Preliminary Results

RNS Number : 3037J

Oxford Metrics PLC

04 December 2018

 

4 December 2018

Oxford Metrics plc

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

Preliminary Results for the financial year ended 30 September 2018

Oxford Metrics plc (LSE: OMG), the international software company servicing government, life sciences, entertainment and engineering markets, announces preliminary results for the financial year ended 30 September 2018.

Summary of Results
	FY18	FY17	% Change
Revenue	£31.7m	£29.2m	+8.6%
Adjusted Profit before Tax*	£5.2m	£3.9m	+32.0%
Ordinary Dividend per Share	1.5p	1.2p	+25.0%
Special Dividend per Share	1.0p	-	-
Statutory Profit before Tax	£4.6m	£3.7m	+25.0%
Statutory Basic Earnings per Share	3.23p	2.55p	+26.7%
Net Cash	£12.2m	£9.2m	+33.1%

* Profit Before Tax before group recharges adjusted for share based payments, amortisation of intangibles arising on acquisition, fair value adjustments to IMeasureU consideration, impairment of Pimloc investment and exceptional costs

Financial Highlights

·      Headline Group revenue of £31.7m, up 8.6% (FY17: £29.2m) - record performance, on track with strategic plan (up 10.7% on a constant currency basis)

·      Adjusted profit before tax up 32.0% to £5.2m (FY17: £3.9m)

·      Cash generated from operations (before paying interest and tax) increased by 20.4% to £6.7m (FY17: £5.6m)

·      Net cash balance of £12.2m (FY17: £9.2m)

·      Recommended Ordinary Dividend increased by 25% to 1.5p per share (FY17: 1.2p per share)

·      Special Dividend of 1.0p per share (FY17: Nil)

·      Growth initiatives at Yotta yielding results:

o  Annualised Recurring Revenue ('ARR') up 16.5% year-on-year

o  95.3% retention of growing SaaS customer base

·      Headline Vicon revenue up 8.3% year-on-year (11.0% at constant currency) - shipped more systems to more customers than ever before.

Operational Highlights

·      Good progress in Year Two of five-year strategic growth plan: leveraging FY17 investments to amplify growth of recurring revenues and profitability.

·      Strategy for Yotta: develop cloud-based software products, expand internationally and grow recurring revenues. That growth is driven through three different routes:

o  Direct: wins at Glasgow, Cambridgeshire and at Auckland Motorways in New Zealand, driving ARR growth;

o  Resellers: wins in Columbia, Germany and Netherlands, taking international customers to 28 (FY17:14); and

o  OEM: signed two OEM partners, Pavement Management Services (PMS) in Australia and Tvilight in the Netherlands.

o  Alloy has been updated throughout the year which incorporated additional functionality in Highways, Streetlighting and Green Spaces

o  Completed disposal of Yotta Surveying activities in line with the Group's strategy.

·      Strategy for Vicon: strengthen and protect profitable market leader

o  Location-based Virtual Reality ('LBVR') solution launched in August 2018 and gained immediate traction already contributing to revenues

o  Integration of IMeasureU sensor technology into Vicon Nexus software, broadening motion capture applications and enabling optical and inertial data to be collected together

o  IMU Step, SaaS solution for elite sports, starting to build momentum with new customer wins at Hospital for Special Surgery, University of Memphis and New South Wales Institute of Sport (NSWIS)

o  Vicon technology used in recent films including Ready Player One, The Nutcracker and the Four Realms and upcoming release, Mowgli: Legend of the Jungle

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

"We have made strong operational and financial progress during the year and remain firmly on track with our five-year plan. Following a period of investment, we have grown profits significantly and driven double digit revenue growth on a constant currency basis in line with market expectations.

2018 has also been a year of significant strategic development. In Vicon, we have a global market leader, which continues to break new ground in its industry. However, we have seen a material change in the market recently. Motion measurement is going mainstream and is being applied to a broader range of markets than ever before. We now see an opportunity to make targeted investments in new markets such as Location-based Virtual Reality and Elite Sports to drive growth and returns. At Yotta, whilst pleasing overall, our Annualised Recurring Revenue ('ARR') growth was mildly impacted by slower than expected international conversion. Ahead of the next Alloy release, we have focused investment on our Indirect and OEM channels and now expect ARR momentum to build.

Looking ahead, both Vicon and Yotta are well positioned in their markets and have clear, well-funded strategies to drive growth. We have made an excellent start to the year and our pipeline continues to build, which gives us confidence in our prospects for the year ahead."

For further information please contact:

Oxford Metrics	[phone]
Nick Bolton, CEO
David Deacon, CFO
FTI Consulting	[phone]
Matt Dixon / Harry Staight
N+1 Singer (NOMAD to OMG)	[phone]
Shaun Dobson / Jen Boorer (Corporate Finance) Tom Salvesen (Corporate Broking)

About Oxford Metrics

Oxford Metrics develops and markets analytics software for motion measurement and infrastructure asset management to customers in over 70 countries worldwide. Our list of clients across the globe is as diverse as the markets we operate in; we help highways authorities manage and maintain their road networks, hospitals and clinicians decide therapeutic strategies and Hollywood studios create stunning visual effects. And the diversity of applications is growing all the time.

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

Founded in 1984 our Group is headquartered in Oxford with offices in Leamington Spa, Gloucester, California, Colorado, Singapore and Auckland. Since 2001, Oxford Metrics (LSE: OMG), has been a quoted company listed on AIM, a market operated by the London Stock Exchange.

For more information about Oxford Metrics, visit www.oxfordmetrics.com

CHAIRMan'S STATEMENT

Group revenue from continuing operations grew 8.6% to £31.7m (FY17: £29.2m) in headline terms and 10.7% at constant currency. Adjusted PBT* from continuing operations rose to £5.2m (FY17: £3.9m). Revenue and Adjusted PBT* were both in line with market expectations. The company reports another year of strong cash generation with £12.2m in cash at year-end (FY17: £9.2m), after accounting for payment of the final FY17 dividend of £1.5m (FY16 Dividend: £1.2m) and receipt of the net consideration of £1.3m for the disposal of our legacy Surveying business.

In light of the strong cash performance we are pleased to propose a 25% increase in our final dividend to 1.50p per share (FY17: 1.20p) in line with our progressive dividend policy and aim of average Ordinary Dividend Cover of 2.0x earnings, as declared in our five-year plan. We continue to be a highly cash-generative business, and following a review of the Group's working capital needs, current M&A opportunities, current contractual obligations and the need to maintain a robust Balance Sheet to navigate economic uncertainties, the Board is pleased to propose the payment of a Special Dividend of 1.00p per share (FY17: Nil), which effectively returns the net proceeds from the disposal of Yotta Surveying.

Strategy Progress

As we enter Year 3 of our current five-year plan to "amplify the core", the results confirm we are making good progress towards achieving our objectives. As a reminder, our strategy recognises the high quality of both of our subsidiaries and, given both have exciting markets, differentiated products and loyal customers, we aim to amplify their visible, material capabilities. In doing this, we committed to achieving two clear publicly-measurable metrics of doubling profits and tripling recurring revenues over the five-year period and we are pleased to report, two years in, we remain on track to deliver these key goals.

·      Double profits: following a period of investment through FY17, Adjusted PBT* has now been restored to above FY16 pre-investment levels as promised; and

·      Triple recurring revenues: Annual Recurring Revenue ('ARR') as of 30 September 2018 has increased 42% since the commencement of the five-year Strategic Plan, driven mainly by Horizons and Alloy. Along with growing interest in Vicon's Software-as-a-Service ('SaaS') offering, IMU Step, we remain confident that our goal will be achieved.

Board

Over the past 12 months there have been a number of changes to the Board. In February 2018 we announced the retirement of our founder, Dr Julian Morris, who has been involved in every step of growing the business from a fledgling start-up to a world-class software company serving thousands of customers across the globe. His insight and leadership over that time have been invaluable and we thank him for his deep contribution to the business and wish him well in his retirement.

Furthermore, in June 2018, we announced the addition of a new Non-Executive Director to the Board in David Quantrell, a highly qualified technology executive. David has more than 30 years of experience in senior management roles across the software sector, including international SaaS businesses. He has held senior positions at Clarify, Nortel, McAfee and HP and is already providing immediate, valuable input at both Vicon and Yotta. We look forward to drawing on David's insights to drive further progress across the Group.

Lastly, I want to thank the stakeholders in our business for all their contributions over the past year - our amazing staff in our offices worldwide, our shareholders for their continuing support, our partners and distributors in all the markets we serve and, most importantly, our ever-expanding number of valued customers, who will always be the very centre of our focus.

Roger Parry

Chair

* Profit Before Tax before group recharges adjusted for share based payments, amortisation of intangibles arising on acquisition, fair value adjustments to IMeasureU consideration, impairment of Pimloc investment and exceptional costs.

 

CEO Review

This was another year of achievement for Oxford Metrics, with our focused strategy and investment translating into strong growth and record revenues at Vicon, our highest level of recurring revenues at Yotta and clear operational progress at both companies. Two years into our five-year plan we are pleased to report we remain firmly on track to achieve it.

Furthermore, our markets and our understanding of them have developed over those years, especially at Vicon, where the business has delivered a 43% increase in revenues over the past three years. We believe something material is changing in Vicon's market, which offers the opportunity to bring forward returns by accelerating specific product and market development in the current year.

VICON

KPI	Revenue		PBT		Adjusted PBT*
	FY18	FY17	FY18	FY17	FY18	FY17
Vicon	£24.4m	£22.5m	£5.5m	£3.8m	£7.3m	£5.6m

2017/18 was an outstanding year for Vicon. The business achieved record revenues, improved Product Gross Margin to 73.4% (FY17: 73.2%) and a record Adjusted PBT well ahead of our expectations. Indeed this excellent result at Vicon means we are essentially a year ahead of our internal plans for this business - a lead we intend to preserve by bringing forward some planned investment.

It has also been a year of strategic development. Our strategy for Vicon, as outlined in our five-year plan, remains unchanged - to make targeted investments to maintain our market-leading position and extend our capability into new markets. Pleasingly, we are now seeing a noticeable increase in movement measurement applications from a broader variety of markets than ever before.

Motion measurement in the Augmented Age

We believe this demand is being driven by the arrival of the Augmented Age, where our lives are becoming increasingly enhanced and augmented through digital interfaces (smartphones, robots, autonomous vehicles and virtual reality). In this new Age, we require these interfaces and machines to understand human movement as well as humans do. Of course, Vicon has been doing this since 1984 and now holds a high degree of proprietary software IP relating to this. What has changed over the past three years is that human movement tracking is entering the mainstream - our smartphones can track head movement and our watches can measure body movement. We are seeing this need for human movement tracking emerging in a wide variety of sectors and we are well positioned to exploit these opportunities.

In order to do this, we are focussing the business on two important growth vectors: our Established Markets and new Adjacent Vertical markets.

Established Markets - making the strong even stronger

Vicon has long been the innovator in optical motion measurement, and over the past year, we delivered more customer solutions than ever before. We have achieved this success by expanding our addressable market and the appeal of our solutions through the addition of inertial and active optical capabilities. Our inertial sensors enable us to measure movement anywhere and for long periods of time, and our active optical capability increases the flexibility of our solutions.

Our strategy of broadening the appeal of our products and differentiation in our markets through targeted investment in product including integration of inertial technology is clearly delivering, and, given the expanded interest in human movement measurement, we plan to bring forward our planned product investment. This means investing an additional £0.7m in FY19 into this Established Markets business in order to accelerate our opportunity and deliver new products that we anticipate will be on sale in FY20.

Adjacent Verticals - driving technology leadership into new growth opportunities

Our Adjacent Vertical markets represent new markets for Vicon, where we have seen early collective interest in our solutions from pioneer customers. In FY18, these new Adjacent Verticals already made up 3.5% of revenues. Such markets offer a meaningful expansion of our addressable market and equally are of an appropriate size and structure that we are able to address them. We are currently pursuing two such vertical markets in Location-based Virtual Reality ('LBVR') and Elite Sports - both of which have seen strong progress in FY18. As a result, we plan to bring forward our plans and invest a further £0.8m to build out our commercial capability in these growing markets.

Location-based Virtual Reality

2018 saw an explosion in Vicon's work in LBVR - an emerging form of entertainment where participants share collective VR experiences in a specific location, such as a shopping mall, cinema or museum. In these experiences, users are free to walk within a virtual world and interact with each other, whether that be enacting a scene from a movie franchise, wandering the surface of Mars or playing a truly interactive video game with friends. In order to deliver such compelling experiences, the users and the objects they interact with have to be accurately tracked in real-time with very low latency. This is where Vicon excels.

In August 2018, we launched Vicon Origin, a specific solution for LBVR, to further extend our product differentiation in this growing marketplace. The Origin solution consists of a new suite of products built to serve current and future demands of the LBVR market.

During the year we established key customer relationships across the world, including Bandai Namco in Japan, Dreamscape Immersive in the US and VR Arcade in the Netherlands. This market is developing quickly and we look forward to updating the market as Vicon-powered solutions are rolled out globally.

Elite Sports

We also made good progress in our Elite Sports vertical market during the year. In this market, our customers use our software to better understand the athlete in training, especially when they are recovering from injury. Principally this is through our IMU Step software, which is provided on a Software as a Service ('SaaS') basis, with customers committing typically to a three-year contract.

The software enables coaches to gain an objective measure of the load an athlete endures in their lower limbs during training. It is a unique solution which is biomechanically-verified and is proving a powerful tool for our first customers, including the Hospital for Special Surgery, University of Memphis and New South Wales Institute of Sport (NSWIS).

Other Verticals

We continue to monitor and develop other adjacent vertical market opportunities and where we see exciting, addressable markets where we can offer differentiated solutions, we will look to add further vertical growth through both organic and inorganic developments. Furthermore, where possible, we will aim to pursue these vertical markets on a SaaS-basis to improve the visibility of our revenues and profits.

YOTTA

KPI	Revenue		PBT		Adjusted PBT*
	FY18	FY17	FY18	FY17	FY18	FY17
Yotta	£7.3m	£6.6m	(£1.0m)	(£0.4m)	£0.4m	£0.7m

2017/18 was a year of mixed fortunes for Yotta - on the one hand our more mature UK business strode forward, achieving ARR growth as expected, a 6% increase in Consulting revenues and successful disposal of our legacy UK Surveying business in June 2018. On the other hand, our newer International business grew more slowly than planned, despite some good customer wins. This led to a divisional result that was slightly behind our expectations. Internationally, we have now taken steps to focus on our Indirect and OEM channels, where we have seen success, and have reduced investment in direct international operations. These changes will yield a net cost saving of around £0.4m per year.

ARR grew 16.5% to £5.7m (FY17: £4.9m), a solid performance, but slightly behind where we would like it to be. Despite this, we continue to make progress in important areas. Firstly, Yotta reported a high rate of customer retention at 95.3% (FY17: 98.8%) thus providing the business with a predictable high-quality revenue stream. Secondly, the value of ARR at Yotta already covers the entire payroll cost of the business as at 30^th September 2018 and 74% measured against all current operating costs on an annualised basis. During FY19, ARR is expected to cover all operating costs.

Our strategy to drive growth within Yotta's three important vectors continues and we have seen progress in all these over the past 12 months:

Direct

ARR from our direct operations grew during the year with wins including Glasgow, Cambridgeshire and at Auckland Motorways in New Zealand. The enterprise system deal at Glasgow was of particular note because of its size and the breadth of its application, which includes Environmental Services, Highways and Street Lighting. We also saw direct Alloy deployments go live during the year including at Stockton and Poole.

Our direct consulting team delivered a number of important customer projects during the year including one for Amey Sheffield, where we created a bespoke model within Horizons for their PFI contract, and at Townsville, Australia, where we were engaged in a water mains modelling project to deliver deterioration models and works plans for the replacement of aging water mains in the city.

Indirect

Our indirect business recorded a number of notable wins during the year, including deals in Colombia at Itineris and Abertis Bitumix, in Germany at VIA IMC and at Volker and Dura Vermeer in the Netherlands. We now have a total of 28 international customers, up from 14 at the end of last financial year.

OEM

During the year we signed two OEM partners: Pavement Management Services ('PMS') in Australia and Tvilight in the Netherlands. As previously announced, Tvilight is a Smart City solution provider focused on the European market, whose new CityManager platform is now powered by Alloy. PMS are a solutions provider in the Australian Highways market, who now offer Horizons to enable their customers to optimise their strategic asset planning. PMS successfully secured and implemented the win at Townsville.

We continue to explore further OEM relationships, especially those that can give us access to otherwise unaddressed vertical markets, such as water and energy.

Product progress

Alloy and Horizons continue to be heralded by the marketplace and we continue to broaden its appeal and its applicability. During this first year of its commercial life, Alloy received a number of upgrades, which were all aimed at expanding both the UK and international appeal of the product.

These improvements included the addition of the Green Spaces module, Data Explorer and Export and also Mesh Integrations, which enable Alloy to monitor and control third-party equipment or assets directly from within our software. This included integrating the location of service vehicles in the London Borough of Newham through Exactrak and even the automatic remote watering of a living wall of plants in bus shelters in Australia.

Looking ahead to the first half of FY19, the next major Alloy release will include an Environmental Services capability that will bring a state-of-the-art software solution to this segment of the local government marketplace, which, given the increasing focus on recycling, is expected to enhance ARR growth.

CURRENT TRADING AND OUTLOOK

We remain firmly on track with the targets set out in our five-year plan. Both businesses have started the new financial year well. The Vicon sales pipeline for Quarter 1 is 42% higher than the same time last year, Yotta has a sales pipeline opportunity for the full year 50% higher than the same time last year.

We operate two market-leading businesses in growing global markets with highly differentiated software products and clear strategies to continue to drive growth. Our continued strategic investment will support our organic growth initiatives, but we will also continue to explore acquisition opportunities which can accelerate our strategies within our chosen markets.

We are an international business with staff and customers around the world. We are a net exporter from the UK and given the nature of our solutions are largely software, we do not anticipate any negative impact to our business from the eventual outcome of Brexit. These factors and an ever-strengthening pipeline lead us to conclude the year ahead shows every sign of being yet another exciting year for Oxford Metrics.

Nick Bolton

CEO

* Profit Before Tax before group recharges adjusted for share based payments, amortisation of intangibles arising on acquisition, fair value adjustments to IMeasureU consideration, impairment of Pimloc investment and exceptional costs.

 

CFO Review

Income Statement

The Group reported revenues of £31.7m (FY17: £29.2m) representing a headline improvement of 8.6%. With a third of the Group's revenues derived from the USA this performance was affected by a foreign exchange headwind, where the average rate for the year was $1.35 (FY17: $1.27). Taking account of this £0.6m effect the underlying revenue growth was 10.7%. From an Adjusted PBT* perspective the impact was £0.2m as the Group remains naturally hedged to some extent, given we have USA operations and purchase certain components in US Dollars.

The disposal of Yotta Surveying was finally completed during the year resulting in a loss on disposal net of tax of £0.5m (FY17: £1.8m).

Gross Profit margins improved to 72.4% (FY17: 70.5%), reflecting a greater proportion of software-related income, and improved in real terms year-on-year by £2.3m to £22.9m.

Reviewing the cost base within the Income Statement:

·      Sales, Support and Marketing costs increased due to the annualised effect of investments in Yotta related to the Five-year Strategic Plan, together with further investments in both Vicon and Yotta during the current year. 

·      Research & Development expensed through the Income Statement increased slightly to £3.3m (FY17: £3.1m) being the annualised effect of investments in Yotta to support the Five-year Strategic Plan in the previous year. Total R&D investment including capitalised development costs of £2.1m (FY17: £1.8m) increased reflecting additional product development within Vicon to £5.4m (FY17: £4.9m). 

·      The Administration charge has risen year-on-year by £0.3m. Increased costs included amortisation for acquired intangibles, property-related costs, IT costs and adverse FX movements. These costs were mitigated to some extent by £0.4m credit relating to an adjustment to fair value of deferred consideration payable for the IMeasureU acquisition.

Adjusted PBT* for continuing operations of £5.2m (FY17: £3.9m) has been determined after adding back non-cash moving items such as Amortisation of Acquired Intangibles, Share Option charge, impairment of investment in Pimloc and Exceptional Items, which in this year includes an adjustment to fair value of deferred consideration payable for IMeasureU Limited.

Statement of Financial Position

Goodwill and Intangibles

The movement in Goodwill and Intangibles arises due to capitalisation of R&D of £2.1m (FY17: £1.8m), amortisation of development costs £1.2m (FY17: £1.3m) and the amortisation of acquired intangibles of £0.6m (FY17: £0.5m).

Property, Plant and Equipment

The increase in Property, Plant and Equipment relates primarily to the relocation of Vicon UK to new premises near Oxford which offer much improved customer-facing and manufacturing facilities. The addition in this Financial Year relates to the completion of this relocation.

Investments

The year-on-year movement relates to the impairment of investment in Pimloc Limited. The carrying value has been reduced by our share of post-acquisition losses from Pimloc's trading. The net effect accounts for the movement year-on-year.

Inventories

The inventory position at the end of the financial year was £2.4m (FY17: £3.3m). The movement is largely accounted for by a very strong September close for Vicon and a slightly higher Inventory last year pending the relocation of Vicon manufacturing to a new facility in October 2017.

Trade and other receivables

At the year-end Accounts Receivable and other receivables increased to £10.6m (FY17: 10.0m). The overall increase primarily related to accrued income in Yotta from longer term consultancy contracts.

Current Liabilities

The year on year decrease in Trade and Other Payables is accounted for by a reduction in Trade Payables for continuing operations at the year-end at £1.6m (FY17: £2.4m) arising from payment of earlier inventory replenishment in anticipation of a higher September shipments in Vicon.

Non-current Liabilities

The year-on-year movement is accounted for by a reduction in the Contingent Consideration payable in relation to the acquisition of IMeasureU Limited of £0.3m (FY17: £0.7m).

Statement of Cashflows

The Group finished the year with cash of £12.2m (FY17: £9.2m) after receipt of the net consideration of £1.3m for the disposal of our legacy Surveying business. Cash generated from operating activities was £6.7m (FY17: £5.6m). The deployment of this cash included the 2017 Final Dividend payment of £1.5m (FY17: £1.2m).

Tax

The Group tax charge this year was £0.6m (FY17: £0.5m) representing a blended rate of 12.1% (FY17: 14.5%) This increase is largely due trading performance which has been partly mitigated by lower US marginal rate of tax 25% (FY17: 38%). The level of Group R&D activities in the UK, where the marginal rate of tax of 17% (FY17: 17%), continues to have beneficial effect on the level of corporation tax payable in the UK given the reliefs available.

The Deferred Tax Asset reduced to £0.2m (FY17: £0.4m) whilst the Deferred Tax Liability increase slightly to  £1.8m (FY17: £1.6m).

David Deacon

CFO

* Profit Before Tax before group recharges adjusted for share based payments, amortisation of intangibles arising on acquisition, fair value adjustments to IMeasureU consideration, impairment of Pimloc investment and exceptional costs.

 

consolidated INCOME statement

for the year ended 30 september 2018

		2018	2017
	Note	£'000	£'000
Revenue	3	31,656	29,155
Cost of sales		(8,743)	(8,599)
Gross profit		22,913	20,556
Sales, support and marketing costs		(7,526)	(6,753)
Research and development costs		(3,336)	(3,144)
Administrative expenses		(7,467)	(7,231)
Other operating income		173	297
Operating profit		4,757	3,725
Finance income		73	29
Finance expense		(172)	-
Share of post-tax loss of equity accounted associate		(75)	(87)
Profit before taxation	3,4	4,583	3,667
Taxation	6	(556)	(533)
Profit from continuing operations		4,027	3,134
Loss from discontinued operations, net of tax		(484)	(2,127)
Profit attributable to owners of the parent during the year		3,543	1,007
Earnings per share for profit on continuing operations attributable to owners of the parent during the year
Basic earnings per ordinary share (pence)	8	3.23p	2.55p
Diluted earnings per ordinary share (pence)	8	3.12p	2.49p
Earnings per share for profit on total operations attributable to owners of the parent during the year
Basic earnings per ordinary share (pence)	8	2.84p	0.82p
Diluted earnings per ordinary share (pence)	8	2.75p	0.80p

COnsolidated statement of

comprehensive income FOR THE YEAR

ENDED 30 sEPTEMBER 2018

		Group	Group
		2018	2017
		£'000	£'000
Net profit for the year		3,543	1,007
Other comprehensive income
Items that will or may be reclassified to profit or loss
Exchange differences on retranslation of overseas subsidiaries		(173)	(208)
Recycling of hedging instrument		-	158
Total other comprehensive expense		(173)	(50)
Total comprehensive income for the year attributable to owners of the parent		3,370	957

consolidated statement of financial position AS AT 30 september 2018

		Group	Group
		2018	2017
		£'000	£'000
Non-current assets
Goodwill and intangible assets		12,361	12,069
Property, plant and equipment		2,496	1,948
Financial asset - investments		157	232
Deferred tax asset		230	377
		15,244	14,626
Current assets
Inventories		2,403	3,330
Trade and other receivables		10,576	9,992
Current tax debtor		101	-
Cash and cash equivalents		12,229	9,185
		25,309	22,507
Assets classified as held for sale		-	3,047
Current liabilities
Trade and other payables		(8,167)	(9,086)
Current tax liabilities		-	(408)
		(8,167)	(9,494)
Liabilities directly associated with assets classified as held for sale		-	(584)
Net current assets		17,142	15,476
Total assets less current liabilities		32,386	30,102
Non-current liabilities
Other liabilities		(631)	(1,003)
Provisions		(8)	(185)
Deferred tax liability		(1,777)	(1,619)
		(2,416)	(2,807)
Net assets		29,970	27,295
Capital and reserves attributable to owners of the parent
Share capital		312	308
Shares to be issued		65	65
Share premium account		17,327	17,302
Retained earnings		12,022	9,549
Foreign currency translation reserve		244	71
Total equity shareholders' funds		29,970	27,295

 

consolidated STATEMENT of CASHFLOWS

For the YEAR ended 30 september 2018

		Group	Group
		2018	2017
	Note	£'000	£'000
Cash flows from operating activities
Operating profit/(loss) from continuing operations		4,757	3,725
Operating loss from discontinued operations		(483)	(2,139)
Group operating profit/(loss)		4,274	1,586
Depreciation and amortisation		2,479	2,166
Impairment of intangibles		-	1,630
Impairment of investment		-	-
Loss/(profit) on the sale of property, plant and equipment		3	(39)
Profit on sale of intellectual property to associate undertaking		-	(208)
Loss on disposal of subsidiary undertaking		445	-
Share-based payments		323	142
Exchange adjustments		89	(360)
Decrease/(increase) in inventories		941	(640)
(Increase)/decrease in receivables		(184)	664
(Decrease)/increase in payables		(1,635)	655
Cash generated from operating activities		6,735	5,596
Tax (paid)/received		(727)	18
Net cash from operating activities		6,008	5,614
Cash flows from investing activities
Purchase of property, plant and equipment		(1,243)	(1,680)
Purchase of intangible assets		(2,125)	(1,822)
Proceeds on disposal of property, plant and equipment		154	55
Interest received		73	29
Interest arising on contingent consideration		(172)	-
Proceeds on disposal of subsidiary undertakings net of cash disposed of		1,295	2,109
Acquisition of subsidiary undertaking net of cash acquired		(76)	(2,042)
Net cash used in investing activities		(2,094)	(3,351)
Cash flows from financing activities
Issue of ordinary shares		29	473
Equity dividends paid	8	(1,499)	(1,224)
Net cash used in financing activities		(1,470)	(751)
Net increase/(decrease) in cash and cash equivalents		2,444	1,512
Cash and cash equivalents at beginning of the period		9,785	8,273
Cash and cash equivalents at end of the period		12,229	9,785
Amount included in cash and cash equivalents		12,229	9,185
Amount included in assets classified as held for sale		-	600
Total cash and cash equivalents at end of the period		12,229	9,785

 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 SEPTEMBER 2018

Group	Share capital	Shares to be issued	Share premium account	Retained earnings	Cash flow hedging reserve	Foreign currency translation reserve	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Balance as at 1 October 2016	303	65	16,834	9,506	(158)	279	26,829
Net profit for the year	-	-	-	1,007	-	-	1,007
Exchange differences on retranslation of overseas subsidiaries	-	-	-	-	-	(208)	(208)
Recycling of hedging instrument	-	-	-	-	158	-	158
Tax recognised directly in equity	-	-	-	118	-	-	118
Transactions with owners:
Dividends	-	-	-	(1,224)	-	-	(1,224)
Issue of share capital	5	-	468	-	-	-	473
Share based payment charge	-	-	-	142	-	-	142
Balance as at 30 September 2017	308	65	17,302	9,549	-	71	27,295
Net profit for the year	-	-	-	3,543	-	-	3,543
Exchange differences on retranslation of overseas subsidiaries	-	-	-	-	-	173	173
Tax recognised directly in equity	-	-	-	106	-	-	106
Transactions with owners:
Dividends	-	-	-	(1,499)	-	-	(1,499)
Issue of share capital	4	-	25	-	-	-	29
Share based payment charge	-	-	-	323	-	-	323
Balance as at 30 September 2018	312	65	17,327	12,022	-	244	29,970

 

1.   Basis of preparation of the financial information

The financial information in this preliminary announcement has been prepared in accordance with the recognition and measurement criteria of IFRSs, this announcement does not itself contain sufficient information to comply with IFRSs. The Company expects to publish full financial statements that comply with IFRS on 4^th December 2018.

The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise judgement in the process of applying the Group's accounting policies which affect the reported amount of assets and liabilities at the statement of financial position date and the reported amounts of revenues and expenses during the reported period.  Although the estimates are based on management's best knowledge of the amount, event or actions, actual results may ultimately differ from those estimates. 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 2018 and 30 September 2017, but is derived from those accounts. The statutory accounts for the year ended 30 September 2017 have been delivered to the Registrar of Companies and those for the year ended 30 September 2018 will be delivered following the Company's annual general meeting. The auditors have reported on those accounts: their report was unqualified, did not contain references to any matters to which the auditors drew attention by way of emphasis and did not contain a statement under Section 498 of the Companies Act 2006 for the year ended 30 September 2018 or 30 September 2017.

2.   Basis of consolidation

The consolidated financial information incorporates the results of the Company and all of its subsidiary undertakings drawn up to 30 September 2018.

3.   Segmental analysis

Segment information is presented in the financial information in respect of the Group's business segments, which are reported to the Chief Operating Decision Maker (CODM).  The Group has identified the Board of Directors of Oxford Metrics plc, formerly OMG plc, ("the Board") as the CODM. The business segment reporting reflects the Group's management and internal reporting structure.

The Group comprises the following business segments:

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

·      Yotta Group: This is the provision of software and services for the management of infrastructure assets and highways surveying services (which were sold during the year) for the Government Agencies, Local Government and major infrastructure contractors. Yotta surveying was discontinued during the prior year and is shown within discontinued operations.

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

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

Intra segment sales between Vicon UK and Vicon USA are eliminated prior to management and internal reporting, and hence are not shown separately in the analysis below.  The total sales from Vicon UK to Vicon USA in the year ended 30 September 2018 are £4,414,000 (2017: £5,103,000).

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

	Revenue
	2018	2017
	£'000	£'000
By destination
UK	9,978	8,512
Germany	1,078	554
Bulgaria	9	301
Poland	145	-
Netherlands	662	677
France	348	208
Switzerland	409	170
Rest of Europe	1,802	687
Canada	420	1,455
USA	9,357	9,640
Rest of North America	123	145
Australia	685	1,106
Hong Kong	1,766	1,948
Japan	3,257	2,441
Rest of Asia Pacific	939	549
Other	678	762
Continuing operations	31,656	29,155
UK	1,693	2,842
Discontinued operations	1,693	2,842
Oxford Metrics Group	33,349	31,997
By origin
UK	20,849	17,722
North America	10,419	11,170
Asia Pacific	388	263
Continuing operations	31,656	29,155
UK	1,693	2,842
Discontinued operations	1,693	2,842
Oxford Metrics Group	33,349	31,997

Business segments are analysed below:

	Revenue
	2018	2017
	£'000	£'000
Vicon UK	13,964	11,342
Vicon USA	10,418	11,170
Vicon Group	24,382	22,512
Yotta	7,274	6,643
Continuing operations	31,656	29,155
Yotta Surveying	1,693	2,842
Discontinued operations	1,693	2,842
Oxford Metrics Group	33,349	31,997

Vicon revenue by market
Engineering	4,367	4,767
Entertainment	7,153	6,661
Life sciences	12,862	11,084
Vicon Group*	24,382	22,512

Group revenue by type
Sale of hardware	21,687	20,240
Sale of software	4,289	3,603
Rendering of services	5,680	5,312
Continuing operations	31,656	29,155
Sale of software	12	-
Rendering of services	1,681	2,842
Discontinued operations	1,693	2,842
Oxford Metrics Group	33,349	31,997

Yotta revenue by type
Software and related services	7,274	6,643
Continuing operations	7,274	6,643
Surveying services	1,693	2,842
Discontinued operations	1,693	2,842
Yotta Group	8,967	9,485

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

 

	2018				2017
	Adjusted profit/(loss) before tax	Adjusting items	Group recharges	Profit/(loss) before tax	Adjusted profit/(loss) before tax	Adjusting items	Group recharges	Profit/(loss) before tax
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Vicon UK	2,916	105	1,309	4,330	1,418	(221)	1,653	2,850
Vicon USA	4,372	-	(3,195)	1,177	4,226	-	(3,237)	989
Vicon Group	7,288	105	(1,886)	5,507	5,644	(221)	(1,584)	3,839
Yotta	437	(472)	(993)	(1,028)	670	(445)	(641)	(416)
Unallocated	(2,556)	(219)	2,879	104	(2,398)	3	2,639	244
Continuing operations	5,169	(586)	-	4,583	3,916	(663)	414	3,667
OMG Life Group	51	-	-	51	(183)	12	-	(171)
Yotta Surveying	(89)	(445)	-	(534)	213	(1,609)	(414)	(1,810)
Unallocated	-	-	-	-	(158)	-	-	(158)
Discontinued operations	(38)	(445)	-	(483)	(128)	(1,597)	(414)	(2,139)
Oxford Metrics Group	5,131	(1,031)	-	4,100	3,788	(2,260)	-	1,528

Adjusted profit before tax is detailed in note 5.

	Segment depreciation and amortisation
	2018 £'000	2017 £'000
Vicon UK	1,525	1,188
Vicon USA	57	45
Vicon Group	1,582	1,233
Yotta	775	666
Unallocated	21	24
Continuing operations	2,378	1,923
Yotta Surveying	101	1,873
Discontinued operations	101	1,873
Oxford Metrics Group	2,479	3,796

	Non-current assets		Additions to non-current assets		Carrying amount of segment assets		Carrying amount of segment liabilities
	2018	2017	2018	2017	2018	2017	2018	2017
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Vicon UK	8,899	8,495	2,006	6,313	22,522	18,380	(4,485)	(5,717)
Vicon USA	797	825	164	40	5,995	5,782	(1,698)	(1,639)
Vicon Group	9,696	9,320	2,170	6,353	28,517	24,162	(6,183)	(7,356)
Yotta	5,212	4,793	1,177	603	16,093	15,399	(3,910)	(3,996)
Yotta Surveying	-	-	-	-	-	-	-	-
Yotta Group	5,212	4,793	1,177	603	16,093	15,399	(3,910)	(3,996)
Unallocated	328	501	14	272	1,987	3,613	(490)	(908)
OMG Life Group*	8	12	-	-	(6,044)	(6,041)	-	(41)
Held for sale	-	-	-	-	-	3,047	-	(584)
Oxford Metrics Group	15,244	14,626	3,361	7,228	40,553	40,180	(10,583)	(12,885)

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

4.   Profit for the year

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

	2018	2017
	£'000	£'000
Loss/(profit) on disposal of property, plant and equipment	3	(39)
Depreciation of property, plant and equipment - owned	570	409
Amortisation of customer relationships	314	314
Amortisation of intellectual property	350	187
Amortisation of development costs	1,245	1,256
Impairment of intangible fixed assets	-	1,630
Share based payments - equity settled	323	142
Operating lease charges - land and buildings	567	641
Foreign exchange loss/(gain)	213	(95)
Profit on transfer of intellectual property to equity accounted associate	-	(208)
Grant income receivable	(173)	(89)

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

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

The reconciliation of profit/(loss) before tax to adjusted profit/(loss) provided below includes items that are:

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

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

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

	2018	2017
	£'000	£'000
Profit before tax - continuing operations	4,583	3,667
Share based payments - equity settled	323	153
Amortisation of intangibles arising on acquisition	645	485
Redundancy costs	-	9
Costs associated with acquisition of subsidiary undertaking	-	137
Adjustment to fair value of deferred consideration payable and unwinding of discount factor	(457)	-
Income from transfer of intellectual property to equity accounted associate	-	(208)
Share of post-tax loss of equity accounted associate	75	87
Reapportion Group overheads	-	(414)
Adjusted profit before tax - continuing operations	5,169	3,916
Loss before tax - discontinued operations	(483)	(2,139)
Share based payments - equity settled	-	(11)
Impairment of intangible assets	-	1,608
Loss on disposal of subsidiary undertaking	445
Reapportion Group overheads	-	414
Adjusted loss before tax - discontinued operations	(38)	(128)
Total adjusted profit before tax - all operations	5,131	3,788

The adjusted profit before tax for the Vicon and Yotta business segments which are included within the Group's continuing operations is shown in detail below;

	Vicon Group
	2018	2017
	£'000	£'000
Profit before tax	5,507	3,839
Share based payments - equity settled	110	23
Amortisation of intangibles arising on acquisition	242	61
Costs associated with acquisition of subsidiary undertaking	-	137
Adjustment to fair value of deferred consideration payable and unwinding of discount factor	(457)	-
Reapportion Group overheads	1,886	1,584
Adjusted profit before tax	7,288	5,644

	Yotta Group
	2018	2017
	£'000	£'000
Profit before tax - continuing operations	(1,028)	(416)
Share based payments - equity settled	69	12
Amortisation of intangibles arising on acquisition	403	424
Redundancy costs	-	9
Reapportion Group overheads	993	641
Adjusted profit before tax - continuing operations	437	670

The redundancy costs in the year ended 30 September 2017 are associated with the restructuring of the Yotta UK business segment.

6.   Taxation

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

	2018	2017
	£'000	£'000
United Kingdom corporation tax at 19.0% (2017: 19.5%)	164	251
Overseas taxation	230	722
Adjustments in respect of prior year	(25)	(21)
Current taxation	369	952
Deferred taxation	188	(431)
Total taxation expense	557	521

Continuing and discontinued operations:

	2018	2017
	£'000	£'000
Income tax expense from continuing operations	556	533
Income tax expense from discontinued operations excluding gain on sale	4	6
	560	539

Total tax expense:

	2018	2017
	£'000	£'000
Income tax expense excluding tax on sale of discontinued operations	560	539
Income tax credit on gain on sale of discontinued operations	(3)	(18)
	557	521

At 30 September 2018, the Group had an undiscounted deferred tax asset of £230,000 (2017: £422,000).  The asset comprises principally short term timing differences and future tax relief available on the exercise of outstanding employee share options in Oxford Metrics plc.

Deferred tax assets and liabilities have been measured at an effective rate of 17% and 25% in the UK and USA, respectively (2017: 17% and 38%, respectively).

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

The tax assessed for the year is lower than the standard rate of corporation tax in the UK of 19.0% (2017: higher than the standard rate of 20%).
The differences are explained as follows:

	2018	2017
	£'000	£'000
Profit on ordinary activities before tax	4,100	1,528
Expected tax income based on the standard rate of corporation tax in the UK of 19.0% (2017: 19.5%)	779	298
Effect of:
Expenses not deductible for tax purposes	(47)	388
Tax gain on sale of discontinued operation in excess of book gain	48	-
Unrelieved current year losses	179	-
Adjustments to tax charge in respect of prior year current tax	(25)	(21)
Adjustments to tax charge in respect of prior year deferred tax	(19)	-
Higher rates on overseas taxation	93	160
Amounts credited directly to equity	164	75
Current tax benefit of share options exercised	(211)	(75)
Research and development tax credit	(487)	(305)
Share based payments	48	39
Effect of rate change	35	(38)
Total tax expense	557	521

 

7.   Earnings/(loss) per share

	2018			2017
	Earnings/(loss)	Weighted average number of shares	Per share amount	Earnings/  (loss)	Weighted average number of shares	Per share amount
	£'000	'000	(pence)	£'000	'000	(pence)
Continuing operations
Basic earnings per share
Earnings attributable to ordinary shareholders	4,027	124,569	3.23	3,134	122,705	2.55
Dilutive effect of employee share options	-	4,327	(0.11)	-	3,322	(0.06)
Diluted earnings per share	4,027	128,896	3.12	3,134	126,027	2.49
Discontinued operations
Basic loss per share
Loss attributable to ordinary shareholders	(484)	124,569	(0.39)	(2,127)	122,705	(1.73)
Dilutive effect of employee share options	-	4,327	-	-	3,322	-
Diluted loss per share	(484)	128,896	(0.39)	(2,127)	126,027	(1.73)
Total operations
Basic earnings per share
Earnings attributable to ordinary shareholders	3,543	124,569	2.84	1,007	122,705	0.82
Dilutive effect of employee share options	-	4,327	(0.09)	-	3,322	(0.02)
Diluted earnings per share	3,543	128,896	2.75	1,007	126,027	0.80

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

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

For discontinued operations the outstanding share options are anti-dilutive and therefore there is no difference between the basic and diluted loss per share.

8.   Dividends

	2018	2017
Equity - ordinary	£'000	£'000
Final 2017 paid in 2018 (1.20 pence per share)	1,499	-
Final 2016 paid in 2017 (1.00 pence per share)	-	1,224
	1,499	1,224

The directors have announced a special dividend of 1.00p per share which will absorb an estimated £1,249,000 of shareholders' funds.  This dividend will be paid on 25 January 2019 to shareholders on the register of members at close of business on 14 December 2018.

The directors are proposing a final dividend in respect of the financial year ended 30 September 2018 of 1.50 pence per share (2017: 1.20 pence per share) which will absorb an estimated £1,874,000 of shareholders' funds.  This dividend will be paid on 7 March 2019 to shareholders who are on the register of members at close of business on 14 December 2018 subject to approval at the AGM. These dividends have not been accrued in this financial information.

9.   Copies of announcement

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

 

END

 

 

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