REG - Image Scan Holdings - Final Results
03/12/2024 07:00
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RNS Number : 4842O Image Scan Holdings PLC 03 December 2024
IMAGE SCAN HOLDINGS PLC
("Image Scan" or the "Company")
Final Results for the Year Ended 30 September 2024
Image Scan (AIM: IGE), the specialist supplier of X-ray screening systems to
the security and industrial inspection markets, today announces final results
for the year ended 30 September 2024.
HIGHLIGHTS
FINANCIAL HEADLINES
· Order intake up to £6.6m (2023: £2.9m)
· Sales £2.9m (2023: £3.0m)
· Gross profit 53% (2023:48%)
· Administrative expenses down to £1.3m (2023: £1.4m)
· Pre-tax profit £0.2m (2023: profit £0.1m)
· Year-end order book £4.47m (2023: £0.65m)
· Year-end cash balance £0.91m (2023: £0.96m)
Image Scan's Chief Executive, Vince Deery, commented:
This year's performance demonstrates significant progress, driven by growing
market confidence in our solutions. Sales were consistent with the prior year,
while gross profit improved to 53%, and administrative expenses were further
reduced, highlighting the success of our cost control initiatives, now in
their third year.
Our pre-tax profit has doubled, reflecting our disciplined operational
approach and ability to convert opportunity into sustained profitability. The
year-end order book, at £4.47m, is at an unprecedented high level, providing
excellent visibility into the coming year and a strong platform for future
growth.
The team's commitment has been vital to this success, and I am immensely proud
of their efforts. Looking ahead, we remain focused on delivering value and
reinforcing our market position. As we continue to build on this positive
momentum, we are also exploring strategic opportunities to enhance our
capabilities and drive future growth.
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
Zeus - Nominated Advisor and Corporate Broker
Tel: +44 (0)203 829 5000
Mike Coe/Sarah Mather (Investment Banking)
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/)
CHAIRMAN'S STATEMENT
Overview
In 2024 Image Scan doubled profit, secured a major defence contract win and
generated a record order book, with new products gaining traction, whilst
sustaining cost control activities.
Financial Summary
For the year ended 30 September 2024 (the "Year"), the Group generated
revenues of £2.9m (2023: £3.0m), and a profit before tax of £0.2m (2023:
£0.1m). This performance was the result of a sustained level of sales with
good cost control. Group cash balances have held steady at £0.91m (2023:
£0.96m).
The launch of new products has played a significant factor in our improved
performance and our recent significant contract wins gives us confidence for
2025.
Environmental, Social and Governance
In the Year, Image Scan transitioned to the new QCA code, taking the
opportunity to review our processes and policies. As part of this the
directors have adopted a code of practice based on the IOD recommendations.
This review process has considered the way we deliver our overarching
business objectives, ensuring that the needs of all our key stakeholders are
met. We are confident in the robust procedures we have in place across the
business and intend to continue building on these in 2025.
Outlook
Our trading performance, aligning with market expectations, reflects a
commendable 115% increase in profit before tax with revenue staying at a
similar level to last year. This accomplishment is a testament to the diligent
efforts of our restructured team and the positive impact of our product
development programme.
With a robust balance sheet and a healthy cash position and a record order
book, we stand on a strong operational and financial foundation ready for
growth. The recent success with our updated product portfolio and the large
contract award 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
opportunity with enthusiasm and drive, 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.
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
2024. Their commitment has been instrumental in our success which we outline
within this report.
Tim Jackson
CHAIRMAN
CEO REPORT
BUSINESS REVIEW
The introduction of the wider product portfolio has as predicted 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.
Image Scan seeks to enable our customers to be more effective by providing the
best possible X-ray imaging systems and ongoing support.
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 particularly as related to new equipment sales.
While the Group continues to focus on expanding its product range to drive
organic growth, it is also actively pursuing strategic growth opportunities
through acquisitions.
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
continued on from last year's initial activity.
OUTLOOK
We expect the level of market activity observed in the Year to be maintained,
and with heightened engagement at trade shows and conferences, we anticipate a
strong 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.
As previously announced in the trading update, a major contract with a
prominent defence contractor valued at over £3m over a 36 month period has
helped provide a very strong opening order book which will enable a constant
level of underlying business and a foundation for the next 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.
We will continue to manage the reduction of the capital equipment sales into
the catalytic convertor manufacturers as this industry recognises the
diminishing prominence of internal combustion engines and the imperative shift
towards achieving net-zero emissions. We will actively pursue and maintain the
aftersales revenue that the Groups installed base of this equipment provides.
Image Scan has successfully navigated through the challenges posed by
inflationary pressures and has demonstrated excellent purchasing strategies
and organisational cost control measures.
With the refined organisational structure and energetic team, revitalised
product range, combined with a strong opening order book 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 growth of the Group, moving beyond
organic growth alone.
Vincent Deery
CHIEF EXECUTIVE OFFICER
CFO REPORT
KEY PERFORMANCE INDICATORS
2024 2023 2022 2021 2020
Order intake £6.6m £2.9m £2.2m £2.8m £2.4m
Turnover £2.9m £3.0m £2.0m £2.9m £3.5m
Gross margin 53% 48% 54% 53% 49%
Profit/(loss) before tax £0.2m £0.1m (£0.4m) £0.2m £0.1m
Cash balance £911k £958k £690k £1,186k £1,409k
Inventory Balance £393k £349k £629k £393k £451k
FINANCIAL RESULTS
FY24 was a strong year for Image Scan, delivering an increase in pre-tax
profit of 115% up from £97k to £208k, ahead of market expectation. This
builds on the good work initiated in 2023, with funds continuing to be
invested in delivering new products which is reflected in orders won in the
year while costs continue to be carefully managed. The closing order book
combined with improved working capital puts the Group in a strong position to
continue to deliver its strategy in 2025.
While sales were down slightly at £2.9m against prior year of £3.0m, the
gross margin percentage increased due to careful purchasing and stock
management and the Group also benefited from a good dollar exchange rate.
These efforts have contributed to a gross margin of £1.5m (53%) against
£1.4m (48%) last year, evidencing the ongoing focus on driving costs down as
highlighted in last year's report.
The focus on delivering to customer requirements has continued and the margin
was achieved without compromising on either the timeframes or the quality of
product delivered to our customers which is reflected in the low levels of
expenditure on warranty and is supported by the smooth recertification of
ISO9001:2015 at the end of the financial year.
Cost control is also reflected in a small decrease in administrative expenses
of 3% in the year despite inflationary pressures and builds on the 5%
reduction delivered in 2023.
The Group continue to invest and maintain in our product portfolio with a
combined spend of £215k (2023: £309k). Expenditure is down against last year
because product development was mainly delivered by the team without external
support. Due to the restrictions on available schemes for our region, we
were not able to access any grant support in the Year and this, combined with
the increasingly restricted R&D tax credit regime, makes the ability of
our internal team crucial to delivering our product strategy.
Our business model continues to be to offer mainly cash neutral commercial
terms, ideally in sterling which allows us to make supplier payments in line
with agreed payment terms. We have set clear stock holding policies which
balances the cost of holding components against the need to meet customer
delivery deadlines. The net result of our cost management is reflected in an
increase in working capital as well as our balance sheet. This means we will
continue to investment in our product portfolio as well as expanding our
demonstration kits in 2025 to showcase the full range of our product
portfolio.
All these measures lead to increase in pre-tax profit by 115% from £97k to
£208k and increasing our EPS by almost 50% for our shareholders. Delivering
this level of improvement could not have been achieved without the commitment
and focus of all the team at Image Scan and I would add my thanks to the whole
team for their continuing efforts.
Sarah Atwell King
CHIEF FINANCIAL OFFICER
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 30 September 2024
Note
2024 2023
£ £
REVENUE 2,860,776 2,962,934
Cost of sales (1,348,975) (1,527,723)
Gross profit 1,511,801 1,435,211
Administrative expenses (1,313,730) (1,354,652)
Other operating income 3,474 14,934
OPERATING PROFIT 201,545 95,493
Finance income 10,736 6,639
Interest payable and similar charges (4,514) (5,555)
PROFIT BEFORE TAXATION 207,767 96,577
Taxation (756) 27,362
PROFIT AND TOTAL COMPREHENSIVE INCOME FOR THE YEAR FROM CONTINUING OPERATIONS
ATTRIBUTABLE TO THE EQUITY OWNERS OF THE PARENT COMPANY
207,011 123,939
Pence Pence
Earnings per share 2
Basic 0.15 0.09
Diluted 0.15 0.09
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 30 September 2024
2024 2023
£ £
NON-CURRENT ASSETS
Intangible assets 333,249 320,957
Property, plant and equipment - 6,599
Right of use asset 143,873 153,678
477,122 481,234
CURRENT ASSETS
Inventories 392,643 348,753
Trade and other receivables 910,775 633,870
Cash and cash equivalents 911,468 958,465
2,214,886 1,941,088
TOTAL ASSETS 2,692,008 2,422,322
CURRENT LIABILITIES
Trade and other payables 792,167 712,455
Lease liability 53,158 37,625
Warranty provision 25,473 33,858
870,798 783,938
NON-CURRENT LIABILITIES
Lease liability 102,498 126,683
102,498 126,683
NET ASSETS 1,718,712 1,511,701
EQUITY
Share capital 1,368,546 1,368,546
Share premium account 8,332,910 8,332,910
Profit and loss account (7,982,744) (8,189,755)
TOTAL EQUITY ATTRIBUTABLE TO SHAREHOLDERS 1,718,712 1,511,701
STATEMENT OF CHANGES IN EQUITY
For the year ended 30 September 2024
Share capital Share premium Profit and loss account
£ £ £ Total
£
As at 1 October 2022 1,368,546 8,332,910 (8,313,694) 1,387,762
Profit for the year and total comprehensive income for the year - - 123,939 123,939
As at 30 September 2023 1,368,546 8,332,910 (8,189,755) 1,511,701
Profit for the year and total comprehensive income for the year - - 207,011 207,011
As at 30 September 2024 1,368,546 8,332,910 (7,982,744) 1,718,712
CONSOLIDATED CASH FLOW STATEMENT
Year ended 30 September 2024
2024 2023
£ £
Cash flows from operating activities
Operating profit 201,545 95,493
Adjustments for:
Amortisation of intangible assets 62,350 60,887
Depreciation 7,199 6,960
Amortisation of right of use asset 40,524 39,375
Research and development expenditure credit (3,474) -
(Decrease) in impairment of inventories (9,280) (54,349)
(Increase)/decrease in inventories (34,610) 334,499
(Increase) in trade and other receivables (300,627) (40,485)
Increase/(decrease) in trade and other payables 79,712 (81,004)
(Decrease) in warranty provisions (8,385) (4,072)
Cash generated from operating activities 34,954 357,304
Corporation tax received 26,440 72,269
61,394 429,573
Cash flows from investing activities
Interest received 10,736 6,639
Purchase of intangibles (74,642) (124,290)
Purchase of property, plant and equipment (600) -
Net cash used in investing activities (64,506) (117,651)
CASH FLOWS FROM FINANCING ACTIVITIES
Lease payments (capital and interest) (43,885) (43,000)
Proceeds from issue of share capital - -
Net cash used in financing activities (43,885) (43,000)
Net (DECREASE)/INCREASE in cash and cash equivalents (46,997) 268,922
Cash and cash equivalents at beginning of year 958,465 689,543
Cash and cash equivalents at end of year 911,468 958,465
Notes to this 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 2024 or 30 September 2023
but is derived from those accounts. Statutory accounts for 2023 have been
delivered to the Registrar of Companies, and those for 2024 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.
2024 2023
£ £
Profit for the year 207,011 123,939
Weighted average number of ordinary shares in issue 136,854,577 136,854,577
Number of diluted shares 136,854,577 136,854,577
Basic profit per share 0.15p 0.09p
Diluted profit per share 0.15p 0.09p
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