|Thanks for the help in trying to sort out this question.
Until Kromek give a statement about the $159million contract mentioned in the 4/4/14 RNS, it will continue in my opinion to muddy the waters and may or may not make investors extremely circumspect about the reliability or otherwise of company forecasts and earnings visibility.
Kromek are now two and a half years into the seven year $159million contract and it does not cut the mustard with me that they cannot give chapter-and-verse on the status of this mega-contract.
ALL IMO. DYOR.
|I listened to the webinar, but other pressures meant I did not give full attention. With that warning, I think the $159m contract was raised in the questions, and answered by saying that the customer was growing. I infer that although KMK are entitled to remove exclusivity, they haven't because they still see the relationship as valuable.
I must listen to the recording of the webinar with more attention. It can be accessed at hTTps://www.equitydevelopment.co.uk/webinars/?d=%3D%3DQNzIjM (assuming ADVFN don't remove this link!)
PS. Just listened to the recording, and I'm sorry to find that the recording does not include the questions asked at the end, so does not confirm my hesitant comments on the $159m contract.|
|You are right DAZ, but this was a MULTI-YEAR contract which they announced officially by way of RNS on 4/4/14.- As far as I can see , they have not retracted their RNS.
The enormous size of the $159million contract DWARVES everything else by way of comparison and makes the DARPA contracts look microscopic by comparison.
If the $159million contract is still in place- albeit subject to some delays- it remains a game-changer. If it's not, then we need to know in my opinion.
That is why I personally believe that it is of the essence for all investors present/past/future/potential to know what the precise status is of the $159million contract.
Surely, it can't be that hard for Kromek to provide a specific update on their 4/4/14 RNS $159million contract announcement to clarify the situation.
ALL IMO. DYOR.
|That was 2 1/2 years ago QP, I can't speak for the company but clearly something didn't go according to plan. Have you tried contacting the company for clarification?|
|But how can you square these comments away with the following statement from Kromek as detailed in their 4/4/14 RNS?
This is the extract:
"For continued exclusivity the contract provides for revenues of $1.4m and $10.2m in the Financial Years 2014-15 and 2015-16 respectively and the overall value of the contract over the next seven years is up to $159m,"
This RNS says they have revenues of US$10.2m in 2015/16 FROM ONE CONTRACT ALONE.
I don't understand how these numbers all fit together with the latest forecasts. It doesn't seem clear to me.
How can they say they have visibility when the numbers -including those clearly detailed in the 4/4/14 RNS- don't seemingly compute.
Maybe, it would be helpful if Kromek could clear up for once and all what is happening to the $159million contract.
ALL IMO. DYOR.
|I listened to the Kromek webinar hosted by Equity Development today and this puts some numbers on the points above
Kromek now have 88% visibility of 2016/17 forecast revenues, so taking ED's forecast of £8.9m, that implies H2 revenues of £5.13m. There are 4.5 months left before the year end and management said they hit their revenue target last year with much less visibility and so were very confident of this year's target.
They already have 80% visibility of 2017/2018 forecast revenues of 12.46m, so that implies they only have to find 2.5m to hit their target with 16 months to go, which looks easily achievable.
Another important note is that these numbers don't include any contribution from possible further DARPA contracts
It's clear they have a very good chance of exceeding both this and next year's forecasts and this would greatly help their cash position.
Based on the revenue visibility, I believe the risk is much lower than perhaps is perceived, while the upside to a big order is substantial.
ED believe that Amphion, who own 6m shares (approx 1.5m value) are the sellers, which is a significant overhang for PI's to take up, but would be a relatively small amount for a smaller company fund, so I remain optimistic.|
|For clarificatory purposes, could you kindly cut and paste the precise extract from the recent interim results which mentions and relates to the elusive $159million contract detailed in Kromek's 4/4/14 RNS.
|Total revenue for the interim 6 month period - not the year - was £3.8mn. It is pretty clear that the bulk of the DARPA shipments to date were in the second half of last year and that the next big pick-up here - if it happens - would be in 2018. They did £3.1mn in H2 last year in the US (as final destination) but this reverted to £2.2mn in this interim. A big fall off even if the positive forex impact is taken into account. There are other smaller orders from DETRA for radiation detectors in the meantime and the company is pushing to get simplified equipment into smaller forces - border security, local police forces etc. It appears they are reasonably confident of doing total revenues of £12.5mn next year which would be b/e at the EBITDA level. I don't know what the H2 expectation is but guess it will be below H1. They are emphasising the much higher visibility of revenues for this H2 and next year, based largely on the order book and the fact that these are orders for product not R&D. The Chinese business to which our friend above refers has been happening, but at a much slower pace than was hoped for. That is in the interim statement. This is high risk reward; they are either going to make a lot of profit in two or three years or be bailed out at a sale price for their technology and client base.
Personally, as a small holder, I am hopeful but quite a few bridges to cross yet.|
Total revenue for year £3.8 m.
so must have got a big discount or purchased chargers elsewhere ! That's what I could not figure out.|
D3S sell for $400, with $100 for a charger. 10,000 units should have been $5m. In due course there will be 15-20 cities of 10,000 each. The military version will be c$5000 and they expect to sell similar numbers so could be much more significant.|
|Value beginning to register here - very positive write up here.
Some good contracts coming in - future looks bright!
|Has anyone got an idea of the sale price of each D3S unit ?|
Sterling has strengthened a lot recently .
From 1.20 to 1.27 currently.
That will likely impact H2/Full year figures whereas H1 reflected post-Brexit sterling weakness and the plunge to 1.20.
They had a significant £700k of Exchange gains in six months to Oct and today's RNS says the following:
"The gain noted in the table above is the position at the half year. This net gain could largely unwind in the second half, and thus for the full year, should the value of the US dollar remain strong against the pound."
Whilst I respect Equity Development, in my view the 45p share valuation is very optimistic in my opinion.
In tracking Kromek closely since flotation, in my opinion there has been very limited reliable forward visibility ever. Kromek's past track record of delivering surprises to the DOWNSIDE cannot be ignored.
ALL IMO. DYOR.
Exponential growth now in sight
Published: Dec 07 2016
Kromek is pioneering digital colour imaging for x- and gamma rays, using cadmium zinc telluride crystals. Key markets include medical imaging, nuclear detection and security screening.
The potential for further major contracts remains promising. They would take time to flow through to the P&L, yet even so the immediate signs are promising. At the interims this morning LFL sales impressively climbed 19% to £3.8m, reflecting triple digit gains in Asia (eg medical products including BMD) and the UK, allied to a solid performance again from the US.
Better still, Kromek is on track to achieve our FY17 sales target of £8.9m supported by in excess of “85% visibility” (RNS), and higher H2 gross margins (ie Est 58% vs 53% in H1) as the business scales. H1’17 adjusted EBITDA of -£636k was in line with our expectations, or -£1,836k if one backs out a £1.2m forex benefit from the balance sheet translation of $ denominated assets and working capital (re £ weakness).
Despite absorbing £1.7m of capitalised R&D, H1 cash-burn was a modest £1.55m (vs -£3.9m H1’16 and -£2.6m H2’16), thanks to positive working capital and the receipt of £0.9m in R&D tax credits. Net funds closed October at a £2.3m, which should be sufficient until the group becomes self-funding in FY19, assuming things go to plan.
Kromek has already landed prestigious BMD and SPECT agreements with several blue-chip OEMs, which together are forecast to more than double revenues from circa £2.7m in FY17 to £6.5m next year. However, to us the biggest near-term opportunity relates to the further roll-out of its portable D3S ‘dirty bomb’ detectors, 10,000 such devices having already been shipped to the US Dept of Defense (DoD).
Looking ahead, visibility is building too for FY18 where we estimate there is now >50% cover of our £12.5m sales estimate - in turn driving adjusted EBITDA into the black at £0.3m. We make no change to our FY17 projections or 45p/share DCF valuation.|
|New research out this morning from Equity development
|Strong Interims. 85% revenue visibility, R&D programmes moving to commercialisation phase. Worth adding. Imo. Dyor|
|Pretty lousy results again in my view against increasing sales.
ANOTHER LOSS of £1.8million for the half-year.
Doesn't bode well for full year results in my opinion.
No mention of the performance/non-performance/status of the $159million contract in the 4/4/14 RNS.
More suggestions of jam tomorrow but the actual arrival date of that oft-mentioned jam seems to be very uncertain in my view.
ALL IMO. DYOR.
|If you would like to hear management present the interim results for Kromek we will be hosting a webinar on Thursday 8th December at 11.45am. Arnab Basu, Chief Executive Officer, and Derek Bulmer, Chief Financial Officer, will give a presentation lasting approximately 30 mins and there will then be an opportunity for Q&A.
To join please register at: hxxps://attendee.gotowebinar.com/register/4991647929164060674
If you would like to submit any questions for management ahead of the meeting please send them to firstname.lastname@example.org
The Equity Development Team|
|Positive comment from GCI....
Kromek (AIM: KMK) has been a disappointing investment since listing in 2013. It has interesting technology used in sectors where there are good growth opportunities but so far the company hasn’t delivered the sort of revenues originally targeted. However recent contract wins hold out the prospect of improved visibility. The hope is to reach break even at the ebitda level in the next financial year to April 2018.
Kromek was founded on technology spun out from Durham University which uses high-performance sensor materials (mainly cadmium zinc telluride) to detect radiation in the medical, nuclear and security markets. Volumes have taken longer to build than hoped, which is not an unusual experience for small companies dealing with government and large corporate buyers.
This year has brought positive news on contracts. In particular, deals with US agencies responsible for homeland security could prove crucial in producing a vital ramp-up in sales. The first 10,000 units for the early detection of radiological ‘dirty bombs’ have been delivered. After this initial deployment and testing in Washington there’s the prospect of the product being rolled out into other cities, each of which would need in the region of 5-10,000 detectors.
A range of other deals were recently announced which should also underpin short term activity, including work for customers in medical and airport security. CEO Arnab Basu believes he has over 80 per cent of this year’s forecast £8.8 million of sales in the bag, which is a stronger position than in previous years. Breaking even at the ebitda level will still require a 40 per cent jump in sales for the 2018 year to £12.5 million. The current £40 million market cap still looks to be a bit ahead of the game, but Kromek is worth keeping an eye on given the potential for those US defence contracts to scale up.|
|Interim result announcement on 7th December. Should get good progress report imo.|
|Ok. Fair enough.
How much have they received so far please?
And when will the rest of this mega $159million contract announced by RNS on 4/4/14 start paying out please?
ALL IMO. DYOR.
As I understand it they have received revenue on this contract but at a slower rate than originally planned. The business is building up and I'm sure we will hear more on this in due course.
India is new to me but very interesting as would be a huge new market for their technology.
Also, the headlines are frequently on ISIS and dirty/nuclear bombs at present, must help their DS3 business prospects.|
|Yes but Kromek has a real track record of not delivering on forecasts in my opinion.
I personally find it hard to have confidence in what they say.
Anyone heard anything about the infamous $159million contract as detailed in the Company's 4/4/14 RNS?
ALL IMO. DYOR.
|Great find Techno! The 15m imaging and diagnostic centre would appear to be where KMK's hopes lie. From reading the text, it seems to be going ahead, so I think the chances are good, though of course KMK's contribution will only be a small part of the 15m|