Final Results

RNS Number : 3486D

OMG PLC

01 December 2009

 



Tuesday, 1 December 2009

OMG plc

Preliminary results for the twelve months ended 30 September 2009

OMG plc, (LSE: OMG) ("OMG" or the "Group"), the technology group providing image understanding products for the entertainment, defence, life science and engineering industries, announces preliminary results for the twelve months ended 30 September 2009.

Financial Highlights:

• Revenue maintained at £26.2m (FY08: £26.2m)

• Adjusted profit before tax* of £1.1m (FY08: £2.1m)

• Reported profit before tax of £0.6m (FY08: £1.6m)

• Cash position ahead of expectations at £2.8m (FY08: £2.9m) 

• Group remains debt-free

• Proposed dividend increased by 30% to 0.15p

Operational Key Points:

• Economic conditions have led to mixed trading, particularly in the US

• Adaptation to the new economic environment

  • Improved operational efficiency 

  • Investment in product innovation

• Vicon showing a varied performance

• North American operations impacted by economic weakness

• Non-American revenues up 14%, with particular growth evident in China

• Launch of new products, Bonita and Revue

• Yotta impacted by tough trading conditions 

  • Refocused on proven areas of demand and growth 

  • Contract wins with county councils in Derbyshire, Hull and North Ayrshire

  • MVS revenues maintained, new contract signed with Miami Dade County

• Further progress from 2d3

  • Continued expansion of our USA operations, now ahead of UK revenue contribution 

  • 3 contracts in the UK

*before share-based payments, amortisation of intangibles arising on acquisition and non-recurring costs - see note 5

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

"Despite the extremely difficult trading conditions, OMG has emerged from the year with strong foundations and a clear plan for the future. Although we have not been able to avoid the impact of the downturn in the US, the diversified operational base has provided us with some comfort, and we have seen enough growth to maintain our revenues at previous levels"

"Overall we've ended the year with the Group in robust good health. Our three main businesses are all competing well in their respective marketplaces; we're continuing to invest in new products and markets; we remain open to the prospect of strengthening our position through acquisition; and we have nearly £3 million in the bank. All of this means we are well positioned to control our own future. OMG enters 2010 better equipped to succeed in these tougher times with the new Vicon products of Bonita and Revue, increasing opportunities at 2d3 and a better aligned Group cost base."

For further information please contact:

OMG plc	[phone]
Nick Bolton, Chief Executive David Deacon, Finance Director
Financial Dynamics	[phone]
Juliet Clarke / Matt Dixon / Emma Appleton
Evolution Securities (NOMAD to OMG)	[phone]
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 Mobile Video Services, Inc. in April 2008 is a leading US provider of data collection services for the assessment of property taxation. 

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

Pretty good, considering

Like countless other annual reports this year, ours is going to start by telling you what a tough 12 months it has been. In certain areas of our business, the deepest recession in decades has hit us hard. And yet, despite some short term pain, we're feeling pretty good about what OMG has achieved during 2008/09.

Not just because some parts of our business have continued to perform well - a few, as you'll see, very well indeed. But, even more importantly, because our entire vision and strategy for the Group have been tested in just about the most extreme conditions imaginable, and have come through looking more solid than ever.

We said that by developing a more entrepreneurial and commercially focused approach, we would be able to capitalise on our brilliant technology, moving into diverse new markets and building successful and sustainable businesses. And that, even in the profoundest depths of a global economic crisis, is exactly what we've done.

Heaven knows, we're not complacent about the future. But we're happy to be able to tell you that, in extraordinary times, OMG continues to achieve some fairly remarkable things.

Remaining focused on the long-term

Ever since I became chairman in 2002, I've been saying that OMG is all about long term capital growth. Despite the tough economic environment, overall we've ended the year with the Group in robust good health. Our three main businesses are all competing well in their respective marketplaces; we're continuing to invest in new products and markets; we remain open to the prospect of strengthening our position through acquisition; and we have nearly £3 million in the bank. All of this means we are well positioned to control our own future. So yes, emphatically, OMG is still on course to deliver growth - provided investors are prepared to be patient. 

A year of ups and downs

In our recent financial reports, I've been able to tell a simple story of uninterrupted growth, with one record year following another. This year, the picture is undeniably more complex, as the recession has slowed most of our markets down, particularly in the US where our customers' spending has been dramatically reduced.

But before going into the sometimes painful detail, it's well worth taking the slightly longer view and reminding ourselves that overall Group revenue of £26.2 million in 2008/09 is around two and a half times the equivalent figure for 2003/04. In other words, in terms of turnover, we have grown by around 250% in the last five years.

Starting with that turnover figure of £26.2 million, it's virtually the same as 2007/08. We feel that this is a decent achievement when you consider that certain parts of our business saw sales decline due to the global recession. Vicon USA reported system revenues of £7.0m compared with £8.9m last year. 

Outside the USA, our performance was better, with Vicon recording rest-of-world sales of £8.8 million, up 14% year on year, and enjoying a stronger second half compared with the same period last year. But at home in the UK, too, we felt the effects of an ailing economy, with Yotta seeing earnings fall to £4.7 million, down 17%, owing to operational challenges and a very tough market.

Despite all of the above, the Group reported a profit of £0.6m compared with £1.6m last year, on an adjusted basis before share-based payments, amortisation of intangibles and non-recurring costs a profit of £1.1 million compared with £2.1 million in 2008 (see note 5).

The exchange rate between the dollar and sterling moved significantly during the year, falling from $1.78 at the start to $1.43 at the half year to $1.59 at the end of the financial year. These movements resulted in a revaluation of UK-based dollar net assets of £0.8 million for the year, which has been credited to the Income Statement. 

Turning to our balance sheet and cash position, we ended the year with £2.8 million in the bank, relatively stable on last year's figure of £2.9 million and up on the 6-month figure of £2.1 million reported at the end of the first half of the year. And we achieved this better than expected result while continuing to invest in the business, though at a prudently reduced level, spending £1.0 million on capital-related assets compared with £2.3 million in 2008.

A strategy built to last

Whilst our financial results have felt the short term impact of the economic environment, I believe the strategic direction that we have set for the Group over the last few years looks more solid than ever. 

In good times, it's easy to make impressive-sounding pronouncements about where a business is heading, and the enormous potential it has for growth. But the real test of any strategy comes when conditions are less favourable, as they have been - to say the least - over the last 12 months. We could have chosen to narrow our horizons, rein in our ambitions, and focus all our efforts on maintaining the strength of our core business; and if we had done so, we would probably have been in a position to pay out increased cash dividends to shareholders. But we are convinced that would have been the wrong course of action, running the risk of leaving OMG marooned in markets with limited growth potential, while passing up opportunities to build a better and more profitable long term future in new markets. 

Instead, by sticking to our guns - continuing to invest in the future and to pursue those opportunities to capitalise further on our brilliant technology - we've not only battled through, but kept OMG firmly on course for long term sustainable growth.

Dividend

In 2006 we introduced a progressive dividend policy and have endeavoured to maintain this commitment ever since. This year, the Board are pleased to announce a proposed increase of the dividend by 30% to 0.15p. The Group dividend will be paid on 15 March 2010 to shareholders on the register of members at the close of business on 15 December 2009.

Looking ahead to 2009/10

Looking to the year ahead, The Board and I remain dedicated to building long-term shareholder value and we remain convinced that we have the right strategy in place to achieve that.

Despite some indicators suggesting that perhaps the worst is over, the world remains in the grip of recession. Whether and how much this will turn around in 2010 is unknown and depends on a wide range of economic factors.  Looking at our markets, it would appear the US entertainment and life sciences markets for Vicon remain weak and there also remains increased uncertainty in UK public sector markets.

Nevertheless, the fundamental strengths of OMG remain firmly in place.  First of all we are a diverse group of businesses, spread across a range of products and sectors as well as geographic markets.  We are also cash generative as a business, have a cost base better aligned to the current economic climate and our balance sheet is healthy.  The new Bonita and Revue products at Vicon also add strength to our offering and we start the year with increasing opportunities at 2d3. Therefore OMG enters 2010 well equipped to succeed in this tougher environment.

  CEO STATEMENT

EXTRAORDINARY TIMES, INCREDIBLE OPPORTUNITIES

We live in extraordinary times. However exhaustively it's been covered in the media, it is worth reminding ourselves that the world in which we do business has changed forever. New technology, global competition and a worldwide economic collapse all combine to put us in completely new territory; a place where none of the old certainties hold good. In short, there is now a "new normal".

There is no point in denying that's a slightly scary thought, but I also find it an invigorating one. Because, while the old order may have disappeared forever, it's clear that this new era presents opportunities for those with the agility, the entrepreneurial skills, and the capacity of innovation to identify and pursue them. That's a perfect description of the kind of business we are continuing to build at OMG.

This "new normal" also means that there are opportunities for firms like ours to further enhance our progress through acquisition. Such acquisitions would be consistent with our long followed "acquire to amplify" strategy which has allowed us to add to the size, scope and strength of our Group over the past five years. 

Getting in shape for the "new normal"

To start with the basics of doing business through a recession, we've done everything possible to cut costs over the last 12 months. Sadly, that has included making people redundant in certain areas. And since there is little point in chasing business where it doesn't currently exist, we've also significantly reduced our marketing expenditure, for the time being.  

Improved leadership, more important than ever in tough times, has been another priority. Across all our businesses, we now have frontline leaders with the capacity to inspire people, make tough decisions, and capitalise on those opportunities we were just talking about.

In early 2008, we set up Springboard, a new professional services arm to the Group, intended to give us the capacity to respond rapidly to opportunities that don't naturally fall within the scope of any of our three main businesses. In terms of increased agility, this initiative has really started to pay off over the last year - in particular, in enabling us to win the trust of Microsoft who granted us a licence to develop and market a new technology with enormous potential in the field of Alzheimer's research. 

Finally, as you will see in the following pages, we haven't wavered in our commitment to product innovation - arguably the most urgent requirement for any technology business in the "new normal". Across all our three businesses, significant advances in our brilliant technology, combined with sharper commercial focus, helped to strengthen our position in the market, by improving the quality of our offering to customers.

2D3 -NOW TAKING OFF STATESIDE

Since we took our first steps into the defence market in 2006, we've been quietly convinced that our 3D imaging capabilities would enable us to make a big impression. But we always knew that, as new kids on the block, it would take us time to make the right connections, and get ourselves taken seriously. Now our patience is starting to pay off.

In 2008/09, 2d3 revenues almost doubled from £0.5 million to £0.9 million; our first two products registered their first sales; and, most important of all, our US operation outsold our UK business for the first time - a massively encouraging development, in view of the growth potential in the American defence market. 

Having set up 2d3 Inc in the US in 2007, Jon Damush took overall charge of the global business when we appointed him CEO in April. In part, this was in response to the obvious need to base 2d3's drive for growth on American soil. It was also, of course, recognition of Jon's outstanding qualities. He joined us as a sales guy in our Vicon Entertainment division back in 2001, then saw a chance to combine his passion for flying with work when we first launched 2d3 in the States, and has since proved himself an inspirational leader.

Just to expand a little on that revenue increase of nearly 100%, it was achieved with very little rise in costs and overheads - proving we have the right people in place, and that our productivity is good. Above all, though, what it demonstrates is that we really have begun to establish 2d3 as a presence in this market, with technology and products that people are prepared to pay for.

Teaming up with major players

In the defence arena, it's not unusual for competitive businesses to work collaboratively on major projects, in a way that would be unthinkable elsewhere in the commercial world. And in 2008/09, we were invited to enter into Teaming Agreements with General Dynamics, SAIC and Sarnoff.

In case you're not familiar with the names, these are very serious players indeed, and the fact they clearly saw a need for our technology to fill a gap in their own capabilities speaks volumes about our growing reputation among the very biggest US defence contractors.

Winning over the armed forces

Similarly, the last year has seen us start to make real headway in establishing relationships within the US military establishment. Our technology has earned us a standing invitation to take part in the quarterly experiments held at Camp Roberts in California.

And we've also taken part in several Navy experiments, deploying our expertise in generating mosaics from still imagery. This has included working closely with Johns Hopkins University Applied Physics Labs, a key player in US defence problem-solving - and a very valuable ally for 2d3, in terms of our future relationship with the US Department of Defense.

Making progress in the UK

While the year's most exciting developments have undoubtedly been in the US, 2d3 has continued to make good progress in the UK, winning nine contracts since October 2008. We were also invited to participate in the Empire Challenge and Project Diamond experiments. 

The first of these, in particular, underlined the advantages to 2d3 of being involved in the defence market on both sides of the Atlantic. Working with the British Ministry of Defence at this important event that takes place in California - essentially a giant testing session for all the very latest defence-related technology - enabled us to forge some valuable US links, leading directly to one of the Teaming Agreements mentioned above. 

First products, first sales 

Last year, we reported on the rapturously received launch of 2d3's first product, TacitView, a suite of advanced image processing tools for maximising the value of video from Unmanned Aerial Vehicles (UAVs). This year, we notched up our first sales, and we expect great things of TacitView in 2010.

We also launched our second product, AltiMap, which builds mosaics from large sets of high resolution still images taken by UAVs flying at low altitudes.

Potential growth, predictable income

Overall, we could hardly be happier with 2d3's progress to date. For a relatively small UK-owned business to make such an impact in the US, and to start winning the trust of key players in the defence community on both sides of the Atlantic, is a really remarkable achievement - giving us every reason to be optimistic about 2d3's long term growth potential.

And there's one further point worth making about 2d3, in relation to the rest of the Group. Gaining a foothold in the defence market may be very hard, but the prize for doing so is predictable long term income, with contracts typically running from one to five years. As 2d3 continues to gain altitude, OMG's financial performance should achieve a new level of stability that will help us ride out any turbulence in our other markets.

YOTTA - A YEAR THAT TURNED OUT WELL, IN THE END

2008/09 was a far from easy year for our highways business. Yotta derives revenues from a mixture of software products and surveying services, and during the year, the seventh revenue stream we added to this mix failed to develop in the way we initially expected - comprehensively Googled. This service, offering high resolution street-level imagery, was effectively wiped out by the introduction of Google Street View, which makes low resolution images available free of charge. Obviously, this came as a bit of a blow. But that's how things are in the "new normal": from now on, we all need to accept that, from time to time, something comes along that changes everything. The key is to ensure that, as often as possible, our technology is the "something" in question.

As a result, we have had to make some necessary realignments within Yotta to ensure that it is clearly focused on the remaining, proven products and services. By the end of the year, we were right back on track, tightly focused on the opportunities within the highway surveying market and, more importantly, trading profitably - with September the most productive month in Yotta and DCL's history - and 100% confident that we have a business with solid growth potential.

Our revised plan for Yotta is to continue building a robust, profitable highways surveying business. The fundamentals here remain attractive. Keeping roads in good repair remains a massive global business - particularly in the UK, where we spend more on maintenance per kilometre than any other country.

New surveys, across the spectrum

Turning to our achievements within that market over the last year, we have every reason to feel good about Yotta's progress, with valuable successes right across the range of highway survey services we offer.

At the most technologically sophisticated end of the spectrum, Derbyshire County Council awarded us a new four year SCANNER contract, worth £60,000 per annum. Meanwhile, in Hull, the local council called us in to do a Detailed Visual Inspection (DVI) of their entire network, at a cost of nearly £100,000. This is high value, labour-intensive work - involving teams of surveyors getting out on the streets, to provide in-depth data on aspects of road condition specified by the customer.

We were thrilled, too, that Hull also decided to replace their previous pavement management system with one of ours; proof that we're now capable of providing local authorities with the complete package, from surveying to software.

In North Ayrshire, we won our first video inventory survey in Scotland, with more work north of the border firmly in prospect.

And perhaps most important for the future, Yotta went "off road" in 2008/09. Announced by the Footway and Cycletrack Management Group (FCMG), the Footway Network Survey (FNS) will be launched in 2010, with the aim of collecting condition data on parts of the footway network that have historically been seen as too expensive to survey. We've already been appointed to carry out an FNS in North Lincolnshire next year, and Hampshire are currently trialling our software to undertake the FNS survey themselves.

Using technology to improve efficiency

In terms of technological innovation, our focus within Yotta has been firmly on helping customers to improve the efficiency and quality of their surveys. For example, Notavia is new software we have designed to transform the surveying process, by allowing data to be loaded and consistency checks made out in the field, using hand-held computers. 

2008/09 also saw the introduction of our new asset van routing software which offers local authorities even greater potential time and cost savings. This allows us to generate automatically optimal routes for a fleet of vehicles - for example, road gritting lorries - to cover a network consisting of thousands of kilometres. Try doing that with a pencil and paper!

We've technologically upgraded our SCANNER surveys, too - reducing the amount of manual intervention and processing time for projects from weeks to hours, by enabling automatic processing of raw data at the touch of a button. 

Yotta in the US: a very different animal 

In the USA, Yotta uses some of the same technology to drive an entirely different business. Our street level surveys help county governments to carry out desktop appraisals of residential property values, which they use to calculate the homeowner's tax liability. 

Since we arrived on American soil in May 2008, acquiring Mobile Video Services of Kansas City, the decline in the US property market has made the ride a little bumpy. In many cases, counties have chosen to defer appraisals, since lower valuation means lower tax-take. Despite this challenge, MVS has maintained revenues and secured a new contract in Miami Dade County, worth $3.6 million over three years; a deal including new services for MVS, which have exciting potential in the wider market.

VICON - 25 YEARS ON, STILL BREAKING NEW GROUND

To start by getting the bad news out of the way, our market-leading motion capture business had a tough year in the US, with sales badly affected by the recession. But everywhere else, there was plenty of reason to celebrate Vicon's "silver anniversary", with sales up by 14% outside North America, well received new products, exciting progress in China and other new territories, and a new licensing agreement with Microsoft in the field of Alzheimer's research that could have enormous implications for Vicon's future.

Just to expand a little on the geographical sales performance, the USA and Japan were the only countries in which we suffered, while that 14% rest-of-world increase was quite a bit better than we expected. Undoubtedly, though, the single most exciting development over the last 12 months has been our performance in China, where Vicon sales have increased by over 75%. In a country where it's estimated there are half a million animators - to name just one group of potential customers - that's just scratching the surface of what we can reasonably hope to achieve.

In China,  and in other developing markets too, high quality products at relatively low prices will play a vital part in helping us build on good beginnings. So the very recent launch of our all new Bonita camera is probably the biggest Vicon product innovation story of the year - paradoxically, since this dinky little item is small enough to fit in the palm of your hand. Bonita is powerful, easy to use, and very affordable. Think of it, in relation to Vicon's top of the range T-Series, as the Mini to our BMW. And then think how that, in the coming years, can continue to widen the market for our world-leading motion capture technology. 

The award winning (and highly versatile) T-Series 

Meanwhile, the T-Series continued to perform in BMW-like fashion. We were particularly thrilled that it picked up a prestigious International Forum award for product design - which for me underlines our ability to execute as brilliantly as we conceive. Many well known companies enter their products year after year in the hope of achieving this recognition; with the T-Series, we were winners at our first attempt.

Equally impressive was the diversity of its accomplishments in terms of applications in 2008/09. At one end of the spectrum, Vicon continued to be one of Hollywood's leading players, helping to make the impossible possible in movies ranging from GI Joe: The Rise of the Cobra to A Christmas Carol, via the latest Harry Potter. While, many light years away from the world of escapist fantasy, Vicon was proud to play a part in the rehabilitation of soldiers wounded in Iraq and Afghanistan.

A life-changing new technology 

The last year has seen our most mature business striking out into completely new territory, with enormous implications for its future. We signed a licensing agreement with Microsoft which allows us to develop their SenseCam technology and to market it worldwide as Vicon Revue. A wearable camera that automatically captures thousands of pictures a day, Revue has already proved itself to have exciting potential as a means of helping Alzheimer's patients to recover "lost" memories. And with one in 14 of the UK's over-65 population suffering from dementia the potential applications of this product are clear. 

Solid achievement, exciting potential

We started this report by suggesting that 2008/09 has been a year of solid achievement for OMG. I hope we've done enough to persuade you to see it in that light. In the "new normal", success criteria may look a bit different from those we used to apply in the good old days. But we're genuinely proud of OMG's overall performance in coming through such a tough 12 months in robust financial good health, with three established businesses competing well in their markets with exciting new opportunities opening up. 

Pretty good, considering? I think I might go as far as to say "really not bad at all".

preliminary announcement

consolidated income statement for the year ended 30 september 2009

		2009	2008
	Note	£'000	£'000
Revenue	3	26,190	26,203
Cost of sales		(11,940)	(11,242)
Gross profit		14,250	14,961
Sales, support and marketing costs		(4,278)	(4,373)
Research and development		(3,351)	(3,646)
Administrative expenses		(6,181)	(5,708)
Other income		178	142
Operating profit	3	618	1,376
Finance income		14	249
Finance expense		(22)	(28)
Profit before taxation	4	610	1,597
Taxation	6	(128)	(348)
Profit for the financial year attributable to equity holders of the Company		482	1,249
Basic earnings per ordinary share (pence)	7	0.74p	1.95p
Diluted earnings per ordinary share (pence)	7	0.71p	1.80p

CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSE

FOR THE YEAR ENDED 30 SEPTEMBER 2009

		2009	2008
		£'000	£'000
Exchange differences on retranslation of overseas subsidiaries		167	118
Deferred tax in respect of employee share options		(53)	(177)
Net income and expense recognised directly in equity		114	(59)
Profit for the financial year		482	1,249
Total recognised income and expense for the year		596	1,190

preliminary announcement

consolidated BALANCE SHEEt at 30 september 2009

		2009	2008
	Note	£'000	£'000
Non-current assets
Intangible assets		1,824	1,960
Goodwill		5,402	4,967
Property, plant and equipment		2,718	3,088
Financial asset - investments		69	69
Deferred tax asset		566	475
		10,579	10,559
Current assets
Inventories		2,309	2,993
Trade and other receivables		7,627	9,503
Cash and cash equivalents		2,776	2,877
		12,712	15,373
Current liabilities
Trade and other payables		(4,451)	(7,346)
Current tax liabilities		(94)	(173)
		(4,545)	(7,519)
Net current assets		8,167	7,854
Total assets less current liabilities		18,746	18,413
Non-current liabilities
Financial liabilities		-	(409)
Deferred tax liability		(405)	(406)
		(405)	(815)
Net Assets		18,341	17,598
Capital and reserves attributable to equity holders of the Company
Share capital		171	163
Shares to be issued		-	1,470
Share premium account	8	6,773	6,620
Merger reserve	8	2,928	1,464
Retained earnings	8	8,304	7,883
Foreign currency translation reserve	8	165	(2)
Total equity shareholders' funds		18,341	17,598

  preliminary announcement

consolidated CASH FLOW STATEMENT For the year ended 30 September 2009

		2009	2008
		£'000	£'000
Cash flows from operating activities
Operating profit		618	1,376
Depreciation and amortisation		1,575	1,244
Impairment of intangible fixed assets		28	-
Profit on disposal of property plant and equipment		11	1
Share-based payments		67	128
Decrease / (increase) in inventories		840	(1,103)
Decrease / (increase) in receivables		2,503	(1,415)
(Decrease) / increase in payables		(4,137)	534
		1,505	765
Tax paid		(380)	(681)
Net cash from operating activities		1,125	84
Cash flows from investing activities
Purchase of property plant and equipment		(1,029)	(2,251)
Purchase of intangible assets		(114)	(605)
Proceeds on disposal of property plant and equipment		309	119
Interest received		14	249
Acquisition of subsidiary undertaking net of cash acquired		(236)	(845)
Net cash used in investing activities		(1,056)	(3,333)
Cash flows from financing activities
Proceeds from the issue of share capital		-	134
Payment of finance lease liabilities		(144)	(169)
Interest element of finance lease repayments		(22)	(28)
Equity dividends paid		(75)	(72)
Net cash used in financing activities		(241)	(135)
Net decrease in cash and cash equivalents		(172)	(3,384)
Cash and cash equivalents at beginning of the period		2,877	6,179
Effect of exchange rate changes		71	82
Cash and cash equivalents at end of the period		2,776	2,877

Major non-cash transactions

Part of the consideration paid during the current and prior year for the purchase of Mobile Video Services Inc comprised shares. Also during the current year shares relating to the deferred consideration for the purchase of Data Collection Limited were issued.  

preliminary annoucement for the year ended 30 september 2009

1.         BASIS of Preparation of the financial statements

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 send full financial statements that comply with IFRSs to shareholder in January  2010.

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 as defined in Section 434 of the Companies Act 2006 for the years ended 30 September 2009 and 30 September 2008, but is derived from those accounts. The statutory accounts for the year ended 30 September 2008 have been delivered to the Registrar of Companies and those for the year ended 30 September 2009 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 without qualifying their report and did not contain a statement under Section 237 of the Companies Act 1985 for the year ended 30 September 2008 or under section 498 of the Companies Act 2006 for the year ended 30 September 2009.

2.         basis of consolidation

The consolidated financial statements consolidate those of the Company and all of its subsidiary undertakings drawn up to 30 September 2009.  

3.         segmental analysis

At 30 September 2009 the Group is organised into three main business segments:

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

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

• Yotta: This is services for the management of infrastructure and taxation.

 Business segments are analysed as the primary reporting format below:

	Year ended 30 September 2009
	Vicon	2d3	Yotta	Other	Unallocated	Group
	£'000	£'000	£'000	£'000	£'000	£'000
Revenue
Total segment revenue Inter company revenue	21,570 (3,215)	905 -	6,882 -	48 -	- -	29,405 (3,215)
	18,355	905	6,882	48	-	26,190
Segment result
Operating profit/(loss)	2,314	(366)	(938)	(311)	(81)	618
Finance income						14
Finance costs						(22)
Profit before tax						610
Tax						(128)
Profit after tax						482
Other segment items included in the income statement are as follows:
Depreciation	574	52	510	-	74	1,210
Amortisation	170	-	186	-	9	365

	Year ended 30 September 2008
	Vicon	2d3	Yotta	Other	Unallocated	Group
	£'000	£'000	£'000	£'000	£'000	£'000
Revenue
Total segment revenue Inter company revenue	25,301 (6,184)	482 -	6,537 -	67 -	- -	32,387 (6,184)
	19,117	482	6,537	67	-	26,203
Segment result
Operating profit/(loss)	2,428	(446)	(308)	(10)	(288)	1,376
Finance income						249
Finance costs						(28)
Profit before tax						1,597
Tax						(348)
Profit after tax						1,249
Other segment items included in the income statement are as follows:
Depreciation	574	31	395	-	56	1,056
Amortisation	63	-	125	-	-	188

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.

Unallocated costs represent head office expenses not recharged to subsidiary companies.

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.

Segment liabilities comprise operating liabilities. Unallocated liabilities comprise items such as taxation.

Capital expenditure comprises additions to property, plant and equipment and intangible assets, including additions resulting from acquisitions.

Segment assets and liabilities at 30 September 2009 and capital expenditure for the year then ended are as follows:

	2009
	Vicon	2d3	Yotta	Other	Unallocated	Group
	£'000	£'000	£'000	£'000	£'000	£'000
Assets	10,556	953	11,279	42	461	23,291
Liabilities	(2,597)	(111)	(2,020)	(18)	(204)	(4,950)
Capital expenditure	907	37	176	-	23	1,143

Segment assets and liabilities are reconciled to entity assets and liabilities as follows:

	Assets	Liabilities
	£'000	£'000
Segment assets / (liabilities)	22,830	(4,746)
Unallocated:
Deferred tax	139	-
Non-current assets / (liabilities)	54	-
Investments	69	-
Cash and cash equivalents	113	-
Other financial assets	86	(204)
	23,291	(4,950)

Segment assets and liabilities at 30 September 2008 and capital expenditure for the year then ended are as follows:

	2008
	Vicon	2d3	Yotta	Other	Unallocated	Group
	£'000	£'000	£'000	£'000	£'000	£'000
Assets	12,852	460	9,903	68	2,649	25,932
Liabilities	(4,953)	(65)	(3,040)	(13)	(263)	(8,334)
Capital expenditure	2,002	52	2,918	-	87	5,059

Segment assets and liabilities are reconciled to entity assets and liabilities as follows:

	Assets	Liabilities
	£'000	£'000
Segment assets / (liabilities)	23,283	(8,071)
Unallocated:
Deferred tax	248	-
Non-current assets/(liabilities)	114	(263)
Investments	69	-
Cash and cash equivalents	1,979	-
Other financial assets	239	-
	25,932	(8,334)

The Group's three business segments operate in five main geographical areas but are managed on a worldwide basis. These geographical segments are analysed as the secondary reporting segment below.

An analysis of revenue by destination, total assets and capital expenditure is given below:

	Revenue		Total assets		Capital expenditure
	2009	2008	2009	2008	2009	2008
	£'000	£'000	£'000	£'000	£'000	£'000
United Kingdom	6,874	7,928	13,572	15,220	562	2,130
Europe	3,289	2,179	-	-	-	-
North America	12,074	12,674	9,719	10,712	581	2,929
Asia Pacific	3,589	2,770	-	-	-	-
Other	364	652	-	-	-	-
	26,190	26,203	23,291	25,932	1,143	5,059

Total assets and capital expenditure is based on where the assets are located.

Analysis of revenue by category	2009	2008
	£'000	£'000
Sale of goods	18,356	19,117
Revenue from services	7,834	7,086
	26,190	26,203

4.         profit before taxation

The profit before taxation is stated after charging / (crediting):

	2009	2008
	£'000	£'000
Loss on disposal of property, plant and equipment	11	1
Depreciation of property plant and equipment - owned	1,084	925
- under hire purchase/finance lease	126	131
Amortisation of customer relationships	171	119
Amortisation of intellectual property	18	44
Amortisation of brand name	6	3
Amortisation of development costs	170	22
Impairment of intangible fixed asset	28	-
Share based payments - equity settled	67	128
Operating lease charges - other than plant and machinery	652	756
Foreign exchange	(759)	(146)
Research and development costs	3,351	3,646

5.         Reconciliation of adjusted proft before tax

	2009	2008
	£'000	£'000
Profit before tax	610	1,597
Share based payments - equity settled	67	128
Amortisation of intangibles arising on acquisition	195	166
Non-recurring charges	239	200
Adjusted profit before tax	1,111	2,091

Non-recurring charges comprise of redundancy costs and restructuring costs.

6.         Taxation

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

		2009		2008
		£'000		£'000
United Kingdom corporation tax at 28% (2008: 29%)		130		271
Overseas taxation		154		118
Adjustments in respect of prior year		18		37
Current taxation		302		426
Deferred taxation		(174)		(78)
Total taxation expense		128		348
At 30 September 2009, the Group had an undiscounted deferred tax asset of £566,000 (2008: £475,000).  The asset comprises principally accelerated capital allowances, the accumulated unrelieved tax losses available to Group undertakings to offset against future taxable trading profits of the same trade 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 28% and 36% in the UK and USA, respectively (2008: 28%).
The tax assessed for the year is lower than the standard rate of corporation tax in the UK of 28%  (2008: 29%). The differences are explained as follows:
	2009		2008
	£'000		£'000
Profit on ordinary activities before tax	610		1,597
Expected tax charge based on the standard rate of corporation tax in the UK of 28% (2008: 29%)	171		463
Effect of:
Share options exercised	-		(122)
Expenses not deductible for tax purposes	67		71
Utilisation of losses	(44)		-
Adjustments to tax charge in respect of prior year	18		38
Higher rates on overseas taxation	34		8
Research and development tax credit	(118)		(110)
Total tax expense	128		348

7.         earnings per share

	Earnings	2009 weighted average number of shares	Per share amount	Earnings	2008 weighted average number of shares	Per share amount
	£'000		(pence)	£'000		(pence)
Basic earnings per share
Earnings attributable to ordinary shareholders	482	65,577,369	0.74	1,249	64,015,679	1.95
Dilutive effect of employee share options	-	2,656,313	(0.03)	-	5,317,405	(0.15)
Diluted earnings per share	482	68,233,682	0.71	1,249	69,333,084	1.80

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

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

8.         movement in reserves 

	Share premium account	Merger reserve	Retained earnings	Shares to be issued	Foreign currency translation reserve	Total
Group	£'000	£'000	£'000	£'000	£'000	£'000
At 1 October 2008	6,620	1,464	7,883	1,470	(2)	17,435
Retained profit for the year	-	-	482	-	-	482
Currency translation differences on foreign currency net investment	-	-	-	-	167	167
Deferred tax in respect of employee share options	-	-	(53)	-	-	(53)
Shares issued	-	-	-	(6)	-	(6)
Premium on issue of shares	153	1,464	-	(1,464)	-	153
Dividend paid	-	-	(75)	-	-	(75)
Share-based payments	-	-	67	-	-	67
At 30 September 2009	6,773	2,928	8,304	-	165	18,170

The following describes the nature and purpose of each reserve within owner's equity.

Reserve	Description and purpose
Share capital	Amount subscribed for share capital at nominal value.
Share premium	Amount subscribed for share capital in excess of nominal value.
Foreign currency translation	Gains/losses arising on retranslation of the net assets of overseas operations into sterling.
Retained earnings	Cumulative net gains and losses recognised in the consolidated income statement.
Merger reserve	Excess of the fair value of the shares issued for the acquisition made in the year to 30 September 2007 over the aggregate of the nominal value of shares issued by the Company to the former shareholders of the acquired company, which qualify for merger relief under Section 612(2) of the Companies Act 2006.
Shares to be issued	Deferred contingent share consideration for the acquisition of Data Collection Limited in the year ended 30 September 2007.

9.         dividend

The directors are proposing a final dividend in respect of the financial year ended 30 September 2009 of 0.15 pence per share (2008: 0.115 pence per share) which will absorb an estimated £102,000 of shareholders' funds. This dividend will be paid on 15 March 2010 to shareholders who are on the register of members at close of business on 15 December 2009 subject to approval at the AGM. This dividend has not been accrued in these financial statements.

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.

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