Oxford Metrics (LSE:OMG) — Investor Presentation

0:00 Good morning, and welcome to the OXFORD METRICS PLC investor presentation. Throughout this recording presentation, investors will be in listen only mode. Questions are encouraged to be submitted at any time via the q and a tab situated in the right hand corner of your screen. Simply type in your question and press send. The company may not be in position to answer every question you see during the meeting itself. However, they can review all questions submitted today and publish responses where it is appropriate to do so. Before we begin, I'd like to submit the following poll. And I'd now like to hand over to Nick Bolton, CEO, and David Deacon, CFO. Good morning.

0:30 Well, good morning, and welcome to this inaugural investor meet company presentation, something that we, as the business, hope that we're the first of many such events. In fact, actually, we'd like it to become a a standard element of our investor relations communications process with sessions at least every every six months in line with our premiums and our interim results. For those who don't know me or haven't met me before, I'm Nick Bolton, the CEO of OXFORD METRICS. And also joining us on today's call is our CFO, David Deacon. And then really the structure for this for today really is is as follows. We're gonna have about forty to forty five minutes of formal presentation from the OXFORD METRICS team, and then we're going to have an opportunity at the end to have fifteen, twenty minutes of question and answer. So if you do have any questions, please fire those through the Investor Meets company platform through their q and a tab there.

1:29 And in terms of really the actual agenda for the for the formal part of the presentation, Well, first of all, we'd like to kick off really with an introduction to the group as a whole. Given that this might be the first time that you have looked at OXFORD METRICS, we'd like to bring everybody up to the same level of knowledge about the group with a brief overview of the business. That will be a two handed between me covering some of the business side and David covering some of the financial underpinnings. Then in we'll move on then, and David will cover the preliminary results for last financial year. That was the period up to the end of thirtieth September twenty twenty one and go in-depth about where the business is from those results. And then we then I will take the baton back and go through the five year plan, our current five year plan that we launch back in October.

2:20 And then at the end towards the end of that, I will also cover an outlook really for the year ahead about where we think how we think the business is doing and where we think we go from here. So with that as the structure, I'd like to kick off with that first section then, the introduction to the group as a whole. We're a business that was established in 1984. We stand at about 240 people strong with offices here in The UK and The US and with a couple of satellite offices in Asia Pacific region and also in Australia. We're listed on the AIM market, and we were listed in 2001, and our market capitalization is around 140,145,000,000, as of, as of today. We have, a strong, shareholder base, including some retail investors and also including some institutions, like Aviva, BlackRock, and also, Herald.

3:13 Many, investors are long term holders, of the, of the shares, which is great, and we really thank them for their for their support, of us in the business. What is it that we do? Well, essentially, we develop and market what we call smart sensing solutions, and we bring those to market in specific end markets. And what we mean by smart sensing is that we take sensed data from a series of different sensors. Sometimes that might be cameras, sometimes that might be an inertial sensor, or in the case of infrastructure asset management, it might even be a sensor that's in a drain measuring how much a gully is filling or not filling with water when it when it rains. So we take that sensed information, and then we process all of that in our very strong high bandwidth analysis software that allows to synthesize all of that sensed information and then really provide a series of tools for our customers then to, in the final stage, apply that knowledge to their to their end use case and to their end market.

4:14 And so we our goal really is we provide integrated solutions that look after the data along that pipeline through sense, through analyze, and apply. And we look after it through that in order to maximize the actual intelligence that the our customers, the users can apply to to them and their worlds. When I talk about the specific businesses, I'll bring that overall technology approach to to to add a bit more color in there. We now stand with over 10,000 customers worldwide, and we're in and we have customers in over 70 different countries worldwide. The way we're organized is that we have a small head office functional group. You're looking at about a fifth of that group head office on this call, and we have then we then trade through two independent subsidiaries.

5:04 One, Yotta, and the other one, Vicon. Yotta provides infrastructure asset management software, and I'll go on to explain a little more about what that means. And the other one is our Vicom business that is really is the global leader in motion tracking. So that really is the overall structure. Let me take you through now a bit of the detail about what the two individual businesses do for for their customers. So starting first of all with Yotta. Yotta provides SaaS software, so software as a service solutions for infrastructure asset management. So those we're providing hosted cloud software plus also a mobile application with customers mostly in UK public sector. So we have a lot of local authorities as customers and also, yeah, here in England, the National Highways Group, what used to be called Highways England.

5:53 And extensively, what they use our software to do is to manage all of the infrastructure assets that they're responsible for. The street side assets that if you walk out on the streets in in front of your houses or your offices or down your high streets, you can see all around you. So that's the the local authorities' responsibility to look after the roadways that we drive on, the footways, the footpaths that we walk on, the lighting columns. All of those assets are all owned and managed by the public sector, and they need a software tool to allow them to best maintain those assets. That's exactly where we come in. To to describe that in a bit more depth, let me paint you a picture. So here's a model town, which you can see is made up of a series of different elements. We've got roadways in there. We've got lighting columns.

6:43 We've got waste bins. We've even got parks, and we've got structures like bridges. So if we focus on all of those, all of those assets, the drainage column, drainage channels, the highways, the waste collection, the services that run on top of those like street works or waste collection, all of those assets, we have to make sure they're up, available, and useful so that we can have a functioning environment. And so what we do is we take all of those assets and provide a digital representation of them within our software. So here is a screen grab of our alloy software. And so, really, we take all of those assets. You we put them on the map, and then you can start to assign jobs to people. So we might decide that we want David to go and inspect the pothole that's appeared outside 52 Acacia Avenue. So we would sign that job. David would then look up on his Alloy app on his phone, see he's got a job that day, and off he'd go to do that. So, really, we provide that digital infrastructure, that digital, business tool that allows local authorities to deliver better qualities of environments at lower costs.

7:46 That's really what Yotta, does, today.

7:50 So that's the that's the first business. And when we come on and talk a bit more about the numbers, David, will give you, some color, on, on all of that. To give you an idea of our scale currently, we have about half of The UK streetlights are being managed within our software. So that's that's a significant footprint here in the in The UK. And about third of all UK roadways are being managed using our software. So there are about 390,000 kilometers of roadway in The UK, and we're looking after about a 130,000 of those. So what that means then across all of the service areas that we we fulfill, and what I mean by service areas, those are the drainage, the highways, the waste across all of those service areas that authority has to provide. We have about 12% of, of The UK market share. So there's plenty more market even within The UK for us to go at to actually see this business grow, from here.

8:43 Turning then to our, our second business, our Vicon business. This provides, integrated three d motion tracking and analysis systems. We basically track things in three d that move, And we do that by actually attaching very small, markers to the things that we're, trying to, track. So little markers, like these, we might attach to the thing we're trying to measure, and then we can give a sub millimeter accuracy at up to 2,000 frames a second of where that marker is in three d sprays. Perhaps the best way to explain that is to to show you on a video. So if Zach could just roll the first video, What you can see in this video is we have the we make these specialized computational cameras. We arrange them around the thing that we're trying to measure in the three d.

9:31 We put these little subject markers on the thing we're trying to measure. We don't care what you attach them to. We're just tracking where the markers are. In this instance, it's Lolo Jones, the 100 meter hurdling world champion from 2008, and she's jumping over the hurdles. We're measuring those markers in three d, and then we provide sophisticated analysis software that allows us to then assess her performance across those hurdles. And then they can then use that. The coach then uses that to effectively enable to train her better. But it's not just that application in sports science. That is an important sector for us, but it's also used in measuring children with cerebral palsy in order that an orthopedic surgeon can make a more informed operative intervention or decision. It's also used in engineering for helping design things like the quadcopter that went off to Mars. So anytime really you want to measure something in three d that's moving, then you're you're using a Vicon system to do that. But perhaps the most visible application of software is in the, entertainment space, which I agree. I'm not gonna we've got a second video that we can show you here. And this really is the application filmmaking, film, and video games where you'll attach markers to actors wearing Lycra suits, and then they use that to drive a three d character.

10:50 If if, Zach, if we can run the second video right now, we're just gonna watch this only for about a minute, but it will really put it on the map exactly what we do for the Thank you. And background action. Action. That's great. Because I hope that's really put on the map there exactly what Vicol does.

12:02 You can see, you know, lots of those shots, a lot of little bit of markers, sometimes being used to track cameras, sometimes using use, to track people to create the effects on some of the shows you saw there, including the Mandalorian, the Star Wars spinout produced by Industrial Light and Magic. Now across all of those markets, since life sciences, entertainment, engineering, the same tech goes to all all three of those vertical markets. It's a very much global business, so we have the solutions in 70 plus different countries. We have about 60% of global market share within that marketplace, and there is actually a refresh and replenishment cycle. Happens about every seven to ten years on the life sciences side and about four to five on the the entertainment or the engineering side. Traditionally, life sciences has been our largest market, but entertainment has really exploded over the past two to three years. And then David, when he goes through his numbers, you'll see it's really overtaken life sciences for the for the first time, the set of results from from last year.

12:59 So that's really the the Vicon business. What I'd like to so collectively, that means that we have a fantastic global blue chip customer pace with some really fantastic long term engagements. And there are some of some of the names actually on on the slide there. They've been customers for over twenty five years. So some great names there from Nike to Lily Lemon to the to the National Institute of Health in The States all the way through to Manchester City Council and Derbyshire County Council as well. So that's what we that's what we do. Let me hand over to David now to take you through what that really means in financial terms. David? Thank you, Nick. I'd also like to add my welcome to the presentation this morning. Good morning, everyone.

13:47 I'm just gonna kick off with a one page financial overview of the past ten years. So fairly brief, but designed to give you a a flavor. So looking back, first of all, revenues, we've just reported 35,600,000. That's up 17.6% year on year. And on a constant currency basis, the growth is slightly better at 19.9%. Compared compared to ten years ago, Vicor revenues back then were around 18,000,000, and Yotta stood at around 3,800,000. And at the time, Yotta was largely a surveying business with a nascent SaaS base. But today, Yotta is now a 100% SaaS business with substantial recurring revenues.

14:33 And over this time, you know, we've recorded revenue growth, but obviously, the pandemic, which affected Vicom the most, did interrupt our progress a little bit. Current profits, FY '21 at 4,800,000. And then really over the last ten years, you know, OXFORD METRICS has invested in IP, which you've just seen there in some of the videos. Current r and d spend as a percentage of revenues before, you know, accounting treatment for capitalization and amortization is around 15% of revenues. OXFORD METRICS has demonstrated a, you know, strong cash generation characteristics over that time. Cash currently stands at 23,000,000. We have been to the market once back in July 2013 to raise funds for an acquisition, and we successfully raised funds there which were oversubscribed.

15:25 Throughout the period, OXFORD METRICS has remained debt free. It's fair to say this CFO is perhaps more at the cautious end of the spectrum when it comes to taking on debt. But that said, we would consider debt in the right circumstances going forward. We also have a progressive dividend policy with the aim of achieving a dividend cover of around two times. And over the past ten years, we've seen the annual ordinary dividend rise from the fairly modest 250,000 ten years ago up to around 2,500,000 proposed today. In total, we've paid GBP 13,600,000 in ordinary dividends over that time and also returned a further GBP 16,800,000 in special dividends, which largely related to the premium disposal of our 2D3 defense business.

16:20 And finally, taking into account the aforementioned dividends and the appreciation of the share price over this time, we've achieved a total shareholder return of around 21% per annum. So that's the brief history. Let me tell you a little bit more now about last year, the annual results. So just to put the revenue in some historical context,

16:45 f y twenty one really represented a return to form with a clear recovery from the pandemic affected f y twenty. And we just surpassed the previous best performance back in f y nineteen, even taking into account that we had a one month contribution from our new acquisition in Templus that added 200,000. From a PBT perspective, again, you can see at the adjusted PBT of 4.8 is nearly double last year, but it's still slightly behind where we were back in FY nineteen. There are obviously various puts and takes and reasons for this, but perhaps the the headline reason is our r and d r and d investment is slightly higher today than it was a couple of years ago. And there's also a little bit more in the by way of performance related bonuses in FY twenty one.

17:44 I'll also take the opportunity to add that Contemplus, our new acquisition, also added a small profit in those numbers, So it's already beginning to add some value. I'll just take a look at the revenue geographically because this helps begin to tell the story of how the groups recovered from the pandemic. All our major geographical markets reported growth year on year. The UK was up 18.8%. Europe was up 49.2%. Both were driven by virtual production and traditional visual effects customers seeking to create more content for the PS five console. The US, that was affected by the pandemic perhaps more than most, but we have seen an improvement here of 14.5% year on year. And if you take a look at the numbers on a half two to half two basis, the improvement was up to 33.1%.

18:43 So clearly, The US is back on track. And finally, Asia Pacific also improved 10.8%, and that was on top of a really strong showing during the pandemic affected year of FY twenty. So moving on then to give you some color on Viacom. Couple of highlights really. One was the acquisition of Contemplus. As I mentioned, the result includes about around 200,000 in revenues and a small profit. The entertainment segment really stands out as the other big headline. For the first time, actually, that I can remember, entertainment has surpassed life sciences in real terms reporting 11,900,000.

19:30 The entertainment segment continues to be buoyant and it's also helped along by the rise of virtual production that you saw in in some of those videos, which was up from 400,000 a year ago to 1,700,000 in in these numbers. Our engineering segment also added 39.2. This improvement really is a post pandemic bounce back as we've seen projects and funding returning to this marketplace. Our life sciences segment did decline year on year by 14.9%. Customers in this segment are typically institutional, meaning universities and hospitals and similar institutions.

20:16 And it appears that this segment has been slower to recover from the pandemic compared to the other segments I've been talking about talking about. It's fair to say perhaps students are taking a little longer to return to universities, and many of our customers are in the health system globally. And clearly, they've had other priorities over the past year or so. That said, though, it is worth noting that life sciences did have a stronger h two in these numbers. And if you compare that with the same period a year ago, the the the decline has narrowed to around 6%. So life sciences is coming back, but it's clearly taking a little longer. And finally, location based entertainment, LBE.

21:03 We may have referred to this in the past as l b b LBVR. This also has declined year on year, but it's really not all bad news. The the LBE sector is now recovering from the pandemic. Many of our customers are reopening their sites and ramp and, you know, ramping up their plans, which include electric game box where we recently had our capital markets day and Sandbox VR. Both have recently raised funds, and they both have ambitious roll out plans for FY '22 and beyond. So based on the current sales pipeline for LBE, we believe it is set to make a significant contribution in the future. And that's really why LBE is carved out from the entertainment line because it does represent a major growth opportunity for Viacom going forward.

21:57 So taken altogether, the revenues were up 21.1%, and it also gives me the opportunity just to cover off inventory. Our inventory position at the end of September was 2,500,000 compared to 3,400,000 a year ago. The the well publicized global supply chain situation has meant that replenishment is a bit slower, and it's also more unpredictable. But it's fair to say our Vicon team, our supply chain management team have successfully managed the challenges that have arisen. The inventory level today is perhaps a million lower than optimal. But as I said, we've managed the challenge and not disappointed any any customers.

22:42 So from an adjusted PBT perspective, this reflects obviously higher gross margin in real terms coming from the revenue improvement

22:52 along with slightly higher amortization and impairment of intangibles and so forth. So to report an adjusted PBT of 6,800,000, up from 4,800,000 a year ago. In terms of the outlook, Viacom starts the year with a revenue pipeline for the first half 20% ahead of last year. And this also includes an unprecedented level of orders in hands of 5,900,000. So Viacom starts the year in a very good position. It's fair to say just returning to the supply chain situation, this has improved to some degree, but still remains challenge. So we may or may not see some order slip into the second half.

23:40 So turning to look at the year.

23:44 So we set out the year really with the goal of adding at least 1,000,000 in new additions to the base. In the first half, we added 500,000 to ARR. And following this, in the second half, we added another point eight. So achieving 1,300,000 in additions during the year. And many of these additions, as we've seen in years gone by, were multiyear contracts. So the total contract value of those additions

24:11 were 2,300,000. So in this year, customers were contracting for for a minimum of two years. During the year, we also added a new partnership partner with Visal based in in Finland. You may not know them, but they are a emerging and disruptive force in The UK surveying marketplace, and they use mobile camera technology to collect condition information. During the year, we enhanced our Horizons product, so the data is compatible out of the box. And this led to a number of nice wins during the year at Northumberland, Calderdale, and Brent. We continue, as as I've already mentioned, to invest in in IP and product development. So alloy now includes finance and accounting functionality, Street Manager compatibility, enhanced reporting functionality, and Horizons is now also capable of emissions monitoring as well.

25:09 From a revenue recognition perspective, overall revenues were up 7% to 8,100,000. And returning to the ARR, the retention rate for the year was 90.1% compared to 91.7% calculated on a revenue basis. So overall, retention appears to be slightly lower, but there was what I would describe as an oddball in in the retention numbers this year, which related to the end of a five year license arrangement with a significant customer. The end customers, in fact, were resigned under different contracts during the year. So in fact, you know, they came back into the fold.

25:54 So adjusting for that, the underlying retention rate in the base is around 94.4%, and that's around the mid nineties is what we would expect to see. The professional services and consulting revenues were slightly down at 1,600,000 compared to 1,900,000 a year ago. This was largely due to the timing of those ARR additions I mentioned, which were back end loaded, which meant that some of the implementations have spilled into the coming financial year. So overall, the improved revenue performance together with a relatively unchanged cost base in Yotta led to an adjusted PBT maiden full year profit of 800,000 compared with 100,000 loss a year ago.

26:43 And again, looking at the sales pipelines for the year ahead, they certainly support the addition of another 1,200,000 or so. So based on that and a relatively unchanged cost base, we're placed to deliver another full year of profitability in FY 2022. And then finally, central overheads. So these are our PLC costs and a number of shared services that are used by Vicon and Yotta. These costs were up year on year by 500,000 due in part really to performance related bonus accruals and some other additional corporate costs. So in summary for me, before I hand back to Nick, so the revenue picture, up 17.6% adjusted PBT, up 89.4% to 4,800,000.

27:39 And as I've said, that included a maiden full year of profits for Yotta, driven by ARR growth of 8.8%. The group finished with a very strong cash position of 23,000,000. And as of the eve of the preliminary results, admittedly, this was back in December, that cash position had improved further to 23.4. We are proposing a final dividend of 2p for the year just gone, so that's up 11.1%. And finally, really, the group remains debt free. You know, we retain a robust balance sheet, so we begin FY '22 in good financial health with two profitable businesses and able to move forward confidently with the next five year plan.

28:28 Oh, and one other thing for me before I hand back to Nick. We have recognized that smaller investors do struggle to access analyst coverage. And we are working on this and we are hopeful that we'll have that available on the website in the next month or so. So that's it for me. Back to you, Nick. Great. Thanks, David. So what I'd like to do now is just move on to the third section of our, formal presentation, really cover and introduce to you our five year, growth plan that was launched back in, October. On actually on our website, there's much more information about the five year plan, and there's a full half hour presentation of it as well on the on the website. But what I wanted to do here was really give you an introduction to it in order to really set the context of last year's results where the five year plan is and, therefore, where we expect the business to drive forward from here. So let me introduce you to that five year growth band plan. It's really been developed in the context of the acceleration of the augmented age that we've

29:35 seen happen, really, that augmented age being brought forward by the pandemic. What I mean by the coming of the augmented age, it was a a term coined by a person called Maurice Conti. And the way augmented age is defined is where humans and machines partner to achieve more than either can achieve alone. And, of course, we can see this all all around us, you know, the how we how we decide to whether we need to run for the train because we've checked whether the train is running on time or whether it's late on our our phone, all the way through to the way that our customers on the yachtter side of the business manage their manage their workforce. So we've seen over the past two years accelerated by the pandemic, a whole series of things changing in the way our customers operate and the way they use our technology. Three very visible examples of that was the is the rise of remote workforce management. Almost as soon as that March, April time frame came around, you can no longer get everybody into the depot to task them out where they're gonna go and collect the waste from this region or that or that area.

30:37 Rather, they all needed to be tasked remotely. So they all started switching towards mobile dispatch, and that required our software to enable that. On the Vicon side of the business, we saw the rise of virtual production when you couldn't get list a actors on airplanes. We actually saw one order go from a single site, in LA to three sites, one in LA, one in London, and one in, Sydney, Australia, where really what they want to do there is they couldn't get all the Axon terraplanes to go to a single site. So instead, they created virtual sets, and they shot them all independently in order to then combine them later on. And then also on the health care side, I think we've all seen the rise of remote, health care even in the way we interact with RGPs. All of that all of that, acceleration there where people are gonna rely on technology just to to live their their everyday lives plays very well to where our technology sits.

31:27 Because where our technology sits is that interface between the real and the virtual, between the the world that we now have on a day to day basis and the digital world. And so for that augmented age to be delivered, it requires technologies to capture pretty every dimension of our world in real time. So objects, people, movements, environments, and so forth. Now we don't do all of those things, but we are expert in a number of those areas. And in order to be able to deliver and capture every dimension, they require integrated smart sensing systems that I talked about at the, at the introduction of this presentation. We need to be able to sense, we need to analyze, and we need to apply. We wanna maximize that actionable intelligence by looking after the data across the length of its pathway. So inside the business, we talk about looking after the data from imagery to insight, from pixel to purpose, from sensor to sense making.

32:18 And what we recognize then is while there's been that acceleration, that expands the opportunity for OXFORD METRICS. So for us, we we're seeing that our total addressable market over the next five years is gonna expand for about a £150,000,000, today of total addressable market of TAM up to about 650 by the end of that five five year period. Now in order to be able to grow that, some of that is the market just growing, but some of it is also seeing our technology being taken into adjacent markets. So the way that we want to drive that growth, both the expansion of the market opportunity as well as our capture of the value within that expanded market opportunity, is through three specific growth levers. The first one of those is to extend our sensing capabilities to, in other words, be able to measure more things in more different environments.

33:04 The second area is to enhance the analysis modes and abilities, and, actually, the Contemplus application Contemplus acquisition is a nice example of that where we can now measure from playing video. We can also measure underwater and so forth. And then lastly, we want to be able to embed our IP in other company's solutions. So we can't really expect to be direct in all of the markets that require these integrated smart sensing solutions. We don't have the whole products for that. We don't have the channels for that, but we do have the technology. So we want to see our technology embedded in other other companies' solutions in order to see that expanded reach. And you can see in location based entertainment where we've got eight eight active partners. That's exactly the sort of embedded relationship we want. We don't we don't rent the unit in South London.

33:51 We don't provide the content for that, but we do provide a very important capture system in order to provide electric game box with a solution so that they can do the rest of what it is that they do. So through those three growth levers, we made a decision within the plan to step up the investment to drive those across the group, and we really expect those to deliver benefits within the five year plan. It's a combination of organic and inorganic activity, which I'll go on to explain in a subsequent two slides. But through that activity, we have two specific aims to achieve by the end of the five year plan. The first thing is to increase our revenues two and a half fold, and secondly, to achieve a 15% return at an adjusted PBT level, which has been our really our historic level of profitability within the business.

34:37 So turning then to the organic plans, what that specifically means right now. So these aren't all of our organic plans over the next five years, but these are a number of things that we're acting on right now in the first year of the plan. It clearly breaks down to the two different subsidiaries. They've got different markets. They're going out with different opportunities and different investment required. At Vicon, it's about broadening, the analysis, capabilities, of the, of the solution so that we can receive a broader sets of sensed information, including those environments where a sensor can't be attached to the subject. Now you remember in the video with Lolo Jones, we were putting the markers on on the actual subject there. Well, of course, there are instances where you can't attach a sensor to the subject, and so we want to be able to be able to measure people in those sorts of environments. Now we can do some of that right now, but we know that we've got some technology bubbling under that we can bring to market to analyze a broader set of in a broader of environments.

35:34 We also want to increase the sophistication of our software interfaces to support embedding in third party solutions. So that's really driving that embed growth lever. We've gotta make sure that our software can be readily integrated into those third party solutions. And then thirdly, at Vicon, we're also adding mobile device support to enable Vicon technology to to be used in specific vertical market applications. Again, in those indirect markets, not all of those markets will will have the possibility to have a PC nearby rather that ever it might they need to mediate the capability of their solutions via via a tablet, an iPad, or some sort of smartphone. So we need to add some support for that. So those are three of the specific things we're doing in Baikon. They're not the only things we're doing, but those are three of the specific things. On the yachtter side, we are investing in multiple mobile apps. I mentioned that the pandemic had brought forward a whole series of ways of managing remote workforces and remote working within our local authority customers.

36:36 And rather than just trying to build a one size fits all mobile app, we want to build more of an archipelago of smaller mobile apps that are there for specific purposes. So, for example, one to run-in cab for the waste the waste collector is gonna be a different app than the arboreal the tree surgeon is being used to task the trimming of the bushes or the trees in the local park. So that's an area that we're investing within within Yotta. And then secondly, we're also opening up systems there for ease of integration into other vertical markets. You know, the we've always designed the Yotta solutions to be asset agnostic. We don't care what assets they use. In fact, it was driven with it was built with the vision that is about managing any asset anywhere by anybody.

37:21 And so that means it can be applied to other vertical markets which are also asset heavy. For example, utilities markets, know, the electricity, gas, telecoms, and so forth, and also in electric vehicles. So electric vehicles, of course, are combination of both public and private, environments. And so that rather well plays, into our capabilities and our knowledge base from the local authority side. And so we just need to open up some of those systems so that we can integrate with the tools that you might find in those other vertical markets. So that's it on the organic side. What does it mean on the acquisition side? On the inorganic side. Well, it's worth saying here that we apply very strict criteria to the targets that we seek. We're looking for we're looking for deep technology businesses, ones that are IP rich with hard to replicate technology that have got attractive cash flow metrics like our two existing subsidiaries have today. We want to have good to high revenue visibility or where that isn't possible or possibly and also have a dominant position in a in a niche market.

38:23 And we're also looking for management teams that share our cultural values. You you can really upset the direction of a a business if you get that cultural mix wrong. So we don't require all those characteristics at the point of transaction, but where it's not possible, we wanna see a clear pathway to achieve those. And our aim really is to identify that latent value in an asset, buy at a fair price, sell at a fair price for both, buyer and seller, and then improve performance through strategy, through technology transfer from the deep resources of IP that we've got elsewhere in the group, and through careful investment in in r and d. And then actually, as a group, we actually have multiple integration choices. You know, it could be integrated very deeply into one of the subsidiaries. It could sit slightly adjacent to one of the subsidiaries but under the same division, or it can also sit as a completely third leg. That's an that's an advantage that we have as a group. And, actually, just coming back to the Contemplus acquisition that David mentioned that we closed towards the end of August of last year. That's a nice example, really, of a business that we like to acquire. It's an IP rich business, you know, with expertise and video based movement analysis. No not always the need to put markers on. It's got a small ARR business, which they're now building, and they've also got a dominant position in the niche market of swimming, a place actually where Vicon wasn't present until now.

39:42 Very close, strong cultural fit, so picking up that fourth requirement. We've actually known the fifteen to twenty years. And we we saw once we'd identified that latent value, we bought at a fair price, and now we're improving performance through two way technology transfer. They're getting some of the stuff from OXFORD, and equally the stuff coming from Germany is also being used inside OXFORD solutions. And actually, it enables Contemplas also to make some bolder strategy moves because we've got a deeper balance sheet that we can leverage that into that marketplace. And actually integration wise, it's tucked very nicely into Vicon. So although it's small, it's a very nice example. And I'm very happy to say that four months, five months into that process, it's the integration is going really well, and we're excited about where that business is gonna gonna be going forward.

40:29 So that's a nice story of where we come from. Now let's turn and look at some example targets. So we're looking for businesses that perhaps have got complementary analysis techniques within our existing markets. In other words, leverage the, the customer base that we already have, but bring a complementary analysis. That's true for Vicor. It's certainly true for Yotta. We're looking for businesses that have got expertise outside our current verticals, who would benefit from leveraging our existing technology. That's certainly true on the yachtter side of the business, especially in that utilities area. So perhaps someone that who's got perhaps an aging product, but a great customer base, and they could back they could transition or migrate their customer base over to the alloy YOXFORD product. And then thirdly, perhaps an embedding licensing business. So people have already got the licensing business model embedding their solutions in others, but where we can then access the back catalog of fantastic OXFORD METRICS technology to boost their own catalog that they can then sell to their existing customers.

41:29 And in terms of scale for that right business, we're really looking for businesses now. They may be very small ones like the Content Plus acquisition, but we can where our advisers suggest and we feel comfortable with this, we're looking all the way up to about £70,000,000. So we've got some real resources there to to scale the business. But, clearly, if we're gonna make that much larger acquisition, we'd have to feel very confident about the way that's, where that business fits and where it's, where it's going. So that's the growth plan on the, m and a side. So you can see with that growth plan, it's very important how we start now the next year. So I want to cover then just briefly the outlook for the the year ahead. Well, it's it's fair to say that both divisions have experienced a strong start to the new year. All of those trends that we saw in q four of last fiscal year, so over the the July, August, September months of virtual production of location based entertainment, they're all continued from q four into the q one of this year as their site opening plans and LBE have restarted. And then, actually, in some instances, they're actually accelerated.

42:33 All the key demand metrics that David and I track across the group, which we track on a daily and a weekly and a monthly basis, they're all pointing towards a positive outlook for the year. Although, Vicom does continue to experience the short term supply chain challenges that David mentioned, we've actually seen as of the results improvement in recent months, but that that there is still at risk that revenues although the orders may be received in the first half, the products wouldn't be necessarily shipping until the second half, and so we'd see a delay in revenue recognition from the first half, you know, into the second half. And then turning to the Yotta side, with the anticipated ARR growth there, the nice stable cost base, we really expect Yotta to deliver another full year of, profitability.

43:18 And as you could see from David's introduction to the finance side of the business, the group really does stand in very strong, financial health. That strength of, finance gives us the confidence to invest organically in our in the five year vision and also to expedite acquisition opportunities that will accelerate that existing, strategy. So that's where we stand, from the growth plan perspective. That's where we stand, from an outlook, for the year ahead. So in summary, you know, last year, it was a good year for an already, strong business, but we believe that there are some really even more exciting years, ahead. So thank you for your time during the formal part of the presentation. What we'll now do is we'll turn to the q and a. So if there's questions that you've got, please feel free to fire those through the Investor Meet company platform. Nick, David, thank you very much for your presentation today. Ladies and gentlemen, please continue to submit your questions using the q and a tab situated in the right hand corner of your screen. We just want to come and take a few moments to review those questions. I'd like to remind you that a recording of this presentation along with a copy of the slides and the published q and a will be accessed via your investor dashboard.

44:29 As you can see, we've received a number of questions today, and thank you to all investors for submitting their questions. If possible, please could ask you to read out the question and give a response where it's appropriate to do so, and I'll pick up from you guys at the end. Okay. Let me pick up a a couple of which have come in relating to competition, first of all. So we've had Shagar s who's asked who is your close competitor, and Jonathan B has also asked. You said that Yotta has around 12% of the market. Who are your who are the main competitors? So, clearly, we have so to pick up both of those questions, try and answer them in one go. We have different competitors on the different subsidiaries. So on the Yotta side, we see competitors like Confirm and Simology. But actually, the largest market share inside street assets is actually a build your own. So there's still a number of local authorities who aren't are running on slightly aging systems, which are built on existing, know, regular technology rather than specific applications. So that's really but that's that's a a dying trend. We're really seeing those customers move over towards more application based solutions.

45:38 That's it already on the on the streets street side assets. We all have a different set of competitors on the waste side, and on that side, probably the one of biggest competitors is a company called Bartech. But they're actually inside world of infrastructure asset management for local authorities. It's actually quite a long tail. So, you know, there there is a specific company just looking after structures. They have relatively modest turnover, but they provide a very specific thing that to to say a bridge engineer is very relevant for them in their world. So there's plenty of opportunity inside Yotta for consolidation and customer acquisition in there from that 12% really to to grow our market share. On the Vicon side, our biggest two competitors are Optatrack and Qualysys. Optatrack is a US business that leverages a direct over the web solution, and Qualysys is a Swedish business that's that's been around for for quite a while, and we tend to see more within the European market, especially on the life sciences side.

46:38 So that's really the those are the two competitors. What I think we feel very confident within the business is our technology has the edge in both market places, and so we now need to make sure that translates to making sure we win the deals when they come up within, within those markets. So that's, some coverage on the, competition, side. David, is there anything there you wanted to cover on the finance side? Any of the questions? You're on mute, David. Yeah. There's one here about cash generation and then basically why why was it so good in the year just gone. We generated 14,400,000. I did cover part of that during the prayers. I mean, one reason is the the inventory is unwang slightly.

47:24 So that was probably about 1,000,000. But what we saw during the course of last year was a a more, how can I say, advantageous revenue profile? Historically, we tend to see revenues second half loaded and also loaded towards September. But in the year just gone, the revenue was the revenue profile was much relatively flatter, which basically meant that I could get my hands on the cash from customers a lot earlier. So that that's the reason. Great. Thank thanks for that, David. We've had a follow-up question on the competition side from James V on the Yotta side. We've one of the there are two parts to his question. One was where people don't use Yotta today, what do they use? Who's the best competitor?

48:12 Well, they they do use Confirm and Synology. I'm gonna say that our product is by far the best within the marketplace, but Confirm is probably our biggest competitor within there. They're the ones that we see, but that's more to do with legacy rather than the approach from my perspective of their technology with the marketplace. You also James, you had also a question about international expansion, which seems to have slowed. What is the why is that, and what are the best current opportunities? It has slowed simply because we we knew we would attempt a number of international markets. And in some of those markets, it was clear that our solution was relevant and that we there were customers willing to take it on. And there were other markets where, structurally, they weren't willing to take on quite a cloud solution quite yet. For example, in Germany, I think it really surprised us, but they that we were continued being asked, instead of having this cloud hosted software, why can't you do a version that we install in our servers on our sites? Well, our business model is not set up for that. You know, we like the benefits that come from having a single instance of the application that multiple customers sign into from an operational perspective. That's a great saver of costs and also a great amplifier of value. So that is our model. So we ended up pulling out the German market. But in I mean, example, in Australia and New Zealand, where they do take a very proactive approach to managing their assets, and we've seen some big successes, we continue to invest in those marketplaces and actually work with local partners who often have those local relationships to deliver the services, that those customer needs. So, really, yes, we've

49:44 trimmed international expansion, but where we do, maintain that, we expect there to be continuing growth, coming from from there. Another question we had, from, Shagawa s, I think it was let me see this, which was oh, it's not there now. There was a question about the metaverse. Maybe it was. Okay. Maybe the question's been withdrawn. Okay. Well, I'm gonna answer it anyway. I think it was through RS, but I can't quite find it on here. It was what was the company's oh, sorry. Here it is. How does OXFORD METRICS play into the metaverse? Well, clearly, the metaverse is being talked about very widely. It seems to be a hot topic for the end of last calendar year, and the conversation still seems to be going on into this year. I mean, clearly, the metaverse never got a whole wide variety of definitions of what that means. I'm not gonna try and, be Mark Zuckerberg and define that on this call. What I can say is that, you know, where we have always sat ever since 1984 is that this interface between the real world and its, you know, its virtual twin, its digital twin.

50:53 So we've been tracking human movement and allowing represent representation of that human movement in the virtual world. So although the metaverse may be a term that's moving into common parlance right now, it's something we feel very, very familiar with. And, of course, we sit with a blue chip customer base of some of those customers who are actually driving the developments within that metaverse. So I think, really, there are two there are twofold opportunities for OXFORD METRICS there in the metaverse. The the first one is actually providing that human interface between the real and the virtual world, And we're already seeing that with our location based entertainment customers. You know, you go there, you put some plates on your hand at Dreamscape Immersive in in Los Angeles, and you can go into a a virtual world, a metaverse, which actually tells you then a story. So you can go and see the alien zoo where they've gathered all of the aliens from across the universe, endangered species, and you actually get to experience them in a in a virtual zoo on some virtual planet. And I say that as if as if I visited you know, genuinely, if you do have the opportunity, you're in Los Angeles, I would really encourage you. Or, actually, they have another place, in Dubai as well as one in Dallas.

52:03 Dreamscape immersive. If you really wanna get an idea of how immersive a virtual experience, can be, I think they've they've done a fantastic job of that as a number of our other, location based entertainment, partners are also doing. So that's the first area is providing the interface between those two worlds. And secondly, we we have an opportunity. It's just provide the tools for those other people working inside the metaverse. So, clearly, companies like Meta and Oculus and their Oculus subsidiary are working on the hardware devices, Matt. Meta also working on the software infrastructure, but there are other companies like Improbable here in The UK are also working in that space. And, also, there are the content developers who are already our customers, the Electronic Arts, the EAs, the the Ubisofts, the Activisions, and the and also the Japanese games companies. So in all of those areas, can we be in the picks and shovels end of that expansion into the metaverse. And because that's the same tool that we sell to those customers as we also sell to our life sciences customers and our engineering customers, actually, we get an amplification. For us, it does it requires a very modest investment in order to get that expansion of of market opportunity. So that's really where I see us fitting within that metaverse world.

53:16 There's another question, here also. What have, what have we learned? What have I, we, and the team learned, from the pandemic? Well, I think there's there's a whole series of things. But if I wanted to pick out perhaps three, highlights, I would say the first thing is it really underlined the value of the great team that we have. There really is no substitute for that quality of that team. Now we have some very long standing employees. We still have one of the original founders of the group, Tom Shannon from you know, founder of the business in 1984 still working with us. We've got a lot of people who were over 20 worth of service. And actually, during that pinch point, when people were challenged overnight, everyone came through. And I I, you know, I'm very I was so excited and enthused and pleased with the way the team responded, you know, making sure that our our customers carry on operating as well as making sure that we that we could operate. That's the first point to underline the value of having a great team. I think the second thing is one of the points that David often makes is there's no substitute for for rainy day money. Right? Going into this challenge, we knew we had a strong balance sheet. That means we could, with confidence, communicate both with our customers and our employees in the market more broadly, that we were gonna be there for the long term. And as things develop, we, you know, we didn't know what the world was gonna be like in that March 20, April, 2020 time frame. Though having the confidence of the strength in the balance sheet gave us

54:47 the confidence, to be able to continue to support, our collective, community. So that's the second one. I'd say the third one is actually, the one that we've seen really coming through about six months into the pandemic, which is really about this accelerated opportunity, this coming of the augmented, age. In fact, you know, we've been talking about the augmented age for about three or four years. You know, we've done a number of presentations where I talk about the augmented age. And, you know, I I'm sure there was a degree of skepticism in what I was talking about. You know, this idea of humans and machines collaborating to achieve more than either can achieve alone. That all sounds a bit, you know, science fiction, bit star Star Trek. But actually, now we've seen it. Right? I mean, you know, here we are, a group of, you know, enthusiastic investors, a group of enthusiastic, business leaders meeting, virtually through a virtual platform, you know, as if it's every day. And that's great. Right?

55:38 That's us embracing as a as a society what technology can bring us in order to achieve much more as that as that community. So I think seeing that acceleration during the pandemic has now been another important lesson, and we absolutely plan to build on that going forward from here. Maybe just time for a couple of more questions. We've had one question about, from Bruce a. In discussing your five year growth plan, you mentioned the addressable market would like to grow from one fifty to, 600 actually, six fifty over the next five years. That being the case, why is the company any claim to grow its revenues by two and a half fold? Doesn't this imply they'd be losing market share? And if so, why should that be the case? So, really, the the expansion of the total addressable market, that that's the addition of markets that we don't currently serve. And so, therefore, we have absolutely no market share over there at all.

56:32 Now we do expect in all of the existing markets that we serve with existing solutions that we serve, we do expect market share or to step forward in there and really at their, you know, their historic levels. You have the sort of low double digit growth within with those opportunities. But what we then wanna see in those other markets that we can address so for example, bringing our the OXFORD product to adjacent vertical markets and utilities or inside the Vicon, seeing our technology through by broadening the scope of sensing and analysis software to be able to address new end market problems. That's all new market territory for us. So we expect that to also grow. So the sum of that really is what drives our estimate of revenues over two and a half fold, and that really is an aim. You know? I would really hope that we can beat that. Right? You know, I'm a I'm I'm a I'm an enthusiastic sales led leader. I would really hope that we can drive that. So, no, we're not expecting to lose market share. Rather, we're expecting to gain both in existing markets we serve and then in the new markets that represent all new territory, for us.

57:33 Couple of minutes left. James v asked the question, what are the synergies between the Vicon and the Yotta businesses? Are they better together? Well, so that's an important question. I think today, there are very few, synergies, today, but they actually did come from the same route. In other words, Yotta was a spinout from Vicon. In fact, Yotta originally took Vicon's measurement system and and truck put them on vehicles and drove around The UK. This is about 2005, 2001, maybe 2006. And in that way, it was measuring the built environment. What we found was is there was less profitability in surveying rather than actually being the software that sits in the middle of that that takes all that sensed data and provides the analytical tools for our end customers. And so that's really why we then sold off the surveying business a number of years ago and folks really just on the software side. So that's really why they're together why they why they stand together today. There are some common services that we run through them, and, actually, I think they provide a nice foil for each other. Know, the Viacom business is a is a capital goods business. So in other words, we have to sell, make, and ship it within the period in order to do the number. The great thing is because it's a a 72, 73% gross margin business, all that 72, 73% gross margin drops through to the bottom line if can we close the deal in that final month of the year. Whereas the Yotta provides a much more visible ARR business, but it's hard to impact the the the revenues and therefore the profitability within that time frame.

59:00 So I think they provide quite a nice balance for the business. I mean, clearly, they represent two valuable assets for us. And if someone wants to come along and pay an enormous price for you, the business, as they as Boeing did back in 2015 for our two d three subsidiary, then, of course, we will look at that. So I think that the complement the complementary capability of the two businesses actually provides us with a greater value opportunity, going forward. But we aren't, you know, we aren't wedded to that if, there's value on the table, and, of course, we'll look at taking that. So I'm aware that's $10.59, and I think I've done all the questions that are in the list there. Yeah. You have addressed all those, questions you can from investors today, and, of course, the company review all questions submitted today. Before redirecting investors to provide you with their feedback, which I know is particularly important to the company, could I please ask you just for a few closing comments?

59:48 Sure. Well, first of all, I wanna thank you for your attention. You know, that's an hour of your time that I'm I'm really very we're all very grateful as a business that you've given up for us today. I'd also point you out if there's clearly, this is only an hour, so I would direct you at our oximetrics.com website where there's lots more information, especially on the video side there. We put a lot of, time and effort into making sure that we try to have as many explainer videos up there, what the technology does, where the strategy is going, why we think we're gonna be successful in the future. Then I'll direct you to, to the website to to gather that information. Really, in summary, I would the thing I really want to communicate is our enthusiasm for what is a really exciting business. That's not just David and I who share that. You know, that's shared by every single employee that we have across the group.

1:00:37 And that excitement really comes, you know, from threefold. One, it's about the our unique and powerful technology. You have to go and ask our customers what they do with it or go and look at some of those videos on our website, and you can see genuinely it's differentiated technology within the markets. It really is global capability, unique technology. The second thing is I think we've got a fantastic balance sheet strength that David talked about. We've got ability to generate cash. We we sit we stand on a strong cash position, and we know that we can deploy those assets, within the group and with the opportunities that we have. And then thirdly, we really do feel that we've got some very real growth prospects. You know, we feel the world at a macro level is coming towards us. And and, well, you know, Dave and I have been through the business for a number of years, and I think really for for the first time, all of the all the compass points all seem to be aligning in the right direction. So really exciting business, something that we're very enthused of as a as a team. So many thanks again for your time this morning. And please, if you have any more questions, you can come and ask us questions through the website, or I hope to all meet you in person one day. Thanks again for your time. Nick, David, thanks for updating investors today. Could I please ask investors not to close this session as you now automatically be redirected for the opportunity to provide your feedback in order that the management team can better understand your views and expectations.

1:02:01 This only takes a few moments to complete, and I'm sure it's greatly valued by the company. On behalf of the management team of OXFORD METRICS PLC, we'd like to thank you for attending today's presentation, and good morning to you all. Great. Thanks, everybody.