REG - Kromek Group PLC - Interim Results
30/01/2025 07:15
For best results when printing this announcement, please click on link below:
https://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20250130:nRSd1930Va&default-theme=true
RNS Number : 1930V Kromek Group PLC 30 January 2025
30 January 2025
Kromek Group plc
("Kromek" or the "Group")
Interim Results
Multi-year agreements signed with Siemens Healthineers post period will
deliver profitability in the current financial year
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
2024.
Multi-year Agreements with Siemens Healthineers
Post period, as also announced today, Kromek has signed agreements with
Siemens Medical Solutions USA, Inc. ("Siemens Healthineers") to enable the
production of cadmium zinc telluride ("CZT") detectors for single photon
emission computed tomography ("SPECT") application pursuant to which:
· Under the Enablement Agreement, the Group will be paid a total of
$37.5m in cash in four installments over a four-year period, with the first
installment of $25.0m to be received in the current financial year, of which a
material amount will be recognised as revenue
· Over a four-year period, Kromek will:
o transfer 15 of its existing 174 furnaces for CZT production to Siemens
Healthineers
o provide Siemens Healthineers with all know-how, IP and related services
for CZT-based SPECT detector production
· All know-how and IP will be provided and licensed on a non-exclusive
basis. Accordingly, Kromek is unencumbered from continuing to utilise its
know-how and IP and supplying other OEMs in SPECT or other advanced imaging
markets
· In addition, Kromek is expected to supply Siemens Healthineers with
CZT-based detector tiles over the four-year period, which the Directors
believe will make a material contribution to advanced imaging revenue from the
second year of the agreement onwards
Impact on Kromek of Agreements with Siemens Healthineers
· The Group expects to become profitable from the current financial
year, with profit for FY 2025 significantly ahead of market expectations
· Debt will be reduced and the balance sheet will be significantly
strengthened
· Kromek intends to continue producing CZT for the SPECT and computed
tomography ("CT") markets utilising the remaining 159 furnaces it owns
· As the largest independent producer and supplier of CZT, and with a
significantly strengthened balance sheet, Kromek is strategically positioned
for sustained revenue growth and profitability
Financial Summary for H1 2025
· Revenue was £3.7m (H1 2024: £7.1m)
· Gross margin improved to 56.9% (H1 2024: 54.2%)
· Adjusted EBITDA loss of £2.3m (H1 2024: £0.1m loss)*
· Loss before tax was £5.7m (H1 2024: £3.5m loss)
· Cash and cash equivalents at 31 October 2024 were £0.6m (30 April
2024: £0.5m)
*A reconciliation of adjusted EBITDA can be found in the Financial Review.
Operational Summary for H1 2025
Advanced Imaging
· Sustained delivery under landmark collaboration contracts and other
component supply agreements, with customers including recognised Tier 1 OEMs,
Analogic and Spectrum Dynamics
· Continued to make progress under the ultra-low dose molecular breast
imaging programme funded by Innovate UK
CBRN Detection
· Awarded a contract worth £2.0m from the UK Ministry of Defence for
the supply of the Group's D5 RIID along with its Alpha Beta probe attachment
and ancillary products
· Selected under two new UK Government frameworks, each lasting four
years, designed to enhance the UK's systems and capabilities for ensuring
public safety and security:
o Kromek's D3M detector was named as the Personal Radiation Detector under
the UK Government Resilience Framework, with a first order already received
under this framework
o Selected as a supplier under the UK Government's Radiological Nuclear
Detection Framework
Biological-Threat Detection
· Continued to progress the development of biological-threat detection
systems under contracts with a UK Government department and the US Department
of Homeland Security
Manufacturing and IP
· Continued to execute on programmes for the expansion of production
capacity and process automation, particularly at its US facility, resulting in
greater manufacturing productivity and cost efficiency
· Applied for three new patents during the period
Dr Arnab Basu, CEO of Kromek, said: "As we stated at the time of the full year
results in October last year, Kromek was actively engaged with OEMs to drive
delivery of products and monetisation of the valuable intellectual property
the Group has developed in the advanced imaging area. We also said we were
confident that these initiatives would benefit the Group and drive a
significant increase in both revenue and cash generation in the second half of
FY 2025. Today's announcement is an exciting moment as both Siemens
Healthineers and Kromek are aligned in our vision to enhance healthcare
through technological advancements.
"The initial $25.0m payment from Siemens Healthineers will be used to support
the delivery of various milestones under the agreements, significantly reduce
our debt and strengthen our balance sheet, ultimately enhancing our
operational capabilities. These significant agreements enable us to deliver
profitability in FY 2025, significantly ahead of market expectations and lay
the groundwork for further growth in revenues and sustainable profitability
beyond that period.
"Looking beyond FY 2025, we expect to deliver growth in revenues for the fifth
year in a row in FY 2026 and remain profitable as we continue to deliver on
our agreement with Siemens Healthineers and our other OEM customers as well as
the CBRN contracts won with governmental agencies in UK and abroad.
Consequently, the Board looks to the future with confidence. "
For further information, please contact:
Kromek Group plc
Arnab Basu, CEO +44 (0)1740 626 060
Paul Farquhar, CFO
Cavendish Capital Markets Limited (Nominated Adviser and Broker)
Geoff Nash/Giles Balleny/Seamus Fricker - Corporate Finance +44 (0)20 7220 0500
Tim Redfern - ECM
Michael Johnson/Tamar Cranford-Smith - Sales
Gracechurch Group (Financial PR)
Harry Chathli/Claire Norbury/Henry Gamble +44 (0)20 4582 3500
Kromek Group plc
Kromek Group plc is a leading developer of radiation detection and
bio-detection technology solutions for the advanced imaging and CBRN detection
segments. Headquartered in County Durham, UK, Kromek has manufacturing
operations in the UK and US, delivering on the vision of enhancing the quality
of life through innovative detection technology solutions.
The advanced imaging segment comprises the medical (including CT and SPECT),
security and industrial markets. Kromek provides its OEM customers with
detector components, based on its core cadmium zinc telluride ("CZT")
platform, to enable better detection of diseases such as cancer and
Alzheimer's, contamination in industrial manufacture and explosives in
aviation settings.
In CBRN detection, the Group provides nuclear radiation detection solutions to
the global homeland defence and security market. Kromek's compact, handheld,
high-performance radiation detectors, based on advanced scintillation and
solid-state readout technology, are primarily used to protect critical
infrastructure, events, personnel and urban environments from the threat of
'dirty bombs'.
The Group is also developing bio-security solutions in the CBRN detection
segment. These consist of fully automated and autonomous systems to detect a
wide range of airborne pathogens.
Kromek is listed on AIM, a market of the London Stock Exchange, under the
trading symbol 'KMK'.
The information contained within this announcement is deemed by the Company to
constitute inside information as stipulated under the Market Abuse Regulation
(EU) No. 596/2014. Upon the publication of this announcement via the
Regulatory Information Service, this inside information is now considered to
be in the public domain.
Operational Review
During the six months to 31 October 2024, the Group continued to deliver on
its agreements in advanced imaging, and in particular the significant
collaboration agreements that were entered into with a blue-chip health
technology solutions provider, a Tier 1 OEM and Analogic, all of which
represent significant additional commercial avenues for Kromek. In the CBRN
detection segment, demand continued to be driven by global geopolitical
insecurity and the consequent need for solutions that help to provide public
safety and security, with the Group receiving a contract from the UK Ministry
of Defence and being selected as a supplier under two UK Government
frameworks. In addition, the Group continued to drive through operational
efficiencies, particularly within the advanced imaging manufacturing process.
Also during the period, the Group undertook discussions to explore the
possibility of entering a strategic partnership with a leading OEM in advanced
imaging. The Directors sought an agreement that would result in a
significantly improved financial position and balance sheet - which had been
identified as the primary constraints to the Group's growth - and thereby
enable the Group to capitalise on the substantial opportunities in the SPECT
and CT markets. This culminated in the signing, post period and as also
announced today, of the agreements with Siemens Healthineers.
Advanced Imaging
Medical Imaging - Agreements with Siemens Healthineers
Kromek has entered into multi-year agreements with Siemens Healthineers to
provide know-how and use rights of IP on a non-exclusive basis, as well as
furnaces and related services, under an Enablement Agreement and Patent
Licensing Agreement, and also for the Group to supply CZT-based detector tiles
(the "Supply Agreement") (together with the Enablement and Patent Licensing
Agreements, the "Agreements") to enable the production of CZT detectors for
SPECT application.
Under the Enablement Agreement, the Group will be paid a total of $37.5m in
cash in four installments over a four-year period, with the first installment
of $25.0m to be received in the current financial year, of which a material
amount will be recognised as revenue. In addition, the Directors believe the
Supply Agreement will make a material contribution to advanced imaging revenue
from the second year of the agreement onwards.
Kromek will transfer title of 15 of its furnaces (the "Transfer Furnaces") for
the production of CZT, which are currently sited in the Group's UK facility,
to Siemens Healthineers. The Group will enable the physical relocation of the
Transfer Furnaces to a Siemens Healthineers facility, which is expected to
occur at the end of the four-year period of the Enablement Agreement. Prior to
the relocation, the Group will use the Transfer Furnaces to deliver the
CZT-based detector tiles under the Supply Agreement.
Over a four-year period, commencing immediately, the Group will provide
Siemens Healthineers with its know-how and use rights of IP regarding the
production of CZT-based detector tiles for SPECT applications and services
required to enable such production. Kromek has licensed in perpetuity its
patents relevant for producing CZT-based detectors for SPECT applications on a
non-exclusive basis. Kromek retains ownership of the patents. Under the terms
of the Agreements, the Group is entitled to continue to exercise all its
know-how and IP and to serve the global SPECT market for CZT-based detectors.
Kromek is set to supply its CZT-based detector tiles to Siemens Healthineers
for the duration of the Enablement Agreement, which may be extended for an
additional year at Siemens Healthineers' discretion.
Medical Imaging - H1 2025 Operational Review
During the period to 31 October 2024, Kromek continued to receive orders in
its regular repeat business, deliver under its supply agreements and progress
its development programmes. In particular, work continued under its landmark
collaboration agreements that were signed in the 2024 and 2023 financial
years. There has been significant technical progress in recent months, which
has enabled Kromek to transition the CZT detector development programme for
photon counting CT ("PCCT") applications to an early commercialisation stage.
Collaborations with leading OEMs in the medical and industrial imaging
segments are now progressing to early stage validation and adoption of this
device capability. Whilst device and production optimisation will continue for
the near future, the Group is rapidly enabling the CT segment with the
detector device capability required for the platform conversion to PCCT
imaging systems.
Through multiple government-funded programmes, Kromek has developed its gamma
imaging detection technologies to make significant breakthroughs in image
quality. By incorporating advancements in detector hardware, machine learning
and algorithms, new opportunities for gamma imaging at low doses are
developing. The Group's technologies, which are protected by a suite of patent
applications and trade secrets, deliver what the Directors believe to be
unprecedented image results, which have been presented at leading industry
gatherings, including the annual meeting of the Radiological Society of North
America in December 2024.
The ultra-low dose molecular breast imaging programme funded by Innovate UK,
which is being undertaken in collaboration with Newcastle Upon Tyne Hospital
and University College London, continues to deliver on its objectives. This
technology is aimed at paving the way for a new screening and diagnostic
capability for the detection of cancer for women with dense breast tissue for
whom mammography is not effective. The first prototype system has been
installed in the Nuclear Medicine department at a hospital in Newcastle, and
it is undergoing evaluation to demonstrate the benefits of the new Kromek
technology. The design and build of the full-size system suitable for clinical
testing and clinical trials is on track to be completed in the second half of
calendar year 2025.
Security & Industrial Screening
In security and industrial screening, Kromek continued to deliver under its
existing component supply agreements and development programmes. This includes
the detector solutions being developed under its collaboration agreement with
Analogic, noted above, which will be for security applications as well as
medical.
CBRN Detection
Nuclear Security
During the period, the Group secured milestone agreements with UK Government
entities for its nuclear security products, receiving a contract from the UK
Ministry of Defence, which is a significant strategic customer for Kromek, and
being selected as a supplier under two UK Government frameworks.
The Group was awarded, after a competitive tender process, a contract worth
£2.0m from the Ministry of Defence for the supply of the D5 RIID and Alpha
Beta probe attachment, which is to be delivered during the Group's current
financial year. The Group's D3M was named as the Personal Radiation Detector
under the UK Government Resilience Framework, scheduled to be in place for
four years. The D3M is the only detector pre-approved for purchase under the
framework. During the period, the Group received its first order under this
framework, which was from Merseyside Fire & Rescue Service, which will
use the D3M for its Detection, Identification and Monitoring vehicles. In
addition, the Group was selected as a supplier under the UK Government's
Radiological Nuclear Detection Framework for the procurement of radiological
nuclear detection equipment and supporting services for the Home Office.
Kromek is pre-qualified to be selected for orders in three categories,
covering the supply of handheld, wearable and large volume static radiation
detectors, which over the four-year term of the framework have a combined
maximum procurement value of £84m.
While the initiation of procurement and the receipt of orders under these
programmes has been later than the Group initially anticipated, Kromek is
pleased to confirm that it has commenced since period end.
Civil Nuclear
Business in the civil nuclear market continued as expected, with regular sales
through Kromek's distributor network and direct to customer. In particular,
Kromek's new Raymon product, which provides spectroscopic detection and
identification capability in a wide range of civil nuclear applications and
that was launched in the prior year, has been well received within the Group's
distribution network.
Biological-Threat Detection
During the period, Kromek continued to progress the development of
biological-threat detection systems under multi-year contracts with a UK
Government department and the US Department of Homeland Security. Under the
contract with a UK Government department, the Group will develop and supply
a biological-threat detection system. The contract with the US Department of
Homeland Security is for the development of technologies focusing on an agent
agnostic bio-detection system. These programmes are continuing to deliver
milestones and meet customer expectations. The Group is also pursuing several
other customer engagements in this area.
Manufacturing and IP
Kromek continued to execute on its programmes for the expansion of production
capacity and increased process automation, with particular progress being made
at its CZT manufacturing facility in the US. These programmes are resulting in
greater manufacturing productivity and cost efficiencies. The Group has
dedicated teams that are focussed on targeted improvements for every step in
the manufacturing process, which directly contributes to yield and cost
improvement.
During the period, Kromek applied for three new patents.
Financial Review
Revenue for the six-month period ended 31 October 2024 was £3.7m (H1 2024:
£7.1m) due to a decrease in product revenue. The split between product sales
and revenue from R&D contracts is as follows:
H1 2025 H1 2024
(Unaudited) (U
na
ud
it
ed
)
£'000 £'000
Product £2,348 64% £5,910 83%
R&D £1,330 36% £1,185 17%
Total £3,678 100% £7,095 100%
The lower product revenue reflects a reduction in both advanced imaging and
CBRN detection. In advanced imaging, the strategic discussions the Group was
having with OEMs resulted in some customers pausing their engagement with the
Group due to uncertainty over the outcome of the process. With the agreement
with Siemens Healthineers now finalised, and on a non-exclusive basis, the
Group is able to resume its work with other OEMs. In CBRN detection, the
Group's key priority was securing the contracts with the UK Government, which
it did so successfully, as it represents a significant strategic customer. As
noted above, while the initiation of procurement and the receipt of orders
under these programmes has been later than the Group initially anticipated,
Kromek is pleased to confirm that it has commenced since period end.
Gross margin improved to 56.9% compared with 54.2% for H1 2024. The increase
is largely due to the mix of product revenue in the period - including the
increased contribution to revenue from R&D contracts - and the continued
easing of global supply constraints resulting in cost savings on component
parts compared with the prior year. Gross margin also continues to benefit
from increasing efficiencies in advanced imaging as the Group delivers on its
manufacturing productivity programmes. Gross profit decreased to £2.1m (H1
2024: £3.8m) as a result of the lower revenue.
Administrative expenses and distribution costs were £6.9m (H1 2024: £6.4m).
The increase is primarily due to increased amortisation, as well as a
reduction in the capitalisation of development costs. The Group's focus
remains on tight cost control.
As a result of the increased operating costs and lower revenue, operating loss
was £4.8m (H1 2024: £2.3m loss). After net finance costs of £1.0m (H1 2024:
£0.9m), loss before tax was £5.7m (H1 2024: £3.5m loss).
The adjusted EBITDA loss for the period was £2.3m (H1 2024: £0.11m loss).
Adjusted EBITDA is calculated as follows:
H1 2025 H1 2024 FY 2024
(Unaudited) (Unaudited) (Audited)
£'000 £'000 £'000
Loss before tax (5,742) (3,492) (3,455)
EBITDA adjustments:
Net interest 954 913 1,834
Depreciation 808 883 1,751
Amortisation 1,475 1,357 2,758
Share-based payments 245 180 490
Change in fair value of derivative - (202) (517)
Exceptional items - 246 246
Adjusted EBITDA* (2,260) (115) 3,107
*Adjusted EBITDA is defined as earnings before interest, taxation,
depreciation, amortisation, exceptional items, the change in fair value of
financial derivatives and share-based payments. 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. The exceptional item in the comparative information relates to
costs associated with the refinancing of the debt facility.
The Group invested £2.2m in product development in the six-month period (H1
2024: £2.6m) that was capitalised on the balance sheet, which largely
reflects:
· the continuing investment in cost reduction and productivity
improvements in CZT crystal growth and detector manufacturing in advanced
imaging; and
· the development of automated and autonomous biological-threat
detection technology to detect airborne pathogens for the purposes of national
security and protecting public health.
This expenditure was capitalised in accordance with IAS38 to the extent that
it related to projects in the later stage (development phase) of the project
life cycle.
Cash and cash equivalents at 31 October 2024 were £0.6m (30 April 2024:
£0.5m). The £0.1m increase in cash over the six-month period was due to the
combination of the following cash inflows and outflows:
· £(2.2)m - operating loss for the period
· £2.1m - net working capital movements
· £(2.3)m - investment in development costs and capital expenditure
· £3m - net new funds raised less debt and interest payments
· £(0.5)m - effect of foreign exchange rate changes
At 31 October 2024, total borrowings included in current liabilities were
£11.8m (30 April 2024: £7.6m), of which £10.4m related to the Group's
principal borrowing facility with Polymer N2 Limited, an existing and
significant shareholder in the Company.
Outlook
As Kromek stated at the time of the full year results in October last year, it
was actively engaged with OEMs to drive delivery of products and monetisation
of the valuable intellectual property the Group has developed in the advanced
imaging area. The Group was confident that these initiatives would benefit it
and drive a significant increase in both revenue and cash generation in the
second half of FY 2025. Today's announcement is an exciting moment as both
Siemens Healthineers and Kromek are aligned in their vision to enhance
healthcare through technological advancements.
The initial $25.0m payment from Siemens Healthineers will enable the Group to
report significant revenue growth for the current financial year, profit
significantly ahead of market expectations and positive cash flow.
Looking further ahead, the Siemens Healthineers agreements, progress with
other customer contracts in advanced imaging as well as delivery of products
and services with the contracts won in CBRN detection last year with the UK
Government and other government agencies lay the groundwork for further growth
in revenues and sustainable profitability. The Group expects to deliver
further revenue growth in FY 2026 and remain profitable. As a result, the
Board is confident in the Group's future prospects.
Consolidated condensed income statement
For the six months ended 31 October 2024
Six months ended 31 October Six months Year
2024 ended 31 October ended
£'000 2023 30 April 2024
£'000 £'000
(Unaudited) (Unaudited) (Audited)
Note
Continuing operations
Revenue 4 3,676 7,095 19,403
Cost of sales (1,583) (3,246) (8,693)
Gross profit 2,093 3,849 10,710
Distribution costs (219) (216) (456)
Administrative expenses (including operating expenses) (6,662) (6,168) (12,146)
Change in fair value of derivative - 202 517
Operating loss (4,788) (2,333) (1,375)
Exceptional items 5 - (246) (246)
Operating results (post exceptional items) (4,788) (2,579) (1,621)
Finance income 2 32 40
Finance costs (956) (945) (1,874)
Loss before tax (5,742) (3,492) (3,455)
Tax 6 50 425 162
Loss from continuing operations (5,692) (3,067) (3,293)
Loss per share
8 (0.9) (0.5) (0.6)
-basic (p)
Consolidated condensed statement of comprehensive income
For the six months ended 31 October 2024
Six months ended 31 October Six months Year
2024 ended ended
£'000 31 October 30 April 2024
(Unaudited) 2023 £'000
£'000 (Audited)
(Unaudited)
Loss for the period (5,692) (3,067) (3,293)
Items that may be recycled to the income statement
Exchange (losses)/gains on translation of foreign operations (1,011) 808 8
Total comprehensive loss for the period (6,703) (2,259) (3,285)
Consolidated condensed statement of financial position
31 October 31 October 30 April
2024 2023 2024
£'000 £'000 £'000
Note (Unaudited) (Unaudited) (Audited)
Non-current assets
Goodwill 1,275 1,275 1,275
Other intangible assets 33,076 32,361 32,726
Property, plant and equipment 9 8,036 9,368 8,675
Right-of-use asset 3,085 3,721 3,400
45,472 46,725 46,076
Current assets
Inventories 11,051 11,411 10,295
Trade and other receivables 9,321 6,586 12,983
Current tax assets 422 300 372
Cash and bank balances 577 3,723 466
21,371 22,020 24,116
Total assets 66,843 68,745 70,192
Current liabilities
Trade and other payables (6,738) (6,750) (7,475)
Lease obligation (436) (448) (452)
Borrowings 11 (11,773) (3,167) (7,573)
Derivative financial instruments 12 - (309) -
(18,947) (10,674) (15,500)
Net current assets 2,424 11,346 8,616
Non-current liabilities
Deferred income (869) (970) (920)
Lease obligation (3,436) (4,051) (3,736)
Borrowings 11 (503) (5,737) (526)
Deferred tax liability (156) - (156)
(4,964) (10,758) (5,338)
Total liabilities (23,911) (21,432) (20,838)
Net assets 42,932 47,313 49,354
As at 31 October 2024
Equity
Share capital 13 6,415 6,003 6,410
Share premium account 81,511 79,138 81,480
Merger reserve 21,853 21,853 21,853
Translation reserve 894 2,705 1,905
Accumulated losses (67,741) (62,386) (62,294)
Total equity 42,932 47,313 49,354
Consolidated condensed statement of changes in equity
For the six months ended 31 October 2024
Equity attributable to equity holders of the Group
Share
Share Capital Premium Merger Reserve Translation Accumulated Losses
£'000 Account £'000 Reserve £'000 Total
£'000 £'000 £'000
Balance at 1 May 2024 6,410 81,480 21,853 1,905 (62,294) 49,354
Loss for the period - - - - (5,692) (5,692)
Exchange difference on translation of foreign operations
- - - (1,011) - (1,011)
Total comprehensive loss for the period - - - (1,011) (5,692) (6,703)
Transactions with shareholders recorded in equity
Conversion of convertible loan notes 5 31 - - - 36
Credit to equity for equity-settled share-based payments
- - - - 245 245
Balance at 31 October 2024 6,415 81,511 21,853 894 (67,741) 42,932
Balance at 1 May 2023 4,319 72,943 21,853 1,897 (59,488) 41,524
Loss for the period
- - - - (3,067) (3,067)
Exchange difference on translation of
foreign operations - - - 808 - 808
Total comprehensive loss for the period - - - 808 (3,067) (2,259)
Transactions with shareholders recorded in equity
Issue of share capital 1,684 - - - - 1,684
Premium on shares issued less expenses - 6,195 - - - 6,195
Conversion of convertible loan notes - - - - (11) (11)
Credit to equity for equity-settled share-based payments
- - - - 180 180
Balance at 31 October 2023 6,003 79,138 21,853 2,705 (62,386) 47,313
Balance at 1 May 2023 4,319 72,943 21,853 1,897 (59,488) 41,524
Loss for the period - - - - (3,293) (3,293)
Exchange difference on translation of foreign operations
- - - 8 - 8
Total comprehensive gain/(loss) for the year
- - - 8 (3,293) (3,285)
Issue of shares less issuance costs 1,606 5,873 - - - 7,479
Conversion of convertible loan notes 485 2,664 - - (11) 3,138
Credit to equity for equity-settled share-based payments - - - - 490 490
Deferred tax movement - - - - 8 8
Balance at 30 April 2024 6,410 81,480 21,853 1,905 (62,294) 49,354
Consolidated condensed statement of cash flows
For the six months ended 31 October 2024
Note Six months ended 31 October Six months Year
2024 ended 31 October ended 30 April
£'000 2023 2024
£'000 £'000
(Unaudited) (Unaudited) (Audited)
Net cash used in operating activities 10 (64) (1,607) (2,802)
Investing activities
Interest received 2 32 40
Purchases of property, plant and equipment (58) (57) (146)
Purchases of patents and trademarks (57) (122) (252)
Capitalisation of research and development costs (2,177) (2,625) (4,644)
Net cash used in investing activities (2,290) (2,772) (5,002)
Financing activities
New borrowings 3,400 5,900 7,000
Interest paid (164) (820) (699)
Payment of loan and borrowings (35) (5,712) (5,822)
Finance lease repayments (221) (340) (678)
Financing costs - - (102)
Net proceeds on issue of shares - 7,879 7,479
Net cash generated from financing activities 2,980 6,907 7,178
Net increase / (decrease) in cash and cash equivalents 626 2,528 (626)
Cash and cash equivalents at beginning of period 466 1,097 1,097
Effect of foreign exchange rate changes (515) 98 (5)
Cash and cash equivalents at end of period 577 3,723 466
Notes to the unaudited interim statements
For the six months ended 31 October 2024
1. Basis of preparation
This interim financial report does not constitute statutory accounts as
defined in section 434 of the Companies Act 2006. The auditors reported on the
Kromek Group plc financial statements for the year ended 30 April 2024, their
report was unqualified and did not contain a statement under section 498(2) or
(3) of the Companies Act 2006. The Group's consolidated annual financial
statements for the year ended 30 April 2024 have been filed with the Registrar
of Companies and are available on the Group's website: www.kromek.com
(http://www.kromek.com) .
2. Interim report
This interim financial report will be available from the Group's website at
www.kromek.com (http://www.kromek.com) .
3. Going concern
The Directors have a reasonable expectation that the going concern basis of
accounting remains appropriate and that the Group has adequate resources and
facilities to continue in operation for the next 12 months based on its cash
flow forecasts prepared. Accordingly, the Group's unaudited interim statements
for the six months ended 31 October 2024 have been prepared on a going concern
basis which contemplates the realisation of assets and the settlement of
liabilities and commitments in the normal course of operations.
4. Business and geographical segments
Products and services from which reportable segments derive their revenues
For management purposes, the Group is organised into two business units (UK
and USA) and it is on these operating segments that the Group is providing
disclosure.
The chief operating decision maker is the Board of Directors who assess
performance of the segments using the following key performance indicators;
revenue, gross profit, operating profit and EBITDA. The amounts provided to
the Board with respect to assets and liabilities are measured in a way
consistent with the Financial Statements.
The turnover, profit on ordinary activities and net assets of the Group are
attributable to one business segment, i.e. the development of digital colour
x-ray imaging enabling direct materials identification, as well as developing
a number of detection products in the industrial market. Whilst results are
not measured by end market, the Group currently categorises its customers as
belonging to the advanced imaging and CBRN detection markets.
A geographical analysis of the Group's revenue by destination is as follows:
Six months ended 31 October Six months ended 31 October Year
2024 2023 ended
£'000 £'000 30 April 2024
£'000
(Unaudited) (Unaudited) (Audited)
United Kingdom 1,323 1,305 3,023
North America 1,396 1,745 5,937
Asia and Middle East 141 2,255 1,374
Europe 796 1,698 8,950
Other 20 92 119
Total revenue 3,676 7,095 19,403
A geographical analysis of the Group's revenue by origin is as follows:
Six months ended 31 October 2024
UK USA Operations Total for Group
Operations £'000 £'000
£'000
Revenue from sales 3,038 3,358 6,396
Revenue by segment:
-Sale of goods and services
-Revenue from grants 281 - 281
-Revenue from contract customers 973 - 973
Total sales by segment 4,292 3,358 7,650
Removal of inter-segment sales (2,679) (1,295) (3,974)
Total external sales 1,613 2,063 3,676
Segment result - operating loss (2,347) (2,441) (4,788)
Net interest (848) (106) (954)
Loss before tax (3,195) (2,547) (5,742)
Tax credit 50 - 50
Loss for the period (3,145) (2,547) (5,692)
Other information
Property, plant and equipment additions 33 25 58
Depreciation of property, plant and equipment 464 348 812
Intangible asset additions 1,420 814 2,234
Amortisation of intangible assets 782 693 1,475
Balance Sheet
Total assets 35,891 30,952 66,843
Total liabilities (18,862) (5,049) (23,911)
Inter-segment sales are charged at prevailing market prices.
No impairment losses were recognised in respect of property, plant and
equipment and goodwill.
Six months ended 31 October 2023
UK Operations USA Operations Total for Group
£'000 £'000 £'000
Revenue from sales 5,575 5,650 11,225
Revenue by segment:
-Sale of goods and services
-Revenue from grants 263 - 263
-Revenue from contract customers 1,028 - 1,028
Total sales by segment 6,866 5,650 12,516
Removal of inter-segment sales (3,574) (1,847) (5,421)
Total external sales 3,292 3,803 7,095
Segment result - operating loss (989) (1,344) (2,333)
Net interest (788) (125) (913)
Exceptional items (246) - (246)
Loss before tax (2,023) (1,469) (3,492)
Tax credit 425 - 425
Loss for the period (1,598) (1,469) (3,067)
Other information
Property, plant and equipment additions 18 39 57
Depreciation of property, plant and equipment 496 387 883
Intangible asset additions 1,152 1,595 2,747
Amortisation of intangible assets 704 653 1,357
Balance Sheet
Total assets 37,863 30,882 68,745
Total liabilities (15,708) (5,724) (21,432)
The accounting policies of the reportable segments are the same as the Group's
accounting policies. Segment profit or loss represents the profit or loss
earned by each segment without allocation of the share of profits or losses of
associates, central administration costs including Directors' salaries,
investment revenue and finance costs, and income tax expense. This is the
measure reported to the Group's Chief Executive for the purpose of resource
allocation and assessment of segment performance.
5. Exceptional Items
The Group has recognised £nil exceptional items in the six months to 31
October 2024 (six months ended 31 October 2023: £246k).
6. Tax
The Group has recognised R&D tax credits of £50k for the six months ended
31 October 2024 (six months ended 31 October 2023: £425k).
7. Dividends
The Directors do not recommend the payment of a dividend (six months ended 31
October 2023: £nil).
8. Losses per share
The calculation of the basic and diluted loss per share is based on the
following data:
Losses
Six months ended 31 October Six months Year
2024 ended 31 October ended
£'000 2023 30 April 2024
£'000 £'000
(Unaudited) (Unaudited) (Audited)
Losses for the purposes of basic loss per share being net loss attributable to (3,067) (3,293)
owners of the Group
(5,692)
Six months Year
Six months ended 31 October ended 31 October ended
2024 2023 30 April 2024
'000 '000 '000
(Unaudited) (Unaudited) (Audited)
Number of shares
Weighted average number of ordinary shares for the purposes of basic loss per 641,431 573,626 595,404
share
Effect of dilutive potential ordinary shares:
Share options and warrants 1,059 640 1,019
Weighted average number of ordinary shares for the purposes of diluted loss 642,490 574,266 596,423
per share
Basic (p) (0.9) (0.5) (0.6)
Basic earnings per share is calculated by dividing the loss attributable to
shareholders by the weighted average number of ordinary shares in issue during
the year. IAS 33 requires presentation of diluted EPS when a company could be
called upon to issue shares that would decrease earnings per share or increase
the loss per share. For a loss-making company with outstanding share options,
net loss per share would be decreased by the exercise of options. Therefore,
the anti-dilutive potential ordinary shares are disregarded in the calculation
of diluted EPS.
9. Property, plant and equipment
During the six months ended 31 October 2024, the Group acquired property,
plant and equipment with a cost of £58k (six months ended 31 October 2023:
£57k).
10. Notes to the cash flow statement
Six months ended 31 October Six months Year
2024 ended 31 October ended
£'000 2023 30 April 2024
£'000 £'000
(Unaudited) (Unaudited) (Audited)
(5,692) (3,067) (3,293)
Loss for the period
Adjustments for:
Finance income (2) (32) (40)
Finance costs 956 945 1,874
Change in fair value of derivative - (202) (203)
Income tax credit (50) (425) (322)
Depreciation of property, plant and equipment 812 883 1,751
Amortisation of intangible assets 1,475 1,357 2,758
Disposal of fixed assets - - 35
Share-based payment expense 245 180 490
Other non-cash movements 74 - -
Operating cash flows before movements in working capital (2,182) (361) 3,050
(756) (517) 599
(Increase) / decrease in inventories
Decrease / (increase) in receivables 3,662 (1,057) (7,454)
Decrease in payables and deferred income (788) (737) (62)
Cash used in operations (64) (2,672) (3,867)
Income taxes received - 1,065 1,065
Net cash used in operating activities (64) (1,607) (2,802)
11. Borrowings
Six months ended 31 October Six months Year
2024 ended 31 October ended
£'000 2023 30 April 2024
£'000 £'000
(Unaudited) (Unaudited) (Audited)
Secured borrowing at amortised cost
Term loan facility 6,103 5,333 5,767
Other borrowings 6,173 1,086 2,298
Convertible loan notes (see note 12) - 2,485 34
Total borrowings 12,276 8,904 8,099
Amount due for settlement within 12 months 11,773 3,167 7,573
Amount due for settlement after 12 months 503 5,737 526
During the prior period, the Group completed a refinancing of its £5.0m
revolving credit facility with HSBC with the signing of a new £5.5m secured
term loan. The new term loan facility was provided by Polymer N2 Limited, an
existing and significant shareholder in the Company. The facility has a
repayment date for the principal sum of 27 March 2025, with an option to
extend for a further 12 months. It carries a fixed interest rate of 9.5%,
which is payable quarterly, and Kromek has the option to pay the interest
through the issue of new ordinary shares of 1p each in the Company at the
trailing 10-day volume weighted average price of the Company's ordinary shares
on the date that payment falls due.
Other borrowings comprise:
· In 2020 and 2021 the Group's US operations were eligible to apply
for Covid-related Economic Injury Disaster Loans. A loan of £0.1m was
approved and secured in June 2020 and a further loan of £0.4m was approved
and secured in August 2021. These loans attract interest at a rate of 3.75%
per annum and the maturity date is 30 years from the date of the loan note.
· Short-term loans totalling £1.5m were secured in FY24 and a
further £3.4m was secured in H1 FY25 to date to aid with working capital
requirements. The additional loan carries the same terms as the term loan
facility described above.
12. Convertible Loan Notes
During the period, the balance of the loan note liability, as well as the loan
accrued interest, was converted into equity on 22 May 2024.
Embedded derivative Convertible loan note Total
£'000 £'000 £'000
Brought forward at 30 April 2024 - 34 34
Extinguish on conversion - (34) (34)
Balance at 31 October 2024 - - -
13. Share capital
During the period, no ordinary shares (six months ended 31 October 2023: nil)
were issued to satisfy the
exercise of employee share options. In May 2024, one convertible loan holder
converted 100% of their holding, as well as accrued interest, into equity.
This resulted in the issue of 527,092 new ordinary shares.
14. Events after the balance sheet date
The Group has received further financing of £1m from Polymer N2 Ltd since
year-end. The further financing was provided on the same terms as the initial
Polymer N2 Ltd loan described in Note 11.
Post period-end, the Group has entered into a multi-year agreement with
Siemens Medical Solutions USA, Inc. to provide know-how and IP on a
non-exclusive basis, and furnaces and related services, under an Enablement
Agreement and Patent Licensing Agreement, and also for the Group to supply
CZT-based detectors under a supply agreement for SPECT applications. Under the
Enablement Agreement, the Group will be paid a total of $37.5m in cash in four
instalments over a four-year period.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END IR UKAKRVUUAUARRecent news on Kromek
See all newsREG - Kromek Group PLC - $25m received under Siemens Healthineers agreement
AnnouncementREG - Kromek Group PLC - Holding(s) in Company
AnnouncementREG - Kromek Group PLC - Holding(s) in Company
AnnouncementREG - Kromek Group PLC - Interim Results
AnnouncementREG - Kromek Group PLC - Kromek Signs Agreements with Siemens Healthineers
Announcement