Oxford Metrics (LSE:OMG) — Interim Results

0:01 Good morning and welcome to the OXFORD METRICS PLC investor presentation. Throughout the quarter presentation, investors will be in listen only mode. Questions are encouraged and can be submitted at any time by the Q and A tab situated in the right hand corner of your screen. Simply type in your questions and press send. The company may not be in a position to answer every question received in the meeting itself. However, the company can review all the questions submitted today and publish responses where it's appropriate to do so. Before we begin, I'd like to submit the following poll. I'd now like to hand you over to Imogen Moorhouse CEO. Good morning to you. Good morning, everybody, and thank you for joining us for our interim results 2024. We're now in year three and just over halfway into delivering our five year plan, and I'm pleased to report that we are on track. So what this presentation will cover this morning is firstly David, who will take you through the financial performance highlights.

0:54 I will then update you on our progress of a five year plan and there are opportunities for growth. And then lastly, we'll look forward to the outlook for the business. So over to you, David. Thank you, Imogen. And I'd also like to add my own warm welcome to this morning's presentation.

1:13 Turning first to the financial headlines, starting top left. Overall reported revenues at $23,500,000 were up 10.5% year on year. Within that, Vicon on a stand alone basis was up 2%. And IVS, our new acquisition, contributed $1,800,000 to revenues. The order book as at the end of March stood at $3,000,000 down from $21,900,000 a year ago and down from $11,300,000 at the end of FY 'twenty three. As described in the statement, the order book now reflects the normalization of customer buying behavior in Viacom. And what we mean by this is worthy of some further explanation. So pre pandemic, Viacom was always a sell make and ship business, and the order book was typically zero.

2:04 To provide some guidance around what revenues might be in the future, we relied on the sales pipeline. Basically, a long list of opportunities that are ranked appropriately to arrive at a list of qualified opportunities that could be closed by a given time. This process was established back in 2006 and it served us well as a means of predicting revenues. So just hold that thought for a moment. So we then had the pandemic, and we saw order intake soar as customers got in the queue to secure systems given the supply chain challenges we faced. And consequently, the order book went well north of 20,000,000. Order intake then subsided. In other words, we experienced a low whilst we fulfilled the order book.

2:51 So fast forward to today, the order book has been largely the key group, and we have now reverted to operating the business as we did pre pandemic. Meaning, now rely on the sales pipeline once again to determine what future revenues will look like. Today, the sales pipeline compared to twelve months ago is 2.5 times bigger, which confirms we have passed through the low point in order intake and so expect this to be considerably higher in the second half. At this point in time, the sum of revenues recognized plus the modest order book that we do have plus the qualified pipeline means we have visibility in excess of 90% of full year revenues as we described in the statement.

3:37 So there is still some work to be done, and it is fair to say the execution risk is slightly higher given we are converting pipeline rather than order book. But it's also fair to say the business has simply reverted to a pre pandemic state, and it's very much now business as usual. So returning to the headlines, we're reporting a statutory path of 2,800,000, down from 3,400,000 a year ago. We were left on an adjusted basis, which excludes noncash related items and exceptional costs, we report a adjusted profit of 4,000,000, which is down from GBP 4,500,000 a year ago. And later on in the presentation, I would explain the bridge between last year and this. So that translated into an adjusted EPS of 2.63, down from GBP 2.94.

4:28 And the cash position at the end of March stood at GBP 54,800,000, which is after the payment of the final dividend, equating to an outflow of GBP 3,600,000. And after the purchase of IVS of 6,200,000. So during the first half, we also invested GBP 1,400,000 in new IP, which represents an increase compared to last year from GBP 900,000. And finally, bottom right, the inventory position at 9,000,000 is higher than we would typically expect to see and is for current operational reasons. That reason is the implementation of a new ERP system, Oracle NetSuite. Given the implementation of a critical system to the business, I know from bitter experience, could be quite a disruptive event.

5:16 So we took the decision to have more cameras on the shelf whilst we went through that phase, which is now complete. And I'm pleased to say, imaging now has a shiny new dashboard with live information and speedo dials. Moving forward, the system will deliver operational benefits, and we expect inventory to reduce to a more appropriate level of around 7,000,000 by the year end. So now I'll take a look at the H1 trading performance in a little more detail, starting with revenues, which I'll look at look at in three ways. Firstly, historical. So the first half reported performance at 23,500,000 is pleasing to see. But of course, what matters is the full year. And as discussed earlier, we currently currently have visibility on over 90% of the full year revenue target.

6:07 Secondly, we'll look at revenues geographically. So compared to last year, we have seen quite a significant change in mix. After several years of buoyant demand in Asia Pacific, this year contributed 27% compared to 43% last year, and this market is largely driven by the entertainment side. On the positive side, the North American market reported strong revenues and contributed 44% revenues compared with 35% last year. And The US is driven largely by life sciences. This illustrates once again that the geographical reach of Viacom provides some overall resilience to revenues. So looking at the revenue picture by market segment, it's just worth remembering this is just a snapshot, and we typically see segments ebb and flow from half to half.

7:01 So it is advisable to look at performance over a longer arc. That said, the events that colored the performance in the first half were as follows. So in engineering, at 4,800,000, that was up 56.6% year on year. The segment had a good half. Contracts were secured from automotive, aerospace, and metrology sectors. And one deal of note is the work being carried out by the satellite applications catapult. And imaging will have a little video for you a little later. In entertainment, revenues at 8,500,000 were down 22.8% year on year. As I said, after a good run-in recent years in Asia Pacific, we are now beginning to see the effects from the global games industry contraction, where decisions are currently being delayed.

7:51 But despite the decline, the first half also included some notable deals, including our customer and partner, LUXFORD METRICS Valkyrie solutions were also delivered to London College of Fashion and Bristol University Vision Institute called MyWorld, which is set to be a new global center of creative technology. Most recently, Paper Games in China added an additional large Valkyrie system to their existing solutions to add realism to their female focused games and their VTuber, Nikki, who lives, who streams live on a weekly basis. And then in life sciences, by 8,000,000, this was up 38.3% year on year. Of note in the first half was Valkyrie successfully achieved The UK conformity assessment medical device market accreditation.

8:42 Or more or more simply put, we could put The UK CA sticker on the camera, which is now globally recognized. The accreditation enabled Valkyrie systems to to be delivered to hospitals around the world, including new customers in Hong Kong, in the Yamagata University Hospital in Japan, and Vincennes International Hospital in Vietnam, along with the University of Sydney who invested in a Valkyrie solution for research into head injuries in rugby league and rugby union. And back here in The UK, guys in St. Thomas' also bought a system along with Shriners Children's Hospital in The USA. And then finally, the location based entertainment segment revenues at GBP 400,000 was lower than we would have liked, but does simply reflect the pace of customer rollouts of existing optical based systems.

9:38 On a more positive note, our partner Sandbox VR is now operating in 46 locations in multiple countries. Sandbox also recently announced its partner partnering with the Aperol Group and plans on opening 25 new locations across The UAE, Kingdom Of Saudi Arabia, Qatar, Kuwait, Bahrain, and Oman by 2028. Elsewhere, our partner, immersive game box, is trading experiences across the Berlin Entertainment Estate following its multimillion pound and multi territory agreement we spoke about at the prelims. And in the case of Dreamscape, their rollout is pending the commercial launch of our markerless solution. So in this market, there is still a lot of promise, but as yet, it's not quite reflected in the reported numbers.

10:29 And finally, in terms of the segmental analysis, smart manufacturing, AK IBS, performed as expected, delivering, as I said earlier, 1,800,000 in revenues. So the focus so far has been on revenue and order book. So next, I will explain the p and l. Turning to the adjusted PBT for continuing operations, I've prepared the following bridge. So on the left hand side, you've got last year's adjusted PBT of 4,500,000, which has been restated to adjust our loss making iMeasure U operations in New Zealand that have been discontinued in the first half. Moving across, well, the FX effects year on year were relatively negligible.

11:17 And from a gross margin perspective, we generated an additional 1,900,000, which are trimmed by around 100,000 just to reflect a very slightly lower gross margin percentage arising from the mix of directs and indirect revenues year on year. One of the big changes compared to last year is the cost base, which is up GBP 2,800,000 due to our planned organic investments described in the five year plan. It also includes investment in Viacom sales and marketing activity and a more general increase in property costs, including our new facility in Botley near Oxford. In addition, there are some general inflationary increases as well. And of course, we now have the addition of the IBS cost base.

12:03 As I mentioned earlier, r and d capital capitalization was up compared to last year by 600,000, so that's helped. And also, amortization was slightly lower, adding another 0.1. And finally, our interest received from year on year adds another 700,000. So adding all of those various puts and takes together, we arrive at the reported adjusted PBT of 4,000,000, which is very much in line with expectations for the year. So in summary, the strong reported revenue performance is backed up by a £3,000,000 order book going into the second half and a healthy sales pipeline that I explained earlier. The adjusted PBT performance is in line with achieving expectations for the year, and our cash position remains strong at 54,800,000.

12:56 In this regard, we expect to deploy through the cash and are active actively pursuing a number of m and a opportunities in smart manufacturing that will build out our presence in this market. We are having sensible conversations around valuation, and there are numbers on the table. These opportunities are established and viable businesses, which will deliver further earnings accretion in the future. So in summary, the business is in a good place to move forward into the second half and onward with the five year plan. Back to you, Imogen. Okay. Great. Thank you, David. Just to let you guys know on the call that this next section has a number of videos. As the videos play, the camera views will disappear.

13:45 My audio will stay on. And then when we go back to slides, the the cameras will come back on again. So don't worry if you see me disappearing and coming back in. It's deliberate. So let's move on to the strategic progress section of the presentation. So our five year plan, as a reminder, is to increase revenues two and a half times and deliver an adjusted profit before tax margin of 15% exiting the fiscal year '26, which ex which ends at the end of September of twenty twenty six. Okay. So if I could have the first video, please, Alexandre. So since the plan was announced in 2021, we sold Yotta to Causeway for 52,000,000 cash in May 2022, which is an over six times ARR and premium valuation providing a very strong cash balance to pursue our growth ambitions.

14:46 In twenty twenty two July, we launched FiCon's new premium camera Valkyrie to stimulate organic growth and upgrades and then pioneered our new Markless technology platform in the summer of twenty twenty three. And then finally, in November 2023, we acquired Industrial Vision Systems, an earnings enhancing acquisition in smart manufacturing. K. Can we come out of that? Thank you. Back to the slides for a moment. So OXFORD METRICS consists of two main companies now, Vicon Motion Systems, a motion capture company specializing in the capture and analysis of humans, animals, and robots in life sciences, visual effects, engineering, and location based entertainment markets.

15:38 We have an Oxford HQ and offices around the world, including Harwell, which is where IVS, Industrial Vision Systems, are based. They are a smart vision company established in 2000, working in quality and compliance smart manufacturing. And indeed, Vicon have just are celebrating our fortieth anniversary as a business this year. Turning to our customer base. We enjoy across the five markets we serve, major sportswear manufacturers, automotive, aviation, aerospace companies, research institutes, hospitals, global tech brands, medical device manufacturers, games companies, visual effects houses, and location based entertainment providers.

16:26 These are just some of the customers that we can talk about on this slide. K. Moving to the next video, please. So Loughborough University School of School of and Sciences. They've been using METRICS PLC. Study here is in collaboration with the ECB to research cricket biomechanics to enhance player performance and reduce injuries. Satellite applications Catapult uses motion capture to help them simulate orbital environments to prepare for servicing, refueling, and assembly operations in space.

17:17 Their in orbit service and manufacturing yard seen here is a room used to simulate orbital environments using robots. The Vicon system is used for close proximity operations, including flying information in orbit. The Vicon system tracks exactly where the robots are positioned in the environment. And Vicon has been bringing realism to video games characters for over twenty years. Here's the BAFTA award winning Baldur's Gate three and game of the year. In Far Cry six, Giancarlo Esposito from Breaking Bad is one of the main characters seen here. Electronic Arts FC 24 captured Cristiano Ronaldo seen here and other famous footballers to add realism to the game. Here's another very famous Hollywood actor, Keanu Reeves, being mo capped as Johnny Silverhand in Cyberpunk 2077.

18:10 A forthcoming, Ironlands game coming out this year. And finally, Hogwarts Legacy, a 24,000,000 sale game and counting using Vicon mocap to power the characters there. Move to the next slide, please. Moving to IBS. Smart Workbench is an in drive application using a mixed AR headset, smart tooling, machine vision, a seven axis collaborative robot, and automation. This combination provides a step by step process for a technician to follow. The instructions are being projected into his eyes through the the HoloLens glasses, and the workbench provides traceability and stores data.

19:01 This robot cell is an automotive application. The two robots are vision are fitted with IVS vision technologies and move through a preprogrammed movement pattern to take multiple images of the automotive assembly. These images are compared with the source CAD by the direct the factory information system to ensure the assembly is correct. Vision technology is essential for guiding robots in the evolution of manufacturing automation. The solution shown here is provided to a leading manufacturer of touchscreen displays. From welding small screens to large format multi touch units, vision system observes minute details and delivers precise automated computations. This in process inspection solution was provided to a bearings manufacturer to conduct comprehensive compliance checks throughout the production cycle to improve product quality.

19:56 The the vision technology scans the surface of every bearing to detect faults and continuous development of this AI based inspection enables the system to spot patterns and anomalies in surface deviation. In this example, IVS technology is being used by a blue chip global medical device manufacturer the manufacture and inspection of implantable orthopedic joint parts. The trays are loaded with knee replacement parts with the capability to load and inspect multiple trays without operator intervention and automatically conduct conduct this critical quality inspection. K. Can we go back to the slides, please? So let's talk about the traditional motion capture market a a k a Vicon.

20:48 This slide shows our closest competitors most recently reported or estimated revenues compared to Vicon's fiscal year twenty three performance of 44,200,000. With a sum of over 130,000,000 and a CAGR of around 10%, Vicom's performance was only 34% of this market. So even in our well established business, we still see plenty of growth opportunities to capitalize upon. As David referred to earlier in the presentation, we have made investment in our sales and marketing machines. In our sales investment, we have analyzed our geographic performance and looked to particular areas of the world where our distribution network perhaps needs support through direct salespeople.

21:36 We started in India and the Eastern Europe and are extending that to Latin America and The Middle East presently. We've also added a sales enablement team to to our sales machine. This is a presales function so that we are the best we possibly can be in competitive situations. And then conversely, customer success is all around customer retention, cross sell, and upsell. And as David mentioned, we were successful in gaining the UKCA mark for Valkyrie, a two year project, and the only camera in MoCap to have this mark. And then excitingly, marketing investment, we now have a growth marketing engine. So we have a pre pipeline pipeline in the business, the lead generation, SDR, MQL, SQL, and and marketing campaigns.

22:31 Can we move to the next video, please?

22:36 So moving to the Markerless technology that we unveiled in 2023, what's the progress? So after forty years of tracking markers, why is markerless important development for Vicon? Well, markerless is a complementary technology to the marker based tracking, and it uses machine learning to improve. We believe most of Vicon's 10,000 existing customers will add this modality to their existing systems. Markerless enables new markets to use motion capture where markers are not desirable. For example, in LBE, the Dreamscape partnership needs a markerless solution to be economically and operationally viable. Moving to the next video, please. This is from the recent Capital Markets Day, and what you see here is the Dreamscape LBE pod before you put your your head mounted display on and go off and have an amazing three d experience.

23:35 So as we work towards commercializing Markalus, Vicon has now partnered with seven cornerstone customers to further develop and test the technology. These partners include some of the leading brands in game and film and have been selected for their groundbreaking innovations in animation, visual effects, virtual production. We intend to be the gold standard in Markalus as we are in market based, winning more market share alongside our existing customer base and building a quality software and services revenue stream on top of the marker based business moving into fiscal year twenty five. Back to the slides. Thank you. So moving to the opportunity in Markkilas. For completeness, we show a TAM which includes both two d and three d markets, but we'll focus primarily on the three d opportunity as the two d market is lower tech and more consumer focused.

24:30 This TAM shows the main markets we are aiming for with our first two launches, and both show CAGR in excess of 15%, which is higher than the market based CAGR. So our largest immediate opportunities are in VR, LVE, and visual effects, which aligns with our strategy. We go to the next video, please. I'd like to explain how we use machine learning in our Mark plus tech tracking technology. So firstly, let's be clear that machine learning is an application of AI, and we've been using AI in Vicon for over ten years now. It's the process of using a mathematical model or models of data to help a computer learn without direct instruction. This enables a computer system to continue learning and improving on its own based on experience.

25:19 And this is how Vicon uses it in our Markless project. What you see here is the same set of data on the left and the right. On the left, the data is being processed through version point six and on the right through version point one six. So it's the same source file in both. And as you can see in the left hand video, the characters to the far right is not tracking and solving very successfully at all. But in the right hand video, the problem is resolved. How?

25:50 We use our machine learning algorithms to continually train the model whilst adding to our growing vision model dataset. The outcome being improvements in accuracy and realism. Go back to the slides, please.

26:07 So turning to the market opportunities in smart manufacturing inspection. In machine vision inspection, we will concentrate on two submarkets that IVS do serve, which are contact lens inspection and automated metrology for implantable orthopedic medical devices, which you saw in one of the videos earlier. In contact lens inspection, the TAM includes manual, semiautomatic, and fully automatic inspection technologies with a CAGR of around four and a half percent. The manual market being almost half of the TAM, so a significant future opportunity with the technology move to semi and fully automated inspection over time. There are definite acquisition opportunities in this area. The competitors in the market include the companies that you can see on the right.

26:56 And why do IVS win?

26:58 Because they're a focused provider of tailored smart industry specific solutions, they are specialists, not generalists. And then turning to medical devices, another very, very large town where parts inspection is not a choice and currently uses many different measurement modalities, including touch probes and coordinate measurement machines. But in medical device inspection for, I hope, very obvious reasons, non contact measurement is preferred. So the case to move to vision inspection is well understood. The TAMs shown here include dental, upper and lower extremity implants and spinal implants. Knee total knee replacement surgery in The US alone is over 800,000 procedures followed closely behind by hip replacement at five hundred and 40,000 per annum. And the competitors shown here are very, very large organizations, whereas who mainly use probe and CMM measurement and are not directly selling to the end user.

28:01 We have chosen to show The UK, Ireland, and US, towns here because these are where IBS is currently focused, and these show considerable growth opportunity via both organic and inorganic activity. Our investment in the commercial activities of IBS is to grow sales as well underway with a focus on The US medical device market and contact lens opportunity. Can we move to the next video, please? So turning to our quadrants of growth. So firstly, we must build a synergistic group. It's important we build a coherent, scalable, and cost manageable group. The motion capture quadrant is the Viacom core market based business, which we will grow through investment in sales, customer success, sales enablement, product, and marketing efforts.

28:54 Marklus is our new technology platform, which will be commercialized through the motion capture division to existing and new markets. In smart manufacturing, we will grow IVS and also seek to acquire other businesses in this space to grow this division. And then the power up is anything organic or inorganic that can accelerate the other three quadrants, making sure that we keep an open mind around technology developments in this space. Next video, please. So how will we get there? The progress on our five year plan is that we started in fiscal year twenty one where we back Yotter out of the the figures, and we received 27,500,000 from the Vicon marker based business.

29:41 Nothing from Markless and nothing from smart manufacturing as we exit '26. At 70,000,000, we expect around 52,000,000 to come from the core Vicon business. If we look back and project forward with a CAGR of 10%, we feel that that number is well within reach. Mark was being a reality with revenue starting from fiscal year twenty five, we expect to build a business of around 8,000,000 and hoping to add a subscription model to that to that business. And then in smart manufacturing to build a division of around 10,000,000. Next video, please. And moving to m and a, our goal is to add earnings enhancing acquisitions with a target size shown here of between 3,000,000 and £9,000,000 of revenues with a focus on measurement in smart manufacturing with the aim of building out from IBS to develop a meaningful presence in this space.

30:38 To that end, we are actively working on several opportunities that will deliver on this goal. We have discovered there is a broad and diverse range of opportunities in this area that fit well. And when we look at opportunities, we use trusted criteria. They should have rich IP, good cash flow metrics, and be earnings accretive, Have good to high revenue visibility or a strong position in its niche. They must have able management teams that will be a good cultural fit and have a latent growth opportunity which could benefit from being part of OXFORD METRICS. K. Can we come out the videos, please? I'll just scoot forward. So in conclusion, our outlook is that we have resource is allocated for our targeted m and a program.

31:26 IVS is performing well and opening up smart manufacturing opportunities. The seven cornerstone customers secured for our Markless rollout. Zoe Fox will be appointed group CFO on the July 1. We have over 90% visibility of orders for h two with a growing sales pipeline from our motion capture division. So we're well placed to deliver on our full year market expectations. Thank you. Perfect. Image and David, thank you very much for your presentation. Ladies and gentlemen, please do continue to submit your questions just by using the q and a tab, is situated on the top right hand corner of your screen. But just for the company, take a few moments for you to the questions that have been submitted today. I'd like to remind you that recording of this presentation along with a copy of the slides and the published q and a can be accessed by your investor dashboard.

32:13 As you can see, we have received a number of questions throughout today's presentation. And Imogen, perhaps if I just ask you to read out those questions and give responses to what's appropriate to do so, I'll pick up from you both at the end. Right. Thank you. Right. I think David, you're gonna take the first one? Yeah. There's a number of questions in in here that are kinda similar. So the answer to this one will help some of the others. I mean, a common theme, you know, there's several questions around, you know, the fact that we have the cash. Should we be considering, you know, a share buyback or tender offer or some special dividends and so forth? So I just like to I just like to cover that off. I mean, what what what we said at the Capital Markets Day was that, you know, right now, the the m and a opportunity in front of us in in in basic terms, you know, can more than justify, you know, the cash that we have on the balance sheet. So our first priority, you know, is to deploy that cash.

33:13 And we, you know, we are seeking those targets that Emma talked about from from 3 to 9,000,000. And on the assumption that we do achieve a few of those in in in in the immediate short term, then the division will grow in size, and then we'll be in a position to perhaps take on slightly more ambitious targets going forward. And the only comfort I can offer to some of the question questions is that, you know, the topic of cash and whether we should return it is a topic that is considered at every single board meeting. But right now, the m and a side more than justifies it. So on the first question, there's also an interesting one about given that we're cash rich, potential sellers of the biz of their businesses would always be asking for the top price.

34:03 Well, they can ask, but that's not gonna change, you know, the the, you know, the rigorous assessment that we make of an acquisition. And I would go as far as to say, yes, cash or the price is important, but I think people sell to you for many other reasons as well, you know, along with, you know, cultural fit, the future, the logic, and so forth. So as I said, they can ask for the top price, but, yeah, they they won't get it just because we've got cash. Do you want me to take the second one as well, Amy? Yeah. If you like. So this the question here is is around location based entertainment and really the the accusation that we've been overoptimistic about the opportunity.

34:52 Well, speaking personally, I have I've done quite a number of experiences myself, I am sold on the idea. I think it is the future. And so I remain very optimistic. It was rather unfortunate that COVID came along and kinda derailed progress for a number of years. I mean, the the the rollout plans basically ceased. But as I said in my presentation, the the pace of rollout is dictated, you know, by by our customers and their plans for the future. But we are aware that a number of them are actually raising further funds. So the investors of some of our key location based entertainment customers do believe in the future of location based entertainment. David, I'll take the meaningful revenues from Markless incremental sales.

35:40 So we expect revenues to start in fiscal year twenty five, so that's up from October. It will not be a substitute. In most cases, our 10,000 customers will want to add Markless because it complements marker based tracking. And excitingly, we are fully exploring with our cornerstone customers, not only the technical finishing and polishing of the first launch, but also a potential subscription model for the software and services, which will enhance our margins further in that area. Okay. So does the five year target mean that recorded revenues ended September 26 will equal or exceed 70,000,000?

36:28 Yes. That is the stated target. Smart sensing software market. Synergies with existing operations. Yes. One of the things that has come out of quite a lot of the work that I've been doing with the IBS guys and observing during m and a conversations is not only the obvious back office synergies of finance, IT, legal, people and culture, and so forth, but I strongly feel that there is an operational compliance and marketing synergy that can be brought to bear across the smart manufacturing division as well. So I think the the synergy play is stronger. And then not only that, but technology synergy too. At the Capital Markets Day, we showed the Vicon Markless technology working alongside the smart workbench, which we showed in the video earlier. And that was the Markless technology was making sure the technician was working safely with a collaborative robot so we can explore further technology synergies down the line.

37:35 I think we've covered the update on m and a, David. Yeah. I think so. As as we said at the CMD, we you know, we've got active engagements in in play. They've all progressed. You know, with all of these things, it it comes with absolutely no guarantee, and some of them are competitive situations. But, you know, what we're looking at very, very you know, very much fits our smart manufacturing ambitions. Assuming we're successful, some of them are quite obvious, you know, why we would do them, how they bolt on to IBS. Others will form part of the sort of broader ecosystem that we're looking to build out in smart manufacturing.

38:21 So keep watching this space, I guess. Yeah. Yeah. And I think, you know, just talking a little bit more about the geographic changes here around entertainment. The Asia Pac performance of the last two years, they very much were early adopters of the Valkyrie camera, which is interesting because normally The US go first, but they didn't. It was Asia Pac. But pleasingly, we now see in our sales pipeline that UK, Europe, and and The US in terms of the entertainment pipeline is is strong. And that the as David referred to earlier, the conversations we're having in and around decision making in the games industry globally is delayed decisions rather than cancellations of decisions.

39:14 Okay. Yeah. Is the value of the iMessage UIP material, David? Yeah. It's probably just worth covering that. So, yeah, we have announced the discontinuation of our New Zealand operations. To be specific, we acquired the business back in 2017 and bought two things. The the the main thing was the actual IMU hardware itself that we subsequently integrated into the the Vicon system. And, you know, we've successfully sold that IMU through our channel, generating in excess of 2,000,000 in gross margin since then, and we continue to do so.

39:59 And also having the IMU as part of the the Vicon solution meant that we did win a number of deals as well on the strength of that. So that part of the acquisition went exactly to plan. The other piece that we purchased was a software application, and the that was subject to an earn out. And, well, it never really got going is the honest answer. It did prove to be quite challenging from a commercial perspective, you know, to to drive those recurring revenues. We did we did successfully generate several £100,000 worth of ARR that we still have today. But we've come to the conclusion that, you know, Vicon really has, you know, focus, markless, and and and and other things, bigger fish, if you if you will, to fry. So we are actually in active conversation with a potential acquirer where the application, which was known as Elite Sports at one time and now more more recently, is more of a generic physiotherapy application would be well suited.

41:12 And I think the potential acquirer of that IP will be much better placed to make, you know, a success of it. So, yes, it does have value. And you will note in the accounts that I've basically written off everything associated with with iMeasure U. So there could potentially be, you know, an add back in the second half, but I'm not really prepared to disclose what that number might be. Fair enough. I'll take the cornerstone customers for Markless. Well, how varied are they in Target? The creative industries are very subjective about how things work. So you can be looking at a piece of of mocap, and one person in the room thinks it looks great, and the next person sat next to them says their feet look rubbish.

42:00 So even though we've got seven cornerstone customers effectively using the technology for what we're calling pre visualization, which is storyboarding of of shots in games, films, TV content, and so forth, they will all have different opinions of what is good. And that's good for us because that really does mean that they're going to give the the technology a good thrashing. And what we're looking for is a consensus across them that they're happy they will be happy to use the technology in their productions. So that's the stage that we're working with them at the moment. We have chosen technology innovators. They are spread out geographically, and they are spread out within the visual effects industry. So some game, some visual effects, and so forth. So we've we've targeted a as broad a range as we can, but but those that seek to implement innovation in their pipelines.

43:00 I'll just take the sports event like the Euro's increased demand for your products. Vicon is actually I'm gonna probably hear the boos through this. It's actually used to help validate VAR. Sorry about that. But, actually, what we do see more commonly is it is is is investment in the technology probably one one to two years prior to Olympics. That tends to be a a good cycle for sports investment in in in terms of looking at performance for for training at the for the Olympics, actually. Okay. Where are we going now? AI. Yep. Well, AI is an opportunity and threat across the business. I do cover this in reasonable detail in the Capital Markets Day video.

43:48 So I'd encourage you to watch that section, and hopefully that answers your question there. And does AI threaten the CAGR, the traditional Viacom business? Well, that's a a little bit further out in the in the future, and we'll probably get to that soon. So I think that's pretty much all the questions that we're going to cover today. Alexandro? Perfect. Imogen, David, thank you very much for answering those questions you can from investors. And of course, the company can review all the questions submitted today. We'll publish those responses on the Investor Meet company platform. But just before redirecting investors to provide you their feedback, which you know is particularly important to you both, could I just ask you for a few closing comments? Sure. Well, again, I'd like to reiterate my thanks for you taking the time to to learn a little bit more today about OXFORD METRICS and our interim results.

44:38 And we welcome all feedback and questions, and we'll get back to you as soon as we can. Thank you. Perfect. Image and David, thank you once again for updating investors today. Could I please ask investors not to close this session as you now be automatically redirected to provide your feedback in order that the management team can better understand your views and expectations? This will only take a few moments to complete, but some should 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, and good morning to you all.