REG - Kromek Group PLC - Kromek Signs Agreements with Siemens Healthineers

KromekAnnouncement

30/01/2025 07:00

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RNS Number : 1926V  Kromek Group PLC  30 January 2025

30 January 2025

 

Kromek Group plc

("Kromek" or the "Company" or the "Group")

 

Kromek Signs Agreements with Siemens Healthineers

Non-exclusive IP licensing and CZT production enablement agreements to
generate $37.5m

Kromek expected to become profitable for FY 2025

 

Kromek Group plc (AIM: KMK), a leading developer of radiation and
bio-detection technology solutions for the advanced imaging and CBRN detection
segments, is pleased to announce that it has entered into multi-year
agreements with Siemens Medical Solutions USA, Inc. ("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 (single-photon emission computed tomography).

 

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, a material amount of
which 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.

 

Summary

·    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

·    The Group has licensed to Siemens Healthineers its patents related to
CZT production for SPECT applications

·    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

·    Kromek is expected to supply Siemens Healthineers with CZT-based
detector tiles over the four-year period under the Supply Agreement

·   The Group expects to report revenue growth for the current financial
year and profit significantly ahead of market expectations, with a much
strengthened balance sheet

 

Enablement and Patent Licensing Agreements

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 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.

 

Supply Agreement

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. This multi-year agreement
is projected to significantly contribute to revenue, complementing the $37.5m
to be received under the Enablement Agreement for the Advanced Imaging
Division, throughout the agreement period.

 

Under the terms of the Supply Agreement, Kromek will manufacture the CZT-based
detector tiles and will be responsible for providing all necessary capital
equipment, engineering, manufacturing technology, as well as the equipment and
facilities required to fulfil the agreement.

 

Benefit to Kromek

Kromek plans to utilise the initial $25.0m installment to support delivery
under the Enablement Agreement, reduce its debt and significantly strengthen
its balance sheet. As a result of the Agreements and recognising a material
amount of the first installment under the Enablement Agreement as revenue in
FY 2025, the Group expects to become profitable in the current year, with
profit significantly ahead of market expectations. The Group also expects to
achieve further revenue growth beyond FY 2025 while delivering sustainable
profits.

 

Additionally, the Enablement Agreement does not restrict Kromek from seeking
other potential collaborations, including similar ventures with other OEMs in
advanced imaging markets. As the largest independent producer and supplier of
CZT, Kromek intends to continue producing CZT for the SPECT and CT (computed
tomography) markets, utilising the remaining 159 furnaces it owns.

 

Arnab Basu, Chief Executive Officer of Kromek, said: "We are delighted to have
entered into these agreements with Siemens Healthineers, a move that
underscores Kromek's position as the largest independent producer of CZT and
CZT-based detectors. We both have an ongoing commitment to innovation that is
critical for developing superior detector solutions that play a vital role in
the early detection of serious illnesses. Both Siemens Healthineers and Kromek
are aligned in our vision to enhance healthcare through technological
advancements, and we eagerly anticipate collaborating to bring this vision to
fruition.

"The initial $25.0m payment 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 Kromek to report FY 2025 profit ahead of market
expectations and lay the groundwork for further growth in revenues and
sustainable profitability beyond that period. These agreements also enable
Kromek to continue its leadership in CZT production for SPECT and CT markets,
as we maintain the flexibility to explore further collaborations with other
OEMs in advanced imaging."

 

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

 

This announcement contains inside information for the purposes of Article 7 of
Regulation (EU) 596/2014 as it forms part of UK domestic law by virtue of the
European Union (Withdrawal) Act 2018 ("MAR"), and is disclosed in accordance
with the Company's obligations under Article 17 of MAR. The person responsible
for making this announcement on behalf of the Company is Paul Farquhar, Chief
Financial Officer.

 

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'.

 

 

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