Brings increased clarity and focus to Oxford Metrics’ five-year growth plan
30 May 2022 - Oxford Metrics plc (LSE: OMG), the smart sensing software company, servicing life sciences, entertainment and engineering markets, today announces the sale of its infrastructure asset management division, Yotta, to Causeway Technologies for a cash consideration of £52.0 million.
Yotta today serves over 200 customers worldwide, providing software to assist in the management of more than 35 million physical assets and related services – including highways, street lighting, and waste management. Originally a spin-out from Oxford Metrics’ core technology, the Group has successfully scaled Yotta and its operation in recent years, particularly increasing the level of recurring revenue it generates and achieving full year profitability. It has done so in a market which is increasingly distinct from the Entertainment, Life Science and Engineering markets served by Vicon: the Group’s larger and higher-growth division.
Causeway – the UK’s leading provider of software solutions to the construction industry – has acquired Yotta as it continues its journey to digitise the processes that underpin the construction and maintenance of infrastructure assets. The Causeway team has a clear understanding of Yotta’s software and is well positioned to continue both its growth and innovation, with a vision to create a truly integrated end-to-end solution that manages the entire asset management lifecycle for local authorities and their contractors.
The sale not only delivers significant value for Oxford Metrics’ shareholders in the near-term, but also brings increased clarity and focus to the Group’s stated five-year growth plan. This plan, targeted at growing revenue by 2.5x and returning the Group to 15% Adjusted PBT margins by the end of the plan, can now be undertaken with one core technology stack, unlocking greater operational leverage. The sale also brings greater coherence to the Group’s end markets, each of which is underpinned by structural growth drivers.
The proceeds from the sale will increase the Group’s near-term financial firepower to accelerate M&A and planned organic investments. In line with the Group’s strategy, these actions will aim to both broaden Vicon’s product bench and extend the Group’s sensing and analysis capabilities. The Group will continue to be disciplined in its approach to M&A, in line with the criteria set out at the time of the 2020/21 results. This will enable the Group to increase its addressable markets and scale as it progresses towards its five-year financial and strategic goals.
For the financial year ended 30 September 2021, Yotta reported headline revenue of £8.1m (c. 23 percent of FY21 Group Revenue), including its highest level of Annual Recurring Revenue of £7.4m, Adjusted PBT of £0.8m (c. 10 percent of Group Adjusted PBT), statutory LBT of £0.4m and gross assets of £13.2m. The cash consideration of £52m is subject to customary adjustments for working capital and debt-like items.
Commenting on the sale, Nick Bolton, CEO of Oxford Metrics said:
“Today’s sale of Yotta is an enabler of growth on multiple fronts. First, it combines our excellent Yotta team and technology with a platform that can unlock additional growth across Yotta’s existing market – and in other adjacencies. I am proud of the Yotta team’s many achievements and I am confident that, in combining with Causeway, many more achievements lie ahead.
For Oxford Metrics, today’s sale not only realises the investment we have made in Yotta at an attractive multiple, but it also brings even greater clarity to our go-forward growth path. This clarity adds to our excitement, our energy and our focus on the Smart Sensing opportunity that lies ahead. Our five-year ambitions to increase revenues by 2.5x and to achieve a 15% adjusted profit before tax margin remain unchanged. Now, through the lens of our Vicon business and its core technology, we have the opportunity – and increased financial firepower – to make organic and M&A investments that broaden our product bench, extend our sensing and analysis capabilities and scale us towards achieving our five-year strategic and financial goals.”
Roger Parry, Chair of Oxford Metrics said:
“Last year the Board conducted a thorough strategic review, setting us on a pathway for the next five years of growth. We decided to focus that pathway on selected high growth markets, where Vicon’s technology offer is a proven success. Yotta has performed well under our stewardship, but it now makes sense for it to join a company that offers a range of complementary solutions. We believe Causeway will be an excellent home for the Yotta team. Oxford Metrics has an ambitious and disciplined growth plan and we now have even greater financial resource to execute against it.”
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