Kromek Group (LON:KMK), a worldwide supplier of detection technology focusing on the medical, security screening and nuclear markets, has today announced its interim results for the six months ended 31 October 2019.
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.”
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:
o Expanded sales team and rapid channel development resulting in the D3S platform now having been sold in 22 countries
o 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
o 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
