On January 13th, the Kromek Group published its interim financial results for the six month period ending 31st October 2020. These show that both top-line sales growth, as well as underlying profitability, deteriorated during the period. Total group sales reached £4.5m for the six months, compared with £5.3m during the same period in 2019, a decrease of approximately -15% year-on-year. For the same period, gross margin decreased from 58% to 54% and adjusted EBITDA deteriorated from a £0.6m loss to a £0.9m loss. The COVID-19 pandemic was a major contributory factor behind the weaker financial results as customers postponed or delayed projects. Up until the end of February 2020, the Group did not experience any material impact on its business due to the pandemic, however, in the subsequent months, it experienced delays due to constraints imposed upon its subcontractors, suppliers and customers. The company reported a strengthening of orders and shipments across all segments during the final two months of the period, indicating that commercial activity began to normalise.
The medical imaging segment
The medical segment provides Cadmium Zinc Telluride (CZT) based detector modules for various medical imaging applications including for single photon emission computed tomography (SPECT) and molecular breast imaging (MBI). Kromek’s CZT detector platforms offer a significantly improved image quality while simultaneously lowering radiation dose and cost, making it an attractive technology for SPECT and MBI system OEMs to adopt. During H2 2018/19, a major medical system OEM awarded the Group a contract to deliver CZT detectors and associated electronics, which is expected to be worth approximately USD$ 58m over a seven-year period. Towards the end of the period, the Group recommenced delivery under this contract and it’s OEM customer has subsequently resumed system installations. System installations are anticipated to continue to increase during H2 2020/21, enabling the Group to return to a pre-COVID contracted delivery schedule. During October 2020, the company announced the commencement of a new development project in collaboration with Adaptix Ltd and the University of Manchester. The project is to develop a new medical imaging system to be used during cancer surgery, which is a new application area for the Group’s technology. The project is anticipated to run for three-years and has received grant funding from Innovate UK.