Kromek interims pass muster as Siemens-linked momentum lifts profits—what investors should watch next

Kromek Group PLC (AIM: KMK) has delivered a much stronger set of interim numbers, showing a clear step up in revenue, margins, and profitability. The big boost came from high-margin milestone income tied to its Siemens Healthineers “Enablement Agreement,” while Kromek’s underlying operations also showed signs of recovery and growth. The key question now is simple: can Kromek keep growing once the Siemens milestone tailwind gradually eases?

This rewritten, detailed English report breaks down what happened in the six months ended 31 October 2025, what analysts focused on, and what “the next phase” could realistically look like for shareholders.

1) The headline result: revenue surged and Kromek returned to profit

In its interim results for the six months ended 31 October 2025, Kromek reported revenue of £15.0 million, a dramatic rise from £3.7 million a year earlier. That jump mattered not just because sales were higher, but because the mix of revenue shifted toward higher-margin income, helping profitability swing sharply upward.

Kromek also moved back into the black, posting:

• Gross margin: 71.7% (up from 56.9%)
• Adjusted EBITDA: £6.0 million (vs an EBITDA loss the year before)
• Profit before tax: £3.1 million (vs a loss the year before)

Those figures signaled that the business is not only selling more, but also converting more of those sales into profit—exactly what the market wants to see from a technology company moving toward sustainable scale.

2) Why margins improved so much: Siemens milestone income did the heavy lifting

A major driver of the step-change in profitability was milestone-related income from Kromek’s agreement with Siemens Healthineers. This kind of revenue can be high margin, which helps explain why gross margin rose above 70% in the period.

To understand why investors are paying close attention to this, it helps to know the broad structure of the Siemens arrangement:

• Kromek has an “Enablement Agreement” with Siemens Healthineers, with cash payments linked to milestones over multiple years.
• Kromek has already received substantial payments to date under the agreement, with further installments expected over time.
• Importantly, some of these payments are expected to taper as the agreement progresses, which means the revenue mix may become less favorable unless the underlying business grows enough to fill the gap.

Kromek has previously reported receiving $5.0 million tied to milestone delivery, taking total receipts under the agreement to $30.0 million at that time, with remaining payments expected over the following years (including an installment expected in the financial year to 30 April 2027).

In plain English: Siemens has been a powerful boost, but it is not a permanent growth engine by itself. That’s why the market is now looking beyond “great interims” to the question of durable growth.

3) The underlying business mattered too: signs of recovery across segments

While Siemens-related income was the headline driver, Kromek and its followers have also pointed to progress in the underlying operations—particularly across its two key areas: Advanced Imaging and CBRN Detection (Chemical, Biological, Radiological, and Nuclear detection).

Advanced Imaging: bigger reported revenue, and “underlying” growth excluding Siemens

Kromek reported Advanced Imaging revenue of £10.8 million for the half year. The company also highlighted that excluding the Siemens Healthineers contribution, Advanced Imaging revenue was £2.5 million, representing an underlying increase versus the prior period. This distinction is important because it helps investors separate:

• Contract-linked milestone impact (which may taper over time), from
• Core product and customer demand (which can be more repeatable if the market is expanding and Kromek is executing well)

So while Siemens can dominate the story today, long-term confidence depends on that “ex-Siemens” base continuing to climb.

CBRN Detection: more than doubled revenue, showing momentum in security markets

CBRN Detection revenue rose to £4.3 million, more than doubling from £2.0 million a year earlier. For investors, this matters because CBRN-related markets can be driven by government and institutional demand, which may behave differently from commercial imaging cycles. A stronger CBRN line can add resilience and diversify revenue streams.

4) Broker reaction: “solid” results, and a focus on what comes after the tailwind

In coverage following the interims, analysts at Cavendish described the performance as “solid”—highlighting the Siemens uplift and the improving trend in underlying operations. But the tone also suggested that the market will now judge Kromek more on forward traction than on a one-off uplift.

Cavendish reiterated a “buy” stance and maintained a 26p price target, arguing that the longer-term opportunity is not fully reflected in the share price. The broker also pointed to a path where the company remains profitable even as Siemens milestone income gradually normalises through to around 2027.

That’s the heart of the debate:

• Bull case: Siemens milestones help fund and validate execution, while the core business scales up fast enough to keep profits rising.
• Bear case: Milestone income fades before core sales growth is strong enough, leading to slower growth and weaker margins.

5) Cash, funding, and the “can they scale without stress?” question

Fast growth is exciting, but it can also strain cash flow if working capital needs rise, production scales, or R&D spend increases. In the interim disclosures circulated via market channels, Kromek also referenced its cash position and credit facilities, including a revolving credit facility. Investors typically watch these details because they influence whether growth can be funded smoothly.

For a company like Kromek—building specialised detection technology—execution often involves:

• Maintaining consistent product quality and yields
• Managing supplier relationships and component availability
• Balancing R&D and commercial delivery schedules
• Scaling without letting costs run away

When interim results show profitability and high margins, the market tends to become more optimistic about scaling. But investors still want evidence that profits are supported by repeatable demand, not just a temporary contract-driven mix.

6) Share price context: strong run-up, then profit-taking

Even strong results don’t always translate into an immediate share price jump—especially if the stock has already climbed a lot in the months before the announcement. Following the interim update, Proactive noted that shares initially rose and then dipped amid profit-taking, after a significant rise over the previous six months.

This is common market behavior. If a stock has rallied hard, many traders and some longer-term holders may decide to “lock in” gains on good news. That does not automatically mean the results were weak—it can simply mean expectations were already high.

7) What “the next phase” really means: practical milestones investors can track

When commentators say “all eyes on the next phase,” they usually mean that the story is shifting from one visible driver (Siemens milestones) to a broader set of proof points. Here are practical markers investors often watch for in Kromek’s situation:

A) Core revenue growth that stands on its own

The most important sign of durable momentum is consistent growth in sales excluding large milestone or exceptional items. Kromek has already helped investors by separating certain segment figures and explaining underlying growth trends. The next step is showing that this trend continues quarter after quarter.

B) Stable gross margins as the mix normalises

Gross margin above 70% is excellent, but it may not remain at that level if milestone income reduces. Investors will watch whether margins settle at a healthy, sustainable level—high enough to support ongoing R&D and sales expansion while still generating profits.

C) New customer wins and product adoption

For technology groups, repeatable growth often comes down to customer adoption. In imaging and detection markets, adoption can take time because customers care about certification, reliability, and integration. Clear announcements on product progress, deployments, or repeat orders can strengthen confidence.

D) Execution against the Siemens pathway through FY27

Kromek’s Siemens-linked cash receipts are expected to extend over multiple years, with an installment anticipated in the financial year to 30 April 2027. Investors will watch delivery against milestones, the pace of receipts, and how management uses that support to accelerate broader growth.

Opportunities: why long-term believers still see upside

Supporters of the investment case typically point to a few big-picture opportunities:

• Structural demand for better detection technologies in healthcare imaging and security
• Validation from working with a major global player like Siemens Healthineers
• Operating leverage—once fixed costs are covered, extra revenue can drop to profit faster
• Portfolio value—specialised IP and know-how can be strategically important in a consolidating tech landscape

These themes don’t guarantee success, but they help explain why brokers can stay positive even while acknowledging that the revenue mix will change over time.

Risks: what could go wrong from here

Every growth story has risks. For Kromek, the main ones are straightforward:

• Mix risk: As milestone income tapers, reported growth may slow unless core sales rise quickly enough.
• Execution risk: Scaling production, meeting timelines, and maintaining quality can be challenging.
• Customer concentration: Big contracts can lift results—but they can also increase dependence on a small number of partners.
• Market cycles: Healthcare and security spending can be influenced by budgets, approvals, and macro conditions.

None of these risks is unique to Kromek, but they are exactly why the next set of updates will matter so much. Investors want to see steady progress that reduces uncertainty over time.

FAQ: common questions investors are asking about Kromek right now

1) What period do the interim results cover?

The interims cover the six months ended 31 October 2025.

2) How much revenue did Kromek report in the half year?

Kromek reported £15.0 million in revenue for the six-month period.

3) Why did gross margin rise so sharply?

Gross margin improved to 71.7%, helped by high-margin milestone-related income connected to the Siemens Healthineers enablement arrangement.

4) Did the company return to profitability?

Yes. Kromek reported profit before tax of £3.1 million for the half year, compared with a loss in the prior-year period.

5) What did Cavendish say about the results?

Coverage cited by Proactive indicated Cavendish viewed the performance as “solid,” reiterated a buy stance, and maintained a 26p price target, while emphasizing the importance of growth beyond the near-term Siemens uplift.

6) What does “milestones taper through to FY27” mean in practice?

It means Siemens-linked milestone payments are expected to reduce over time rather than remain at the same level indefinitely. Kromek has noted remaining payments and timing expectations extending into the financial year to 30 April 2027. Investors therefore watch whether the core business grows fast enough to offset a less favorable revenue mix later on.

Conclusion: strong interims, but the market wants proof of repeatable growth

Kromek’s interim results showed meaningful progress: much higher revenue, stronger margins, and a return to profitability. The Siemens Healthineers enablement milestones clearly helped, and they also provide a bridge toward a longer-term ambition—building a bigger, steadier base business in imaging and detection.

Now, expectations are shifting. Investors and analysts will increasingly judge Kromek on whether it can keep growing as milestone income normalises. If the company can sustain core sales momentum, protect healthy margins, and continue executing across both Advanced Imaging and CBRN Detection, the “next phase” could turn a strong interim boost into a durable growth story.

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