Nanoco Group PLC · LSE:NANO
Nanoco — FY2017 Earnings Presentation
46 slides from Nanoco's earnings presentation, October 2017
Slide 1: Preliminary Results Presentation
PRELIMINARY RESULTS PRESENTATION For the year ended 31 July 2017
Slide 2: Disclaimer
DISCLAIMER The following presentation is being made only to, and is only directed at, persons to whom such presentation may lawfully be communicated (“relevant persons”). Any person who is not a relevant person should not act or rely on this presentation or any of its contents. This presentation doe
Slide 3: Highlights
HIGHLIGHTS • Hybrid commercial model in display established • First display sales orders achieved • Substantial pipeline of commercial opportunities • 10x increase in manufacturing capacity at Runcorn, production costs reduced • Agreement signed with Kyulux focused on next generation displays • Life
Slide 4: Company Overview
COMPANY OVERVIEW • Pioneer and world leader in the development and production of cadmium-free Display quantum dots (CFQDs) • Scalable "platform technology" with multiple markets and product applications • Extensive patent portfolio, c.600 patents granted/pending • Large addressable markets • Main fo
Slide 5: Strengths
STRENGTHS Leader in heavy-metal-free CFQD® quantum dot & Nano- material products Leading R&D innovation Intellectual property • Leading performance • High quality • Reliability Efficient mass production process • Low risk Molecular seeding process • High volume Efficient scalable production • Low Co
Slide 6: Display
(oo DISPLAY
Slide 7: Growing Display Market Opportunity
GROWING DISPLAY MARKET OPPORTUNITY • Benefits of CFQDs o Enables Wide Color Gamut (WCG) displays for 4K, UHD, HDR, gaming, streaming, photos o Integrated into existing LCD technology o Consistent and accurate colours across product range o Improved peak brightness and contrast o Lightning fast respo
Slide 8: Competition and Supply
COMPETITION AND SUPPLY • Nanoco and its licensees, Dow and Merck, are the only commercial suppliers of CFQDs • Competition chasing cadmium free hard Cadmium-free QDs CFQD Market Players Cadmium Market Players Samsung via Hansol – shipped Nanosys – stated capacity 6m >3m TVs in 2016 TVs pa, recently
Slide 9: Multi-Channel Strategy to Display Success
MULTI-CHANNEL STRATEGY TO DISPLAY SUCCESS Nanoco Non-exclusive Licensees • Licence fee, royalties on • Revenue from Runcorn • Royalty on Dow sales sales of Merck produced produced CFQD resin + • South Korean factory product royalty producing commercial • Merck buying Runcorn • Focus on Chinese and q
Slide 10: Growing & Focused Sales Pipeline
GROWING & FOCUSED SALES PIPELINE NDA, scope and design specifications • Large pipeline of active programmes Specification agreement and development sampling • Focused on OEMs with near term potential • Sales process longer than Technical approval anticipated o Customisation required for each OEM Des
Slide 11: Slower Adoption
SLOWER ADOPTION • Protracted RoHS ruling has allowed cadmium QDs to prevail, especially in China o October 2019 – cadmium exemption ends in Europe • Initial adoption on high end TVs where volumes are low • China currently using cadmium QD for local Chinese market, exploring CFQDs for export to Weste
Slide 12: Expanding Capacity to Meet Forecast Demand
EXPANDING CAPACITY TO MEET FORECAST DEMAND • Runcorn ready to fulfil commercial orders • 10x increase in capacity through innovative technology improvements; cost reduced significantly • Enables rapid transition for new materials from lab to production • Awarded ISO 9001 certification in December 20
Slide 13: Touch Taiwan Success
TOUCH TAIWAN SUCCESS • AUO showed line of next generation 8k and 4k TVs equipped with Nanoco CFQD Fine Colour Film at Touch Taiwan • Film produced from CFQD’s produced by Nanoco in the UK and coated onto film by Wah Hong in Taiwan 65” CFQD 4K TV 85” CFQD 8K TV 75” CFQD 4K TV 12
Slide 14: Continuous Innovation Critical to Success
CONTINUOUS INNOVATION CRITICAL TO SUCCESS Nanoco has led the development of CFQD technology with rapid improvements in quality, performance and yield Diminished R&D resource needs to be reinstated to keep up and stay ahead of competition and deliver improved technology • Continuous • QD enabled • EL
Slide 15: Other Markets
OTHER MARKETS
Slide 16: Other Markets
OTHER MARKETS LIGHTING LIFE SCIENCES NANO-MATERIALS SOLAR Initial Horticulture lighting Image guided surgery, cancer Infra red, 2D other nano- Printable thin film CIGS application Light therapy (crosses diagnostics & targeted materials solar cells into life sciences) therapy CFQD Enhanced plant grow
Slide 17: Horticultural Lighting
HORTICULTURAL LIGHTING • Focus on horticultural and photodynamic therapy • Tune light to match the ideal growing conditions for plants • Nanoco lights won CES 2017 Innovation Award • Commercializing technology today Horticultural lighting to enhance seed germination and seedling growth 16
Slide 18: Medical Device / Lighting
NANOCO* Pain Relief & Recovery
Slide 19: Nanoco Life Sciences – Rapid Progress
NANOCO LIFE SCIENCES – RAPID PROGRESS • Focus on in vivo imaging, diagnostic and targeted therapy of In vivo cancer photoluminescence images of the 650 • Partnership in place with University College London, University emissive VivodotsTM of Manchester and University of Nottingham nanoparticles follo
Slide 20: 2D / Nano-Materials
2D / NANO-MATERIALS • Nano material development is a core competency of Nanoco o Complex particle design and development o Scale up o Manufacturing • 2D material development programme o Partnership between Nanoco and University of Manchester, National Graphene Institute o Collaboration between Nobel
Slide 21: Financial Review
FINANCIAL REVIEW
Slide 22: Business Model
BUSINESS MODEL Licence fees Royalties Sources of revenue Joint development and Sale of materials grant income 21
Slide 23: Financial Highlights
FINANCIAL HIGHLIGHTS 2017 2016 Movement £m £m £m Revenue and other income 1.6 0.8 0.8 Billings 1.1 1.9 (0.8) R & D investment (5.5) (6.0) 0.5 LBITDA (9.7) (11.5 1.8 Loss after tax (9.1) (10.6) 1.5 Cash and short term deposits 5.7 14.5 (8.8) R &D tax credit 1.8 2.0 (0.2) Deferred revenue (0.7) (1.2)
Slide 24: Movement in Net Loss During 2017
MOVEMENT IN NET LOSS DURING 2017 14,000 12,000 835 10,607 80 10,000 137 205 9,110 1,684 487 583 8,000 £'m 6,000 4,000 2,000 - 2016 Loss Billings Deferred Cost of sales R&D Admin Interest Tax credit 2017 Loss revenue 23
Slide 25: Revenue and Billings
REVENUE AND BILLINGS Movement vs 2016 £'m -1.5 -1 -0.5 0 0.5 1 1.5 2 Revenue and other operating income Release of deferred income Billings New deferred revenue Materials and services provided JDA & Grants Milestone and royalties 24
Slide 26: R&D and Administrative Costs
R&D AND ADMINISTRATIVE COSTS Total non-cash operating expenses 7 • Operating expenses are tightly controlled 6 • Cost savings achieved in H2 17 5 • Further reductions in staff costs have £million 4 occurred post year end. 3 2 1 Movement in Administrative costs vs 2016 0 £‘million H1 16 H2 16 H1 17 H
Slide 27: Movement in Cash 2017
MOVEMENT IN CASH 2017 16,000 14,511 14,000 12,000 10,000 £'000 8,000 1,921 1,365 552 5,706 6,000 32 242 482 741 1,125 20 525 1,559 11 4,000 10,898 2,000 - - 26
Slide 28: Summary
SUMMARY
Slide 29: Summary – Solid Progress
SUMMARY – SOLID PROGRESS • Achieved first commercial display sales orders • Focus on target near term display programmes • Dow royalty, although modest, is increasing • Global supply chain established for display • Recent European Commissions decision to ban cadmium stimulating interest in CFQDs • L
Slide 30: Questions & Q&A
NANOCO GROUP PLCe® QUESTIONS Q&A
Slide 31: Appendices
APPENDICES
Slide 32: What Is a Quantum Dot?
WHAT IS A QUANTUM DOT? • Tiny particles of a fluorescent semiconductor material • 1 to 10 nanometers in diameter • Size of the quantum dot determines the spectrum of light emitted • Smaller = blue; larger = red • Can be tuned to light beyond visible light into the Infra-red or ultra- violet parts of
Slide 33: Benefits of CFQD Quantum Dot Film
BENEFITS OF CFQD® QUANTUM DOT FILM QD manufacture Resin Film Film stack Panel Display Better Colour Gamut Energy Efficient Minimal Process Much improved colour saturation Narrow bandwidth = more light Change Uses existing LCD extraction through colour filters manufacturing infrastructure Imp
Slide 34: Breakdown of a QD LCD Display
BREAKDOWN OF A QD LCD DISPLAY Film CFQD Quantum Dot (BLU) Back Light Unit Optical Films Pure White light LCD Panel LCD Filter Blue / White light Luminance Luminance Wavelength Wavelength Emits light – Light energises Quantum dots LCD panel creates the Each pixel / shutter is paired much more blue th
Slide 35: What People Are Saying About QD Displays
WHAT PEOPLE ARE SAYING ABOUT QD DISPLAYS “A TV screen that is jaw-droppingly good” “TVs are entering a new era in 2017” - The Independent - Trusted Reviews “May be the holy grail “CF791’s pitch-perfect colors change the of gaming displays” game for ultrawides” - Forbes - Monitornerds.com Digital Tre
Slide 36: Cadmium-Free to Dominate Rapidly Growing Market
CADMIUM-FREE TO DOMINATE RAPIDLY GROWING MARKET 35
Slide 37: LCD TV Market Share 2016
LCD TV MARKET SHARE 2016 Samsung 22% Others 27% LG Changhong 12% 3% Haier 3% Vizio 4% TCL TPV 9% Source: Statista 4% Skyworth 5% Hisense Sony 6% 6% 36
Slide 38: RoHS Update
RoHS UPDATE • The European Commission (EC) has completed a lengthy review of the use of cadmium-based quantum dots in displays and LED lighting, following the rejection by the European Parliament in 2015 of their previous proposal to extend their use • The report from their consultants (Oeko-Institu
Slide 39: Leadership
LEADERSHIP Dr Christopher Richards • CEO, Non-Executive chairman, Arysta LifeSciences Non-Executive Chairman • 20 years of increasing management roles at Syngenta • Executive chairman of Plant Health Care • NED of Origin Enterprises plc Dr Michael Edelman • Led spin-out of Nanoco from University of
Slide 40: Statement of Comprehensive Income
STATEMENT OF COMPREHENSIVE INCOME 2017 2016 £’000 £’000 Revenue 1,326 474 Cost of sales (257) (177) Gross profit 1,069 297 Other operating income 281 284 Operating expenses Research and development expenses (5,508) (5,995) Administrative expenses (6,784) (7,367) Operating loss (10,942) (12,781) - be
Slide 41: Statement of Financial Position
STATEMENT OF FINANCIAL POSITION 31 July 31 July 31 July 31 July 2017 2017 2016 2016 Group Company Group Company £’000 £’000 £’000 £’000 Assets Non-current assets Tangible fixed assets 865 - 1,260 — Intangible assets 2,619 - 2,423 — Investment in subsidiaries - 66,564 — 66,322 3,484 66,564 3,683 66,3
Slide 42: Statement of Financial Position
STATEMENT OF FINANCIAL POSITION 31 July 31 July 31 July 31 July 2017 2017 2016 2016 Group Company Group Company £’000 £’000 £’000 £’000 Non-current liabilities Other payables - 450 — 450 Deferred revenue 552 - 648 — 552 450 648 450 Total liabilities 1,972 450 3,654 450 Net assets 10,447 118,741 18,7
Slide 43: Statement of Cash Flow
STATEMENT OF CASH FLOW 31 July 31 July 31 July 31 July 2017 2017 2016 2016 Group Company Group Company £’000 £’000 £’000 £’000 (Loss)/profit before tax (10,898) 30 (12,600) 167 Adjustments for: Net finance income (44) (30) (181) (167) Depreciation of tangible fixed assets 741 - 991 — Amortisation of
Slide 44: Statement of Cash Flow
STATEMENT OF CASH FLOW 31 July 31 July 31 July 31 July 2017 2017 2016 2016 Group Company Group Company £’000 £’000 £’000 £’000 Cash flow from investing activities Purchases of tangible fixed assets (374) - (189) — Purchases of intangible fixed assets (1,185) - (900) — Cash advance to subsidiary - (4
Slide 45: Shareholder Analysis (as at 31 October 2017)
SHAREHOLDER ANALYSIS (AS AT 31 OCTOBER 2017) Name Shareholding Percentage Lombard Odier 33,363,147 14.00 Hargreaves Lansdown Asset Management 23,143,241 9.71 Baillie Gifford & Co 18,051,750 7.58 COGEFI 17,101,951 7.18 Dr Nigel Pickett (CTO) 10,945,681 4.59 TD Direct Investing 8,170.676 3.43 Killik A
Slide 46: Nanoco Group PLC contact details
Nanoco Group PLC 46 Grafton Street, Manchester, M13 9NT, United Kingdom, Tel: +44 161 603 7900 | Fax: +44 161 603 7901 info@nanocotechnologies.com www.nanocogroup.com 45