REG - Image Scan Holdings - Half-year Report <Origin Href="QuoteRef">IMGE.L</Origin>

Image Scan HoldingsAnnouncement

26/04/2017 07:06

RNS Number : 3152D
Image Scan Holdings PLC
26 April 2017
Image Scan Holdings plc
Interim report 2017
26/04/2017
IMAGE SCAN HOLDINGS PLC
("Image Scan" or the "Company")
(AIM: IGE)
INTERIM RESULTS 
Good momentum in core markets delivers growth 
Image Scan, (AIM: IGE) specialists in the field of X-ray imaging for the security and industrial inspection markets today announces its interim results for the six months ended 31 March 2017. Given performance during the first six months, the Board remains confident of meeting market expectations for the year to 30 September 2017.
Financial summary:
 Revenue up 50% to 2.1m (2016: 1.4m)
 Gross profit margin down to 39% due to sales mix (2016: 44%) 
 Profit before taxation of 111k (2016: loss of 44k) 
 Period end bank balance of 469k (2016: 532k)
 Period end order book up 48% to 940k (2016: 634k)
 Order intake of 1.3m (2016: 1.3m)
Operational highlights:
 70% increase in number of portable X-ray units sold over the prior period
 Major customer deliveries made ahead of schedule
 New portable X-ray customers in Asian and European markets
 New compact detector panel developed and launched at Asian security exhibition
 Development phase of the Government supported Precision Linescan Detector project completed 
 Industrial inspection system selected for a new plant by a recent customer, following extensive trials 
Bill Mawer, Chairman and Chief Executive Officer of Image Scan, commented: "This period shows continued strong momentum in the business with sales and profits well ahead of the equivalent period in the prior year, while order intake remained constant. TheThreatScan-LS1 system has continued to be popular with military and police bomb technicians around the world and has now been joined by the compact ThreatScan-LS3. This new unit offers the same superior performance as the LS1 but in a compact format that can be deployed in a backpack by mobile explosives ordnance disposal teams. The forthcoming ThreatScan-PLD (Precision Linescan Detector), developed with Government support, will complete the renewal of our portable X-ray product range, in line with the strategy set out two years ago.
In our industrial inspection area, new orders have been received and the activity levels remain high, both on new unit sales and customer funded development work. 
The order pipeline in both of our principal markets remains robust and, with new products being introduced to the market, the company looks to the future with confidence."
For further information on the Company, please visit:www.ish.co.ukand 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 (Corporate Finance)
David Banks /Alex Pollen (Sales)
Tel: +44 (0) 207 894 7000
 
Chairman's statement
Introduction
Image Scan Holdings plc is a specialist in innovative 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
Revenues for the six months ended 31 March 2017 were 2.1m (2016: 1.4m), 50% higher than the prior period. The improved performance was driven by portable X-ray system sales, the number of units delivered increasing by 70%. Gross margin was reduced at 39% (2016: 44%) due to changes in the sales mix. 
New customers, using Image Scan products for the first time, have been achieved in both Asia and Europe. Despite the 50% increase in activity levels, overheads were tightly controlled at 695k (2016: 670k). This allowed the business to make a post-tax profit of 111k (2016: loss of 64k). 
New orders were received for both security and industrial units, total new orders being similar to the prior period at 1.3m (2016: 1.3m), leaving the Company with a period end order book up 48% at 940k (2016: 634k).
The company held 469k in cash at the period end (2016: 532k). 
Overview
The strong performance of our manufacturing and supply chain management functions continued into FY2017, with several large customer orders delivered ahead of schedule. We achieved manufacturing efficiencies in response to the continued high volume of activity, working closely with key component and subsystem suppliers. 
Our portable X-ray systems continue to be displayed and trialled across the world and this has led to valuable new orders and a strong pipeline of further opportunities. During the period, it was decided to accelerate the planned development of a compact detector panel designated the ThreatScan-LS3. In less than two months the system was designed, prototyped and tested before being integrated into our control software and sent to an Asian security exhibition for customer presentations. The success of this exercise demonstrated the advantages of the flexible, modular architecture used in both the hardware and software of our X-ray systems. 
The development phase of the government grant supported project to design a new generation of Precision Linescan Detectors has come to an end and the prototype will be on display for the first time at the Security and Counter Terror exhibition at Olympia in May. The outstanding pre-launch tasks relate to final optimisation of the software and transfer to production. Once this is complete, Image Scan's portable X-ray product range will include two X-ray generators, three sizes of detector panels with varying performance options, a complete suite of control and image analysis software and a wide range of ancillaries, all developed over the last 30 months. 
In the industrial inspection business area, where the Company provides machines for scanning catalytic converters and diesel particulate filters in the automotive industry, applications development work focussed on techniques for scanning larger parts and on greater software integration across machines. A relatively recent customer, who has been carrying out an extended evaluation of the MDXi400 industrial inspection system, ordered a new unit for operational deployment in Eastern Europe, an important milestone. 
The Company continues to focus on Quality Control and process improvements with new metrics and management systems introduced during the period. 


Outlook
The Company's much expanded range of portable X-ray inspection systems leaves it well positioned to benefit from continued high levels of focus on the ongoing global threat of terrorist attack. Further enhancements and innovations are planned that should allow the Company to maintain its recent momentum in this exciting market. 
Our industrial customers report a strengthening focus on automotive emission controls, with new and tighter regulations being introduced in several territories. This should drive demand for emission control systems and strengthen the need for quality control in their manufacture, both trends that support deployment of our highly specialised X-ray inspection systems.
Our short-term focus is to accelerate the marketing of the new range of portable X-ray machines to security customers around the world, building on the considerable momentum already achieved, while increasing the deployment of our inspection systems in automotive emissions control. However, the Board believes the Company is capable of further expansion and is looking for additional opportunities for both organic and acquisition growth. 
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
25/04/2017


Consolidated income statement
For the six months ended 31 March 2017
Note
Six months 
ended
31 March 2017
(Unaudited)
'000
Six months 
ended
31 March 2016
(Unaudited)
'000
Year ended
30 September
2016
(Audited)
'000
Revenue
 2,086
 1,372
 3,315
Cost of sales
(1,280)
(766)
(1,911)
Gross profit
 806
 606
 1,404
Other Operating Income
[3]
 -
 20
 78
Operating expenses
(695)
(670)
(1,378)
Operating profit /(loss)
 111
(44)
 104
Finance income
 -
 -
 1
Profit/ (loss) before taxation
 111
(44)
 105
Taxation
 -
 -
 -
Profit/(loss) for the period
 111
(44)
 105
Pence
Pence
Pence
Earnings per share

Basic profit/(loss) per share
[4]
0.09
(0.04)
0.08
Diluted profit/(loss) per share
0.09
-
0.08
Consolidated statement of changes in equity
For the six months ended 31 March 2017
Note
Six months 
ended
31 March 2017
(Unaudited)
'000
Six months 
ended
31 March 2016
(Unaudited)
'000
Year ended
30 September
2016
(Audited)
'000
Opening equity shareholders' funds
 740
 617
 617
Share-based payments
[5]
 5
 8
 18
Profit/(loss) attributable to equity shareholders
111
(44)
 105
 856
 581
 740

Consolidated statement of financial position
As at 31 March 2017
As at
31 March 2017
(Unaudited)
'000
As at
31 March 2016
(Unaudited)
'000
As at
30 September
2016
(Audited)
'000
Non-current assets


Plant and equipment
 31
 11
 17
 31
 11
 17
Current assets


Inventories
 700
 459
 504
Trade and other receivables
 652
 354
 842
Cash and cash equivalents
 469
 532
 1,055
 1,821
 1,345
 2,401
Total assets
 1,852
 1,356
 2,418
Current liabilities


Trade and other payables
 929
 742
 1,627
Non-current liabilities


Provisions for liabilities and charges
 67
 33
 51
Total liabilities
 996
 775
 1,678
Net assets
 856
 581
 740
Equity


Share capital
 1,256
 1,256
 1,256
Share premium account
 7,935
 7,935
 7,935
Retained earnings
(8,335)
(8,610)
(8,451)
Equity shareholders' funds
 856
 581
 740


Consolidated cash flow statement
For the six months ended 31 March 2017
Six months 
ended
31 March 2017
(Unaudited)
'000
Six months 
ended
31 March 2016
(Unaudited)
'000
Year ended
30 September
2016
(Audited)
'000
Cash flows from operating activities
Operating profit/(loss)
 111
(44)
105
Adjustments for:


Depreciation
 6
 2
 6
Impairment of inventories
 13 
 10
 14
Increase in provision for warranty
 16
 -
 18
(Increase)/decrease in inventories
 (209)
 102
 53
Decrease/(increase) in trade and other receivables
 190
 30
 (459)
(Decrease)/increase in trade and other payables
(698)
 (36)
 849
Share-based payment charge
 5
 8
 18
Net cash (used)/generated in operating activities
(566)
 72
 604
Corporation tax recovered
 -
 -
 -
Net cash (outflow)/inflow from operating activities
 (566)
 72
 604



Cash flows from investing activities


Interest Received
 -
 -
 1
Purchase of property, plant and equipment
 (20)
 (9)
(19)
Net cash used in investing activities
 (20)
 (9)
 (18)






Net (decrease)/increase in cash and cash equivalents
 (586)
 63
 586
Cash and cash equivalents at beginning of period
 1,055
 469
 469
Cash and cash equivalents at end of period
 469 
 532
 1,055

Notes to the unaudited interim financial statements
For the six months ended 31 March 2017
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 2017 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 2016.
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 2016 does not constitute the full statutory accounts for that period. The annual report and financial statements for the year ended 30 September 2016 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 2016 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 Other Operating Income
In the comparative results presented, R&D tax credits have been reclassified from taxation to other operating income as the Board has decided that this reflects nature on the income.
The R&D tax credits in the year have been decreased due to part of the spending being met by an Innovate UK grant and also due to the limits on the amount credits which can be claimed
4 Earnings per share ('EPS')
Basic earnings per ordinary share is based on the profit on ordinary activities before taxation of 111,570 and on 125,604,577 ordinary shares in issue throughout the period.
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, based on the share price at the end of the period. 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.
5 IFRS 2 'Share-based payments'
Operating expenses includes a charge of 4,691 (2016: 8,492) 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 charges have been credited to equity in accordance with IFRS2 as presented in the consolidated statement of changes in equity.
6 Additional copies
Further copies of the 2017 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.

This information is provided by RNS
The company news service from the London Stock Exchange
  END
IR EELFLDZFEBBX