January - June, 2009
•Acquisition driven growth of 114 percent
•Margin improvement with an EBITDA margin of 15 percent
•Program Management continues to demonstrate its stable income model whilst
equipment sales remains severely affected by the downturn in the economy
•Several new strategically important contracts won in the U.S.
•Takeover of BIMA's operations from Volvo Cars completed
•Profitability program being implemented in Business Area Europe
Interim Period (January - June, 2009)
•Sales increased to SEK 120.3 million (56.3), equivalent to a growth of 113.8
percent
•EBITDA amounted to SEK 17.6 million (7.4)
•EBITDA margin amounted to 14.6 percent (13.2)
•Net earnings amounted to SEK 1.6 million (2.0)
•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
(193,062,046) after dilution and the average number of shares outstanding
during the period amounted to 193,062,046 (93,962,753)
Reporting Period (April - June, 2009)
•Sales increased to SEK 56.2 million (34.6), equivalent to a growth of 62.4
percent
•EBITDA amounted to SEK 6.3 million (5.6)
•EBITDA margin amounted to 11.2 percent (16.2)
•Net earnings amounted to SEK -1.2 million (0.5)
•Earnings per share after dilution amounted to SEK -0.01 (0.00)
•The total number of shares outstanding at the end of the period was 193,062,046
(193,062,046) after dilution and the average number of shares outstanding
during the period amounted to 193,062,046 (123,743,936)
Program Management continues to demonstrate its stable
income model whilst equipment sales remains severely
affected by the downturn in the economy
After seeing the outcome from the first half of this year, it feels reassuring
to be able to conclude that the activities within Inspection & Maintenance
program management have not been materially affected by the global economic
downturn. Just as I wrote in my CEO comments in the interim report for the
first quarter this year, the North American business delivers stable earnings
with very good profitability. The fact that we have also won several new
contracts in the U.S. ,of strategic importance for future expansion, creates a
good foundation for the future.
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, where the Group is mainly active within
sales of equipment. For comparable units, sales dropped 38 percent during the
second quarter, which is in line with the development we saw during the first
quarter. To adapt the organization to the current business situation, the Group
has initiated a profitability program for the European operations. As I wrote
in my previous CEO comments, the outlook within the equipment business
continues to be uncertain as we have not yet seen any signs of a recovery. It
is our belief though that the negative trend has now leveled out.
Production in the Group's Asian production facility has decreased during the
quarter as volumes have been adapted to the current business environment in
Europe. As volumes in Europe return to normal levels the capacity utilization
of our production facility in Asia will also do so.
The work with meeting the challenges we faced in Europe during the first
half-year continue whilst we have many exciting opportunities ahead of us. The
Group sees interesting growth opportunities in particular in South America,
Middle East and Asia. Through our American subsidiary, 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.
Gothenburg, Sweden, in August, 2009
Magnus Greko
President and CEO
Notable Events During the Reporting Period
Annual General Meeting 2009
On May 27, 2009, the Annual General Meeting was held at Opus Prodox AB (publ)
with respect to the fiscal year 2008.
The meeting decided:
• to approve the annual accounts for 2008,
• that in accordance with the Board's proposal, no dividend would be paid for
2008,
• to grant the Board of Directors and Chief Executive Officer discharge for the
financial year 2008,
• that the Board, in accordance with the notice convening the Annual General
Meeting, shall consist of five members and no deputies until the next AGM,
• that for year 2009, grant the Board a total remuneration of SEK 360,000, of
which SEK 120,000 to the Chairman and SEK 80,000 to each of the other three
Board members who are not employees of the company,
• to grant compensation to the company's auditors on an invoice basis,
• to re-elect the existing Board of Directors consisting of Göran Nordlund,
Chairman; Märtha Josefsson; Bertil Engman; Jan-Crister Persson and Lothar
Geilen,
• to establish a nomination committee in accordance with the revised proposal
presented at the AGM,
• to approve the Board's proposed guidelines for remuneration to senior
executives,
• to authorize the Board, as proposed to the AGM, to amend the Articles of
Association as practicable in order to implement the cost-effective rules for
convening the Annual General Meeting,
• to authorize the Board in accordance with the revised proposal presented at
the AGM, to decide on the issue of new shares of up to 10 percent of existing
share capital,
• to cancel the Share Option Program 2008:1 in accordance with the Board's
proposal and
• that in accordance with the Board's proposal, decide on a new issue of
6,000,000 share options, that with deviation from the shareholders preferential
rights, are aimed at Opus Bima AB, a wholly owned subsidiary and with the
condition that the share options, under the proposed conditions, shall be
transferred to employees and other key members in the Group.
The company's President and CEO Magnus Greko presented the company's
development during the financial year 2008 and first quarter 2009 and
significant events during the periods.
Opus Concentrates its European Operations
On April 27, 2009, Opus announced that it has initiated 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 was implemented immediately and includes:
•The Group's operations in Denmark are being 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
as the activities are merged.
•Further manufacturing of products is being 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. Effects from the program are expected to be seen already during the
fourth quarter this year with full effect starting early 2010.
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 the first day of operations, 184 vehicles
were inspected of which 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.
Other Notable Events During the Interim 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
Louisiana Department of Environmental Quality (LDEQ) for their inspection and
maintenance program. 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 Appoints Remium As Its Liquidity Provider (Market Maker)
On July 10, 2009, Opus announced that the Group has appointed Remium as
liquidity provider for the Opus share, which is traded on First North, NASDAQ
OMX.
The purpose is to reduce the price difference between the bid and ask price and
promote the liquidity in the share. The goal is a lower investment cost and
reduced risk for investors in the trading of the share. The commitment began
August 3, 2009.
Sales and Results
Reporting Period
Sales for the current reporting period amounted to SEK 56.2 million (34.6). The
sales growth amounted to approx. 62 percent. Organic growth amounted to approx.
-21 percent* as a result of the downturn within the equipment business in
Europe.
Earnings before interest, taxes, depreciation and amortization (EBITDA)
amounted to SEK 6.3 million (5.6). The EBITDA margin amounted to 11.2 percent
(16.2).
Acquired IP rights are amortized 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. Amortization relating to
these IP rights amount to approx. SEK 5 million (USD 0.6 million) per quarter.
For this reason, the company uses EBITDA, which excludes amortization, as a key
performance measurement of the Groups profitability.
Interim Period
Sales for the current interim period amounted to SEK 120.3 million (56.3). The
sales growth amounted to approx. 114 percent. Organic growth amounted to
approx. -22 percent* as a result of the downturn within the equipment business
in Europe.
Earnings before interest, taxes, depreciation and amortization (EBITDA)
amounted to SEK 17.6 million (7.4). The EBITDA margin amounted to 14.6 percent
(13.2).
Business Areas
Starting 2009, Opus reports the 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 28.1 million (21.2). The
sales growth amounted to approx. 32 percent whereof organic growth amounted to
approx. -38 percent*.EBITDA amounted to SEK -3.2 million (0.7).
Sales for the current interim period amounted to SEK 66.2 million (42.8). The
sales growth amounted to approx. 55 percent whereof organic growth amounted to
approx. -38 percent*. EBITDA amounted to SEK 1.8 million (2.7), equivalent to
an EBITDA margin of 2.7 percent (6.4).
The average number of employees during the current interim period was 62.
North America
Sales for the current reporting period amounted to SEK 28.2 million (13.4).
Comparable figures only include two months as SysTech was only part of the Opus
Group starting April 30, 2008. Organic growth amounted to approx. 7 percent*.
EBITDA amounted to SEK 9.6 million (4.6), equivalent to an EBITDA margin of
34.2 percent (34.0).
Sales for the current interim period amounted to SEK 54.0 million (13.4).
Comparable figures only include two months as SysTech was only part of the Opus
Group starting April 30, 2008. Organic growth amounted to approx. 7 percent*.
EBITDA amounted to SEK 16.2 million (4.6), equivalent to an EBITDA margin of
29.9 percent (34.0).
The average number of employees during the current interim period was 99.
Asia
Sales for the current reporting period amounted to SEK 0.1 million (1.6).
EBITDA amounted to SEK -0.4 million (0.3).
Sales for the current interim period amounted to SEK 2.0 million (1.9). EBITDA
amounted to SEK -0.4 million (0.2).
The average number of employees during the current interim period was 13.
Customers
Opus customers are primarily vehicle inspection companies (state and privately
owned), government agencies (counties, states etc.), the automotive 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 current interim period.
Financial Position and Liquidity
The equity ratio amounted to approximately 71.3 percent (66.5) at the end of
the period. The cash flow from operating activities amounted to SEK 16.8
million (6.5) during the current interim period. Cash and cash equivalents at
the end of the period amounted to SEK 7.8 million (23.0) and unused credit
facilities amounted to SEK 1.4 million 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 in the Group was 174 (119) during the current
interim period.
Parent Company
The Parent company's sales during the current reporting period amounted to SEK
10.3 million (14.3) and profit after financial items to SEK -1.4 million (0.4).
The Parent company's sales during the current interim period amounted to SEK
20.2 million (25.2) and profit after financial items to SEK -0.5 million (1.0).
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, 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 2008.
Outlook 2009
In the equipment business the Group experienced a downturn during the first
half 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 interim
report for the first quarter 2009.
Opus provides no forecasts.
Financial Information 2009
November 26, 2009, Interim report 3rd quarter, 2009
February 25, 2010, Year-end report 2009
This report has not been subject to auditors' review.
Gothenburg, Sweden, August 27, 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, Sweden
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 177 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.
