Profits in the air, Aromascan tells investors

AROMASCAN, a Manchester University-backed technology company, is promising investors the sweet smell of success within three years.

The maker of electronic noses is to raise pounds 12m in a placing that will value it at pounds 35m-pounds 40m. Allan Syms, managing director, said sales of its smell-sensing equipment would deliver profits and dividends by 1997.

Although research and development began in 1980, the company was formed only last October. It has installed 25 machines so far. Customers include Whitbread, Ford, ICI and the US Food and Drug Administration.

The technology's potential applications range from testing perfumes for authenticity to assessing food and drink. Research has been sponsored by clients including Coca- Cola and Deutsche Aerospace.

Aromascan puts the market for its instruments, which sell for pounds 25,000, at pounds 215m a year. It also earns revenues from upgrades, software sales and sales of consumables such as disposable sample bags.

Dr Syms said Aromascan competed with Neotronics, another British artificial nose firm, and the 'human sensory panels' many companies use to do their sniffing for them. Patents would protect its own technology for 17-20 years.

The University of Manchester Institute of Science and Technology is a 10 per cent shareholder in Aromascan. Both the university and management shareholders, with 30 per cent of the equity, will retain all of their holding.

If the placing is successful, Aromascan will pay the university pounds 500,000 for the transfer of intellectual property rights, in addition to the pounds 400,000 it has already paid.

Pricing details will be announced on 26 July and dealings are expected to begin on 3 August.