A WEEK after a profits warning saw its shares lose almost half their value a North-East scanner company has signed a contract worth up to £95m.
Shares in Kromek jumped by about 20 per cent this morning after the Sedgefield firm announced it had signed a long term deal with a manufacturer of x-ray diagnostics and analysis equipment in China.
The contract grants the manufacturer preferential rights for the supply of Kromek's innovative cadmium zinc telluride (CZT) detector. Supplies start in October.
These rights are for an existing medical diagnostic application with a large market potential and the exclusive supply agreement is conditional upon the County Durham company receiving agreed revenues.
Kromek, which supplies scanners to the security, medical and nuclear industries, has been working with the manufacturer for the past nine months on the deal.
For continued exclusivity the contract provides for revenues of £800,000 and £6m in the financial years 2014 to 2015, and 2015 to 2016 respectively, and the overall value of the contract over the next seven years is worth up to £95m, subject to the customer meeting its revenue targets.
Cash payments worth £157,000 are expected from the customer this year, part of which has already been received.
Arnab Basu, the chief executive of Kromek, said: "We are pleased to announce significant, further traction in the medical imaging space, particularly in a large, high growth market such as China.
"The signing of this contract represents further endorsement of our offering and highlights the role we can play as global medical imaging capability advances, with Kromek's technology at its heart as a key enabler.
"Kromek will continue to explore the opportunities for our technology platform in the medical imaging, nuclear detection and security screening markets and we look forward to updating shareholders as to progress in due course."
In October last year, Kromek raised £15m from a flotation on the AIM stock exchange, but delays to some of its major contracts forced the firm a week ago to warn investors it would not make a profit this financial year.
However, Kromek's strong order book, rising revenues and efficiency savings would not hold back plans to expand operations and create jobs at the Sedgefield site, Dr Basu has confirmed.