Following two disposals and the reorganisation of a loss-making business, cash-rich imaging technology group OMG (OMG) is focused on increasing shareholder value by boosting the quality of its earnings and focusing on the latent value of its intellectual property (IP). We feel the share price fails to fully reflect the attractions of the strategy and the potential for further returns of capital following a string of special dividends.
- Accelerating profit and margin growth
- Focusing on value of intellectual property
- Shares are cheaply rated
- Penchant for special dividends
- Restructuring could be disruptive
- Modest top-line growth
Oxford Metrics Group targets the entertainment, engineering, life sciences and consumer electronics markets and counts Ford, Sony and Transport for London among its customers. Management has reshaped the company to focus on higher margin, more reliable work. Indeed, it sold defence software business 2d3 for $25m (£16.8m) to Boeing subsidiary Institu and disposed of US business House of Moves for £0.8m in the last financial year. Those deals have reduced the volatility of revenues and profits and boosted cash generation. They've also helped the company return more than £15m through three special dividend payments.