Pre-Close Trading Update
21 October 2019
Image Scan (AIM: IGE), the specialist supplier of X-ray screening systems to the security and industrial inspection markets provides a pre-close trading update ahead of its results for the year ended 30 September 2019.
Sales of £2.4m (2018: £3.5m) at a gross margin of 54% (2018: 48%)
- Unaudited trading loss before tax of approximate £370k (2018: profit of £49k)
- New security screening system in development
- New international sales partners appointed
- New order of over £800k for portable X-ray systems received close to year end
- Total order bookings strongly higher at £3.9m (2018: £2.5m)
- Period-end orderbook of £1.7m (2018: £465k)
- £627k of cash at the end of the period (2018: £782k)
At the start of FY2019, the Company was affected by delays in overseas Government contracts, resulting in a further decline in sales and a loss for the financial year. However, order intake turned around strongly in the final quarter, particularly in portable X-ray, leaving Image Scan better positioned at the start of FY 2020.
Sales for the year ended 30 September 2019 were £2.4m (2018: £3.5m). Sales of portable X-ray systems declined by 40%, with the fall-off particularly noticeable in the Indian Subcontinent, where budgets have been tight. However, there are new opportunities in this important market in the year ahead. Sales of industrial units returned to a more normal level after the record high seen in FY 2018 but included systems installations with automotive customers in the important Indian market.
Gross margins were again strong at 54% (2018: 48%), partly driven by new service contracts. Overheads were fractionally higher at £1.7m (2018: £1.6m). Subject to any audit adjustments, the pre-tax trading loss for the year was approximately £370k (2017: profit of 49k) after a Research and Development Tax Credit.
Receipt of a large European order, announced on 18 September 2019, and, more recently, a significant order from an Asian customer, brought total orders received for the year to £3.9m (2018: £2.5m). The Company starts FY 2020 with an order book of £1.7m (2018: £465k), most of which is expected to be delivered during the first half of the year.
The year ended with a positive cash balance of £627k (2018: £782k).
The Company currently holds high levels of stock, particularly part-complete portable X-ray systems. With most of this stock allocated to the recently received orders, the stock level is expected to decline over the next few months. A stock control policy, constantly reviewed by management, strikes a balance between control of working capital and the need to offer short delivery times to customers.
The Company’s product strategy is focused on defending our position in the competitive portable X-ray market while simultaneously broadening the product range into other security screening sectors. These aims will be achieved by a combination of internal Research and Development and partnership with other security technology suppliers. A new range of security screening systems is now in development. The Company’s international reach has been further extended with the appointment of new sales partners.
Image Scan’s Chairman and Chief Executive, Bill Mawer, commented: “It is disappointing to be reporting a decline in sales and profits. However, while the portable X-ray market has undoubtably become more competitive, recent orders show that our strong product range and focused international sales activity can still deliver. I am pleased to report that we start the new financial year with an order book that includes more portable systems than were delivered in all of last year. Our strong network of international partners will provide further growth opportunities as new products come to market.”
For further information, please contact:
Image Scan Holdings plc Tel: +44 (0) 1509 817400
William Mawer, Chairman
Sarah Atwell-King, Company Secretary
Cantor Fitzgerald Europe Tel: +44 (0) 207 894 7000
Rick Thompson / Will Goode (Corporate Finance)
Caspar Shand Kydd (Sales)
The person responsible for arranging the release of this announcement on behalf of Image Scan is William Mawer.
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® 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.