Vision moves to calm punters after biotech buy

Vision Systems (ASX:VSL) has moved to calm jittery investors following last week's $94 million purchase of UK biochemical manufacturer Novocastra Laboratories.

Shares in the diversified company plummeted almost 22 per cent following the June 26 announcement, closing yesterday at $1.23. But the company has now reassured investors that its cash reserves have not been fully depleted, and that it was not dependent on fresh debt or equity raisings.

In a statement to the market, Vision Systems said that post-acquisition its cash reserves were $13 million and that its total bank debt liabilities were $13 million.

It said references in the previous announcement to the possibility of accessing new debt or equity funds were made in the context of a possible "bolt-on acquisition of a small profitable business".

The company said that if the purchase proceeded it would be earnings per share positive and would require funding of $10 to $15 million, which the company intended to fund through debt.

CEO Jim Fox also confirmed that sales for its new addition, Novocastra, were up 30 per cent in the June quarter compared to the same time last year.

He said this was expected to translate into earning growth for the UK company, which for the year ended March 31 grew 36 per cent on the previous year.

"Vision System's directors and management are confident that the Novocastra acquisition is an excellent one creating a sound platform for Vision Systems to leverage its globally competitive intellectual property and capabilities in pathology laboratory instrument design and manufacture," the latest statement said.

The assurances were received well by the market, which at the time of writing had added about 6 per cent to the price to trade at $1.30, after an earlier high of $1.35.

Vision Systems predominantly deals in the area of fire-detection, security and surveillance, but also operates a BioSystems division; a clinical diagnostics business that accounts for about 5 per cent of the company's total revenue.

The company believes reagents manufacturer Novocastra would fit nicely with BioSystems to result in a "powerful, total solution to the pathology market".