28th Mar 2014 07:58
LONDON (Alliance News) - Radiation technology company Kromek Group PLC Friday warned that revenues for its current financial year are expected to come in well below expectations due to delays for a large number of contracts, and therefore it no longer expects to be profitable this year.
The supplier of radiation technology to the medical, security and nuclear markets said it had been hit by delayed orders from UK and US government programmes, from the Japanese nuclear detection products market, and delays to large orders in the medical and security markets.
The company, which listed on AIM last October, also said it had taken longer than expected to set up distribution channels for nuclear radiation products. It said the channels are now in place in many of its important markets, and it is expanding its commercial teams.
"Whilst the company had anticipated breaking even in the current financial year, it does not now expect to be profitable," it warned.
"However cash balances at the year-end continue to be strong and the directors believe that the business has sufficient capital required to execute the business plan and deliver growth in the years ahead," it added.
It said the factors will also impact its performance in its next financial year, although it said it could soon announce some big orders.
The company's financial year runs to the end of April.
"The board believes the medium term fundamentals remain strong, with the technology addressing broader markets. The pipeline includes substantial new orders that we hope to announce in the near future, which could materially impact our growth expectations going forward," it said.
Kromek said it had achieved significant efficiency improvements in its manufacturing process in the last half of the year, which would allow a much broader acceptance of its products in mainstream medical diagnostic markets and lower its capital investment requirements. It is also expanding production capacity in the UK, supported by the Regional Growth Fund.
It added that it is continuing to win contracts across its three markets and has seen "substantial" growth in current order booking.
"I am disappointed that we will not meet market expectations but I am confident that we will harvest real value from our technology going forward. The build up of our sales and marketing resources since the IPO has been slower than expected which has also been a contributory factor in the shortfall," Chief Executive Arnab Basu said in a statement.
"The demand, both for using our technology as a component and for our products remains strong and I am confident that we will continue to add substantially to our order book in the months ahead and realise value for our shareholders in the years that follow," he added.
By Steve McGrath; [email protected]; @SteveMcGrath1
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