OMG

Debt-free image technology venture OMG delivered strong profits growth for the half-year to March, driven by its Vicon arm.

Pre-tax profits at OMG, which comprises three image technology businesses – Vicon, 2d3 and Yotta – involved in motion capture and mapping, surged 35% higher to £1.25m on 6% sales growth to £14.4m. Cash ‘at bank’ at the half-year stood at £4.1m, increased from £2.8m at the previous year-end.

Vicon, whose technology was recently used in Playstation 3 game Heavy Rain, generated eye-catching operating profits of £2.7m, although 2d3, an aerial imaging and defence business, posted losses of £237,000 and road-mapping operation Yotta saw losses widen by 165% to £980,000, largely due to disruption caused by poor UK weather conditions.

Nick Bolton, OMG's ebullient CEO, informed Growth Company Investor he was ‘very pleased with the results, having had a record half in terms of revenue’. Bolton believes the financially robust OMG to be a relatively reliable investment with good growth prospects, since ‘we are plugged into diverse markets, some of which offer a lower risk profile and some which offer higher levels of risk’.

Following the results, broker Daniel Stewart forecasts increased pre-tax profits of £1.1m for the year to September, giving earnings of 1.1p, ahead of a £1.4m profit by 2011. OMG shares, originally backed by Growth Company Investor at 35.5p in 2006, may trade on a punchy-looking prospective p/e of 24.5, but given the group’s considerable balance sheet strength and the prospect of a continuing cyclical upturn in its markets, they represent a reliable investment. Buy/hold.