Optos (OPTS), which develops retina-scanning machines, is fixing its mistakes. The launch of its next-generation Daytona machine two years ago was marred by sky-high production costs, software glitches and a heavy dependence on leasing revenues. But there's now some evidence the business is recovering.
Having dropped its prices, Optos won 628 new customers in the six months to 31 March. In two years, the company has now sold about 2,000 Daytona machines. This is impressive considering it took 10 years to sell 4,000 units of the old design.
The revenue mix is also shifting as the company tries to replace rental contracts with capital sales or finance leases. The supposedly recurring income stream from rents turned out to be less robust than the company had hoped, as customers did not renew their contracts; chief executive Roy Davis now thinks there is more value to be found in outright sales to new customers. The number of operating leases fell to as few as 224, with revenues down a half to $5.6m (£3.3m). Meanwhile, revenue from sales grew 22 per cent to $38.7m. The installed capital base now stands at 3,191 machines.
Brokerage Investec expects pre-tax profits of $16.5m for 2014, giving EPS of 15.2ȼ, up from $9.2m and 10.4ȼ in 2013.
OPTOS (OPTS) | ||||
|---|---|---|---|---|
| ORD PRICE: | 185p | MARKET VALUE: | £134m | |
| TOUCH: | 184-185p | 12-MONTH HIGH: | 215p | LOW: 107p |
| DIVIDEND YIELD: | NA | PE RATIO: | 3 | |
| NET ASSET VALUE: | 176ȼ* | NET DEBT: | 28% | |
| Half-year to 31 March | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (ȼ) | Dividend per share (p) |
|---|---|---|---|---|
| 2013 | 72.2 | 0.7 | 1.0 | nil |
| 2014 | 71.9 | 1.6 | 2.3 | nil |
| % change | - | +129 | +130 | - |
*Includes intangible assets of $42.2m or 58ȼ a share £1 = $1.68 | ||||
