Kromek, 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 2018.
Financial Summary*
- Revenue was £3.7m (H1 2017/18: £4.8m)
- Gross margin increased to 67% (H1 2017/18: 63%)
- Operating costs reduced to £4.6m (H1 2017/18: £4.8m)
- Loss before tax was £2.1m (H1 2017/18: £1.8m loss)
- EBITDA** was £0.6m loss (H1 2017/18: £0.3m loss)
- Gross cash and cash equivalents at 31 October 2018 were £6.3m*** (30 April 2018: £9.5m; 31 October 2017: £15m)
*The Group has prepared the interim statements in accordance with the new accounting standards IFRS 15 ‘Revenue from Contracts with Customers’ and IFRS 16 ‘Leases’. For more information, please see note 1 to the consolidated financial statements below
**EBITDA defined as earnings before interest, taxation, depreciation, amortisation and share-based payments as detailed in the Financial Review below
***This excludes £1.3m (H1 2017/18: £1.3m) that has been invested into a money market account that is classified as an investment rather than cash and cash equivalents
Operational Summary
- Unchanged outlook for FY 2018/19: on track to achieve revenue growth and EBITDA profit in line with market expectations.
- Successfully relocated Kromek’s US manufacturing operations to new premises in Pittsburgh, which was purpose-built to be a high-volume manufacturing site for SPECT cameras and other medical imaging products.
- Increased revenue visibility for the current and next financial year through new contracts and repeat orders won during the period.
Medical Imaging
- Awarded a $700k contract, to be delivered over 18 months, by a new OEM customer in the nuclear medicine instrumentation market.
- Received a $340k repeat order, to be delivered in the current financial year, from an OEM customer in the Bone Mineral Densitometry market.
- Won a five-year repeat order, worth $1.2m, from an existing medical customer for the supply of gamma detector modules.
- Continued to advance towards full clinical validation of Kromek’s CZT-based SPECT detector system.
Nuclear Detection
- Awarded two contracts in the US by DTRA, worth a total of $2.9m, to enhance the D3S platform, including the development of a ruggedized small form factor device for use in the military field.
- D3S continued to be deployed and field-tested in major areas in the US by DARPA and by other public administrations across the globe.
- Won several new customers in the nuclear sector, including the Spanish Army, and added new distributors in Europe and Asia.
- Post period, received first contract for biological threat detection: $1.99m awarded by DARPA to develop, over a 12-month period, a proof-of-concept device for a vehicle-mounted biological-threat identifier.
Security Screening
- Awarded a two-year $1.5m contract by the US Department of Homeland Security to develop CZT detector modules for commercial off-the-shelf detectors for advanced X-ray systems for passenger baggage screening
- Post period, won a new five-year $7.8m contract from an existing OEM customer to provide customised detector modules for incorporation in baggage screening products
Three new patents were filed and four were granted during the period.
Dr Arnab Basu, CEO of Kromek, said: “The progress of 2017/18 was sustained into the current fiscal year as Kromek remained at the forefront in developing solutions to combat some of the greatest security and health challenges that are faced by society today. Our position has been strengthened by our new state-of-the-art facility in the US, which is designed to be a world-class manufacturing base for the production of medical imaging products including SPECT cameras. During the six months, we undertook a significant process of relocation, installation and revalidation of our manufacturing processes, and I’m delighted that the facility is now fully operational.
“Over the last three fiscal years we have won $80m of contracts, across all of our core sectors, demonstrating the successful conversion of our growing order pipeline. They also demonstrate the strong and long-lasting partnerships that we are continuing to build with our commercial and large government customers across the globe.
“As we continue to deliver on existing contracts as well as win new orders, our visibility of revenue for the next six to 24 months continues to increase, which includes visibility of approximately 86% of the forecast revenue for 2018/19. As a result, the Board is confident of delivering full year revenue growth and positive EBITDA, in line with market expectations.”
