TIDMIGE
RNS Number : 0180R
Image Scan Holdings PLC
06 December 2016
PRELIMINARY RESULTS FOR THE YEARED 30 SEPTEMBER 2016
Image Scan, (AIM: IGE) specialists in the field of innovative
real-time X-ray imaging for the Security and Industrial Inspection
markets, today announces preliminary results for the year ended 30
September 2016.
KEY POINTS
-- Total order intake for the year was GBP4.3m (2015: GBP1.9m).
-- Sales of GBP3.3m (2015: GBP1.7m) at an improved gross margin
of 42% (2015: 38%) resulted in a pre-tax trading profit of GBP105k
(2015: loss of GBP550k).
-- Total portable X-ray sales tripled compared to the previous
year, with units delivered to customers in Europe, the Middle East,
Asia and North Africa.
-- The government grant assisted project to develop a new
generation of portable X-ray systems reached the prototype
stage.
-- Industrial sales increased, driven by higher demand from key automotive industry customers.
-- Total R & D spend increased to GBP369k, with internal
funding supported by customer funding and a government grant.
-- The outstanding order book at the end of the period was
GBP1.7m (2015: GBP0.7m) including more than 50 portable X-ray
systems.
-- Cash at the end of the period was GBP1.1m (2015: GBP0.5m).
Bill Mawer, Chairman and Chief Executive of Image Scan,
commented: "The strong growth in security sales validates the
product strategy laid out and adopted two years ago, and
demonstrates how attractive our new products are in the very active
market for portable X-ray systems. Our consistent on-time delivery
of these high volumes of product demonstrates the progress we have
made in developing our supply chain and manufacturing processes.
Sales to industrial customers have also been healthy, reflecting
the current strength of the automotive emissions control market,
where key players use our X-ray inspection systems to support their
manufacturing processes.
Our strong order book and cash positions point to continued good
performance in the short term while our product pipeline and the
expanding customer base point to a strong longer-term future. The
20(th) anniversary of the founding of the Company comes at an
exciting time for Image Scan and the immediate task is to continue
the momentum we have built this year."
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 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 / Michael Reynolds (Corporate
Finance)
David Banks / Alex Pollen (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 2016. The year saw substantial
increases in both orders and sales, and the business recorded a
profit for the first time since FY 2012/13.
Order intake during 2016 totalled GBP4.3m (2015: GBP1.9m) and
was particularly strong in portable X-ray systems. Sales for the
year were GBP3.3m (2015: GBP1.7m) and the business made a pre-tax
profit of GBP105k (2015: loss of GBP550k). The Company closed the
year with an order book of GBP1.7m (2015: GBP0.7m) and a positive
cash balance of GBP1.1m (2015: GBP469k)
The pace of new product development continued into 2016.
However, the primary focus of the Company has been to take the
newly developed products to market, particularly the new portable
X-ray systems. Orders started to build early in the year with large
contracts being awarded in the second half. The business also
focussed on restructuring its supply chain and manufacturing
processes to better meet the demands of volume manufacturing. The
results of this effort were demonstrated by on-time deliveries of
high volumes of portable X-ray systems late in the year. That
performance has continued into the first half of FY 2016/17.
Sales of industrial inspection systems to customers in the
automotive sector increased and several new service contracts were
signed. The large nuclear project, which adversely impacted Company
performance for several years, has completed; the system is out of
warranty and a service contract has been put in place.
Innovation has continued and the business has developed a first
working prototype of its new generation of portable X-ray systems.
The Company works with Ibex Innovations on this project from whom
it has exclusive license to innovative X-ray detection and
processing technology. In the industrial product range, substantial
customer funded software development projects were delivered and
new and potentially valuable techniques were developed for the
inspection of large Diesel Particulate Filters.
BUSINESS REVIEW
Portable X-ray Systems
The number of portable X-ray units sold trebled in comparison to
the prior year, and the year end order book included in excess of
50 units for sale in the first half of FY 2017. The majority of
units sold were the ThreatScan(R)-LS1 which was launched in 2015.
This system, which offers exceptional imaging performance in a
rugged and highly portable package, was successfully demonstrated
at major global gatherings of bomb disposal experts including the
International Association of Bomb Technicians and Investigators,
held in Halifax, Nova Scotia. Experts who used the system liked its
speed of deployment, ease of use and the quality of the image
produced. During the year, potentially valuable new customers were
acquired and several large multi-unit orders were received.
A new lower cost system, the FlatScan-Lite, which teams an
upgraded version of the Company's smaller detector panel with a new
low cost generator, was introduced and orders started to build,
particularly in Central Asia. The approach makes the Company's
superior Linescan X-ray technology available to new markets.
An extensive range of portable X-ray accessories were
introduced. These include extended range communications, radiation
protection devices and a dedicated trolley for under vehicle
inspection; systems which give customers new deployment options and
add value to individual sales.
For markets where even higher performance is required, the
Company is developing a Precision Linescan Detector using unique
detection and image processing technology licensed exclusively to
Image Scam from Ibex Innovations, a Durham University spinoff. The
project is supported by a grant from Innovate UK, the first time
the Company has had such a grant. A prototype has been produced and
is demonstrating both exceptionally clear images and excellent
materials discrimination. The grant completes in February 2017 and
the system will be launched later in the year.
Mail Scan systems
An agreement was signed with Todd Research Limited for Image
Scan to market that company's Mail Scan X-ray systems and orders
were received in Africa and Asia. Campaigns to sell further systems
are underway.
Industrial inspection systems
Sales of MDXi industrial inspection systems increased to 7
systems (2015: 2 systems), as the Company's major customers
continued to roll out the technology into their manufacturing
plants. MDXi systems are primarily used to inspect catalytic
converters and diesel particulate filters in the manufacturing
process.
The Company also carried out several substantial customer
development projects, providing additional features and
enhancements to these machines. A new technique was developed for
inspecting large diesel particulate filters and it is hoped these
techniques will be deployed during 2017.
The inspection system provided under a longstanding nuclear
industry contract, which adversely impacted the Company's
performance for several years, reached the end of its warranty
period and a support contract was put in place.
OPERATIONAL IMPROVEMENTS
The process of operational improvement, which had been started
under our new Operations Manager in 2015, gathered pace in 2016. In
particular, it became necessary to gear up the manufacturing and
supply chain processes to handle the increasing volume of security
system orders in the later part of the year. In manufacturing,
temporary staff were recruited and trained and an efficient
resource planning system was put in place. An upgraded Sage
business system led to improvements to ordering and stock control.
Key strategic suppliers were identified and improvements were made
in supplier communications and management. The success of this
process was a key component in the Company's considerably improved
on-time delivery performance and customer satisfaction ratings. The
improvement process will continue in 2017.
FINANCIAL RESULTS
The Company started the year with an order book of GBP0.7m
(2015: 0.5m), won new orders worth GBP4.3m (2015: GBP1.9m) and made
sales of GBP3.3m (2015: GBP1.7m), finishing the year with an order
book of GBP1.7m (2015: GBP0.7m).
Gross margin on sales made a further improvement to 42% (2015:
38%). Gross margin has increased by over 10 percentage points from
the 2014 level of 31%. This improving gross margin, which has been
driven by sales of higher margin, newly developed products and
supply chain and manufacturing efficiencies, allowed the business
to record a profit of GBP105k (2015: loss of GBP550k), its first
profit since FY 2012.
Overheads were managed carefully with an increase of just
GBP0.1m to GBP1.4m (2015: GBP1.3m), the increase due largely to
increased marketing expenses as the new products were taken to
market.
The business finished the year with a positive cash balance of
GBP1.1m (2015: GBP0.5m).
OUTLOOK
The Company starts 2017 strongly with a substantial order book,
including in excess of 50 portable X-ray machines which will be
delivered during the first half. The sales pipeline remains strong
and support contracts for the large installed base of industrial
machines provide valuable recurring revenue.
The sales team will continue their extensive programme of
demonstrations and trials of the ThreatScan(R)-LS1 and
FlatScan-Lite portable X-ray systems and both systems are expected
to continue to be popular with customers. New product launches
planned for 2017 should keep the Company's products competitive and
allow it to further extend its customer base.
In the industrial product range, the Company will continue its
focus on the principle manufacturers of automotive emissions
control systems, seeking expanded global deployment by current
customers and the acquisition of new customers in this active
market. Recent developments in the inspection of larger diesel
particulate filters will be extended and the potential market for
systems incorporating these techniques will be further
explored.
The outlook for the Company remains strong in all its major
markets and opportunities for further expansion continue to be
explored.
STAFF
The Board values greatly the considerable efforts made by our
staff and 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 2016
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
2016 2015
GBP GBP
Continuing operations
REVENUE 3,314,806 1,707,768
Cost of sales (1,911,046) (1,058,935)
Gross profit 1,403,760 648,833
Other Operating Income 77,790 90,201
Operating expenses (1,058,927) (924,152)
Research and development
expenses (317,841) (366,095)
Total administrative expenses (1,376,768) (1,290,247)
OPERATING PROFIT/(LOSS) 104,782 (551,213)
Finance income 671 984
PROFIT/(LOSS) BEFORE
TAXATION 105,453 (550,229)
Taxation - -
PROFIT/(LOSS) AND
TOTAL COMPREHENSIVE
INCOME FOR THE YEAR
FROM CONTINUING OPERATIONS
ATTRIBUTABLE TO THE
EQUITY OWNERS OF THE
PARENT COMPANY 105,453 (550,229)
Pence Pence
Earnings/(loss) per
share
Basic 0.08 (0.44)
Diluted 0.08 -
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
2016 2015
GBP GBP
NON-CURRENT ASSETS
Property, plant and
equipment 16,796 4,069
16,796 4,069
CURRENT ASSETS
Inventories 504,584 570,501
Trade and other receivables 842,376 383,681
Cash and cash equivalents 1,054,588 469,458
2,401,548 1,423,640
TOTAL ASSETS 2,418,344 1,427,709
CURRENT LIABILITIES
Trade and other payables 1,627,061 777,893
Warranty provision 51,232 33,180
1,678,293 811,073
NET ASSETS 740,051 616,636
EQUITY
Share capital 1,256,046 1,256,046
Share premium account 7,934,528 7,934,528
Retained earnings (8,450,523) (8,573,938)
TOTAL EQUITY ATTRIBUTABLE
TO SHAREHOLDERS 740,051 616,636
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share Share Retained Total
capital premium earnings GBP
GBP GBP GBP
As at 1 October 2014 1,256,046 7,934,528 (8,034,398) 1,156,176
Profit/(loss) for
the year and total
comprehensive income/(expenditure)
for the year - - (550,229) (550,229)
Share-based transactions - - 10,689 10,689
As at 30 September
2015 1,256,046 7,934,528 (8,573,938) 616,636
Profit/(loss) 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
CONSOLIDATED CASH FLOW STATEMENT
2016 2015
GBP GBP
Cash flows from operating
activities
Operating profit/(loss)
before research and development
expenditure 422,623 (185,118)
Research and development
expenditure (317,841) (366,095)
Operating Profit/(Loss) 104,782 (551,213)
Adjustments for:
Depreciation 6,215 5,292
Impairment of inventories 13,335 17,847
Decrease/(increase) in inventories 52,582 (257,522)
(Increase) in trade and other receivables (458,695) (129,666)
Increase in trade and other
payables 849,168 414,072
Increase in warranty provisions 18,052 11,673
Share-based payments 17,962 10,689
Cash generated from/(used
in) operating activities 603,401 (478,828)
Corporation Tax recovered - -
Net cash flows generated
from/ (used in) operating
activities 603,401 (478,828)
Cash flows from investing
activities
Interest received 671 984
Purchase of property,
plant and equipment (18,942) (979)
Net cash (used in)/ generated
from investing activities (18,271) 5
CASH FLOWS FROM FINANCING
ACTIVITIES
Proceeds from issue of - -
share capital
Financial costs of fundraising - -
Net cash generated from - -
financing activities
Net INCREASE/(DECREASE) in cash and
cash equivalents 585,130 (478,823)
Cash and cash equivalents
at beginning of year 469,458 948,281
Cash and cash equivalents
at end of year 1,054,588 469,458
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 2016
and 30 September 2015 but is derived from those accounts. Statutory
accounts for 2015 have been delivered to the Registrar of
Companies, and those for 2016 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 GBP17,962 (2015:
GBP10,689) 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/(loss) 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.
2016 2015
GBP GBP
Profit/ (Loss) for
the year 105,453 (550,229)
Weighted average number
of ordinary shares in issue 125,604,577 125,604,577
Basic profit/( loss)
per share 0.08p (0.44p)
Diluted profit/(loss)
per share 0.08p -
This information is provided by RNS
The company news service from the London Stock Exchange
END
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