Signs of new life at Vita Life

Troubled biopharmaceutical group Vita Life Sciences (ASX: VLS) has warned shareholders not to expect much from the natural medicines arm of its business in the coming year.

But new managing director Gerald Adams told the company's annual general meeting today its medical division offered more to be confident about.

In a year that has seen the former managing director step down over allegations of fraudulent activity, the company's consolidated net profit slide by more than $5 million and stock consignments having to be written off to the tune of $9.8 million, its shareholders were surprisingly restrained.

Part of the reason for the lack of animosity was no doubt the board's apparent openness with investors over the progress of court action against former managing director Pang Seng Meng.

Chairman Vanda Gould told shareholders a writ had been served against Pang in the High Court of Singapore relating to a raft of allegations including money from the business being siphoned off to non-existing entities, unauthorised businesses being set up, Pang's brother remaining on the payroll although the board had been assured otherwise and personal loans that remained unpaid.

Gould said the allegations amounted to serious breaches of corporate codes in Australia and Singapore and that further writs were to be issued in coming weeks.

The company was also currently seeking an injunction to prevent Pang, who remains the company's major stakeholder, from selling his shares.

Gould said the company had set aside $750,000 to cover its anticipated legal costs and pointed out that Pang, who attended the meeting, was maintaining his innocence against all the allegations.

One of the biggest problems for the company over the past year was the situation in which sales had been artificially inflated in the Vita Health natural pharmaceuticals arm of the business because up to 14 months worth of consignments were left sitting in warehouses across Malaysia and Taiwan.

The predicament, which formed part of the pending court action, had led to a massive write down that dragged the company's over all revenues down 29 per cent to $39 million for 2001.

Vita Medical, a division specialising in lung diagnostics and cardiac stress testing, carried the company with a 322 per cent jump in divisional earnings before interest and tax from $900,000 in 2000 to $3.8 million in the year to December 31, 2001.

Adams said the company's new drug application for its Technegas lung diagnostic product in the United States was on track for commercialisation by 2004.

It also said it was close to signing a collaborative agreement with the Australian National University on development of its Thrombotrace product to detect blood clots.

Adams, who comes from management positions with such companies as Amcor and Orica, said that despite the fact the two arms of Vita Life were poles apart in terms of their success, the company was not considering selling the less successful Vita Health.

"Once we get that side of the business back to health it should be a good profitable business that should be able to sustain itself and do some interesting things for itself, because that is a growing area," he said.

Other business settled at the AGM included acceptance of the resignations of directors Tay Swee Sze and Sue Akeroyd and the appointment of John Sharman as non-executive director.

Chairman Gould also told shareholders the company was in the process of remedying its cash position through a $1.5 million line of credit through Westpac bank and a private injection of $2.5 million, which was to be finalised within the week.