Interim Results

Image Scan Holdings PLC

30 April 2024

 

 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")

Interim Results

Image Scan (AIM: IGE),  the specialist supplier of X-ray screening systems for security and industrial inspection, is delighted to announces its interim results for the six months ended 31 March 2024 ("H1 2024" or the "Period").

Financial summary:

·      Order intake £1,136k (H1 2023: £1,858k)

·      Revenue was at £1,061k (H1 2023: £1,459k)

·      Gross profit margin of 54% (H1 2023: 48%)

·      Loss before taxation of £119k (H1 2023: profit before tax of £16k)

·      Period end bank balance was £759k (H1 2023: £1,003k)

·      Period end orderbook of £729k (H1 2023: £1,116k)

Operational highlights:

·      Launch of ThreatScan®-AS2 product to extend the portable product family

·      Customer deliveries and satisfaction maintained by effective management of supply chain challenges

·      Research and development effort focussed on developing high precision portable x-ray products

·      New ThreatScan®-AS1 product contract wins in Europe, Middle East, Asia and Indian Sub-continent

·      Opportunity pipeline at a significantly higher level than at the same period in FY23

Post Period-end highlights

·      Have secured an initial order of c£300k from a partner to supply them with ThreatScan®-AS1 portable X-ray systems pursuant to a framework work contract the partner has won. Further comparable orders are expected over the period of the partner's two-year framework contract.

Vince Deery, Chief Executive Officer of Image Scan commented: 

"We are very pleased with the reception to our new products especially the ThreatScan®-AS1 which has become readily accepted and adopted by the marketplace and orders are being received from across the globe. We are also seeing the number of opportunities for this product increasing as the participation in large volume government tenders is now more accessible to which the recently announced order is testament.

"The recent launch of the ThreatScan®-AS2 also adds to the positive response from the marketplace, and will provide even greater opportunity for the partner network to offer a comprehensive range of portable x-ray products.

"The H1 2024 performance is a reduction over the same period last year, however, the pipeline is buoyed by the introduction of the new products and the participation in a large volume mainly government opportunities. The increase in margin reflects the product mix and great efforts on combatting inflationary pressures. Taking into consideration our careful cost management and the opportunity pipeline, the Board is confident of delivering a full year performance in line with market expectations."

 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

-ENDS-

Image Scan Holdings plc                                                                Tel: [phone]

Vincent Deery CEO

Sarah Atwell-King, CFO & Company Secretary

WH Ireland Limited - Nominated Advisor and Corporate Broker     Tel: [phone]

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/  

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

Chief Executive Officer'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 Company'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 Company also supplies high-quality screening systems used in the manufacture of catalytic converters and diesel particulate filters.

Financial results

Following a successful return to profit in 2023, trading for H1 2024 was slow in terms of sales and order intake.

Revenue for the Period was £1,061k (H1 2023: £1,459k). Gross profit margin increased 6% for the Period to 54% (H1 2023: 48%).

Operating expenses were stable at £691k (H1 2023: £688k), reflecting strong cost control efforts.

The reduced level of sales led to a pre-tax loss of £119k in H1 2024 (H1 2023: pre-tax profit of £16k).

The Company finished H1 2024 with an order book of £729k (H1 2023: £1,116k).

As at the period end the Company had a cash balance of £759k (H1 2023: £1,003k) and no debt.

Review of the period

As previously reported, the results for FY 2024 will be significantly second half weighted. H1 2024 saw a slowdown in terms of sales and order intake, following a successful return to profit in 2023, but has created a pipeline of sales opportunities that will benefit the second half when converted. Therefore, the Company remains confident of meeting market expectations for the year.

The year to date has seen extensive marketing activities; the team has been actively attending exhibitions in Europe and the Middle East and going on territory visits, to showcase and demonstrate the enhanced product portfolio. The focus has been on the latest addition to the product family, the ThreatScan®-AS2, a very thin and light weight imaging panel ideal for rapid response Counter Explosive Ordnance operations using a backpack deployment, which was launched at the Middle Eastern Security Exhibition in January 2024.

The introduction of the ThreatScan®-AS2 complements the ThreatScan®-AS1, expanding outreach to a broader customer and more sophisticated territory base, and is providing opportunities via partners in larger volume tender processes that were historically unavailable to Image Scan.

The year-to-date contracts have witnessed a broad geographic spread of customers from territories including Europe, South East Asia, China, India, Middle East and Australasia and activity levels in the marketplace remain strong and are improved by the new product portfolio. Pleasingly, the Group has received orders from new territories, notably Spain and Switzerland for Axis-CXi, the cabinet-based x-ray system for screening mail, parcels and small baggage for potentially harmful items and contraband.

We continue to adeptly manage the reduction in industrial business supporting the catalyst market (associated with the internal combustion engine), as this sector undergoes geographic migration to lower cost-based locations. Image Scan is focusing on service and support revenue rather than relying on capital equipment sales.

Stock levels are being managed carefully to ensure customer delivery expectations are achieved. Stock levels have increased since a low at the 2023 year end (following strong sales) back to more normal levels and in anticipation of a stronger second half sales performance.

The product development program continues to focus on additional options for the higher precision portable X-ray imaging systems and widening the scope of opportunity for our global partner network to participate in all portable x-ray competitions regardless of their location or technical specifications.

Post Period-end highlights

As announced on Monday 29 April 2024 the Company has won an initial order of c£300k from a partner to supply them with ThreatScan®-AS1 portable X-ray systems pursuant to a framework contract the partner has secured with a European Ministry of Defence (MOD) organisation.

The initial order of ThreatScan®-AS1 portable X-ray system's valued at approximately £300k and is scheduled for delivery in H2 FY24. Further orders are expected over the period of the partner's two-year framework contract albeit the volume and timing of subsequent orders is as yet not certain.

This order represents a major milestone for Image Scan, marking the first large-scale order for the recently released ThreatScan-AS1 for use by a European military organisation. It validates the Company's product development strategy to develop and deliver higher-performance solutions in the portable x-ray market.

Outlook

The introduction of the higher value ThreatScan®-AS1 complemented by the ThreatScan®-AS2, demonstration activity, the level of attendance at security trade shows globally, the order outlined above and the opportunity pipeline built with ours partners instils growing confidence for the future. The orders received in H1 2024 combined with the significantly improved (compared to the same period of FY23) sales pipeline will deliver increased sales in the second half such that we remain confident of meeting market expectations for the year.

The Board continue to look create strategic opportunities to expand the business organically through partnerships and via acquisitions. The Board, with the support of the Company's largest shareholder, has commenced  a process of identifying and analysing organisations offering complementary products or technology that would benefit from Image Scan's well developed partner network.

I want to express my sincere gratitude to the team for their ongoing commitment to making this strategy a reality

Vince Deery

Chief Executive Officer

Consolidated income statement

For the six months ended 31 March 2024

	Note	Six months ended 31 March 2024 (Unaudited) £'000	Six months ended 31 March 2023 (Unaudited) £'000	Year ended 30 September  2023 (Audited) £'000
Revenue		1,061	1,459	2,963
Cost of sales		(492)	(752)	(1,528)
Gross profit		569	707	1,435
Gross profit %		54%	48%	48%
Operating expenses		(691)	(688)	(1,354)
Other operating income		-	-	15
Operating (loss)/profit		(122)	19	96
Finance income		5	2	7
Interest payable		(2)	(5)	(6)
(Loss)/profit before taxation		(119)	16	97
Taxation		-	-	26
(Loss)/profit for the period		(119)	16	123

		Pence	Pence	Pence
Earnings per share
Basic (loss)/profit per share	3	(0.09)	0.01	0.09
Diluted (loss)/profit per share		(0.09)	0.01	0.09

Consolidated statement of changes in equity

For the six months ended 31 March 2024

	Note	Six months ended 31 March 2024 (Unaudited) £'000	Six months ended 31 March 2023 (Unaudited) £'000	Year ended 30 September  2023 (Audited) £'000
Opening equity shareholders' funds		1,511	1,388	1,388
(Loss)/profit attributable to equity shareholders		(119)	16	123
Closing equity shareholders' funds		1,392	1,404	1,511

Consolidated statement of financial position

As at 31 March 2024

	As at 31 March 2024 (Unaudited) £'000	As at 31 March 2023 (Unaudited) £'000	As at 30 September  2023 (Audited) £'000
Non-current assets
Intangible and tangible assets	488	514	481
	488	514	481
Current assets
Inventories	495	569	349
Trade and other receivables	514	440	634
Cash and cash equivalents	759	1,003	958
	1,768	2,012	1,941
Total assets	2,256	2,526	2,422
Current liabilities
Trade and other payables	753	981	784
Non-current liabilities	111	141	127
Total liabilities	864	1,122	911
Net assets	1,392	1,404	1,511
Equity
Share capital	1,368	1,368	1,368
Share premium account	8,333	8,333	8,333
Retained earnings	(8,309)	(8,297)	(8,190)
Equity shareholders' funds	1,392	1,404	1,511

Consolidated cash flow statement

For the six months ended 31 March 2024

	Six months ended 31 March 2024 (Unaudited) £'000	Six months ended 31 March 2023 (Unaudited) £'000	Year ended 30 September  2023 (Audited) £'000
Cash flows from operating activities
Operating (loss)/profit	(119)	19	96
Adjustments for:
Depreciation	6	8	7
Amortisation of intangibles	24	22	61
Amortisation of right of use asset	17	21	38
Impairment of inventories	(5)	(14)	(54)
(Increase)/decrease in inventories	(141)	74	334
Decrease/(increase) in trade and other receivables	82	172	(40)
(Decrease)/increase in trade and other payables	(6)	105	(81)
(Decrease)/increase in provision for warranty	(6)	3	(4)
Net cash (used in)/generated from operating activities	(148)	410	357
Corporation tax recovered	-	-	71
Net cash (outflow)/ inflow from operating activities	(148)	410	428
Cash flows from investing activities
Interest received	5	2	7
Purchase of intangible assets	(37)	(80)	(124)
Net cash used in investing activities	(32)	(78)	(117)
Cash flows from financing activities
Lease payments	(19)	(19)	(43)
Net cash used in financing activities	(19)	(19)	(43)
Net (decrease)/increase in cash and cash equivalents	(199)	313	268
Cash and cash equivalents at beginning of period	958	690	690
Cash and cash equivalents at end of period	759	1,003	958

Notes to the unaudited interim financial statements

For the six months ended 31 March 2024

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 2024 and in accordance with recognition and measurement principles of International Financial Reporting Standards ('IFRSs') as adopted by the United Kingdom. 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 2023.

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 2023 does not constitute the full statutory accounts for that period. The annual report and financial statements for the year ended 30 September 2023 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 2023 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 Earnings per share ('EPS')

Basic earnings per ordinary share is based on the loss on ordinary activities before taxation of £119k (H1 2023 profit £16k) and on 136,854,577 ordinary shares in issue throughout the period.

Diluted profit 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.

 

END