Kromek Group PLC – Interim Results

Kromek Group PLC – Interim Results

Kromek (AIM: KMK), a worldwide supplier of detection technology focusing on the medical, security screening and nuclear markets, announces its interim results for the six months ended 31 October 2019.

 

Financial Summary

·      Revenue increased by 43% to £5.3m (H1 2018/19: £3.7m)

·      Product sales accounted for 82% of total revenue (H1 2018/19: 78%)

·      Gross margin was 58% (H1 2018/19: 67%; FY 2018/19: 57%)

·      Adjusted EBITDA* was £0.6m loss (H1 2018/19: £0.6m loss)

·      Loss before tax was £2.7m (H1 2018/19: £2.1m loss)

·      Gross cash and cash equivalents at 31 October 2019 were £13.4m (30 April 2019: £20.6m; 31 October 2018: £6.3m), with the key movement being planned capex of £5.5m primarily to expand production capacity to fulfil customer demand

*Adjusted EBITDA defined as earnings before interest, taxation, depreciation, amortisation and share-based payments as detailed in the Financial Review below

 

Operational Summary

·      Record H1 revenue driven by delivery of high value, multi-year contracts with commercial and large government customers worldwide across nuclear detection, medical imaging and security screening

·      Substantial expansion programme implemented at UK headquarters to increase CZT manufacturing capacity and D3S production

·      Significant commercial traction with D3S family of products:

Expanded sales team and rapid channel development resulting in the D3S platform now having been sold in 22 countries

Received and has successfully delivered orders of £2.1m from a European government-related company, a new customer, for the provision and integration of D3S-related technologies

Further contracts won from US government and European Commission and, post period, a national civil defence agency of a European country

·      Commenced delivery on a significant $58.1m contract to provide an OEM customer with CZT detectors and associated advanced electronics for its state-of-the-art medical imaging systems

·      Substantial increase in capacity in detector manufacturing and introduction of process automation resulting in increased throughput and efficiency in the US facility, which is delivering on substantial medical contracts

·      3 new patents were filed and 8 were granted during the period

 

Outlook

·      Entered H2 2019/20 with increasing commercial momentum: Kromek signed multi-year contracts totalling c. £100m in the three years to 31 October 2019 compared with c. £50m and c. £30m for the three years to 31 October 2018 and 2017 respectively

·      Unchanged outlook for FY 2019/20: on track to achieve revenue and EBITDA profit in line with market expectations

 

 

Dr Arnab Basu, CEO of Kromek, said: “This year has seen a focus on executing on the previously-signed agreements and commencing delivery on the multi-year contracts won in recent years. This has resulted in record first half revenues. We have seen an increase in adoption of our next-generation products in the medical imaging market and an expansion of applications for our D3S platform. Consequently, our product sales have seen a year-on-year increase of 53% and account for 82% of revenues in the first half.

 

“Kromek entered the second half well-positioned to report its highest ever full year revenues as delivery of high value, multi-year contracts continues to ramp up. We are delivering on contracts worth nearly £100m won over the past three fiscal years in our target markets of medical imaging, nuclear detection and security screening as customers commercially deploy their next-generation CZT-based products. Additionally, we continue to experience growing demand for our flagship products, which is expected to convert to further orders. As a result, the Group has visibility of 90% of expected revenue for FY 2019/20 based on delivery of the contracts already won and supported by a strong and increasing pipeline. The Board expects to deliver significant revenue growth and EBITDA profit for full year in line with market expectations.”

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