REG - Oxford Metrics PLC - Interim Results for the 6 months ended 31.03.2019
11 June 2019
Oxford Metrics plc
("Oxford Metrics", the "Company" or the "Group")
Interim Results for the six months ended 31 March 2019
Oxford Metrics plc (LSE: OMG), the international software company servicing government, life sciences, entertainment and engineering markets, announces interim results for the six months ended 31 March 2019.
Summary of Results
H1 FY19
H1 FY18
% Change
Revenue
£16.1m
£14.3m
+12.6%
Adjusted Profit before Tax*
£1.7m
£1.5m
+16.1%
Statutory Profit before Tax
£1.2m
£1.2m
-1.5%
Statutory Earnings per Share
0.86p
0.58p
+48.3%
Net Cash
£10.9m
£9.2m
+18.7%
* Profit/(loss) Before Tax from continuing operations before Group recharges adjusted for share-based payments, amortisation of intangibles arising on acquisition, change in fair value of deferred consideration payable and unwinding of associated discount factor, Pimloc and exceptional costs
Financial Highlights
· Headline Group revenue of £16.1m, up 12.6% (H1 FY18: £14.3m)
o Group revenue up 10.4% on a constant currency basis
· Adjusted profit before tax up 16.1% to £1.7m (H1 FY18: £1.5m)
· Cash generated from operations (before paying interest and tax) £3.3m (H1 FY18: £3.5m)
· Cash of £10.9m as at 31 March 2019 (H1 FY18: £9.2m) after the payments of a final and special dividend worth £3.1m
· Growth initiatives at Yotta yielding results:
o Annualised Recurring Revenue ('ARR') up 10.7% year-on-year
o 93.2% (FY18: 95.3%) retention of growing SaaS customer base
o As at 10th June 2019, ARR stood at £6.0m
· Headline Vicon revenue up 14.4% year-on-year (11.5% at constant currency) against a strong comparator
Operational Highlights
· Five-year "amplify the core" strategic growth plan launched in 2016, with aim to drive growth by building on core strengths and capabilities of subsidiaries
· Good progress in Third Year of plan leveraging investments made in previous years to broaden product range and expand addressable markets
· Vicon capitalising on its leadership position in its established markets, with a particularly strong performance in Engineering which grew 89% year-on-year
· Vicon seeing increasing traction for Location-based Virtual Reality ('LBVR') solution which now accounts for 8% of first-half revenue
· Established new partnership with Sandbox VR, who immediately purchased systems from Vicon, with significant opportunity to scale the partnership over time
· IMU Step, SaaS solution for elite sports, continues to build momentum with universities and trials being undertaken by a number of major sporting franchises
· Yotta launched a new Waste and Environmental Management module for Alloy expanding its addressable market and the pipeline continues to build following sales team changes
Commenting on the results Nick Bolton, Chief Executive Officer said:
"We have made a positive start to the year, delivering record revenue and double-digit revenue and earnings growth. Driving that performance was Vicon, which delivered revenue growth of 14%, securing deals with NASA's Jet Propulsion Lab and Square Enix to consolidate our leadership position in the Engineering and Entertainment markets.
This year we have also seen the Location-based Virtual Reality market really beginning to take off. The scale of this market is significant, our partners are now launching new locations across multiple geographies and we signed an exciting new partnership with Sandbox VR.
The focused investments we are making this year will help us to capture these new opportunities and launch new products to drive future growth. As we move into the second half, our pipeline of sales for both Yotta and Vicon is strong, underpinning our confidence in delivering in-line with market expectations for the full year."
For further information please contact:
Oxford Metrics
+44 (0) 1865 261860
Nick Bolton, CEO
David Deacon, CFO
FTI Consulting
+44 (0) 20 3727 1021
Matt Dixon / Harry Staight
N+1 Singer (NOMAD to OMG)
+44 (0) 20 7496 3000
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, Los Angeles, Denver, 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 and Chief Executive's Statement
KPI
Revenue
PBT
Adjusted PBT*
H1 FY19
H1 FY18
H1 FY19
H1 FY18
H1 FY19
H1 FY18
Group
£16.1m
£14.3m
£1.2m
£1.2m
£1.7m
£1.5m
Overall the Group has traded well in the first half setting a new record for revenue performance on a continuing operations basis of £16.1m (H1 FY18: £14.3m), up 12.6% on last year at a headline level and 10.4% on a constant currency basis and reporting Adjusted PBT* up 16.1% to £1.7m (H1 FY18: £1.5m). The cash position, having paid a Final and Special Dividend of £3.1m in the first half, finished at £10.9m as at 31 March 2019 (H1 FY18: £9.2m). Cash generated from operations during the first half was £3.3m (H1 FY18: £3.5m); the slight decline accounted for by the intentionally higher inventory position in preparation for Brexit. The Group remains debt-free.
This pleasing trading performance is being driven by our five-year strategic plan, launched in 2016, which aims to "amplify the core". Through this plan we aim to broaden and enhance future profit streams, improve the quality of future earnings and ultimately accelerate future growth. As we reach the half way point of our plan, overall progress has been strong and we remain on track.
Vicon - continuing momentum
KPI
Revenue
PBT
Adjusted PBT*
H1 FY19
H1 FY18
H1 FY19
H1 FY18
H1 FY19
H1 FY18
Vicon
£12.5m
£11.0m
£2.2m
£2.0m
£3.3m
£3.0m
Revenue momentum achieved by Vicon in the last financial year continued into the first half of FY19 with record headline revenues of £12.5m (H1 FY18: £11.0m), improving 14.4% year-on-year on a constant currency basis equating to 11.5% underlying growth. Vicon reported Adjusted PBT* of £3.3m (H1 FY18: £3.0m) and an unadjusted profit before tax of £2.2m (H1 FY18: £2.0m). Vicon also reported improved product gross margins at 75.4% (H1 FY18: 72.6%) in the first half.
The implementation of our "amplify the core" strategy at Vicon aims to strengthen and protect a profitable market leader, driving the business through two key growth vectors, Established Markets and Adjacent Verticals - both saw notable highlights during the first half.
Established Markets - making the strong even stronger
Now 35 years since its original founding, Vicon has long been the market leader in its space but it still continues to break new ground, inspired by a material increase in movement measurement applications from a broader variety of markets than ever before. We believe this is driven by the arrival of the Augmented Age, where our lives are becoming increasingly enhanced and augmented through digital interfaces. Responding to this increased market interest, we have broadened the appeal of our products through targeted investments since the start of the strategic plan. For example, introduced in April 2017, Vicon Shōgun, our software for Visual Effects customers, made our solutions more accessible and productive. This broadened appeal across our solutions is driving the growth reported in this set of Interim Results. As previously announced, this strategy has seen considerable success and we have accelerated investment this year to deliver new products to market for FY20 and drive future growth.
The Engineering market segment performed particularly well in the first half, delivering 89% year-on-year growth. Amongst the many new contracts won across a variety of geographies, notable were those with Northrop Grumman and NASA's Jet Propulsion Lab.
In the Entertainment market, we delivered a strong performance, landing large system wins at NC Soft in South Korea and Square Enix in Japan. This drove 67% growth for Vicon in the Asia Pacific region over the same period last year. In the UK, games company Ninja Theory, creators of Hellblade and many other titles, invested in a significant size Vicon system to help drive their future game development.
There were good contract wins in the Life Sciences market with long-term Vicon customer KTH Stockholm upgrading and further wins at Deakin University, Shriners' Hospitals, Athlone University and University of Western Scotland.
Adjacent Markets - capitalising on new growth opportunities
Our adjacent market business delivered an outstanding performance, reporting a tripling of revenues over the same period last year, albeit off a low base. Our adjacent markets represent vertical market opportunities, where our broad motion tracking capability is tailored to provide an end-to-end complete solution for the customer. Currently we are pursuing two specific vertical opportunities: Location-based Virtual Reality (LBVR) and Elite Sports.
Firstly, our LBVR business continued to gain momentum, with LBVR sales now accounting for 8% of Vicon's first-half revenues. LBVR is an emerging form of entertainment where participants share collective VR experiences in a specific location, such as a shopping mall, cinema, theme-park or museum. In these experiences, users are free to walk around and interact with each other - all within a virtual world. Vicon's software tracks the complex movement of these users and various props which delivers simplicity, accuracy and resilience.
Having broadened our product range with Vicon Origin, we saw real progress in this LBVR market, rolling out our products across multiple site locations in multiple geographies with both existing and new partners. One of those new partners is Sandbox VR, a market leader in LBVR with a total of seven active locations currently. Their latest and most ambitious experience, Amber Sky 2088, will be powered by Vicon. As part of the partnership, Sandbox has initially purchased a series of seed systems from Vicon. Some of these will be used at Sandbox's existing locations in Hong Kong, upgrading their current solution. Sandbox plan to open 40 experience rooms across 12 new locations around the world, so there is significant opportunity to scale the partnership over time.
Turning to our Elite Sports vertical, this business line saw growing understanding of our lower-limb load monitoring software, IMU Step. This unique software, provided on a Software-as-a-Service (SaaS) basis, enables coaches to gain an objective measure of the load an athlete endures in their lower limbs during training. The first half saw product trials being undertaken by major sporting franchises and some satisfying wins, including the University of Memphis and the University of Tennessee Knoxville. Recognising the unique capability of the solution, our patent applications for the technology are making good progress.
Lastly as part of our push into vertical markets, we are pursuing further OEM relationships, where Vicon's tracking capability is embedded in other companies' end market solutions. We have a number of such engagements already, including Motek and Innovative Sports Training. Ultimately our aim is to see Vicon software running on a wide variety of platforms, empowering the Augmented Age with motion tracking excellence.
Yotta - driving innovation, winning market share
KPI
Revenue
PBT
Adjusted PBT*
H1 FY19
H1 FY18
H1 FY19
H1 FY18
H1 FY19
H1 FY18
Yotta
£3.5m
£3.3m
(£1.0m)
(£0.8m)
(£0.2m)
(£0.1m)
Yotta reported software revenues up 6.8% to £3.5m (H1 FY18: £3.3m). Annualised Recurring Revenues ('ARR') as at 31 March 2019 grew 10.7% year-on-year to £5.9m (H1 FY18: £5.3m). Overall growth in the first half was muted by a lower retention rate of 93.2% (FY18: 95.3%) largely due to the anticipated termination of one unused software element by one specific customer who continues to use Yotta software. As at 10 June 2019, ARR stood at £6.0m.
Our market-defining SaaS software, Alloy, saw growing levels of interest and market adoption during the first half. This is driven by strengthened capabilities across our maturing platform. Of particular note is the new Blueprints feature, which enables faster on-boarding of new customers and helps drive partner differentiation. Furthermore, a new version of Alloy has just been released, adding Waste and Environmental Management functionality, broadening the Total Addressable Market for the product.
We also started to see our enhanced subscription offer be taken up by a growing number of customers. This new programme enables a customer to subscribe to a combined offer of SaaS software and relevant services, where the customer receives a number of credits that can be used to acquire services from Yotta on a use-it-or-lose-it basis. This enables customers to get more out of our solutions in an easy-to-use manner.
We are winning an increased number of contracts with longer than average durations. Total Contract Value ('TCV'), being the sum of ARR over the life of the contract, of all deals in the first half was £1.5m (H1 FY18: £1.2m) and since the start of the second half we have added a further £0.5m TCV to that. We continue to drive this business to capture a greater market share and as a result Yotta reported an Adjusted* loss before tax of £0.2m (H1 FY18: £0.1m loss) and an unadjusted loss before tax of £1.0m (H1 FY18: £0.8m loss).
As previously announced, we implemented changes early in the financial year to our sales approach and made modest changes to the cost base. Given the length of sales cycles in the markets we serve, the benefits of these changes are expected to emerge in the second half. The early signs are encouraging with a healthy sales pipeline.
Yotta is driving growth through three important vectors: direct sales, indirect sales via a network of independent international resellers and through OEMs, where third-party companies re-label our software products as their own and then market them through their existing sales teams.
· Direct - sales grew through wins across the UK, including Bury Metropolitan Borough Council, Chorley Council and Northamptonshire County Council. Bury plans to use Alloy to help manage the reactive maintenance of its highway networks and street lighting assets, enabling them to inspect and fix potholes and street lights more efficiently. Northamptonshire Highways have replaced legacy software from a competitor with Alloy, which provides an end-to-end workflow management solution from the reporting of a pothole through to its repair.
· Resellers (Indirect) - Following changes to our sales approach implemented early in the financial year, we are now focussing on key international partners in Europe and South America. This has led to some notable wins at Aeropuerto de Bogotá and Concesiones CCFC.
· OEM - We currently have two OEM partners within Highways (in Australia and the Netherlands) and we are now actively engaged in pursuing partnerships in other asset-rich vertical markets, such as other forms of Transportation and Utilities.
Yotta's long-term opportunity remains strong. In the geographical markets Yotta serves, there is a clear need for infrastructure assets to be better managed. Yotta's software suite does exactly that - effectively and efficiently.
Outlook
As we look to the second half, the Board is encouraged by the strong pipeline of sales opportunities in both Vicon and Yotta. Vicon's qualified sales pipeline is currently 11% higher than this time last year and Vicon orders-in-hand for the remainder of the financial year are encouraging. Following changes made to the sales team at Yotta, pipelines continue to grow in this subsidiary and the benefits of those changes are expected to emerge in the second half. The H2 outlook for the Group is promising.
We continue to pursue our organic "amplify the core" growth strategy and remain on track to achieve the objectives set out in our five-year plan. Complementing this, the Group will also continue to explore value-enhancing acquisition opportunities.
Notwithstanding macro-economic factors, the Board remains confident that, with the expected performance across the business, the Group is on track to deliver in line with current market expectations for the year as a whole.
* Profit/(loss) Before Tax from continuing operations before Group recharges adjusted for share-based payments, amortisation of intangibles arising on acquisition, change in fair value of deferred consideration payable and unwinding of associated discount factor, Pimloc and exceptional costs.
CONDENSED CONSOLIDATED INCOME STATEMENT
Six months ended
31 March
2019
Six months ended
31 March
2018*
Year
ended
30 September 2018*
(unaudited)
(unaudited)
(audited)
Note
£'000
£'000
£'000
Revenue
16,055
14,253
31,656
Cost of sales
(4,394)
(4,105)
(8,743)
Gross profit
11,661
10,148
22,913
Sales, support and marketing costs
(4,262)
(3,476)
(7,526)
Research and development
(2,112)
(1,797)
(3,336)
Administrative expenses
(4,161)
(3,744)
(7,467)
Other operating income
104
107
173
Operating profit
1,230
1,238
4,757
Finance income
12
11
73
Finance expense
(43)
(15)
(172)
Share of post-tax loss of equity accounted associate
(33)
(50)
(75)
Profit before taxation
1,166
1,184
4,583
Taxation
(49)
(438)
(556)
Profit from continuing operations
1,117
746
4,027
Loss from discontinued operations, net of tax
(4)
(269)
(484)
Profit for the period attributable to
owners of the parent during the period
1,113
477
3,543
Earnings per share for profit on continuing operations attributable to owners of the parent during the year
Basic earnings per share (pence)
5
0.89p
0.60p
3.23p
Diluted earnings per share (pence)
5
0.86p
0.58p
3.12p
Earnings per share for profit on total operations attributable to owners of the parent during the year
Basic earnings per share (pence)
5
0.89p
0.38p
2.84p
Diluted earnings per share (pence)
5
0.86p
0.37p
2.75p
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Six months ended
31 March
2019
Six months ended
31 March
2018*
Year
ended
30 September 2018*
(unaudited)
(unaudited)
(audited)
£'000
£'000
£'000
Net profit for the period
1,113
477
3,543
Other comprehensive income
Items that will or may be reclassified to profit or loss
Exchange differences on retranslation of overseas subsidiaries
-
(115)
173
Total other comprehensive (expense)/income
-
(115)
173
Total comprehensive income for the period attributable to the owners of the parent
1,113
362
3,716
*The Group has applied IFRS 15 using the cumulative effect method. Under this method the comparative information is not restated. See note 8.
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
31 March
2019
31 March
2018*
30 September
2018*
(unaudited)
(unaudited)
(audited)
Note
£'000
£'000
£'000
Non-current assets
Goodwill and intangible assets
12,389
11,927
12,361
Property, plant and equipment
2,428
2,404
2,496
Financial asset - investments
125
182
157
Deferred tax asset
426
127
230
15,368
14,640
15,244
Current assets
Inventories
3,080
3,406
2,403
Trade and other receivables
9,488
7,641
10,576
Current tax debtor
72
-
101
Cash and cash equivalents
10,949
9,225
12,229
23,589
20,272
25,309
Assets classified as held for sale
-
2,247
-
Current liabilities
Trade and other payables
(9,420)
(7,515)
(8,167)
(9,420)
(7,515)
(8,167)
Liabilities directly associated with assets classified as held for sale
-
(437)
-
Net current assets
14,169
14,567
17,142
Total assets less current liabilities
29,537
29,207
32,386
Non-current liabilities
Other liabilities
(317)
(1,039)
(631)
Provisions
(12)
(189)
(8)
Deferred tax liability
(1,802)
(1,519)
(1,777)
(2,131)
(2,747)
(2,416)
Net assets
27,406
26,460
29,970
Capital and reserves attributable to the owners of the parent
Share capital
6
313
312
312
Shares to be issued
65
65
65
Share premium account
17,391
17,327
17,327
Retained earnings
9,393
8,800
12,022
Foreign currency translation reserve
244
(44)
244
Total equity shareholders' funds
27,406
26,460
29,970
*The Group has applied IFRS 15 using the cumulative effect method. Under this method the comparative information is not restated. See note 8.
CONDENSED CONSOLIDATED STATEMENT OF CASHFLOWS
Six months
ended
31 March
2019
Six months ended
31 March
2018*
Year
ended
30 September 2018*
(unaudited)
(unaudited)
(audited)
£'000
£'000
£'000
Cash flows from operating activities
Operating profit from continuing operations
1,230
1,238
4,757
Operating loss from discontinued operations
(3)
(275)
(483)
Group operating profit
1,227
963
4,274
Depreciation and amortisation
1,353
1,245
2,479
Loss on sale of property, plant and equipment
-
1
3
Loss on disposal of subsidiary undertaking
-
-
445
Share based payments
122
163
323
Exchange adjustments
5
(72)
89
(Increase)/decrease in inventories
(677)
(110)
941
Decrease/(increase) in receivables
1,089
2,832
(184)
Increase/(decrease) in payables
132
(1,542)
(1,635)
Cash generated from operating activities
3,251
3,480
6,735
Tax paid
(59)
(571)
(727)
Net cash from operating activities
3,192
2,909
6,008
Cash flows from investing activities
Purchase of property, plant and equipment
(293)
(713)
(1,243)
Purchase of intangible assets
(1,068)
(809)
(2,125)
Proceeds on disposal of property, plant and equipment
54
7
154
Proceeds on disposal of subsidiary undertakings net of cash disposed of
-
-
1,295
Acquisition of subsidiary undertaking net of cash acquired
(74)
-
(76)
Interest arising on contingent consideration
(43)
(15)
(172)
Interest received
12
11
73
Net cash used in investing activities
(1,412)
(1,519)
(2,094)
Cash flows from financing activities
Issue of ordinary shares
65
29
29
Equity dividends paid
(3,125)
(1,499)
(1,499)
Net cash used in financing activities
(3,060)
(1,470)
(1,470)
Net (decrease)/increase in cash and cash equivalents
(1,280)
(80)
2,444
Cash and cash equivalents at beginning of the period
12,229
9,785
9,785
Cash and cash equivalents at end of the period
10,949
9,705
12,229
Amount included in cash and cash equivalents
10,949
9,225
12,229
Amount included in assets classified as held for sale
-
480
-
10,949
9,705
12,229
*The Group has applied IFRS 15 using the cumulative effect method. Under this method the comparative information is not restated. See note 8.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES TO EQUITY
Share
Capital
Shares
to be
issued
Share premium account
Retained earnings
Foreign currency translation reserve
Total
£'000
£'000
£'000
£'000
£'000
£'000
Balance as at 30 September 2018 as previously stated
312
65
17,327
12,022
244
29,970
Impact of change in accounting policy - IFRS 15 Revenue from Contracts with Customers (see note 8)
-
-
-
(872)
-
(872)
Balance as at 1 October 2018 as restated
312
65
17,327
11,150
244
29,098
Net profit for the period
-
-
-
1,113
-
1,113
Exchange difference on retranslation of overseas subsidiaries
-
-
-
-
-
-
Tax recognised directly in equity
-
-
-
133
-
133
Transactions with owners:
Dividends
-
-
-
(3,125)
-
(3,125)
Issue of share capital
1
-
64
-
-
65
Movement in relation to share based payments
-
-
-
122
-
122
Balance as at 31 March 2019
313
65
17,391
9,393
244
27,406
Balance as at 1 October 2017*
308
65
17,302
9,549
71
27,295
Net profit for the period
-
-
-
477
-
477
Exchange differences on retranslation of overseas subsidiaries
-
-
-
-
(115)
(115)
Tax recognised directly in equity
-
-
-
110
-
110
Transactions with owners:
Dividends
-
-
-
(1,499)
-
(1,499)
Issue of share capital
4
-
25
-
-
29
Movement in relation to share options
-
-
-
163
-
163
Balance as at 31 March 2018*
312
65
17,327
8,800
(44)
26,460
Balance as at 1 October 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
Movement in relation to share options
-
-
-
323
-
323
Balance as at 30 September 2018*
312
65
17,327
12,022
244
29,970
*The Group has applied IFRS 15 using the cumulative effect method. Under this method the comparative information is not restated. See note 8.
The accompanying notes are an integral part of this interim financial information
NOTES TO THE CONDENSED CONSOLIDATED INTERIM STATEMENTS
1. Basis of preparation
Oxford Metrics Plc, (the "Company") is a company domiciled in England. The condensed consolidated interim financial statements of the Company for the six months ended 31 March 2019 comprise the Company and its subsidiaries (together referred to as the "Group").
At the date of authorisation of these financial statements the following standards, amendments to standards and interpretations, which have not been adopted early in these financial statements, were issued by the IASB, but not yet effective:
• IFRS 16 'Leases'
• Amendments to IFRS 9 'Financial Instruments'
• Amendments to IFRS 3 'Business Combinations'
• Amendments to references to the Conceptual Framework in IFRS Standards
• Amendments to IAS 1 'Presentation of Financial Statements'
• Amendments to IAS 8 'Accounting Policies, Changes in Accounting Estimates and Errors'
• Amendments to IAS 28 'Investments in Associates and Joint Ventures'
• Amendments to IAS 19 'Employee Benefits'
• Amendment to IFRIC 23 'Uncertainty over Income Tax Treatments
• Annual improvements to IFRS's (2015-2017) cycle
At the date of authorisation of these financial statements, the directors have considered the standards and interpretations which have not been applied in these financial statements that were in issue but not yet effective (and in some cases had not yet been adopted by the EU).
During the period the Group adopted IFRS 15 'Revenue from contracts with customers' and IFRS 9 'Financial Instruments'. The impact of adopting IFRS 15 is shown in note 8, the impact of adopting IFRS 9 is not material. Otherwise, the condensed consolidated interim financial statements have been prepared using accounting policies consistent with those of the annual financial statements for the year ended 30 September 2018. They are in accordance with IAS 34.
The interim financial statements have not been audited or reviewed and the financial information contained in this report does not constitute statutory accounts within the meaning of Section 434 of the Companies Act 2006. The comparative figures for the year ended 30 September 2018 are not the statutory accounts but have been extracted from the Group's 2018 financial statements which have been delivered to the Registrar of Companies. The auditors' report on those financial statements was unqualified did not contain references to any matters to which the auditors drew attention without qualifying the report and did not contain a statement under Section 498(2) or (3) of the Companies Act 2006.
2. Segmental reporting
Segment information is presented in the condensed consolidated interim financial statements 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, ("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 entertainment, engineering 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 disposed of during the year ended 30 September 2018) for the Government Agencies, Local Government and major infrastructure contractors.
Other unallocated costs represent head office expenses not recharged to subsidiary companies.
Business segments are analysed below:
Revenue from contracts with customers
Revenue
Six months ended
31 March
2019
Six months ended
31 March
2018
Year
ended
30 September
2018
(unaudited)
(unaudited)
(audited)
£'000
£'000
£'000
Vicon UK
7,063
6,315
13,964
Vicon USA
5,466
4,635
10,418
Vicon Group
12,529
10,950
24,382
Yotta
3,526
3,303
7,274
Continuing operations
16,055
14,253
31,656
Yotta surveying
-
1,208
1,693
Discontinued operations
-
1,208
1,693
Oxford Metrics Group
16,055
15,461
33,349
Vicon revenue by market
Engineering
3,287
1,740
4,367
Entertainment
3,298
2,951
7,153
Life sciences
5,944
6,259
12,862
Vicon Group*
12,529
10,950
24,382
Group revenue by type
Sale of hardware
10,449
9,419
21,687
Sale of software
3,506
1,831
4,289
Rendering of services
2,100
3,003
5,680
Continuing operations
16,055
14,253
31,656
Sale of software
-
-
12
Rendering of services
-
1,208
1,681
Discontinued operations
-
1,208
1,693
Oxford Metrics Group
16,055
15,461
33,349
Yotta revenue by type
Software and related services
3,526
3,303
7,274
Continuing operations
3,526
3,303
7,274
Surveying services
-
1,208
1,693
Discontinued operations
-
1,208
1,693
Yotta Group
3,526
4,511
8,967
*This additional information is provided to the Chief Operating Decision Maker. Further analysis by market is not available.
Revenue
Six months ended
31 March
2019
Six months ended
31 March
2018
Year
ended
30 September
2018
(unaudited)
(unaudited)
(audited)
£'000
£'000
£'000
By destination
UK
3,994
5,106
9,978
Germany
376
313
1,078
Poland
-
52
145
Netherlands
540
254
662
France
160
110
348
Switzerland
121
130
409
Rest of Europe
616
753
1,811
Canada
424
224
420
USA
4,911
4,002
9,357
Rest of North America
123
-
123
Australia
288
340
685
Hong Kong
1,526
683
1,766
Japan
1,739
1,443
3,257
Korea
937
209
270
Rest of Asia Pacific
212
133
669
Other
88
501
678
Continuing operations
16,055
14,253
31,656
UK
-
1,208
1,693
Discontinued operations
-
1,208
1,693
Oxford Metrics Group
16,055
15,461
33,349
By origin
UK
10,406
9,410
20,849
North America
5,466
4,635
10,419
Asia Pacific
183
208
388
Continuing operations
16,055
14,253
31,656
UK
-
1,208
1,693
Discontinued operations
-
1,208
1,693
Oxford Metrics Group
16,055
15,461
33,349
Segment depreciation and amortisation
Six months ended
31 March
2019
Six months ended
31 March
2018
Year
ended
30 September
2018
(unaudited)
(unaudited)
(audited)
£'000
£'000
£'000
Vicon UK
923
751
1,525
Vicon USA
32
27
57
Vicon Group
955
778
1,582
Yotta
393
377
775
Unallocated
5
11
21
Continuing operations
1,353
1,166
2,378
Yotta surveying
-
79
101
Discontinued operations
-
79
101
Oxford Metrics Group
1,353
1,245
2,479
Six months ended 31 March 2019 (unaudited)
Six months ended 31 March 2018 (unaudited)
Year ended 30 September 2018 (audited)
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
Adjusted profit/(loss) before tax
Adjusting items
Group recharges
Profit/(loss) before tax
£'000
£'000
£'000
£'000
£'000
£'000
£'000
£'000
£'000
£'000
£'000
£'000
Vicon UK
1,208
(174)
699
1,733
947
(107)
335
1,175
2,916
105
1,309
4,330
Vicon USA
2,098
-
(1,666)
432
2,034
-
(1,212)
822
4,372
-
(3195)
1,177
Vicon Group
3,306
(174)
(967)
2,165
2,981
(107)
(877)
1,997
7,288
105
(1,886)
5,507
Yotta
(191)
(284)
(495)
(970)
(125)
(246)
(391)
(762)
437
(472)
(993)
(1,028)
Unallocated
(1,386)
(105)
1,462
(29)
(1,367)
(122)
1,438
(51)
(2,556)
(219)
2,879
104
Continuing operations
1,729
(563)
-
1,166
1,489
(475)
170
1,184
5,169
(586)
-
4,583
OMG Life Group
(3)
-
-
(3)
18
-
-
18
51
-
-
51
Yotta surveying
-
-
-
-
(123)
-
(170)
(293)
(89)
(445)
-
(534)
Discontinued operations
(3)
-
-
(3)
(105)
-
(170)
(275)
(38)
(445)
-
(483)
Oxford Metrics Group
1,726
(563)
-
1,163
1,384
(475)
-
909
5,131
(1,031)
-
4,100
Non-current assets
Additions to non-current assets
Carrying amount of segment assets
Carrying amount of segment liabilities
Six months ended 31 March 2019 (unaudited)
Six months ended 31 March 2018 (unaudited)
Year ended 30 September 2018 (audited)
Six months ended 31 March 2019 (unaudited)
Six months ended 31 March 2018 (unaudited)
Year ended 30 September 2018 (audited)
Six months ended 31 March 2019 (unaudited)
Six months ended 31 March 2018 (unaudited)
Year ended 30 September 2018 (audited)
Six months ended 31 March 2019 (unaudited)
Six months ended 31 March 2018 (unaudited)
Year ended 30 September 2018 (audited)
£'000
£'000
£'000
£'000
£'000
£'000
£'000
£'000
£'000
£'000
£'000
£'000
Vicon UK
8,838
8,629
8,899
759
885
2,006
20,924
18,022
22,522
(5,312)
(4,910)
(4,485)
Vicon USA
858
788
797
31
137
164
6,196
4,764
5,995
(2,125)
(1,303)
(1,698)
Vicon Group
9,696
9,417
9,696
790
1,022
2,170
27,120
22,786
28,517
(7,437)
(6,213)
(6,183)
Yotta
5,301
4,912
5,212
462
497
1,177
15,978
15,558
16,093
(3,644)
(3,705)
(3,910)
Yotta Group
5,301
4,912
5,212
462
497
1,177
15,978
15,558
16,093
(3,644)
(3,705)
(3,910)
Unallocated
364
300
328
-
2
14
1,905
2,610
1,987
(470)
(344)
(490)
OMG Life Group*
7
11
8
-
-
-
(6,046)
(6,042)
(6,044)
-
-
-
Held for sale
-
-
-
-
-
-
-
2,247
-
-
(437)
-
Oxford Metrics Group
15,368
14,640
15,244
1,252
1,521
3,361
38,957
37,159
40,553
(11,551)
(10,699)
(10,583)
*The negative balance within segment assets represents a cash overdraft which is part of the Group's cash offset facility.
3. Reconciliation of adjusted profit/(loss) before tax
Six months ended
31 March
2019
Six months ended
31 March
2018
Year
ended
30 September
2018
(unaudited)
(unaudited)
(audited)
£'000
£'000
£'000
Profit before tax - continuing operations
1,166
1,184
4,583
Share based payments - equity settled
122
163
323
Amortisation of intangibles arising on acquisition
270
333
645
Redundancy costs
117
-
-
Adjustment to fair value of deferred consideration payable and unwinding of associated discount factor
21
(71)
(457)
Share of post-tax loss of equity accounted associate
33
50
75
Reapportion Group overheads
-
(170)
-
Adjusted profit before tax - continuing operations
1,729
1,489
5,169
Loss before tax - discontinued operations
(3)
(275)
(483)
Loss on disposal of subsidiary undertaking
-
-
445
Reapportion Group overheads
-
170
-
Adjusted loss before tax - discontinued operations
(3)
(105)
(38)
Total adjusted profit before tax - all operations
1,726
1,384
5,131
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
Six months ended
31 March
2019
Six months ended
31 March
2018
Year
ended
30 September
2018
(unaudited)
(unaudited)
(audited)
£'000
£'000
£'000
Profit before tax
2,165
1,997
5,507
Share based payments - equity settled
32
56
110
Amortisation of intangibles arising on acquisition
121
121
242
Adjustment to fair value of deferred consideration payable and unwinding of discount factor
21
(70)
(457)
Reapportion Group overheads
967
877
1,886
Adjusted profit before tax
3,306
2,981
7,288
Yotta Group
Six months ended
31 March
2019
Six months ended
31 March
2018
Year
ended
30 September
2018
(unaudited)
(unaudited)
(audited)
£'000
£'000
£'000
Loss before tax
(970)
(762)
(1,028)
Share based payments - equity settled
18
34
69
Amortisation of intangibles arising on acquisition
149
212
403
Redundancy costs
117
-
-
Reapportion Group overheads
495
391
993
Adjusted (loss)/profit before tax
(191)
(125)
437
4. Taxation
The Group's consolidated effective tax rate for the six months ended 31 March 2019 was 4.5% (for the six months ended 31 March 2018: 35.2%; for the year ended 30 September 2018: 13.6%).
In accordance with IAS 34 the tax charge for the half year is calculated on the basis of the estimated full year tax rate.
5. Earnings per share
The calculation of the basic earnings per share is based on the earnings attributable to ordinary shareholders divided by the weighted average number of shares in issue during the period. The calculation of diluted earnings per share is based on the basic earnings per share, adjusted to allow for the issue of shares on the assumed conversion of all dilutive options.
31 March 2019 (unaudited)
31 March 2018 (unaudited)
30 September 2018 (audited)
Earnings/(loss)
Weighted average number of shares
Per share amount
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)
£'000
'000
(pence)
Continuing operations
Basic earnings/(loss) per share
Earnings attributable to ordinary shareholders
1,117
124,970
0.89
746
124,230
0.60
4,027
124,569
3.23
Dilutive effect of employee share options
-
4,092
(0.03)
-
3,619
(0.02)
-
4,327
(0.11)
Diluted earnings/(loss) per share
1,117
129,062
0.86
746
127,849
0.58
4,027
128,896
3.12
Discontinued operations
Basic earnings/(loss) per share
Earnings attributable to ordinary shareholders
(4)
124,970
-
(269)
124,230
(0.22)
(484)
124,569
(0.39)
Dilutive effect of employee share options
-
4,092
-
-
3,619
-
-
4,327
-
Diluted earnings/(loss) per share
(4)
129,062
-
(269)
127,849
(0.22)
(484)
128,896
(0.39)
Total operations
Basic earnings/(loss) per share
Loss attributable to ordinary shareholders
1,113
124,970
0.89
477
124,230
0.38
3,543
124,569
2.84
Dilutive effect of employee share options
-
4,092
(0.03)
-
3,619
(0.01)
-
4,327
(0.09)
Diluted earnings/(loss) per share
1,113
129,062
0.86
477
127,849
0.37
3,543
128,896
2.75
6. Share capital
31 March
31 March
30 September
2019
2018
2018
(unaudited)
(unaudited)
(audited)
£'000
£'000
£'000
Allotted, called up and fully paid
125,063,130 shares of 0.25p (31 March 2018: 124,905,475 shares of 0.25p and 30 September 2018: 124,905,475 shares of 0.25p)
313
312
312
During the six month period ended 31 March 2019 there were 122,194 shares issued relating to share options that were exercised. In addition 35,461 shares were issued to the non-executive Chairman, Roger Parry, in satisfaction of salary.
There were 1,812,750 shares issued in respect of share options exercised during the six months ended 31 March 2018 (year ended 30 September 2018: 1,812,750).
7. Dividends
The following dividends were recognised as distributions to equity holders in the period:
31 March
31 March
30 September
2019
2018
2018
(unaudited)
(unaudited)
(audited)
£'000
£'000
£'000
Final dividend for 2018 paid in 2019 - 1.50 pence per share
1,875
-
-
Special dividend paid in 2019 - 1.00 pence per share
1,250
-
-
Final dividend for 2017 paid in 2018 - 1.20 pence per share
-
1,499
1,499
3,125
1,499
1,499
The final dividend for 2018 was paid to shareholders on 7 March 2019 at 1.50 pence per share, a total of £1,875,000. In addition, a special dividend of 1.00 pence per share was paid on 25 January 2019, a total of £1,250,000.
8. Changes in accounting policies
The Group has applied IFRS 15 using the cumulative effect method, i.e. by recognising the cumulative effect of initially applying IFRS 15 as an adjustment to the opening balance of equity at 1 October 2018, and presenting in the Statement of Changes in Equity for the period ended 31 March 2019. Therefore the comparative information has not been restated and continues to be reported under IAS 18. The details of the significant changes and quantitative impact of the changes are set out below.
Sales of Vicon systems which include customer support
Under IAS 18 revenue was recognised on the delivery of the product or service, with a deferral made for the fair value of the undelivered element under the terms of the sale. This undelivered element relates to ongoing hardware and software support, the fair value of which was calculated by reference to the anticipated cost, plus a margin, of providing the support service. Revenue that was not recognised in the income statement under this policy was classified as deferred income in the statement of financial position.
Under IFRS 15, revenue should be recognised to depict the transfer of goods and services to customers in an amount that reflects the consideration to which the entity expects to be entitled. IFRS 15 also includes specific guidance for multi element arrangements, contract costs and disclosures. An assessment has been made of the impact of IFRS 15 on the way in which revenue will be recognised across the Group. Whilst most revenue streams within Yotta and Vicon will not be materially affected by the move to IFRS 15, there will be an impact on the way in which revenue from system sales within Vicon is recognised. These system sales are multi element and include the sale of hardware, software and ongoing support. Under IFRS 15 the support element of the system sale has been identified as a separate performance obligation and revenue is recognised over time as this obligation is fulfilled. The revenue attributable to the support element of a system sale is calculated by reference to the equivalent standalone selling price of that support had it not been included within a system sale. In general, this has resulted in a greater revenue deferral per system sale than under IAS 18.
Impact on Financial Statements
The following extracts summarise the impact on the Group consolidated financial statements of adopting IFRS 15 for the period ended 31 March 2019. Had the Group continued to report in accordance with IAS 18 'Revenue', it would have reported the following amounts in the financial statements for the period ended 31 March 2019.
Condensed consolidated income statement
As reported under IFRS 15
Effect
As would have been reported under IAS 18
£'000
£'000
£'000
Revenue
16,055
47
16,102
Finance income
12
-
12
Finance expense
(43)
-
(43)
Taxation
(49)
-
(49)
Profit for the period attributable to
owners of the parent during the period
1,113
47
1,160
Total comprehensive income for the period attributable to owners of the parent during the period
1,113
47
1,160
Earnings per share for profit on continuing operations attributable to owners of the parent during the year
Basic earnings per share (pence)
0.89p
0.04p
0.93p
Diluted earnings per share (pence)
0.86p
0.04p
0.90p
Earnings per share for profit on total operations attributable to owners of the parent during the year
Basic earnings per share (pence)
0.89p
0.04p
0.93p
Diluted earnings per share (pence)
0.86p
0.04p
0.90p
Condensed Consolidated Statement of Financial Position
As reported under IFRS 15
Effect
As would have been reported under IAS 18
£'000
£'000
£'000
Contract liabilities/deferred income (included in trade and other payables)
(3,861)
919
(2,942)
Total equity shareholders' funds
27,406
919
28,325
9. Copies of the interim statement
Copies of the interim statement 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.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.ENDIR GMGMVRGLGLZM
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