The Investment Column: Celsis builds up its sales

Despite its name, Celsis International is not a biotechnology company, but a maker of bacteriological testing kits which use technology derived from fireflies. As a result, the shares have tended to be bypassed in the excitement over the biotech sector. But blame for their 25 per cent underperformance against the rest of the market this year looks better directed at a steady trickle share sales by two of the founder directors, Chris Evans and John Morris.

Their apparent diffidence about the company looks odd, given the prospects. Yesterday's announcement of pre-tax losses cut from pounds 2.99m to pounds 2.7m in the six months to September was less important in itself than in what it heralded. In contrast to most biotech companies, sales are already starting to build rapidly and the latest six months have been marked by three developments which should more than maintain the momentum.

Last year's link-up with Unilever offshoot Lever Industrial has delivered its first sales, with 400 deliveries of the systemSURE dirt-monitoring device since its launch in May. Meanwhile, sales of kits for screening end products from cosmetics to food, already up from 60 to 160 in the half year, are set to get a big leg-up from the partnership with Millipore, a big US filtration and microbial testing company, announced six months ago. Already five more multinational groups have been signed up and the eventual market is put at pounds 600m.

Finally, September's pounds 11.2m acquisition of Lumac, a Dutch rival, has broadened the group's position in the food industry and gives Celsis a state-of-the-art production facility.

The pounds 7.8m in net cash on the balance sheet should see the group through to first profits in the 1997/98 year, while previous worries about competition seem to be dispelled by the confidence displayed by the big groups willing to team up with Celsis. At 103.5p, 3.5p above the 1993 float price, the shares do not look dear.