With the share price languishing at all time lows, the UK designer, manufacturer and vendor of specialist buses and coaches came out with a somewhat mixed trading update which did give hope of better times in 2011. However, high levels of debt remains an issue! Optare (LON:OPE), which was formed in 1985 out of the old Leyland Bus business, has led the revolution in ‘low’ floor buses. The company is now focusing on hybrid technology and energy saving drivetrains.Its latest trading update confirmed that the order book had further improved from £24.4m per the interim statement on the 30 September 2010 to over £34m; the group has also forecast a stronger output for 2011.
However, the cold and snowy weather conditions that blighted the UK in December adversely affected production, which, combined with a re-phasing of some customer orders from Q4 2010 to early 2011 have impacted turnover for the year ended 31st December 2010. This has a corresponding impact on EBITDA, although this is expected to be recovered in early 2011. The update set a generally positive tone! 2010 was a significant year for the firm, with many developments in bus technology, including the award winning driver console, which helps drivers drive more economically. This revolutionary product was recognised with a prestigious award from the Chartered Institute of Logistics and Transport.100 Hybrid and Electric vehicles are now expected to be produced in 2011. They are doing their best to actively reduce costs in all areas including the move, as previously announced, to concentrate production on a single site during Q3 2010. This strategy will also be assisted from the benefits of low cost sourcing leveraging Ashok Leyland supply chain this year. As well as this, plans are also being reviewed with regards to relocating the Leeds site, whose lease expires this year with little chance of renewal. Relatively high levels of debt remain a concern which wasn’t helped by the recent production disruption. Bank term debt is currently £3.3m, which management anticipates will be significantly reduced by sale of the Rotherham facility where offers have now been accepted to sell the site as two separate developments. In addition to the current overdraft arrangement of £3m a further £1.5m facility for a term of 90 days was agreed through the parent company of a major shareholder due the disruption to production and cash-flow in…
