A PROFIT warning from video surveillance systems specialist IndigoVision sent its shares plunging 12.4% to a 52-week low and wiped £3.3 million off its market value.
The news is just the latest problem to engulf the company which spent the tail end of 2011 and part of 2012 embroiled battle for control of its boardroom with its former chief executive Oliver Vellacott.
In a pre-close trading update issued to investors yesterday, Midlothian-based IndigoVision said operating profits for the year to the end of July "are expected to be below earlier expectations and market estimates".
Pre-tax profit for the year would come in at £2m, down from £2.3m for 2012. Broking house N+1 Singer Capital Markets had pencilled it in for pre-tax earnings of £3.4m. Investors responded by sending its shares down 43.5p to 306.5p, valuing it at £23.2m.
The guidance comes despite expectations that IndigoVision will meet market expectations with sales for the year of £32m, up from £30.3m for the 2012 financial year.
Marcus Kneen, chief executive, said: "We have made progress towards our goal of repositioning IndigoVision to achieve market rates of sales growth, and the rapid growth of intelligent camera sales in the current year demonstrates what IndigoVision is capable of."
IndigoVision attributed improvements in its product range in the last two years for an expected 30% year-on-year rise in sales of its intelligent cameras, which would more than offset falls in sales of its traditional encoders.
Intelligent cameras are expected to account for half of group revenues for the year.
IndigoVision said that gross margins have improved in the second half of its financial year but remain lower than in 2012 due to a changing product mix more weighted towards cameras.
It said that its overheads are also rising due to further investment in the sales and distribution network and in product development.
Mr Kneen said: "During the current year we have again broadened the core product range significantly and increased the sales and pre-sales headcount by one third. The benefit of this investment in future growth has begun to show through in intelligent camera sales growth, but the transition has impacted the operating result for the year."
IndigoVision will confirm its results for the year on September 26. They come after the company recorded pre-tax profits of £952,000 in the first half of its financial year to January 31, down from £1.3m on the same period of the previous year.
Mr Vellacott parted company with Indigovision in late 2011 after having three separate management buy-out (MBO) proposals rejected by IndigoVision's board.
After leaving the Midlothian-based firm, Mr Vellacott mounted then abandoned a bid to oust Hamish Grossart as chairman. He sold his stake of more than 22% in October last year. Scottish Equity Partners, which had backed Mr Vellacott's MBO attempts and then considered but decided against making a further offer proposal, also sold its 6.63% holding in October 2012 .
IndigoVision employs about 150 people, including 84 in Scotland.
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