Growth Company Investor flagged up Image Scan’s speculative attractions in November, and with chief executive Nicholas Fox predicting a move into profits this year, we retain our cautiously optimistic stance.

Annual numbers to last September from the self-styled leader in real-time 3D and 2D x-ray imaging demonstrated burgeoning sales, culled losses and rising margins.

On 69% top-line growth to over £1.4m, building on a strong sales assault in 2005, losses were pared from £722,000 to £508,000, and gross margins grew to 50% (47%), benefiting from contracts coming into play in the second half. Auguring well for the future, Fox also flagged a five-fold year-end order book increase to £1.7m – ‘an all time peak’ – and a ‘stronger than ever’ sales pipeline.

The company’s industrial inspection systems are gaining traction in the market, with Johnson Matthey a satisfied repeat customer and a £1m deal clinched with British Nuclear Group. In the heightened security sector, where products include 3D bag inspection systems for airport security and portable bomb/suspect package detection systems supplied to the British Transport Police. A favourable report from US aviation security sector regulator and main purchasing authority the TSA should boost the sales effort. That missive stated that Image Scan’s 3D x-ray baggage inspection system is far more effective than traditional 2D systems. Threat detection probability goes up by more than 10% when 3D is used, and the endorsement is a major feather in the Image Scan cap.

Bolder investors could profit on Image Scan, which expects to turn a profit this year and offers a twin investment spin on industry regulation and the worldwide demand for advance x-ray baggage scanning. Speculative buy.

Image Scan Holdings	AIM	£1.39m	2.50p	0.00p
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