Nanoco : Notice of AGM

Notice of Annual General Meeting 2022

Nanoco Group plc

Incorporated and registered in England and Wales with registered number 05067291.

Annual General Meeting - 20 December 2022

I have pleasure in inviting you to the 2022 Annual General Meeting (the "Meeting" or the "AGM") of Nanoco Group plc (the "Company"), which will be held at The Heath Conference Centre, The Heath Business and Technical Park, Runcorn WA7 4QX at 11.00 a.m. on

20 December 2022. This document includes the Notice of AGM, which sets out the resolutions that shareholders are being asked to consider and vote on (the "Resolutions").

The Company understands and respects the importance of the AGM to shareholders and the Board greatly values the opportunity to meet shareholders in person. However, we understand that this may not be possible or desirable for all who wish to attend; therefore, the Company will offer shareholders the option to participate in the Meeting remotely via a conference call facility that can be accessed from any computer with internet access or through a telephone (mobile or landline). If you wish to use this facility, please register at https://stream.brrmedia.co.uk/broadcast/6365415893b0033e50b97bcd. After verification of their identity, details of how to join the conference call will be provided to each shareholder who has registered. However, shareholders will not be able to vote at the Meeting when joining via the conference call. Shareholders are therefore asked, whether or not they propose to attend the AGM, to exercise their votes and appoint the Chairman of the Meeting as their proxy by completing the Proxy Form sent to them with this document and return it to our registrars as soon as possible. They must receive it by 11.00 a.m. on 16 December 2022 (or, in circumstances where the AGM is adjourned to a date later than 48 hours after the time specified for the Meeting, 48 hours before the time of the adjourned meeting, excluding any UK non-working days). Any questions should be submitted in advance of the Meeting by emailing such questions to the Company Secretary at LGray@nanocotechnologies.com.

Shareholders should note that in the event any changes need to be put in place at short notice in relation to the AGM, any updates to the arrangements will be included on the Company's website at https://www.nanocotechnologies.com/investors/.

Further details and guidance can be found in note 1 to the Notice of AGM set out below. Shareholders should also continue to monitor the Company's website and announcements for any updates regarding the AGM.

The purpose of this document is to set out the background to and reasons for the Resolutions which are to be proposed at the AGM and to explain why the Directors consider them to be in the best interests of the Company and shareholders and recommend that you vote in favour of the Resolutions.

Certain of the Resolutions cross-refer to the Annual Report and Accounts. A copy of the Annual Report and Accounts is available for inspection on the Company's website at www.nanocotechnologies.com.

Explanation of the business of the Meeting

The business to be conducted at the Meeting reflects the ordinary business and related Ordinary Resolutions and Special Resolutions that are put to the Annual General Meeting of the Company each year.

Detailed explanatory notes on all of the business to be considered at this year's AGM are set out below.

Resolutions numbered 1 to 12 are proposed as Ordinary Resolutions. This means that for each of those Resolutions to be passed, more than half of the votes cast must be in favour of the Resolution. Resolutions numbered 13 to 16 are proposed as Special Resolutions. This means that for each of those Resolutions to be passed, at least three-quarters of the votes cast must be in favour of the Resolution.

To more accurately reflect the views of shareholders of the Company, voting on all of the Resolutions will be carried out by way of a poll put to the Meeting in accordance with Article 10.11 of the Company's Articles of Association adopted by special resolution on 22 April 2015 (as amended, the "Company's Articles"). The Board of Directors of the Company (the "Board") considers this to be best practice as it gives all shareholders the opportunity to participate in the decision making of the Company and have their votes recorded even if they are unable to attend the Meeting in person.

Ordinary Resolutions (1 to 12)

Resolution 1 - Approval of reports and accounts

The Companies Act 2006 (the "2006 Act") requires the directors of a public company to lay before the company in a general meeting copies of its Annual Report and Accounts in respect of each financial year prior to the end of the period for filing those reports and accounts. Resolution 1 deals with the receipt by the shareholders of the Company's audited accounts and the reports of the Directors of the Company (the "Directors") and the auditors for the year ended 31 July 2022.

Resolutions 2 and 3 - Appointment of auditors and auditors' remuneration

The auditors of the Company must be submitted for appointment at each general meeting at which the accounts are laid to serve from the conclusion of that meeting until the conclusion of the next such meeting. The Company appointed Mazars LLP as the Company's auditors on 29 June 2022. Resolution 2 proposes the appointment of Mazars LLP as auditors of the Company until the conclusion of the next meeting. Resolution 3 gives authority to the Board to determine the auditors' remuneration.

Resolutions 4 to 9 - Re-election of Directors

Resolutions 4 to 9 deal, respectively, with the re-election of Dr Christopher Richards, Brian Tenner, Dr Nigel Pickett, Dr Alison Fielding, Chris Batterham and Liam Gray as Directors. Notwithstanding the Company's Articles which require all Directors to submit themselves for re-election: (i) if they have been in office for more than three years since their appointment or last appointment;

1. if they have held office at the time of the two preceding Annual General Meetings and did not retire at either of them; or
2. (in respect of Non-Executive Directors only) if they have held office for a continuous period of nine years or more at the date of the relevant Annual General Meeting, the Directors recognise the importance of sound corporate governance and have therefore determined, in accordance with the recommendations of the latest UK Corporate Governance Code (the "Code") published by the UK Financial Reporting Council on 16 July 2018, that all Directors will submit themselves for re-election each year at the Company's Annual General Meeting. Separate Resolutions will be proposed at the Meeting for each re-election. Dr Christopher Richards, Brian Tenner, Dr Nigel Pickett, Dr Alison Fielding, Chris Batterham and Liam Gray are therefore acting in accordance with the Code and, being eligible, will retire voluntarily and submit themselves for re-election.

Following an assessment of the performance of each individual Director, the Nomination Committee has confirmed to the Board that each Director continues to make an effective and valuable contribution and that they demonstrate excellent commitment to their respective roles. The Board therefore supports the re-election of Dr Christopher Richards, Brian Tenner, Dr Nigel Pickett, Dr Alison Fielding, Chris Batterham and Liam Gray pursuant to Resolutions 4 to 9 inclusive.

Biographical details of all of the Directors can be found on pages 40 and 41 of the Annual Report and Accounts and on the Company's website.

Resolution 10 - Approval of Directors' remuneration report

The 2006 Act requires quoted companies, at each general meeting at which statutory accounts are to be laid, to propose an Ordinary Resolution approving the Directors' remuneration report for the year (the "Remuneration Report"). Shareholders will be asked to approve the content of the Company's Remuneration Report, including the Annual Statement by the Chairman of the Remuneration Committee, for the financial year ended 31 July 2022. A copy of the Remuneration Report is included in the Annual Report and Accounts on pages 64 to 79. The vote is advisory in nature and does not affect the actual remuneration paid to any individual Director.

Resolution 11 - Approval for political donations

It remains the policy of the Company not to make political donations or to incur political expenditure. However, the Directors consider that it is in the best interests of shareholders for the Company to participate in public debate and opinion forming on matters which affect its business. To avoid inadvertent infringement of the 2006 Act, which defines political donations and expenditure widely, the Directors are seeking shareholders' authority for the Company and its UK subsidiaries to make political donations and to incur political expenditure, up to a maximum aggregate amount of £50,000, during the period from the date of the Meeting until the conclusion of the next Annual General Meeting of the Company to be held after the passing of the Resolution or, if earlier, 15 months from the date of the passing of the Resolution, unless such authority is renewed prior to this time.

Neither the Company nor any of its subsidiaries has made any political donations since the 2021 Annual General Meeting and the Company proposes to maintain its policy of not making such payments.

Resolution 12 - Authority of the Directors to issue and allot new ordinary shares

The existing authority granted to the Directors by shareholder resolution at the Annual General Meeting held on 30 November 2021 to allot shares in the Company in accordance with section 551 of the 2006 Act expires at the conclusion of the AGM.

The authority given to the Directors to allot further shares in the capital of the Company requires the prior authorisation of the shareholders in general meeting under section 551 of the 2006 Act. Upon the passing of Resolution 12, the Directors will have authority (pursuant to paragraph (a) of Resolution 12) to allot ordinary shares in the capital of the Company ("Ordinary Shares") (and other relevant securities, as defined within section 551 of the 2006 Act) up to an aggregate nominal amount of £10,747,784, which is approximately one-third of the Company's issued Ordinary Share capital (excluding treasury shares) as at 4 November 2022, being the latest practicable date before the publication of this document.

Notice of Annual General Meeting 2022

Ordinary Resolutions (1 to 12) continued

Resolution 12 - Authority of the Directors to issue and allot new ordinary shares continued

In addition, in accordance with guidance from the Investment Association ("IA") on the expectations of institutional investors in relation to the authority of directors to allot shares, which the Directors believe it is appropriate for the Company to follow, upon the passing of Resolution 12, the Directors will have authority (pursuant to paragraph (b) of Resolution 12) to allot, including the Ordinary Shares referred to in paragraph (a) of Resolution 12, Ordinary Shares (and other relevant securities, as defined within section 551 of the 2006 Act) in connection with a rights issue in favour of Ordinary Shareholders up to an aggregate nominal amount of £21,495,568 as reduced by the nominal amount of any shares issued under paragraph (a) of Resolution 12. This amount (before any reduction) represents approximately two-thirds of the Company's current issued Ordinary Share capital (excluding treasury shares) as at 4 November 2022, being the latest practicable date before the publication of this document.

As a result, if Resolution 12 is passed, the Directors could allot shares representing up to two-thirds of the current issued share capital of the Company pursuant to a rights issue.

Although the Directors have no present intention to exercise this authority other than in connection with the exercise of options granted pursuant to the Company's employee share schemes, it is considered desirable to give the Directors the maximum flexibility permitted by corporate governance guidelines to respond to market developments and to enable allotments to take place to finance business opportunities in the interests of the Company as a whole.

This authority will, if granted, expire on the conclusion of the next Annual General Meeting of the Company to be held after the passing of the Resolution or, if earlier, 15 months from the date of the passing of the Resolution, unless such authority is renewed prior to this time. The Directors intend to renew such power at successive Annual General Meetings of the Company in accordance with current best practice.

As at 4 November 2022, being the latest practicable date before the publication of this document, the Company held 12,222 Ordinary Shares in treasury, representing approximately 0.004% of the Company's current issued Ordinary Share capital (excluding treasury shares) as at that date.

Special Resolutions (13 to 16)

Resolutions 13 and 14 - Disapplication of statutory pre-emption rights

The existing authority granted to the Directors by shareholder resolution at the Annual General Meeting held on 30 November 2021 to allot shares for cash pursuant to sections 570 and 573 of the 2006 Act expires at the conclusion of the AGM.

If the Directors wish to exercise the authority under Resolution 12 and allot shares (or sell any shares which the Company currently holds and/or may subsequently purchase and elect to hold as treasury shares) for cash, the 2006 Act requires that unless shareholders have given specific authority for the waiver of their statutory pre-emption rights, the shares must be offered first to existing shareholders in proportion to their existing shareholdings. In certain circumstances, it may be in the best interests of the Company to allot new shares (or to grant rights over shares) for cash or to sell treasury shares for cash without first offering them to existing shareholders in proportion to their holdings.

Resolution 13 would, if passed, authorise the Directors to do this by allowing the Directors to allot shares for cash or sell treasury shares for cash: (i) by way of a rights issue (subject to certain exclusions), or by way of an open offer or other offer of securities (not being a rights issue) in favour of existing shareholders in proportion to their shareholdings (subject to certain exclusions); or (ii) otherwise up to an aggregate nominal value of £1,612,167, which is equivalent to approximately 5% of the Company's issued Ordinary Share capital (excluding treasury shares) as at 4 November 2022, being the latest practicable date before the publication of this document, in each case, without the shares first being offered to existing shareholders in proportion to their existing holdings.

In addition to the authority granted by Resolution 13, Resolution 14 authorises Directors to allot equity shares up to an aggregate of £1,612,167 (being approximately 5% of the Company's issued Ordinary Share capital (excluding treasury shares) as at 4 November 2022) for cash pursuant to the authority contained in Resolution 12 where that allotment is in connection with an acquisition or specified capital investment which is announced contemporaneously with the issue, or which has taken place in the preceding six-month period and is disclosed in the announcement of the issue.

The authority to issue up to an aggregate 10% of the issued Ordinary Share capital of the Company reflects guidance from the Pre-Emption Group's revised statement of principles published on 12 March 2015 (the "PEG Principles"). Resolutions 13 and 14 are proposed as separate Special Resolutions in compliance with the best practice guidance issued by the Pre-Emption Group whilst they are also reflective of the form of template resolutions published by the Pre-Emption Group in May 2016. The PEG Principles provide the Company with greater flexibility to undertake non-pre-emptive issuances in connection with acquisitions and specified capital investments.

The Directors confirm, in accordance with the PEG Principles, that it is intended that a maximum of £1,612,167 (representing 5% of its issued share capital excluding treasury shares) will be available (pursuant to Resolution 13) for general purposes and that it will only allot shares with a nominal value in excess of £1,612,167 for cash pursuant to the authority conferred in Resolution 14 where that allotment is in connection with an acquisition or specified capital investment (as described in the PEG Principles) which is announced contemporaneously with the issue, or which has taken place in the preceding six-month period and is disclosed in the announcement of the issue.

Special Resolutions (13 to 16) continued

Resolutions 13 and 14 - Disapplication of statutory pre-emption rights continued

Although the Directors have no present intention to exercise the authorities conferred by Resolutions 13 and 14 other than in connection with the exercise of options granted pursuant to the Company's employee share schemes, it is considered prudent to give the Directors additional flexibility and the opportunity to finance expansion opportunities as and when they arise in the interests of the Company as a whole.

Each of the authorities conferred by Resolution 13 and Resolution 14, if granted, will expire on the conclusion of the next Annual General Meeting of the Company to be held after the passing of such Resolution or, if earlier, 15 months from the date of the passing of such Resolution, unless such authorities are renewed prior to this time.

The Directors intend to seek renewal of the powers conferred by Resolutions 13 and 14 at subsequent Annual General Meetings of the Company in accordance with current best practice.

Resolution 15 - Authority of the Company to purchase its own shares

The existing authority granted to the Directors by shareholder resolution at the Annual General Meeting held on 30 November 2021 to purchase its own shares will expire at the conclusion of the AGM.

The Directors consider that it would be beneficial if, in certain circumstances, the Company had the power to purchase its own Ordinary Shares, albeit that no share buybacks were carried out during the reporting year ended 31 July 2022, for the purposes of returning surplus funds to shareholders and providing a return on investments. The Directors therefore consider that it would be beneficial for the shareholders as a whole if the Company were to be granted the flexibility to repurchase its own shares.

Accordingly, the Directors recommend that the existing power to purchase Ordinary Shares (in defined circumstances) up to a maximum prescribed limit be renewed for a further limited period.

The Company will only make such purchases if the Directors are satisfied, after careful consideration, that these are in the best interests of the Company and shareholders generally and could be reasonably expected to result in an increase in expected earnings per share. Furthermore, account will be taken of the overall financial implications for the Company.

If such purchases of its own shares were made, the Company would be able to do either, or a combination, of the following:

1. cancel the purchased Ordinary Shares so reducing the total number of Ordinary Shares in issue; or
2. where the Ordinary Shares were purchased out of distributable profits, subject to certain limitations, hold them as treasury shares.

Treasury shares themselves may be cancelled, sold for cash or transferred for the purposes of the Company's share schemes. The statutory pre-emption rights apply to a sale of treasury shares for cash and the disapplication of the statutory pre-emption rights in Resolutions 13 and 14 include, within the authorised amount, any sales of treasury shares for cash which may occur.

Finally, if such purchases were made, to the extent the purchased shares are held as treasury shares, any increase in earnings per share would only be temporary, until the shares in question were either cancelled, or sold or transferred out of treasury.

Resolution 15 authorises the Directors to purchase up to a maximum of 32,243,352 Ordinary Shares, representing approximately 10% of the Company's issued Ordinary Share capital (excluding treasury shares) as at 4 November 2022, and provides that the maximum price per Ordinary Share payable on any exercise of the authority shall be the higher of: (i) an amount equal to 105% of the average of the market value for an Ordinary Share as derived from the Daily Official List of the London Stock Exchange for the five business days prior to making any such purchase; and (ii) the higher of the price of the last independent trade and the highest current bid on the London Stock Exchange at the time the purchase is carried out. The minimum price payable shall be 10 pence per Ordinary Share, being the nominal value of an Ordinary Share. For this purpose, both the maximum and minimum prices permitted to be paid are exclusive of expenses.

As at 4 November 2022, being the latest practicable date before the publication of this document, the number of Ordinary Shares in respect of which options have been granted and which remain outstanding (and on the assumption that all conditions to the exercise of such options will be satisfied) is 22,282,049 (constituting approximately 6.91% of the current issued Ordinary Share capital of the Company as at 4 November 2022). If the Company were to buy back the maximum number of Ordinary Shares permitted pursuant to Resolution 15, then the total number of options to subscribe for Ordinary Shares (on the assumptions set out above) outstanding as at 4 November 2022 would represent approximately 6.28% of the reduced issued share capital.

This authority, if granted, will expire on the conclusion of the next Annual General Meeting of the Company to be held after the passing of the Resolution or, if earlier, 15 months from the date of the passing of the Resolution, unless such authority is renewed prior to this time.

The Board intends to seek renewal of this power at subsequent Annual General Meetings of the Company in accordance with current best practice.