Final Results
OMG PLC
04 December 2003
4 DECEMBER 2003
OMG plc ('OMG' or the 'Company')
Preliminary Results for the Year Ended 30 September 2003
OMG, a leading supplier of motion capture and visual geometry systems used for
life sciences, entertainment and engineering applications, today announces its
preliminary results for the year ended 30 September 2003.
Highlights:
•Turnover increased 21% to £9.8m over previous year (2002: £8.0m)
•Strong return to profitability with Pre-tax Profit of £0.9m (2002: loss
of £1.8m)
•Positive cash flow with cash balances increased by £1.0m to £4.8m at the
year end
•Strong recovery and renewed growth in US market, with sales up by 54%
•Exceptionally strong sales growth in the Japanese entertainment market
following appointment of new distributor
•Vicon Motion capture used in 2003 releases of Pirates of the Carribean,
Hulk and many other successful films
•Installation of the largest motion capture system ever for Sony Pictures
Imageworks production of Polar Express starring a motion-captured
performance from Tom Hanks
Julian Morris, Chief Executive, commenting on the results said:
'The performance for the year ended 30 September 2003 was well ahead of
expectations and a dramatic improvement on the previous year. OMG has reaffirmed
its position as market leader in its core markets. Initiatives are now in place
to capitalise on this position and develop new markets for the Company's
technology.'
For further information:
OMG
Julian Morris, Chief Executive, julian.morris@omg3d.com
Peter Wharton, Finance Director, peter.wharton@omg3d.com
Tel: 01865 261800
Buchanan Communications
Tim Thompson / Catherine Miles
Tel: 020 74665000
Joint Statement by the Chairman and Chief Executive
Performance for the year ended 30 September 2003 was well ahead of expectations
and a dramatic improvement on the previous year. The Company achieved the
objective, as stated in the last annual report, of returning to its historical
pattern of profitable growth. Profits and earnings per share are at record
levels for OMG as a public company.
Financial Summary
Turnover rose to £9.8m (2002: £8.0m), an increase of 21% over the previous year.
Gross profit rose to £6.5m (2002: £5.4m), an increase of 19%. Increasing
revenues and careful control of costs resulted in a return to profitability with
pre-tax profit for the year of £0.9m (2002: £1.8m loss).
Earnings per share were 1.69p (2002: 3.22p loss).
Sales of all products to the US rose by 54% to £4.8m (2002: £3.1m), to represent
49% of global volume.
Positive cash flow over the year increased cash balances by £1.0m to £4.8m at
the year end.
Market & Business Review
Global Markets
OMG's business continues to be built around two core technologies based on the
common theme of '3D from the moving image'. Under the Vicon brand, OMG develops,
manufactures and sells motion capture systems. 2d3 develops and sells advanced
visual processing software.
Once again, OMG generated over 90% of the year's revenues outside the UK, with
shipments to over 25 countries. The geographic distribution of sales followed
the year's global economic pattern with strong recovery and renewed growth in
North America, and improvements in Far Eastern markets, especially Japan.
Revenues from Europe, excluding UK, fell, reflecting the continuing stagnation
of the larger European economies, particularly Germany. However, there are some
recent signs of an upturn, stimulated in part by a new round of EU government
spend on technology R&D (Framework VI).
The performance of OMG's business in the US has been well ahead of expectations.
Sales growth was dominated by strong recovery in entertainment markets and,
after last year's overall fall in market confidence, renewed diversification
into a range of engineering applications. OMG's US operation, Vicon Motion
Systems Inc, has further consolidated its position as market leader in all US
motion capture markets.
Continuing a strategy of consolidating and strengthening key markets, OMG has
recently appointed two new distributors in Japan. Following the appointment of
Crescent Video to focus on the Japanese entertainment, broadcast and virtual
reality markets, sales growth of both Vicon and 2d3 products has been
exceptionally strong. This result supported a similar strategy in the
appointment of IRC to distribute Vicon motion capture systems to life science
and engineering customers. This new company has taken over most of the
successful Vicon sales team from the former distributor and complemented them
with additional resource.
Life Sciences
Life Science applications of motion capture continue strongly, both in the core
market for clinical gait analysis for cerebral palsy and in academic
biomechanics research.
A recently published study by Gillette, a world-renowned children's hospital in
St Paul, Minnesota found that 93% of children with cerebral palsy who were
treated with both a rhizotomy and orthopaedic surgery following their gait
analysis improved or maintained their mobility and skill levels. Such high
success rates have continued to provide a sound basis for our Life Sciences
business. Vicon also benefits from over 15 years of leadership in a market which
still contributes over 50% of revenues. 27% of the year's Vicon Life Science
sales were upgrades to existing customers, such as Shriners' and Veteran's
Administration hospitals in US.
Entertainment
It has been an exceptional year for our Entertainment business, in terms of both
financial growth and pushing forward technological boundaries. Film making could
be changed forever by the installation of the largest motion capture system ever
for Sony Pictures Imageworks production of Polar Express. Directed by Robert
Zemeckis and starring a motion-captured performance from Tom Hanks, the animated
children's feature will be released in 2004. Vicon motion capture was also used
in 2003 releases Pirates of the Caribbean and Hulk, as well as in many other
successful films.
During the year Vicon won notable accounts in this sector from its principal
competitor including Rearden Studios in San Francisco and Virtual Concepts (part
of Sega) for ESPN Games.
Microsoft Game Studios, recently used Vicon on forthcoming high-profile game
releases including Top Spin, a tennis title offering singles or doubles matches
with 16 of the world's top professionals. Using Vicon, the moves of players such
as Pete Sampras and Anna Kournikova are authentically recreated.
2d3's boujou camera tracker consolidated its market-leading position with 2003
credits including Matrix 2&3, Harry Potter 2, The Italian Job, X-Men2 and future
releases Lord of the Rings 3 and Troy.
The broadcast market in the Far East has been particularly strong for both Vicon
and 2d3, with Fuji TV, Nippon TV and Asahi TV all now customers.
Engineering
The demand for optical motion tracking in virtual engineering applications is
increasing. Notable sales were made to Los Alamos National Laboratory for the 3D
visualisation of complex data sets, John Deere for virtual prototyping to reduce
time to market for farm machinery products and US Army TACOM for 3D simulations
used for soldier training from basic induction to special operations. University
of Salford also uses Vicon for research into 'gesture recognition'. Virtual
reality is a working environment in which the user is surrounded by, and can
move through, a 'virtual' 3D scene generated by computer graphics. Future
engineering and industrial users will be able to interact by pointing, selecting
and manipulating 3D models and representations as diverse as prototype vehicles,
flow through turbines, explosions and database information.
Ergonomic applications are also expanding. Vicon systems based on the new
miniature SVCam (see Technology Update below) sold to NASA in USA and ESA in
France are being used to study astronaut motion in weightless conditions. In
Japan, the government-funded Communication Research Lab uses Vicon to study
interaction between babies and robots.
Consumer
Towards the end of the year, two events marked OMG's first moves into consumer
markets.
2d3's revolutionary SteadyMove technology brings cinema-quality stabilisation to
shaky hand-held film or video clips, even when shot by a walking or running
cameraman or from a moving vehicle. Under a marketing and distribution agreement
with Adobe Systems, the world's second-largest software producer, SteadyMove is
now bundled with every copy of Adobe's market-leading DV editing product,
Premiere Pro.
Simultaneously, 2d3 released the more fully-featured SteadyMove-Pro for use with
Premiere and a range of other video and film editing products. SteadyMove-Pro is
sold and delivered directly to customers on-line from 2d3's website.
Technology Update
As well as delivering good profitability and positive cash flow, OMG invested
14% of revenues in R&D.
Cameras
All Vicon systems now make exclusive use of the Company's own high-resolution,
high-speed motion capture cameras. Motion capture applications demand the image
resolution of a digital still camera and the frame rate of a high-speed film
camera. A major part of Vicon's unique IP lies in the design of these cameras.
During the year, Vicon introduced SVCam, the world's smallest special-purpose
motion capture camera. Its small size and wide field-of-view make it ideal for
studying human movement in constrained environments such as road, battlefield,
aircraft and space vehicles.
'Immersive virtual environments' place the user inside an artificial 3D space
and are increasingly used to display and interact with complex phenomena such as
fluid dynamics and seismology, as well as for 3D design and training. SVCams are
used to track the observer and deliver the appropriate 3D stereo view.
Software
Shipments of Vicon's iQ software for motion captured animation post-processing
commenced early in the financial year. iQ has been a major contributory factor
in the upturn in Vicon sales in entertainment markets and is now confirmed as
the industry standard. Performance upgrades and enhancements have been released
steadily throughout the year, and major new versions will continue well into the
future.
Analysis and Outlook
OMG has invested time and resource in reviewing its business strategy and set
itself some demanding targets for the future. The review confirmed OMG's market
leading position in its core global Life Science and Entertainment markets,
providing a solid foundation for growth in 2004. It also identified a number of
other growth markets, particularly Engineering and Consumer, where the potential
exists for OMG to take and hold a similar lead position. The new strategic
targets include maximising the value of core markets, as well as focusing on new
markets for the Company's technology.
The past year's performance has restored the Company's confidence in core
markets and this is a signal for investment in new products and services. Market
weakness over the past two years in the Far East and Europe presents an
opportunity for recovery and increased market share. The strengthening position
of Vicon and 2d3 brands progressively differentiates OMG's products from those
of smaller and less well funded competitors. OMG expects its core business to
continue to generate organic growth. In addition, there will be increasing
activity in evaluation of opportunities for growth by acquisition.
OMG has diversifications of existing products under development which are
planned to exploit the significant growth opportunities in both Engineering and
Consumer markets. While these developments are aimed at longer term growth, some
will start to make a contribution during 2004.
Delivering shareholder value is a key objective of OMG management, to be
achieved by aligning the goals of employee stakeholders with external
shareholders. The policy of careful cost control will continue, although the
level of internal investment in both new and core business is anticipated to
increase following the Company's return to profitability.
Board Changes
Chairman
Following the retirement of Sir Peter Thompson, on 5 December 2002, Anthony
Simonds-Gooding was appointed as Chairman.
Finance Director
Following the resignation of Malcolm Lewin in June this year, Peter Wharton
joined the Company and was appointed as Finance Director on 3 September 2003.
Dividend Policy
As in previous years, the directors are not declaring a dividend, although the
dividend policy will be kept under review.
Shareholder, Employee and Director Support
We should 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 websites at www.omg3d.com, www.vicon.com and www.2d3.com.
Anthony Simonds-Gooding, Chairman Julian Morris, Chief Executive
CONSOLIDATED PROFIT AND LOSS ACCOUNT
For the year ended 30 September 2003
2003 2002
£'000 £'000
Turnover 9,758 8,041
Cost of sales (3,304) (2,629)
Gross profit 6,454 5,412
Administrative expenses (5,763) (7,480)
Grant income 80 140
Operating profit /(loss) 771 (1,928)
Interest receivable 120 133
Profit /(loss) on ordinary activities before 891 (1,795)
taxation
Tax on profit /(loss) on ordinary activities (38) 201
Retained profit/(loss) for the financial year 853 (1,594)
Basic earnings /(loss) per share 1.69p (3.22)p
Diluted earnings /(loss) per share 1.52p (3.22)p
All of the activities of the Group are classed as continuing.
STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
For the year ended 30 September 2003
2003 2002
£'000 £'000
Profit /(loss) for the year 853 (1,594)
Exchange difference on retranslation of net assets of (4) (10)
subsidiary undertakings
Total recognised gains and losses for the year 849 (1,604)
BALANCE SHEETS AT 30 SEPTEMBER 2003
Group Group Company Company
2003 2002 2003 2002
£'000 £'000 £'000 £'000
Fixed assets
Tangible assets 324 469 33 27
Investments - - 107 107
324 469 140 134
Current assets
Stocks 1,365 1,609 - -
Debtors 2,502 1,764 2,180 2,748
Cash at bank and short term 4,826 3,823 4,334 3,666
deposits
8,693 7,196 6,514 6,414
Creditors: amounts falling due 1,347 880 178 115
within one year
Net current assets 7,346 6,316 6,336 6,299
Total assets less current 7,670 6,785 6,476 6,433
liabilities
Capital and reserves
Share capital 129 125 129 125
Share premium account 5,301 5,269 5,301 5,269
Merger reserve 1 1 - -
Profit and loss account 2,239 1,390 1,046 1,039
Shareholders' funds 7,670 6,785 6,476 6,433
CONSOLIDATED CASH FLOW STATEMENT
For the year ended 30 September 2003
2003 2002
£'000 £'000
Net cash inflow /(outflow) from operating activities 962 (549)
Returns on investments and servicing of finance
Interest received 120 133
Taxation (38) (178)
Capital expenditure and financial investment
Purchase of tangible fixed assets (256) (451)
Disposal of tangible fixed assets 179 160
Financing
Issue of share capital 36 22
Increase /(decrease) in cash 1,003 (863)
NOTES TO THE PRELIMINARY ANNOUNCEMENT
For the year ended 30 September 2003
1. Basis of preparation
The financial statements have been prepared under the historical cost
convention and in accordance with applicable United Kingdom accounting
standards.
The principal accounting policies of the Group have remained unchanged from
the previous year.
2. Basis of consolidation
The consolidated financial statements consolidate those of the Company and
of its subsidiary undertakings drawn up to 30 September 2003. Acquisitions
of subsidiaries are dealt with by the acquisition method of accounting,
except those qualifying as Group reconstructions where merger accounting is
permitted.
3. Tax on (loss)/profit on ordinary activities
The tax charge /(credit) is based on the profit /(loss) for the year and
represents:
2003 2002
£'000 £'000
United Kingdom corporation tax at 30% (2002: 30%) - (166)
Adjustments in respect of prior period - (47)
Overseas taxation 38 12
-------- --------
38 (201)
======== ========
The tax assessed for the year is lower than the standard rate of
corporation tax in the UK of 30%
(2002: 30%). The differences are explained as follows:
2003 2002
£'000 £'000
Profit/(loss) on ordinary activities before tax 891 (1,795)
======== ========
Profit/(loss) on ordinary activities multiplied by 267 (539)
the standard rate of corporation tax in the UK of
30% (2002: 30%)
Effect of:
Expenses not deductible for tax purposes 5 3
Depreciation in excess of capital allowances 32 34
Utilisation of losses (182) 162
Other timing differences - (21)
Group relief - 7
Losses not recognised - 191
Adjustments to tax charge in respect of prior (11) (50)
year
Overseas taxation 25 12
Research & development tax credit (98) -
-------- --------
Current tax charge/ (credit) for the year 38 (201)
======== ========
Unrelieved tax losses of £623,000 remain available to offset against future
taxable trading profits of the same trade. A deferred tax asset has not been
recognised in this respect due to risks and uncertainties which make the
timing and extent of the profits difficult to predict.
4. Earnings per share
Earnings 2003 weighted Per share Earnings 2002 weighted Per share
average number amount average number amount
of shares of shares
£'000 pence £'000 pence
Basic earnings
per share
Earnings 853 50,479,806 1.69 (1,594) 49,494,141 (3.22)
attributable
to ordinary
shareholders
Dilutive
effect of
securities
Options - 5,768,707 (0.17) - - -
------- --------- ------- ------- ------- -------
Diluted
earnings per
share 853 56,248,513 1.52 (1,594) 49,494,141 (3.22)
------- --------- ------- ------- ------- -------
Since the conversion of options to ordinary shares would not increase the
net loss per share for 2002, no dilutive effect is relevant.
5. Reconciliation of movements in shareholders' funds
2003 2002
£'000 £'000
Retained profit/(loss) for the financial year 853 (1,594)
Issue of shares 36 22
-
Currency movements (4) (10)
Net movements in shareholders' funds 885 (1,582)
Shareholders' funds at 1 October 2002 6,785 8,367
Shareholders' funds at 30 September 2003 7,670 6,785
6. Reconciliation of operating profit to net cash outflow from operating
activities
2003 2002
£'000 £'000
Operating profit / (loss) 771 (1,928)
Depreciation 249 355
(Profit)/loss on disposal of fixed assets (31) 2
Decrease /(increase) in stock 244 (272)
(Increase)/decrease in debtors (738) 1,559
Increase /(decrease) in creditors 467 (265)
Net cash outflow from operating activities 962 (549)
7. 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 as at 30 September 2003 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 2003 statutory financial statements upon which
the auditor's opinion is unqualified and does not include any statement
under Section 237 of the Companies Act 1985.
8. 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
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