Interim Results for the six months to 31 March 2014

LONDON, UK, 15 May 2014 – Optos plc (LSE: OPTS), a leading medical retinal imaging company, today publishes its interim results for the first half of its financial year ending 30 September 2014 (H1 FY14).  All figures are reported in US$ and are unaudited.

Overview

Today we report headline revenue(1) for H1 FY14 of $72.7m in line with expectations and comparable to last year ($73.0m) up 8% on an underlying(2) basis, with an improved cash position.

During H1 FY14 we:

• Continued to deliver strong growth in new customers adding 628 in the period
• Grew the overall installed base of ultra-widefield (“UWF”) devices 10% since the start of the year to 6,515, and 27% from the same time last year
• Increased gross margins from 59% to 60%
• Improved cash flow and reduced net debt to $35.5m, some $20.3m lower than at the same point last year
• Further progressed the development of the next generation products, the 200TX replacement and an integrated UWF and optical coherence tomography (“OCT”) device

Daytona continues to be well received by the market and is the main driver of our new customer growth.  Since the market launch just under 2 years ago, we have placed over 2,000 Daytona devices and now represent over 30% of the installed base.  We have continued to make good progress on reducing the Daytona unit cost.

Roy Davis, CEO of Optos, commented:

“We are pleased to report another strong increase in the number of new customers and our installed base of devices, principally as a result of Daytona’s continuing traction in the market place.  Our financial discipline has allowed us to achieve this while keeping costs flat resulting in improved cash flow and a marked reduction in net debt, a trend we expect to continue.  Our R&D pipeline is progressing well and we remain excited by its potential.

“As we flagged in our preliminary results, and in line with previous years, we expect a significant second-half weighting to our business. As we progress through this period, the visibility on our order book, coupled with an ongoing focus on reducing the cost of Daytona and improving operational effectiveness suggests we are well positioned to meet our expectations for the full year.”

Financial Highlights (comparisons are to H1 FY13)

• Underlying revenue(2) was up 8%, with capital sales up 22% to $38.7m and service and warranty revenue increasing by 23% to $16.1m
• Gross margins improved to 60% from 59%
• Good control of operating expenses; these were flat at $43.3m (H1 FY13: $43.4m) despite adverse currency movements
• Operating profit was $0.5m (H1 FY13: $0.6m loss) and profit before tax was $1.6m (H1 FY13: $0.7m)
• Cash flow before tax and financing was up $8.5m on the previous year with an inflow of $3.8m (H1 FY13: $4.7m outflow)
• Net debt at period end was $35.5m, down from $39.4m at the end of FY13 and $20.3m lower than at the same time last year (H1 FY13: $55.8m)

Operational Highlights

• The installed base of ultra-widefield devices has increased 10% to 6,515 units in the period (5,945 units at the end of FY13; H1 FY13: 5,130 units)
• Daytona installed base has increased to 2,046 units in the period (end FY13 1,474 units; H1 FY13 729 units)  
• Increase of 628 new customers in H1 FY14 (H1 FY13: 492)
• The rental vs capital sales mix is now 51% to 49% respectively (H1 FY13: 63% to 37%)
• Production cost of Daytona continues to be reduced
• Further validation with the publication of clinical studies demonstrating the value of ultra-widefield imaging
• Continued advancement on development of product pipeline including the integrated UWF and OCT device and a replacement 200Tx, using the Daytona platform

Outlook FY14

We remain confident in our future prospects:

• We have a large market opportunity and low market share in key markets
• We are making good progress on reducing the Daytona device cost and expect to be on track to achieve the target cost by the end of the year  
• We continue to focus on improving operational effectiveness. We are currently implementing changes which we anticipate will deliver overhead cost savings of at least 5% ($4m) in the following financial year
• Our clinical research programmes continue to demonstrate the value of our technology
• We have an exciting pipeline of new products, including the 200Tx replacement and the integrated UWF / OCT device which are both currently expected to come to market in FY15, subject to achieving regulatory clearance

We expect to meet the guidance given at the start of the year.

Definitions

• Revenue and gross profit include other operating income
• Underlying revenue treats all finance leases as if they were operating leases

Enquiries:

Note to Editors: Images available upon request

About Optos Plc
Optos plc has the vision to be The retina company.  We aim to be recognised as a leading provider of devices and solutions to eyecare professionals for improved patient care.  Optos' core devices produce ultra-widefield, high resolution digital images (optomaps®) of approximately 82% of the retina, something no other device is capable of doing in any one image.  Our acquisition of OPKO instrumentation in 2011 brought the group optical coherence tomography (“OCT”) diagnostic devices and optical ultrasound scanners, used in the diagnosis and management of eye disease and conditions.

Optos’ widefield retinal imaging technology, combined with the specific data that can be derived from OCT images, has the potential to offer ophthalmologists and optometrists the most powerful tools for disease diagnosis and management.  The optomap images provide enhanced clinical information which facilitates the early detection, management and treatment of disorders and diseases evidenced in the retina such as retinal detachments and tears, glaucoma, diabetic retinopathy and age-related macular degeneration.  Retinal imaging can also indicate evidence of non-eye or systemic diseases such as hypertension and certain cancers.  OCT delivers an image that shows a three dimensional, cross-sectional view of the retina in any particular area, typically in the central pole area of the retina around the optic nerve and macula and is used to detect the presence of and understand the severity of disease, determine treatment approaches and monitor post-treatment effect.

Optos has a range of imaging devices that support different customer segments and patient levels: the P200 and 200Dx devices are concentrated on wellness screening carried out by optometrists and ophthalmologists in primary care; the P200C devices are designed to meet the need for more exacting clinical imaging capabilities and standards in secondary care within the ophthalmology market and at optometric practices that are clinically managing a patient base with advanced ocular disease; and the P200MA and 200Tx devices supports ophthalmologists and retinal specialists in the medical care market. In 2012 we introduced Daytona, our next generation imaging device. Daytona is a desk top device with multiple imaging modalities and was designed to enable us to globalise our ultra widefield technology.  Our expanded product range includes visual acuity, perimetry and treatment laser products

For more information please visit our website www.optos.com.

Forward-Looking Statements

Certain statements made in this announcement are forward-looking statements. These forward-looking statements are not historical facts but rather are based on the Company's current expectations, estimates and projections about its industry, its beliefs and assumptions.  Words such as 'anticipates,' 'expects,' 'intends,' 'plans,' 'believes,' 'seeks,' 'estimates,' and similar expressions are intended to identify forward-looking statements. These statements are not guarantees of future performance and are subject to known and unknown risks, uncertainties and other factors, some of which are beyond the Company's control, are difficult to predict and could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements. The Company cautions shareholders and prospective shareholders not to place undue reliance on these forward-looking statements, which reflect the view of the Company only as of the date of this announcement. The forward-looking statements made in this announcement relate only to events as of the date on which the statements are made. The Company will not undertake any obligation to release publicly any revisions or updates to these forward-looking statements to reflect events, circumstances or unanticipated events occurring after the date of this announcement except as required by law or by any appropriate regulatory authority.

Download the full release