IndigoVision slides on sales warning

Published on Thursday 7 August 2008 22:00

INDIGOVISION shares slid to their lowest price in almost two years yesterday after the company warned of slowing sales growth in the second half.

While reassuring the market that it would still meet profit forecasts for the year to 31 July, the digital CCTV company said revenue would miss forecasts published by its house broker by about 8 per cent.

IndigoVision has shown strong growth in recent years, winning contracts to supply security surveillance across the world, from casinos in the US to tourist attractions such as Edinburgh Castle.

The Aim-listed company said that because of "slower spending" by corporate clients, revenue for the year was expected to be 18.4 million.

The figure is a 37 per cent increase over the previous year, but falls below the 20m forecast by stockbrokers Brewin Dolphin, and means sales in the second half were less than 1 per cent better than those of the first half.

Shares in the Edinburgh-based company tumbled 19 per cent yesterday.

Chief financial officer Marcus Kneen said that despite slowing growth in sales, the company had maintained it margins, meaning it would still meet forecasts for a pre-tax profit of 2m, almost triple the 700,000 profit reported last year.

"To do that in the current market, when you're not an oil and gas company, is, I think, a pretty good performance," Kneen said.

Two of IndigoVision's most important sectors, banking and casinos, had been hit by a drop in confidence and falling consumer spending, but despite taking longer to secure the deals, they are still being made, Kneen added.

"The purchases are alive, they are still happening. They're just taking longer to come through," he said.

Kneen said the timetable for a number of large deals the company had been hoping to complete towards the end of the financial year had slipped, causing the revenue targets to be missed.

Despite fears over falls in consumer spending, Kneen said he believed there was still "good growth to be had" as the CCTV market matures and clients upgrade systems from analog to digital.

"You have to plan cautiously, but I think the sector in which we sit should be reasonably insulated," he said.

He maintained that the conversion from analog to digital systems was "still happening", adding: "The market is so big that even if there is a slowdown, the conversion should be such that it would compensate for any general economic slowdown".

Kneen said uncertainty in the wider job market meant the company was currently hiring sales people "who are probably better quality than we have ever been able, because they're available".

Shares in IndigoVision closed down 110p, at 465p, valuing the company at 33.3m.