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RNS Number : 8570O
Image Scan Holdings PLC
02 June 2015
 

Image Scan Holdings plc

Interim report 2015

2 June 2015

IMAGE SCAN HOLDINGS PLC

("Image Scan" or the "Company")

(AIM: IGE)

 

INTERIM RESULTS

Income down but new products launched

 

Image Scan, (AIM: IGE) specialists in the field of innovative real-time X-ray imaging for the Security and Industrial Inspection markets, today announces its interim results for the six months ended 31 March 2015.

Financial summary:

·      Revenue £863,000 (2014: £1,678,000)

·      Gross profit margin of 36% (2014: 31%)

·      Loss after taxation of £335,000 (2014: £36,000)

·      Period end bank balance of £455,000 (2014: £25,000)

 

Operational highlights:

·      Replacement X-ray generator performing well for first customers

·      New portable X-ray product launched and first orders received

·      Research and development expenditure increased to £219,000 (2014: £95,000)

·      Strong international orders for Axis conveyor X-ray systems

·      Management team strengthened with new operations manager and (post period end) additional sales manager

·      New range of portable X-ray systems under the name "Threatscan" launched at Counter Terror Expo post period end

·      First order received for new ultra-thin detector panel post period end

 

Bill Mawer, Chairman and Chief Executive Officer of Image Scan, commented: "We have previously commented that order intake in the period was slow with the new portable X-ray generator only becoming available mid-way through the period. However we increased our research and development expenditure significantly and, at the end of the period, achieved the launch of new portable X-ray detector panels and new software. These elements integrate with the new generators to give the Company a highly competitive range of portable X-ray systems, well suited to a variety of customer applications. It is gratifying to have received the first orders for our new ultra-thin Threatscan LS1 detector panel."

Demand for portable X-ray systems remains strong so the current focus of the business is on moving the new range of portables into volume production while supporting the newly enhanced sales team and our distributors with live equipment demonstrations. We will then shift the focus of the R and D team into expansion of the product range beyond the portable X-ray systems."

 

 

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

Bill Mawer, Chairman and Chief Executive Officer

Tel: +44 (0) 1509 817 400

ir@ish.co.uk

Cantor Fitzgerald Europe (Nominated Adviser)  

Rick Thompson / David Foreman / Michael Reynolds (Corporate Finance)

 

David Banks / Tessa Sillars (Corporate Broking)

Tel: +44 (0) 207 894 7000

                                   

 

Chairman's statement

 

Introduction

Image Scan Holdings plc is a specialist in innovative real-time X-ray technology, operating globally in the security and industrial inspection sectors. The Group'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 Group also supplies high-quality image acquisition systems for non-destructive testing to commercial organisations worldwide.

 

Financial results

Revenue for the six months ended 31 March 2015 was significantly down over the period at £863,000 (2014: £1,678,000), with 77% of sales (2014: 85%) coming from the security market. Of this, only £362,000 (2014: £752,000) came from portable X-ray systems, reflecting the delayed availability of the replacement portable X-ray generator from our US-based supplier. However, gross margin improved to 36% (2014: 31%) supported by high margin service contracts on industrial systems.

 

An increased focus and investment in research and development saw expenditure more than double to £219,000 (2014: £95,000). Overhead expenses were carefully controlled and remained approximately flat at £478,000 (2014: £481,000). An operating loss of £387,000 (2014: £59,000) was somewhat ameliorated by research and development tax credits of £52,000 (2014: £23,000) giving a loss after tax of £335,000 (2014: £36,000).

 

The Company held £455,000 (2014: £25,000) cash at the end of the period.

 

Overview

The portable X-ray development programme, which includes the external development of X-ray generators and the internal development of detector panels and software, proceeded more slowly than planned during the period and the resultant delays in availability of these new systems to the sales team impacted order intake. However, these systems have now been shown at the Counter Terror Expo at Olympia and sparked high levels of interest from customers. The Axis conveyor X-ray systems achieved strong order intake over the period with orders for 22 units added to the 14 units that were carried forward into the reporting period. 13 of these units were sold in the period with the remainder due for delivery in the second half of the year.

 

An experienced operations manager was recruited and has already contributed to both on-time delivery and cost control.

 

A single industrial testing unit was sold to the Company's main automotive customer; whilst service revenue was strong at £125,000 (2014: £50,000).

 

Outlook

The portable X-ray market remains strong, driven by concerns over a variety of terrorist threats, not least those from ISIS and the potential for ISIS trained militants to return to their country of origin. A number of countries are planning large multi-unit procurements. Demonstrator models for the new portable X-ray systems are starting to be deployed worldwide through the sales team and the distributor network in order to drive early uptake. This effort has been supported by recruitment of an experienced security sales manager who is starting to develop the European portable X-ray market.

 

Strong demand for the Axis system supports the desirability of re-engineering this system.

 

The Company is currently working on a new strategy for the industrial inspection market. Overall growth in the automotive sector, where most of Image Scan's units are placed, remains strong with KPMG forecasting 5% CAGR (1) over the next five years.  The new strategy will be focused on improvements to both product range and routes to market in this sector.

 

With the launch of the new portable X-ray products, I am confident that we now have a highly competitive range of systems and an excellent route to market. I intend for portable X-ray to be the foundation of the Company's recovery and growth and the basis from which we develop our position in adjacent markets. The staff at Image Scan are enthusiastic, dedicated and creative and on behalf of my fellow Board members and shareholders, I would like to formally thank our staff for their contribution during this period.

 

Bill Mawer

Chairman and Chief Executive Officer

2 June 2015

(1)   KPMG report 'Global Automotive Retail Market' - September 2013.



 

Consolidated income statement

For the six months ended 31 March 2015

 

 

Note

Six months

ended

31 March 2015

(Unaudited)

£'000

Six months

ended

31 March 2014

(Unaudited)

£'000

Year ended

30 September

 2014

(Audited)

£'000

Revenue

 

863

1,678

2,195

Cost of sales

 

(553)

(1,161)

(1,522)

Gross profit

 

310

517

673

Administrative expenses

 

(697)

(576)

(1,197)

Operating loss

 

(387)

(59)

(524)

Finance revenue

 

-

-

1

Loss before taxation

 

(387)

(59)

(523)

Taxation

 

52

23

72

Loss for the period

 

(335)

(36)

(451)

 

 

 

Pence

Pence

Pence

Earnings per share

 


 

 

Basic and diluted loss per share

[3]

(0.27)

(0.05)

(0.57)


Consolidated statement of changes in equity

For the six months ended 31 March 2015

 

 

Note

Six months

ended

31 March 2015

(Unaudited)

£'000

Six months

ended

31 March 2014

(Unaudited)

£'000

Year ended

30 September

 2014

(Audited)

£'000

Opening equity shareholders' funds

 

1,156

677

677

Shares issued during the year

 

-

-

970

Shares issued during the year in payment of creditors

 

-

-

35

Share issue costs

 

-

-

(78)

Share-based payments

[4]

5

-

3

Loss attributable to equity shareholders

 

(335)

(36)

(451)

 

 

826

641

1,156


Consolidated statement of financial position

As at 31 March 2015

 

 

As at

31 March 2015

(Unaudited)

£'000

As at

 31 March 2014

(Unaudited)

£'000

As at

30 September

 2014

(Audited)

£'000

Non-current assets


 

 

Plant and equipment

5

16

8

 

5

16

8

Current assets


 

 

Inventories

659

352

331

Trade and other receivables

459

651

182

Cash and cash equivalents

455

25

948

Current tax asset

124

59

72

 

1,697

1,087

1,533

Total assets

1,702

1,103

1,541

Current liabilities


 

 

Trade and other payables

845

440

363

Non-current liabilities


 

 

Provisions for liabilities and charges

31

22

22

Total liabilities

876

462

385

Net assets

826

641

1,156

Equity


 

 

Share capital

1,256

763

1,256

Share premium account

7,935

7,501

7,935

Retained earnings

(8,365)

(7,623)

(8,034)

Equity shareholders' funds

826

641

1,156

 

This interim financial information was approved by the Board of Directors on 2 June 2015.

 

Bill Mawer

Chairman and Chief Executive Officer


Consolidated cash flow statement

For the six months ended 31 March 2015

 

 

Six months

ended

31 March 2015

(Unaudited)

£'000

Six months

ended

31 March 2014

(Unaudited)

£'000

Year ended

30 September

 2014

(Audited)

£'000

 

Cash flows from operating activities

 

 

 

 

Operating loss

(387)

(59)

(524)

 

Adjustments for:


 

 

 

Depreciation

3

7

13

 

Impairment of inventories

10

-

45

 

Transfer of fixed assets to stock

-

2

6

 

Increase in provision for warranty

9

-

-

 

(Increase)/decrease in inventories

(338)

106

83

 

(Increase)/decrease in trade and other receivables

(277)

469

938

 

Increase/(decrease) in trade and other payables

482

(509)

(585)

 

Share-based payment charge

5

-

38

 

Net cash (used in/generated from operating activities

(493)

16

14

 

Corporation tax recovered

-

-

36

 

Net cash (outflow)/inflow from operating activities

(493)

16

50

 

Cash flows from investing activities


 

 

 

Purchase of property, plant and equipment

-

(3)

(6)

 

Net cash used in investing activities

-

(3)

(6)

 

Cash flows from financing activities


 

 

 

Proceeds from issue of share capital

-

-

970

 

Financial costs of fundraising

-

-

(78)

 

Net cash from financing activities

-

-

892

 

Net (decrease)/ increase in cash and cash equivalents

(493)

13

936

 

Cash and cash equivalents at beginning of period

948

12

12

 

Cash and cash equivalents at end of period

455

25

948

 

 


Notes to the unaudited interim financial statements

For the six months ended 31 March 2015

 

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 2015 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 2014.

 

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 2014 does not constitute the full statutory accounts for that period. The annual report and financial statements for the year ended 30 September 2014 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 2014 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 Earnings per share ('EPS')

Basic earnings per ordinary share is based on the loss on ordinary activities after taxation of £335,000 and on 125,604,577 ordinary shares in issue throughout the period.

 

IAS 33 requires presentation of diluted EPS when a company could be called upon to issue shares that would decrease net profit or increase net loss per share. Earnings or loss per share would not be affected by the exercise of out-of-the-money options since it is inappropriate to assume that option holders would act irrationally. Accordingly, as there are no other diluting future share issues, diluted EPS equals basic EPS.

 

4 IFRS 2 'Share-based payments'

Operating expenses includes a charge of £5,000 (2014: £nil) 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 items have been added back in the consolidated statement of changes in equity.

 

5 Additional copies

Further copies of the 2015 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.

 


Professional advisers

 

Directors

William Mawer

Executive Chairman/Chief Executive Officer

 

Vincent Deery

Sales and Marketing Director

 

Richard Leaver

Non-executive Director

 

Timothy Jackson

Non-executive Director

 

Company Secretary

Sarah Atwell-King

 

Registered Office

16-18 Hayhill Industrial Estate
Sileby Road
Barrow-upon-Soar
Leicestershire LE12 8LD

 

Company number

03062983

 

Nominated adviser and broker

Cantor Fitzgerald Europe

One Churchill Place
Canary Wharf
London EC14 5RB

 

Principal bankers

Royal Bank of Scotland plc

8 South Parade
Nottingham NG1 2JS

 

Solicitors

Browne Jacobson

44 Castle Gate
Nottingham NG1 7BJ

 

Registrars

Neville Registrars Ltd

Neville House
18 Laurel Lane
Halesowen B63 3DA

 

Auditors

Wilkins Kennedy LLP

Statutory Auditor
Chartered Accountants
Bridge House
London Bridge
London SE1 9QR


Image Scan Holdings plc

16-18 Hayhill Industrial Estate
Sileby Road
Barrow-upon-Soar
Leicestershire LE12 8LD

Tel:         +44 (0)1509 817 400
Fax:         +44 (0)1509 817 401

ir@ish.co.uk
www.ish.co.uk


This information is provided by RNS
The company news service from the London Stock Exchange
 
END
 
 
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