Final Results
OMG PLC
28 November 2007
28 November 2007
OMG plc
Preliminary results for the year ended 30 September 2007
OMG plc, Oxford Metrics Group (LSE: OMG), ('OMG' or 'the Group') the technology
group providing image understanding products and services for the entertainment,
defence, life science and engineering industries, announces preliminary results
for the year ended 30 September 2007.
A very good year: the headlines
• Record turnover - up 20% to £19.6m (2006: £16.3m) including £0.9m for
two months of trading from Data Collection Limited (DCL) acquired at
the end of July.
• At constant exchange rates, turnover up by 27%.
• Profit before tax of £1.84m (2006: £1.66m), up 11%, including £0.15m
from DCL.
• Strategic investment in continuing 2d3 and Yotta start ups of £1.3m
(2006: £0.3m).
• Earnings per share 2.6p (2006: 2.48p), up 5%.
• Cash balance of £6.2m (2006: £6.5m).
• Dividend increased 15% to 0.115p.
• Our biggest acquisition yet boosts Yotta to offer unique range of
highway surveying products and services.
• First two Ministry of Defence contracts, worth £600,000 in total, won
by our 2d3 Advanced Imaging Group (AIG) - the new division focused on
Defence.
• New Vicon F Series camera successfully launched, setting new standards
in motion capture technology.
An even better year: behind the headlines:
• Like-for-like* turnover up 14% to £18.5m (2006: £16.3m). Up 21% at
constant exchange rates.
• Like-for-like* profit before tax of £3.0m (2006: £2.0m), up 50%.
*Excluding the net investment of £1.3m in Yotta and 2d3 AIG, and the acquisition
of DCL.
Nick Bolton, Chief Executive of OMG plc, commented,
'I am delighted that yet again our results are ahead of expectations, setting
new records of achievement both in revenues and profits in our traditional
business, whilst our two new businesses have made excellent progress.
'Within 2d3 AIG, our MoD contract wins, which include winning the Competition of
Ideas initiative, are a strong endorsement of our technology, and our recent
decision to open 2d3 Inc in the US offers us an exciting opportunity to expand
our presence overseas. In addition to these developments, we have made great
strides within Yotta, with a number of local council contract wins and, most
recently, the DCL acquisition, which has given us additional scale, experience
and key relationships, which will enhance the growth of our business.
'I remain confident that with our technology we will continue to consolidate our
position in the new areas of defence and street level imaging and highway data
collection as well as maintain our leading position in motion capture. I am
extremely excited about the many opportunities open to the company and the
progress I am certain we will make in the next 12 months and beyond.'
ENDS
For further information please contact:
OMG plc 01865 261800
Nick Bolton, Chief Executive
Peter Wharton, Finance Director
Financial Dynamics 020 7831 3113
Juliet Clarke / Hannah Sloane
Evolution Securities (NOMAD to OMG) 020 7071 4308
Jeremy Ellis
About OMG
OMG plc (Oxford Metrics Group. LSE: OMG) is a group of technology companies
producing image understanding products and services for the entertainment,
defence, life science and engineering industries. Be it for capturing the
movements of actors (for the movie industry), sportsmen (for video games or
improving team performance), children with Cerebral Palsy, rehab patients and
animals (for medical, life science and research industries) or virtual reality
displays (for engineering and development), the Group has the world leading
market position and a strong international reputation for precision instruments.
Founded in 1984, the Group's headquarters are in Oxford, UK, and it has offices
in California and Colorado, USA. It has customers in over 50 countries and is a
quoted company listed on AIM, a market operated by the London Stock Exchange.
The Group trades through three operating subsidiaries - Vicon, the world's
biggest motion capture and movement analysis company, 2d3, a manufacturer of
specialised image understanding software for entertainment and defence
applications and Yotta, our 3D mapping business, which collects and analyses
highway data and street level imaging and which, following the acquisition of
DCL in July 2007, offers the most accurate and complete highway survey
available.
Oxford Metrics' global clients in science, medicine, sport, engineering, gaming,
film, broadcast and 3D mapping include major hospitals and research facilities
such as Guy's Hospital, Nuffield Orthopaedic Centre and Loughborough University,
engineering industry leaders including Ford Motor Company, BMW, Airbus and
Toyota, and in the entertainment sector, Sony, Industrial Light and Magic, The
Moving Picture Company (MPC), Sega, Nintendo, UbiSoft, EA, Square Enix and in 3D
mapping and highway surveys: Mouchel Parkman, Atkins, and Oxfordshire, Cumbria,
Derbyshire and Pembrokeshire County Councils as well as many others.
For more information about OMG and its subsidiaries, visit www.omg3d.com,
www.vicon.com, www.2d3.com or www.yotta.tv
CHAIRMAN'S STATEMENT
Delivering on our promises
A year ago, I said that the way forward for OMG was to continue building on
positions of great strength in our existing markets while capitalising on our
incredible technology to gain a foothold in new and much bigger ones. And that,
I'm very pleased to tell you, is precisely what we've done. In fact, in a long
career in business, I can think of few occasions when what I've predicted has so
completely come to pass.
In terms of results, we've maintained our impressive recent performance, once
again surpassing expectations, at the same time as seeing both our fledgling new
businesses start to take flight. As we said we would, we've made an important
acquisition, buying one of the UK's leading highway surveying companies, Data
Collection Limited (DCL) to accelerate the growth of our 3D mapping business.
Meanwhile, our venture into the defence market has more than lived up to our
expectations, having secured not one but two contracts from the UK Ministry of
Defence, worth in total around £600,000. In short, we ended the year with two
viable new businesses; still acorns perhaps, but giving real glimpses of the oak
trees they could become.
Another record year - for performance and investment
Once again, it's been a record year - both in terms of revenues and
profitability. But to understand the scale of our success, you have to look
behind the headline figures. Specifically, it's important to register the fact
that our record performance has been achieved while, at the same time, we have
been putting investment into our two new ventures. So, while reported trading is
in line with expectations, we have actually performed better and have been able
to invest more than we predicted at the beginning of the year.
Turning to the numbers in more detail, turnover was up by 20% to £19.6m. But
this has been a year when the US dollar has had a significant impact, as roughly
half of our revenues come from North America. Taking out the effect of the
weakening dollar, turnover has actually increased by closer to 27%. This
includes a strong performance from DCL during its first two months as part of
the Group with revenues of £942,000 and profit before tax of £149,000.
Profit before tax has increased by 11% on the previous year at £1.84m despite
the investment in new businesses and adverse effect of the dollar. And, although
our effective rate of taxation is higher this year, earnings per share has
increased by 5% to 2.6p
Cash balances at the year end remained a healthy £6.2m and although this is
slightly down from the £6.5m at the start of the year, we have utilised £1.0m on
the cash element of the consideration for DCL.
So, looking behind the headlines, excluding the net investment of £1.3m in our
two main new ventures, 2d3 Advanced Imaging Group (AIG) and Yotta (our 2006
start ups), and excluding the effect of DCL, the like-for-like trends look even
better. Turnover is up 14% to £18.5m, or 21% at constant exchange rates.
Like-for-like profit before tax is up 50% at £3.0m. This clearly demonstrates
continuing improvements in performance outside of our latest ventures.
Our strategy for sustained growth
While we're very satisfied with what we achieved last year, I can't emphasise
too strongly that it's only the beginning for the 'new OMG'. Our priority is
sustained and significant long term growth, which we aim to deliver by building
businesses far bigger than those we already have, in markets where there is
virtually no limit to what we can achieve - and where we believe our entry can
disrupt the status quo, to profitable effect.
Our goals are extremely ambitious, and we're fully aware that - even with the
huge advantage that our technology gives us - they won't be achieved through
organic growth alone, which is why using well chosen acquisitions to accelerate
growth is a key part of our strategy.
I've been involved in numerous acquisitions over the years, and there are almost
always a few twists and turns along the way. But the one we completed in July
went extraordinarily smoothly and represents, I believe, a textbook example of
what we're aiming to achieve: buying a totally compatible profitable business
that brings with it talented people and valuable experience in the market - and
the opportunity to combine these acquired capabilities with our amazing
technology.
Of course, there's no such thing as a completely risk-free acquisition, but
we've come close to it with DCL; the new much enlarged business was up and
running - offering a much enhanced service to clients of both the component
businesses - from day one.
Making the most of talent
The other major theme of the last year has been our recognition of the urgent
need to maximise the potential of our brilliantly talented people - which, as a
strictly non-technological business person, I continue to be astonished and
humbled by.
Nick discusses this in more detail overleaf, but, from a management perspective,
one key concern is making sure that the right people are in the right place to
make the greatest possible impact. I'm thinking, for example, of the way that
Jon Damush, after six years playing a leading part in our Vicon entertainment
business, has taken charge of setting up 2d3 Inc, the new dedicated US arm of
our defence business. As a qualified flying instructor and self-confessed
aviation nut, as well as a genuinely entrepreneurial salesperson, he could
hardly be better equipped to make a success of this hugely important start-up.
Similarly, it's fantastic for the Group that Steve Batchelor, formerly Chairman
of DCL, is now leading our drive to establish Yotta DCL in the US, where he has
strong previous experience of running a successful business.
More generally, too, it's given me great pleasure over the last year, as our
business has grown, to watch a 'new generation' of exceptionally talented people
from within the Group taking on new challenges and responsibilities, as
opportunities have presented themselves.
Our dividend policy: rewarding patience
A year ago, we announced the introduction of a progressive dividend policy, and
declared a maiden dividend of 0.1p per ordinary share.
Since then, our excellent performance has been reflected in a consistently
rising share price. So I'm pleased to announce that we are proposing to increase
the dividend for 2007 by 15%, to 0.115p - providing shareholders with some well
deserved reward for their patient belief in the Group's enormous potential.
The dividend will be paid on 12 March 2008 to shareholders on the register of
members at the close of business on 7 December 2007.
Building on our achievements
I'm proud of how much this group of companies has achieved, in a remarkably
short time. Yet it's fair to say that we've been moving forward relatively
cautiously, using the profitability of our established businesses to fund our
first steps into new markets.
But a seriously risk-averse business could never deliver the kind of growth that
OMG is aiming for; and we are confident that our strategy, including planned
acquisitions, will deliver further significant progress in the years ahead.
Whatever the future holds, it's essential that we can clearly demonstrate our
ability to maximise the incredible potential of our technology and our talent;
and that we have the systems in place to turn that potential into sustained
growth and profitability. Over the last 12 months, we've taken hugely important
steps towards achieving this.
And so, thinking about the year ahead of us, we anticipate a similar strong
performance. There remains scope for further growth in revenues and profits from
our mature business, while our new ventures will benefit from contracts already
secured from the MoD and from the broad base of customers supplied through DCL.
And, rest assured that we are working hard toward accelerating our growth both
organically and through further acquisitions which we will say more about at the
appropriate time.
Anthony Simonds-Gooding
Chairman
CHIEF EXECUTIVE'S STATEMENT
Managing growth
Of course, it's true that we all need to learn from our mistakes. But I believe
that success can teach us important lessons, too. And for all of us at OMG, I
think that's been the theme of the last 12 months: looking closely at what we've
achieved in the last couple of years, assessing how we've done it, and working
to make it a continually improving process.
For me personally, what's become clear is that my passion in business is for
managing a dynamically growing company. Why? For the very simple reason, that
strong growth opens up limitless possibilities. A business like OMG that has
doubled its revenues since 2004 and increased profits for five successive halves
has all kinds of choices denied to a more sluggish performer. Exploring some of
those possibilities and choices - in order to open up further possibilities and
choices for the Group in future - has been the most exciting aspect of my job in
2006/07.
Acquiring to amplify
Successful businesses have the option of accelerating their growth through
acquisitions. And, as you've heard, we made our biggest yet earlier this year.
In the process, we also clarified and put on record what I might rather
pretentiously call our acquisition philosophy. For us, this method of building
our business works when we can see exceptional talent and highly relevant
expertise in the target company, to which we can add our incredible technology
in order to create something greater than the sum of the parts; a new business
with the potential to turn its market upside down.
The Chairman has already outlined how this applies in the case of DCL and our 3D
mapping business. But it's worth my pointing out that we've already demonstrated
the effectiveness of this approach, with our two rather less recent
acquisitions: House of Moves (now integrated into Vicon) joined the Group in
2004, and has just delivered its best ever trading year. And over the first two
full financial years since we took over Peak, turnover has increased. In total
the combined Vicon turnover in North America has grown by 43%. We call it
acquiring to amplify.
Getting the best from our people
Buying in high grade talent and growth opportunities is, and will remain, an
important part of OMG's strategy; but we've also been focusing on ways of
maximising the vast potential already within the Group - starting, of course,
with our people.
At the time of writing, there are almost 200 of them. And while it's always a
mistake to generalise about that many individuals, I can say without fear of
contradiction that they are a special breed - bringing together a highly unusual
blend of technological, engineering and commercial skills and aptitudes. I think
of them as 'fusion people'.
In any case, we're very lucky to have them. And, recognising that, we're
absolutely determined to hang onto them, and get the very best possible return
on their talent. Which is why, over the last couple of years, we've shown our
willingness, when necessary, to virtualize our business: we currently have
brilliant people working for us from Barcelona to Bognor Regis, Utah to
Singapore.
But our key focus in 2006/07 has been a greatly increased investment in
developing individuals and teams, having spent more on training than in the
previous five years added together. And now we're going even further: working to
improve and systematise our process for identifying and developing the skills
and attributes needed to sustain the Group's success.
Making the most of opportunities for growth
Another way in which we need to take steps to maximise the Group's enormous
potential has come into focus over the last year.
As world leaders in our field, we're continually receiving enquiries from
potential clients with issues that our technology could address - many with real
potential to generate revenue and to provide the seed from which a successful
new business could grow.
Currently, we don't always have the available brain-power to respond to such
enquiries, which means we're letting opportunities to touch more lives in more
new markets slip through our grasp. But we're determined to find ways of
improving our performance in this respect, by making better use of the pool of
talent available to us through the extended technological/academic 'family' to
which OMG belongs.
Again, it's worth noting that what I'm describing here is not just an aspiration
for the future, but a proven part of OMG's track record: both of our current new
ventures - Yotta DCL and our move into imaging systems for Unmanned Aerial
Vehicles - were developed from external enquiries.
Standardising systems, processes . . . and values
Start-ups and young businesses may be able to get by doing things on a wing and
prayer, but the serious players in any market need structure and order in every
aspect of their operation. So in 2006/07 we've been paying serious attention to
ensuring that our basic systems and processes are reliable and consistent. As a
result, we achieved ISO9001 certification for 2d3, and for Vicon, added ISO13485
- a further recognition of our commitment to providing ever improving quality
products and services.
Building on this, we've started work on putting in place Group-wide support
services, covering key functions such as M&A, finance, legal, IT and
communications. It may not be the most exciting thing we've done in the last
year, but it's one of the most important in terms of our continued growth.
We've been doing a bit of thinking about our values, too. And the same point
I've just made about systems and processes applies here: big businesses need to
be explicit about things that can remain unspoken in smaller ones. What does OMG
stand for? How should what we believe be reflected in how we behave?
Instinctively, those of us who have been with the company for years feel we know
the answers; but, for the next stage in our development, it's important that we
can express our shared values clearly. We've made a start on this recently, and
we'll be pursuing it further in the year ahead.
Touching more lives, transforming markets
Overall, as another year ends, I could hardly be happier with where we find
ourselves today. Clearly, the really eye-catching achievement of the past year
is the way our two new businesses have progressed, although both are still at
early stages in their development.
But, in case you detect a hint of self-congratulation in my tone, please believe
that we're nowhere near satisfied with the advances OMG has made so far. Which
is why, in terms of the Group's future, the most significant news story of the
past year is probably the work that we've been doing to put in place the systems
and structures for sustained and rapid growth. Today, we're reporting on a
Group made up of three businesses at different stages of maturity; but tomorrow
. . . well, who knows exactly? But I'm 100% confident that OMG's amazing
technology will touch countless more lives, and enable us to bring about
dramatic and profitable change in further new markets.
BUSINESS REVIEW
How our businesses performed
In the preceding pages, we've talked a lot about the future of OMG and the
important steps we've taken in 2006/07 to ensure the Group's long term sustained
growth. But the last thing we want to do is deflect attention from the
outstanding performance of our three businesses over the last 12 months . . .
Yotta DCL
A new name, a major acquisition . . . and firmly on the road to success.
Launched in June 2006, our street level imaging and highway data collection
business began the year as Geospatial Vision, was rebranded Yotta during the
first half, and ended the year with increased capability following the
acquisition of Data Collection Limited (DCL), one of the UK's largest dedicated
highways surveying companies.
The acquisition took place in July this year, but long before that, we were
seeing strong evidence that this new application of OMG's incredible technology
was set to make a major impact on the roads of Britain. In fact, during the
first half, Yotta - newly named and smartly rebranded in May - completed its
first five projects, capturing over 15 million images in total and delivering
data on around 500,000 assets to local authorities all over the UK, from
Carlisle to Bournemouth.
Joining forces to transform the market
Joining forces with DCL has transformed our prospects and accelerated our
growth. One of the UK's largest and best respected highway condition surveyors,
DCL has brought to the Group vast experience of working with highway agencies,
infrastructure management groups and local authorities.
More tangibly, it has also added a 13 vehicle road survey fleet, some
exceptionally talented people, and long term contracts for many tens of
thousands of kilometres of condition surveys - covering everything from major
roads to footpaths.
We believed at the time of the acquisition that bringing together these highly
valuable assets with our vision technology - by blending proven operational
excellence with leading edge image understanding - we could create a business
capable of transforming the market it operates in, and with spectacular
prospects for continued growth. Putting this into a financial context, DCL's
results (under their previous accounting policies) for the 12 months prior to
the acquisition show turnover of £4.0m and profit before tax of £0.5m, which
will continue to enhance the revenue and profits of the group significantly in
the future , even before taking account of growth potential..
So far, the signs could hardly be better. In the first 12 weeks of Yotta DCL,
we've started to see the benefits of cross-fertilisation, in terms of the
improved service we're able to offer. And, pleasingly, we've had nothing but
positive feedback from customers, who have been quick to recognise that Yotta
plus DCL adds up to something distinctively better.
The only way is up . . .
Looking to the near future, we plan to start offering a full asset inventory
service, which will also enable us - with our 13 vehicles continually out on the
UK's roads - to collect huge amounts of mapping information, which we'll be able
to make available to interested parties.
As for our longer term prospects, we remain excitedly optimistic. Both within
the UK and overseas, we believe there's a huge amount more that Yotta DCL
technology can achieve; and we're actively pursuing opportunities that we
believe will very soon enable us to make the next quantum leap forward.
2d3
Two businesses in one - defence and entertainment - both flying high.
An established star in entertainment, supplying the movie industry's favourite
camera tracking systems, 2d3 is also a brand new market entrant in the field of
defence, where our technology is now starting to demonstrate its potential to
transform the capabilities of the next generation of Unmanned Aerial Vehicles
(UAVs).
We've said since we launched 2d3 Advanced Imaging Group (AIG) in late 2006 that,
in view of how defence procurement works, we would need to play a long and
patient game. So we're well ahead of schedule in having secured our first two UK
Ministry of Defence (MoD) contract wins in July and August 2007.
A winner in the Competition of Ideas
As part of the Competition of Ideas initiative, we were awarded a contract worth
£475,000 over two years, to develop a proposal for using our image processing
software to greatly increase the accuracy of vehicle tracking and target
geolocation.
With a budget of £10 million, this initiative encourages the UK's best
innovators to bid for funding to develop their ideas further to meet key defence
challenges, showing how they can be rapidly developed to become operational
equipment of value to the armed forces. This year there were around 50 winners;
so the size of our award represents a significant and very welcome vote of
confidence in our technology from the MoD.
At the same time, we've continued to develop our relationships with prime
defence contractors; and we're delighted with the quality of the response we've
been getting, which has included a number of spontaneous enquiries - reflecting
fast growing awareness of our technology's potential within the sector.
2d3 Inc: our US business takes off
In the US, we took a hugely important - and necessary - step when in June this
year, we set up 2d3 Inc, under the leadership of Jon Damush, formerly a key part
of our Vicon Entertainment team.
For practical commercial reasons, relating to trade restrictions and
intellectual property protection, we needed a base on American soil. But, of
course, we also wanted to be right there, on the ground, and capable of
delivering a dedicated service to customers in the world's most important
defence market.
Just four months in at the time of writing, 2d3 Inc is very much up and running,
and starting to build a team capable of developing our core technology and
innovation in ways that reflect the specific requirements of US customers.
Once again, we participated with real success at the Unmanned Vehicle System
International (AUVSI), which took place this year in Washington DC. And we can
confirm what we reported 12 months ago: that generally the US market remains
highly responsive to innovative new technology, whatever its source. And our
relationships with both the defence establishment and prime contractors have
continued to develop very promisingly. We expect to sign contracts within our
first year trading as 2d3 Inc.
A star performer in the entertainment world
Turning to the field in which 2d3 first became a star, our performance in the
movie business has been steady rather than spectacular. Five years after we
launched boujou, the world's first viable automatic camera tracking system,
demand in what is a fairly small industry has inevitably levelled off somewhat.
No less predictably, our innovative technology, which once stood alone, now
faces more competition, though boujou remains clearly the premier product of its
type.
And we've continued to put more distance between ourselves and the chasing pack
by pushing back still further the boundaries of what is possible in terms of
combining live action and animation. New lower price derivatives of boujou,
silver bullet and bullet SD, were successfully launched in April. And boujou 4.1
also made its debut at the end of the year, raising the bar higher once more,
with a range of new features including tracking based on geometric models and
the generation of 3-dimensional scenes.
Another innovation during the first half of the year was our introduction of a
new camera that piggy-backs on a normal film camera, enabling us to offer a
'real time boujou' service. More proof that, while we're realistic about
prospects for growth in this sector, we're 100% committed to retaining top
billing as providers of user-focused technology.
Vicon
Another market-leading year for the first name in motion capture technology.
When you've dominated your field for as long as Vicon, you have two choices: you
can grow complacent, or continue to raise your game. With important new
products, improved production efficiency and a strengthened sales and support
team, it's easy to see which option Vicon has chosen.
Once again, Vicon strengthened its position as world leader in motion capture,
not just delivering sales well ahead of targets but further improving production
efficiency, forecasting and all round business execution.
Raising the bar with our new F Series
In product innovation terms, the big story of our year was the launch of the new
F Series camera in April. The F stands for 'Faster Full Frame' motion capture;
and, in terms of speed and accuracy, this latest addition to our award winning
MX platform, raises the bar yet again.
Featuring the world's first camera sensors designed specifically for motion
capture, the new F40 and F20 enable performance data to be captured at higher
speeds than ever before. Customer response has been enthusiastic, with almost
1,000 F series cameras sold between launch and September 2007.
Meanwhile, on the life sciences side of the business, our ground-breaking Nexus
software is enabling our customers to touch and transform more lives, by
capturing and analyzing movement in ways that previously were not possible. In
the first half, Nexus shipped with over 60% of all Vicon systems.
Reaching new heights in the Mile High City
To help Nexus maintain its clear technological advantage, and put ourselves at
the heart of the key US market, we moved development to Denver - strengthening
our team with new members, and relocating key people from the UK.
More generally, we put on muscle in Denver, adding new support and testing
staff, to strengthen testing and QA for clients in both North and South America,
across life sciences and entertainment. And, still in the Mile High City, we
also opened a new Vicon production facility, greatly increasing our capacity to
offer US clients a smooth and seamless service.
As a result of all these developments, the impressive growth rate of our Denver
operation has continued, with life science sales for the year up by around 17%.
And the figures for Vicon Entertainment sales in the US from our Los Angeles
office are better still: up over 43%.
Making Vicon a more widely known name than ever
Elsewhere in the world, our leadership in motion capture technology is making
the Vicon name more widely known than ever. We established a new sales base in
Singapore, to service customers throughout Asia, New Zealand and Australia. We
made our first ever sale to Pakistan, as well as shipping our first
entertainment system to India; while, closer to home, we made inroads into
Eastern Europe and the Middle East, with particularly strong sales in Lithuania
and The Emirates.
Our strong performance in these and other emerging territories provides
encouraging evidence that there is still considerable growth potential for this
long established business. And, bearing this out, sales in the UK and the rest
of the world (excluding the USA) were up by a very healthy 14%.
To help us respond to increasing demand, we added heads to the Vicon sales and
support team. We also made an important investment in sales training,
introducing our people to a more structured approach that focuses not on
shifting product, but being responsive to customer needs. It's already clear
that this has given our sales people more confidence, which has undoubtedly
contributed to their excellent performance.
While continually driving for technology innovation and with plans for further
improvements to efficiency, Vicon's determination to remain the undisputed No 1
in motion capture shows no sign at all of diminishing.
Nick Bolton
Chief Executive
GROUP PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 30 SEPTEMBER 2007
Unaudited Unaudited Unaudited Audited
2007 2007 2007 2006
Continuing Continuing Continuing
Operations Operations: Operations
Acquisitions Total (as restated
see note 1)
Note £'000 £'000 £'000 £'000
Turnover 3 18,676 942 19,618 16,274
Cost of sales (6,308) (520) (6,828) (6,019)
Gross profit 12,368 422 12,790 10,255
Sales, support and marketing costs (3,856) (50) (3,906) (3,021)
Research and development (3,519) - (3,519) (2,354)
Administrative expenses (3,653) (224) (3,877) (3,451)
Other income 49 1 50 12
Operating profit before share-based
payments and goodwill amortisation 1,719 199 1,918 1,650
Share-based payments (note 1) (202) - (202) (81)
Goodwill amortisation (128) (50) (178) (128)
Operating profit 1,389 149 1,538 1,441
Interest receivable and similar income 303 217
Profit on ordinary activities before taxation 1,841 1,658
Tax charge on profit on ordinary activities 4 (267) (179)
Retained profit for the financial year 1,574 1,479
Basic earnings per ordinary share 5 2.60p 2.48p
Diluted earnings per ordinary share 5 2.44p 2.38p
There is no material difference between the retained profit on ordinary
activities before taxation and the retained profit for the financial year stated
above and their historical cost equivalents.
STATEMENT OF GROUP TOTAL RECOGNISED GAINS AND LOSSES
FOR THE YEAR ENDED 30 SEPTEMBER 2007
Unaudited Audited
2007 2006
£'000 £'000
(as restated
-
see note 1)
Retained profit for the financial year as previously stated 1,574 1,479
Prior year adjustment - see note 1 (81) -
Retained profit for the financial year as restated 1,493 1,479
Exchange differences on retranslation of overseas subsidiaries (120) (121)
Total recognised gains and losses for the year 1,373 1,358
CONSOLIDATED AND COMPANY BALANCE SHEETS
AT 30 SEPTEMBER 2007
Unaudited Audited Unaudited Audited
Group Group Company Company
2007 2006 2007 2006
£'000 £'000 £'000 £'000
(as restated (as restated
see note 1) see note 1)
Fixed assets
Intangible assets 3,833 998 50 91
Tangible assets 1,847 921 75 122
Investments 69 69 5,739 1,183
5,749 1,988 5,864 1,396
Current assets
Stocks 1,786 934 - -
Debtors 7,729 4,721 319 1,312
Cash at bank and short term deposits 6,179 6,494 5,355 6,071
15,694 12,149 5,674 7,383
Creditors: amounts falling due within
one year (5,940) (3,483) (1,264) (1,707)
Net current assets 9,754 8,666 4,410 5,676
Creditors: amounts falling due after more
than one year (187) - - -
Provisions for liabilities (70) - - -
Net Assets 15,246 10,654 10,274 7,072
Capital and reserves
Share capital 157 150 157 150
Shares to be issued 1,470 - 1,470 -
Share premium account 7,427 5,908 7,427 5,908
Profit and loss account 6,192 4,596 1,220 1,014
Total equity shareholders' funds 15,246 10,654 10,274 7,072
CONSOLIDATED CASH FLOW STATEMENT
FOR THE YEAR ENDED 30 SEPTEMBER 2007
Unaudited Audited
Note 2007 2006
£'000 £'000
Net cash inflow from operating activities 8 1,388 2,646
Returns on investments and servicing of finance
Interest received 303 217
Interest element of finance lease repayments (4) -
299 217
Taxation (117) (179)
Capital expenditure and financial investment
Purchase of tangible fixed assets (727) (610)
Purchase of intangible fixed assets (164) -
Disposal of tangible fixed assets 84 128
(807) (482)
Acquisitions
Purchase of subsidiary undertaking (1,616) (44)
Net cash acquired with new subsidiary 603 -
(1,013) (44)
Equity dividends paid (60) -
Net cash (outflow)/inflow before financing (310) 2,158
Financing
Issue of ordinary share capital 57 13
Capital element of finance lease repayments (32) -
25 13
(Decrease)/increase in cash (285) 2,171
The purchase of the subsidiary undertaking cash outflow in 2006 relates to the
final deferred consideration paid during the year in respect of acquisitions in
previous years.
NOTES TO THE PRELIMINARY ANNOUNCEMENT
FOR THE YEAR ENDED 30 SEPTEMBER 2007
1. BASIS OF PREPARATION
The financial information in this preliminary announcement is un-audited and has
been prepared on the going concern basis, under the historical cost convention
and applicable accounting standards in the United Kingdom and is consistent with
the policies set out in the Group's statutory accounts for the year ended 30
September 2006, except for the adoption by the Group of FRS 20 'Share-based
payments' during the year by means of a prior year adjustment.
The adoption of FRS 20 has led to the cost of employee share option schemes
being charged to operating expenses within the profit and loss account, with an
equal and opposite credit to profit and loss reserves.
As a result, there is no impact on the opening balance sheet at 1 October 2005
and 1 October 2006. The charge for the year ended 30 September 2007 is £202,000
(2006: £81,000).
2. BASIS OF CONSOLIDATION
The consolidated financial statements consolidate those of the Company and all
of its subsidiary undertakings drawn up to 30 September 2007. Acquisitions of
subsidiaries are dealt with by the acquisition method of accounting from the
date of acquisition.
3. TURNOVER AND SEGMENTAL ANALYSIS
An analysis of turnover destination by geographical market is given below:
Unaudited Audited
2007 2006
£'000 £'000
United Kingdom 2,435 1,899
Continental Europe 2,957 2,018
North America 9,881 8,248
Asia Pacific 3,739 3,666
Other 606 443
19,618 16,274
An analysis of turnover, operating profit and net assets by geographical origin
is given below:
Turnover Operating profit Net Assets
2007 2006 2007 2006 2007 2006
(as restated -
see note 1)
£'000 £'000 £'000 £'000 £'000 £'000
United Kingdom 8,819 8,039 1,299 1,392 10,562 10,228
North America 9,857 8,235 90 49 178 426
Continuing
operations 18,676 16,274 1,389 1,441 10,740 10,654
Acquisition - United
Kingdom 942 - 149 - 4,506 -
19,618 16,274 1,538 1,441 15,246 10,654
Interest earned in the year of £301,000 is attributable to the UK (2006:
£194,000).
An analysis of turnover, operating profit and net assets by class of business is
given below:
Turnover Operating profit Net Assets
2007 2006 2007 2006 2007 2006
(as restated
-
see note 1)
£'000 £'000 £'000 £'000 £'000 £'000
Vicon & 2d3 entertainment -
continuing 18,544 16,274 2,755 1,864 12,529 11,077
2d3 AIG - continuing 66 - (280) (83) (363) (83)
Yotta - continuing 66 - (1,086) (340) (1,426) (340)
Yotta acquisition - Data
Collection Limited 942 - 149 - 4,506 -
Yotta - total 1,008 16,274 (937) (340) 3,080 (340)
19,618 16,274 1,538 1,441 15,246 10,654
4. TAX ON PROFIT ON ORDINARY ACTIVITIES
The tax charge is based on the profit for the year and represents:
Unaudited Audited
2007 2006
£'000 £'000
United Kingdom corporation tax at 30% (2006: 30%) 345 8
Overseas taxation 43 66
Adjustments in respect of prior year 42 105
Current taxation 430 179
Deferred taxation (163) -
267 179
At 30 September 2007, the Group had an undiscounted deferred tax asset of
£105,000 (2006: £352,000), which has not been recognised due to the risks and
uncertainty over the timing and extent of future trading profits. The asset
comprises accelerated capital allowances of £nil (2006: £170,000), and the
accumulated unrelieved tax losses of £373,000 (2006: £1,003,000) available to
subsidiary undertakings of the Group, to offset against future taxable trading
profits of the same trade. Unrelieved tax losses in respect of prior years were
increased by £88,000, principally due to the submission of claims for R&D tax
credits. Tax losses amounting to £497,000 have been utilised during the year. A
deferred tax asset of £163,000 (2006: £nil) has been established on items where
it is considered more probable than not that the Group will generate sufficient
profits to utilise the tax losses and timing differences in the foreseeable
future. Deferred tax assets and liabilities have been measured at an effective
rate of 28% (2006:30%).
The tax assessed for the year is lower than the standard rate of corporation tax
in the UK of 30% (2006: 30%). The differences are explained as follows:
Unaudited Audited
(as restated -
see note 1)
2007 2006
£'000 £'000
Profit on ordinary activities before tax 1,841 1,658
Profit on ordinary activities multiplied by the standard rate of
corporation tax in the UK of 30% (2006: 30%) 552 497
Effect of:
Expenses not deductible for tax purposes 72 31
Accelerated capital allowances 30 3
Utilisation of losses (149) (507)
Adjustments to tax charge in respect of prior year 42 130
Higher rates on overseas taxation 7 11
Unrecognised deferred tax on losses - 112
Recognised deferred tax on losses (62) -
Recognised deferred tax on share-based payment (57) -
Recognised deferred tax on accelerated capital allowances (44) -
Research and development tax credit (124) (98)
Tax charge on profit on ordinary activities 267 179
5. EARNINGS PER SHARE
Unaudited Audited
2007 2006
weighted weighted
average average
number of Per share number of Per share
Earnings shares amount Earnings shares amount
£'000 pence £'000 pence
Basic earnings per share
Earnings attributable to
ordinary shareholders 1,574 60,533,180 2.60 1,479 59,597,690 2.48
Dilutive effect of securities
Options - 4,016,893 (0.16) - 2,475,826 (0.10)
Diluted earnings per share 1,574 64,550,073 2.44 1,479 62,073,516 2.38
6. RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
Unaudited Audited Unaudited Audited
Group Group Company Company
2007 2006 2007 2006
£'000 £'000 £'000 £'000
Retained profit / (loss) for the financial year
(as restated) 1,574 1,479 64 (119)
Dividends (60) - (60) -
Issue of shares 1,526 219 1,526 219
Contingent share consideration issued - (205) - -
Contingent shares to be issued 1,470 - 1,470 -
Share-based payments 202 81 202 81
Currency movements (120) (121) - -
Net movements in shareholders' funds 4,592 1,453 3,202 181
Shareholders' funds at 1 October 2006
(as restated) 10,654 9,201 7,072 6,891
Shareholders' funds at 30 September 2007 15,246 10,654 10,274 7,072
Issue of shares includes shares issued on acquisition of DCL (see note 7).
7. ACQUISITION
On 26 July 2007 the Group purchased 100% of the share capital of Data Collection
Limited for a total consideration with a provisional fair value of up to
£4,407,000. This includes deferred consideration of £1,470,000 subject to
certain performance conditions. The purchase has been accounted for as an
acquisition.
The total goodwill arising on acquisition was £2,988,000 which is being written
off over 10 years.
The provisional fair value of the net assets acquired was as follows:
Fair value adjustments
Alignment of
accounting Provisional
Book value policy Revaluation Fair value
£'000 £'000 £'000 £'000
Fixed assets 876 - 54 930
Intangible assets 12 - (12) -
Long term contracts 143 (29) - 114
Trade debtors 1,004 - - 1,004
Prepayments and accrued income 37 - - 37
Amounts recoverable on contracts 257 126 - 383
Cash 603 - - 603
Trade creditors (156) - (54) (210)
Accruals and deferred income (444) - - (444)
Payments on account in respect
of long term contracts (89) 13 - (76)
HP and finance lease creditors (404) - - (404)
Other creditors (294) - - (294)
Deferred tax (75) - - (75)
Net business assets acquired 1,470 110 (12) 1,568
£'000
Consideration:
Cash 1,467
Share consideration 1,470
Deferred contingent consideration 1,470
Total provisional consideration 4,407
Costs of acquisition 149
Provisional purchase consideration
and costs of acquisition 4,556
Provisional goodwill arising 2,988
The contingent consideration is dependant upon certain performance criteria
being met in the period commencing from the date of acquisition and ending on 30
June 2009.
The fair value adjustments represent the alignment to group accounting policies
and finalisation of amounts. The principle fair value adjustment concerns the
alignment of the accounting policy for survey contracts not completed at the
date of acquisition.
In the 14 month period ended 31 July 2007 Data Collection Limited recorded
turnover of £4,704,000, operating profit of £618,000 and profit before tax of
£643,000. The tax charge for the period was £89,000 resulting in profit after
tax of £554,000.
8. RECONCILIATION OF OPERATING PROFIT TO NET CASH INFLOW FROM OPERATING ACTIVITIES
Unaudited Audited
(as restated -
see note 1
2007 2006
£'000 £'000
Operating profit 1,538 1,441
Depreciation & amortisation 835 695
Profit on disposal of fixed assets (3) (16)
Share-based payments 202 81
(Increase) / decrease in stock (749) 794
Increase in debtors (1,675) (1,255)
Increase in creditors 1,240 906
Net cash inflow from operating activities 1,388 2,646
9. DIVIDEND
The directors are proposing a final dividend in respect of the financial year
ending 30 September 2007 of 0.115pence per share (2006: 0.1pence per share)
which will absorb an estimated £72,000 of shareholders' funds. This dividend
will be paid on 12 March 2008 to shareholders who are registered on the register
of members at the close of business on 7 December 2007 subject to approval at
the AGM.
10. PUBLICATION OF NON-STATUTORY ACCOUNTS
The preliminary results for the year ended 30 September 2007 are un-audited.
The financial information set out in this preliminary announcement does not
constitute statutory accounts as defined in Section 240 of the Companies Act
1985 for the years ended 30 September 2007 and 30 September 2006. The financial
information for the year ended 30 September 2006 is derived from the Annual
Report for that year which was delivered to the Registrar of Companies. The
auditors, PricewaterhouseCoopers LLP, reported on those accounts: their report
was unqualified and did not contain a statement under either Section 237(2) or
237(3) of the Companies Act 1985.
11. 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
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