LONDON (ShareCast) - (ShareCast News) - Specialist x-ray screening systems supplier Image Scan issued a pre-close trading update ahead of its results for the year to 30 September on Monday, reporting a more-than-50% increase in sales to £5.0m, from £3.3m, driven primarily by a 65% increase in the number of portable X-ray systems sold to customers around the world.
The AIM-traded company said it made "strong progress" in penetrating new markets in the Indian subcontinent, achieved primarily with the entry level ThreatScan-Lite system.

Its board said that vindicated its product strategy, developing different system configurations to match the price and performance requirements of individual regional markets and customer types.

Industrial inspection X-ray units for inspection of catalytic converters in the automotive industry were delivered to customers in the UK, Eastern Europe and South America during the year.

Image Scan said an "important customer" started to deploy the system into its global manufacturing centres after extensive trials at its European base.

Gross margins decreased slightly to 39% from 42%, which the board said reflected a change in product mix and selective use of "aggressive" pricing to break into new markets.

Overheads increased to £1.5m from £1.3m, which included "substantial" budgeted expenditure on both research and development, and sales and marketing.

That reportedly represented a relative decrease to 30% of sales from 39% in 2016.

Subject to any audit adjustments, profit before tax increased to almost 10% of sales at approximately £0.48m from £0.11m.

Image Scan said its research and development team successfully developed and integrated upgrades into the ThreatScan-LS1 system during the year and the smaller ThreatScan-LS3 was launched after an accelerated development programme.

The decision to prioritise the LS3 development was said to have been driven by market demand, which resulted in a delay in the launch of the Precision Linescan Detector.

However, a second prototype of the PLD has been built, is being tested and will be exhibited for the first time at the Milipol security show in Paris in November, the board confirmed.

It added that, having secured a record level of orders during the year totaling £5.4m, up from £4.3m, Image Scan had started the 2018 financial year with an order book of £2.1m, compared to £1.7m at the start of the 2017 year.

The year also ended with a positive cash balance of £1.2m, broadly in line with the £1.1m seen at the end of the 2016 year.

"To achieve a 50% growth in sales and a five-fold increases in profit is an achievement the directors and staff are exceptionally proud of," said chairman and chief executive Bill Mawer.

"We have successfully launched important new products and penetrated valuable new markets."

Mawer said he was also pleased with how the firm's operations team and supply chain handled wide variations in its manufacturing activity though the year.

"We start the new year with a good order book, new products and an ambitious team, who are looking to continue the strong momentum of the company."

Image Scan said it expected to announce its preliminary results in early December.

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