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Oxford Metrics can get back up again

Sales delays hurt income this year, but the VR company spies recovery on the horizon in most markets
Oxford Metrics can get back up again
  • The VR company struggled to close sales during the pandemic, which has led profits down by more than half 
  • But with improving recurring revenues and a healthy orderbook, it is on track for a better 2021 
IC TIP: Buy at 89p

Even for a company with expertise in virtual reality, 2020 has been an unforgiving year. Oxford Metrics (OMG) saw its adjusted pre-tax profits drop by more than half, as it struggled to close sales during the pandemic at its largest division, Vicon. Sales delays were an issue especially in the US, where the subsidiary generates two-fifths of its revenues.

But that is not to say Oxford Metrics did not make any progress this year. Annual recurring revenues ticked up 10 per cent to £6.8m, which was led by its asset management business Yotta. The segment had a relatively robust year, even achieving profitability for the first time in the second half. The group said that it had seen an acceleration in the digital transformation of public asset management, with maintenance and service teams working remotely. Indeed, the business secured a number of new contract wins across local UK governments. 

Looking ahead, the group is confident that it will be able to secure the sales that it was not able to close in time for the end of its financial year. At Yotta, it expects a further £1m in its annual recurring revenue figure and to reach full year profitability in 2021. Meanwhile at Vicon, management noted that data from its long-term sales pipeline suggests a recovery is under way across almost all of the geographies that it operates in, although it described activity in the US as subdued. But the group's improving earnings quality, robust orderbook and absence of debt means that it is well positioned for a better 2021. Buy. 

TOUCH:88-90p12-MONTH HIGH:126pLOW: 71p
Year to 30 SepTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
% change-14-66-62 
Ex-div:10 Dec   
Payment:5 Mar   
*Includes intangible assets of £12.6m, or 10p a share **Restated


Last IC View: Buy, 95p, 21 May 2020