Preliminary Results

RNS Number : 0230R
OMG PLC
06 December 2016
 

Tuesday, 6 December 2016

OMG plc

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

Preliminary Results for the financial year ended 30 September 2016

Oxford Metrics (OMG plc LSE: OMG), the international software company servicing government, life sciences, entertainment and engineering markets, announces preliminary results for the financial year ended 30 September 2016.

 

Financial Key Points

 

·      Group revenue from continuing operations of £29.5m (FY15: £25.7m)

·      Adjusted PBT* improved to £5.6m (FY15: £4.9m)

·      Net cash balance at 30 September 2016 of £8.3m (FY15: £11.7m)

·      Over the past two years, £16.8m has been returned to shareholders in dividends

·      Proposed Final Dividend increased by 54% to 1.00p (FY15: 0.65p), in line with our stated progressive dividend policy

·      Yotta total revenue up 5.2% to £9.1m; software and related services revenues grew by 21.7%. Adjusted PBT* maintained at £2.0m (FY15: £2.0m) reflecting investment to establish an Australian subsidiary in H2

·      Vicon revenue up 19.4% to £20.4m with improved Adjusted* PBT to £5.9m (FY15: £5.3m)

 

Operational Key Points

 

·      Further international expansion for Yotta with 5 year contract extension with Amey plc to deploy Horizons at customer sites in UK, Australia, New Zealand and Spain

Appointment of Lehmann and Partner as Yotta's new distributor in Germany

·      Solid traction with next generation motion measurement camera Vicon Vantage

·      Well-received launch of Vero and Vue systems - Vero became the fastest selling system in Vicon's history

·      Vicon's motion measurement used most recently in the films Dr Strange, Fantastic Beasts and Where to Find Them, FIFA 17 and also in the new RSC production of The Tempest

·      In May 2016, the Group announced its intention to spin out Intellectual Property ("IP") assets developed inside OMG Life into a new independently funded vehicle, called Pimloc, with Oxford Metrics taking a 27% stake

·      In October 2016, the Board took the decision to discontinue OMG Life's initiatives to license its remaining camera-based IP to focus on growth opportunities within Vicon and Yotta

·      Appointment of Roger Parry, Non-Executive Chairman

·      Proposed name change to Oxford Metrics plc

 

Strategy Review

 

·      Five-year growth plan in place to invest in the future organic growth opportunities

·      Additional investment to be made in FY17 in:

International expansion and broadening of product capability in Yotta; and

Improvements to Vicon's existing offering

·      Two key financial objectives have been adopted: by 2021, aim to double Group profit and to triple recurring revenues

 

* Profit Before Tax from continuing operations before Group recharges adjusted for share based payments, amortisation of intangibles arising on acquisition and redundancy costs. The statutory equivalents of the adjusted numbers shown in this statement are disclosed in notes 3 and 5.

 

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

 

"I'm pleased to report a successful year for Oxford Metrics, delivering near record numbers from our Vicon business and a high level of recurring revenue at Yotta. The combination of these two strong businesses, provide a solid platform to accelerate our future growth.

We are announcing a five-year plan to take the business to the next stage of its development. This will see us amplify our core strengths, making both Vicon and Yotta stronger and better through targeted investments. The goal is for both divisions to broaden and enhance their future profit streams, improve the quality of future earnings and ultimately realise their potential. As we enter a new financial year, Oxford Metrics is a simpler business with a clear focus and we look to the future with confidence."

For further information please contact:

Oxford Metrics

+44 (0) 1865 261800

Nick Bolton, CEO


David Deacon, CFO




FTI Consulting

+44 (0) 20 3727 1021

Matt Dixon / Emma Appleton / Charles Palmer / Harry Staight




N+1 Singer (NOMAD to OMG)

+44 (0) 20 7496 3000

Shaun Dobson / Jen Boorer


 

About Oxford Metrics

The Group trades through two subsidiaries: Vicon and Yotta. Vicon is the world's leader in high precision motion measurement analysis to thousands of customers worldwide, including Guy's Hospital, EA Sports, MIT and NASA and our software is used in an ever expanding range of applications. Yotta provides cloud-based infrastructure asset management software to central and local government agencies and other infrastructure owners. Yotta has a large number of high profile clients including Highways England and Amey in the UK and VicRoads in Australia amongst others.

Founded in 1984 our Group is headquartered in Oxford with offices in Leamington Spa, Gloucester, California, Colorado and Singapore. 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

Roger Parry

The past financial year (to end September 2016) has seen your company deliver growth in both revenues and profits, alongside continued investment in strengthening our two businesses, Vicon and Yotta. It was a strong year for Vicon which enjoyed some good individual sales.

The Group reported improved revenues from continuing operations of £29.5m (FY15: £25.7m) up 14.6% year-on-year. Accordingly, Adjusted PBT* also improved 15.4% to £5.6m (FY15: £4.9m).

We finished the year with £8.3m (FY15: £11.7m) in cash after payment of Final and Special dividends totalling £5.3m (FY15: £11.5m) during the year. Oxford Metrics therefore had another year of strong cash generation.

In light of the performance I am pleased to announce that a proposed Final Dividend of 1.00p (FY15: 0.65p) per share will be paid to shareholders in line with our progressive dividend policy.

Strategy Review

Oxford Metrics is now focused on two operating businesses - Vicon and Yotta. We have more than 30 years of experience turning innovative technologies into commercial solutions, serving clients in more than 70 countries ranging from leading research hospitals and sports coaches to Hollywood studios and highways authorities.

The first step to achieving this sharper focus came in April 2015 when we sold our defence software business, 2d3, to Boeing for $25m. Then in May 2016 we announced the intended spin out of Intellectual Property ("IP") assets developed inside OMG Life into a new independently funded vehicle, called Pimloc, which has since completed and where we received a 27% stake in the new company. Most recently we discontinued OMG Life's initiatives to license its remaining camera-based IP to focus on growth opportunities within Vicon and Yotta.

In light of this focussed revised set of assets, we conducted a detailed strategy review during the second half of 2016 with the objective of developing a five-year growth plan. The results of this are described later in this report. The broad direction is to focus our resources and capital allocation initially on the strategic development of Yotta through reaching into new geographical markets and expanding the capabilities of our software, whilst continuing to strengthen and grow our Vicon business. Strategic plans have been developed for Vicon to expand into adjacent markets but the formal decision to implement these will be made by the Board at a later date pending further research into these opportunities and progress with Yotta.

Whilst the Group's main focus is organic growth, we will continue to consider acquisition opportunities where there is strategic rationale to strengthen Vicon and Yotta and leverage our technical and/or market expertise.

Cash Generation and an Efficient Balance Sheet

As part of this simpler business, I want to be clear on the Group's attitude towards cash generation and its focus on managing an efficient Balance Sheet.

Going forward we anticipate making investments to grow both Vicon and Yotta. On the basis of the currently identified organic investment opportunities we do not anticipate any need to raise new funds from equity or debt.

Over the past two financial years we have returned some £16.8 million to shareholders in ordinary and special dividends. The Board has a progressive dividend policy that reflects our status as an ambitious, AIM-listed, technology business. We intend to maintain or grow the dividend each year with the aim of achieving an average Dividend Cover of 2.0x over the next five years, whilst recognising that some reported earnings fluctuations are to be expected as we move into an investment phase. The annual dividend will reflect the Board's view of the earnings prospects over the entirety of the investment cycle.

STRATEGIC DIRECTION

The year to September 2016 was a good cash generative year and combined with receipts from asset disposals post year-end, leaves us with deployable cash resources. Against this backdrop, the Group plans to proceed with a five-year growth plan to invest in the future organic growth of Oxford Metrics, by investing in the Group's two main businesses - Vicon and Yotta.

Although these investments will impact our reported profit in the financial year to September 2017, we do expect to see some early revenue benefits from the initiatives we outline in the Strategy Review section of this Report. Indeed, Vicon's Adjusted PBT* performance in FY17 is expected to be unaffected, given anticipated revenue growth and accounting treatment of R&D. And even in Yotta, where we will be investing £1.9m in FY17, approximately split between additional people in sales and marketing and R&D, we expect accelerating revenues will at least restore Adjusted PBT* to pre-investment levels by FY18.

Our organic growth plans are expected to result in significant revenue growth in Yotta from 2018 onward and some growth from Vicon over the full five-year period. The goals in the plan will be closely aligned with the long-term incentives for individual managers - much of which are intended as share awards.

In this way, our five-year plan will see the Group accelerate the returns from the markets it serves. By acting now with these targeted investments, we aim to establish or maintain dominant market positions and achieve higher levels of profits in the mid-term than we would have seen without these actions.

The Group also announces its intention to change its name to Oxford Metrics plc, in order that the name more accurately reflects the brand recognised in the marketplace, subject to shareholder approval at the Company's next Annual General Meeting ("AGM"). The Group's website will be changed to www.oxfordmetrics.com with immediate effect and further details of the AGM will be announced in due course. 

Board

I was delighted to be invited to join the Board as Non-executive Chairman in June 2016 so can take no credit for the excellent results reported but I have taken the lead in developing a five-year plan for the business and I look forward to working with the great team here to execute it.

Julian Morris who founded this company in 1984 has stepped down from his role as executive Deputy Chairman to become a Non-executive Director. Additionally he is now the Executive Chairman of Pimloc. For the past 30 years Julian has been the inspirational driving force behind Oxford Metrics. I am delighted that he remains on our Board and on behalf of shareholders would like to both congratulate and thank him for building such an impressive and valuable business over the years.

Outlook

The current financial year to end September 2017 has started well with good trading and healthy sales pipelines in both Vicon and Yotta. Vicon's new range of systems continues to be received well and Yotta has recently been awarded notable new contracts at Rhondda Cynon Taf County Borough Council and Northamptonshire County Council to provide software and services for the management of a wide range of assets. Also on the international expansion side, Yotta's new German distributor, Lehmann and Partner, has secured their first deal within three months of becoming a partner. The increased investment in Yotta bodes well for its prospects in the years to come and we look forward to updating the market in due course.

 

Roger Parry

Chairman

 

* Profit Before Tax from continuing operations before Group recharges adjusted for share based payments, amortisation of intangibles arising on acquisition and redundancy costs. The statutory equivalents of the adjusted numbers shown in this statement are disclosed in notes 3 and 5.

 

 

 

OPERATIONAL REVIEW

Nick Bolton, CEO

2015/16 was another successful year for Oxford Metrics. We saw commercial progress with near record numbers from our Vicon business and the highest level of recurring revenue ever achieved at Yotta. We saw product successes too with the well-received launch of the Vicon Vero and Vue systems and market acclaim for Yotta's new range of mobile apps extending the applicability of our software. But in addition to this tactical progress, perhaps the greatest step the Group took over the past 12 months has been the development and implementation of the strategic plan for the business, which we will go into greater detail in this report. This plan created some changes for the business which are already starting to show the green shoots of progress within each of the subsidiaries.

YOTTA

KPI

Revenue

PBT

Adjusted PBT*


FY16

FY15

FY16

FY15

FY16

FY15

Yotta

£9.1m

£8.6m

£0.7m

£0.8m

£2.0m

£2.0m

Yotta achieved revenue growth of 5.2% during the year and the transition to a software and services business continues with 63.6% of revenues (FY15: 54.9%) derived from these activities representing year-on-year growth of 21.7%. Yotta made progress with Software as a Service ("SaaS") and support-related revenues, which increased to an annual value of contracted revenues of £3.8m (FY15: £3.6m) at the end of the financial year. Adjusted PBT* for the year remained unchanged reflecting additional investment to establish an Australian subsidiary in the second half to exploit the clear market opportunity in this region.

Yotta recorded another strong year of operational development - with both the software and professional services sides of the business making clear progress. This was exemplified in August when Yotta announced a five-year extension of its existing contract with Amey, one of the UK's leading public and regulated services providers. The new deal, which is worth over £1.1m in total over five years, enables Amey to roll out licences for Yotta's visualised asset management solution, Horizons, to subscribers in Australia, New Zealand and Spain in addition to those based in the UK.

2016 has also seen Yotta record further international expansion with the appointment of a European Distributor Manager, who is tasked with growing the distribution network in Europe. This has led to both new software wins in existing territories, for example the SAAOne win in the Netherlands, and increasing the focus on signing new distributors. As a direct result, in September we appointed Lehmann and Partner as a new distributor in Germany. Lehmann and Partner, a surveying business with offices throughout Germany provides asset and condition surveys, consultancy and equipment to over 175 local authorities in Germany.

Yotta continues to perform well in the UK. Indeed, Yotta's software now underpins nearly 90 per cent of Welsh Local Authorities in the management and delivery of frontline street scene services. With more than 60 individual installations of Yotta's Mayrise Management Software, including Street Lighting, Street Works, Highways and Waste, Yotta is also leading the way in mobile and hosted solutions across Wales.

Also during the year, Yotta expanded the footprint of its software, enabling us to solve more problems for customers. This software expansion included an all new Android suite of mobile apps including Street Works Mobile and Highways Assets. The latter is the partner application for the new Asset module, which was released to the Mayrise user base earlier in 2016.

It was a great year for our Professional Services team where the recruitment of a number of senior consultants led to an increase in strategic consultancy. The team also saw growth through the success of Yotta's software, which is creating demand for product-related consultancy, training and configuration services, which in turn deepens Yotta's client relationships. This can be seen in the project at Transport for Greater Manchester ("TfGM"), where Yotta provides a wide variety of services to assist TfGM in their asset management strategies for their Key Road Network. This is also helping TfGM and the relevant highways authorities move towards a holistic and integrated region-wide approach to road maintenance.

2016 has seen us lay a lot of the groundwork for Yotta's future, which will be built around the successful expansion of both its international reach and enhancing Yotta's product capabilities. Worldwide there is a clear need for infrastructure assets to be better managed from the condition of roads to monitoring waste and managing street lights. Yotta's software tools effectively and efficiently do exactly that. With its track record to date of strong customer relationships, its highly differentiated products and innovative approach, Yotta is positioned well to take advantage of this truly global opportunity.

Vicon

KPI

Revenue

PBT

Adjusted PBT*


FY16

FY15

FY16

FY15

FY16

FY15

Vicon

£20.4m

£17.1m

£4.5m

£4.2m

£5.9m

£5.3m

Vicon continues to lead its marketplace with a strong performance in almost all geographies, with overall revenue growth of 19.4% during the year and an improved Adjusted PBT* up £0.6m. Indeed, FY16 was a particularly good year for Vicon which included a number of deals from entertainment customers who tend to adopt early in the product life cycle. The overall performance was further enhanced by the movements in foreign exchange rates in the latter half of the year, which is discussed further in the Financial Review section.

Throughout the year, Vicon benefited from the competitiveness of the Vicon Vantage system - an easy-to-use, yet high capability system, which, following its launch late in 2015, has opened up motion capture to a wider audience. Indeed, the system won a StudioDaily Prime Award in the Best Production Tools category at NAB 2016 for its innovation and market-defining capabilities.

Vicon sold well around the world to both new and existing customers including Industrial Light and Magic for both its London and San Francisco locations, Duke University within its Human Performance Lab, CD Projekt in Poland, Autodesk, Children's Hospital Colorado and Teleton in Uruguay. The system with Teleton was the first sale to this large charitable group that will support children's rehabilitation centres across South America.

During the year Vicon saw further progress in its Life Sciences market. Of particular note, Vicon signed a sole source vendor agreement with a major US hospital group to supply all its gait laboratory equipment. Also in the year, the University of Oregon invested in multiple Vicon systems to individualise the training of student athletes to maximise performance and prevent injury. Vicon offered the best-in-class solution to provide data for Oregon's three key measurements goals: Recovery, Physiology, and Movement analysis. With a 36 camera Vicon system, the new Marcus Mariota Sports Performance Center is one of the most comprehensive and capable sports facilities in the world.

With interest in Virtual Reality growing, Vicon announced a strategic partnership with ArtAnim, a company offering a multi-user immersive platform which combines a 3D environment, viewed through a VR headset, with a large, real life set, which can be up to hundreds of metres square. Players put on the headsets and then battle each other in any one of number of virtual scenarios, but in a real environment - so where there is a wall in the VR world there is a physical wall in the real environment. Users are tracked by the Vicon motion capture system allowing them to see their own bodies and move physically in the virtual environment.

Building on the success of Vantage, Vicon launched and shipped Vero and Vue systems in July 2016 - systems that offer powerful performance and great value for money. Vero is the replacement for the highly successful Bonita system. Vero introduces a series of Vantage-led innovations but makes them available to a broader audience at a competitive price point. This unique combination was received well by the market and became the fastest selling system in the company's history.

Significant technological progress has also been made in the Innovate UK-funded project, Real Time Digital Acting, and Vicon now moves into a focused exploitation phase of the research. This covers how the technology developed thus far will be integrated into the company's existing and future products.

LIFE

KPI

Revenue

PBT

Adjusted PBT**


FY16

FY15

FY16

FY15

FY16

FY15

Total Life

£0.1m

£0.0m

(£3.0m)

(£3.4m)

(£1.1m)

(£2.5m)

Lastly turning to OMG Life, as reported in our Trading Update in October 2016, the decision was made during the financial year to discontinue operations. Whilst we had seen positive market interest from consumer technology businesses and we had successfully delivered the two engineering engagements announced earlier in the year, following extensive analysis, the Board concluded it should discontinue this division in order to focus the Group's resources on Vicon and Yotta and capitalise on lower risk opportunities within these divisions.

The potential reward from any potential licensing deal with a consumer brand was clear. Indeed, such a license had the potential for higher returns than our other businesses, but the opportunities to achieve such a deal are more challenging to deliver, as they are subject to factors outside our influence. Undoubtedly, through our work in Life we have developed strong relationships with a number of large technology companies and these may prove useful to the Group in the future.

Conclusion

Both Vicon and Yotta have had strong years. Vicon continues to push boundaries and make clear advances in innovation whilst Yotta is expanding into new geographical markets, providing the Group with increasing levels of recurring revenue.

The combination of these two strong businesses provide the Group with a solid platform as it enters the next stage of its development. This gives us confidence in deploying additional investment in the year ahead to see both divisions broaden and enhance their future profit streams, improve the quality of future earnings and ultimately realise their potential.

* Profit Before Tax from continuing operations before Group recharges adjusted for share based payments, amortisation of intangibles arising on acquisition and redundancy costs. The statutory equivalents of the adjusted numbers shown in this statement are disclosed in notes 3 and 5.

** Profit Before Tax before Group recharges adjusted for share based payments, amortisation of intangibles arising on acquisition and exceptional costs including compensation to contract manufacturer, Autographer inventory write off and redundancy costs. The statutory equivalents of the adjusted numbers shown in this statement are disclosed in notes 3 and 5.

 

STRATEGIC REVIEW AND FIVE-YEAR PLAN

In the summer of 2016 after the appointment of the new Chairman and following the disposal of our defence business, 2d3, in the previous year, we felt the time was right to conduct a detailed strategic review and adopt a five-year plan for investment and growth.

Oxford Metrics was founded in 1984 to develop commercial applications for then newly available digital imaging technologies. Over the following 30 years, the Group has created Vicon, a world leader in motion measurement and analysis, and built other businesses linked to digital imaging such as the recently sold 2d3. We established Yotta which grew out of the use of digital imaging in asset surveying and now provides software for infrastructure asset management.

Today, we have two clearly defined and well-focused businesses - Vicon and Yotta. They share a common history in imaging and both companies now provide analytical software solutions to an enviable list of international clients spread over 70 countries across a broad range of industry verticals. Through proprietary algorithms and elegant visualisation, both companies help their clients measure, analyse and optimise the metrics that matter most to them.

Although the two companies share this focus on analytics, they have developed with different economics, address different markets, and have different customers and competitors. This means they offer different growth opportunities and also face different challenges. Our investment strategy therefore reflects the specific needs of each operation.

At an early stage of the review we concluded we should implement two immediate actions. As has been reported, we discontinued operations at OMG Life which licensed consumer facing technology in the B2C (Business to Consumer) market. And secondly, we spun out some nascent image-recognition technology into a new start-up, Pimloc, in which we have taken a 27% holding.

AMPLIFY THE CORE

In conducting the review, we looked at all the assets remaining in our Group at the end of the financial year and assessed their potential for growth. We sought input from a wide range of stakeholders including customers, industry analysts, shareholders and our own employees. We examined the dynamics of the markets in which the companies operate and we explored the opportunities open to them. This review made clear that we own some valuable assets in both Vicon and Yotta in which we can invest to create further organic growth.

Our path ahead is clear - we must drive growth by amplifying our core strengths and capabilities across our core products, our core markets, our core customers and our people. In this way, we aim to achieve two challenging but realistic objectives: by 2021, we aim to double Group profit and to triple those revenues which are recurring, predictable and ideally contracted. But we do not plan to take risks in new areas. We want to amplify our core strengths and make our two existing businesses stronger and better.

Through targeted investments in Yotta and Vicon, we aim to accelerate our growth. In broad terms, the investment we plan to make in Vicon will be designed to further strengthen and protect the position of this proven, profitable global market leader. In Yotta, the objective is to expand geographically through the building of new international sales channels and further develop our cloud-based software products, both of which should drive significant growth in Yotta's revenues and profit over time.

Yotta

Yotta grew out of using Oxford Metrics-developed image analysis technology to map roads and other assets owned by local government. Yotta's origins are as a surveying business but this led us into the development of software to maintain, visualise and analyse the surveyed information to greatly improve the management of these assets. Yotta is mostly a Business to Government ("B2G") business and our clients include central and local government agencies and other infrastructure owners who wish to optimise the management of assets. The majority of our software is now provided on a cloud-based Software as a Service ("SaaS") model, so the business benefits from significant levels of recurring and predictable revenues.

Today, this young growing business, offers a range of 10 software products with over 150 customers in the UK, Netherlands, Germany and Australia. This strong software foundation fuels a growing professional services practice, delivering both strategic asset management advice and software implementation services. This practice is strategically important to Yotta as whilst infrastructure asset management requires data analysis and systems; successful implementation requires a far wider context to be considered, including policies, strategies, processes and organisational structure.

Our investment plans for Yotta are two-fold. First, we aim to expand the business internationally as the market for infrastructure asset management software is clearly global and the UK is a very credible source of case studies of satisfied clients. Secondly, we hope to broaden the capability of our software, so we can solve more problems for customers in more integrated ways.

Expand Internationally

The UK continues to be Yotta's strongest market and will remain a major focus area for growth. The UK plays a leadership role in the global asset management field and there is no better place to generate innovation-led growth for Yotta. The early successes Yotta has enjoyed in Germany, the Netherlands and Australia have demonstrated that there is international appetite for Yotta's products and approach. We will actively invest in growing in those territories, and other regions, through direct and indirect channels. This will involve the hiring of sales staff, so there will naturally be some lag before they can generate revenue.

All countries hold infrastructure assets. These are relied upon every day and form the very fabric of civilised society. Very often these assets are some of the most valuable and important assets a country holds, so their efficient and effective management are central concerns for their governments. That said, every country presents a unique asset management challenge. Countries have differing assemblages of asset types, they have differing densities of population depending on those assets, they have differing conditions of those assets and they certainly have differing budgets available to maintain those assets. However, they all share a common goal - the need to efficiently manage those assets, which is where Yotta can help.

Yotta's software is designed to be flexible to meet the specific needs of each geographical market. For example, the tools can be readily translated to support multiple local languages. This is true for Horizons and will be even truer for new products.

We will look to prioritise the order in which we enter each geographical market, based on a wide variety of factors. But in each instance our aim is to partner with local, experienced professionals who can bring market access. When combined with Yotta's unique software proposition this will provide clear market differentiation. This local distributor approach to some markets means Yotta can reach a relatively large number of geographies cost effectively.

Broaden Product Capability

Yotta developed its software service Horizons to turn commoditised data into something elegant, usable and powerful. It created a value-adding tool, which not only delivered real benefit to its users, but also established Yotta as an innovator in its market. Our investment plan is simple - to hire additional in-house software developers to bring this approach to all aspects of asset management, for all asset types, in many more markets.

Yotta will change to reflect the demands of our clients who are looking for services which are cloud-based and constantly updated, which capture all the benefits of the mobile internet and provide more data driven insights.

The availability of data is also changing. Where clients would have once relied upon periodic inspections or surveys, they now have the chance to use sensors and smart-devices to monitor the state of their asset base. The Internet of Things ("IoT") is changing the very essence of data collection and it brings great opportunity to help our clients make better, faster decisions.

IoT will be at the heart of many aspects of asset management. It will provide the asset owner with information more frequently and provide real-time interaction where appropriate. Yotta provides the repositories for that information and tools to allow the user to make optimised decisions about that asset.

When Yotta took the decision to create Horizons, it did so to embrace the richness of the data that was collected by survey vehicles. Previously, that data was mostly discarded - there was just too much of it. Horizons changed that. It enabled the richness to be used to make better decisions and provided visualisations that made the data intelligible by all. Yotta's customers, be they in the UK or anywhere else in the world, need to deliver outcomes that are common across geographies. It is truly a global opportunity.

Vicon

Founded in 1984, Vicon is the world leader in the niche market of high precision movement analysis. We estimate Vicon supplies about 50% of the addressable world market, supplying motion measurement software and hardware to a wide range of end users. It is mainly a Business-to-Business ("B2B") company with revenues derived from three vertical markets: Life Sciences (50% of revenues in year to 30 September 2016), Engineering (22%) and Entertainment (28%). It has always been a globally focussed business with customers now in over 70 countries with the following geographical split in revenues in the year to 30 September 2016: Americas (53%), UK (7%), non-UK Europe (15%), Asia Pacific (20%) and elsewhere (5%).

Vicon makes a range of highly sophisticated and extremely accurate motion capture software tools supported by some proprietary measurement sensors and specialist cameras. Our systems are generally purchased as capital goods from our own direct salesforce in the UK and USA or via agents elsewhere. Sales to our current markets tend to be skewed towards the end of our financial year reflecting the traditional buying patterns of our customers. Because our customers are buying one system or a few systems at a time, either as a new investment or as a replacement, our order book and sales cycle are "lumpy". We can be affected by some specific vertical market factors, for example; by changing government policies on university funding and "hit and miss" cycles in entertainment.

There is a wide and growing range of applications for our motion capture tools. In medical applications, therapists model the movements of people who have disabilities and or have suffered injuries to help them improve their mobility (gait analysis). Sports coaches use the systems to assess and improve the performance of athletes. Researchers use our systems to better understand the biomechanics of animal movement, including horses and even kangaroos. Aero engineers use the systems to design and manufacture the latest commercial aircraft and quadcopter drones. And in the most high profile application, content production companies use them to capture the motion of human actors to drive the movement of characters in films, television shows, theatre and video games (motion capture animation).

The business has a successful track record in driving growth through the addition of adjacent marketplaces. To achieve success in these new markets, sometimes product development is required to customise the existing products, and sometimes an investment in market development is required. And sometimes it requires both.

We have two specific targeted investment projects, both of which will require modest cash in 2017. The exact objectives are commercially sensitive but the broad thrust is to improve our existing offer and to grow market share in new vertical markets. We have also identified several specific more ambitious growth projects in Vicon but the formal decision to implement these will not take place until we have completed additional research.

FINANCIAL IMPACT

While we understand the importance of short term profitability in order to maintain a robust Balance Sheet and to deliver dividend returns to investors, we also believe that long term growth requires investment and, sometimes, our long term growth opportunity may require us to invest ahead of the curve. The year to September 2016 was a good cash generative year and combined with receipts from asset disposals post year-end leaves us with deployable cash resources. So, although our new investment will impact our profitability in the financial year to 30 September 2017, we are not adding any financial risk to the Group and we can fund all our strategic objectives from our own resources.

Our organic growth plans are expected to result in significant revenue growth from Yotta from 2018 onward and some growth from Vicon over the full five year period. The goals in the plan will be closely aligned with the long-term incentives for individual managers - much of which will be paid in shares.

We also believe there are possible acquisition opportunities for both Vicon and Yotta which might bring us additional products, technologies and markets. Whilst this is under consideration, it is a secondary priority to our organic growth and we have no immediate plans to move forward on these.

From a P&L perspective, the investments to be made to implement our Strategy are expected to affect our trading performance as follows:

·      Underlying trading performance in Vicon, given expected revenue growth and the accounting treatment of R&D, is expected to be unaffected in FY17.

·      Yotta will be investing an additional £1.9m in FY17. Given expected revenue growth and the accounting treatment of R&D a modest level of Adjusted PBT* is expected to be reported in FY17. In FY18, we expect accelerating revenues will at least restore Adjusted PBT* to pre-investment levels. Thereafter, the full benefit of the strategic investment will be realised.

In this way, our five-year plan will see the Group accelerate the returns from our markets. By acting now with these targeted investments, we aim to establish or maintain dominant market positions and bring forward higher levels of profits than we would have seen without these actions. We want to make our two existing businesses stronger and better, and in the case of Yotta, much larger in scale. The time for this acceleration is now. We have the opportunity and the resources to amplify the already demonstrable qualities of each business. Both Yotta and Vicon have progressed far but now we embark on a new strategy - a strategy we expect will result in both growth and improved quality of earnings.

 

Nick Bolton

Chief Executive

 

 

FINANCIAL REVIEW

David Deacon, CFO

Income Statement

The Group reported revenues of £29.5m (FY15: £25.7m). The weakening of sterling during the latter part of the financial year has had a beneficial impact on the results this year given 37% of our revenues are denominated in dollars. Taking account of this, the underlying revenue growth achieved was 10.9% (Headline revenue growth: 14.6%) in the year equating to a benefit of around £0.9m for the full year. From an Adjusted PBT* perspective, the benefit is less pronounced given the Group has operations in the USA, the benefit arising being around £0.3m.

Gross Profit improved year-on-year in real terms from £16.3m to £19.4m and in percentage terms from 63.2% to 65.9% reflecting increased higher margin software related revenues from Yotta and improved product gross margins in Vicon of 72%: (FY15: 70.1%), driven by the new product line up of Vantage, Vero and Vue.

Reviewing the cost base on the face of the Income Statement:

·      Sales, Support and Marketing costs increased during the year due to further business development investment by Yotta and higher commission costs in Vicon due to sales success.

·      The increase in Research & Development costs was due to lower R&D capitalisation in the year of £1.2m (FY15: £1.7m) and a higher amortisation charge of £1.1m (FY15: (£0.9m). The remainder of the increase is related to the Real Time Digital Acting (RTDA) project which is mitigated by an increase in Grant Income reported in Other Operating Income.

·      The Administration charge has risen year-on-year for a variety of reasons including performance related payments to management, additional IT infrastructure costs in Yotta and increases arising from costs in the US being converted at a lower exchange rate.

·      The Group has reported Other Operating Income of £1.0m (FY15: £0.5m) which relates to Grant income receivable from Innovate UK for the RTDA project which was completed in October 2016.

Adjusted PBT* for continuing operations of £5.6m (FY15: £4.9m) has been determined after adding back non-cash moving items such as Amortisation of Acquired Intangibles, Share Option charge, and Exceptional Items, which in this year includes a small re-organisation cost relating to Yotta surveying.

Statement of Financial Position

Goodwill and Intangibles

The carrying value of Goodwill relating to previous acquisitions of Peak Performance Technologies Inc., Data Collection Limited and Mayrise Systems Limited have been reviewed in accordance with IAS 36 and remain unchanged.

Amortisation relating to Mayrise Acquired Intangibles has been charged to the P&L. This amounts to £0.4m (FY15: £0.4m) which is a common feature of this and last year's results.

Changes to Intangible Assets includes the capitalisation of R&D of £1.4m (FY15: £2.5m), amortisation of development costs £1.1m (FY15: £1.4m) and impairment of previously capitalised OMG Life R&D £1.6m (FY15: £0.4m).

Inventories

The inventory position at the end of the Financial year was £2.7m (FY15: £1.9m), so somewhat higher than last year. There are several reasons for this: the end of life Vicon T-Series and Bonita cameras has necessitated holding stock to support and/or replace cameras sold in the past to maintain good customer service, secondly Vicon now has a broader hardware product set than in the past and thirdly Vicon is selling more so working capital needs have risen. Whilst Vicon endeavours to minimise the stock level required this higher level of Inventory is likely to be a feature of future results.

Trade and other receivables

The Group normally enjoys a strong September driven in part by the fiscal year-end of the US Government and this year was stronger still, Accounts Receivable stood at £9.8m (FY15: £7.5m). In addition, Other Receivables included the deferred consideration of £1.8m relating to the disposal of 2d3 to Insitu/Boeing in April 2015 which had been classed as a Non-current Asset in the previous year. Post year-end the full consideration has now been received.

Current Tax debtor

The Group pays corporation tax on account in the USA and given the final result and inter-company recharges a refund is now expected early in the new financial year.

Trade and other payables

Trade Payables remained largely unchanged at the year-end at £2.4m (FY15: 2.6m) so the overall increase was due to year end Accruals.

Derivative financial liability

In April 2016 the Group hedged the receipt of the 2d3 deferred consideration (due and received in October 2016) in order to lock in the foreign exchange benefit compared to April 2015 when the deal was completed. Sterling however weakened even further since putting in place the hedging arrangement giving rise to this liability.

Non-current liabilities

Other liabilities include Deferred Income recognisable beyond one year and provision for leasehold dilapidations.

Statement of Cashflows

The Group finished the year with cash of £8.3m (FY15: £11.7m). During the year the Group paid Special and Final dividends of £5.3m (FY15: £11.5m) so in real terms generated an additional £1.8m in cash after changes in working capital, investing activities and payment of tax detailed in the Statement of Cashflow.

Tax

The Group tax charge this year was £0.6m (FY15: £0.4m) representing a blended rate of 11.2% (FY15: 7.6%) This increase is due to our strong performance in the US this year where the marginal rate of tax (38%) is significantly higher than the UK (20%). The level of Group R&D activities in the UK continues to have beneficial effect on the level of corporation tax payable in the UK given the reliefs available. Tax paid in the year included the final settlement of tax arising on the 2d3 disposal and tax payments on account for the financial year just ended.

The deferred tax asset reduced to £0.3m (FY15: £0.6m) whilst the Deferred Tax Liability £1.6m (FY15: £2.2m) decreased mainly due to adjustments which reflect the write off of OMG Life Intangibles discussed earlier.

Summary

In summary, Oxford Metrics enters the new financial year with a robust Balance Sheet including a strong cash position and no debt.

 

David Deacon

Chief Financial Officer

 

* Profit Before Tax from continuing operations before Group recharges adjusted for share based payments, amortisation of intangibles arising on acquisition and redundancy costs. The statutory equivalents of the adjusted numbers shown in this statement are disclosed in notes 3 and 5.

 

 

consolidated INCOME statement

for the year ended 30 september 2016

 



2016

2015


Note

£'000

£'000

Revenue

3

29,492

25,733

Cost of sales


(10,065)

(9,445)





Gross profit


19,427

16,288

Sales, support and marketing costs


(5,136)

(4,149)

Research and development costs


(3,910)

(2,835)

Administrative expenses


(6,027)

(5,167)

Other operating income


990

601





Operating profit


5,344

4,738

Finance income

7

45

40

Finance expense

7

-

(7)





Profit before taxation

3,4

5,389

4,771

Taxation

6

(608)

(361)

Profit from continuing operations


4,781

4,410





(Loss)/profit from discontinued operations, net of tax


(2,510)

3,632

Profit attributable to owners of the parent during the year


 

 

2,271

 

 

8,042









Earnings per share for profit on continuing operations attributable to owners of the parent during the year




Basic earnings per ordinary share (pence)

8

3.96p

3.85p

Diluted earnings per ordinary share (pence)

8

3.90p

3.76p





Earnings per share for profit on total operations attributable to owners of the parent during the year




Basic earnings per ordinary share (pence)

8

1.89p

7.02p

Diluted earnings per ordinary share (pence)

8

1.86p

6.85p





 

 

 

COnsolidated statement of

comprehensive income FOR THE YEAR

ENDED 30 sEPTEMBER 2016

 



Group

Group



2016

2015



£'000

£'000

Net profit for the year


2,271

8,042

Other comprehensive income




Items that will or may be reclassified to profit or loss




Exchange differences on retranslation of overseas subsidiaries


224

336

Loss on hedging instrument


(158)

-

Tax recognised directly in equity


121

336

Total other comprehensive income


187

672

Total comprehensive income for the year attributable to owners of the parent


2,458

8,714

 

 

 

consolidated statement of financial position AS AT 30 september 2016

 

COMPANY NUMBER: 3998880

 

 

Group

Group



2016

2015



£'000

£'000

Non-current assets




Goodwill and intangible assets


11,086

12,838

Property, plant and equipment


787

984

Financial asset - investments


69

69

Deferred consideration receivable


113

1,971

Deferred tax asset


311

632



12,366

16,494

Current assets




Inventories


2,704

1,876

Trade and other receivables


13,919

9,631

Current tax debtor


453

-

Cash and cash equivalents


8,273

11,738



25,349

23,245





Current liabilities




Trade and other payables


(8,582)

(8,013)

Derivative financial liability


(158)

-

Current tax liabilities


-

(497)



(8,740)

(8,510)





Net current assets


16,609

14,735

Total assets less current liabilities


28,975

31,229





Non-current liabilities




Other liabilities


(321)

-

Provisions


(185)

-

Deferred tax liability


(1,640)

(2,174)



(2,146)

(2,174)





Net assets


26,829

29,055





Capital and reserves attributable to

owners of the parent




Share capital


303

294

Shares to be issued


65

65

Share premium account


16,834

16,326

Retained earnings


9,506

12,315

Cash flow hedging reserve


(158)

-

Foreign currency translation reserve


279

55

Total equity shareholders' funds


26,829

29,055





 

 

 

consolidated STATEMENT of CASHFLOWS For the YEAR  ended 30 september 2016

 



Group

Group



2016

2015



£'000

£'000

Cash flows from operating activities




Operating profit/(loss) from continuing operations


5,344

4,738

Operating (loss)/profit from discontinued operations


(3,016)

5,707

Group Operating profit/(loss)


2,328

10,445





Depreciation and amortisation


2,016

2,697

Impairment of intangibles


1,634

415

Loss/(profit) on the sale of property, plant and equipment


9

(71)

Profit on the sale of subsidiary undertakings


-

(10,798)

Share-based payments


103

170

Exchange adjustments


(147)

(283)

Increase in inventories


(674)

(105)

(Increase)/decrease in receivables


(1,950)

3,264

Increase in payables


1,088

578

Cash generated from operating activities


4,407

6,312





Tax paid


(1,301)

(1,530)





Net cash from operating activities


3,106

4,782





Cash flows from investing activities




Purchase of property, plant and equipment


(526)

(626)

Purchase of intangible assets


(1,425)

(2,514)

Proceeds on disposal of property, plant and equipment


122

346

Interest received


45

40

Proceeds from sale of subsidiary undertakings net of cash disposed


-

12,790





Net cash (used in)/generated from investing activities


(1,784)

10,036





Cash flows from financing activities




Payment of finance lease liabilities


-

(51)

Interest element of finance lease repayments


-

(6)

Bank interest paid


-

(4)

Issue of ordinary shares


517

894

Equity dividends paid


(5,304)

(11,541)





Net cash used in financing activities


(4,787)

(10,708)





Net (decrease)/increase in cash and cash equivalents


(3,465)

4,110





Cash and cash equivalents at beginning of the period


11,738

7,628









Cash and cash equivalents at end of the period


8,273

11,738









 

 

 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 SEPTEMBER 2016

 

 

 

 

Group

Share

capital

Shares

to be issued

Share premium account

Merger reserve

Retained earnings

Cash flow hedging reserve

Foreign currency translation reserve

Total


£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

Balance as at 1 October 2014

283

65

15,443

6,589

8,493

-

(55)

30,818

Net profit for the year

-

-

-

-

8,042

-

-

8,042

Exchange differences on retranslation of overseas subsidiaries

-

-

-

-

-

 

 

-

336

336

Transfer between reserves

-

-

-

(6,589)

6,815

-

(226)

-

Tax recognised directly in equity

-

-

-

-

336

-

-

336

Transactions with owners:









Dividends

-

-

-

-

(11,541)

-

-

(11,541)

Issue of share capital

11

-

883


-

-

-

894

Movement in relation to share options

-

-

-

-

170

 

-

-

170

Balance as at 30 September 2015

294

65

16,326

-

12,315

-

55

29,055

Net profit for the year

-

-

-

-

2,271

-

-

2,271

Exchange differences on retranslation of overseas subsidiaries

-

-

-

-

-

 

 

-

224

224

Loss on hedging instrument

-

-

-

-

-

(158)

-

(158)

Tax recognised directly in equity

-

-

-

-

121

-

-

121

Transactions with owners:









Dividends

-

-

-

-

(5,304)

-

-

(5,304)

Issue of share capital

9

-

508

-

-

-

-

517

Movement in relation to share options

-

-

-

-

103

 

-

-

103

Balance as at 30 September 2016

303

65

16,834

-

9,506

(158)

279

26,829

 

 









 

 

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 IFRSs, this announcement does not itself contain sufficient information to comply with IFRSs. The Company expects to publish full financial statements that comply with IFRS on 6th December 2016.

 

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 balance sheet 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. There have been no significant changes to the Group's accounting policies during the year.

 

The financial information set out in this preliminary announcement does not constitute statutory accounts for the years ended 30 September 2016 and 30 September 2015, but is derived from those accounts. The statutory accounts for the year ended 30 September 2015 have been delivered to the Registrar of Companies and those for the year ended 30 September 2016 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 2016 or 30 September 2015.

 

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 2016.

 

 

3.     Segmental analysis

 

Segment information is presented in the financial information 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 engineering, entertainment and life science markets;

 

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

 

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

 

·      OMG Life: Development and sale of software and hardware solutions for the consumer electronics market.

 

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 sales from Vicon UK to Vicon USA in the year ended 30 September 2016 are £6,150,000 (2015: £3,416,000).

 

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.

Business segments are analysed below:

 


Revenue


2016

2015


£'000

£'000




Vicon UK

9,607

9,458

Vicon USA

10,802

7,637

Vicon Group

20,409

17,095




Yotta UK

5,889

5,708

Yotta Mayrise

3,194

2,930

Yotta Group

9,083

8,638




Continuing operations

29,492

25,733




OMG Life Group

87

32




House of Moves**

-

38




2d3 UK

-

380

2d3 USA

-

1,580

2d3 Group

-

1,960




Discontinued operations

87

2,030




OMG Group

29,579

27,763




Revenue


2016

2015


£'000

£'000

By destination



UK

11,218

10,386

Europe

3,014

2,532

North America

10,246

7,306

Asia Pacific

4,049

4,854

Other

965

655

Continuing operations

 

29,492

 

25,733




UK

1

274

Europe

-

161

North America

86

1,580

Asia Pacific

-

15

Discontinued operations

 

87

 

2,030




OMG Group

29,579

27,763




By origin



UK

18,670

18,096

North America

10,802

7,637

Asia Pacific

20

-

Continuing operations

 

29,492

25,733




UK

82

447

North America

5

1,583

Discontinued operations

 

87

2,030




OMG Group

29,579

27,763

 


2016

2015


£'000

£'000

Vicon revenue by market



Engineering

4,490

3,605

Entertainment

5,635

4,595

Life sciences

10,284

8,895

Vicon Group*

20,409

17,095

 

Group revenue by type



Sale of hardware

19,359

15,580

Sale of software

2,081

1,572

Rendering of services

8,052

8,581

Continuing operations

29,492

25,733




Sale of hardware

-

32

Sale of software

-

1,226

Rendering of services

87

772

Discontinued operations

87

2,030




OMG Group

29,579

27,763

 

Yotta revenue by type



Software and related services

 

5,775

 

4,743

Surveying services

3,308

3,895

Yotta Group

9,083

8,638

 

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

**House of Moves was considered part of the Vicon Group prior to its sale on 15 October 2014.

 

 


2016

2015


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










Vicon UK

1,544

-

2,360

3,904

2,489

(76)

791

3,204

Vicon USA

4,375

-

(3,774)

601

2,769

(5)

(1,796)

968

Vicon Group

5,919

-

(1,414)

4,505

5,258

(81)

(1,005)

4,172








Yotta UK

11

(29)

(505)

(523)

560

(107)

(424)

29

Yotta Mayrise

1,949

(424)

(347)

1,178

1,475

(424)

(298)

753

Yotta Group

1,960

(453)

(852)

655

2,035

(531)

(722)

782



















Unallocated

(2,237)

(64)

2,530

229

(2,404)

(87)

2,308

(183)










Continuing operations

 

5,642

 

(517)

 

264

 

5,389

 

4,889

 

(699)

 

581

 

4,771










OMG Life Group

 

(1,079)

 

(1,673)

 

(264)

 

(3,016)

 

(2,497)

 

(657)

 

(238)

 

(3,392)










House of Moves**

 

-

 

 

-

 

-

 

-

 

(93)

 

(175)

 

-

 

(268)










2d3 UK

-

-

-

-

2,693

(8)

(208)

2,477

2d3 USA

-

-

-

-

(3,819)

10,840

(135)

6,886

2d3 Group

-

-

-

-

(1,126)

10,832

(343)

9,363










Discontinued operations

 

(1,079)

 

(1,673)

 

(264)

 

(3,016)

 

(3,716)

 

10,000

 

(581)

 

5,703










OMG Group

4,563

(2,190)

-

2,373

1,173

9,301

-

10,474

 

Adjusted profit before tax is detailed in note 5.

 

**House of Moves was considered part of the Vicon Group prior to its sale on 15 October 2014.

 

 


Non-current assets

Additions to non-current assets

Carrying amount of segment assets

Carrying amount of segment liabilities

Segment depreciation and amortisation


2016

2015

2016

2015

2016

2015

2016

2015

2016

2015


£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000












Vicon UK

3,381

3,501

1,044

1,752

10,949

16,262

(3,587)

(3,229)

1,002

797

Vicon USA

860

885

17

330

6,342

4,772

(2,042)

(1,332)

27

84

Vicon Group

4,241

4,386

1,061

2,082

17,291

21,034

(5,629)

(4,561)

1,029

881












Yotta UK

3,742

4,288

361

458

8,706

9,076

(2,133)

(2,531)

495

611

Yotta Mayrise

4,094

4,197

350

66

11,211

10,967

(1,884)

(1,757)

456

448

Yotta Group

7,836

8,485

711

524

19,917

20,043

(4,017)

(4,288)

951

1,059












Unallocated

254

2,091

37

32

6,184

2,498

(1,114)

(1,310)

28

21












Continuing operations

 

12,331

 

14,962

 

1,809

 

2,638

 

43,392

 

43,575

 

(10,760)

 

(10,159)

 

2,008

 

1,961












Yotta USA

-

-

-

-

32

28

(6)

(5)

-

-












OMG Life Group

 

35

 

1,532

 

-

 

776

 

(5,709)

 

(3,864)

 

(120)

 

(520)

 

1,642

 

893












2d3 UK

-

-

-

23

-

-

-

-

-

3

2d3 USA

                                -

-

-

18

-

-

-

-

-

255

2d3 Group

-

-

-

41

-

-

-

-

-

258












Discontinued operations

 

35

 

1,532

 

-

 

817

 

(5,677)

 

(3,836)

 

(126)

 

(525)

 

1,642

 

1,151












OMG Group

12,366

16,494

1,809

3,455

37,715

39,739

(10,886)

(10,684)

3,650

3,112

 

 

4.     Profit for the year

 

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


2016

2015


£'000

£'000

Loss/(profit) on disposal of property, plant and equipment

9

(71)

Depreciation of property, plant and equipment - owned

478

575

                                                                                   - under hire purchase/finance lease

-

82

Amortisation of customer relationships

305

397

Amortisation of intellectual property

126

228

Amortisation of development costs

1,107

1,415

Impairment of intangible fixed assets

1,634

415

Share based payments - equity settled

103

170

Operating lease charges - land and buildings

576

721

Foreign exchange (gain)/loss

(552)

41

Grant income receivable

(990)

(490)

 

 

5.     Reconciliation of adjusted profit/(loss) before tax

 

A reconciliation of profit/(loss) before tax to adjusted profit/(loss) before tax, which the Board consider better reflects operational performance is provided below. This measure complements the statutory measure as reported in the Consolidated Income Statement and is a performance indicator provided to the Chief Operating Decision Maker.


2016

2015


£'000

£'000

Profit before tax - continuing operations

5,389

4,771

Share based payments - equity settled

64

117

Amortisation of intangibles arising on acquisition

424

502

Redundancy costs

29

80

Reapportion Group overheads

(264)

(581)

Adjusted profit before tax - continuing operations

5,642

4,889




(Loss)/profit before tax - discontinued operations

(3,016)

5,703

Share based payments - equity settled

39

53

Amortisation of intangibles arising on acquisition

-

124

Impairment of intangible assets

1,634

-

Redundancy costs

-

80

Compensation to contract manufacturer and Autographer inventory write off

-

540

Profit on disposal of House of Moves and 2d3 Group

-

(10,797)

Reapportion Group overheads

264

581

Adjusted loss before tax - discontinued operations

(1,079)

(3,716)




Total adjusted profit before tax - all operations

4,563

1,173

 

The redundancy costs in the year ended 30 September 2016 are associated with the restructuring of the Yotta UK business segment and those in the year ended 30 September 2015 are associated with the restructuring of the Yotta UK, Vicon and OMG Life business segments. 

 

The compensation to contract manufacturer and Autographer inventory write off relates to the cost of terminating the contract with our manufacturer in OMG Life Limited.

 

 

6.     Taxation

 

The tax is based on the profit/(loss) for the year and represents:

 


2016

2015


£'000

£'000

United Kingdom corporation tax at 20% (2015: 20.5%)

492

212

Overseas taxation

312

2,041

Adjustments in respect of prior year

(275)

(155)

Current taxation

529

2,098

Deferred taxation

(427)

334

Total taxation expense

102

2,432

 

Continuing and discontinued operations:


2016

2015


£'000

£'000

Income tax expense from continuing operations

608

361

Income tax credit from discontinued operations excluding gain on sale

(526)

(589)


82

(228)

 

Total tax expense:

 


2016

2015


£'000

£'000

Income tax expense/(credit) excluding tax on sale of discontinued operations

82

(228)

Income tax expense on gain on sale of discontinued operations

20

2,660


102

2,432

 

At 30 September 2016, the Group had an undiscounted deferred tax asset of £311,000 (2015: £632,000).  The asset comprises principally accelerated capital allowances and future tax relief available on the exercise of outstanding employee share options in OMG plc.

Deferred tax assets and liabilities have been measured at an effective rate of 17% and 38% in the UK and USA, respectively (2015: 20% and 38%, respectively).

The inclusion of legislation to reduce the main rate of corporation tax from 20% to 19% from 1 April 2017 and then a further reduction to 17% from 1 April 2020 was substantively enacted on 15 September 2016

The tax assessed for the year is lower than the standard rate of corporation tax in the UK of 20% (2015: higher than the standard rate of 20.5%).

 

The differences are explained as follows:

 


2016

2015


£'000

£'000

Profit on ordinary activities before tax

2,373

10,474

Expected tax income based on the standard rate of
corporation tax in the UK of 20% (2015: 20.5%)

475

2,147

Effect of:



Expenses not deductible for tax purposes

(53)

61

Tax gain on sale of discontinued operation in excess of book gain

2

346

Book gain on sale of discontinued operation in excess of tax gain

-

(1,732)

Unrelieved current year losses

-

475

Utilisation of losses brought forward

201

-

Adjustments to tax charge in respect of prior year current tax

(275)

(155)

Adjustments to tax charge in respect of prior year deferred tax

(185)

(203)

Higher rates on overseas taxation

250

1,754

Research and development tax credit

(308)

(320)

Tax deduction in excess of income statement charge

88

6

Effect of rate change

(93)

53

Total tax expense

102

2,432

 

 

7.     Finance income and expense


2016

2015


£'000

£'000

Finance expense - Hire purchase liabilities

-

(6)

-  Bank interest paid

-

(4)


-

(10)




Finance income - Interest income on short term bank deposits

23

30

                          - Unwinding of discount on contingent consideration

22

10


45

40

 

 

8.     Earnings/(loss) per share


2016

2015


Earnings/(loss)

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

4,781

120,354

3.96

4,410

114,626

3.85

Dilutive effect of employee share options

-

1,717

(0.06)

-

2,789

(0.09)

Diluted earnings per share

4,781

122,071

3.90

4,410

117,415

3.76

Discontinued operations







Basic (loss)/earnings per share







(Loss)/earnings attributable to ordinary shareholders

(2,510)

120,354

(2.07)

3,632

114,626

3.17

Dilutive effect of employee share options

-

1,717

-

-

2,789

(0.08)

Diluted (loss)/earnings per share

(2,510)

122,071

(2.07)

3,632

117,415

3.09

Total operations







Basic earnings per share







Loss attributable to ordinary shareholders

2,271

120,354

1.89

8,042

114,626

7.02

Dilutive effect of employee share options

-

1,717

(0.03)

-

2,789

(0.17)

Diluted earnings per share

2,271

122,071

1.86

8,042

117,415

6.85

 

Basic earnings per share is calculated by dividing the profit/(loss) 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

 


2016

2015

Equity - ordinary

£'000

£'000

Final 2015 paid in 2016 (0.65 pence per share)

784

-

Final 2014 paid in 2015 (0.50 pence per share)

-

567

Special paid in 2016 (3.75 pence per share)

4,520

-

Special paid in 2015 (4.50 pence per share)

-

5,102

Special paid in 2015 (5.00 pence per share)

-

5,872


5,304

11,541

 

The directors are proposing a final dividend in respect of the financial year ended 30 September 2016 of 1.00 pence per share (2015: 0.65 pence per share) which will absorb an estimated £1,213,000 of shareholders' funds.  This dividend will be paid on 9 March 2017 to shareholders who are on the register of members at close of business on 16 December 2016 subject to approval at the AGM. These dividends have not been accrued in this financial information.

 

 

10.  Copies of announcement

 

Copies of this announcement will be available from the Company's registered office at 14 Minns Business Park, West Way, Oxford, OX2 0JB.

 

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
END
 
 

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