Kromek Group plc (AIM: KMK), a leading developer of radiation and bio-detection technology solutions for the advanced imaging and CBRN detection segments, announces its interim results for the six months ended 31 October 2022.
Financial Summary & Outlook
- Revenue increased by 44% to £6.8m (H1 2022: £4.7m)
- Gross margin of 40.4% (H1 2022: 46.8%)
- Adjusted EBITDA* was £2.7m loss (H1 2022: £0.6m loss), primarily reflecting FX impact and inflation related costs
- Substantial order book and good visibility into H2, with 91% of forecast FY revenue already awarded, contracted, shipped or provided by regular repeat business
- Expect to be EBITDA positive and broadly cashflow neutral in H2
- Cash and cash equivalents at 31 October 2022 were £1.0m (30 April 2022: £5.1m)
- Cash position improved post period, with cash and cash equivalents of £1.3m at 23 January 2023
- Expecting strong revenue growth in H2 with continued contract wins in both the CBRN detection and advanced imaging segments. Engaged with eight tier 1 and tier 2 OEMs in key target area of medical imaging and Board expects to announce a number of contracts across the Group in the near term
- On track for record revenue for FY 2023: Kromek expects to report over 45% year-on-year growth
*A reconciliation of adjusted EBITDA can be found in the Financial Review.
Operational Summary
Advanced Imaging
- Strong revenue growth with delivery under component supply agreements and increased customer engagement for future projects
- Excellent progress in medical imaging:
- Significant expansion in customer engagement for development programmes in key target areas of single photon emission computed tomography (“SPECT”) and photon-counting computed tomography (“CT”)
- Launch by Spectrum Dynamics Medical (“Spectrum Dynamics”) of the world’s first digital SPECT/CT scanner for higher energy imaging, which uses Kromek detectors
- Won two new orders worth a total of $751k from existing OEM customers
- Post period, received £2.5m in funding from Innovate UK for two programmes to further develop a low dose molecular breast imaging (“MBI”) technology based on Kromek’s CZT-based SPECT detectors
Chemical, Biological, Radiological and Nuclear (“CBRN”) Detection
- Significant momentum in nuclear security, with the winning and delivery of new and repeat orders, participation in a greater number of tenders and establishing key distribution partnerships:
- Received and delivered two orders from existing US customers totalling $2m for the Group’s D3S-ID and D3M wearable nuclear radiation detectors
- Secured a distribution agreement with Smiths Detection to distribute the Group’s nuclear security solutions to North and South American markets, which was expanded post period to include the Middle East and certain key markets in Asia and Australasia
- Post period, the Group was awarded and delivered two contracts, totalling £1.5m, for the supply of its D3M and D3S-based product lines to European government end-users; and received a repeat order, for $836k, from a US government customer for the D3S-ID
- Post period, received a £4.9m contract from a UK government department for a three-year programme to deliver bio-security solutions
Manufacturing and IP
- Expanded production capabilities and implemented several productivity improvements leading to further cost efficiency in CZT manufacturing
- 4 new patents filed and 2 granted during the period
Dr Arnab Basu, CEO of Kromek, said: “This has been a record six months for Kromek. We’ve generated our highest ever revenue in an interim period while building our substantial pipeline for the full year and beyond. Our engagement with customers and potential customers in advanced imaging and CBRN detection has grown significantly. In our key target market of SPECT/CT, we are now working with eight tier 1 and tier 2 OEMs to get qualified and designed into their next-generation medical imaging systems – which reflects our position as the only large-scale, independent provider of CZT. At the same time, the geopolitical conflict continues to drive strong demand for our nuclear security products as governments increase their defence spending.
“Whilst we have been significantly impacted during the period by the inflationary environment and currency pressures, we are seeing this ease in the second half and, combined with strong revenue growth, expect to be EBITDA positive for H2 2023. Accordingly, with the excellent revenue momentum and highest ever levels of customer engagement, we look to the future with confidence.”
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