Nanoco : Proposal to tender for up to 38.5% of the company share capital, plus a subsequent buyback

The availability of the Tender Offer to Shareholders who are not resident in the United Kingdom may be affected by the laws of the relevant jurisdiction in which they are located. Shareholders who are not resident in the United Kingdom should read paragraph 6 of Part IV (Details of the Tender Offer) of this document and should inform themselves about, and observe, any applicable legal or regulatory requirements. In addition, the attention of Shareholders who are resident in the United States is drawn to the Notice for US Shareholders on page 3 of this document.

The Tender Offer is not being made, directly or indirectly, in or into, or by use of the mails of, or by any means or instrumentality (including, without limitation, facsimile transmission, telex, telephone and e-mail) of interstate or foreign commerce of, or any facilities of a national securities exchange of, any Restricted Jurisdiction and the Tender Offer cannot be accepted by any such use, means, instrumentality or facility or from within any Restricted Jurisdiction. Accordingly, unless otherwise determined by the Company and permitted by applicable law and regulation, neither this document nor the Tender Form nor any related document is being, nor may it be, directly or indirectly, mailed, transmitted or otherwise forwarded, distributed, or sent in, into or from any Restricted Jurisdiction, and persons receiving this document, the Tender Form and/or any related document (including, without limitation, trustees, nominees or custodians) must not mail or otherwise forward, distribute or send it in, into or from such Restricted Jurisdiction, as to do so may invalidate any purported acceptance of the Tender Offer. Any person (including, without limitation, trustees, nominees or custodians) who would or otherwise intends to, or who may have a contractual or legal obligation to, forward this document, the Tender Form and/or any related document to any jurisdiction outside the United Kingdom, should seek appropriate advice before taking any action.

The Tender Offer is conditional on approval from Shareholders, which is being sought at the General Meeting. Notice of the General Meeting, to be held at the offices of Reed Smith LLP at The Broadgate Tower, 20 Primrose Street, London EC2A 2RS at 10.00 a.m. on 28 March 2024, is set out at the end of this document. Save where Shareholders have opted to register proxy appointments electronically, a Form of Proxy to be used in connection with the General Meeting is enclosed with this document. Whether or not Shareholders propose to attend the General Meeting in person, they are requested to complete and send or deliver the enclosed Form of Proxy in accordance with the instructions printed on such form to the Company's registrars, Neville Registrars Limited, Neville House, Steelpark Road, Halesowen B62 8HD, by no later than 10.00 a.m. on 26 March 2024, being 48 hours before the time appointed for holding the General Meeting (excluding UK non-working days) or, in circumstances where the General Meeting is adjourned to a date later than 48 hours after the time specified for the General Meeting, 48 hours before the time of the adjourned meeting, excluding any UK non-working days. If you hold Ordinary Shares in CREST, you may appoint a proxy by completing and transmitting a CREST Proxy Instruction to the Registrar, Neville Registrars Limited (CREST Participant ID 7RA11), so that it is received by not later than 10.00 a.m. on 26 March 2024, being 48 hours before the time appointed for holding the General Meeting (excluding UK non-working days) or, in circumstances where the General Meeting is adjourned to a date later than 48 hours after the time specified for the General Meeting, 48 hours before the time of the adjourned meeting, excluding any UK non-working days.

This document is a circular relating to the proposed Tender Offer and Return of Value prepared in accordance with the Listing Rules made under section 73A of the Financial Services and Markets Act 2000 ("FSMA") and approved by the Financial Conduct Authority (the "FCA").

Cavendish Capital Markets Limited ("Cavendish"), which is authorised and regulated by the FCA in the United Kingdom, is acting as sponsor and financial adviser to the Company and no one else in connection with the Tender Offer and the Return of Value and will not regard any other person as its client in relation to the Tender Offer and the Return of Value and will not be responsible to anyone other than the Company for providing the protections afforded to clients of Cavendish or its affiliates nor for providing advice in relation to the Tender Offer or the Return of Value, nor for providing advice in relation to the contents of this document or the Tender Offer or the Return of Value or any transaction, arrangement or matter referred to in this document.

Save for the responsibilities and liabilities, if any, of Cavendish under FSMA or the regulatory regime established thereunder, neither Cavendish or any persons associated or affiliated with it accepts any responsibility whatsoever and makes no representations or warranties, express or implied, in relation to the contents of this document, including its accuracy, completeness or verification or for any other statement made or purported to be made by the Company, or on the Company's behalf. Nothing contained in this document is, or shall be, relied on as a promise or representation in this respect, whether as to the past or the future, in connection with the Company or the Tender Offer. Cavendish disclaims to the fullest extent

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permitted by law all and any responsibility and liability whether arising in tort, contract or otherwise which it might otherwise be found to have in respect of this document or any such statement.

Forward-looking statements

This document contains (or may contain) certain forward-looking statements with respect to certain of the Company's plans and its current goals and expectations relating to its future financial condition and performance and which involve a number of risks and uncertainties. The Company cautions readers that no forward-looking statement is a guarantee of future performance and that actual results could differ materially from those contained in the forward-looking statements. These forward-looking statements can be identified by the fact that they do not relate only to historical or current facts. Forward-looking statements sometimes use words such as "aim", "anticipate", "target", "expect", "estimate", "intend", "plan", "goal", "believe", or other words of similar meaning. Examples of forward-looking statements include statements regarding or which make assumptions in respect of future events. By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances, including, but not limited to, economic and business conditions, the effects of continued volatility in credit markets, market-related risks such as changes in the price of oil or changes in interest rates and foreign exchange rates, the policies and actions of governmental and regulatory authorities, changes in legislation, the success of future acquisitions and other strategic transactions and the impact of competition. A number of these factors are beyond the Company's control. As a result, the Company's actual future results may differ materially from the plans, goals and expectations set forth in the Company's forward-looking statements. Any forward-looking statements made in this document by or on behalf of the Company speak only as of the date they are made. Except as required by any applicable laws, the Listing Rules, the Disclosure and Transparency Rules, the Market Abuse Regulation or other regulations, the Company expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained in this document to reflect any changes in the Company's expectations with regard thereto or any changes in events, conditions or circumstances on which any such statement is based.

Shareholders should note that the contents of paragraphs related to forward-looking statements are not intended to qualify the statements made as to the sufficiency of working capital in paragraph 9 of Part VII (Additional Information) of this document.

Note regarding presentation of currencies

All references in this document to "GBP", "pounds sterling" or "£" are to the lawful currency of the United Kingdom and all references to "US dollars", "US$" and "$" are to the lawful currency of the United States.

Notice for US Shareholders

The Tender Offer relates to securities in a non-US company registered in England and Wales and is subject to the disclosure requirements, rules and practices applicable to companies listed in the UK, which differ from those of the US in certain material respects. This document has been prepared in accordance with UK style and practice for the purpose of complying with English law and the Listing Rules, and US Shareholders should read this entire Circular, including Part IV (Details of the Tender Offer) and Part V (Taxation) of this document. The financial information relating to the Company, which is available for review on the Company's website, has not been prepared in accordance with generally accepted accounting principles in the US and thus may not be comparable to financial information relating to US companies.

The Tender Offer is not subject to the disclosure and other procedural requirements of Rule 13e-4 or Regulation 14D under the US Securities Exchange Act of 1934, as amended (the "US Exchange Act"). The Tender Offer will be made in the US pursuant to Section 14(e) of, and Regulation 14E under, the US Exchange Act, subject to the exemptions provided by Rule 14d-1(d) thereunder and otherwise in accordance with the requirements of the rules of the FCA. US Shareholders should note that the Ordinary Shares are not listed on a US securities exchange and the Company is not subject to the periodic reporting requirements of the US Exchange Act and is not required to, and does not, file any reports with the SEC thereunder. The Tender Offer is being made in the United States solely to Qualifying US Shareholders.

It may be difficult for US Shareholders to enforce certain rights and claims arising in connection with the Tender Offer under US federal securities laws since the Company is located outside the US and most of its officers and directors reside outside the US. It may not be possible to sue a non-US company or its officers

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or directors in a non-US court for violations of US federal securities laws. It also may not be possible to compel a non-US company or its affiliates to subject themselves to a US court's judgment.

The receipt of cash pursuant to the Tender Offer by a Shareholder who is a US person will be a taxable transaction for US federal income tax purposes. Paragraph 2 of Part V (Taxation) of this document sets out a guide to certain US tax consequences of the Tender Offer for US Shareholders under current US law. However, each such US Shareholder should consult and seek individual advice from an appropriate professional adviser.

To the extent permitted by applicable law and in accordance with normal UK practice, the Company, Cavendish or any of their respective affiliates, may make certain purchases of, or arrangements to purchase, Ordinary Shares outside the United States during the period in which the Tender Offer remains open for participation, including sales and purchases of Ordinary Shares effected by Cavendish acting as market maker in the Ordinary Shares. These purchases, or other arrangements, may occur outside the United States either in the open market at prevailing prices or in private transactions at negotiated prices. In order to be excepted from the requirements of Rule 14e-5 under the US Exchange Act by virtue of Rule 14e- 5(b)(12) thereunder, such purchases, or arrangements to purchase, must comply with applicable English law and regulation, including the Listing Rules, and the relevant provisions of the US Exchange Act. Any such purchases by Cavendish or its affiliates will not be made at prices higher than the price of the Tender Offer provided in this document, unless the price of the Tender Offer is increased accordingly. In addition, in accordance with normal UK market practice, Cavendish and its affiliates may continue to act as market makers in the Shares and may engage in certain other purchasing activities consistent with their respective normal and usual practice and applicable law. Any information about such purchases will be disclosed as required in the UK and the US and, if required, will be reported via a Regulatory Information Service and will be available on the London Stock Exchange website at http://www.londonstockexchange.com.

While the Tender Offer is being made available to Shareholders in the US, the right to tender Ordinary Shares is not being made available in any jurisdiction in the US in which the making of the Tender Offer or the right to tender such Ordinary Shares would not be in compliance with the laws of such jurisdiction.

Cavendish has engaged Beech Hill Securities, Inc. to act as its chaperone pursuant to Rule 15a-6 under the US Exchange Act in connection with securities transactions effected by Cavendish with Qualifying US Shareholders. Beech Hill Securities, Inc. is a US broker-dealer registered with the SEC and a member of FINRA with its principal place of business at 880 Third Avenue, 16th Floor, New York, NY 10022, United States.

This document has not been approved, disapproved or otherwise recommended by the SEC or any US state securities commission and such authorities have not confirmed the accuracy or determined the adequacy of this document. Any representation to the contrary is a criminal offence in the US.

Dated 11 March 2024

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SHAREHOLDER HELPLINE

Questions of a factual nature relating to the Resolutions to be proposed at the General Meeting may be directed to the Company's registrar, Neville Registrars Limited, using the telephone helpline number +44

1. 121 585 1131. Lines are open from 9.00 a.m. to 5.00 p.m. (UK time) Monday to Friday (excluding public holidays in England and Wales). Calls to the helpline from outside the UK will be charged at the applicable international rate. Please note that calls to these numbers may be monitored or recorded for security and training purposes.

Please note that, for legal reasons, this helpline will not be able to provide advice on the merits of the Resolutions to be proposed at the General Meeting or the Return of Value or give personal, legal, financial or tax advice.

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PART I

LETTER FROM THE CHAIRMAN

NANOCO GROUP PLC

(Incorporated and registered in England and Wales with registered number 05067291)

Proposed Return of Value to Shareholders

1. Introduction

On 24 January 2024, the Company announced that it had received the second tranche of litigation proceeds from Samsung after settling last year on a no fault basis for the alleged infringement of the Group's IP (the "Final Litigation Proceeds"). The Group has received a net sum of $71.75 million, being $75.0 million less the expected Korean withholding tax, which amounted to $3.25 million. The Korean withholding tax is available to offset the Group's future profits in the UK. The Group previously announced the hedging of this tranche of proceeds at a rate of $1.22 / £1.00. The funds have been converted at this rate and generated a sterling receipt of £58.8 million. This represents a gain of £2.1 million compared to the exchange rate for USD on the date of receipt.

The Board first signalled its intention to return significant funds to shareholders on 3 February 2023 when the final settlement agreement was signed with Samsung. At that time, the Chairman made the following statement:

"In deciding the allocation of the net proceeds, the Board will balance any investment needs of Nanoco's growing organic business with a firm intention to deliver a material return of capital to shareholders."

The Company now proposes to return up to £33.0 million of value from the Final Litigation Proceeds to Shareholders (the "Return of Value") as the appropriate balance between the investment needs of the business and the material return of capital.

Following the receipt of the Final Litigation Proceeds, the Company and its advisers consulted with over 20 Shareholders representing approximately 37.5 per cent. of the Company's issued share capital on the different options for a proposed return of capital. The Board has determined that, in order to provide flexibility and choice to Shareholders, the most appropriate means of returning value is to conduct a Tender Offer to return up to £30.0 million to Shareholders. In addition to the Tender Offer, the Board intends to return a further sum of up to £3.0 million by way of an on-market share buyback of Ordinary Shares to provide a continuing value-accretive return of capital to Shareholders.

The principal purpose of this document is to explain the background to and reasons for the Return of Value, and to seek Shareholder approval of certain matters required to effect the Return of Value. This document is also designed to provide Shareholders with information on the mechanisms for the proposed Return of Value. Eligible Shareholders are also being invited, in connection with the Tender Offer, to tender some or all of their Ordinary Shares for purchase on the terms and subject to the conditions set out in this document.

Shareholders may decide not to participate fully or partially in the Tender Offer for a number of reasons, including their view of the potential for the value of the Company to increase in the future. If a material amount of the £33.0 million is not returned through the Tender Offer and Share Buyback Programme, the Board will consider a possible further stage of the Return of Value comprising a Special Dividend.

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A general meeting of the Company is to be held at the offices of Reed Smith LLP at The Broadgate Tower, 20 Primrose Street, London EC2A 2RS at 10.00 a.m. on 28 March 2024 to seek the approval of Shareholders to the proposed Return of Value. The notice of that general meeting is set out at the end of this document.

Shareholders should read the whole of this document and not rely solely on the information in this letter.

2. Background to and Reasons for the Tender Offer

Over the last five years, Nanoco has been transformed from an R&D first mover facing going concern challenges to a commercial manufacturer of nano-materials in the strongest commercial and financial position in its history, as detailed in the graphic below.

The Board now believes that Nanoco has entered a new phase of its development as a Company, and is confident in the Group's future growth prospects, primarily as a result of the factors below:

1. The Group has successfully fulfilled its first commercial production orders for two new materials;
2. The Group has a diverse portfolio of second and further generation nano-material development projects underway with some of the world's most respected electronics supply chain companies, presenting a compelling pipeline of organic growth opportunities;
3. Key display and sensing Group patents were validated during the Samsung litigation by the US Patent
   Trial and Appeal Board in the United States and Samsung felt compelled to take out a licence over the Group's IP, with further licensing efforts underway; and
4. The Group is in the strongest financial position in its history following the receipt of the Final Litigation Proceeds.

Allocation of proceeds

Given the Group's current commercial and financial position, the Board is now in a position to execute a return of capital to shareholders. Following the consultation noted above, the Board concluded that a Tender Offer is the best way to return a significant amount of capital to Shareholders in a short space of time, taking account of the relative costs, complexity and timeframes of the various possible methods, as well as the likely tax treatment for Shareholders. The Board recognises that the Tender Offer and the subsequent Share Buyback Programme may not return the full £33.0 million so will consider returning any balance remaining at the end of the Share Buyback Programme by way of a Special Dividend.

Nanoco has reached a number of critical milestones, delivering its first ever commercial production orders for two new materials in late 2023, signing two extended joint development agreements with large global electronics supply chain customers, and with the expectation that commercial opportunities for the Group will continue to grow. Delivering growth will require additional funding as Nanoco invests in proactive business development.

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It is the Board's view that the receipt of the Final Litigation Proceeds present a unique opportunity in Nanoco's history to enhance its financial resilience and invest in its operational capability, further enhancing the Group's future growth prospects, margin profile and ability to provide future potential returns to shareholders. Therefore, following the completion of the return of capital of up to £33.0 million noted above, and after allowing for the repayment of the Group's outstanding debt of approximately £5.0 million and remaining cash reserves from the first tranche of litigation proceeds, the Group expects to have approximately £23.0 million of cash available to support the commercial business. The Board intends to use the retained funds to invest as follows:

• Investment in the Group's production capability to enable further production efficiencies and expansion of the Group's gross profit margin as Nanoco continues to transition from a pure-play R&D first mover towards a commercial producer of nano-materials at scale;

The Board remains confident that near-term opportunities fully merit the allocation of funds noted above, namely for growing commercial production of sensing materials, together with the current interest in the Group's display materials following the press coverage of the Company generated by the IP litigation with Samsung as well as the growing display market for CFQD® cadmium free quantum dots.

3. Key points to the Tender Offer

The key points to the Tender Offer are as follows:

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4. Benefits of the Tender Offer for Shareholders

The benefits of the Tender Offer for Shareholders as a whole are that:

• it provides Shareholders with an opportunity to sell their shares without incurring any dealing costs, and therefore avoids Shareholders holding a small number of Ordinary Shares having their proceeds significantly eroded by dealing costs; and
• it permits Shareholders who wish to retain their current investment in the Company and their Ordinary Shares to do so since no Shareholder is required to participate in the Tender Offer.

The Company intends to cancel approximately 90 per cent. of the Ordinary Shares acquired in connection with the Return of Value which will reduce the number of Ordinary Shares in issue. Assuming the Company's earnings stay the same, this should have a positive impact on the Group's earnings per share. The Company intends to transfer the remaining approximately 10 per cent. balance of the Ordinary Shares which are not cancelled from treasury to the Nanoco Employee Benefit Trust to meet potential future obligations which may arise from the Company's share option schemes.

5. Further Details of the Tender Offer

5.1 Overview of the Tender Offer

It is proposed that up to one hundred and twenty five million (125,000,000) Ordinary Shares (representing approximately 38.5 per cent. of the Issued Ordinary Share Capital as at the Latest Practicable Date) be purchased under the Tender Offer, for a maximum aggregate cash consideration equal to £30.0 million.

All Eligible Shareholders on the Register of Members at 6.00 p.m. on 8 April 2024 are entitled, but not required, to tender some or all of their Ordinary Shares for purchase by Cavendish, acting as principal, at the Tender Price. For US Shareholders, the Tender Offer will be open solely to Qualifying US Shareholders.

Subject to satisfaction of the conditions to the Tender Offer, Ordinary Shares which are successfully tendered under the Tender Offer will be purchased at the Tender Price.

The Tender Offer is to be effected by Cavendish (acting as principal and not as agent, nominee or trustee) purchasing Ordinary Shares from Shareholders. Cavendish, in turn, has the right to require the Company to purchase from it, and can be required by the Company to sell to it, such Ordinary Shares at the Tender Price under an option agreement (the "Option Agreement"), details of which are set out in paragraph 3 of Part VII (Additional Information) of this document.

Following discussions between Cavendish and the Takeover Panel in respect of the application of Rule 9, the Takeover Panel has agreed that Cavendish will not be required to make an offer under Rule 9 as a result of purchasing Ordinary Shares from Eligible Shareholders pursuant to the Tender Offer. For more information, please see paragraph 4 of Part VII (Additional Information).

5.2 Options available to Eligible Shareholders in respect of the Tender Offer

Eligible Shareholders are not obliged to tender any Ordinary Shares if they do not wish to do so. If no action is taken by Eligible Shareholders, there will be no change to the number of Ordinary Shares that they hold and they will receive no cash as a result of the Tender Offer.

Eligible Shareholders who wish to participate in the Tender Offer can tender some or all of their Ordinary Shares for purchase and receive cash in consideration of such purchase (subject to scaling back of tenders in excess of their Basic Entitlement). Shareholders, other than certain Shareholders in Restricted Jurisdictions and non-Qualifying US Shareholders, will be entitled to have up to 38.5 per cent. of their respective holdings purchased under the Tender Offer (such percentage being the Basic Entitlement). Such Shareholders will be able to tender additional Ordinary Shares, but such tenders will only be satisfied, on a pro rata basis, to the extent that other Shareholders tender less than their Basic Entitlement or do not submit a tender, save that tenders from Shareholders who hold 2,000 Ordinary Shares or less will be accepted in full subject to there being capacity to purchase those Ordinary Shares in accordance with the terms of the Tender Offer.

Once made, any tender of Ordinary Shares will be irrevocable.

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The Tender Offer will close at 1.00 p.m. on 9 April 2024 and tenders received after that time will not be accepted (unless the Closing Date is extended by the Company in accordance with the terms of the Tender Offer).

Shareholders should note that the Tender Offer is conditional on, among other things, the passing at the General Meeting of Resolution 1 set out in the notice of the General Meeting set out at the end of this document.

5.3 Number of Ordinary Shares purchased under the Tender Offer

All Eligible Shareholders who tender Ordinary Shares at the Tender Price will receive the Tender Price for all successful tenders accepted, subject, where applicable, to the scaling-down arrangements described in paragraph 2.3(c) of Part IV (Details of the Tender Offer) of this document. Accordingly, where scaling-down applies there is no guarantee that all of the Ordinary Shares which are tendered by Eligible Shareholders at the Tender Price will be accepted for purchase.

If the aggregate value of the Ordinary Shares validly tendered by Shareholders at the Tender Price is higher than £30.0 million, tenders will be scaled down so that their aggregate value is £30.0 million. Further information on the scaling-down arrangements that apply in this situation is contained in Part IV (Details of the Tender Offer) of this document.

5.4 Basic Entitlement of each Eligible Shareholder

If the Tender Offer is over-subscribed, then Eligible Shareholders will receive a minimum level of participation in the Tender Offer (known as their "Basic Entitlement"). This Basic Entitlement is expressed as a percentage of an Eligible Shareholder's shareholding in the Company as at the Record Date. Shareholders will be able to tender additional Ordinary Shares, but such tenders will only be satisfied, on a pro rata basis, to the extent that other Shareholders tender less than their Basic Entitlement or do not submit a tender, save that tenders from Shareholders who hold 2,000 Ordinary Shares or less will be accepted in full subject to there being capacity to purchase those Ordinary Shares in accordance with the terms of the Tender Offer.

5.5 Circumstances in which the Tender Offer will or may not proceed

There is no guarantee that the Tender Offer will take place. The Tender Offer is conditional on the passing of Resolution 1 set out in the Notice of General Meeting. The Tender Offer is also conditional on the other matters specified in paragraph 2.1 of Part IV (Details of the Tender Offer) of this document, including:

1. receipt of valid tenders in respect of at least 3,244,187 Ordinary Shares (representing approximately one per cent. of the Issued Ordinary Share Capital as at the Latest Practicable Date) by 1.00 p.m. on the Closing Date;
2. the Tender Offer not having been terminated in accordance with its terms and the Company having confirmed to Cavendish that it will not exercise its right to require Cavendish not to proceed with the Tender Offer; and
3. Cavendish being satisfied at all times up to immediately prior to the Unconditional Date that the Company has complied with its obligations and the conditions set out under the Option Agreement, and the Company is not in breach of any of the representations and warranties given by it under the Option Agreement.

The Board has reserved the right, at any time prior to the Tender Offer becoming unconditional, to require Cavendish not to proceed with the Tender Offer if the Board concludes that the implementation of the Tender Offer is no longer in the best interests of the Company and/or Shareholders as a whole. The Board has also reserved the right, at any time prior to the announcement of the results of the Tender Offer, with the prior consent of Cavendish, to extend the period during which the Tender Offer is open, based on market conditions and/or other factors, subject to compliance with applicable legal and regulatory requirements.

If the Tender Offer does not occur, the Group will have on its balance sheet up to £30.0 million of cash from the Final Litigation Proceeds that it had proposed to be returned pursuant to the Return of Value. Holding this amount of cash means that the Group is likely to receive a reduced return on capital while the Board considers how best to deploy or return these funds to Shareholders. The Board is of the opinion that, subject to any value-creating alternatives, this cash is surplus to the requirements of the Group and that it would be in the best interests of the Company and Shareholders as a whole not to retain this cash on the Group's balance sheet but to return it to Shareholders by way of a special dividend.

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