CCTV systems maker Indigo-Vision has predicted record full-year sales after enjoying a jump in first-half revenues.
However, a drop in margins and higher product development costs saw pre-tax profits for the six months to 31 January fall 26.6 per cent to £952,000.
Despite the fall in profits, shareholders will receive an interim dividend of 5.5p a share, up 10 per cent on last year.
Chief executive Marcus Kneen said sales during the first half rose 11 per cent to a record £16.1 million, with the pace of growth accelerating to 15 per cent in the second quarter.
He added: “We set ourselves the task of returning the business to better rates of growth, and accelerating sales indicate that we are on target to achieve that. We currently expect record sales for the year as a whole.
“Notwithstanding lower margins and the additional spend on sales and new product development, we also currently expect the operating outcome for the year as a whole to better last year’s strong result.”
Chairman Hamish Grossart said second-half margins are expected to “at least equal” the 54.2 per cent achieved in the first half. That was down from 60 per cent a year earlier, with the fall blamed on “changes in the mix of sales and project wins”.
He said the Edinburgh-based firm also planned to expand its sales team, particularly in North America, which will lead to an increase in costs.
Grossart said: “Notwithstanding these twin brakes on short-term profitability as we pursue more rapid growth, we currently expect the operating result for the year as a whole to exceed last year’s strong outcome.”
Shares in the firm, which saw founder Oliver Vellacott launch an unsuccessful takeover bid in 2011, dipped 2.5p to close at 330p.