THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED HEREIN IS RESTRICTED AND IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN, INTO OR FROM THE UNITED STATES, CANADA, JAPAN, THE REPUBLIC OF SOUTH AFRICA, AUSTRALIA, THE REPUBLIC OF IRELAND, NEW ZEALAND OR ANY OTHER JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF THAT JURISDICTION. PLEASE SEE THE IMPORTANT NOTICES AT THE END OF THIS ANNOUNCEMENT.

THIS ANNOUNCEMENT IS FOR INFORMATION PURPOSES ONLY AND DOES NOT CONSTITUTE OR CONTAIN ANY INVITATION, SOLICITATION, RECOMMENDATION, OFFER OR ADVICE TO ANY PERSON TO PURCHASE AND/OR SUBSCRIBE FOR, OTHERWISE ACQUIRE OR DISPOSE OF ANY SECURITIES IN NANOCO GROUP PLC OR ANY OTHER ENTITY IN ANY JURISDICTION. NEITHER THIS ANNOUNCEMENT NOR THE FACT OF ITS DISTRIBUTION, SHALL FORM THE BASIS OF, OR BE RELIED ON IN CONNECTION WITH ANY INVESTMENT DECISION IN RESPECT OF NANOCO GROUP PLC.

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF THE MARKET ABUSE REGULATION (596/2014/EU) AS THE SAME HAS BEEN RETAINED IN UK LAW AS AMENDED BY THE MARKET ABUSE (AMENDMENT) (EU EXIT) REGULATIONS (SI 2019/310) ("UK MAR"). IN ADDITION, MARKET SOUNDINGS (AS DEFINED IN UK MAR) WERE TAKEN IN RESPECT OF CERTAIN OF THE MATTERS CONTAINED WITHIN THIS ANNOUNCEMENT, WITH THE RESULT THAT CERTAIN PERSONS BECAME AWARE OF INSIDE INFORMATION (AS DEFINED UNDER UK MAR). UPON THE PUBLICATION OF THIS ANNOUNCEMENT VIA A REGULATORY INFORMATION SERVICE, THOSE PERSONS THAT RECEIVED INSIDE INFORMATION IN A MARKET SOUNDING ARE NO LONGER IN POSSESSION OF SUCH INSIDE INFORMATION, WHICH IS NOW CONSIDERED TO BE IN THE PUBLIC DOMAIN.

6 June 2022

FOR IMMEDIATE RELEASE

Nanoco Group plc

("Nanoco", the "Company" or the "Group")

Trading Update &

Proposed Fundraise to raise £2.25 million by way of a Placing and Subscription

Additional Broker Option to enable broader retail participation in the Fundraise

Appointment of Joint Corporate Broker

Nanoco Group plc (LSE: NANO), a world leader in the development and manufacture of cadmium-free quantum dots and other specific nanomaterials emanating from its technology platform, today announces a trading update and a placing (the "Placing") and subscription (the "Subscription") in respect of, in aggregate, 6,081,081 new ordinary shares of 10.0 pence each in the Company ("Ordinary Shares") ("New Ordinary Shares"), at a price of 37 pence per New Ordinary Share ("Issue Price"), to raise £2.25 million before expenses.  A Broker Option (as defined below) has been put in place to allow new and existing shareholders who are qualifying investors to participate on the same terms as the Placing and the Subscription. Further details of the Placing, the Subscription and the Broker Option (together the "Fundraise") are set out below. The total Fundraise will not exceed the equivalent of approximately 5.0% of the Company's issued share capital immediately prior to the Fundraise.

Overview

·              Significant trading progress has been made in terms of order book growth, new contract momentum and cost management.

·              The Board remains very confident in the strength of the Company's case in the litigation against Samsung and in an outcome that is transformational for Nanoco's prospects and shareholder value.

·              The net proceeds of the Fundraise will extend the Company's cash runway into CY24 - past the key strategic milestones which are expected to be delivered in the short term, namely visibility of commercial production orders and the outcome of the Samsung litigation trial in Texas. The Fundraise will also support Nanoco's core IP assets and its ongoing business operations.

Trading Update

New contract with existing major European electronics customer underpins revenue expectations for FY22 and FY23

·              Today's separate announcement of a full year service contract with our major European electronics customer (the 'New Contract') more than doubles the Group's order book year-on-year.

·              As a result of the New Contract, the Board now expects revenue for FY22 to be ahead of its previous expectations.

·              The New Contract:

▪    underpins FY23 revenue at least in line with FY22 as well as creating favourable working capital terms to fund a raw material stock build ahead of potential production order visibility in H2 CY22;

▪    adds an additional new material to the Group's range and emphasises the long term nature of the Group's development and production relationship with this significant customer; and

▪    covers a period of one year to May 2023 during which the Company expects to have visibility of commercial production orders.

Continued progress in organic business and growth

·              New orders in Q3 FY22 from the major Asian electronics customer for additional development material, with additional development work packages, are at an advanced stage of discussion.

·              Tight cost management and agreement of terms to exit the surplus facility in Manchester will reduce the Company's annualised cash cost base by around 15% by January 2023 compared to expectations for FY22, from around £4.8 million to around £4.0 million, resulting in a cash break even revenue figure of around £5.0 million.

·              With the benefit of the Fundraise and the firm cash flows in the New Contract, the Company's cash runway will now extend past the key strategic milestones of production order visibility and the outcome of the Samsung litigation trial - both expected in H2 CY2022 or shortly thereafter.

·              The Company expects revenue in FY23 to exceed expectations for FY22. Depending on the size of the initial use case for sensing materials, the Company expects to achieve the cash breakeven levels of revenue noted above in FY24 or FY25. A high volume initial use case such as a mobile handset would result in the earlier date.

Litigation Update (as announced on 17 May 2022)

Significant progress towards and confidence in an outcome that is transformational for Nanoco's prospects and shareholder value.

·              In the litigation against Samsung, the Patent Trial and Appeal Board (PTAB) validated all 47 claims in the five patents at issue in the lawsuit in the Eastern District of Texas. As fully expected, Samsung has lodged notices to appeal the outcomes but the Board notes the robustness of the PTAB opinions in dismissing all grounds asserted by Samsung in its claims. While the outcome of any appeal by Samsung is by its nature uncertain, the Board believes that the PTAB opinions appear to limit both the scope of any appeal and the chances of success.

·              The Board will now press for, and is hopeful of achieving, a lifting of the stay in the case in the very near term. This is expected to lead to a rescheduled trial in Q4 CY22 where the jury will consider the questions of infringement, wilfulness and damages, with the PTAB having settled the issue of validity.

·              The Board is very confident in the strength of the Company's case and in an outcome that is transformational for Nanoco's prospects and shareholder value.

Placing of, and Subscription for, New Ordinary Shares and Broker Option

Proceeds extend cash runway into CY24 and beyond key value inflection points

·              The Company has raised £2.25 million through the Placing and Subscription, which involves the issue of 6,081,081 New Ordinary Shares at the Issue Price.

·              In addition, the Company has implemented a Broker Option to enable new and existing shareholders who are qualifying investors to participate in the equity fundraise on the same terms as the Placing and the Subscription. The total Fundraise will not exceed 5% of the Company's issued share capital immediately prior to the Fundraise.

·              Six directors of the Company ("Directors") and/or persons closely associated with them have agreed to subscribe for new Ordinary Shares at the Issue Price with a total value of £65,000 as shown in the Additional Information section of this announcement. Henry Turcan (Non-Executive Director), as a representative of Lombard Odier Asset Management, is unable to participate.

·              The net proceeds of the Fundraise will extend the Company's cash runway into CY24 and beyond key value inflection points for the organic business and for the Samsung litigation as well as supporting its core IP assets and its business operations during the ongoing lawsuit against Samsung.

Brian Tenner, CEO of Nanoco Group said:

"This Fundraise will enable Nanoco to plan confidently for the future of the organic business and to position us in the strongest possible way for the next stages of the litigation.  It creates a cash runway that extends comfortably past both of the expected H2 value inflection points noted above and potentially through to the point when the organic business may become self-financing.

"We are at a very exciting moment in Nanoco's evolution. This calendar year was set up for four major value inflection points; two in our organic business development and two more in our litigation against Samsung; two have now been successfully delivered, with the next two anticipated in our second half.

"The first of those organic value inflection points has now been delivered in the New Contract with our important European Electronics Customer. It creates a significantly more stable financial environment for Nanoco's operations and business planning and allows us to prepare better for potential commercial production orders in the short term.

"The first of the two significant hurdles in our litigation against Samsung was also recently successfully delivered. On 16 May 2022, the PTAB ruled emphatically in favour of Nanoco on all 47 claims in the five patents in the lawsuit. We will now be pressing for a lifting of the stay in the trial and are hopeful of a rescheduled trial date in Q4 CY22.

"We look forward to the second half of CY22 when we aim to deliver the other two significant value inflection points: production order visibility in the organic business and a successful outcome to the litigation trial.  In particular, commercial production orders will be the first in our history and would quickly establish Nanoco as a fully-fledged and self-financing operating business with significant upside value to be earned in the many large and growing international markets that our materials can serve."

ADDITIONAL INFORMATION

Background to the Fundraise

The Company announced its Interim Results for the six months ended 31 January 2022 ("H1 FY22", the "Period") on 12 April 2022. During the Period, Nanoco delivered Revenues of £1.1 million, Other Operating Income of £0.2 million and an Adjusted EBITDA Loss of £1.1 million, being a 27% improvement on the first half of FY21.  The first half included the successful delivery of all milestones for two large customers, the important European Electronics Customer and the significant Asian chemical company. H1 FY22 also included material deliveries to a number of other customers and further work packages for the two larger customers.

Shortly after the end of the Period, the Group completed the exit from the first floor of its Manchester facility and announced the exit from the ground floor by Q3 FY23. These two changes are expected to reduce the Group's annualised cash cost base to approximately £4.0 million.

The Company's cash balance was £1.8 million as at 31 January 2022 and this had risen to £2.6 million by the end of February 2022. This was sufficient to create a cash runway into H1 CY23, subject to customer demand being in line with expectations.

The third-party funder continues to finance the Company's litigation against Samsung for the alleged wilful infringement of the Group's IP. This third party funding prevents a drain on the Group's cash position for a number of years. The third-party funder will only receive a return of their capital in the event of a successful outcome to the lawsuit.  The recent favourable decision by the PTAB in respect of the Group's patents in the law suit has increased the Board's confidence in a successful outcome to the litigation which is still expected to have a potentially transformational impact on the Group's prospects and shareholder value.

The Fundraise, combined with recent commercial wins, will ensure that the Group has adequate funding to retain operational capabilities of R&D, scale-up and production in its Sensing and Display product lines for a number of years and, subject to initial use cases for its materials, potentially to a point when the organic business is self-financing.

Use of proceeds of the Fundraise

The Company is raising gross proceeds of £2.25 million from the Placing and the Subscription. The net proceeds (after deducting the costs and expenses of the Fundraise, which are expected to be £0.2 million), along with the Company's existing cash resources, will be used to:

(i)     support the Group's R&D, scale-up and production capabilities of novel nanomaterials for use in infra-red sensing and CFQD^® display applications with short to medium term prospects for self-financing commercial production revenues;

(ii)    protect its IP and Company operations during the ongoing litigation against Samsung, which is being funded by a third-party;

(iii)    strengthen the Group's balance sheet opposite Samsung during the litigation process to reduce the attractiveness of potential delaying tactics designed to weaken Nanoco;

(iv)   improve the Group's position as a reliable supplier in the very large electronics supply chains in which it operates; and

(v)    retain key skilled personnel and attract new staff as the business rebuilds itself.

The Company intends to use any net proceeds from the Broker Option to further extend the Company's cash runway, maintain a reasonable balance sheet and to support business development activity with a number of new potential customers and opportunities in a range of applications.

Details of the Placing and the Subscription

In total, 6,081,081 New Ordinary Shares are proposed to be allotted and issued pursuant to the Placing and the Subscription, at an Issue Price of 37 pence per New Ordinary Share to raise gross proceeds of £2.25 million.

The New Ordinary Shares to be issued pursuant to the Placing have been conditionally placed by Turner Pope Investments (TPI) Ltd ("TPI"), acting as agent and broker of the Company, with certain new and existing institutional and other investors pursuant to a Placing Agreement, as detailed below.

New Ordinary Shares have also been subscribed for directly with the Company, pursuant to the Subscription, by subscribers pursuant to direct subscription agreements.

The New Ordinary Shares (and the Broker Option Shares (as defined below)) will be issued pursuant to the Company's existing share allotment authorities which were granted at the Company's annual general meeting held on 30 November 2021. The New Ordinary Shares and the Broker Option Shares will, when issued, be credited as fully paid and will rank pari passu in all respects with the existing Ordinary Shares of the Company.

Broker Option

The Company has also granted an option to TPI under the Placing Agreement in order to deal with additional demand for New Ordinary Shares in the event that requests from new or existing shareholders who are qualifying investors to participate in the Fundraise during the period following the release of this announcement and up to 5:00 pm on Tuesday 7 June 2022 (the "Broker Option"). To participate in the Broker Option, qualifying investors should communicate their interest to TPI via their independent financial adviser, stockbroker or other firm authorised by the Financial Conduct Authority (all of whom will be required to confirm to TPI whether their client is a new or existing shareholder), as TPI cannot take direct orders from individual private investors. TPI should be contacted by telephone on (020) 3657 0050 or by email at [email protected].

TPI may choose not to accept bids and/or to accept bids, either in whole or in part, on the basis of allocations determined at their discretion (after consultation with the Company) and may scale down any bids for this purpose on such basis as TPI may determine. A separate announcement will be made regarding the results of the Broker Option.

Any Ordinary Shares issued pursuant to the exercise of the Broker Option ("Broker Option Shares") will be issued on the same terms and conditions as the New Ordinary Shares. The Broker Option may be exercised by TPI, following consultation with the Company, but there is no obligation on TPI to exercise the Broker Option or to seek to procure subscribers for Broker Option Shares pursuant to the Broker Option. The maximum number of Broker Option Shares that may be issued pursuant to the exercise of the Broker Option will be limited to ensure that the total Fundraise does not exceed 5.0% of the Company's issued share capital immediately prior to the Fundraise. The maximum aggregate number of new Ordinary Shares (including both the New Ordinary Shares and Broker Option Shares) that may be issued pursuant to the Fundraise is therefore 15,284,340.

The Broker Option Shares are being made available only to new and existing shareholders who are qualifying investors and not to the public, and none of the Broker Option Shares are being offered or sold in any jurisdiction where it would be unlawful to do so. No prospectus will be issued in connection with the Broker Option.

Placing Agreement

Under the terms of a Placing Agreement between the Company and TPI, TPI will, conditional upon Admission, receive a corporate finance fee from the Company and commission relating to the New Ordinary Shares and Broker Option Shares.  The Company will give customary warranties and undertakings to TPI in relation, inter alia, to its business and the performance of its duties. In addition, the Company has agreed to indemnify TPI in relation to certain liabilities that it may incur in undertaking the Placing. TPI has the right to terminate the Placing Agreement in certain circumstances prior to Admission, in particular, in the event that there has been, inter alia, a material breach of any of the warranties. No part of the Placing, the Subscription or the Broker Option is being underwritten.

Appointment of Joint Broker

The Company also confirms that it has appointed TPI as its joint broker with immediate effect.

Details of the Directors' participation

The Directors have agreed to subscribe for new Ordinary Shares pursuant to the Subscription as shown in the table below:

*Director subscriptions shall not be subject to scaling back in the event that the Fundraise is oversubscribed. The resulting shareholding percentage assumes that the maximum number of Ordinary Shares (being 15,284,340 new Ordinary Shares) will be issued. The actual position will be announced with the results of the total Fundraise, being the combined Placing, Subscription and Broker Option.

The Directors are considered to be related parties for the purposes of chapter 11 of the Listing Rules of the Financial Conduct Authority ("FCA"). However, the Directors' participation in the Fundraise is exempt from the requirements of LR11.1.7R to LR11.1.10R by virtue of paragraph 1 of LR11 Annex 1 (small transactions).

Application for admission to trading

Application will be made to the FCA for admission of the New Ordinary Shares and the Broker Option Shares to listing on the Official List and to the London Stock Exchange for admission of the New Ordinary Shares and the Broker Option Shares to trading on its main market for listed securities ("Admission").

It is expected that Admission will take place no later than 8:00am on 10 June 2022 and that dealings in the New Ordinary Shares and the Broker Option Shares will commence at the same time.

Total voting rights

Following Admission and assuming that the maximum number of 15,284,340 new Ordinary Shares are issued, the Company's total issued share capital will consist of 322,445,744 Ordinary Shares, with one voting right per share. The Company currently holds 12,222 Ordinary Shares in treasury. Therefore, the total number of Ordinary Shares in the Company will be 322,445,744 and the total number of voting rights will be 322,433,522 from Admission.  This figure may be used by shareholders in the Company as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change to their holdings of, Ordinary Shares pursuant to the FCA's Disclosure Guidance and Transparency Rules.

Expected Timetable of Principal Events

All references to time in this document are to London time, unless otherwise stated.

MAR

The person responsible for arranging for the release of this announcement on behalf of Nanoco is Liam Gray, Company Secretary.

The information contained within this announcement is considered by the Company to contain inside information for the purposes of UK MAR.  Upon the publication of this announcement via a Regulatory Information Service, this inside information will be considered to be in the public domain.

For further information, please contact:

Nanoco Group PLC:

Brian Tenner, CEO                                                                                             +44 (0) 161 603 7900

Liam Gray, CFO                                                                                                            +44 (0) 161 603 7900

Turner Pope Investments (Joint Corporate Broker):

Andrew Thacker                                                                                                 +44 (0) 20 3657 0050

James Pope

Peel Hunt LLP (Joint Corporate Broker):

Edward Knight                                                                                                  +44 (0) 20 7418 8900

James Smith

MHP Communications:                                                                                                +44 (0) 203 128 8570

Reg Hoare

Pete Lambie

Charlie Protheroe

[email protected]

IMPORTANT NOTICES

This announcement, or any copy of it, including the information contained within it, is restricted and is not for publication, release, transmission, distribution or forwarding, in whole or in part, directly or indirectly, in or into the United States (other than pursuant to certain limited exemptions described below), Canada, Japan, the Republic of South Africa, Australia, the Republic of Ireland, New Zealand or any other jurisdiction in which publication, release or distribution would be unlawful (or to any persons in any of those jurisdictions). This announcement is for information purposes only and does not constitute an offer to sell or issue, or the solicitation of an offer to buy, acquire or subscribe for shares in the capital of the Company in the United States (including its territories and possessions, any state of the United States and the District of Columbia) subject to the limited exceptions described below, or Canada, Japan, the Republic of South Africa, Australia, the Republic of Ireland, New Zealand or any other state or jurisdiction (or to any persons in any of those jurisdictions) or any other jurisdiction in which the same would be unlawful. No public offering of the New Ordinary Shares or Broker Option Shares is being made in any such jurisdiction. Any failure to comply with these restrictions may constitute a violation of the securities laws of such jurisdictions.

Neither the New Ordinary Shares nor the Broker Option Shares have been, nor will they be, registered under the US Securities Act 1933, as amended (the "US Securities Act") or with any securities regulatory authority or under any securities laws of any state or other jurisdiction of the United States and may not be offered, sold, resold, pledged, transferred or delivered, directly or indirectly, in or into the United States except pursuant to an applicable exemption from, or in a transaction not subject to, the registration requirements of the US Securities Act and in compliance with the securities laws of any state or any other jurisdiction of the United States. Accordingly, the New Ordinary Shares and the Broker Option Shares will be offered and sold only outside of the United States in "offshore transactions" (as such term is defined in Regulation S under the US Securities Act) pursuant to Regulation S and otherwise in accordance with applicable laws. No public offering of securities is being made in the United States. The Fundraise has not been approved, disapproved or recommended by the U.S. Securities and Exchange Commission, any state securities commission in the United States or any other U.S. regulatory authority, nor have any of the foregoing authorities passed upon or endorsed the merits of the offering of the New Ordinary Shares and/or the Broker Option Shares. Subject to certain exceptions, the securities referred to herein may not be offered or sold in the United States, Canada, Japan, the Republic of South Africa, Australia, the Republic of Ireland, New Zealand or to, or for the account or benefit of, any national, resident or citizen of the United States, Canada, Japan, the Republic of South Africa, Australia, the Republic of Ireland or New Zealand.

No public offering of the New Ordinary Shares and/or the Broker Option Shares is being made in the United States, United Kingdom or elsewhere. All offers of the New Ordinary Shares and/or the Broker Option Shares will be made pursuant to an exemption from the requirement to produce a prospectus under the EU Prospectus Regulation or the UK Prospectus Regulation. This announcement has not been approved by the London Stock Exchange, nor is it intended that it will be so approved.

This announcement is not being distributed by, nor has it been approved for the purposes of section 21 of the Financial Services and Markets Act 2000 ("FSMA") by, a person authorised under FSMA. This announcement is being distributed and communicated to persons in the United Kingdom only in circumstances in which section 21(1) of FSMA does not apply.

No prospectus has been or will be made available in connection with the matters contained in this announcement and no such prospectus is required (in accordance with the EU Prospectus Regulation or UK Prospectus Regulation) to be published. Members of the public are not eligible to take part in the Fundraise.

This announcement (including the terms and conditions contained in this announcement) is for information purposes only and (unless otherwise agreed by TPI) is directed at and is only being distributed to: (a) persons in member states of the EEA who are qualified investors within the meaning of Article 2(e) of the EU Prospectus Regulation ("EEA Qualified Investors"); (b) persons in the United Kingdom, who are qualified investors, being persons falling within the meaning of Article 2(e) of the UK Prospectus Regulation, and who (i) have professional experience in matters relating to investments falling within the definition of "investment professionals" in article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "Order"); or (ii) are persons falling within article 49(2)(a) to (d) ("high net worth companies, unincorporated associations, etc") of the Order; or (c) persons to whom it may otherwise lawfully be communicated, (each such persons in (a), (b) and (c) together being referred to as "Relevant Persons"). This announcement (including the terms and conditions set out in this announcement) must not be acted on or relied on by persons who are not Relevant Persons. Persons distributing this announcement must satisfy themselves that it is lawful to do so. Any investment or investment activity to which this announcement (including the terms and conditions set out herein) relates is available only to, and will be engaged in only with, Relevant Persons.

This announcement has been issued by, and is the sole responsibility of, the Company. No responsibility or liability is or will be accepted by, and no undertaking, representation or warranty or other assurance, express or implied, is or will be made or given by  TPI, or by any of their respective partners, directors, officers, employees, advisers, consultants or affiliates as to, or in relation to, the accuracy, fairness or completeness of the information or opinions contained in this announcement or any other written or oral information made available to or publicly available to any interested person or its advisers, and any liability therefore is expressly disclaimed. The information in this announcement is subject to change. 

TPI, which is authorised and regulated in the United Kingdom by the FCA is acting solely for the Company and no-one else in connection with the Fundraise and the transactions and arrangements described in this announcement and will not regard any other person (whether or not a recipient of this announcement) as a client in relation to the Fundraise or the transactions and arrangements described in this announcement.  TPI is not responsible to anyone other than the Company for providing the protections afforded to clients of TPI or for providing advice in connection with the contents of this announcement, the Fundraise or the transactions and arrangements described herein. 

This announcement (including information incorporated by reference in this announcement) and other information published by Nanoco may contain statements about Nanoco that are or may be deemed to be forward looking statements.  Such statements are prospective in nature.  All statements other than historical statements of facts may be forward looking statements.  Without limitation, statements containing the words "targets", "plans", "believes", "expects", "aims", "intends", "will", "may", "anticipates", "estimates", "projects" or "considers" or other similar words may be forward looking statements.

Forward looking statements inherently contain risks and uncertainties as they relate to events or circumstances in the future.  Important factors such as business or economic cycles, the terms and conditions of Nanoco's financing arrangements, tax rates, or increased competition may cause Nanoco's actual financial results, performance or achievements to differ materially from any forward looking statements.  Due to such uncertainties and risks, readers are cautioned not to place undue reliance on such forward looking statements, which speak only as of the date hereof.  Nanoco disclaims any obligation to update any forward looking or other statements contained herein, except as required by applicable law.