NEOS Resources – misleading RNS’s and a welter of unanswered questions…

14 mins. to read

Stephen Rudofsky



Below is a story that we believe needs to be told for the wider cleansing of the public markets aswell as hopefully to precipitate momentum for actions by the authorities against Directors of AIM listed companies that report one thing to shareholders and (a) at best, are unaware of the real workings of the companies they are tasked with managing (and therefore should not be in those roles) or (b) at worst, are part of effective frauds on shareholders. We pass no judgement and leave our readers to draw their own conclusions as to which of these best describes the actions of Mr Rudofsky, Executive Chairman of NEOS Resources. 

Preface – NEOS Resources is the sorry remnants of what was once a company with a market capitalisation running to hundreds of millions of pounds, that partnered with no lesser of a corporate goliath than BP in order to develop the biofuel crop that is Jatophra and create a marketplace for the sale of this as a viable alternative to conventional fuels. It has wound up as a company forced to delist with a market cap of just £400,000; testimony to the absolute worst of corporate mismanagement that is prevalent in the small cap arena of the UK.

NEOS 6 year weekly chart – utter capital destruction

NEOS’s history is a long one but, unfortunately not a particularly illustrious one for its shareholders. At this stage, enter Mr Brian Myerson – a man who was famously “cold shouldered” by the Takeover Panel in 2010 for 3 years – one of the harshest penalties possible – in relation to concert party charges and who is a large shareholder here primarily via his Principle Capitla Management company. The Panel did not mince their words and described his actions as”co-ordinated, disingenuous and dishonest”. 

The vast majority of the large cash backing of tens of millions of pounds was actually dissipated on former CEO Martin Jarvis’ watch between 2008 and 2011. In the early summer of 2011, one Mr Stephen Rudofsky – a man with no previous public market’s experience that we are aware of – was wheeled in by Mr Myerson (according to Rudofsky) to “rejuvenate” the company’s fortunes. Rejuvenate is usually defined as “to being to restore to a former state”, i.e. the opposite of the value destruction and delisting which shareholders are now sadly faced with.

I personally met with Mr Rudofsky, as a shareholder in what was then named D1 Oil’s, during early summer 2011 and, at our initial meeting, it was made explicitly clear to me by Mr Rudofsky that he believed, with what he described as “good evidence”, that fraudulent activities had been carried out at D1 Oils prior to his joining the Board. I pointed out at this stage that he had a duty as a Board member, and indeed as Executive Chairman, to attempt to recover the alleged missing/misappropriated monies. I also re-iterated this in subsequent communications with him. As yet, not one iota of evidence has been revealed to his wider shareholders that he adhered to this implicit fiduciary duty to his shareholders in investigating these suspicions that he himself raised with me and believed were well founded. We would be very happy to be proved wrong here.

At our meeting, and  during subsequent telephone calls, Mr Rudofsky was very bullish on the company and he made clear to me that he fully expected to create a company with a market cap of £20-30m plus over the next few years. In the months post his appointment, I continuously asked why, if he was so bullish, was he not purchasing any shares in the company? KEY LESSON THAT WE HAVE MADE CLEAR NUMEROUS TIMES IN OUR BLOG – WHERE MANAGEMENT HAVE NEXT TO NO STOCK IN THE COMPANY THEY ARE MANAGING, NO MATTER HOW GOOD THE “STORY”, LEAVE WELL ALONE.

Below we set out, in chronological order, the RNS releases by said Mr Rudofsky that no doubt prompted other shareholders to invest incrementally in the company (we highlight in bold the key statements) –

29 Sep 2011 Outlook 

The new Board is enthusiastic and optimistic about the outlook for the Company. This spirit is based upon the new skill sets which have been added to an experienced team in the field, primarily in India. Whilst Jatropha has been a disappointment to the investment community over the past few years, D1 has positioned itself in the middle of two exciting opportunities; investment exposure in a BRIC country and in bio-fuels. The bulk of our revenue and profit for the foreseeable future will be derived from India and we will endeavour to maximise that unique opportunity within the agricultural and energy sectors. Whilst North American and European investment opportunities in these sectors remain limited and mature, India (in our view) will be the primary driver of growth and D1 shareholders will be involved in this market. Along with this position is the knowledge that the Jatropha paradigm is beginning to realise its potential albeit more slowly than initially thought. Plantings made in the middle of the 2000s are finally reaching maturity and we expect a trajectory of solid growth in revenues in the coming years. The combination of all of these factors will lead the company to allocate less of its capital to overhead and more to working capital, including off balance sheet financing in the form of commodity trade finance. We envisage that D1 will evolve into a more robust company focused on revenue generation and therefore value to shareholders in the medium to long term. 

31 Dec 2011 – 

In October 2011 the Board announced that the Company may seek to raise further funds from shareholders during the latter half of 2012 to enable the Group to finance its development until it becomes cash flow self sufficient.  In light of the positive impact of the restructuring and cost reduction plan which has been achieved to date, and the ongoing review of future development plans, the Board will over the coming months be considering this matter further and whether it would be  appropriate  to proceed with a shareholder funding process this year. 


The Board is enthusiastic and cautiously optimistic for the development of the Group going forward. This is based on the confidence in the strategy of procuring, processing and selling multiple non-edible oil seeds in India and South East Asia.  

The Group is still in the early stages of its commercial development, and there are many ongoing commercial challenges to be addressed.  However, I believe the Company is now well positioned for the future; firstly by investing and building infrastructure in India, a high growth region; and secondly by developing the scale and growth of multiple non-edible oil seed production with multiple sales applications for the crude oil that is produced. The Board firmly believes that the Group has very good opportunities within the agricultural, pharmaceutical, personal care, and energy sectors which will allow it to strengthen and expand through profitable trading, with reduced reliance on the demand for biofuels and the impact of biofuel legislation. 

20 April 2012 – 

Sale of Intellectual Property and Cumulative Redeemable Preference Shares to Quinvita N.V.  

Commenting on the sale, Steven Rudofsky stated:

“The Board believes this to be an excellent deal for the Group as it enables us to liquidate our animal feed programme technology whilst retaining access to the technology on preferential terms and to secure repayment of £372,000 of the redeemable Preference Shares. The Group will utilise the proceeds to increase its working capital investment in its Indian operations which should enable it to generate increase profits in India.” (NOTE THE INCREASE, WHICH WE PRESUME IS A TYPO AND RUDOFSKY MEANT ‘INCREASED’ – IMPLICATION BASED ON STANDARD UNDERSTANDING OF ENGLISH LANGUAGE THAT IT IS ACTUALLY MAKING PROFITS)

11 Jul 2012 –

NEOS is currently discussing the sale of very significant quantities of CJO to several major European businesses. As a result of these discussions, the Board decided in April 2012 to reduce its ongoing processing of CJO, so that NEOS would be able to fulfil the potential supply requirements of these European businesses. 

NEOS announced on 13 March 2012 that central costs had been reduced to approximately £90,000 per month. The Board is pleased to announce that this rate was maintained for the remainder of the period to 30 June 2012 and that it expects that the rate will decline further to £75,000 per month with effect from July 2012. 

NEOS’ cash and cash equivalents and term deposits at 30 June 2012 amounted to £1.53 million. 

The Company expects to issue its preliminary results for the eighteen months ended 30 June 2012 by no later than 31 October 2012. 

Commenting on the update, Steven Rudofsky, Executive Chairman of NEOS, stated: “The Board is delighted with the progress achieved by the Company. Although, as explained in the end of period update, we restricted processing of CJO in the latter stages of the period, NEOS now has sufficient working capital and crushing capacity to process significantly increased quantities of non edible seed oil. In addition there are significant supplies of feedstock available in the market. 

The Board is now confident that the Indian operations will trade profitably in the year ending 30 June 2013, which, in view of the reduced overhead base, will lead to a significant improvement in the group’s overall performance”. (KEY LANGUAGE “NOW CONFIDENT THAT THE INDIAN OPERATIONS WILL TRADE PROFITABLY”)

Now, cue halted music, but as an (allegedly) intelligent individual, one could be excused for thinking at this stage as a shareholder in NEOS that Mr Rudofsky had (a) sufficient cash resources for the forseeable for the company, (b) India was to trade profitably through 2013, (c) there was a large CJO order to hit the company’s bottom line and (d) the overall company would enjoy a “significant improvement in the overall performance” – all exact words… If anybody else would have interpreted these announcements in any other form then please email me at – I’d love to be enlightened… 

There is then a long gap to Jan of 2013, during which shareholders could reasonably have expected the company to be trading profitably as relayed in the RNS. of course, it wasn’t, or at the very least in line with the directors’ bullish expectations. It appears to us that it was in fact trading well below the directors’ expectations and, in our opinion, the directors should have disclosed this. And, again in our opinion, if the directors didn’t make this disclosure then the NOMAD should have made it on the company’s behalf. 

22 Jan 2013 


NEOS has continued to make losses in the 6 month period ended 31 December 2012 and following a review of its Indian operation, the Directors have now concluded that even with funding, the business will not be scalable to the level where it becomes a viable long-term business for the Group.  In light of this, the Directors no longer propose to raise funds in the second quarter of 2013 to develop the Indian business. The Directors are currently evaluating the structure of NEOS’ operation and its overall cost base and reviewing its future plans, including exploring other opportunities. This evaluation may lead the Directors to conclude that NEOS should become an investing company. Further announcements will be made in due course. 

30 Jan 2013 

Update and Proposed Delisting 

Further to the announcement made on 22 January 2013 the Board of Directors have continued to evaluate the structure of NEOS’ operation and its overall cost base.  

NEOS currently has approximately £1.1 million in cash available to it in the United Kingdom. Neos has known liabilities amounting to approximately £0.9 million which are due for payment in the period up to December 2014, of which a significant portion have been previously recognised in the Company’s accounts at 30 June 2012, with the remainder arising in the ordinary course of business. The cost of continuing to run the United Kingdom head office is approximately £55,000 per month and any reduction in head count or the termination of certain services will result in further contractual obligations.  NEOS’ Indian subsidiary has net current assets of approximately £300,000 and NEOS intends to repatriate any surplus cash from this subsidiary. The Board is examining methods of achieving this although the timing and amount of any such repatriation is currently uncertain. The Board is urgently reviewing NEOS’ financial position and is taking appropriate professional advice. 

The Directors have also concluded that it is in the best interests of NEOS to cancel the admission of its ordinary shares of 1 p each (“Shares”) to trading on the AIM Market of the London Stock Exchange (“the Cancellation”).  Pursuant to Rule 41 of the AIM Rules the Directors have notified the London Stock Exchange that the intended date of the proposed cancellation is 28 February 2013. Cancellation will be conditional on the approval of not less than 75 per cent. of votes cast at a general meeting of Neos shareholders and it is expected that a circular convening such general meeting will be sent to shareholders shortly. The Directors recognize that admission to trading imposes significant costs in both cash and management time and Cancellation forms part of the plans to manage the Company’s cost base. 

Nomad issues

AIM Rule 11 provides that a Company must: “issue notification without delay of any new developments which are not public knowledge concerning a change in: its financial condition; its sphere of activity; the performance of its business; or its expectation of its performance, which, if made public, would be likely to lead to a substantial movement in the price of its AIM securities. As far as we are aware there are no exceptions to this rule.

The responsibility for “advising and guiding” the AIM Company in relation to the Company’s responsibilities under the AIM Rules rests with the Company’s Nominated Adviser, or NOMAD (AIM Rule 1). In NEOS’s case Mr Chris Fielding at WH Ireland until November 2012 and thereafter Stuart Andrews and Christopher Ragget of FinnCap Ltd. The NOMAD can demand information from the AIM Company at any reasonable time upon reasonable notice. In any case we understand that it is usual practice for NOMAD’s to see an AIM Company’s Board papers at least on a quarterly basis, these would include forecasts, management accounts and comparison of forecast with actual. For AIM Companies where there is concern over the performance of the company, the NOMAD would see the board papers each month.

In the extreme situation where the NOMAD believe an announcement by an AIM Company is required and the AIM Company refuse to make the announcement, then the NOMAD should, in consultation with AIM, make the announcement on behalf of the Company. Correspondence between the NOMAD and AIM is confidential to AIM.

Maybe NEOS’s problems simply fell between the two NOMADS? Although it seems incredible to us that FinnCap didn’t conduct a thorough review of NEOS’s affairs before accepting the appointment. Certainly such a review would be usual and would presumably have unearthed the information that was at odds with Rudofsky’s statements to the market.

Now, I have a number of questions for Mr Rudofsky – 

1. Why was there no update prior to the announcement of 23 Jan 2013 of the deterioration of the Indian operations activities? Our interpretation of the AIM rules is that you were duty bound to report this to your shareholders as soon as you become aware of a material change. Ditto, the NOMAD should have made the disclosure on the Company’s behalf at the first opportunity.

2. What has happened to the £300,000 in cash from the sale of Quinvinta? Where is it recognised in the accounts? 

3. How are you accounting for the £372,000 of loan capital due to NEOS from Quinvinta? 

4. Out of the £900,000 in future liabilities that you say is due and payable to 31 Dec 2014 – where in the accounts does it relay this? Note (19) refers to £561.5k but that this is connected to the sale of Jatropha – what has happened to these sale proceeds? 

5. How much have you and Myerson Junior personally taken out of the Company during your tenure including salary and all emoluments? 

6. Do you plan to adhere to your fiduciary duty and follow up on your suspicions of corporate misappropriation by prior officers of the company with the relevant authorities? 

7. Have the directors taken insolvency advice and if so, will that advice be made public ?

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