Oxford Metrics (LSE:OMG) — Interim Results

0:01 Good morning, ladies and gentlemen, and welcome to the OXFORD METRICS PLC Interim Results Investor Presentation. Throughout this recorded meeting, attendees will be in listen only mode. Your questions are encouraged. They can be submitted at any time just using the Q and A tab situated on the right hand corner of your screen. Simply type in your questions at any time and press send. The company may not be in a position to answer every question received during today's meeting. However, the company can review your questions and will publish any responses on the platform in due course. Before we begin, we'd like to submit the following poll, and please do give that your kind attention. I'd now like to hand over to CEO, Imogen O'Connor. Good morning. Good morning, everybody, and thank you for taking the time to join us for our interim results twenty four-twenty five. I'm Imogen O'Connor, CEO, and Zoe Fox, our CFO, seated here.

0:46 Next slide, please. So today, we'll take you through an overview of how our h one has gone from operational and execution perspective. I'll then hand over to Zoe, who'll take you through the financials. Back to me for a divisional update on the motion capture and smart manufacturing divisions. I'll then cover off where we're sitting currently on the a AI opportunity and market dynamics, closing off with some strategy thoughts and an outlook section as well. So next slide, please. This is our safe harbor statement. This will be available to read on our website when the presentation is put up there later on. But this obviously is a standard safe harbor statement, so please do take this time to read it in the following when you look at the presentation.

1:40 So Okay. OXFORD METRICS. Who are we? Well, we are a smart sensing and software group with a global reach, which was done through eight offices and over 40 distributors that you can see located there on the world map. The group consists of three main companies, Vicon, Motion Systems, IVS, and Sempra Group. We use vision and other sensing technologies to derive value insights into real world applications with a combination of hardware and software products. The original founding company was started in '90 and we floated on AIM in 2001. We've won a few awards along the way and over 10,000 customers globally. Next slide, please.

2:27 If you attended our prelims investor meet company meeting, we talked about our intention for the year ahead, and I'd like to take you through some of the things that we've managed to tick off the list during that period of time. In our motion capture division, we were delighted finally to launch our Markless technology in March at the game developer conference in San Francisco. It's the best launch the company's ever done in its history. Very proud of it. And the initial feedback continues to be extremely positive with a series of global demos underway. We've done demos in three three days here in The United Kingdom, two days in The United States, and a three day event in Tokyo to over 250 prospects for the technology.

3:12 And furthermore, in March, Dreamscape Immersive, our location based VR partner, their latest experience alongside Audemars Pique, the watch manufacturer, is already using BICON's Markless technology. We also won new contracts and new customers for our marker based systems across all main markets and geographies. And then post period end, building that Markless opportunity pipeline with some revenues expected in fiscal year twenty five. We launched our first of the h two products that we signaled at the prelims, which is the active crown. This is an accessory used on virtual production stages, and we have further product launches in the pipeline for the rest of h two.

3:57 Moving to smart manufacturing, we secured multiple contracts across aerospace, medical, pharma, and auto. We strengthened the division with two acquisitions, the first in October, last year of the Semper Group, and then post period end Amber Optics Limited. We appointed our divisional managing director to focus and grow that division, strengthened our product portfolios, and have good h two visibility with a building order book and pipeline beyond the current financial year. Next slide, please. So I'll now hand you over to Zoe to take you through the financial reports. Zoe? Good morning, everybody, and thank you for joining us. As Imadin said over the next few slides, I will take you through the final financial performance for the first half of financial year '25.

4:50 You may may remember that h one twenty twenty four benefited from a very large and unusual and not expected to repeat opening order book of circa £11,000,000. This has given us a a strong comparative on their half. We are seeing revenues of 20,100,000 compared to last year of 23,500,000. Overall, the financials are in line with our management expectations and our internal targets, although they are against, as I've said, that strong comparative. The revenue decline just reflects that expected slower start to the year because of that large order book being fulfilled in the gross margin remained solid at 65 and a half percent, demonstrating our continued strength and resilience in our core business lines in motion capture and our IVS company. The margin is slightly down on last year, which was 66.8%.

6:02 This decline is due to the growth in our smart manufacturing division, which the new acquisition of Sempra purchased in October of last year and has a different business model. It is more a distribution and sales model and therefore has slightly margins. On a profitability, our adjusted EBIT is a negative 400,000 versus last year of 3,000,000. Again, reflecting that drop in volume on sales in motion capture and also being offset with some of the cost savings that we implemented at the beginning of the financial year. Whilst the strong performance whilst it is offset against the strong performance of h one of last year, the profitability of business is in is consistent with our anticipated phasing of revenues and profit through through the first half of the year.

7:07 Importantly, our balance sheet remains robust with just shy of £40,000,000 at the end of the period, providing us with significant headroom and flexibility to support our ongoing investment in growth, our M and A strategy, and navigate any short term variability in our demand. We also maintain commitment to shareholders to return to shareholders returns for that aggressive dividend policy paying at £4,200,000 in the period versus prior year of 3,600,000. We saw a good generation of cash in the half despite that lower profitability with the cash on an operational basis up to 2,800,000 from previous year of 2.2.

7:54 This is really driven by stronger working capital management within business. We've reduced our inventory inventory levels and working to optimize our inventory in the business. In summary, h one performance is below prior year, prior year was that strong comparative. Encouragingly, we are seeing our gross margins remain high. Financial performance is in line with our management expectations and good cash generation in the period. Next slide, please. Just before I take you through the revenues by markets in more details, I just thought it would be useful to talk about that h one, h two revenue waiting in a little bit more detail and looking at our historics.

8:45 So if you take this graph and look at the left hand side, we can see pre COVID in 2018 and 2019. Our h one revenues were about the mid 40% of the total full year revenue. We consider this the more normalized web revenue waiting for the business. You then have the COVID years of lots of disruption. And as we move to the right of the graph, that is really when we started to see the supply chain challenges that followed COVID that many other businesses also suffered with certain components being very sourced. What that led to was difficulty in supply to customers and the building of that order book I talked about on the previous slide.

9:37 Meaning that as we exited financial year twenty three and into financial year twenty four, we had £11,000,000 of an order book, which generated 56% of our revenues last year. Next slide, please. So when you're looking at the four or there's three different markets, which we have in the motion capture division, the engineering, entertainment, and life sciences, We do need to remember that large £11,000,000 order book fulfillment in the previous year's numbers. So engineering down 59% in previous year. That was also compounded by the company having the largest ever order in the history of the company, also being fulfilled in h one financial year '24.

10:32 Moving more on to this year, we are seeing in all of our territories, excluding The US, an increase on prior year. And we're starting to see, you know, we've had some good, you know, upgrades on the Valkyrie system. One of those being in that a one of the top UK universities. The end The US territory across our engineering and life sciences has slowed down. We are seeing a impact and softening of the sales due to the funding cuts and policy change in The US. So when we're looking at the life sciences, that's also been impacted by that as well as the large order book with that decline of 31% from previous year.

11:30 We have, however, in h one, seeing new business and new customers. We we have a group of hospitals based in Brazil. We're now purchasing about three systems. But as I said, we just remain quite cautious about The US with some delays and cancellations and pipeline opportunities impacted by the academic funding change. When we move into the entertainment, we are seeing an increase in all territories including The US. And, again, we're seeing some systems and upgrades coming through in different areas outside The US as well. Smart manufacturing. We've had a good start to building out that division.

12:18 We've purchased there's been two acquisitions, one in the period. So one in October, I previously talked about, which is Sempra. And then one just post period in April, which is a smaller business that has been hiked up into the IBS business, which you may remember was bought a couple of years ago that also sits within smart manufacturing. Sempra has had £3,600,000 of sales in the first half, and that is in line and tracking in line with where we expect. IBS is a little bit down. It is 3% down on previous year. This is due to contract delays and customer delays. The business is contracts over a long period of time, and there was a couple of slippages on deliveries at the end of the year, some of those customer driven.

13:16 But all of those contracts which did slip have now been invoiced and recognized in h two. So overall, you know, this half reflects a a decline, but it is against a very strong comparative overall. Next slide, please. Just taking on our profitability and looking at those key drivers from that adjusted EBIT of £3,000,000 last year to the loss of 400,000 for this year. The the the main driver of that is that sales volume reduction at £2,600,000 on May, a profit point of view. We do have some increase in gross margins.

14:12 That is the IBS and the motion capture business, which we talked about on the first slide. We have got a reduction in sorry, an increase in sales support and marketing, the £900,000. That is predominantly the Sempra acquisition, but it is also where we have continued investing in some more customer facing operations within the businesses. R and d is a reduction of £300,000 year on year, reflecting more efficient product development, but also we've the r and d costs within the period. We've capitalized 1,800,000 versus previous year of 1.4.

14:57 That is the markless, which we product which we launched in March and also development on some new products that are due for release in h two. Admin costs are up on year on year, again, reflecting that acquisition, but also seeing some offset there of those cost efficiencies that and cost cuts that we made at the start of the year. And then finally, that last block is £400,000, which is FX and other. Is that FX is 300,000 of that, and that brings us to that loss of 400,000 for the year. In summary, while the first half reflects that decline in profitability, it is driven mainly from that volume.

15:45 We have maintained the margin discipline during the period. We've continued investing in strategic areas and have benefited from that those early cost actions. As a business, we continue to acutely focus on our cost savings and efficiencies across the business. Next slide, please. Now turning to our capital allocation and the priorities. We do continue to follow a disciplined capital allocation framework that balances investment in the growth and returning value to shareholders. Following that recent acquisition of Sempra, we have £39,900,000 on balance sheet, which gives us significant flexibility to execute on our strategy whilst preserving that balance sheet strength.

16:41 We have continued to invest in our products in r and d. That's about 12% of revenues. It really does reflect our ongoing commitment to innovation and maintaining our technology leadership across our core markets. We've got a 20,000,000 m and a program in place. We've actually we are actively assessing strategic opportunities that are complementary to our core business, earnings accretive, and aligned with our long term vision. And the the imaging will talk more to this in slides that follow. Our m and a program is concentrating more around our smart manufacturing division currently. At the same time, we remain debt free.

17:26 This is a key part of our current financial resilience. And in line with our commitment to shareholder returns, we've continued that progressive dividend policy at 3.25p. And we've also executed on £6,000,000 share buyback at the start of financial year, which we've announced the 4,000,000 extension last week on. In summary, our capital allocation approach remains focused on supporting our growth, maintaining our financial strength and delivering a sustainable return for the shareholders. Thank you. And I'll hand you back to him again. Okay. Great. So the first part of this section is just to introduce Viacom to those of you who perhaps are new to OXFORD METRICS. For those who are very familiar with Vicon, sorry, but there's some new case studies in there. But if you could move the slide on, please.

18:27 So the motion capture division consists of Vicon Motion Systems established in '84. We have specialized camera and integrated software, which is all our own, operating in three main markets. And our customer type split is generally in life sciences and engineering more academic than commercial. But in entertainment, it kind of flips the other way, 7030. We are direct in The UK, Ireland, and North America, and then indirect through a a team of over 45 territory distributors worldwide. We can see that we enjoy over 80% repeat business annually. And the little graphic that you can see at the bottom is the generations of cameras that we've made over the years starting at the left of 1984.

19:12 So right back at the very, beginning, right through to the right hand side, which is the Valkyrie, which is our latest premier camera. Next slide, please. We have an very we enjoy a very strong customer base with some very famous names on there. Those are just some of the ones we can actually talk about. But that's something where we we see repeat business. You can see we've got games, visual effects customers, household name, blue chip technology providers, health providers, universities, and research institutes and hospitals. Next slide, please. And I just wanted to just break down the main vertical markets and use cases. Entertainment, we're generally used in content creation for games and V Tubing, visual effects used in episodic TV, films, and so forth, and also location based entertainment, which is interactive experiences, elearning, luxury goods training, interactive gaming, and so forth.

20:18 In life sciences, which is the originating market for that entire technology, We're still using the the base use case, which is clinical gait analysis, biomechanics sport research, and more laterally as we got more commercial customers, product design, sports manufacturers, Nike, Adidas, and so forth. And then in engineering, it's a much more into back into the research mode, but product design and testing in the commercial areas, robots and drones, control system design, validation, what we call human factors engineering where a human interacts with a machine or robot. Next slide, please. Okay. So this video will actually show you a few of those use cases and customers that I've just talked to in the previous two slides.

22:18 So we study multi robot systems. Our main robots that we use are small little crazy flies that kind of fit in the palm of your hand. Here at Brown, we've flown experiments with 32 of them, but we also do things with fewer robots as well. So we are running experiments with downwash where we just care about the relationship between two different crazy flies. We'd like to know how close drones can fly together such that they can lift an object precisely, accurately, and have it delivered to a location. Or this could be tied to search and rescue, where we could help other people. I've recommend Vicon to people starting labs multiple times at this point. The precision that Vicon gives you if you wanna do multi robot research is definitely worth it.

23:18 Great. Okay. So the case study here that you could see in the the video there of the lady running is the elite marathon runner, Melinda Elmore. So shoes, high performance running shoes, have been using Vicon to help us in product design. Next slide, please. But now we have markerless. So we spent forty one years tracking markers, now we don't need them anymore. Well, that's not strictly true, but we'll we'll get to that. We just go back in time a little bit. We have been working on this project in a very fledgling form since 2017 and then really started to invest in the team to build it from 2022 onwards. The the r and d brains that you need to design and build a markerless technology, which is machine learning, are slightly those that do the marker based technology.

24:12 So we I've been talking about the Markerless program for a while. We entered a beta program with 10 customers. Some of the names that you can logo, you can see there on the right. And this culmination was of this program ended at the GDC conference in March in San Francisco where we launched the first version of this technology. This is a technology that will be iterated over time and its capabilities will grow. Next slide, please. We like to we prefer our customers to tell their story about how they use our products and how it adds value to them rather than ourselves. So I'll let this video play through and let Dimension Studios tell you how they're using it.

25:01 The great thing about Vicon's new Marklist system is the ability for us to put talent straight into the performance capture stage and very early start testing creative ideas. The purpose of this project is to demonstrate what Vicon's MACLESS motion capture system can do to enable a friction free environment to capture as much motion and story points as possible to allow the director or creative to use all that data to craft the perfect film. In the past, when we've done motion capture shoots, usually the first hour or two is spent getting the actors and the talent into the suits, getting them calibrated. This way we don't have that overhead. We just come in, system boots up, t pose, and we're done. Thank you. That's perfect. At Dimension, we're really about trying to help the filmmaking process, and a big part of that is understanding how the shots might start to look. So being able to use something like the markerless system allows us to very quickly iterate.

26:05 It tracks me straight away, and I can start acting and workshopping on movements. But it also allows Martin to step in and say, can I just have a go at this and see what it looks like? Thank you. Okay. And there there there's a little case study in in the deck too around how Dimension are using the Markerless solution. Next slide, please. You know, what we what we achieved in the last six months and what's our six to twelve month plan for Vicon in terms of the capitalization of growth. So we launched the Markerless technology with modest revenues expected.

26:52 We're building that pipeline of opportunities for the markerless technology in conducting these white glove demos. We obviously secured new marker based contracts and launched a visual effects product post period end with more to come. So, obviously, we we were able to tick off the divisional managing director half of the smart manufacturing division in the first half, but not yet in the Bicon area. So that's still work to be done. We have talked in the past about the fact we've implemented more of the rev ops discipline within the business. That includes hunters or sales development representatives and more on the ground salespeople globally.

27:39 So we will expand that program because the the fledgling program has worked very, very well for us. We need to expand our capability in Markalus quickly. Markalus is a rapidly evolving technology. It's machine learning. You train models quickly. You update. You improve. We need to expand its capability in entertainment, but in parallel, then start to address the life sciences market who can also take advantage of the Markless technology, and I will talk to how this will be done later in the deck. But it we mustn't forget our marker based customers, and in fact, our markerless and marker based solutions work together. They don't work separately. You can work operate them separately if you want, but they all work on the same platform.

28:25 So we need to improve our continue to improve our capabilities in the market based world as well. And then operationally across the whole of this time, continuing that inventory optimization was obviously helps with the work working capital and cash generation, constant process and ERP improvements, and that continued focus on the cost management, the cost base of the business. Next slide, please. So moving to smart manufacturing. Next slide, please. So we we now have two companies in the group with the post period end. Little company was obviously hived up into IBS at the at the point of acquisition. So we acquired IBS in 2023. They're a vision system IP based business, and in Sempra '24, much more of a sales commercial metrology business.

29:15 The logos that you can see in the middle are the customers that that the companies enjoy. We have over 75% repeat business across the division as well. And to the right, some of the typical use cases that this this division talks to and the products and technologies or have solutions for. Next slide, please. So here's a a video of of an IVS contact lens inspection machine. So you can see how the technology kind of works, and I'll talk to you a little bit about the level of value and where where this sits once the videos ends. Thank you. Next slide, please.

31:00 So in the deck, you have that video turned into a case study to read about later. This is all about inspecting contact lenses at speed for micron level faults and defects completely hands off and automated in the production line. Next slide, please. This is more on the medical device side. This is actually a Sempra case study. Again, critical tolerance inspections, adding value to the machine that they've they've sold with fixtures, custom fixtures programming, validation, installation, and training. This is, again, a precision measurement to improve cycle times and increase throughput on this particular component. Next slide, please.

31:47 So overall, this is this is where our technologies are adding value to to manufacturing. And what we have to to start with is what is the arbiter here, and this is compliance. Our companies, our technologies address highly regulated markets where this inspection and validation is not a choice. They must do it. This is so we're we're medical room pharma. It's customer patient safety, health and safety, legal purity, and so so on and so forth. So how we then address that is our technologies help with precision. And I mean by precision, I mean impeccable appearance. There are standards for things like even the paracetamol that you buy from the supermarket as a visual standard.

32:39 Precision tolerances in engineering, as you can imagine, aerospace, automotive, and so forth. Very, very important. So this is then feeding into the quality control that's required. If you can do sample to a 100% testing and then automate it, that speeds up your operation. You can automate repetitive processes. There still are processes where human beings are used to inspect these parts, but it's a repetitive and boring process that can you can feed human error into it. So these solutions take the place of that. One of the interesting things is in operational side is a growing market of traceability, and that is actually image archiving. So if you are a manufacturer in automotive or aerospace, for example, and your component leaves the factory, it's very common for that component to be photographed from many angles to prove the condition of the component before it leaves the factory. And there is a definite need for that archiving and retrieval to be done in an automated way.

33:48 And somewhere where we're just starting to look at and be involved in is on the software side. Again, talking about data collection, storage, and orchestration, but data really helps drive decision making back in the production line. So perhaps the yield of the part going through is not at the level it should be. So the data will then tell you you have a repeatable problem. Let's go back in the production line and find what it is, correct it. The yield goes up. The yield goes up. The profitability of the component goes up. But there's a lot a lot of opportunity in that software side. Guidance systems for training operators and operator support, and then, of course, using AI not only in the vision solution but in advanced analytics.

34:36 Next slide, please. So how are we building this division together, you know, from its constituent components? So what we're doing is we're gonna turn projects to products. And this is a strategy that we've employed over the history of the group because that's how Vicon started in 1984. Vicon was not a product company. It was a project company. And over time, it became a product company. The same with two d three, which was a company that was built from internal IP and then exited to Boeing in situ for cash, $25,000,000 in cash in 2014. And the same with Yotta, which was the last sale we made. That started as a project business, became a product business as it as it matured, and then then was exited. So what we're saying here is that at the moment, there's a lot of projects in this division, and we want to turn them into products because you then get a nonlinear growth.

35:37 In a project based company, you get more projects. You just tend to need more people to to fulfill them, and project deliveries are subject to time slippage, delays in contracts. What we want to be able to do is optimize that order to revenue cycle by turning one of the best of these projects that have the best chance in the market to products. If we take the contact lens inspection as an example, IBS have already gone through this. So they identified in sort of 2014, 15 in the contact lens work they were doing that there was a product here. So when we talk about IBS securing contact lens business, which we did with an RNS in March, that's not a project. That's a product. So they they just build the same thing.

36:28 So what we want to do is identify more of those and build more products to get that nonlinear growth. We've identified two further examples here, just two to talk about. There is more than that. The high performance bore inspection systems in vehicles. And then in defense, which, of course, is getting a lot of funding, inspection of nonconforming parts. Next slide, please. So, again, this this is what we achieved in in the first half with those contracts and the two acquisitions and the appointment of of the new MD to lead and grow the division. So over time, you'll start to see probably we'll not not be talking about Sempra and IBS as two different things. They could be brand names, but in terms of the actual company, we'll have teams of sales, teams of operation, team in engineering, and so on and so forth. So we're drawing the strengths of both organizations together.

37:28 We need to define those sales strategies around the products that we're offering. We're also already cross selling and upselling between the two. So the Sempra sales organization are already proposing and quoting IVS solutions in into their customers. We need to be able to deliver the projects that we do have in a reliable and visible way whilst generating these best chance products. And then operationally, you've got to be able to deliver all these things. So build that operation engine and deliver deliver those efficient order to revenue cycles so for for for the visibility. And as we're building this nonlinear growth energy and scaling this business from an m and a perspective, we wanna focus now potentially on customers who've already gone through this journey.

38:21 So less of what we've done and maybe slightly different, slightly bigger, more mature from an operational and product perspective in in the m and a program that we're executing upon. Next slide, please. So now I'd like to talk talk to AI. It's an important part of the business. Let's start with the the the market dynamics around generative AI and Vicon in content creation specifically because I feel feel this is where we get the most questions around how do you you do you view Gen AI as a as a potential threat to the technology? So if we start at the left, this is a classic output from generative AI tool and used to quickly articulate vision.

39:12 Perhaps in the past, this would have been a pen and paper storyboard, pencil and paper, in fact. But now there's an ability to to perhaps get something slightly more rich creatively from a GenAI tool. And this slide is how our customers are using things too as well, not just our view of it. So the idea is you you storyboard something quickly in Gen AI, but that Gen AI has no you can't ask that character in that image there to touch their toes or spin around on the spot or do a roll a forward roll or hug someone else or get three people in the space. That part of the technology does not quite yet exist. So you then move to the Michael Markerless solution because it's a friction free environment as our customer explained in the video.

40:02 It's very quick to iterate. It eventually it's effectively a three-dimensional storyboard. But then if you're really going to go to the high end high value production content, you really need to start to be moving to still to the right hand side because the Markerless technologies are also not able to currently replicate the level of control nuance direction, multiple characters that a performance capture stage, which is what you can see on the right hand side can do. So you you straddle the two with with a hybrid system. So this is with icon allows our customers to use a markerless and marker based system together. So you can use markers to help you with tricky tricky situations as the markerless technology iterates and get trains and gets better and better and better. So this is how Gen AI sits in the content creation space with Viacom technology.

40:58 Next slide, please. But we also have to address, you know, the fact that there's a lot of these tools out there. There's motion creation tools. There's even GitHub repos with code that you can just download and lots of startups. This quality is improving, but, again, that complexity control and nuance is lacking. We're now in the point of the first litigation around copyright concerns with Disney and Universal suing Midjourney AI for scraping images from them and the and movements from from their copyrighted images. But the opportunities for us are that we continue to enhance our technology with AI. We've been using AI since 2013 in the market based solution. We also feel that you have to you have to look at Gen AI as it's coming. And if you don't embrace it and use it and and work with it, that's probably the wrong call.

41:55 So we have a a view that there's a combination of mocap and AI generated motion could be the way forward there, and we have a lot of data at Viacom. So we could leverage that and create our own motion generation tool that could be used with generative AI. That's kind of forward looking idea, but something that we are looking into with my head of ML. Next slide, please. But then moving to the other markets. I mean, we are we're using AI in them, but I'm really talking about GenAI. In our engineering markets, as you saw from that drone tracking, it's they require highest accuracy and lowest latency because in effect, they they they're using our technology to make control loops.

42:42 So it's gonna be very, very difficult for a Gen AI product to do that, but that it does help with the data analysis and the simulations that go alongside the measurement part. And then in life sciences, well, human movement is a individual, very complex biological process. To replicate that is a very significant technical challenge, and we therefore believe that deterministic systems, I e markers and specialized AI, I e marker less, will still be needed, but then the AI can be used for diagnosis assistant, number crunching, and simulation. And then in smart manufacturing, of course, you still have to measure the actual part in situ. We already use AI to enhance the the vision solution. So the contact lens video that you saw where we were detecting those very, very tiny faults in those contact lenses, you just use AI to to assist with that.

43:38 Again, the AI enhances the integration, the downstream data analysis, and the bringing together of the data. So we see that it's a kinda complementary technology to those markets. Next slide, please. So turning to strategy. So our focus is that we want to be able to report in every six months and and set out a stall of what we want to achieve and then report back in in the six month period. So our motion capture division to be a core business to be profitable and and reliably cash generative with an agile execution of the market opportunity with that pivot into life sciences. So recall that we talked a little bit about the commercial model for Markless being having an ARR element.

44:27 That is now live and is part of the commercial model that we are quoting to that pipeline of opportunities that I talked about earlier. We want to optimize that working capital by continuing to focus on core costs and inventory reduction. In smart manufacturing, as discussed, we wanna show that growth engine to scale, show clear progress of projects to products, show clear progress on upsell and cross sell of opportunities on the current sector with that optimized revenue cycle with that selective m and a, and that's to accelerate the ambition with one to two deals. And then at the top level, we're formulating the new group three year plan, which we expect to launch our full year results later in the year.

45:17 Next slide, please. And next slide, please. So closing out with our outlook. Come a bit forward. That's it. So to close out, we have an h two trading that started in line with previous years. We have a typical motion capture pipeline across majority of our geographies. Talking to The US policy change relating to academic funding, we enjoy a, usually, a seasonal uptick in activity in September. What we are signaling here is that we are uncertain that seasonality will happen this year due to The US policy change. We have the Markless global demos underway and expected to release those modest revenues into '25 rolling into '26.

46:09 Our smart manufacturing division has good visibility, a building order book, and a pipeline that extends beyond our current fiscal year. Long term drivers of our business remain strong. We've announced our additional 4,000,000 extension of the buyback to close out and anticipate a full year adjusted EBIT to be in line with board expectations. So thank you very much. And then we'll just move to the questions now. That's great. Imogen, Zoe, thank you very much indeed for updating investors. Ladies and gentlemen, please do continue to submit your questions just as you have been using the Q and A tab on the right hand corner of your screen. But just while the guys take a couple of moments to review your questions submitted already, I'd just like to remind you a recording of this presentation along with a copy of the slides and the published Q and A, can be accessed via your Investor Meeting company dashboard. Imogen, Zoe, you've received a number of questions from investors throughout your presentation and ahead of today's presentation. So firstly, thank you to you all for your engagement. If I may, Imogen, just hand back to you just to take us through the Q and A and I'll pick up from you at the end. Sure, absolutely. Yes, thank you everybody for questions. We'll get to as many of them as we can.

47:11 I think we'll start with US tariffs, which was a pre submitted question. So we were able to act pretty quickly. We have a US subsidiary, of course, which warehouses our stock for The US. The first thing we did was we restricted their, say, their shipments. So originally, The US organization would ship to Canada. They would ship to Central And South America. So we'd stop that, and we just ship directly from The United Kingdom there. So there's the the tariff is is not not applicable. We were able to ship a reasonable amount of h two stock out to The United States before the tariff was applicable.

47:59 And we managed the overall customer messaging and price increases in a, I believe, graceful way with understanding and a 10% tariff on the base product from Vicon does not translate to a 10% increase in the system price because the system does consist of non tariffable items as well. The other thing, does affect our competition. Our Swedish competitor, of course, will have a higher tariff. And then our American, but ultimately Chinese owned competitor may have some issues elsewhere in the world. So at the moment, the tariffs are being managed in a a graceful way with talking to our customers and making sure that we can still help them out.

48:53 I'm hoping I've covered the risks and opportunities to AI in the deck. K. Yeah. I mean, I would just a little bit more on the crackdown of educational sector. I just really wanna talk to the fact that we have already taken into account the short term effect of that in in everything that we've considered for this interim. And the bigger thing is the the the seasonality in September and signaling that we are less certain that that may be be take place this year due to the the crackdown. Okay. While the successful launch of Vicod, what indicators will you use to measure commercial traction and success over the next twelve months?

49:48 Well, we will be reporting our market less revenues separately. Right, Zoe? Mhmm. And we'll also we'll be reporting the ARR element as we move through. So our success will be very clear. We want to build, you know, a significant and meaningful revenue stream from this given the investment that we've made in it. So that's what how we will be reporting it. Anything that you've spotted here. Just last question on that list. What was the interest on on our cash? It was £800,000 in this half year, I think, versus 2.3 previous year, with the interest rate slightly lower and the bank balance post acquisitions also being lower.

50:35 It's 800,000 on the half. Okay. I think I'll just take this with smart manufacturing, more of a distribution business and the technology owner, what synergies there with IP led Viacom. Well, I'm hoping that you're starting to see that obviously we've got IBS which is IP led, that we want to turn that division into more of an IP led business. We want to turn projects into products. We continue to explore cross divisional synergies. We do have the obvious ones in in terms of back office. We've also made marketing a group function as well. And then over time, from computer vision and AI perspective, looking for those synergies across the the two divisions as well.

51:27 Anything else you want to cover? I don't think so. Alright. Thank you, everybody. Imogen, Zoe, thank you very much indeed. And of course, we can make any other questions available post today's meeting and we can add responses if appropriate. Imogen, I know investor feedback is particularly important to yourself and to Zoe, and I'll shortly redirect attendees on the call to give you their thoughts and their expectations. But before doing so, I wondered if I may just ask you for a couple of closing comments, and then I'll redirect investors for feedback. Yeah. Well, again, I'd like to take the opportunity to thank you all for taking the time to attend today and ask those questions. And, yeah, thanks again for supporting OXFORD METRICS. That's great. Zoe, Imogen, thank you once again for your time this morning. Can I please ask investors not to close this session as we're now automatically redirect you for the opportunity to provide your feedback, and all the company can better understand your views and expectations?

52:17 It's only take a couple of moments to complete. I'm sure it'll be 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. Thank you once again.