A trading update from Nanoco, the maker of cadmium-free quantum dots for TVs and other display screens, revealed revenues and year-end cash levels were in line with expectations, with a larger royalty paid by key partner Dow Chemical.
Unaudited revenues in the year to 31 July were £1.9m, down 5% on the last full year, which is an improvement on the 80% decline in the first half of the year.
This is better than some analysts were predicting for the full year, for example Stifel had earlier this month forecast £1.6m revenue and a £10.6m loss before tax, though other analysts had expected nearer £2m of revenue.
The balance sheet showed the results of the company's prudent cash management, with unaudited net cash of £14.4m at the year end, down from £18.3m over the last six months.
Fully-listed Nanoco, which took the big step in March of giving up some of the short-term revenue benefits of an exclusive deal with Dow to move to a non-exclusive model instead, said its quarterly royalty payment from Dow for the quarter ended 30 June 2016 was "modest" but was higher than the first royalty received earlier this year. The company is currently in the process of transferring its improved manufacturing processes to Dow, which will enable increased productivity and is expected to result in a fee being paid by Dow.
Since moving to the non-exclusive commercialisation strategy, Nanoco has signed a supply and licence agreement with Wah Hong Industrial Corporation of Taiwan, a major licensing agreement with Germany's Merck, and said it continues to evaluate other potential commercial opportunities in the display sector, as well as its other target markets of lighting, life sciences and solar.
Ahead of the publishing of preliminary results in October, the board said it "remains confident of achieving further progress in the commercialisation of the company's technologies during the current financial year and beyond".
Broker Liberum said the initial Dow payments are for samples being shipped to the Korean TV OEMs by Dow and does not represent commercial revenue, though commercial revenue from Dow's supply to Samsung is poised to kick off.
"We forecast Nanoco to start showing meaningful revenue growth in FY17 due to the expected contribution from all three of its partners in the display segment - Dow, Wah Hong and Merck," analysts wrote.
"In the case of Dow the plant in Korea now largely ready and shipping samples to potential customers. We expect Samsung to be the main customer from this plant and for commercial shipments to start this year. Samsung's quantum dot-based SUHD TVs are seeing strong growth in the market and Nanoco is expected to be a beneficiary of this."
Shares in Nanoco were down 5% to 66.25p just after 1100 BST on Monday.