A must read3 Jan 2024 10:39
Recent article from JakNife over on ADVFN.
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Kromek boss ‘might not have listed technology company on Aim’
Arnab Basu joins other technology bosses ‘frustrated’ with London’s small-cap market after his firm’s share price dropped more than 90 per cent since 2013
Katie Prescott, Technology Business Editor
Tuesday December 26 2023, 12.01am GMT, The Times
Arnab Basu, the chief executive of Kromek, argues that technology businesses that require time and investment to grow are often ignored by UK investors in favour of short-term successes
The boss of Kromek has said that with hindsight he might not have listed the scanning technology business on London’s junior stock market, adding his voice to those of other British technology chief executives who complain that the City lacks understanding of the sector.
The share price of the Co Durham-based company, which designs and makes high-specification materials for security and medical imaging, has fallen by more than 90 per cent since it was listed on Aim in 2013, despite Kromek increasing its revenue and market share.
Arnab Basu said it was “frustrating that the company’s value isn’t recognised”. The business, which celebrated its 20th anniversary this year, made £17 million of revenue in 2022, a 44 per cent rise from the year before.
However, it has yet to make a profit, suffering an adjusted pre-tax loss of £7 million in 2023, down from £7.8 million the year before. About a third of its revenue is from the United States and a fifth from Britain.
Kromek is covered by only one firm of City analysts — Cavendish, part of the finnCap Group. In July, after the company’s full-year results, Mark Brewer, finnCap’s director of research, wrote: “As the only independent supplier at scale of CZT [a semiconductor] for imaging systems, we believe there is substantial strategic value in Kromek that is not reflected in the current price.”
Another London technology analyst, who does not follow the stock, said: “The low end of the Aim market capitalisation spectrum can be a trap in terms of low valuations. The company capitalises a lot of development costs and has been cashflow-negative for the past two years; improving profitability and turning cash-positive will be keys to getting a higher valuation.”
Reflecting on its ten years as a public company, Basu, 50, said: “We have had a difficult time in the market, where the business has grown continuously but the value recognition has declined continuously. When you’re talking to retail investors, it must be very challenging for them to really understand a small, complex business. The relationship we had with private investors was much more interactive.”
He argued that technology businesses that required time and investment to grow were often ignored in favour of short-term successes. “Hardware tech is still rare in the UK. And I think if you’re not in certain segm
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