Nanoco’s contract extension for work with its US customer fully underpins our FY19 estimates and gives the business a c £3m+ head start entering FY20. Our forecasts are unchanged, but progress with this major customer has shone a bright light on Nanoco’s IP and execution credentials. Discussions are now ongoing with a number of parties, which could drive upside to our near-term estimates.
The contract extension runs from January 2019 to December 2019 and relates to stress testing and process optimisation on the new production facility. The statement highlights that the agreement only has limited deferrals or contingent or milestone payments, and it substantially underpins our FY19 £6.7m revenue estimate. With £3m of revenue already contracted prior to this agreement, this implies the extension has a total value of £6–7m to be recognised broadly equally across H2 of FY19 and H1 of FY20. We understand that the extended agreement has no bearing on the expected timing of the move to volume production nor the revenue opportunity from commercial volume shipments to this client.