Interim Results 2016
19 April 2016
Improved performance in both security and industrial sectors
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 2016 which are in line with the Board’s expectations. Given performance during the first six months the Board remains confident of meeting market expectations for the year to 30 September 2016.
Financial summary:
- Order intake for the period of £1,314k (2015: £977k)
- Revenue of £1,372k (2015: £863k)
- Gross profit margin of 44% (2015: 36%)
- Loss before taxation of £64k (2015: £387k)
- Period end bank balance of £532k (2015: £455k)
- Period end order book of £634k (2015: £536k)
Operational highlights:
- New portable X-ray system demonstrated worldwide
- Multi unit portable X-ray orders received
- Good progress with Government supported Precision Linescan Detector development
- Continued new orders for industrial inspection systems
- Growth in customer funded research and development for industrial systems
Bill Mawer, Chairman and Chief Executive Officer of Image Scan, commented: “This period shows a marked improvement in the Company’s performance, driven by growing sales of standard products in both the security and industrial sectors. Our new systems are well positioned in the very active portable X-ray inspection market and sales have substantially increased from the prior year. It has been gratifying to see the return of substantial multi-unit government orders.
The increase in our industrial inspection activity shows Image Scan’s ability to benefit from our deep and longstanding relationships with a number of key customers in the automotive emissions control area. We hope to further strengthen these relationships and extend the deployment of our systems across these customers’ global manufacturing operations.
Although we start the second half of the year with a healthy order book, the business will be focussed on continuing the momentum so far achieved and winning further orders.”
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
Sarah Atwell King, Company Secretary Tel: +44 (0) 1509 817 400
ir@ish.co.uk
Cantor Fitzgerald Europe (Nominated Adviser and Broker)
Rick Thompson / David Foreman / Michael Reynolds / David Banks 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 2016 of £1,372k (2015: £863k) represented a significant increase over the prior period. Security sales were £741k (2015: £669k). There was a significant change in security product mix, with almost double the number of portable X-ray units being sold, including two significant multi-unit orders. These increases in portable unit sales offset a decrease in the number of Axis Conveyor systems sold and lead to an improved gross margin for security of 41% (2015: 32%). Industrial sales were £631k (2015: £194k) reflecting an increase of activity in this area.
Overheads were tightly managed at £670k (2015: £697k). The post-tax loss in the business narrowed significantly to £44k (2015: £335k) while growth in orders seen at the end of the previous financial year continued with new orders received during the period totalling £1,314k (2015: £977k) leaving the Company with a period end order book of £634k (2015: £536k).
The company held £532k in cash at the period end (2015: £455k).
Overview
The sales team have continued to demonstrate our range of portable X-ray systems to customers and partners around the world. Important new customers, who have placed their first orders for these systems, have been found in the Middle East, Canada and Europe. The research and development team is working to further extend the portable X-ray products range. This activity includes the development of the Precision Linescan Detector with our partner Ibex Innovations. This Government supported programme continues to make good progress and high resolution images of complex objects have already been produced.
The industrial inspection business area, focussed on scanning catalytic converters and diesel particulate filters in the automotive industry, continues to grow with 3 units in the order book at the period end. Additionally, orders totalling approximately £150k for customer funded development are allowing additional features to be added to these systems.
The nuclear project, which had a negative impact on company performance for a number of years, has completed all its milestones and reached the end of its warranty period and an ongoing support contract has been put in place with the end user.
The Company’s commitment to process improvement and quality continues and in December 2015 our quality systems were recertified by an independent assessor as compliant to ISO 9001.
Outlook
The market for security X-ray systems remains strong, reflecting the existence of a continuing terrorist threat and the impact of recent incidents in Paris and Brussels. This has led to multi-unit procurements of our portable X-ray systems and we have submitted tenders against Government requirements for further multi-unit orders on which decisions are expected in the second half of FY 2015/16. Discussions with current and potential customers support the requirement for the Precision Linescan Detector and we remain confident that this system will do well following its anticipated launch in financial year 2017.
In the industrial area we believe that increased demands for in-line quality assurance in the manufacture of automotive emission control systems will continue to drive demand for Image Scan’s suite of inspection products. We are enhancing the product range through a combination of customer funded and self-funded research and development.
Although we start the second half of the year with a healthy order book, the business will be focussed on continuing the momentum so far achieved, winning further orders and supporting the continued development of new products. 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.
Bill Mawer
Chairman and Chief Executive Officer
19/04/2016
Consolidated income statement
For the six months ended 31 March 2016
| Note | Six months ended 31 March 2016 (Unaudited) £’000 |
Six months ended 31 March 2015 (Unaudited) £’000 |
Year ended 30 September 2015 (Audited) £’000 |
|
| Revenue | 1,372 | 863 | 1,707 | |
| Cost of sales | (766) | (553) | (1,058) | |
| Gross profit | 606 | 310 | 649 | |
| Administrative expenses | (670) | (697) | (1,290) | |
| Operating loss | (64) | (387) | (641) | |
| Finance revenue | – | – | 1 | |
| Loss before taxation | (64) | (387) | (640) | |
| Taxation | 20 | 52 | 90 | |
| Loss for the period | (44) | (335) | (550) |
| Note | Pence | Pence | Pence | |
| Earnings per share | ||||
| Basic and diluted loss per share | [3) | (0.04) | (0.27) | (0.44) |
Consolidated statement of changes in equity
For the six months ended 31 March 2016
| Note | Six months ended 31 March 2016 (Unaudited) £’000 |
Six months ended 31 March 2015 (Unaudited) £’000 |
Year ended 30 September 2015 (Audited) £’000 |
|
| Opening equity shareholders’ funds | 617 | 1,156 | 1,156 | |
| Shares issued during the year | – | – | – | |
| Share issue costs | – | – | – | |
| Share-based payments | [4] | 8 | 5 | 11 |
| Loss attributable to equity shareholders | (44) | (335) | (550) | |
| 561 | 826 | 617 |
Consolidated statement of financial position
As at 31 March 2016
| Note | As at 31 March 2016 (Unaudited) £’000 |
As at 31 March 2015 (Unaudited) £’000 |
As at 30 September 2015 (Audited) £’000 |
|
| Non-current assets | ||||
| Plant and equipment | 11 | 5 | 4 | |
| 11 | 5 | 4 | ||
| Current assets | ||||
| Inventories | 459 | 659 | 571 | |
| Trade and other receivables | 334 | 459 | 294 | |
| Cash and cash equivalents | 532 | 455 | 469 | |
| Current tax asset | 20 | 124 | 90 | |
| 1,345 | 1,697 | 1,424 | ||
| Total assets | 1,356 | 1,702 | 1,428 | |
| Current liabilities | ||||
| Trade and other payables | 742 | 845 | 778 | |
| Non-current liabilities | ||||
| Provisions for liabilities and charges | 33 | 31 | 33 | |
| Total liabilities | 775 | 876 | 811 | |
| Net assets | 581 | 826 | 617 | |
| Equity | ||||
| Share capital | 1,256 | 1,256 | 1,256 | |
| Share premium account | 7,935 | 7,935 | 7,935 | |
| Retained earnings | (8,610) | (8,365) | (8,574) | |
| Equity shareholders’ funds | 581 | 826 | 617 |
This interim financial information was approved by the Board of Directors on 18/04/2016.
Bill Mawer
Chairman and Chief Executive Officer
Consolidated cash flow statement
For the six months ended 31 March 2016
| Note | Six months ended 31 March 2016 (Unaudited) £’000 |
Six months ended 31 March 2015 (Unaudited) £’000 |
Year ended 30 September 2015 (Audited) £’000 |
|
| Cash flows from operating activities | ||||
| Operating loss | (64) | (387) | (641) | |
| Adjustments for: | ||||
| Depreciation | 2 | 3 | 5 | |
| Impairment of inventories | 10 | 10 | 18 | |
| Increase in provision for warranty | – | 9 | 12 | |
| Decrease/(increase) in inventories | 102 | (338) | (258) | |
| (Increase) in trade and other receivables | (40) | (277) | (112) | |
| (Decrease)/increase in trade and other payables | (36) | 482 | 414 | |
| Share-based payment charge | 8 | 5 | 11 | |
| Net cash (used) in operating activities | (18) | (493) | (551) | |
| Corporation tax recovered | 90 | – | 72 | |
| Net cash inflow/(outflow) from operating activities | 72 | (493) | (479) | |
| Cash flows from investing activities | ||||
| Interest Received | – | – | 1 | |
| Purchase of property, plant and equipment | (9) | – | (1) | |
| Net cash used in investing activities | (9) | – | – | |
| Cash flows from financing activities | ||||
| Proceeds from issue of share capital | – | – | – | |
| Financial costs of fundraising | – | – | – | |
| Net cash from financing activities | – | – | – | |
| Net (decrease)/ increase in cash and cash equivalents | 63 | (493) | (479) | |
| Cash and cash equivalents at beginning of period | 469 | 948 | 948 | |
| Cash and cash equivalents at end of period | 532 | 455 | 469 |
Notes to the unaudited interim financial statements
For the six months ended 31 March 2016
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 2016 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 2015.
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 2015 does not constitute the full statutory accounts for that period. The annual report and financial statements for the year ended 30 September 2015 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 2015 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 £43,845 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 £8,492 (2015: £5,000) 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 2016 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 9Q