Indigovision boss quits as profit alert sees shares crash
Technology firm hit by contract delays Says financial position remains strong
By Technology firm Indigovision saw its stock market value fall by more than a quarter yesterday as its chief executive stood down and it issued a profit warning.
The Edinburgh-based company, which specialises in video security systems used by customers such as casinos and airports, blamed difficult trading conditions and contract delays in the Middle East for it now expecting to report a full-year operating loss.
Chief executive Marcus Kneen, who replaced founder Oliver Vellacott six years ago, has resigned from the board with immediate effect.
Pedro Simoes, who was appointed as senior vicepresident of global sales last month, will take on the role on an interim basis as the search for a permanent replacement gets under way. Shortly after his appointment yesterday, Simoes bought 15,000 shares in the company at 120p each, his first investment. The announcements came in a trading update issued to the stock market for the financial year ending 31 December.
The company said that although there are “several important trading weeks” before the end of the group’s financial year, “it is now clear that management’s expectations will not be achieved and that a full-year operating loss will be reported”.
“The management and sales team changes in the US are showing continued signs of delivery, with further growth in the sales pipeline, but the Middle East has experienced more difficult trading conditions, with unforeseen delays in securing a number of large contracts,” it said.
It said current expectations are that revenue for the year will be in the region of $41 million (£30.7m) to $43m compared to $46m last year.
Gross margins for the year are likely to be “a little ahead” of last year although total overheads are expected to be around 5 per cent higher, due mainly to expansion of its North American sales and support team.
The company said the financial position of the group “remains strong”, with current cash balances of $2.5m and bank facilities of $4m which remain undrawn.
The statement expressed the board’s thanks to Kneen for his contribution to the company over the last 14 years. He had initially joined as chief financial officer and had replaced Vellacott who left the company following a fall-out with the board. Vellacott then joined forces with Scottish Equity Partners, which had been a shareholder before its flotation on Aim, in a bid to take control of the company. They were understood to have offered close to 400p a share at the time but board rejected the approach and talks ended early in 2012.
In its interim results, announced in September, the company said it had secured a number of major new project wins including installations at several casinos in North America and upgrade work on airports. Shares in Indigovision closed down 46p or 28 per cent at 116.5p.
businessdesk@scotsman.com