IndigoVision shares surge ‘shows shake-up at the top was needed’

SHARES in technology group IndigoVision, which was at the centre of a bitter boardroom battle less than a year ago when its founder was ousted, soared to their highest level in almost 18 months yesterday after posting bumper profits.

Chairman Hamish Grossart, who replaced former chief executive Oliver Vellacott with finance director Marcus Kneen in December, said that the progress made since had highlighted there had been “much that needed adjusting” at the Edinburgh-based firm.

Grossart said a “tremendous amount” had already been achieved under Kneen’s “energetic and effective leadership”. He added: “These are excellent

results from a business with the potential to be much larger.

“Although change is not always easy, there is now a visible spring in the step of management worldwide as they see improvements being made that should unlock IndigoVision’s potential.”

The group – which makes CCTV systems for airports, casinos, ports and other sites – posted an operating profit of £2.7 million for the year to 31 July, an increase of 123 per cent compared with the previous year as revenues grew

5 per cent to £30.3m. Cash balances rose to £6m from £5.1m a year earlier.

The board proposed a final dividend of 5p a share, which would take the total pay-out for the year to 10p – an increase of 33 per cent year-on-year.

The board has also recommended a special dividend of 70p – a move Kneen said had been well-received by the company’s major shareholders.

Kneen told The Scotsman: “From my perspective, the dividend is a statement of confidence. We have good working capital, good cash balances and unused banking facilities and we felt this was the right thing to do.”

He said a number of fundamental changes had been introduced since he had taken the reins, including providing more flexibility for customers to use existing cameras with IndigoVision systems rather than having to buy complete packages.

“We are not trying to do everything ourselves and that is helping us close many deals,” said Kneen.

The company has also increased its range of cameras to include lower-priced equipment than previously available and a number of key management appointments have been made across the company’s global operations.

“I’ve spent a lot of time making sure the chemistry of the people and their teams is right as that is absolutely key to this business,” said Kneen.

Grossart said that double-digit growth in sales and order intake has continued into the first seven weeks of the current year.

“At this early stage there is every

reason to believe that the current year will be a good one,” he added.

Vellacott was ousted in December, with Kneen taking over his role. The boardroom coup sparked a tentative takeover approach by Vellacott and Scottish Equity Partners, which was believed to have been at about 400p a share and would have valued the company at about £30m.

Dot.com technology bubble survivor Vellacott – who founded the business in 1994 – still holds a 23 per cent stake in the company and will receive more than £1.2m from the special dividend pay-out.

Shares in the company closed up 57.5p, or 16.3 per cent, last night at 410p.

17 June 2011 - Shock profit warning wipes third off share price

9 December 2011 - Founder Oliver Vellacott ousted in boardroom coup, Marcus Kneen appointed chief executive

28 December 2011 - Vellacott withdraws bid to return to the company

15 March 2012 - Record half-year profits announced

27 September 2012 - Annual operating profits up by 123 per cent