REG - Image Scan Holdings - Half Yearly Report <Origin Href="QuoteRef">IMGE.L</Origin>
06/09/2014 02:14
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Image Scan Holdings PLC
12 June 2014
Image Scan Holdings plc
Interim report 2014
12 June 2014
IMAGE SCAN HOLDINGS PLC
("Image Scan" or the "Company")
(AIM: IGE)
INTERIM RESULTS
Revenue up 57%, reduced overheads
Image Scan, the AIM-listed specialist supplier of x-ray screening systems to
the security and industrial inspection markets, today announces its interim
results for the six months ended 31 March 2014.
Financial summary:
· Revenue up 57% to £1,678,000 (2013: £1,072,000)
· Gross profit margin of 31% (2013: 32%) after provision for further
losses on the nuclear contract
· Overheads down 22% to £576,000 (2013: £740,000) following the 2013
restructuring exercise
· Loss after taxation of £36,000 (2013: £389,000)
· Period end bank balance of £25,000 (2013: £138,000)
· Current bank balance of £190,000
Operational highlights:
· Board realigned and strengthened with appointment of Bill Mawer as
Chairman and Chief Executive Officer
· H1 revenue increase based on strong sales across whole security product
range
· Delivered a number of multiple unit contracts for the portable FlatScan
system
· Repeat sales of standard industrial systems to existing customer
· Confirmed orders of £2.3m having opened the year with £1.2m and booked
£1.1m of new orders in the year to date
Bill Mawer, Chairman and Chief Executive Officer of Image Scan, commented:
"These results show positive improvement over the equivalent period in the
prior year, and the growth in sales in the core portable X-ray market is
particularly encouraging. Maintenance of that growth is dependent, in the
short term, on the supply of a newly developed replacement portable x-ray
generator, and, in the medium term, on the timely completion of new product
development.
"Image Scan has a strong brand in its core markets; however, there is a need
to accelerate product development in order to drive the business forward, both
in terms of the competitive solutions we provide and our geographical reach.
Our strategy will focus on supporting targeted growth in our R&D and sales
activity with the aim of evolving Image Scan into a business that consistently
delivers both top-line growth and bottom line profitability."
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 plcBill Mawer, Chairman and Chief Executive Officer Tel: +44 (0) 1509 817 400ir@ish.co.uk
Cantor Fitzgerald Europe (Nominated Adviser) Mark Percy/Rick ThompsonPaul Jewell/David Banks Tel: +44 (0) 207 894 7000
Yellow Jersey PR LimitedDominic BarrettoAnna Legge Tel: +44 (0) 7768 537 739
Chairman's statement
Introduction
I am pleased to report my first set of results as Chairman and Chief Executive
Officer of Image Scan. Image Scan remains 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 Axis range of conveyor systems; the FlatScan range of
portable bomb and suspect package detection 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.
Financial results
I am pleased to report that revenue for the six months has increased by 57% to
£1,678,000 (2013: £1,072,000) based on strong sales across the whole security
product portfolio. The gross margin of 31% (2013: 32%) reflected two
significant security contracts which were subject to highly competitive
tendering processes and the recognition of a further £30,000 (2013: £112,000)
of losses against the nuclear contract.
Following the restructuring exercise carried out in May 2013, the comparative
overheads for the period were down by 22% to £576,000 (2013: £740,000). As a
result, the Company has made a loss after tax of £36,000 (2013: £389,000).
The loss per share was 0.05p (2013: 0.5p).
The cash position as at the end of the period was £25,000 (2013: £138,000).
The Company has an agreed £100,000 overdraft facility with the Royal Bank of
Scotland. The current bank balance is £190,000.
Overview
Security accounted for 85% of total sales. Security revenue in the period was
£1,427,000 (2013: £546,000) with increased levels of sales reported against
each of the conveyor, portable and vehicle screening product ranges. First
half sales of both the conveyor and portable products included a number of
multiple unit contracts.
Industrial revenue of £251,000 (2013: £526,000) comprised 15% of total revenue
and included the sale of a cabinet x-ray system to an existing customer and
further deliverables on the nuclear contract. The nuclear customer has
accepted delivery of the system and the final phases relate to installation,
commissioning and training at the customer's site. Key software engineering
resources previously engaged on this contract have now been refocused on the
development of the core product range.
Subsequent to the period end, the following Board appointments were made to
strengthen the technology lead and provide greater strategic focus:
o Bill Mawer, as Chairman and Chief Executive Officer, who has 13 years'
experience with Smiths Detection and is a specialist in product development
and market strategy; and
o Dr Richard Leaver, as Non-Executive Director, who has extensive
international experience of developing and sustaining value in technology-rich
growth businesses at all stages of investment.
Outlook
The Company has total confirmed orders in the year to date of £2.3m, having
started the year with an opening order book of £1.2m and secured new orders of
£1.1m. All outstanding orders are deliverable in the current financial year.
Whilst the revenue in the first half of the year was on target, performance in
the second half will be reliant on the supply of a newly developed portable
generator to replace the existing system which is no longer available.
As a result of the commitment of a limited resource base to the nuclear
contract over the last three years the Company's R&D activities have been
restricted to modest incremental development. The Board recognises the need
to expand the product range and has been reviewing what additional inputs are
required to accelerate product development. The strategy that I have been
developing since becoming involved with the Company in late 2013 will be to
support carefully targeted growth in R&D and sales activity to include the
following projects:
o complete the renewal of the existing portable x-ray product range to
restore its competitive edge;
o extend the portable range to include both higher and lower-end solutions,
giving the Company, for the first time, a competitive product in each market
segment;
o co-development, with an experienced partner, of a highly competitive range
of checkpoint x-ray systems to replace the current Axis products;
o recruit an additional security sales manager and development of the sales
network to provide geographical coverage of all important security x-ray
markets; and
o recruit a dedicated sales manager for industrial sales, in order to expand
the Company's potentially valuable market position.
Image Scan has a strong brand in its core markets and loyal distributors and
customers. Over-commitment of its limited R&D resources in recent years has
caused a decline in competitiveness which is now being addressed. The staff at
Image Scan are enthusiastic, dedicated and creative and on behalf of my fellow
Board members and shareholders, I would like to formally thank our staff for
their contribution during this period.
Bill Mawer
Chairman and Chief Executive Officer
12 June 2014
Consolidated income statement
for the six months ended 31 March 2014
Six months ended Six months ended Year ended
31 March 2014 31 March 2013 30 September 2013
(Unaudited) (Unaudited and restated) (Audited)
Note £'000 £'000 £'000
Revenue 1,678 1,072 2,538
Cost of sales 2 (1,161) (731) (1,587)
Gross profit 517 341 951
Administrative expenses 2 (576) (740) (1,293)
Operating loss (59) (399) (342)
Finance revenue - - -
Loss before taxation (59) (399) (342)
Taxation 23 10 45
Loss for the period (36) (389) (297)
Pence Pence Pence
Earnings per share
Basic and diluted loss per share 4 (0.05) (0.50) (0.39)
Consolidated statement of changes in equity
for the six months ended 31 March 2014
Six months to Six months to Year to
31 March 2014 31 March 2013 30 September 2013
(Unaudited) (Unaudited) (Audited)
Note £'000 £'000 £'000
Opening equity shareholders' funds 677 977 977
Share-based payments 5 - - (3)
Loss attributable to equity shareholders (36) (390) (297)
641 587 677
Consolidated balance sheet
as at 31 March 2014
As at As at As at
31 March 2014 31 March 2013 30 September 2013
(Unaudited) (Unaudited) (Audited)
£'000 £'000 £'000
Non-current assets
Plant and equipment 16 31 22
Intangible assets - - -
16 31 22
Current assets
Inventories 352 650 458
Trade and other receivables 651 240 1,120
Cash and cash equivalents 25 138 12
Current tax asset 59 - 36
1,087 1,028 1,626
Total assets 1,103 1,059 1,648
Current liabilities
Trade and other payables 440 426 928
Non-current liabilities
Provisions for liabilities and charges 22 46 43
Total liabilities 462 472 971
Net assets 641 587 677
Equity
Share capital 763 763 763
Share premium account 7,501 7,501 7,501
Retained earnings (7,623) (7,677) (7,587)
Equity shareholders' funds 641 587 677
This interim financial information was approved by the Board of Directors on
12 June 2014.
Bill Mawer
Chairman and Chief Executive Officer
Consolidated cash flow statement
for the six months ended 31 March 2014
Six months to Six months to Year to
31 March 2014 31 March 2013 30 September 2013
(Unaudited) (Unaudited) (Audited)
£'000 £'000 £'000
Cash flows from operating activities
Operating loss (59) (400) (342)
Adjustments for:
Depreciation 7 11 21
Transfer of fixed assets to stock 2 - 4
Decrease/(increase) in inventories 106 (237) (46)
Decrease in trade and other receivables 469 548 2
(Decrease)/increase in trade and other payables (509) 60 224
Share-based payment charge - - (2)
Corporation tax recovered - 85 85
Net cash inflow/(outflow) from operating activities 16 67 (54)
Cash flows from investing activities
Purchase of property, plant and equipment (3) (3) (8)
Net cash used in investing activities (3) (3) (8)
Net increase/(decrease) in cash and cash equivalents 13 64 (62)
Cash and cash equivalents at beginning of period 12 74 74
Cash and cash equivalents at end of period 25 138 12
Notes to the unaudited interim financial statements
for the six months ended 31 March 2014
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 2014 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 2013.
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 IFRS, they cannot be
construed as being in full compliance with IFRSs.
The financial information for the year ended 30 September 2013 does not
constitute the full statutory accounts for that period. The Annual Report and
Financial Statements for the year ended 30 September 2013 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 2013 was unqualified, did
not draw attention to any matters by way of emphasis, and did not contain a
statement under 498(2) or 498(3) of the Companies Act 2006.
2 Losses on nuclear contract
In the 2013 interim results, the loss of £112,000 on the nuclear contract was
reported as an exceptional item within administrative expenses. This was
subsequently accounted for as cost of sales in the full statutory accounts for
the year ended 2013. The comparative 2013 numbers in the 2014 interim results
reflect this same treatment, giving cost of sales of £731,000 and
administrative expenses of £740,000 (previously reported as £619,000 and
£852,000 respectively).
3 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.
4 Earnings per share ('EPS')
Basic earnings per ordinary share is based on the loss on ordinary activities
after taxation of £36,000 and on 76,267,932 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.
5 IFRS 2 'Share-based payments'
Operating expenses includes a charge of £nil (2013: £nil) 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.
6 Additional copies
Further copies of the 2014 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
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