TIDMIGE
RNS Number : 5299Y
Image Scan Holdings PLC
06 December 2017
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.
PRELIMINARY RESULTS FOR THE YEARED 30 SEPTEMBER 2017
Image Scan (AIM: IGE), the specialist supplier of X-ray
screening systems to the security and industrial inspection
markets, today announces preliminary results for the year ended 30
September 2017.
HIGHLIGHTS
-- Total order intake for the year increased 25% to GBP5.4m (2016: GBP4.3m)
-- Sales increased 50% to GBP5.0m (2016: GBP3.3m) at a gross margin of 38% (2016: 42%)
-- Pre-tax trading profit increased 350% to GBP477k (2016: GBP105k)
-- Closing order book of GBP2.1m (2016: GBP1.7m) and cash of GBP1.3m (2016 GBP1.1m)
-- Portable X-ray systems sold extensively in Asia, the Middle East and Europe
-- Growing sales to customers in the Indian subcontinent
-- Compact portable X-ray detector developed and launched
-- Continuing sales of industrial inspection systems
Bill Mawer, Chairman and Chief Executive of Image Scan,
commented: "For a second consecutive year, sales of our range of
portable X-ray systems to both current customers and first-time
users increased considerably. We launched important new products
and opened up promising new markets, a real team effort. I am also
pleased with the continued progress in our supply chain and
manufacturing processes, and with the growing library of positive
feedback from users.
We started the new year with a record order book but have yet to
finalise extended delivery dates on a portion of those orders. We
continue to target large, multi-unit orders across our markets and
this remains our primary short-term focus. In growing our order
intake, we are focussed on diversifying our customer base, as in
both our security and industrial businesses, a significant portion
of the revenue is currently dependent on a small group of
customers. In order to maximise the revenue from our well-developed
route to market, we also plan to work towards adding new product
lines to our portfolio during the coming year, beyond our current
portable and industrial X-ray systems. This will be achieved
through internal development, through partnerships or by
acquisition and we can see opportunities in each of these
areas."
--
Image Scan Holdings plc Tel: +44 (0) 1509 817400
William Mawer, Chairman
Sarah Atwell-King, Company Secretary
ir@ish.co.uk
Cantor Fitzgerald Europe Tel: +44 (0) 207 894 7000
Rick Thompson / David Foreman (Corporate Finance)
Alex Pollen / Caspar Shand Kydd (Sales)
About Image Scan Holdings plc
Image Scan Holdings plc (AIM: IGE) is focused on the development
and commercialisation of market leading real-time X-ray solutions
for use in the global Security and Industrial inspection markets.
The Company's Security portfolio includes the ThreatScan(R) range
of portable bomb and suspect package detection systems; the Axis
range of baggage inspection systems; and SVXi, a small vehicle
inspection system. The Industrial inspection solutions include the
MDXi product range, cabinet X-ray systems for laboratories and
production lines. The Company was founded in 1996 and joined AIM in
2002.
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
CHAIRMANS STATEMENT
OVERVIEW
I am pleased to report on the results for Image Scan Holdings
plc for the year ended 30 September 2017. The year saw substantial
increases in both orders and sales and, with overheads under tight
control, pre-tax profits grew strongly.
Order intake during 2017 totalled GBP5.4m (2016: GBP4.3m) and
featured strong demand for portable X-ray systems. Revenue for the
year was GBP5.0m (2016: GBP3.3m) and the business generated a
pre-tax profit of GBP477k (2016: GBP105k). The Company closed the
year with a record orderbook of GBP2.1m (2016: GBP1.7m) and a
positive cash balance of GBP1.3m (2016: GBP1.1m).
In April the Company successfully raised GBP525k through a
placing of 9,500,000 new ordinary shares at a price of 5.25 pence
per share with new and existing institutional investors and a
subscription of 500,000 new shares by William Mawer, Chairman and
Chief Executive Officer, at the same price.
The Company's product strategy for the portable X-ray market has
been to develop a modular and flexible systems that allows precise
targeting of the performance requirements and budget availability
in particular regional markets and for individual customer groups.
That strategy has led to significant breakthroughs in markets in
the Indian subcontinent with several new customers purchasing
systems during the year, particularly the 'entry level'
ThreatScan(R)-Lite system. Sales also grew in South East Asia and
Europe.
Industrial X-ray systems, were delivered to manufacturing plants
in the UK, Eastern Europe and South America and an important
customer started to deploy the system into its global manufacturing
centres after extensive trials at its European base.
An accelerated product development project led to the launch of
the ThreatScan(R)-LS3, a new compact detector panel for use in
portable X-ray systems. This system makes the technology of the
ThreatScan(R)-LS1 available in the more compact package required by
certain customer groups, notably the more mobile threat
investigation teams. First customer deliveries were made in 2017.
The decision to prioritise the LS3 development was driven by market
demand and resulted in a delay in the launch of the Precision
Linescan Detector ("PLD"). A second prototype of the PLD has now
been built. The unit is currently being tested and was exhibited
for the first time at the Milipol security show in Paris in
November.
BUSINESS REVIEW
The number of portable X-ray systems sold increased by 65% in
comparison to the prior year, much of the growth coming from
markets in South East Asia and the Indian subcontinent. The
year-end orderbook included over 80 portable systems, scheduled for
delivery during FY2018. The majority of units sold were
ThreatScan(R)-LS1 system following a major sales campaign during
the prior year. That sales campaign has continued with units shown
at major security equipment exhibitions and demonstrated at
customer sites. However, several multi unit orders were received
for the entry level ThreatScan(R)-Lite system. The launch of the
compact ThreatScan(R)-LS3 system makes the technology and advanced
image performance of the LS1 system available to users requiring a
small imaging panel. It is now possible to provide a complete
portable X-ray system in a backpack for users needing this
flexibility.
Conveyor X-ray systems were sold to customers in the Middle East
and a small number of MailScan systems from our UK manufacturing
partner were sold to international customers.
The decision to prioritise the LS3 development was driven by
market demand and resulted in a delay in the launch of the
Precision Linescan Detector ("PLD"). This system has been developed
with support of a grant from Innovate UK, the UK Government's
innovation funding body. A second prototype of the PLD has been
built, and is being tested. The system will be exhibited for the
first time at the Milipol security show in Paris in November.
Industrial inspection systems, used for quality control in the
manufacture of catalytic converters and diesel particulate filters
in the automotive industry, were manufactured during the period and
delivered to plants in UK, Eastern Europe and South America. We are
working with our customers in this industry to explore and develop
even more sophisticated testing regimes.
OPERATIONAL IMPROVEMENTS
In response to both the growing volume of sales and our desire
to continue to improve on-time delivery and quality performance, we
continued a strong drive for operational improvement in the Company
and its processes. Manufacturing volume varied widely through the
year and tight control of the manufacturing process allowed us to
recruit and train temporary staff at peak periods with no loss of
quality. The factory was re-laid out in the year, providing a 30%
increase in capacity. There is further room for growth if
required.
The support of the supply chain has also been important, and we
now have a number of key suppliers working under framework
contracts that allow us to call forward components as we need them
rather than having to hold expensive stock in Image Scan or accept
long lead times.
FINANCIAL RESULTS
The Company started the year with an order book of GBP1.7m
(2016: GBP0.7m), won new orders worth GBP5.4m (2016: GBP4.3m) and
made sales of GBP5.0m (2016: GBP3.3m), finishing the year with an
order book of GBP2.1m (2016: GBP1.7m).
Gross margin on sales remained strong at 38% (2016: 42%). The
small decrease reflected a change in product mix and selective use
of aggressive pricing to break into new markets. Overheads
increased to GBP1.5m (2016: GBP1.4m) and included substantial
budgeted expenditure on both research and development and sales and
marketing. This represented a relative decrease to 30% of sales
(2016: 42% of sales).
Profit before tax increased to almost 10% of sales at GBP477k
(2016: GBP105k).
The business finished the year with a positive cash balance of
GBP1.3m (2016: GBP1.1m)
OUTLOOK
The Company starts 2018 with a robust orderbook, although we
need to finalise the extended delivery dates on a proportion of
those orders. The Company has an encouraging sales pipeline and a
product range that allows a wide range of customers and markets to
be addressed. Further portable X-ray product launches are planned
during the year and these should allow the company to continue to
extend its customer base. The security equipment market continues
to be very active, reflecting the continuing high level of the
terrorist threat, as portable X-ray systems are important tools for
early detection/identification of a threat and often one of the
first security technologies to be deployed after a threat is
detected. We expect continuing healthy demand for these
products.
We expect tighter legislation around vehicle emissions,
particularly of diesel engines, to drive a continued focus on
manufacturing quality in catalytic converters and diesel
particulate filters. As a major supplier of automated X-ray
inspection systems to this industry we expect these trends to
continue to drive demand for our MDXi range of systems.
While the Company does receive valuable service and support
revenue, this is its only recurring revenue. The Company has seen a
growth in the number of support contracts in the year. The Company
will be very focussed on maintaining the strong order intake of the
last 18 months in order to continue the momentum recently
established. We are considering adding additional resource to the
sales team to support this effort.
The outlook for the Company remains positive in all its major
markets with the key short-term focus being to drive sales and
diversify our sources of revenue. Opportunities for further
strategic expansion continue to be explored.
Over the next few years we intend to reinvest any profit made
into the business and do not anticipate paying a dividend.
STAFF
The Board values greatly the considerable efforts made by our
staff and, on behalf of the Directors, I would like to take this
opportunity to personally thank staff and shareholders for their
continued commitment to Image Scan.
William Mawer
CHAIRMAN
5 December 2017
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Note 2017 2016
GBP GBP
Continuing operations
REVENUE 3 5,033,636 3,314,806
Cost of sales (3,104,007) (1,911,046)
Gross profit 1,929,629 1,403,760
Other operating income 4 57,166 77,790
Operating expenses (1,218,111) (1,058,927)
Research and development
expenses (291,593) (317,841)
Total administrative expenses (1,509,704) (1,376,768)
OPERATING PROFIT/(LOSS) 5 477,091 104,782
Finance income 286 671
PROFIT/(LOSS) BEFORE
TAXATION 477,377 105,453
Taxation 7 102,811 -
PROFIT AND TOTAL COMPREHENSIVE
INCOME FOR THE YEAR
FROM CONTINUING OPERATIONS
ATTRIBUTABLE TO THE
EQUITY OWNERS OF THE
PARENT COMPANY 580,188 105,453
Pence Pence
Earnings per share 8
Basic 0.45 0.08
Diluted 0.43 0.08
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Note 2017 2016
GBP GBP
NON-CURRENT ASSETS
Property, plant and
equipment 9 26,842 16,796
26,842 16,796
CURRENT ASSETS
Inventories 11 1,094,879 504,584
Trade and other receivables 12 1,660,489 842,376
Cash and cash equivalents 13 1,253,114 1,054,588
4,008,482 2,401,548
TOTAL ASSETS 4,035,324 2,418,344
CURRENT LIABILITIES
Trade and other payables 14 2,166,248 1,627,061
Warranty provision 15 47,977 51,232
2,214,225 1,678,293
NET ASSETS 1,821,099 740,051
EQUITY
Share capital 17 1,357,046 1,256,046
Share premium account 8,317,410 7,934,528
Retained earnings (7,853,357) (8,450,523)
TOTAL EQUITY ATTRIBUTABLE
TO SHAREHOLDERS 1,821,099 740,051
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
CONSOLIDATED Share Share Retained Total
capital premium earnings GBP
GBP GBP GBP
As at 1 October 2015 1,256,046 7,934,528 (8,573,938) 616,636
Profit for the year
and total comprehensive
income/(expenditure)
for the year - - 105,453 105,453
Share-based transactions - - 17,962 17,962
As at 30 September
2016 1,256,046 7,934,528 (8,450,523) 740,051
Shares issued during
the year 101,000 426,000 - 527,000
Share issue Costs - (43,118) (43,118)
Profit for the year
and total comprehensive
income/(expenditure)
for the year - - 580,188 580,188
Share-based transactions - - 16,978 16,978
As at 30 September
2017 1,357,046 8,317,410 (7,853,357) 1,821,099
CONSOLIDATED CASH FLOW STATEMENT
Note 2017 2016
GBP GBP
Cash flows from operating
activities
Operating profit before
research and development
expenditure 768,684 422,623
Research and development
expenditure (291,593) (317,841)
Operating profit 477,091 104,782
Adjustments for:
Depreciation 12,975 6,215
Impairment of inventories 30,116 13,335
(Increase)/decrease in inventories (620,411) 52,582
Increase in trade and other receivables (715,301) (458,695)
Increase in trade and other
payables 539,186 849,168
(Decrease)/increase in warranty
provisions (3,255) 18,052
Share-based payments 16,978 17,962
Cash generated (used in)/from
operating activities (262,621) 603,401
Corporation tax recovered - -
Net cash flows (used in)/generated
from operating activities (262,621) 603,401
Cash flows from investing
activities
Interest received 286 671
Purchase of property,
plant and equipment 9 (23,021) (18,942)
Net cash used in investing
activities (22,735) (18,271)
CASH FLOWS FROM FINANCING
ACTIVITIES
Proceeds from issue of 527,000 -
share capital
Financial costs of fundraising (43,118) -
Net cash generated from 483,882 -
financing activities
Net INCREASE in cash and cash equivalents 198,526 585,130
Cash and cash equivalents
at beginning of year 1,054,588 469,458
Cash and cash equivalents
at end of year 13 1,253,114 1,054,588
Notes to the preliminary statement
1. Basis of preparation
The financial information set out above does not constitute the
Company's statutory accounts for the years ended 30 September 2017
and 30 September 2016 but is derived from those accounts. Statutory
accounts for 2016 have been delivered to the Registrar of
Companies, and those for 2017 will be delivered following the
Company's Annual General Meeting. The auditors have reported on
those accounts; their reports were unqualified and did not contain
statements under Section 498 of the Companies Act 2006.
2. IFRS 2 'Share-based payments'
Operating expenses includes a charge of GBP16,978 (2016:
GBP17,962) after valuation of the Company's employee share options
schemes in accordance with IFRS 2 'Share-based payments'. Under
this standard, the fair value of the options at the grant date is
spread over the vesting period. These items have been added back in
the statement of changes in equity.
3. .Earnings per share
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. 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.
2017 2016
GBP GBP
Profit for the year 580,188 105,453
Weighted average number
of ordinary shares in issue 129,512,227 125,604,577
Basic profit per share 0.45p 0.08p
Diluted profit per
share 0.43p 0.08p
This information is provided by RNS
The company news service from the London Stock Exchange
END
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