Good morning,

In case anyone missed it, Paul has heroically covered a large bunch of stocks I didn't get around to yesterday, in a Part 2 report.

It's available at this link. Stocks covered: XLM, LAKE, MUR, KLBT, AVO, PRSM.

Paul is also writing a Part 2 report today, covering LOOP, TAP, KOOB and STAF. It's available here.

Kromek (LON:KMK)

Share price: 21p (+6%)
No. shares: 153m
Market cap: £32m

Firm Placing and Open Offer to Raise up to £21 million

This very large fundraising (vs. the market cap) comes as something of a surprise to me - bigger than I would have expected.

The company had £3.8 million in cash and some spare capacity in a borrowing facility, at the date of its interims (last October). When this was reported, I said the company could potentially get to profitability before raising fresh funds - but the risk of a further dilution was enough to keep me away.

100 million new shares are conditionally being placed at 20p, and a further 5 million will be available through the open offer (if the proposals are accepted).

Admirably, the placing is taking place at no discount to the middle market price of yesterday evening.


An interesting rationale - it needs financial strength to boost its perception among its customers, apparently. Cash reserves are needed "to provide comfort to third parties".

The Directors believe that a perceived lack of balance sheet strength has, at times, weakened the Group's position when negotiating contracts with OEM and government bodies. Whilst these organisations are increasingly interested in pursuing CZT as a new technology, when the Group has historically engaged in commercial discussions with these organisations concerns have been expressed about the financial strength of the Group and its ability to supply significant quantities of CZT detectors over an extended period of time. The Directors believe these concerns have delayed or prevented the Group from entering into significant supply contracts with potential new and existing customers.

Use of proceeds

£17 million for the balance sheet strength required as above, and £3 million for general purposes.

Current Trading

in line with expectations.

My opinion

I think this is great news for the company, and it's nice that shareholders have been so supportive, but is there value at the current share price? At the current share price, the market…

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