Brighter outlook as Optos back in black

OPTOS, the Dunfermline-based maker of medical eye scanners, swung to an interim profit after what analysts hailed as a "turnaround" of the business.

Chief executive Roy Davis, who was brought in during November 2008, adjusted Optos's focus to concentrate on growing sales among existing customers.

He said the strategy was now paying off, with gross margins increasing from 61.5 to 66 per cent and new pricing structures in place. Strong cash generation led to net debt being reduced from $59.2 million (41.3m) to $32.7m. Davis said: "I think we have turned the ship around now and we're ready to build up the business."

The company posted a pre-tax profit of $1.8m for the six months to 31 March, compared with a loss of $4.9m in the first half of 2009, when the firm booked restructuring costs and write-downs on research and development projects.

Optos's business model involves installing scanners in opticians' surgeries – mainly in the US – and then charging for each use of the machine.

Revenues edged down from $47.8m to $47.3m, but Davis said the fall was due to scanners being removed from under- performing locations.

On a like-for-like basis, he said average revenues from the group's sites had edged up by 7 per cent.

House broker Piper Jaffray said: "The interim results show the turnaround of the business has been successful, with sustainable profitability achieved and strong cash generation substantially reducing debt.

"We expect to see revenue growth and improving profitability in the second half."

Shares closed up 2p at 130p.