Optare PLC Final Results -4-

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 of GBP12.0m were renegotiated in December 2011, are guaranteed by Ashok Leyland Limited, are annually renewable, and fall due for renewal in January 2013. They are guaranteed by Ashok Leyland Limited. The directors are confident that the bank facilities will be renewed. There are no fixed or floating charges on the assets of the Company following the full repayment of facilities provided by the Company's previous bankers. The Group also has a GBP3.2m short term loan facility from one of its major shareholders as at 31(st) March 2012, which has a duration of up to two years, but repayable on 30 days notice if requested by the lender. The Group is additionally in advanced discussions with a second bank to provide additional loan finance of GBP1.8m and expect this facility to be in place in July 2012.

The Group has prepared trading forecasts through to March 2015 which include detailed cash flow calculations. The forecasts are based on detailed assumptions as to sales performance, variable and fixed costs. The forecasts reflect the move to a single site, the strength of the current order book and prospects, together with the continued emphasis on launching new products from within its development portfolio. This includes an increased level of exports, both fully built and CKD, and continued sales of Green Bus vehicles - both electric vehicles and hybrids. The forecast assumes a gradual increase in the level of savings in material costs over the forecast period, achieved both through the Company's own efforts and through joint initiatives with Ashok. Improvement in labour productivity is factored in, recognising what has been achieved so far in 2012 and from further efficiency gains from the new modern assembly plant as well as redesigns of the buses for easier manufacturing. Tax losses at current corporation tax rates equivalent to approximately GBP9.3m will be useable when the Group achieves profitability, so no tax charge is foreseen within the forecast period.

There is inherent uncertainty in any forecast. In assessing such forecasts the Directors have considered the impact of such uncertainties, including the risks involved in managing increases in output volumes in a new plant, the financial strength of customers, any lack of visibility regarding sales beyond the current order book, the ability of suppliers to meet demand, the achievability of material and labour savings and the possibility that the external economic environment might worsen. The Directors feel that a reasonably conservative approach has been taken in the forecast.

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 achieving the internally targeted higher level of a) material savings than included in the forecast, arising from joint initiatives with Ashok, and b) productivity savings. Further sales opportunities exist in Europe, Southern Africa, the Middle East and Asia in excess of the forecast volumes, both as a standalone business and in conjunction with Ashok.

The Directors are confident that the assumptions underlying their forecast are reasonable and that the Group will be able to operate within its current funding limits and those currently being arranged with support from Ashok. Ashok have confirmed that they will defer GBP1.8 million of loan repayment for a period of three months from the date of approval of the financial statements to provide additional headroom.

On the above basis the Board believes that it is appropriate to prepare the financial statements on the going concern basis. 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.

3. Loss Per Share

 
 The calculation of the basic and diluted     Period ended     Year ended 
  loss per share is based on the following        31 March    31 December 
  data:                                               2012           2010 
                                                   GBP'000        GBP'000 
 Loss: 
 Loss for the purposes of basic loss 
  per share 
 (net loss for the period attributable 
  to equity holders of the parent)                (13,392)        (6,440) 
                                                    Number         Number 
 
 Weighted average number of ordinary 
  share for the purposes of basic earnings 
  per share                                    967,052,981    307,965,208 
                                                    (1.4)p         (2.1)p 
 Basic and fully diluted loss per share 
 
                                              Period ended     Year ended 
                                                  31 March    31 December 
                                                      2012           2010 
 Excluding Exceptional Items                       GBP'000        GBP'000 
 Net loss for the period attributable 
  to equity holders of the parent                 (13,392)        (6,440) 
 Adjustment to exclude exceptional 
  costs                                              4,599          2,163 
 Loss from continuing operations for 
  the purposes of basic earnings per 
  share                                            (8,793)        (4,277) 
 
 Basic and fully diluted loss per share             (0.9)p         (1.4)p 
 

There are no dilutive potential ordinary shares in issue.

This information is provided by RNS

The company news service from the London Stock Exchange

END

FR SEFFAAFESEFM