Kromek Group Q&A: Strong portfolio of products, good reference & a good set of customers (LON:KMK)

Kromek Group plc (LON:KMK) Chief Executive Officer Arnab Basu caught up with DirectorsTalk to discuss their recent £13million fundraise, what the proceeds will be used for, the two new orders worth a total of $750,000 and coping well during the COVID-19 pandemic.

Q1: Now, you did a fundraise for £13 million, can you tell us more about it and what it’ll be used for?

A1: We completed a £13 million fundraise yesterday which h we announced, £10 million was done via an institutional placing supported very well by both existing shareholders but also, we were pleased to see new institutions investing in that placing. The £3 million was placed on an open offer which was hugely oversubscribed so we had nearly 350% oversubscription in the open offer so again, very well supported through our first, private investors and retail investor base.

So, yes, wee are very pleased, this is really about really accelerating the commercial journey of Kromek Group, getting us towards that sustainable growth and sustainable profitability figures.

Three main areas where this is going to really help the company:

The first is investing in sales, marketing, and commercial efforts so we have been, over the last two years or so, building up a very strong sales pipeline and we are going to continue to invest in sales and marketing and commercial activity within the business. In our core markets, which is in medical imaging and nuclear security, as we all know the key drivers in these markets remains very strong so early detection of cancer, things like protection of critical infrastructures against the threat of nuclear terrorism, they key drivers in those markets remain strong and we believe by investing further into this area in commercial activities and getting our suite of products into the market with a wide scale adoption is  going to really reap benefits.

The second area, as your viewers will know, we’re working on a bio-pathogen detection system where we are starting to look for the optimum route to market but also find the best commercialisation strategy. Some of the pilots for COVID-19 detection is going to start very soon and we are going to, of course, continue with our journey of building that system and bringing to the market which is able to detect the whole range of viruses and bacteria present in the air which really has a long term sustainable requirement and need in the market. Again, investing in understanding how best we commercialise, how best we leverage what we have developed and take it to the market is something where we’re going to use some of the money.

Thirdly, and it’s quite important, a lot of our customers are very large OEM’s and government customers and having a balance sheet strength helps in conversion of the opportunities that we are seeing in the market, in our core nuclear detection, medical imaging, security screening market.

So, shoring up the balance sheet, having that strength visible, investing in developing and executing on the commercialisation strategy for the bio-pathogen detector and indeed, continuing the investment in our sales and marketing and commercial efforts in our core markets of nuclear detection and medical imaging is where this is going to really be used.

It’s all about commercialisation, as I said, accelerating commercialisation which will help us grow in the coming periods.

Q2: You also announced that you’d received two new orders worth a total of $750,000, can you tell us more about that?

A2: As we spoke before, last year, particularly at the beginning of this fiscal year 2020, right in the middle of COVID, we started off in a very difficult world where our markets, our customers was suffering as a result of the pandemic. Towards the end of the fiscal year, we had a very strong end and we reported good results at the end of the first half, we are seeing that growth and expect that growth to continue, both in the second half of this year where we are now but also into the next year as well.

We do have a very good pipeline of opportunities and those opportunities are driven by the needs of our products and this is just two of those:

One in medical imaging, this is for detection of cancer, the detectors that we supply to an existing customer, it’s great to see the customer again starting to feel that their markets are strengthening and their markets are coming back as well.

The second is in the nuclear security or nuclear detection, again an existing customer and again, this is all that journey and that start of business getting back to its normal rhythm and the journey of returning to normality which will get us back to that growth curve that we had been before COVID.

Q3: It sounds like Kromek Group have coped well since we last spoke, despite COVID?

A3: Indeed, as I said, the key growth drivers within our markets remain strong, we have got a very strong portfolio of products, good reference, and a good set of customers within all of our segments.

What we will see over the coming months is that we will start to, again, get back to that rhythm of our customers coming back, placing more orders, winning new customers and that journey will continue. We are confident of delivering growth and growing shareholder value.

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