Gothenburg, Sweden, 2011-05-25 08:00 CEST (GLOBE NEWSWIRE) --
Key Highlights
> Organic growth 14 percent for the Group*
> EBITDA SEK 9 million, 15 percent margin, equivalent to an increase of 42 percent* year-on-year
> Continued good profitability in North America - EBITDA margin 30 percent
> Positive development in Europe & Asia - organic growth 23 percent* and EBITDA margin 7 percent
> Cash flow from operating activities SEK 8 million
January – March 2011
• Sales increased to SEK 61.3 million (56.3)
• EBITDA increased to SEK 9.1 million (7.0), equivalent to an EBITDA margin of 14.8 percent (12.4)
• Cash flow from operating activities before changes in working capital increased to SEK 8.4 million (5.8)
• Net earnings increased to SEK 2.4 million (0.8)
• Earnings per share after dilution amounted to SEK 0.01 (0.00)
* For comparable units and in local currencies.
Continued Good Profitability in North America and Increasing Growth and Profitability in Europe
The North American business continues to deliver good profitability with an EBITDA margin of approx. 30 percent. For the year, focus continues on growth in the U.S. market and on exporting SysTech’s technology and knowledge to select international markets. The U.S. EPA (Environmental Protection Agency) has announced that they will issue a final ruling on new ground level ozone standards during 2011, which should positively affect the U.S. emission testing market long term.
Europe & Asia combined reports an increasing organic growth of around 23 percent for the first quarter, which is a result of the increased demand on the strong Swedish home market amongst others. EBITDA amounted to approx. SEK 3 million, equivalent to a margin of approx. 7 percent. The results improvement is an effect of the implemented cost saving programs in combination with increasing sales. For 2011 focus is to continue to grow profitably. The demand for the company’s products and services continue to increase and the business area sees several interesting markets such as Italy, the UK, Holland and Serbia where test lanes for vehicle inspection shall be replaced or updated in the coming years. In addition, there are test lane expansion opportunities in markets where vehicle inspection is being expanded, such as in Russia.
The deregulation of the vehicle inspection market in Sweden has gained momentum and several companies are starting to act in the market which generates opportunities for both Opus equipment and services business. In addition, Opus signed an agreement with Bilia in April with regards to establishing its own vehicle inspection stations around the country and management are now working on a plan for how to best utilize the opportunities that this contract brings.
For the company as a whole, we see increasing growth in parallel with increasing profitability. The operations delivered a total EBITDA of around SEK 9 million, equivalent to an increase of approx. 42 percent in local currencies. The cash flow for the period was also strong, SEK 8 million, which the company continues to use to amortize on oustanding debt obligations. This is reflected in the net debt position at the end of the quarter which is now down to approx. SEK 36 million.
Gothenburg, Sweden, in May, 2011
Magnus Greko
President and CEO
Notable Events
SysTech Obtains Three-Year Contract Extension in Nashville, Tennessee
On May 24, 2011, Opus announced that The Metropolitan Government of Nashville and Davidson County had unanimously voted in favour of a three-year contract extension for continuation of the current centralized emission testing program operated by Opus subsidiary, SysTech International. The amendment extends the term of the contract to June 30, 2015. This secures the continuation of one of SysTech’s three largest vehicle inspection contracts.
Opus to Offer Vehicle Inspections to the Public at Bilia Locations
On April 13, 2011, Opus and Bilia announced that the companies have signed an agreement giving Opus the exclusive right of first refusal to establish vehicle inspection at Bilia’s 68 dealerships in Sweden. Initially, vehicle inspection will be launched in the Stockholm region at the end of the year. Bilia will sublease premises and land surface to Opus, which will independently run the vehicle inspection business through a separate subsidiary. The vehicle inspection activities will be clearly separated from Bilia’s customer reception and workshop. The operations require approval and accreditation by SWEDAC (the Swedish Board for Accreditation and Conformity Assessment). The contract period is five years with a five-year extension option.
Success for Opus at the AUTO Exhibition 2011 and a New Service Contract Signed with Bilia
In January 2011, the Opus Group participated at the AUTO Exhibition 2011 in Gothenburg, Sweden, with an impressive display. The event proved very successful. Opus wholly-owned subsidiary, J&B Maskinteknik AB, also signed a service contract with Bilia Personbilar AB for all workshops in Region West and South.
Sales and Results
Sales for the current reporting period amounted to SEK 61.3 million (56.3). Organic growth was approx. 14 percent (6)*. Earnings before interest, taxes, depreciation and amortization (EBITDA) amounted to SEK 9.1 million (7.0). The EBITDA margin equated to 14.8 percent (12.4).
In connection with the SysTech acquisition in April, 2008, the company acquired Intellectual Propety (IP) of USD 12.3 million. These include patents, software and systems, and are amortized over five (5) years which affects the Group’s net earnings negatively. Amortization relating to these IP amount to approx. SEK 4 million (USD 0.6 million) per quarter and approx. SEK 16 million (USD 2.5 million) per year. For this reason, the company uses EBITDA, which excludes amortization, as a key performance measurement of the Groups profitability.
Business Areas
Opus has decided to consolidate business area Europe and Asia starting 2011, and thus only have two reporting business areas. Reporting to the Group Management Team and the Board of Directors is in accordance with this new structure. Opus operations are therefore now divided into Europe & Asia and North America.
Europe & Asia
Sales for the current reporting period amounted to SEK 40.9 million (33.3). Organic growth was approx. 23 percent (8)*. EBITDA amounted to SEK 2.9 million (0.6), equivalent to an EBITDA margin of 7.0 percent (1.7).
The average number of employees during the current reporting period was 67 (71).
North America
Sales for the current reporting period amounted to SEK 20.4 million (22.9). Organic growth was approx. -1 percent (4)*. EBITDA amounted to SEK 6.1 million (7.3), equivalent to an EBITDA margin of 30.1 percent (31.5).
The average number of employees during the current reporting period was 95 (87).
Customers
Opus customers are primarily government agencies (counties, states etc.), the automotive industry, vehicle garages, and vehicle inspection companies (state and privately owned).
Opus has no individual customers which represent more than 10 percent of the Group’s turnover.
Investments
Investments during the current reporting period consist mainly of ongoing development projects and investments in furnishings, machinery and other technical equipment.
Financial Position and Liquidity
The equity ratio amounted to approximately 74.4 percent (71.8) at the end of the period. The cash flow from operating activities before changes in working capital was SEK 8.4 million (5.8) during the current reporting period. Cash and cash equivalents at the end of the period equated to SEK 14.8 million (15.9) and unused credit facilities amounted to SEK 6.2 million (0.3) at the end of the period.
Taxes
The tax expense for the period is calculated using the current tax rate for the Parent company and each subsidiary. Temporary differences and existing fiscal loss carry-forwards have been taken into account.
Employees
The average number of FTEs (full-time equivalents) in the Group was 162 (158) during the current reporting period.
Parent Company
The Parent company’s sales during the current reporting period amounted to SEK 15.8 million (17.6) and profit after financial items to SEK -0.6 million (0.1).
Related Parties
No transactions with related parties have taken place during the reporting period.
Accounting and Valuation Policies
This report has been prepared in accordance with IAS 34, Interim Financial Reporting. The group accounting has been prepared in accordance with International Financial Reporting Standards, IFRS, as approved by EU, and the Swedish Annual Accounts Act. The interim report for the Parent company has been prepared in accordance with the Swedish Annual Accounts Act and recommendation RFR 2.3.
The same accounting and valuation policies were applied as in the 2010 Annual Report. New standards and interpretations effective from January 1, 2011 have not had any significant impact on the Group’s financial statements.
Accounting Estimates and Assumptions
The preparation of financial reports in accordance with IFRS requires the Board of Directors and Management to make estimates and assumptions that affect the application of accounting principles and the carrying amounts of assets, liabilities, revenue and expenses. Actual outcomes may deviate from these estimates.
Translation of Foreign Operations
Assets and liabilities in foreign entities, including goodwill and other corporate fair value adjustments, are translated to Swedish kroner at the rate prevailing on the balance sheet date, meanwhile all items in the income statement are translated using an average rate for the period.
Essential Risks and Uncertainty Factors
Opus Prodox AB (publ) and the Opus Group companies are through their activities at risk of both financial and operational nature, which the companies themselves may affect to a greater or lesser extent. Within the companies, continuous processes are ongoing to identify possible risks and assess how these should be handled.
The companies’ operations, profitability and financial conditions are directly related to investments within the automotive industry and regulations within environmental and safety testing of vehicles. With the recent dramatic development of the global economic climate, there is a general insecurity, which in the short term results in an increased risk and uncertainty in respect of Opus sales, profitability and financial condition, primarily in the business segment Europe, which is more dependent of the equipment business. In North America, the Group runs vehicle inspection programs through long-term contracts with government agencies. There is a risk of early contract termination which would affect the Group’s financial position negatively. Furthermore, the Group has a currency risk through its translation exposure of the operations in the U.S. A detailed description of the Parent company and subsidiaries’ risks and risk management are given in Opus Annual Report 2010.
Outlook
In the North American vehicle inspection business unit, the company sees a number of interesting opportunities as a number of government contracts in the U.S. emission testing market are scheduled to come out for bid. In addition, there are a number of interesting new markets outside the U.S., where the demand for environmental and safety testing of vehicles is increasing.
In Europe, focus is to continue to grow profitably. During the last six months, demand for the company’s products has increased significantly and Opus thinks that this trend will continue during the reminder of the year. In addition to that, there are several law-driven programs where vehicle inspection activities are to be updated or expanded. Opus organization, with its own products developed in Europe and the United States, and with its own production in China, creates a competitive advantage that the company shall use internationally.
This outlook replaces the outlook which was presented in the Annual Report 2010.
Opus does not provide financial forecasts.
Financial Information
• August 25, 2011, Interim Report (January - June, 2011)
• November 24, 2011, Interim Report (January - September, 2011)
• February 23, 2012, Year-end report 2011
This report has not been subject to auditors’ review.
Gothenburg, Sweden, May 25, 2011
Magnus Greko
President and CEO
Contact Information
Opus Prodox AB (publ), (org no 556390-6063)
Bäckstensgatan 11C
SE-431 49 Mölndal, Sweden
Phone: +46 31 748 34 00
Fax: +46 31 28 86 55
E-mail: info@opus.se
www.opus.se
For any questions regarding the interim report, please contact Magnus Greko, President and CEO, +46 31 748 34 91.
Opus Certified Adviser
Thenberg & Kinde Fondkommission AB
Box 2108
SE-403 12 Gothenburg, Sweden
Phone: +46 31 745 50 00
Opus Prodox AB (publ) in Brief
The Opus Group is in the business of developing, producing and selling products and services within Automotive Test Equipment, Vehicle Inspection Systems and Fleet Management for the global market. The products include emission analyzers, diagnostic equipment, and automatic test lanes. Services include management of mandatory vehicle inspection programs. The Group sells its products and services in more than 50 countries all over the world and currently has around 160 employees. The turnover for 2010 was roughly SEK 230 million. Opus’ share is listed on First North Premier (NASDAQ OMX) under the ticker OPUS.
