Preliminary Results

6 December 2022

Oxford Metrics plc

 

 ("Oxford Metrics", the "Company" or the "Group")

 

Preliminary Results for the financial year ended 30 September 2022

 

- Year of strategic progress with disposal of Yotta -

- Record order book underpins more than half FY23 revenue expectation -

- Overall strong demand picture provides encouraging momentum into new year -

 

Oxford Metrics plc (LSE: OMG), the smart sensing software company servicing life sciences, entertainment and engineering markets, announces preliminary results for the financial year ended 30 September 2022.

	FY22	% Change	FY21
Revenue #	£28.8m	+4.5%	£27.6m
Adjusted Profit Before Tax*#	£2.6m	-35.5%	£4.0m
Adjusted* Basic Earnings per Share #	2.55p	-6.6%	2.73p
Ordinary Dividend per Share	2.50p	+25%	2.00p
Statutory Profit after Tax	£46.9m	+1498.5%	£2.9m
Statutory Basic Earnings per Share	36.70p	+1481.9%	2.32p
Net Cash**	£67.7m	+194.8%	£23.0m
Orders-in-hand	£24.0m	+306.8%	£5.9m

 

* Profit Before Tax before Group recharges adjusted for share-based payments, amortisation and impairment of intangibles arising on acquisition, additional Contemplas consideration deemed remuneration and exceptional costs

** Including Fixed Term Deposits

# Continuing operations

 

Financial Highlights (for continuing operations)

 

·   Headline revenue of £28.8m (FY21: £27.6m), up 4.5%, up 0.5% on a constant currency basis with global supply chain constraints leading to deferment of £3.5m orders unable to ship in FY22

·   Adjusted Profit Before Tax* at £2.6m (FY21: £4.0m), reflecting measured investment in five-year plan and the impact of deferred orders

·    Debt free with strong net cash position of £67.7m (FY21: £23.0m), strengthened by sale of Yotta

·    Board proposes increasing final dividend to 2.50p per share (FY21: 2.00p)

 

Operational Highlights

 

Clear need for Vicon's market-leading offering drives strong demand and revenue growth

·    Largest-ever order book as at 30^th September 2022 of £24.0m (FY21: £5.9m)

·    Strong demand across all our market segments:

o  Buoyant demand in Entertainment accounting for 58.6% of orders in hand, including contract wins with Dark Matters, to deploy Vicon's Vero solution Shōgun software in France's first virtual production studio, ByteDance, which purchased a large system to evolve the next viral dance move, and Industrial Light & Magic to create the highly acclaimed Abba Voyage experience

o  Life Sciences revenues grew 16.3% and account for 22.6% of the orders in hand, including Saarland University acquiring a system in a collaboration with NASA, ESA & DLR, the German Aerospace Centre, for large scale studies into the Musculoskeletal (MSK) aging process

o  Location-based Entertainment recovery is well underway reporting year-on-year revenue growth of 220.7% and accounts for 12.0% of orders in hand, including additional contracts with Sandbox VR, MackNext, and Immersive Gamebox

o  Engineering revenues reported 3.2% decrease year-on-year, including a contract win with TU Delft's Department of Cognitive Robotics who bought a system to extend their work in robotics

·     Encouraging traction with new flagship system - Valkyrie, providing momentum into the new year

·     Most recent acquisition, Contemplas, now integrated

Successful sale of Yotta to Causeway Technologies for £52.0m

·     All cash transaction realises investment made in Yotta at an attractive multiple

·     Provides even greater clarity to go-forward growth path building more connected business

·     Boosts near-term financial firepower to accelerate M&A as well as ongoing organic investments

 

Outlook and Guidance

 

·     Vicon enters new financial year with well over half of revenue expectation underpinned by orders in hand

·     Demand remains strong and we believe supply chain constraints are gradually easing

·     Vicon will continue to invest in augmenting capabilities to sense, analyse and apply our technology

·   As a more focussed business, supported by positive fundamentals, we are well placed to capitalise on the Smart Sensing opportunity that lies ahead

·    M&A pipeline focussed on acquisitions in known markets of entertainment, Life Sciences, engineering and sports, and on companies which possess hard-to-replicate, deep Intellectual Property in integrated Smart Sensing and attractive financial metrics

 

Commenting on the results Nick Bolton, Chief Executive said:

 

"Year one of our five-year plan has marked significant change and progress for Oxford Metrics, as we seek to build a growing, connected enterprise focussed on the expanding market opportunities in smart sensing systems, through organic and inorganic investment.

 

During the year, we successfully divested Yotta, creating a more focussed group while bringing further clarity to our go-forward strategy; a laser focus on our market-leading Vicon business. At the same time, we have continued to push boundaries to extend our sensing capabilities, bringing to market Valkyrie - our new flagship solution - to capture motion more accurately than ever before.

 

We enter a new financial year with our largest ever set of orders-in-hand and demand for our systems remains buoyant. While we have seen a deferment of shipments due to wider global supply chain constraints, this situation is gradually improving, and our commercial momentum is regaining pace. The Board is encouraged by the overall strong demand picture for our market-leading products.

 

As a more focussed business with a strengthened balance sheet and strong fundamentals, the Board looks forward to the new financial year which is set to be a year of opportunity and growth for Oxford Metrics."

 

For further information please contact:

 

Oxford Metrics	+44 (0) 1865 261860
Nick Bolton, CEO
David Deacon, CFO
Numis Securities Limited	+44 (0)20 7260 1000
Simon Willis / Hugo Rubinstein / Tejas Padalkar
FTI Consulting	+44 (0)20 3727 1000
Matt Dixon / Emma Hall / Jamille Smith / Jemima Gurney

 

 

About Oxford Metrics

 

Oxford Metrics develops software that enables the interface between the real world and its virtual twin. Our smart sensing software helps over 10,000 customers in more than 70 countries, including all of the world's top 10 games companies and all of the top 20 universities worldwide. Founded in 1984, we started our journey in healthcare, expanded into entertainment, winning an OSCAR® and an Emmy®, then moved into defence and engineering. We have a track record of creating value by incubating, growing and then augmenting through acquisition, unique technology businesses.

 

The Group trades through Vicon, a world leader in motion measurement analysis to thousands of customers worldwide, including Guy's Hospital, Industrial Light & Magic, MIT and NASA.

 

The Group is headquartered in Oxford with offices in California, Colorado, Germany and New Zealand. Since 2001, Oxford Metrics (LSE: OMG), has been a quoted company listed on AIM, a market operated by the London Stock Exchange. For more information about Oxford Metrics, visit www.oxfordmetrics.com

Chairman's Statement

2021/22 was a year of important change for Oxford Metrics. At the start of the financial year, we launched our new five-year strategy through which we aim to grow revenues 2.5x whilst delivering an Adjusted PBT* margin of 15% by the end of the plan. In May, we announced the disposal of Yotta for £52m, which now allows us to focus on growth through the lens of the faster growing Vicon, a world leader in motion tracking. We then, in July, launched our most advanced motion capture system, Vicon Valkyrie, which captures motion more accurately than ever before and, which we expect will drive revenues in the next financial year and beyond. All this provides us with a springboard from which to focus on building a higher growth, more connected Group.

 

But the year was not without its frustrations. We were subject to the well-publicised global supply chain challenge faced by many industries in a post-pandemic world. This was made all the more frustrating given the high level of market demand we experienced and continue to experience for our solutions. As of 30 September 2022, our order book stood at £24.0m (FY21: £5.9m), a record level for our business. Despite this buoyant market demand, we were unable to fulfil some customer orders, which moved approximately £3.5m of orders into the new financial year. Although some uncertainty remains, the overall supply chain picture continues to improve, and we expect these orders to ship in the first half of the new financial year. The launch of our Valkyrie system that uses the latest component technology rather than legacy components used in the outgoing Vantage system will also help ease the situation.

 

For continuing operations, revenues of £28.8m (FY21: £27.6m) are reported and an Adjusted PBT* of £2.6m (FY21: £4.0m), which reflects the deferment of £3.5m orders we were unable to ship in September 2022.

 

The Group reports a statutory Profit after tax of £46.9m (FY21: £2.9m) with a bolstered cash position including Fixed Term Deposits of £67.7m (FY21: £23.0m, following the disposal of our Yotta business at a highly attractive valuation. 

 

The Board proposes to increase our final dividend to 2.50 per share (FY21 Final Dividend: 2.00p) this year. We remain committed to our progressive dividend policy and will to aim to achieve average dividend cover of approximately two-times Adjusted PBT* per Share over time.

 

I would like to take this opportunity to recognise the outstanding contribution made by Dr Tom Shannon, one of our founders, who passed away in August 2022. Tom was one of the original team which founded Oxford Metrics in 1984 and has been part of the business ever since. Tom's contribution was felt across the entire business from R&D to quality management, from compliance to commercials. There is no doubt Tom helped make Oxford Metrics the great business it is today and we owe him our deep gratitude.

 

Lastly, I would like to thank everyone involved in supporting and building our business - our customers, our shareholders, our partners, and, of course, our brilliant team across the world.

 

 

Roger Parry

Chair

CEO STATEMENT

As we enter a new financial year, our vision for Oxford Metrics is clear. Our current five-year plan, set out in our annual report last year, aims to build a growing enterprise focussed on the expanding market opportunities in smart sensing systems, through organic and inorganic investment. Such sensor-based, analytical systems offer the possibility to transparently enhance our lives: enabling the digital to interface directly with the real world.

In our plan, we describe the coming of the Augmented Age, where humans partner with technology to achieve what neither can alone. For this augmented partnership to thrive, technologies are needed which have the ability to perceive us and our surroundings. They must be able to sense and understand every dimension of our world in real-time: humans, objects, movements, environments. Ever since our founding in 1984, this has been our domain and where our deep Intellectual Property resides powering the interface between the real world and its virtual twin. And importantly, we stand to gain as this smart sensing is applied to an increasing number of end market applications.

Our plan looks to capitalise on exactly this expanded opportunity by focussing on driving each of the three elements of smart sensing: sense, analyse and apply.

1. Extend our sensing capabilities

Our first thread is to extend our sensing methods through R&D, M&A and fostering key supplier partnerships, which broadens the applicability of our solutions and thus expands our addressable market. Here, we are focussed on building and acquiring a consistent, integrated core technology stack. Although the end market applications may be new, there will always be a tie-back to this central capability of integrated smart sensing systems.

A good example of this over the past year was the introduction of Vicon's new flagship motion tracking system, Valkyrie. This new solution pushes the envelope of measurement capability further than any previous Vicon generation. The system can measure smaller movements, more accurately, in larger volumes and at higher speeds. We believe these newly extended powers will address the growing demand for larger volume measurement driven by trends in the engineering, sports performance analysis and visual effects markets.

2. Enhance the analysis we can perform

Secondly, we seek to augment the analysis our customers can undertake with our software and thus broaden further the range of applications to which our systems can be applied. Again, this will be pursued through both organic and inorganic means. Expanding the analysis our customers can undertake with our systems has the potential to both grow our market opportunity and fill out our solutions in our existing markets.

We are constantly working to improve Vicon's suite of analysis software. For example, in March, we introduced a new version of our innovative Capture.U app. The app working with Vicon's Blue Trident inertial sensor, can now be used in an educational and training context. For universities and schools, it provides a means to develop practical understanding of human movement to build on their theoretical models. It helps the student apply their knowledge by engaging them to perform specific movements, such as squats, bicep curls and shoulder raises, then guiding the user in analysing and interpreting the data captured.

3. Embed our IP in other companies' solutions

Finally, we aim to grow by seeing our deep technology incorporated into other business' products and services. This aims to expand our addressable market as we drive the integration of our sensing and analysis IP to specific application domains. Over the past year we have both opened up our technology to selected partners and invested in specific resources to identify, partner and support such embedding companies.

Our most progressed embedding opportunities are in the Location-based Entertainment (LBE) market and, as we emerged from the period of pandemic-related lockdowns, we saw a number of those partners restart their roll-outs during the second half including Sandbox VR, who most recently announced the opening of their 30th location, MackNext, who installed their second Yullbe VR experience at Miniature Wonderland in Hamburg and Immersive Gamebox, who have plans for over 250 sites over the next three years.

Through these three mutually reinforcing mechanisms we will continue to drive growth. But over the past year, this has mostly been the result of organic initiatives. As previously communicated, we have the financial firepower for M&A and while our ambition remains, the environment for M&A has materially changed over the past six months. Although public company valuation multiples have reduced, private company valuations metrics are only now starting to reflect these lower levels. This has meant a price mismatch between buyer and seller, which has made concluding transactions tougher. We will still continue to pursue our carefully selected targets, but we will only do so at a price that represents fair value for our shareholders.

It is also worth adding that the sale of Yotta in May 2022, does not change our vision or plan but it does enable us to bring increased financial firepower to execute our growth. With a stronger balance sheet, we have the opportunity to accelerate our pace of growth through lifting our ambition to complete a number of larger transactions. We continue to hold a pipeline of M&A opportunities which fit well within this clear, coherent plan. Our pipeline is focussed on acquisitions in markets we understand well, entertainment, Life Sciences, engineering and sports, and on companies which possess hard-to-replicate, deep IP in integrated smart sensing. The right targets also possess attractive cashflow metrics, good-to-high revenue visibility or strong position in a niche market, and able management teams who share our cultural values. We look forward to announcing deals as the markets normalise.

OPERATIONAL REVIEW

KPI	Revenue		PBT		Adjusted PBT*
	FY22	FY21	FY22	FY21	FY22	FY21
Vicon	£28.8m	£27.6m	£2.7m	£3.5m	£5.4m	£6.8m
Plc	-	-	-	£0.1m	(£2.8m)	(£2.8m)
Group	£28.8m	£27.6m	£2.7m)	£3.6m	£2.6m	£4.0m

 

Despite achieving revenue growth of 4.5% (0.5% on a constant currency basis), the results achieved do not reflect the underlying strength of the business, and in particular the strong demand across all our market segments. Strong demand for our products during the year resulted in accumulating a record orderbook at the end of the financial year of £24.0m (FY21: £5.9m). Despite the constraints, reported revenues were up 4.5% at £28.8m (FY21: £27.6m).

 

There has been strong demand in the Entertainment segment which, although it saw a 15.7% decline year-on-year in revenue as a result of deferred orders, accounted for 58.6% of orders in hand. Life sciences, traditionally our cornerstone market saw revenue growth of 16.3% and accounted for 22.6% of the orders in hand. The recovery in Location-based Entertainment is well underway reporting year-on-year revenue growth of 220.7% and accounted for 12.0% of orders in hand. Engineering reported a small 3.2% decrease in reported revenues year-on-year and accounted for 6.8% of orders in hand.

 

Product gross margin was 70.5% (FY21: 72.6%). Two factors account for the net decline, with a favourable revenue mix being more than offset by gross margin erosion arising from more expensive components which accounted for approximately 3 percentage points of the decline. The overall cost base increased as we began to invest in the five-year plan though, given the possibility of supply chain constraints, the pace investment was measured, which resulted in a Vicon reported Adjusted PBT* of £5.4m (FY21: £6.8m).

 

Vicon's customers continued to extend the possibilities of our systems with some notable highlights over the past 12 months. We saw success in our Life Sciences market, including Saarland University acquiring a system for a collaboration with NASA, ESA & DLR, the German Aerospace Centre, for large scale studies into the Musculoskeletal (MSK) aging process, including investigating physical decline when immobilised; for example when overwintering in Antarctica or on the International Space Station.

 

In our Entertainment market, ByteDance purchased a large entertainment system as they look to evolve the next viral dance move, and longstanding Vicon customer, Industrial Light & Magic, merged the physical and the digital to create the highly acclaimed Abba Voyage experience. While in our Engineering vertical market, the Department of Cognitive Robotics at TU Delft, bought a system to extend their work in robotics, which includes human-robot interaction.

 

2022 also saw the rise of the use of Vicon motion capture for VTubing, where virtual characters are live streamed to fans. This trend has been growing for a while. Amazon reports that last year VTubing content grew 467% year-on-year on Twitch, and in 2020 some 38% of YouTube's 300 most profitable channels were from VTubers. At the low end, content creators can drive a 2D avatar from their webcam. But now increasingly, popular VTubers, especially in Japan, are using sophisticated Vicon capture setups to drive full 3D characters. This is yet another exciting application of Vicon's 3D capture technology.

CURRENT TRADING AND OUTLOOK

With strong market demand, Vicon start the new financial year with an Order Book of £24.0m which will underpin over half of the full year revenue expectations. Based on order intake so far in the new financial year which, includes our largest ever single order, demand remains strong. With regards to the supply chain constraints, the Board believes the situation is gradually improving and the launch of our Valkyrie system that uses the latest component technology rather than legacy components used in the outgoing Vantage system will also help ease the situation. That said, the global supply chain picture and more general global uncertainties means further supply chain disruption cannot be entirely ruled out.

 

Overall, the fundamentals at Vicon remain positive and the business is well placed to capitalise on the substantial market opportunity in the year ahead. As part of the new five-year strategic plan, Vicon will continue to invest to augment our capabilities to sense, analyse and apply our technology. The £2.3m investment previously announced was tempered in FY22 and is set to increase to £2.8m on an annualised basis. The investment compared to the current cost base will be reflected in FY23 by an increase of £0.8m and by a further £1.0m in FY24.

 

The Group remains in good financial health which includes a cash position of £67.7m which will enable the business to pursue our investment strategy including the ability to execute acquisition opportunities as the markets normalise that will accelerate our strategy.

 

The successful sale of Yotta brings even greater clarity to our go-forward growth plan and our energy and excitement to capitalise on the smart sensing opportunity that lies ahead. The Board looks forward to the new financial year which is set to be a year of opportunity and growth.

 

Nick Bolton

CEO

 

* Profit Before Tax before Group recharges adjusted for share-based payments, amortisation and impairment of intangibles arising on acquisition, additional Contemplas consideration deemed remuneration and exceptional costs

 

FINANCIAL REVIEW

Disposal of Yotta

In May 2022, the Group completed the disposal of the Yotta subsidiary for a headline consideration of £52.0m. After customary adjustments for working capital and Debt-like items the sale generated a profit on disposal after costs of £43.6m. The net cash generated by the transaction was £47.1m.

The disposal has resulted in a significant change to the year-on-year comparison in the Income Statement, Statement of Financial Position and Statement of Cash which is highlighted as appropriate in this Financial Review.

Income Statement

The Group reported revenue from continuing operations of £28.8m (FY21: £27.6m) representing a headline increase of 4.5%, on a constant FX basis revenues increased by 0.5%. From a geographical perspective, our Asia Pacific region had a strong year driven by Entertainment, Europe also reported growth of 6.4% and Vicon USA reported 11.7% headline growth though on a constant FX basis growth was nearer 0.7%.

Gross Profit margin held steady at 67.5% (FY21: 68.8%), reflecting a favourable change in the mix of revenue and gross margin erosion of approximately 3 percentage points during the year arising from supply chain constraints. In real terms Gross Profit improved year on year by £0.5m to £19.5m.

Reviewing the cost base within the Income Statement:

·      Sales, Support and Marketing costs increased by £1.3m which was largely due to increased marketing efforts and commission together with  operational activity returning to near normal levels post the pandemic.

·      Research & Development expensed through the Income Statement was £3.5m (FY21: £3.5m). The continual investment and innovation in product and services is necessary to maintain the Group's competitive position which included a number of the new products released during the financial year, some of which are described in the CEO review.

·      Administration expenses increased by £0.4m which was due to £0.2m additional consideration for the Contemplas acquisition arising from growth in ARR and other corporate costs. Adjusted PBT* of £2.6m (FY21: £4.0m/£4.5m on a constant currency basis) has been determined after adding back to the Statutory PBT £2.7m (FY21: £3.6m) non-cash items such as amortisation and impairment of acquired intangibles, share option charge and non-recurring exceptional items. A full reconciliation is available in note 6.

Statement of Financial Position

Goodwill and intangibles

The movement this year is a net £3.5m reduction. The movement is accounted for by the disposal of Yotta which accounted for £5.1m of Goodwill and Intangibles as at the end of FY22 offset by the net effect during the year of capitalised R&D of £3.4m (FY21: £2.8m), amortisation and impairment of development costs £1.4m (FY21: £2.2m) and the amortisation and impairment of acquired intangibles of £0.3m (FY21: £1.5m).

Property, plant and equipment

A small decline of £0.1m is reported. The net movement reflects the disposal of £0.3m relating to Yotta and the net effect during the year of additions of £0.6m (FY21: £0.2m) and the depreciation of £0.4m (FY21: £0.5m).

Right of use assets (IFRS16)

The decrease of £0.6m is largely accounted for by the disposal of £0.7m Right of Use assets relating to Yotta.

Investments

The investment of £0.2m relates to a minority interest in Trensl Inc. which provides training VR solutions for the military and healthcare (rehabilitation). The investment comes back-to-back with an exclusive Supply Agreement to provide all systems.

Inventories

The inventory position at the end of the financial year was £4.5m (FY21: £2.5m). The higher inventory position largely reflecting the cost of goods relating to the £3.5m deferred orders into the next financial year.

Trade and other receivables

At the year-end Trade and other receivables were £7.4m (FY21: £6.1m). The net overall increase is due to higher Vicon Trade receivables £5.3m (FY21: £2.9m), which reflected a higher final quarter revenue performance compared to last year, Accrued interest £0.3m (FY21: £0.0m), higher Other Debtors £1.0m (FY21: £0.1m) being mostly VAT repayment due from HMRC offset by the disposal of Yotta that accounted for £2.5m of Trade and Other receivables at the end of FY21.

Current liabilities

At the year-end, Trade and other payables were £11.3m (FY21: £12.5m). The net decrease is due to the disposal of Yotta that accounted for £4.3m of Trade and other payables at the end of FY21 offset by an increase in trade payables at the year-end to £4.0m (FY21: £2.3m), lower accruals £1.9m (FY21: £2.5m) and higher Vicon support contract liabilities £5.1m (FY21: £3.1m).

The lease liabilities balance reported at £0.4m (FY21: £0.6m) represents the value of lease payments due within one year relating to right of use assets. The overall decrease was accounted for by the disposal of Yotta lease liabilities and amortisation.

Non-current liabilities

The £0.1m increase in Other liabilities is due to Vicon Support contract liabilities.

The lease liabilities balance reported of £1.1m (FY21: £1.6m) represents the value of lease payments due greater than one year relating to right of use assets.

Statement of cashflows

The Group finished the year with cash of £67.7m (FY21: £23.0m) including Fixed Term deposits of £55.0m (FY21: £Nil).

Cash generated by operating activities was £3.5m (FY21 Cash generated: £14.5m).

The deployment of this cash included continued investment in development giving rise to a purchase of intangibles of £3.5m (FY21: 2.8m) and payment of dividends of £2.5m (FY21: £2.3m).

Surplus cash not required for the day to day working capital needs of the business is on a variety of 3-12 month  bank deposits. Interest received in the year was £0.3m (FY21:£Nil).

Tax

The Group tax credit this year is £0.7m (FY21: Charge £0.6m). The tax credit for the year arose due various deferred tax adjustments including but not exclusively Research & Development tax credits which continues to have a beneficial effect on the level of corporation tax payable in the UK.

The deferred tax asset decreased to £1.6m (FY21: £1.9m) arising from a decrease in the asset associated with the notional gain on exercise of share options and the disposal of Yotta offset by an increase in unrelieved losses carried forward. The deferred tax liability decreased to £2.5m (FY21: £3.1m) largely arising from the disposal of Yotta.

 

 

David Deacon

CFO

* Profit Before Tax before Group recharges adjusted for share-based payments, amortisation and impairment of intangibles arising on acquisition, additional Contemplas consideration deemed remuneration and exceptional costs

 

 

consolidated INCOME statement

for the year ended 30 september 2022

 

		2022	2021
	Note	£'000	£'000
Revenue	3	28,816	27,571
Cost of sales		(9,352)	(8,589)
Gross profit		19,464	18,982
Sales, support and marketing costs		(6,608)	(5,336)
Research and development costs		(3,547)	(3,511)
Administrative expenses		(6,814)	(6,438)
Operating profit		2,495	3,697
Finance income		305	4
Finance expense		(67)	(67)
Profit before taxation	3,5	2,733	3,634
Taxation	7	665	(574)
Profit from continuing operations		3,398	3,060
Profit from discontinued operations net of tax	10	43,519	(125)
Profit attributable to owners of the parent during the year		46,917	2,935
Earnings per share for profit on continuing operations attributable to owners of the parent during the year
Basic earnings per ordinary share (pence)	8	2.66p	2.42p
Diluted earnings per ordinary share (pence)	8	2.62p	2.40p
Earnings per share for profit on total operations attributable to owners of the parent during the year
Basic earnings per ordinary share (pence)	8	36.70p	2.32p
Diluted earnings per ordinary share (pence)	8	36.11p	2.30p

 

COnsolidated statement of

comprehensive income FOR THE YEAR

ENDED 30 sEPTEMBER 2022

 

		Group	Group
		2022	2021
		£'000	£'000
Net profit for the year		46,917	2,935
Other comprehensive expense
Items that will or may be reclassified to profit or loss
Exchange differences on retranslation of overseas subsidiaries		953	(129)
Total other comprehensive expense		953	(129)
Total comprehensive income for the year attributable to owners of the parent		47,870	2,806

 

 

 

 

consolidated statement of financial position AS AT 30 september 2022

 

COMPANY NUMBER: 03998880		Group	Group
		2022	2021
		£'000	£'000
Non-current assets
Goodwill and intangible assets		10,081	13,543
Property, plant and equipment		1,638	1,756
Right of use assets		1,367	1,978
Financial asset - investments		236	236
Deferred tax asset		1,588	1,877
		14,910	19,390
Current assets
Inventories		4,462	2,494
Trade and other receivables		7,397	6,099
Current tax receivable		254	118
Fixed term deposits		55,000	-
Cash and cash equivalents		12,679	22,957
		79,792	31,668
Current liabilities
Trade and other payables		(11,287)	(12,504)
Lease liabilities		(440)	(582)
		(11,727)	(13,086)
Net current assets		68,065	18,582
Total assets less current liabilities		82,975	37,972
Non-current liabilities
Other liabilities		(965)	(883)
Lease liabilities		(1,064)	(1,563)
Provisions		(40)	(32)
Deferred tax liability		(2,520)	(3,058)
		(4,589)	(5,536)
Net assets		78,386	32,436
Capital and reserves attributable to owners of the parent
Share capital		324	317
Shares to be issued		65	65
Share premium account		19,094	18,483
Retained earnings		57,917	13,538
Foreign currency translation reserve		986	33
Total equity shareholders' funds		78,386	32,436

 

 

 

CONSOLIDATED STATEMENT OF CASHFLOWS

FOR THE year ENDED 30 SEPTEMBER 2022

 

		Group	Group
		2022	2021
		£'000	£'000
Cash flows from operating activities
Profit for the year		46,917	2,935
Income tax (credit)/expense		(934)	286
Finance income		(305)	(4)
Finance expense		114	106
Dividends receivable		-	-
Depreciation and amortisation		2,555	3,339
Impairment of intangible assets		-	1,341
Increase in fair value of investment		-	(68)
Profit on disposal of discontinued operation		(43,578)	-
Share-based payments		139	98
Exchange adjustments		-	(69)
(Increase)/ decrease in inventories		(1,919)	1,144
(Increase)/decrease in receivables		(3,664)	3,126
Increase/(decrease) in payables		4,187	2,223
Cash generated from operating activities		3,512	14,457
Tax paid		(248)	(102)
Net cash from operating activities		3,264	14,355
Cash flows from investing activities
Purchase of property, plant and equipment		(588)	(239)
Purchase of intangible assets		(3,464)	(2,778)
Disposal of discontinued operation, net of cash disposed of		47,141	-
Proceeds on disposal of property, plant and equipment		37	11
Cash placed on fixed term deposits		(65,000)	-
Fixed term deposits maturing		10,000	-
Interest received		28	4
Dividends received		-	-
Acquisition of subsidiary undertaking net of cash acquired		-	(1,149)
Net cash used in investing activities		(11,846)	(4,151)
Cash flows from financing activities
Principal paid on lease liabilities		(460)	(504)
Interest paid		-	(1)
Interest paid on lease liabilities		(112)	(105)
Issue of ordinary shares		583	687
Equity dividends paid		(2,542)	(2,264)
Net cash used in financing activities		(2,531)	(2,187)
Net (decrease)/increase in cash and cash equivalents		(11,113)	8,017
Cash and cash equivalents at beginning of the period		22,957	14,940
Exchange gain/(loss) on cash and cash equivalents		835	-
Cash and cash equivalents at end of the period		12,679	22,957

 

 

 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 SEPTEMBER 2022

 

 

Group	Share capital	Shares to be issued	Share premium account	Retained earnings	Foreign currency translation reserve	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Balance as at 30 September 2020	314	65	17,763	12,437	162	30,741
Net profit for the year	-	-	-	2,935	-	2,935
Exchange differences on retranslation of overseas subsidiaries	-	-	-	-	(129)	(129)
Transactions with owners:
Tax recognised directly in equity in relation to employee share option schemes	-	-	-	368	-	368
Dividends	-	-	-	(2,264)	-	(2,264)
Issue of share capital	3	-	720	-	-	723
Share based payment charge	-	-	-	62	-	62
Balance as at 30 September 2021	317	65	18,483	13,538	33	32,436
Net profit for the year	-	-	-	46,917	-	46,917
Exchange differences on retranslation of overseas subsidiaries	-	-	-	-	953	953
Transactions with owners:
Tax recognised directly in equity in relation to employee share option schemes	-	-	-	(99)	-	(99)
Dividends	-	-	-	(2,542)	-	(2,542)
Issue of share capital	7	-	611	-	-	618
Share based payment charge	-	-	-	103	-	103
Balance as at 30 September 2022	324	65	19,094	57,917	986	78,386

 

 

 

1.   Basis of preparation of the financial information

 

The financial information in this preliminary announcement has been prepared in accordance with the recognition and measurement criteria of IFRS.  This announcement does not itself contain sufficient information to comply with IFRS. The Company expects to publish full financial statements that comply with IFRS on 6 December 2022.

 

The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise judgement in the process of applying the Group's accounting policies which affect the reported amount of assets and liabilities at the statement of financial position date and the reported amounts of revenues and expenses during the reported period.  Although the estimates are based on management's best knowledge of the amount, event or actions, actual results may ultimately differ from those estimates.

 

The financial information set out in this preliminary announcement does not constitute statutory accounts as defined in Section 435 of the Companies Act 2006 for the years ended 30 September 2022 and 30 September 2021 but is derived from those accounts. The statutory accounts for the year ended 30 September 2021 have been delivered to the Registrar of Companies and those for the year ended 30 September 2022 will be delivered following the Company's annual general meeting. The auditors have reported on those accounts: their report was unqualified, did not contain references to any matters to which the auditors drew attention by way of emphasis and did not contain a statement under Section 498 of the Companies Act 2006 for the year ended 30 September 2022 or 30 September 2021.

 

2.   Basis of consolidation

 

The consolidated financial information incorporates the results of the Company and all of its subsidiary undertakings drawn up to 30 September 2022.

 

3.   Revenue from contracts with customers

 

	2022	2021
Revenue	£'000	£'000
Continuing operations
Vicon UK	17,338	17,260
Vicon USA	11,478	10,311
	28,816	27,571

 

 

Timing of the transfer of goods and services	Vicon UK	Vicon USA	Total
2022	£'000	£'000	£'000
Point in time	15,494	9,175	24,669
Over time	1,844	2,303	4,147
Total	17,338	11,478	28,816
Contract Counterparties
Direct to consumers	4,256	10,529	14,785
Third party distributor	13,082	949	14,031
Total	17,338	11,478	28,816
By destination
UK	2,396	-	2,396
Germany	2,156	-	2,156
Italy	304	-	304
Netherlands	441	-	441
France	473	-	473
Poland	332	-	332
Spain	260	-	260
Rest of Europe	1,022	-	1,022
Total Europe	4,988	-	4,988
Canada	39	1,008	1,047
USA	24	10,197	10,221
Rest of North America	-	177	177
Total North America	63	11,382	11,445
Australia	797	-	797
Hong Kong	2,539	-	2,539
Japan	2,334	-	2,334
South Korea	1,314	-	1,314
China	2,158	-	2,158
Rest of Asia Pacific	532	-	532
Total Asia Pacific	9,674	-	9,674
Other	217	96	313
Total	17,338	11,478	28,816

 

Timing of the transfer of goods
and services	Vicon UK	Vicon USA	Total
2021	£'000	£'000	£'000
Point in time	15,606	8,353	23,959
Over time	1,654	1,958	3,612
Total	17,260	10,311	27,571
Contract Counterparties
Direct to consumers	4,750	9,265	14,015
Third party distributor	12,510	1,046	13,556
Total	17,260	10,311	27,571
By destination
UK	3,519	-	3,519
Germany	1,591	-	1,591
Italy	484	-	484
Netherlands	435	-	435
France	220	-	220
Poland	355	-	355
Rest of Europe	1,601	-	1,601
Total Europe	4,686	-	4,686
Canada	-	1,221	1,221
USA	-	8,920	8,920
Rest of North America	2	104	106
Total North America	2	10,245	10,247
Australia	530	-	530
Hong Kong	1,277	-	1,277
Japan	3,290	-	3,290
South Korea	1,364	-	1,364
China	2,254	-	2,254
Rest of Asia Pacific	338	-	338
Total Asia Pacific	9,053	-	9,053
Other	-	66	66
Total	17,260	10,311	27,571

 

 

	2022 £'000	2021           £'000
Vicon revenue by market - Continuing operations
Engineering	5,581	5,763
Entertainment	10,023	11,884
Life sciences	10,589	9,106
Location based entertainment	2,623	818
Total	28,816	27,571

 

 

Group revenue by type Continuing operations
Sale of hardware	22,700	22,496
Sale of software	1,970	1,662
Rendering of services	3,009	2,485
SaaS	193	141
Support	944	787
Total	28,816	27,571

 

 

Group revenue by origin
Continuing operations
UK	16,010	17,000
Europe	1,312	238
North America	11,478	10,311
Asia Pacific	16	22
Total	28,816	27,571

 

 

 

Contract balances

 

	2022
	Contract assets	Contract liabilities
	£'000	£'000
At 1 October 2021	261	7,474
Transfers from contract assets to trade receivables	(520)	-
Amounts included in contract liabilities recognised as revenue during the period	-	(23,176)
Excess of revenue recognised over cash during the period	770	-
Cash received in advance of performance and not recognised as revenue during the period	-	26,670
Disposal	(511)	(5,325)
Foreign exchange differences	-	400
At 30 September 2022	-	6,043
	2021
	Contract assets	Contract liabilities
	£'000	£'000
At 1 October 2020	411	5,850
Transfers from contract assets to trade receivables	(1,525)	-
On acquisition	-	227
Amounts included in contract liabilities recognised as revenue during the period	-	(13,459)
Excess of revenue recognised over cash during the period	1,375	-
Cash received in advance of performance and not recognised as revenue during the period	-	14,926
Foreign exchange differences	-	(70)
At 30 September 2021	261	7,474

 

 

Contract assets and contract liabilities are included within trade and other assets and trade and other payables and other liabilities respectively on the face of the statement of financial position.    They arise primarily from the Group's software and support contracts which are delivered over time and where the cumulative payments received from customers at each balance sheet date do not necessarily equal the amount of revenue recognised on the contract.

Remaining performance obligations

 

The majority of the Group's contracts are for the delivery of goods and services within the next 12 months for which the practical expedient in paragraph 121(a) of IFRS 15 applies.  However, some software and support contracts are for a period greater than 12 months and the amount of revenue that will be recognised in future periods on these contracts is as follows:

 

At 30 September 2022	2023	2024	2025	2026	2027	2028 and beyond
	£'000	£'000	£'000	£'000	£'000	£'000
Support contracts	3,143	595	239	75	44	11

 

 

At 30 September 2021	2022	2023	2024	2025	2026	2027
	£'000	£'000	£'000	£'000	£'000	£'000
Support contracts	2,550	428	263	83	22	11

 

The remaining performance obligations at 30 September 2021 in the table above exclude those relating to Yotta Group.

4.   Segmental analysis

 

Segment information is presented in the 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 Oxford Metrics plc ("the Board") as the CODM. The business segment reporting reflects the Group's management and internal reporting structure.

 

During the year the Group comprised the following business segments:

 

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

 

·     Yotta Group: This is the provision of software and services for the management of infrastructure assets for Government Agencies, Local Government and major infrastructure contractors.  Yotta Group was disposed of during the year.

 

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

 

Inter segment transfers are priced along the same lines as sales to external customers, with an appropriate discount being applied to encourage use of Group resources.  This policy was applied consistently throughout the current and prior year.  There were no significant inter segment transfers during the current or prior year.

 

Intra segment sales between Vicon UK and Vicon USA are eliminated prior to management and internal reporting, and hence are not shown separately in the analysis below.  The total intra segment sales between Vicon UK and Vicon USA in the year ended 30 September 2022 are £5,718,000 (2021: £4,439,000).

 

Segment assets consist primarily of property, plant and equipment, intangible assets, inventories and trade and other receivables.  Unallocated assets comprise deferred taxation, investments and cash and cash equivalents.

 

 

	2022				2021
	Adjusted profit/(loss) before tax	Adjusting items	Group recharges	Profit/(loss) before tax	Adjusted profit/(loss) before tax	Adjusting items	Group recharges	Profit/(loss) before tax
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Continuing operations
Vicon UK	1,590	(434)	1,426	2,582	3,229	(1,344)	1,130	3,015
Vicon USA	3,848	-	(3,712)	136	3,562	-	(3,065)	497
Vicon Group	5,438	(434)	(2,286)	2,718	6,791	(1,344)	(1,935)	3,512
Unallocated	(2,840)	(86)	2,941	15	(2,763)	30	2,855	122
Total continuing operations	2,598	(520)	655	2,733	4,028	(1,314)	920	3,634

Adjusted profit before tax is detailed in note 6.

 

 

 

	Segment depreciation and amortisation
	2022 £'000	2021 £'000
Continuing operations
Vicon UK	1,810	3,436
Vicon USA	203	208
Vicon Group	2,013	3,644
Unallocated	59	38
Total continuing operations	2,072	3,682
Discontinued operations
Yotta	483	998
Oxford Metrics Group	2,555	4,680

 

 

 

	Non-current assets		Additions to non-current assets		Carrying amount of segment assets		Carrying amount of segment liabilities
	2022	2021	2022	2021	2022	2021	2022	2021
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Vicon UK	12,825	10,324	3,304	2,137	30,757	22,962	(11,007)	(8,702)
Vicon USA	1,585	941	566	33	6,613	6,971	(4,644)	(2,989)
Vicon Group	14,410	11,265	3,870	2,170	37,370	29,933	(15,651)	(11,691)
Yotta Group	-	7,262	661	1,078	-	13,193	-	(5,952)
Unallocated	500	863	8	94	63,384	13,984	(665)	(979)
OMG Life Group*	-	-	-	-	(6,052)	(6,052)	-	-
Oxford Metrics Group	14,910	19,390	4,539	3,342	94,702	51,058	(16,316)	(18,622)

 

* The negative balance within segment assets represents a cash overdraft which is part of the Group's cash offset facility.

 

5.   Profit for the year

 

The profit for the year is stated after charging / (crediting):

	2022	2021
	£'000	£'000
Amortisation of right of use assets	496	522
Depreciation of property, plant and equipment - owned	424	495
Amortisation of customer relationships	-	249
Amortisation of intellectual property	272	261
Amortisation of development costs	1,363	1,812
Impairment of development costs	-	360
Impairment of intellectual property	-	981
Share based payments - equity settled	36	36
Share option charges	103	62
Operating lease charges - land and buildings	-	3
Foreign exchange loss	487	10

 

 

 

6.   Reconciliation of adjusted profit before tax

 

The adjusted profit before tax is considered by the Board to more accurately reflect the underlying operating performance of the business on a go-forward basis and complements the statutory measure as reported in the Consolidated Income Statement.

The reconciliation of profit before tax to adjusted profit provided below includes items that are:

·      non-recurring in nature, such as redundancy costs incurred from time to time, acquisition costs and results of the Group's equity accounted associate, which are not core to operations or future operating performance.

·      non-cash moving items which arise from the accounting treatment of share based payments and the amortisation of acquired intangibles which affect neither future operating performance nor cash generation.

The above definition has been consistently applied historically and is the measure by which the market generally judges PBT performance.

	2022	2021
	£'000	£'000
Profit before tax - continuing operations	2,733	3,634
Share option charges	103	51
Amortisation of intangibles arising on acquisition	261	258
Impairment of intangible arising on acquisition	-	981
Reorganisation costs	-	6
Costs associated with the acquisition of Contemplas	156	86
Adjustment to fair value of investment	-	(68)
Reapportion Group overheads	(655)	(920)
Adjusted profit before tax - continuing operations	2,598	4,028

 

Adjusted earnings per share for profit on continuing operations attributable to owners of the parent during the year
Basic earnings per share (pence)			2.55p	2.73p
Diluted earnings per share (pence)			2.51p	2.71p

 

 

 

 

The adjusted profit before tax for the Vicon and Yotta business segments (note 4) is shown in detail below;

 

	Vicon Group
	2022	2021
Continuing operations	£'000	£'000
Profit before tax	2,718	3,512
Share option charges	17	13
Amortisation of intangibles arising on acquisition	261	258
Impairment of intangible arising on acquisition	-	981
Reorganisation costs	-	6
Costs associated with the acquisition of Contemplas	156	86
Reapportion Group overheads	2,286	1,935
Adjusted profit before tax	5,438	6,791

 

 

	Yotta Group
	2022	2021
Discontinued operations	£'000	£'000
Profit before tax	43,250	(413)
Profit on disposal of discontinued operation	(43,578)	-
Share option charges	-	11
Amortisation of intangibles arising on acquisition	-	249
Reorganisation costs	93	26
Reapportion Group overheads	655	920
Adjusted profit before tax	420	793

The Group overheads in the tables above include head office expenses recharged to subsidiaries.

 

7.   Taxation

 

The tax is based on the profit for the year and represents:

 

	2022	2021
	£'000	£'000
United Kingdom corporation tax at 19.0% (2021: 19.0%)	462	60
Overseas taxation	69	228
Adjustments in respect of prior year	(79)	(3)
Current taxation	452	285
Deferred taxation	(1,386)	1
Total taxation (credit)/expense	(934)	286

 

Continuing and discontinued operations:

	2022	2021
	£'000	£'000
Income tax (credit)/expense from continuing operations	(665)	574
Income tax credit from discontinued operations excluding gain on sale (note 10)	(269)	(288)
Total tax (credit)/ expense	(934)	286

 

At 30 September 2022, the Group had an undiscounted deferred tax asset of £1,588,000 (2021: £1,877,000).  The asset comprises principally short term timing differences, future tax relief available on the exercise of outstanding employee share options in Oxford Metrics plc and unrelieved trading losses carried forward for which recoverability is reasonably certain.

Deferred tax assets and liabilities have been measured at an effective rate of 25% in both the UK and USA (2021: 25%).

The tax assessed for the year is lower than the standard rate of corporation tax in the UK of 19.0% (2021: lower than the standard rate of 19%).

The differences are explained as follows:

 

	2022	2021
	£'000	£'000
Profit for the year	46,917	2,935
Income tax (credit)/expense including discontinued operations	(934)	286
Profit on ordinary activities before tax	45,983	3,221
Expected tax income based on the standard rate of corporation tax in the UK of 19.0% (2021: 19.0%)	8,737	612
Effect of:
Expenses not deductible for tax purposes	68	255
Book gain on disposal in excess of tax gain	(8,280)	-
Unrelieved current year losses	(335)	(161)
Utilisation of losses brought forward	-	(32)
Adjustments to tax charge in respect of prior year current tax	(79)	(8)
Adjustments to tax charge in respect of prior year deferred tax	(383)	(62)
Higher rates on overseas taxation	29	42
Research and development tax credit	(467)	(310)
Effect of tax rate change	(224)	(50)
Total tax (credit)/expense	(934)	286

 

During the prior year the UK Government substantively enacted an increase in the corporation tax rate to 25.0% effective from 1 April 2023. The deferred tax asset and liability as at 30 September 2022 has been calculated based on the rate of 25.0% unless the asset/liability is expected to be realised or settled before the rate increase in which case the rate of 19.0% has been used.

 

8.   Earnings per share

	2022			2021
	Earnings	Weighted average number of shares	Per share amount	Earnings	Weighted average number of shares	Per share amount
	£'000	'000	(pence)	£'000	'000	(pence)
Continuing operations
Basic earnings per share
Earnings attributable to ordinary shareholders	3,398	127,840	2.66	3,060	126,437	2.42
Dilutive effect of employee share options	-	2,081	(0.04)	-	993	(0.02)
Diluted earnings per share	3,398	129,921	2.62	3,060	127,430	2.40
Discontinued operations
Basic earnings per share
Earnings attributable to ordinary shareholders	43,519	127,840	34.04	(125)	126,437	(0.10)
Dilutive effect of employee share options	-	2,081	(0.54)	-	993	-
Diluted earnings per share	43,519	129,921	33.50	(125)	127,430	(0.10)
Total operations
Basic earnings per share
Earnings attributable to ordinary shareholders	46,917	127,840	36.70	2,935	126,437	2.32
Dilutive effect of employee share options	-	2,081	(0.59)	-	993	(0.02)
Diluted earnings per share	46,917	129,921	36.11	2,935	127,430	2.30

 

Basic earnings per share is calculated by dividing the profit attributable to equity holders of the Company by the weighted average number of ordinary shares in issue during the year.

 

Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares (share options).  For share options a calculation is done to determine the number of shares that could have been acquired at fair value (determined as the average annual market share price of the Company's shares) based on the monetary value of the subscriptions rights and outstanding share based payment charges attached to outstanding share options.  The number of shares calculated as above is compared with the number of shares that would have been issued assuming the exercise price of the share options.

 

9.   Dividends

 

	2022	2021
Equity - ordinary	£'000	£'000
Final 2020 paid in 2021 (1.80 pence per share)	-	2,264
Final 2021 paid in 2022 (2.00 pence per share)	2,542	-
	2,542	2,264

 

 

 

 

10.  Discontinued operations

 

During the year the Group sold its 100% interest in Yotta Limited and Yotta Pty Limited (Yotta Group) for a total consideration of £49,105,000.

The transaction was based on an enterprise value of £52m and the final cash consideration was determined as follows;

	£'000
Enterprise value	52,000
Adjustments for debt-like items	(2,432)
Working capital adjustments	(463)
Cash consideration received	49,105

 

The post-tax gain on disposal of discontinued operations was determined as follows;

	£'000
Cash consideration received	49,105
Cash disposed of	(1,629)
Transaction costs	(335)
Net cash inflow on disposal of discontinued operation	47,141
Net assets disposed (other than cash)
Property, plant, and equipment	281
Intangibles	5,400
Trade and other receivables	3,398
Other financial assets	2,085
Trade and other payables	(5,997)
Other financial liabilities	(1,604)
	3,563
Pre-tax gain on disposal of discontinued operation
Related tax expense	-
Gain on disposal of discontinued operation	43,578

 

 Result of Yotta Group

	2022	2021
	£'000	£'000
Revenue	5,604	8,056
Expenses other than finance costs	(5,885)	(8,430)
Finance costs	(47)	(39)
Tax credit	269	288
Profit from selling discontinued operation after tax	43,578	-
Profit for the year	43,519	(125)

 

The statement of cash flows includes the following amounts relating to discontinued operations:

	2022	2021
	£'000	£'000
Operating activities	(1,228)	(2,658)
Investing activities	44,851	(900)
Financing activities	(109)	(189)
Net cash flow from discontinued operations	43,514	(3,747)

 

11.  Copies of announcement

 

Copies of this announcement will be available from the Company's registered office at 6 Oxford Industrial Park, Yarnton, Oxfordshire, OX5 1QU and from the Company's website: www.oxfordmetrics.com.