Nanoco Group plc (GXG.DU) Earnings Call Transcript & Summary

Good morning, everybody. My name is Brian Tenner, I'm the CEO of Nanoco Group plc. Welcome to our Preliminary Results Announcement for the year ended 31st of July, 2022. With me in the room, I have Liam Gray, our Chief Financial Officer. And so without further ado, we'll be looking through the highlights of the year, which are on Slide 3, which should be on the screen in front of you. Looking first at operational highlights. Basically, taking all of these together, what we've achieved over the last 12 months is to start to generate longer-term commercial visibility. So earlier this calendar year, we signed a major contract extension with our European electronics customer, that's for a full year. We have previously been working on 3-month and 6-month type contracts. And this new full year contract covers a number of important developments, 2 of which are getting through our materials through to final production-ready validation, meaning all we're waiting for is an end customer order. But importantly also, there's a brand-new material set at a new wavelength in there, which is a sign of the continuing investment of this key customer in this area of technology and their intent to actually get these things into commercial production and into the market. And the second thing you'll see, I'll talk about a bit later on, is that we significantly expanded yet again the number of customer engagements we have around our sensing business, but also the number of individual or distinct materials that we're working on. Moving then across, just mentioning briefly the lawsuit. Our IP, all 5 patents and the 47 associated claims were all validated by the Patent Trial and Appeal Board following the interparty's reviews that were requested by Samsung. And basically, the story of this year from a legal and litigation point of view is that we've been successfully clearing every single hurdle put in front of us. And we're not expecting a trial, whether it's in the very short-term at some point in Q4 this year or potentially early into Q1 next year, but I'll say a bit more about that later on. And then finally, from an operational perspective, we are in the process of completing the consolidation of all of our operations. So R&D scale-up and production into our Runcorn facility. And once complete, which will be around the end of this calendar year, that will generate annualized savings of around GBP 700,000 net. Then just quickly looking at the financial highlights, again, still staying with Slide 3. Basically, through the year, we twice have traded ahead of expectations and updated the market accordingly. And importantly, we've also significantly extended our cash runway over those same 12 months. So as I said, we've twice revised our revenue outlook upwards. If you remember, we started the year with an order book just under GBP 1 million and finished the year with revenue of GBP 2.5 million, which was really great leverage from new business that we're generating through the year. We also delivered further savings on our cash cost base during the year and now our monthly gross cash costs are now trending below GBP 400,000. As I mentioned, by extending the cash runway in June, we had a significantly oversubscribed equity issue, and we took the opportunity to issue the full or the maximum 5% that we're allowed to issue under our AGM resolutions. By doing that, combining it with the increase in revenues and the outlook for the years ahead, our organic cash runway now extends out into calendar year 2025, which is actually beyond the period at which we expect to be self-financing. And therefore, effectively, that cash runway will then extend indefinitely as long as we maintain that position of being a self-financing business. So those were the highlights for the year. If we now turn over to Slide 4. And this is just a very simple reminder of the 3 key areas where we're trying to generate shareholder value inside Nanoco. Top left bubble is about our sensing applications, so very much the organic part of the business. And there, as you'll see when I go over the pages, we've made a number of positive developments. There's good momentum growing -- or continuing in the sensing business. Looking at the litigation in the middle, again, as I've already said, we've successfully cleared every litigation hurdle put in front of us so far this year. There are more to clear. As we've explained in the past, if you get over 5 hurdles and then fall at the 6, it's over. But you have to take a lot of comfort, a lot of confidence from the fact that we've cleared all 5 hurdles so far. Then moving on to the bubble on the top right-hand page, the display business. Again, this has been very sedate if you like, for the last couple of years. But what we've seen in this past 12 months is reenergizing a new interest appearing from a number of large OEMs and panel manufacturers, particularly around cadmium-free quantum dot displays. And again, I'll explain a little later why we think that's happening and how we will be able to take advantage of that. So then turning over the page and moving on to Slide 6 here, just to talk about those 2 organic parts of the business. So firstly, addressing the IR or infrared sensing opportunities. This slide here, Slide 6, it's a quick recap of the market picture. I wouldn't necessarily go through everything on here because people should be familiar with this. But just to remind, so the problem with silicon sensors today is they're actually very, very inefficient when it comes to absorbing infrared light. They only absorb something like 7% of the available photons that are falling on them. So you're straight away getting a very low efficiency when it comes to converting that into data that can be analyzed by programs or software. Those sensors are operating at a wavelength that actually experiences significant interference from natural sunlight. They're also impacted by atmospheric conditions. Because of that, therefore, you need a higher powered laser to deal with those issues, which particularly in a mobile device that impacts directly on the battery life. And last but by no means least, the only real viable alternative, which technologically is actually superior, but it can be up between a 100x or even 1,000x more expensive and that's an InGaAs sensor, indium gallium arsenide, which are in very, very short supply. And again, as I remind people, those are the sorts of sensors that are being used in the Moon and on Mars. So again, that gives you some sort of context of the cost of those types of sensors. And basically, they're far, far too expensive to go into a mass market use, whether it's in a phone, whether it's in a car, whether it's in a laptop, any consumer electronic device. In terms of then why you'd use quantum dots to solve those problems. Well, quantum dots allow the silicon sensor to see much longer wavelengths. Silicon effectively becomes blind once you're getting past 950 of those nanometers, putting quantum dots in there, I mean you get out to 1,100 nanometers, 1,300 nanometers, 1,500 nanometers, 1,800 nanometers, 2,000 nanometers. So that in itself is useful because you can then get beyond the interference from Sunlight, because Sunlight doesn't have much activity out in those wavelengths, whom's wavelengths also deal with atmospheric conditions ones they are mentioned. Once you're capturing more data, once you can see further, you can actually then turn down the power of the laser, which then will help with battery consumption in a mobile device. And lastly, as I've already said, a silicon or a CMOS sensor with quantum dots on it can be anywhere between 100x and 1,000x cheaper than the InGaAs sensors. And then the last piece of the puzzle. So that was the problem. This is why quantum dots solve it. And there the question is, why would you use Nanoco? Well, we've already proven that we get 10x better data capture. So instead of that 7%, it's closer to 70%. We already have in place from our time with working with the U.S. customer, very large production capability. We also have a very wide range of materials, so not just different materials, but we also then tune those materials to different wavelengths for multiple different end-use applications. And last but, again, by no means least, from an investor point of view, a lot of our work in this area is protected by Nanoco's own IP and our platform technology of -- on the IP that we have inside that portfolio. I won't go through all of the examples below or the different sorts of applications, but one that struck me the other day, driving into our Runcorn facility through Cheshire. I have a small electric car. It's got adaptive cruise controls, and it's got sensors on the front. But it was a very, very misty day. And actually for the entire drive to work, the car was telling me do not rely on the sensors because we can't see what's going on basically those sensors weren't able to see through the mist. So that's just one simple example. If those sensors have actually had 1,400, 1,500 nanometer quantum dots applied to them, then I wouldn't have been getting that error message in that, the cruise control, the adaptive functions, et cetera, automatic braking, all would have been enabled. And it just struck me, I was quite tickled by that, that was one very specific example of where Nanoco can add real value to the supply chain. So the key thing is, when it comes to IR sensing, us and our customers are trying to address a very significant set of market applications where actually -- which were actually growing almost on a daily basis. If you go over the page then to Slide 7. So the previous slide, I talked about the market and a snapshot of the market. This slide is much more about, so okay, so what have Nanoco been doing then over the past 12 months? Well, just as a reminder, back in early 2018, we were a one product, one customer company when it comes to sensing applications. If you fast forward to July 2022, you can see, we've actually had the -- condensed the information into this chart, and I'll just explain some of the figures that are on there, because we are now dealing with 8 or 9 different customers with 12 distinct materials. The numbers that you can see inside those circles, that's the number of either customers looking at a similar material or it could be 2 different customers looking at 2 different materials. And again, the last part of explaining that little chart is the boxes with the dotted lines, those are changes since we last reported 12 months ago. So if you're looking at the box, in particular, say, under the 1.3 microns to 1.5 microns column B material, we've now got a combination of 5 customer/materials that we're actually looking at in that area. So as I say, the summary here is, we have been moving these on, significantly expanding our portfolio, and it remains our objective that by 2023, so next calendar year, we will have one product or expect to have, aiming to have one product in commercial production and a second product fully validated for commercial production. And that road map or objectives that -- those objectives remain in line with our customer published road maps of when they're intending to be in commercial production. So that's it on the sensing side. If we now go over the page to Slide 8. Again, I'll say a little bit about the market and what's happening in the display market. We've been really pleased that actually new opportunities have been emerging for Nanoco again, because as I said earlier, things have been relatively quiet in display and almost our entire focus was on the sensing market. So as I said before, Samsung's share the QD TV market is below and still going down below that 90% figure. We are still seeing more OEMs, more panel makers wanting to get into film-based QD systems. If you have a look at the chart on the bottom right, and again, just a bit of background, there are roughly 250 million LCD TVs sold every year. What this chart is showing is, well, what proportion of that market is made up by QD TVs. So if you look at the 2021 figure, you can see that the 250 million odd LCD TVs, less than 20 million of those TVs included quantum dots. You can see there the forecast is that the absolute number and the relative share of the LCD flat-panel TV market will move much more strongly towards quantum dot solutions. The one thing I should clarify though is that, that quantum dot TV market does include cambium today, and it also includes solutions that people would describe as CAD Lite or I've even seen them described as CAD Safe. But obviously, our view and our strategy is to avoid the use of cadmium in displays and completely avoid the use of cadmium in displays just because of the toxicity level of it. Again, just a quick reminder, why would you use quantum dots in a TV? Well, if you walk into any carriers or TV stores and you have a look, when they have a look at a Samsung TV, it's got Cad free quantum dots in it. Look at some of the other TVs on display, you can see the quality, the depth of color, the color gamut, the color saturation, et cetera. And again, importing -- the good thing about quantum dot solution here is it does integrate into existing supply chain. So there isn't a huge reengineering required of supply chains. It's similar actually in the sensing application, but the sensors that are out there that are already silicon-based sensors, it's not a huge stretch to then apply quantum dots to the solution, which encourages adoption and makes it easier and more likely that the technology will be adopted. And finally, in terms of, again, Nanoco's differentiation in that market and addressing those problems. Our solution is 100% cadmium-free. Again, it gives that enhanced color and energy efficiency compared to standard LCDs. Our materials can be used in all generations of TVs. And actually, while I keep using the word TV, it's any display device. So there is a move towards whether it's monitors, films, tablets, fablets, advertising hoardings, anything with a display, a lot more of them are starting to move towards or consider the adoption of quantum dot technology. And then the very last point on here is, and is relevant for what I'm about to say in terms of what we're seeing inside Nanoco is that, because our IP was validated at the PTAB, we think that's one of the factors that's encouraging people now to reengage with Nanoco, because there is this obvious potential threat that anyone who is using cadmium-free, if they don't have a license agreement with Nanoco's potentially infringing our IP. So that has been helpful. So that's a picture of the market. If we go over to page, Page 9. And again, this is now switching from that external market view on to the internal view of Nanoco ourselves. We are seeing -- certainly, we've increased the amount of activity that we're focusing around display. We've seen an increased increase from third parties in CF QD solutions and in talking to Nanoco. I should emphasize it is very early days, but again, what we're saying is, there are a growing number of territories were RoHS, Restriction of Hazardous Substances and the limits on cadmium in consumer electronics is getting a higher profile and is getting closer to the day of actual legislation. You're also seeing whether it's generally SG awareness or large OEMs realizing they do not want to wait until there's a cadmium ban in place. They're actually going to move early to get ahead of the curve in some areas. As I mentioned, the fact that our core IP was validated by the PTAB in the United States, that does raise risks for some of these larger players that if they get into it and they haven't got licenses from Nanoco, that we could come after them if we're successful, in particular, in the Samsung litigation. I've already mentioned, there's a wider range of devices moving to QD based displays. And again, you can tell by the popularity of the Samsung TVs that there is a market appetite for QD-based panels and displays. So all that translates into, we've restarted small-scale sampling activity for potential customers. And we have a number of active customer engagements on technical and commercial propositions. Again, the nature of these supply chains is that things do take time. So this is not something that you start talking to someone and a month later you've got an order. It's a much longer development cycle and whether it's 1 to 2 years. But the good news is that people have started taking interest again, we're interacting with customers, which creates the potential for the display business to be a contributor on the organic side and not just to be relying on the sensing organic business to deliver value for shareholders. So that's it on the organic business. If you just turn over to Page 11 now. I'll give you a quick update on litigation events in 2022, and I'll then say a little bit about the expected forward time line. I've already said in May 2022, the Patent Trial and Appeal Board validated all of Nanoco's IP, the 5 patents that were originally in this litigation, and all 47 claims in all 5 patents. And we do know that Samsung have launched notice that they intend to appeal those decisions. We also know that they applied for an extension to submit their appeals, because they're worried about having to submit IPR appeals at the same time that they might be going to trial. So we're expecting them to submit their appeals in November of this year. And then the regulatory time table or statutory framework on PTAB and IPRs is a more defined based than the judicial process. So we would expect the final outcome of any appeals on IPRs around 12 months to 15 months from November, so call it, 12 months to 15 months from today. Obviously, those appeals do expose us to risk from a purely statistical point of view. And if you look at PTAB appeals, though typically 70% of PTAB appeals, so by Samsung in this case, fail out right, i.e., they get nowhere and they achieved nothing. Less than 10% are actually accepted in full. So less than 10% would -- of cases would result in Nanoco losing all 5 of our patents in all 47 claims with the balance of 20% being somewhere in between that some claims are lost, maybe some patents are lost, et cetera. Now again, I emphasize those are just historical statistics because if you're in the 10%, you've lost everything. If you're in the 70%, you won everything, you don't know which bracket you fall into until if you are likely that sure again it is cat, until you open the box and know whether or not the cats are alive or dead. So it's the same position on those IPRs until the PTABs are actually over, yes, 70% of the time you win, but we don't know if we're in the 70% or the 10%. The other major legal event during the year was the pre-trial conference, and that's where the judge basically in advance of trial made a number of rulings. And Samsung had applied to have all of our damages cases and all of our damages experts dismissed as either unreliable, irrelevant or just not applicable to the case or too confusing for the jury to be able to understand. The judge rejected all of those arguments and all of those damages models and all those experts survived. Samsung also tried to have the testimony of all of our expert witnesses throughout on the same ground, again, that was rejected. And finally, and this didn't get a lot of headline and -- but just to emphasize, and we did mention it in the RNS. Samsung also had a motion to have the whole thing thrown out. They basically want the judge to say, there's no case to answer, this is over. The judge rejected that motion, and that's why at the time I used the words, so we're going to trial, because the judge has said, you're going to trial. So that pre-trial conference is very important. They're helping some more motions and rulings recently on that, so we didn't resolve them all. But our understanding now is that all the administrative rulings, all the motions have not been ruled upon, and there isn't anything to stop us getting a firm scheduled trial date. But of course, at the moment, we don't know when that is. And again, I'll say a little bit more about that over the page. What we have now done? Again, those following the case closely will have seen that we have now focused rather than taking 5 and 47 claims into the trial. We have significantly narrowed that down to, I think it's 2 or 3 patents and a handful of claims. And the reason for that is simple, just to remind people, this trial will start on a Monday usually, and it is over in 5 days. We will have 12 hours to present to our case. You cannot possibly present the arguments around 5 and 47 claims, 3 damages models and all the expert testimony that goes with it and cross-examine the other side in 12 hours. So you can see why it was important for us to narrow the case. The really good news is having 1 of 47 claims and all 5 patents and all damages models, we got to pick which ones we're going to trial on. And you can naturally assume that we picked the ones that we feel most confident or strongest about. Our team is ready to go to trial. And again, those who have been following us will know that we've twice been scheduled for trial and both times have been bumped. The first time we were scheduled second in the trial and got bumped or scheduled to go second in the trial and got bump. The second time we're actually scheduled sixth and got bumped. So we'll wait to see for the dates ahead, whether we move up. But what we're waiting for is to be scheduled first. Once you're scheduled first, or you are tooled to be you are first, then you know you're going to trial, and we'll tell the market when we know we're going to trial rather than constantly saying, well, we might be and no, we're not, et cetera. Last point to make is, the suit house now have been filed in Germany. Again, I'll say a little bit more about that when we go over page on the time line. We are still looking at options in other territories where it could be faster, cheaper to get to a result. We won't necessarily sue Samsung all over the world all at the same time because that would be prohibitive in terms of time and money. But we are still evaluating options in other territories. Just go over the page and the last one for me before I hand over to Liam. The indicative timeline, I mean to emphasize this is indicative. So if we look at the top part of the page, this is PTAB. So we had the rulings in May '22, Samsung lodged notice to appeal in May '22. They will file those appeals in November '22. So sometime between November '23, first quarter or so of '24, we expect the outcome of those IPR appeals, okay? So that is relatively well understood as a time frame, okay? The second big arrow down below, that goes through the judicial trial and potential appeal timeline. So looking at the first box on the left, jury verdict. We're not being deliberately vague here by saying, well, some time in Q4 or sometime in Q1 of next year. The truth is, we do not know the -- all the reasons for why a case will be scheduled for a second, third or fourth on any particular day. We do not control that. That is all bound to the judge, and the judge will have different objectives. There will be other cases that will -- competing to go first, et cetera. So all we can do is, stay ready and wait patiently to be given our confirmed date. There are 2 more dates between now and Christmas. I can tell you that one at the end of this month, one is in December. There are then 2 in January, 2 in February and I think one in March or something like that. But if we get that trial and if there's a jury verdict that is in favor of Nanoco, that jury verdict on the Friday, so on day 5 of the trial, the jury will give a verdict of infringement or not. And if Samsung are found to have infringed our IP, the jury will say, what is the damages award, so what is the number? And they will say if it was deliberate. They do not specify the multiplier. That's for the judge. And a third thing they will say, if they've said there was infringement is whether or not that damages number covers just the past or includes the future. And if it does not include the future, then the judge when he issues his formal opinion, he will calculate a forward royalty rate. So you'll have a verdict on the Friday of the trial. But if the jury have said that this is for the past only, then the number that you're being told may well be subject to change because the judge may apply a will from this moat to the applier and should specify future royalty, which may or may not be equal to the same dollar amount per TV or as a percent of revenue. Once you've got the verdict, then there will be post-trial motions to have things through overnight rejectings, et cetera, et cetera, or be the normal hurly-burly of a trial and the post-trial period. The judge could take anywhere between 3 and 6 months to issue his formal opinion. That formal opinion is when if there was willfulness found, he'll put in the damages multiplier. If the damages award was just for the past, he'll put in the running royalty rate to cover the future. Again, this just impacts the United States, every territory in the world has got its own judicial system and is not bound by anything that happens in the United States might give you confidence, but it certainly doesn't prove anything anywhere else. So if the judge's formal opinion comes out sometimes around Q2, Q3 in 2023, that's the point of time at which both parties can submit their appeals, if they want to appeal against that verdict, unanimously that appeal process can last a long time. In a worst-case scenario, you could win a trial, get a damages award, go through to appeal and the Federal Circuit actually says, "No, rerun the race, we want you to go back and have another trial for infringement, for willfulness and damages." Federal Circuit equally could say actually the verdict is okay, but we don't like the damages. So go back and now you have a trial that is only about damages. And the case that we got bumped for back in the first time we were bumped, the actual case that bumped us was one of those, they were having a retrial just around damages, not around the guilt or otherwise an infringement. So the one extra graphic, if you like, on this page is that gray box, it says potential German injunction. So again, the German litigation is a more well-defined regulatory framework for how long things take. So we have filed in Germany saying that Samsung are infringing. Part of Samsung's defense, if they defend and they're likely to, they can then raise the question of validity, so they can ask for an IPR, if you like, again, in Germany. However, that IPR is likely to take longer than the infringement argument. So it's the reverse the United States. You could get a ruling of infringement before you know whether the patent was valid. Once you've got a ruling of infringement, then you have the choice as the plaintiff to ask for an injunction to be imposed. If you have not yet exhausted all the legal appeal processes and had a ruling of validity, then you actually have to put a bond in to secure the defendant against loss profits, et cetera. But once you've got that threat of an injunction, it's a very large hammer and certainly as a commercial negotiation point, it certainly strengthens your position. So the summary of all of that is that, pre-supposing that there's no early settlement. And to emphasize any early settlement is up to Samsung and whether or not they're prepared to engage in discussions about fair value for our global patent portfolio and the rest of their lives. We've always said this. We've said it from the very first day when we sued them on Valentine's Day back in 2019 that we were always ready to listen and talk to them. So -- but pre-supposing that they decide not to go down that route and they draw this out, then you could be looking at, if you have to go all the way to the end of appeals processes that this could take 3 years to 4 years, unless something like an injunction in Germany or legal action in another territory persuaded Samsung to come to the table and reach a negotiated settlement ahead of that 3-year to 4-year time table. So you can see, there's a lot of pieces on the table, all of which we're moving in order to strengthen our overall position. And our goal remains to achieve transformational value whether through an enforced court judgment or through a sense of a negotiated settlement. And with all of that, I'll then hand you over to Liam, who will take you through the financials.

Thank you Brian, and good morning everyone. So we move to Slide 14 and this summarizes our financial highlights for the year ended 31st July, 2022. We start with our top line, our revenue and other operating income increased by 24% from GBP 2.3 million to GBP 2.8 million. Given the high operational leverage within the business, this increase in revenue, along with the cost savings we have been implementing, has had a significant impact on improving the adjusted LBITDA by 26%. Moving forward, we anticipate revenue growth of around 20% in FY23 with a similar cost base to FY22. So if we just look at our cost base, in early calendar year '22, we decided to consolidate our operations into Runcorn and close our Manchester site. The closure of the first floor was completed in FY '22, and we anticipate the completion of the, exit of the ground floor in Q2 of FY23. Given the tech cost control over the past few years, we've recently announced company-wide pay rises and sort of benefits and intend to continue to invest in our people and the office environment. And then on cash, the fund raise we completed in June '22 raised GBP 5.4 million net of fees. This takes our cash runway out to calendar year '25, which surpassed our expected break-even point. We move on to the next slide. Here, we have our income statement compared to the prior year. Our revenue has grown by GBP 0.4 million to GBP 2.5 million. This increase has been driven by the work we're doing at our European electronics customer with increases in both services revenue and products sold. In addition, there are a number of other projects about sensing and display, which have contributed to this increase. Our other operating income in the year increased due to the completion of the COVID-19 diagnostic test, which was given to us by Innovate. Other costs totaling for in the year reflect in our reduced cost base. If we move down the table, our share-based payments and associated charges have increased due to the increase in the company share price year-on-year. Depreciation and amortization are large in line with prior year, but will fall next year due to reduced IFRS 16 depreciation following the exit of our Manchester facility. And finally, our R&D tax credit of GBP 0.5 million has been offset by the full year impact of interest on the loan notes taken out in July '21. All-in-all, this gets us to a bottom line loss after tax of GBP 4.7 million compared with GBP 4.4 million in the prior year. If you move on to Slide 16. This slide shows a propound split of our revenue and billings in FY22 compared to FY21. We have historically incorporated the slides to highlight the mismatch in revenue and billings and point out the potential impact this may have on future years. However, as shown in the bar chart, our revenue and billings are largely in line with both being driven by our work with our sensing customers. However, work can display discontinued, and as Brian has mentioned, we have seen additional inbound inquiries in this area, potentially as a result of the litigation. If we move on to Slide 17. This slide produced our -- the movement in our net loss from FY21 to FY22. The FY21 net loss was GBP 4.4 million. As mentioned, revenue in the period grew by GBP 0.4 million, provided in the gross profit contribution of GBP 0.2 million. With the increase in total operating income contributing to an additional GBP 0.2 million. We now had some cost savings in our R&D departments. Offsetting these is a small increase in depreciation charge and increase in share-based payment charge and associated costs, which is driven -- has been driven by the increase in the share price year-on-year. We then have the full year impact of the interest on the loan notes we issued last year. Again, this gets us back to a net loss of GBP 4.7 million. Moving on to Slide 18. This bridge is the movements in our closing cash positions in FY21 to the closing cash position in FY22. So we started the year with GBP 3.8 million of cash. Our adjusted LBITDA of GBP 2.1 million reduces that, offset by the receipt of our R&D tax credit of GBP 0.7 million. We now have the cash payment of our operating leases and some of the small movements, which gets us to GBP 1.5 million. The fund rate completed in June '22, raised GBP 5.4 million of cash, which takes us back up to GBP 6.8 million closing balance. An important takeaway of this is that our underlying net cash consumption in the year was GBP 2.4 million, which compares to GBP 4.4 million in the prior year. And then we move on to the final slide, the financial summary. Here we have our financial summary slide. In regards to FY23, we opened the year with contracted order book of GBP 2.1 million, which is more than double the open order book for the prior year. Based on the current pipeline of work, we anticipate revenue being approximately 20% higher than that of FY22. Our cash cost base remained similar with some savings from reduction in property costs, offset by increases elsewhere, such as payroll. But that doesn't mean our revenue break-even point is now around EUR 5 million. On our capabilities, we now have all staff working on one site, which provides both financial and operational benefits. All staff are working on revenue-generating work and our production facility in Runcorn, which we're now operating at full capacity, generates around GBP 130 million of revenue. On our cash, our average net monthly cash burn is now below GBP 0.2 million. Our business has the benefit of strong operational leverage and so any further commercial wins will have a significant impact on both LBITDA and cash. And finally, we believe our current cash resources this year has past our expected break-even point. And with that, I'll pass you back to Brian to summarize.

Thanks, Liam. So just to turn then to a summary of the last financial year and also a quick look ahead at the next 12 months. In terms of the opportunity in front of us, the markets that we're dealing with are truly global, they're huge and they are growing significantly, in both sensing and in the adoption of Quantum Dots technology in the display markets. It's really important that we held on to our Runcorn production facility. It was debated early on in some of our restructuring a few years ago, whether or not we should keep that facility available. I think my argument at that time was we need to keep it because if we don't, we can never become that full scale fully fledged production company that is our ultimate commercial goal. So the fact that we've managed to hold on to Runcorn while reducing the costs of doing so, that we've not consolidated into that, we still retain, as Liam mentioned, the capacity for a continuous shift operation coming out of both facilities well in excess of GBP 100 million of revenue a year, if we can get those first commercial orders. It's also worth emphasizing that actually success in either of display or the sensing business will deliver our medium-term goal of becoming a self-funding business. We do not need both of those to come off to achieve that goal. The opportunities in each are big enough to make either of them on their own, get us to that position of being self-financing. Clearly, we want to succeed in both because that would take us well beyond self-financing and into a strongly growing and attractive and profitable company. In terms of outlook for the next 12 months, we are expecting steady incremental revenue growth. I think we've already flagged to the market in our trading update just after the year-end that we're expecting revenue growth of around 20% this year. So again, moving up from around GBP 2.4 million, GBP 2.5 million of revenue towards the GBP 3 million mark. Our organic cash runway does now extend into calendar year 2025. But the critical point is that's past when we already expect to be a self-financing business, in which case, that cash runway then just extends indefinitely because we'll obviously be funding the business just from its own operations on an ongoing basis. So what we have in the short to medium term is a very clear path to that initial break-even goal, and then we'll build from that in terms of increasing the size of the business and moving strongly into profitability. So in terms of the value in the business and the potential value, there's obviously still the transformational potential value in the Samsung litigation. The trial is expected soon, as I say, whether or not that's around quarter 4, at the end of this calendar year, the first quarter of next calendar year. It is restricting to have to wait. But we're keen to remind people, actually we're in a jurisdiction and we're in a judicial venue that moves much, much faster than the alternatives in the United States. And literally, while we might be and investors might be slightly frustrated and having to wait an extra few weeks, a few months. If we're in some other states in the United States with this legal action, we could be talking about being 2 years or 3 years away from even getting a trial date. So it's one small downside, if you like, to a situation which overall is beneficial for us. We are still aiming to get visibility by the end of this calendar year on sensing production revenue in 2023. As I mentioned earlier, our key customer still has published road maps. They're still working towards being in commercial production in 2023. I should emphasize visibility of production does not mean we'll have a production order or that will be in production. Those are both theoretically possible one aspect of visibility, but visibility really means that we will have finished our program of getting our products ready for production, and then you are waiting for that final commercial order. But as I say, with the customer having published their own road maps and then that they want to be in commercial production in 2023. That's why we've got the assumption that we have actually started commercial production by the end of this new financial year. So by the end of the second half of FY23, our expectation or hope is that we are in commercial production. And you know that we make a prudent forecast. So we're assuming that, that will be a low-volume initial order, but it would still from a substandard point of view, be transformational for Nanoco, because it will be the first time in our history that we've had an actual commercial product in production. So the last message I want to leave you with, besides just pointing out there is still steadily growing momentum in the business, is that we do have a number of different tracks to significant shareholder value growth in the short to medium term. One is on the litigation, the other is on the organic business. And as I think already explained, the organic business itself has 2 different tracks to shareholder value generation in both the sensing business and in the display business. So that's completing the presentation for this morning. I'll now hand you over to Marion, the moderator on the call. He will explain how a folk can ask questions. We do have some questions that have been submitted online. But I think the process will be, we'll go to Marion first for verbal questions. And then if there aren't any or once they're exhausted, we will come back and we will attempt to answer in the next 20 minutes or so of those written questions that have been submitted online. So over to you, Marion.

[Operator Instructions] There are currently no questions on the phone. So I'll pass it back over to you, Brian, for questions from the webcast.

Okay. Thanks very much, Marion. So as before, I'll just read out the questions. Hopefully, I will understand them, so we're reading them live. So question #1. Could a German court case give some economic benefit to organic growth in some way? Largely, we regard the litigation and the organic business as being separate from each other. The one connection, I think I mentioned earlier, is that if players in this market see that someone is already successfully defending their IP against the biggest participant in the market. So if we win the trial against Samsung, if it looks like we're getting a preliminary injunction in Germany, that will give anyone who is participating in the display market with quantum dots polls for thought. So it may provide an indirect boost, if you like, that someone's realized, hey, if I want to be in the CFQD market, I need to talk to Nanoco, so they'll come and talk to us. But it wouldn't provide a direct benefit. I would describe that as some indirect help or a push in the right direction. Second question, how much CFQD production will be done at Runcorn? If you have further inquiries of new display customers or will they have their own production facilities? So our CFQD model had a number of different strands to it. So we have license partners, and we still have one of those in place in terms of production. That's Dai. So we could outsource to somebody else under license to manufacture the dots. Our production facility can handle a few million TVs, with small capital investment, we could probably double that. And again, if you consider that the QD TV market at the moment is only around 10 million or so a year and Samsung is 90% of it. Even if you hovered up all of the other market, you're only looking at 1 million TVs. So certainly for the short to medium term, we've got enough capacity in Runcorn to do it ourselves. However, if a customer insisted that they wanted to use a different supplier, then we would be able to negotiate that license to our IP, and we may well charge both a license fee for the access to the IP and potentially then a royalty on every unit of product shipped. So we're open to both, but the key thing is we are able to directly meet from our own production facility, initial demand for a few million TVs worth of quantum dots. The next question is on the display side. Will inquiries have to start at the beginning of the validation process? What about microLED? So, on the display side, we already have, if you like, fully validated, qualified quantum dots ready to go into the supply chain. Now they may require some tweaking. And what I mean by tweaking is 2 months, 3 months, 4 months worth of work to say shift and we have lengthened from 500 nanometers to 501 nanometers or 525 nanometers or to have a slightly different composition. But you're talking about very short tweaking type validation programs. We're not talking about the big development programs that we've carried out for the European customer where first you make a product or design a brand-new product, and that could take 12 months to 18 months, and then you have to optimize it. And then you have to scale it up, and each step of the way you're validating it, by the way. And then the final validation is when you're getting ready for production. So the CFQD side of it does not have to start at the beginning of the validation process. There still is a validation, but clearly, no one is going to go into production without getting some kind of validation process. But on the CFQD side for display, it could be much shorter. MicroLED is a slightly different catla fish, because on the -- the first category I was talking about was film-based systems and Nanoco had already developed solutions for film-based systems. MicroLED, depending on the actual application, that might take a longer period of time. And indeed, it is one of the areas where we've got a number of very large market players who, again, whether it's because microLED is taking off or because they've seen our IP or because they know that we're good at what we do, we are seeing some engagement there. So primarily, if it's film-based systems, validation or development program is very short, more by tweaking the material. If it's about microLED or a novel application, then you're back to a longer-term development plan, which you'd certainly measure in many months, if not a year or 2. And the next question, what is the next region that you would file a lawsuit for an injunction? We're not going to answer that question directly. We have said that we are evaluating regions. Some of those decisions are tactical. Some of them are about costs, some of them about speed, some are about the remedy. So for example, in Germany, you don't apply for damages, you apply for an injunction, and that's what you get and you then use the injunction to negotiate damages. But -- so that's a very tactical discussion or decision. There's also some geopolitical reasoning in there for where you might go and whether or not you think that it would be a patent owner-friendly territory or it could be a patent owner hostile territory, et cetera. But what we are doing is, looking to sue Samsung in a number of different territories, all designed to persuade them to see reason and actually to end up with a sensible fair value recognition of our IP and IP portfolio and the cost that we've incurred. So, it is sort of [ counting ] more specific to say where is next. But I think we've said in the past that we're evaluating other places in Europe, like the U.K., we're evaluating in China. We're evaluating a number of other countries, because our patents apply in probably -- I think we said 80% to 90% of the markets in which Samsung sell their TVs and a number of them are big. But again, tactically, you might go for a sort of medium-sized one for tactical reasons. So that's the answer to that question, what's the next region. Sorry. The next question. Please comment on the motions in limine relating to the NDA agreements and whether or not Nanoco are disadvantaged by the recent order from the judge? There is a lot in that motion in limine. And as I say, those were the last ones that the judges had to rule on to before we go to trial. I think we've said in the past, we won't give running commentary on every single thing that is issued. But I would say that some days, you have a bad day. Some days, you have an okay day, and some days you have a good day, and that was a good day. And there are direct quotes, I mean I can read you bits from that motion, I've got it in front of me, where it says, in the judges words, "the acquisition proposal states that Samsung Electronics Company Ltd. was strongly supportive of the contemplated transaction, i.e., the potential acquisition of Nanoco." And there's also stuff in there about Samsung saying "how good our technology is." So just remember that this is the kind of stuff that will be put in front of the jury. And while we can't use that stuff to prove willfulness, we can't use it to prove an infringement. We always knew that. We were never ever going to win those arguments. But we are able to talk about it in terms of the appropriate damages. So if we win the case, then this will be very, very relevant. And as I say, that was a good day for us. And last question. Please remind us exactly what compromises grants, et cetera, the other operating income? So for this year, we have won 2 significant grants from Innovate UK. One of them is to come up with a brand new material set at a brand new wavelength of a new material for sensing applications. And again, the reason you go for new material sets is the performance of the material could be better. So for example, one of the critical things in any sensor is speed of response. You do not want a sensor that takes 15 minutes to process what's in front of it without being glib, frankly, that wouldn't be much used in a car, okay? And you want something that's going very fast. And bluntly, the faster, the better because the processors are able to handle much higher speed of any signal input. So that particular material set that we're researching to come up with a brand-new material set of new wave length, one of the key performance characteristics of that is it will go even faster than the current high-speed sensors. And the second grant, I guess we've referred slightly [ numically ] to it as being other quantum applications. But without getting too far into it or too carried away, a quantum dot, if it's single dot, colloidal quantum dot can actually be used in quantum computing. So any of you who know what a cubit is, a quantum dot can actually serve that function. Now again, that has got a long way to go. I have someone who was asking about development cycles, getting quantum dots into quantum computing is going to be a long journey. But for us, it just emphasizes our capabilities, we're in this field, we're in this area. It shows what we are capable of and what we can do with our platform technology and our IP in this area. So that's what those 2 grants are about. One in the last 12 months, one in last 18 months, they may or may not lead on to new things. The new sensing material, if we're successful in that, yes, we absolutely will push it forward either under our own steam or with support from customers. And the same would also apply with the quantum -- the other quantum application research grants. So whether that's quantum computing or other types of quantum applications, that might need a partner or again, someone new to come in to support us on that. And I think that is the last question yet that's been submitted online. So, thank you everyone, for your time today. Thank you for listening, and we will look forward to updating you at our Interim Results next March around that sort of time by which time hopefully we'll be the other side of a successful trial verdict, and we may well be the other side of actually having commercial production orders. We are doing another webcast tomorrow for Investor Meet Company, and I know quite a number of questions have been submitted on that. This webcast will obviously be available on our website. So thanks very much, and I look forward to speaking to you again at a future date. Thank you.