Image Scan Holdings Regulatory News (IGE)

13 Dec 2005 07:00

13th December 2005 IMAGE SCAN HOLDINGS PLC ("Image Scan" or the "Company") PRELIMINARY RESULTS FOR THE YEAR ENDED 30 SEPTEMBER 2005 Image Scan Holdings (AIM:IGE), a leading provider of 3D and multi-view, X-rayimaging technologies for the security and industrial inspection markets, todayannounces preliminary results for the year ended 30 September 2005.Key Points * Sales of ‚£843,000 up by 98% (2004: ‚£425,000); * Gross profit of ‚£399,000 more than doubled (2004: ‚£186,000); * Group loss before tax of ‚£722,000 substantially reduced (2004: ‚£1,255,000); * Basic and diluted loss per ordinary share at 2.7p (2003: 6.3p); * The Board and sales management teams have been strengthened; * Repeat sales such as those to Johnson Matthey accounting for the majority of turnover; * Renewed relationship with Rapiscan in October 2005 giving rise to early revenue of ‚£345,000; * A new explosives ordnance security product TPXi was launched in November 2005; * Year end order book of ‚£326,000 (2004: ‚£nil), rising to ‚£684,000 by the end of October 2005. Peter Woods, Chairman of Image Scan Holdings Plc, commented:"During the year we concentrated on broadening our industrial customer base andare currently in discussion with over twenty companies. We launched TPXi, ournew security product targeted at explosives and ordnance detection, in November2005 at the Milipol exhibition in Paris. The market reaction at Milipol andsince the launch has been extremely positive. We believe the significantachievements of 2005 will continue into 2006."For further information:Nicholas Fox (Chief Executive) 01664 503 600 Peter Woods (Chairman) Toby Hall (GTH Communications) 020 7153 8039 Howard Drummon (Keith Bayley Rogers Ltd) 020 7871 2232 CHAIRMAN'S STATEMENTINTRODUCTIONThe year to 30th September 2005 was one of substantial progress. During theyear the management team has been strengthened, we have seen a sharp growth inindustrial sales, the relationship with Rapiscan has been revitalised, and wehave completed the development of and launched our portable security productTPXi.FINANCIAL RESULTSI am pleased to report that our turnover was almost double the prior year at ‚£843,000 (2004: ‚£425,000) with the industrial sector accounting for 82% andsecurity for 18%.Administrative costs in 2005 have been reduced on a like-for-like basis by 13%compared with 2004 and were ‚£1,116,000 (2004: ‚£1,448,000, which included thewrite-off of certain patent costs amounting to ‚£162,000). The benefits of thesesavings will continue into future years. R&D expenditure increased by 8% to ‚£128,000.The pre-tax loss for the year was significantly reduced to ‚£722,000 (2004: ‚£1,255,000), with substantial improvement from a loss of ‚£542,000 in the firsthalf to one of ‚£180,000 in the second half of the year.Following the successful placing and open offer, which raised ‚£932,000 net ofcosts, we have reduced loan funding by ‚£237,000 and increased cash balances to‚£154,000 (2004 ‚£50,000).SIGNIFICANT EVENTSThe most significant operational events in the year were: * Following a major review of world-wide sales and marketing strategy, initiated after the April 2005 fund-raising, we have identified and clarified those market opportunities with the greatest potential. We have appointed an Industrial Products Sales Manager, a Marketing Manager and a Project Manager, and discussions are well advanced for the appointment of two world-wide distributors, to take full advantage of these opportunities. * Repeat sales, such as those announced to Johnson Matthey and other USA clients in the automotive market, accounted for the majority of our turnover and confirmed the validity of our 2D/3D technology in the industrial inspection sector. Sales of stand-alone batch inspection equipment systems using Image Scan X-Line x-ray camera technology and multi-station industrial inspection systems such as the MDXi product range, have progressed well. * During the year we concentrated on broadening our industrial customer base and are currently in discussion with over twenty companies with sound industrial sector potential. These present good prospects for order placement in the automotive, pharmaceutical and medical markets over the medium term. * The resolution of the Rapiscan situation was an important step-change for the Company, clearing away a significant structural barrier to the development of sales in the aviation security sector. The renewed relationship has led to early additional sales revenue and improved cash flow, as well as strengthened 2D & 3D opportunities for growth with Rapiscan and greater flexibility in developing wider market partnerships. * We launched TPXi, our new security product targeted at explosives and ordnance detection, in November 2005 at the Milipol exhibition in Paris. In terms of 2D design technology, wireless configuration, ease of use and price, the TPXi clearly makes a valuable contribution to today's market for fully portable scanning detectors in the security, customs, and non-destructive testing applications markets. The market reaction at Milipol and since the launch has been extremely positive and we anticipate strong sales growth. The market size for this sector is estimated to reach $1.2 billion by 2009. OutlookWe believe the significant achievements of 2005 will continue into 2006. Theyear ended with a healthy order book of ‚£326,000 which increased to ‚£684,000 bythe end of October 2005.Cash balances have increased since the year end and revenue is growingsteadily.Other MattersFinally, the commitment of all members of staff at Image Scan to meet theCompany needs over the last year has been extraordinarily positive and I wouldlike to take this opportunity to thank everyone for this response, and fortheir persistence, ingenuity, and hard work.P J WoodsChairman12 December 2005GROUP PROFIT AND LOSS ACCOUNTYear ended September 2005 Note 2005 2004 ‚£ ‚£ TURNOVER 843,089 424,620 Cost of sales (444,252) (239,100) Gross profit 398,837 185,520 Administrative expenses (1,116,370) (1,448,125)(including exceptional charge of ‚£nil (2004:‚£161,995) ) OPERATING LOSS (717,533) (1,262,605) Interest receivable 5,580 12,513 Interest payable (10,446) (4,877) LOSS ON ORDINARY ACTIVITIES (722,399) (1,254,969)BEFORE TAXATION Taxation 30,289 44,486 RETAINED LOSS FOR THE (692,110) (1,210,483)FINANCIAL YEAR Retained reserves brought (4,001,126) (2,790,643)forward Revenue reserves carried (4,693,236) (4,001,126)forward Pence Pence Earnings per share (i) Basic and diluted earnings (2.7) (6.3)per share NOTE:(i) EARNINGS PER SHARE 2005 2004 ‚£ ‚£ Loss for the year 692,110 1,210,483 Weighted average number of ordinary 25,931,619 19,073,580shares in issue Pence Pence Basic and diluted earnings per (2.7) (6.3)share FRS14 requires presentation of diluted earnings per share (EPS) when a companycould be called upon to issue shares that would decrease net profit or increasenet 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-moneyoptions. Since it seems inappropriate to assume that option holders would actirrationally and there are no other diluting future share issues, diluted EPSequals basic EPS.CONSOLIDATED BALANCE SHEETAs at 30 September 2005 Note 2005 2004 ‚£ ‚£ FIXED ASSETS Tangible fixed assets 155,760 191,579 Intangible fixed assets 17,913 19,594 173,673 211,173 CURRENT ASSETS Stock and work in progress 94,645 44,449 Debtors 341,175 146,189 Cash at bank and in hand 153,857 50,027 589,677 240,665 CREDITORS: amounts falling (427,356) (343,722) due within one year NET CURRENT ASSETS/ 162,321 (103,057) (LIABILITIES) TOTAL ASSETS LESS CURRENT 335,994 108,116 LIABILITIES CREDITORS: amounts falling - (17,307) due after more than one year Provisions for liabilities (20,500) (15,700) and charges 315,494 75,109 CAPITAL AND RESERVES Called up share capital 348,681 193,356 Share premium account 4,660,049 3,882,879 Profit and loss account (4,693,236) (4,001,126) EQUITY SHAREHOLDERS' FUNDS 315,494 75,109 CONSOLIDATED CASH FLOW STATEMENTYear ended 30 September 2005 Note 2005 2004 ‚£ ‚£ Net cash outflow from (i) (738,032) (1,060,615)operating activities Returns on investments and servicing of finance Interest received 5,580 12,513 Interest payable (10,446) (4,877) (4,866) 7,636 Taxation Corporation tax recovered 20,564 54,431 Capital expenditure and financial investment Purchase of tangible fixed (70,764) (90,421) assets Receipts from sales of 1,796 - tangible fixed assets Purchase of intangible fixed - (20,182) assets (68,968) (110,603) Net cash outflow (791,302) (1,109,151) Financing Issue of ordinary share 932,495 986,885 capital Bank loans repaid (37,363) (37,362) 895,132 949,523 Increase/(decrease) in cash in (ii), 103,830 (159,628) the year (iii) NOTES TO THE CASH FLOW STATEMENTYear ended 30 September 2005i) RECONCILIATION OF OPERATING CASH FLOWS 2005 2004 ‚£ ‚£ Operating loss (717,533) (1,262,605) Depreciation 104,787 121,101 Amounts written off intangible fixed 1,681 178,898 assets (Increase)/decrease in stock (50,196) (17,492) (Increase)/decrease in debtors (excluding corporation tax (185,262) (12,686) recoverable) Increase/(decrease) in creditors 108,491 (67,831) Net cash outflow from operating (738,032) (1,060,615)activities NOTES TO THE CASH FLOW STATEMENTYear ended 30 September 2005 ii) ANALYSIS OF NET FUNDS 2004 2005 Other 2005 ‚£ Cash non-cash ‚£ flow changes ‚£ ‚£ Cash at bank and in hand 50,027 103,830 - 153,857 Debt due within one year (37,363) 37,363 (17,307) (17,307) Debt due after one year (17,307) - 17,307 - (4,643) 141,193 - 136,550 iii) RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET FUNDS/(DEBT) 2005 2004 ‚£ ‚£ Increase/(decrease) in cash in the 103,830 (159,628)period Cash outflow from decrease in debt 37,363 37,362 Change in net funds/(debt) resulting 141,193 (122,266)from cash flows Net (debt)/funds at 1 October (4,643) 117,623 Net funds/(debt) at 30 September 136,550 (4,643) NOTES TO THE ANNOUNCEMENTYear ended 30 September 2005 1. The financial information set out above does not constitute the Company's statutory accounts for the years ended 30 September 2005 and 30 September 2004 but is derived from those accounts. Statutory accounts for 2004 have been delivered to the Registrar of Companies, and those for 2005 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 237(2) or (3) of the Companies Act 1985. The financial information has been prepared in accordance with the accounting policies adopted for the 2004 accounts. 2. It is intended that the financial statements for the year ended 30 September 2005 will be posted to shareholders in January 2006 and will also be available thereafter at the registered office, Pera Innovation Park, Nottingham Road, Melton Mowbray, Leicestershire, LE13 0PB. 3. The Annual General Meeting will be held on 23 March 2006, at the offices of DMH Stallard, Centurion House, 37 Jewry Street, London, EC3N 2ER. IMAGE SCAN HOLDINGS PLC