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Optos sees the light

RESULTS: Full-year figures from medical devices specialist Optos demonstrated the lack of operational visibility generated by the group's fairly unique business structure

Clarity is seldom a big feature of figures released by eyecare devices specialist, Optos (OPTS). That's because its mix of operating agreements and devices sales makes for big swings in revenues as leases for its Daytona retinal mapping machine expire and are then renewed. These full-year results did little to dispel that - a difficult economic backdrop combined with fewer opportunities for lease renewals and underlying operating profit slumped 65 per cent to $9.2m (£5.7m).

IC TIP: Sell at 157p

Indeed, the timing of contract renewals and the conversion of rental agreements into operating leases, left the operational performance looking oddly counter-intuitive. For example, the number of customers increased by an impressive 25 per cent during the year to 5,945, but the number of lease renewals for its retinal devices was barely a quarter of what was achieved in 2012. The net result was far fewer actual contracts for Optos during the year - 1,714 compared with 2,634 last time - which explains the revenue slide.

There was no relief, either, from international sales, which remained flat at $48.9m. Overall, management is currently guiding for low single-digit revenue growth for 2014.

Broker Investec Securities expects pre-tax profit for 2014 of $21.9m, giving EPS of 20.3¢ (from $9.2m and 12.4¢ in 2013).

OPTOS (OPTS)

ORD PRICE:157pMARKET VALUE:£113m
TOUCH:157-158p12-MONTH HIGH:221pLOW: 107p
DIVIDEND YIELD:nilPE RATIO:19
NET ASSET VALUE:174¢*NET DEBT:31%

Year to 30 SepTurnover ($m)Pre-tax profit ($m)Earnings per share (¢)Dividend per share (¢)
200997.0-3.80-6.10nil
201010612.718.1nil
201114322.031.0nil
201219323.432.7nil
20131589.5013.2nil
% change-18-59-60-

Ex-div:-

Payment:-

*Includes intangible assets of $42.3m, or 59¢ a share

£1=$1.61