Gothenburg November 10, 2008
Continued strong sales growth (+123 percent)
Strong margin improvement (EBITDA margin of 22 percent during the third quarter,
which is above the Group's financial target)
Acquisition of SysTech International in the U.S.
OMX listing process initiated
Interim Period (January - September, 2008)
Sales increased to SEK 97.5 million (43.8), equivalent to a growth of 123
percent
EBITDA increased to SEK 16.6 million (2.0)
EBITDA margin increased to 17.0 percent (4.6)
Net earnings increased to SEK 2.7 million (1.5)
Earnings per share after dilution amounted to SEK 0.021 (0.025)
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 127,236,968 (58,420,918)
Reporting Period (July - September, 2008)
Sales increased to SEK 41.3 million (17.7), equivalent to a growth of 134
percent
EBITDA increased to SEK 9.1 million (1.4)
EBITDA margin increased to 22.1 percent (8.1)
Net earnings amounted to SEK 0.7 million (1.2)
Earnings per share after dilution amounted to SEK 0.004 (0.019)
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 (61,735,919)
Notable Events During the Reporting Period (July - September, 2008)
During the third quarter, the delivery of 5,000 systems for Remote OBD to Oregon
in the U.S. was completed. Installation of the antenna system is estimated to be
initiated during the forth quarter of 2008. Remote OBD is one of the Opus
Group's patented technologies that automates and simplifies environmental
testing and control of vehicles. Several U.S. states have shown an interest in
Remote OBD and the company's management believes that this technology may be one
of the company's most important going forward.
In September, Opus Group completed its largest international marketing campaign
ever by participating at the Automechanika exhibition in Frankfurt. More than
SEK 1 million was invested in the exhibition by Opus, which burdens this year's
result. The exhibition was very successful and Opus expects to see an impact
from this campaign on sales during the next year.
Opus strengthened its management team with a new CFO, Tomas Jonson, who
previously worked at Nordea Corporate Finance. The appointment of a new CFO was
done in part to meet the tougher requirements that follow from a future listing
on OMX Small Cap, but also to strengthen the organisation ahead of the expected
growth that the Group anticipates during the coming years.
During the spring, Opus' subsidiary, SysTech International, participated in the
tender process for vehicle inspection program management in Wisconsin. It is the
management's judgment that the earn-out payment to the sellers of SysTech
relating to this contract will most likely not materialize.
Other Notable Events During the Interim Period (January - September, 2008)
Nordic
During the first quarter the company experienced a breakthrough within equipment
for vehicle emission testing. In connection to the AUTO exhibition in Gothenburg
2008, Opus Prodox was informed that A-Katsastus, the Finnish equivalent to
Svensk Bilprovning AB, had approved Opus equipment for vehicle emission testing.
The approval marks a breakthrough in the Finnish market for Opus and the
company's Finnish distributor Suomen Työkalu Oy. Sales to A-Katsastus have been
good during the first nine months.
Sales to Svensk Bilprovning AB in Sweden have been weaker during a period as
Svensk Bilprovning AB has been awaiting a decision regarding their future. Opus
expects that the market for equipment to vehicle inspection testing will
increase strongly when the vehicle inspection market is opened up for private
actors, as this will lead to additional test lines according to the study by
McKinsey in 2007 on behalf of the Swedish government.
Other Europe
Within the business area Fleet Management, Opus received during May month its
first order for the company's new version of the log TripLogPRO, an electronic
driver's log that also includes GPS and map programs. A new version of the
TripLogPRO was launched during the CEBIT exhibition earlier
this year and BMW became the first customer of this product. The system is
specially tailored for the DACH region, namely Germany, Austria and Switzerland.
The order was worth SEK 1.5 million. BMW also expressed a desire to brand the
product as "BMW" to increase the impact on the market.
In June, 2008, Opus won a public procurement in Poland through its distributor
WSOP regarding test equipment for exhaust-emission tests and analysis, to be
delivered to vocational schools for mechanics. The order was worth SEK 2.0
million and was delivered in full during the third quarter.
North America and the Acquisition of SysTech
On April 9, 2008, Opus announced that an agreement had been signed to acquire
SysTech International in the United States. By acquiring SysTech International
Opus becomes a leading supplier of complete solution for automotive emission
and safety inspection programs. The acquisition is expected to enhance
Opus'possibilities for further international expansion and establishes the
company on the North American market. SysTech International is one of the
fastest growing companies in the American vehicle inspection market and
reported a turnover of approx. SEK 113 million and an EBITDA margin (Earnings
before interest, taxes, depreciation and amortization) of approx. 23 percent in
2007.
At the extraordinary general meeting on April 25, 2008, the meeting decided to
approve the Boards decision as per April 7, 2008, of a directed share issue to
the sellers of SysTech, totalling 20,000,000 shares for a subscription price of
SEK 3.00 per share (a total of SEK 60.00 million) and a directed
share issue to institutional investors for a total of 21,125,000 shares for a
subscription price of SEK 2.00 per share (a total of SEK 42.25 million). The
weighted average subscription price for both issues was SEK 2.49 per share. The
meeting agreed to authorize the Board, until the next Annual General Meeting, to
decide on a rights issue to partly finance the acquisition of SysTech.
On April 29, 2008, the acquisition of American SysTech International was carried
out according to plan. The purchase price of SEK 226 million was financed
through two successful new directed share issues, debt financing from Nordea and
a vendor's note to the sellers.
In May, 2008, the company carried out a new share issue with preferential right
for the existing shareholders, as decided by the Board, with the right to
subscribe for five (5) new shares for six (6) existing shares in Opus at a
subscription price of SEK 1.20 per share. The rights issue was oversubscribed
with 16 percent. In total 87,755,475 shares were issued and the company was
provided SEK 105,306,570 before issuing costs. The vendor's note for the SysTech
acquisition of SEK 46 million and the bridge financing from Nordea of SEK 30
million was paid off as planned on June 13, 2008.
In the U.S., vehicle inspection is privatized and operated in a number of
counties or states in the country. Opus sees a strong trend in that the number
of counties conducting environmental testing in the U.S. will increase as
environmental awareness has increased and the number of areas that exceed the
permitted levels of air quality also has increased. That Barack Obama won the
presidential election is considered to have a positive impact on the general
trend to introduce more environmental measures.
During the coming year several states are estimated to expand their
environmental control and through the acquisition of SysTech, the company is
well positioned to take advantage of this new market.
Asia and the Pacifics
The company has decided on a conscious effort in emerging markets where
management considers that the need for environmental testing equipment and
vehicle inspection will grow in the next 10-year period.
In the beginning of the year, Opus signed an agreement with New Zealand's
largest vehicle inspection company regarding the supply of equipment for vehicle
emission testing of vehicles. The agreement was signed by Opus New Zealand
distributor Sulco. Opus won two of three completed procurements concerning the
delivery of equipment to testing stations in New Zealand. The equipment was
supplied by Opus during the spring and will be used for environmental testing of
imported cars. This will be a good reference case for future expansion within
the region.
During April, 2008, Opus expanded its presence in the Chinese and Asian market
(APAC) by appointing a sales and marketing director in Asia to identify the
market opportunities for environmental test equipment for vehicles and to build
up sales in the region with a focus on China.
Notable Events after the End of the Period
The Board of Opus has decided to summon an extraordinary general meeting for the
election of Märtha Josefsson as a new Board member in Opus. In connection to the
extraordinary general meeting, the current Board members, Jörgen Hentschel and
Henrik Wagner Jörgensen, will resign from the Board. The proposed changes to the
Board is a part of the preparations in for an initial public offering on OMX and
an action to adapt the Board to the OMX regulations with regards to
independence of the members from the company and the company's management.
Outlook 2008
Automotive Test Equipment
A decline in sales of equipment was experienced during the third quarter. The
weaker sales were partly due to the fact that many customers awaited the
Automechanika exhibition in September as well as the unrest in the world economy
which caused customers to be more cautious.
Markets provide very different signals for the fourth quarter, but the slowdown
is expected to persist while some compensation can be expected as, among other
things, the United Kingdom will be a strong market because all MOT stations need
a new Diesel smoke analyzer by December 31, 2008, and as some new customers have
been gained during the Automechanika exhibition.
Vehicle Inspection Systems
Within the system side, where the company runs Vehicle Inspection programs in
the U.S., no downturn has been experienced despite all the turmoil on the U.S.
financial market. The business is stable and insensitive to the general economic
climate. In SEK the result is positively affected by the stronger USD.
During the third quarter, SysTech delivered good results exceeding their
targets.
Fleet Management & Telematics
Within short an electronic driver's log will be prepared under the "BMW brand"
since BMW in Munich, after just over a year of sales of this product, have
proved to be very satisfied with the quality of the product and Opus support.
The sales volumes have so far not lived up to expectations but are still growing
steadily month by month. The new BMW version is expected to lead to higher
volumes through better penetration of distributors as a BMW product.
Opus Group
Opus Group's financial targets for the next three-year period, as per the
prospectus dated May, 2008, stands firm. The financial targets include achieving
an average annual sales growth of 30-40 percent including acquisitions. Opus has
also adopted an overall growth target that the company shall have a turnover of
at least SEK 500 million by the year 2012 at the latest. It is furthermore the
company's goal for the next three-year period to achieve an average EBITDA
margin above 20 percent.
The company has previously communicated its intent to list the company's share
on OMX during 2008. The process is initiated but the time plan is delayed. The
management intends to complete the re-listing during 2009.
Comments to the Third Quarter of 2008
Sales
Sales amounted to SEK 41.3 million (17.7). The sales growth amounts to
approx. 134 percent. The increase can be attributed partly to the acquisition of
SysTech International in the United States, which is included from April 30 to
June 30 in the consolidated accounts. Opus activities, excluding the SysTech
acquisition, showed no significant growth during the period.
Results
Earnings before interest, taxes, depreciation and amortization (EBITDA)
amounted to SEK 9.1 (1.4). The EBITDA margin increased to 22.1 percent
(8.1).The positive economic impact of the acquisition was already noticeable in
the third quarter at the same time that the strengthening of the USD has had
further positive impact. It is management's assessment that the positive
effects of longer-term synergies between the companies will provide additional
results in the future.
Acquired IP rights are written-off over five years which affects the Group's
earnings negatively. In connection to the SysTech acquisition the company
acquired IP rights of USD 12.3 million. During the third quarter the write-offs
relating to these IP rights amounted to approx. SEK 4 million (USD 0.6 million).
For this reason, the company uses EBITDA, which excludes these write-offs, as a
key performance measurement of the Groups profitability.
Investments
No specific investments in addition to current ongoing development projects
were completed during the period.
Financial Position and Liquidity
The equity ratio amounts to approximately 70 percent. The cash flow from
operating activities amounted to a negative SEK 2.9 million for the first nine
months and cash and cash equivalents at the end of the period amounted to SEK
14.4 million.
Accounting Policies
This interim report was prepared in accordance with IFRS. For information about
the accounting policies applied we refer to the 2007 annual report. The
accounting policies are unchanged from those applied in 2007.
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.
Financial Information 2008
Year end report, 2008, on February 23, 2009.
This report has been subject to
auditors' review.
Gothenburg, November 10, 2008
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 in Brief
The Opus Group is in the business of developing, producing and selling products
within Automotive Test Equipment, Vehicle Inspection Systems and Fleet
Management for the global market. The products include emission analyzers,
diagnostic equipment, brake testers, wheel alignment, automatic test lines,
vehicle databases, Fleet Management systems, electronic driver log systems, and
alco-locks. The Group sells its products in more than 50 countries all over the
world and currently employs around 150 persons. The turnover for 2007 was SEK
193 million pro forma (including acquisitions). Opus share is listed on First
North (Stockholm Stock Exchange) under the ticker OPUS.
