IndigoVision is a picture of health after shares surge on forecasts

The trading update prompted a 34 per cent rise in the digital CCTV maker’s market value, although the nature of smaller quoted companies means the trading of a relatively low number of shares can have a significant impact on the price.

The announcement came less than a month after the firm, whose security systems are installed in airports, casinos and other sites in 84 countries, issued a positive AGM statement which said it had made an “encouraging start to the current year”.

IndigoVision said yesterday that the good progress had continued and described the operating result for the first four months of the current year as “excellent”.

“In particular, gross margins have recovered sharply from the levels experienced in the second half of last year. In addition, overheads for the year to date are materially below the corresponding period last year,” said chairman Hamish Grossart.

The company said the combination of higher gross margins and lower costs in the year to date had meant an operating performance significantly higher than the corresponding period last year and “materially ahead” of the same period in any earlier year.

But it did stress that given the firm’s short forward visibility on orders, the strong start did “not necessarily mean that the group will return to record levels of performance for the year as a whole. It is clear, however, that the poor performance reported for last year’s second half has been quickly reversed by strong management focus on margins and costs”.

In the second half of last year the group, led by chief executive Oliver Vellacott, had incurred losses after a slow0down in growth particularly in North America, Europe, the Middle East and Africa.

IndigoVision’s house broker, Brewin Dolphin, currently has full-year estimates for the company to make £600,000 in pre-tax profits on sales of £26 million. It did not raise its forecast following the AGM statement – citing the uncertainty in Europe and the potential impact on capital spending – but said that it felt the firm was well placed to beat expectations. Following yesterday’s update it is expected the forecasts will be raised early next week.

Shares closed up 67.5p at 265p, valuing the company at just under £20m.