IndigoVision - IND is a designer and manufacturer of "networked video security systems". Essentially cameras and related software.
I am not sure why IND came onto my watchlist but it has been on it for about a year.
IND is a small company its current market capitalisation is circa £14m and its sales for the YE Dec 2016 are only £46m. Down from £47m in 2015. In 2014 the company reported a 17 month accounting period with sales of £82m. As a pro rata that is £58m for 12 months, so there was a big collapse in business in 2015.
The collapse in business in 2015 was significant in every region and not well explained in the 2015 annual report. Lots of references to management changes and management strengthening which continue into 2016. But to be cynical it reads as though the UK management didn't know what was happening in the regions and rather than admit their mistake fired a lot of local management and replaced them with someone new - hopefully better. A lack of knowledge that may also explain why the well paid FD left mid 2016. If the CEO is going to claim he didn't know in time to save the business and his job the FD as the information provider gets the blame.
YE of the business is December and in 2015 the business lost about £1m and £3.3m in 2016.
However the business has the following points of interest;
Mkt Cap is only £14m but the NAV (December 2016 excluding intangibles and deferred tax assets) is £18m. A Margin of Safety of 22%.
I say Margin of Safety as whilst the business did under GAAP make a loss of £3.3m in 2016 £3.2 of it was from adjustments to the deferred tax asset on the Balance Sheet. Eliminating this loss and the remaining Deferred tax assets the business was virtually breakeven and as such £500k ahead of 2015.
Alongside this the at year end the balance sheet contained £6m of cash.
Ongoing the company claims to have developed its product range to broaden the range of applications it can serve. I read the reality to mean they have a lower cost, less camera option to catch the smaller requirement. Which is still backed up by a variant of the newer software.
Also worth noting that in both 2015 and 2016 the company recorded foreign exchange translation differences on foreign operations of £1/2m. Given the size of the operation (and sterlings performance since Brexit) these are stupidly high amounts that the company should be able to better manage going forward. This may also feed into the FD's departure.
So bottom line. Current weak performance and concerns over the CEO versus, improving performance, a significant MoS. Plenty of cash and some new products that may be well received into the market.
I am going to make a small opening investment. And move the company up my level of watching.
As Walter Schloss may have said if I can buy $1 for 80c and sit and wait good things may happen.