Optare plc
("Optare" or the "Company")
Final Results for year ended 31 December 2009
Highlights
Financial
Operational
Product and Business Development
• £13m order secured for Optare's Advanced Hybrid buses in Greater Manchester
• Introduction of the UK's first bio-methane and electric buses
• Launch of Optare's market leading driver console to aid fuel efficient driving
• Design completion of Optare's new integrated double-decker
• New facility for refurbishment and low-carbon bus conversions has been established in Blackburn
• Significant progress made in developing foundations for export growth with breakthrough orders anticipated in coming months
Board and Management
In June 2009, the board was strengthened with the appointment of Jim Sumner as Chief Executive, who brought with him a wealth of vehicle manufacturing knowledge and experience.
Following the year end, a further strengthening was made with the appointment of Glenn Saint to the board as Commercial Director.
Outlook
Order levels are now at a 12 month high with order prospects continuing to grow as a result of the product and market development initiatives taken.
The Company has made significant progress in relation to the business turnaround actions, including the reduction of the Company's break-even point and the new green bus initiatives. The Board also continues to actively work to reduce net debt.
Although the general bus markets remain uncertain, the Board anticipates stronger UK demand particularly for single-deck buses in 2011 and 2012. This is driven by an expected pre-buy of existing Euro 5 emission buses to avoid the additional cost burdens of Euro 6 legislation compliance due in 2013 along with compliance with the Disability Discrimination legislation which is required for all single-decker buses by 2014. In addition it is anticipated that there will be a recovery of the replacement cycle for buses as the UK economy climbs out of recession.
The Company is also confident that its investment in green bus technology is well-timed as the trend toward low carbon technology gathers momentum.
The Board believes that significant progress has been achieved in the turnaround of the business with the complementary strategies of reducing the business break-even point and investing in green bus technology and that this has positioned the business strongly to take advantage of the anticipated market recovery.
Strategic partnership discussions are progressing well and the board expects to make a further announcement on this by the end of June
Chairman's Statement
I am pleased to be able to report that although 2009 proved to be a challenging year it has also been a year of great change and progress. I believe that the Group is now well positioned to capitalise on any uptick in the market and look to the future with confidence.
Following a period of significant management change it became apparent that the challenges facing the business were greater than had previously been appreciated. The decision not to relocate meant that large contractual commitments had to be met using the Group's existing manufacturing facilities. Subsequently, the credit crunch hit the bus industry hard and forward visibility of orders declined markedly from the second quarter of 2009 onwards. We reacted promptly by commencing a series of cost and debt reduction actions.
The appointment of Jim Sumner as Chief Executive Officer in June 2009 was a major coup for us, bringing with him a wealth of experience of strategic development in the commercial vehicle manufacturing industry.
As a result of these actions we have been able to reposition the Group strategically, particularly on green issues, and I believe the business is now in a strong position to take advantage of changes in the market.
Strategic Development
Our aim is to be:
· A European leader in green bus technologies by the development of the full range of options from hybrids to electric and dual fuel vehicles;
· The UK leader in the midi-bus market;
· Offering a product portfolio with the full range of buses that is demanded by the UK bus market;
· A significant exporter of buses;
· A business with complementary income streams including coach sales, after-sales and refurbishment.
The board is very pleased with the progress that has been made on all these fronts during the year, as detailed in the Business and Financial Review.
Our People
Despite the very challenging market conditions I am proud to say that management and workforce have combined their efforts to ensure that Optare has come through the current recession fitter and stronger to take advantage of the anticipated recovery in market demand. The workforce has shown great flexibility in accepting short-term working to minimise the impact of redundancies whilst retaining jobs and skills. I am pleased to report that all staff are once again working a full working week, and I would like to take this opportunity to thank all employees for their continued dedication.
Summary
2009 was a year of change, challenges and enormous progress. The £13m recent order for advanced hybrid buses received from Greater Manchester Integrated Transport Authority is a vindication of both our strategy and our technology. We can now look forward to improved trading in the second half of 2010 and in 2011 and 2012 as market demand recovers.
John Fickling
Non-Executive Chairman
For further information please contact:
Optare plc Jim Sumner - Chief Executive
|
Tel: 0845 838 9901
|
Cenkos Securities plc Stephen Keys/Camilla Hume |
Tel: +44 (0) 20 7397 8900 |
Chief Executive's Review
Operational Highlights
2009 has been about restructuring and cost reduction as part of the turnaround of Optare. Vigorous actions were taken to significantly reduce the cost base and business break-even point in order to align manufacturing capacity with the downturn in the UK bus market. Headcount reductions were made from a peak of 913 full-time equivalents in February 2009 to 474 in December 2009 resulting in £2.5m of non-recurring redundancy costs. Although short time working was required at the Company's Blackburn and Leeds plants in the second half of 2009, the recent strengthening of the order book reported in the trading update in December 2009 has facilitated both plants returning to standard working patterns. Restructuring in 2009 included the consolidation of production from three sites to two. The closure of the Rotherham manufacturing facility in July 2009 and the Cumbernauld service centre in November 2009 resulted in total one-off impairment costs of £1.0m In total, £6.9m of exceptional costs were incurred in 2009 to support the turnaround, the costs which are now substantially behind us. Offers for the Rotherham property are currently being considered which will help further reduce net debt.
Overall these actions resulted in more than a 40% reduction in revenue break-even levels over the year. In addition, the adoption of lean manufacturing processes has resulted in a 60% reduction in bus assembly times at both the Leeds and Blackburn facilities and increased capacity potential at Leeds by 30%. This has enabled short lead time response to customer demand at a time when the market has continued to lack visibility. These changes also supported significant working capital reduction with a 57% reduction in inventory of £16.8m to £7.2m by the end of the year.
Optare has successfully developed a new business unit at its Blackburn facility focused on refurbishment and low-carbon upgrades of existing buses. The Board sees this as an increasing revenue stream, not only from the growing interest among operators to improve the carbon footprint of buses over their whole life, but also from the counter-cyclical trends towards refurbishment and upgrade, rather than replacement of buses.
The Company has also made good progress on implementation of the global automotive quality standard TS16949 which will set a new quality standard for the bus manufacturing industry.
Product and Business Development
The funds from the share placing completed in September 2009 have supported significant achievements in positioning Optare as an industry leader in Green Bus technology. Milestones achieved to date include:
· the introduction of the UK's first bio-methane and electric buses into service;
· the launch of Optare's market leading driver console to aid fuel-efficient driving;
· successful integration of the latest diesel-electric technology with Optare's driver console and Actia telematics system to produce the most advanced hybrid system currently available as demonstrated by winning the £13m Greater Manchester order for 66 hybrid buses announced on 13 May 2010;
· design completion of Optare's new integrated double-decker;
· commencement of a low cost mechanical hybrid system development for the bus industry as part of the Flybus consortium with Ricardo, Allison, and TorotrakAdditionally, the placing funds were used to support the building of demonstration units and for restructuring costs and working capital to support the turnaround of the business.
Order Book and Market Conditions
During 2009 the Company saw pressure on the supply chain due to economic factors and lower industry volumes which weakened the supply chain and culminated in a sudden major supplier failure in Q4 2009 which affected the business and disrupted production in the early part of 2010. The Board remains mindful of this and continues to closely monitor 'at-risk' suppliers, and is vigilant for potential supplier failure taking advanced action where necessary. Suppliers have also exerted additional pressures due to restrictions in available credit insurance.
As highlighted in the Company's trading update in December 2009, the Company's order book increased from a low of £8.8m to £11.7m at the end of 2009. This trend has continued through 2010 with the order book now standing at £25.3m. This has been achieved against a background of continued difficult market conditions.
To mitigate the expected downturn in the UK bus market Optare has continued to focus on development of export opportunities, with initial 'seed' orders received from Benelux, Italy, Germany, Malta, Israel, South Africa and New Zealand. The Board expects to be in a position to announce positive news on export orders in the coming months following the success of demonstration fleet trials.
Board and Management Changes
Following my appointment as CEO on the June 1st 2009, the Board has been further strengthened with the appointment of Glenn Saint as Commercial Director on January 29th 2010. Glenn brings 28 years of experience in the transport sector and has held executive posts at Optare over the past 12 years as Technical Director and Manufacturing Director.
2009 has seen a significant strengthening and development of the wider management team focused on creating a culture of flexibility and customer focus, underpinned by a dynamic team ethic.
Strategic partnership
As reported in the December trading update, the Board has been progressing discussions with potential strategic partners and is at an advanced stage of talks with one of these potential partners and expects to make a further announcement on this before the end of June. The Board continues to believe that entering into such a partnership will be a key part of Optare's strategy to realise the full potential of the business by benefiting from joint sales activity, new distribution channels, low cost sourcing and potential technology sharing.
Financial Performance
The Group's financial performance for the year ended 31 December 2009 is reported in the Directors' Report.
Outlook
Despite the current market downturn in 2010, Optare's sales order book has gradually increased during 2010. Order levels of £25.3m in May 2010 are at a 12 month high with order prospects continuing to grow as a result of the product and market development initiatives taken. Although the order book is strengthening, there still continues to be low visibility in the market place as a whole which requires the business to operate on short lead time responses.
The Board is actively working to reduce net debt. The proceeds of the planned sale of the Rotherham site will be applied to reduce debt.
While the general bus markets remain uncertain, the Board anticipates stronger UK demand particularly for single-deck buses in 2011 and 2012. This is driven by an expected pre-buy of existing Euro 5 emission buses to avoid the additional cost burdens of Euro 6 legislation compliance due in 2013 along with compliance with the Disability Discrimination legislation which is required for all single-decker buses by 2014. In addition it is anticipated that there will be a recovery of the replacement cycle for buses as the UK economy climbs out of recession.
The Company is confident that its investment in green bus technology is well-timed as the trend toward low carbon technology gathers momentum.
The Board believes that significant progress has been achieved in the turnaround of the business with the complementary strategies of reducing the business break-even point and investing in green bus technology. This has positioned the business very strongly to take advantage of the anticipated market recovery.
Jim Sumner
Chief Executive Officer
Directors' Report
The directors submit their report and the financial statements of Optare Group plc for the year ended 31 December 2009.
Principal Activities
The Company is engaged in bus design, manufacture, sales, coach sales, aftermarket support and bus refurbishment.
Results and Dividends for Year Ended 31 December 2009
The results for the year shown in the Consolidated Income Statement on page 18 comprise the results of the Group for the year. The comparative period comprises the results of the Group for the 72-week period from the date of incorporation 9 August 2007 to 31 December 2008. That is, the results of the Blackburn-based body on chassis manufacturing operation for the sixteen month period from August 2007 to 31 December 2008 plus the results of the Leeds-based integrated bus operation for the five months from 15 July 2008 to 31 December 2008.
Turnover for the year was £79.8m (2008:£53.5m) and loss from operations before exceptional items was £4.9m (2008:£5.5m) The operating loss reflects a very difficult year in which legacy issues from the date of acquisition and from the previous management team had to be resolved. A significant portion of the turnover for the year comprised buses sold under an onerous contract reported in the 2008 annual report, on which no margin was achieved. During the year, the level of market demand fell rapidly and the company had to reduce its cost base in order to reset the level of capacity to this lower level of activity. Price competition became very severe in some market sectors, particularly in the London double-deck market, and the company refused to be drawn into the very low price levels that were being set. Therefore volumes suffered further, particularly for double deck buses.
However, significant cost savings have been achieved, and the workforce has been reduced from a peak of 913 to a low point of 450 full-time equivalents.
It became apparent during 2009 that flaws in the Company's quality management system had been allowed to develop by previous operational management. This has been tackled on two fronts: restoration of quality systems and quality control within the factories leading to a significant improvement in the quality of new buses; secondly, after-sales campaigns have been run to resolve the issues customers have faced in the field in order to successfully restore Optare's quality reputation. The extent to which these costs exceed the expected run-rate for warranty costs has been charged to exceptional costs.
The Company terminated production at its Rotherham site mid-2009 and a sale for the building has been agreed subject to contact. An impairment provision of £1,185,000 has been made.
Exceptional items were £6.9m (2008: £8.3m,) comprising: restructuring and redundancy costs £2.8m; warranty costs £1.6m; fundraising and associated costs of renegotiating bank facilities £0.2m; fixed asset impairment of £1.2m including Rotherham site £1m; additional costs relating to 2008's onerous contracts £0.9m and costs of £0.1m relating to the termination of the proposed move to Walker Park. (2008: deal costs arising from fundraising during the year of £0.7m; restructuring and redundancy costs including the closure of the Rotherham facility of £3.5m; abortive move costs mentioned below of £0.6m and provisions against contracts of £3.5m.)
Net interest cost was £0.3m (2008:£0.3m). Basic and fully diluted loss per share was 8.4p (2008: basic and fully diluted loss per share 23.3p). Loss per share before exceptional items was 3.6p (2008:9.6p).
No dividends were paid during the year and the Board does not propose the payment of any dividend in respect of the year.
During the post-acquisition measurement period following the acquisition of Jamesstan Investments Ltd, the fair values of certain assets and liabilities have been re-revaluated. This has resulted in the changes to fair values shown in Note 27.
Cash Flow and Net Debt
The cash flow statement shows the year ended 31 December 2009. The comparative period is the year ended 31 December 2008.
Management has put significant efforts into the reduction of working capital, with good effect. Stock and WIP were reduced by £8.6m (2008: increase of £4.3m), trade and other receivables were cut by £5.4m (2008: increase of £8.5m). Trade and other payables fell by £7.0m (2008: increase of £11.6m). Overall, working capital reductions generated £4.7m cash (2008: consumed £0.1m ). This contributed to a reduction in net debt.
Operating cash outflow before movements in working capital for the year was £9.5m (2008: £13.3m.)
£8.1m was raised from share issues via a share placing in September 2009 (2008: £20.9m). £1.7m of debt was repaid (2008: £1.2m). There was no spending on the acquisition of subsidiaries in the year (2008: £7.7m ). Capital expenditure was £1.3m (2008: £2.2m) comprising £0.5m investment in new product development (2008: £1.0m), and £0.8m on plant and equipment (2008: £1.2m).
The net movement in cash and cash equivalents was a reduction in overdrafts of £17,000.
Net debt fell by £2.6m from £10.3m in June 2009 to £7.7m (2008:£9.1m). The Directors are confident that net debt will fall further by applying the proceeds of the anticipated sale of the Rotherham property for mortgage repayment. During the year the Company renegotiated its banking facilities and covenants, based on the view of trading taken early in the second half of the year.
Political and Charitable Contributions
There were no political contributions during the year. Charitable contributions were £nil in the year (2008:£41,000)
Financial Instruments
The Group's financial instruments comprise cash, finance leases and short term debtors and creditors arising from its operations. The principal financial instruments used by the Group are loans and mortgages which, together with cash raised from share issues by the company are applied in financing the Group's fixed assets. The Group has not established a formal policy on the use of financial instruments but assesses the risks faced by the Group as economic conditions and the Group's operations develop. Further disclosures relating to financial instruments are included in the Summary of Significant Accounting Policies.
Market Value of Land and Buildings
The company's sole freehold site at Hellaby Way, Rotherham has been actively marketed for sale. It has therefore been reclassified from fixed assets to asset held for sale. In the current economic circumstances the commercial property market is somewhat uncertain. With due regard to this the book value of land and building's is believed to be broadly in line with market value of £2.4m. A sale of the property has been agreed subject to contract.
Research and Development
The Group has one of the strongest product development teams in the industry. During the year the major developments included: the launch of the Solo EV, an all electric, zero emissions midi-bus; the development of the Optare eco-dash, a dashboard that integrates all of a bus's electronic systems bringing added benefits that include remote diagnostics and enabling significant improvements in fuel economy by instant driver feedback; and the development of the Optare Olympus double-deck built on our own chassis.
Events Since the End of the Year
On 21 January 2010 the Company raised £2.1m from institutional shareholders by way of a placing of 37,010,712 ordinary shares.
Directors' Interest in Contracts
No director had a material interest at any time during the year in any contract of significance, other than a service contract, with the company or any of its subsidiary undertakings.
Going Concern
The directors have made enquiries into the adequacy of the Group's financial resources, through a review of the current financial projections, which includes capital expenditure plans and cash flow forecasts and the funding facilities available. Accordingly, the directors have satisfied themselves that the Group will continue in operational existence for the foreseeable future and therefore have continued to adopt the going-concern basis in preparing the Group's financial statements. Further disclosures are made on the matters considered by the directors and related uncertainties in the 'basis of preparation' section in Note 1 to the financial statements.
|
|
Before |
|
|
Before |
|
|
|
|
Exceptional |
Exceptional |
|
Exceptional |
Exceptional |
|
|
Notes |
items |
Items |
Total |
items |
Items |
Total |
|
|
|
|
|
|
|
|
|
|
Year ended 31 December 2009 |
Year ended 31 December 2009 |
Year ended 31 December 2009 |
72 weeks ended 31 December 2008* |
72 weeks ended 31 December 2008 |
72 weeks ended 31 December 2008* |
|
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
|
|
|
|
|
|
|
Revenue |
|
79,831 |
- |
79,831 |
53,490 |
- |
53,490 |
|
|
|
|
|
|
|
|
Cost of sales |
|
(73,270) |
(2,236) |
(75,506) |
(48,625) |
(3,007) |
(51,632) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit |
|
6,561 |
(2,236) |
4,325 |
4,865 |
(3,007) |
1,858 |
|
|
|
|
|
|
|
|
Administrative expenses |
|
(10,696) |
- |
(10,696) |
(9,796) |
- |
(9,796) |
Distribution costs |
|
(558) |
- |
(558) |
(272) |
- |
(272) |
Amortisation of intangible assets |
12 |
(173) |
- |
(173) |
(151) |
- |
(151) |
Impairment of goodwill |
11 |
- |
- |
- |
(126) |
- |
(126) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from operations |
3 |
(4,866) |
(2,236) |
(7,102) |
(5,480) |
(3,007) |
(8,487) |
|
|
|
|
|
|
|
|
Restructuring and other exceptional costs |
2 |
- |
(4,648) |
(4,648) |
- |
(5,260) |
(5,260) |
Finance costs |
6 |
(303) |
- |
(303) |
(529) |
- |
(529) |
Finance income |
6 |
41 |
- |
41 |
254 |
- |
254 |
|
|
|
|
|
|
|
|
Loss for the year from continuing operations |
|
(5,128) |
(6,884) |
(12,012) |
(5,755) |
(8,267) |
(14,022) |
|
|
|
|
|
|
|
|
Loss for the year from discontinued operations |
|
- |
- |
- |
(198) |
(412) |
(610) |
|
|
|
|
|
|
|
|
Loss on ordinary activities before taxation |
|
(5,128) |
(6,884) |
(12,012) |
(5,953) |
(8,679) |
(14,632) |
|
|
|
|
|
|
|
|
Taxation |
7 |
28 |
- |
28 |
271 |
- |
271 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss attributable to the equity |
|
|
|
|
|
|
|
holders of the parent company |
|
(5,100) |
(6,884) |
(11,984) |
(5,682) |
(8,679) |
(14,361) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss per share (Note 9):
2009 2008
From continuing operations (basic and diluted) (8.4)p (24.4)p
From continuing and discontinued operations (basic and diluted) (8.4)p (23.3)p
Before exceptional items (basic and diluted) (3.6p) (9.6)p
There are no other recognised items of income and expense other than those presented above.
*Comparatives have been restated for the finalisation of the far value exercise on the acquisition of Jamesstan Investments Ltd. See note 27.
Consolidated Statement of Changes in Equity
at 31 December 2009
|
Share capital |
Share premium |
Merger reserve |
Retained earnings |
Share based payment reserve |
Total |
|
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
Balance at incorporation |
- |
- |
- |
- |
- |
- |
|
Loss for the year |
- |
- |
- |
(14,361) |
- |
(14,361) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive income for the year |
- |
- |
- |
(14,361) |
- |
(14,361) |
|
Transactions with owners in their capacity as owners:- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issue of shares
Created on acquisition of Darwen Group Ltd |
1,084
- |
15,798
- |
-
5,542 |
-
- |
-
- |
16,882
5,542 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total transactions with owners in their capacity as owners |
1,084 |
15,798 |
5,542 |
- |
- |
22,424 |
|
|
|
|
|
|
|
|
|
Share-based payment |
- |
- |
- |
- |
- |
- |
|
|
|
|
|
|
|
|
|
Balance at 31 December 2008 |
1,084 |
15,798 |
5,542 |
(14,361) |
- |
8,063 |
|
Loss for the year |
- |
- |
- |
(11,984) |
- |
(11,984) |
|
|
- |
- |
- |
- |
- |
- |
|
Total comprehensive income for the year |
- |
- |
- |
(11,984) |
- |
(11,984) |
|
Transactions with owners in their capacity as owners:-
Issue of shares
|
1,240 |
6,822 |
- |
- |
-
|
8,062
|
|
Total transactions with owners in their capacity as owners |
|
|
|
|
|
|
|
Share-based payment |
- |
- |
- |
- |
27 |
27 |
|
Balance at 31 December 2009 |
2,324 |
22,620 |
5,542 |
(26,345) |
27 |
4,168 |
|
The merger reserve was created when Optare plc acquired Darwen Group Ltd via a share for share transaction.
Consolidated Balance Sheet
at 31 December 2009
|
Notes |
2009 |
2008* |
|
|
£'000 |
£'000 |
Non - Current Assets |
|
|
|
Goodwill |
11 |
8,574 |
8,574 |
Other intangible assets |
12 |
3,953 |
3,326 |
Property, plant and equipment |
13 |
3,680 |
6,676 |
|
|
|
|
|
|
16,207 |
18,576 |
|
|
|
|
Current Assets |
|
|
|
Inventories |
14 |
7,175 |
16,823 |
Trade and other receivables |
15 |
4,456 |
9,810
|
Assets held for sale |
16 |
11,631 2,400 |
26,633 - |
|
|
|
|
Total Assets |
|
30,238 |
45,209 |
|
|
|
|
Current Liabilities |
|
|
|
Trade and other payables |
18 |
14,198 |
21,200 |
Bank loans and overdrafts |
17 |
2,301 |
2,318 |
Provisions |
19 |
1,958 |
3,928 |
Obligations under finance leases |
20 |
35 |
249 |
|
|
|
|
|
|
18,492 |
27,695 |
|
|
|
|
Non Current Liabilities |
|
|
|
Bank loans |
17 |
5,287 |
6,799 |
Provisions |
22 |
2,247 |
2,619 |
Obligations under finance leases |
20 |
44 |
33 |
|
|
|
|
|
|
7,578 |
9,451 |
|
|
|
|
Total Liabilities |
|
26,070 |
37,146 |
|
|
|
|
Net Assets |
|
4,168 |
8,063 |
|
|
|
|
Equity |
|
|
|
Share capital |
23 |
2,324 |
1,084 |
Share premium |
|
22,620 |
15,798 |
Share based payment reserve |
|
27 |
- |
Merger reserve |
|
5,542 |
5,542 |
Retained loss |
|
(26,345) |
(14,361) |
|
|
|
|
Total equity attributable to equity holders of the parent |
|
4,168 |
8,063 |
*Comparatives have been restated for the finalisation of the fair value exercise on the acquisition of Jamesstan Investments Ltd. See note 27.
The financial statements on pages 17 to 44 were approved by the board of directors and authorised for issue on 28 May 2010 and are signed on its behalf by:
Mike Dunn FCA
Chief Financial Officer
Consolidated Cash Flow Statement
For the year ended 31 December 2009
|
|
2009 |
2008 |
|
|
£'000 |
£'000 |
Operating activities |
|
|
|
Cash absorbed by operations |
28 |
(4,203) |
(13,448) |
Interest paid |
6 |
(303) |
(529) |
|
|
|
|
|
|
|
|
Net cash used in operating activities |
|
(4,506) |
(13,977) |
|
|
|
|
Investing activities |
|
|
|
Acquisition of subsidiaries |
|
- |
(7,660) |
Cash received from acquisitions |
|
- |
838 |
Disposal of subsidiaries |
|
- |
(235) |
Purchase of property, plant and equipment |
13 |
(1,065) |
(1,169) |
Proceeds on disposal of property, plant and equipment |
|
- |
2,420 |
Purchase of intangible assets |
12 |
(800) |
(1,069) |
|
|
|
|
Interest received |
6 |
41 |
254 |
|
|
|
|
|
|
|
|
Net cash used in investing activities |
|
(1,824) |
(6,621) |
|
|
|
|
Financing activities |
|
|
|
Proceeds from issuance of ordinary shares |
|
8,062 |
20,946 |
Loan repayments |
|
(1,715) |
(1,184) |
|
|
|
|
Net cash generated from financing activities |
|
6,347 |
19,762 |
|
|
|
|
Net increase /(decrease) in cash and cash equivalents |
|
17 |
(836) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of year |
|
|
|
Overdraft |
17 |
(819) |
(836) |
|
|
|
|
|
|
|
|
Consolidated Financial Statements Summary of Significant Accounting Policies
Basis of Preparation
The financial information set out herein does not constitute the Company's statutory accounts for the periods ended 31 December 2009 or 2008 but is derived from those accounts. Statutory accounts for 2008 have been delivered to the registrar of companies, and those for 2009 will be delivered in due course. The auditors have reported on those accounts; their report was (i) unqualified, (ii) did not include references to any matters to which the auditors drew attention by way of emphasis without qualifying their report, and (iii) did not contain statements under sections 237(2) or (3) of the Companies Act 1985 in respect of the accounts for 2008 nor a statement under sections 498(2) or 498(3) of the Companies Act 2006 in respect of the accounts for 2009.
Optare plc is a company incorporated and domiciled in the UK.
The historical financial statements consolidate those of Optare plc and its subsidiaries.
The historical financial statements have been prepared in accordance with International Financial Reporting Standards and IFRIC interpretations issued by the International Accounting Standards Board (IASB) and adopted by the European Union ("Endorsed IFRS") and with those parts of the Companies Act 2006 applicable to companies preparing their accounts under Endorsed IFRS.
The financial statements have been prepared on the going concern basis, which assumes that the Group will continue to be able to meet its liabilities as they fall due for the foreseeable future. The Group's banking facilities were renegotiated in November 2009. The Group's total committed banking and other committed finance facilities are £9.3m. The overdraft facility, which comprises £2.5m of this amount and is annually renewable, falls due for renewal in November 2010. The expiry of the remainder of the facility is between 3 and 12 years, as disclosed in note 17 and 20 to the accounts. The anticipated proceeds of the sale of the Rotherham site will be applied in reduction of debt.
The Group has prepared trading forecasts through to December 2011 which include detailed cash flow calculations. The forecasts are based on detailed assumptions as to sales performance by month. The forecasts reflect a higher level of turnover for the second half of 2010 than the first half, but are based largely upon order book for the third quarter and known prospects for the fourth quarter. This includes an increased level of sales of Green Bus vehicles - both electric vehicles and hybrids - based on announced Green Bus awards.
During the first quarter of 2010, disruption was suffered due to problems with the supply chain including the failure of a major supplier of bus doors to both our manufacturing sites. The forecast is based on the current state of affairs, where these issues have been resolved. Trade debtors and creditors are forecast to increase consistent with increased sales.
The impact of this disruption was such that the Group would have breached one of its banking covenants at 31 March had a waiver not been received from its bank. All the conditions of that waiver are either completed or in hand. Because of disruption faced in Q1 the Directors are currently forecasting the Group to breach its cumulative Interest Cover bank covenant at the end of Q2. The forecast shows no other covenant breaches and the Directors are already in negotiations with the bank about the forecast breach and fully expect to obtain a waiver for the breach.
There is inherent uncertainty in any forecast. Such uncertainties include the lack of visibility regarding sales beyond the third quarter of 2010 in the current economic and financial climate, however the level of orders taken and known prospects is more than adequate to support the forecast sales for 2010; and the possibility that the external economic environment might worsen. Furthermore the Company faces additional uncertainties: the risk that the actions that are planned and being put into effect might take more time to complete than forecast; the uncertainty arising from the renewal of overdraft facilities; and the movement in the euro exchange rate below €1.13:£1. The Directors feel that a reasonably balanced approach has been taken to these risks in the forecast. In particular, the directors are satisfied with the ongoing discussions they are having with their bank such that they are confident that they will be able to renew their facilities in the ordinary course of business.
Additionally, against these uncertainties, there are upside opportunities which are not reflected in the forecast but which would offset or mitigate the impact of downside risks which might occur. These include the opportunity to achieve significant one-off and/or ongoing cash inflows from a potential strategic investor; significant export contracts currently under tender; agreement of long-term repair and maintenance contracts for the support of future bus sales; the sales opportunities in Europe and other foreign territories for our hybrid and electric buses which has generated strong interest but for which only a modest level of sales have been assumed in the forecast.
The Directors are confident that the assumptions underlying their forecasts are reasonable and that the Group will be able to operate within its overdraft limit. The Board believes that it is appropriate to prepare the financial statements on the going concern basis and that the uncertainties referred to above, when considered together with the upside opportunities, do not represent a material uncertainty. The financial statements do not include any adjustment to the value of the balance sheet assets or provisions for further liabilities, which would result should the going concern concept not be valid.
The financial statements have been prepared on a historical cost basis.
Basis of consolidation
Subsidiaries are entities controlled by Optare plc. Control exists when Optare plc has the power, directly or indirectly, to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, potential voting rights that are currently exercisable or convertible are taken into account. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases. Group reorganisations that fall outside the scope of IFRS 3 are accounted for in accordance with FRS 6 Acquisitions and mergers whereby fair value adjustments are not required and the results of the combined entities are included from the beginning of the period.
Inter-company transactions, balances and unrealised gains on transactions between group companies are eliminated.
New IFRS and amendments to IAS and interpretations not applied
There are a number of standards and interpretations issued by the International Accounting Standards
Board that are effective for financial statements after this reporting period. The following have not been adopted by Optare plc.
International Financial Reporting Standards Effective for accounting periods starting on or after
IAS 27* Consolidated and separate financial statements 1 July 2009
IFRS3* Business Combinations 1 July 2009
IAS39* Financial Instruments: recognition and Measurements 1 July 2009
IAS24 Revised IAS24 Related Party Disclosures 1 January 2011
IFRS9 Financial Instruments 1 January 2013
International Financial Reporting Interpretations committee
IFRIC 17 * Distributions of Non-cash Assets to owners 1 July 2009
IFRIC 18 * Transfers of Assets from Customers 1 July 2009
* These standards and interpretations have been endorsed by the European Union.
The application of these standards and interpretations are not anticipated to have a material effect on
Optare plc's financial statements except for additional disclosure.
The following principal accounting policies have been applied consistently in the preparation of the
financial statements:
Revenue
The Company's revenue arises from the sale of vehicles and parts and the provision of repairs and is stated at the invoiced amount net of VAT. Revenue is recognised upon the transfer of all risks and rewards in relation to the Company's products. For the sale of vehicles and parts revenue is recognised on delivery of the goods and for repairs it is recognised on completion of the relevant repair.
Foreign Currency
Transactions entered into in a currency other than the currency of the primary economic environment
(the "functional currency") are recorded at the rates ruling when the transactions occur. Foreign currency monetary assets and liabilities are translated at the rates ruling at the reporting date. Exchange differences arising on the retranslation of unsettled monetary assets and liabilities are recognised immediately in the income statement.
Functional and Presentation Currency
The functional and presentation currency for Optare plc is sterling.
Goodwill
Goodwill, being the difference between the fair value of the assets acquired and the fair value of the consideration paid, arising on business combinations is capitalised as an intangible asset with any impairment in carrying value being charged to the income statement. The asset is reviewed for impairment at least annually.
Goodwill is allocated to cash-generating units for the purpose of impairment testing. The allocation is made to those cash-generating units that are expected to benefit from the business combination in which the goodwill arose.
Intangible Assets
Externally acquired intangible assets are initially recognised at cost and subsequently amortised over their useful economic lives.
Intangible assets are recognised on business combinations if they are identifiable and their fair value can be reliably measured. The amounts ascribed to such intangibles are arrived at by using appropriate valuation techniques.
The significant intangibles recognised by the Company, their useful economic lives and the methods used to determine the cost of intangibles acquired in a business combination are as follows:
1. Vehicle Design
Vehicle designs are valued at the estimated cost of generating vehicle designs including internal and external engineering and testing costs. The amortisation period is the anticipated useful economic life of the design up to 20 years. Amortisation is incurred using a straight line basis.
2. Customer Relationships
Customer relationships are valued using the multi-period excess earnings model. The customer relationships are amortised over ten years using a straight line basis.
3. Order Book
The order book is valued at estimated cost of developing the order book acquired based on resources used to generate the orders. The order book has a finite useful life and is carried at cost less accumulated amortisation. The order book is amortised in line with the delivery of the orders acquired.
Research and Development
Expenditure on research activities is recognised as an expense in the period in which it is incurred.
An internally-generated intangible asset arising from development is recognised only if all of the following conditions are met:
• an asset is created that can be identified;
• it is probable that the asset created will generate future economic benefits;
• the development cost of the asset can be measured reliably;
• the product or process is technically and commercially feasible; and
• sufficient resources are available to complete the development and to either sell or use the asset.
Where no internally-generated intangible asset can be recognised, development expenditure is recognised as an expense in the period in which it is incurred. Internally-generated intangible assets are amortised on a straight-line basis over their useful lives.
Impairment of non-financial assets:
Impairment tests on goodwill and other intangible assets with indefinite useful economic lives are undertaken annually. Other non-financial assets including tangible fixed assets are subject to impairment tests whenever events or changes in circumstances indicate that their carrying amount may not be recoverable. Where the carrying value of an asset exceeds its recoverable amount the asset is written down accordingly.
Where it is not possible to estimate the recoverable amount of an individual asset, the impairment test is carried out on the asset's cash-generating unit (i.e., the lowest group of assets in which the asset belongs for which there are separately identifiable cash flows).
Impairment charges are included as a separate line item in the income statement, except to the extent they reverse gains previously recognised directly in equity.
Financial Assets
Loans and receivables
These assets are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They arise principally through the provision of goods and services to customers (trade receivables, cash and cash equivalents), but also incorporate other types of contractual monetary asset. They are carried at amortised cost less any provision for impairment.
Cash and Cash Equivalents
Cash and cash equivalents comprise cash on hand less bank overdrafts.
Bank Borrowings
Interest-bearing bank loans and overdrafts are recorded initially at their fair value, net of direct transaction costs. Such instruments are subsequently carried at their amortised cost and finance charges, including premiums payable on settlement or redemption, are recognised in the income statement over the term of the instrument using an effective rate of interest
Other Financial Liabilities
Other financial liabilities comprise trade payables and other short-term monetary liabilities, which are recognised at amortised cost.
Retirement Benefits: Defined Contribution Schemes
Contributions to defined contribution pension schemes are charged to the income statement in the period to which they relate. The Group has no further payment obligations once the contributions have been paid.
Leased Assets
Where substantially all of the risks and rewards incidental to ownership of a leased asset have been transferred to the Company (a "finance lease"), the asset is treated as if it had been purchased outright.
The amount initially recognised as an asset is the present value of the minimum lease payments payable over the term of the lease. The corresponding lease commitment is shown as a liability. Lease payments are analysed between capital and interest. The interest element is charged to the income statement over the period of the lease and is calculated so that it represents a constant proportion of the lease liability. The capital element reduces the balance owed to the lessor.
Where substantially all of the risks and rewards incidental to ownership are retained by the lessor (an
"operating lease"), the total rentals payable under the lease are charged to the income statement on a straight-line basis over the lease term.
Deferred Taxation
Deferred tax assets and liabilities are recognised where the carrying amount of an asset or liability in the balance sheet differs to its tax base, except for differences arising on:
• the initial recognition of goodwill;
• goodwill for which amortisation is not tax deductible;
• the initial recognition of an asset or liability in a transaction which is not a business combination and at the time of the transaction affects neither accounting nor taxable profit or loss.
Recognition of deferred tax assets is restricted to those instances where it is probable that taxable profit will be available against which the difference can be utilised.
The amount of the asset or liability is determined using tax rates that have been enacted or substantively enacted by the reporting date and are expected to apply when the deferred tax liabilities/ (assets) are settled/ (recovered).
Deferred tax assets and liabilities are offset when the Company has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.
Property, Plant and Equipment
Items of property, plant and equipment are initially recognised at cost. Depreciation is provided on all items of property, plant and equipment so as to write off the carrying value of items over their expected useful economic lives. It is applied at the following rates:
Plant and machinery - 25% per annum straight line
Fixtures, fittings and equipment - 10 - 33% per annum straight line
Motor vehicles - 17% to 25% per annum straight line
Demonstration fleet
Vehicles manufactured and held principally for customer demonstrations which are intended at the date of entering service to remain in such use for twelve months or more are capitalised at cost as part of our demonstration fleet. When no longer required as a sales aid they are transferred into stock at net book value. When sold the proceeds are treated as revenue. Demonstration fleet vehicles are depreciated at 17% per annum straight line.
Inventories
Inventories are initially recognised at cost, and subsequently at the lower of cost and net realisable value. Cost comprises all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition.
Work in progress and finished goods include labour and attributable overheads.
Provisions
Provisions are recognised for liabilities of uncertain timing or amount that have arisen as a result of past transactions and are discounted at a pre-tax rate reflecting current market assessments of the time value of money and the risks specific to the liability.
Share-based payment transactions
The Group issues equity-settled share-based payment transactions to certain employees. Equity-settled share-based payment transactions are measured at fair value at the date of grant. The fair value determined at the grant date of equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the Group's estimate of the number of instruments that will eventually vest with a corresponding adjustment to equity. Fair value is measured by use of a binomial model. The expected life used in the model has been adjusted, based on management's best estimate, for the effect of non-transferability, exercise restrictions, and behavioural considerations. |
|
|
|
|
|
|
Non vesting and market vesting conditions are taken into account when estimating the fair value of the option at grant date. Non-market vesting conditions are taken into account by adjusting the number of options expected to vest at each reporting date. Cancelled options are accounted for as an acceleration of vesting. The unrecognised grant date fair value is recognised in profit or loss in the year that the options are cancelled.
|
|
Critical Judgements and Estimates
The preparation of historical financial information in conformity with Endorsed IFRS requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. The key sources of estimation that have a significant impact on the carrying value of assets and liabilities are discussed below:
1. Valuation of Intangibles Acquired In Business Combinations
Determining the fair value of intangibles acquired in business combinations requires estimation of the cost or value of the cash-flows related to the identified intangibles and a suitable discount rate in order to calculate the present value.
2. Provision for Warranty Claims
Management has estimated the cost of potential warranty claims arising on acquisition of the various businesses; this requires an element of judgement about the likely level of claims and their financial impact upon the business. The key factors affecting the level of warranty cost are: the number of buses sold; the length in years and the breadth in cover of the terms of the warranty given with the bus; the ability of the Company to obtain suitable back-to-back warranties from its suppliers; the efficacy of the quality processes applied in designing and building the buses; the strictness with which warranty claims from customers are vetted, and the extent to which goodwill claims are allowed. Judgements on the level of warranty provision that is required are based on the number of buses in service and their remaining warranty life, and an assessment of the likely warranty cost per bus. That is based on historical trends of warranty cost per bus, the effect of any known service issues or campaigns, and a judgement of the impact of any changes to design, quality processes and policy for dealing with claims and goodwill.
3. Impairment Reviews
Management perform impairment reviews annually on goodwill and other intangible assets. These involve comparing the estimated future cashflows of the business over the next ten' years discounted at the weighted average cost of capital, to the carrying value of the Group's tangible and intangible fixed assets. Where the net present value of the forecast cashflows exceeds the carrying value, no impairment is required. As required by IFRS, no assumption is made that profits growth can exceed national, market or product averages without justification. Clearly, there is an element of judgement required in assessing the potential future benefits to be derived from these assets.
Financial Instruments - Risk Management
The Company is exposed through its operations to one or more of the following financial risks:
· Liquidity risk
· Market risk
· Credit risk
Policy for managing these risks is set by the Board following recommendations from the Chief Financial Officer. The policy for each of the above risks is described in more detail below.
Principal Financial Instruments
The principal financial instruments used by the Company, from which financial risk arises, are as follows:
· Trade receivables
· Trade and other payables
Liquidity Risk
The liquidity risk of the Company is managed centrally. Liquidity risk arises from the Company's management of working capital and the finance charges and principal payments on debt financing. It is the risk that the Company will have difficulty in meeting its financial obligations as they fall due. The Company currently has sufficient liquid resources to meet the liquidity requirements of the business and its future plans. The Board monitors the cash flow forecasts on a regular basis.
Market Risk
Market risk arises from the use of interest bearing, tradable and foreign currency financial instruments. It is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in interest rates, currency rates or other market factors.
Fair Value and Cash Flow Interest Rate Risk
Management has a policy to obtain long term debt at fixed rates and short term debt at flexible rates.
Although the Board accepts that this policy neither protects the Company entirely from the risk of paying rates in excess of current market rates nor eliminates fully cash flow risk associated with interest payments, it considers that it achieves an appropriate balance of exposure to these risks.
Foreign Currency Risk
Management's primary foreign currency risk arises from suppliers who invoice in Euros, US dollars and Swiss Francs. The Company monitors exchange rate movements and considers the utilization of forward contracts to manage this risk. The Company bulk purchases of stock enable management of the overall pricing of materials, and monitoring of exchange rates ensures that the Company makes payments against trade payables at an appropriate time to reduce the effect of exchange rate fluctuations. Expected foreign currency receipts from export sales are taken into consideration in assessing the net foreign currency exposure.
Credit Risk
Credit risk is managed on a Group basis. Optare plc's credit risk is primarily derived from its trade receivables. This risk is managed daily by the Company's credit control function who monitor recovery and ensure that outstanding debts are identified when these become overdue and appropriate action is taken to recover the amounts outstanding.
Optare plc's customers are also the main major bus operators who have significant resources and facilities in place to fund their vehicle acquisitions thus limiting Optare plc's exposure to credit risk. Credit checks are also made for new customers and appropriate credit limits are set from this information. Credit limits may only be exceeded with the express authorisation of the Directors.
Capital
Optare plc considers its capital to comprise its ordinary share capital, share premium and accumulated retained earnings.
It is Optare plc's policy to maintain its gearing ratios at a level that balances risks and returns and ensures that Optare plc has sufficient liquidity in the business.
Sensitivity Analysis
Whilst Optare plc takes steps to minimise its exposure to cash-flow interest rate risk and foreign exchange risk as described above, changes in interest and foreign exchange rates may have an impact on profit and cash flow. Optare plc's foreign exchange risk is dependent on the movement in the Euro, US dollar and Swiss franc to sterling exchange rate. Any significant foreign currency denominated assets or liabilities at the period end are translated using exchange rates applicable at the time with any exchange rate difference being realised in the income statement. It is estimated that a one per cent increase/decrease in interest rates would increase/reduce losses and reduce/increase equity by approximately £50,000, and that a one per cent weakening/strengthening of sterling against the euro would increase/reduce losses and reduce/increase equity by approximately £50,000.
Notes to the Consolidated Financial Statements
For the year ended 31 December 2009
1. Business And Geographical Segments and Customer Concentration
The directors consider that the Company has only one business segment being bus manufacture, other income is ancillary and does not constitute a segment in its own right. The Company operates solely in the UK and hence has only one geographical segment.
During the year more than 10% of revenue was generated from one customer. That customer was one of the large UK bus operating groups and it comprised 19.8% of turnover, purchasing new buses and parts from the Group.
2. Restructuring And Other Exceptional Items
Exceptional items are costs and income that are not expected to recur in the normal course of business |
2009 £'000 |
2008 £'000 |
|
|
|
Cost of sales |
2,236 |
3,007 |
Restructuring costs |
4,648 |
5,260 |
Discontinued activity |
- |
412 |
|
6,884 |
8,679 |
|
|
|
Warranty |
1,560 |
- |
Redundancy and other restructuring costs |
2,765 |
3,442 |
Impairment |
1,224 |
- |
Onerous contracts |
858 |
3,479 |
Refinancing |
245 |
723 |
Relocation costs |
232 |
623 |
Discontinued activity |
- |
412 |
|
6,884 |
8,679 |
The Group has been in a turnaround situation since mid-2009. Many decisive actions have had to be taken to remedy both legacy issues and the market downturn. The nature of those issues is reflected in the high level of exceptional costs incurred in the year, and the Directors consider to be an overall cost of the turnaround effort.
Restructuring costs: The Group has been through a very turbulent period of restructuring, with the workforce reduced from a peak of 913 to a low-point of 470 full-time equivalents, during a period of rapid reduction in the order book. That necessitated implementing 90-day consultation periods at both manufacturing sites. Restructuring costs include the costs of redundancy and notice periods of £1,051,000, and wage costs of periods of consultation which are deemed by management to have been unproductive of £1,388,000. 2008 costs include the costs of closure of the Rotherham facility together with the write off of related fixed assets.
Warranty costs: it became apparent during 2009 that serious flaws in the Company's quality systems had been allowed to develop by previous operational management. This has been tackled on two fronts: restoration of quality systems and quality control within the factories leading to a significant improvement in the quality of new buses; secondly, after-sales campaigns have been run to resolve the issues customers have faced in the field in order to successfully restore Optare's quality reputation. The extent to which these costs exceed the expected run-rate for warranty costs has been charged to exceptional costs.
Fundraising and Acquisition costs: in the year relate to the costs of renegotiating bank facilities. In 2008 it comprises costs relating to the admission to AIM, the share capital placing and the costs of acquisition for East Lancashire Coachbuilders Ltd, Leyland Product Developments Ltd and Jamesstan Investments Ltd that were not capable of being charged to share premium or capitalised as part of the cost of investment.
Fixed asset impairment: is an impairment provision against the Rotherham site now held as an asset for sale of £1,185,000
Onerous contract costs: relate to certain significant contracts taken in 2008 and delivered during 2008 and 2009, and related penalty payments. The 2009 costs relate to further costs incurred on those contracts in the year. There were no new onerous contracts entered into in the year.
Relocation costs: relate to the planned 2008 move to Walker Park which has been aborted following the developer of the site being unable to complete required works within the required timeframe. In order to escape certain contractual and lease obligations relating to that site, further costs were incurred in 2009.
3. Loss From Operations
Loss from operations has been arrived at after charging/(crediting): |
2009 £'000 |
2008 £'000 |
|
|
|
|
|
Net foreign exchange (gains)/ losses |
(123) |
513 |
|
Cost of inventories recognised in cost of sales |
54,373 |
37,861 |
|
Amounts charged in respect of share options
|
27
|
- |
|
Depreciation |
|
|
|
- owned assets |
2,243 |
675 |
|
- leased assets |
40 |
17 |
|
|
|
|
|
Rental under operating leases |
583 |
384 |
|
Staff costs (See Note 4) |
18,706 |
15,401 |
|
|
|
|
|
Amounts payable to Baker Tilly UK Audit LLP and their associates in respect of both audit and non-audit services. |
|
|
|
Audit services |
|
|
|
- statutory audit including audit of subsidiary companies |
78 |
118 |
|
|
|
|
|
Non Audit services: |
|
|
|
- Services relating to Corporate Finance |
42 |
445 |
|
- Services relating to Tax Services - Advisory |
8 |
33 |
|
- Services relating to Tax Services - Compliance |
12 |
17 |
|
|
140 |
613 |
|
4. Staff Costs
|
2009 |
2008 |
The average monthly number of persons (including directors) employed by the Group's principal divisions was as follows |
No. |
No. |
Production |
563 |
364 |
Head office and administration |
153 |
145 |
|
716 |
509 |
|
|
|
|
|
|
The aggregate remuneration for the above persons comprised: |
2009 £'000 |
2008 £'000 |
|
|
|
Wages and salaries |
16,758 |
13,870 |
Social security costs |
1,669 |
1,359 |
Other pension costs |
279 |
172 |
|
18,706 |
15,401 |
Detils of Directors' fees and salaries, bonuses, pensions, benefits in kind and other benefit schemes are given in the Directors' Remuneration Report on pages 14 to 15.
5. Depreciation And Amortisation
|
2009 £'000 |
2008 £'000 |
|
|
|
Depreciation and impairment of property, plant and equipment |
2,287 |
692 |
Impairment of goodwill |
- |
126 |
Amortisation of intangible fixed assets |
173 |
151
|
|
2,460 |
969 |
6. Finance Costs And Income
|
2009 £'000 |
2008 £'000 |
|
|
|
Interest on bank overdrafts and loans |
294 |
510 |
Interest on obligations under finance leases |
9
|
19 |
Total borrowing costs |
303 |
529
|
Interest receivable |
41 |
254 |
7. Taxation
|
2009 £'000 |
2008* £'000 |
|
|
|
UK Corporation Tax (credit) |
(28) |
(109) |
Total current tax |
(28) |
(109) |
|
|
|
Deferred taxation: |
|
|
Current year |
- |
(19) |
Other material items |
- |
(143) |
Tax attributable to the Company and its subsidiaries |
(28) |
(271) |
Domestic income tax is calculated at 28 per cent of the estimated assessable profit for the year.
The charge for the year can be reconciled to the loss per the income statement as follows:
|
2009 £'000 |
2008* £'000 |
|
|
|
Loss on ordinary activities before tax |
(12,012) |
(14,022) |
Tax at the domestic income tax rate 28% |
(3,363) |
(3,926) |
Tax effect of expenses that are not deductible in determining taxable profit |
639 |
419 |
Tax effect of utilisation of tax losses not previously recognised |
- |
(36) |
Deferred tax asset not provided |
2,696 |
3415 |
Other |
|
(143) |
Tax credit for the year |
(28) |
(271) |
*Comparatives have been restated for the finalisation of the fair value exercise on the acquisition of Jamsstan Investments Ltd.
8. Dividends
In respect of the current year, the Directors do not propose the payment of a dividend.
9. Loss Per Share
Including discontinued operations
The calculation of the basic and diluted earnings per share is based on the following data: |
|
|
|
2009 £'000 |
2008 * £'000 |
Loss: |
|
|
Loss for the purposes of basic earnings per share (net profit for the year attributable to equity holders of the parent) |
(11,984) |
(14,361) |
|
|
|
|
Number |
Number |
|
|
|
Weighted average number of ordinary share for the purposes of basic earnings per share |
142,760,280 |
58,925,752 |
|
|
|
Basic and fully diluted loss per share |
(8.4)p |
(24.4)p |
|
|
|
From Continuing Operations |
2009 |
2008* |
|
£'000 |
£'000 |
|
|
|
Net loss for the year attributable to equity holders of the parent |
(11,984) |
(14,361) |
Adjustment to exclude loss for the year from discontinued operations |
- |
610 |
Loss from continuing operations for the purposes of basic earnings per share |
(11,984) |
(13,751) |
|
|
|
Basic and fully diluted loss per share |
(8.4)p |
(23.3)p |
|
|
|
|
|
|
From Discontinued Operations |
2009 |
2008* |
|
£'000 |
£'000 |
|
|
|
Basic and fully diluted loss per share |
- |
(1.0)p |
|
|
|
Excluding Exceptional Items |
2009 |
2008 |
|
£'000 |
£'000 |
|
|
|
Net loss for the year attributable to equity holders of the parent |
(11,984) |
(14,361) |
Adjustment to exclude exceptional costs |
6,884 |
8,679 |
Loss from continuing operations for the purposes of basic earnings per share |
(5,100) |
(5,682) |
|
|
|
Basic and fully diluted loss per share |
(3.6)p |
(9.6)p |
|
|
|
|
|
|
*Comparatives have been restated for the finalisation of the fair value exercise on the acquisition of Jamesstan Investments Ltd.
There are no dilutive potential ordinary shares in issue. Potentially dilutive share options in issue are detailed in the Directors' Remuneration Report.
Subsequent to the year-end a share issue took place which would have affected the number of shares in issue if had taken place prior to the year-end. Details are disclosed in Note 23.
10. Subsidiaries
Name of subsidiary
|
Place of incorporation & operation |
Proportion of ownership interest |
Proportion of voting power held |
Principal activity |
|
|
|
|
|
Optare UK Ltd |
UK |
100% |
100% |
Manufacturer of passenger vehicles |
Optare Group Ltd |
UK |
100% |
100% |
Manufacturer of passenger vehicles |
Darwen LPD Ltd |
UK |
100% |
100% |
Dormant |
Optare Aftersales Ltd |
UK |
100% |
100% |
Dormant |
Jamesstan Investments Ltd |
UK |
100% |
100% |
Holding Company |
Optare Holdings Ltd |
UK |
100% |
100% |
Holding Company |
Optare (Leeds) Ltd |
UK |
100% |
100% |
Dormant |
Autotec Vehicles Ltd |
UK |
100% |
100% |
Dormant |
Autobus Classique Ltd |
UK |
100% |
100% |
Dormant |
Optare PCV Ltd |
UK |
100% |
100% |
Dormant |
Chalgrove Ltd |
UK |
100% |
100% |
Dormant |
East Lancashire Busbuilders Ltd |
UK |
100% |
100% |
Dormant |
11. Goodwill
|
2009 |
2008* |
|
£'000 |
£'000 |
Cost |
|
|
Balance at start of the year/period |
8,700 |
- |
Acquisition of subsidiary undertakings |
- |
8,700 |
At end of the year/period - |
8,700 |
8,700 |
|
|
|
Impairment: |
|
|
Balance at start of the year/period |
126 |
- |
Charge for the year/period |
- |
126 |
|
|
|
At end of the year/period
|
126 |
126 |
Carrying amount at the end of the year/period
|
8,574
|
8,574 |
|
|
|
*Comparatives have been restated for the finalisation of the fair value exercise on the acquisition of Jamesstan Investments Ltd.
Goodwill arose on the 2008 purchase of Jamesstan Investments Limited, Darwen LPD Ltd and Darwen Group Ltd (now Optare UK Ltd). Goodwill arising on the acquisitions of Darwen LPD Ltd has been treated as fully impaired in the accounts following the disposal of part of the business in 2008.
The Directors consider there is only one cash generating unit (CGU).
The recoverable amount of the CGU has been determined by "value in use" calculations. The calculations used pre-tax cash flow projections over the next ten year period based on current management forecasts to December 2010 and 2011 and extrapolation for later years.
The growth assumptions used in these forecast are, for the next twelve months, the same as those used in the forecasts referred to in the Basis of Preparation. For the remainder of 2011, they reflect management's view that there will be modest growth in the UK bus market as it emerges from the recent period of severely restricted purchasing activity. Growth is expected through 2012 as the pressures on operators mount: to update their fleets to comply with the Disability Discrimination Act; to address the increased average age of their buses following a period during 2009-2010 of low investment; and through a desire to avoid the extra costs that will be incurred if they delay replacements until Euro 6 emissions regulations come into force. In addition the Directors anticipate that increased sales of green buses and success in exports markets will contribute to healthy growth.
The key assumptions applied in the extrapolations were:
Growth rate (%) 2.0%
Discount rate 9.47%
Management determined the gross margin rate based on past performance, future trading conditions and expected margins.
The discount rate used is the weighted average cost of capital calculated for the Company.
A period of ten years has been used in the impairment review because of the relatively product life cycle of bus designs.
12. Intangible Fixed Assets
|
Vehicle related intangible assets |
Customer related intangible assets |
Total |
|
£'000 |
£'000 |
£'000 |
|
|
|
|
Cost |
|
|
|
At incorporation |
- |
- |
- |
Additions - internally generated |
1,069 |
|
1,069 |
Acquisition of subsidiary undertakings |
1,800 |
608 |
2,408 |
|
|
|
|
At 31 December 2008 |
2,869 |
608 |
3,477 |
Additions - internally generated |
800 |
- |
800
|
At 31 December 2009 |
3,669 |
608 |
4,277 |
|
|
|
|
Amortisation |
|
|
|
At incorporation |
- |
- |
- |
Charge for the period |
50 |
101 |
151 |
|
|
|
|
At 31 December 2008 |
50 |
101 |
151
|
Charge for the year |
120 |
53 |
173
|
At 31 December 2009 |
170 |
154 |
324
|
Carrying amount At 31 December 2009 |
3,499 |
454 |
3,953 |
|
|
|
|
At 31 December 2008 |
2,819 |
507 |
3,326 |
|
|
|
|
Of the vehicle related intangible assets' carrying amount at the year-end, £1,870,000 (2008:£1,070,000) related to internally generated assets and £1,629,000 (2008:£1,749,000) related to assets recognised on acquisition.
The vehicle related intangible assets include internally generated new product developments in the year which includes the Optare Olympus, the Solo EV and the Optare Eco-Dash. Also included are vehicle designs included in the acquisition of Jamesstan Investments Ltd.
Customer related intangible assets relate to customer relationships and order book included in the acquisition of Jamesstan Investments Ltd
Customer related intangible assets are amortised over periods of between six months and ten years. Vehicle designs are amortised over a period of 20 years on a straight line basis.
13. Property , Plant and Equipment
|
Land & building |
Production tooling |
Plant, equipment & motor vehicles* |
Fixtures & fittings |
Total |
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
|
|
|
|
|
Cost |
|
|
|
|
|
Acquired through business combination |
6,017 |
1,115 |
1,214 |
409 |
8,755 |
Additions |
101 |
194 |
799 |
75 |
1,169 |
Disposals |
(2,426) |
- |
(216) |
(1) |
(2,643) |
|
|
|
|
|
|
As at 31 December 2008* |
3,692 |
1,309 |
1,797 |
483 |
7,281 |
|
|
|
|
|
|
Additions |
- |
219 |
846 |
- |
1,065 |
Disposals |
- |
- |
(80) |
- |
(80) |
Transferred
|
(3,692)
|
-
|
603
|
-
|
(3,089)
|
As at 31 December 2009 |
- |
1,528 |
3,166 |
483 |
5,177 |
|
|
|
|
|
|
Depreciation |
|
|
|
|
|
Charge for the period |
31 |
155 |
404 |
102 |
692 |
Disposals |
- |
- |
(87) |
- |
(87) |
|
|
|
|
|
|
As at 31 December 2008* |
31 |
155 |
317 |
102 |
605 |
|
|
|
|
|
|
Charge for the year |
1,261 |
381 |
616 |
29 |
2,287 |
Disposals |
- |
(28) |
(75) |
- |
(103) |
Transferred
|
(1,292)
|
-
|
-
|
-
|
(1,292)
|
As at 31 December 2009 |
- |
508 |
858 |
131 |
1,497 |
|
|
|
|
|
|
Net book value As at 31 December 2009 As at 31 December 2008 |
- 3,661 |
1,020 1,154 |
2,308 1,480 |
352 381 |
3,680 6,676 |
|
|
|
|
|
|
*Comparatives have been restated for the finalisation of the fair value exercise on the acquisition of Jamesstan investments ltd.
The net book value of assets held under finance leases and hire purchase agreements is £112,000 (2008: £377,000). Fixed assets are held as security for the Group loan and overdraft facilities with Bank of Scotland plc.
Depreciation charged in the year includes an exceptional charge for the impairment of the Rotherham site of £1,185,000.
14. Inventories
|
2009 £'000 |
2008* £'000 |
|
|
|
Raw materials and consumables |
4,284 |
6,630 |
Work in progress |
2,891 |
8,469 |
Finished goods |
- |
1,121 |
Demonstration |
- |
603 |
|
|
|
Total |
7,175 |
16,823 |
*Comparatives have been restated for the finalisation of the fair value exercise on the acquisition of Jamesstan Investments Ltd. This comprised a £400,000 reduction in the value of raw materials and consumables due to concerns over the realisable value of that stock.
Inventories are held as security for the Group loan and overdraft facilities with Bank of Scotland plc.
15. Trade and Other Receivables
|
2009 £'000 |
2008* £'000 |
|
|
|
Trade receivables |
3,946 |
9,338 |
Allowance for estimated irrecoverable amounts |
(283) |
(203) |
Other receivables and prepayments |
793 |
675 |
|
4,456 |
9,810 |
*Comparatives have been restated for the finalisation of the fair value exercise on the acquisition of Jamesstan investments ltd.
The Directors consider that the carrying amount of trade and other receivables approximates to their fair value.
The Group's credit risk relates primarily to its trade receivables.
16. Assets held for sale
|
2009 £'000 |
2008 £'000 |
|
|
|
Assets held for sale |
2,400 |
-
|
The Company's freehold land and buildings in Rotherham have been classified as non-current assets held for sale as management were committed to a plan to sell them at the reporting date and they were being actively marketed at a price which is considered to be reasonable given the age and condition of the assets. A sale has been agreed subject to contact. |
17. Bank And Other Borrowings
|
2009 £'000 |
2008 £'000 |
|
|
|
Bank overdrafts |
819 |
836 |
Bank loans |
6,769 |
8,281 |
|
|
|
|
7,588 |
9,117 |
|
|
|
The borrowings are repayable as follows: |
|
|
On demand or within one year |
2,301 |
2,318 |
In the second year |
1,482 |
1,482 |
In the third to fifth year (inclusive) |
2,194 |
4,446 |
After 5 years |
1,611 |
871 |
|
7,588 |
9,117 |
|
|
|
|
|
|
Analysis of borrowings by currency |
|
|
Euro - cash balance |
(73) |
(257) |
US Dollar - cash balance |
(1) |
(163) |
Sterling - overdraft |
822 |
1,256 |
Sterling - loans |
6,769 |
8,281 |
Swiss Francs - overdraft |
71 |
- |
7,588 9,117
The fair value of borrowings is not significantly different to carrying value. On 10 February 2009 the LIBOR rate payable on certain of the loans was fixed at a rate of 1.78% for two years on £5,253,000 of the loans, the fixed amount diminishing in line with the scheduled repayments over that period. At the balance sheet date, £4,181,000 of the loans was on that fixed rate. The remainder were floating rate.
18. Trade And Other Payables
|
2009 £'000 |
2008 £'000 |
|
|
|
Trade payables |
9,314 |
17,449 |
Social security and other taxes |
2,360 |
1,102 |
Accruals and deferred income |
2,524 |
2,649 |
|
14,198 |
21,200 |
Creditor days as at 31 December 2009 were 76 days (2008: 69 days). The Directors consider that the carrying amount of trade payables approximates to their fair value. Of the trade creditors outstanding at the year-end that were denominated in foreign currencies was £1,540,000, principally in Euros.
19. Current Provisions
|
Warranty |
Onerous |
Other |
Total |
|
Provision |
Contracts |
Provisions |
Provisions |
|
|
|
|
|
|
£'000 |
£'000 |
£'000 |
£'000 |
|
|
|
|
|
Balance acquired on acquisition |
1,627 |
- |
1,050 |
2,677 |
Additional provision Utilisation of provision |
745 (745) |
2,301 - |
- (1,050) |
3,046 (1,795) |
|
|
|
|
|
At 31 December 2008 |
1,627 |
2,301 |
- |
3,928 |
Additional provision |
1,878 |
272 |
- |
2,150 |
Utilisation of provision |
(1,627) |
(2,493) |
- |
(4,120) |
|
|
|
|
|
At 31 December 2009 |
1,878 |
80 |
- |
1,958 |
During the period ended 31 December 2008 the Group entered into some contracts to increase its presence in specific markets. The terms under which certain of these contracts were agreed have proved to be onerous so provision was made to reflect the onerous element of the outstanding commitments of these contracts. Certain further costs in respect of those contracts were incurred during 2009. No new onerous contracts were entered into during the year.
20. Obligations Under Finance Leases
|
Minimum lease payments |
Present value of minimum lease payments |
Minimum lease payments |
Present value of minimum lease payments |
|
2009 |
2009 |
2008 |
2008 |
|
£'000 |
£'000 |
£'000 |
£'000 |
Amounts payable under finance leases: |
|
|
|
|
- within one year |
35 |
31 |
249 |
224 |
- two to five years |
44 |
32 |
33 |
28 |
|
|
|
|
|
|
79 |
63 |
282 |
252 |
It is the Group's policy to lease certain equipment under finance leases. Obligations under finance leases are secured on the assets to which they relate.
21. Deferred Tax
|
2009 £'000 |
2008* £'000 |
|
|
|
Analysis for financial reporting purposes: |
|
|
Deferred tax liabilities |
- |
- |
|
|
|
Net position at 31 December 2009 |
- |
- |
|
|
|
The movement in the year in the Group's net deferred tax position was as follows: |
|
|
|
2009 £'000 |
2008 £'000 |
|
|
|
At start of year/period |
- |
- |
Credit to income for the year/period |
- |
(19) |
Arising on acquisitions |
- |
19 |
|
|
|
At end of year/period |
- |
- |
*Comparatives have been restated for the finalisation of the fair value exercise on the acquisition of Jamesstan Investments ltd.
At the reporting date, the Group has unused tax losses of £18,975,000 (2008:£10,629,000) available for offset against future profits. A deferred tax asset of £5,437,040 (2008:£2,976,000) has not been recognised in respect of these losses due to the unpredictability of future profit streams.
|
|
|
22. Provisions
|
Warranty |
Total |
Warranty |
Total |
|
Provision |
provision |
Provision |
Provision |
|
2009 |
2009 |
2008* |
2008* |
|
£'000 |
£'000 |
£'000 |
£'000 |
|
|
|
|
|
At 1 January 2009 |
2,619 |
2,619 |
- |
- |
Balance acquired on acquisition |
- |
- |
2,536 |
2,536 |
Additional provision |
2,570 |
2,570 |
962 |
962 |
Utilisation of provision |
(2,942) |
(2,942) |
(879) |
(879) |
|
|
|
|
|
At 31 December 2009 |
2,247 |
2,247 |
2,619 |
2,619 |
*Comparatives have been restated for the finalisation of the fair value exercise on the acquisition of Jamesstan investments ltd.
The warranty provision represents management's best estimate of the Group's liability under warranties granted on passenger vehicles manufactured, based on past experience for defective products.
23. Share Capital - Group
|
|
|
|
|
|
|
|
No. |
£ |
Authorised share capital: Ordinary shares of 1p each As at incorporation:
|
|
|
60,000,000 |
600,000 |
As at 31 December 2008
As at 31 December 2009 |
|
|
120,000,000
310,000,000 |
1,200,000
3,100,000 |
|
|
|
|
|
Issued and fully paid shares capital: ordinary shares of 1p each
|
|
|
|
|
As at incorporation |
|
|
4 |
0.04
|
Shares issued in the year |
|
|
108,459,807 |
1,084,598 |
|
|
|
|
|
As at 31 December 2008 |
|
|
108,459,811
|
1,084,598
|
Shares issued in the year As at 31 December 2009 |
|
|
123,957,142 232,416,953
|
1,239,572 2,324,170 |
The Company has one class of ordinary share which carry no right of fixed income.
The premium net of related charges on the issue of shares has been credited to the share premium account.
On 22 September 2009 123,957,142 new shares were issued at a price of 7p. Subsequent to the year-end, on 21 January 2010, 37,010,712 new shares were issued at a price of 6p via a placing. Each placee received the promise of one warrant for each new share subscribed, exercisable at the price of 6p per warrant for a period of up to 24 months after issue.
24. Retirement Benefits
Defined contribution plans
The Group operates defined contribution retirement benefit plans for employees. The assets of the schemes are held separately from those of the Group in funds under the control of trustees. Where there are employees who leave the scheme prior to vesting fully in the contributions, the contributions payable by the Group are reduced by the amount of forfeited contributions.
The total cost charged to income of £279,000 (2008:£172,000) represents contributions payable to these schemes by the Group at rates specified in the rules of the schemes. As at 31 December 2009, contributions of £87,000 (2008:£50,000) due in respect of the current reporting year had not been paid over to the schemes.
25. Share Based Payments
Equity-settled share option plan
The Group plan provides for a grant price equal to the average quoted market price of the Group shares in the five days prior to the date of grant. If options remain unexercised after a period of 10 years from the date of grant, the options expire. Furthermore, options may be forfeited if the employee leaves the Group before the options vest, depending on the circumstances.
|
2009 |
2008 |
||
|
Options |
Weighted average exercise price |
Options |
Weighted average exercise price |
|
No. '000 |
Pence |
No.'000 |
Pence
|
Outstanding at 1 January |
- |
n/a |
- |
n/a |
Granted during the year |
2,250 |
3.45 |
- |
n/a |
Outstanding at 31 December |
2,250 |
3.45 |
- |
n/a |
|
|
|
|
|
|
|
|
|
|
Exercisable at 31 December |
2,250 |
3.45 |
- |
n/a |
No options were exercised during the year. The options outstanding at 31 December 2009 had an exercise price between 1p and 4.15p, and a weighted average remaining contractual life of 9.5 years.
The fair value of options granted in the year was £27,000 (2008: £nil).
The inputs into the Binomial model are as follows:
|
2009 |
2008 |
|
£'000 |
£'000 |
Weighted average share price |
4.63p |
n/a |
Weighted average exercise price |
3.45p |
n/a |
Expected volatility |
98.21% |
n/a |
Expected life |
2 years |
n/a |
Risk free rate |
1% |
n/a |
Expected dividends |
0% |
n/a |
Expected volatility was determined by calculating the historical volatility of the Group's share price since listing on AIM in February 2008. The expected life used in the model has been adjusted, based on management's best estimate, for the effects of non-transferability, exercise restrictions, and behavioural considerations.
The Group recognised total expenses of £5,000 (2008: £nil) relating to equity-settled share-based payment transactions.
26. Operating Lease Arrangements
The Group as a lessee:
The minimum lease payments under non-cancellable operating lease rentals are in aggregate as follows:
|
Group |
Group |
|
2009 £'000 |
2008 £'000 |
|
|
|
Amounts due within one year |
653 |
592 |
Amounts due between one and five years |
467 |
505 |
|
|
|
|
1,120 |
1,097 |
27. Review of provisional fair values
In accordance with IFRS 3 "Business Combinations" the Company has revised the fair values of the assets acquired on 15 July 2008 via the acquisition of the Jamesstan/Optare Group. The Company has revised its estimate of the realisable value of various balance sheet items as of that date. The effect of the revision is set out below
|
|
|
|
As at 15 July 2008
|
Book |
Fair Value |
Fair |
|
Value |
Adjustments |
Value |
|
£'000 |
£'000 |
£'000 |
|
|
|
|
Plant, Property & Equipment |
6,267 |
|
6,267 |
Inventories |
11,972 |
(756) |
11,216 |
Trade & Other Receivables |
46 |
|
46 |
Demo Vehicles |
1,016 |
|
1,016 |
Cash & cash equivalents |
838 |
|
838 |
Trade & Other Payables |
(9,080) |
(188) |
(9,268) |
Bank Loans & Overdraft |
(9,747) |
|
(9,747) |
Deferred Tax Liability |
(292) |
(410) |
(702) |
Warranty Provision |
(1,450) |
|
(1,450) |
Order Book |
|
79 |
79 |
Customer Lists & Relationships |
|
529 |
529 |
Vehicle Designs |
|
1,800 |
1,800 |
|
|
|
|
|
|
|
|
|
(430) |
1,054 |
624 |
|
|
Provisional |
Adjustment |
Revised |
|
|
|
|
|
|
|
£000 |
£000 |
£000 |
|
|
|
|
|
Goodwill |
|
5,864 |
2,710 |
8,574 |
Trade and other receivables
Inventories Demo vehicles |
|
46
11,216 1,016 |
(234)
(400) (61) |
(188)
10,816 955 |
Warranty provision |
|
(1,450) |
(2,717) |
(4,167) |
Deferred tax liability |
|
(702) |
702 |
- |
The principle adjustment has been in respect of warranty provisions. Based on a detailed review of the costs of warranty costs on buses to which the Company was committed prior to acquisition, management has decided that extra provision was required. These extra costs included warranties on buses sold to certain customers that were for a five-year period rather than the standard two-year warranty period.
The consolidated income statement for the period ended 31 December 2008 has been adjusted to reflect a decrease in the deferred tax credit for the period of £439,000.
28. Net Cash From Operating Activities
Reconciliation of loss from operations to net cash used in operating activities:
|
Group |
Group |
|
2009 £'000 |
2008 £'000 |
|
|
|
Operating activities: |
|
|
Loss before tax |
(12,012) |
(14,632) |
|
|
|
Adjustments for: Share based payments |
27 |
- |
Depreciation |
2,287 |
631 |
Impairment of goodwill |
- |
126 |
Amortisation of intangible assets |
173 |
151 |
Net finance expense |
262 |
274 |
(Profit)/loss on disposal of fixed assets |
(23) |
135 |
Operating cash-flows before movements in working capital |
(9,286) |
(13,315) |
|
|
|
Changes in working capital: |
|
|
Decrease/(increase) in inventories |
9,045 |
(4,349) |
Decrease/(increase) in trade and other receivables |
5,354 |
(8,488) |
(Decrease)/increase in trade and other payables |
(6,974) |
11,614 |
Increase/(decrease) in provisions |
(2,342) |
1,090 |
Total changes in working capital |
5,083 |
(133) |
|
|
|
Net cash absorbed in operating activities |
(4,203) |
(13,448) |
29. Post Year End Events
Post year end events are disclosed in the Directors' Report.
30. Related Party Transactions
Transactions between the Company and its subsidiaries, which are related parties to the Company, have been eliminated on consolidation.
31. Contingent Liabilities
There are no contingent liabilities of which the Directors are aware.
|
Notes |
2009 |
2008 |
|
|
£'000 |
£'000 |
Fixed Assets |
|
|
|
Tangible assets |
33 |
8 |
13 |
Investments |
32 |
19,794 |
19,794 |
|
|
|
|
|
|
19,802 |
19,807 |
|
|
|
|
Current Assets |
|
|
|
Debtors due within one year |
34 |
4,401 |
4,309 |
|
|
|
|
|
|
4,401 |
4,309 |
|
|
|
|
|
|
|
|
Current Liabilities |
|
|
|
Creditors: amounts falling due within one year |
35 |
14,316 |
14,692 |
|
|
|
|
Net Current Liabilities |
|
(9,915) |
(10,383) |
|
|
|
|
Net Assets |
|
9,887 |
9,424 |
|
|
|
|
Capital and Reserves |
|
|
|
Share capital |
36 |
2,324 |
1,084 |
Capital reserves |
37 |
27,056 |
20,234 |
Share based payment reserve Retained loss |
38 39 |
27 (19,520) |
- (11,894) |
|
|
|
|
Total Equity |
|
9,887 |
9,424 |
The Company's Loss After Tax for the year was £7,626,000 (2008:£11,894,000)
The financial statements on pages 45 to 48 were approved by the board of directors and authorised for issue on 28 May 2010 and are signed on its behalf by:
Mike Dunn FCA
Chief Financial Officer
The following accounting policies have been applied consistently in dealing with items which are considered material in relation to the Company's financial statements.
Basis of Preparation
The financial statements have been prepared in accordance with applicable accounting standards under UK GAAP and under the historical cost accounting rules.
The Directors have taken advantage of the exemption available under s.408 of the Companies Act 2006 and have not presented an income statement of the Company.
Under FRS 1 the Company is exempt from the requirement to prepare a cash flow statement on the grounds that a parent undertaking includes the Company in its own published consolidated financial statements.
Taxation
The charge for taxation is based on the profit for the year and takes into account taxation deferred because of timing differences between the treatment of certain items for taxation and accounting purposes. Deferred tax is recognised, without discounting, in respect of all timing differences between the treatment of certain items for taxation and accounting purposes which have arisen but not reversed by the balance sheet date, except as otherwise required by FRS 19.
Investments
Investments are carried at historical cost less provision for impairments in carrying value. Impairments are calculated by reference to the expected recoverable amount.
32. Investments
Details of investments held in the Company accounts are as follows:
|
Cost |
Impairment |
Carrying Value |
|
£'000 |
£'000 |
£'000 |
|
|
|
|
Optare Group Ltd |
13,307 |
- |
13,307 |
Jamesstan Investments Ltd |
6,487 |
- |
6,487 |
Optare UK Ltd |
16,129 |
16,129 |
- |
|
39,923 |
16,129 |
19,794 |
Details of the Company's subsidiaries at 31 December 2009 are shown in Note 10.
33. Fixed Assets
|
Fixtures & Fittings |
Total |
|
£'000 |
£'000 |
Cost: |
|
|
At 1 January 2009 |
16 |
16 |
Additions |
- |
- |
At 31 December 2009 |
16 |
16 |
Depreciation |
|
|
At 1 January 2009 |
3 |
3 |
Charged during year |
5 |
5 |
At 31 December 2009 |
8 |
8 |
|
|
|
Net book value as at 31 December 2009 |
8 |
8 |
|
|
|
Net book value as at 31 December 2008 |
13 |
13 |
34. Debtors Due Within One Year
|
2009 |
2008 |
|
£'000 |
£'000 |
|
|
|
Prepayments and other debtors |
344 |
389 |
Amounts due from subsidiary undertakings |
4,057 |
3,920 |
|
|
|
|
4,401 |
4,309 |
35. Creditors: Amounts Falling Due Within One Year
|
2009 |
2008 |
|
£'000 |
£'000 |
|
|
|
Overdraft |
128 |
589 |
Trade creditors |
376 |
298 |
Amounts payable to subsidiary undertakings |
13,307 |
13,492 |
Social security and other taxes |
93 |
78 |
Accruals and deferred income |
412 |
235 |
|
|
|
|
14,316 |
14,692 |
36. Share Capital - Company
Details of the Company's share capital are disclosed in Note 23.
37. Capital Reserves
|
Share |
Merger |
|
|
premium |
reserve |
Total |
|
£'000 |
£'000 |
£'000 |
As at 1 January 2009 |
15,798 |
4,436 |
20,234 |
Issue of ordinary share capital (net of expenses) |
6,822 |
- |
6,822 |
|
|
|
|
As at 31 December 2009 |
22,620 |
4,436 |
27,056 |
|
|
|
|
38. Share based payment reserve
|
2009 |
2008 |
|
£'000 |
£'000 |
|
|
|
As at start of year |
- |
- |
Charge for year |
27 |
- |
|
|
|
Balance as at 31 December 2009 |
27 |
- |
See note 26.
39. Retained Loss
|
2009 |
2008 |
|
£'000 |
£'000 |
|
|
|
As at start of year |
(11,894) |
- |
Net loss for the year |
(7,626) |
(11,894 ) |
|
|
|
Balance at end of year |
(19,520) |
(11,894) |