Scantronic losses trigger alarm: Company must raise pounds 1.6m of new equity to secure banking facilities

SCANTRONIC, the supplier of security alarms, coupled a warning of first-half losses with proposals to raise pounds 1.6m of new equity to secure increased banking facilities. Without the new money, its auditors are likely to warn that the company cannot continue as a going concern.

News of the expected losses and capital-raising follows the resignation of Ray Dias, finance director, three weeks ago. At the time, the company said net borrowings had risen sharply and also warned there would be no final dividend.

Unaudited pre-tax profits for the year to 31 March, previously announced as pounds 2.8m, have been restated to pounds 1.9m. This followed changes in accounting policy to take research and development and litigation costs as they are incurred. There was also a pounds 200,000 provision against a loan to an employees' share option plan.

Christopher Brookes, chief executive, said that after the company's trading statement in July, net debt had risen from pounds 7.6m at the end of March to pounds 11.2m at the end of June. Scantronic's bankers, Barclays, had said it was not going to support the cash requirements of the business.

Barclays has asked for a personal guarantee from Mr Brookes to secure Scantronic's banking facilities and is making increased facilities conditional on a capital raising involving a pounds 1.6m placing and open offer at 10p. The Scantronic board and senior management will subscribe for the shares but will offer them first to shareholders.

Mr Brookes said exceptional costs associated with the banking negotiations would amount to pounds 700,000 and rationalisation in the UK businesses would cost a further pounds 200,000.

He said Scantronic would be run for cash rather than profitability. In addition, the company would sustain a pounds 240,000 loss from the sale of loan stock in the Gardiner group from which it bought its subsidiary Alarm Parts.

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