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Image Scan Holdings – full-year results emphasise impressive growth, so why the share price decline?

By Steve Moore | Wednesday 6 December 2017


Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.


An 8:11am (why?) announcement of results for its year ended 30th September 2017 from X-ray screening systems company Image Scan Holdings (IGE) - and the shares currently a further more than 10% lower towards 8p…

The results emphasise “revenue for the year was £5.0m (2016: £3.3m) and the business generated a pre-tax profit of £477k (2016: £105k). The company closed the year with a record orderbook of £2.1m (2016: £1.7m) and a positive cash balance of £1.3m (2016: £1.1m)”, as well as that “the company has an encouraging sales pipeline” - so why the share price decline?

It is also stated “while the company does receive valuable service and support revenue, this is its only recurring revenue”, “we are focussed on diversifying our customer base, as in both our security and industrial businesses, a significant portion of the revenue is currently dependent on a small group of customers” and “over the next few years we intend to reinvest any profit made into the business and do not anticipate paying a dividend”. These mean elevated investment risk, but should not be of great surprise.

Something else though stated on the orderbook is that “we need to finalise the extended delivery dates on a proportion of those orders”. This creates current year doubt - and likely sparking the noted market response.

The current share price gives a circa £11 million market cap – suggesting interesting growth value on positive trading continuing. However, the noted current caution sees me presently only continue to monitor from the watchlist.


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