Key contracts postponed at radiation detection business
Kromek, a listed supplier of detection technology for the medical, security screening and nuclear markets, says two of its key contracts will now be postponed to the new financial year.
The Huddersfield-based listed business has released an update on trading for the 12-month period ended 30 April 2020 and its response to COVID-19.
It says that until the end of February 2020, the Group did not experience any material impact as a result of the outbreak.
However, in the subsequent two months, it has experienced delays in certain projects due to constraints imposed upon sub-contractors, suppliers and customers.
Due to this, along with the contract postponements, Kromek expects to report revenues of £14.5m – similar to FY 2018/2019 revenues. Adjusted EBITDA is expected to be breakeven.
Its update adds: “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 £10m, including £3m utilised under its revolving credit facility due for renewal in 2024 as well as a £2m five-year term-loan.”
As part of its response to the virus, some of the Group’s employees in the UK and US have been shifted to remote working.
Kromek says its use of virtualised applications and storage on the cloud means there has been no significant reduction in the Group’s delivery capability for clients.
It notes the measures it has taken to mitigate the impact of the emergency are expected to cut monthly running costs and cash outflow, generating annualised savings of about £3m.
The firm’s update states: “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.”
