Interim Results
1 June 2005
IMAGE SCAN HOLDINGS PLC
("Image Scan" or the "Company")
INTERIM RESULTS
FOR THE SIX MONTHS ENDED
31 MARCH 2005
Image Scan (AIM: IGE), a leading provider of multi-view, 3D X-ray imaging technologies for
the security and industrial inspection markets, announces interim results for
the six months ended 31 March 2005.
Financial highlights
* Order book at 31st March 2005 of £683,000 (2004: £12,000), including the
largest order to date which was received from Johnson Matthey of £601,000;
* Reduction in overheads to £590,000 (2004: £680,000);
* Loss on ordinary activities before taxation £542,000 (2004: £596,000);
Business highlights
* Launch of MDXI product range at the February 2005 IPOT exhibition;
* Preliminary results of Transport Security Administration ("TSA") trial in
the US indicates significant improvement in detection rates when comparing
3D to 2D X-ray screening;
* Two non-executive directors appointed to strengthen Board;
Post period-end highlights
* Successful placing and open offer raises over £1million;
* Licence agreement signed with Galaxy Scientific Corp ("Galaxy") for sales
of an aviation security computer based training software package;
* Interim sales and marketing manager appointed;
* Company Secretary, Louise George, promoted to Finance Director.
Ian Johnson, Chairman comments, "The commercial order book is stronger at £
683,000 than at any time in the Company's history. The Company believes that
its reputation has been significantly enhanced by having established a key
reference site in Johnson Matthey."
For further information:
Nicholas Fox Chief Executive ) 01664 503 600
Ian Johnson Chairman )
Toby Hall GTH Communications ) 020 7153 8039
Howard Drummon Keith Bayley Rogers Ltd ) 020 7871 2232
CHAIRMAN'S STATEMENT
Introduction
I am pleased to present the interim results of Image Scan Holdings plc for the
six months ended 31 March 2005 and the Board's view of the Company's prospects
for the remainder of this financial year.
Financial Results
Sales for the six months were £109,000 (2004: £149,000). However, these sales
do not reflect the significantly increased commercial activity that the Company
has experienced in the current financial year. As explained more fully below,
the Company received two significant orders totalling £683,000 in the period
that are scheduled for delivery in the second half of the current financial
year.
In the period, sales to Rapiscan Systems Limited ("Rapiscan") under the sales
and marketing agreement amounted to 6 units - £90,000 in total. The Board is
disappointed with the rate of call-off that Rapiscan has been able to achieve
and is working closely with Rapiscan to resolve the situation.
Margins have remained strong at 50% (2004: 52%) compared to 44% for the 2004
full year.
Overheads were £590,000 (2003: £680,000) reflecting tighter control on
expenditure and a shift in emphasis towards commercial activity, resulting in a
£30,000 additional charge of labour against contracts. Counterbalancing this
was a cost of £47,000 in respect of the compromise agreement reached with the
previous Chief Finance and Operating Officer, who left the Company following a
cost cutting exercise in January. The benefit of these changes will be evident
in the second half of 2005. Sales and marketing expenditure was reduced by £
100,000 compared to 2004 when a one-off expense of carrying out a cost benefit
analysis of the Axis-3d® was incurred.
The loss for the period was £542,000 (2003: £572,000), a loss per share of
2.80p (2004: 3.04p). No dividend is proposed.
In November 2004 the Company issued £200,000 9% loan stock ahead of the
completion of a successful placing and open offer that raised over £1m in April
2005. This loan stock was repaid in May 2005. During the period, bank loans
were reduced by £19,000 to £36,000. At 31st March 2005 the bank balance was £
68,000.
Commercial Overview
Security Sector
The TSA are planning a further hand-baggage screening trial at a major US
airport following on from the successful trial carried out in 2004, where a
significant improvement in the probability of detection was indicated when
using 3D when compared to 2D X-ray image presentation formats.
In addition to the focus on the promotion of the Axis-3d® with Rapiscan, the
Company is looking to expand its product range within the security sector:
* A prototype for a large area detector for explosives and ordnance
detection, known as PanDEX, has been completed and following pre-launch
marketing is due to be launched at the Milipol exhibition in Paris in
November 2005.
* Following the completion of a prototype high energy X-ray imaging system
for screening small vehicles in 2004, the Company is looking further to
develop this technology with the customer into a commercial product.
Industrial Sector
The Company has actively marketed its industrial products through attendance at
two key exhibitions; INSPEX in October 2004 and IPOT in February 2005. Both
gave rise to a strong lead pipeline and the latter provided the platform for
the launch of the MDXI range of industrial inspection systems.
To ensure that the momentum of recent commercial successes is maintained, the
Company will be using some of the funds raised in April to appoint a full time
sales and marketing manager to pursue further opportunities and build a strong
and sustainable sales pipeline. In the intervening period the Company has
appointed an interim sales and marketing manager to maintain momentum in sales
and to assist in the review of the strategic market direction of the Company.
Current Trading and Outlook
The commercial order book is stronger at £683,000 than at any time in the
Company's history. The Company believes that its reputation has been
significantly enhanced by having established a key reference site in Johnson
Matthey. The prototype MDXI inspection system delivered to Johnson Matthey in
September 2004 was well received and resulted in the follow-up order of £
601,000 for a multi-station industrial inspection system. Subsequent to the
formal launch in February 2005 of the MDXI range of X-ray inspection equipment
at the UK's leading industrial vision event, IPOT, we secured our first export
order of £82,000 for the product from the USA. These successes confirm the
efficacy of the Company's products and we believe that there are a number of
other significant opportunities for these systems within the industrial sector.
Following the development of a new generation of aviation security computer
based training software for Galaxy in 2004, the Company has now successfully
negotiated a licence agreement with Galaxy to market the system to customers
outside the TSA. This will give rise to income from the licence, further
software development and sales of the Axis-3d® system.
Strategic Direction
The Board is committed to applying the balance of the funds raised in the
recent placing and open offer to securing the Company's future. This will be
achieved by:
* the appointment of a full time sales and marketing manager to enhance
market awareness of our product portfolio, to pursue existing sales leads
and to open up new opportunities;
* raising market awareness through increased press coverage, which is already
underway following the appointment of GTH Communications Ltd in March as PR
agents for both financial and trade press;
* introducing our technology and solutions to a wider audience by continued
attendance at key trade exhibitions and conferences;
* working closely with Rapiscan to exploit the partnership opportunities
under the sales and marketing agreement; and
* expanding the Company's partnering agreements so that in each product area
we are working with specialist companies with experience and an established
customer base in that relevant sector.
Other Matters
I should like to congratulate Mrs Louise George on her appointment as Finance
Director. Louise has been with the Company for three years as Financial
Controller and Company Secretary and has clearly demonstrated that she has the
skills to step into this new role. I should also like to welcome Peter Hughes
and Peter Woods to the Board, both of whom were appointed in March and are
already contributing to the strategic direction of the Company with experience
drawn from their extensive financial and commercial careers. As a final point,
I should like to express my appreciation to the staff for their commitment to
the Company and their dedication in ensuring that the Company continues to
retain its position at the forefront of its technological sectors.
Ian Johnson
Chairman
1st June 2005
Unaudited Consolidated Profit & Loss Account
6 months to 6 months to Year to
31 March 2005 31 March 30 September
2004 2004
(Unaudited) (Unaudited) (Audited)
£'000 £'000 £'000
Turnover 109 149 425
Cost of sales (55) (71) (239)
Gross profit 54 78 186
Administration expenses (590) (680) (1,448)
Operating loss (536) (602) (1,262)
Interest received 1 9 13
Interest payable (7) (3) (5)
Loss on ordinary activities (542) (596) (1,254)
before taxation
Taxation - 24 44
Loss on ordinary activities (542) (572) (1,210)
after taxation
Loss per share: Basic and
fully diluted (2.80)p ( 3.04)p (6.3)p
Unaudited Consolidated Balance Sheet
31 March 2005 31 March 2004 30 September 2004
(Unaudited) (Unaudited) (Audited)
£'000 £'000 £'000
Fixed Assets
Tangible assets 142 256 191
Intangible assets 19 171 20
161 427 211
Current assets
Stock and work in progress 271 24 45
Debtors 60 211 146
Cash at bank and in hand 67 466 50
398 701 241
Creditors - amounts falling
due
within one year (1,007) (394) (344)
Net current assets/ (609) 307 (103)
(liabilities)
Total assets less current (448) 734 108
liabilities
Creditors - amounts falling (6) (36) (17)
due after more than one year
Provisions for liabilities (13) - (16)
and charges
Net assets (467) 698 75
Capital and reserves
Called up share capital 193 193 193
Share premium account 3,883 3,867 3,883
Profit and loss account (4,543) (3,362) (4,001)
Equity shareholders' funds (467) 698 75
Unaudited Consolidated Cash Flow Statement
6 months to 6 months to Year to
Notes 31 March 2005 31 March 30 September
2004 2004
(Unaudited) (Unaudited) (Audited)
£'000 '000 £'000
Net cash inflow/(outflow) (a) (157) (626) (238)
from operating activities
Returns on investments
and servicing of finance
Interest received 1 9 8
Interest paid (7) (3) (7)
(6) 6 1
Taxation
Corporation tax recovered - - 97
Capital expenditure and
financial investment
Purchase of tangible (1) (91) (189)
fixed assets
Purchase of intangible - - (4)
fixed assets
(1) (91) (193)
Net cash flow before (164) (711) (333)
management of liquid
resources
Management of liquid
resources
Withdrawal/(purchase) of - - 43
short term deposits
Financing
Issue of ordinary share - 987 -
capital
Bank loans repaid (19) (19) (36)
Other loans issued 200 - -
181 968 (36)
Increase in cash in the (b) 17 257 (326)
period
Note (a) Reconciliation of operating cash
flows
Operating loss (536) (602) (840)
Depreciation 50 57 76
Amortisation 1 8 18
(Increase)/decrease in stock and (226) 3 43
work in progress
Decrease/(increase) in 86 (59) 195
debtors
Increase/(decrease) in 468 (33) 270
creditors
Net cash (outflow) from (157) (626) (238)
operating activities
Unaudited Consolidated Cash Flow Statement (continued)
Note (b) Analysis of net
debt
1 October 2004 Cash flow 31 March 2005
£'000 £'000 £'000
Cash at bank and in hand 50 17 67
Debt due within one year (38) (192) (230)
Debt due after one year (17) 11 (6)
(5) (164) (169)
Reconciliation of Movement in Shareholders' Funds
6 months to 6 months to Year to
31 March 2005 31 March 2004 30 September
2004
(Unaudited) (Unaudited) (Audited)
£'000 £'000 £'000
Opening shareholders' 75 283 283
funds
Issue of shares - at par - 31 31
Issue of shares - share - 956 972
premium
Loss attributable to (542) (572) (1,211)
members
(467) 698 75
Notes to the Unaudited Interim Statement
1 Basis of Preparation
(a) The interim statement has been prepared in accordance with the accounting
policies set out in the Company's Annual Report and Accounts for the year ended
30 September 2004.
(b) The interim statement is neither audited nor reviewed. The figures for the
year ended 30 September 2004 do not comprise statutory accounts for the purpose
of section 240 of the Companies Act 1985 and have been extracted from the
Company's full accounts for that year, which received an unqualified Auditors'
Report and did not contain a statement under section 237(2) or (3) of the
Companies Act 1985. The accounts have been filed with the Registrar of
Companies.
(c) Basic loss per ordinary share is based on the loss on ordinary activities
after taxation of £542,000 and on 19,335,630 ordinary shares in issue
throughout the period.
FRS14 requires presentation of diluted earnings per share (EPS) when a company
could be called upon to issue shares that would decrease net profit or increase
net loss per share. For a loss making company with outstanding share options,
net loss per share would only be increased by the exercise of out-of-the-money
options. Since it seems inappropriate to assume that option holders would act
irrationally and there are no other diluting future share issues, diluted EPS
equals basic EPS.
* Additional Copies
Further copies of the Interim Report are available from the Company's
registered office, Pera Innovation Park, Nottingham Road, Melton Mowbray,
Leicestershire, LE13 0PB