January - March, 2009
> Acquisition driven growth of 196 percent
> Margin improvement with an EBITDA margin of 18 percent
> Stable income within Inspection & Maintenance program management compensates
for the downturn within the equipment business
> Several new strategically important contracts won in the U.S.
> Takeover of BIMA's operations from Volvo Cars completed
> Profitability program implemented in business area Europe
Reporting Period (January - March, 2009)
Sales increased to SEK 64.0 million (21.6), equivalent to a growth of 196.0
percent
EBITDA amounted to SEK 11.3 million (1.8)
EBITDA margin amounted to 17.7 percent (8.4)
Net earnings amounted to SEK 2.8 million (1.4)
Earnings per share after dilution amounted to SEK 0.01 (0.02)
The total number of shares outstanding at the end of the period was 193,062,046
(64,181,571) after dilution and the average number of shares outstanding
during the period amounted to 193,062,046 (64,181,571)
Stable Income Within Inspection & Maintenance Program Management Compensates
for the Downturn Within the Equipment Business
The activities within Inspection & Maintenance program management have not been
materially affected by the global economic downturn. The North American
business delivers stable earnings with very good profitability and the Group
has won several new contracts in the U.S. of strategic importance for future
expansion. The strengthening of the dollar during the quarter has also had a
positive effect on earnings for the period.
The current economic situation together with a particularly exposed automotive
industry has however resulted in reduced investment levels amongst Opus
customers within the European business. For comparable units, sales dropped 25
percent during the first quarter. To adapt the organization to the current
business situation, the Group has initiated a profitability program for the
European operations, the business unit within the Group which has been affected
by the recession. The market environment in the equipment side continues to be
uncertain but it is Opus belief that demand should increase as investment
levels in the automotive aftermarket return to normal levels.
Production in the Group's Asian production facility has increased during the
quarter as more of the Group's products are now manufactured there. The Group
continuously works to move more production to low cost countries to strengthen
the Group's profitability and competitiveness.
As described, there are challenges in the current market, but there are also
many exciting opportunities. The Group sees interesting growth opportunities in
particular in South America, Middle East and Asia. Through the acquisition of
SysTech the Group can offer total solutions within vehicle inspection. In the
U.S., a number of important vehicle inspection contracts will come up for
procurement during the year where Opus could be involved. Moreover, it is Opus
belief that the planned deregulation of vehicle inspection in Sweden will
create interesting business opportunities for the Group's European operations.
During the remainder of the year, we will continue working to develop the Group
in line with our long-term strategy where we try to take advantage of
attractive growth opportunities in a global perspective but also trim the
organization to improve the profitability of all affiliates. We are now well on
track towards our financial goals of a turnover of at least half a billion
Swedish kronor with an average EBITDA margin exceeding 20 percent. Our exciting
journey continues!
Gothenburg, Sweden, in May, 2009
Magnus Greko
President and CEO
Notable Events During the Reporting Period
Opus Awarded New Support and Services Contract in the U.S.
On March 16, 2009, Opus announced that its wholly-owned subsidiary SysTech
International, LLC, had been awarded a support and services contract by the
state of Louisiana for the Batan Rouge area in a competitive procurement. The
contract is of great strategic importance for future upcoming procurements in
the region. The contract period is one year with two possible one-year
extensions. The order value was not disclosed due to competitive reasons. The
contract did not trigger any earn-out payments to the sellers of SysTech.
Opus Takes Over Bilmateriel AB's (BIMA) Operations from Volvo Cars
On January 1, 2009, Opus took over Bilmateriel AB's (BIMA) operations within
sale of workshop equipment to both Volvo dealers as well as to independent
garages. As a part of the transition, Opus took over 18 employees, inventories
of workshop equipment and spare parts, the existing order backlog and the right
to use the BIMA trademark in some form of combination with the Opus brand.
Notable Events After the End of the Period
Opus Concentrates its European Operations
On April 27, 2009, Opus announced that it is initiating a profitability program
for the Group's European operations. The organizational changes are made to
further improve the Group's profitability and lead the Group towards its
financial targets. The program is expected to have a positive impact on Opus
earnings per share starting end of 2009.
The plan will be implemented immediately and includes:
The Group's operations in Denmark, will be moved to the head office in Mölndal,
Sweden, where Opus already has vacant office and production space to
accommodate the Danish operations. Significant economies of scale are expected
to be realized when the activities are merged. The only remaining operations in
Denmark will be sales and service to the local market, either through external
partners or through a subsidiary.
Further manufacturing of products will be moved to the Group's factory in China
and other low cost countries to further improve the gross margins in selected
product ranges.
Service activities in the Swedish market will be integrated to exploit
identified economies of scale.
The profitability program is expected to reduce the total cost base in the
European operations by approximately 10-15 percent compared to 2008 year's
level. The relocation of the Danish operations to Sweden starts immediately and
it is management's intention that this shall be completed by August 1, 2009.
Work with the other parts of the program will take place continuously during
the year.
Changes in the Financial Statements 2008
In connection with the completion of the annual report for 2008, Opus chose to
make some corrections to the 2008 financial statements. The corrections to the
results are mainly a result of changes in accounting principles related to the
acquisition of SysTech International, LLC, which was completed in April 2008.
The adjustments in the balance sheet relate mainly to translation differences
related to the U.S. subsidiaries, which were underestimated in the year-end
report for 2008 and increasing the equity capital.
Opus Launches Vehicle Inspection Program in Bermuda
On April 15, 2009, Opus announced that Bermuda Emissions Control, Ltd. and
their partner, SysTech International,LLC, an Opus wholly-owned subsidiary, have
begun inspecting vehicles for emissions and road worthiness in three new
inspection facilities in Bermuda. On this first day of operations, 184 vehicles
were inspected and about 80 percent passed.
Opus Awarded a Remote OBD and Data Management Contract in the U.S.
On April 2, 2009, Opus announced that its wholly-owned subsidiary, SysTech
International, LLC, has been awarded a contract with the Davis County Health
Department, Utah for a Data Management and Reporting System for its emission
testing program and to establish a Remote OBD pilot program. The order value
was not disclosed due to competitive reasons. The contract did not trigger any
earn-out payments to the sellers of SysTech.
Sales and Results
Sales for the current reporting period amounted to SEK 64.0 million (21.6). The
sales growth amounted to approx. 196 percent. The organic growth amounted to
approx. -25 percent as a result of the downturn within the equipment business
in Europe.
Earnings before interest, taxes, depreciation and amortization (EBITDA)
amounted to SEK 11.3 million (1.8) for the current reporting period. The EBITDA
margin amounted to 17.7 percent (8.4).
Acquired IP rights are depreciated over five years which affects the Group's
net earnings negatively. In connection to the SysTech acquisition in April,
2008, the company acquired IP rights of USD 12.3 million. During the first
quarter depreciation relating to these IP rights amounted to approx. SEK 5
million (USD 0.6 million). For this reason, the company uses EBITDA, which
excludes depreciation, as a key performance
measurement of the Groups profitability.
Business Areas
Starting 2009, Opus reports these segments Europe, North America and Asia. For
a more detailed description of the business areas, please see Opus Annual
Report 2008.
Europe
Sales for the current reporting period amounted to SEK 38.2 million (21.6). The
sales growth amounted to approx. 77 percent. The organic growth amounted to
approx. -25 percent.
Earnings before interest, taxes, depreciation and amortization (EBITDA)
amounted to SEK 5.0 million (2.0) for the current reporting period. The EBITDA
margin amounted to 13.0 percent (9.3).
The average number of employees was 63 (41).
North America
Sales for the current reporting period amounted to SEK 25.9 million, equivalent
to an organic growth of approx. 6 percent (SysTech was however not part of the
Opus Group during the first quarter 2008).
Earnings before interest, taxes, depreciation and amortization (EBITDA)
amounted to SEK 6.5 million for the current reporting period. The EBITDA margin
amounted to 25.3 percent.
The average number of employees was 100.
Asia
Sales for the current reporting period amounted to SEK 1.8 million (0.3). The
sales growth amounted to approx. 541 percent.
Earnings before interest, taxes, depreciation and amortization (EBITDA)
amounted to SEK 0.1 million (-0.1) for the current reporting period. The EBITDA
margin amounted to 3.0 percent.
The average number of employees was 13 (10).
Customers
Opus customers are primarily vehicle inspection companies (state and privately
owned), government agencies (counties, states etc.), the car industry and
vehicle garages.
Opus has no individual customers which represent more than 10 percent of the
Group's turnover.
Investments
Except for current ongoing development projects and the takeover of BIMA, no
specific investments were completed during the reporting period.
Financial Position and Liquidity
The equity ratio amounted to approximately 70.0 percent (62.0) at the end of
the period. The cash flow from operating activities amounted to SEK 12.9
million (2.1) and cash and cash equivalents at the end of the period amounted
to SEK 7.1 million (5.4).
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 in the Group was 176 (51) during the reporting
period.
Parent Company
The Parent company's sales during the first quarter amounted to SEK 9.9 million
(10.7). Profit after financial items amounted to SEK 0.8 million (0.5).
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 2.2.
As of 2009, the revised IFRS 8 Segment Accounting, replacing IAS 14 and the
revised version of IAS 1 Presentation of Financial Statement, are applied. IAS
23 Borrowing Costs are at present not relevant for the Group.
In the new version of IAS 1 a split between changes in equity due to
transaction with shareholders and other changes shall be made. The presentation
of changes in equity shall only include transactions with the shareholders,
whilst other changes in equity shall be presented either in one statement
(statement of comprehensive income) or two statements (separate profit and loss
statement and statement of comprehensive income). The Group has chosen to
present a separate profit and loss statement and statement of comprehensive
income.
No other changes have been made to the accounting principles applied in the
2008 annual report.
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.
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 and profitability, 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 2008.
Outlook 2009
In the equipment business the Group experienced a downturn during the first
quarter of 2009. It is management's judgement that the weaker sales are a
result of the current global economic situation which has caused customers to
be more careful with regard to new investments. The end customers in this
business segment are to a certain extent car dealers which have been hit by
lower car sales volumes. At the same time car owners are expected to repair
their cars to a greater extent which can lead to higher demand for test
equipment and to some extent mitigate the foreseen downturn. The different
geographical markets provide mixed signals but management expects the downturn
on the equipment side to continue during the year whilst some compensation can
be obtained through some new customers and markets which were gained during the
Automechanika exhibition in September 2008. To respond to the lower demand for
test equipment, management has initiated a profitability program for the
Group's European businesses. Within Inspection & Maintenance program
management, where the Group runs Vehicle Inspection programs primarily in the
U.S., no downturn has been experienced despite the turmoil on the U.S.
financial markets. The business is stable and independent of the general
economic climate. It is also the management's judgement that the shift to a
democratic president will have a positive impact on increased environmental
investments and testing in the U.S.
The outlook for 2009 is unchanged compared to that presented in the 2008 annual
report.
Opus provides no forecasts.
Financial Information 2009
May 27, 2009, Annual General Meeting 2009
August 27, 2009, Interim report 2nd quarter, 2009
November 26, 2009, Interim report 3rd quarter, 2009
February 25, 2010, Year-end report 2009
This report has been subject to auditors' review.
Gothenburg, Sweden, May 20, 2009
Magnus Greko
President and CEO
Contact Information
Opus Prodox AB (publ), (org no 556390-6063)
Bäckstensgatan 11C
SE-431 49 Mölndal, Sweden
Phone: +46 (0) 31 748 34 91
Fax: +46 (0) 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 (0) 31 748 34 91 or +46 (0) 705 58 45 91.
Opus Certified Adviser
Thenberg & Kinde Fondkommission AB
Box 2108
403 13 Gothenburg
Phone: +46 (0) 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 lines. 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 employs around 175 persons. The turnover for 2008 was SEK 175 million
pro forma (including acquisitions). Opus' share is listed on First North
(NASDAQ OMX) under the ticker OPUS.
