Friday May 9, 05:20 PM
European award gives boost to ailing Optos
By Andrew Bolger
Optos (LSE: OPTS.L - news) , a Dunfermline-based eyecare company, has just been awarded a European Commission inventor of the year award for
its scanning laser technology that allows powerful but pain-free examination of the retina.The award was received by Optos's founder, Douglas Adams, who created the company in 1992 after his son became blind in one eye because a detached retina was discovered too late. A few days before the European award, Optos's products were described as "cutting-edge technology" by a leading US professor who used them in a study into the links between diabetes and blindness. These reports last week gave a boost to the share price of Optos, which closed on Friday at 188p - well above their January low point of 114p. But the shares are still well short of the 250p at which they were floated in 2006 in an initial public offering that valued the company at £165m. Optos made a pre-tax profit of $1.6m (£821,000) in the year to September, compared with a loss of $1.1m the previous year, while its revenue rose 28 per cent to $86.8m. Thomas Butts, chief executive, expects revenue growth of 20 to 25 per cent in the current year, and has forecast further profits at the half-year stage. Optos mainly supplies its retinal scanners to the US, although it is now expanding in Germany, France, Spain, Switzerland and Norway, as well as the UK. It retains ownership and charges every time they are used. Mr Butts said: "We've been putting in 600-plus systems per year. We've got an 89 per cent renewal rate - that is the real tickertape: do physicians keep the technology once they incorporate it into their practices?" Optos has 100 employees in the UK, where it does its research and development and manufacturing, and about 200 in North America, who are mainly involved in customer services. Mr Butts acknowledges that some analysts have expressed concern about the company's modest profit levels, but he is confident that margins will increase over the next three years. "We're a young company and we are not outdoing capital sales - we're placing systems for a recurring revenue stream and consistent growth. So we need to get a certain number of systems out in the field to start to drive profitability. As our assets age, then profitability ramps up, because we write off those assets and it becomes more of a cash generator and a profit generator." Mr Butts is also philosophical about the share price. "We're a small company - we can't control what happens in the market. What we can control is continuing to deliver what we committed to deliver, and the market will recognise that." However, he has also noticed a marked change in the market's priorities. "Prior to the changes that occurred with all the credit crisis, people wanted us to grow, grow, grow. Now people want profit, profit, profit."
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