25th Mar 2014 12:29
LONDON (Alliance News) - Nanoco Group PLC Tuesday posted a widened pretax loss in the half year ended January 31, as it saw revenue drop and increased its operating expenses as it ramped up development of its quantum dot technology.
Nanoco produces quantum dots, nanocrystals made of semiconductor materials, which can be used in solar cells, LEDs and diode lasers. Nanoco's quantum dots do not use cadmium, a heavy metal whose use is restricted under European and other territories environmental legislation.
Nanoco posted a pretax loss of GBP5.0 million, widened from GBP1.6 million in the previous year, as revenue dropped to GBP679,000 from GBP2.5 million, and administrative expenses rose. The decline in revenue was as a result of the timing of completion of certain joint development programmes, Nanoco said, as it primarily derives revenue from milestone and joint development payments from its strategic partners at this stage in its development.
Sales costs increased due to the increase in quantity and size of samples required for display application customers, and commission costs from doubling its Semi-Tech production capacity at its Runcorn site.
Administrative expenses increased due to the recruitment of new staff as it ramps up commercialisation and scale-up activities at its Runcorn and Manchester sites.
The company signed a joint development programme with a South Korean electronics company which will focus on the commercialisation of Nanoco's quantum dots in its displays. It is expected that this company will launch commercial products using the dots following the third phase of development work.
The company said that its licensing partner, the Dow Chemical Co, expects construction of its quantum dot manufacturing facility in South Korea to be completed during the early part of 2015. The company said that Dow had been actively marketing its technology in the half year for use in electronic displays.
Nanoco said it was actively evaluating a transition to the main market as soon as is practicable and also a US ADR listing.
"We are pleased with the positive progress made during the past six months in tailoring Nanoco quantum dots for use with particular display manufacturers' applications," said Chairman Anthony Clinch in a statement. "The adoption of quantum dots is gaining momentum in the display industry and we look forward to the early adoption of Nanoco quantum dots in commercial display applications."
Liberum reiterated its 'Buy' rating for the company, noting that results had been below its forecasts, and the schedule for the completion of the South Korean facility had slipped by around six or seven months. Although this was disappointing, it was somewhat expected, Liberum said.
"Encouragingly the technical issues associated with converting quantum dots into film for TV back lighting now appear to be largely resolved, paving the way for commercial contracts with the Korean TV vendors," Liberum said. Due to the delay of the construction of the Dow facility, it cut its sales forecast for the financial year 2016 and financial year 2013 to 62% and 48% respectively.
Shares in Nanoco were trading up 5.0% at 105.00 pence Tuesday morning.
By Hana Stewart-Smith; [email protected]; @HanaSSAllNews
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