TIDMIGE
RNS Number : 4049W
Image Scan Holdings PLC
12 December 2023
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")
Preliminary Results for the Year Ended 30 September 2023
Image Scan (AIM: IGE), the specialist supplier of X-ray
screening systems to the security and industrial inspection
markets, today announces preliminary results for the year ended 30
September 2023.
HIGHLIGHTS
FINANCIAL HEADLINES
-- Order intake up 31% to GBP2.9m (2022: GBP2.2m)
-- Sales up 50% to GBP3.0m (2022: GBP2.0m)
-- Gross profit 48% (2022:54%)
-- Costs down 5% GBP1.4m (2022: GBP1.4m)
-- Pre-tax profit GBP0.1m (2022: loss: GBP0.35m)
-- Year-end order book GBP0.65m (2022: GBP0.71m)
-- Year-end cash balance GBP0.96m (2022: GBP0.69m)
Image Scan's Chief Executive, Vince Deery, commented:
I'm very pleased by our results, a testament to the team's
tireless efforts for a profitable year. New products and an
optimised cost base significantly contributed to this turnaround.
Our extended portable product range for the security market gained
traction, resulting in a substantial uplift in sales compared to
the previous year. With a robust operational and financial
foundation, we look forward to the coming year, aiming for organic
growth and strategic development. My sincere thanks to the team for
their commitment in propelling us into 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
-S-
Image Scan Holdings plc Tel: +44 (0) 1509 817400
Vincent Deery CEO
Sarah Atwell-King, CFO & Company Secretary
WH Ireland Limited - Nominated Advisor and Corporate Broker Tel: +44 (0) 207 220 1666
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
CHAIRMANS STATEMENT
Overview
2023 delivered a welcome return to profit, meeting expectation.
This was derived from strong teamwork, organisational restructuring
and the return to near pre-pandemic levels of market activity.
Financial Summary
For the year ended 30 September 2023 (the "Year"), the Group
generated revenues of GBP3.0m (2022: GBP2.0m), up 50% and a profit
before tax of GBP0.1m (2022: loss GBP0.35m). This performance was
the result of a strong recovery in sales and good cost control.
There has been a significant increase in the Group cash balances to
GBP0.96m (2022: GBP0.69m).
The launch of new products and the continued new product
pipeline gives us confidence for 2024.
Environmental, Social and Governance
Image Scan recognises the importance of adopting a strong
environmental, social and governance ("ESG") framework, and this
guides our overarching business objectives and is influential to
serving the needs of all our key stakeholders. We are confident in
the robust procedures we have in place across the business and
intend to continue building on these in 2024.
Board Composition
The development of the board has continued this year with the
appointment of Sunil Vadgama as a Non-Executive Director in
December 2022. He has an excellent technical background and
understanding of the product range. Dr Richard Leaver resigned from
the board in September 2023 after eight years of dedicated service.
The Board extends its thanks to Richard for all he has contributed
and wishes him well in his future .
Outlook
On behalf of the Board and the dedicated team at Image Scan, I
wish to thank our colleagues and customers for their invaluable
contributions throughout 2023. Their commitment has been
instrumental in positioning us for the success we outline
below/within this report.
Our trading performance, aligning with expectations, reflects a
commendable 50% increase in revenue and a swing of c.GBP450k into
profitability. This accomplishment is a testament to the diligent
efforts of our restructured team and the positive shifts in the
business environment.
With a robust balance sheet and a healthy cash position, we
stand on a strong operational and financial foundation ready for
growth. The sustained vigour in our sales and marketing activities
instils confidence in our ability to achieve organic growth and
meet expectations for the current financial year.
While macroeconomic and geopolitical uncertainties persist, we
approach each challenge as an opportunity, engaging the collective
talents of our team. The Board of Directors remains confident in
the Group's prospects in the medium to long term. We are committed
to capitalising on this Year's performance and actively seeking
strategic avenues for growth in conjunction with our organic
initiatives.
Tim Jackson
CHAIRMAN
CEO REPORT
BUSINESS REVIEW
With the global markets becoming more active, the marketing and
sales activities have recommenced at an energetic pace. The recent
introduction of the new portable product has broadened our scope of
opportunity and bolstered the Group's ability to compete in
international tenders.
The sales team's active participation in trade shows and Counter
Explosive Ordnance (Counter EO) conventions and demonstrations has
provided market experts and thought leaders' exposure to the
benefits of the Group's latest product offerings and enhancements,
which has directly led to an improved financial performance and
sales to over 30 different countries.
We have adeptly managed the reduction in the industrial business
supporting the catalyst market (associated with the internal
combustion engine) and its transition of production to lower-cost
countries. Our strategic measures have, to date, successfully
mitigated the impact of this transition on our business
demonstrating our resilience in the face of market shifts.
OUR STRATEGY
The Group's strategy focuses on the organic growth of current
activities by expansion of the product range, and its target
territories. The Group seeks to operate in profitable, niche
security segments for which it can offer differentiated products
that it offers to the market at good margins.
In industrial screening, we will continue to mitigate the
reduction in the catalyst market related to the internal combustion
engine and its impact on the Group revenue.
The Group possesses extensive and valuable expertise in
establishing and maintaining market routes, particularly in the
field of security and Counter EO. It aims to enhance these channels
by incorporating new, in-house-developed products or by identifying
organisations that can provide innovative technologies or products
associated with the industry, thereby enriching the Group's product
portfolio. The process of identifying and analysing organisations
offering products or services aligned with the Group has already
begun.
OUTLOOK
We expect the increased market activity observed this year to be
maintained, and with heightened engagement at trade shows and
conferences, we anticipate a strengthening opportunity pipeline.
Expanding our product range is not only a safeguard for our market
position but also provides access to opportunities that were
previously unavailable with our historic product portfolio.
The Group is steadily building on its initial sales for the AXIS
range X-ray systems, with a focus on showcasing this product
prominently at upcoming exhibitions in the coming year. Sales of
this product line are anticipated to experience growth in the
upcoming financial year.
We will concentrate on our core expertise, specifically our
portable X-ray products and associated software. This strategic
focus is aimed at sustaining and expanding our market share,
countering competition in this market. Our approach involves
extending our range into markets featuring higher performance and
higher value systems.
Recognising the diminishing prominence of internal combustion
engines and the imperative shift towards achieving net-zero
emissions, we acknowledge the necessity to pinpoint alternative
sectors where our industrial inspection technology can offer a
suitable and cost-effective solution, whilst minimising the impact
of the decline in this revenue source. Our focus for success in
this sector lies in aligning with replacement technologies for
internal combustion engines which is a longer-term strategic
priority.
Image Scan has successfully navigated through the challenges
posed by this year's inflationary pressures, as well as the
disruptions to supply chains and logistical difficulties. While the
impact of supply chain disruptions is diminishing, there remains a
concern regarding the supply of certain components that are beyond
the control of the Group.
With our new organisational structure and reduced cost base, we
believe we are well-positioned to sustain the momentum of this
year's achievements. Our goal is to enhance the Group's
profitability and leverage the advantages of the Group listing to
strategically advance the business. Our focus is on executing
deliberate actions that contribute to the strategic growth of the
Group, moving beyond organic growth alone.
Vincent Deery
CHIEF EXECUTIVE OFFICER
CFO REPORT
KEY PERFORMANCE INDICATORS
2023 2022 2021 2020 2019
Order intake GBP2.9m GBP2.2m GBP2.8m GBP2.4m GBP3.9m
-------------- -------------- ---------------- ---------------- --------------
Turnover GBP3.0m GBP2.0m GBP2.9m GBP3.5m GBP2.4m
-------------- -------------- ---------------- ---------------- --------------
Gross margin 48% 54% 53% 49% 54%
-------------- -------------- ---------------- ---------------- --------------
Cash balance GBP958k GBP690k GBP1,186k GBP1,409k GBP640k
-------------- -------------- ---------------- ---------------- --------------
Inventory Balance GBP349k GBP629k GBP393k GBP451k GBP483k
-------------- -------------- ---------------- ---------------- --------------
FINANCIAL RESULTS
The Group had a much improved financial year, turning a pre-tax
loss of GBP350k into a pre-tax profit of GBP0.1m. In addition bank
balances increased by GBP268k to GBP958k (2022: GBP690k) putting us
in a good position to continue to build the Group and its product
portfolio.
As highlighted in the CEO Report, we saw renewed activity in the
security market and this led to sales growth of 50%, increasing
sales to GBP3.0m. This was driven by an increase in original
equipment sales of 70% growth, including a good contribution from
our most recently launched products. All regions saw sales growth,
with the largest growth coming from Europe/Middle East and
Africa.
A change in mix of products as well as inflationary pressures of
component cost pushed gross margin down from 54% to 48% and an
internal focus in the coming year will be on working with our
suppliers to manage our component cost base. A strong focus by the
team on the customer requirement has ensured that goods are
received by our customers in a timely manner with very high
standards of quality which has resulted in lower levels of spend on
warranty.
In the Year, the Group applied for and won a number of grants
towards our marketing and development activity, and we will
continue to explore further funding opportunities.
Alongside the restructure of the Board and Management team,
driving down costs has been a successful focus for the Year, while
enabling the Group to continue to invest in product development and
marketing.
As well as the reported participation in trade shows, the Group
has also increased the number of demonstration kits held and
upgraded the current kits allowing the team to better tailor its
demonstrations to the requirements of the customer. These
investments were made while administration expenses were reduced by
5% from GBP1.42m to GBP1.35m.
This work alongside the tremendous efforts of the sales team
have seen a return to profit of GBP0.1m (2022; loss GBP350k) which
is a testament to the whole team.
Funds from R&D tax credits were down as the Government
reduced the allowance from April 2023 but are still a good source
of cashflow for the business.
In the Year, our focus on strategic inventory management proved
highly successful, as we drove down stock levels. This achievement
reflects our commitment to operational efficiency whilst still
being able to ensure our continued ability to respond promptly to
customer requests, contributing significantly to our overall
success. Stock levels have fallen from GBP629k to GBP349k ensuring
funds are not tied up unnecessarily while delivering in agreed
timescales.
At the same time, bank balances have increased to GBP958k (2022:
GBP690k) which is a net increase of GBP268k. Funds generated from
operating activities were positive at GBP430k (2022: used GBP290k)
some of which has been invested in the new product range with a
combined spend net of grants of GBP309k (2022: GBP395k without
grants).
Delivering the turn around and achieving a pre-tax profit of
GBP0.1m could not have been achieved without the commitment and
focus of the team at Image Scan and I would add my thanks to the
whole team.
Sarah Atwell King
CHIEF FINANCIAL OFFICER
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 30 September 2023
2023 2022
Note GBP GBP
REVENUE 2,962,934 2,002,299
Cost of sales (1,527,723) (924,380)
Gross profit 1,435,211 1,077,919
Administrative expenses (1,354,652) (1,421,456)
Other Operating Income 14,934 -
OPERATING PROFIT/(LOSS) 95,493 (343,537)
Finance income 6,639 440
Interest payable and similar
charges (5,555) (6,426)
PROFIT/(LOSS) BEFORE TAXATION 96,577 (349,523)
Taxation 27,362 77,998
PROFIT /(LOSS) AND TOTAL
COMPREHENSIVE INCOME/(LOSS)
FOR THE YEAR FROM CONTINUING
OPERATIONS ATTRIBUTABLE TO
THE EQUITY OWNERS OF THE PARENT
COMPANY 2 123,939 (271,525)
Pence Pence
Earnings/(loss) per share
Basic 0.09 (0.20)
Diluted 0.09 (0.20)
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 30 September 2023
2023 2022
GBP GBP
NON-CURRENT ASSETS
Intangible assets 320,957 257,554
Property, plant and equipment 6,599 13,559
Right of use asset 153,678 193,053
481,234 464,166
CURRENT ASSETS
Inventories 348,753 628,903
Trade and other receivables 633,870 638,292
Cash and cash equivalents 958,465 689,543
1,941,088 1,956,738
TOTAL ASSETS 2,422,322 2,420,904
CURRENT LIABILITIES
Trade and other payables 712,455 793,459
Lease liability 37,625 37,625
Warranty provision 33,858 37,930
783,938 869,014
NON-CURRENT LIABILITIES
Lease liability 126,683 164,128
126,683 164,128
NET ASSETS 1,511,701 1,387,762
EQUITY
Share capital 1,368,546 1,368,546
Share premium account 8,332,910 8,332,910
Profit and loss account (8,189,755) (8,313,694)
TOTAL EQUITY ATTRIBUTABLE
TO SHAREHOLDERS 1,511,701 1,387,762
STATEMENT OF CHANGES IN EQUITY
For the year ended 30 September 2023
Share capital Share premium Profit
GBP GBP and loss Total
account GBP
GBP
As at 1 October 2021 1,363,546 8,327,910 (8,042,169) 1,649,287
Shares issued in the year 5,000 5,000 - 10,000
Loss for the year and total
comprehensive income for
the year - - (271,525) (271,525)
As at 30 September 2022 1,368,546 8,332,910 (8,313,694) 1,387,762
Shares issued in the year - - - -
Profit for the year and total
comprehensive loss for the
year - - 123,939 123,939
As at 30 September 2023 1,368,546 8,332,910 (8,189,755) 1,511,701
CONSOLIDATED CASH FLOW STATEMENT
Year ended 30 September 2023
2023 2022
GBP GBP
Cash flows from operating activities
Operating profit /(loss) 95,493 (343,537)
Adjustments for:
Amortisation of intangible assets 60,887 29,381
Depreciation 6,960 6,098
Amortisation of right of use asset 39,375 39,375
Decrease in impairment of inventories (54,349) (11,263)
Decrease/(increase) in inventories 334,499 (224,566)
(Increase)/decrease in trade and
other receivables (40,485) 132,441
(Decrease)/increase in trade and
other payables (81,004) 41,179
Decrease in warranty provisions (4,072) (7,710)
Cash generated from / (used in)
operating activities 357,304 (338,602)
Corporation tax received 72,269 48,114
429,573 (290,488)
Cash flows from investing activities
Interest received 6,639 440
Purchase of intangibles (124,290) (177,345)
Purchase of property, plant and equipment - (1,862)
Net cash used in investing activities (117,651) (178,767)
CASH FLOWS FROM FINANCING ACTIVITIES
Lease payments (capital and interest) (43,000) (37,625)
Proceeds from issue of share capital - 10,000
Net cash used in financing activities (43,000) (27,625)
Net INCREASE/(DECREASE) in cash and cash equivalents 268,922 (496,880)
Cash and cash equivalents at beginning
of year 689,543 1,186,423
Cash and cash equivalents at end
of year 958,465 689,543
Notes to the preliminary statement
1. Basis of preparation
While the financial information included in this annual
financial results announcement has been prepared in accordance with
the recognition and measurement principles of UK adopted
international accounting standards, this announcement does not
contain sufficient information to comply therewith.
The financial information set out above does not constitute the
Group's statutory accounts for the years ended 30 September 2023 or
30 September 2022 but is derived from those accounts. Statutory
accounts for 2022 have been delivered to the Registrar of
Companies, and those for 2023 will be delivered following the
Company's Annual General Meeting. The auditors have reported on
those accounts; their reports were unqualified and did not contain
statements under Section 498 of the Companies Act 2006.
2. Earnings per share
The diluted earnings 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. 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. Where the
Company is reporting losses, the impact of share options is
considered anti-dilutive. Where the Company is reporting profits,
share options could potentially dilute basic earnings per share in
the future but are only included in the calculation of diluted
earnings per share when the exercise price of the share options is
below the average share price in the year.
2023 2022
GBP GBP
Profit/(loss) for the year 123,939 (271,525)
Weighted average number of ordinary
shares in issue 136,854,577 136,753,207
Number of diluted shares 136,854,577 136.753.207
Basic profit/(loss) per share 0.09p (0.20)p
Diluted profit/(loss) per
share 0.09p (0.20)p
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