Oxford Metrics Regulatory News (OMG)

28 Nov 2007 07:01

OMG PLC28 November 2007 28 November 2007 OMG plc Preliminary results for the year ended 30 September 2007 OMG plc, Oxford Metrics Group (LSE: OMG), ("OMG" or "the Group") the technologygroup providing image understanding products and services for the entertainment,defence, life science and engineering industries, announces preliminary resultsfor the year ended 30 September 2007. A very good year: the headlines • Record turnover - up 20% to £19.6m (2006: £16.3m) including £0.9m for two months of trading from Data Collection Limited (DCL) acquired at the end of July. • At constant exchange rates, turnover up by 27%. • Profit before tax of £1.84m (2006: £1.66m), up 11%, including £0.15m from DCL. • Strategic investment in continuing 2d3 and Yotta start ups of £1.3m (2006: £0.3m). • Earnings per share 2.6p (2006: 2.48p), up 5%. • Cash balance of £6.2m (2006: £6.5m). • Dividend increased 15% to 0.115p. • Our biggest acquisition yet boosts Yotta to offer unique range of highway surveying products and services. • First two Ministry of Defence contracts, worth £600,000 in total, won by our 2d3 Advanced Imaging Group (AIG) - the new division focused on Defence. • New Vicon F Series camera successfully launched, setting new standards in motion capture technology. An even better year: behind the headlines: • Like-for-like* turnover up 14% to £18.5m (2006: £16.3m). Up 21% at constant exchange rates. • Like-for-like* profit before tax of £3.0m (2006: £2.0m), up 50%. *Excluding the net investment of £1.3m in Yotta and 2d3 AIG, and the acquisitionof DCL. Nick Bolton, Chief Executive of OMG plc, commented, "I am delighted that yet again our results are ahead of expectations, settingnew records of achievement both in revenues and profits in our traditionalbusiness, whilst our two new businesses have made excellent progress. "Within 2d3 AIG, our MoD contract wins, which include winning the Competition ofIdeas initiative, are a strong endorsement of our technology, and our recentdecision to open 2d3 Inc in the US offers us an exciting opportunity to expandour presence overseas. In addition to these developments, we have made greatstrides within Yotta, with a number of local council contract wins and, mostrecently, the DCL acquisition, which has given us additional scale, experienceand key relationships, which will enhance the growth of our business. "I remain confident that with our technology we will continue to consolidate ourposition in the new areas of defence and street level imaging and highway datacollection as well as maintain our leading position in motion capture. I amextremely excited about the many opportunities open to the company and theprogress I am certain we will make in the next 12 months and beyond." ENDS For further information please contact: OMG plc 01865 261800Nick Bolton, Chief ExecutivePeter Wharton, Finance Director Financial Dynamics 020 7831 3113Juliet Clarke / Hannah Sloane Evolution Securities (NOMAD to OMG) 020 7071 4308Jeremy Ellis About OMG OMG plc (Oxford Metrics Group. LSE: OMG) is a group of technology companiesproducing image understanding products and services for the entertainment,defence, life science and engineering industries. Be it for capturing themovements of actors (for the movie industry), sportsmen (for video games orimproving team performance), children with Cerebral Palsy, rehab patients andanimals (for medical, life science and research industries) or virtual realitydisplays (for engineering and development), the Group has the world leadingmarket position and a strong international reputation for precision instruments. Founded in 1984, the Group's headquarters are in Oxford, UK, and it has officesin California and Colorado, USA. It has customers in over 50 countries and is aquoted company listed on AIM, a market operated by the London Stock Exchange.The Group trades through three operating subsidiaries - Vicon, the world'sbiggest motion capture and movement analysis company, 2d3, a manufacturer ofspecialised image understanding software for entertainment and defenceapplications and Yotta, our 3D mapping business, which collects and analyseshighway data and street level imaging and which, following the acquisition ofDCL in July 2007, offers the most accurate and complete highway surveyavailable. Oxford Metrics' global clients in science, medicine, sport, engineering, gaming,film, broadcast and 3D mapping include major hospitals and research facilitiessuch as Guy's Hospital, Nuffield Orthopaedic Centre and Loughborough University,engineering industry leaders including Ford Motor Company, BMW, Airbus andToyota, and in the entertainment sector, Sony, Industrial Light and Magic, TheMoving Picture Company (MPC), Sega, Nintendo, UbiSoft, EA, Square Enix and in 3Dmapping and highway surveys: Mouchel Parkman, Atkins, and Oxfordshire, Cumbria,Derbyshire and Pembrokeshire County Councils as well as many others. For more information about OMG and its subsidiaries, visit www.omg3d.com,www.vicon.com, www.2d3.com or www.yotta.tv CHAIRMAN'S STATEMENT Delivering on our promises A year ago, I said that the way forward for OMG was to continue building onpositions of great strength in our existing markets while capitalising on ourincredible technology to gain a foothold in new and much bigger ones. And that,I'm very pleased to tell you, is precisely what we've done. In fact, in a longcareer in business, I can think of few occasions when what I've predicted has socompletely come to pass. In terms of results, we've maintained our impressive recent performance, onceagain surpassing expectations, at the same time as seeing both our fledgling newbusinesses start to take flight. As we said we would, we've made an importantacquisition, buying one of the UK's leading highway surveying companies, DataCollection Limited (DCL) to accelerate the growth of our 3D mapping business.Meanwhile, our venture into the defence market has more than lived up to ourexpectations, having secured not one but two contracts from the UK Ministry ofDefence, worth in total around £600,000. In short, we ended the year with twoviable new businesses; still acorns perhaps, but giving real glimpses of the oaktrees they could become. Another record year - for performance and investment Once again, it's been a record year - both in terms of revenues andprofitability. But to understand the scale of our success, you have to lookbehind the headline figures. Specifically, it's important to register the factthat our record performance has been achieved while, at the same time, we havebeen putting investment into our two new ventures. So, while reported trading isin line with expectations, we have actually performed better and have been ableto invest more than we predicted at the beginning of the year. Turning to the numbers in more detail, turnover was up by 20% to £19.6m. Butthis has been a year when the US dollar has had a significant impact, as roughlyhalf of our revenues come from North America. Taking out the effect of theweakening dollar, turnover has actually increased by closer to 27%. Thisincludes a strong performance from DCL during its first two months as part ofthe Group with revenues of £942,000 and profit before tax of £149,000. Profit before tax has increased by 11% on the previous year at £1.84m despitethe investment in new businesses and adverse effect of the dollar. And, althoughour effective rate of taxation is higher this year, earnings per share hasincreased by 5% to 2.6p Cash balances at the year end remained a healthy £6.2m and although this isslightly down from the £6.5m at the start of the year, we have utilised £1.0m onthe cash element of the consideration for DCL. So, looking behind the headlines, excluding the net investment of £1.3m in ourtwo main new ventures, 2d3 Advanced Imaging Group (AIG) and Yotta (our 2006start ups), and excluding the effect of DCL, the like-for-like trends look evenbetter. Turnover is up 14% to £18.5m, or 21% at constant exchange rates.Like-for-like profit before tax is up 50% at £3.0m. This clearly demonstratescontinuing improvements in performance outside of our latest ventures. Our strategy for sustained growth While we're very satisfied with what we achieved last year, I can't emphasisetoo strongly that it's only the beginning for the "new OMG". Our priority issustained and significant long term growth, which we aim to deliver by buildingbusinesses far bigger than those we already have, in markets where there isvirtually no limit to what we can achieve - and where we believe our entry candisrupt the status quo, to profitable effect. Our goals are extremely ambitious, and we're fully aware that - even with thehuge advantage that our technology gives us - they won't be achieved throughorganic growth alone, which is why using well chosen acquisitions to accelerategrowth is a key part of our strategy. I've been involved in numerous acquisitions over the years, and there are almostalways a few twists and turns along the way. But the one we completed in Julywent extraordinarily smoothly and represents, I believe, a textbook example ofwhat we're aiming to achieve: buying a totally compatible profitable businessthat brings with it talented people and valuable experience in the market - andthe opportunity to combine these acquired capabilities with our amazingtechnology. Of course, there's no such thing as a completely risk-free acquisition, butwe've come close to it with DCL; the new much enlarged business was up andrunning - offering a much enhanced service to clients of both the componentbusinesses - from day one. Making the most of talent The other major theme of the last year has been our recognition of the urgentneed to maximise the potential of our brilliantly talented people - which, as astrictly non-technological business person, I continue to be astonished andhumbled by. Nick discusses this in more detail overleaf, but, from a management perspective,one key concern is making sure that the right people are in the right place tomake the greatest possible impact. I'm thinking, for example, of the way thatJon Damush, after six years playing a leading part in our Vicon entertainmentbusiness, has taken charge of setting up 2d3 Inc, the new dedicated US arm ofour defence business. As a qualified flying instructor and self-confessedaviation nut, as well as a genuinely entrepreneurial salesperson, he couldhardly be better equipped to make a success of this hugely important start-up. Similarly, it's fantastic for the Group that Steve Batchelor, formerly Chairmanof DCL, is now leading our drive to establish Yotta DCL in the US, where he hasstrong previous experience of running a successful business. More generally, too, it's given me great pleasure over the last year, as ourbusiness has grown, to watch a "new generation" of exceptionally talented peoplefrom within the Group taking on new challenges and responsibilities, asopportunities have presented themselves. Our dividend policy: rewarding patience A year ago, we announced the introduction of a progressive dividend policy, anddeclared a maiden dividend of 0.1p per ordinary share. Since then, our excellent performance has been reflected in a consistentlyrising share price. So I'm pleased to announce that we are proposing to increasethe dividend for 2007 by 15%, to 0.115p - providing shareholders with some welldeserved reward for their patient belief in the Group's enormous potential. The dividend will be paid on 12 March 2008 to shareholders on the register ofmembers at the close of business on 7 December 2007. Building on our achievements I'm proud of how much this group of companies has achieved, in a remarkablyshort time. Yet it's fair to say that we've been moving forward relativelycautiously, using the profitability of our established businesses to fund ourfirst steps into new markets. But a seriously risk-averse business could never deliver the kind of growth thatOMG is aiming for; and we are confident that our strategy, including plannedacquisitions, will deliver further significant progress in the years ahead. Whatever the future holds, it's essential that we can clearly demonstrate ourability to maximise the incredible potential of our technology and our talent;and that we have the systems in place to turn that potential into sustainedgrowth and profitability. Over the last 12 months, we've taken hugely importantsteps towards achieving this. And so, thinking about the year ahead of us, we anticipate a similar strongperformance. There remains scope for further growth in revenues and profits fromour mature business, while our new ventures will benefit from contracts alreadysecured from the MoD and from the broad base of customers supplied through DCL.And, rest assured that we are working hard toward accelerating our growth bothorganically and through further acquisitions which we will say more about at theappropriate time. Anthony Simonds-Gooding Chairman CHIEF EXECUTIVE'S STATEMENT Managing growth Of course, it's true that we all need to learn from our mistakes. But I believethat success can teach us important lessons, too. And for all of us at OMG, Ithink that's been the theme of the last 12 months: looking closely at what we'veachieved in the last couple of years, assessing how we've done it, and workingto make it a continually improving process. For me personally, what's become clear is that my passion in business is formanaging a dynamically growing company. Why? For the very simple reason, thatstrong growth opens up limitless possibilities. A business like OMG that hasdoubled its revenues since 2004 and increased profits for five successive halveshas all kinds of choices denied to a more sluggish performer. Exploring some ofthose possibilities and choices - in order to open up further possibilities andchoices for the Group in future - has been the most exciting aspect of my job in2006/07. Acquiring to amplify Successful businesses have the option of accelerating their growth throughacquisitions. And, as you've heard, we made our biggest yet earlier this year.In the process, we also clarified and put on record what I might ratherpretentiously call our acquisition philosophy. For us, this method of buildingour business works when we can see exceptional talent and highly relevantexpertise in the target company, to which we can add our incredible technologyin order to create something greater than the sum of the parts; a new businesswith the potential to turn its market upside down. The Chairman has already outlined how this applies in the case of DCL and our 3Dmapping business. But it's worth my pointing out that we've already demonstratedthe effectiveness of this approach, with our two rather less recentacquisitions: House of Moves (now integrated into Vicon) joined the Group in2004, and has just delivered its best ever trading year. And over the first twofull financial years since we took over Peak, turnover has increased. In totalthe combined Vicon turnover in North America has grown by 43%. We call itacquiring to amplify. Getting the best from our people Buying in high grade talent and growth opportunities is, and will remain, animportant part of OMG's strategy; but we've also been focusing on ways ofmaximising the vast potential already within the Group - starting, of course,with our people. At the time of writing, there are almost 200 of them. And while it's always amistake to generalise about that many individuals, I can say without fear ofcontradiction that they are a special breed - bringing together a highly unusualblend of technological, engineering and commercial skills and aptitudes. I thinkof them as "fusion people". In any case, we're very lucky to have them. And, recognising that, we'reabsolutely determined to hang onto them, and get the very best possible returnon their talent. Which is why, over the last couple of years, we've shown ourwillingness, when necessary, to virtualize our business: we currently havebrilliant people working for us from Barcelona to Bognor Regis, Utah toSingapore. But our key focus in 2006/07 has been a greatly increased investment indeveloping individuals and teams, having spent more on training than in theprevious five years added together. And now we're going even further: working toimprove and systematise our process for identifying and developing the skillsand attributes needed to sustain the Group's success. Making the most of opportunities for growth Another way in which we need to take steps to maximise the Group's enormouspotential has come into focus over the last year. As world leaders in our field, we're continually receiving enquiries frompotential clients with issues that our technology could address - many with realpotential to generate revenue and to provide the seed from which a successfulnew business could grow. Currently, we don't always have the available brain-power to respond to suchenquiries, which means we're letting opportunities to touch more lives in morenew markets slip through our grasp. But we're determined to find ways ofimproving our performance in this respect, by making better use of the pool oftalent available to us through the extended technological/academic "family" towhich OMG belongs. Again, it's worth noting that what I'm describing here is not just an aspirationfor the future, but a proven part of OMG's track record: both of our current newventures - Yotta DCL and our move into imaging systems for Unmanned AerialVehicles - were developed from external enquiries. Standardising systems, processes . . . and values Start-ups and young businesses may be able to get by doing things on a wing andprayer, but the serious players in any market need structure and order in everyaspect of their operation. So in 2006/07 we've been paying serious attention toensuring that our basic systems and processes are reliable and consistent. As aresult, we achieved ISO9001 certification for 2d3, and for Vicon, added ISO13485- a further recognition of our commitment to providing ever improving qualityproducts and services. Building on this, we've started work on putting in place Group-wide supportservices, covering key functions such as M&A, finance, legal, IT andcommunications. It may not be the most exciting thing we've done in the lastyear, but it's one of the most important in terms of our continued growth. We've been doing a bit of thinking about our values, too. And the same pointI've just made about systems and processes applies here: big businesses need tobe explicit about things that can remain unspoken in smaller ones. What does OMGstand for? How should what we believe be reflected in how we behave?Instinctively, those of us who have been with the company for years feel we knowthe answers; but, for the next stage in our development, it's important that wecan express our shared values clearly. We've made a start on this recently, andwe'll be pursuing it further in the year ahead. Touching more lives, transforming markets Overall, as another year ends, I could hardly be happier with where we findourselves today. Clearly, the really eye-catching achievement of the past yearis the way our two new businesses have progressed, although both are still atearly stages in their development. But, in case you detect a hint of self-congratulation in my tone, please believethat we're nowhere near satisfied with the advances OMG has made so far. Whichis why, in terms of the Group's future, the most significant news story of thepast year is probably the work that we've been doing to put in place the systemsand structures for sustained and rapid growth. Today, we're reporting on aGroup made up of three businesses at different stages of maturity; but tomorrow. . . well, who knows exactly? But I'm 100% confident that OMG's amazingtechnology will touch countless more lives, and enable us to bring aboutdramatic and profitable change in further new markets. BUSINESS REVIEW How our businesses performed In the preceding pages, we've talked a lot about the future of OMG and theimportant steps we've taken in 2006/07 to ensure the Group's long term sustainedgrowth. But the last thing we want to do is deflect attention from theoutstanding performance of our three businesses over the last 12 months . . . Yotta DCL A new name, a major acquisition . . . and firmly on the road to success. Launched in June 2006, our street level imaging and highway data collectionbusiness began the year as Geospatial Vision, was rebranded Yotta during thefirst half, and ended the year with increased capability following theacquisition of Data Collection Limited (DCL), one of the UK's largest dedicatedhighways surveying companies. The acquisition took place in July this year, but long before that, we wereseeing strong evidence that this new application of OMG's incredible technologywas set to make a major impact on the roads of Britain. In fact, during thefirst half, Yotta - newly named and smartly rebranded in May - completed itsfirst five projects, capturing over 15 million images in total and deliveringdata on around 500,000 assets to local authorities all over the UK, fromCarlisle to Bournemouth. Joining forces to transform the market Joining forces with DCL has transformed our prospects and accelerated ourgrowth. One of the UK's largest and best respected highway condition surveyors,DCL has brought to the Group vast experience of working with highway agencies,infrastructure management groups and local authorities. More tangibly, it has also added a 13 vehicle road survey fleet, someexceptionally talented people, and long term contracts for many tens ofthousands of kilometres of condition surveys - covering everything from majorroads to footpaths. We believed at the time of the acquisition that bringing together these highlyvaluable assets with our vision technology - by blending proven operationalexcellence with leading edge image understanding - we could create a businesscapable of transforming the market it operates in, and with spectacularprospects for continued growth. Putting this into a financial context, DCL'sresults (under their previous accounting policies) for the 12 months prior tothe acquisition show turnover of £4.0m and profit before tax of £0.5m, whichwill continue to enhance the revenue and profits of the group significantly inthe future , even before taking account of growth potential.. So far, the signs could hardly be better. In the first 12 weeks of Yotta DCL,we've started to see the benefits of cross-fertilisation, in terms of theimproved service we're able to offer. And, pleasingly, we've had nothing butpositive feedback from customers, who have been quick to recognise that Yottaplus DCL adds up to something distinctively better. The only way is up . . . Looking to the near future, we plan to start offering a full asset inventoryservice, which will also enable us - with our 13 vehicles continually out on theUK's roads - to collect huge amounts of mapping information, which we'll be ableto make available to interested parties. As for our longer term prospects, we remain excitedly optimistic. Both withinthe UK and overseas, we believe there's a huge amount more that Yotta DCLtechnology can achieve; and we're actively pursuing opportunities that webelieve will very soon enable us to make the next quantum leap forward. 2d3 Two businesses in one - defence and entertainment - both flying high. An established star in entertainment, supplying the movie industry's favouritecamera tracking systems, 2d3 is also a brand new market entrant in the field ofdefence, where our technology is now starting to demonstrate its potential totransform the capabilities of the next generation of Unmanned Aerial Vehicles(UAVs). We've said since we launched 2d3 Advanced Imaging Group (AIG) in late 2006 that,in view of how defence procurement works, we would need to play a long andpatient game. So we're well ahead of schedule in having secured our first two UKMinistry of Defence (MoD) contract wins in July and August 2007. A winner in the Competition of Ideas As part of the Competition of Ideas initiative, we were awarded a contract worth£475,000 over two years, to develop a proposal for using our image processingsoftware to greatly increase the accuracy of vehicle tracking and targetgeolocation. With a budget of £10 million, this initiative encourages the UK's bestinnovators to bid for funding to develop their ideas further to meet key defencechallenges, showing how they can be rapidly developed to become operationalequipment of value to the armed forces. This year there were around 50 winners;so the size of our award represents a significant and very welcome vote ofconfidence in our technology from the MoD. At the same time, we've continued to develop our relationships with primedefence contractors; and we're delighted with the quality of the response we'vebeen getting, which has included a number of spontaneous enquiries - reflectingfast growing awareness of our technology's potential within the sector. 2d3 Inc: our US business takes off In the US, we took a hugely important - and necessary - step when in June thisyear, we set up 2d3 Inc, under the leadership of Jon Damush, formerly a key partof our Vicon Entertainment team. For practical commercial reasons, relating to trade restrictions andintellectual property protection, we needed a base on American soil. But, ofcourse, we also wanted to be right there, on the ground, and capable ofdelivering a dedicated service to customers in the world's most importantdefence market. Just four months in at the time of writing, 2d3 Inc is very much up and running,and starting to build a team capable of developing our core technology andinnovation in ways that reflect the specific requirements of US customers. Once again, we participated with real success at the Unmanned Vehicle SystemInternational (AUVSI), which took place this year in Washington DC. And we canconfirm what we reported 12 months ago: that generally the US market remainshighly responsive to innovative new technology, whatever its source. And ourrelationships with both the defence establishment and prime contractors havecontinued to develop very promisingly. We expect to sign contracts within ourfirst year trading as 2d3 Inc. A star performer in the entertainment world Turning to the field in which 2d3 first became a star, our performance in themovie business has been steady rather than spectacular. Five years after welaunched boujou, the world's first viable automatic camera tracking system,demand in what is a fairly small industry has inevitably levelled off somewhat.No less predictably, our innovative technology, which once stood alone, nowfaces more competition, though boujou remains clearly the premier product of itstype. And we've continued to put more distance between ourselves and the chasing packby pushing back still further the boundaries of what is possible in terms ofcombining live action and animation. New lower price derivatives of boujou,silver bullet and bullet SD, were successfully launched in April. And boujou 4.1also made its debut at the end of the year, raising the bar higher once more,with a range of new features including tracking based on geometric models andthe generation of 3-dimensional scenes. Another innovation during the first half of the year was our introduction of anew camera that piggy-backs on a normal film camera, enabling us to offer a"real time boujou" service. More proof that, while we're realistic aboutprospects for growth in this sector, we're 100% committed to retaining topbilling as providers of user-focused technology. Vicon Another market-leading year for the first name in motion capture technology. When you've dominated your field for as long as Vicon, you have two choices: youcan grow complacent, or continue to raise your game. With important newproducts, improved production efficiency and a strengthened sales and supportteam, it's easy to see which option Vicon has chosen. Once again, Vicon strengthened its position as world leader in motion capture,not just delivering sales well ahead of targets but further improving productionefficiency, forecasting and all round business execution. Raising the bar with our new F Series In product innovation terms, the big story of our year was the launch of the newF Series camera in April. The F stands for "Faster Full Frame" motion capture;and, in terms of speed and accuracy, this latest addition to our award winningMX platform, raises the bar yet again. Featuring the world's first camera sensors designed specifically for motioncapture, the new F40 and F20 enable performance data to be captured at higherspeeds than ever before. Customer response has been enthusiastic, with almost1,000 F series cameras sold between launch and September 2007. Meanwhile, on the life sciences side of the business, our ground-breaking Nexussoftware is enabling our customers to touch and transform more lives, bycapturing and analyzing movement in ways that previously were not possible. Inthe first half, Nexus shipped with over 60% of all Vicon systems. Reaching new heights in the Mile High City To help Nexus maintain its clear technological advantage, and put ourselves atthe heart of the key US market, we moved development to Denver - strengtheningour team with new members, and relocating key people from the UK. More generally, we put on muscle in Denver, adding new support and testingstaff, to strengthen testing and QA for clients in both North and South America,across life sciences and entertainment. And, still in the Mile High City, wealso opened a new Vicon production facility, greatly increasing our capacity tooffer US clients a smooth and seamless service. As a result of all these developments, the impressive growth rate of our Denveroperation has continued, with life science sales for the year up by around 17%.And the figures for Vicon Entertainment sales in the US from our Los Angelesoffice are better still: up over 43%. Making Vicon a more widely known name than ever Elsewhere in the world, our leadership in motion capture technology is makingthe Vicon name more widely known than ever. We established a new sales base inSingapore, to service customers throughout Asia, New Zealand and Australia. Wemade our first ever sale to Pakistan, as well as shipping our firstentertainment system to India; while, closer to home, we made inroads intoEastern Europe and the Middle East, with particularly strong sales in Lithuaniaand The Emirates. Our strong performance in these and other emerging territories providesencouraging evidence that there is still considerable growth potential for thislong established business. And, bearing this out, sales in the UK and the restof the world (excluding the USA) were up by a very healthy 14%. To help us respond to increasing demand, we added heads to the Vicon sales andsupport team. We also made an important investment in sales training,introducing our people to a more structured approach that focuses not onshifting product, but being responsive to customer needs. It's already clearthat this has given our sales people more confidence, which has undoubtedlycontributed to their excellent performance. While continually driving for technology innovation and with plans for furtherimprovements to efficiency, Vicon's determination to remain the undisputed No 1in motion capture shows no sign at all of diminishing. Nick Bolton Chief Executive GROUP PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 30 SEPTEMBER 2007 Unaudited Unaudited Unaudited Audited 2007 2007 2007 2006 Continuing Continuing Continuing Operations Operations: Operations Acquisitions Total (as restated see note 1) Note £'000 £'000 £'000 £'000 Turnover 3 18,676 942 19,618 16,274 Cost of sales (6,308) (520) (6,828) (6,019) Gross profit 12,368 422 12,790 10,255 Sales, support and marketing costs (3,856) (50) (3,906) (3,021)Research and development (3,519) - (3,519) (2,354)Administrative expenses (3,653) (224) (3,877) (3,451)Other income 49 1 50 12 Operating profit before share-based payments and goodwill amortisation 1,719 199 1,918 1,650 Share-based payments (note 1) (202) - (202) (81) Goodwill amortisation (128) (50) (178) (128) Operating profit 1,389 149 1,538 1,441 Interest receivable and similar income 303 217 Profit on ordinary activities before taxation 1,841 1,658 Tax charge on profit on ordinary activities 4 (267) (179) Retained profit for the financial year 1,574 1,479 Basic earnings per ordinary share 5 2.60p 2.48p Diluted earnings per ordinary share 5 2.44p 2.38p There is no material difference between the retained profit on ordinaryactivities before taxation and the retained profit for the financial year statedabove and their historical cost equivalents. STATEMENT OF GROUP TOTAL RECOGNISED GAINS AND LOSSES FOR THE YEAR ENDED 30 SEPTEMBER 2007 Unaudited Audited 2007 2006 £'000 £'000 (as restated - see note 1)Retained profit for the financial year as previously stated 1,574 1,479Prior year adjustment - see note 1 (81) -Retained profit for the financial year as restated 1,493 1,479Exchange differences on retranslation of overseas subsidiaries (120) (121)Total recognised gains and losses for the year 1,373 1,358 CONSOLIDATED AND COMPANY BALANCE SHEETS AT 30 SEPTEMBER 2007 Unaudited Audited Unaudited Audited Group Group Company Company 2007 2006 2007 2006 £'000 £'000 £'000 £'000 (as restated (as restated see note 1) see note 1)Fixed assetsIntangible assets 3,833 998 50 91Tangible assets 1,847 921 75 122Investments 69 69 5,739 1,183 5,749 1,988 5,864 1,396 Current assetsStocks 1,786 934 - -Debtors 7,729 4,721 319 1,312Cash at bank and short term deposits 6,179 6,494 5,355 6,071 15,694 12,149 5,674 7,383 Creditors: amounts falling due within one year (5,940) (3,483) (1,264) (1,707) Net current assets 9,754 8,666 4,410 5,676 Creditors: amounts falling due after more than one year (187) - - - Provisions for liabilities (70) - - - Net Assets 15,246 10,654 10,274 7,072 Capital and reservesShare capital 157 150 157 150Shares to be issued 1,470 - 1,470 -Share premium account 7,427 5,908 7,427 5,908Profit and loss account 6,192 4,596 1,220 1,014 Total equity shareholders' funds 15,246 10,654 10,274 7,072 CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 30 SEPTEMBER 2007 Unaudited Audited Note 2007 2006 £'000 £'000 Net cash inflow from operating activities 8 1,388 2,646 Returns on investments and servicing of financeInterest received 303 217Interest element of finance lease repayments (4) - 299 217 Taxation (117) (179) Capital expenditure and financial investmentPurchase of tangible fixed assets (727) (610)Purchase of intangible fixed assets (164) -Disposal of tangible fixed assets 84 128 (807) (482)AcquisitionsPurchase of subsidiary undertaking (1,616) (44)Net cash acquired with new subsidiary 603 - (1,013) (44) Equity dividends paid (60) - Net cash (outflow)/inflow before financing (310) 2,158 FinancingIssue of ordinary share capital 57 13Capital element of finance lease repayments (32) - 25 13 (Decrease)/increase in cash (285) 2,171 The purchase of the subsidiary undertaking cash outflow in 2006 relates to thefinal deferred consideration paid during the year in respect of acquisitions inprevious years. NOTES TO THE PRELIMINARY ANNOUNCEMENT FOR THE YEAR ENDED 30 SEPTEMBER 2007 1. BASIS OF PREPARATION The financial information in this preliminary announcement is un-audited and hasbeen prepared on the going concern basis, under the historical cost conventionand applicable accounting standards in the United Kingdom and is consistent withthe policies set out in the Group's statutory accounts for the year ended 30September 2006, except for the adoption by the Group of FRS 20 "Share-basedpayments" during the year by means of a prior year adjustment. The adoption of FRS 20 has led to the cost of employee share option schemesbeing charged to operating expenses within the profit and loss account, with anequal and opposite credit to profit and loss reserves. As a result, there is no impact on the opening balance sheet at 1 October 2005and 1 October 2006. The charge for the year ended 30 September 2007 is £202,000(2006: £81,000). 2. BASIS OF CONSOLIDATION The consolidated financial statements consolidate those of the Company and allof its subsidiary undertakings drawn up to 30 September 2007. Acquisitions ofsubsidiaries are dealt with by the acquisition method of accounting from thedate of acquisition. 3. TURNOVER AND SEGMENTAL ANALYSIS An analysis of turnover destination by geographical market is given below: Unaudited Audited 2007 2006 £'000 £'000 United Kingdom 2,435 1,899Continental Europe 2,957 2,018North America 9,881 8,248Asia Pacific 3,739 3,666Other 606 443 19,618 16,274 An analysis of turnover, operating profit and net assets by geographical originis given below: Turnover Operating profit Net Assets 2007 2006 2007 2006 2007 2006 (as restated - see note 1) £'000 £'000 £'000 £'000 £'000 £'000 United Kingdom 8,819 8,039 1,299 1,392 10,562 10,228 North America 9,857 8,235 90 49 178 426Continuingoperations 18,676 16,274 1,389 1,441 10,740 10,654 Acquisition - UnitedKingdom 942 - 149 - 4,506 - 19,618 16,274 1,538 1,441 15,246 10,654 Interest earned in the year of £301,000 is attributable to the UK (2006:£194,000). An analysis of turnover, operating profit and net assets by class of business isgiven below: Turnover Operating profit Net Assets 2007 2006 2007 2006 2007 2006 (as restated - see note 1) £'000 £'000 £'000 £'000 £'000 £'000 Vicon & 2d3 entertainment -continuing 18,544 16,274 2,755 1,864 12,529 11,0772d3 AIG - continuing 66 - (280) (83) (363) (83)Yotta - continuing 66 - (1,086) (340) (1,426) (340)Yotta acquisition - DataCollection Limited 942 - 149 - 4,506 -Yotta - total 1,008 16,274 (937) (340) 3,080 (340) 19,618 16,274 1,538 1,441 15,246 10,654 4. TAX ON PROFIT ON ORDINARY ACTIVITIES The tax charge is based on the profit for the year and represents: Unaudited Audited 2007 2006 £'000 £'000 United Kingdom corporation tax at 30% (2006: 30%) 345 8Overseas taxation 43 66Adjustments in respect of prior year 42 105Current taxation 430 179 Deferred taxation (163) - 267 179 At 30 September 2007, the Group had an undiscounted deferred tax asset of£105,000 (2006: £352,000), which has not been recognised due to the risks anduncertainty over the timing and extent of future trading profits. The assetcomprises accelerated capital allowances of £nil (2006: £170,000), and theaccumulated unrelieved tax losses of £373,000 (2006: £1,003,000) available tosubsidiary undertakings of the Group, to offset against future taxable tradingprofits of the same trade. Unrelieved tax losses in respect of prior years wereincreased by £88,000, principally due to the submission of claims for R&D taxcredits. Tax losses amounting to £497,000 have been utilised during the year. Adeferred tax asset of £163,000 (2006: £nil) has been established on items whereit is considered more probable than not that the Group will generate sufficientprofits to utilise the tax losses and timing differences in the foreseeablefuture. Deferred tax assets and liabilities have been measured at an effectiverate of 28% (2006:30%). The tax assessed for the year is lower than the standard rate of corporation taxin the UK of 30% (2006: 30%). The differences are explained as follows: Unaudited Audited (as restated - see note 1) 2007 2006 £'000 £'000 Profit on ordinary activities before tax 1,841 1,658 Profit on ordinary activities multiplied by the standard rate ofcorporation tax in the UK of 30% (2006: 30%) 552 497 Effect of:Expenses not deductible for tax purposes 72 31Accelerated capital allowances 30 3Utilisation of losses (149) (507)Adjustments to tax charge in respect of prior year 42 130Higher rates on overseas taxation 7 11Unrecognised deferred tax on losses - 112Recognised deferred tax on losses (62) -Recognised deferred tax on share-based payment (57) -Recognised deferred tax on accelerated capital allowances (44) -Research and development tax credit (124) (98)Tax charge on profit on ordinary activities 267 179 5. EARNINGS PER SHARE Unaudited Audited 2007 2006 weighted weighted average average number of Per share number of Per share Earnings shares amount Earnings shares amount £'000 pence £'000 penceBasic earnings per shareEarnings attributable toordinary shareholders 1,574 60,533,180 2.60 1,479 59,597,690 2.48 Dilutive effect of securitiesOptions - 4,016,893 (0.16) - 2,475,826 (0.10) Diluted earnings per share 1,574 64,550,073 2.44 1,479 62,073,516 2.38 6. RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS Unaudited Audited Unaudited Audited Group Group Company Company 2007 2006 2007 2006 £'000 £'000 £'000 £'000 Retained profit / (loss) for the financial year (as restated) 1,574 1,479 64 (119)Dividends (60) - (60) -Issue of shares 1,526 219 1,526 219Contingent share consideration issued - (205) - -Contingent shares to be issued 1,470 - 1,470 -Share-based payments 202 81 202 81Currency movements (120) (121) - -Net movements in shareholders' funds 4,592 1,453 3,202 181Shareholders' funds at 1 October 2006 (as restated) 10,654 9,201 7,072 6,891Shareholders' funds at 30 September 2007 15,246 10,654 10,274 7,072 Issue of shares includes shares issued on acquisition of DCL (see note 7). 7. ACQUISITION On 26 July 2007 the Group purchased 100% of the share capital of Data CollectionLimited for a total consideration with a provisional fair value of up to£4,407,000. This includes deferred consideration of £1,470,000 subject tocertain performance conditions. The purchase has been accounted for as anacquisition. The total goodwill arising on acquisition was £2,988,000 which is being writtenoff over 10 years. The provisional fair value of the net assets acquired was as follows: Fair value adjustments Alignment of accounting Provisional Book value policy Revaluation Fair value £'000 £'000 £'000 £'000 Fixed assets 876 - 54 930Intangible assets 12 - (12) -Long term contracts 143 (29) - 114Trade debtors 1,004 - - 1,004Prepayments and accrued income 37 - - 37Amounts recoverable on contracts 257 126 - 383Cash 603 - - 603Trade creditors (156) - (54) (210)Accruals and deferred income (444) - - (444)Payments on account in respect of long term contracts (89) 13 - (76)HP and finance lease creditors (404) - - (404)Other creditors (294) - - (294)Deferred tax (75) - - (75) Net business assets acquired 1,470 110 (12) 1,568 £'000 Consideration:Cash 1,467Share consideration 1,470Deferred contingent consideration 1,470 Total provisional consideration 4,407 Costs of acquisition 149 Provisional purchase consideration and costs of acquisition 4,556 Provisional goodwill arising 2,988 The contingent consideration is dependant upon certain performance criteriabeing met in the period commencing from the date of acquisition and ending on 30June 2009. The fair value adjustments represent the alignment to group accounting policiesand finalisation of amounts. The principle fair value adjustment concerns thealignment of the accounting policy for survey contracts not completed at thedate of acquisition. In the 14 month period ended 31 July 2007 Data Collection Limited recordedturnover of £4,704,000, operating profit of £618,000 and profit before tax of£643,000. The tax charge for the period was £89,000 resulting in profit aftertax of £554,000. 8. RECONCILIATION OF OPERATING PROFIT TO NET CASH INFLOW FROM OPERATING ACTIVITIES Unaudited Audited (as restated - see note 1 2007 2006 £'000 £'000 Operating profit 1,538 1,441Depreciation & amortisation 835 695Profit on disposal of fixed assets (3) (16)Share-based payments 202 81(Increase) / decrease in stock (749) 794Increase in debtors (1,675) (1,255)Increase in creditors 1,240 906Net cash inflow from operating activities 1,388 2,646 9. DIVIDEND The directors are proposing a final dividend in respect of the financial yearending 30 September 2007 of 0.115pence per share (2006: 0.1pence per share)which will absorb an estimated £72,000 of shareholders' funds. This dividendwill be paid on 12 March 2008 to shareholders who are registered on the registerof members at the close of business on 7 December 2007 subject to approval atthe AGM. 10. PUBLICATION OF NON-STATUTORY ACCOUNTS The preliminary results for the year ended 30 September 2007 are un-audited.The financial information set out in this preliminary announcement does notconstitute statutory accounts as defined in Section 240 of the Companies Act1985 for the years ended 30 September 2007 and 30 September 2006. The financialinformation for the year ended 30 September 2006 is derived from the AnnualReport for that year which was delivered to the Registrar of Companies. Theauditors, PricewaterhouseCoopers LLP, reported on those accounts: their reportwas unqualified and did not contain a statement under either Section 237(2) or237(3) of the Companies Act 1985. 11. COPIES OF ANNOUNCEMENT Copies of this announcement will be available from the Company's registeredoffice 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