Final Results

OMG PLC
05 December 2002

For Immediate Release                              5 December, 2002

                                    OMG PLC

            PRELIMINARY RESULTS FOR THE YEAR ENDED 30 SEPTEMBER 2002

OMG plc ('OMG') the supplier of image-based tracking systems to obtain
3-dimensional information contained in 'the moving image' to the entertainment,
medical, scientific and engineering industries, announces preliminary results
for the twelve months ended 30th September, 2002

*     Turnover down 18% to £8.0m (2001: £9.9m), in line with expectations

*     Loss before tax of £1.8m (2001: £0.8m profit), in line with expectations

*     Cash reserves at £3.8m

*     Level of sales enquiries remains high - good prospects for the current
       year

*     Overheads reduced and controlled

Life Sciences:

*     Vicon maintains position as market leader in life science applications -
       15% increase in delivered products

*     Major upgrades sold to international hospitals and sports institutes

Visual Effects & Design:

*     Microsoft utilising Vicon system for Xbox development

*     Sony Computer Entertainment (US) upgraded Vicon system for PS2 development

*     Vicon technology successfully applied in high profile feature films: Star
       Wars Episode II, Spy Kids 2

*     Boujou camera tracking software used by leading, international
       post-production companies: Die Another Day, Harry Potter & The Chamber of
       Secrets, Black Hawk Down



Commenting on the results, Sir Peter Thompson, Chairman said:

'2001/02 was the first in eighteen years of trading that OMG plc, (and its
predecessor Oxford Metrics Ltd), was unprofitable. The year was always planned
to be one in which profits were significantly restrained by a substantial level
of investment made in response to rapid and sustained growth.

The overall plan for the year ahead is of a careful balance between maintaining
short-term revenues and gross margin, investing in response to market growth,
and effective application of cash reserves - in other words, a managed return to
the path of long-term, profitable growth that OMG has historically followed.'

Joint Statement by the Chairman and Chief Executive

Financial Results

Turnover fell to £8.0m (2001: £9.9m), a decrease of 18% over the previous year.
Gross profit, while maintaining margin, fell to £5.4m (2001: £6.6m). Pre-tax
loss for the year was £1.8m (2001: £0.8m profit).


Sales of motion capture systems by Vicon Motion Systems Limited and Vicon Motion
Systems Inc (USA) to medical, research, and engineering customers fell by 4%,
and to the entertainment industry fell by 49%. Sales of visual geometry products
by 2d3 Limited, largely to the entertainment industry, increased by 123% over
the previous year. However 2d3 trading in the previous year was limited to 6
months. Sales of all products to the USA, at 39% of the total, fell less than
those to the rest of the world.


Cash reserves at the year end were £3.8m (2001: £4.7m).

Variance from Forecast Revenues

At the start of the year in October 2001, growth in sales in excess of 40% per
annum had been sustained for over two years and looked set to continue. Order
prospect levels were high. Order intake had not collapsed in the immediate
aftermath of the US terrorist attacks.


Historic rolling annual sales reached a peak of well over £10 million in
December 2001, but during the first quarter there was no growth in revenues from
the entertainment sector, a not unusual situation in this volatile market. In
the second quarter entertainment sales began to fall off rapidly but, as
reported in the Interim Statement, total company revenues for the six months to
31 March 2002 were just over £5 million, sustained by continued strength in the
'core' medical, scientific, and engineering markets. In the third quarter the
steady growth in sales to these markets also started to falter, and revenues
from all sources under-performed in the traditionally busy final quarter of the
year.


Potential demand - measured by the level of sales enquiries, indications of
intent to purchase, and requests for quotations - has remained high. Global
market share is believed to have been held and increased in several territories.
(All significant competitors are non-UK private companies and none publishes
financial information.)


The market factor that has most clearly altered over the year is the level of
business confidence, resulting in greatly extended purchase decision times. The
effect is global but has been particularly evident in several regions, Western
Europe, Japan and Korea, which were all previously very strong. The
entertainment market has a shorter sales cycle and so was affected earlier and
more severely. In general, unclosed orders expected in 2001/02 have not been
lost. They remain good prospects for the current year.


Management & Costs


Variable Costs

Faced with the disappointing levels of revenue, during the year the company took
action to reduce costs and refocus resources without significantly impairing its
ability to continue business development once market conditions improve.


In March 2002, all variable expenditure planned for the remainder of the year
was reviewed and either eliminated or severely reduced. The greater part of this
reduction fell on planned marketing expenditure such as advertising and
attendance at major exhibitions, particularly in the entertainment sector.


At the same time, a decision was made to postpone indefinitely a move to new
premises. This reduced planned on-going expenses but also achieved a saving of
£750,000 of capital expenditure for re-fitting a new building.


Board Changes

Following an internal review in September 2002, Julian Morris, Group Chief
Executive, has taken over direct management of UK operating companies Vicon
Motion Systems Limited and 2d3 Limited. He is now also responsible for technical
development in both companies.


Pete Meddings, formerly Managing Director of Vicon Motion Systems Limited, has
been appointed Group Director of Sales and Marketing.


Chris Steele, formerly Chief Executive of 2d3 Limited, has been appointed Group
Director of Business Development.


Staff Reductions

As a consequence of the re-organisation and the need for a reduction in fixed
costs, a number of positions in the company became redundant. The total number
of OMG employees fell from a peak of 79 in March 2002 to 63 by 30 September,
resulting in a reduction in payroll-related costs of 18%.


Business Review

OMG sales have recently been reorganised into two divisions, reflecting current
patterns of revenue, technology and market activity. The major division, Life
Sciences, builds upon the core Vicon business in gait analysis and biomechanics.
The second, Visual Effects & Design, recognises the considerable synergies for
both Vicon and 2d3 products across a wide range of graphics applications in the
entertainment and engineering markets.

Life Sciences

Demand for Vicon in clinical gait analysis, biomechanics research, sports
medicine, and other life science applications remains strong. Despite the slight
fall in revenues, the total number of Vicon systems delivered increased by
approximately 15%, helped by the introduction of lower-priced systems that suit
the current economic climate.


The large world-wide installed base of over 350 sites provides a reference
network which is essential to the maintenance of Vicon's position as market
leader. It also delivers a steady flow of upgrade, replacement, and support
contract business which accounted for 33% of Life Science revenues. Major
upgrades were sold to Children's Hospital Los Angeles, five US Shriners'
Hospitals, Oswestry Orthopaedic Hospital, Oxford University, and the Australian
Institute of Sports.


Among the leading new Vicon Life Science system sales made during the year were
4 biomechanics installations in Italy, Otto Bock - the leading German
prosthetics company, Dana Children's Hospital in Tel Aviv, Rikshospitalet in
Oslo, and the Chinese Academy of Sports Science.



Visual Effects & Design

Despite the volatility of the entertainment market, Vicon and boujou enjoyed
some notable successes.


Microsoft Games (US) purchased a Vicon system for Xbox games development. Sony
Computer Entertainment (US) upgraded their Vicon system for PlayStation 2 games
development, reporting that 'at times, we use our Vicon system to capture
200-250 moves per day'.

Vicon was also used for several major film productions, including Star Wars
Episode 2 and Spy Kids 2. Vicon is also working with Sony Pictures Imageworks
(US) on novel motion-capture technology for several high-profile movie projects.
Broadcast sales included Central China TV and Beijing Broadcast Institute.


Hundreds of licenses for boujou camera tracking software are now in use in
leading post-production companies throughout the world. During the year boujou
was used by Framestore-CFC for Harry Potter and the Chamber of Secrets, The
Moving Picture Company for Harry Potter and Die Another Day, Mill Film for Black
Hawk Down, and by Cinesite for Die Another Day. Other boujou customers include
Sony Imageworks, DreamWorks SKG, Aardman Animation, and CBS television.


In the ergonomics and virtual reality market for engineering and design, notable
customers for Vicon included Lockheed Martin (US), Los Alamos National
Laboratory (US), and Nissan Motors (Japan).


Technology Update

Cameras

During the year, Vicon completed the design of two new cameras and introduced
them to the market.


MCam2 is a high-performance motion capture camera with a resolution of 1.3
megapixels, capable of running at up to 1000 pictures per second. This
remarkable camera can detect and track tiny (9mm) reflectors at distances of
well over 18 metres.


VCam is a lower-cost camera operating at up to 200 pictures per second, bringing
high-quality motion capture to a wider range of users. Its performance exceeds
top-of-range motion capture cameras of three years ago.

Software

During the summer OMG announced three new software packages, two from Vicon and
one from 2d3.


OLGA (Optimised Lower Limb Gait Analysis) is the first practical application in
gait analysis of a powerful new technique called 'non-linear global
optimisation'. OLGA looks at the entire motion sequence recorded on a patient
and calculates anatomical dimensions and movement hidden from the naked eye with
previously unattainable precision. One great advantage of OLGA is that it can
improve accuracy without the need to change established clinical laboratory
methods.

IQ is a completely new motion capture software package which greatly reduces the
processing time and cost of tracking complex moves. Directors, particularly in
the film and games industry, now need to track multiple actors interacting
closely within the same scene, often hiding their reflective markers from view.
IQ allows the user to reconstruct the motion with maximum realism in minimum
time.


Boujou, 2d3's automatic camera tracker, is acknowledged to have made a major
contribution to production efficiency in the film and TV post-production
industry. In September 2002, the Society of Television Arts and Sciences
presented 2d3 Limited with an Emmy Award for 'outstanding achievement in
engineering development'. A new version, boujou2 for Windows and Linux users,
was announced in August 2002, with a Mac version to follow in January 2003.

Share Price History

In the early months of 2001/02 there was no evidence to connect OMG's business
performance with the rapid loss of confidence in the Internet, telecomms,
travel, and advertising industries. The share price held at close to issue price
of 75p until March 2002.


On 10 April 2002 the company issued a trading statement warning that 'current
market expectations for the year to 30 September 2002 are unlikely to be
achieved'. The share price fell sharply to 40p. Selling pressure in a falling
market subsequently pushed the price down to 15p following publication of the
interim results on 5 June 2002.


On 27 August 2002 the company issued a further statement warning of poor
profitability for the year but emphasising that the company's cash position was
much stronger than forecast at the start of the year. The share price fell to a
mid-price of 6p, and it has fluctuated around this level since then.


At 6p, the company's market capitalisation is just 79% of cash and 44% of net
worth as shown on the year end Balance Sheet.

Analysis and Outlook

2001/02 was the first in eighteen years of trading that OMG plc, and its
predecessor Oxford Metrics Ltd, was unprofitable. The year was always planned to
be one in which profits were significantly restrained by a substantial level of
investment made in response to rapid and sustained growth. Staffing,
particularly in product development and marketing, had been considerably
expanded over the previous year following the company's successful fund-raising
in April 2001. Despite the cut-backs detailed in this Statement, the majority of
that investment has continued in the belief that OMG's chosen markets still have
good potential for growth.


The use of clinical gait analysis, in which Vicon is clear market leader,
continues to grow. The two major obstacles to wider adoption have been
complexity, for both patient and practitioner, and cost. The trends of the past
year clearly support this view. Despite highly depressed economic conditions,
unit sales of Vicon systems to life science markets grew by 15%, with static
total market value. Yet, because Vicon engineering developments anticipated this
trend, average gross margin ratios in this market were sustained.


With lower unit prices and simpler operation, the market for human movement
analysis can be extended to a large group of new users in clinical, sports and
research markets who would previously have considered a Vicon system beyond
their budget. With its large and active user base, OMG is ideally placed to
drive this expansion without the need for high marketing costs.




On the evidence of the rate of release of computer games and fantasy/
block-buster films, the retail end of the games and movie industry is booming,
supported by highly effective consumer marketing. Beneath this surface is an
intensely competitive production infrastructure which over the past year has
been characterised by uncertainty, price erosion, high-risk projects, and
financial failure of businesses large and small. Over the past year these
conditions have inevitably influenced the industry's purchasing decisions, and
suppliers of software and systems for animation and other visual effects have
almost all reported similar proportional downturns in revenue.

However, the confidence of the games and visual effects industry does now appear
to be returning as evidence emerges that fast-growing consumer demand for visual
entertainment has continued almost without faltering. However, the market has
changed. Sales are now made only when the customer can see a rapid financial
return on the investment. Spending must be justified within the timescale and
budget of a project, rather than to provide a long-term resource.


Entertainment remains a market with excellent long-term growth potential for
suppliers with the right products. As evidence, Vicon recently won the
industry's largest-ever order for a single motion capture facility, worth well
over $0.6 million.


OMG continues to believe in the long-term growth potential of the engineering
market for virtual reality and industrial ergonomics. Initial customers have all
been large companies or government organisations with the resources and
infrastructure to explore these new techniques. Through working with these
customers while exploring the needs of a much wider user base, OMG has defined
the parameters of a set of new products which are currently under development
and are due to be launched during the current financial year.


The overall plan for the year ahead is of a careful balance between maintaining
short-term revenues and gross margin, investing in response to market growth,
and effective application of cash reserves - in other words, a managed return to
the path of long-term, profitable growth that OMG has historically followed.


Dividend Policy

As indicated in the flotation Prospectus, the directors are not declaring a
dividend in relation to these results, but the issue of dividend policy will be
kept under review.


Shareholder, Employee, and Director Support

We would like to thank all shareholders, employees, and directors for their
continuing support and hope that they will enjoy a long association with the
company.


Further Information

Further information on OMG plc, its markets and products is available from the
company's Web sites at www.omg3d.com, www.vicon.com, and www.2d3.com.







Sir Peter Thompson, Chairman               Julian Morris, Chief Executive
5 December 2002                            5 December 2002





CHAIRMAN'S VALEDICTION

This will be my final report to the shareholders as I am resigning from the
Board as I reach my 75th birthday. It is a disappointment to be leaving at a
time when the company's short-term fortunes are at a low level. However, I am
confident that the management will emerge from this setback and will continue
their normal path of profitable growth. I personally have bought shares on two
occasions this year and will be holding them as a long-term investor.


I wish all the employees and management my very best for the future, and as a
shareholder to advise them of my continuing interests in the company.


Finally I welcome as my successor to the Chair, Anthony Simonds-Gooding who has
wide experience of being Chairman of other developing companies and who has been
an effective and challenging Non-Executive Director of OMG plc for the past
year.



Sir Peter Thompson, Chairman

5 December 2002





CONSOLIDATED PROFIT AND LOSS ACCOUNT

FOR THE YEAR ENDED 30 SEPTEMBER 2002
                                                             Before
                                                        exceptional       Exceptional        Total
                                             Note             items             items         2002           2001
                                                              £'000             £'000        £'000          £'000

Turnover                                                      8,041                 -        8,041          9,850

Cost of sales                                               (2,629)                 -      (2,629)        (3,274)

Gross profit                                                  5,412                 -        5,412          6,576

Administrative expenses                      3              (7,393)              (87)      (7,480)        (6,176)

Grant income                                                    140                 -          140            260

Operating (loss)/profit                                     (1,841)              (87)      (1,928)            660

Interest receivable                                                                            133            145

(Loss)/profit on ordinary activities before                                                (1,795)            805
taxation

Tax on (loss)/profit on ordinary activities  4                                                 201          (263)
(Loss)/profit retained and transferred to                                                  (1,594)            542
reserves

Basic (loss)/earnings per share              5                                             (3.22)p          1.21p

Diluted (loss)/earnings per share            5                                                   -          1.03p





STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
FOR THE YEAR ENDED 30 SEPTEMBER 2002
                                                                                              2002           2001
                                                                                             £'000          £'000

(Loss)/profit for the year                                                                 (1,594)            542
Exchange difference on retranslation of net assets of                                         (10)              -
subsidiary undertakings
Total recognised gains and losses for the year                                             (1,604)            542





BALANCE SHEETS AT 30 SEPTEMBER 2002
                                                                     Group         Group       Company       Company
                                                     Note             2002          2001          2002          2001
                                                                     £'000         £'000         £'000         £'000
Fixed assets
Tangible assets                                                        469           544            27             -
Investments                                                              -             -           107           107
                                                                       469           544           134           107
Current assets
Stocks                                                               1,609         1,337             -             -
Debtors                                                              1,764         3,157         2,748         3,443
Cash at bank and short term deposits                                 3,823         4,686         3,666         2,864
                                                                     7,196         9,180         6,414         6,307
Creditors: amounts falling due within one year                         880         1,357           115            23
Net current assets                                                   6,316         7,823         6,299         6,284
Total assets less current liabilities                                6,785         8,367         6,433         6,391
Capital and reserves
Share capital                                                          125           123           125           123
Share premium account                                                5,269         5,249         5,269         5,249
Merger reserve                                                           1             1             -             -
Profit and loss account                                              1,390         2,994         1,039         1,019
Shareholders' funds                                  6               6,785         8,367         6,433         6,391





CONSOLIDATED CASH FLOW STATEMENT
FOR THE YEAR ENDED 30 SEPTEMBER 2002
                                                           Note               2002            2001
                                                                             £'000           £'000
Net cash outflow from operating activities                 7                 (551)           (541)
Returns on investments and servicing of finance
Interest received                                                              133             145
Taxation                                                                     (178)           (476)
Capital expenditure and financial investment
Purchase of tangible fixed assets                                            (451)           (615)
Disposal of tangible fixed assets                                              162               2
Financing
Issue of share capital                                                          22           5,271
(Decrease)/increase in cash                                                  (863)           3,786





NOTES TO THE PRELIMINARY RESULTS
FOR THE YEAR ENDED 30 SEPTEMBER 2002


1.     basis of preparation

The preliminary announcement has been prepared under the historical cost
convention and in accordance with applicable United Kingdom accounting standards
up to and including FRS 19.


The principal accounting policies of the group are set out in the group's 2002
financial statements. These policies have remained unchanged from the previous
year with the exception of deferred taxation. This change has not had a material
impact on the financial statements.

2.     basis of consolidation

The consolidated financial statements consolidate those of the company and of
its subsidiary undertakings drawn up to 30 September 2002. Acquisitions of
subsidiaries are dealt with by the acquisition method of accounting, except
those qualifying as group reconstructions where merger accounting is permitted.

3.     exceptional items

Exceptional items represent redundancy costs arising from reorganisation.

4.     Tax on (loss)/profit on ordinary activities

The tax credit/charge is based on the (loss)/profit for the year and represents:
                                                                                             2002           2001
                                                                                            £'000          £'000
United Kingdom corporation tax at 30% (2001: 30%)                                           (166)            220
Adjustments in respect of prior period                                                       (47)             25
Overseas taxation                                                                              12             18
                                                                                            (201)            263

Unrelieved tax losses of £1,280,000 remain available to offset against future
taxable trading profits of the same trade.



5.     earnings per share
                                                    2002                                         2001
                                                weighted                                     weighted
                                                 average                                      average
                                               number of      per share                     number of      Per share
                                 Earnings         shares         amount       Earnings         shares         amount
                                    £'000                         pence          £'000                         pence
Basic earnings per share
Earnings attributable to          (1,594)     49,494,141         (3.22)            542     44,786,462           1.21
ordinary shareholders
Dilutive effect of
securities
Options                                 -              -              -              -      7,829,713         (0.18)
Diluted earnings per
share                                   -              -              -            542     52,616,175           1.03

Since the conversion of options to ordinary shares would not increase the net
loss per share for 2002, no dilutive effect or diluted loss per share is
relevant.

6.     reconciliation of movements in shareholders' funds
                                                                                              2002           2001
                                                                                             £'000          £'000
Retained (loss)/profit for the financial year                                              (1,594)            542
Issue of shares                                                                                 22          5,889
Expenses of share issues                                                                         -          (618)
Currency movements                                                                            (10)              -
Net movements in shareholders' funds                                                       (1,582)          5,813
Shareholders' funds at 1 October 2001                                                        8,367          2,554
Shareholders' funds at 30 September 2002                                                     6,785          8,367

7.     reconciliation of operating profit to net cash outflow from operating
activities
                                                                                             2002           2001
                                                                                            £'000          £'000
Operating (loss)/profit                                                                   (1,928)            660
Depreciation                                                                                  355            221
Increase in stock                                                                           (272)          (923)
Decrease/(increase) in debtors                                                              1,559        (1,041)
(Decrease)/increase in creditors                                                            (265)            542
Net cash outflow from operating activities                                                  (551)          (541)





8.     publication of non-statutory accounts

The financial information set out in this preliminary announcement does not
constitute statutory accounts as defined in Section 240 of the Companies Act
1985.


The balance sheet at 30 September 2002 and the group profit and loss account,
statement of total recognised gains and losses, consolidated cashflow statement
and associated notes for the year then ended have been extracted from the
Group's 2002 statutory financial statements upon which the auditors opinion is
unqualified and does not include any statement under Section 237 of the
Companies Act 1985.


9.     COPIES OF ANNOUNCEMENT

Copies of this announcement will be available from the Company's registered
office at 14 Minns Business Park, West Way, Oxford OX2 0JB.






                      This information is provided by RNS
            The company news service from the London Stock Exchange