Kromek Group PLC Full Year Trading Update and Response to COVID-19 (5838L)
May 01 2020 - 2:00AM
UK Regulatory
TIDMKMK
RNS Number : 5838L
Kromek Group PLC
01 May 2020
1 May 2020
Kromek Group plc
("Kromek" or the "Group")
Full Year 2019/20 Trading Update and Response to COVID-19
Kromek (AIM: KMK), a worldwide supplier of detection technology
focusing on the medical, security screening and nuclear markets,
provides an update on trading for the 12-month period ended 30
April 2020 and its business response to COVID-19.
FY 2019/20 Trading Update
As previously announced in its interim results on 11 December
2019, Kromek started the second half of the financial year
2019/2020 with increasing commercial momentum and delivering on
multi-year contracts won over the previous three years. Until the
end of February 2020, the Group did not experience any material
impact on its businesses as a result of the COVID-19 outbreak.
However, in the subsequent two months, it has experienced a delay
in certain projects due to constraints imposed upon
sub-contractors, suppliers and customers. Also, it has been
informed that two of its key contracts will now be postponed to the
new financial year. As a result, Kromek expects to report revenues
of GBP14.5m, similar to FY 2018/2019 revenues, and adjusted EBITDA
is expected to be breakeven. The Group will continue to deliver on
its multi-year contracts, which give it good visibility over future
revenues, and it has a healthy pipeline of projects. At 30 April
2020, the Group had a robust balance sheet and cash of
approximately GBP10m, including GBP3m utilised under its revolving
credit facility due for renewal in 2024 as well as a GBP2m
five-year term-loan.
Response to COVID-19
In the middle of March 2020, Kromek activated its business
continuity plan in response to the COVID-19 outbreak. In order to
protect the health and safety of its workforce, some of the Group's
employees in the UK and US were transitioned to remote working.
Kromek uses virtualised applications and storage on the cloud,
which has enabled easier remote working and therefore there has
been no significant reduction in the Group's delivery capability
for clients. Sales and marketing activities have also adapted to
current market conditions.
Furthermore, a number of temporary mitigation measures have been
implemented to bolster the liquidity of the business and its
financial position. Actions taken include the implementation of
some organisational restructuring; ceasing all discretionary
capital expenditure; curtailing all travel and non-essential spend;
and, securing a short-term rent concession on the Group's leased
properties. These measures, along with others in the pipeline, are
expected to reduce monthly running costs and cash outflow,
generating annualised savings of approximately GBP3m.
The Group also leveraged its technical and manufacturing skills
in response to increased demand for sophisticated medical equipment
such as ventilators. It formed a partnership with Metran Co., Ltd.
to commence manufacture and sale of medical ventilators in the UK
and globally. Kromek is receiving significant interest in the
ventilators from potential customers in Europe and worldwide, and
it is on track to produce at least 2,000 units by the end of July
2020.
Outlook
Given the evolving nature of the pandemic and the uncertainty
over its length and severity, Kromek is working diligently to
assess, plan for and mitigate the potential impact on its core
markets by using its technical and manufacturing skills to procure
other opportunities in the short-term. As a result, the Group is
unable to provide accurate market guidance for FY 2020/2021. The
fundamentals of the business remain sound, and the Board is
confident in the Group's ability to withstand the current
situation, maximise the short-term opportunities and deliver on its
long-term growth ambitions.
A further announcement will be made as and when appropriate.
This announcement contains inside information.
For further information, please contact:
Kromek Group plc
Arnab Basu, CEO
Derek Bulmer, CFO +44 (0)1740 626 060
Cenkos Securities plc (Nominated Adviser
and Broker)
Max Hartley (NOMAD)
Julian Morse (Sales) +44 (0)20 7397 8900
Luther Pendragon (PR)
Harry Chathli
Claire Norbury
Alexis Gore
Joe Quinlan +44 (0)20 7618 9100
About Kromek Group plc
Kromek Group plc is a technology group (global HQ in County
Durham) and a leading developer of high performance radiation
detection products based on cadmium zinc telluride ("CZT") and
other advanced technologies. Using its core technology platforms,
Kromek designs, develops and produces x-ray and gamma ray imaging
and radiation detection products for the medical, security
screening and nuclear markets.
The Group's products provide high resolution information on
material composition and structure and are used in multiple
applications, ranging from the identification of cancerous tissues
to hazardous materials, such as explosives, and the analysis of
radioactive materials.
The Group's business model provides a vertically integrated
technology offering to customers, from radiation detector materials
to finished products or detectors, including software, electronics
and application specific integrated circuits ("ASICs").
The Group has operations in the UK and US (California and
Pennsylvania), and is selling internationally through a combination
of distributors and direct OEM sales.
Currently, the Group has over one hundred full-time employees
across its global operations. Further information on Kromek Group
is available at www.kromek.com and
https://twitter.com/kromekgroup.
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