Image Scan Holdings Regulatory News (IGE)

27 Jan 2005 17:12

Image Scan Holdings PLC27 January 2005 For Immediate Release 27 January 2005 IMAGE SCAN HOLDINGS PLC ("Image Scan" or the "Company") PRELIMINARY RESULTS FOR THE YEAR ENDED 30 SEPTEMBER 2004 Image Scan, a leading provider of 3D and multi-view, X-ray imaging technologiesfor the security and industrial inspection markets announces preliminary resultsfor the year ended 30 September 2004. Key Points • Commercial sales £425,000 (2003: £351,000, plus £159,000 of funded research); • Gross profit £186,000 (2003: £121,000) as margin increases from 24% to 44%; • Group loss after tax of £1,210,000 (2003: £788,000); • Basic and diluted loss per ordinary share at 6.3p (2003: 4.9p); • The target of establishing two "blue chip" reference sites for industrial X-ray inspection systems has been met with one at GE Healthcare Amersham and the other at Johnson Matthey; • Formal launch and initial commercial sales of the Rapiscan 3D20 product which contains the Company's market leading 3D X-ray baggage screening system; • Largest single order - in excess of £600,000 received by the Company in December 2004. For further information: Nick Fox, Chief Executive Image Scan Holdings plc 01664 503 600Richard Darby/Suzanne Brocks Buchanan Communications 020 7466 5000 Chairman's Statement INTRODUCTION I am pleased to present the results of Image Scan Holdings plc for the yearended 30 September 2004 and the Board's view of the Company's progress andprospects. FINANCIAL RESULTS AND ACCOUNTING POLICY Commercial sales in the year were £425,000 (2003: £351,000). In 2003 there wereadditional sales of £159,000 relating to one-off funded research projects. Thechange in emphasis from a mixture of commercial and research contracts toentirely commercial sales has resulted in the recovery of the profit margin to44% (2003: 24%). This gave an improvement in gross profit from £121,000 to£186,000. The overheads of £1,448,000 (2003: £961,000) included £162,000 written off thevalue of the patents licensed from The Nottingham Trent University. TheDirectors felt that the Company's technology had progressed beyond thoseoriginal patents such that significant future sales arising from their use wasnot anticipated. Other 'one-off' costs included £60,000 spent on a cost benefitanalysis and £60,000 incurred in professional fees relating to abortednegotiations for a strategic partner to take a stake in the Company. Since theyear-end the Directors have taken action to reduce overheads. Overheads included research and development expenditure of £118,000 (2003:£150,000), which is expensed as incurred in accordance with the group'saccounting policy. The lower expenditure in 2004 reflects the move towardscommercial sales, whilst still maintaining a research focus on the nextgeneration of imaging techniques. The loss for the year after R&D tax credits amounts to £1,210,000 (2003:£788,000), being a loss per share of 6.3p (2003: 4.9p). In accordance with thecurrent policy there is no dividend. During the year the Company invested £20,000 in a licence for a castellateddetector patent which represents a key component of the current product range.Other capital expenditure included £65,000 for two demonstration units; one foruse at exhibitions and the other a prototype for a large area detector forexplosives and ordnance detection. OUTLOOK Although the launch and subsequent sales of the Rapiscan 3D20 have been slowerthan anticipated, we are now beginning to see the first significant salesresulting from the Sales and Marketing Agreement with Rapiscan Security ProductsLimited (Rapiscan) with the latest order of £90,000 for 6 cameras being receivedin October 2004. This order brings the total number of camera units sold toRapiscan to 16 out of the agreed 150 units to be ordered by February 2006 underthe Sales and Marketing Agreement. Following the launch of the industrial products into the market in October 2003,we have been delighted to have met our target of establishing two key referencesites during 2004. These sites, at GE Healthcare Amersham and Johnson Matthey,both resulted from an intense evaluation of our technology by the customer andadd significantly to the credibility of our systems. The calendar year ended on a high note, with turnover in the first quartershowing a significant improvement at £102,000 compared to £13,000 for the sameperiod last year. Furthermore the Company's largest single order to date of£600,000 was received in December 2004 as a follow-on order from our firstsystem delivered to Johnson Matthey. Against this background the Board is seeking to raise additional capital by wayof a rights issue to provide sufficient resources to take advantage of theseemerging commercial opportunities and to continue operations for the foreseeablefuture. For further details, refer to note 2 to this announcement. OTHER MATTERS As a final point I should like to offer my personal thanks and acknowledgementto the unwavering loyalty and dedication of the staff on a day-to-day basis. Itis their skill and expertise that has put this Company at the forefront of itstechnological sectors. Ian JohnsonChairman IMAGE SCAN HOLDINGS PLC GROUP PROFIT AND LOSS ACCOUNTYear ended September 2004 Note Unaudited Audited 2004 2003 £ £ TURNOVER 424,620 509,750Cost of sales (239,100) (389,016) Gross profit 185,520 120,734 Administrative expenses (1,448,125) (960,507) OPERATING LOSS (1,262,605) (839,773) Interest receivable 12,513 8,219 Interest payable (4,877) (7,164) LOSS ON ORDINARY ACTIVITIES BEFORE TAXATION (1,254,969) (838,718) Taxation 44,486 50,419 LOSS ON ORDINARY ACTIVITIES ATTRIBUTABLE TO SHAREHOLDERS (1,210,483) (788,299)Dividends - - RETAINED LOSS FOR THE FINANCIAL YEAR (1,210,483) (788,299)Retained reserves brought forward (2,790,643) (2,002,344) Revenue reserves carried forward (4,001,126) (2,790,643) Pence PenceEarnings per shareBasic and diluted loss per share (i) 6.3 4.9 NOTE: (i) EARNINGS PER SHARE Unaudited Audited 2004 2003 £ £ Loss for the year 1,210,483 788,299 Weighted average number of ordinary shares in 19,073,580 16,250,203issue Basic and diluted earnings per share (6.3) (4.9) 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. IMAGE SCAN HOLDINGS PLC CONSOLIDATED BALANCE SHEETAs at 30 September 2004 Note Unaudited Audited 2004 2003 £ £FIXED ASSETSTangible fixed assets 191,579 222,259Intangible fixed assets 19,594 178,310 211,173 400,569 CURRENT ASSETSStock and work in progress 44,449 26,957Debtors 146,189 127,717Cash at bank and in hand 50,027 209,655 240,665 364,329 CREDITORS: amounts falling due within one year (343,722) (427,251) NET CURRENT (LIABILITIES) (103,057) (62,922) TOTAL ASSETS LESS CURRENT LIABILITIES 108,116 337,647 CREDITORS: amounts falling due after more than oneyear (17,307) (54,670) Provisions for liabilities and charges (15,700) - 75,109 282,977 CAPITAL AND RESERVESCalled up share capital 193,356 162,502Share premium account 3,882,879 2,911,118Profit and loss account (4,001,126) (2,790,643) 75,109 282,977 IMAGE SCAN HOLDINGS PLC CONSOLIDATED CASH FLOW STATEMENTYear ended 30 September 2004 Note Unaudited Audited 2004 2003 £ £ Net cash outflow from operating activities (i) (1,060,615) (237,723) Returns on investments and servicing of financeInterest received 12,513 8,219Interest payable (4,877) (7,164) 7,636 1,055TaxationCorporation tax recovered 54,431 97,389 Capital expenditure and financial investmentPurchase of tangible fixed assets (90,421) (189,360)Purchase of intangible fixed assets (20,182) (3,655) (110,603) (193,015) Net cash outflow before management of liquid resources (1,109,151) (332,294) Management of liquid resourcesWithdrawal of short term deposits - 42,924 FinancingIssue of ordinary share capital 986,885 -Bank loans repaid (37,362) (36,172) 949,523 (36,172) Decrease in cash in the year (ii), (iii) (159,628) (325,542) NOTES TO THE CASH FLOW STATEMENTYear ended 30 September 2004 i) RECONCILIATION OF OPERATING CASH FLOWS Unaudited Audited 2004 2003 £ £ Operating loss (1,262,605) (839,773)Depreciation 121,101 76,151Amounts written off intangible fixed assets 178,898 17,805(Increase)/decrease in stock (17,492) 42,974(Increase)/decrease in debtors (excluding corporation tax (12,686) 195,533recoverable)(Decrease)/increase in creditors (67,831) 269,587 Net cash outflow from operating activities (1,060,615) (237,723) IMAGE SCAN HOLDINGS PLC NOTES TO THE CASH FLOW STATEMENTYear ended 30 September 2004 ii) ANALYSIS OF NET FUNDS 2004 Other Audited Cash non-cash Unaudited 2003 flow charges 2004 £ £ £ £ Cash at bank and in hand 209,655 (159,628) 50,027 Debt due within one year (37,363) 37,362 (37,362) (37,363)Debt due after one year (54,669) 37,362 (17,307) 117,623 (122,266) - (4,643) iii) RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET (DEBT)/FUNDS Unaudited Audited 2004 2003 £ £ Decrease in cash in the period (159,628) (325,542)Cash outflow from decrease in debt 37,362 36,172Cash outflow from decrease in liquid resources - (42,924) Change in net debt resulting from cash flows (122,266) (332,294) Net funds at 1 October 117,623 449,917 Net (debt)/funds at 30 September (4,643) 117,623 IMAGE SCAN HOLDINGS PLC NOTES TO THE ANNOUNCEMENTYear ended 30 September 2004 1. The financial information set out above does not constitute the Company's statutory accounts for the years ended 30 September 2004 or 2003. The financial information for the year ended 30 September 2003 is derived from the statutory accounts for that year which have been delivered to the Registrar of Companies. The auditors have reported on those accounts; their report was unqualified and did not contain a statement under section 237(2) or (3) of the Companies Act 1985. The statutory accounts for the year ended 30 September 2004 will be finalised on the basis of the financial information presented by the directors in this preliminary announcement and will be delivered to the Registrar of Companies following the Company's Annual General Meeting. The financial information has been prepared in accordance with the accounting policies adopted for the 2003 accounts. 2. On 15th November 2004 the Company issued £200,000 9% secured loan stock repayable at par on 14th November 2005 or on the date of a debt or equity fundraising by the Company which raises not less than £1 million gross, whichever is earlier. £200,000 of warrants were issued with the loan stock at a subscription price of the lower of 10p per share or the price at which the Company next issues new ordinary shares in an open offer, placing or rights issue to ordinary shareholders of the Company. The Company hopes to shortly announce a rights issue to raise £1 million of additional working capital. Negotiations are underway by the brokers to secure underwriters to the issue. Based on a successful rights issue the Board believes the Company will have sufficient resources to continue in operational existence for the foreseeable future and therefore have prepared this announcement on a going-concern basis. 3. It is intended that the financial statements for the year ended 30 September 2004 will be posted to shareholders in March 2005 and will also be available thereafter at the registered office, Pera Innovation Park, Nottingham Road, Melton Mowbray, Leicestershire, LE13 0PB. 4. The Annual General Meeting will be held in April 2005, at the registered office, Pera Innovation Park, Nottingham Road, Melton Mowbray, Leicestershire, LE13 0PB. This information is provided by RNS The company news service from the London Stock Exchange