Good morning and Happy Friday!

Thanks for the suggestions, I won't be able to cover all of them but will see how far I get. It's a surprisingly busy end to the week.



Indigovision (LON:IND)

  • Share price: 116p (-29%)
  • No. of shares: 7.6 million
  • Market cap: £9 million

Trading Update and Board Changes

This falls below our cut-off minimum market cap as sadly it is another profit warning for this Scottish manufacturer of security systems (CCTV).

The stock has seen many false dawns over the years and confirms today that it will make an operating loss for 2017 with the following expectations:

  • Revenues in the region of $41-$43 million (GN note: this compares to $46 million in 2016, $47 million in 2015). The Middle East "has experienced more difficult trading conditions, with unforeseen delays in securing a number of large contracts".
  • Gross margins "likely to be a little ahead of those achieved last year", but total overheads "around 5% higher, due principally to the investment in the US".
  • Current cash balances of $2.5 million and undrawn bank facilities of $4 million.

The CEO leaves after 14 years with the company, six of them as CEO.

My opinion - I haven't got much to say about this, that hasn't been said before. It's operating in a difficult B2B, contract-driven industry, the type that habitually runs into difficulty getting important customers and prospects to sign in a timely fashion.

Checking the archives, I see that only in May, the company announced a share buyback. Granted that it wasn't very large (5% of shares), and wasn't fully executed, but the announcement declared that the company saw a "persistent gap between the market valuation of the company and the Board's assessment of intrinsic value". The share price was more than double its current level, at the time.

The discount to intrinsic value must be even greater now, yet with declining USD-denominated sales (measured in GBP it's not so bad), and an operating loss, and a very patchy track record over a considerable period of time, the only hope is that the new CEO can breathe new life into it.

Unless you're very close to the company, I don't see how future contract wins can be predicted. Perhaps it would be better off fixing itself away from the glare of the public markets?

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