TIDMOMG
RNS Number : 8007J
OMG PLC
10 April 2015
10 April 2015
OMG plc
("OMG" or the "Group")
Disposal of 2d3 for $25 million
-- Sale of 2d3 to Insitu Inc., a subsidiary of The Boeing
Company, for $25 million (approx. GBP16.8 million) in all cash
transaction
-- Profit before tax of the transaction $16.4 million (approx. GBP11.0 million)
-- Transaction price represents a significant premium over the Group's current EV/EBITDA ratio
-- Net cash generated from the transaction $16.9 million (approx. GBP11.3 million)
-- 45% of net transaction proceeds to be returned to
shareholders via an initial GBP5.1m special dividend
-- Reduces volatility of Group revenue and profit streams and
enhances future visibility of earnings
OMG plc (AIM:OMG) the technology group providing image
understanding products for the entertainment, defence, life
science, engineering and consumer electronics markets, is pleased
to announce the sale of 2d3 - the Group's defence software division
focussed on processing, exploiting and disseminating critical
intelligence imagery - to Insitu Inc., a subsidiary of The Boeing
Company for $25 million (approximately GBP16.8 million) (the
"Disposal").
Background to 2d3
2d3 is now a leading provider of imaging intelligence solutions
to the defence market. 2d3 has over the past seven years created a
suite of advanced video and image processing solutions - both
organically and through acquisition - that are used by some of the
most important defence organisations in the United States, UK,
Germany and the Netherlands.
Rationale for the Disposal
2d3's success in the defence market stems from the superiority
and responsiveness of its technology and the partnerships it has
forged with larger defence contractors. 2d3 has proven its ability
to win cornerstone projects with some of the world's largest
defence purchasers, including the US Air Force's Remotely Piloted
Aircraft Squadron Operations Center, the US Navy and the UK MoD's
Defence Science and Technology Laboratory.
Whilst these customer relationships have translated into
encouraging revenues in recent years, the size and timing of those
revenues can be hard to predict. Annual revenue and profit
performances can often be dependent upon the outcome of one large
deal or subject to variations and scale of changes in public sector
spending. Tier 1 customer relationships take significant time to
build and in order to maintain its strong market position,
continuous investment in 2d3 technology and product is
required.
The Group and its shareholders will benefit, post disposal, from
a lower cost base and a more predictable, visible revenue stream
moving forward. It is also the Group's view that 2d3 could more
fully achieve its potential and benefit from competitive advantage
as part of a larger, more established organisation.
Since 2009, 2d3 and Insitu Inc. have had a successful OEM
relationship and a series of 2d3 products are already embedded
within Insitu Inc. solutions. 2d3 has now reached the level of
maturity that it is of interest to possible acquirers and the Group
believe this sale offers a clear, strategic fit transforming Insitu
Inc. from a strong partner to a strong parent for 2d3.
Terms of the Disposal
The Group has entered in to a Share Purchase Agreement with
Insitu Inc. to sell the entire issued share capital of 2d3 for $25m
(approximately GBP16.8m). The expected profit before tax on
disposal will be $16.4 million (approximately GBP11.0 million).
This represents a significant premium over the Group's current
EV/EBITDA ratio and recognises significant value for OMG
shareholders that is not currently reflected in the overall
valuation of the Group. Consideration will be payable wholly in
cash, 90% paid upon completion today and the remaining 10% in 18
months' time.
For the year ended 30 September 2014, 2d3 contributed revenue of
GBP5.6m and a profit before tax of GBP0.5m. The total value of the
Net Assets being disposed of is GBP3.8m including Goodwill and
Intangibles of GBP3.7m which arose through the acquisition of
Sensing Systems in 2011.
Proceeds and their use
Net cash proceeds from the Disposal are expected to be at least
GBP11.3 million or approximately 10 pence per OMG share, compared
to the closing price per OMG share of 41 pence on 9(th) April
2015.
On account of OMG's already healthy net cash position, the Group
will return a significant portion of the net cash proceeds to
shareholders via a special dividend. A sum of GBP5.1m, representing
45% of the net cash proceeds will be used to pay a special dividend
of 4.5 pence per share. This will be paid on 15(th) May 2015,
following an ex-dividend date of 23(rd) April 2015 to all
shareholders on the register on 24(th) April 2015.
In the medium term the Group will retain the balance of the sale
proceeds for use in general corporate purposes including possible
acquisitions, but does not rule out a further cash distribution to
shareholders if deemed appropriate in the future.
Commenting on the transaction Nick Bolton, Chief Executive
Officer of OMG said:
"Today's sale is a positive and important step for our Group for
several reasons. First, it represents in many ways the culmination
of OMG's guiding strategy: to take great technology, nurture and
develop it, and realise meaningful shareholder value from those
efforts. Today's special dividend serves as our recognition of the
support given to us in this venture by long-standing shareholders.
For the 2d3 team it represents a logical and very exciting
development as they see a strong partner of many years become a
strong and committed parent."
"The sale of 2d3 does not change our Group strategy - it
emboldens it. It strengthens the Group's already healthy cash
resources and creates a revenue base that is smoother and more
predictable moving forward. From this base, we will continue to
focus on increasing the profitability of our operations and the
pursuit of growth, be that through licensing of our IP or indeed
through other corporate activity, where it can enhance the quality
and visibility of existing revenue streams."
For further information please contact:
OMG plc +44 (0) 1865 261800
Nick Bolton, CEO
David Deacon, CFO
+44 (0) 20 3727
FTI Consulting 1000
Matt Dixon / Emma Appleton / Charles
Palmer / Harry Staight
+44 (0) 20 7496
N+1 Singer (NOMAD to OMG) 3000
Shaun Dobson / Jen Boorer
Notes to Editors
About OMG plc
OMG plc (Oxford Metrics Group. LSE: OMG) is a group of
technology companies producing image understanding products and
services for the entertainment, life science, engineering
industries and consumer electronics markets.
The Group's technology is used globally to capture the movements
of actors (for the movie industry), sportsmen and women (for video
games or improving team performance), and children with cerebral
palsy, rehab patients and animals (for medical, life science and
research industries). The technology is also used for the
management of pavement and street furniture. Through this diverse
offering the Group has earned its strong international reputation
for precision from pixels and its unique expertise in imaging
technology.
Founded in 1984, the Group is headquartered in Oxford, UK, and
has two offices in the US and four in the UK. It has customers in
over 50 countries and is a quoted company listed on AIM, a market
operated by the London Stock Exchange. The Group trades through
three subsidiaries: Vicon, the world's largest motion capture and
movement analysis company, Yotta, a provider of software and
services for infrastructure asset management and OMG Life our IP
licensing business which is focused on unlocking latent value in
OMG's IP.
The Group's global clients spanning the worlds of science,
medicine, sport, engineering, gaming, film and broadcast include:
major hospitals and research facilities such as Guy's Hospital,
Nuffield Orthopaedic Centre, Headley Court and Loughborough
University, engineering industry leaders including: Ford Motor
Company, BMW, Toyota and European Space Agency and in the
entertainment sector; The Imaginarium, Sony, Industrial Light and
Magic, Sega, Nintendo, UbiSoft, EA and Square Enix. In
infrastructure asset management, clients include Highways England,
East Sussex, Kent, Lancashire, Transport for London, UK Power
Network, Cheshire East and West as well as many others.
Ends
This information is provided by RNS
The company news service from the London Stock Exchange
END
DISUGUQACUPAGMB
Oxford Metrics (LSE:OMG)
Historical Stock Chart
From Feb 2024 to Mar 2024
Oxford Metrics (LSE:OMG)
Historical Stock Chart
From Mar 2023 to Mar 2024