Stanelco

STANELCO uses radio frequency (RF) applications for a range of services, from welding to the building of fibre-optic furnaces.

One of its RF applications is used for packaging nuclear waste as safely as possible. It has also branched out in a more commercial direction to use RF welding under the GreenSeal brand to seal food trays. Stanelco also operates under the FrogPack brand, which provides packaging for fragile items such as glass and liquids.

Stanelco's products are being trialled with Asda, whose parent company is the mighty US giant Wal-Mart. It is also rumoured that McDonald's is considering Stanelco's products.

Unfortunately, although the company's revolutionary sealing process's intellectual properties have been confirmed, the move to commercial reality is proving challenging. Indeed, Stanelco's share price has collapsed from 24p to about 1p over the past 12 months.

The group's cash burn is quite high and it was obliged to raise some 16 million last October through a placing and open offer. The latest set of results did not offer much encouragement either, if heavily distorted by the company's restructuring.

Even so, Stanelco's loss of 15m, against a loss of 3.3m last year, was appreciable and the group's survival cannot be guaranteed.

On the other hand, the developing campaign against the proliferation of plastic bags suggests that alternative methods of sealing and packaging are under serious consideration.

I am a shareholder in Stanelco, normally an overwhelming burden for any quoted company but, for those prepared to take the real risk that this investment implies, the rewards could be considerable.

• The value of your investment could fall and you may get back less than you invested. You should take professional advice if you have any doubt about the suitability of this company for your portfolio.