Interim Report - Replacement

The following amendment(s) has (have) been made to the 'Interim Results' announcement released on 28/04/2021 at 7.00 a.m. under RNS No 7769W.

The financial statements have been included in this announcement.

All other details remain unchanged.

The full amended text is shown below.

 

 

Image Scan Holdings plc

Interim Report 2021

28/04/2021

 

 

 

IMAGE SCAN HOLDINGS PLC

("Image Scan" or the "Company")

(AIM: IGE)

 

INTERIM RESULTS

 

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 2021. During the first six months the performance of the Company has continued to be impacted by COVID-19, but there is a sufficiently strong orderbook and pipeline of new business for us to expect a stronger second half.  

Financial summary:

·    Revenue £868k (2020: £2.3m)

·    Gross profit margin improved to 55% (2020: 45%)

·    Loss before taxation of £201k (2020: profit of £180k)

·    Period end bank balance of £1m (2020: £1.1m)

·    Order intake £938k (2020: £1.5m)

·    Period end order book of £702k (2020: £933k)

·    Order book increased to £1.5m at 27 April 2021 including large Asian portable X-ray contract win

 

Operational highlights:

·    First order for new conveyor X-ray system received from USA

·    New portable X-ray customer in Canada

·    Contract to supply portable X-ray systems to RAF

·    New orders for industrial screening systems

·    Research and Development effort supported by customer funding

·    Large portable X-ray order received from Asian customer after period end

The Board considers that the Company has a sufficiently strong pipeline of new orders to continue to trade in line with market expectations for the year ending 30 September 2021 which are for sales of £3m and a loss of £200k.

Bill Mawer, Chairman and Chief Executive Officer of Image Scan commented: "We expected that the COVID-19 pandemic would continue to impact the flow of new orders into the business in the first half of this financial year, and that impact is reflected in these results. However, we are delighted that our new products are finding their first customers and that we have been able to open up new markets in North America and the UK. The new portable X-ray order and our strong new business pipeline point to a stronger performance in the second half, though we continue to monitor closely the potential impact of COVID-19 outbreaks in important markets such as India and Brazil. Nonetheless, we will continue our ambitious new product development programme as this is putting us in a strong position for when the effects of the pandemic diminish."

 

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 plc William Mawer, Chairman and Chief Executive Officer Sarah Atwell King, Finance Director and Company Secretary	Tel: +44 (0) 1509 817 400 [email protected]
W H Ireland - Nominated Adviser and Broker Mike Coe/Chris Savidge (Corporate Finance) Jasper Berry (Broking)	Tel: +44 (0) 117 945 3470

                       

 

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 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 image acquisition systems for non-destructive testing to commercial organisations worldwide.

 

 

Financial results

Revenues for the six months ended 31 March 2021 declined to £868k (2020: £2.3m) reflecting the low opening order book of £633k and the fact that much of the order intake of £938k (2020: £1.5m) arrived towards the end of the period. We saw delays in a number of important projects as Governments worldwide continued to focus on battling the pandemic. However, a key new portable X-ray project, one of those directly delayed by COVID-19, was won after the period end.

 

A favourable mix of sales lead to an improvement in gross margin to 55% (2020: 45%). Costs were carefully managed, and we received £32k from the Government furlough scheme to support salaries in quiet periods, allowing us to reduce overheads by 20% to £682k (2020: £840k). The loss for the period was £201k (2020: profit of £180k).

 

The Company finished the period with an orderbook of £702k (2020: £933k) and positive cash balance of £1m (2020: £1.1m). Trading in the first part of April, brought the orderbook to £1.5m at April 27^th.

 

 

Overview

While overall order intake for security systems was at a disappointing level in the period, the orders received did include some notable wins. Examples include: a follow-on order for portable X-ray systems from a major global NGO, who uses our scanners to support its worldwide operations; a first order for a conveyor X-ray system for a customer in the USA, as well as previously announced orders in the UK and Canada. Since the period end, we have received a large contract for portable X-ray systems and the first order for the new Axis-CXi cabinet X-ray screening system, both from customers in Asia

While we have been concerned about the impact of the pandemic on our automotive customers, it is reassuring to have received orders for two new industrial screening systems and to be working on the implementation of new X-ray measurement techniques under a customer funded software development contract. 

Our access to global security markets is a key strength of the Company and it has been pleasing to see our investment in appointing a sales consultant in North America bear fruit with new customers in both Canada and the USA. We have also won orders from new customers in Eastern Europe and Asia.

Servicing our large installed base of industrial screening systems has presented a challenge through the pandemic, but we have adapted to this situation through customer training, increased remote machine access and recruitment of overseas service partners.

We continue to invest in our product range and the launch of the Axis-CXi cabinet X-ray scanner in October 2020 was a significant milestone. This system brings new levels of performance to the cabinet X-ray market and we are pleased by the level of customer interest. We expect to have a number of variants of our conveyor X-ray system fully on the market in the next few months. We are exploring new X-ray detection and image processing techniques to further strengthen the differentiation of our products in the security X-ray marketplace.

 

Outlook - COVID-19 and beyond

The path of the Covid-19 pandemic continues to be unpredictable. Two places where the disease is currently most prevalent are India and Brazil, one a longstanding market for the Company, the other a more recent addition for which we have high hopes for the future. In other parts of the world, the disease has subsided, and more normal levels of activity are starting to return. The new portable X-ray order described above will be delivered in the second half and so we remain cautiously optimistic for an improved performance in the second half and that we can trade in line with market expectations for the year as a whole.

Our strategy continues to be focussed on expansion of the product range so that, as market activity returns to more normal levels, we are well placed to capitalise, offering the broader product range through our excellent network of local partners. Our product development strategy meets several goals: the maintenance and upgrade of existing products, for which recently launched Wi-Fi range extenders for portable X-ray systems would be an example; the broadening of current product ranges to include multiple formats for different users, and, lastly the development of new product ranges such as the recent addition of new conveyor X-ray systems. The partner network continues to expand, and this has led to the recent acquisition of promising new customers in several regions.

To better support the sales activity in an environment where travel is difficult or impossible, we are currently building a demonstration room at our facility that will be fully equipped to support on-site visits, attendance at on-line trade exhibitions and person to person remote presentations and demonstrations. We continue to expand our on-line and social media presence and our participation in counter terrorism forums.

The Company retains a positive outlook and our small but industrious team work hard to build a platform for sustainable growth into the future. On behalf of my fellow Board members, I would like to formally thank all our personnel for their outstanding response to the continuing challenging circumstances.

 

 

Bill Mawer

Chairman and Chief Executive Officer

28/04/2021

 

 

 

 

Consolidated income statement

For the six months ended 31 March 2021

 

	Note	Six months ended 31 March 2021 (Unaudited) £'000	Six months ended 31 March 2020 (Unaudited) £'000	Year ended 30 September  2020 (Audited) £'000
Revenue		868	2,287	3,484
Cost of sales		(387)	(1,268)	(1,760)
Gross profit		481	1,019	1,724
Operating expenses		(682)	(840)	(1,612)
Operating (loss)/profit		(201)	179	112
Finance income		-	1	1
Loss/(profit) before taxation		(201)	180	113
Taxation		-	-	25
Loss/(profit) for the period		(201)	180	138

 

		Pence	Pence	Pence
Earnings per share
Basic profit per share	[3]	(0.15)	0.13	0.10
Diluted profit per share		(0.15)	0.13	0.10

 

 

 

Consolidated statement of changes in equity

For the six months ended 31 March 2020

 

	Note	Six months ended 31 March 2021 (Unaudited) £'000	Six months ended 31 March 2020 (Unaudited) £'000	Year ended 30 September  2020 (Audited) £'000
Opening equity shareholders' funds		1,409	1,268	1,268
Share-based payments	[4]	-	4	3
(Loss)/profit attributable to equity shareholders		(201)	180	138
Closing equity shareholders' funds		1,208	1,452	1,409

 

 

 

Consolidated statement of financial position

As at 31 March 2020

 

	As at 31 March 2021 (Unaudited) £'000	As at 31 March 2020 (Unaudited) £'000	As at 30 September  2020 (Audited) £'000
Non-current assets
Intangible and tangible assets	61	40	64
	61	40	64
Current assets
Inventories	366	439	450
Trade and other receivables	404	697	315
Cash and cash equivalents	1,048	1,140	1,410
	1,818	2,276	2,175
Total assets	1,879	2,316	2,239
Current liabilities
Trade and other payables	671	864	783
Non-current liabilities
Bank Loan			47
Total liabilities	671	864	830
Net assets	1,208	1,452	1,409
Equity
Share capital	1,363	1,363	1,363
Share premium account	8,328	8,328	8,328
Retained earnings	(8,483)	(8,239)	(8,282)
Equity shareholders' funds	1,208	1,452	1,409

 

 

 

Consolidated cash flow statement

For the six months ended 31 March 2021

 

	Six months ended 31 March 2021 (Unaudited) £'000	Six months ended 31 March 2020 (Unaudited) £'000	Year ended 30 September  2020 (Audited) £'000
Cash flows from operating activities
Operating (loss)/profit	(201)	179	112
Adjustments for:
Depreciation	10	11	21
Impairment of inventories	9	14	26
Amortisation of Lease	21	-	39
(Decrease)/increase in provision for warranty	(9)	16	18
Decrease in inventories	75	330	306
(Increase)/decrease in trade and other receivables	(90)	(143)	350
(Decrease)/increase in trade and other payables	(98)	29	(140)
Share-based payment charge	-	4	4
Net cash used in operating activities	(283)	440	736
Corporation tax recovered	(1)	64	32
Net cash outflow from operating activities	(284)	504	768
Cash flows from investing activities
Interest received	-	1	1
Purchase of intangible and tangible assets	(7)	(6)	(10)
Net cash used in investing activities	(7)	(5)	(9)
Cash flows from financing activities
(Repayment)/proceeds from bank loan	(50)	-	50
Lease payments	(21)	-	(40)
Net cash from financing activities	(71)	-	10
Net (decrease)/increase in cash and cash equivalents	(362)	499	769
Cash and cash equivalents at beginning of period	1,410	641	641
Cash and cash equivalents at end of period	1,048	1,140	1,410

 

 

 

Notes to the unaudited interim financial statements

For the six months ended 31 March 2021

 

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 2021 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 2020.

 

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 2020 does not constitute the full statutory accounts for that period. The annual report and financial statements for the year ended 30 September 2020 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 2020 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 £201,198 and on 136,354,577 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.

 

4 IFRS 2 'Share-based payments'

Operating expenses includes a charge of £nil (2020: £3,877) 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.

 

5 Additional copies

Further copies of the 2021 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.