Nanoco Group latest 2023 research from Turner Pope

Nanoco Group

Nanoco Group plc (LON:NANO) has confirmed a transformative outcome for the Group in terms of its signing of final definitive agreements (collectively the ‘Settlement’) with Samsung for US$150m (c.£125m) to settle ongoing litigation with Samsung on a no-fault basis for the alleged infringement of its IP.

Separately it has published a trading update for its half year ended 31 January 2023 in relation to the organic business, which has continued to make progress ahead of expectations in customer delivery and scaling for potential production orders this year. Although the cash settlement (which is to be paid in two equal tranches: by 5 March 2023 and by 3 February 2024) is below Turner Pope Investments’ estimate of lost revenue in the range of USS$200m to US$300m for the US alone, Friday’s outcome nevertheless draws proceedings, that otherwise appeared set for a further, possibly extended, period of appeal, legal work and negotiation, to a close.

It leaves Nanoco Group more than adequately financed to build on the significant positive operating momentum achieved over the past few years, with an outlook for strong, near-term organic growth while remaining strongly positioned to continue protection of its now highly validated IP.

Shareholders meanwhile have also been reassured of the Board’s firm intention to distribute a “material return” of surplus capital. Taking on board the expected accounting impact of the Settlement (which is protected by existing carried forward tax losses in excess of £40m), balancing expected net cash against the Group’s likely wish to invest substantially in its technologies for creation of a self-sustaining organic business, TPI considers it may be realistic for the Board to recommend distribution of up to £45m (potentially in the form of special dividends this year and next and/or a share buy-back).

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