Oxford Metrics Regulatory News (OMG)

23 Jun 2005 07:01

OMG PLC23 June 2005 OMG plc ("OMG" or "the Company") Interim Statement for the six months ended 31 March 2005 OMG, the global leader in the three-dimensional capture and analysis ofmovement, providing tools and services for life sciences, entertainment andengineering applications, announced today its interim results for the six monthsended 31 March 2005. Highlights: * Revenues increased by 10% to £4.8m (2004: £4.4m) including the effect of acquisitions.* Operating loss of £0.6m (2004: operating profit of £0.1m) resulting principally from US revenues being below expectations.* Business outside of the US in line with expectations with strong growth in important Japanese market.* Integration of Peak Performance Technologies business, acquired in February 2005, progressing well with combined businesses now trading globally as Vicon Peak.* Appointment of Nick Bolton as Chief Executive and Julian Morris as Deputy Chairman in May 2005.* Order received from Electronic Arts, the world's leading independent developer and publisher of interactive software, for a number of large MX systems for delivery in the second half.* Vicon's optical motion capture technology honoured with Academy Award(R). Nick Bolton, Chief Executive commented:"The Company has made some significant steps forward during the first half ofthe year which are not immediately apparent from the financial performance.While the first half got off to a slow start, recent large system orders willhelp improve performance during the second half. I look forward to guiding OMGtowards reaching its full potential." For further information please contact: Nick Bolton, Chief Executive, nick.bolton@omg3d.comPeter Wharton, Finance Director, peter.wharton@omg3d.comTel: 01865 261800 Tim Thompson / Nicola CronkBuchanan CommunicationsTel: 020 7466 5000 About OMGOMG plc (LSE: OMG) is the global leader in the three-dimensional capture andanalysis of movement, providing tools and services for life science,entertainment and engineering applications. Based in Oxford UK, California USAand Colorado USA, OMG has customers in over 35 countries and is listed on AIM, amarket operated by the London Stock Exchange. The group trades through a numberof operating subsidiaries in the name of Vicon Peak, 2d3 and House of Moves inthe UK and USA, and through a network of distributors in other major countries.Vicon Peak provides professionals with the latest tools to capture accuratelythree-dimensional human motion for research, medicine, sport, engineering, gamedevelopment, broadcast and film. 2d3 produces innovative visual geometrysoftware deriving 3D data from moving images. House of Moves is the world's mostexperienced motion capture service studio, producing high quality motion capturedata for entertainment production companiesFor more information about OMG, or its subsidiaries, visit www.omg3d.com,www.viconpeak.com, www.2d3.com or www.moves.com. CHAIRMAN & CHIEF EXECUTIVE'S JOINT STATEMENT The six months to 31 March 2005 follows a record finish to last year. However,as indicated at the AGM in February, in the US, our largest market, tradingexperienced a slow start and performance for the first half and full yeardepended critically on the timing of a number of major contracts. Businessprospects are good with potential for a significant recovery in the US marketand therefore the results for the first half of the year may not be a goodindication of the underlying activity within the Company. Financial Results Turnover was 10% ahead of the same period last year at £4.8m (2004: £4.4m),helped by the acquisition of House of Moves in May 2004 and Peak PerformanceTechnologies Inc. ("Peak") business in February of this year. Revenues werebelow expectation in the US and as a result of continuing investments andplanned expenditure, the Company incurred an operating loss of £0.6m (2004:operating profit of £0.1m). Cash balances remain healthy at £2.5m, although this represents a decrease of£1.5m during the six month period. Cash decreased by £0.9m from operatingactivities and £0.7m from investment in fixed assets and the effect ofacquisitions. Lower than expected sales in the first half resulted in higherstocks of finished goods and work in progress, contributing to the net cashoutflow from operating activities. Board Changes As announced on 27 May 2005, Nick Bolton was appointed as Chief Executive. Dr Julian Morris, founder and former Chief Executive, continues as an Executive Director in the role of Deputy Chairman. Chris Steele, Director of UK Operations, left the Company with effect from 25 May. Business Developments The MX product range, launched last year, has continued to be enhanced with therelease of lower priced MX3 which started shipping in January 2005. This marketleading product range has continued to generate strong interest from ourcustomer base and potential new customers. The recent order from ElectronicArts, the world's leading independent developer and publisher of interactiveentertainment software, for a number of large MX systems to replace competitiveproducts and the commitment to a long term relationship underlines the advancesmade in our technology and product offering. In February, the Company was honoured with a Scientific and Technical AcademyAward(R) from The Academy of Motion Picture Arts & Sciences. Moreover, four ofthe seven films which competed for the Best Visual Effects Oscar(R) award ("TheDay After Tomorrow", "Harry Potter and the Prisoner of Azkaban", "LemonySnicket's A Series of Unfortunate Events" and "Spider-Man 2") used products orservices from OMG group companies. In the US, the year started with a strong prospect list with a noticeable shifttoward the opportunity for large systems and multiple system orders. Typically,the timing of large orders or multiple system orders is more difficult topredict and there is a longer gestation period. During the first half, none ofthese larger prospects were concluded and buying decisions have continued to bedeferred, although none of these larger prospects were lost to competitors. As aresult, US revenues were significantly lower than the same period of last yearand well below management expectations. In the rest of the world, overall revenues increased by 15% compared to the sameperiod last year. Of particular note, strong revenue growth was experienced inJapan as this important market continued its recovery. House of Moves (acquired in May 2004), which provides motion capture services tothe film and games sector, has achieved its first gross revenue target and,under the terms of the purchase agreement, the Company is due to issue 965,927ordinary shares to the vendors. In addition, further contingent cash and shareconsideration is payable following each of two subsequent twelve month periodsfollowing acquisition. Preliminary estimates indicate that a small amount ofadditional consideration will be payable following the end of the first twelvemonth period. The integration of Peak, acquired in February 2005, is continuing to besuccessful and it has made a profitable contribution in the two months sinceacquisition. The proposition of the leading optical motion capture capabilitycombined with the leading video based motion capability under the new brand ofVicon Peak has been well received. Work has already been completed to enable theMX system to be operated using Peak's Motus software system with the firstcustomer delivery in June. Dividend Policy The current policy is not to pay a dividend and none will be paid in relation tothe interim period. However, this policy will be kept under review. Outlook Following a disappointing first half result, the immediate priority for theCompany is to deliver a significant improvement in the second half. To this end,Nick Bolton, our new Chief Executive, has started and is leading a reviewfocused on sales execution and delivery against a strong prospect list. Thisincreased focus on sales together with a programme of improving internal processand cost control is expected to continue into the next financial year andrepresents an increase in emphasis on delivery of profits from our corebusiness. The Company continues to invest in product development and has identifiedopportunities for improving the release of new products and product featureswhich will help to increase differentiation of our product offering. Whilst we are confident that business will be stronger during the second half ofour financial year, given the first half performance, the Company has moderatedits expectations for the full year result as a whole. Anthony Simonds-Gooding, Chairman Nick Bolton, Chief Executive23 June 2005 GROUP PROFIT AND LOSS ACCOUNT For the six months ended 31 March 2005 Unaudited Unaudited Unaudited Unaudited Audited Six months Six months Six months Six months Twelve to to to to months to 31 March 31 March 31 March 31 March 30 2005 2005 2005 2004 September Continuing Continuing Continuing (As 2004 Operations Operations- Operations- restated Acquisitions Total See Note 1) £'000 £'000 £'000 £'000 £'000 Turnover 4,551 246 4,797 4,350 10,895 Cost of (1,965) (82) (2,047) (1,827) (4,818)sales ---------- --------- ---------- ---------- ----------- Gross profit 2,586 164 2,750 2,523 6,077 Sales, supportand marketingcosts (1,209) (41) (1,250) (927) (2,360)Research anddevelopment (724) (15) (739) (597) (1,399)Administrativeexpenses (1,284) (84) (1,368) (982) (2,146)Grant income - - - 44 114 ---------- --------- ---------- ---------- ----------- Operating(loss) /profit (631) 24 (607) 61 286 Interestreceivable andsimilar income 58 93 171 ----------- ---------- ----------- (Loss) /profit onordinaryactivitiesbeforetaxation (549) 154 457 Tax on (loss)/ profit onordinaryactivities - (21) (51) ----------- ---------- ------------ Retained(loss) /profit for theperiod (549) 133 406 =========== ========== ============ Basic (loss) /earnings pershare (Note 4) (0.96p) 0.26p 0.77p Diluted (loss)/ earnings pershare (Note 4) (0.96p) 0.23p 0.71p STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES For the six months ended 31 March 2005 Unaudited Unaudited Audited Twelve Six months to Six months to months to 31 March 31 March 30 September 2005 2004 2004 £'000 £'000 £'000 (Loss) / profit for the financialperiod (549) 133 406 Exchange adjustments offset inreserves (40) (6) (7) ---------- --------- --------- Total recognised gains and lossesfor the period (589) 127 399 ========== ========= ========= GROUP BALANCE SHEET At 31 March 2005 Unaudited at Unaudited at Audited at 31 March 31 March 30 September 2005 2004 2004 £'000 £'000 £'000Fixed assetsIntangible assets 1,334 - 891Tangible assets 1,142 457 863 --------- ---------- -------- 2,476 457 1,754Current assetsStocks 2,409 1,521 1,712Debtors 2,967 2,374 3,239Cash and short term deposits 2,518 4,991 4,096 --------- ---------- --------- 7,894 8,886 9,047 Creditors: amounts falling duewithin (2,406) (1,750) (2,558)one year ---------- ----------- --------- Net current assets 5,488 7,136 6,489 ----------- ----------- --------- Total assets less current 7,964 7,593 8,243liabilities Creditors: amounts falling due inmore (82) - (82)than one year ----------- ------------ --------- Net assets 7,882 7,593 8,161 =========== ============ ========= Capital and reservesShare capital 146 132 138Share premium account 5,672 5,321 5,370Shares to be issued 241 - 241Profit and loss account 1,823 2,140 2,412 ---------- ---------- ---------- 7,882 7,593 8,161 ========== ========== ========== GROUP CASH FLOW STATEMENT For the six months ended 31 March 2005 Unaudited Unaudited Audited six months six months Twelve months to to to 31 March 31 March 30 September 2005 2004 2004 £'000 £'000 £'000 Net cash (outflow) / inflowfrom operating activities(note 5) (929) 134 236 Returns on investments andservicing of finance Interest received 57 84 169 Taxation (10) 164 164 Capital expenditure Purchase of tangible fixedassets (517) (245) (780) Proceeds on disposal oftangible fixed assets 30 1 43 Acquisitions Purchase of subsidiaryundertaking (307) - (629) Net cash acquired withsubsidiary 111 - - ---------- ---------- ---------- Net cash (outflow)/inflowbefore financing andmanagement of liquidresources (1,565) 138 (797) Financing Issue of share capital 40 23 78 ---------- ---------- ----------- (Decrease) / increase incash (note 6) (1,525) 161 (719) ========== ========== =========== NOTES TO THE INTERIM FINANCIAL INFORMATION For the six months ended 31 March 2005 1. Preparation of the interim financial information The financial information for each of the six month periods ended 31 March 2005and 31 March 2004 is unaudited and does not constitute statutory accounts withinthe meaning of the Companies Act 1985. It has been prepared on the basis ofaccounting policies set out in the Group's statutory accounts for the year ended30 September 2004. As explained in the 2004 Group accounts, the directors have taken the view thatclearer categorisation on the face of the profit and loss account would enhancethe presentation to the user. Therefore costs relating to sales, support, andmarketing have been separately analysed, where previously they were classifiedwith administration expenses. Additionally, the Group's definition of costs ofsales has been broadened to include all other production overheads, resulting inthe cost of sales for the six months to 31 March 2005 increasing by £616,000 (31March 2004: increasing by £251,000) with gross profit and administrationexpenses reducing by the same amount. In the previous interim financial statements a merger reserve of £1,000 wasincluded in the Group reserves. At the year ended 30 September 2004, thedirectors disclosed this in the profit and loss account as it is de minimus. 2. Acquisition of Peak Performance Technologies, Inc On 9 February 2005 the Group completed the acquisition of the trade and assetsof Peak Performance Technologies Inc for a total consideration of £593,000. Thisincludes a deferred cash consideration element of up to £53,000 subject tocertain performance conditions. The total provisional goodwill arising upon acquisition was £424,000, which isbeing written off over 10 years. The provisional fair value of the business assets acquired is set out below Book value Adjustment Fair Value £'000 £'000 £000Tangible Fixed Assets 40 - 40Intangible Fixed Assets - 108 108Stock 89 - 89Trade debtors 46 - 46Prepayments and accrued income 9 - 9Cash 111 - 111Trade creditors (14) - (14)Accruals and deferred income (197) - (197) -------- -------- ---------Net business assets acquired at bookand fair value 84 108 192 -------- -------- ---------Provisional consideration:Cash 270Share consideration 270Contingent cash consideration 53 --------Total provisional consideration 593 Costs of acquisition 23 ---------Provisional purchase consideration andcosts of acquisition 616 ---------Provisional goodwill arising 424 ========= The contingent cash consideration, is dependent upon a review of the fair valueof the net assets acquired, to be performed after 30 September 2005. The maximumamount payable under this arrangement will be £53,000. The directors have madeuse of all the available information at the period end in order to estimate thelikely value of the contingent cash consideration. This value will be subject tore-assessment at the year end. The provisional fair value of the intellectual property acquired amounted to£108,000. In its last financial year to 30 September 2004, Peak Performance TechnologiesInc. had revenues of £1.8 million and made a profit before tax of £25,000. Inthe period from 1 October 2004 to 8 February 2005, Peak Performance TechnologiesInc. had a loss after taxation of £34,000. 3. Tax on profit on ordinary activities There is no tax charge for the six month period ended 31 March 2005 due to theloss for the half year and brought forward UK tax losses. 4. Earnings per share The calculation of the basic earnings per share is based on the earningsattributable to ordinary shareholders divided by the weighted average number ofshares in issue during the period. Due to the loss per share, the outstandingshare options are non-dilutive at 31 March 2005. At 31 March 2005 there were 58,390,358 allotted, called up and fully paidordinary shares of 0.25p each, and the weighted average number of shares was57,250,126. 5. Reconciliation of operating profit to net cash outflow from operatingactivities Unaudited Unaudited Audited six months six months Twelve months to to to 31 March 31 March 30 September 2005 2004 2004 £'000 £'000 £'000 Operating (loss) / profit (607) 61 286Depreciation andamortisation 301 102 268Profit on sale of tangiblefixed assets (1) (1) (4)Increase in stock (609) (156) (347)Decrease / (Increase) indebtors 327 (29) (837)(Decrease) / Increase increditors (340) 157 870 -------- -------- ------- Net cash (outflow)/inflow fromoperating activities (929) 134 236 ======== ======== ======= 6. Reconciliation of net cash flow to movement in net funds Unaudited Unaudited Audited six months six months Twelve months to to to 31 March 31 March 30 September 2005 2004 2004 £'000 £'000 £'000 (Decrease) / increase incash for the period (1,525) 161 (719) Currency movements (53) 4 (11) --------- --------- --------- Change in net funds for theperiod (1,578) 165 (730) Opening net funds 4,096 4,826 4,826 ---------- --------- --------- Closing net funds 2,518 4,991 4,096 ========== ========= ========= 7. Copies of the interim statement Copies of the interim statement will be sent to shareholders. Further copieswill be available from the Company's registered office at 14 Minns BusinessPark, West Way, Oxford OX2 0JB, and from the Company's website: www.omg3d.com. Independent review report to OMG plc Introduction We have been instructed by the company to review the financial information whichcomprises the profit and loss account, the statement of total recognised gainsand losses, the balance sheet, the cash flow statement and the related notes. Wehave read the other information contained in the interim report and consideredwhether it contains any apparent misstatements or material inconsistencies withthe financial information. Directors' responsibilities The interim report, including the financial information contained therein, isthe responsibility of, and has been approved by the directors. The directors areresponsible for preparing the interim report in accordance with the AIM Ruleswhich require that the accounting policies and presentation applied to theinterim figures should be consistent with those applied in preparing thepreceding annual accounts except where any changes, and the reasons for them,are disclosed. Review work performed We conducted our review in accordance with guidance contained in Bulletin 1999/4issued by the Auditing Practices Board for use in the United Kingdom. A reviewconsists principally of making enquiries of OMG plc management and applyinganalytical procedures to the financial information and underlying financial dataand, based thereon, assessing whether the accounting policies and presentationhave been consistently applied unless otherwise disclosed. A review excludesaudit procedures such as tests of controls and verification of assets,liabilities and transactions. It is substantially less in scope than an auditperformed in accordance with United Kingdom Auditing Standards and thereforeprovides a lower level of assurance than an audit. Accordingly we do not expressan audit opinion on the financial information. This report, including theconclusion, has been prepared for and only for the company for the purpose ofthe AIM Rules and for no other purpose. We do not, in producing this report,accept or assume responsibility for any other purpose or to any other person towhom this report is shown or into whose hands it may come save where expresslyagreed by our prior consent in writing. Review conclusion On the basis of our review we are not aware of any material modifications thatshould be made to the financial information as presented for the six monthsended 31 March 2005. PricewaterhouseCoopers LLPChartered AccountantsWest London23 June 2005 This information is provided by RNS The company news service from the London Stock Exchange