies continued
Financial liabilities at amortised cost
(i) Trade and other payables
Trade and other payables are non-interest bearing and are initially recognised at amortised cost. 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 amortised cost. 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.
Derivatives
The group occasionally uses forward foreign currency contracts to manage its exposure to fluctuations in foreign exchange rates.
These instruments are initially recognised at fair value on the trade date and are subsequently remeasured at their fair value at
the end of the reporting period. The group does not designate forward contracts as hedging instruments, as such changes in the
fair value of the derivative are recognised in the income statement as they arise.
(q) Share capital
Proceeds on issue of shares are included in shareholders’ equity, net of transaction costs. The carrying amount is not remeasured
in subsequent years.
(r) 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.
Where awards relating to services within the year have not been issued and therefore the fair value has not been calculated at
the year end, an estimate, based on the current share price, is made of the cost incurred to date and a true-up is performed
once the valuation is complete.
(s) 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.
(t) 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. Where obligations are covered by “no win, no fee” funding arrangements, the liability
is recognised in full at the point when the group becomes liable, i.e. when the outcome is known.
(u) Alternative performance measurements
Items of income and expenditure which are material and non-recurring are presented separately in the consolidated statement
of comprehensive income. The separate reporting of such items helps to provide an indication of the underlying performance of
the group and hence allows the user of the accounts a fuller understanding of that performance.
Financial statements
Nanoco Group plc – Annual Report and Accounts 2024
110
3. Significant accounting policies continued
(v) Contingent assets and liabilities
A contingent asset is a possible asset that arises from past events and whose existence will be confirmed only by the occurrence
or non-occurrence of one or more uncertain future events not wholly within the control of the group. Contingent assets are not
recognised but are disclosed in the notes to the financial statements when an inflow of economic benefits is probable.
Contingent liabilities are possible obligations that arise from past events and whose existence will be confirmed only by the
occurrence of one or more uncertain future events not wholly within the control of Nanoco. Additionally, contingent liabilities may
be present obligations that arise from past events but which are not recognised because it is not probable that an outflow of
resources will be required to settle the obligation or the amount of the obligation cannot be measured with sufficient reliability.
Contingent liabilities are not recognised in the consolidated statement of financial position but are disclosed and explained in
the notes.
(w) IFRS 16 Leases
IFRS 16 sets out the principles for the recognition, measurement, presentation and disclosure of leases for both the lessee
and the lessor.
Lease payments for low value or short-term leases where the group has elected not to recognise a right of use asset and lease
liability are charged as an expense on a straight-line basis.
At the date of commencement of property leases, the group determines the lease term to be the full term of the lease, assuming
that any option to break or extend is not likely to be exercised. Leases are regularly reviewed and will be revalued if it becomes
likely that a break clause or option to extend will be exercised. The weighted average incremental borrowing rate applied at the
date of transition was 3.75%. For new leases entered into in the year ended 31 July 2024, the weighted average incremental
borrowing rate applied was 8.25% (2023: 8.00%).
The group recognises a right of use asset at the lease commencement date. The right of use asset is measured at its carrying
amount as if IFRS 16 had been applied since the commencement date, discounted using the lessee’s incremental rate at the date
of initial application. Subsequent to measurement, right of use assets are amortised on a straight-line basis over the remaining
term of the lease or over the remaining economic life of the asset if assessed to be shorter.
The lease liabilities are measured at the present value of the remaining lease payments, discounted using the group’s incremental
borrowing rate as at initial application or commencement date if later. The group’s incremental borrowing rate is the rate at
which a similar borrowing could be obtained over a similar term in a similar economic environment. Judgement is required to
determine an approximation with consideration given to the Bank of England base rates adjusted by an indicative credit
premium and lease-specific adjustment. Subsequently, the lease liability is increased by the interest cost on the lease liability
and decreased by the lease payments made. It is remeasured if there is a modification, a change in lease term or a change
in the fixed lease payment.
(x) New accounting standards and interpretations
The following standards have been issued but have not been applied by the group in these financial statements.
These amendments to standards and interpretations had no significant impact on the financial statements.
IFRS standards effective from 1 January 2024 (UK adopted):
| IAS 1 Amendment: Classification of Liabilities as Current or Non-current
| IAS 1 Amendment: Non-current Liabilities with Covenants
| IFRS 16 Leases Amendment: Lease Liability in a Sale and Leaseback
| IAS 7 and IFRS 7 Amendment: Supplier Finance Arrangements
IFRS standards effective from 1 January 2025 (UK adopted):
| IAS 21 The Effects of Changes in Foreign Exchange Rates (Amendment): Lack of Exchangeability
The amendments to standards and interpretations noted above are expected to have no significant impact on the financial statements.
Notes to the financial statements continued
Nanoco Group plc – Annual Report and Accounts 2024
111
4. Segmental information
Operating segments
During the years ended 31 July 2024 and 2023, 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 Board) 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
| 2024 | 2023
| £’000 | £’000
Analysis of revenue |  |
Products sold | 408 | 867
Rendering of services | 1,410 | 1,685
Licences | 6,056 | 3,066
| 7,874 | 5,618

There was one material customer who generated product and service revenue of £1,194,000 (2023: one material customer
amounting to £2,014,000). £6,013,000 of the licence income related to the Samsung licence (2023: £2,963,000).
Revenue from the provision of services delivered over time totalled £7,466,000 (2023: £4,751,000). Revenue from the sale of goods
transferred at a point in time amounted to £408,000 (2023: £867,000).
The group operates in a number of countries across the world, although all are managed in the UK. The group’s revenue per
country based on the customer’s location is as follows:

| 31 July | 31 July
| 2024 | 2023
| £’000 | £’000
Revenue |  |
South Korea | 6,013 | 2,963
Netherlands | 926 | 1,423
Japan | 573 | 447
France | 268 | 385
USA | 46 | 59
Taiwan | 42 | 323
Canada | 3 | 9
Belgium | 2 | —
UK | 1 | 1
Poland | — | 8
| 7,874 | 5,618

All of the group’s assets are held in the UK and all of its capital expenditure arises in the UK. The profit before taxation and
attributable to the single segment was £1,865,000 (2023: loss of £9,573,000).
5. Other operating income

| 31 July | 31 July
| 2024 | 2023
| £’000 | £’000
Government grants | 142 | 230

Grants of £142,000 (2023: £230,000) are included in other operating income. The grants were in the form of reimbursement for a
proportion of qualifying expenditure on supported development projects. There are no unfulfilled conditions or other
contingencies attached to these grants.
Financial statements
Nanoco Group plc – Annual Report and Accounts 2024
112
6. Operating profit/(loss)

| 31 July | 31 July
| 2024 | 2023
| £’000 | £’000
Operating profit/(loss) is stated after charging/(crediting): |  |
Depreciation of tangible fixed assets (see note 11) | 117 | 76
Depreciation of right of use assets (see note 12) | 698 | 555
Loss on disposal of fixed assets | 2 | 8
Amortisation of intangible assets (see note 13) | 224 | 279
Impairment of intangible assets (see note 13) | 132 | 92
Profit on disposal of intangible assets | — | (68,687)
Settled litigation costs | — | 49,337
Requisitioned general meeting | — | 490
Realised gain on derivative financial instrument | (1,814) | —
Lease costs of low value/short life lease obligations | 16 | 7
Staff costs (see note 7) | 3,396 | 3,480
Foreign exchange (gains)/losses | (852) | 1,747
Research and development expense 1 | 1,630 | 1,802
Share-based payments | 957 | 953
Employer’s tax on share-based payments | 0 | (225)

1 Included within research and development expense are staff costs totalling £1,225,000 (2023: £1,117,000) also included in note 7. Included in research and
development expenses are £777,000 (2023: £507,000) included in cost of sales.
On 3 February 2023, the group signed agreements with Samsung for a sale of part of the group’s IP portfolio and a licence on the
remaining IP. The two contracts also ended the litigation against Samsung for the alleged infringement of the group’s IP on a
no-fault basis. The payment for the agreements was received in two halves: one in February 2023 and one in January 2024.
Nanoco took out a forward contract to exchange the $71.75 million receipt of the second tranche to GBP at a rate of 1.22 in
February 24. The information and tables below set out the impact of the transactions on the group’s financial statements for FY24.
Income statement impact

| 31 July | 31 July
| 2024 | 2023
| £’000 | £’000
Revenue (licence fee income) | 6,013 | 2,963
Administrative costs (litigation costs) | — | (49,337)
Profit on disposal of intangible assets | — | 68,687
Gain on derivative financial instrument | 1,814 | —
FX gain on cash held prior to conversion | 349 | —
Unrealised foreign exchange gain/(loss) on accrued income | 504 | (1,929)
Net operating profit | 8,680 | 20,384
Interest payable on loan notes | — | (4,725)
Profit before tax | 8,680 | 15,659

The sale of IP was recognised in full in FY23 as a profit on disposal of intangible assets. The litigation costs were also recognised
in full in FY23 as an administrative expense. The profit on disposal of intangible assets is made up of proceeds of £69,067,000 less
£356,000 of net book value at the time of sale and £24,000 of IP registration transfer fees.
The IP licence income will be recognised as revenue over the average remaining life of the patent portfolio as it exists at
3 February 2023. This is estimated to be 8.8 years from 3 February 2023. The licence income in FY23 reflects the six months of the
revenue recognition period included in FY23. The estimated remaining life of the patent profile is reviewed each year and as at
31 July 2024 was concluded to be 8.8 years. The following table demonstrates the sensitivity to the estimate of the remaining life
of the patent portfolio.
Notes to the financial statements continued
Nanoco Group plc – Annual Report and Accounts 2024
113
6. Operating profit/(loss) continued
Income statement impact continued

| Impact on
| revenue
| 2024
Remaining patent life at start of licence | £’000
7 years | 1,555
8 years | 609
9 years | (127)
10 years | (715)

The following table sets out the balance sheet impact of the agreements:
Balance sheet impact

| 31 July | 31 July
| 2024 | 2023
| £’000 | £’000
Proceeds receivable (debtors due within one year) | — | 33,041
Deferred income (due within one year) | (5,944) | (6,080)
Deferred income (due after more than one year) | (37,583) | (17,801)
Disposal of intangible assets | — | (356)
Withholding tax asset | 4,314 | 2,269
Cash | 58,811 | 4,458
Net assets | 19,598 | 15,531

The figures above are shown before the impact of any UK taxation. Tax treatment is disclosed in note 9.
Auditors’ remuneration

| 31 July | 31 July
| 2024 | 2023
| £’000 | £’000
Audit services: |  |
– Fees payable to Company auditors for the audit of the Parent and the consolidated accounts | 200 | 102
– Auditing the accounts of subsidiaries pursuant to legislation | 62 | 60
Total audit fees | 262 | 162
Non-audit services: |  |
– Fees payable for working capital review | 100 | —
Total auditors’ remuneration | 362 | 162

7. Staff costs
The group’s costs for employees, including Directors, during the year were as follows:

| 31 July | 31 July
| 2024 | 2023
| £’000 | £’000
Wages and salaries | 2,925 | 3,022
Social security costs | 295 | 340
Defined contribution pension costs | 176 | 118
| 3,396 | 3,480
Share-based payments | 957 | 953
Social security costs/(credits) on share-based payments | 26 | (225)
Total staff costs | 4,379 | 4,208
Directors’ remuneration (including benefits in kind) included in the aggregate remuneration above comprised: |  |
Emoluments for qualifying services | 961 | 1,401

Financial statements
Nanoco Group plc – Annual Report and Accounts 2024
114
7. Staff costs continued
Emoluments for Directors of the group (excluding social security costs and long-term incentives, but including benefits in kind)
disclosed above include £323,000 paid to the highest paid Director (2023: £542,000). Details of the compensation of key
management personnel are described in note 29.
The group made contributions to money purchase pension schemes for two current Directors (2023: two). Aggregate gains made
by Directors during the year following the exercise of share options were £191,000 (2023: £357,000). An analysis of the highest paid
Director’s remuneration is included in the Directors’ remuneration report.
The monthly average number of employees during the year (including Directors) was as follows:

| 31 July | 31 July
| 2024 | 2023
Group | Number | Number
Directors | 3 | 3
Laboratory and administrative staff | 43 | 36
| 46 | 39

Staff numbers exclude Non-Executive Directors; the prior year comparative has been amended in line with this.
8. Finance income and expense

| 31 July | 31 July
| 2024 | 2023
Group | £’000 | £’000
Finance income |  |
Interest receivable on bank deposits | 835 | 38
Finance expense |  |
Loan note interest | (517) | (643)
Loan note success fee | — | (4,725)
Unwinding interest on lease liabilities | (103) | (86)
Interest on tax payable | (53) | —
Other interest payable | (4) | (3)
| 158 | (5,419)

The loan note success fee in FY23 was a one-off interest payment to the loan note holders on the successful conclusion to the
Samsung litigation.
9. Taxation
The tax charge/(credit) is made up as follows:

| 31 July | 31 July
| 2024 | 2023
Group | £’000 | £’000
Current income tax |  |
UK corporation tax | — | 1,072
Research and development income tax credit receivable | (235) | (302)
Foreign taxation | 601 | 291
Provision for unrecoverable foreign tax incurred | 2,501 | —
Adjustment in respect of prior years | 28 | —
| 2,895 | 1,061
Deferred tax |  |
Origination and reversal of temporary differences | 397 | (2,522)
Adjustments in respect of prior periods | (174) | (51)
Total income tax charge/(credit) | 3,118 | (1,512)

Notes to the financial statements continued
Nanoco Group plc – Annual Report and Accounts 2024
115
9. Taxation continued
The tax assessed for the year varies from the standard rate of corporation tax as explained below:

| 31 July | 31 July
| 2024 | 2023
Group | £’000 | £’000
Profit before taxation | 1,865 | 9,573
Tax at standard rate of 25% (2023: 21%) | 466 | 2,011
Effects of: |  |
Expenses not deductible for tax purposes | 16 | 1,237
Capital allowances in excess of depreciation | (10) | 13
Research and development tax credit receivable | 78 | (302)
Share options exercised (CTA 2009 Pt 12 deduction) | — | (75)
Losses recognised | (412) | (4,636)
Credit for foreign tax expensed | (150) | —
Provision for unrecoverable foreign tax incurred | 2,501 | —
Foreign tax charges | 601 | 291
Adjustment in respect of prior years | 28 | (51)
Tax charge/(credit) in income statement | 3,118 | (1,512)

The group has accumulated losses available to carry forward against future trading profits of £30.0 million (2023: £31.6 million).
Deferred tax liabilities/(assets) provided/(recognised) at a standard rate of 25% (2023: 25%) are as follows:

| 31 July | 31 July
| 2024 | 2023
| £’000 | £’000
Accelerated capital allowances | 311 | (37)
Short-term temporary differences | (475) | (272)
Tax losses | (2,186) | (2,264)
| (2,350) | (2,573)
Foreign withholding tax receivable – current | (149) | (592)
Foreign withholding tax receivable – non-current | (1,664) | (1,756)
Total foreign withholding tax receivable | (1,813) | (2,348)

The group also has deferred tax assets, measured at a standard rate of 25% (2023: 25%), in respect of share-based payments
and tax losses of £5,159,000 (2023: £5,326,000) which have not been recognised as assets as it is not yet sufficiently probable
that future taxable profits will be available against which the assets can be utilised. The foreign withholding tax receivable
relates to withholding tax incurred on licence income that will be recovered through tax deductions in future years. The group
also has foreign withholding tax receivable, measured at a standard rate of 25% (2023: 25%), of £2,501,000 (2023: £nil) which have
not been recognised as assets as it is not yet sufficiently probable that future taxable profits will be available against which the
assets can be utilised. There is no expiry for the utilisation of these losses.
The following table demonstrates the sensitivity of the deferred tax assets to the period over which tax losses are recognised as
described in note 2(e):

|  | Impact on
|  | deferred tax
|  | assets
|  | 2024
| Number of years over which losses are recognised | £’000
2 years |  | (1,331)
3 years |  | —
4 years |  | 1,350
5 years |  | 2,715

Financial statements
Nanoco Group plc – Annual Report and Accounts 2024
116
10. Earnings per share

| 31 July | 31 July
| 2024 | 2023
Group | £’000 | £’000
(Loss)/profit for the financial year attributable to equity shareholders | (1,253) | 11,085
Share-based payments | 957 | 953
(Loss)/profit for the financial year before share-based payments | (296) | 12,038
Weighted average number of shares |  |
Ordinary shares in issue | 288,791,171 | 322,472,939
Options exercisable at the reporting date | 160,664 | 195,000
Options not yet exercisable at the reporting date | 12,717,665 | 11,720,600
Diluted weighted average number of shares | 301,669,500 | 334,388,539
Adjusted (loss)/profit per share before share-based payments (pence) | (0.10) | 3.73
Basic (loss)/profit per share (pence) | (0.43) | 3.44
Diluted adjusted (loss)/profit per share before share-based payments (pence) | (0.10) | 3.60
Diluted (loss)/profit per share (pence) | (0.43) | 3.32

The convertible potential ordinary shares were anti-dilutive in nature, therefore, their effect was not included in the calculation of
diluted EPS. Adjusted (loss)/profit per share and diluted adjusted (loss)/profit per share are non-GAAP measures included for
reference.
11. Tangible fixed assets

|  | Office |  |
|  | equipment, |  |
| Laboratory | fixtures and | Plant and |
| infrastructure | fittings | machinery | Total
Group | £’000 | £’000 | £’000 | £’000
Cost |  |  |  |
At 1 August 2022 | 3,338 | 399 | 7,228 | 10,965
Additions | 25 | 50 | 230 | 305
Disposals | (1,825) | (88) | (1,385) | (3,298)
At 31 July 2023 | 1,538 | 361 | 6,073 | 7,972
Additions | 375 | 95 | 996 | 1,466
Disposals | — | (29) | (46) | (75)
At 31 July 2024 | 1,913 | 427 | 7,023 | 9,363
Accumulated depreciation |  |  |  |
At 1 August 2022 | 3,338 | 388 | 7,141 | 10,867
Charged during the year | 4 | 8 | 64 | 76
Disposals | (1,825) | (86) | (1,364) | (3,275)
At 31 July 2023 | 1,517 | 310 | 5,841 | 7,668
Charged during the year | 11 | 27 | 79 | 117
Disposals | — | (29) | (44) | (73)
At 31 July 2024 | 1,528 | 308 | 5,876 | 7,712
Net book value |  |  |  |
At 31 July 2024 | 385 | 119 | 1,147 | 1,651
At 31 July 2023 | 21 | 51 | 232 | 304

The aggregate original cost of tangible assets now fully depreciated but considered to be still in use is £7,523,000 (2023: £7,458,000).
Capital commitments
At 31 July 2024, the group had capital commitments amounting to £159,000 in respect of orders placed for capital expenditure (2023: £nil).
Notes to the financial statements continued
Nanoco Group plc – Annual Report and Accounts 2024
117
12. Right of use assets

| Office | Property |
| equipment | leases | Total
Right of use assets | £’000 | £’000 | £’000
Cost |  |  |
At 1 August 2023 | 34 | 3,208 | 3,242
Additions | — | 811 | 811
Disposals | — | — | —
At 31 July 2024 | 34 | 4,019 | 4,053
Accumulated depreciation |  |  |
At 1 August 2023 | 6 | 1,161 | 1,167
Charged during the year | 11 | 687 | 698
Disposals | — | — | —
At 31 July 2024 | 17 | 1,848 | 1,865
Net book value |  |  |
At 31 July 2024 | 17 | 2,171 | 2,188
At 1 August 2023 | 28 | 2,047 | 2,075

| Total
Lease liabilities | £’000
Opening liabilities at 1 August 2023 | (1,871)
Additions | (596)
Lease payments | 661
Interest charge | (103)
Closing liabilities at 31 July 2024 | (1,909)

A provision for dilapidations of £659,000 is recognised in relation to the right of use assets; see note 23.
The group had undiscounted future lease payments due as follows:

|  |  |  |  |  | More than |
| Within 1 year | 1 to 2 years | 2 to 3 years | 3 to 4 years | 4 to 5 years | 5 years | Total
| £’000 | £’000 | £’000 | £’000 | £’000 | £’000 | £’000
31 July 2024 | 709 | 678 | 677 | — | — | — | 2,064
31 July 2023 | 509 | 509 | 500 | 496 | — | — | 2,014

The group has several lease contracts that include extension and termination options. These options are negotiated by management
to provide flexibility in managing the leased-asset portfolio and align with the group’s business needs. Management exercises
judgement in determining whether these extension and termination options are reasonably certain to be exercised.
Set out below are the undiscounted potential future rental payments related to periods following the exercise date of extension
and termination options that are not included in the lease term:

| Within | More than |
| five years | five years | Total
31 July 2024 | £’000 | £’000 | £’000
Extension options expected not to be exercised | — | — | —
Termination options expected not to be exercised | 1,254 | — | 1,254
Total | 1,254 | — | 1,254

31 July 2023

| Within | More than |
| five years | five years | Total
| £’000 | £’000 | £’000
Extension options expected not to be exercised | — | — | —
Termination options expected not to be exercised | 1,739 | — | 1,739
Total | 1,739 | — | 1,739

Financial statements
Nanoco Group plc – Annual Report and Accounts 2024
118
12. Right of use assets continued
Capital commitments
At 31 July 2024, the group had capital commitments amounting to £nil in respect of new leases (2023: £nil).
13. Intangible assets

| Patents
Group | £’000
Cost |
At 1 August 2022 | 4,779
Additions | 76
Disposals | (1,034)
At 31 July 2023 | 3,821
Additions | 135
Disposals | (238)
At 31 July 2024 | 3,718
Accumulated amortisation |
At 1 August 2022 | 3,163
Charged during the year | 279
Impairment charge | 92
Disposals | (679)
At 31 July 2023 | 2,855
Charged during the year | 224
Impairment charge | 132
Disposals | (238)
At 31 July 2024 | 2,973
Net book value |
At 31 July 2024 | 745
At 31 July 2023 | 966

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.
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 £1,686,000 (2023: £1,470,000).
The group continues to undertake annual reviews to identify patents which are deemed insufficiently certain to recover their
carrying value and should therefore be allowed to lapse. The lapses in the current year related to patents whose potential of
commercial viability was considered to be lower than the costs of maintaining the patents. As a consequence, patents with a
value of £132,000 (2023: £92,000) have been fully impaired in these financial statements. The impairment charge is recognised
within administrative expenses.
14. Investment in subsidiaries

|  | Share |  | Loan |
| Shares | impairment | Loans | impairment | Total
Company | £’000 | £’000 | £’000 | £’000 | £’000
At 1 August 2022 | 63,235 | (24,006) | 25,693 | (24,175) | 40,747
Increase in respect of share-based payments | — | — | 953 | — | 953
At 31 July 2023 | 63,235 | (24,006) | 26,646 | (24,175) | 41,700
Increase in respect of share-based payments | — | — | 957 | — | 957
Reversal of previous impairments | — | 3,816 | — | — | 3,816
At 31 July 2024 | 63,235 | (20,190) | 27,603 | (24,175) | 46,473

Notes to the financial statements continued
Nanoco Group plc – Annual Report and Accounts 2024
119
14. Investment in subsidiaries continued

|  | Share |  | Loan |
| Shares | impairment | Loans | impairment | Total
By subsidiary | £’000 | £’000 | £’000 | £’000 | £’000
Nanoco Tech Limited | 63,235 | (20,190) | — | — | 43,045
Nanoco Life Sciences Limited | — | — | 20,286 | (20,286) | —
Nanoco Technologies Limited | — | — | 7,317 | (3,889) | 3,428
At 31 July 2024 | 63,235 | (20,190) | 27,603 | (24,175) | 46,473

Accounting standards (IAS 36 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 IAS 36 (paragraph 12) include, but are
not limited to, situations where the carrying amount of the net assets of the entity is more than its market value and where
significant changes with an adverse effect on the entity have taken place during the year.
Consistent with IAS 36 and the indicator of impairment noted above, the Directors have concluded that the reduction in market
capitalisation of the group as a result of the tender offer and buy-back constitutes an indicator of impairment. As such, a
valuation exercise was performed by an external party to assess the value of the trading companies and it was concluded that
recoverable amount was the value in use of £46,473,000. As a result, the Company has recognised an impairment reversal of
£3,816,000 in the year. This reversal primarily relates to the increased maturity of the markets in which the group operates and
consequently higher returns from strategic income streams.
The investment balance with Nanoco Technologies Limited arises due to the recharge for share-based payments. There is no
immediate intention for this to be repaid.
Loans to subsidiary undertakings included in investments carry no interest and are not expected to be repaid.

|  |  | Share of issued |
|  |  | ordinary share capital
|  |  | 31 July | 31 July
Subsidiary undertakings | Country of incorporation | Principal activity | 2024 | 2023
Nanoco Life Sciences Limited | England and Wales | Research and development | 100% | 100%
Nanoco Tech Limited | England and Wales | Holding company | 100% | 100%
Nanoco Technologies Limited 1 | England and Wales | Manufacture and development of nanoparticles | 100% | 100%
Nanoco 2D Materials Limited | England and Wales | Research and development | 100% | 100%
Nanoco US Inc. 2 | USA | Management services | 100% | 100%

All subsidiaries incorporated in England and Wales are registered at Science Centre, The Heath Business and Technical Park,
Runcorn WA7 4QX. 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.
1 Share capital is owned by Nanoco Tech Limited.
2 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 2024 | 31 July 2024 | 31 July 2023 | 31 July 2023
| Group | Company | Group | Company
| £’000 | £’000 | £’000 | £’000
Finished goods | — | — | 37 | —
Raw materials and consumables | 305 | — | 271 | —
Total | 305 | — | 308 | —

Inventories are measured at the lower of cost and net realisable value. The group uses a standard costing method based on
latest contractual prices which is reviewed every six months.
A total of £441,000 (2023: £626,000) was included in cost of sales with respect to the cost of inventory expensed during the year.
Inventories are stated net of an allowance of £204,000 (2023: £111,000) in respect of excess or slow-moving items. Movement in
the allowance was due to additional provisions in the year as a result of the loss of a key contract.
Financial statements
Nanoco Group plc – Annual Report and Accounts 2024
120
16. Trade and other receivables

| 31 July 2024 | 31 July 2024 | 31 July 2023 | 31 July 2023
| Group | Company | Group | Company
| £’000 | £’000 | £’000 | £’000
Trade receivables | 301 | — | 87 | —
Accrued income | 40 | — | 33,139 | —
Accrued interest | 50 | 50 | — | —
Prepayments | 372 | — | 430 | —
Loan to EBT | — | 3,322 | — | —
Inter-company loan to subsidiary | — | 11,497 | — | 67, 220
Less impairment provision | — | (11,497) | — | (14,490)
Other receivables | 320 | 146 | 330 | 146
| 1,083 | 3,518 | 33,986 | 52,876

The impairment of the loan to subsidiary is due to the subsidiary holding insufficient funds to repay the loan on demand. The quantum
of this provision will be reviewed at each reporting date. The provision has decreased by £2,993,000 in the year due to a higher than
expected repayment figure. The loan to EBT consists of shares transferred to the EBT for the satisfaction of further option exercises.
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. An expected credit loss of £nil (2023: £nil) has
been recognised at the year end.
The movement in accrued income is due to the receipt of the second tranche of IP sale proceeds from Samsung as described in
note 6.
Other receivables include an amount of £146,000 (2023: £146,000) relating to consideration due on shares awarded as part of
the Deferred Bonus Plan.
Trade receivables are denominated in the following currencies:

| 31 July 2024 | 31 July 2024 | 31 July 2023 | 31 July 2023
| Group | Company | Group | Company
| £’000 | £’000 | £’000 | £’000
US Dollars | 300 | — | 87 | —
Sterling | 1 | — | — | —
| 301 | — | 87 | —

At 31 July, the ageing analysis of trade receivables was as follows:

| Not |  | Past due |
| yet due | Due | > 120 | Total
| £’000 | £’000 | £’000 | £’000
2024 | 1 | 296 | 4 | 301
2023 | 58 | 29 | — | 87

17. Cash and cash equivalents

| 31 July 2024 | 31 July 2024 | 31 July 2023 | 31 July 2023
| Group | Company | Group | Company
| £’000 | £’000 | £’000 | £’000
Cash and cash equivalents | 20,293 | 20,164 | 8,207 | 105

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 2024 (2023: none).
An analysis of cash, cash equivalents and deposits by denominated currency is given in note 27.
Notes to the financial statements continued
Nanoco Group plc – Annual Report and Accounts 2024
121
18. Trade and other payables

| 31 July 2024 | 31 July 2024 | 31 July 2023 | 31 July 2023
| Group | Company | Group | Company
| £’000 | £’000 | £’000 | £’000
Current |  |  |  |
Trade payables | 752 | — | 864 | —
Other payables | 182 | 146 | 338 | 146
Accruals | 644 | 4 | 1,581 | 381
Inter-company payable | — | 628 | — | 626
| 1,578 | 778 | 2,783 | 1,153

The Directors consider that the carrying amount of trade and other payables approximates to their fair value. The average credit
period taken is 39 days (2023: 67 days). Interest is not charged on inter-company loans (2023: no interest).
19. Loans

| 31 July 2024 | 31 July 2024 | 31 July 2023 | 31 July 2023
| Group | Company | Group | Company
| £’000 | £’000 | £’000 | £’000
Convertible Series A loan note 2028 | — | — | 400 | —
Accrued interest on Convertible Series A loan note 2028 | — | — | 157 | —
Loan notes (net of costs) | — | — | 2,989 | 2,989
Accrued interest on loan notes | — | — | 1,015 | 1,015
| — | — | 4,561 | 4,004

The loan note issued by Nanoco 2D Materials Limited is unsecured, bears a fixed interest at 6.5% per annum and was fully repaid
in February 2024.
On 26 July 2021, there was a non-dilutive loan note subscription with two major shareholders, raising net proceeds before fees
(£161,000) of £3.15 million on a loan note price of £4.50 million. The loan notes are unsecured and have a nominal value of £1 each
and an arrangement fee of 1.4% of the nominal amount and are repayable three years from completion. The subscription price of
70 pence represents a discount to the nominal value of £1 equivalent to 12% interest per annum. The Company may redeem the
loan notes at any time prior to their maturity at 80% of nominal value during the first year of the term, 90% at any time in year two,
and 100% at any time in year three. The loan notes were fully repaid in April 2024. There have been no changes in liabilities arising
from financing activities other than described in this note.

| Group | Company
| £’000 | £’000
Movement in loans |  |
At 1 August 2022 | 3,919 | 3,392
Accrued interest on loan note | 612 | 612
Success fee due following Samsung agreement | 4,725 | 4,725
Success fee paid | (4,725) | (4,725)
Interest on convertible loan | 30 | —
At 31 July 2023 | 4,561 | 4,004
Accrued interest on loan note | 496 | 496
Loan note paid | (4,500) | (4,500)
Interest on convertible loan | 21 | —
Convertible loan paid | (578) | —
At 31 July 2024 | — | —

Financial statements
Nanoco Group plc – Annual Report and Accounts 2024
122
20. Deferred revenue

| 31 July 2024 | 31 July 2024 | 31 July 2023 | 31 July 2023
| Group | Company | Group | Company
| £’000 | £’000 | £’000 | £’000
Current |  |  |  |
Upfront licence fees | 5,934 | — | 6,123 | —
Non-current |  |  |  |
Upfront licence fees | 37,594 | — | 17,801 | —
| 43,528 | — | 23,924 | —

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.

| 31 July 2024 | 31 July 2023
| £’000 | £’000
Opening deferred revenue | 23,924 | 604
Revenue deferred | 25,660 | 26,843
Revenue booked current year | (6,056) | (3,523)
Closing deferred revenue | 43,528 | 23,924

The movements in deferred revenue in the year relates to the Samsung licence agreement and are described in detail in note 6.
Of the revenue recognised in the current year £3,050,000 relates to revenue deferred at the start of the year.
21. Lease liabilities

| 31 July 2024 | 31 July 2024 | 31 July 2023 | 31 July 2023
| Group | Company | Group | Company
| £’000 | £’000 | £’000 | £’000
Current |  |  |  |
Property leases | 612 | — | 448 | —
Equipment leases | 9 | — | 8 | —
Total current | 621 | — | 456 | —
Non-current |  |  |  |
Property leases | 1,284 | — | 1,399 | —
Equipment leases | 4 | — | 16 | —
Total non-current | 1,288 | — | 1,415 | —

22. Issued equity capital

|  |  |  | Capital | Reverse |
|  | Share | Share | redemption | acquisition |
|  | capital | premium | reserve | reserve | Total
Group | Number | £’000 | £’000 | £’000 | £’000 | £’000
Allotted, called up and fully paid ordinary shares of 10p |  |  |  |  |  |
At 1 August 2022 | 322,445,744 | 32,244 | 121,145 | — | (77,868) | 75,521
Capital reduction | — | — | (121,145) | — | — | (121,145)
Shares issued on exercise of options | 1,985,206 | 199 | — | — | — | 199
At 31 July 2023 | 324,430,950 | 32,443 | — | — | (77,868) | (45,425)
Tender offer shares cancelled | (111,250,000) | (11,125) | — | 11,125 | — | —
Buy-back shares cancelled | (10,609,453) | (1,061) | — | 1,061 | — | —
At 31 July 2024 | 202,571,497 | 20,257 | — | 12,186 | (77,868) | (45,425)

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.
On 18 July 2023, the Company undertook a capital reduction which cancelled the share premium reserve.
The capital redemption reserve is the nominal value of shares cancelled by the company following re-purchase.
Notes to the financial statements continued
Nanoco Group plc – Annual Report and Accounts 2024
123
22. Issued equity capital continued
On 12 April 2024, the Company purchased 125,000,000 of its own shares via a tender offer priced at 24 pence per share.
111,250,000 of these shares were subsequently cancelled while the remaining 13,750,000 were transferred to the EBT in order to
satisfy future share option exercises. The existing 12,222 treasury shares were transferred to the EBT at the same time.
Between 11 April 2024 and 31 July 2024 the Company purchased a further 10,792,463 of its own shares via an on-market buy-back;
10,609,453 of these shares were cancelled in the year with the remaining 183,010 cancelled after the year end.
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.
23. Provisions

| Property |
| dilapidations | Total
| £’000 | £’000
At 1 August 2023 | 445 | 445
Provided during the period | 214 | 214
At 31 July 2024 | 659 | 659

The provision relates to the potential dilapidation costs from the exit of all its premises. Because of the long-term nature of the
liability, there is uncertainty in estimating the provision. The extent and cost of potential dilapidation costs represent a best
estimate applied across the group’s lease portfolio based on past experience, the extent of remediation work required and
the expected timing of activity, for which there is a high level of uncertainty.
During the year, an additional provision was included in relation to the new lease for extra space at our Runcorn site.
24. Share-based payment reserve

Group and Company | £’000
At 1 August 2022 | 4,916
Share-based payments | 953
Exercise of share options | (259)
At 31 July 2023 | 5,610
Share-based payments | 957
Exercise of share options | (207)
Transfer of expired options | (4,788)
At 31 July 2024 | 1,572

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 £957,000 has been recognised in the statement of comprehensive income for the year (2023: charge of £953,000).
£4,788,000 of the reserve has been transferred to retained earnings in relation to options that expired or lapsed in the current
and previous years.
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.
Financial statements
Nanoco Group plc – Annual Report and Accounts 2024
124
24. Share-based payment reserve continued
Share option schemes continued
Nanoco Group plc 2015 Long Term Incentive Plan (“LTIP”)
Grants in December 2015 (fully lapsed), April 2016 (fully lapsed), November 2017 (fully lapsed), November 2018 (fully lapsed),
October 2020 (fully lapsed), November 2021 (fully lapsed), December 2021, October 2022 and January 2024
Following approval of the new scheme at the 2015 AGM, share options have been granted to Executive Directors and key staff on
a number of occasions at nil cost and have an exercise price of £nil. The fair value benefit is measured using a stochastic model,
taking into account the terms and conditions upon which the share options are issued. In each case, the options vest at the end
of the three-year performance period subject to meeting the performance criteria (as detailed in the Directors’ remuneration
report) in each reporting period and are exercisable after a two-year holding period until the tenth anniversary of the award.
Deferred Bonus Plan (“DBP”)
On 9 November 2021, awards in the form of nil-cost options were granted to the Executive Directors and certain other employees
in respect of 100% of their bonuses for the year ended 31 July 2021 which are delivered in the form of a share award under the
DBP. These awards vested in FY24, after the required two-year holding period.
On 27 October 2022, awards in the form of nil-cost options were granted to the Executive Directors and certain other employees
in respect of 100% of their bonuses for the year ended 31 July 2022 which are delivered in the form of a share award under the
DBP. The awards will vest in FY25, after the required two-year holding period.
On 23 January 2024, awards in the form of nil-cost options were granted to the Executive Directors and certain other employees
in respect of 33% of their bonuses for the year ended 31 July 2023 which are delivered in the form of a share award under the DBP.
The awards will vest in FY26, after the required two-year holding period.
The following tables illustrate the number and weighted average exercise prices of, and movements in, share options during the year
:

| 2024 total | 2023 total
Group and Company | Number | Number
Outstanding at 1 August | 11,915,600 | 19,820,352
Granted during the year | 9,056,742 | 5,314,890
Exercised during the year | (928,580) | (1,985,206)
Forfeited during the year | (1,797,099) | (237,388)
Expired during the year | (35,000) | (2,853,193)
Lapsed during the year | (5,333,334) | (8,143,855)
Outstanding at 31 July 2024 | 12,878,329 | 11,915,600
Exercisable at 31 July 2024 | 160,664 | 195,000

Weighted average exercise price of options

| 2024 | 2023
Group and Company | Pence | Pence
Outstanding at 1 August | 1.0 | 8.9
Granted during the year | — | —
Exercised during the year | — | —
Expired during the year | 89.0 | 57.0
Lapsed during the year | 0.1 | 0.2
Outstanding at 31 July 2024 | 0.7 | 1.0

The weighted average exercise price of options granted during the year to 31 July 2024 was £nil (2023: £nil). The range of exercise
prices for options outstanding at the end of the year was £nil–56.5 pence (2023: £nil–89 pence). The weighted average exercise
price of options exercisable at 31 July 2024 was 53 pence (2023: 64 pence).
For the share options outstanding as at 31 July 2024, the weighted average remaining contractual life is 8.9 years (2023: 8.6 years).
The aggregate fair value of options issued in the year was £1,368,000 (2023: £1,550,000).
Notes to the financial statements continued
Nanoco Group plc – Annual Report and Accounts 2024
125
24. Share-based payment reserve continued
Weighted average exercise price of options continued
The following table lists the inputs to the models used for the years ended 31 July 2024 and 31 July 2023:

|  | Market | Non-market |
|  | performance-linked grants | performance-linked grants |
Group and Company | 2024 | 2023 | 2024 | 2023
Expected volatility | 57.55% | 89.5% | N/A | N/A
Risk-free interest rate | 4.18% | 3.19% | N/A | N/A
Expected life of options (years average) | 3 | 3 | 2 | 2
Weighted average exercise price | £nil | £nil | £nil | £nil
Weighted average share price at date of grant | 20.5p | 35.6p | 20.5p | 35.6p
Expected dividends | £nil | £nil | £nil | £nil
Model used | Stochastic | Stochastic | Black-Scholes | Black-Scholes

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.
Sensitivity analysis to movement in non-market vesting assumptions
The following table demonstrates the sensitivity to a reasonably possible change in the non-market vesting assumptions, with all
other variables held constant, of the group’s share-based payment charge for the year:

| Impact on
| share-based
| payment expense
| 2024
Increase/(decrease) at vesting % | £’000
100% | 142
60% | 2
25% | (121)
0% | (209)

25. Merger reserve and capital redemption reserve
Merger reserve

Group | £’000
At 1 August 2022, 31 July 2023 and 31 July 2024 | (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 | £’000
At 1 August 2022 | 4,402
Capital reduction | (4,402)
At 31 July 2023 | —
Cancellation of shares following tender offer and buy-back | 12,186
At 31 July 2024 | 12,186

The capital redemption reserve arises from the off-market purchase of deferred shares on 4 May 2005 and their subsequent
cancellation. On 18 July 2023, the Company undertook a capital reduction which cancelled the capital redemption reserve.
The reserve was reinstated on 12 April 2024 following the tender offer and buy-back and subsequent cancellation of shares
as detailed in note 22.
Financial statements
Nanoco Group plc – Annual Report and Accounts 2024
126
26. Movement in retained earnings/(accumulated losses)

|  | Foreign |  |  | Total
| Profit | currency |  |  | (accumulated
| and | translation | Treasury | Shares held | losses)/retained
| loss | reserve | shares | by EBT | earnings
Group | £’000 | £’000 | £’000 | £’000 | £’000
At 1 August 2022 | (74,699) | 4 | (20) | — | (74,715)
Profit for the year | 11,085 | — | — | — | 11,085
Capital reduction | 121,145 | — | — | — | 121,145
Issue of shares to EBT | — | — | — | (199) | (199)
Shares utilised by EBT to satisfy options | 60 | — | — | 94 | 154
At 31 July 2023 | 57,591 | 4 | (20) | (105) | 57,470
Profit for the year | (1,253) | — | — | — | (1,253)
Shares utilised by EBT to satisfy options | — | — | — | 105 | 105
Transfer of expired options | 4,788 | — | — | — | 4,788
Tender offer and share buy-back | (29,703) | — | (8) | (3,320) | (33,031)
Share option exercise | 5 | — | — | — | 5
At 31 July 2024 | 31,428 | 4 | (28) | (3,320) | 28,084

Profit and loss represents the cumulative profit/(loss) attributable to the equity holders of the Parent Company.
At 31 July 2024, 13,762,222 shares in the Company were held by the EBT for future distribution to employees on the exercise
of share options (2023: 1,050,282). In addition there are 183,010 (2023: 12,222) treasury shares not held by the EBT.

|  |  | Total
|  |  | (accumulated
| Accumulated | Treasury | losses)/retained
| losses | shares | earnings
Company | £’000 | £’000 | £’000
At 1 August 2022 | (120,298) | (20) | (120,318)
Profit for the year | 46,182 | — | 46,182
Capital reduction | 125,547 | — | 125,547
Exercise of share options | 60 | — | 60
At 31 July 2023 | 51,491 | (20) | 51,471
Profit for the year | 8,807 | — | 8,807
Transfer of expired options | 4,788 | — | 4,788
Tender offer and share buy-back | (29,703) | (8) | (29,711)
Exercise of share options | 7 | — | 7
At 31 July 2024 | 35,390 | (28) | 35,362

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 accumulated losses as disclosed in notes 22 to 26 and in the group statement of changes in equity. At 31 July 2024
total equity was -£17,011,000 (2023: £16,413,000).
The Company is not subject to externally imposed capital requirements.
Notes to the financial statements continued
Nanoco Group plc – Annual Report and Accounts 2024
127
27. Financial risk management continued
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.
Categorisation of financial instruments

| Group | Group | Financial assets |
| financial | financial | and liabilities at |
| assets at | liabilities at | amortised cost |
| amortised | amortised |  |
| cost | cost | Group | Company
Financial assets/(liabilities) | £’000 | £’000 | £’000 | £’000
31 July 2024 |  |  |  |
Cash and cash equivalents | 20,293 | — | 20,293 | 20,164
Trade receivables | 301 | — | 301 | —
Other receivables | 174 | — | 174 | —
Inter-company short-term loan to subsidiary | — | — | — | 11,497
Less impairment provision | — | — | — | (11,497)
Trade and other payables | — | (1,432) | (1,432) | (4)
Lease liabilities | — | (1,909) | (1,909) | —
Inter-company payable | — | — | — | (628)
| 20,768 | (3,341) | 17,427 | 19,532

| Group | Group | Financial assets |
| financial | financial | and liabilities at |
| assets at | liabilities at | amortised cost |
| amortised | amortised |  |
| cost | cost | Group | Company
Financial assets/(liabilities) | £’000 | £’000 | £’000 | £’000
31 July 2023 |  |  |  |
Cash and cash equivalents | 8,207 | — | 8,207 | 105
Trade receivables | 87 | — | 87 | —
Other receivables | 184 | — | 184 | —
Inter-company short-term loan to subsidiary | — | — | — | 67,220
Less impairment provision | — | — | — | (14,490)
Trade and other payables | — | (2,637) | (2,637) | (378)
Lease liabilities | — | (1,871) | (1,871) | —
Loan notes and accrued interest | — | (4,561) | (4,561) | (4,004)
Inter-company payable | — | — | — | (626)
| 8,478 | (9,069) | (591) | 47,827

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.
Financial statements
Nanoco Group plc – Annual Report and Accounts 2024
128
27. Financial risk management continued
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 maximum exposure to credit risk in relation to cash, cash equivalents and deposits is the carrying value at the
balance sheet date.
The group trades only with recognised, creditworthy third parties. Receivable and accrued income 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 and accrued income
are ultimately overseen by the CFO and are managed on a day-to-day basis by the UK finance team. Credit limits are set as
deemed appropriate for the customer.
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 flows 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 2024 or at 31 July 2023.
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 2024 |  |  |  | 31 July 2023 |  |
| GBP | EUR | USD | Total | GBP | EUR | USD | Total
Group | £’000 | £’000 | £’000 | £’000 | £’000 | £’000 | £’000 | £’000
Cash and cash equivalents | 20,255 | — | 38 | 20,293 | 7,948 | 1 | 258 | 8,207
Trade receivables | 1 | — | 300 | 301 | — | — | 87 | 87
Accrued income | — | — | 40 | 40 | 97 | — | 33,042 | 33,139
Trade payables | (712) | (11) | (29) | (752) | (775) | (5) | (84) | (864)
| 19,544 | (11) | 349 | 19,882 | 7,270 | (4) | 33,303 | 40,569

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 on | Impact on
| loss before | loss before
| tax and | tax and
| group equity | group equity
| 2024 | 2023
Increase/(decrease) | £’000 | £’000
10% | 38 | 3,700
5% | 18 | 1,753
(5%) | (16) | (1,586)
(10%) | (31) | (3,027)

Notes to the financial statements continued
Nanoco Group plc – Annual Report and Accounts 2024
129
27. Financial risk management continued
Interest rate risk
As the group’s borrowing is in the form of loan notes with a fixed rate of return and which are held at amortised cost, interest rate
risk is limited to the reduction of interest received on cash surpluses held at bank which receive a floating rate of interest. The group’s
financial instruments with interest rate risk exposure and maximum exposures are set out below:

|  | 31 July 2024 |  |  | 31 July 2023 |
| Fixed | Floating |  | Fixed | Floating |
| rate | rate | Total | rate | rate | Total
Group | £’000 | £’000 | £’000 | £’000 | £’000 | £’000
Cash and cash equivalents | — | 20,293 | 20,293 | — | 8,207 | 8,207
Loan notes | — | — | — | 4,561 | — | 4,561
Company |  |  |  |  |  |
Cash and cash equivalents | — | 20,164 | 20,164 | — | 105 | 105
Loan notes | — | — | — | 4,004 | — | 4,004

Sensitivity analysis to movement in interest rates
The following table demonstrates the sensitivity to a reasonably possible change in the UK base rate, with all other variables held
constant, of the group’s loss before tax (due to finance income) and the group’s equity.

| Impact on | Impact on
| profit before | profit before
| tax and | tax and
| group equity | group equity
| 2024 | 2023
Increase/(decrease) | £’000 | £’000
1% | 203 | 82
0.5% | 101 | 41
(0.5%) | (101) | (41)
(1%) | (203) | (82)

Maturity profile
Set out below is the maturity profile of the group’s financial liabilities at 31 July 2024 and 31 July 2023 based on contractual
undiscounted payments, including contractual interest.

|  | One to | Greater |
| Up to | five | than five |
| one year | years | years | Total
2024 | £’000 | £’000 | £’000 | £’000
Financial liabilities |  |  |  |
Trade and other payables | 1,432 | — | — | 1,432
Lease liabilities | 709 | 1,354 | — | 2,063
| 2,141 | 1,354 | — | 3,495

|  | One to | Greater |
| Up to | five | than five |
| one year | years | years | Total
2023 | £’000 | £’000 | £’000 | £’000
Financial liabilities |  |  |  |
Trade and other payables | 2,521 | 445 | — | 2,966
Lease liabilities | 509 | 1,505 | — | 2,014
Loans (including contractual interest) | 4,500 | 751 | — | 5,251
| 7,530 | 2,701 | — | 10,231

Trade and other payables are due within three months.
As all financial assets are expected to mature within the next twelve months, an aged analysis of financial assets has not
been presented.
Financial statements
Nanoco Group plc – Annual Report and Accounts 2024
130
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
|  | 2024 | 2023
| Notes | £’000 | £’000
Loan from Nanoco Group plc to: |  |  |
Nanoco Technologies Limited 2 | 16 | 11,497 | 67,220
Less impairment provision | 16 | (11,497) | (14,490)
|  | — | 52,730
Inter-company payable by Nanoco Group plc to: |  |  |
Nanoco Tech Limited | 18 | (450) | (450)
Nanoco US Inc. | 18 | (178) | (176)

2 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.
None of the loans are interest bearing.
There is no controlling party of the group or Company.
29. Compensation of key management personnel (including Directors)

| 31 July | 31 July
| 2024 | 2023
Company | £’000 | £’000
Short-term employee benefits | 765 | 753
Pension costs | 62 | 56
Cash bonus | — | 549
Share-based payments | 197 | 283
| 1,024 | 1,641

The key management team comprises the Executive Directors and one member of staff (2023: one) who is not a Director
of the Company. The staff member of the team is the Operations Director.
Notes to the financial statements continued
Nanoco Group plc – Annual Report and Accounts 2024
131
30. Reconciliation of net debt

| Liabilities from financing activities |  |  |  |
|  |  | Total |  |
|  |  | liabilities from | Cash |
|  | Lease | financing | and cash | Total
| Loans | liabilities | activities | equivalents | net debt
Group | £’000 | £’000 | £’000 | £’000 | £’000
At 1 August 2022 | (3,919) | (169) | (4,088) | 6,762 | 2,674
Financing cash flows | 4,725 | 549 | 5,274 | 1,263 | 6,537
New leases | — | (2,165) | (2,165) | — | (2,165)
Foreign exchange adjustments | — | — | — | 182 | 182
Interest expense | (5,367) | (86) | (5,453) | — | (5,453)
At 31 July 2023 | (4,561) | (1,871) | (6,432) | 8,207 | 1,775
Financing cash flows | 5,078 | 661 | 5,739 | 11,743 | 17,482
New leases | — | (596) | (596) | — | (596)
Foreign exchange adjustments | — | — | — | 343 | 343
Interest expense | (517) | (103) | (620) | — | (620)
At 31 July 2024 | — | (1,909) | (1,909) | 20,293 | 18,384

|  | Cash |
|  | and cash | Total
| Loans | equivalents | net debt
Company | £’000 | £’000 | £’000
Net debt as at 1 August 2022 | (3,392) | 5,497 | 2,105
Financing cash flows | 4,725 | (5,402) | (677)
Foreign exchange adjustments | — | 10 | 10
Interest expense | (5,337) | — | (5,337)
Net debt at 31 July 2023 | (4,004) | 105 | (3,899)
Financing cash flows | 4,500 | 19,709 | 24,209
Foreign exchange adjustments | — | 350 | 350
Interest expense | (496) | — | (496)
Net debt at 31 July 2024 | — | 20,164 | 20,164

31. Subsequent events
Between 1 August 2024 and 29 October 2024, the Company returned a further £1.0 million to shareholders through the completion
of the on-market buy-back. This constituted 7,780,449 shares which were subsequently cancelled alongside the 183,010 shares
held at 31 July 2024, leaving the Company with 194,608,038 shares in issue.
On 30 August 2024, the group announced it had received confirmation that its European customer would be placing no further
orders for the first generation sensing product. We have considered the impact across the financial statements and the lack of
orders for first generation sensing products was considered to be an adjusting event in relation to the realisable value of the
stock held at 31 July 2024. As a consequence, an additional provision of £140,000 was included in the accounts. There is no
further impact on the numbers shown in these accounts.
On 30 August 2024, the group also announced the termination of the two-year Joint Development Agreement with its European
customer. Under IAS 10, the termination of the Joint Development Agreement is a non-adjusting event for the purposes of these
financial statements. There is no post year-end impact on the carrying value of the groups assets as the related assets can be
used in other areas of the business and their recoverability is supported by the remaining business.
On 3 October 2024, the group announced measures to reduce its cost base, including reducing headcount through a redundancy
process. This is considered to be a non-adjusting event in these financial statements but will reduce the group’s annualised cost
base by £2.6 million following a restructuring cost of £0.1 million.
On 25 October 2024, the group received a Requisition from a shareholder for a general meeting. On 15 November 2024 a circular
was issued in response to the requisition. There is no impact on the financial statements of this event.
Financial statements
Nanoco Group plc – Annual Report and Accounts 2024
132
Investor information
Directors
Dr Christopher Richards Non-Executive Chairman
Dmitry Shashkov Chief Executive Officer
Dr Nigel Pickett Chief Technology Officer
Liam Gray Chief Financial Officer
Dr Alison Fielding Senior Independent and
Non-Executive Director
Chris Batterham Non-Executive Director
Dieter May Non-Executive Director
Dr Jalal Bagherli Non-Executive Director
Secretary
Liam Gray
Registered office
Science Centre
The Heath Business and Technical Park
Heath Road South
Runcorn WA7 4QX
Website
www.nanocotechnologies.com
Independent auditors
Forvis Mazars LLP
1 St Peter’s Square
Manchester M2 3DE
Legal adviser
Reed Smith LLP
The Broadgate Tower
20 Primrose Street
London EC2A 2RS
Investor relations
Sodali & Co
122 Leadenhall Street
London EC4Y 0AH
Corporate brokers
Cavendish Capital Markets
One Bartholomew Close
London EC1A 7BL
Registrar
Neville Registrars
Neville House
Steelpark Road
Halesowen B62 8HD
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Nanoco Group plc
The Science Centre
The Heath Business and
Technical Park
Runcorn
WA7 4QX
Nanoco Group plc Annual Report and Accounts 2024