Shares in Nanoco (NANO) – a developer of cadmium-free quantum dots – crashed by around 80 per cent on the news that the contract in place with its anonymous US customer will not carry on beyond the current agreed period. "Clearly, this is a major blow to the company’s prospects given that this was expected to move towards commercialisation in the short term," says broker Peel Hunt.
In January of this year, Nanoco revealed that the respective customer had signed a 12-month extension to this contract – taking it to December 2019 – covering stress-testing and commissioning services at the group’s Runcorn production facility.
The US customer made up just over 90 per cent of Nanoco’s top line for the half-year to January 2019. Nanoco noted that the customer’s decision not to prolong this contract is “for reasons wholly unconnected to the performance of our materials and our service delivery”. Other potential uses for its technology are being considered with various customers, including the US customer, and the group is also still pursuing opportunities in multiple sectors.
Nanoco added that the decision doesn’t impact its current contract. It still expects to hit cash break-even at its 2019 year-end, with a cash balance of around £6m.
For the next financial year to July 2020, its revenues and associated cash flows under contract sit at around £4m.
