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Image Scan Holdings PLC

Image Scan Holdings - Half-year Report

RNS Number : 4654M
Image Scan Holdings PLC
30 April 2018
 

Image Scan Holdings plc

Interim Report 2018

30/04/2018

 

The information contained within this announcement is deemed to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014. Upon the publication of this announcement, this inside information is now considered to be in the public domain

 

 

 

IMAGE SCAN HOLDINGS PLC

("Image Scan" or the "Company")

(AIM: IGE)

 

INTERIM RESULTS

Strong recovery after contract loss

 

Image Scan, (AIM: IGE) specialists in the field of X-ray imaging for the security and industrial inspection markets today announces its interim results for the six months ended 31 March 2018. Given performance during the first six months, the Board remains confident of meeting market expectations for the year to 30 September 2018.

Financial summary:

·      Order intake increased by 54% to £2.0m (2017: £1.3m)

·      Revenue flat at £2.0m (2017: £2.1m)

·      Gross profit margin increased to 40% (2017: 39%)

·      Profit before taxation of £39k (2017: £111k)

·      Period end bank balance of £752k (2017: £469k)

·      Period end order book of £1.1m (2017: £940k)

 

Operational highlights:

·      Despite the cancellation of a large order, the number of portable X-ray units sold increased over the prior period

·      All units from the cancelled order now sold to other customers

·      New ThreatScan® 2 precision detector launched; first orders received

·      70% of sales to Indian Subcontinent and Asia

·      Sales campaign in South America produced first order

·      Orders received for 5 industrial units

·      Updated quality management system passed ISO 9001:2015 assessment

 

Bill Mawer, Chairman and Chief Executive Officer of Image Scan, commented: "In February we announced we had accepted the cancellation of a £1m contract for portable X-ray systems. I am pleased to report that a cancellation agreement has been reached with the customer and compensation payment has been received. Furthermore, all the units manufactured for this order have now been sold to other customers. The number of portable units delivered increased over the same period last year. 

We are excited by the potential of our newly launched ThreatScan®2 detector panels, which offer a significant performance increase. Currently available in the compact LS3 panel, this technology will soon be available across the product range.

Recent security exhibitions in UK, Europe and Asia have confirmed high levels of interest in our products and the order pipeline remains strong, both in well established markets and in newer markets such as South America, where a recently launched sales campaign has delivered its first order. 

We have now started to build a batch of 5 industrial X-ray inspection systems and expect to achieve valuable cost savings from building these complex machines in this quantity.

The cancelled portable X-ray order was undoubtedly a setback, but I am pleased at the speed with which we have been able to put this behind us and the company looks to the future with confidence."

 

For further information on the Company, please visit: www.ish.co.uk and for further information on its products, please visit: www.3dx-ray.com

 

 

Enquiries:


Image Scan Holdings plc

William Mawer, Chairman and Chief Executive Officer

Sarah Atwell King, Company Secretary

Tel: +44 (0) 1509 817 400

ir@ish.co.uk

Cantor Fitzgerald Europe

Rick Thompson / David Foreman/Will Goode (Corporate Finance)

Alex PollenCaspar Shand Kydd (Sales)

Tel: +44 (0) 207 894 7000

                                   

 

 

Chairman's statement

 

Introduction

Image Scan Holdings plc is a specialist in innovative X-ray technology, operating globally in the security and industrial inspection sectors. The Company's principal activity is the design, manufacture and supply of both portable and fixed X-ray security screening systems to governments, security organisations and law enforcement agencies. The Company also supplies high-quality image acquisition systems for non-destructive testing to commercial organisations worldwide.

 

Financial results

New order intake grew by 50% to £2.0m (2017: £1.3m) with the business performing particularly well in Asia and the Indian Subcontinent.

 

Revenues for the six months ended 31 March 2018 were £2.0m (2017: £2.1m). This revenue performance was achieved despite the loss of a £1m contract, 50% of which had been scheduled for delivery in the period. The continued demand for the Company's products was reflected in the fact that the number of portable X-ray systems sold increased by 10% over the prior year. Gross margin increased to 40% (2017: 39%) reflecting favourable product mix and strong support revenue.

 

Overhead costs increased to £759k (2017: £695k), principally due to an additional £40k spend on research and development as the new precision detectors were transferred to production. The business made a post-tax profit of £39k (2017: £111k).

 

The Company finished the period with an order book of £1.1m (2017: £940k) and a cash balance of £752k (2017: £469k)

 

 

Overview

 

Having decided in February to accept the cancellation of a £1m contract, the Company has moved rapidly to negotiate a cancellation agreement, against which a payment has been received. The units built for the cancelled order have been repackaged and sold to other customers, leaving a stock of accessories against which a conservative provision has been made. Some of these accessories are common across many customers and may be sold in the future. The Company considers that this temporary setback is now behind it and is able to move forward strongly.

 

The continued focus on the Indian subcontinent led to a four-fold increase in X-ray unit sales to this region. These were primarily the lower cost, compact units, which are targeted specifically at this market. Asia continued to be a valuable market for the larger, more expensive systems, demonstrating the value of a product strategy that gives the Company a portfolio of products that can be optimised for particular requirements and budgets. Over the last 12 months, several sales visits have been made to South America and new partners have been appointed in key territories. This effort produced its first orders in the period and the order pipeline in the region is growing.

 

A change in technology strategy saw technology from our Precision Linescan Detector programme reach the market with the launch of the Threatscan®2. This offers a four-fold improvement in display resolution and allows our linescan technology to compete more directly with the much more expensive medical X-ray type detectors used by some competitors,

 

In the industrial inspection business area, where the Company provides machines for scanning catalytic converters and diesel particulate filters in the automotive industry, sales were light in the first half. However, the Company goes into H2 with an orderbook of five units (2017: 2 units) allowing valuable cost saving to be achieved in the supply chain and in assembly/test time. We expect to deliver all these units in H2.

 

The Company developed a new Quality Management System, and, in December 2017, its processes and systems were judged to meet the new ISO9001:2015 quality standard. These new processes are being implemented through a newly-launched Continuous Improvement Programme, backed up by detailed performance measurements, under the Operations Manager.

 

Outlook

 

In response to the continuing terrorist threats we see continued high demand for threat detection systems world-wide and demand for portable X-ray systems is part of this trend. The Company's expansion into new geographies such as the Indian Subcontinent and South America, alongside its continuing strength in Asia and the Middle East should allow it to capitalise on this continuing demand.

 

The Threatscan®2, with its high-resolution detector panel, together with a range of new system configuration options and accessories, will further broaden the range of customer requirements that Image Scan can address.

 

We have seen our catalytic converter customers expanding their industrial footprint to meet demands caused by tighter emissions controls legislation, and expect this trend to continue, further driving demand for our inspection systems.

 

The impact of the cancelled order, while short term, was significant and points to the need to expand the activities of the Company so that it is less dependent on individual product lines or customers. The Board is pursuing initiatives to achieve this through acquisition and partnership, as well as through internal product development. 

 

The staff at Image Scan are enthusiastic, dedicated and creative and on behalf of my fellow Board members, I would like to formally thank our staff for their contribution during this period.

 

The Board and staff of Image Scan look forward to the future with confidence.

 

Bill Mawer

Chairman and Chief Executive Officer

30/04/2018

 



 

Consolidated income statement

For the six months ended 31 March 2018

 

 

Note

Six months

ended

31 March 2018

(Unaudited)

£'000

Six months

ended

31 March 2017

(Unaudited)

£'000

Year ended

30 September

 2017

(Audited)

£'000

Revenue

 

           1,990

           2,086

           5,033

Cost of sales

 

(1,192)

(1,280)

(3,104)

Gross profit

 

               798

              806

          1,929

Other operating Income

[3]

          -

                   -

               57

Operating expenses

 

(759)

(695)

(1,509)

Operating profit

 

                 39

111

             477

Finance income

 

                   -

                  -

        -

Profit before taxation

 

                 39

111

              477

Taxation

 

                   -

                 -

              103

Profit for the period

 

                 39

111

             580

 

 

 

Pence

Pence

Pence

Earnings per share

 


 

 

Basic profit per share

[4]

0.03

0.09

0.45

Diluted profit per share

 

0.03

0.09

0.43

 

 

 

                                                               

Consolidated statement of changes in equity

For the six months ended 31 March 2018

 

 

Note

Six months

ended

31 March 2018

(Unaudited)

£'000

Six months

ended

31 March 2017

(Unaudited)

        £'000

Year ended

30 September

 2017

(Audited)

£'000

Opening equity shareholders' funds

 

      1,821

        740

         740

Shares issued in the year

 

             6

            -

         527

Share issue costs

 

             -

            -

          (43)

Share-based payments

[5]

              6

             5

          17

Profit attributable to equity shareholders

 

            39

         111

        580

Closing equity shareholders' funds

 

       1,872

         856

      1,821


Consolidated statement of financial position

As at 31 March 2018

 

 

As at

31 March 2018

(Unaudited)

£'000

As at

31 March 2017

(Unaudited)

£'000

As at

30 September

 2017

(Audited)

£'000

Non-current assets



 

Plant and equipment

           20

          31

                27

 

           20

          31

                27

Current assets



 

Inventories

         676

         700

          1,095

Trade and other receivables

      1,327

         652

          1,660

Cash and cash equivalents

         752

         469

          1,253

 

      2,755

      1,821

          4,008

Total assets

      2,775

      1,852

          4,035

Current liabilities



 

Trade and other payables

         855

         929

           2,166

Non-current liabilities



 

Provisions for liabilities and charges

           48

          67

               48

Total liabilities

         903

         996

           2,214

Net assets

      1,872

         856

           1,821

Equity



 

Share capital

      1,360

     1,256

           1,357

Share premium account

      8,320

      7,935

           8,317

Retained earnings

(7,808)

(8,335)

(7,853)

Equity shareholders' funds

     1,872

         856

           1,821

 



 

Consolidated cash flow statement

For the six months ended 31 March 2018

 

 

Six months

ended

31 March 2018

(Unaudited)

£'000

Six months

ended

31 March 2017

(Unaudited)

£'000

Year ended

30 September

 2017

(Audited)

£'000

Cash flows from operating activities

 

 

 

Operating profit/(loss)

              39

         111

        477

Adjustments for:



 

Depreciation

                7

           6

          13

Impairment of inventories

              24

         13

          30

Increase in provision for warranty

                -

          16

           (3)

Decrease/(increase) in inventories

           394

        (209)

        (620)

Decrease/(increase) in trade and other receivables

            267

        190

        (715)

(Decrease)/increase in trade and other payables

        (1,274)

        (698)

         539

Share-based payment charge

               6

            5

          17

Net cash used in operating activities

           (537)

        (566)

       (262)

Corporation tax recovered

             30

            -

              -

Net cash outflow from operating activities

           (507)

        (566)

        (262)




 

Cash flows from investing activities



 

Purchase of property, plant and equipment

                -

          (20)

(23)

Net cash used in investing activities

                 -

          (20)

          (23)




 

Cash flows from financing activities



 

Proceeds from issue of share capital

                6

              -

527

Financial costs of fundraising

                -

              -

(43)

Net cash from financing activities

                6

              -

483




 

Net (decrease)/increase in cash and cash equivalents

           (501)

        (586)

          198

Cash and cash equivalents at beginning of period

         1,253

      1,055

       1,055

Cash and cash equivalents at end of period

            752

         469

       1,253

 


Notes to the unaudited interim financial statements

For the six months ended 31 March 2018

 

1 Basis of preparation

The interim financial statements, which are unaudited, have been prepared on the basis of the accounting policies expected to apply for the financial year to 30 September 2018 and in accordance with recognition and measurement principles of International Financial Reporting Standards ('IFRSs') as endorsed by the European Union. The accounting policies applied in the preparation of these interim financial statements are consistent with those used in the financial statements for the year ended 30 September 2017.

 

The interim financial statements do not include all of the information required for full annual financial statements and do not comply with all the disclosures in IAS 34 'Interim financial reporting'. Accordingly, whilst the interim statements have been prepared in accordance with IFRSs, they cannot be construed as being in full compliance with IFRSs.

 

The financial information for the year ended 30 September 2017 does not constitute the full statutory accounts for that period. The annual report and financial statements for the year ended 30 September 2017 have been filed with the Registrar of Companies. The Independent auditor's report on the report and financial statements for the year ended 30 September 2017 was unqualified, did not draw attention to any matters by way of emphasis, and did not contain a statement under Section 498(2) or 498(3) of the Companies Act 2006.

 

2 Going concern

The interim financial information has been prepared on a going concern basis, which assumes that the Company will have adequate resources to continue in operational existence for the foreseeable future.

 

3 Other Operating Income

The R&D tax credits in the year have been decreased due to the limits on the amount credits which can be claimed

 

4 Earnings per share ('EPS')

Basic earnings per ordinary share is based on the profit on ordinary activities before taxation of £38,619 and on 136,004,577 ordinary shares in issue throughout the period.

 

Diluted profit/ per share is calculated by adjusting the weighted average number of ordinary shares in issue on the assumption of conversion of  dilutive potential ordinary shares, based on the share price at the end of the period.  The Company's dilutive potential ordinary shares are shares issued under the Company's Enterprise Management Incentive ('EMI') scheme and options issued under the Company's Unapproved scheme.

 

5 IFRS 2 'Share-based payments'

Operating expenses includes a charge of £5,887 (2017: £4,691) after valuation of the Company's employee share option schemes in accordance with IFRS 2. Under this standard, the fair value of the options at the grant date is spread over the vesting period. These charges have been credited to equity in accordance with IFRS2 as presented in the consolidated statement of changes in equity.

 

6 Additional copies

Further copies of the 2018 interim report are available on the Company's website, www.ish.co.uk, and from the Company's registered office, 16-18 Hayhill Industrial Estate, Sileby Road, Barrow-upon-Soar, Leicestershire LE12 8LD.

 

 

 


This information is provided by RNS
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