Optare Plc Annual Report and Accounts 2016
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Optare plc Annual report and accounts 2016 Optare plc | Annual report and accounts 2016 Our vehicles are designed with the environment in mind. Optare plc has almost a century of expertise in using the latest technologies in bus design and manufacturing to deliver the vehicles of today and tomorrow. Strategic report Financial statements 01 Review of the year 23 Independent auditor’s report 02 Chairman’s statement 24 Consolidated income statement 03 President’s statement 25 Consolidated statement of changes in equity 05 Our mission and values 26 Consolidated balance sheet 06 Our business 27 Consolidated cash flow statement 08 Annual highlights 28 Summary of significant accounting policies 14 Our strategy 33 Notes to the consolidated financial statements 15 Our key risks 45 Company balance sheet Corporate governance 46 Summary of significant accounting policies 16 Board of Directors and senior leadership team 47 Notes to the Company financial statements 17 Corporate governance 50 Letter to shareholders 18 Directors’ remuneration report 52 Notice of annual general meeting Read our President’s 20 Directors’ report 55 Form of proxy statement on pages 3 and 4 22 Statement of Directors’ responsibilities IBC Advisers See Our strategy on page 14 Our products Solo Metrocity Versa Type: Mini-bus Type: Midi-bus Type: Midi-bus Length: 7.2–9.9 metres Length: 10.1–11.5 metres Length: 9.7–11.7 metres Engine solution: Euro 6, electric Engine solution: Euro 6, electric Engine solution: Euro 6, electric Optare plc Annual report and accounts 2016 Strategic report Corporate governance Financial statements Review of the year Operational highlights 2015/16 saw a significant investment ▪ Productionisation of the Metrodecker and customer trials programme commenced. and effort put in to widening Optare’s product portfolio and improving product quality, which ▪ Development of extended range electric Solo. has now prepared the Company ▪ Increased sales of Metrocity midi-bus. for a better future. We have the support of our parent company, Ashok Leyland, which helped us tide over the volatile industry during the year, where Optare maintained its market share despite Financial highlights a decline in the single deck industry ▪ Revenue for the period was £38.3m, a drop of 34% over prior year. volumes. We also made our operations more efficient and ▪ There were exceptional costs of £0.8m in this year’s accounts (2014/15: £0.5m). improved our resources in key Gross profit was £3.4m (representing 9% of turnover) over the twelve-month areas which will deliver more ▪ value to our customers.” period (2014/15: £7.5m representing 13% of turnover). Graham Belgum, President ▪ The pre-exceptional EBITDA loss was £5.5m (2014/15: £1.6m). ▪ Operating cash outflow before working capital changes was £6.3m (2014/15: £2.0m). ▪ Loss per share was 0.4p per share (2014/15: loss 0.2p per share). Stay up to date Visit our website for the latest investor news and information: www.optare.com Tempo Metrodecker Type: Full size single deck Type: Double deck Length: 12.5 metres Length: 10.5–11.1 metres Engine solution: Euro 5 Engine solution: Euro 6 www.optare.com Annual report and accounts 2016 01 Chairman’s statement We remain focused on delivering a high quality, innovative product with class-leading support that delivers the best possible whole life cost for our customers.” John Fickling, Non-executive Chairman Introduction ▪ over three-quarters of fully electric single Our people 2015/16 has been a year of continued focus deck buses currently in service in London During the year investment has been made in on long-term growth and evolution for Optare, are Optare vehicles; a programme of training across the business to with investment in product development enhance skills and support the business strategy. Scotland’s first all battery electric fleet goes working closely with customers. Some of ▪ into operation in Inverness using Optare I would like to thank our workforce for their the major achievements for the year include: Solos; and dedication, commitment and support in delivering investment in a larger demonstration fleet the strategic objectives of the Company. Lastly, ▪ continued integration with Ashok Leyland to enable more availability of vehicles for ▪ I would like to thank the shareholders and our to deliver key business objectives. long-term evaluation by customers; bankers for their continuing support. Strategic development promising sales of the recently launched Summary for 2016/17 ▪ Our strategy is consistent with what we stated Metrocity model, accounting for almost In summary 2016/17 will focus on: last year which is outlined below: 20% of Optare’s vehicle sales in 2015/16; increasing sales in the UK with Metrocity, increasing volume in the UK through sales ▪ marginal improvement of market share in ▪ Metrodecker and electric products; ▪ of the Metrocity and Metrodecker products; the single deck sector despite the market continued development of products contracting by 20% in 2015/16; continued development of products and ▪ ▪ and commercial relationships for the commercial relationships for export markets improved customer brand perception UK and export markets to drive UK ▪ to drive further international expansion; through new aftermarket structure and international expansion; and extensive quality campaigns; continuing to “embrace the environment” ▪ continuing to innovate and deliver sustainable by developing and delivering green ▪ extensive in-service customer trials began green bus technology, with a focus on fuel ▪ product technology; following an investment in a fleet of efficiency and EV technology across the Metrodecker demo vehicles; ▪ continuing to drive cost reduction and European product range; integrate business processes to deliver development of an extended range Solo continuing to drive cost reduction and ▪ quality products; and ▪ electric bus – designed to carry out a day’s integrate business processes to deliver service with little or no need to opportunity ▪ focus on the “aftermarket”. quality products; charge the vehicle; I am pleased to report during the year ▪ continued focus on quality improvements, ▪ awarded the Low Carbon Heavy Duty we have made progress on all these aftermarket delivery and ensuring the Vehicle Manufacturer of the Year and key strategic objectives. best possible whole life cost for our the “Grand Prix” award for Outstanding customers; and Our customers Achievement in Low Carbon Transport Our customers remain the focus training and development of skills by the LowCVP; ▪ of everything we do at Optare. to support the business strategy. awarded the Passenger Transport Air ▪ We continue to strengthen our business Quality award for electric buses at the relationships with the major bus groups. National Air Quality Awards; We are confident that this relationship and John Fickling ▪ the first fully electric commercial London partnership will continue to grow and we Non-executive Chairman bus route goes into operation using Optare remain focused on delivering a high quality, 21 June 2016 Metrocity buses; innovative product with class-leading support that delivers the best possible whole life cost for our customers. Optare plc 02 Annual report and accounts 2016 Strategic report Corporate governance Financial statements President’s statement As a manufacturer we have a responsibility to innovate greener vehicles and provide service solutions that support operators in delivering an outstanding service for passengers at the best possible whole life cost. This philosophy is at the heart of everything we do.” Graham Belgum, President Business and financial report only present in the single deck segment The Company’s integration with our parent 2015/16 represented another important year in 2015/16 and marginally improved its company, Ashok Leyland, continues to deliver for Optare in terms of long-term growth strategy market share (0.3 percentage points). sales opportunities in international markets and through investment in product development continued product development and cost control. In the single deck market, Optare continues to and customer care through aftermarket quality lead in the less than 12t segment (Solo) where Financial performance campaigns. 2015/16 also saw further progress Optare achieves 100% of market share. Initial The financial results for the year show a net in building relationships with the national sales of the Metrocity also look promising loss of £9.3m compared to a loss of £4.8m operators with a 57% increase in sales to in the 12–16t market, accounting for 20% in the previous period, because of a drop in these customers from 2014/15. of Optare’s vehicle sales in 2015/16 and volumes and spend on aftermarket quality Optare posted overall sales of 253 single deck helping Optare maintain its market share campaigns and rationalisation. vehicles in 2015/16, marginally improving its in the 12–16t market. The key highlights for the period were: market share. Optare saw sales of eight electric buses in 2015/16. Revenue for the period was £38.3m, The global turnover decreased from £57.8m Over three-quarters of fully electric single deck ▪ a drop of 34% over prior year. to £38.3m. Loss after tax was £9.3m; this buses currently in service in London are Optare can be attributed to a combination of factors, vehicles. The Company’s green vehicle strategy ▪ There were exceptional costs of £0.8m which include a contracted market, an absence is supported by Transport for London’s plans in this year’s accounts (2014/15: £0.5m). of government funding for electric buses over for 300 single deck electric buses to be in service Gross profit was £3.4m (representing the last two years, a multi-million pound in London to meet the requirements of the ▪ 9% of turnover) over the twelve-month investment in aftermarket quality campaigns Ultra Low Emission Zone by 2020. The new period (2014/15: £7.5m representing and investment in product development, Mayor of London has also indicated proposals 13% of turnover).