Final Results

OMG PLC
04 December 2003


4 DECEMBER 2003

OMG plc ('OMG' or the 'Company')

Preliminary Results for the Year Ended 30 September 2003

OMG, a leading supplier of motion capture and visual geometry systems used for
life sciences, entertainment and engineering applications, today announces its
preliminary results for the year ended 30 September 2003.


Highlights:

   •Turnover increased 21% to £9.8m over previous year (2002: £8.0m)

   •Strong return to profitability with Pre-tax Profit of £0.9m (2002: loss
    of £1.8m)

   •Positive cash flow with cash balances increased by £1.0m to £4.8m at the
    year end

   •Strong recovery and renewed growth in US market, with sales up by 54%

   •Exceptionally strong sales growth in the Japanese entertainment market
    following appointment of new distributor

   •Vicon Motion capture used in 2003 releases of Pirates of the Carribean, 
    Hulk and many other successful films

   •Installation of the largest motion capture system ever for Sony Pictures
    Imageworks production of Polar Express starring a motion-captured
    performance from Tom Hanks


Julian Morris, Chief Executive, commenting on the results said:

'The performance for the year ended 30 September 2003 was well ahead of
expectations and a dramatic improvement on the previous year. OMG has reaffirmed
its position as market leader in its core markets. Initiatives are now in place
to capitalise on this position and develop new markets for the Company's
technology.'



For further information:

OMG

Julian Morris, Chief Executive, [e-mail]

Peter Wharton, Finance Director, [e-mail]

Tel: [phone]

Buchanan Communications

Tim Thompson / Catherine Miles

Tel: [phone]

Joint Statement by the Chairman and Chief Executive

Performance for the year ended 30 September 2003 was well ahead of expectations
and a dramatic improvement on the previous year. The Company achieved the
objective, as stated in the last annual report, of returning to its historical
pattern of profitable growth. Profits and earnings per share are at record
levels for OMG as a public company.

Financial Summary

Turnover rose to £9.8m (2002: £8.0m), an increase of 21% over the previous year.
Gross profit rose to £6.5m (2002: £5.4m), an increase of 19%. Increasing
revenues and careful control of costs resulted in a return to profitability with
pre-tax profit for the year of £0.9m (2002: £1.8m loss).

Earnings per share were 1.69p (2002: 3.22p loss).

Sales of all products to the US rose by 54% to £4.8m (2002: £3.1m), to represent
49% of global volume.

Positive cash flow over the year increased cash balances by £1.0m to £4.8m at
the year end.

Market & Business Review

Global Markets

OMG's business continues to be built around two core technologies based on the
common theme of '3D from the moving image'. Under the Vicon brand, OMG develops,
manufactures and sells motion capture systems. 2d3 develops and sells advanced
visual processing software.

Once again, OMG generated over 90% of the year's revenues outside the UK, with
shipments to over 25 countries. The geographic distribution of sales followed
the year's global economic pattern with strong recovery and renewed growth in
North America, and improvements in Far Eastern markets, especially Japan.

Revenues from Europe, excluding UK, fell, reflecting the continuing stagnation
of the larger European economies, particularly Germany. However, there are some
recent signs of an upturn, stimulated in part by a new round of EU government
spend on technology R&D (Framework VI).

The performance of OMG's business in the US has been well ahead of expectations.
Sales growth was dominated by strong recovery in entertainment markets and,
after last year's overall fall in market confidence, renewed diversification
into a range of engineering applications. OMG's US operation, Vicon Motion
Systems Inc, has further consolidated its position as market leader in all US
motion capture markets.

Continuing a strategy of consolidating and strengthening key markets, OMG has
recently appointed two new distributors in Japan. Following the appointment of
Crescent Video to focus on the Japanese entertainment, broadcast and virtual
reality markets, sales growth of both Vicon and 2d3 products has been
exceptionally strong. This result supported a similar strategy in the
appointment of IRC to distribute Vicon motion capture systems to life science
and engineering customers. This new company has taken over most of the
successful Vicon sales team from the former distributor and complemented them
with additional resource.

Life Sciences

Life Science applications of motion capture continue strongly, both in the core
market for clinical gait analysis for cerebral palsy and in academic
biomechanics research.

A recently published study by Gillette, a world-renowned children's hospital in
St Paul, Minnesota found that 93% of children with cerebral palsy who were
treated with both a rhizotomy and orthopaedic surgery following their gait
analysis improved or maintained their mobility and skill levels. Such high
success rates have continued to provide a sound basis for our Life Sciences
business. Vicon also benefits from over 15 years of leadership in a market which
still contributes over 50% of revenues. 27% of the year's Vicon Life Science
sales were upgrades to existing customers, such as Shriners' and Veteran's
Administration hospitals in US.

Entertainment

It has been an exceptional year for our Entertainment business, in terms of both
financial growth and pushing forward technological boundaries. Film making could
be changed forever by the installation of the largest motion capture system ever
for Sony Pictures Imageworks production of Polar Express. Directed by Robert
Zemeckis and starring a motion-captured performance from Tom Hanks, the animated
children's feature will be released in 2004. Vicon motion capture was also used
in 2003 releases Pirates of the Caribbean and Hulk, as well as in many other
successful films.

During the year Vicon won notable accounts in this sector from its principal
competitor including Rearden Studios in San Francisco and Virtual Concepts (part
of Sega) for ESPN Games.

Microsoft Game Studios, recently used Vicon on forthcoming high-profile game
releases including Top Spin, a tennis title offering singles or doubles matches
with 16 of the world's top professionals. Using Vicon, the moves of players such
as Pete Sampras and Anna Kournikova are authentically recreated.

2d3's boujou camera tracker consolidated its market-leading position with 2003
credits including Matrix 2&3, Harry Potter 2, The Italian Job, X-Men2 and future
releases Lord of the Rings 3 and Troy.

The broadcast market in the Far East has been particularly strong for both Vicon
and 2d3, with Fuji TV, Nippon TV and Asahi TV all now customers.

Engineering

The demand for optical motion tracking in virtual engineering applications is
increasing. Notable sales were made to Los Alamos National Laboratory for the 3D
visualisation of complex data sets, John Deere for virtual prototyping to reduce
time to market for farm machinery products and US Army TACOM for 3D simulations
used for soldier training from basic induction to special operations. University
of Salford also uses Vicon for research into 'gesture recognition'. Virtual
reality is a working environment in which the user is surrounded by, and can
move through, a 'virtual' 3D scene generated by computer graphics. Future
engineering and industrial users will be able to interact by pointing, selecting
and manipulating 3D models and representations as diverse as prototype vehicles,
flow through turbines, explosions and database information.

Ergonomic applications are also expanding. Vicon systems based on the new
miniature SVCam (see Technology Update below) sold to NASA in USA and ESA in
France are being used to study astronaut motion in weightless conditions. In
Japan, the government-funded Communication Research Lab uses Vicon to study
interaction between babies and robots.

Consumer

Towards the end of the year, two events marked OMG's first moves into consumer
markets.

2d3's revolutionary SteadyMove technology brings cinema-quality stabilisation to
shaky hand-held film or video clips, even when shot by a walking or running
cameraman or from a moving vehicle. Under a marketing and distribution agreement
with Adobe Systems, the world's second-largest software producer, SteadyMove is
now bundled with every copy of Adobe's market-leading DV editing product,
Premiere Pro.

Simultaneously, 2d3 released the more fully-featured SteadyMove-Pro for use with
Premiere and a range of other video and film editing products. SteadyMove-Pro is
sold and delivered directly to customers on-line from 2d3's website.

Technology Update

As well as delivering good profitability and positive cash flow, OMG invested
14% of revenues in R&D.

Cameras

All Vicon systems now make exclusive use of the Company's own high-resolution,
high-speed motion capture cameras. Motion capture applications demand the image
resolution of a digital still camera and the frame rate of a high-speed film
camera. A major part of Vicon's unique IP lies in the design of these cameras.

During the year, Vicon introduced SVCam, the world's smallest special-purpose
motion capture camera. Its small size and wide field-of-view make it ideal for
studying human movement in constrained environments such as road, battlefield,
aircraft and space vehicles.

'Immersive virtual environments' place the user inside an artificial 3D space
and are increasingly used to display and interact with complex phenomena such as
fluid dynamics and seismology, as well as for 3D design and training. SVCams are
used to track the observer and deliver the appropriate 3D stereo view.


Software

Shipments of Vicon's iQ software for motion captured animation post-processing
commenced early in the financial year. iQ has been a major contributory factor
in the upturn in Vicon sales in entertainment markets and is now confirmed as
the industry standard. Performance upgrades and enhancements have been released
steadily throughout the year, and major new versions will continue well into the
future.

Analysis and Outlook

OMG has invested time and resource in reviewing its business strategy and set
itself some demanding targets for the future. The review confirmed OMG's market
leading position in its core global Life Science and Entertainment markets,
providing a solid foundation for growth in 2004. It also identified a number of
other growth markets, particularly Engineering and Consumer, where the potential
exists for OMG to take and hold a similar lead position. The new strategic
targets include maximising the value of core markets, as well as focusing on new
markets for the Company's technology.

The past year's performance has restored the Company's confidence in core
markets and this is a signal for investment in new products and services. Market
weakness over the past two years in the Far East and Europe presents an
opportunity for recovery and increased market share. The strengthening position
of Vicon and 2d3 brands progressively differentiates OMG's products from those
of smaller and less well funded competitors. OMG expects its core business to
continue to generate organic growth. In addition, there will be increasing
activity in evaluation of opportunities for growth by acquisition.

OMG has diversifications of existing products under development which are
planned to exploit the significant growth opportunities in both Engineering and
Consumer markets. While these developments are aimed at longer term growth, some
will start to make a contribution during 2004.

Delivering shareholder value is a key objective of OMG management, to be
achieved by aligning the goals of employee stakeholders with external
shareholders. The policy of careful cost control will continue, although the
level of internal investment in both new and core business is anticipated to
increase following the Company's return to profitability.

Board Changes

Chairman

Following the retirement of Sir Peter Thompson, on 5 December 2002, Anthony
Simonds-Gooding was appointed as Chairman.

Finance Director

Following the resignation of Malcolm Lewin in June this year, Peter Wharton
joined the Company and was appointed as Finance Director on 3 September 2003.

Dividend Policy

As in previous years, the directors are not declaring a dividend, although the
dividend policy will be kept under review.

Shareholder, Employee and Director Support

We should like to thank all shareholders, employees and directors for their
continuing support and hope that they will enjoy a long association with the
Company.

Further Information

Further information on OMG plc, its markets and products is available from the
Company's websites at www.omg3d.com, www.vicon.com and www.2d3.com.

Anthony Simonds-Gooding, Chairman                 Julian Morris, Chief Executive



CONSOLIDATED PROFIT AND LOSS ACCOUNT
For the year ended 30 September 2003

                                                         2003     2002
                                                        £'000    £'000

Turnover                                                9,758    8,041

Cost of sales                                          (3,304)  (2,629)

Gross profit                                            6,454    5,412

Administrative expenses                                (5,763)  (7,480)
Grant income                                               80      140

Operating profit /(loss)                                  771   (1,928)

Interest receivable                                       120      133

Profit /(loss) on ordinary activities before              891   (1,795)
taxation

Tax on profit /(loss) on ordinary activities              (38)     201

Retained profit/(loss) for the financial year             853   (1,594)

Basic earnings /(loss) per share                         1.69p   (3.22)p

Diluted earnings /(loss) per share                       1.52p   (3.22)p


All of the activities of the Group are classed as continuing.



STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
For the year ended 30 September 2003

                                                         2003     2002
                                                        £'000    £'000

Profit /(loss) for the year                               853   (1,594)

Exchange difference on retranslation of net assets of      (4)     (10)
subsidiary undertakings

Total recognised gains and losses for the year            849   (1,604)



BALANCE SHEETS AT 30 SEPTEMBER 2003

                                     Group   Group   Company   Company
                                      2003    2002      2003      2002
                                     £'000   £'000     £'000     £'000

Fixed assets
Tangible assets                        324     469        33        27
Investments                              -       -       107       107

                                       324     469       140       134
Current assets
Stocks                               1,365   1,609         -         -
Debtors                              2,502   1,764     2,180     2,748
Cash at bank and short term          4,826   3,823     4,334     3,666
deposits
                                     8,693   7,196     6,514     6,414

Creditors: amounts falling due       1,347     880       178       115
within one year

Net current assets                   7,346   6,316     6,336     6,299

Total assets less current            7,670   6,785     6,476     6,433
liabilities

Capital and reserves
Share capital                          129     125       129       125
Share premium account                5,301   5,269     5,301     5,269
Merger reserve                           1       1         -         -
Profit and loss account              2,239   1,390     1,046     1,039

Shareholders' funds                  7,670   6,785     6,476     6,433



CONSOLIDATED CASH FLOW STATEMENT
For the year ended 30 September 2003

                                                         2003     2002
                                                        £'000    £'000

Net cash inflow /(outflow) from operating activities      962     (549)

Returns on investments and servicing of finance
Interest received                                         120      133

Taxation                                                  (38)    (178)

Capital expenditure and financial investment
Purchase of tangible fixed assets                        (256)    (451)
Disposal of tangible fixed assets                         179      160

Financing
Issue of share capital                                     36       22

Increase /(decrease) in cash                            1,003     (863)


NOTES TO THE PRELIMINARY ANNOUNCEMENT
For the year ended 30 September 2003

 1. Basis of preparation

    The financial statements have been prepared under the historical cost
    convention and in accordance with applicable United Kingdom accounting
    standards.

    The principal accounting policies of the Group have remained unchanged from
    the previous year.

 2. Basis of consolidation

    The consolidated financial statements consolidate those of the Company and
    of its subsidiary undertakings drawn up to 30 September 2003. Acquisitions
    of subsidiaries are dealt with by the acquisition method of accounting,
    except those qualifying as Group reconstructions where merger accounting is
    permitted.

 3. Tax on (loss)/profit on ordinary activities

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

                                                                 2003     2002
                                                                £'000    £'000

            United Kingdom corporation tax at 30% (2002: 30%)       -     (166)
            Adjustments in respect of prior period                  -      (47)
            Overseas taxation                                      38       12
                                                               -------- --------
                                                                   38     (201)
                                                               ======== ========


            The tax assessed for the year is lower than the standard rate of
            corporation tax in the UK of 30%
            (2002: 30%). The differences are explained as follows:


                                                                 2003     2002
                                                                £'000    £'000

            Profit/(loss) on ordinary activities before tax       891   (1,795)
                                                               ======== ========

            Profit/(loss) on ordinary activities multiplied by    267     (539)
            the standard rate of corporation tax in the UK of
            30% (2002: 30%)

            Effect of:
            Expenses not deductible for tax purposes                5        3
            Depreciation in excess of capital allowances           32       34
            Utilisation of losses                                (182)     162
            Other timing differences                                -      (21)
            Group relief                                            -        7
            Losses not recognised                                   -      191
            Adjustments to tax charge in respect of prior         (11)     (50)
            year
            Overseas taxation                                      25       12
            Research & development tax credit                     (98)       -
                                                               -------- --------
            Current tax charge/ (credit) for the year              38     (201)
                                                               ======== ========


    Unrelieved tax losses of £623,000 remain available to offset against future
    taxable trading profits of the same trade. A deferred tax asset has not been
    recognised in this respect due to risks and uncertainties which make the
    timing and extent of the profits difficult to predict.
 
 4. Earnings per share

                   Earnings    2003 weighted Per share Earnings    2002 weighted Per share
                              average number  amount              average number  amount
                                   of shares                           of shares
                      £'000                    pence      £'000                    pence

    Basic earnings
    per share

    Earnings            853     50,479,806      1.69     (1,594)    49,494,141     (3.22)
    attributable
    to ordinary
    shareholders

    Dilutive
    effect of
    securities

    Options               -      5,768,707     (0.17)         -              -         -
                      -------    ---------   -------    -------        -------   -------

    Diluted
    earnings per
    share               853     56,248,513      1.52     (1,594)    49,494,141     (3.22)
                      -------    ---------   -------    -------        -------   -------

    Since the conversion of options to ordinary shares would not increase the
    net loss per share for 2002, no dilutive effect is relevant.

 5. Reconciliation of movements in shareholders' funds


                                                       2003       2002
                                                      £'000      £'000

    Retained profit/(loss) for the financial year       853     (1,594)
    Issue of shares                                      36         22
                                                                     -
    Currency movements                                   (4)       (10)
    Net movements in shareholders' funds                885     (1,582)
    Shareholders' funds at 1 October 2002             6,785      8,367
    Shareholders' funds at 30 September 2003          7,670      6,785


 6. Reconciliation of operating profit to net cash outflow from operating
    activities

                                                       2003       2002
                                                      £'000      £'000

    Operating profit / (loss)                           771     (1,928)
    Depreciation                                        249        355
    (Profit)/loss on disposal of fixed assets           (31)         2
    Decrease /(increase) in stock                       244       (272)
    (Increase)/decrease in debtors                     (738)     1,559
    Increase /(decrease) in creditors                   467       (265)
    Net cash outflow from operating activities          962       (549)

 7. Publication of non-statutory accounts

    The financial information set out in this preliminary announcement does not
    constitute statutory accounts as defined in Section 240 of the Companies Act
    1985.

    The balance sheet as at 30 September 2003 and the group profit and loss
    account, statement of total recognised gains and losses, consolidated
    cashflow statement and associated notes for the year then ended have been
    extracted from the Group's 2003 statutory financial statements upon which
    the auditor's opinion is unqualified and does not include any statement
    under Section 237 of the Companies Act 1985.

 8. 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