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Nanoco has issued a circular recommending that shareholders vote against both resolutions being proposed by Milkwood in its requisition for a general meeting (scheduled for 11:30am on 13 December 2024). We summarise the board’s key arguments below.
Nanoco Group |
Board states case for voting against resolutions |
Issue of circular |
Technology |
19 November 2024 |
Share price performance
Business description
Analyst
Nanoco Group is a research client of Edison Investment Research Limited |
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Nanoco has issued a circular recommending that shareholders vote against both resolutions being proposed by Milkwood in its requisition for a general meeting (scheduled for 11:30am on 13 December 2024). We summarise the board’s key arguments below.
Year end |
Revenue (£m) |
EBITDA* (£m) |
EPS* (p) |
Net cash (£m) |
EV/sales (x) |
P/E (x) |
07/22 |
2.5 |
(2.1) |
(1.3) |
2.8 |
1.7 |
N/A |
07/23 |
5.6 |
(0.5) |
(0.7) |
3.6 |
0.7 |
N/A |
07/24e** |
7.9 |
0.5 |
(0.3) |
20.0 |
0.5 |
N/A |
07/25e*** |
N/A |
N/A |
N/A |
N/A |
N/A |
N/A |
Note: *EBITDA and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments. **FY24 estimates reflect the company’s trading updates from 30 August 2024. ***FY25 estimates have been withdrawn.
Nanoco announced the receipt of the requisition notice from Milkwood Fund on behalf of 5.6% of the voting rights in the company on 28 October, proposing the appointments of Mr Rhys Summerton and Mr Andre Tonkin (a director and employee of Milkwood, respectively) to the Nanoco board. On 15 November, Nanoco issued an RNS stating that the board has not been provided with a rationale for the proposed board appointments and issued a circular detailing five key reasons why the board is advising investors to vote against Milkwood’s proposals. The board’s key arguments are listed below.
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Milkwood is not acting in the best interests of all shareholders: Milkwood has a history of activist campaigns against undervalued, cash-rich entities and intends to convert Nanoco into an investment company, retaining surplus cash. The board finds no rationale for Milkwood’s nominees and considers the resolutions disruptive.
■
Re-underlining the commitment to return surplus cash to shareholders: Having already distributed £33m in 2024, the board plans further returns in FY25, demonstrating a clear commitment to delivering shareholder value promptly.
■
Commercial potential and strategic value: The circular reiterated the board’s confidence that Nanoco has commercial potential and inherent value. Actions include appointing CDX Advisors for a potential sale, reducing costs and planning cash returns.
■
Board expertise: The company has significantly strengthened its industry knowledge and experience with the appointments of CEO Dmitry Shashkov, the appointment and planned succession of Jalal Bagherli as chairman from January 2025 and the appointment of Dieter May. Interests are aligned, with over 50% of directors’ fees to be deferred and taken in the form of shares.
■
Disruption concerns: The board believes that appointing Milkwood’s nominees would hinder its ability to return surplus cash. Milkwood’s plan to convert Nanoco into an investment company would require retaining significant cash, contrary to shareholders’ interests in a technology-focused operating company.
The circular and letter from Nanoco chair Christopher Richards can be found here.
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