IndigoVision shares up on divi spike

SHARES in video security systems specialist IndigoVision zoomed ahead by more than 15 per cent yesterday after the Edinburgh-based firm boosted its dividend by 50 per cent.

The digital CCTV system maker recommended hiking its shareholder payout from 5p to 7.5p to "reflect the strong balance sheet and a more encouraging start to the current year".

Chief financial officer Marcus Kneen told The Scotsman that contracts with banks in the United States had picked up in the past eight weeks and that the company had signed a fourth deal with a casino in Las Vegas.

News of the rising dividend came as the group posted a 6 per cent fall in pre-tax profit for the year to 31 July to 3 million.

The drop followed narrowing of the gross margin from 60 per cent to 64 per cent caused by a change in the sales mix and "teething problems" with new equipment, as highlighted in the firm's pre-close statement on 10 August.

Turnover rose by 6 per cent to 28m, in line with guidance in the pre-close update.

The rise in revenue came from emerging markets, with Asia Pacific up 24 per cent and Europe, the Middle East and Africa rising by 8 per cent. A 4 per cent fall for the Americas masked a "strong" performance from Latin America, the firm said.

But Kneen emphasised that the firm had increased its research and product development spending by 32 per cent to 3m, funded through cutting back on operational costs.

He said the investment in engineering came as part of IndigoVision's move away from being a niche player to making its own digital security cameras, complete with its integrated chips that compress signals, allowing high-quality digital images to be used across a network.

Kneen said: "Over the past seven years, we've grown turnover from 1m to 28m and now have our own sales people in 24 countries, with products being shipped to 82 nations.

"We're cautiously optimistic having had a good start to this financial year and we're seeing our markets growing strongly."

Greig Aitken, an analyst at house broker Brewin Dolphin, said: "Weakness in the US casino market was a drag against financial year 2009 performance but prisons, police and transport all performed well."

Shares closed up 55p or 15.7 per cent at 405p.

Chief executive Oliver Vellacott founded IndigoVision in 1994. He had earlier studied piano at the Guildhall School of Music before changing careers and reading software engineering at Imperial College, London and electrical engineering at Edinburgh University.