IndigoVision : 2019 January 10 N+1 Singer Company Comment

IndigoVision Group

IndigoVision Group (IND LN)

Company Update - Forecasts under review

CORPORATE

IT Hardware

Current price*: 115p Mkt cap (£m): 9

10 January 2019

Losses reduced in FY18 with momentum building

N+1 Singer view

Today's update confirms solid year on year progress,with sales expected to increase by 9% to $45.9m in FY18 (N+1SE: $48.0m) and the positive gross margin trend continuing throughout the year. However, whilst the Group expects to report a significant reduction in its operating loss in the year, the revenue shortfall means it is now expected to be loss making in FY18 vs. our break even forecast. A strong cash outperformance is a key positive in the statement, with net cash at the period end standing at $2.0m (N+1SE: net debt of $2.6m). This was driven by an improvement in payment terms and a reduction in inventories. We expect to update our forecasts at the results in March, but place them under review for now. With momentum continuing to build in response to recent management actions, we expect a further performance improvement in FY19.

Event

The year end trading update highlights that sales in the year ended 31stDecember 2018 are expected to have increased by 9% YoY to $45.9m. The positive trend on gross margins reported in the interim results was maintained throughout the year. In 2018, the Company expects to report a significant reduction in its operating loss. Net cash at 31stDecember stood at $2.0m, a strong improvement driven by a focus on working capital management. The Company is continuing its discussions with debt providers to replace the existing Royal Bank of Scotland overdraft facility which expires on 28 February 2019. Preliminary results will be published on 7thMarch 2019.

Impact on earnings & valuation

We will update our forecasts alongside the results in March, placing them under review for now. We expect the Group to be loss making in FY18 vs. our current break even forecast, though losses are expected to have significantly reduced. Net cash at the period end stood at $2.0m, a strong outperformance vs. our $2.6m net debt forecast.

Financials and valuations**

Year end Dec 2015 2016 2017 2018E 2019E

Revenue ($m) 47.1 45.9 42.1 48.0 54.0 EBITDA (adj.) ($m) 0.4 1.3 -1.6 0.9 2.9 PBT (adj.) ($m) -0.8 0.4 -2.4 0.0 2.0 EPS (Adj., FD) (¢) 0.0 9.0 -29.6 2.7 29.8 Consensus EPS (¢) - - 27.8 - - DPS (¢) 2.5 3.0 0.0 0.0 0.0 Net cash/(debt) ($m) 2.8 6.2 2.6 -2.6 -1.1 EV/EBITDA (x) P/E (x) 21.6 n/m 3.8 16.3 n/m n/m 16.0 4.1 55.0 4.9 Dividend yield (%) 1.7 2.0 0.0 0.0 0.0

* Price as at COB 08/01/2019. ** Sources: N+1 Singer, Company accounts, FactSet

IndigoVision Group (IND LN) $Rat ingTOC $ Company C omment Greg Poult on [phone] For further details contact: Greg Poulton [e-mail]115.000000

[phone], [e-mail]

IndigoVision Group (IND LN)

$RatingTOC$ $ReasonTOC$ Greg Poulton [phone]

This document is a Marketing Communication and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research. Please refer to important disclosures at the end of this document.

Important Disclosures

Important disclosures

Analyst certification

The analyst(s) responsible for preparing this research report or sections of this report, in whole or in part, hereby certify/ies that, with respect to any and all of the securities or issuers that the analyst(s) cover(s) in this report, the views expressed in this report accurately reflect the individual research analyst's personal views. In addition, no part of the research analyst's compensation was, is, or will be directly or indirectly, related to the specific recommendations or view expressed in this report or summary.

Stock ratings

Recommendation / Shares outstanding (m) / Target price

IndigoVision Group (GBP)

Date	Rec	Shares
As of 10-Jan-18	Corporate	8

TP

Conflicts of interest disclosures

NB: please note that any companies mentioned in this report but not listed in the following table are not included in N+1's database and therefore no disclosures have been made. Please follow link for full description of allConflicts of Interest Disclosures

http://www.n1singer.com/terms-conditions/

• 2.N+1 S and the company to whom this research relates have agreed that N+1 S may produce and disseminate non independent research as a service to the company and N+1 S may receive remuneration for such a service: IndigoVision Group

• 3.N+1 S acts as a market maker or liquidity provider in relation to securities issued by this company: IndigoVision Group

• 6.N+1 S has received compensation from this company for the provision of investment banking or financial advisory services within the previous twelve months: IndigoVision Group

• 11.N+1 S acts as a corporate broker to this company: IndigoVision Group

• 12.N+1 S acts as nominated adviser, financial advisor or as a sponsor to the Company in the UK or as a sponsor specialist in accordance with the local regulations: IndigoVision Group

Other important disclosures

Please follow the link below for full Further Disclosures, Analyst Certification, Allocation of Equity Ratings, Ratings System, Valuation Methods & Risk Disclosure, Fundamental View &Planned Frequency of Updates.

http://www.n1singer.com/legalandreg/Further-Research-Disclosures.pdf

January 2019

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January 2019