REG - Image Scan Holdings - Final Results
12/12/2023 07:00
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RNS Number : 4049W Image Scan Holdings PLC 12 December 2023
This announcement contains inside information for the purposes of Article 7 of
the UK version of Regulation (EU) No 596/2014 which is part of UK law by
virtue of the European Union (Withdrawal) Act 2018, as amended ("MAR"). Upon
the publication of this announcement via a Regulatory Information Service,
this inside information is now considered to be in the public domain.
IMAGE SCAN HOLDINGS PLC
("Image Scan" or the "Company")
Preliminary Results for the Year Ended 30 September 2023
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 2023.
HIGHLIGHTS
FINANCIAL HEADLINES
· Order intake up 31% to £2.9m (2022: £2.2m)
· Sales up 50% to £3.0m (2022: £2.0m)
· Gross profit 48% (2022:54%)
· Costs down 5% £1.4m (2022: £1.4m)
· Pre-tax profit £0.1m (2022: loss: £0.35m)
· Year-end order book £0.65m (2022: £0.71m)
· Year-end cash balance £0.96m (2022: £0.69m)
Image Scan's Chief Executive, Vince Deery, commented:
I'm very pleased by our results, a testament to the team's tireless efforts
for a profitable year. New products and an optimised cost base significantly
contributed to this turnaround. Our extended portable product range for the
security market gained traction, resulting in a substantial uplift in sales
compared to the previous year. With a robust operational and financial
foundation, we look forward to the coming year, aiming for organic growth and
strategic development. My sincere thanks to the team for their commitment in
propelling us into profitability.
For further information on the Company, please visit: www.ish.co.uk
(http://www.ish.co.uk/) and for further information on its products, please
visit: www.3dx-ray.com (http://www.3dx-ray.com/)
-ENDS-
Image Scan Holdings plc
Tel: +44 (0) 1509 817400
Vincent Deery CEO
Sarah Atwell-King, CFO & Company Secretary
WH Ireland Limited - Nominated Advisor and Corporate Broker Tel: +44
(0) 207 220 1666
Mike Coe/Sarah Mather (Corporate Finance)
ABOUT IMAGE SCAN HOLDINGS PLC
About Image Scan Holdings plc
The core activity of the Group is the manufacture of portable X-ray systems
for security and counter terrorism applications. The Group recently launched a
cabinet X-ray machine and is replacing its Axis range of checkpoint X-ray
systems with new machines developed with a partner. All these products are
taken to market across the world through a strong network of international
partners.
In addition, over the last sixteen years, Image Scan has developed and
manufactured industrial X-ray inspection systems, the MDXi range. The primary
market for these systems is in automotive emissions control where they are
used for quality control inspection of catalytic converters and diesel
particulate filters.
The visibility and reach of the Company's 3DX-Ray brand has been further
strengthened through a new LinkedIn profile focussed on its EOD and
counter-terrorism activities. This can be found at:
https://www.linkedin.com/company/3dx-ray/
(https://www.linkedin.com/company/3dx-ray/)
(https://www.linkedin.com/company/3dx-ray/)
For further information on the Company, please visit: www.ish.co.uk
(http://www.ish.co.uk/) - and for further information on its products,
please visit: www.3dx-ray.com (http://www.3dx-ray.com/)
CHAIRMANS STATEMENT
Overview
2023 delivered a welcome return to profit, meeting expectation. This was
derived from strong teamwork, organisational restructuring and the return to
near pre-pandemic levels of market activity.
Financial Summary
For the year ended 30 September 2023 (the "Year"), the Group generated
revenues of £3.0m (2022: £2.0m), up 50% and a profit before tax of £0.1m
(2022: loss £0.35m). This performance was the result of a strong recovery in
sales and good cost control. There has been a significant increase in the
Group cash balances to £0.96m (2022: £0.69m).
The launch of new products and the continued new product pipeline gives us
confidence for 2024.
Environmental, Social and Governance
Image Scan recognises the importance of adopting a strong environmental,
social and governance ("ESG") framework, and this guides our overarching
business objectives and is influential to serving the needs of all our key
stakeholders. We are confident in the robust procedures we have in place
across the business and intend to continue building on these in 2024.
Board Composition
The development of the board has continued this year with the appointment of
Sunil Vadgama as a Non-Executive Director in December 2022. He has an
excellent technical background and understanding of the product range. Dr
Richard Leaver resigned from the board in September 2023 after eight years of
dedicated service. The Board extends its thanks to Richard for all he has
contributed and wishes him well in his future.
Outlook
On behalf of the Board and the dedicated team at Image Scan, I wish to thank
our colleagues and customers for their invaluable contributions throughout
2023. Their commitment has been instrumental in positioning us for the success
we outline below/within this report.
Our trading performance, aligning with expectations, reflects a commendable
50% increase in revenue and a swing of c.£450k into profitability. This
accomplishment is a testament to the diligent efforts of our restructured team
and the positive shifts in the business environment.
With a robust balance sheet and a healthy cash position, we stand on a strong
operational and financial foundation ready for growth. The sustained vigour in
our sales and marketing activities instils confidence in our ability to
achieve organic growth and meet expectations for the current financial year.
While macroeconomic and geopolitical uncertainties persist, we approach each
challenge as an opportunity, engaging the collective talents of our team. The
Board of Directors remains confident in the Group's prospects in the medium to
long term. We are committed to capitalising on this Year's performance and
actively seeking strategic avenues for growth in conjunction with our organic
initiatives.
Tim Jackson
CHAIRMAN
CEO REPORT
BUSINESS REVIEW
With the global markets becoming more active, the marketing and sales
activities have recommenced at an energetic pace. The recent introduction of
the new portable product has broadened our scope of opportunity and bolstered
the Group's ability to compete in international tenders.
The sales team's active participation in trade shows and Counter Explosive
Ordnance (Counter EO) conventions and demonstrations has provided market
experts and thought leaders' exposure to the benefits of the Group's latest
product offerings and enhancements, which has directly led to an improved
financial performance and sales to over 30 different countries.
We have adeptly managed the reduction in the industrial business supporting
the catalyst market (associated with the internal combustion engine) and its
transition of production to lower-cost countries. Our strategic measures have,
to date, successfully mitigated the impact of this transition on our business
demonstrating our resilience in the face of market shifts.
OUR STRATEGY
The Group's strategy focuses on the organic growth of current activities by
expansion of the product range, and its target territories. The Group seeks to
operate in profitable, niche security segments for which it can offer
differentiated products that it offers to the market at good margins.
In industrial screening, we will continue to mitigate the reduction in the
catalyst market related to the internal combustion engine and its impact on
the Group revenue.
The Group possesses extensive and valuable expertise in establishing and
maintaining market routes, particularly in the field of security and Counter
EO. It aims to enhance these channels by incorporating new, in-house-developed
products or by identifying organisations that can provide innovative
technologies or products associated with the industry, thereby enriching the
Group's product portfolio. The process of identifying and analysing
organisations offering products or services aligned with the Group has already
begun.
OUTLOOK
We expect the increased market activity observed this year to be maintained,
and with heightened engagement at trade shows and conferences, we anticipate a
strengthening opportunity pipeline. Expanding our product range is not only a
safeguard for our market position but also provides access to opportunities
that were previously unavailable with our historic product portfolio.
The Group is steadily building on its initial sales for the AXIS range X-ray
systems, with a focus on showcasing this product prominently at upcoming
exhibitions in the coming year. Sales of this product line are anticipated to
experience growth in the upcoming financial year.
We will concentrate on our core expertise, specifically our portable X-ray
products and associated software. This strategic focus is aimed at sustaining
and expanding our market share, countering competition in this market. Our
approach involves extending our range into markets featuring higher
performance and higher value systems.
Recognising the diminishing prominence of internal combustion engines and the
imperative shift towards achieving net-zero emissions, we acknowledge the
necessity to pinpoint alternative sectors where our industrial inspection
technology can offer a suitable and cost-effective solution, whilst minimising
the impact of the decline in this revenue source. Our focus for success in
this sector lies in aligning with replacement technologies for internal
combustion engines which is a longer-term strategic priority.
Image Scan has successfully navigated through the challenges posed by this
year's inflationary pressures, as well as the disruptions to supply chains and
logistical difficulties. While the impact of supply chain disruptions is
diminishing, there remains a concern regarding the supply of certain
components that are beyond the control of the Group.
With our new organisational structure and reduced cost base, we believe we are
well-positioned to sustain the momentum of this year's achievements. Our goal
is to enhance the Group's profitability and leverage the advantages of the
Group listing to strategically advance the business. Our focus is on executing
deliberate actions that contribute to the strategic growth of the Group,
moving beyond organic growth alone.
Vincent Deery
CHIEF EXECUTIVE OFFICER
CFO REPORT
KEY PERFORMANCE INDICATORS
2023 2022 2021 2020 2019
Order intake £2.9m £2.2m £2.8m £2.4m £3.9m
Turnover £3.0m £2.0m £2.9m £3.5m £2.4m
Gross margin 48% 54% 53% 49% 54%
Cash balance £958k £690k £1,186k £1,409k £640k
Inventory Balance £349k £629k £393k £451k £483k
FINANCIAL RESULTS
The Group had a much improved financial year, turning a pre-tax loss of £350k
into a pre-tax profit of £0.1m. In addition bank balances increased by £268k
to £958k (2022: £690k) putting us in a good position to continue to build
the Group and its product portfolio.
As highlighted in the CEO Report, we saw renewed activity in the security
market and this led to sales growth of 50%, increasing sales to £3.0m. This
was driven by an increase in original equipment sales of 70% growth, including
a good contribution from our most recently launched products. All regions saw
sales growth, with the largest growth coming from Europe/Middle East and
Africa.
A change in mix of products as well as inflationary pressures of component
cost pushed gross margin down from 54% to 48% and an internal focus in the
coming year will be on working with our suppliers to manage our component cost
base. A strong focus by the team on the customer requirement has ensured
that goods are received by our customers in a timely manner with very high
standards of quality which has resulted in lower levels of spend on warranty.
In the Year, the Group applied for and won a number of grants towards our
marketing and development activity, and we will continue to explore further
funding opportunities.
Alongside the restructure of the Board and Management team, driving down costs
has been a successful focus for the Year, while enabling the Group to continue
to invest in product development and marketing.
As well as the reported participation in trade shows, the Group has also
increased the number of demonstration kits held and upgraded the current kits
allowing the team to better tailor its demonstrations to the requirements of
the customer. These investments were made while administration expenses were
reduced by 5% from £1.42m to £1.35m.
This work alongside the tremendous efforts of the sales team have seen a
return to profit of £0.1m (2022; loss £350k) which is a testament to the
whole team.
Funds from R&D tax credits were down as the Government reduced the
allowance from April 2023 but are still a good source of cashflow for the
business.
In the Year, our focus on strategic inventory management proved highly
successful, as we drove down stock levels. This achievement reflects our
commitment to operational efficiency whilst still being able to ensure our
continued ability to respond promptly to customer requests, contributing
significantly to our overall success. Stock levels have fallen from £629k
to £349k ensuring funds are not tied up unnecessarily while delivering in
agreed timescales.
At the same time, bank balances have increased to £958k (2022: £690k) which
is a net increase of £268k. Funds generated from operating activities were
positive at £430k (2022: used £290k) some of which has been invested in the
new product range with a combined spend net of grants of £309k (2022: £395k
without grants).
Delivering the turn around and achieving a pre-tax profit of £0.1m could not
have been achieved without the commitment and focus of the team at Image Scan
and I would add my thanks to the whole team.
Sarah Atwell King
CHIEF FINANCIAL OFFICER
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 30 September 2023
Note
2023 2022
£ £
REVENUE 2,962,934 2,002,299
Cost of sales (1,527,723) (924,380)
Gross profit 1,435,211 1,077,919
Administrative expenses (1,354,652) (1,421,456)
Other Operating Income 14,934 -
OPERATING PROFIT/(LOSS) 95,493 (343,537)
Finance income 6,639 440
Interest payable and similar charges (5,555) (6,426)
PROFIT/(LOSS) BEFORE TAXATION 96,577 (349,523)
Taxation 27,362 77,998
PROFIT /(LOSS) AND TOTAL COMPREHENSIVE INCOME/(LOSS) FOR THE YEAR FROM
CONTINUING OPERATIONS ATTRIBUTABLE TO THE EQUITY OWNERS OF THE PARENT COMPANY
2 123,939 (271,525)
Pence Pence
Earnings/(loss) per share
Basic 0.09 (0.20)
Diluted 0.09 (0.20)
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 30 September 2023
2023 2022
£ £
NON-CURRENT ASSETS
Intangible assets 320,957 257,554
Property, plant and equipment 6,599 13,559
Right of use asset 153,678 193,053
481,234 464,166
CURRENT ASSETS
Inventories 348,753 628,903
Trade and other receivables 633,870 638,292
Cash and cash equivalents 958,465 689,543
1,941,088 1,956,738
TOTAL ASSETS 2,422,322 2,420,904
CURRENT LIABILITIES
Trade and other payables 712,455 793,459
Lease liability 37,625 37,625
Warranty provision 33,858 37,930
783,938 869,014
NON-CURRENT LIABILITIES
Lease liability 126,683 164,128
126,683 164,128
NET ASSETS 1,511,701 1,387,762
EQUITY
Share capital 1,368,546 1,368,546
Share premium account 8,332,910 8,332,910
Profit and loss account (8,189,755) (8,313,694)
TOTAL EQUITY ATTRIBUTABLE TO SHAREHOLDERS 1,511,701 1,387,762
STATEMENT OF CHANGES IN EQUITY
For the year ended 30 September 2023
Share capital Share premium Profit and loss account
£ £ £ Total
£
As at 1 October 2021 1,363,546 8,327,910 (8,042,169) 1,649,287
Shares issued in the year 5,000 5,000 - 10,000
Loss for the year and total comprehensive income for the year - - (271,525) (271,525)
As at 30 September 2022 1,368,546 8,332,910 (8,313,694) 1,387,762
Shares issued in the year - - - -
Profit for the year and total comprehensive loss for the year - - 123,939 123,939
As at 30 September 2023 1,368,546 8,332,910 (8,189,755) 1,511,701
CONSOLIDATED CASH FLOW STATEMENT
Year ended 30 September 2023
2023 2022
£ £
Cash flows from operating activities
Operating profit /(loss) 95,493 (343,537)
Adjustments for:
Amortisation of intangible assets 60,887 29,381
Depreciation 6,960 6,098
Amortisation of right of use asset 39,375 39,375
Decrease in impairment of inventories (54,349) (11,263)
Decrease/(increase) in inventories 334,499 (224,566)
(Increase)/decrease in trade and other receivables (40,485) 132,441
(Decrease)/increase in trade and other payables (81,004) 41,179
Decrease in warranty provisions (4,072) (7,710)
Cash generated from / (used in) operating activities 357,304 (338,602)
Corporation tax received 72,269 48,114
429,573 (290,488)
Cash flows from investing activities
Interest received 6,639 440
Purchase of intangibles (124,290) (177,345)
Purchase of property, plant and equipment - (1,862)
Net cash used in investing activities (117,651) (178,767)
CASH FLOWS FROM FINANCING ACTIVITIES
Lease payments (capital and interest) (43,000) (37,625)
Proceeds from issue of share capital - 10,000
Net cash used in financing activities (43,000) (27,625)
Net INCREASE/(DECREASE) in cash and cash equivalents 268,922 (496,880)
Cash and cash equivalents at beginning of year 689,543 1,186,423
Cash and cash equivalents at end of year 958,465 689,543
Notes to the preliminary statement
1. Basis of preparation
While the financial information included in this annual financial results
announcement has been prepared in accordance with the recognition and
measurement principles of UK adopted international accounting standards, this
announcement does not contain sufficient information to comply therewith.
The financial information set out above does not constitute the Group's
statutory accounts for the years ended 30 September 2023 or 30 September 2022
but is derived from those accounts. Statutory accounts for 2022 have been
delivered to the Registrar of Companies, and those for 2023 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. Earnings per share
The diluted earnings 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. Where the
Company is reporting losses, the impact of share options is
considered anti-dilutive. Where the Company is reporting profits, share
options could potentially dilute basic earnings per share in the future but
are only included in the calculation of diluted earnings per share when the
exercise price of the share options is below the average share price in the
year.
2023 2022
£ £
Profit/(loss) for the year 123,939 (271,525)
Weighted average number of ordinary shares in issue 136,854,577 136,753,207
Number of diluted shares 136,854,577 136.753.207
Basic profit/(loss) per share 0.09p (0.20)p
Diluted profit/(loss) per share 0.09p (0.20)p
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