Acquistion of Sensing Systems, Inc

OMG plc, Oxford Metrics Group (LSE: OMG), the technology group providing image understanding products for the entertainment, defence, life science and engineering industries, is pleased to announce that it has acquired Sensing Systems, Inc. (“Sensing”), a leading provider of software products and services for aerial platforms demanding superior digital media capability, for a maximum consideration of up to $8.5m (£5.3m).

A combination of Sensing and 2d3, OMG’s defence and aerial imaging business, is highly complementary. 2d3 and Sensing are currently both 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. Sensing will provide OMG with instant operational capabilities by opening up a wide array of digital media opportunities.

The addressable market of both businesses will expand considerably. 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 value with its proven ability to provide low-level video import and export tools as well as standards compliant software libraries.

The acquisition will establish 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 deal represents the next important step in the development of the 2d3 business. A combined entity will 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.

The acquisition comprises an initial consideration of $3.5m (£2.2m) with $2.5m (£1.6m) in cash and $1m (£0.6m) in OMG shares, to be satisfied by the issue of 1,568,964 new ordinary shares. In addition, a contingent share consideration of up to $5m (£3.1m) is based on the achievement of three cumulative revenue goals and is expected to be paid out over the course of a four year period following the completion of the acquisition.

For the full year ended 31st December 2010, Sensing reported revenues of $1.5m (£1.0m) and a profit before tax of $0.3m (£0.2m). OMG expects the acquisition to be earnings neutral during the first year post acquisition, however assuming the achievement of revenue goals during the earn-out period the acquisition is expected to become increasingly earnings enhancing for OMG in subsequent financial years.

Application will be made for 1,568,964 new ordinary shares, comprising the initial share consideration, to be admitted to AIM, with admission expected to become effective on 28 February 2011.

Nick Bolton, Chief Executive of OMG plc, said:

“I am pleased to be announcing this acquisition of Sensing, which represents an exciting opportunity for OMG by providing a number of important benefits, such as integrated product sets, new functionality and access to new customers, particularly in the US. Technology is at the heart of OMG and bringing these businesses together will provide a strengthened platform for us to grow in the expanding video intelligence market.” 

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