Kromek Group substantial expansion programme implemented at UK headquarters

Kromek Group plc (LON:KMK), a worldwide supplier of detection technology focusing on the medical, security screening and nuclear markets, has announced its final audited results for the year ended 30 April 2020.

Financial Summary

· Revenue of £13.1m (2018/19: £14.5m)

· Gross margin was 47.3% (2018/19: 57.2%)

· Adjusted EBITDA* of £0.4m loss (2018/19: £2.0m earnings)

· Loss before tax excluding exceptional items was £5.2m (2018/19: £1.3m loss)

· Exceptional loss in respect of trade receivables and amounts recoverable on contract due to the economic and operational impacts of COVID-19 was £13.1m (2018/19: £nil)

· Loss before tax including exceptional items was £18.3m (2018/19: £1.3m loss)

·Cash and cash equivalents at 30 April 2020 were £9.4m (30 April 2019: £20.6m) following planned investment in property, plant and equipment totalling £7.0m

*Adjusted EBITDA is defined as earnings before interest, taxation, depreciation, amortisation, other income, exceptional items, early settlement discounts and share-based payments. For further details, see the Financial Review below.

Operational Summary

·Solid progress was made in the early part of the year with Kromek reporting record H1 2019/2020 revenues. However, the COVID-19 pandemic caused disruption in Q4 2019/2020 causing some projects to be delayed into the new financial year

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

·    Significant commercial traction with D3S family of products with sales in 22 countries:

o  Successfully delivered orders of £2.1m from a European government-related company, a new customer

o  Expanded the geographic reach with the win of a competitive tender to provide the D3S platform to the Irish Civil Defence under a three-year contract

o  Further contracts won from the US government and European Commission

· 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

· Won contracts with the Canadian Nuclear Safety Commission and Curaçao government for civil nuclear solutions and sold radiation mapping solution for drones to UKAEA (1) and Sellafield (2)

· Key milestone reached in security screening with OEM customer achieving the highest level of European liquid explosive detection certification for cabin baggage for its scanner. Received first commercial order post-period

· Five new patents were filed and 20 were granted during the year

Current Trading and Outlook

· Impact of pandemic has continued into the first four months of the new financial year

· Two key customers whose material contracts were postponed from the previous year have now issued instructions to recommence

· Business patterns now returning to normal and detector shipments are being scheduled

·Post-period, awarded a $5.2m contract extension, by the Defense Advanced Research Projects Agency (“DARPA”), an agency of the US Department of Defense, to work on a mobile wide-area bio-security system capable of detecting airborne pathogens

·   Increased visibility from customers as evidenced by largest customer in medical imaging segment providing the Group with their plans for the full fiscal year

· Demand for D3S family of products continues to increase and there is renewed procurement activities in the US, Asia and Europe

· New emerging segment of biological-threat detection has significant long-term implications

· Board cautiously optimistic for the year ahead

Dr Arnab Basu, CEO of Kromek Group, said:

“We entered 2019/20 in a stronger position than ever before, increasing revenues by 43% in the first half. However, the pandemic caused markets to shut down and materially impacted both our global customer base and supply chain resulting in overall revenues for full year 2019 to be lower than the previous year. However, the mitigation measures and operational progress we have made during the year means we are well-positioned to rebound strongly.

“We have significantly expanded our production capacity and increased sales of our popular D3S platform that is being deployed in 22 countries, including new contracts with the US Government and European Commission. We have also deepened our relationship with DARPA to build a bio-surveillance system for detecting airborne pathogens. In medical, we expect product cycles to continue to refresh as early and better diagnostics is increasingly recognised as critical to more effectively managing diseases like cancer and cardiac conditions. These are substantial addressable markets underpinned by fundamental long-term growth drivers.  

“I am immensely proud of the resilience and attitude of our staff as we have all adapted to new ways of working. It is greatly encouraging that we are now starting to see a return to normal business patterns, and this is feeding through into increased activity from our customers around the world. As a result, the Board is cautiously optimistic for the year ahead and will provide updates to the market as the outlook becomes clearer moving forward.”


Kromek entered 2019/20 in a stronger position than ever before, increasing revenue by 43% in the first half over the previous period. The pandemic caused markets to shut down and materially impacted both the Group’s global customer base and supply chain resulting in overall revenues for full year 2019/20 to be lower than the previous year. However, the mitigation measures and operational progress that Kromek made during the year mean the Group is well-positioned to rebound strongly.  

Notwithstanding the impact of the pandemic, the Group made notable progress during the year in the strengthening of its operations. Kromek implemented a substantial expansion programme at its UK headquarters in Sedgefield to increase its cadmium zinc telluride (“CZT”) manufacturing capacity. The Group also continued to gain traction for its next-generation molecular imaging single photon emission computed tomography (“SPECT”) products in medical imaging and its D3S family of products in nuclear detection – which management believe are the key drivers of the Group’s future growth along with newly emerging segment of biological-threat detection.

COVID-19 Impact

The COVID-19 pandemic presented unprecedented challenges to Kromek’s supply chains and operations while adversely impacting demand from certain customers. Some contracts were postponed to the new financial year and two key customers have now issued instructions to recommence their contracts.

The Group was fast to respond to the evolving public health emergency and by the middle of March 2020, it had activated its business continuity plan and transitioned most of its employees in the UK and US to remote working in order to protect the health and safety of the workforce.

The Group undertook a number of temporary mitigation measures to bolster the liquidity of the business and its financial position. Actions taken included the implementation of some organisational restructuring; ceasing all discretionary capital expenditure; curtailing all travel and non-essential spend; and securing short- and medium-term rent concessions on some of the Group’s leased properties. Kromek has undertaken job reductions in the US and engaged the Job Retention Scheme in the UK, furloughing a number of staff. These measures, along with others in the pipeline, are expected to reduce running costs and cash outflow. In addition, the Group has secured further loans with HSBC of £1.4m and, in the US, Paycheck Protection loans of around $1m. The Group has also varied the bank covenants on the Revolving Credit Facility with HSBC to ensure the continued availability of this instrument.

In April 2020, Kromek entered a licensing agreement with Metran Co., Ltd, a Japan-based leading developer of medical ventilator products and technology, with the intention to manufacture and sell invasive emergency ventilators to support the COVID-19 crisis. Kromek continues to see interest in the product and signed an agreement for the supply of ventilators in a European country, which will become effective following receipt of appropriate certifications in that jurisdiction. The Group anticipates this market to remain active over the next 12-18 months as countries continue to build capacity in the fight against COVID-19 and build resilience against any similar pandemics in the future.

With the lifting of lockdowns in the UK and the US, Kromek’s workforce that are required to be onsite have been able to return to the Group’s facilities as Kromek now starts to resume full scale production. Business is showing signs of returning to normal trading, with orders being issued and shipments, once again, being scheduled. However, this still remains a challenge for certain parts of the world where both movement of people and goods continue to be hindered by restrictions. 

Medical Imaging

Medical imaging represents a significant market opportunity for Kromek with SPECT and molecular breast imaging (“MBI”) as key target growth areas for the Group’s CZT-based detector solutions.

Kromek continued to make progress in this market during the year. In particular, the Group commenced delivery on one of its most significant contracts to date, which had been awarded in H2 2018/19, to provide an OEM customer with CZT detectors and associated advanced electronics to be used in its state-of-the-art medical imaging systems. The contract is expected to be worth a minimum of $58.1m over an approximately seven-year period.

In recent years, leading OEMs in medical imaging have been increasingly adopting CZT detector platforms as the enabling technology for their product roadmaps – leading to growing demand for Kromek’s solutions. However, because of COVID-19 related factors, hospital resources have been temporarily redirected and logistics constraints hamper new system installations. Consequently, some orders were postponed as medical OEM customers were required to delay new systems sales and product introductions. While this disruption has had a significant impact on Kromek’s medical imaging business, the Group expects this to be short-term and believes the market opportunity remains substantial. In addition, normal business patterns are returning and some customers are now beginning to resume orders with detector production and shipments being scheduled. 

The Group also progressed the development of its ultra-low dose MBI technology based on its CZT-based SPECT detectors. Under this three-year project, which commenced in 2018, Kromek is working alongside partners in the Newcastle-upon-Tyne Hospitals NHS Foundation Trust in the UK and an OEM partner.

Nuclear Detection

Nuclear Security

Kromek continued to see opportunities and demands for its D3S platform, which is attracting business interest across the globe – and has been sold in more than 22 countries.

A key achievement was the award of a strategically significant contract, worth £1.1m, by a European-government related company, a new customer, for the provision of D3S-related technologies, which was subsequently extended by £1.0m to provide technology integration. The customer works with a European government to detect and protect against potential nuclear threats. The Group has successfully delivered this contract and its solutions are being actively deployed by the customer for wide-area threat monitoring.

Kromek was awarded a new and an extension contract worth over $1m in total under two initiatives by the US government: 

· The Countering Weapons of Mass Destruction Office, which is a component within the US Department of Homeland Security, has awarded Kromek a $0.7m extension contract to add further technical innovation capability to the D3S family of products.

·The Joint Program Executive Office for Chemical, Biological, Radiological and Nuclear Defense (JPEO-CBRND) awarded Kromek a $0.4m contract to provide D3S-related customisation for military operational transition, which will leverage the DARPA SIGMA Program sensor and technology.

The D3S platform was used in active deployments and field-tests in multiple locations of strategic importance and high risk across the US, Asia and Europe. This includes deployment under an initiative, for which the Group was awarded a 0.2m contract, by the European Commission’s Directorate-General for Migration and Home Affairs, working alongside security authorities in Belgium, Luxembourg, The Netherlands and Spain, to allow the law enforcement authorities to validate new and emerging technologies for homeland protection. The European Commission used the D3S-ID and D3S Drone radiation detectors for the protection of public spaces across multiple European locations covering high-risk venues such as airports, train stations and other public areas. Following this initiative, the Group has received an additional order for software development to expand the capabilities of the D3S Drones as well as more detectors for a new trial application.

Kromek also continued to expand the geographic reach of the D3S with the win of a competitive tender to provide its D3S platform to the Irish Civil Defence under a three-year contract worth up to €0.2m. The first units are now in use and further orders are expected shortly. In addition, the Swiss Government has listed the D3S-ID for use at waste and recycling sites.

The Group’s business and product development pipeline have remained good. During the year, Kromek launched the latest version of the D3S for first responders, the D3M PRD. The Group has continued to execute on multiple US government sponsored programmes, including the development of a fully ruggedised radio isotope identification device (RIID), which is expected to be launched later this calendar year. The Group is starting to see renewed procurement activities in the US, Asia and Europe after a period of slowdown over the last six months. The Group has continued to strengthen and expand its distribution network both in Europe and Asia. This includes new in-country partners for the D3S in France, Spain, Italy, Poland and Serbia.

Civil Nuclear

In the civil nuclear markets, the Group won several new contracts globally for its portfolio of high-resolution detectors and measurement systems used in nuclear power plants, research and for other applications. This included contracts with the Canadian Nuclear Safety Commission as well as other government customers. This was supplemented by the home market, where the Group’s radiation mapping solutions for drones were sold to UKAEA and Sellafield. Kromek’s markets in civil nuclear continue to expand with new customers and repeat orders from existing customers.

Security Screening

In security screening, the Group continued to provide its OEM and government customers with components and systems for cabin and hold luggage scanning applications. This includes delivery on the $2.7m expansion order, which was received at the end of the 2018/19 year, under Kromek’s long-term contract to provide key components for a US-based customer’s security screening system for the detection of explosives. The order expansion reflects the growing recognition of the strength of Kromek’s detection solution and credentials as a high-quality product supplier. The Group continues to receive increasing interest in its technologies that can meet the high-performance standards demanded by customers to ensure passenger safety while increasing the convenience and efficiency of the security process.

The Group also reached a key milestone with another OEM customer in the security screening market, which achieved the highest level of European liquid explosive detection certification for cabin baggage for their new generation scanner that is based on Kromek technologies. This certification enabled commercial deployment of the product and, post period, the Group has received the first commercial order from its customer.

Biological-Threat Detection

Post period, Kromek was awarded a contract extension worth up to $5.2m by DARPA, a long-standing customer, to advance the development of a solution for the detection and identification of pathogens in an urban environment via a vehicle-mounted biological-threat identifier. However, in response to the outbreak of COVID-19, the project is expected to be expanded beyond the development of a mobile wide-area bio-surveillance system against possible bioterrorism.

Once fully developed over the next few months, the technology should be able to sample air and identify the presence of any biological pathogen – including COVID-19 or any mutant version that may emerge over time. It is intended that the technology will be used to immediately flag the presence of someone with a contagious disease and allow effective mitigation of the risk of transmission. By placing samplers in high footfall areas, such as airports and hospitals, or where people are in close proximity for long periods, for example in transport vessels such as aircraft and care homes, threats can be identified without having to individually test people. Knowing a carrier is infected with a disease before they infect further individuals is key to halting the onset of an outbreak and before it causes major global disruption.

The Group expects to continue further development, piloting, and commercial deployments of this solution over the coming months.

Manufacturing Facilities

In order to meet growing demand for Kromek’s products, the Group continued its planned programme to significantly increase its production capacity and optimise the manufacturing process. During the year, Kromek successfully completed a substantial expansion programme at its UK headquarters in Sedgefield by increasing both the number of furnaces for growing CZT and material processing tools. In addition, the Group expanded the product assembly space for new and existing handheld radiation detector products in its existing UK factory.

The CZT manufacturing process capability was enhanced with advanced automated sensor assembly capability, significantly improving both process capability and operational capacity. As part of the process, Kromek will be introducing new CZT processing technology, which is expected to further enhance process quality, yield and manufacturing throughput.

This investment in the UK headquarters follows the relocation of the Group’s US operations to a new purpose-built premise near Pittsburgh, Pennsylvania. The site move was completed during the year with the operation moving in its entirety during June 2019, which has enabled a ramp-up in production for CZT-based cameras to serve the SPECT market. Both the UK and US manufacturing sites are certified to ISO9001:2015 through the annual ISO audit cycle.

R&D, Product Development and IP

The Group conducts continuous appraisal of a global supply chain for electronics components, critical materials and partner capabilities to ensure readiness for both changing customer and market demands. Kromek has continued to expand its IP portfolio through its core technology and product developments, in line with its key aims for IP protection: protect products; create market position and freedom to operate; and increase property value.

During the year, the Group applied for five new patents and had 20 patents granted across 10 patent families. The new applications cover innovations across Kromek’s nuclear, medical and biological-threat detection offerings and, while relating to targeted product developments, will also provide value beyond these fields. For example, the patent applications in the nuclear field can apply to multiple uses of scintillator detectors; the medical application will provide valuable IP, which underpins a key benefit of CZT; and the biological applications cover components that will have uses far beyond CBRN detection.

Financial Review

Kromek started the year well, with half-year revenue increasing by 43% to £5.3m (H1 2018/19: £3.7m), and the Group felt confident of delivering another year of strong growth. However, the Group’s financial year end of 30 April 2020 was at the height of global lockdown measures following a highly disrupted Q4 2019/2020 from January 2020 onwards. As noted in the announcement of 1 May 2020, the Group experienced a material impact on its operations because of the COVID-19 outbreak with delays in certain projects due to constraints imposed upon sub-contractors, suppliers, and customers. The Group was also informed that two of its key contracts would be delayed until the new financial year. Both customers have now issued instruction to re-commence, though initially at lower levels than originally contracted.

As a result, revenue was reduced by 10% to £13.1m (2018/19: £14.5m) and gross margin to £6.2m (2018/19: £8.3m). Due to higher administration costs of £10.6m (2018/19: £9.0m), the adjusted EBITDA decreased to a loss of £0.4m compared with earnings of £2.0m for the prior year.


The Group generated total revenue of £13.1m (2018/19: £14.5m).

Revenue was directly affected in Q4 2019/2020 by the impact of COVID-19. To strengthen its cash position, the Group negotiated an early payment from a specific customer in exchange for an early settlement discount. In line with IFRS 15 accounting standard, these discounts (amounting to £0.7m; 2018/19: £nil) have been netted off against revenue. Without this discount, revenue would have been £13.8m and gross profit would have been £6.9m with a gross margin of 50.0%.

Gross Margin

The year-on-year decrease in revenue, combined with a reduction in gross margin, resulted in a fall in gross profit to £6.2m (2018/19: £8.3m). The fall in gross margin to 47.3% (2018/19: 57.2%) is attributable to three key elements. Firstly, a lower margin yield associated with the initial year of the commencement of production of the seven-year medical imaging contract announced in early 2019.  The second key element, as noted above, results from a discount on an early settlement to one key customer in airport security relating to a substantial call-off and payment ahead of schedule. This both de-risked this commercial opportunity, but also ensured that the Group could record further receipts of $2m at the year-end and thus strengthen its cash position. The third key element to the reduction in gross margin was the cost impact of bought in goods where alternative suppliers had to be sought to complete the products and services that could be shipped during the final two months of the year.

Administration Costs

Administration costs and operating expenses increased by £1.6m to £10.6m (2018/19: £9.0m). This increase is substantially the net result of:

·£1.2m additional staff costs due to the planned expansion of the sales and production teams, plus technology personnel to support the biological detection project.

·£0.3m additional costs of depreciation largely relating to the capital expenditure on the furnace and fabrication expansion of £6.1m.

·£0.3m additional costs of amortisation due to continued investment in the technology platform and product applications.

· £(0.7)m foreign exchange credit largely due to a surplus realised on the Group’s US$ overdraft facility settled during the year.

·£0.5m relating to a combination of other items, including an increase in the US cost base, largely compensated by the foreign exchange gain noted above.

Exceptional Items

The Group has recorded an exceptional Item of £13.1m being substantially the write down of Amounts Recoverable On Contract (“AROC”) brought about by the uncertainty of COVID-19. As set out last year, the Group had planned to reduce the significant debtor balance regarding AROC and the Group’s management had undertaken several visits to China to effect this. That process looked very promising during the period up to January 2020, but the onset of COVID-19 in China, and subsequently the rest of the world, resulting in the financial status of the Group’s customers becoming uncertain. Consequently, the Board has prudently chosen to take a full provision against the AROC balance.

The Board is confident that once there is greater clarity on the flow of funds through investment and movement of goods and people, both globally and within China, this position will reverse, and the Group will see the opportunities materialise. The Group has secured a contract addendum for medical imaging systems with its major customer that sets out clear call-off schedules and a commitment to a multi-year opportunity, which also assists in monitoring any changes in deemed credit status. As the Chinese economy reopens and this contract addendum becomes effective, the Board remains committed to creating value from this relationship, but also more widely from the investment in the underlying technology. Kromek’s exposure and reputation for this technology in China is growing and the Group’s network and support structures in the region will ensure that it can effectively work with its customers and expand its opportunities.

Adjusted EBITDA* and Result from Operations

Primarily due to the impact of COVID-19 on the Group’s operations, adjusted EBITDA for 2019/20 was a loss of £0.4m compared with earnings of £2.0m for the prior year as set out in the table below:

Gross profit margin6,2088,309
Gross margin (%)47.3%57.2%
Loss before Tax(18,345)(1,270)
EBITDA Adjustments:  
Non-COVID-19Related Items:  
Net interest544364
Depreciation of PPE and Right of Use assets1,185879
Share-based payments225195
COVID-19Related Items:  
Early settlement discount746
Exceptional Item13,062
Adjusted EBITDA*(441)1,974

*Adjusted EBITDA is defined as earnings before interest, taxation, depreciation, amortisation, other income, exceptional items and share-based payments. The impact of COVID-19 has resulted in an exceptional item of £13.1m relating to receivables and AROC and a specific airport security customer early settlement discount of £0.7m as neither are in the normal course of events and are significant in their size, practice and nature. Share-based payments are added back when calculating the Group’s adjusted EBITDA as this is currently an expense with a zero direct cash impact on financial performance. Adjusted EBITDA is considered a key metric to the users of the financial statements as it represents a useful milestone that is reflective of the performance of the business resulting from movements in revenue, gross margin and the costs of the business. This definition has changed from 2018/19 to include the exceptional item and early settlement discount. However, in 2018/19 there were no exceptional items or such specific early settlement discounts meaning the Adjusted EBITDA from 2018/19 has not changed.

The £2.4m decrease in adjusted EBITDA in 2019/20 compared with 2018/19 is substantially a result of a loss in gross profit of £2.1m due to the lower revenue and reduction in gross profit margin noted above.

Loss before tax for the year increased to £18.3m (2018/19: £1.3m loss), largely due to the loss in gross profit of £2.1m, additional administration costs of £1.6m and the exceptional item of £13.1m.

During 2019/20, the Group recognised other comprehensive income of £1.0m (2018/19: £1.2m income) that arose in respect of exchange differences on a net investment in a foreign operation as described in note 2 to the financial statements.  Unlike the £0.7m gain resulting from foreign exchange on consolidation and revaluations and realisation of working capital balances noted above that were expensed to the profit and loss account, this gain has been treated as a reserve movement, consistent with the prior year.


The Group continues to benefit from the UK Research and Development Tax Credit, resulting from the investment in technology developments, and recorded a credit of £0.9m for the year (2018/19: £1.0m).

Following a review, the Group has revisited the historical treatment of deferred tax in relation to development costs capitalised in Kromek’s US operations since reporting under IFRS. As a result, through a prior year adjustment, a deferred tax liability has now been recognised on the Group’s balance sheet as at 30 April 2019 totalling £0.9m with the corresponding adjustments made to the profit and loss account and retained earnings. This liability has subsequently been fully eliminated during the year ending 30 April 2020 following an offset with a deferred tax asset arising in the Group’s US operations relating to accumulated losses to date. Please refer to note 2 to the financial statements for a summary of the adjustments made.

Due to the elimination of the deferred tax liability and the UK Research and Development Tax Credit, the tax charge for the year is a credit of £1.8m (2018/19: £0.6m credit).

Earnings per Share (“EPS”)

Due to a £3.5m loss after tax from continuing operations (after excluding exceptional Items) for the year, the EPS is recorded in the year on a basic and diluted basis as 1.0p loss per share (2018/19 restated: 0.2p loss per share). Due to a £16.5m loss after tax from continuing operations (including exceptional items) for the year, the EPS is recorded in the year on a basic and diluted basis as 4.8p loss per share (2018/19 restated: 0.2p loss per share).


The Group invested £5.3m in the year (2018/19: £2.7m) in technology and product developments that were capitalised on the balance sheet, reflecting the ongoing investment in new products and new applications for the future growth of the business. This capitalisation is higher in the current year because of two key factors.  Firstly, last year the figure was artificially reduced due to the facility move in the US during the first half of 2018/19 and the restrictions this disruption placed on development work. Secondly, the Group has chosen to pursue the opportunity in automated wide-area detection of biological pathogens, involving portable DNA sequencing.  It is the Board’s belief that this technology will enable the identification of the COVID-19 threat in public spaces and offers opportunities for the Group in this critical market. This is a position endorsed by the US government with DARPA awarding Kromek a major contract in May 2020 as part of the development of this platform and product applications.

The other key areas of development continue to be the expansion in the D3S suite of products and the SPECT platforms. All such investments in research and development are linked to contract deliverables and the Board’s belief in the significant future revenue opportunities that the Group’s technology offers. The Group continues to undertake this investment to strengthen its commercial advantage. 

During the year, the Group undertook expenditure on patents and trademarks of £0.2m (2018/19: £0.2m) with five new patents filed and 20 patents granted across 10 patent families.

Capital Expenditure

Capital expenditure in the year amounted to £7.0m (2018/19: £3.6m). As previously stated, this planned increase relates primarily to the expansion of the CZT growth facility, manufacturing processes and capacity in both the UK and US. Over recent years, the Group has demonstrated that it can now replicate this capability on multiple sites and significantly implement and scale up operations. This is a major achievement by the Group and the many members of Kromek’s team that have worked on this project. The capital project is now installed, commissioned and in operation – delivering against multiple projects, but particularly against the major medical imaging contract announced in early 2019. 

Cash Balance

Cash and cash equivalents were £9.4m as of 30 April 2020 (30 April 2019: £20.6m). The decrease in cash during 2019/20 was a combination of the following:

· An adjusted EBITDA loss for the year of £0.4m.

· Net cash used in financing activities of £0.9m.

· £0.4m reduction in working capital, excluding the exceptional write off of the AROC balance of £13.1m.

· R&D Tax Credit receipts of £0.9m.

· Investment in product development and other intangibles, with capitalised development costs of £5.3m and IP additions of £0.2m.

· Capital expenditure of £7.0m, as noted above.

· £1.3m conversion of the Investment in long-term cash deposits into a more liquid form.

The movement in key working capital balances is analysed as follows:

· A £3.2m increase in inventories held on 30 April 2020 to £6.4m (30 April 2019: £3.2m).  Following the $58.1m medical imaging contract awarded in January 2019, the Group is holding more component stock and work in progress to meet the call-off plan of the contract.  Due to delays driven by COVID-19, a substantial element of shipments intended for March and April 2020 were held back due to customer requests. A revised call-off plan has been received during August 2020 and it is anticipated that this inventory will begin to flow into a monthly rolling production and shipment plan.

· A £1.3m increase in trade and other receivables (excluding exceptional items) reflecting the timing of invoicing and payments during the strict lockdown of the Group’s Q4.

· A £3.9m increase in trade and other payables to £8.8m (2018/19: £4.9m). This increase is due to capital expenditure in the year and the timing of invoicing around the year end. Additionally, there has been a build-up of inventory to meet the needs of the medical imaging contract noted above. The Group also secured a £0.7m grant during the year regarding job creation in County Durham following the aforementioned $58.1m medical imaging contract, which is currently recognised on the balance sheet as deferred income.

· As noted last year, in March 2019 the Group renewed its existing Revolving Credit Facility with HSBC. The facility was extended to £5.0m from £3.0m and the renewal period was increased to a minimum of three years, with an additional option for up to five years. At 30 April 2020, £3.1m of the facility was drawn (30 April 2019: £3.0m) to support the working capital expansion.  A further £1.8m of the facility has been used to fund plant and machinery. Given the downward impacts on immediate outlook because of COVID-19, Kromek has renegotiated the bank covenants to ensure that the Group can continue to rely on the flexibility of this facility. 


Kromek’s position as a leading manufacturer of next-generation CZT-based products, supplying substantial growing markets and multi-year contracts, gives the business a degree of resilience.

The disruption in the final quarter of the 2019/20 year carried through to the first four months of the new financial year. Normal business patterns are now returning and some customers are beginning to resume orders with detector production and shipments being scheduled. Two customers who had postponed their contracts have now issued instructions to recommence work. Additionally, the Group is experiencing increasing visibility from its customers, including from Kromek’s largest customer in the medical imaging segment who has provided it with visibility on their plans for the full fiscal year. Demand for D3S family of products continues to increase and there is renewed procurement activities in the US, Asia and Europe after a period of slowdown over the past six months. As a result, the Board is cautiously optimistic for the year ahead and will provide updates to the market as the outlook becomes clearer moving forward.  

From a long-term perspective, Kromek’s key addressable markets benefit from fundamental growth drivers. The Group expects to see the refresh of product cycles continue in the medical sector, which is being transformed by CZT-based radiation detection. Early and better diagnostics is recognised as one of the means to deal more effectively with diseases like cancer and cardiac conditions. This pandemic has shown some of the vulnerabilities in the western healthcare systems and the lack of resilience due to under-investment over the last decade, which is expected to drive growth in addition to new demands in countries like China, India and Brazil. In the nuclear detection segment, security authorities continue to invest in sophisticated technologies, while bio-security is an emerging focus with significant long-term implications and monitoring and surveillance is expected to become the only way to deal with threats from novel viruses such as COVID-19.

With substantial long-term market drivers and significantly expanded production capacity in place, Kromek is well positioned to deliver on demand from around the world for next-generation radiation detection technologies.

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The D3 PRD is a high accuracy personal radiation detector with dose accuracy of ± 10%. Compare to the current state of the art detector, the D3 PRD’s detection of isotopes is two times faster, two times further,


Kromek wins Manufacturing Innovation Award

The winners of the Insider Made in North East Awards have been revealed, celebrating the best and most innovative manufacturers in the region. Due to the unprecedented Covid-19 pandemic and subsequent restrictions, the awards ceremony was held virtually at the Insider Made


Kromek distributor will be attending SECON 2021

WHY VISIT SECON 2021? Kromek’s South Korean distributor will be attending this event with Kromek radiation detectors. You can also: Explore state-of-the-art developments in the security industryOn the occasion of 4th industrial revolution, you can find out all kinds