Interim Results

RNS Number : 8814G

OMG PLC

19 May 2011

 



Thursday, 19 May 2011

OMG plc

("OMG" or the "Group")

Interim Results for the six months ended 31 March 2011

OMG plc (LSE: OMG), the technology group providing image understanding products for the entertainment, defence, life science and engineering industries, announces interim results for the six months ended 31 March 2011.

Financial Key Points

·      Revenue of £13.3m (H1'10: £14.4m)

o  Revenue largely impacted by unexpected delay in the progress of one large project within the Vicon "House of Moves" segment

o  Project is expected to resume in the second half

o  H1'10 revenue performance was a record revenue period for OMG

·      Adjusted loss before tax of £0.3m (H1'10: profit before tax £1.4m)

o  Not accounting for the delayed project, H1'10 would have shown an adjusted profit before tax of £0.7m

·      Net Cash balance remains buoyant at £2.3m (H1'10: £4.1m; FY'10: £6.1m)

o  Reflects £1.3m cash used in period in the acquisition of Sensing Systems

Operational Key Points

·      Vicon

o  Launch of New T-Series S Edition cameras, which enable outdoor motion capture.

o  Bonita making headway in engineering space: Boeing, Hyundai, French Atomic Energy Commission and ASICS

o  Recent films include: The Chronicles of Narnia: The Voyage of the Dawn Treader, Gulliver's Travels, Mars Needs Moms and Black Swan

o  Upcoming films include: The Green Lantern and Transformers 3

·      Yotta UK

o  Revenue maintained, operating loss reduced

o  Contracts won with Cheshire & Merseyside

o  Launch of SaaS software platform "Horizons" well received

·      2d3

o  Revenue up 55%, delivering maiden divisional profit

o  Acquisition of Sensing Systems, establishing OMG as technology leader in the growing video intelligence market

·      OMG today forms new consumer subsidiary, "OMG Life"

o  Strategic partnership between OMG and brand agency Barty Bogle Hegarty will support creation, roll-out and targeting of new consumer-facing offering

o  Initial efforts will focus on developing technology from OMG's successful "Revue" product

o  The Board believes OMG Life has significant potential across a range of markets and we will be further investing during H2. The revenue benefits are expected to come through from 2012

Commenting on the results Nick Bolton, Chief Executive Officer said:

"It is disappointing to report a loss for this first half of the year, particularly when I believe very firmly that the underlying momentum of our business remains strong. Our strategic positioning as a Group is as resilient today as it has ever been and the investment we are planning to make in OMG Life, I believe, is a clear indication of our confidence in the Group's future and in the potential of our product set.

"Global economic conditions have not yet stabilised, but the strength and breadth of our offering across multiple markets means we are well placed to contend with this. There is much to do in the second half, but there is much to aim for also and, as such, the Group looks forward to the remainder of the year with a cautious optimism."  

For further information please contact:

OMG plc                                                                       [phone]

Nick Bolton, CEO

David Deacon, CFO

Financial Dynamics                                                     + 44 (0)20 7831 3113

Matt Dixon / Emma Appleton / Charles Palmer

Evolution Securities (NOMAD to OMG plc)                   [phone]

Jeremy Ellis / Chris Clarke

About OMG plc

OMG plc (Oxford Metrics Group. LSE: OMG) is a group of technology companies producing image understanding products and services for the entertainment, defence, life science and engineering industries.

Be it for capturing the movements of actors (for the movie industry), sportsmen (for video games or improving team performance), or children with Cerebral Palsy, rehab patients and animals (for medical, life science and research industries); or recording the condition of highways and the assets that surround them or assessing the value of properties; or even providing image intelligence and situational awareness from drone aircraft. Through this diversified offering the Group has earned its strong international reputation for precision from pixels.

Founded in 1984, the Group is headquartered in Oxford, UK, and has four offices in the US and two in the UK. It has customers in over 50 countries and is a quoted company listed on AIM, a market operated by the London Stock Exchange. The Group trades through three operating subsidiaries:  Vicon, the world's largest motion capture and movement analysis company, 2d3, a manufacturer of specialised image understanding software for defence applications, and Yotta, our highways and property surveying business.

The Group's global clients spanning the worlds of science, medicine, sport, engineering, gaming, film and broadcast include: major hospitals and research facilities such as Guy's Hospital, Nuffield Orthopaedic Centre and Loughborough University, engineering industry leaders including: Ford Motor Company, BMW, Airbus and Toyota, and in the entertainment sector; Sony, Industrial Light and Magic, The Moving Picture Company (MPC), Sega, Nintendo, UbiSoft, EA and Square Enix. In surveying clients include Miami-Dade county, Atkins, and Oxfordshire, Cumbria, Derbyshire and Pembrokeshire County Councils as well as many others.

For more information about OMG and its subsidiaries, visit www.omgplc.com, www.vicon.com, www.2d3.com, www.yottadcl.co.uk or www.yottamvs.com.

About Barty Bogle Hegarty and Zag

Barty Bogle Hegarty (BBH)

BBH is one of the world's most famous and creative advertising agencies. Launched in 1982, the Agency has offices in six countries around the world. BBH has spent 28 years creating value for world leading brands such as Audi (Vorsprung Durch Technik), Lynx (The Lynx Effect) and Johnnie Walker (Keep Walking).

ZAG

In 2006 BBH launched its brand invention division, ZAG, to leverage its idea generating expertise and develop a new business model for the agency. Successes to date include the stylish security brand Ila, which was floated on AIM in 2010 and has a market value of £10m and the accessories brand, Bo Peep, which is on track to reach UK retail sales of £2m this year.

Chairman and Chief Executive's Statement

The first half again proved the resilience of the Group's business model thanks to our diverse portfolio of activities in a range of global markets. Overall, we saw good performances both in Yotta UK and 2d3 with new product launches and exciting expansions. However, we saw a mixed performance from the Vicon motion capture systems business in a slightly tougher trading environment and, more importantly, a disappointing financial result in our House of Moves business in connection with The Guardian Project ('GME'), which was previously expected to complete in the first half, is now expected to deliver in the second half of the current financial year. This delay has affected both Group revenues and profits to the tune of £1.0m.

Whilst this is disappointing, there are still successes achieved in the half of which we can be proud.  In particular, 2d3 achieved a maiden operating profit and with the complementary acquisition of Sensing Systems, we expect the addressable market of both businesses to expand considerably, positioning OMG as a leader in the growing video intelligence market.

Another important positive is the establishment of a new Group subsidiary - OMG Life. Over the years, OMG has worked hard to look at opportunities in a wide range of markets where imaging technology can either solve a tough problem or open up new avenues for invention and research.  We continue to invest in new areas and as evidenced during the downturn we were particularly successful in diversifying and launching new product ranges such as Vicon Bonita and Revue. OMG Life marks a natural progression in that strategy, adding to and building upon our broad industry client base and targeting those individuals - you, me, our families and friends - who might also benefit from applying OMG technology to their everyday lives. 

Targeting the consumer will take time and it will take effort; it will also require financial investment.  However, the OMG Board is very excited to be embarking on this significant opportunity; we believe that the investment is right, and we are confident that our excellent partners at BBH will bring a great deal of experience and support to the process.

Technology is at the heart of OMG and we remain focussed on the execution and launch of innovative new products and services to deliver shareholder value and drive growth in future years.

Financial Summary

For the first half, the Group achieved revenue of £13.3m compared to the prior record half performance of £14.4m. Adjusting for GME, the Group's revenue would have been comparable with last year.

The Group is reporting a loss of £0.6m (H110: Profit £1.2m) for the first half. A loss is clearly not desirable and in addition to GME, the Group has also seen Sterling strengthen which has impacted profits by £0.4m compared with the same period last year.  We have also seen an impact as a result of the ongoing restructuring of Yotta MVS as well as costs relating to the recently acquired Sensing Systems of £0.1m.

However, gross margins within Vicon, a key performance indicator for the Group, improved during the first half to 71% (H110:69.0%). Overall, the Group's gross margin was slightly below at 49% compared to 52% the same period last year due to GME.

Cash at bank as at 31 March 2011 stood at £2.3m (H110: £4.1m). Cash declined due to the acquisition of Sensing Systems which utilised £1.3m of resources and the Group's current working capital requirement is higher than normal due to GME.

Vicon

Following a record performance in 2010, we are seeing slightly tougher than expected market conditions for Vicon. However, demand for Vicon's differentiated products in the half remained strong, although unfortunately certain deals that were expected to close are now expected to do so in the second half. This meant that both Rest of World and USA saw revenues down by 7.4% and 12% respectively compared with the first half of 2010. Vicon as a whole including House of Moves achieved revenues of £9.3m (H110: £10.6m) and an operating profit of result of £0.8m (H110: £3.0m) before allocation of Group overheads.

As mentioned earlier in the statement, The Guardian Project, a creative property owned by Guardian Media Entertainment, LLC, whose members consist of SLG Entertainment, LLC, NHL Enterprises, LP and a major US media company, has not been recognised in these results.

Our Los Angeles studio, House of Moves, has been involved from the beginning in this exciting project delivering impressive content to develop 30 animated superheroes in line with the studio's strategy to develop the animation services side of the business. During the half, the timings of The Guardian Project have not developed as planned and has slowed down for a number of reasons.

More positively, these obstacles have now been resolved, enabling GME to progress its business development through a fund raising exercise. We believe the project has a bright future and the raising of additional funds by GME will ultimately be successful. Our revenue recognition policy dictates that whilst uncertainty exists we cannot recognise this revenue, so we have therefore taken a prudent view. However, we do expect to recognise this and receive related operational cashflow in the second half of the current financial year.

During the half, Vicon has been successful in many other ways including a system sale to Headley Court, the UK armed forces rehabilitation centre. The purchase, which included customized hardware, was funded by the well-known charity 'Help for Heroes'. This charity helps many of the UK's servicemen and women and we are proud to say Vicon is part of this.

The Bonita camera and Tracker software, launched in 2010, has continued to establish itself across our Life Science, Entertainment and Engineering markets. In particular in Engineering, Bonita continues to grow with sales made to multiple Boeing sites in the US together with other international sales to Hyundai, French Atomic Energy Commission and ASICS.

The S-Edition version of our flagship T-series camera range was launched in February 2011 enabling customers to use our systems outdoors for the first time. This benefit means that sports capture can move from inside the laboratory to the sports arena itself. The new capability was first purchased by the University of Western Australia and in the UK by the Motor Industry Research Association for outdoor capture of motor vehicles at speeds up to 70mph.The S-Edition range continues to offer a mocap experience like no other and builds on the speed and flexibility of the existing T-Series family of cameras, now boasting the world's fastest full-frame 1 megapixel mocap camera. This product offers unparalleled accuracy and the new advancements in technology to achieve precise and robust outdoor mocap are being welcomed by the industry. Recent films in the half included: The Chronicles of Narnia, The Voyage of the Dawn Treader, Gulliver's Travels, Mars Needs Moms and Black Swan. Upcoming films include The Green Lantern and Transformers 3.

Yotta

Yotta UK reported revenues of £2.2m (H110: £2.2m) and reported a reduced operating loss of £0.1m (H110: Loss £0.3m) before allocation of Group overheads. Given the worst UK winter in living memory (even worse than the poor winter of 2010) and an increasingly price competitive market driven by the Comprehensive Spending Review ('CSR'), Yotta has responded well to these challenges and, despite this backdrop, has delivered an improved and commendable first half result.

In the half, Yotta UK was awarded a four year contract to carry out visual surveys on behalf of Cheshire East & West and the Merseyside Consortium. Over the last five years, OMG has had a good relationship with Cheshire and Merseyside and it is satisfying to be awarded the contract for another four years. We will continue to provide them with robust, consistent and accurate data for their analysis and asset management decisions.

Product development and innovation has continued within Yotta UK, which saw the release of a new SaaS (software as a service) software platform - Horizons in April 2011. This new platform enables a Local Authority to visualise, manage and optimise the highway survey data it collects and subsequently check on the status of every road under its management through a single web-delivered interface. This platform provides a new, improved way for Local Authorities to manage their roads at a time when cost-efficiency is a major concern but road repairs and reviews still need to take place. We believe that the solution is set to revolutionise the way highways are managed in the UK and elsewhere.

Yotta USA reported revenues of £0.8m (H110: £0.9m) and an operating loss of £0.3m (H110: Loss £0.5m). During the first half, the Group has been actively seeking an exit from the USA property surveying market. To this end, the Group released 19 employees in February 2011 leaving a small compliment to successfully the complete the wind-down of the business and fulfil its remaining contractual commitments. In addition, the Group has agreed a deal in principle with a third party to take over responsibility for the Miami Dade Contract, representing the only major long-term contractual commitment remaining. The Group anticipates its withdrawal from the US Property Appraisal market will be completed during the second half. The Group anticipate that a write down of Net Assets will become necessary in the region of £0.4m; no provision is included as at 31^st March 2011 in the Interim results.

2d3

Our aerial imaging and defence business 2d3, performed well achieving revenues of £1.1m (H110: £0.7m) - only just short of revenues for the whole of last year and reported a maiden profit of £0.1m (H110: Breakeven).

The UK side enjoyed a particularly strong H1 successfully undertaking research work for the UK Ministry of Defence. In the USA, performance was similar to that seen in the prior year and as is often the case in the defence business, contracts take a long time to bear fruit but the Group continued to work on significant opportunities but none that can be disclosed.

The highlight in the first half for 2d3 was the recent acquisition of Sensing Systems Inc, in February 2011. The acquisition establishes OMG as a new leader in a growing market and will accelerate the growth of 2d3's defence and aerial imaging business, fulfilling OMG's strategic objective to expand its operations in this important marketplace. The acquisition represents the next important step in the development of the 2d3 business.

Both 2d3 and Sensing are well positioned within the growing video intelligence market and work directly both with government departments and with key prime contractors in the space including: US Department of Defence, UK Ministry of Defence, US and UK civilian agencies and commercial customers. 2d3 has a strong track record of creating vision science capabilities, which are used by analysts to enrich the raw image content from aerial platforms into powerful and actionable reports. Sensing will add additional value with its proven ability to provide low-level video import and export tools as well as standards compliant software libraries. Sensing will provide OMG with additional operational capabilities by opening up a wide array of digital media opportunities.

It is anticipated that the addressable market of both businesses will expand considerably and post acquisition we are already seeing the benefits of the combined entities, evidenced by new and accelerated development and selling opportunities for 2d3's technology into the Sensing customer base. The combined entity will further exploit both 2d3 and Sensing's existing involvement in the US and UK, establishing a strong position in a number of important US and NATO-related projects.

New Developments - OMG Life

We are pleased to announce we have established a new subsidiary - OMG Life.  The new subsidiary, led directly by our Group Chief Executive Officer, Nick Bolton, will focus on exploiting both current and future opportunities for OMG to adapt its market-leading imaging technology for sales to the direct-to-consumer market.

OMG Life will focus initially on adapting the Group's "Revue" product for a range of consumer end-markets. Revue, a wearable digital camera that takes photographs automatically without user intervention is currently used across a variety of medical and research applications, for example as an aid for people with memory loss.  OMG believes that there exists a compelling opportunity to market this product directly to a range of consumer groups and also believes that, over time, other adjacent consumer markets could be developed where OMG technology has a saleable application.

To support OMG Life in its development, and to support the Group in targeting the direct-to-consumer vertical, OMG is pleased to announce that it has entered into a strategic partnership with Bartle Bogle Hegarty ("BBH"), one of the world's most respected brand communications agencies. BBH will support OMG in the branding, marketing and targeting of its new consumer-facing products, drawing on its experience in creating advertising campaigns for major global brands such as Audi, British Airways and Unilever. Through its brand invention division, Zag, BBH will also support OMG in the development, consumer-testing, marketing and targeting of the products themselves, some of which will come to market during the current calendar year.

For the past twelve months, OMG and BBH have worked together to create a strategy and product development plan for OMG Life. Today's strategic partnership formalises that relationship, such that BBH will be the exclusive provider of marketing services to OMG Life.

Investment to date has been largely development related and has consequently been capitalized. To enable OMG Life to get off to a good start, the Group has planned for significant additional OMG Life expenditure in the second half, which will affect our bottom line performance for the full year 2011 results. A budget of £1.3m has been set aside in preparation for OMG Life's product launch which is planned for 2012. However, we are excited about this new development and the Board believes OMG Life and its "Revue-based" product range could have significant potential across a range of markets in FY2012 and beyond.

Outlook

General global economic conditions have not yet stabilised. OMG is not immune to this type of uncertainty but the strength and breadth of our offering across multiple markets means we are well placed to contend with this. Whilst these conditions present challenges the Group does have the advantage of not having its eggs all in one basket, offering a breadth of differentiated products and services across multiple geographical markets.

Vicon continues to hold a dominant position in its market and current product developments will give rise to new product releases in the second half and we continue to explore new opportunities. Yotta UK, having 'weathered' the first half goes into the second half, which is normally its stronger half, with additional optimism due to the launch of its SaaS software offering Horizons. In 2d3, we continue to work on both sides of the Atlantic to further segment our relationships with key contractors in the US and 2d3 continues to develop interest in Tacitview and its technology is far greater than its size might justify. OMG looks forward to 2d3, further strengthened by Sensing Systems delivering some new opportunities previously out of reach. The Guardian Project is expected to resume in the second half so this delay, which has affected our first half, will be resolved.

Technology is at the heart of OMG and we continue to be excited about the many opportunities it presents for the Group - from OMG Life's revolutionary camera to Yotta's innovative Horizons software, from the restart of the Guardian Project to the expanded portfolio of 2d3 Sensing. There is much to do in the second half, but there is much to aim for also and, as such, the Group looks forward to the remainder of the year with a cautious optimism.

Anthony Simonds-Gooding, Non-Executive Chairman

Nick Bolton, Group CEO

CONDENSED CONSOLIDATED INCOME STATEMENT

		Six months ended 31 March 2011	Six months ended  31 March 2010	Year ended  30 September 2010
		(unaudited)	(unaudited)	(audited)
	Note	£'000	£'000	£'000
Revenue	2	13,337	14,392	31,179
Cost of sales		(6,802)	(6,846)	(14,224)
Gross profit		6,535	7,546	16,955
Sales, support and marketing costs		(2,186)	(2,069)	(4,750)
Research and development		(1,016)	(1,152)	(2,335)
Administrative expenses - exceptional		(107)	-	(1,920)
- other		(3,938)	(3,171)	(7,153)
Other income		157	107	168
Operating (loss)/profit		(555)	1,261	965
Finance income		4	6	11
Finance expense		(1)	(22)	(22)
(Loss)/profit before taxation	2,3	(552)	1,245	954
Taxation	4	186	(399)	(632)
(Loss)/profit for the period attributable to owners of the parent during the period		(366)	846	322
Basic (loss)/earnings per share (pence)	5	(0.53)p	1.24p	0.47p
Diluted (loss)/earnings per share (pence)	5	(0.53)p	1.19p	0.45p

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

		Six months ended 31 March 2011	Six months ended  31 March 2010	Year ended  30 September 2010
		(unaudited)	(unaudited)	(audited)
	Note	£'000	£'000	£'000
Net (loss)/profit for the period		(366)	846	322
Other comprehensive income
Currency translation differences		31	(8)	(75)
Deferred tax in respect of share options		110	21	(14)
Total comprehensive income for the period attributable to the owners of the parent		(225)	859	233

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

		31 March 2011	31 March 2010	30 September 2010
		(unaudited)	(unaudited)	(audited)
	Note	£'000	£'000	£'000
Non-current assets
Intangible assets		3,449	2,003	1,647
Goodwill		6,642	5,487	3,528
Property, plant and equipment		2,274	2,747	2,367
Financial asset - investment		69	69	69
Deferred tax asset		1,037	644	505
		13,471	10,950	8,116
Current assets
Inventories		2,205	1,787	1,475
Trade and other receivables		10,184	9,291	9,413
Cash and cash equivalents		2,349	4,077	6,198
		14,738	15,155	17,086
Current liabilities
Trade and other payables		(6,519)	(6,020)	(5,651)
Current tax liabilities		(259)	(539)	(783)
		(6,778)	(6,559)	(6,434)
Net current assets		7,960	8,596	10,652
Total assets less current liabilities		21,431	19,546	18,768
Non-current liabilities
Financial liabilities		(1,964)	-	(9)
Deferred tax liability		(544)	(363)	(120)
		(2,508)	(363)	(129)
Net assets		18,923	19,183	18,639
Capital and reserves attributable to the owners of the parent
Share capital	6	176	171	171
Share premium account		7,407	6,773	6,773
Merger reserve		2,928	2,928	2,928
Retained earnings		8,291	9,154	8,677
Foreign currency translation reserve		121	157	90
Total equity shareholders' funds		18,923	19,183	18,639

CONDENSED CONSOLIDATED STATEMENT OF CASHFLOWS

		Six months ended 31 March 2011	Six months ended 31 March 2010	Year ended 30 September 2010
		(unaudited)	(unaudited)	(audited)
	Note	£'000	£'000	£'000
Cash flows from operating activities
Operating (loss) / profit		(555)	1,261	965
Depreciation and amortisation		604	706	1,358
Impairment of intangibles		-	-	1,920
Loss on disposal of property, plant and equipment		(1)	-	(2)
Share based payments		77	85	167
Exchange adjustments		164	(318)	(53)
(Increase) / decrease in inventories		(742)	566	846
(Increase) in receivables		(716)	(1,524)	(1,704)
Increase in payables		692	1,512	1,574
		(477)	2,288	5,071
Tax paid		(783)	(50)	(179)
Net cash from operating activities		(1,260)	2,238	4,892
Cash flows from investing activities
Purchase of property, plant and equipment		(467)	(619)	(864)
Purchase of intangible assets		(746)	(348)	(753)
Proceeds on disposal of property, plant and equipment		140	142	284
Interest received		4	6	11
Acquisition of subsidiary undertaking net of cash acquired		(1,295)	-	-
Net cash used in investing activities		(2,364)	(819)	(1,322)
Cash flows from financing activities
Issue of ordinary shares		19	-	-
Payment of finance lease liabilities		(9)	(23)	(32)
Interest element of finance lease repayments		(1)	(3)	(4)
Other interest paid		-	(19)	(18)
Equity dividends paid		(207)	(102)	(102)
Net cash used in financing activities		(198)	(147)	(156)
Net (decrease) / increase in cash and cash equivalents		(3,822)	1,272	3,414
Cash and cash equivalents at beginning of the period		6,198	2,776	2,776
Effect of exchange rate changes		(27)	29	8
Cash and cash equivalents at end of the period		2,349	4,077	6,198

CONDENSED CONSOLIDATED STATEMENT OF CHANGES TO EQUITY

	Share Capital	Share premium account	Merger reserve	Retained earnings	Foreign currency translation reserve	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Balance as at 1 October 2010	171	6,773	2,928	8,677	90	18,639
Total comprehensive income for the period	-	-	-	(256)	31	(225)
Transactions with owners:
Dividends	-	-	-	(207)	-	(207)
Shares issued	5	634	-	-	-	639
Movement in relation to share based payments	-	-	-	77	-	77
Balance as at 31 March 2011	176	7,407	2,928	8,291	121	18,923
Balance as at 1 October 2009	171	6,773	2,928	8,304	165	18,341
Total comprehensive income for the period	-	-	-	867	(8)	859
Transactions with owners:
Dividends	-	-	-	(102)	-	(102)
Movement in relation to share based payments	-	-	-	85	-	85
Balance as at 31 March 2010	171	6,773	2,928	9,154	157	19,183

CONDENSED CONSOLIDATED STATEMENT OF CHANGES TO EQUITY (CONTINUED)

	Share Capital	Share premium account	Merger reserve	Retained earnings	Foreign currency translation reserve	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Total comprehensive income for the period	-	-	-	308	(75)	233
Transactions with owners:
Dividends	-	-	-	(102)	-	(102)
Movement in relation to share based payments	-	-	-	167	-	167
Balance as at 30 September 2010	171	6,773	2,928	8,677	90	18,639

The accompanying notes are an integral part of this interim financial information

NOTES TO THE CONDENSED CONSOLIDATED INTERIM STATEMENTS

1.  Basis of preparation

OMG Plc (the "Company") is a company domiciled in England.  The condensed consolidated interim financial statements of the Company for the six months ended 31 March 2011 comprise the Company and its subsidiaries (together referred to as the "Group").

The following IFRIC amendments and IASs have been adopted during this accounting period although they have no impact on the Group's reporting: 

·      IFRS 1 (Amendment) 'First-time Adoption of International Financial Reporting Standards'

·      IFRS 2 (Amendment) 'Share-based Payment: Group Cash-settled Share-based Payment Transactions'

·      IAS 32 (Amendment) 'Financial Instruments: Presentation: Classification of Rights Issues'

·      IFRIC 15 'Agreements for the construction of Real Estate'

·      IFRIC 17 'Distributions of Non-cash Assets to Owners'

·      IFRIC 18 'Transfer of Assets From Customers'

·      IFRIC 19 'Extinguishing Financial Liabilities with Equity Instruments'

·      Improvements to IFRSs (2009)

Otherwise, the condensed consolidated interim financial statements have been prepared using accounting policies consistent with those of the annual financial statements for the year ended 30 September 2010.  They are in accordance with IAS 34.

The interim financial statements have not been audited or reviewed and the financial information contained in this report does not constitute statutory accounts within the meaning of Section 434 of the Companies Act 2006. The comparative figures for the year ended 30 September 2010 are not the statutory accounts but have been extracted from the Group's 2010 financial statements which have been delivered to the Registrar of Companies.The auditors' report on those financial statements was unqualified did not contain references to any matters to which the auditors drew attention without qualifying the report and did not contain a statement under Section 498(2) or (3) of the Companies Act 2006. 

2.  Segmental reporting

In accordance with IFRS 8, 'Operating Segments', the Group has derived the information for its operating segments using the information used by the Chief Operating Decision Maker.  The Group has identified the Board of Directors of OMG plc ("the Board") as the Chief Operating Decision Maker as it is responsible for the allocation of resources to operating segments and assessing their performance.  Operating segments are consistent with those used in internal management reporting and the profit measure used by the Board is the profit before tax as set out below.

The Group considers business segments as determined by reference to the markets in which they operate, which also follows the legal entity structure of the Group.

Information is presented in the condensed consolidated interim financial statements in respect of the Group's three business segments.

Vicon - this is the development, production and sale of computer software and equipment for the entertainment, engineering and life science markets.

2d3 - this is the development and sale of computer software and equipment for the defence market

Yotta - the provision of services for the management of infrastructure and taxation.

	Revenue			(Loss)/profit before tax
	Six months ended 31 March 2011 (unaudited)	Six months ended 31 March 2010 (unaudited)	Year ended 30 September 2010  (audited)	Six months ended 31  March 2011 (unaudited)	Six months ended 31 March 2010 (unaudited)	Year ended 30 September 2010  (audited)
	£'000	£'000	£'000	£'000	£'000	£'000
Vicon UK	4,602	4,969	9,936	1,489	2,227	4,940
Vicon USA	3,573	4,058	8,789	13	290	(438)
House of Moves USA	1,097	1,576	4,448	(1,022)	217	936
Vicon Group	9,272	10,603	23,173	480	2,734	5,438
Yotta UK	2,191	2,235	4,791	(419)	(516)	(747)
Yotta USA	819	874	1,976	(278)	(475)	(2,698)
Yotta Group	3,010	3,109	6,767	(697)	(991)	(3,445)
2d3 UK	847	478	610	251	(86)	(796)
2d3 USA	208	202	629	(330)	(151)	113
2d3 Group	1,055	680	1,239	(79)	(237)	(683)
Unallocated	-	-	-	(256)	(261)	(356)
OMG Group	13,337	14,392	31,179	(552)	1,245	954
	Six months ended 31 March 2011 (unaudited)	Six months ended 31 March 2010 (unaudited)	Year ended 30 September 2010  (audited)
	£'000	£'000	£'000
By origin
UK	7,640	7,681	15,337
USA	5,697	6,711	15,842
	13,337	14,392	31,179
By destination
UK	3,663	3,689	6,891
Europe	1,452	1,370	2,525
North America	5,667	6,511	15,255
Asia Pacific	2,407	2,723	5,762
Other	148	99	746
	13,337	14,392	31,179

The following additional information is provided to the Chief Operating Decision Maker.  Further analysis by market is not available.

	Six months ended 31 March 2011 (unaudited)	Six months  ended 31 March 2010 (unaudited)	Year ended 30 September 2010  (audited)
	£'000	£'000	£'000
Revenue by market
Entertainment	3,368	3,724	9,213
Life sciences	4,865	5,093	10,071
Engineering	1,039	1,786	3,889
	9,272	10,603	23,173

	Six months ended 31 March 2011 (unaudited)			Six months  ended 31 March 2010 (unaudited)			Year ended 30 September 2010   (audited)
	PBT	Group recharges	PBT net of Group recharges	PBT	Group recharges	PBT net of Group recharges	PBT	Group recharges	PBT net of Group recharges
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Vicon UK	1,489	(147)	1,342	2,227	(406)	1,821	4,940	(1,789)	3,151
Vicon USA	13	494	507	290	705	995	(438)	2,432	1,994
House of Moves USA	(1,022)	-	(1,022)	217	-	217	936	-	936
Vicon Group	480	347	827	2,734	299	3,033	5,438	643	6,081
Yotta UK	(419)	286	(133)	(516)	247	(269)	(747)	539	(208)
Yotta USA	(278)	-	(278)	(475)	-	(475)	(2,698)	-	(2,698)
Yotta Group	(697)	286	(411)	(991)	247	(744)	(3,445)	539	(2,906)
2d3 UK	251	335	586	(86)	294	208	(796)	873	77
2d3 USA	(330)	(106)	(436)	(151)	(98)	(249)	113	(445)	(332)
2d3 Group	(79)	229	150	(237)	196	(41)	(683)	428	(255)
Unallocated	(256)	(862)	(1,118)	(261)	(742)	(1,003)	(356)	(1,610)	(1,966)
OMG Group	(552)	-	(552)	1,245	-	1,245	954	-	954

	Adjusted profit before tax			Non-current assets
	Six months ended 31 March 2011 (unaudited)	Six months  ended 31 March 2010 (unaudited)	Year ended 30 September 2010  (audited)	Six months ended 31 March 2011 (unaudited)	Six months ended 31 March 2010 (unaudited)	Year ended 30 September 2010  (audited)
	£'000	£'000	£'000	£'000	£'000	£'000
Vicon UK	1,500	2,238	4,962	1,786	1,402	1,565
Vicon USA	13	290	(438)	1,267	1,593	1,381
House of Moves USA	(1,022)	217	936	1,227	803	771
Vicon Group	491	2,745	5,460	4,280	3,798	3,717
Yotta UK	(365)	(461)	(638)	3,835	3,850	3,791
Yotta USA	(215)	(429)	(681)	92	2,778	114
Yotta Group	(580)	(890)	(1,319)	3,927	6,628	3,905
2d3 UK	251	(86)	(796)	140	42	44
2d3 USA	(259)	(151)	113	4,523	248	141
2d3 Group	(8)	(237)	(683)	4,663	290	185
Unallocated	(198)	(194)	(227)	601	234	309
OMG Group	(295)	1,424	3,231	13,471	10,950	8,116

	Carrying amount of segment assets			Carrying amount of segment liabilities
	Six months ended 31 March 2011 (unaudited)	Six months ended 31 March 2010 (unaudited)	Year ended 30 September 2010  (audited)	Six months ended 31 March 2011 (unaudited)	Six months ended 31  March 2010 (unaudited)	Year ended 30 September 2010 (audited)
	£'000	£'000	£'000	£'000	£'000	£'000
Vicon UK	4,673	5,764	7,235	(2,010)	(2,241)	(2,894)
Vicon USA	4,111	5,014	5,123	(1,164)	(1,254)	(1,293)
House of Moves USA	3,027	1,521	1,730	(1,210)	(193)	(344)
Vicon Group	11,811	12,299	14,088	(4,384)	(3,688)	(4,531)
Yotta UK	8,690	8,187	7,967	(1,556)	(1,851)	(1,142)
Yotta USA	1,041	3,623	1,171	(129)	(927)	(188)
Yotta Group	9,731	11,810	9,138	(1,685)	(2,778)	(1,330)
2d3 UK	2,109	1,013	1,137	(130)	(100)	(53)
2d3 USA	4,990	685	734	(2,725)	(73)	(99)
2d3 Group	7,099	1,698	1,871	(2,855)	(173)	(152)
Unallocated	(432)	298	105	(362)	(283)	(550)
OMG Group	28,209	26,105	25,202	(9,286)	(6,922)	(6,563)

	Segment depreciation and amortisation
	Six months ended 31 March 2011 (unaudited)	Six months  ended 31 March 2010 (unaudited)	Year ended 30 September 2010 (audited)
	£'000	£'000	£'000
Vicon UK	175	188	370
Vicon USA	81	116	191
House of Moves USA	64	52	134
Vicon Group	320	356	695
Yotta UK	212	250	468
Yotta USA	18	71	139
Yotta Group	230	321	607
2d3 UK	11	9	18
2d3 USA	33	11	18
2d3 Group	44	20	36
Unallocated	10	9	20
OMG Group	604	706	1,358

3.  Reconciliation of adjusted profit before tax

	Six months ended 31 March 2011	Six months ended 31 March 2010	Year ended 30 September 2010
	(unaudited)	(unaudited)	(audited)
	£'000	£'000	£'000
Profit before tax	(552)	1,245	954
Share based payments - equity settled	77	85	167
Amortisation of intangibles arising on acquisition	73	94	190
Exceptional costs	107	-	1,920
Adjusted profit before tax	(295)	1,424	3,231

Exceptional costs comprise acquisition and redundancy costs in the period ended 31 March 2011 and the impairment of intangible fixed assets in the year ended 30 September 2010.

4.  Taxation

The Group's consolidated effective tax rate for the six months ended 31 March 2011 was 34.0% (for the six months ended 31 March 2010: 32.0%; for the year ended 30 September 2010: 66.0%).

In accordance with IAS 34 the tax charge for the half year is calculated on the basis of the estimated full year tax rate.

5.  Earnings per share

The calculation of the basic earnings per share is based on the earnings attributable to ordinary shareholders divided by the weighted average number of shares in issue during the period. The calculation of diluted earnings per share is based on the basic earnings per share, adjusted to allow for the issue of shares on the assumed conversion of all dilutive options.

	Six months ended 31 March 2011	Six months ended 31 March 2010	Year ended 30 September 2010
	(unaudited)	(unaudited)	(audited)
	£'000	£’000	£’000
(Loss)/profit attributable to ordinary shareholders	(366)	846	322
	000’s	000’s	000’s
Weighted average number of ordinary shares for the purpose of basic earnings per share	69,098	68,306	68,306
Dilutive effect of employee share options	-	2,753	3,005
Weighted average number of ordinary shares for the purpose of dilutive earnings per share	69,098	71,059	71,311
Basic (loss)/earnings per share (pence)	(0.53)	1.24	0.47
Diluted (loss)/earnings per share (pence)	(0.53)	1.19	0.45

6.  Share capital

	31 March	31 March	30 September
	2011	2010	2010
	(unaudited)	(unaudited)	(audited)
	£'000	£'000	£'000
Authorised
100,000,000 ordinary shares of 0.25p	250	250	250
Allotted, called up and fully paid
70,578,604 shares of 0.25p (31 March 2010: 68,306,306 shares of 0.25p and 30 September 2010: 68,306,306 shares of 0.25p)	176	171	171

During the six month period ended 31 March 2011 703,334 shares were issued for cash in respect of share options exercised.  During the year ended 30 September 2010 no ordinary shares of 0.25p were issued for cash in respect of share options exercised.

7.  Acquisition

On 21 February 2011 the Group purchased 100% of the share capital of Sensing Systems Inc. for a total consideration with a provisional fair value of up to £3,902,000.  This includes deferred consideration of £1,952,000 subject to certain performance conditions.  The purchase has been accounted for as an acquisition.

All intangible assets were recognised at their respective fair values.  The residual excess over the net assets acquired, including intangible assets, is recognised as goodwill in the financial statements.

		Fair value adjustments
	Book value	Alignment of accounting policy	Revaluation	Provisional fair value
	£'000	£'000	£'000	£'000
Intangible assets	-	-	1,255	1,255
Property, plant and equipment	3	12	-	15
Accounts receivable	127	8	-	135
Cash	34	-	-	34
Accruals	(159)	(53)	-	(212)
Deferred tax liability	-	-	(439)	(439)
Net business assets acquired	5	(33)	816	788

 

				£'000
Consideration:
Cash				1,329
Share consideration				621
Deferred contingent consideration				1,952
Total provisional consideration				3,902
Provisional goodwill arising				3,114

8.  Dividends

The following dividends were recognised as distributions to equity holders in the period:

	31 March	31 March	30 September
	2011	2010	2010
	(unaudited)	(unaudited)	(audited)
	£'000	£'000	£'000
Final dividend for 2009 paid in 2010 - 0.15 pence per share	-	102	102
Final dividend for 2010 paid in 2011 - 0.30 pence per share	207	-	-

9.  Copies of the interim statement

Copies of the interim statement will be sent to shareholders.  Further copies will be available from the Company's registered office at 14 Minns Business Park, West Way, Oxford OX2 0JB, and from the Company's website: www.omgplc.com.

 

END

 

 

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