Kromek Share Discussion Threads

[isaready] 21/12/2016 19:10

culford, just looking at this but looking at the current downtrend

[trotterstrading] 21/12/2016 16:33

Took some more in the drop. I think AMP are the seller, raising funds for their endless litigation proceedings

[quepassa] 12/12/2016 17:55

it would seem that the Company are not keen to reply to direct questions about this contract. one can but wonder to oneself why they are so coy about it.

In terms of what the company can or can't say - i disagree with that.

In the 4/4/14 RNS , Kromek gave very precise figures , dates and numbers.

It seems a very easy thing to say whether those specific numbers and dates have or have not been met or indeed have any likelihood of being met.

ALL IMO> DYOR.
QP

[culford] 12/12/2016 15:31

QP
I am not an insider and can't put any more meat on the bone. I agree with your sentiments, but my take is that it is v difficult for small companies that come to market, as they are overseen by Nomads who advise what they can and can't publish. They signed that contract with the Chinese and thus had clearly to announce it. The contract has been slow to develop and the company has kept brokers and market updated as to overall forecasts - i.e. revenues of £8.9m to April 2017 and £12.5m for following year. When there is something tangible to update the market on I am sure they will. Dealing with the Chinese is notoriously difficult and the market has given the above contract no value. The company cannot say anything sensible until it starts delivering on it, which may happen next year. Stock market is also not giving them much value for the progress made with Darpa etc etc. The flip side of all that is you find much better value on the public markets for small companies than you do in the private markets :)

[ali47fish] 12/12/2016 15:10

que passa- why dont you ascertain this from the company by directly asking the question?

[quepassa] 12/12/2016 14:20

Culford,

Thank you.

But can you kindly put any real meat on the bone (ie hard figures) about the RNS 4/4/14 $159m RNS contract?

They seem to indicate they know the DARPA contracts down to the last unit.

1.So why is there zero detail about the big contract for $159million after two and a half years?

2.What troubles me is that if they got their sales forecasts badly wrong just after flotation,and now the $159million contract seems totally unclear and without any meaningful detail or updates, why should investors be expected to have faith in their latest forecasts?

3.Why do you think that Kromek won't update on the mega $159million contract which they announced by RNS on the 4/4/14? - They seem prepared to mention other contracts.


I guess that certain investors may or may not be drawing their own conclusions by now about Kromek's 4/4/14 RNS announcement where they announced the $159million contract to the market by formal RNS.

I like to invest in companies where I personally feel that I can rely on company announcements.

ALL IMO. DYOR.
QP

[culford] 12/12/2016 11:32

QuePassa,
The last time I spoke with the company they said that the Chinese contract has been slow to take off but is still developing. The market there is huge and healthcare a government priority but there have been lots of issues to resolve. The impression I got was that product shipments would start next year.

Kromek is making really good progress and is now a matter of time before the sales move up to another level. In addition to above contract there is the civilian nuclear detection which will be 15-20 cities at 5$m per city starting in 2018 and the military contract for D3S which is likely to start at 20,000 units at $5000, or $100m. This is likely to be similar timescale now......

[srichardson8] 12/12/2016 11:16

The Group continued to make progress under its contract signed in 2014 for the development and delivery of CZT-based SPECT modules for an established manufacturer of x-ray diagnostics and analysis equipment in China.

[quepassa] 09/12/2016 18:49

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.
QP

[gnnmartin] 09/12/2016 13:14

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 (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.

[quepassa] 09/12/2016 08:34

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.
QP

[daz] 09/12/2016 08:10

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?

[quepassa] 09/12/2016 05:48

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.
QP

[daz] 08/12/2016 23:01

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.

[quepassa] 08/12/2016 18:37

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.

Many thanks.

QP

[srichardson8] 08/12/2016 17:55

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.

[haroldthegreat] 08/12/2016 15:50

Culford thanks.
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.

[culford] 08/12/2016 07:56

haroldthegreat
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.

[mikeroot5] 07/12/2016 09:37

Value beginning to register here - very positive write up here.

Some good contracts coming in - future looks bright!

[haroldthegreat] 07/12/2016 09:00

Has anyone got an idea of the sale price of each D3S unit ?

[quepassa] 07/12/2016 08:59

Caveat.

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.
QP

[aishah] 07/12/2016 08:38

Eqyuity Development:

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.

[brummy_git] 07/12/2016 08:28

New research out this morning from Equity development

hxxps://www.equitydevelopment.co.uk/edreader/?d=%3D%3DANzIjM

[aishah] 07/12/2016 07:25

Strong Interims. 85% revenue visibility, R&D programmes moving to commercialisation phase. Worth adding. Imo. Dyor