Oxford Metrics : Preliminary Results 2021

2 December 2021

Oxford Metrics plc

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

Preliminary Results for the financial year ended 30 September 2021

- Strong full year performance and recovery following pandemic impacted trading -

- Updated 5-year plan to deliver further shareholder value -

- Positive outlook with both divisions experiencing a strong start in the new financial year -

Oxford Metrics plc (LSE: OMG), the smart sensing software company servicing, life sciences, entertainment and engineering markets, announces preliminary results for the financial year ended 30 September 2021.

	FY21	% Change	FY20
Revenue	£35.6m	+17.6%	£30.3m
Annual Recurring Revenue	£7.4m	+8.8%	£6.8m
Adjusted Profit Before Tax*	£4.8m	+89.4%	£2.6m
Adjusted* Basic Earnings per Share	3.59p	+75.1%	2.05p
Ordinary Dividend per Share	2.00p	+11.1%	1.80p
Statutory Profit before Tax	£3.2m	+103.6%	£1.6m
Statutory Basic Earnings per Share	2.32p	+81.3%	1.28p
Net Cash	£23.0m	+53.7%	£14.9m
Operating Cashflow	£14.5m	+105.9%	£7.0m**

• Profit Before Tax before Group recharges adjusted for share-based payments, amortisation and impairment of intangibles arising on acquisition, impairment of Pimloc investment and exceptional costs.
• Restated

Financial Highlights

• Headline revenue of £35.6m (FY20: £30.3m), up 17.6% (up 19.9% on a constant currency basis)
• Improved quality of earnings, with Annual Recurring Revenue ('ARR') of £7.4m (FY20: £6.8m) with new ARR
  additions of £1.3m (FY20: £1.0m)
• Adjusted Profit Before Tax* at £4.8m (FY20: £2.6m)
• Continued cash generation, with £23.0m in net cash (FY20: £14.9m) and operating cashflow of £14.5m
  (FY20: £7.0m - Restated)
• Board proposes increasing our final dividend to 2.00p per share (FY20: 1.80p) this year

Operational Highlights

Vicon delivers impressive revenue growth and profitability

• Vicon's growth restored in FY21 reporting an increase in revenues of 21.1% to £27.6m (FY20: £22.8m), gross
  margin of 72.6% (FY20: 73.6%) reflecting a slightly higher prevalence of larger deals during the year.
• Revenue growth underpinned by strong Entertainment segment driven, up 76.5%.
• The Contemplas acquisition, completed in August 2021, has brought benefits to Vicon including adding a video-based movement analysis to our offering and contributed revenues of £0.2m in the last month of the financial year and a small profit.

Yotta continued growth and a full year of profitability

• Another major milestone achieved: Full year of Adjusted profits delivered following transition to SaaS model

• Digital transformation in public sector continues to improve quality of earnings with our highest level of ARR, up 8.8% to £7.4m at year-end adding £1.3m (FY20: £1.0m) to the ARR base during the year.
• Continuing to invest in our products: Alloy added finance and accounting, Street Manager and enhanced reporting functionality while Horizons has benefitted from collaboration with new partner Vaisala.

Outlook and Guidance

• Both divisions have experienced a strong start to the new fiscal year with key demand metrics pointing to a positive outlook.
• Vicon's current revenue pipeline for the first half is at least 20% ahead of this time last year and the business currently holds an unprecedented level of orders in hand of £5.9m.
• As in many industries, Vicon continues to experience some short-term supply chain challenges arising from the well-publicised global semiconductor shortage
• Investment in the year ahead to augment our capabilities to sense, analyse and apply our technology, increased by £2.3m on an annualised basis.
• Yotta has a strong ARR sales pipeline for the full year, consistent with adding at least another £1.2m gross additions to ARR during the financial year.
• The Group starts the year in a strong financial position to invest in its future and continues to evaluate acquisition opportunities that will accelerate our strategy.
• The Board look forward to an exciting year ahead that will be the first step in our new five-year plan delivering further shareholder value.

Commenting on the results Nick Bolton, Chief Executive said:

"Oxford Metrics is pleased to report a return to form with a strong full year performance and recovery following last year's pandemic impacted trading, with all the Group's key financial metrics having improved.

The pandemic demonstrated the Group's resilience but has also accelerated market drivers in both Vicon and Yotta. Vicon's growth has been restored driven by the buoyant video games sector and the demand for Virtual Production. Yotta continues to benefit from the ongoing need to digitally transform assets, reporting its highest level of ARR.

During the second half of the year, we gradually saw Location-based Entertainment partners restart their facilities and, in some cases, their rollouts.

As we move into the next financial year both divisions have experienced a strong start with key demand metrics pointing to a positive outlook. Vicon's current revenue pipeline for the first half is at least 20% ahead of this time last year and has an unprecedented level of orders in hand but, like many industries, continues to experience some short-term supply chain challenges. Yotta has a strong ARR sale pipeline for the full year with ARR growth anticipated. The Board is looking forward to an exciting year and the first step in our new five-year plan."

For further information please contact:
Oxford Metrics	+44	(0)	1865 261860
Nick Bolton, CEO
David Deacon, CFO
Numis Securities Limited	+44	(0)20 7260 1000
Simon Willis / Hugo Rubinstein
FTI Consulting	+44	(0)	20 3727 1000
Matt Dixon / Jamille Smith / Greg Hynes

About Oxford Metrics

Oxford Metrics develops software that enables the interface between the real world and its virtual twin. Our smart sensing software helps over 10,000 customers in more than 70 countries, including all of the world's top 10 games companies and all of the top 20 universities worldwide. Founded in 1984, we started our journey in healthcare, expanded into entertainment, winning an OSCAR® and an Emmy®, then moved into defence and engineering. We have a track record of creating value by incubating, growing and then augmenting through acquisition, unique technology businesses.

The Group trades through two market-leading divisions: Vicon and Yotta. Vicon is a world leader in motion measurement analysis to thousands of customers worldwide, including Guy's Hospital, Industrial Light & Magic, MIT and NASA. Yotta's cloud-based infrastructure asset management software enables central and local government agencies and other infrastructure owners to digitally manage their assets. Yotta has a large number of high-profile clients including VicRoads in Australia , Auckland Motorway System in New Zealand, and, in the UK, National Highways and over 160 local authorities.

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

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

CHAIRMAN'S STATEMENT

We are pleased to report a strong full year performance in 2020/21 and a return to form following last year's pandemic-impacted trading. The business has demonstrated its resilience during the period and signs of accelerating market trends commented on last year are now being realised. Furthermore, we have emerged from the challenges over the past 18 months with an even stronger financial platform to fund organic growth and expedite potential acquisition opportunities.

Without exception, the key financial metrics of the business have improved for the 12 months to 30 September 2021 with the Group reporting revenue of £35.6m (FY20: £30.3m), a statutory PBT of £3.2m (FY20: £1.6m), an Adjusted PBT* of £4.8m (FY20: £2.6m), cash generated from operating activities £14.5m (FY20: £7.0m - Restated) and a cash position of £23.0m (FY20: £14.9m). We also continued to enhance the quality of our earnings by increasing our Annual Recurring Revenue ('ARR') to £7.4m (FY20: £6.8m).

In the light of the financial performance and confidence in the ongoing resilience of the business, the Board proposes increasing our final dividend to 2.00p per share (FY20 Final Dividend: 1.80p) this year. Our dividend policy remains to make the pay-out progressive with the aim of maintaining an average dividend cover of approximately two-times Adjusted* Earnings per Share.

Having successfully navigated a challenging period, our focus is now firmly on the future. We are embarking on our growth plan for the next five years designed to augment our capabilities to sense, analyse and apply our technology and increase our addressable markets with the goal of creating a substantially larger business and shareholder value.

Board

On October 1 2021, we appointed Paul Taylor to replace Adrian Carey as Chair of the Audit Committee. Paul brings over 20 years of boardroom experience as an Executive and Non-Executive Director, and throughout his career has been involved with growth-oriented technology businesses. Paul spent a large part of his executive career with AVEVA Group plc, where as CFO he was part of the team that delivered consistently high levels of growth in revenue and profitability both organically and through acquisition. Paul has also served on the Board of a number of technology businesses in a Non-Executive capacity supporting Executive teams in delivering strong stakeholder returns. I welcome Paul to our Board and look forward to working with him and the rest of Board as we further grow the business.

Furthermore, following Paul Taylor assuming Audit Committee Chair responsibilities, Adrian Carey will stand down as a Non-Executive Director and Senior Independent Director at the company's next AGM, expected to be held in February 2022. During Adrian's near 10 years of continuous service to the group, he has been instrumental in guiding the business as we grew into the strong position we stand today. I would like to take this opportunity on behalf of the Board to thank Adrian for his insight and valuable contributions, and wish him well in his future endeavours.

Lastly, I want to thank the stakeholders in our business for all their contributions over the past year - our outstanding team in our offices worldwide, our shareholders, our partners and most importantly our customers.

Roger Parry

Chair

• Profit Before Tax before Group recharges adjusted for share-based payments, amortisation and impairment of intangibles arising on acquisition, impairment of Pimloc investment and exceptional costs.

CEO STATEMENT

To use a meteorological metaphor, we have seen all types of weather over this past 12 months. We started the year with the winter of on-going, multiple lockdowns and we finished it in the sunshine of greater than pre- pandemic levels of demand, albeit with a squeezed supply chain. As you can see from the headline results, it was a year of clear trading progress and we now stand on our strongest ever platform. We have over 10,000 customers worldwide in over 70 different countries, including all 10 of the world's top 10 games companies and all of the top 20 universities worldwide. We even have around half the UK street lighting assets managed using our software. It was also a year where the macro changes we have been tracking for several years started to accelerate and it is this acceleration that indicates the path we must take to drive further future growth through our new five-year plan.

STRATEGIC REVIEW - OUR NEW FIVE-YEAR PLAN

Ever since 1984, Oxford Metrics has been enabling the interface between the real world and its virtual twin. It was in that year we introduced our first motion capture system and we have been providing a bridge between the physical and digital world ever since.

We started our journey in healthcare, we expanded into entertainment, winning an OSCAR® and an Emmy®, then we moved into defence and engineering. We have a track record of creating value by incubating, growing and then augmenting through acquisition, unique technology businesses.

Accelerated Augmentation

As we emerge from the pandemic, something fundamental is changing in our markets and in our opportunity. We are seeing an acceleration of the Augmented Age - an era where machines and humans partner to achieve what neither can do alone. We were already seeing this in many of the markets we serve, including robotics, healthcare, sports and entertainment - but now it's been brought forward by the pandemic. Look at the faster adoption of tele- medicine, remote management, and virtual production.

For this augmented partnership between human and machine to work, we need technologies which have the ability to perceive us and our surroundings. They must be able to capture and understand every dimension of our world in real-time - humans, objects, movements, environments. This requires smart sensing systems, where cameras and other sensors are deeply coupled with powerful software to enable machines to transparently enhance our lives.

No longer will it be sufficient for a company's solution to just stop at the image or sensed data. Integrated smart sensing solutions, such as the ones we offer, look after the full life cycle of the data - sense, analyse, apply. From imagery to insight; from pixel to purpose; from sensing to sense-making, we aim to lead this important and expanding category in those end markets we already understand well.

The expansion of this market opportunity is being driven by two recent and still on-going underlying technology trends. Firstly, improvements in sensing capability - lower cost, higher resolution, better imagers, which can be readily combined with other also rapidly improving sensors (e.g. inertial, LIDAR and environmental sensors). Secondly, improvements in processing capability - both in terms of hardware (GPUs and now Neural Processing Units and other forms of specialised processors) and software (especially in Machine Learning).

Rise of Smart Sensing

These improvements mean smart sensing can be applied to a much wider set of problems and markets, and this represents a significantly expanded opportunity for Oxford Metrics. But one which requires us to both broaden and adapt our own offering to access the significantly larger marketplace than we operate in today.

We cannot serve all these end markets directly because we lack the necessary whole products, channels and other resources to be successful. Where we can generate significant value, however, is in providing both the tools