Neotronics Plc is continuing to pump money into marketing and developing its electronic NOSE, the olfactory sensing equipment, pushing earnings down. A white knight is still being sought to invest in the Neotronics Scientific business to speed the NOSE’s progress to full production levels. A US investment bank on the West Coast has been appointed to conduct negotiations with potential investors, which include European, as well as US fund companies. Chairman Paul Gotley said that the company is looking for several million dollars, and added that the company is getting a good response. He would not reveal how close the deal is to completion, but admitted that its taking longer than he would like, as things tend to. He said that the company could go for some time without the extra money and that if research on the NOSE was stopped, it would not be for a lack of cash. Pre-tax profits plunged 93% to just ú26,000, from turnover down by just two pounds to ú9.8m.
Complex vapours
Research and development costs on the NOSE were ú229,000, and another ú554,000 for other products. The NOSE analyses complex vapours, and has taken longer than anticipated to reach full production levels. The sales process is also proving more protracted than the company would like, said Gotley in his statement. With the lower margin Mini Gas monitors, more need to be sold, which is what happened in all markets outside the US, where demand fell away. New management has since produced an upturn there. The South American market has progressed and approval has been won from the Chinese government for the gas monitors. A purpose-built distribution and service centre was opened in the quaint-sounding Flowery Branch, Georgia for the entire Neotronics product range, employing 45 people. Air quality and water monitoring sales increased by 6% and a distribution agreement was signed with an air conditioning supplier. An office was opened in Singapore recently, winning a contract for water quality equipment from the Thai education ministry. Despite its pressing need for additional funds to bring all its most promising product plans to fruition, the company has decided to keep its shareholders sweet by declaring plans to pay them a 0.9 pence maiden interim dividend.
