Interim Results

RNS Number : 3156D

OMG PLC

15 May 2012

 



Tuesday, 15 May 2012

OMG plc

("OMG" or the "Group")

Interim Results for the six months ended 31 March 2012

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 2012.

Financial Key Points

·     Revenue of £13.6m (H1 11: £12.5m) Adjusted profit before tax of £0.7m (H1 11: loss before tax £0.1m)

o  Strong performance within core Vicon systems business, particularly in USA up 20.1%

o  Improved performance in Vicon House of Moves

·     Net Cash balance remains buoyant at £3.9m (H1 11: £2.3m; FY 11: £2.8m)    

o  Up 67% compared to the prior year, due to aggressive working capital management

Operational Key Points

·     Vicon

o  Strong recovery and growth in the Americas market

o  Notable wins globally across Entertainment, Life Sciences and Engineering

o  Continued headway in Engineering sector with demand for systems

o  Technology used in films including Wrath of the Titans and recent video games FIFA 12 and Unchartered 3: Drake's Deception

·     Yotta

o  Secured several surveying contracts including London Borough of Richmond, Nottingham, Hampshire and East Sussex amongst others

o  Awarded 4 year £2.3m contract to survey 140,000km of individual lanes on motorways and other major roads across England

o  Engaged in providing higher margin professional services to 37 local authorities including: Wigan, London Boroughs of Brent

o  New, higher value and higher margin products continue to gain traction, namely our Tempest surveying vehicle and Horizons SaaS platform

·     2d3

o  Revenue maintained against strong comparative period

o  Sensing acquisition now fully integrated

o  6 defence focused projects awarded through The Centre for Defence Enterprise in the UK

o  Enter the second half with solid pipeline of prospects

·     OMG Life

o  Investment and launch preparations continue

o  Simon Randall hired as Managing Director to run the division

o  OMG Life product remains on track for launch in current financial year

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

"We started this year with much to do and we are making good progress with our plans.  Overall the Group has improved its financial performance and has continued to drive profitability.  At the same time we have taken action to ensure that this progress continues, developing our offering and refining our platform to make sure that the balance of cost, investment, good margins and compelling products is right.

Global economic conditions clearly remain unsettled. Nevertheless, the strength and breadth of our offering across multiple markets means we are well placed to contend with this. We enter the next six months with a good pipeline of prospects and look forward to the remainder of the year with cautious optimism."  

For further information please contact:

OMG plc	[phone]
Nick Bolton, CEO
David Deacon, CFO
FTI Consulting	[phone]
Matt Dixon / Emma Appleton / Charles Palmer
Singer Capital Markets (NOMAD to OMG)	[phone]
Shaun Dobson

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 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 four operating subsidiaries: Vicon, the world leader movement analysis systems; 2d3 Sensing, providing video intelligence software for defence and civil applications, Yotta DCL, our infrastructure software and services business and OMG Life, our new consumer subsidiary.

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, Sega, Nintendo, UbiSoft, EA and Square Enix. Infrastructure clients include Highways Agency, Atkins and Cumbria, Derbyshire and Pembrokeshire County Councils amongst others.

For more information about OMG and its subsidiaries, visit

www.omgplc.com, www.vicon.com, www.2d3.com, www.yottadcl.com.

Chairman and Chief Executive's Statement

Introduction

The Group has made good progress during the first half, providing an encouraging platform from which to keep working to deliver a successful full year result. This result demonstrates the wide and enduring applicability of OMG's core technology across a variety of markets. Technology remains at the heart of our strategy. It is this core technology that will continue to drive profitability in our more mature divisions, such as Vicon and which will accelerate and support the growth we are targeting in our newer businesses.

Vicon continues to hold a dominant and profitable position in its market. Whilst Yotta continues to operate within the constraints of UK Highways budgets, our new Tempest vehicle and SaaS Horizons offerings now provide real differentiation to our offering, opening up a clear route toward gradual improvements in performance. After a very strong showing in the second half of last year, in the first six months of this year 2d3 has delivered a more muted performance. This does remain very much the nature of the defence industry and we are well positioned to take advantage of an encouraging pipeline of opportunities opening up to us in the second half. Finally, OMG Life moves closer to the commercial release of its new product. We are pleased to report that this new product launch remains on track for completion in the current financial year and we look forward to updating the market on developments here in due course.

Building on the foundation of these first half results, each subsidiary is signalling that good pipelines and opportunities lie ahead. In addition, several recently launched products, including Vicon's new Bonita video cameras and version two of Yotta's Horizons software, are expected to drive performance through the remainder of this fiscal year and beyond.

Overall, the Board is satisfied with the progress made so far this year and with numerous opportunities now to re-invigorate growth, we look forward to the coming six months with cautious optimism and believe we remain on track to meet full year expectations.

Financial Summary

KPI	H1 12	H1 11	Change
Group Revenue	£13.6m	£12.5m	+£1.1m
Group Cash position	£3.9m	£2.3m	+£1.6m
Group Adjusted Profit before Tax	£0.7m	(£0.1m)	+£0.8m

During the first half, the Group increased revenue year on year by 8.5% to £13.6m (H1 11: £12.5m).  The Group also reports an improved adjusted profit before tax for the period of £0.7m (H1 11: Loss £0.1m), boosted by strong performance in Vicon, particularly in the USA. Cash at bank as at 31 March 2012 stood at £3.9m: an improvement of 67% compared to the prior year (H1 11: £2.3m).

Divisionally, when compared to the prior year Vicon and House of Moves also reported improved adjusted profits before Group overheads, up £1.6m to £2.5m.  Due to challenging market conditions in the UK, OMG's Yotta division reported revenue of £2.0m (H1 11: £2.2m) and an adjusted operating loss of £0.2m (H1 10: Loss £0.1m) before allocation of Group overheads. This was primarily due to the residual effects of the UK Government's Comprehensive Spending Review, which had an impact on Yotta's margin. Our defence division, 2d3 maintained its revenue performance, reporting revenue of £1.1m (H1 11: £1.1m), which was held back chiefly by lower activity in the UK and USA. The Group has continued to invest in OMG Life and, as planned, the new consumer-facing division remains on target for the commercial release of its first product during the current financial year.

Vicon

	Revenue		PBT		Adjusted PBT
	H1 12	H1 11	H1 12	H1 11	H1 12	H1 11
Vicon UK	£4.7m	£4.6m	£1.4m	£1.5m	£0.9m	£1.4m
Vicon US	£4.3m	£3.6m	£0.3m	£0.0m	£1.6m	£0.5m
Total Vicon	£9.0m	£8.2m	£1.7m	£1.5m	£2.5m	£1.9m
HoM	£1.5m	£1.1m	£0.0m	(£1.0m)	(£0.0m)	(£1.0m)

Demand for Vicon's differentiated products remains strong, with an increase in the half of Vicon systems sales to £9.0m (H1 11: £8.2m), largely underpinned by a recovery in demand in the USA.  Vicon sales in the Americas grew by 20.1% year-on-year, with sales growth in the Rest of World region (non-Americas) of 1.3%. This relatively strong Americas growth was, in part, supported by one large entertainment gaming deal valued in excess of £0.5m.

As highlighted at the time of December's preliminary results, the Group initiated a Vicon restructuring programme at the beginning of the current financial year to essentially centralise its development activities in the UK. These efforts focussed this business on serving the needs of its core markets. This planned exercise cost £0.2m but the benefits are already being evidenced in the shape of improved profitability, especially in the USA where the bulk of changes were implemented. Overall, Vicon's adjusted profit before allocation of Group overheads increased to £2.5m (H1 11: £1.9m).

House of Moves, our motion capture and animation services studio in Los Angeles, reported revenue of £1.5m, up by 33% year-on-year (H1 11: £1.1m) and an adjusted operating breakeven result (H1 11: Loss £1.0m) before allocation of Group overheads. For some time we have highlighted that the entertainment market as a whole remains unpredictable and demand for our services can be affected as a consequence. This trend resulted in a slower start to the financial year but at the close of the second quarter we saw a sharp turnaround such that we are currently seeing close to normal levels of activity.

There were notable wins across all three of our markets - Entertainment, Life Sciences and Engineering - with the Company installing systems for Entertainment customers such as Ubisoft in Canada and The Imaginarium in the UK to supply 80 T160 motion capture ("mocap") cameras to the London-based studio, co-founded by actor/director Andy Serkis and film producer Jonathan Cavendish. In the Life Sciences market there was demand for outdoor capture systems at Red Bull to showcase athletic performance improvement as well as at CSIR in Pretoria, South Africa, which is now the largest mocap system in Africa. In the Engineering market wins included Airbus France which is using the system in its manufacturing environment. In addition, the systems are being put to work in a design environment, for example at Toyota in Japan and at IMTO National Research Centre in Russia. The Engineering market continues to grow; now making up over 17.5% (H1 11: 12.7%) of the division's system revenues.

Vicon's technology has been used in a variety of entertainment titles in the first half, including the film Wrath of the Titans and recent video games releases FIFA 12and Unchartered 3: Drake's Deception.

The first half of 2012 also saw the release of Vicon's latest mocap camera, the Bonita 10, which shipped in December 2011. This new camera, targeted primarily at Engineering and Life Science solutions provides further resolution and capability at a lower price point, thus expanding the appeal and the footprint of our camera range as a whole.

Yotta

	Revenue		PBT		Adjusted PBT
	H1 12	H1 11	H1 12	H1 11	H1 12	H1 11
Yotta UK	£2.0m	£2.2m	(£0.4m)	(£0.4m)	(£0.2m)	(£0.1m)

Yotta UK reported revenue of £2.0m (H1 11: £2.2m) and an adjusted loss of £0.2m (H1 10: Loss £0.1m) before allocation of Group overheads. The first half saw the residual effects of the UK Government's Comprehensive Spending Review which had an impact on margins. Very simply, Yotta had to run faster to mitigate this effect, surveying 20,000km of roads compared with 17,000km a year ago equating to a productivity improvement of nearly 20% compared to the first half of last year.

In addition to these productivity improvements, Yotta continued to win new surveying and services contracts. Notable wins in the first half included securing Asset Inventory surveys at the London Borough of Hillingdon and both the South and North Wales Trunk Road Agencies, as well as SCANNER surveys in Nottinghamshire, Hampshire and East Sussex. Among the visual surveys Yotta undertook was a Coarse Visual Inspection survey in Hertfordshire, which produces the Best Value Performance Indicators on the condition of Local Authority's roads (as required by the Government) and Detailed Visual Inspection surveys in Hull and Sandwell. Yotta continues to build up its professional services capability and has been successful in winning contracts across the UK. It has engaged in providing professional services to 37 local authorities over the last 6 months, including working with Wigan, Rochdale and the London Boroughs of both Richmond and Brent.

In another important development for the future, Yotta also made progress in the first half with the development of its new Tempest scanning vehicle. This vehicle has already proven its worth, assisting greatly in Yotta securing the Highways Agency Traffic Speed Condition Survey ("TRACS") contract in February 2012 to survey 140,000 individual lane kilometres of motorways and major roads across England, as too has Yotta's Software as a Service ("SaaS") software Horizons platform, which continues to gain further traction in the marketplace. The contract is worth £2.3m over four years, the first benefit of which is expected to contribute in the second half of this financial year. This contract win validates the potential of our new Tempest vehicles and it is anticipated that this contract will fully employ two vehicles for its duration.

As the Company shifts into the manufacturing stage of the Tempest vehicle we now have a clear understanding of the cost benefits of building the vehicle. In tests we have proven Tempest offers unbeatable accuracy at a quarter of the construction costs of other vehicles. Furthermore, because the package offers a lighter footprint, it is cheaper and easier to run.

Yotta continues to work towards the launch of the second version of its Horizons SaaS offering, which matches the sector-defining visualisation capabilities of the original software with the addition of a new analysis module. We anticipate this broadening of the software's abilities will enhance adoption through the remainder of the year and into 2013.

2d3 Sensing

	Revenue		PBT		Adjusted PBT
	H1 12	H1 11	H1 12	H1 11	H1 12	H1 11
UK	£0.2m	£0.9m	(£0.1m)	£0.2m	£0.0m	£0.6m
US	£0.9m	£0.2m	(£0.5m)	(£0.3m)	(£0.3m)	(£0.4m)
Total 2d3	£1.1m	£1.1m	(£0.6m)	(£0.1m)	(£0.3m)	£0.2m

2d3 Sensing, our intelligence from imagery business serving the defence and civil aviation industry, reported revenues of £1.1m (H1 11: £1.1m) and an adjusted operating loss of £0.3m (H1 11 Profit: £0.2m) before allocation of Group overheads. The small loss reflects the Group's continued investment in business development.

Whilst the Group believes that defence budgets for Intelligence, Surveillance and Reconnaissance ('ISR') are protected, military hardware is expected to bear the brunt of the cuts. The delay in the release of various defence programme budgets has resulted in much lower activity in the UK during the first half and extended sales cycles in the USA. However, 2d3 goes into the second half with a high level of business development activity focussed on the largest pipeline of opportunities it has ever had.

Twelve months on from the acquisition of Sensing Systems, the 2ds and Sensing businesses are now completely integrated, combining their talents to pursue business opportunities with a common technology platform. The underlying Sensing business continues to perform well with its former owners on track to achieve further earn-out payments in line with the terms laid out at the time of the acquisition.

2d3 continues to undertake interesting research projects and recently scored a big hit with The Centre for Defence Enterprise ("CDE") in the UK. The CDE is the first point of contact for anyone with a disruptive technology, new process or innovation that has a potential defence application. It is a gateway between the outside world and the Ministry of Defence ("MOD") to ensure front-line forces have the best battle-winning technologies for the future. 2d3 has been awarded six defence focused projects through CDE in recent times with a combined value of almost £450,000. As a result of the success on one particular project, Crosshair 2, the divisional team was invited to demonstrate its work to ministerial and defence personnel at a CDE Showcase day.

Since the end of the first half, 2d3 has introduced version 2.0 of its server-side product, Catalina. This server hosted software provides powerful processing, exploitation, and dissemination (PED) capabilities, where a single server instance can simultaneously support many imagery feeds and many users.  Catalina 2.0 is built upon an open, flexible architecture that will provide the framework for PED capabilities within the server rooms of our customer's facilities.  The design is even flexible enough to incorporate our customers' or third party proprietary algorithms.  Essentially, Catalina provides the bridge between sensor (e.g. the airborne camera) and the intelligence analyst. This new version extends the reach of the system and adds several new toolsets.

OMG Life

	Revenue		PBT		Adjusted PBT
	H1 12	H1 11	H1 12	H1 11	H1 12	H1 11
OMG Life UK	£0.0m	£0.0m	(£0.3m)	(£0.3m)	(£0.3m)	(£0.1m)

OMG Life is the Group's new consumer products division, due to launch its first product ("Product X"), a completely new kind of camera. The main focus for OMG Life in the first half has been the on-going development of Product X as well as preparations for its launch which is expected within the current financial year. To enable OMG Life to get off to a good start we have, as planned, invested in this new development. The operation reported an adjusted loss of £0.3m (H1 11 Loss £0.1m).

To lead this subsidiary and the all important launch of Product X, the Company has hired Simon Randall as OMG Life Managing Director. Simon has over 15 years of consumer product experience, having been an executive at Nokia for twelve of those years in a variety of UK and global marketing and product roles. With this experience, Simon is now busy overseeing the finalising of launch planning and the scaling up of production.

We look forward to sharing more details about the product as we move into the launch phase.

Outlook

Clearly, general global economic conditions remain unsettled. Despite this, the Board believes that the overall strategy of leveraging our Group's core technology across multiple markets and multiple geographies positions OMG well to deal with these challenges.

Vicon continues to hold a dominant position in its market and current product developments will further reinforce its position. Yotta will continue to deal with constrained UK Highways budgets, but with the TRACS contract and our new Tempest vehicle and SaaS Horizons offerings, we have a clear route to further improving performance. Whilst 2d3 has experienced a muted first half, we remain confident that our proposition is well positioned to take advantage of ISR opportunities in the second half and we are bolstered by its strong pipeline of opportunities. And finally, OMG Life nears commercial release and promises an exciting future.

Overall, the Board is satisfied with progress so far this year and with numerous opportunities to re-invigorate growth we expect Vicon, Yotta and 2d3 to trade profitably in the second half.  Accordingly the Group looks forward with cautious optimism and remains on track to meet full year expectations.

CONDENSED CONSOLIDATED INCOME STATEMENT

		Six months ended 31 March 2012	Six months ended 31 March 2011	Year ended  30 September 2011
		(unaudited)	(unaudited)	(audited)
	Note	£'000	£'000	£'000
Revenue	2	13,587	12,518	26,366
Cost of sales		(5,780)	(6,264)	(12,088)
Gross profit		7,807	6,254	14,278
Sales, support and marketing costs		(2,139)	(2,064)	(4,962)
Research and development		(1,195)	(964)	(1,931)
Administrative expenses - exceptional		(186)	-	-
- other		(3,937)	(3,660)	(6,956)
Other income		23	157	293
Operating  profit/(loss)		373	(277)	722
Finance income		3	4	4
Finance expense		(1)	(1)	(5)
Profit/(loss) before taxation	2,3	375	(274)	721
Taxation	4	(58)	186	(80)
Profit/(loss) from continuing operations		317	(88)	641
Loss on discontinued operation net of tax		(36)	(278)	(828)
Profit/(loss) for the period attributable to owners of the parent during the period		281	(366)	(187)
Basic earnings/ (loss) per share (pence)	5	0.39p	(0.53)p	(0.27)p
Diluted earnings /(loss) per share (pence)	5	0.39p	(0.53)p	(0.27)p
Continuing operations
Basic earnings/(loss) per share (pence)	5	0.44p	(0.13)p	0.92p
Diluted earnings/(loss) per share (pence)	5	0.44p	(0.13)p	0.90p

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

		Six months ended 31 March 2012	Six months ended 31 March 2011	Year ended 30 September 2011
		(unaudited)	(unaudited)	(audited)
	Note	£'000	£'000	£'000
Net profit/(loss) for the period		281	(366)	(187)
Other comprehensive income
Currency translation differences		29	31	(59)
Tax recognised directly in equity		14	110	(58)
Total other comprehensive income		43	141	(117)
Total comprehensive income for the period attributable to the owners of the parent		324	(225)	(304)

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

		31 March 2012	31 March 2011	30 September 2011
		(unaudited)	(unaudited)	(audited)
	Note	£'000	£'000	£'000
Non-current assets
Intangible assets		4,426	3,449	4,270
Goodwill		6,665	6,642	6,801
Property, plant and equipment		2,144	2,274	2,137
Financial asset - investment		69	69	69
Deferred tax asset		700	1,037	711
		14,004	13,471	13,988
Current assets
Inventories		1,876	2,205	1,768
Trade and other receivables		7,770	10,184	8,535
Current tax debtor		-	-	35
Cash and cash equivalents		3,934	2,349	2,817
		13,580	14,738	13,155
Current liabilities
Trade and other payables		(4,863)	(6,519)	(4,523)
Current tax liabilities		(1)	(259)	-
		(4,864)	(6,778)	(4,523)
Net current assets		8,716	7,960	8,632
Total assets less current liabilities		22,720	21,431	22,620
Non-current liabilities
Financial liabilities		(1,964)	(1,964)	(2,028)
Deferred tax liability		(1,468)	(544)	(1,425)
		(3,432)	(2,508)	(3,453)
Net assets		19,288	18,923	19,167
Capital and reserves attributable to the owners of the parent
Share capital	6	179	176	178
Shares to be issued		65	-	65
Share premium account		7,002	7,407	6,998
Merger reserve		3,546	2,928	3,546
Retained earnings		8,436	8,291	8,349
Foreign currency translation reserve		60	121	31
Total equity shareholders' funds		19,288	18,923	19,167

CONDENSED CONSOLIDATED STATEMENT OF CASHFLOWS

		Six months ended 31 March 2012	Six months ended 31 March 2011	Year ended 30 September 2011
		(unaudited)	(unaudited)	(audited)
	Note	£'000	£'000	£'000
Cash flows from operating activities
Operating profit/(loss)		373	(277)	722
Depreciation and amortisation		724	586	1,265
Impairment of intangibles		396	-	36
Loss on disposal of property, plant and equipment		-	(1)	-
Share based payments		6	77	399
Exchange adjustments		308	100	(185)
Increase in inventories		(132)	(742)	(288)
Decrease/(increase) in receivables		507	(814)	193
Increase/(decrease) in payables		350	604	(1,232)
Cash generated from continuing operations		2,532	(467)	910
Discontinued operations		(9)	(8)	(157)
Cash generated from operating activities		2,523	(475)	753
Tax paid		48	(783)	(332)
Net cash from operating activities		2,571	(1,258)	421
Cash flows from investing activities
Purchase of property, plant and equipment		(222)	(456)	(963)
Purchase of intangible assets		(1,007)	(746)	(1,843)
Proceeds on disposal of property, plant and equipment		27	138	419
Interest received		3	4	4
Proceeds from disposal of discontinued operation		-	-	81
Acquisition of subsidiary undertaking net of cash acquired		-	(1,306)	(1,306)
Net cash used in investing activities		(1,199)	(2,366)	(3,608)
Cash flows from financing activities
Issue of ordinary shares		5	19	20
Payment of finance lease liabilities		(9)	(9)	(18)
Interest element of finance lease repayments		(1)	(1)	(1)
Other interest paid		-	-	(7)
Equity dividends paid		(214)	(207)	(207)
Net cash used in financing activities		(219)	(198)	(213)
Net increase/(decrease) in cash and cash equivalents		1,153	(3,822)	(3,400)
Cash and cash equivalents at beginning of the period		2,817	6,198	6,198
Effect of exchange rate changes		(36)	(27)	19
Cash and cash equivalents at end of the period		3,934	2,349	2,817

CONDENSED CONSOLIDATED STATEMENT OF CHANGES TO EQUITY

	Share Capital	Shares to be issued	Share premium account	Merger reserve	Retained earnings	Foreign currency translation reserve	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Balance as at 1 October 2011	178	65	6,998	3,546	8,349	31	19,167
Total comprehensive income for the period	-	-	-	-	295	29	324
Transactions with owners:
Dividends	-	-	-	-	(214)	-	(214)
Shares issued	1		4	-	-	-	5
Movement in relation to share based payments	-	-	-	-	6	-	6
Balance as at 31 March 2012	179	65	7,002	3,546	8,436	60	19,288
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 2010	171	-	6,773	2,928	8,677	90	18,639
Total comprehensive income for the period	-	-	-	-	(245)	(59)	(304)
Transactions with owners:
Dividends	-	-	-	-	(207)	-	(207)
Issue of share capital	7	-	225	618	-	-	850
Shares to be issued	-	65	-	-	-	-	65
Movement in relation to share based payments	-	-	-	-	124	-	124
Balance as at 30 September 2011	178	65	6,998	3,546	8,349	31	19,167

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 2012 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: 

·      Improvements to IFRS (2010)

·      IFRIC 19 'Extinguishing Financial Liabilities with Equity instruments'

·      Amendments to IFRS 1 ' First-time Adoption of IFRS'

·      Amendment to IAS 24 'Related Party Disclosures'

·      Amendment to IFRIC 14 ' Employee Benefits'

The following IFRIC amendments and IASs have been issued by the IASB, but are applicable to future periods. They are not expected to have any material impact on the Group's reporting:

·      Amendments to IFRS 7 'Disclosures: Transfers of Financial Assets'

·      Amendments to IFRS 1 'Severe Hyperinflation and Removal of Fixed Dates for First-time Adopters'

·      Amendment to IAS 12 ' Deferred Tax: Recovery of Underlying Assets'

·      Amendment to IAS 19 'Employee Benefits'

·      Amendment to IAS 1 'Presentation of Items of Other Comprehensive Income'

·      IFRS 9 'Financial Instruments'

·      IFRS 10 'Consolidated Financial Statements'

·      IFRS 11 'Joint Arrangements'

·      IFRS 12 'Disclosure of Interests in Other Entities'

·      IFRS 13 'Fair Value Measurement'

·      IAS 27 'Separate Financial Statements'

·      IAS 28 'Investments in Associates and Joint Ventures'

·      IFRIC 20 'Stripping Costs in the Production Phase of a Surface Mine'

·      Amendments to IFRS7 ' Disclosures: Offsetting Financial Assets and Financial Liabilities'

·      Amendments to IAS 32  'Offsetting Financial Assets and Financial Liabilities'

·      Amendments to IFRS1 ' Government Loans'

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 2011.  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 2011 are not the statutory accounts but have been extracted from the Group's 2011 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

Segment information is presented in the condensed consolidated interim financial statements in respect of the Group's business segments, which are reported to the Chief Operating Decision Maker (CODM). The Group has identified the Board of Directors of OMG plc ("the Board") as the CODM. The business segment reporting reflects the Group's management and internal reporting structure.

The Group comprises the following business segments:

Vicon Group:  This is the development, production and sale of computer software and equipment for the entertainment, engineering and life science markets;

Yotta Group:  This is services for the management of infrastructure and taxation, highway surveying and associated software development;

2d3 Group:  This is the development and sale of computer software and equipment for the defence market;

OMG Life:  This is the direct to consumer segment currently engaged in product development.

Other unallocated costs represent head office expenses not recharged to subsidiary companies.

Business segments are analysed below:

	Revenue				Profit/(loss) before tax
	Six months ended 31 March 2012 (unaudited)	Six months ended 31 March 2011 (unaudited)		Year ended 30 September 2011 (audited)	Six months ended 31 March 2012 (unaudited)		Six months ended 31 March 2011 (unaudited)	Year ended 30 September 2011 (audited)
	£'000	£'000		£'000	£'000		£'000	£'000
Vicon UK	4,664	4,602		9,455	1,446		1,489	4,591
Vicon USA	4,292	3,573		8,523	301		13	423
House of Moves USA	1,461	1,097		1,986	(50)		(1,022)	(1,772)
Vicon Group	**10,417	9,272		19,964	1,697		480	3,242
Yotta UK	1,975	2,191		3,847	(406)		(419)	(1,048)
Yotta Group	1,975	2,191		3,847	(406)		(419)	(1,048)
2d3 UK	264	847		869	(55)		251	(235)
2d3 USA	882	208		1,686	(531)		(330)	(306)
2d3 Group	1,146	1,055		2,555	(586)		(79)	(541)
OMG Life	49	-		-	(319)		(255)	(940)
Unallocated	-	-		-	(11)		(1)	8
Continuing operations	13,587	12,518		26,366	375		(274)	721
Yotta USA - discontinued operation	-	819		900	(36)		(278)	(828)
OMG Group	13,587	13,337		27,266	339		(552)	(107)

	Underlying profit/(loss) before tax			Non-current assets
	Six months ended 31 March 2012 (unaudited)	Six months ended 31 March 2011 (unaudited)	Year ended 30 September 2011 (audited)	Six months ended 31 March 2012 (unaudited)	Six months ended 31 March 2011 (unaudited)	Year ended 30 September 2011 (audited)
	£'000	£'000	£'000	£'000	£'000	£'000
Vicon UK	1,427	1,500	4,606	2,250	1,786	2,454
Vicon USA	487	13	423	1,297	1,267	1,364
House of Moves USA	(50)	(1,022)	(1,772)	823	1,227	900
Vicon Group	1,864	491	3,257	4,370	4,280	4,718
Yotta UK	(357)	(365)	(942)	4,038	3,835	3,841
Yotta Group	(357)	(365)	(942)	4,038	3,835	3,841
2d3 UK	(55)	251	(235)	220	140	164
2d3 USA	(415)	(259)	(122)	4,505	4,523	4,780
2d3 Group	(470)	(8)	(357)	4,725	4,663	4,944
OMG Life	(319)	(255)	(940)	671	148	299
Unallocated	12	57	103	191	453	177
Continuing operations	730	(80)	1,121	13,995	13,379	13,979
Yotta USA - discontinued operations	(36)	(215)	(513)	9	92	9
OMG Group	694	(295)	608	14,004	13,471	13,988

	Six months  ended 31  March 2012  (unaudited)	Six months  ended 31  March 2011  (unaudited)	Year ended 30 September 2011  (audited)
	£'000	£'000	£'000
Revenue by origin
UK	6,952	7,640	14,171
USA - continuing operations	6,635	4,878	12,195
Continuing operations	13,587	12,518	26,366
USA - discontinued operations	-	819	900
OMG Group	13,587	13,337	27,266
Revenue by destination
UK	2,995	3,663	5,851
Europe	1,363	1,452	2,934
North America	6,513	4,848	12,002
Asia Pacific	2,449	2,407	5,018
Other	267	148	561
Continuing operations	13,587	12,518	26,366
North America - discontinued operations	-	819	900
OMG Group	13,587	13,337	27,266

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

	Six months ended 31 March 2012 (unaudited)	Six months ended 31 March 2011 (unaudited)	Year ended 30 September 2011 (audited)
	£'000	£'000	£'000
Revenue by market
Engineering	1,569	1,039	4,111
Entertainment	4,369	3,368	5,790
Life sciences	4,479	4,865	10,063
	10,417	9,272	19,964

An analysis of adjusted profit before tax net of Group recharges is provided below:

	Six months ended 31 March 2012 (unaudited)			Six months ended 31 March 2011 (unaudited)			Year ended 30 September 2011 (audited)
	Under-lying PBT	Group recharges	Adjusted PBT	Under-lying PBT	Group recharges	Adjusted PBT	Under-lying PBT	Group recharges	Adjusted PBT
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Vicon UK	1,427	(526)	901	1,500	(147)	1,353	4,606	(1,180)	3,426
Vicon USA	487	1,113	1,600	13	494	507	423	1,762	2.185
House of Moves USA	(50)	-	(50)	(1,022)	-	(1,022)	(1,772)	-	(1,772)
Vicon Group	1,864	587	2,451	491	347	838	3,257	582	3,839
Yotta UK	(357)	183	(174)	(365)	286	(79)	(942)	489	(453)
Yotta Group	(357)	183	(174)	(365)	286	(79)	(942)	489	(453)
2d3 UK	(55)	77	22	251	335	586	(235)	381	146
2d3 USA	(415)	78	(337)	(259)	(106)	(365)	(122)	-	(122)
2d3 Group	(470)	155	(315)	(8)	229	221	(357)	381	24
OMG Life	(319)	62	(257)	(255)	146	(109)	(940)	243	(697)
Unallocated	12	(987)	(975)	57	(1,008)	(951)	103	(1,695)	(1,592)
Continuing operations	730	-	730	(80)	-	(80)	1,121	-	1,121
Yotta USA - discontinued operation	(36)	-	(36)	(215)	-	(215)	(513)	-	(513)
OMG Group	694	-	694	(295)	-	(295)	608	-	608

	Carrying amount of segment assets			Carrying amount of segment liabilities
	Six months ended 31 March 2012 (unaudited)	Six months ended 31 March 2011 (unaudited)	Year ended 30 September 2011 (audited)	Six months ended 31 March 2012 (unaudited)	Six months ended 31 March 2011 (unaudited)	Year ended 30 September 2011 (audited)
	£'000	£'000	£'000	£'000	£'000	£'000
Vicon UK	6,016	4,673	4,924	(2,104)	(2,010)	(2,211)
Vicon USA	4,971	4,111	5,777	(1,439)	(1,164)	(1,475)
House of Moves USA	1,696	3,027	1,282	(244)	(1,210)	(199)
Vicon Group	12,683	11,811	11,983	(3,787)	(4,384)	(3,885)
Yotta UK	8,780	8,690	8,000	(1,248)	(1,556)	(762)
Yotta Group	8,780	8,690	8,000	(1,248)	(1,556)	(762)
2d3 UK	2,395	2,109	2,134	(134)	(130)	(86)
2d3 USA	5,432	4,990	6,139	(2,518)	(2,725)	(2,818)
2d3 Group	7,827	7,099	8,273	(2,652)	(2,855)	(2,904)
OMG Life	(395)	(214)	(324)	(280)	(43)	(160)
Unallocated	(1,377)	(218)	(868)	(324)	(319)	(260)
Continuing operations	27,518	27,168	27,064	(8,291)	(9,157)	(7,971)
Yotta USA - discontinued operations	66	1,041	79	(5)	(129)	(5)
OMG Group	27,584	28,209	27,143	(8,296)	(9,286)	(7,976)

	Additions to non-current assets			Segment depreciation and amortisation
	Six months ended 31 March 2012 (unaudited)	Six months ended 31 March 2011 (unaudited)	Year ended 30 September 2011 (audited)	Six months ended 31 March 2011 (unaudited)	Six months ended 31 March 2011 (unaudited)	Year ended 30 September 2011 (audited)
	£'000	£'000	£'000	£'000	£'000	£'000
Vicon UK	486	486	1,611	277	175	379
Vicon USA	33	39	71	41	81	129
House of Moves USA	2	177	154	50	64	125
Vicon Group	521	702	1,836	368	320	633
Yotta UK	387	223	435	186	212	419
Yotta Group	387	223	435	186	212	419
2d3 UK	73	56	62	14	11	29
2d3 USA	24	4,451	4,570	146	33	168
2d3 Group	97	4,507	4,632	160	44	197
OMG Life	374	148	274	1	-	1
Unallocated	4	24	37	9	10	15
Continuing operations	1,383	5,604	7,214	724	586	1,265
Yotta USA - discontinued operations	-	-	-	-	18	27
OMG Group	1,383	5,604	7,214	724	604	1,292

3.  Reconciliation of underlying  profit/(loss) before tax

	Six months  ended 31 March 2012	Six months  ended 31 March 2011	Year ended 30 September 2011
	(unaudited)	(unaudited)	(audited)
	£'000	£'000	£'000
Profit/(loss) before tax - continuing operations	375	(274)	721
Share based payments - equity settled	6	77	124
Amortisation of intangibles arising on acquisition	163	73	232
Acquisition costs	-	44	44
Redundancy costs	186	-	-
Underlying profit/(loss) before tax - continuing operations	730	(80)	1,121
Loss before tax - discontinued operations	(36)	(278)	(828)
One off expenses	-	63	315
Underlying loss before tax - discontinued operations	(36)	(215)	(513)

Redundancy costs in the six months ended 31 March 2012 relate to the reorganisation of operations at Vicon Motion Systems, inc.

Acquisition costs in the six months ended 31 March 2011 comprise costs relating to the acquisition of Sensing Systems, Inc.

One off expenses in the year ended 30 September 2011 comprise redundancy and restructuring costs associated with the disposal of Yotta MVS Inc.

4.  Taxation

The Group's consolidated effective tax rate for the six months ended 31 March 2012 was 15.5% (for the six months ended 31 March 2011: 67.9%; for the year ended 30 September 2011: 11.1%).

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 2012	Six months ended 31 March 2011	Year ended 30 September 2011
	(unaudited)	(unaudited)	(audited)
	£'000	£'000	£'000
Profit/(loss) from continuing operations	317	(88)	641
Profit/(loss) attributable to ordinary shareholders	281	(366)	(187)
	000's	000's	000's
Weighted average number of ordinary shares for the purpose of basic earnings per share	71,348	69,098	69,967
Dilutive effect of employee share options	530	-	1,659
Weighted average number of ordinary shares for the purpose of dilutive earnings per share	71,878	69,098	71,626
Continuing operations
Basic earnings/(loss) per share (pence)	0.44	(0.13)	0.92
Diluted earnings/(loss) per share (pence)	0.44	(0.13)	0.90
Total operations
Basic earnings /(loss) per share (pence)	0.39	(0.53)	(0.27)
Diluted earnings/(loss) per share (pence)	0.39	(0.53)	(0.27)

6.  Share capital

	31 March	31 March	30 September
	2012	2011	2011
	(unaudited)	(unaudited)	(audited)
	£'000	£'000	£'000
Authorised
100,000,000 ordinary shares of 0.25p	250	250	250
Allotted, called up and fully paid
71,413,399 shares of 0.25p (31 March 2011: 70,578,604 shares of 0.25p and 30 September 2011: 71,348,399 shares of 0.25p)	179	176	178

During the six month period ended 31 March 2012 65,000 shares were issued for cash in respect of share options exercised (six month period ended 31 March 2011: 703,334 shares).

During the year ended 30 September 2011 1,568,964 shares were issued as consideration for the purchase of Sensing Systems, Inc by 2d3, Inc. In addition 769,795 shares were issued to Bartle Bogle Hegarty as remuneration for services rendered.

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 £3,913,000. 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	-	-	(451)	(451)
Net business assets acquired	5	(33)	804	776

				£'000
Consideration:
Cash				1,340
Share consideration				621
Deferred contingent consideration				1,952
Total provisional consideration				3,913
Provisional goodwill arising				3,137

8.  Dividends

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

	31 March	31 March	30 September
	2012	2011	2011
	(unaudited)	(unaudited)	(audited)
	£'000	£'000	£'000
Final dividend for 2010 paid in 2011 - 0.30 pence per share	-	207	207
Final dividend for 2011 paid in 2012 - 0.30 pence per share	214	-	-

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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