REG - Kromek Group PLC - Final Results
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RNS Number : 4191Z Kromek Group PLC 16 September 2025
16 September 2025
Kromek Group plc
("Kromek" or the "Company" or the "Group")
Final Results
Profit before tax significantly ahead of market expectations
Kromek (AIM: KMK), a leading developer of radiation and bio-detection
technology solutions for the advanced imaging and CBRN detection segments,
announces its final results for the year ended 30 April 2025.
Financial Highlights
· Revenue increased 37% to £26.5m (2024: £19.4m)
o Advanced Imaging revenue of £20.3m (2024: £9.0m)
o CBRN Detection revenue of £6.2m (2024: £10.4m)
· Gross margin improved to 81% (2024: 55%)
· Adjusted EBITDA increased to £10.3m (2024: £3.1m)*
· Profit before tax was significantly ahead of market expectations at
£3.1m (2024: £3.5m loss), which is positive for the first time in the
history of Kromek
· £5.5m term loan facility and £5.9m short-term loan facilities were
repaid in February 2025
· Cash and cash equivalents at 30 April 2025 were £1.7m (30 April
2024: £0.5m) with $5m received post year end and an undrawn credit facility
of £6.0m plus a £0.5m asset finance facility to ensure there is sufficient
capital to drive further growth
*A reconciliation of adjusted EBITDA can be found in the Financial Review
Operational Highlights
Advanced Imaging
· Substantial growth as a result of landmark agreements signed 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
o Received the initial payment of $25.0m during the year, out of a total of
$37.5m, and a further $5.0m post year end
· Sustained delivery under collaboration contracts and other component
supply agreements, with customers including recognised Tier 1 OEMs, Analogic
Corporation and Spectrum Dynamics
· Continued to make progress under the ultra-low dose molecular breast
imaging programme funded by Innovate UK
CBRN Detection
Nuclear Security
· Demand in H1 was subdued as a result of the elections in the UK and
US and consequent impact on government spending, but a strong recovery in H2
· Awarded a contract worth £2.0m from the UK Ministry of Defence
("MoD") for the supply of the D5 RIID along with 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 The UK Government's Resilience Framework, with a first order received
from Merseyside Fire & Rescue Service during the year
o The UK Government's Radiological Nuclear Detection Framework, with a
first order received, post year end, worth £1.7m
· Further Nuclear Security orders received post year end amounting to
c. £2.9m, with the vast majority to be delivered in the current financial
year, from customers across the UK and Europe, the US, Japan and Canada
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
· Received a contract, post year end, from the MoD's Defence Science
and Technology Laboratory, worth £250k, for the development of novel methods
of enhancing the detection of biological agents and incidents
Manufacturing and IP
· Continued to execute on programmes for the expansion of production
capacity and process automation, resulting in greater manufacturing
productivity and cost efficiency
· Applied for four new patents and had one patent granted, with the
total number of patents held being in excess of 180
Dr Arnab Basu, CEO of Kromek, said: "This year has been pivotal for Kromek,
marked by our maiden profit, which exceeded market expectations, and a
significant reduction in debt. These achievements were driven by a landmark
agreement with Siemens Healthineers, showcasing the strength of our Advanced
Imaging division. While the CBRN Detection division had a slower start, the
second half saw a sharp acceleration in momentum due to contract awards under
UK Government frameworks, US federal contracts and a healthy international
sales pipeline.
"Looking ahead to FY 2026, we expect to deliver further revenue growth and
profitability, in line with market expectations. The CBRN Detection division
is on track for a strong year-on-year revenue increase, while Advanced Imaging
is set to deliver growth on a like-for-like basis. With a strengthened balance
sheet and strong operational momentum, we are well-positioned to capitalise on
growth opportunities across both divisions and drive sustained, long-term
profitable growth."
Enquiries
Kromek Group plc
Arnab Basu, CEO +44 (0)1740 626 060
Claire Burgess, 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 - Sales
Gracechurch Group (Financial PR)
Harry Chathli/Claire Norbury/Henry Gamble +44 (0)20 4582 3500
Investor Webinar
Arnab Basu, CEO, and Claire Burgess, CFO, will be hosting an online Q&A
session for investors at 5.00pm on Monday 22 September 2025 on the Investor
Meet Company platform. A recording of the results presentation will be
uploaded to the Investor Meet Company platform ahead of the webinar by midday
on Friday 19 September 2025.
Questions can be submitted pre-webinar via the Investor Meet Company platform
or at any time during the live webinar. Investors can sign up to Investor Meet
Company for free and register to attend the Kromek Q&A session via:
https://www.investormeetcompany.com/kromek-group-plc/register
(https://www.investormeetcompany.com/kromek-group-plc/register)
Operational Review
The year ended 30 April 2025 was transformational for Kromek, marked by a
substantial increase in revenue, the achievement of profitability for the
first time and a significantly improved financial position through debt
reduction.
This progress was driven by a landmark agreement with Siemens Healthineers in
the Advanced Imaging division. The Group received an initial payment of $25.0m
during the year, a material portion of which has been recognised as revenue as
outlined below. The Group also made major strategic strides in its CBRN
Detection division, including selection under two new four-year UK Government
frameworks focused on enhancing national public safety and security
capabilities.
As Kromek's operations continue to grow, the Group is evolving its reporting
to reflect the two core divisions: Advanced Imaging and CBRN Detection. For
the first time, Kromek is pleased to provide a P&L breakdown for FY 2025
by division to offer greater clarity on business performance and value
creation paths. While FY 2025 revenue was weighted towards Advanced Imaging
due to the Siemens Healthineers agreement, the Group expects both divisions to
deliver significant future growth.
Advanced Imaging
Revenue in the Advanced Imaging division more than doubled to £20.3m (2024:
£9.0m), reflecting the transformational impact of the Group's agreement with
Siemens Healthineers. While discussions leading to this agreement temporarily
affected regular sales activity, Kromek is now seeing renewed commercial
momentum returning across this division, including ramping up deliveries under
the contract with Spectrum Dynamics and demonstrating commercial traction
beyond the Siemens Healthineers agreement.
The market is entering a structural shift from conventional scintillator
technology to CZT, driven by the demand for higher-resolution, spectral
imaging - particularly in medical diagnostics. This evolution supports better
clinical outcomes and lower system-level costs, making CZT a key enabler of
next-generation imaging platforms.
Kromek is uniquely positioned as the only independent commercial-scale
producer of CZT globally. With rising demand and strategic partnerships in
place, this gives the Group a strong competitive advantage and clear leverage
in a growing market with high barriers to entry.
Medical Imaging
The standout development in Kromek's Medical Imaging business during the year
was the signing of multi-year agreements with Siemens Healthineers, announced
on 30 January 2025. These agreements mark a major commercial milestone for
Kromek, encompassing a Patent Licensing Agreement and an Enablement Agreement
- providing non-exclusive rights to the Group's intellectual property,
know-how, furnaces and support services - as well as a multi-year Supply
Agreement for CZT-based detector tiles.
The Enablement Agreement is valued at $37.5m over four years, with $25.0m
received during the year and an additional $5.0m since year end. These
agreements validate both the robustness of the Group's CZT technology and
growing market demand. Importantly, they are non-exclusive and focused solely
on the SPECT segment, allowing the Group to pursue further opportunities with
other OEMs - particularly in the much larger computed tomography ("CT")
imaging market.
The Group continues to make good progress in the CT market, especially in
photon-counting CT ("PCCT"), which is an advanced form of CT. The Group
advanced key collaboration programmes initiated in prior years with a
blue-chip Tier 1 health technology OEM and three other companies in this
segment. Technical progress in these projects enabled the transition of the
Group's PCCT detector development into early-stage commercialisation.
Engagements with leading OEMs in both medical and industrial imaging are
progressing toward device validation and initial adoption.
The Group is rapidly enabling the shift to PCCT by supplying the detector
capability essential for next-generation imaging platforms. While device and
production optimisation remains ongoing, the foundational work completed this
year significantly strengthens the Group's position in the CT segment.
Kromek's innovation pipeline also continues to advance. The ultra-low dose
molecular breast imaging programme, supported by Innovate UK and delivered in
partnership with Newcastle Upon Tyne Hospitals, Newcastle University and
University College London, made strong progress. A prototype detector set has
been installed at a hospital in Newcastle and is currently undergoing
evaluation. This technology aims to improve screening and diagnostics for
women with dense breast tissue, where mammography is less effective.
Development of the full-size detector system remains on schedule for
completion by the end of calendar year 2025.
Security & Industrial Screening
In security and industrial screening, the Group continued to deliver under its
existing component supply agreements and development programmes. This
includes the detector solutions being developed under the Group's
collaboration agreement with Analogic Corporation.
CBRN Detection
In the CBRN Detection division, the Group generated revenue of £6.2m (2024:
£10.4m). The reduction reflects the first half of the year being subdued,
primarily as a result of the elections in the UK and the US and the consequent
impact on government spending. In the second half of FY 2025, the CBRN
Detection division demonstrated a clear recovery with revenues in H2 2025
being more than double those of H1 2025, albeit from a low base. This momentum
has continued into FY 2026 as detailed below.
Nuclear Detection
FY 2025 was a strategically important year for the CBRN Detection division,
marked by multiple contract wins and increasing adoption and selection of
Kromek's nuclear security solutions by key government and international
customers.
The Group secured significant milestone agreements with UK Government
entities, including a £2.0m contract from the MoD - a key strategic customer
for Kromek - for the delivery of the Group's D5 RIID and Alpha Beta Probe.
This award followed a competitive tender process and was successfully
delivered within the year.
Kromek's D3M personal radiation detector was officially designated under the
UK Government's Resilience Framework. The first order under this framework
came from Merseyside Fire & Rescue Service, which will deploy the D3M
across its detection, identification and monitoring vehicles - marking an
important step in broadening end-user adoption across UK emergency services.
Additionally, Kromek was selected as a supplier under the UK Government's
Radiological Nuclear Detection Framework. This framework, led by the Home
Office, facilitates the procurement of radiological detection equipment and
services, with a combined potential value of £84.0m over four years. Kromek
is pre-qualified in three key categories: handheld, wearable and large-volume
static detectors. Post period, the Group secured its first order under this
framework - worth £1.7m - for the supply of Kromek's D3S-ID wearable
detector, along with training and maintenance. The majority of revenue from
this order will be recognised in the year to 30 April 2026.
Momentum has continued beyond the year end. The Group has received additional
nuclear security orders totalling approximately £2.9m from customers across
the UK, Europe, the US, Japan and Canada.
These orders are predominantly scheduled for delivery within the current
financial year and reflect growing global demand for Kromek's mission-critical
detection solutions. This, alongside continued delivery on the Group's
pre-existing orders and its strong institutional relationships, positions
Kromek for strong growth in Nuclear Security in the current year.
These wins also underscore the strength of the Group's product portfolio, the
trust placed in its technology by leading government agencies and the
increasing role Kromek plays in supporting global radiological security
infrastructure.
Civil Nuclear
Activity in the civil nuclear market remained steady, with ongoing sales
through Kromek's distributor network and direct channels. Notably, the Raymon
device - launched last year and offering advanced spectroscopic detection and
identification - has been well received by distribution partners. Its
versatility across a broad range of civil nuclear applications is driving
continued interest and supporting Kromek's position in this important market
segment.
Biological-threat Detection
During the year, the Group continued to meet key milestones and deliver
successfully under the Group's multi-year contracts with a UK Government
agency and the US Department of Homeland Security, focused on developing
agent-agnostic biological-threat detection systems. Post period, Kromek
secured a third programme - an 18-month, £0.25m contract from the MoD's
Defence Science and Technology Laboratory, funded via the UK Government's
Defence and Security Accelerator. This project aims to develop novel methods
for enhancing biological agent detection and complements the Group's strategy
of pursuing customer-funded R&D in this critical area.
The projects in Biological-threat Detection continue on budget. As the
technology reaches full maturity by 2027, the Group intends to scale up
production of these platforms, opening up new partnerships and avenues for
commercialisation both in the defence industry and other critical sectors. The
Group believes these contracts offer significant short- and medium-term
opportunities for Kromek.
Manufacturing and Intellectual Property
Kromek made strong progress in driving continuous improvement programmes
across the Group's manufacturing plants. Further enhancements were made in
process automation, with significant advancements at the Group's CZT
manufacturing facility in the US. These initiatives are driving improved
manufacturing productivity and delivering meaningful cost efficiencies,
strengthening the Group's competitive position. Dedicated teams focus on
optimising every stage of the manufacturing process, directly boosting yield
and reducing costs, which will support scalable, profitable growth.
Kromek's commitment to innovation remains robust. During the year, Kromek
filed four new patent applications, and one patent was granted, reinforcing
the Group's technology leadership and protecting critical intellectual
property. The total number of patents held at 30 April 2025 was in excess of
180. This ongoing investment in manufacturing excellence and IP development
underpins Kromek's ability to meet growing market demand.
Financial Review
As outlined above, 2025 was a transformational year for Kromek. Securing the
Enablement Agreement with Siemens Healthineers and receiving the first $25.0m
in cash has significantly strengthened the balance sheet and enabled the
delivery of positive PBT for the first time in the Group's history - and ahead
of market expectations.
Revenue
Revenue increased by 37% year-on-year to £26.5m (2024: £19.4m). This was
driven by the significant Siemens Healthineers agreement, with revenue
recognised in the year relating to the contract being $20.5m (£16.5m). The
remaining revenue will be recognised over the following three years in line
with milestone achievements. The second milestone in the contract was achieved
post year end with a further $5.0m cash being received in July 2025. The Group
anticipates the Enablement Agreement revenue in the year to 30 April 2026 to
be $11.7m. Kromek is progressing towards the third milestone in the contract
and anticipates this being complete within the year to 30 April 2027 when a
further $2.5m payment will be received.
Total Advanced Imaging revenue was £20.3m (2024: £9.0m). On a like-for-like
basis, to exclude the significant contribution from Siemens Healthineers,
revenue in Advanced Imaging was £3.8m, which reflects existing OEMs pausing
ongoing business and new programmes slowing down while the Group undertook
negotiations with Siemens Healthineers. In the CBRN Detection division,
revenue was £6.2m (2024: £10.4m), which reflects the UK and US elections
delaying contracts.
Gross Margin
Gross margin improved substantially to 81% (2024: 55%). With the increase in
revenue, this enabled gross profit to double to £21.4m (2024: £10.7m). The
increase in gross margin is attributable to the contribution from the
Enablement Agreement with Siemens Healthineers. On an underlying basis, the
gross margins of the two divisions were comparable with the prior year. Note 4
to the financial statements provides further information on the financial
performance of the Advanced Imaging and CBRN Detection divisions. The Group
expects gross margin in FY 2026 to continue to be elevated, in line with
market expectations, due to the Enablement Agreement - albeit lower than in FY
2025 commensurate with the reduced contribution to revenue from that agreement
as detailed above - and to return to normalised levels in FY 2027.
Distribution and Administrative Expenses
Distribution and administrative expenses increased to £16.7m (2024: £12.6m),
but accounted for a slightly lower proportion of revenue at 63% (2024: 65%).
The increase in expenses is substantially the net result of:
· the receipt in the prior year of a credit of £1.0m relating to a US
IRS Employee Retention Credit, which was netted off staff costs and presented
within other receivables at 30 April 2024;
· an increase of £1.2m in a bad debt provision compared with 2024
resulting from the impact of macro conditions on certain distributors. All
remaining debtor balances are considered recoverable;
· £1.8m of one-off fees and expenses relating to the Siemens
Healthineers Enablement Agreement (of this, £413k relates to share-based
payments as described below);
· a £0.1m increase in other share-based payments relating to options
issued to new employees;
· a decrease of £0.6m of capitalised R&D costs;
· a £0.4m increase in the RDEC tax credit; and
· a net decrease of £0.2m relating to all other expenses.
Profitability
As a result of the increase in revenue and gross margin - combined with a
stable cost base as a proportion of revenue - profit before tax increased
substantially to £3.1m (2024: £3.5m loss), and which is significantly ahead
of market expectations. This better-than-expected performance reflects
slightly lower-than-expected costs and slightly higher-than-expected revenue
recognition associated with the Siemens Healthineers agreement; the impact on
depreciation of the Siemens Healthineers agreement, which is lower than
anticipated; and a higher-than-expected R&D tax credit of £0.6m (2024:
£0.2m).
Adjusted EBITDA was £10.3m for 2025 compared with £3.1m for the prior year
as set out in the table below:
2025 2024
£'000 £'000
Revenue 26,506 19,403
Gross profit 21,431 10,710
Gross margin (%) 80.9% 55.2%
Profit/(loss) before tax 3,079 -3,455
EBITDA Adjustments:
Net interest 1,658 1,834
Depreciation of PPE and Right-Of-Use assets 1,612 1,751
Amortisation 2,956 2,758
Share-based payments 1,028 490
Change in fair value of derivative - -517
Exceptional item - 246
Adjusted EBITDA* 10,333 3,107
*Adjusted EBITDA is defined as earnings before interest, taxation,
depreciation, amortisation, exceptional items, early settlement discounts, the
change in fair value of financial derivatives and share-based payments. The
change in the value of financial derivatives and share-based payments are
adjusted for when calculating the Group's adjusted EBITDA as these items have
no 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.
Included within adjusted EBITDA are £1.4m of one-off costs relating to the
Siemens Healthineers agreement (with total costs being £1.8m as described
above). In addition, there are costs of £1.3m relating to bad debt
provisions. Excluding these one-off costs, adjusted EBITDA would be £13.1m.
Tax
The Group recorded a net tax credit to the income statement of £0.7m for the
year (2024: £0.2m credit). The tax benefit in 2025 represented a net deferred
tax credit in the year of £0.65m and an adjustment in respect of the prior
period of £0.05m.
The Group benefits from the UK Research and Development Tax Credit regime as
it continues to invest in developments of technology and exercises the option
of surrendering tax losses in the years that qualify for cash credit, rather
than carrying forward the tax losses to set against future taxable profits.
The £0.6m tax credit is recognised within administrative expenses.
The Group's deferred tax asset for the year was £0.5m (2024: £0.2m
liability). The movement on deferred tax for the year was a £0.6m credit
(2024: £0.2m), which reflects a deferred tax provision of £1.8m in respect
of accelerated capital allowances and tax losses less the recognition of a
deferred tax asset of £2.4m in respect of short-term timing differences and
share-based payments.
Earnings per Share ("EPS")
Due to the profit after tax, EPS for the year on a basic and diluted basis was
0.6p profit per share compared with 0.6p loss per share (after excluding
exceptional items) in 2024.
Share-based payments - grant of options
Following the successful completion of the Siemens Healthineers agreement, a
special conditional bonus was granted to the Executive Directors amounting to
£400k each. The award of the bonus is to be paid in four instalments
dependent on the delivery of the four milestones, and the receipt by the Group
of the associated cash payment, and subject to the individual remaining an
employee of the Group. To support the cash position of the Group, the
Executive Directors have elected to receive a significant proportion of the
bonus as options over Ordinary Shares in the Company as detailed below.
On 30 April 2025 (the "Grant Date"), Arnab Basu, CEO, and Berry Beumer, COO
and President of the Advanced Imaging Division, were granted 4,306,578 and
4,098,195 options, respectively, following the completion of delivery of the
first milestone and the receipt of the initial payment under the Enablement
Agreement. The options vested upon issue and expire on the tenth anniversary
of the Grant Date. The options have an exercise price of 1p per Ordinary Share
and the number of options was calculated based on a price of 5.65p per
Ordinary Share, being the average price of the Company's Ordinary Shares on
AIM for the three months preceding and three months following the announcement
of the Siemens Healthineers transaction on 30 January 2025.
In relation to the above options, the Group recorded a £0.4m non-cash expense
in respect of the grant of options to the Executive Directors. In addition,
there were further share-based payments of £0.6m relating to options issued
to new employees during the year.
As at 30 April 2025, the Group had options outstanding over a total of
35,234,074 Ordinary Shares. This included the following options held by
Directors:
Director Number of options at 30 April 2025 Date of grant Exercise price Expiry date
(p)
Arnab Basu 1,000,000 20 November 2011 20.0 20 November 2026
Arnab Basu 1,250,000 14 December 2020 12.0 14 December 2030
Arnab Basu 110,000 29 April 2021 1.0 30 April 2026
Arnab Basu 400,000 1 May 2021 1.0 1 May 2031
Arnab Basu 750,000 18 March 2024 5.9 18 March 2034
Arnab Basu 4,306,578 30 April 2025 1.0 30 April 2035
Berry Beumer(1) 180,000 1 January 2016 27.0 1 January 2026
Berry Beumer(1) 1,250,000 14 December 2020 12.0 14 December 2030
Berry Beumer 150,000 29 April 2021 1.0 30 April 2026
Berry Beumer 150,000 1 May 2021 1.0 1 May 2031
Berry Beumer 750,000 18 March 2024 5.9 18 March 2034
Berry Beumer 4,098,195 30 April 2025 1.0 30 April 2035
Paul Farquhar(2) 1,000,000 15 October 2020 12.0 15 October 2030
Paul Farquhar(2) 150,000 1 May 2021 1.0 1 May 2031
Paul Farquhar(2) 750,000 18 March 2024 5.9 18 March 2034
(1) Awarded to Mr Beumer prior to him being appointed as a Director
(2) Mr Farquhar retired as a Director, post year end, on 1 June 2025
Post year end, the Group granted, on 12 May 2025 (the "Grant Date"), 1,000,000
options over Ordinary Shares to Claire Burgess, who became an Executive
Director and CFO of the Group on 1 June 2025. The options have an exercise
price of 6p per Ordinary Share, being the closing price of the Company's
Ordinary Shares on AIM on the day immediately prior to the Grant Date. The
options vest in two equal tranches on the second and third anniversaries of
the Grant Date and expire on the tenth anniversary of the Grant Date.
As at 16 September 2025, the Company has 36,286,141 options outstanding,
representing 5.5% of the Company's issued share capital.
Capitalised Development
The Group invested £4.4m in the year (2024: £4.6m) in technology and product
developments that were capitalised on the balance sheet, reflecting the
continuing investment in new products, applications and platforms for the
future growth of the business. This expenditure is 16.5% of revenue (2024:
23.9%) and 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. It should be noted that within the accounts £3.4m of this
capitalisation is shown within administrative costs and £1.0m within gross
profit (2024: £4.0m and £0.6m respectively).
Amortisation of capitalised development costs in the year was £2.7m (2024:
£2.5m), which results in a £1.7m net impact on the income statement from
capitalised development costs (2024: £2.1m).
Capital Expenditure
Capital expenditure in the year, comprising property, plant and equipment and
investments in patents and trademarks, amounted to £0.3m (2024: £0.4m). The
expenditure primarily relates to modest capital expenditure across lab and
computer equipment, IT and manufacturing projects.
Financing Activities
During the year, prior to the completion of the Siemens Healthineers
agreement, the Group received £4.4m of additional working capital support
from Polymer N2 Ltd in the form of short-term loans. These were subsequently
repaid in February 2025 alongside £1.5m of short-term loans received in the
prior year and the £5.5m secured term loan facility. Total repayment
inclusive of interest and fees of the short-term loans was £12.9m.
Post year end, the Group repaid £0.7m of accrued interest on the £5.5m
secured term loan facility with Polymer N2 Ltd through the issue of new
ordinary shares of 1p each in the Company ("Ordinary Shares"). This resulted
in the issue of 13,440,514 new Ordinary Shares. Further information can be
found in note 22 to the financial statements.
The remaining convertible loan notes of £34k were converted into shares
during the year.
At 30 April 2025, the Group had total borrowings of £0.5m (30 April 2024:
£8.1m). These relate to the COVID-related Economic Injury Disaster Loans that
the Group's US operations were eligible to apply for in 2020 and 2021.
Post year end, the Group negotiated a three-year, £6.0m revolving credit
facility ("RCF") with HSBC bank. The RCF carries interest of 2.75% over the
Bank of England base rate. In addition, HSBC is providing a £0.5m asset
finance facility to support limited capex within the Group. At the date of
signing of these accounts, the facility documents have been signed and the
Group anticipates completion of the security documents prior to the end of
September 2025. The RCF will provide a stable platform for growth and
underpins the working capital requirements of the Group for the foreseeable
future. Further details on the Group's borrowings are available in notes 19
and 21 to the financial statements.
Cash Balance
Cash and cash equivalents were £1.7m as of 30 April 2025 (30 April 2024:
£0.5m). The increase was due to the combination of the following cash inflows
and outflows:
· Cash generated in operations, including changes in working capital,
of £15.9m.
· Investment in product development and other intangible assets, with
capitalised development costs of £(4.4)m and IP additions of £(0.1)m.
· Capital expenditure of £(0.2)m.
· Interest received of £0.1m from the US Employee Retention credit.
· Net cash used in financing activities of £(9.2)m (£4.4m net
proceeds of new borrowings, less £13.6m of repayment of borrowings, lease
repayments financing costs and loan interest payments).
· Effect of foreign exchange rate changes of £(0.9)m.
Outlook
The Group expects further revenue growth and profitability in FY 2026, in line
with market expectations, reflecting sustained progress across both the
Advanced Imaging and CBRN Detection divisions.
The CBRN Detection division is positioned for strong year-on-year growth,
driven by awards under UK Government framework agreements, continued execution
on key contracts and rising global demand amid evolving security challenges.
This sustained interest reflects the strategic importance and long-term market
potential of the Group's solutions.
The Advanced Imaging division continues to perform well. It is expected to
deliver good growth on a like-for-like basis when excluding the exceptional
contribution from Siemens Healthineers under the Enablement Agreement. Revenue
generation under the Group's contract with Spectrum Dynamics is expected to be
higher than the previous year as well as from other OEM agreements that have
resumed following the completion of the Siemens Healthineers transaction.
With a significantly strengthened balance sheet and good operational momentum,
the Group is confident in leveraging the positive dynamics in both divisions
to drive sustained, profitable growth.
Kromek Group plc
Group statement of comprehensive income
For the year ended 30 April 2025
Note 2025 2024
£'000 £'000
Continuing operations
Revenue 4 26,506 19,403
Cost of sales (5,075) (8,693)
Gross profit 21,431 10,710
Distribution costs (470) (456)
Administrative expenses (16,224) (12,146)
Change in fair value of derivative - 517
Operating profit/(loss) (before exceptional items) 4,737 (1,375)
Exceptional refinancing costs - (246)
Operating results (post exceptional items) 4,737 (1,621)
Finance income 107 40
Finance costs 7 (1,765) (1,874)
Profit/(Loss) before tax 5 3,079 (3,455)
Tax credit 8 675 162
Profit/(Loss) for the year from continuing operations 3,754 (3,293)
Profit/(Loss) per share 9
0.6 (0.6)
- basic (p)
- diluted (p) 0.6 (0.6)
The accompanying notes form part of these financial statements.
Kromek Group plc
Group statement of other comprehensive income
For the year ended 30 April 2025
2025 2024
£'000 £'000
Profit/(Loss) for the year 3,754 (3,293)
Items that are or may be subsequently reclassified to profit or loss:
Exchange (loss)/gain on translation of foreign operations (1,988) 8
Total comprehensive profit/(loss) for the year 1,766 (3,285)
The accompanying notes form part of these financial statements.
Kromek Group plc
Consolidated statement of financial position
As at 30 April 2025
Note 2025 2024
£'000 £'000
Non-current assets
Goodwill 10 1,275 1,275
Other intangible assets 11 33,422 32,726
Property, plant and equipment 12 7,066 8,675
Right-of-use assets 13 2,778 3,400
Deferred tax assets 16 474 -
45,015 46,076
Current assets
Inventories 14 12,108 10,295
Trade and other receivables 15 6,436 12,983
Current tax assets 15 608 372
Cash and bank balances 1,704 466
20,856 24,116
Total assets 65,871 70,192
Current liabilities
Trade and other payables 17 (8,821) (7,475)
Borrowings 19 (12) (7,573)
Lease obligation 18 (387) (452)
(9,220) (15,500)
Net current assets 11,636 8,616
Non-current liabilities
Deferred income 17 (819) (920)
Lease obligation 18 (3,173) (3,736)
Borrowings 19 (481) (526)
Deferred tax liability 16 - (156)
(4,473) (5,338)
Total liabilities (13,693) (20,838)
Net assets 52,178 49,354
Equity
Share capital 6,415 6,410
Share premium account 81,511 81,480
Merger reserve 21,853 21,853
Translation reserve (83) 1,905
Accumulated losses (57,518) (62,294)
Total equity 52,178 49,354
The accompanying notes form part of these financial statements.
Kromek Group plc
Consolidated statement of changes in equity
For the year ended 30 April 2025
Share capital Share premium Translation reserve Retained Total
£'000 account Merger reserve £'000 losses equity £'000
£'000 £'000 £'000
Balance at 1 May 2023 4,319 72,943 1,897 (59,488) 41,524
21,853
Loss for the year - - - - (3,293) (3,293)
- - 8 - 8
Exchange difference on translation of foreign operations
-
Total comprehensive gain/(loss) for the year - - 8 (3,293) (3,285)
-
1,606 5,873 - - - 7,479
Issue of shares less issuance costs(1)
485 2,664 - - (11) 3,138
Conversion of CLN
- - - - 8 8
Deferred tax movement
- - - 490 490
Credit to equity for equity-settled share-based payments
-
Balance at 30 April 2024 6,410 81,480 21,853 1,905 (62,294) 49,354
Profit for the year - - - - 3,754 3,754
- - (1,988) - (1,988)
Exchange difference on translation of foreign operations
-
Total comprehensive (loss)/gain for the year - - (1,988) 3,754 1,766
-
5 31 - - - 36
Conversion of CLN
- - - 1,028 1,028
Credit to equity for equity-settled share-based payments
-
- - - - (6) (6)
Deferred tax movement
Balance at 30 April 2025 6,415 81,511 21,853 (83) (57,518) 52,178
(1) The fees associated with issue of shares were £549k
The accompanying notes form part of these financial statements.
Kromek Group plc
Consolidated statement of cash flows
For the year ended 30 April 2025
Note 2025 2024
£'000
£'000
Net cash generated from/(used in) operating activities 20 15,901 (2,802)
Investing activities
Interest received 107 40
Purchases of property, plant and equipment 12 (186) (146)
Purchases of patents and trademarks 11 (106) (252)
Capitalisation of development costs 11 (4,369) (4,644)
Net cash used in investing activities (4,554) (5,002)
Financing activities
New borrowings 21 4,400 7,000
Payment of borrowings 21 (11,438) (5,822)
Payment of lease liability 18 (660) (678)
Interest paid 7 (1,440) (699)
Financing costs (55) (102)
Net proceeds on issue of shares - 7,479
Net cash (used in)/generated from financing activities (9,193) 7,178
Net increase/(decrease) in cash and cash equivalents 2,154 (626)
Cash and cash equivalents at beginning of year 466 1,097
Effect of foreign exchange rate changes (916) (5)
Cash and cash equivalents at end of year 1,704 466
The accompanying notes form part of these financial statements.
Kromek Group plc
Notes to the consolidated financial statements
For the year ended 30 April 2025
1. General information
Kromek Group plc is a company incorporated and domiciled in the United Kingdom
under the Companies Act 2006. These financial statements are presented in
pounds sterling because that is the currency of the primary economic
environment in which the Group operates. Foreign operations are included in
accordance with the policies set out in note 2.
The Group prepares its consolidated financial statements in accordance with
UK-adopted IFRS.
The Board is currently evaluating the impact of the adoption of all other
standards, amendments and interpretations but does not expect them to have a
material impact on the Group's operation or results.
New and amended IFRS Accounting Standards that are effective for the current
year
There are a number of standards and amendments to standards which have been
issued by the IASB that are effective in future accounting periods that have
not been adopted early. The following standards are effective for annual
reporting periods beginning on or after 1 January 2024:
- Classification of liabilities as current or non-current (Amendments
to IAS 1)
- Deferred tax related to assets and liabilities arising from a single
transaction (Amendments to IAS 12)
- Lease Liability in a Sale and Leaseback (Amendments to IFRS 16)
- Classification of Financial Instruments (Amendments to IFRS 9)
- Non-current liabilities with covenants (Amendments to IAS 1)
- Supplier Finance Arrangements (Amendments to IAS 7 and IFRS 7)
No new standards or amendments that became effective in the financial year had
a material impact in preparing these financial statements.
New and revised IFRS Accounting Standards in issue but not yet effective
The following amendments are effective for annual reporting periods beginning
on or after 1 January 2025:
- Guidance on the exchange rate to use when a currency is not
exchangeable (Amendments to IAS 21)
- Accounting treatment for the sale or contribution of assets
(Amendments to IFRS 10 and IAS 28)
The following amendments are effective for annual reporting periods beginning
on or after 1 January 2026:
- Amendments to the classification and measurement of financial
instruments (Amendments to IFRS 9 and IFRS 7)
- Annual improvements to IFRS Standards 2022 - 2024 Cycle (covering
amendments to IFRS 1, IFRS 7, IFRS 9, IFRS 10 and IAS 7)
The following standards are effective for annual reporting periods beginning
on or after 1 January 2027:
- IFRS 18 Presentation and Disclosure in Financial Statements
- IFRS 19 Subsidiaries without Public Accountability: Disclosures
Beyond the information above, it is not practicable to provide a reasonable
estimate of the effect of these standards until a detailed review has been
completed.
2. Significant accounting policies
Basis of preparation
The Group's financial statements have been prepared in accordance with IFRS
and International Financial Reporting Interpretations Committee ("IFRIC").
The financial statements have been prepared on the historical cost basis
modified for assets recognised at fair value on acquisition. Historical cost
is generally based on the fair value of the consideration given in exchange
for the assets. The principal accounting policies adopted are set out below.
Basis of consolidation
The consolidated financial statements incorporate the results and net assets
of the Group and entities controlled by the Group (its subsidiaries) made up
to 30 April each year. Control is achieved where the Group has the power to
govern the financial and operating policies of an investee entity so as to
obtain benefits from its activities.
The results of subsidiaries acquired during the year are included in the
consolidated income statement from the effective date of acquisition or up to
the effective date of disposal, as appropriate. Where necessary, adjustments
are made to results of subsidiaries to bring the accounting policies used into
line with those used by the Group. All intra-Group transactions, balances,
income and expenses, and profits are eliminated on consolidation.
Going concern
As at 30 April 2025, the Group had net current assets of £11.6m (30 April
2024: £8.6m) and cash and cash equivalents of £1.7m (30 April 2024: £0.5m)
as set out in the consolidated statement of financial position. The Group made
a profit before tax of £3.1m in the year (2024: £3.5m loss before tax).
During the year the completion of the Siemens Healthineers Enablement
Agreement resulted in a $25m cash payment to the Group. This payment resulted
in repayment in full of the loans from Polymer N2 Ltd. At 30 April 2025, total
borrowings were £0.5m (2024: £8.1m), these borrowings relate to
Covid-related Economic Injury Disaster Loans that the Group's US operations
were eligible to apply for in 2020 and 2021.
The Directors have prepared a detailed forecast of the Group's financial
performance over the next twelve months from the date of this report. Given
the rapidly changing macroeconomic landscape and the Group's forecast
financial performance for the next twelve months, management also prepared
financial forecasts based on sensitised and severe but plausible scenarios. It
should be noted that in each scenario, the Board has specifically excluded any
significant upsides from these scenarios or mitigating cost reductions.
Post year-end, the Group has successfully secured a £6.0m revolving credit
facility with HSBC to support and assist working capital requirements. In
addition, the Group has secured a £0.5m asset finance facility with HSBC.
This facility will be used to support capital expenditure. As a consequence,
the Board is confident that the Group will have sufficient resources and
working capital to meet its present and foreseeable obligations for a period
of at least twelve months from approval of these financial statements.
Accordingly, the Board continues to adopt the going concern basis in preparing
the Group financial statements.
Business combinations
The Group financial statements consolidate those of the Company and its
subsidiary undertakings. Subsidiaries are entities controlled by the Group.
Control exists when the Group has the power, directly or indirectly, to govern
the financial and operating policies of an entity so as to obtain benefits
from its activities. In assessing control, potential voting rights that are
currently exercisable or convertible are taken into account. The financial
information of subsidiaries is included from the date that control commences
until the date that control ceases. Intra-Group balances and transactions, and
any unrealised income and expenses arising from intra-Group transactions, are
eliminated in preparing the consolidated financial information.
Acquisitions on or after 1 May 2010
For acquisitions on or after 1 May 2010, the Group measures goodwill at the
acquisition date as:
· the fair value of the consideration transferred; plus
· the recognised amount of any non-controlling interests in the
acquiree; plus
· the fair value of the existing equity interest in the acquiree;
less
· the net recognised amount (generally fair value) of the
identifiable assets acquired and liabilities assumed.
When the excess is negative, the negative goodwill is recognised immediately
in profit or loss.
Costs related to the acquisition, other than those associated with the issue
of debt or equity securities, are expensed as incurred.
Goodwill
Goodwill arising in a business combination is recognised as an asset at the
date that control is acquired (the acquisition date). Goodwill is measured as
the excess of the sum of the consideration transferred, the amount of any
non-controlling interest in the acquiree and the fair value of the acquirer's
previously held equity interest (if any) in the entity over the net of the
acquisition-date amounts of the identifiable assets acquired and the
liabilities assumed.
If, after reassessment, the Group's interest in the fair value of the
acquiree's identifiable net assets exceeds the sum of the consideration
transferred, the amount of any non-controlling interest in the acquiree and
the fair value of the acquirer's previously held equity interest in the
acquiree (if any), the excess is recognised immediately in profit or loss as a
bargain purchase gain.
Goodwill is not amortised but is reviewed for impairment at least annually.
For the purpose of impairment testing, goodwill is allocated to each of the
Group's cash-generating units expected to benefit from the synergies of the
combination. Cash-generating units to which goodwill has been allocated are
tested for impairment annually, or more frequently when there is an indication
that the unit may be impaired. If the recoverable amount of the
cash-generating unit is less than the carrying amount of the unit, the
impairment loss is allocated first to reduce the carrying amount of any
goodwill allocated to the unit and then to the other assets of the unit
pro-rata on the basis of the carrying amount of each asset in the unit. An
impairment loss recognised for goodwill is not reversed in a subsequent
period.
On disposal of a subsidiary, the attributable amount of goodwill is included
in the determination of the profit or loss on disposal.
Contracts with customers
The Group recognises revenue in line with IFRS 15 'Revenue from contracts with
customers'. Revenue represents income derived from contracts for the provision
of goods and services by the Group to customers in exchange for consideration
in the ordinary course of the Group's activities.
The Board disaggregates revenue by sales of goods or services, grants and
contract customers. Sales of goods and services typically include the sale of
product on a run rate or ad-hoc basis. Grants include technology development
with parties such as Innovate UK. Customer contracts represent agreements that
the Group has entered into that typically span a period of more than 12
months.
Performance obligations
Upon approval by the parties to a contract, the contract is assessed to
identify each promise to transfer either a distinct good or service or a
series of distinct goods or services that are substantially the same and have
the same pattern of transfer to the customer. Goods and services are distinct
and accounted for as separate performance obligations in the contract if the
customer can benefit from them either on their own or together with other
resources that are readily available to the customer, and they are separately
identifiable in the contract.
Transaction price
At the start of the contract, the total transaction price is estimated as the
amount of consideration to which the Group expects to be entitled in exchange
for transferring the promised goods and services to the customer, excluding
sales taxes. Variable consideration, such as price escalation and early
settlements, is included based on the expected value or most likely amount
only to the extent that it is highly probable that there will not be a
reversal in the amount of cumulative revenue recognised. The transaction price
does not include estimates of consideration resulting from contract
modifications, such as change orders, until they have been approved by the
parties to the contract. The total transaction price is allocated to the
performance obligations identified in the contract in proportion to their
relative standalone selling prices.
Given the bespoke nature of many of the Group's products and services, which
are designed and/or manufactured under contract to the customer's individual
specifications, there are sometimes no observable standalone selling prices.
Instead, standalone selling prices are typically estimated based on expected
costs plus contract margin consistent with the Group's pricing principles or
based on market knowledge of selling prices relating to similar product.
Revenue and profit recognition
Revenue is recognised as performance obligations are satisfied as control of
the goods and services is transferred to the customer.
For each performance obligation within a contract, the Group determines
whether it is satisfied over time or at a point in time. The Group has
determined that the performance obligations of the majority of its contracts
are satisfied at a point in time. Performance obligations are satisfied over
time if one of the following criteria are satisfied:
- The customer simultaneously receives and consumes the benefits
provided by the Group's performance as it performs.
- The Group's performance creates or enhances an asset that the
customer controls as the asset is created or enhanced.
- The Group's performance does not create an asset with an alternative
use to the Group, and it has an enforceable right to payment for performance
completed to date.
For each performance obligation to be recognised over time, the Group
primarily recognises revenue using an input method, based on costs incurred in
the period. Revenue and attributable margin are calculated by reference to
reliable estimates of transaction price and total expected costs, after making
suitable allowances for technical and other risks. Revenue and associated
margin are therefore recognised progressively as costs are incurred, and as
risks have been mitigated or retired. However, for certain performance
obligations to be recognised over time, the Group also recognises revenue
using an output method when appropriate, based on the value received by the
customer. This is particularly the case for intellectual property licensing
agreements signed by the Group. The Group has determined that these methods
faithfully depict the Group's performance in transferring control of the goods
and services to the customer.
If the over-time criteria for revenue recognition are not met, revenue is
recognised at the point in time that control is transferred to the customer,
which is usually when legal title passes to the customer, and the business has
the right to payment. Kromek's standard terms of delivery are FCA Delivery
Location (Incoterms 2020), unless otherwise stated.
The Group's contracts that satisfy the over-time criteria are typically
product development contracts where the customer simultaneously receives and
consumes the benefit provided by the Group's performance. In some specific
arrangements, due to the highly specific nature of the contract deliverables
tailored to the customer requirements and the breakthrough technology
solutions that Kromek provides, the Group does not create an asset with an
alternative use but retains an enforceable right to payment and recognises
revenue over time on that basis.
When it is probable that total contract costs will exceed total contract
revenue, the expected loss is recognised immediately as an expense.
Contract modifications
The Group's contracts are sometimes amended for changes in customers'
requirements and specifications. A contract modification exists when the
parties to the contract approve a modification that either changes existing,
or creates new, enforceable rights and obligations. The effect of a contract
modification on the transaction price and the Group's measure of progress
towards the satisfaction of the performance obligation to which it relates, is
recognised:
(a) prospectively as an additional, separate contract;
(b) prospectively as a termination of the existing contract and creation of a
new contract; or
(c) as part of the original contract using a cumulative catch up.
The majority of the Group's contract modifications are treated under either
(a) (for example, the requirement for additional distinct goods or services)
or (b) (for example, a change in the specification of the distinct goods or
services for a partially completed contract), although the facts and
circumstances of any contract modification are considered individually as the
types of modifications will vary contract-by-contract and may result in
different accounting outcomes.
Costs to obtain a contract
The Group expenses pre-contract bidding costs that are incurred regardless of
whether a contract is awarded. The Group does not typically incur costs to
obtain contracts that it would not have incurred had the contracts not been
awarded.
Costs to fulfil a contract
Contract fulfilment costs in respect of over-time contracts are expensed as
incurred. No such costs have been incurred in the year under review or in
previous years. Contract fulfilment costs in respect of point-in-time
contracts are accounted for under IAS 2, Inventories.
Sale of Inventories
Inventories include raw materials, work-in-progress and finished goods
recognised in accordance with IAS 2 in respect of contracts with customers
that have been determined to fulfil the criteria for point-in-time revenue
recognition under IFRS 15. Also included are inventories for which the Group
does not have a contract. This is often because fulfilment costs have been
incurred in expectation of a contract award. The Group does not typically
build inventory to stock. Inventories are stated at the lower of cost,
including all relevant overhead and net realisable value. The Group continued
to adopt the policy of valuing its recyclable material. In accordance with the
standard, this is valued at the lower of cost and net realisable value, less
the cost required to bring the material back into use.
Contract receivables
Contract receivables represent amounts for which the Group has an
unconditional right to consideration in respect of unbilled revenue recognised
at the balance sheet date and comprises costs incurred plus attributable
margin. The Group does not plan, anticipate or offer extended payment terms
within its contractual arrangements unless express payment interest charges
are applied and represent a value over and above that contracted or invoiced
with the customer.
Contract liabilities
Contract liabilities represent the obligation to transfer goods or services to
a customer for which consideration has been received, or consideration is due,
from the customer.
Leases
The Group recognises a right-of-use ("ROU") asset and a lease liability at the
lease commencement date. The ROU asset is initially measured at cost, which
comprises the initial amount of the lease liability adjusted for any lease
payments made at or before the commencement date, plus any initial direct
costs incurred, and an estimate of costs to dismantle and remove the
underlying asset or to restore the underlying asset or the site on which it is
located, less any lease incentives received.
The ROU asset is subsequently depreciated using the straight-line method from
the commencement date to the earlier of the end of the useful life of the ROU
or the end of the lease term. The estimated useful lives of the ROU assets are
determined on the same basis as those of property and equipment. In addition,
the ROU is periodically reduced by impairment losses, if any, and adjusted for
certain remeasurements of the lease liability.
The lease liability is initially measured at the present value of the lease
payments that are not paid at the commencement date, discounted using the
interest rate implicit in the lease, or, if that rate cannot be readily
determined, the Group's incremental borrowing rate.
Lease payments included in the measurement of the lease liability comprise
fixed payments.
The lease liability is measured at amortised cost using the effective interest
method. It is remeasured when there is a change in future lease payments
arising from a change in an index or rate, if there is a change in the Group's
estimate of the amount expected to be payable under a residual value
guarantee, or if the Group changes its assessment of whether it will exercise
a purchase, extension or termination option.
When the lease liability is remeasured in this way, a corresponding adjustment
is made to the carrying amount of the ROU asset, or is recorded in profit or
loss if the carrying amount of the ROU has been reduced to zero.
The Group has elected not to recognise ROU assets and lease liabilities for
short-term leases of machinery that have a lease term of 12 months or less and
leases of low value assets, including IT equipment and leased cars. The Group
recognises the lease payments associated with these leases as an expense on a
straight-line basis over the lease term.
Foreign currencies
The individual results of each Group company are presented in the currency of
the primary economic environment in which it operates (its functional
currency). For the purpose of the consolidated financial statements, the
results and financial position of each Group company are expressed in pounds
sterling, which is the functional currency of the Company and the presentation
currency for the consolidated financial statements. The Directors have applied
IAS 21 The Effects of Changes in Foreign Exchange Rates and have concluded
that the intra-Group loans held by Kromek Limited substantially form part of
the net investment in Kromek USA (Kromek Inc, eV Products, Inc. and Nova
R&D, Inc.), and so any gain or loss arising on intra-Group loan balances
are recognised as other comprehensive income in the period.
In preparing the results of the individual companies, transactions in
currencies other than the entity's functional currency (foreign currencies)
are recognised at the average exchange rate for the month to which the
transaction relates. At each statement of financial position date, monetary
assets and liabilities that are denominated in foreign currencies are
retranslated at the rates prevailing at that date. Non-monetary items carried
at fair value that are denominated in foreign currencies are translated at the
rates prevailing at the date when the fair value was determined. Non-monetary
items that are measured in terms of historical cost in a foreign currency are
not retranslated. Exchange differences are recognised in profit or loss in the
period in which they arise.
For the purpose of presenting consolidated financial statements, the assets
and liabilities of the Group's foreign operations are translated at exchange
rates prevailing on the statement of financial position date. Income and
expense items are translated at the average exchange rates for the period,
unless exchange rates fluctuate significantly during that period, in which
case the exchange rate at the date of transaction is used. Exchange
differences arising, if any, are recognised in other comprehensive income and
accumulated in equity. On consolidation, the results of overseas operations
are translated into pounds sterling at rates approximating to those ruling
when the transactions took place. All assets and liabilities of overseas
operations, including goodwill arising on the acquisition of those operations,
are translated at the rate ruling at the statement of financial position date.
Exchange differences arising on translating the opening net assets at opening
rate and the results of overseas operations at actual rate are recognised
directly in other comprehensive income and are credited/(debited) to the
retranslation reserve.
Government grants
Government grants are not recognised until there is reasonable assurance that
the Group will comply with the conditions attaching to them and that the
grants will be received.
Government grants towards job creation and growth are normally recognised as
income over the useful economic life of the capital expenditure to which they
relate.
Government grants are recognised in the income statement so as to match them
with the related expenses that they are intended to compensate. Grants that
relate to capital expenditure are offset against related depreciation costs.
Where grants are received in advance of the related expenses, they are
initially recognised in the balance sheet and released to match the related
expenditure. Non-monetary grants are recognised at fair value.
Operating result
Operating profit is stated as profit before tax, finance income and costs.
Exceptional items
Exceptional items are those items that, in the judgement of management, need
to be disclosed separately by virtue of their nature, size or incidence.
Exceptional items in the prior year, associated with refinancing costs, have
been classified separately in order to draw them to the attention of the
reader of the accounts and, in the opinion of the Board, to show more
accurately the underlying results of the Group. There are no exceptional items
in the current year.
Retirement benefit costs
The Group operates two defined contribution pension schemes for UK employees,
one of which is an auto-enrolment workplace pension scheme established
following the UK Pensions Act 2008. The employees of the Group's subsidiaries
in the US are members of a state-managed retirement benefit scheme operated by
the US Government.
Payments to defined contribution retirement benefit schemes are charged as an
expense as they fall due. For these schemes, the assets are held separately
from those of the Group in independently administered funds. Payments made to
US state-managed retirement benefit schemes are dealt with as payments to
defined contribution schemes where the Group's obligations under the schemes
are equivalent to those arising in a defined contribution retirement benefit
scheme.
Taxation
The tax expense represents the sum of the tax currently payable and deferred
tax. Tax is recognised in the income statement except to the extent that it
relates to items recognised directly in equity, in which case it is recognised
in equity. The UK R&D tax credit is calculated using the current rules as
set out by HMRC and is recognised in the income statement during the period in
which the R&D programmes occurred.
i) Current tax
The tax credit is based on the taxable profit or loss for the year. Taxable
profit or loss differs from net profit or loss as reported in the income
statement because it excludes items of income or expense that are taxable or
deductible in other years and it further excludes items that are never taxable
or deductible. The Group's liability for current tax is calculated using tax
rates that have been enacted or substantively enacted at the date of the
statement of financial position.
ii) Deferred tax
Deferred tax is the tax expected to be payable or recoverable on differences
between the carrying amounts of assets and liabilities in the consolidated
statement of financial position and the corresponding tax bases used in the
computation of taxable profit and is accounted for using the statement of
financial position liability method.
Deferred tax liabilities are generally recognised for all taxable temporary
differences and deferred tax assets are recognised to the extent that it is
probable that taxable profits will be available against which deductible
temporary differences can be utilised. Such assets and liabilities are not
recognised if the temporary difference arises from the initial recognition of
goodwill or from the initial recognition (other than in a business
combination) of other assets and liabilities in a transaction that affects
neither the taxable profit nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary differences
arising on investments in subsidiaries and associates, and interests in joint
ventures, except where the Group is able to control the reversal of the
temporary difference and it is probable that the temporary difference will not
reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at each statement of
financial position date and reduced to the extent that it is no longer
probable that sufficient taxable profits will be available to allow all or
part of the asset to be recovered.
Deferred tax is calculated at the tax rates that are expected to apply in the
period when the liability is settled, or the asset is realised, based on tax
laws and rates that have been enacted or substantively enacted at the date of
the statement of financial position. Deferred tax is charged or credited in
the income statement, except when it relates to items charged or credited in
other comprehensive income, in which case the deferred tax is also dealt with
in other comprehensive income. Deferred tax assets and liabilities are offset
when there is a legally enforceable right to set off current tax assets
against current tax liabilities and when they relate to income taxes levied by
the same taxation authority and the Group intends to settle its current tax
assets and liabilities on a net basis.
Property, plant and equipment
Property, plant and equipment is stated at cost less accumulated depreciation
and any recognised impairment loss.
Depreciation is recognised so as to write off the cost or valuation of assets
(other than land and properties under construction) less their residual values
over their useful lives, using the straight-line method, on the following
bases:
Plant and
machinery
6% to 25%
Fixtures, fittings and
equipment
15%
Computer
equipment
25%
Lab equipment
6% to 25%
The gain or loss arising on the disposal or scrappage of an asset is
determined as the difference between the sales proceeds and the carrying
amount of the asset, and is recognised in income.
Internally-generated intangible assets - research and development expenditure
Expenditure on research activities is recognised as an expense in the period
in which it is incurred.
An internally-generated intangible asset arising from the Group's product
development is recognised only if all of the following conditions are met:
§ The technical feasibility of completing the intangible asset so that it
will be available for use or sale.
§ Its intention to complete the intangible asset and use or sell it.
§ Its ability to use or sell the intangible asset.
§ How the intangible asset will generate probable future economic benefits.
Among other things, the entity can demonstrate the existence of a market for
the output of the intangible asset or the intangible asset itself or, if it is
to be used internally, the usefulness of the intangible asset.
§ The availability of adequate technical, financial and other resources to
complete the development and to use or sell the intangible asset.
§ Its ability to measure reliably the expenditure attributable to the
intangible asset during its development.
Research expenditure is written off as incurred. Development expenditure is
also written off, except where the Directors are satisfied as to the
technical, commercial and financial viability of individual projects. In such
cases, the identifiable expenditure is deferred and amortised over the period
during which the Group is expected to benefit. This period normally equates to
the life of the products to which the development expenditure relates. Where
expenditure relates to developments for use rather than direct sales of
product, the cost is amortised straight-line over a 2-15-year period. Assets
that have been developed are not amortised until they are available for use
and commercial sale. Provision is made for any impairment.
Amortisation of the intangible assets recognised on the acquisitions of Nova
R&D, Inc. and eV Products, Inc. are recognised in the income statement on
a straight-line basis over their estimated useful lives of between five and
fifteen years.
Patents and trademarks
Patents and trademarks are measured initially at purchase cost and are
amortised on a straight-line basis over their estimated useful lives.
Impairment of tangible and intangible assets, excluding goodwill
At each statement of financial position date, the Group reviews the carrying
amounts of its tangible and intangible assets to determine whether there is
any indication that those assets have suffered an impairment loss. If any such
indication exists, the recoverable amount of the asset is estimated to
determine the extent of the impairment loss (if any). Where the asset does not
generate cash flows that are independent from other assets, the Group
estimates the recoverable amount of the cash generating unit ("CGU") to which
the asset belongs. When a reasonable and consistent basis of allocation can be
identified, corporate assets are also allocated to individual CGUs, or
otherwise they are allocated to the smallest group of CGUs for which a
reasonable and consistent allocation basis can be identified.
An intangible asset with an indefinite useful life is tested for impairment at
least annually and whenever there is an indication that the asset may be
impaired.
Recoverable amount is the higher of fair value less costs to sell and value in
use. In assessing value in use, the estimated future cash flows are discounted
to their present value using a pre-tax discount rate of 8.93% for Advanced
Imaging and 12.24% for CBRN and Biological Threat Detection (2024: 9.13% and
11.85% respectively) that reflects current market assessments of the time
value of money and the risks specific to the asset for which the estimates of
future cash flows have not been adjusted. See note 10 for further detail.
If the recoverable amount of an asset (or CGU) is estimated to be less than
its carrying amount, the carrying amount of the asset (or CGU) is reduced to
its recoverable amount. An impairment loss is recognised immediately in profit
or loss, unless the relevant asset is carried at a revalued amount, in which
case the impairment loss is treated as a revaluation decrease.
Where an impairment loss subsequently reverses, the carrying amount of the
asset (or CGU) is increased to the revised estimate of its recoverable amount,
but so that the increased carrying amount does not exceed the carrying amount
that would have been determined had no impairment loss been recognised for the
asset (or CGU) in prior years. A reversal of an impairment loss is recognised
immediately in profit or loss, unless the relevant asset is carried at a
revalued amount, in which case the reversal of the impairment loss is treated
as a revaluation increase.
Inventories
Inventories are stated at the lower of cost and net realisable value. The
Group continues to adopt a policy of valuing recyclable material. Costs
comprise direct materials and, where applicable, direct labour costs and those
overheads that have been incurred in bringing the inventories to their present
location and condition. Cost is calculated in the statement of financial
position at standard cost, which approximates to historical cost determined on
a first in, first out basis. Net realisable value represents the estimated
selling price less all estimated costs of completion and costs to be incurred
in marketing, selling and distribution. Work in progress costs are taken as
production costs, which include an appropriate proportion of attributable
overheads.
Provision is made for obsolete, slow moving or defective items where
appropriate. This is reviewed by operational finance at least every six
months. Given the nature of the products and the gestation period of the
technology, commercial rationale necessitates that this provision is reviewed
on a case-by-case basis.
Provisions for liabilities
Provisions are recognised when the Group has a present legal or constructive
obligation as a result of past events, it is more likely than not that an
outflow of resources will be required to settle the obligation, and the amount
can be reliably estimated. Such provisions are measured at the present value
of management's best estimate of the expenditure required to settle the
present obligation at the balance sheet date. The discount rate used to
determine the present value reflects current market assessments of the time
value of money. Provisions are not recognised for future operating losses.
Financial instruments
(i) Recognition and initial measurement
Trade receivables are initially recognised when they are originated. All other
financial assets and financial liabilities are initially recognised when the
Group becomes a party to the contractual provisions of the instrument.
A financial asset (unless it is a trade receivable without a significant
financing component) or financial liability is initially measured at fair
value plus, for an item not at Fair Value Through Profit or Loss ("FVTPL"),
transaction costs that are directly attributable to its acquisition or issue.
A trade receivable without a significant financing component is initially
measured at the transaction price.
(ii) Classification and subsequent measurement
Financial assets
(a) Classification
On initial recognition, a financial asset is classified as measured at:
amortised cost; Fair Value through Other Comprehensive Income ("FVOCI") - debt
investment; FVOCI - equity investment; or FVTPL.
Financial assets are not reclassified subsequent to their initial recognition
unless the Group changes its business model for managing financial assets in
which case all affected financial assets are reclassified on the first day of
the first reporting period following the change in the business model.
A financial asset is measured at amortised cost if it meets both of the
following conditions:
· It is held within a business model whose objective is to hold assets
to collect contractual cash flows.
· Its contractual terms give rise on specified dates to cash flows that
are solely payments of principal and interest on the principal amount
outstanding.
On initial recognition of an equity investment that is not held for trading,
the Group may irrevocably elect to present subsequent changes in the
investment's fair value in Other Comprehensive Income. This election is made
on an investment-by-investment basis.
All financial assets not classified as measured at amortised cost or FVOCI as
described above are measured at FVTPL.
Investments in subsidiaries are carried at cost less impairment.
Cash and cash equivalents comprise cash balances and call deposits.
(b) Subsequent measurement and gains and losses
Financial assets at FVTPL - these assets (other than derivatives designated as
hedging instruments) are subsequently measured at fair value. Net gains and
losses, including any interest or dividend income, are recognised in profit or
loss.
Financial assets at amortised cost - these assets are subsequently measured at
amortised cost using the effective interest method. The amortised cost is
reduced by impairment losses. Interest income, foreign exchange gains and
losses and impairment are recognised in profit or loss. Any gain or loss on
derecognition is recognised in profit or loss.
Financial liabilities and equity
Financial instruments issued by the Group are treated as equity only to the
extent that they meet the following two conditions:
(a) They include no contractual obligations upon the Group to deliver cash or
other financial assets or to exchange financial assets or financial
liabilities with another party under conditions that are potentially
unfavourable to the Group.
(b) Where the instrument will or may be settled in the Group's own equity
instruments, it is either a non-derivative that includes no obligation to
deliver a variable number of the Group's own equity instruments or is a
derivative that will be settled by the Group exchanging a fixed amount of cash
or other financial assets for a fixed number of its own equity instruments.
To the extent that these conditions are not met, the proceeds of the issue are
classified as a financial liability. Where the instrument so classified takes
the legal form of the Group's own shares, the amounts presented in these
financial statements for called up share capital and share premium account
exclude amounts in relation to those shares.
Financial liabilities are classified as measured at amortised cost or FVTPL. A
financial liability is classified as at FVTPL if it is classified as held for
trading, it is a derivative or it is designated as such on initial
recognition. Financial liabilities at FVTPL are measured at fair value and net
gains and losses, including any interest expense, are recognised in profit or
loss. Other financial liabilities are subsequently measured at amortised cost
using the effective interest method. Interest expense and foreign exchange
gains and losses are recognised in profit or loss. Any gain or loss on
derecognition is also recognised in profit or loss.
Where a financial instrument that contains both equity and financial liability
components exists, these components are separated and accounted for
individually under the above policy.
Convertible loan notes
The convertible loan issued by the Group is a hybrid financial instrument,
whereby a debt host liability component and an embedded derivative liability
component were determined at initial recognition. The conversion option did
not satisfy the fixed-for-fixed equity criterion (fixed number of shares and
fixed amount of cash). Conversion features that are derivative liabilities are
accounted for separately from the host instrument. The embedded derivative is
accounted for as a financial instrument through profit or loss and is
initially measured at fair value, and changes therein are recognised in profit
or loss. The debt host liability is accounted for at amortised cost. In the
case of a hybrid financial instrument, IFRS 9 requires that the fair value of
the embedded derivative is calculated first and the residual value (residual
proceeds) is assigned to the host financial liability. The initial recognition
of the embedded derivative conversion feature has been recognised as a
liability on the balance sheet with any changes to the fair value of the
derivative recognised in the income statement. It has been fair valued using a
Black Scholes simulation which was performed at the transaction date and the
period end date.
The debt host liability will be accounted for using the amortised cost basis
with an effective interest rate of 5.67%. The Group will recognise the
unwinding of the discount at the effective interest rate, until the maturity
date. The carrying amount at the maturity date will equal the cash payment
required to be made.
Intra-Group financial instruments
Where the Group enters into financial guarantee contracts to guarantee the
indebtedness of other companies within its Group, the Group considers these to
be insurance arrangements and accounts for them as such. In this respect, the
Group treats the guarantee contract as a contingent liability until such time
as it becomes probable that the Group will be required to make a payment under
the guarantee.
(iii) Impairment
The Group recognises loss allowances for expected credit losses ("ECLs") on
financial assets measured at amortised cost, debt investments measured at
FVOCI and contract assets (as defined in IFRS 15).
The Group measures loss allowances at an amount equal to lifetime ECL, except
for other debt securities and bank balances for which credit risk (i.e. the
risk of default occurring over the expected life of the financial instrument)
has not increased significantly since initial recognition, which are measured
as twelve-month ECL.
Loss allowances for trade receivables and contract assets are always measured
at an amount equal to lifetime ECL. When determining whether the credit risk
of a financial asset has increased significantly since initial recognition and
when estimating ECL, the Group considers reasonable and supportable
information that is relevant and available without undue cost or effort. This
includes both quantitative and qualitative information and analysis, based on
the Group's historical experience and informed credit assessment and including
forward-looking information.
The Group assumes that the credit risk on a financial asset may have increased
if it is more than 120 days past due. This is assessed on a case-by-case
basis, taking into consideration the commercial relationship and historical
pattern of payments.
The Group considers a financial asset to be at risk of default when:
• the borrower is unlikely to pay its credit obligations to the
Group in full, without recourse by the Group to actions such as realising
security (if any is held); or
• the financial asset is more than 120 days past due, subject to
management discretion and commercial relationships.
Lifetime ECLs are the ECLs that result from all possible default events over
the expected life of a financial instrument.
Twelve-month ECLs are the portion of ECLs that result from default events that
are possible within 12 months after the reporting date (or a shorter period if
the expected life of the instrument is less than 12 months).
The maximum period considered when estimating ECLs is the maximum contractual
period over which the Group is exposed to credit risk.
Measurement of ECLs
Credit losses are measured and assessed on an individual balance by balance
basis. In calculating, the Group uses its historical experience, external
indicators and forward-looking information to calculate the expected credit
losses. The general approach incorporates a review for any significant
increase in counterparty credit risk since inception.
Credit-impaired financial assets
At each reporting date, the Group assesses whether financial assets carried at
amortised cost and debt securities at FVOCI are credit impaired. A financial
asset is "credit impaired" when one or more events that have a detrimental
impact on the estimated future cash flows of the financial asset have
occurred.
Write-offs
The gross carrying amount of a financial asset is written off (either
partially or in full) to the extent that there is no realistic prospect of
recovery. If there is recovery of the financial asset, a reversal will be
recognised in the profit and loss.
Share-based payments
Equity-settled share-based payments to employees and others providing similar
services are measured at the fair value of the equity instruments at the grant
date and spread over the period during which the employees become
unconditionally entitled to the options, which is based on a period of
employment of three years from the grant date. In accordance with IFRS 2, from
a single entity perspective, Kromek Group plc recognises an increase in
investment and corresponding increase in equity to represent the settlement.
The fair value determined at the grant date of the equity-settled share-based
payments is expensed on a straight-line basis over the vesting period, based
on the Group's estimate of equity instruments that will eventually vest. The
vesting date is determined based on the date an employee is granted options,
usually three years from date of grant. At each statement of financial
position date, the Group revises its estimate of the number of equity
instruments expected to vest as a result of the effect of non-market-based
vesting conditions and taking into account the average time in employment
across the year. The impact of the revision of the original estimates, if any,
is recognised in profit or loss such that the cumulative expense reflects the
revised estimate, with a corresponding adjustment to equity reserves.
Cash
Cash, for the purposes of the statement of cash flows, comprises cash in hand
and term deposits repayable between one and twelve months from balance sheet
date, less overdrafts repayable on demand.
3. Critical accounting judgements and key sources of
estimation uncertainty
In the application of the Group's accounting policies, which are described in
note 2, the Directors are required to make judgements, estimates and
assumptions about the carrying amounts of assets and liabilities that are not
readily apparent from other sources. The estimates and associated assumptions
are based on historical experience and other factors that are considered to be
relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognised in the period in which the
estimate is revised if the revision affects only that period or in the period
of the revision and future periods if the revision affects both current and
future periods.
Critical judgements in applying the Group's accounting policies
The following are the critical judgements that the Directors have made in the
process of applying the Group's accounting policies and that have the most
significant effect on the amounts recognised in the financial statements.
Development costs
As described in note 2, Group expenditure on development activities is
capitalised if it meets the criteria as per IAS 38. Management have exercised
and applied judgement when determining whether the criteria of IAS 38 is
satisfied in relation to development costs. As part of this judgement process,
management establish the future total addressable market relating to the
product or process, evaluate the operational plans to complete the product or
process and establish where the development is positioned on the Group's
technology road map and asses the costs against IAS 38 criteria. This process
involves input from the operational, financial and commercial functions and is
based upon detailed project cost analysis of both time and materials.
Performance obligations arising from customer contracts
As described in note 2, the Group recognises revenue as performance
obligations are satisfied when control of the goods and services is
transferred to the customer. Management have exercised and applied judgement
in determining what the performance obligations are and whether they are
satisfied over time or at a point in time. In applying this judgement,
management considers the nature of the overall contract deliverable, legal
form of the contract and economic resources required for the performance
obligation to be satisfied. Management disaggregate revenues by sales of goods
and services, revenue from development grants (such as Innovate UK) and
revenue from contract customers. Typically, revenue from the sales of goods
and services is recognised at a point in time. Revenue from development grants
and contract customers is recognised either over time or at a point in time
depending on the characteristics of the specific contract when applying IFRS
15.
In the current financial year, the Group announced the signing of an
Enablement Agreement and Patent Licensing Agreement with Siemens Healthineers.
Under the Enablement Agreement, the Group will be paid a total of $37.5m in
cash in four instalments over a four-year period. As described above and in
note 2, the Group recognises revenue as performance obligations are satisfied
when control of the goods and services is transferred to the customer.
Therefore, management have exercised and applied judgement in determining what
the performance obligations are and whether they are satisfied over time or at
a point in time. In applying this judgement, management had to consider the
initial value received by the customer upon signing of the agreement by virtue
of patent licensing, the value received by the customer over the four-year
period under the Enablement Agreement, an allocation of the $37.5m to the
multiple performance obligations identified under the Enablement Agreement and
the economic resources required for these performance obligations to be
satisfied in full. Management engaged an independent firm of Chartered
accountants to provide an independent review of the cash and revenue flows of
the contract.
Cash Generating Units
Management have exercised judgement in determining the number of CGUs. As set
out in note 10, an asset's CGU is the smallest identifiable group of assets
that includes the asset and generates cash inflows that are largely
independent of the cash inflows from other assets or groups of assets. An
asset or group of assets must be identified as a CGU where an active market
exists for the output produced by that asset or group of assets, even if some
or all of the output is used internally. This is because the asset or group of
assets could generate cash inflows that would be largely independent of the
cash inflows from other assets or group of assets. The smallest identifiable
group of assets identified by management can be split into three markets:
advanced imaging, CBRN and biological threat detection. CGUs are not
necessarily consistent with the way management monitors the business.
Management continues to oversee and monitor the business as two separate
operating segments - UK and US - and as three separate CGUs as noted above.
Key sources of estimation uncertainty
The key assumptions concerning the future, and other key sources of estimation
uncertainty at the statement of financial position date, that have a
significant risk of causing a material adjustment to the carrying amounts of
assets and liabilities within the next financial year, are discussed below.
i) Development costs
The key source of estimation uncertainty relates to the estimation of the
asset's recoverable amount, which involves assumptions in relation to future
uncertainties including discount rates and growth rates. For further details,
see note 10.
As disclosed in note 11, development costs are capitalised in accordance with
the accounting policy noted above. These capitalised assets are amortised over
the period during which the Group is expected to benefit.
ii) Contract revenue
This policy requires forecasts to be made of the outcomes of long-term
contracts, which include assessments and judgements on changes in expected
costs, progress measurement and the value received by the customer. A change
in the estimate of total forecast contract costs would impact the stage of
completion of those contracts and the level of revenue recognised thereon,
which could have a material impact on the results of the Group.
iii) R&D tax credit
The R&D tax credit is calculated using the current rules as prescribed by
HMRC. The estimation is based on the actual UK R&D projects that qualify
for the scheme that have been carried out in the period. Management estimates
the tax credit on a prudent basis and then obtains additional professional
input from the Group's tax advisers prior to submission of the claim to HMRC.
The Group has assumed 100% of the R&D tax credit is recoverable. If only
95% of the claim were to be accepted by HMRC, this would have the effect of
reducing the tax receivable and corresponding tax credit by £30k to £578k.
iv) Recoverability of receivables and amounts recoverable
on contract ("AROC")
Management judges the recoverability at the balance sheet date and makes a
provision for impairment where appropriate. The resultant provision for
impairment represents management's best estimate of losses incurred in the
portfolio at the balance sheet date, assessed on the customer risk scoring and
commercial discussions. Further, management estimates the recoverability of
any AROC balances relating to customer contracts. This estimate includes an
assessment of the probability of receipt, exposure to credit loss and the
value of any potential recovery. Management bases this estimate using the most
recent and reliable information that can be reasonably obtained at any point
of review. A material change in the facts and circumstances could lead to a
reversal of impairment proportional to the expected cash inflows supported by
this information.
v) Impairment reviews
Management conducts annual impairment reviews of the Group's non-current
assets on the consolidated statement of financial position. This includes
goodwill annually, development costs where IAS 36 requires it, and other
assets as the appropriate standards prescribe. Any impairment review is
conducted using the Group's future growth targets regarding its key markets of
nuclear detection, medical imaging, biological threat detection and security
screening. The current carrying value of this class of assets is £45,015k as
set out on the Group's consolidated statement of financial position.
Sensitivities are applied to the growth assumptions to consider any potential
long-term impact of current economic conditions. Provision is made where the
recoverable amount is less than the current carrying value of the asset.
Further details as to the estimation uncertainty and the key assumptions are
set out in note 10.
vi) Calculation of share-based payment charges
The charge related to equity-settled transactions with employees is measured
by reference to the fair value of the equity instruments at the date they are
granted, using an appropriate valuation model selected according to the terms
and conditions of the grant. The simplest option pricing model is the
Black-Scholes model, which tends to be suitable for simple forms of share
awards, in particular where there are no market-based performance conditions.
More complex share schemes require the use of a more complex model such as the
Monte Carlo Model. Judgement is applied in determining the most appropriate
valuation model and estimates are used in determining the inputs to the model.
The Group engaged a third-party expert in FY 2024 to value the LTIPs granted
in year using the Monte Carlo Model. Management believes an external valuation
should be carried out every two to three years.
vii) Convertible loan notes
In August 2022, the Group issued £2.8m of convertible loan notes. The
convertible loan is a hybrid financial instrument, whereby a debt host
liability component and an embedded derivative liability component was
determined at initial recognition. The conversion option did not satisfy the
fixed-for-fixed equity criterion (fixed number of shares and fixed amount of
cash).
During the period, the one remaining noteholder converted their convertible
loan holdings, as well as the interest accrued on that holding, into equity.
This resulted in the issue of 527,092 new ordinary shares during the period.
For convertible notes with embedded derivative liabilities, the fair value of
the embedded derivative liability is determined first, and the residual amount
is assigned to the debt host liability.
The embedded derivative has been fair valued using a Black Scholes simulation
that was performed at the transaction date and the period end date. The future
expected market share price of the Group and the volatility of the share price
are the key estimates that are critical in the determination of the fair value
of the embedded derivative and subsequently the debt host liability of the
convertible loan notes.
4. Operating segments
Products and services from which reportable segments derive their revenues
For management purposes, the Group is organised into two geographical
operating segments from which the Group currently operates (US and UK). Whilst
there are two operating segments (US and UK), the Group recognises three CGUs
(CBRN Detection, Advanced Imaging and Biological-threat Detection) on the
basis that operating segments can consist of multiple CGUs. Both operating
segments serve the three principal key markets. However, typically, the US
business unit focuses principally on advanced imaging and the UK focuses on
CBRN Detection and Biological-threat Detection. However, this arrangement is
flexible and can vary based on the geographical location of the Group's
customer.
The chief operating decision maker is the Board of Directors, which assesses
the performance of the operating segments using the following key performance
indicators: revenues, gross profit and operating profit. The amounts provided
to the Board with respect to assets and liabilities are measured in a way
consistent with the financial statements.
Analysis by geographical area
A geographical analysis of the revenue from the Group's customers, by
destination, is as follows:
2025 2024
£'000 £'000
United Kingdom 6,055 3,023
North America 18,134 5,937
Asia 118 1,374
Europe 2,178 8,950
Other 21 119
Total revenue 26,506 19,403
Analysis by business segment
The Group has aggregated its CGUs, being CBRN Detection, Advanced Imaging and
Biological-threat Detection, into two reporting segments being
CBRN/Biological-threat Detection and Advanced Imaging. The Board currently
considers this to be the most appropriate aggregation due to the main markets
that are typically addressed by the business units and the necessary skillsets
and expertise.
A business segmental analysis of the Group's performance is as follows:
Year ended 30 April 2025:
Advanced Imaging Total for Group
£'000 CBRN/Bio £'000
£'000
Revenue from sales 5,117 16,143
-Sale of goods and services 11,026
-Revenue from grants 313 189 502
-Revenue from contract customers 16,494 2,357 18,851
Total sales by segment 27,833 7,663 35,496
Removal of inter-segment sales (7,559) (1,431) (8,990)
Total external sales 20,274 6,232 26,506
Segment result - operating profit/(loss) before exceptional items 7,760 (3,023) 4,737
Interest received 103 4 107
Interest expense (980) (785) (1,765)
Exceptional items - - -
Profit/(loss) before tax 6,883 (3,804) 3,079
Tax credit 356 319 675
Profit/(loss) for the year 7,239 (3,485) 3,754
Reconciliation to adjusted EBITDA:
Net interest 877 781 1,658
Tax (356) (319) (675)
Depreciation of PPE and right-of-use assets 1,384 228 1,612
Amortisation of intangible assets 1,832 1,124 2,956
Change in fair value of derivative - - -
Share-based payment charge 715 313 1,028
Exceptional items - - -
Adjusted EBITDA 11,691 (1,358) 10,333
Other segment information
Property, plant and equipment 6,972 94 7,066
Right-of-use assets 2,427 351 2,778
Intangible assets 15,185 18,237 33,422
Trade receivables 1,990 2,286 4,276
Year ended 30 April 2024:
Advanced Imaging
£'000 CBRN/Bio Total for Group
£'000 £'000
Revenue from sales 10,616 27,764
-Sale of goods and services 17,148
-Revenue from grants 445 137 582
-Revenue from contract customers - 2,478 2,478
Total sales by segment 17,593 13,231 30,824
Removal of inter-segment sales (8,572) (2,849) (11,421)
Total external sales 9,021 10,382 19,403
Segment result - operating loss/(profit) before exceptional items (4,291) 2,916 (1,375)
Interest received 20 20 40
Interest expense (1,056) (818) (1,874)
Exceptional items (123) (123) (246)
Loss/(profit) before tax (5,450) 1,995 (3,455)
Tax credit 76 86 162
Loss/(profit) for the year (5,374) 2,081 (3,293)
Reconciliation to adjusted EBITDA:
Net interest 1,036 798 1,834
Tax (76) (86) (162)
Depreciation of PPE and right-of-use assets 1,473 278 1,751
Amortisation of intangible assets 1,695 1,063 2,758
Change in fair value of derivative (258) (259) (517)
Share-based payment charge 320 170 490
Exceptional items 123 123 246
Adjusted EBITDA (1,061) 4,168 3,107
Statement of financial position
Property, plant and equipment 8,511 164 8,675
Right-of-use assets 2,893 507 3,400
Intangible assets 15,878 16,848 32,726
Trade receivables 5,538 4,614 10,152
Inter-segment sales are charged on an arms-length basis.
The accounting policies of the reportable segments are the same as the Group's
accounting policies described in note 2. Segment result represents the result
reported by each segment. This is the measure reported to the Group's Chief
Executive for the purpose of resource allocation and assessment of segment
performance.
Revenues from major products and services
The Group's revenues from its major products and services were as follows:
2025 2024
£'000 £'000
Product revenue 7,006 16,351
Research and development revenue 3,006 3,052
Licensing revenue 16,494 -
Consolidated revenue 26,506 19,403
Information about major customers
Included in revenue is £16,494k (2024: £nil) arising from the Enablement
Agreement with Siemens Healthineers signed in the period. Included in revenues
arising from Advanced Imaging operations are revenues of £16,494k (2024:
£4,878k) that arose from the Group's largest commercial customer. Included in
revenues arising from CBRN/Bio operations are revenues of approximately
£2,300k (2024: £2,121k) that arose from a major commercial customer of the
Group and the largest commercial customer of the CBRN operations.
5. Profit before tax for the year
Profit before tax for the year has been arrived at after charging/(crediting):
2025 2024
£'000 £'000
Net foreign exchange gains (34) (26)
Research and development costs recognised as an expense 1,012 793
Depreciation of property, plant and equipment (see note 12) 1,416 1,751
Release of capital grant (44) (44)
Amortisation of internally-generated intangible assets (see note 11) 2,956 2,758
Cost of inventories recognised as expense (see note 14) 2,846 5,590
Exceptional items - 246
Staff costs (see note 6) 11,944 10,051
6. Staff costs
The average monthly number of employees (excluding Non-Executive Directors)
was:
2025 2024 Number
Number
Directors (Executive) 3 3
Research and development, production 136 136
Sales and marketing 7 8
Administration 16 15
162 162
Their aggregate remuneration comprised:
2025 2024
£'000 £'000
Wages and salaries 9,323 8,176
Social security costs 815 747
Pension scheme contributions 778 638
Share-based payments 1,028 490
11,944 10,051
The total Directors' emoluments (including Non-Executive Directors) was
£1,796k (2024: £1,044k). The aggregate value of contributions paid to money
purchase pension schemes was £29k (2024: £27k) in respect of three Directors
(2024: four Directors). There has been no exercise of share options by the
Directors in the period and therefore no gain recognised in the year (2024:
£nil).
The highest paid Director received emoluments of £566k (2024: £313k),
including an amount paid to a money purchase pension scheme of £4k (2024:
£4k).
Key management compensation:
2025 2024
£'000 £'000
Wages and salaries and other short-term benefits 1,676 1,184
Social security costs 145 117
Pension scheme contributions 39 36
Share-based payment expense 967 456
2,827 1,793
Key management comprise the Executive Directors, Non-Executive Directors and
senior operational staff. There were three Executive Directors in 2025 (2024:
three); four Non-Executive Directors in 2025 (2024: four) and two senior
operational staff in 2025 (2024: two).
7. Finance costs
2025 2024
£'000
£'000
Interest on bank overdrafts, loans and borrowings 1,551 1,277
Interest expense for lease arrangements 214 244
Interest on convertible loan notes - 353
Total interest expense 1,765 1,874
8. Tax
Recognised in the income statement
2025 2024
£'000
£'000
Current tax credit:
UK corporation tax on losses in the year - 278
Adjustment in respect of previous periods 38 58
Foreign taxes paid - (10)
Total current tax 38 326
Deferred tax:
Origination and reversal of timing differences 719 (164)
Adjustment in respect of previous periods (82) -
Total deferred tax 637 (164)
Total tax credit in income statement 675 162
The main rate of UK corporation tax for the financial year was 25% (2024: 25%)
whilst the US federal corporate tax rate was 21% (2024: 21%). The deferred tax
asset at 30 April 2025, which has been recognised, has been calculated at 25%
(2024: 25%).
Reconciliation of tax credit
The charge for the year can be reconciled to the profit in the income
statement as follows:
2025 2024
£'000 £'000
Profit/(loss) before tax 3,079 (3,455)
Tax at the UK corporation tax rate of 25% (770) 864
(2024: 25%)
Non-taxable income/expenses not deductible 573 (148)
Effect of R&D (39) 737
Effect of other tax rates/credits (158) (58)
Unrecognised movement on deferred tax 888 (1,379)
Adjustment in respect of previous periods (44) 58
Chargeable losses (42) -
Effects of overseas tax rates 261 96
Deferred tax credited/(charged) directly to equity 6 (8)
Total tax credit for the year 675 162
Further details of deferred tax are given in note 16. There are no tax items
charged to other comprehensive income.
The effect of R&D is the tax impact of capitalised development costs being
deducted in the year in which they are incurred.
The rate of UK corporation tax for the year is 25% (2024: 25%). The other tax
jurisdiction that the Group currently operates in is the US. Any deferred tax
arising from the US operations is calculated at 31% (2024: 31%), which
represents the federal plus state tax rate.
9. Earnings per share
As the Group is profit making, dilution has the effect of reducing the
earnings per share. The calculation of the earnings per share is based on the
following data:
Profit for the year 2025 2024
£'000
£'000
3,754 (3,293)
Profit/(loss) for the purposes of basic and diluted earnings per share being
net profit/(loss) attributable to owners of the Group
2025 2024
Number of shares Number Number
Weighted average number of ordinary shares for the purposes of basic earnings 641,488,404 595,404,643
per share
Effect of dilutive potential ordinary shares:
Share options 1,050,353 1,018,796
Weighted average number of ordinary shares for the purposes of diluted 642,538,757 596,423,439
earnings per share
2025 2024
Basic earnings/(loss) per share (p) 0.6 (0.6)
Diluted earnings/(loss) per share (p) 0.6 (0.6)
Basic earnings per share is calculated by dividing the profit 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.
10. Intangible assets including goodwill
£'000
Cost
At 1 May 2024 and 30 April 2025 1,275
Accumulated impairment losses
At 1 May 2024 and 30 April 2025 -
Carrying amount
At 1 May 2024 and 30 April 2025 1,275
Goodwill acquired in a business combination is allocated, at acquisition, to
the CGUs that are expected to benefit from that business combination. Before
recognition of impairment losses, the carrying amount of goodwill had been
allocated as follows:
CGU Goodwill Intangibles
£'000 £'000
Advanced Imaging 1,275 14,053
CBRN Detection - 4,929
Biological-Threat Detection - 13,218
Total 1,275 32,200
The goodwill arose on the acquisition of Nova R&D, Inc. in 2010, and
represents the excess of the fair value of the consideration given over the
fair value of the identifiable assets and liabilities acquired.
Goodwill has been allocated to the Advanced Imaging CGU.
Impairment tests
The Group tests goodwill annually for impairment or more frequently if there
are indications that goodwill might be impaired, by comparing the carrying
value of the goodwill to its value in use on a discounted cash flow basis.
The Group tests intangible assets with finite lives for impairment if an
indicator exists. In undertaking the impairment test, management considered
both internal and external sources of information. The impairment testing did
not identify any impairments in each of the CGUs.
Forecast cash flows
Management have prepared cash flow forecasts for 10 years (CBRN
Detection/Biological-threat Detection) and 15 years (Advanced Imaging) plus a
perpetuity. This exceeds the five years as set out in IAS 36 but has been used
on the basis that the entities are in the early stage of their maturity and
will not have reached steady state after five years. Management have
visibility over contracts in place and in the pipeline that enable it to
forecast accurately and the cash flows are based on the useful economic life
of the 'know how', which is considered to be the essential asset.
Advanced Imaging
The key assumptions to the value-in-use calculations are set out below:
- Growth rate. The 2025 model includes a prudent revenue growth rate
in years 1 and 2. This growth rate comprises increases in raw material to
finished product efficiencies, factoring in existing contracts and those in
the pipeline and is reflective of historical growth rates as well as the
Group's share of the overall markets the Advanced Imaging CGU operates in.
- Discount rates. Management have derived a pre-tax discount rate of
8.93% (2024: 9.13%) using the latest market assumptions for the risk-free
rate, the equity premium and the net cost of debt, which are all based on
publicly available sources, as well as adjustments for forecasting risk for
which management considered the historical growth of the entity as well as the
visibility of cash flows from a contracted perspective, which are all based on
publicly available sources. The discount rate is lower than that used in 2024.
The key drivers of this change are the changes in market assumptions for US
corporate bond yields and risk-free rates.
The Challenge Model Base Case incorporates the following into the Advanced
Imaging forecast:
· Revised year 1 and year 2 cash flows to match the severe but
plausible budget conducted as part of the Going Concern review.
· Modelled a smoother increase in revenues from the year 1 and year 2
budgets to year 15 whilst taking into consideration potential capacity
constraints.
CBRN Detection
- Growth rate. The 2025 model includes a growth rate of 20% per annum,
which is reflective of recent growth in this particular sector of the
business. This growth rate considers existing contracts and those in the
pipeline and is reflective of historical growth rates as well as the Group's
share of the overall markets the CBRN Detection CGU operates in. No growth is
assumed after 10 years.
- Discount rates. Management have derived a pre-tax discount rate of
12.24% (2024: 11.85%) using the latest market assumptions for the risk-free
rate, the equity premium and the net cost of debt, which are all based on
publicly available sources, as well as adjustments for forecasting risk for
which management considered the historical growth of the entity as well as the
visibility of cash flows from a contracted perspective. The discount rate is
higher than that used in 2024. The key drivers of this change are the changes
in market assumptions for UK corporate bond yields and risk-free rates.
The Challenge Model Base Case scenarios incorporates the following into the
CBRN Detection forecast:
· Revised year 1, 2 and 3 cash flows to match the severe but plausible
budget conducted as part of the Going Concern review.
· Modelled a smoother increase in revenues from the year 1 and year 2
budgets to year 10.
Biological-Threat Detection
- Growth rate. The 2025 model is based on management's assumption of
future programme revenue and product delivery. The forecast revenue consists
of known revenue opportunities across four key areas. For prudency, additional
upside revenue from other known opportunities has been excluded.
- Discount rates. Management have derived a pre-tax discount rate of
12.24% (2024: 11.85%) using the latest market assumptions for the risk-free
rate, the equity premium and the net cost of debt, which are all based on
publicly available sources, as well as adjustments for forecasting risk for
which management considered the historical growth of the entity as well as the
visibility of cash flows from a contracted perspective. The discount rate is
higher than that used in 2024. The key drivers of this change are the changes
in market assumptions for UK corporate bond yields and risk-free rates.
The Challenge Model Base Case scenarios incorporates the following into the
Biological-threat Detection forecast:
· Modelled a smoother increase in revenues from the year 1 and year 2
budgets to year 10.
Sensitivities
The headroom in the base case model for each CGU are noted below:
Advanced Imaging headroom CBRN Detection headroom Biological-Threat Detection headroom
Base model £13,941k £31,480k £91,796k
Combination of Discount Rate +2% and Challenge model £10,887k £26,672k £79,658k
Combination of Discount Rate -2% and Challenge model £17,431k £37,139k £105,954k
The table below sets out the headroom in the challenge base model for each
CGU:
Advanced Imaging headroom CBRN Detection headroom Biological-Threat Detection headroom
Challenge base model £9,588k £24,926k £35,226k
Combination of Discount Rate +2% and Challenge model £6,448k £20,731k £29,921k
Combination of Discount Rate -2% and Challenge model £13,330k £29,860k £41,373k
The Directors have reviewed the recoverable amount of each CGU and do not
consider there to be any impairment in 2025 or 2024.
11. Other intangible assets
Development costs Patents, Total
£'000 trademarks & other intangibles £'000
£'000
Cost
At 1 May 2024 45,394 8,363 53,757
Additions 4,369 106 4,475
Exchange differences (1,173) (274) (1,447)
At 30 April 2025 48,590 8,195 56,785
Amortisation
At 1 May 2024 14,106 6,925 21,031
Charge for the year 2,676 280 2,956
Exchange differences (392) (232) (624)
At 30 April 2025 16,390 6,973 23,363
Carrying amount
At 30 April 2025 32,200 1,222 33,422
At 30 April 2024 31,288 1,438 32,726
The Group amortises capitalised development costs on a straight-line basis
over a period of 2-15 years rather than against product sales directly
relating to the development expenditure. Any impairment of development costs
are recognised immediately through the profit and loss.
Patents and trademarks are amortised over their estimated useful lives, which
is on average 10 years.
The carrying amount of acquired intangible assets arising on the acquisitions
of Nova R&D, Inc. and eV Products, Inc. as at 30 April 2025 was £169k
(2024: £180k), with amortisation to be charged over the remaining useful
lives of these assets, which is between 3 and 13 years.
The amortisation charge on intangible assets is included in administrative
expenses in the consolidated income statement.
Further details on impairment testing are set out in note 10.
12. Property, plant and equipment
Computer equipment Plant and machinery Fixtures Total
Lab equipment £'000 £'000 and £'000
£'000 fittings
£'000
Cost or valuation
At 1 May 2024 210 1,495 18,983 636 21,324
Additions - 74 52 60 186
Disposals - (3) (628) - (631)
Transfer between classes - - (8) 8 -
Exchange differences - (40) (497) (23) (560)
At 30 April 2025 210 1,526 17,902 681 20,319
Accumulated depreciation and impairment
At 1 May 2024 159 1,383 10,656 451 12,649
Charge for the year 42 60 996 43 1,141
Disposals - - (196) - (196)
Exchange differences - (36) (290) (15) (341)
At 30 April 2025 201 1,407 11,166 479 13,253
Carrying amount
At 30 April 2025 9 119 6,736 202 7,066
At 30 April 2024 51 112 8,327 185 8,675
13. Right-of-use assets
Details of the Group's right-of-use assets and their carrying amount are as
follows:
£'000
Cost
Cost at 1 May 2024 6,017
Additions -
Effect of movements in exchange rates (236)
Cost at 30 April 2025 5,781
Depreciation
Depreciation at 1 May 2024 2,617
Charge for the year 471
Exchange differences (85)
Depreciation at 30 April 2025 3,003
Carrying amount
At 30 April 2025 2,778
At 30 April 2024 3,400
14. Inventories
2025 2024
£'000 £'000
Raw materials 2,681 2,167
Work-in-progress 8,682 7,914
Finished goods 745 214
12,108 10,295
The cost of inventories recognised as an expense during the year in respect of
continuing operations was £2,846k (2024: £5,590k).
The write-down of inventories to net realisable value amounted to £1,225k
(2024: £1,292k). The reversal of write-downs amounted to £166k (2024:
£123k).
15. Amounts recoverable on contracts and trade and other
receivables
Trade and other receivables
2025 2024
£'000 £'000
Amount receivable for the sale of goods 4,276 10,152
Other receivables 1,466 416
Prepayments and accrued income 694 2,415
Current tax assets 608 372
7,044 13,355
Amount receivable for the sale of goods
Trade receivables disclosed above are classified as financial assets at
amortised cost.
The average credit period taken on sales of goods is 81 days. The Group
reviews the recoverability of receivables over 120 days every six months and
on an individual balance by balance basis. This impairment review seeks
evidence of recoverability, most notably, where specific support is being
provided to strategic partners in the marketing of new products. The Group's
commercial and finance functions will then determine if the Group should
recognise an impairment allowance. When considering the impairment allowance,
strategic and commercial relationships are taken into account.
Before accepting any new customer, the Group uses an external credit scoring
system to assess the potential customer's credit quality and defines credit
limits by customer.
The Group does not hold any collateral or other credit enhancements over any
of its trade receivables, with the exception of stock recovered from customers
in respect of the doubtful debts disclosed below.
Management assessed the requirement for a general bad debt provision under
IFRS 9. The expected loss rates are based on the combination of the Group's
historical credit losses experienced over a year period coupled with forward
looking information. Management also note that the Group generally has a
consistent recovery rate on trade and other receivables due to a significant
amount of work being completed for reputable businesses. However, management
does note that dealings with businesses can be difficult at times to recover
funds owed and, as such, provisions have been raised on historic knowledge of
each customer's credit risk. During the year, the Group provided for certain
accounts receivable balances where the collection of the outstanding amounts
is uncertain.
In determining the recoverability of a trade receivable, the Group considers
any change in the credit quality of the trade receivable from the date credit
was initially granted up to the reporting date.
The Directors consider that the carrying amount of trade and other receivables
is approximately equal to their fair value.
At 30 April 2025, trade receivables are shown net of an impairment allowance
of £1,469k (2024: £2,548k) arising from the ordinary course of business as
follows:
2025 2024
£'000 £'000
Balance at 1 May 2,548 2,496
Provided during the year 1,244 106
Released during the year (2,112) (61)
Impact of foreign exchange (211) 7
Balance at 30 April 1,469 2,548
The doubtful debt provision records impairment losses unless the Group is
satisfied that no recovery of the amount owing is possible, at which point the
amounts considered irrecoverable are written off against the trade receivables
directly.
The £2.1m (2024: £0.1m) of the doubtful bad debt provision released during
the year was deemed irrecoverable and written off in full against the trade
receivable directly.
During the year, management elected to write off £0.3m (2024: £0.1m) of
unprovided trade receivables.
As at 30 April 2025, the lifetime expected loss provision for trade
receivables was:
Current More than 30 days past due More than 60 days past due More than 90 days past due More than 120 days past due Total
£'000 £'000 £'000 £'000 £'000 £'000
Expected loss rate 6% 11% 16% 0% 33%
Gross carrying amount 1,098 513 136 - 3,998 5,745
Loss provision 66 56 22 - 1,325 1,469
As at 30 April 2024, the lifetime expected loss provision for trade
receivables was:
Current More than 30 days past due More than 60 days past due More than 90 days past due More than 120 days past due Total
£'000 £'000 £'000 £'000 £'000 £'000
Expected loss rate 4% 13% 51% 0% 54%
Gross carrying amount 7,894 807 3 - 3,996 12,700
Loss provision 302 105 2 - 2,139 2,548
16. Deferred tax
The following are the major deferred tax liabilities and assets recognised by
the Group and movements thereon during the current and prior reporting period:
Fair value revaluation of acquired intangibles Accelerated capital allowances Short-term timing differences Tax Share-based payments Total
£'000 £'000 £'000 losses £'000 £000
£'000
At 1 May 2024 389 7,477 (822) (6,764) (124) 156
(Credit)/charge to profit or loss - 272 (2,409) 1,559 (58) (636)
(Credit)/charge to equity - - - - 6 6
389 7,749 (3,231) (5,205) (176) (474)
At 30 April 2025
Deferred tax assets and liabilities are offset where the Group has a legally
enforceable right to do so. The following is the analysis of the deferred tax
balances (after offset) for financial reporting purposes:
2025 2024
£'000 £'000
Deferred tax liabilities 8,136 6,917
Deferred tax assets (8,610) (6,761)
(474) 156
At the statement of financial position date, the Group has unused tax losses
of £52,270k (2024: £58,465k) available for offset against future profits. A
deferred tax asset has been recognised in respect of £20,820k (2024:
£27,056k) of such losses. The asset is considered recoverable because it can
be offset to reduce future tax liabilities arising in the Group. No deferred
tax asset has been recognised in respect of the remaining £31,450k (2024:
£31,409k) as it is not yet considered sufficiently certain that there will be
future taxable profits available. All losses may be carried forward
indefinitely subject to a significant change in the nature of the Group's
trade with US losses having a maximum life of 20 years.
17. Trade and other payables
Payable within one year:
2025 2024
£'000 £'000
Trade payables and accruals 5,200 7,345
Deferred income 3,621 130
8,821 7,475
Payable in more than one year:
2025 2024
£'000 £'000
Deferred income 819 920
819 920
Trade payables and accruals principally comprise amounts outstanding for trade
purchases and ongoing costs. The average credit period taken for trade
purchases is 113 days. For all suppliers, no interest is charged on the trade
payables. The Group has financial risk management policies in place to ensure
that all payables are paid within the pre-agreed credit terms.
Included within trade payables and accruals is £0.74m (2024: £nil) of
accrued interest that was converted into shares post year end. Please see note
22 for further details.
Deferred income relates to government grants received that have been deferred
until the conditions attached to the grants are met.
The Directors consider that the carrying amount of trade payables approximates
to their fair value.
18. Lease obligation
The Group has measured lease liabilities at the present value of the remaining
lease payments, discounted using the Group's incremental borrowing rate at the
date of initial application. Details of the Group's liability in respect of
right-of-use assets and their carrying amount are as follows:
2025 2024
£'000 £'000
Opening lease liability at 1 May 4,188 4,494
New leases entered into during the year - 118
Finance costs 214 244
Payments made during the year (660) (678)
Foreign exchange (gain)/loss (182) 10
At 30 April 3,560 4,188
Presented as:
Lease liability payable within 1 year 387 452
Lease liability payable in more than 1 year 3,173 3,736
At 30 April 3,560 4,188
Rental charges associated with other low value leased assets that fall within
the expedient threshold have been expensed to the profit and loss accounts,
amounting to £46k (2024: £38k).
19. Borrowings
2025 2024
£'000 £'000
Secured borrowing at amortised cost
Term loan facility - 5,767
Other borrowings 493 2,298
Convertible loan notes - 34
493 8,099
Total borrowings
Amount due for settlement within 12 months 12 7,573
Amount due for settlement after 12 months 481 526
During the period, the Group repaid in full the £5.5m secured term loan
facility with Polymer N2 Ltd, an existing and significant shareholder in the
Company. The facility had a repayment date for the principal sum of 27 March
2025. It carried a fixed interest rate of 9.5%, which was payable quarterly,
and Kromek had 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 fell due. Kromek exercised this option and issued 13,440,514 new
ordinary shares post year-end.
In 2025, other borrowings only related to Covid-related Economic Injury
Disaster Loans that the Group's US operations were eligible to apply for in
2020 and 2021. 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.
During the period, the Group received a short-term £2.5m loan in June 2024, a
short-term £0.4m loan in September 2024, a short-term £0.5m loan in October
2024 and a short-term £1.0m loan in December 2024 to aid with working capital
requirements. These were subsequently repaid in February 2025 alongside £1.5m
of short-term loans received in the prior year.
The remaining convertible loan notes of £34k were converted into shares in
the period.
Finance lease liabilities are secured by the assets leased. The borrowings are
at a fixed interest rate with repayment periods not exceeding five years.
The weighted average interest rates paid during the year were as follows:
2025 2024
% %
Term loan facility 8.34 6.38
Other borrowing facilities 3.03 2.73
20. Notes to the cash flow statement
2025 2024
£'000
£'000
Profit/(Loss) for the year 3,754 (3,293)
Adjustments for:
Finance income (107) (40)
Finance costs 1,765 1,874
Change in fair value of derivative - (203)
Income tax credit (640) (322)
Deferred tax movement (630) -
Capitalisation and amortisation of loan fees 135 -
Depreciation of property, plant and equipment and ROU 1,612 1,751
Amortisation of intangible assets 2,955 2,758
Disposal of fixed assets 435 35
Share-based payment expense 1,028 490
Operating cash flow before movements in working capital 10,307 3,050
(Increase)/Decrease in inventories (1,813) 599
Decrease/(Increase) in receivables 6,547 (7,454)
Increase/(Decrease) in payables 469 (62)
Cash generated/(used) in operations 15,510 (3,867)
Income taxes received 391 1,065
Net cash from/(used in) operating activities 15,901 (2,802)
Cash and cash equivalents
2025 2024
£'000
£'000
Cash and bank balances 1,704 466
Cash and cash equivalents comprise cash and term bank deposits repayable
between one and twelve months from balance sheet date, net of outstanding bank
overdrafts. The carrying amount of these assets is approximately equal to
their fair value.
21. Reconciliation of liabilities arising from financing
activities
Borrowings Lease liability
£'000
£'000
Balance at 1 May 2024 8,099 4,188
Cash flows
- Repayments of borrowings (11,438) -
- Repayments of interest (1,387) (660)
- Additions and modifications 4,400 -
Non-cash
- Conversions (776) -
- Effect of exchange rates (34) (182)
- Interest applied 1,629 214
Balance at 30 April 2025 493 3,560
22. Events after the balance sheet date
Post year-end, the Group exercised its option to repay the total accrued
interest on the £5.5m secured term loan facility with Polymer N2 Ltd through
the issue of new Ordinary Shares at the trailing 10-day volume weighted
average price of the Company's Ordinary Shares on the date that payment fell
due. This resulted in the issue of 13,440,514 new ordinary shares.
The Group has successfully secured a £6.0m revolving credit facility with
HSBC to support and assist working capital requirements. The facility is for a
36-month period. The facility will be secured by a debenture and a composite
guarantee across the Group. The interest rate on the RCF is Bank of England
Base Rate +2.75%. In addition, the Group has secured a £0.5m asset finance
facility with HSBC. This facility will be used to support capital expenditure.
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