4th Jun 2014 13:14
LONDON (Alliance News) - OMG PLC Wednesday reiterated confidence in meeting market expectations for the full year, even as it reported a wider pretax loss for the half year to end-March due to the costs of getting its new consumer market camera off the ground.
The company posted a pretax loss of GBP2.1 million for the six months to March 31, nearly treble the GBP736,000 loss it booked a year earlier, even though revenue rose to GBP14.3 million from GBP13.0 million. Revenue was boosted by its acquisition of Mayrise in July 2013, but this was offset by higher costs mostly relating to its new consumer unit OMG Life.
OMG produces imaging technology for a variety of markets, including the medical, defence and engineering sectors. It has now developed a new wearable camera for the consumer market. The camera, called Autographer, uses sensors and GPS to find the perfect time to take a picture and can automatically take up to 2,000 high resolution photos every day through a custom designed wide-angle lens.
OMG Life posted a pretax loss of GBP2.2 million, double the GBP1.1 million loss of a year earlier, due to an increase in research and development amortisation of GBP500,000, and increased sales and marketing activity.
The company said that due to the newness of the product and its relatively limited marketing resources, it had not been able to engage with as many customers as it would like to. Autographer has so far been picked up by a number of specialist stores, and OMG said it is continuing discussions with larger US and European retail chains.
"What has been interesting over the last six months is that the larger retailers now are looking at merchandising whole wearable ranges," Chief Executive Nick Bolton told Alliance News. "Wearables is a space that is happening, it's soared over the past year, but it is early days."
The product was originally used for early onset dementia and alzheimer sufferers, but the company has expanded its target audience to the broader consumer market.
OMG is considering how it can add value to the product using its intellectual property. It has filed patents on some of its wearable imaging and image management software, and OMG said is in discussions about potential licensing and partnerships.
"We're living in an increasingly visual culture," Bolton said. "This puts the technology that we have in centre stage and mainstream, and I think that's why we're seeing some interest in our IP from external companies".
"We are in some very interesting areas of technology from wearables, imaging, to drone aircraft, things that are very on trend at the moment, and it means we don't have to approach other people, they are approaching us," Bolton said. "If we come across an opportunity like that we're going to seize it, but through licensing and partnerships, not directly," Bolton said.
OMG's motion capture business Vicon posted a pretax profit of GBP1.6 million, down from GBP2.3 million a year earlier, as a weaker performance in the US offset growth in the UK and rest of the world. Margins continued to face pressure in the competitive entertainment market, the company said.
During the year, the division won new customers for motion cameras including video-game studios Quantic Dream and Konami. It also signed up the US Army Research Lab and Naval Warfare Systems Command for UAV tracking systems.
Vicon's systems were used for game and film releases during the year, including the Oscar winning 'Gravity', Electronic Art's 'Battlefield 4', and the upcoming 'Transformers: Age of Extinction'.
While the use of the technology in high profile entertainment projects tends to bring attention to OMG, Bolton said the technology is actually used more by hospitals. About 20% to 25% of Vicon's revenue comes from entertainment, whereas about 60% comes from life sciences, he said.
The company conducted a review of its 'House of Moves' business, which provides motion capture and animation services, during the first half and has opted to sell the business. It expects to complete the sale in the second half of the year.
OMG's motion capture technology is available for sale, so customers can buy the equipment and complete production in house, rather than hiring a business to do it for them. As a result, OMG said that the 'House of Moves' business no longer fits with its strategic direction, although it noted that it has "an exciting future in content creation."
Surveying, software and services business Yotta posted a pretax loss of GBP200,000, narrowed from the GBP500,000 it booked a year earlier, as revenue was boosted by the incorporation of Mayrise. Yotta won further software customers including the London Borough of Tower Hamlets, Telford And Wrekin Council and Gloucestershire County Council. It also won a contract with the Highways Agency for its Horizon software as a service.
Yotta's survey activities were hit by the wet winter. However, it won new business with the Liverpool, Hertfordshire and Hampshire Councils.
OMG's 2d3 business, which provides imagery products for the defence and civil aviation industry, posted a pretax loss of GBP1.0 million, narrowed from GBP1.2 million, due to a strong performance in the UK. The company secured further contracts with the US National Geospatial Agency and the UK Ministry of Defence.
Excluding OMG life, the company expects to meet market expectations for revenue and pretax profit, and it said its overall loss from OMG Life will also be in line with market expectations.
Shares in OMG were trading down 4.8% at 26.17 pence Wednesday afternoon.
By Hana Stewart-Smith; [email protected]; @HanaSSAllNews
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