Kromek Group plc (LON:KMK) Chief Executive Officer Arnab Basu caught up with DirectorsTalk for an exclusive interview to discuss new contract extensions for their D3S products, what this means for the company, how the business has been coping since the COVID-19 pandemic and how they are positioned from 2021.
Q1: Now, Kromek Group announced new contract extensions for your D3S products. Firstly, can you just remind everybody what your D3S products are?
A1: D3S, as we have spoken before, is a family of products that we developed under a DARPA program, DARPA is an agency of Department of Defence in the United States.
The D3S is used to identify signatures of nuclear material, it’s a high accuracy, radiation detector identifying exact nature of the nuclear material that is emitting the radiation itself. Primarily used for detection of radiation which may be used by terrorists as part of a dirty bomb so the DARPA program was aimed at having number of these detectors networked together, providing a real time information about radiation signature of a wide area. It could be as big as a city or it could be critical infrastructure or inside the building as well.
So, it’s a high performance radiation detector which provide very accurate information about nuclear presence or absence of nuclear materials.
Q2: So, what did these extensions mean for the company?
A2: We have announced a couple of contracts with this particular customer in the last 18 to 24 months so this is a great signal those contracts, which were aimed at pilot scale implementation of the D3S technologies to protect critical infrastructure and urban areas is still on track.
So, although, the nature of these programs take a long time, and a lot of trials and pilots need to be done, they’re all on track. This extension gives a very clear signal that the customer is fully engaged and the potential for wide-scale implementation of this technology by this customer is significantly enhanced by this extension, which we announced yesterday.
Q3: Now, it’s been a crazy year with the COVID pandemic, how have you been coping since the last update?
A3: In the last update, we articulated the affect of COVID-19 and the pandemic, the global pandemic, has had on our business, particularly on our customers in certain sectors in aviation and medical sectors.
So, the first few months of our fiscal year had been rather challenging but as we indicated in October, we’re during our results announcement that the business is starting to get back to normality. We have made two announcements, one in new contract from a new customer and of course, yesterday we announced the extension of an existing contract from an existing customer.
So, these are all indicators that business is starting to return, business is starting to become normal again. Our factories are now operational, we are getting back to the pace and scale of operations in most of our sectors, medical, nuclear, and indeed, the work that we are doing on bio-security is indeed going ahead and getting back to normality again.
Q4: 2021 is fast approaching, how do you think Kromek Group is positioned for next year?
A4: The long term positioning of our technology and why we win customers and why our customers buys our products, that proposition remains very, very strong and underpinned by fundamental needs in the market.
Although COVID has had a disruptive effect for a short period of time, ultimately the underlying reasons why our products technologies are important in markets such as medical diagnostics, cancer detection will remain an important modality. So, what we bring into that market is absolutely necessary and absolutely needed and that need had short term disruption earlier this year but those fundamental needs in the diagnostic market remains exactly the same as it was pre-COVID.
So, the medical diagnostic imaging market remains a very robust proposition for us and our position in that, particularly inspect and CT in osteoporosis detection remains as strong as we had. The business is returning to normal in that segment, our customer interactions are getting back to the rate that we had in earlier this year of 2020.
More importantly, we are shipping products in that market and the rate of shipment is increasing, secondly in the nuclear security market, we have seen round the world there is an increased amount of effort and procurement processes that are starting up. The defence and security spending is supposed to go up going forwards.
So again, the prospects in those markets for our products, which are unique and which brings a unique value proposition to our customer, are remaining very strong so we are looking, in our core markets of nuclear detection, medical imaging, and also to a certain extent aviation security, we are looking at it very, very positively.
Of course, the biosecurity markets where we are doing this program with DARPA for detection of bio pathogen is a very exciting new opportunity for us and the prospects in this market, as we have said before, remains very exciting, very robust, and particularly relevant for the world we are living in today.
So, 2021 and beyond, we are looking with increased amount of confidence with great degree of optimism.
