Thruvision’s trading update to March 2020 reflects a good year which experienced a ‘material slowdown’ in order-flow in March due to COVID-19. Revenue is expected to be £8.0 million - 6% shy of our forecast, but still a very-creditable 33% up on the prior year. H2 saw continued strategic progress in key markets of aviation and “profit protection” (employers checking employees for items smuggled out of distribution centres). These sectors may exhibit some level of resilience despite COVID-19, if the Company can work via its existing in-country representatives. The impact of the pandemic on orders and product trials – and hence revenue visibility - is clearly significant and management has decided against giving guidance for the new financial year. We adjust our FY 2020E estimates to reflect the revenue and cash described in the update (Thruvision retains a healthy balance sheet) and leave numbers for FY 2021E and FY 2022E unchanged until such time that the position becomes clearer. Those latter two estimate years are obviously now subject to a very high degree of uncertainty.
Thruvision’s second half sales saw repeat orders from an Asian government and in the UK, Morrisons (distribution centres remain vital for retailers to fulfil their online commitments). Two new profit protection customers ordered their first units, one being the Company’s first in North America. The group also received its first order for the new higher performance sensor from a global technology firm.
The group continued to support rollouts of units purchased by international Customs agencies in H1. Thruvision also made ‘steady progress’ through ongoing US Transportation Security Administration laboratory testing and airport employee security trials.
Thruvision has implemented measures to tighten cash flow management and had an £8.6 million cash balance and zero debt at the end of March. Despite the impact of COVID-19 on the certainty of the trading outlook, management says that it is ‘encouraged by the recent uptick in interest in Thruvision’s unique ability’ to provide effective security screening which is respectful of privacy, at a safe distance and with no physical contact – clearly a key differentiator.
With potential pent-up demand in domestic aviation markets and the continuing importance of retail distribution centres, we believe that Thruvision’s cash balance and sales pipeline leave it well positioned to weather the current storm and emerge well-placed in due course.