Interim Results
OMG PLC
13 June 2007
13 June 2007
OMG plc
Interim Statement for the six months ended 31 March 2007
OMG plc, Oxford Metrics Group (LSE: OMG), ('OMG' or 'the Group') 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 2007.
FINANCIAL HIGHLIGHTS:
• Turnover of £8.5m, up 4% on last year's record breaking first half
(H1 2006: £8.2m) - up 9% at constant exchange rates.
• Profit before tax of £0.9m (H1 2006: £1.1m), but represents an increase
of 23% excluding £0.6m investment (H1 2006: negligible) in Yotta
(formerly Geospatial Vision) and 2d3 Defence operations.
• Operating profit margin increased to 16% of revenues (H1 2006: 14%),
excluding the effect of investment in Yotta and 2d3 Defence.
• Earnings per share at 1.1p (H1 2006: 1.58p) lower due to increased
investment. Stripping out investments, earnings per share increases to
1.8p - up 14% on the first half of last year.
• Continuing healthy cash balance at £6.6m. (30 September 2006: £6.5m)
OPERATIONAL HIGHLIGHTS:
• Continuing solid growth of Vicon:
• Major sales success for ground-breaking Nexus software, launched
into life sciences market June 2006.
• 2d3 progressing well:
• New defence business offering encouraging progress, establishing
strong links with MoD and major contractors.
• 3D mapping business, Geospatial Vision, entering next phase:
• Successfully completed first 5 contracts.
• Business now re-branded as Yotta.
• Technological leadership maintained:
• Launch of new Vicon F Series camera.
• Launch of 'real time boujou' service.
Nick Bolton, Chief Executive of OMG plc, commented:
'We're starting to realise our potential, and get results. In every area of our
business - both in markets where we lead the way and those where we are just
finding our feet - we're doing things differently and better. Vicon continues to
dominate the motion capture market, aided by the launch of Nexus into the life
science sector, while our investments in 2d3 defence and Geospatial Vision, now
Yotta, are paying off, with progress in both divisions giving us confidence in
the future growth of the company as a whole.'
OMG plc 01865 261800
Nick Bolton, Chief Executive
Peter Wharton, Finance Director
Financial Dynamics 020 7831 3113
Juliet Clarke / Hannah Sloane
ABOUT OMG
OMG plc (Oxford Metrics Group. LSE: OMG) is a group of technology companies
producing image understanding solutions 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), children with Cerebral Palsy, rehab patients and animals (for
medical, life science and research industries) or virtual reality displays (for
engineering and development), the Group has the world leading market position
and a strong international reputation for precision instruments.
Founded in 1984, the Group's headquarters are in Oxford, UK, and has offices in
California and Colorado, USA. 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
biggest motion capture and movement analysis company, 2d3, a manufacturer of
specialised image understanding software for entertainment and defence
applications and Yotta (formerly Geospatial Vision), our 3D mapping business.
Oxford Metrics' global clients in 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, Caterpillar, and
Toyota, and in the entertainment sector, Sony, Industrial Light and Magic, The
Moving Picture Company (MPC), Sega, Nintendo, UbiSoft, EA, Square Enix and many
others.
For more information about OMG and its subsidiaries, visit www.omg3d.com,
www.vicon.com, www.2d3.com or www.geospatialvision.com.
CHAIRMAN'S STATEMENT
ANYTHING IS POSSIBLE II
Six months ago, we told you that for OMG, Anything is Possible. Now, ladies and
gentlemen, please take your seats for Anything is Possible II. Well, we are in
the movie business, among others. And we have won an Oscar. And it is fair to
say that this interim report is very much a sequel to our last annual report.
Same characters. Same basic plot (quietly successful British technology company
develops new commercial focus and takes over world). And a few rather exciting
new developments, to keep the audience on the edge of their seats.
Getting results
In December, I talked about a major strategic shift that OMG needed to make; a
sideways leap into new, bigger markets, where we would be able to capitalise on
our technology base, to transform the company's long term growth potential. And
I ended by saying that we were on the brink of an exciting new era.
Now it's begun. Of course, it's still early days; but, during this first half,
we've started to see hard evidence that our new ventures can deliver the kind of
returns we predicted - as Nick reports later. And, at the same time, we've
demonstrated we can continue to improve the performance of our established
businesses, through innovation, better execution, and a more customer-focused
approach to sales.
A record first half (again)
Turning to the figures, first half turnover was £8.5m, up 4% on last year's
record first half performance; and up 9% at constant exchange rates, removing
the effect of the weakened dollar.
We invested £0.6m in operating our two main new ventures (2d3 Defence and Yotta,
formerly Geospatial Vision); and while both have made good progress, they have
not yet made any significant impact on turnover. Yet, despite this, profit
before tax remained healthy at £0.9m. This is down from £1.1m in the first half
of last year; but, when our investment in new markets is taken into account, we
see that underlying profitability has actually increased by £0.3m or 23%.
Operating expenses increased by £0.7m overall; but, thanks to improved sales
performance and tight cost control, operating profit increased to 16% of
revenues, when the effect of the new venture investments is stripped out,
compared to 14% in the comparable period.
Basic earnings per share were 1.10p compared with 1.58p last year. Once again,
the £0.6m spent on 2d3 Defence and Yotta accounts for the decrease. Stripping
out these investments, this figure increases to 1.8p - up 14% on the first half
of last year.
We continue to hold the view that employee share options are appropriate
incentives. However, the adoption of FRS 20 has led to the cost of these options
being charged to the profit and loss account during the period and comparative
period results being restated. The cost during the six month period ended 31
March 2007 was £102,000, and £31,000 in the comparable period. While these costs
are charged to the profit and lost account it is worth noting that there is an
equal and opposite credit to the profit and loss reserve in the balance sheet
and that there is no impact on the Group's cash flow.
Our cash balance remains very healthy, up slightly from the beginning of the
year at £6.6m.
Dividend policy
In last year's annual report we announced the intention to implement a
progressive dividend policy, reflecting the Group's continued strong financial
performance and the Directors' confidence in the future. Consequently, a maiden
dividend of 0.1p was paid in March of this year. This change of policy has been
well received, differentiating OMG from the vast majority of AIM listed
companies that do not pay dividends. We intend to continue with this policy and
will announce the proposed dividend for the current year with the annual
results.
Management changes
Brian Nilles has advised the Board of his intent to leave the business at the
end of the year. His resignation from the Board will take effect on this
announcement, and for the coming months he will work closely with the US
management team to ensure a smooth transition of his responsibilities. It is too
early for goodbyes, but we'd like to thank him for his 10 years of leadership
and his significant contribution to OMG's growth, and we wish him well in his
future endeavours.
A wider impact on the world
Overall, I'm hugely optimistic about this company's future. True, as I said six
months ago, it will take time to achieve all of our major strategic ambitions -
particularly in the defence market, where patience is an absolute prerequisite
for success. But our progress so far this year has been everything we hoped for,
as the incredible things made possible by OMG's technology begin to make a wider
impact on the world. To return briefly to our movie theme, we've been a hit with
the critics; now we're looking for major box office success.
Anthony Simonds-Gooding
Chairman
13 June 2007
CHIEF EXECUTIVE'S STATEMENT
POTENTIAL INTO PERFORMANCE
My theme back in December was the vast unrealised potential I could see in OMG,
and the steps we were taking to make possible its fulfilment. More specifically,
I focused on our efforts to bring about a significant change of outlook within
the company which would enable us to turn potential into performance.
Like the Chairman, I'm very pleased that I can tell you we're starting to get
results. In every area of our business - both in markets where we lead the way
and those where we are just finding our feet - we're doing things differently
and better. And if 'anything is possible' sounded like an extravagant claim six
months ago, I'm more certain than ever now that we can make it stick.
Developing our 'inner entrepreneur'
Before I turn to the performance of our businesses, I want to update you on our
ongoing efforts to discover and liberate the entrepreneurial talent with the
company.
During the first half, we've increased both the energy and the money we're
investing in developing individuals and teams. In fact, we've spent more on
commercial skills training in recent months than in the previous five years
added together. This has been not just for our sales and marketing people, but a
wide cross-section of management, backroom and even technological personnel.
It's made an enormous impact on the company, the key lesson learned being that
we need to listen more closely to our clients and understand their needs better,
before attempting to dazzle them with our incredible technology. (Perhaps that
sounds obvious, but too many technology companies seem to forget it.)
VICON: LEADING THE MARKET, BETTER
Our longest established business has continued to strengthen its position as
global leader in motion capture. Here, we're pursuing sustained growth by means
of a classic market leader strategy: ensuring it's Vicon that innovates;
developing new products that offer something different and better to existing
customers; and investing in great service.
We've ticked all those boxes over the last six months. On the life sciences side
of this market, our ground-breaking Nexus software - launched last June - is
enabling customers to capture and analyze movement in ways that previously were
not possible. In the first half, Nexus shipped with over 60% of all Vicon
systems. And to help Nexus maintain its clear technological advantage, we've
recently moved its development to Denver, putting ourselves at the heart of the
US market that is key in driving the pace of progress in this field.
Staying on the other side of the pond, I mentioned in our annual report that we
had strengthened Vicon Entertainment's position in the US film and games
industries by integrating all our Vicon motion capture systems and House of
Moves service into a single facility in Los Angeles. It's paid off
impressively, with sales up by well over 100% on the first half of last year.
Looking at performance by geography, North America continues to be our largest
market, accounting for 43% of revenues with growth during the period of 10%,
although the benefit of this was negated by the weakened dollar. Continental
Europe experienced particularly strong growth at over 60%, and combined with the
UK, accounted for 29% of revenues.
By market, the life science sector continues to represent slightly more than
half of revenues at 56% of the total. This represents a small increase over last
year, helped by the success of Nexus.
But undoubtedly the biggest Vicon news story in recent times was the launch of
our all-new F Series cameras in April. The F stands for 'Faster Full Frame'
motion capture; and, in terms of speed and accuracy, this latest addition to our
award winning MX platform, raises the bar yet again. Featuring the world's first
camera sensors designed specifically for motion capture, the new F40 and F20
enable performance data to be captured at higher speeds than ever before.
Maybe less exciting, but still important, we've beefed up our customer service
offering, adding more heads to the Vicon support and back-up team.
Again, Vicon has been used in a large number of the top movies and video games
including Spiderman 3, Brian Lara Cricket 2007 and the soon to be released
Uncharted: Drakes Fortune.
2d3: AN ESTABLISHED STAR, AND A PROMISING NEWCOMER
Our 2d3 business is unusual in being both a long term market leader and a brand
new market entrant. Let's start with entertainment, where the story is simple:
Boujou remains one of the movie industry's favourite and best selling camera
tracking systems.
As with Vicon, we've continued to build on a dominant position and to extend the
franchise. Launched in April, silver bullet and bullet SD are new derivatives of
Boujou 4, offering many of the same tracking and solving capabilities at lower
prices. And during the half, we also advanced the state of play in this market
by introducing a new camera that piggy-backs on a normal film camera, enabling
us to offer a 'real time boujou' service.
New Boujou credits in the first half include the films 300, Spiderman 3,
Charlotte's Web and the popular TV series Lost.
Turning to our new venture in defence, our 2d3 Advanced Imaging Group (AIG) has
continued to advance the case for our technology to transform the imaging
capabilities of the next generation of Unmanned Aerial Vehicles (UAVs).
As anyone who knows anything at all about MoD procurement will understand, we're
engaged in a long game here. Major contracts for technology won't fall into our
laps just because we have a 'better mousetrap'. We always knew that would be the
case; and we have started to see real reasons for optimism in our developing
relationship with MoD.
At the same time, we've been building closer links with prime defence
contractors, both in the UK and the US. And in the US, especially, we've been
getting a very positive response. We've already delivered prototypes, and hope
to make further announcements soon. As a reflection of our confidence in this
market, we have appointed Jon Damush, who has been running our Vicon LA
Entertainment, to lead 2d3's growth into the US defence industry.
Of course, until we start generating serious revenue, we can't claim success for
this venture. But we're more convinced than ever that the investment - in money,
energy and time - will deliver significant returns over the next few years.
YOTTA: A NEW NAME THAT WILL SOON BE VERY FAMILIAR
In June 2006, we launched Geospatial Vision - a boring name for an incredibly
exciting new business that revolutionises the collection and analysis of highway
data and street level imaging.
A yotta, as you probably know, is 10 to the 24th power, and the largest unit
there is for measuring data, roughly equivalent to the number of grains of sand
on the planet. The relevance to the business formerly known as Geospatial Vision
is our unique ability to extract tiny details from unimaginably vast data-sets.
The name and smart new image are brand new at the time of writing; but the
business itself is now very much up and running. In fact, during this first
half, we've completed our first five projects, capturing over 15 million images
in total and delivering data on around 500,000 assets to local authorities all
over the UK, from Carlisle to Bournemouth. One of our agreements was with
Atkins, the largest European multidisciplinary consultancy group, a strong
endorsement of the Yotta offering.
Feedback has been highly positive, as clients begin to explore the many ways in
which data supplied by Yotta can help them manage and maintain highway networks
better and more cost-effectively - from improving road safety by ensuring
warning signs are correctly placed, to negotiating better deals with contractors
charged with looking after road assets.
By way of example, Nottinghamshire County Council recently decided to record
details of all the assets within their 4,200 km road network. They realised
that, using traditional 'manual' methods of data collection, this would
represent an enormous challenge. So they embraced the potential of Yotta's
technology and commissioned a trial covering 250km of A, B and C roads. The
result: we proved that Yotta can efficiently deliver all the necessary data, and
the Council are now considering whether to extend the process to every road, or
whether they just want A road data.
Future prospects? Very promising indeed: we have lots of leads, many directly
resulting from our successfully completed UK projects, plus some exciting
possibilities in the UK, and other overseas markets. And bear in mind that so
far, we've done virtually no promotion. With our first serious sales campaign
about to get underway, we firmly believe that Yotta will soon start to live up
the size of its name.
What next for OMG?
Looking to the immediate future, we have a healthy-looking sales pipeline for
the second half. As I said in December, we're in the unusual position of having
businesses at very different stages of maturity, from long term market leader to
start-up. And we believe that makes OMG a very attractive proposition, as
improved business execution enables us to build on existing positions of
strength and capitalise on new opportunities.
One other aspect of our strategy I should briefly mention: our desire to pursue
growth through appropriate acquisitions. This continues to be an important part
of our plans, and we're making good progress.
I was intending to build to a rousing conclusion; but, looking back over what
I've already written, I think a bit of modesty and British understatement might
be the appropriate note to end on. There's still a lot of work to be done to
realise OMG's unlimited potential. But, on the basis of our progress over the
last six months, I think it's fair to say that anything remains distinctly
possible!
Nick Bolton
Chief Executive
13 June 2007
GROUP PROFIT AND LOSS ACCOUNT
for the six months ended 31 March 2007
Unaudited Unaudited Audited
six months to six months to twelve months to
31 March 31 March 30 September
2007 2006 2006
(as restated see (as restated see
note 1) note 1)
£'000 £'000 £'000
Turnover 8,520 8,184 16,274
Cost of sales (3,001) (3,047) (6,019)
---------- ---------- -----------
Gross profit 5,519 5,137 10,255
Sales, support and marketing costs (1,747) (1,350) (3,021)
Research and development (1,345) (1,062) (2,354)
Administrative expenses (1,734) (1,676) (3,451)
Other income 25 9 12
---------- ---------- -----------
Operating profit before share based
payments and goodwill amortisation 884 1,153 1,650
Share based payments (note 1) (102) (31) (81)
Goodwill amortisation (64) (64) (128)
Operating profit 718 1,058 1,441
Interest receivable and similar income 144 82 217
----------- ---------- -----------
Profit on ordinary activities before
taxation 862 1,140 1,658
Tax on profit on ordinary activities (note 2) (203) (202) (179)
----------- ---------- ------------
Retained profit for the period 659 938 1,479
======= ====== =======
Basic earnings per share (note 3) 1.10p 1.58p 2.48p
Diluted earnings per share (note 3) 1.03p 1.52p 2.38p
All amounts relate to continuing activities.
STATEMENT OF GROUP TOTAL RECOGNISED GAINS AND LOSSES
for the six months ended 31 March 2007
Unaudited Unaudited Audited twelve
six months to six months to months to
31 March 31 March 30 September
2007 2006 2006
£'000 £'000 £'000
(as restated see (as restated see
note 1) note 1)
Profit for the financial period 659 938 1,479
Exchange differences on retranslation of opening
net assets of overseas subsidiaries (59) 27 (121)
--------- --------- ---------
Total recognised gains and losses for the period 600 965 1,358
========= ========= =========
GROUP BALANCE SHEET
at 31 March 2007
Unaudited at Unaudited at Audited at
31 March 31 March 30 September
2007 2006 2006
£'000 £'000 £'000
Fixed assets
Intangible assets 860 1,288 998
Tangible assets 959 945 921
Investments 69 69 69
---------- ---------- ---------
1,888 2,302 1,988
Current assets
Stocks 1,472 1,452 934
Debtors 4,884 4,428 4,721
Cash and short term deposits 6,619 5,255 6,494
---------- ---------- ---------
12,975 11,135 12,149
Creditors: amounts falling due within one year (3,562) (3,238) (3,483)
---------- ---------- ---------
Net current assets 9,413 7,897 8,666
---------- ---------- ---------
Net assets 11,301 10,199 10,654
========== ========== =========
Capital and reserves
Share capital 150 149 150
Share premium account 5,913 5,897 5,908
Profit and loss account 5,238 4,153 4,596
---------- ---------- ----------
11,301 10,199 10,654
========== ========== ==========
GROUP CASH FLOW STATEMENT
for the six months ended 31 March 2007
Unaudited Unaudited Audited
six months to six months to twelve months to
31 March 31 March 30 September
2007 2006 2006
£'000 £'000 £'000
Net cash inflow from operating
activities (note 5) 380 992 2,646
Returns on investments and servicing of finance
Interest received 144 82 217
Taxation - (1) (179)
Capital expenditure
Purchase of tangible fixed assets (358) (241) (610)
Proceeds on disposal of tangible fixed assets 30 35 128
Acquisitions
Purchase of subsidiary undertaking - - (44)
Equity dividends paid (60) - -
---------- ---------- ----------
Net cash inflow before financing 136 867 2,158
Financing
Issue of share capital 6 2 13
---------- ---------- -----------
Increase in cash (note 6) 142 869 2,171
========== ========== ===========
NOTES TO THE INTERIM FINANCIAL INFORMATION
for the six months ended 31 March 2007
1. Preparation of the interim financial information
The financial information for the six months ended 31 March 2007 has been
prepared on the basis of the accounting policies set out in the financial
statements of the Group for the year ended 30 September 2006, except for
adoption by the Group of FRS 20 'Share-based payment' during the half year by
means of a prior year adjustment. The adoption of the standard represents a
change in accounting policy and the comparative figures have been restated
accordingly. The adoption of FRS 20 has led to the cost of employee share
option schemes being charged to operating expenses within the profit and loss
account, with an equal and opposite credit to profit and loss reserves. As a
result there is no impact on the opening balance sheet. The charge for the six
months ended 31 March 2007 is £102,000 (six months ended 31 March 2006 £31,000,
twelve months ended 30 September 2006 £81,000).
The interim financial information is unaudited and the financial information
contained in this report does not constitute statutory accounts with the meaning
of the Companies Act 1985. The comparative figures for the year ended 30
September 2006 have been extracted from the Group's financial statements which
have been delivered to the Registrar of Companies and have been amended for a
change of accounting policy. The auditors' report on those statements was
unqualified and did not include a statement under Section 237(2) or (3) of the
Companies Act 1985.
2. Tax on profit on ordinary activities
The tax charge for the six months ended 31 March 2007 of £203,000 is calculated
using an estimate of the effective tax rate for the full year ended 30 September
2007. The rate used of 23.5% (six months ended 31 March 2006: 17.7%) is lower
than the rate of corporation tax in the United Kingdom of 30%, principally due
to the utilisation of tax losses brought forward at 30 September 2006 and
additional R&D tax credits to be claimed in respect of the year ended 30
September 2007. The actual rate for the full year may vary due to a number of
factors, including the amount and distribution of profits between subsidiary
undertakings for the full year and the extent to which brought forward losses
can be utilised.
Losses brought forward at 30 September 2006 were £1,003,000.
3. 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.
At 31 March 2007 there were 60,067,616 allotted, called up and fully paid
ordinary shares of 0.25p each, and the weighted average number of shares was
60,017,910 (30 September 2006: 59,597,690, 31 March 2006: 59,336,867).
The diluted earnings per share is based on a weighted average number of shares
for the six months ended 31 March 2007 of 63,986,164 after taking account of the
dilutive effect of share options (30 September 2006: 62,073,516, 31 March 2006:
61,564,182).
4. Movement in reserves
Share premium Profit and
account loss account Total
£'000 £'000 £'000
At 1 October 2006 as restated 5,908 4,596 10,504
Retained profit for the period - 659 659
Currency translation differences on
foreign currency net investment - (59) (59)
Dividend paid - (60) (60)
Premium on issue of shares 5 - 5
Share based payments - 102 102
-------- -------- --------
At 31 March 2007 5,913 5,238 11,151
======== ======== ========
5. Reconciliation of operating profit to net cash outflow from operating
activities
Unaudited Unaudited Audited
six months to six months to twelve months to
31 March 31 March 30 September
2007 2006 2006
£'000 £'000 £'000
(as restated see (as restated see
note 1) note 1)
Operating profit 718 1,058 1,441
Depreciation and amortisation 356 325 695
Share based payments 102 31 81
Loss / (profit) on sale of tangible fixed assets 1 (4) (16)
(Increase) / decrease in stock (519) 290 794
Increase in debtors (329) (752) (1,255)
Increase in creditors 51 44 906
-------- -------- --------
Net cash inflow from operating
activities 380 992 2,646
======== ======== ========
6. Reconciliation of net cash flow to movement in net funds
Unaudited Unaudited Audited
six months to six months to twelve months to
31 March 31 March 30 September
2007 2006 2006
£'000 £'000 £'000
Increase in cash for the period 142 869 2,171
Currency movements (17) 15 (48)
--------- --------- ---------
Change in net funds for the period 125 884 2,123
Opening net funds 6,494 4,371 4,371
--------- -------- --------
Closing net funds 6,619 5,255 6,494
========= ======== ========
7. Dividend
During the six months ended 31 March 2007 a dividend of 0.1pence per share was
paid in respect of the financial year ended 30 September 2006 totalling £60,000.
8. 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.omg3d.com.
This information is provided by RNS
The company news service from the London Stock Exchange
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