Gothenburg April 9, 2008
This press release is intended only for non-U.S. and non-Canadian persons, and
for persons who are not resident in Australia, New Zeeland, Japan or South
Africa
This press release may not be distributed or made public, and does not
constitute an offer of any securities for sale, in the United States of America
or Canada, or to persons resident in Australia, New Zeeland, Japan or South
Africa. Securities may not be offered or sold in the United States of America or
Canada, or sold to persons resident in Australia, New Zeeland, Japan or South
Africa, unless they are registered or exempt from registration. Opus has not
registered and does not intend to register any securities for sale in the United
States of America or Canada, or for sale to persons resident in Australia, New
Zeeland, Japan or South Africa. Any offering of securities to be made in the
United States of America or Canada, or to persons resident in Australia, New
Zeeland, Japan or South Africa, will be made by means of a prospectus or other
disclosure document that will contain detailed information about Opus and its
management, as well as financial statements.
The information in this press release speaks only as of April 9, 2008, and Opus
does not intend to update any of the information in the press release. Certain
statements made in the press release may constitute forward-looking statements
with respect to plans, projections and/or future performance of Opus. Actual
results, performance or achievements could differ, materially from those
expressed or implied by those statements. Forward-looking statements represent
the expectations of Opus and are subject to a number of risks and uncertainties
that are subject to change based on factors that are, in many instances, beyond
Opus' control.
Opus Acquires SysTech International in the U.S.
By acquiring SysTech International1 The legal form of SysTech International is
Limited Liability Company (LLC), which is approx. equivalent to a trading
company in Sweden. The acquisition of SysTech International LLC also includes
the property company TriLen LLC. In this press release SysTech International
and/or SysTech mean both SysTech International LLC and TriLen LLC. , Opus
Prodox AB (publ) (“Opus” and/or the “Company”) becomes a competitive supplier of
complete systems for environmental and safety testing of vehicles. The
acquisition is expected to enhance Opus' possibilities for further international
expansion and establishes the Company in 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 million2 Translated
to SEK at a USD/SEK rate of 6.761. and an EBITDA margin (Earnings Before
Interest, Taxes, Depreciation and Amortisation) of approx. 23 per cent in 2007.
SysTech has a contracted order book of approx. USD 79 million (approx. SEK 474
million)3 Translated to SEK at a USD/SEK rate of 6.000. The acquisition is
expected to be completed at the end of April 2008.
The Acquisition is an Important Step in Opus' Growth Strategy
The acquisition of SysTech is a step further in Opus' strategy for growth and
internationalisation. The transaction results in Opus more than doubling its
size and turnover and broadens its market presence by also including the North
American market. After the acquisition, more than 75 per cent of the Company's
net turnover will derive from markets other than the Nordic countries.
Increased Growth through Revenue and Product Related Synergies
Through the acquisition, Opus gains access to a complete product range for
environmental and safety testing of vehicles. SysTech provides leading IT
solutions for business control and administration of vehicle testing as well as
an extensive experience of modern and profitable business models for vehicle
inspection where the supplier takes the entire responsibility, also known as
pay-per-test. It is the New Group's4 The New Group refers to Opus Prodox AB
(publ) and subsidiaries after the acquisition of SysTech International LLC and
TriLen LLC. intention to offer this business model, in combination with the New
Group's product offering, through its global sales system.
CEO's Comments
“Opus has a clear growth philosophy based on organic as well as acquisition
driven growth. SysTech is an acquisition we have been working on during the last
year. We are convinced that the New Group will be the leading player in the
world for environmental and safety testing of vehicles. We have cooperated with
SysTech and its owners for many years, which vouch for a good and effective
process now when we intend to offer the combined product range throughout our
entire sales system. One of our most exciting areas of growth is “wireless
vehicle inspection”, where SysTech, who also owns the concept's patent, has been
our partner throughout the project. After the acquisition Opus will have large
opportunities to be world leading in this area in the growing market observed
not only in the U.S. but also in the rest of the world” says Magnus Greko, CEO
and President of Opus.
Revised Targets
Opus' targets have been revised due to the acquisition:
Opus' target for the next three-year period is to achieve an annual average
growth in net turnover of 30‑40 per cent, through organic growth and
acquisitions
Opus' target for the next three-year period is to achieve an average EBITDA
margin (Earnings Before Interest, Taxes, Depreciation and Amortisation)
exceeding 20 per cent
Opus strives to pay dividends to such extent that allows further acquisitions as
well as significant organic growth. With regard to the Company's growth
ambition, it is the Board of Directors' opinion that no dividends will be
proposed/paid over the next three years
Profit per Share Increasing in 2008
Opus is acquiring all shares in SysTech for USD 37,749,468 (approx. SEK 226
million)5 Translated to SEK at a USD/SEK rate of 6.000.,6 Denominated in USD.
plus any earn-out payments. Starting from this year it is expected that the
acquisition will have a significant positive effect on Opus' profit per share
before synergies and amortisation of acquisition related surplus values.
Financing
Financing of the acquisition will be obtained through:
A share issue targeted at the sellers of SysTech;
A share issue targeted at institutional and professional investors, including
the Second AP fund;
A share issue with pre-emption rights for Opus' shareholders; and
Short and long term debt financing.
It is estimated that the Rights Issue will take place in May/June, 2008.
Decision to List Opus on OMX Small Cap in 2008
Opus has roughly 1,300 shareholders and is listed on First North. Considering
the acquisition of SysTech and the increased institutional ownership and the
broadened shareholder base in the Company, Opus' Board of Directors has decided
to apply for listing on the OMX Nordic Exchange Stockholm AB (“OMX”) as soon as
possible with the goal of having the Opus share listed on OMX Small Cap during
2008.
Background and Reasons for the Acquisition of SysTech
Opus
Opus is an industrial group within environmental and safety testing of vehicles.
The Company's business concept is to develop, produce and sell test equipments
and analyzers for the vehicle industry, vehicle inspection and vehicle repair
shops in the global market. Activities are carried out through three business
areas: Automotive Test Equipments, Fleet Management and Wireless Vehicle
Inspection. The product range includes exhaust meters, diagnostic equipment,
brake testers, wheel alignment equipment, electronic driver log systems, fleet
management systems and systems for wireless vehicle inspection, so called Remote
OBD. During 2007 parts of the Company's manufacturing were transferred to a
newly built production plant in China.
In 2007 Opus reported a turnover of approx. SEK 67 million, a growth of approx.
80 per cent compared to the previous year, an EBITDA (Earnings Before Interest,
Taxes, Depreciation and Amortisation) of SEK 6.0 million, equivalent to an
EBITDA margin of 9.1 per cent. Opus sells its products in more than 50
countries, and its target is to establish business activities on 3-4 new markets
each year. Prior to the acquisition of SysTech, Opus had approx. 50 employees.
The Opus shares are listed on First North since September 2006.
Opus' vision is to be world leading in the field of innovative technology for
environmental and safety testing of vehicles and to create opportunities for
industrial and developing countries to improve their environment through optimal
use of the latest and most cost effective technology. The market for Opus'
products is primarily driven by new and tightened environmental legislation.
Another factor is the increasing number of vehicles that is particularly
prominent today in developing countries such as China and India. Competition in
the market has historically been European based with mainly German and British
companies and for some time also Italian.
There is great future potential for growth in developing markets where emission
controls have not yet been introduced or are deficient. Over the next five-year
period growth is primarily expected to be strong in Asia, the Middle East and
South America. In recent years Opus has succeeded in several prestigious
projects in these growth regions, e.g. in Mongolia, on the Philippines and in
Vietnam. On mature markets in Europe and North America growth is primarily
driven by replacement investments, a consequence either due to the fact that
equipment is approaching the end of its life cycle or that newer technology is
demanded. Developments in these countries are moving towards favouring suppliers
with a complete set of products. Vehicle inspection is increasingly being put
out to contract - a business model that is currently being applied in the U.S. -
where the supplier manages the complete operation of the vehicle inspection
programme and gets paid per test. Development in mature markets is also moving
towards new and more user friendly technology, whereby motorists take a more
active role in exchange for increased flexibility of vehicle inspections.
Through the acquisition of SysTech, Opus will obtain significant competitive
advantages over other players in the market, partly through a more complete
product and service mix, and partly through access to the technology which is
favoured in the expected market development.
SysTech
SysTech is at the forefront of product development and technology related to
environmental control, and is one of the fastest growing companies in the
American vehicle inspection market. SysTech develops and supplies diagnostic
equipment, IT solutions and services for vehicle inspection, and its customer
base principally comprises American states. SysTech's contracts incorporates
everything from delivery of vehicle inspection equipment, IT solutions and
networks, servicing and maintenance of vehicle inspection stations to full
operation of vehicle inspection programmes.
SysTech has a turnover of approx. SEK 113 million7 Translated into SEK at a
USD/SEK rate of 6.761., an EBITDA (Earnings Before Interest, Taxes, Depreciation
and Amortisation) of approx. SEK 26 million1 and has approx. 90 employees. Over
the past year SysTech has achieved an organic growth of more than 250 per cent
and an EBITDA margin exceeding 20 per cent. SysTech has won seven out of the
nine most recent larger procurements of vehicle inspection programmes in the
U.S. since 2005, and SysTech's contracted order book totals approx. SEK 474
million8 Translated into SEK at a USD/SEK rate of 6.000., with an average margin
exceeding the reported EBITDA margin of approx. 23 per cent for 2007. The
acquisition of SysTech International LLC includes the property company TriLen
LLC. This company owns six motor vehicle testing properties in Nashville and a
further four sites in Tennessee.
Value Creation through Good Profitability and State of the Art Technology
The deal is primarily based on two components that are considered to be of long
term importance for Opus' shareholders. The Company's target is to accelerate
its growth and to have a net turnover of at least SEK 500 million by 2012. The
acquisition of SysTech is an important step in attaining this target and in Opus
becoming a leading global supplier of complete high-tech solutions within
vehicle inspection.
The industrial rationale for Opus' acquisition of SysTech's operations involves
combining Opus' product portfolio with SysTech's products, IT solutions and
service offering, thus creating a competitive group on the global market. Opus
can thereby offer existing and new customers complete solutions for vehicle
inspection from a single supplier, as well as products and technology that are
considered to be at the cutting edge of development in the field of
environmental and safety testing of vehicles and it can consequently be given
the opportunity for more and larger undertakings in forthcoming procurements. It
is also assumed that sales will increase through integration of the existing
sales networks. For example, Opus' products can be sold in the American market
through SysTech's distribution channels. Through this process Opus is expected
to take an important step towards attaining its set growth and profitability
targets and in the long term create significant value to the Company's
shareholders. The acquisition combines two companies with strong positions in
two different markets with good profitability. Given the two companies'
backgrounds and offerings, there are also major opportunities for exchanges
around production and investments.
The combination of the two companies creates a more diversified product mix,
which therefore also is more suited for meeting the demand from both existing
and new customers. Opus and SysTech will jointly further develop SysTech's
strong service offering in North America and will also implement this model in
the European market, and in the growth markets in which Opus is present. By
transferring SysTech's manufacturing to Opus' plant in China significant cost
savings are expected to be realised within the New Group.
The Acquisition of SysTech
Opus is acquiring all shares in SysTech for USD 37,749,468 (approx. SEK 226
million)2,9 Denominated in USD. plus any earn-out payments. Earn-out payments,
capped at a maximum amount of USD 25 million (approx. SEK 150 million)2,3, are
payable for all new business generated within a period of 15 years as of the
closing day of the acquisition and which are based on the technology or the
business concepts that were developed or planned by SysTech prior to January 1,
2008. For such new business an earn-out payment of a maximum 35 per cent of the
net profit related to such business is payable and shall be paid annually at the
latest 60 days after the end of the calendar year.
A particular earn-out payment of USD 4 million (appox. SEK 25 million) 10
Translated into SEK at a USD/SEK rate of 6.000.2 Denominated in USD. ,2 shall be
payable if the state of Wisconsin, at the latest December 31, 2008, allots
SysTech a contract with a contract value of at least USD 20 million (approx. SEK
120 million) 1,2 regarding a centralised vehicle inspection programme. The
contract is currently still in the process of procurement. The contract is of an
estimated value of approx. USD 60 million (approx. SEK 360 million)1,2. If this
particular earn-out payment becomes payable, payment is to be made at latest by
March 31, 2009.
Finally, a particular earn-out payment shall be payable on the sale in the U.S.
of systems for wireless vehicle control - Remote OBD - on the number of units
sold which, within 15 years as of the closing day of the acquisition, exceed
205,000 units. This earn-out payment amounts to 7.5 per cent of the sales value
of the units exceeding the 205,000 units and shall be paid annually at the
latest 60 days after the end of the calendar year.
Financing
The acquisition will be financed by share issues and an increase in bank debt.
A number of institutional and professional investors (the “Institutional and
Professional Investors”), including the Second AP Fund, have undertaken to
subscribe to a total of 21,125,000 shares in Opus in a directed share issue at a
price of SEK 2.00 per share, equivalent to a discount of approx. 27 per cent in
relation to the volume weighted average price for Opus over the past 20 trading
days (March 7, 2008 - April 7, 2008) on First North. This share issue will
provide Opus with SEK 42.25 million. For this reason Opus' Board of Directors,
subject to approval by the extra general meeting on April 25, 2008, has decided
on a share issue of a maximum of 21,125,000 shares with right to subscribe for
the Institutional and Professional Investors.
Furthermore, the acquisition amount is being financed through a share issue of a
total of 20,000,000 shares in Opus with right to subscribe for SysTech's founder
Pradeep Tripathi and the CEO Lothar Geilen (the “Sellers”), who together hold
all shares in SysTech. The shares are being issued at a price of SEK 3.00 per
share, equivalent to an issue amount of SEK 60 million and a premium of approx.
9 per cent in relation to the volume weighted average price for Opus over the
past 20 trading days (March 7, 2008 - April 7, 2008) on First North. Payment of
shares subscribed for shall be in cash from the Sellers, or by transferring
promissory notes. Due to this, Opus' Board of Directors, subject to approval by
the extra general meeting on April 25, 2008, has decided on a directed share
issue targeted at the Sellers. The Sellers have undertaken not to sell allotted
shares in Opus within a period of 6 months from the closing of the acquisition.
Moreover, the Sellers have undertaken not to sell shares exceeding 50 per cent
of the allotted shares within a period of 12 months from the closing of the
acquisition. Subscription of shares in both share issues shall be carried out as
soon as possible after the extra general meeting's approval of the share issues.
It is furthermore intended that part of the acquisition shall be financed
through a share issue of approx. SEK 100 million, with pre-emption rights for
Opus' shareholders (the “Rights Issue”). For this reason, Opus' Board of
Directors has decided to propose the extra general meeting on April 25, 2008, to
authorise the Board of Directors to decide that the Company's share capital
shall be increased by a maximum of SEK 1,789,869 to a maximum of SEK 3,896,000
through a share issue with right to subscribe for Opus' shareholders.
AB Kommandoran, HWJ Holding ApS, Vision Invest sprl, Fore C Investment sprl and
Digital Image SA, who together hold shares equivalent to approx. 59 per cent of
the capital and votes in Opus prior to the share issues, have undertaken to vote
at the extra general meeting on April 25, 2008, in accordance with the Board of
Directors' proposal as above. A separate press release regarding the extra
general meeting will be distributed shortly. These shareholders have furthermore
undertaken to subscribe shares to a value of SEK 6.0 million by cash payment,
and in addition to this subscribe to additional shares cash flow neutrally (i.e.
subscription to the extent it can be financed by the sale of subscription rights
and/or shares in Opus).
The Institutional and Professional Investors, who after the directed share
issues will together hold shares equivalent to approx. 20 per cent of the
capital and votes in Opus, are positive towards the Rights Issue and have
declared their intention to subscribe to their share in the Rights Issue.
The acquisition will finally be financed by long term debt by SEK 55 million1,
granted by Nordea. Short term borrowing is furthermore being undertaken to a
maximum amount of SEK 76 million, with the intention of the short term debt
being amortised by the proceeds from the Rights Issue. The short term debt
consists of a bank loan of SEK 30 million, granted by Nordea, and promissory
notes of a maximum USD 7,716,135 (approx. SEK 46 million)11 Denominated in
USD.,12 Translated into SEK at a USD/SEK rate of 6.000., granted by the sellers
of SysTech. The promissory notes shall be repaid with the funds from the Rights
Issue, however no later than 15 months after the completion of the acquisition.
Decision to List Opus on OMX Small Cap in 2008
Opus has roughly 1,300 shareholders and is listed on First North. Considering
the acquisition of SysTech and the increased institutional ownership and the
broadened shareholder base in the Company, Opus' Board of Directors has decided
to apply for listing on the OMX Nordic Exchange Stockholm AB (“OMX”) as soon as
possible with the goal of having the Opus share listed on OMX Small Cap during
2008.
As a result of the share issues the number of outstanding shares in Opus will
increase significantly. It is therefore expected that that there will be an
improvement in the conditions for regular and liquid trading in the Opus shares.
Revised Targets
Following the acquisition of SysTech, Opus' organisation has changed with regard
to size, growth prospects and profitability. Therefore, the Company's targets
have been revised.
Growth
Opus' target for the next three-year period is to achieve an annual average
growth in net turnover of 30‑40 per cent, through organic growth and
acquisitions
Margin
Opus' target for the next three-year period is to achieve an average EBITDA
margin (Earnings Before Interest, Taxes, Depreciation and Amortisation)
exceeding 20 per cent
Dividend Policy
Opus strives to pay dividends to such extent that allows further acquisitions as
well as significant organic growth. With regard to the Company's growth ambition
it is the Board of Directors' opinion that no dividends will be proposed/paid
over the next three years
Preliminary Timetable
The Board of Directors has today decided to summon an extra general meeting on
April 25, 2008. Provided that the extra general meeting decides in accordance
with the Board of Directors' proposal, and the other fulfilment terms regarding
the acquisition are met, subscription in the directed share issues will take
place, the purchase price paid and access obtained as soon as possible
thereafter; estimated to take place at the end of April, 2008. It is estimated
that the Rights Issue will take place during May/June 2008.
Presentation of the Deal April 9, 2008
Today, April 9, 2008 at 11.00 a.m. CET a press conference in Swedish will take
place at Nordic Sea Hotel, Vasaplan 4, in Stockholm.
For Further Information:
CEO and President
Magnus Greko
+46 (0) 31 748 34 91
+46 (0) 70 558 45 91
Chairman of the Board
Göran Nordlund
+46 (0) 70 433 13 20
Nordea Bank AB (publ) is Opus' financial adviser.
Opus' Certified Adviser at First North is Thenberg & Kinde Fondkommission AB.
The legal advisers for Opus are Advokatfirman Glimstedt for Sweden and Squire,
Sanders & Dempsey for the U.S.
BDO Nordic AB is the Company's auditor.
This press release is also available at www.opus.se.
Pro Forma Financial Statements
To illustrate the financial impact of Opus' acquisition of SysTech and the new
share issues, historic pro forma financial statements have been prepared. Given
that the transaction is not yet closed and that the acquisition structure has
not yet been finalised, that all information is not available, that the final
acceptance ratio for the Rights Issue is not known, the combined data presented
below should be considered purely illustrative. Neither does the information
necessarily provide any indication of the combined group's future result.
The pro forma financial statements are based on (i) audited annual financial
statements of Opus for the financial year 2007 pro forma adjusted for the
companies acquired during the year and (ii) audited annual financial statements
of SysTech for the financial year 200713 SysTech's accounts comprise
consolidated annual accounts for SysTech International LLC and TriLen LLC.
adjusted for major differences in accounting principles with regard to Opus.
Opus applies IFRS and pro forma adjustments are therefore accounted for under
IFRS. SysTech applies U.S. GAAP and there has been no restatement of accounting
principles to IFRS when preparing the pro forma financial statements presented
here. After the transaction is completed SysTech's financial statements will be
restated to IFRS. As a result of this, future pro forma financial statements may
deviate from the pro forma financial statements presented. However, Opus'
auditors have carried out a general review of the major differences between U.S.
GAAP and IFRS, and their opinion as of today is that there are no major
differences in this instance.
It is intended that part of the purchase price shall be financed by a rights
issue. The effect of the Rights Issue has been taken into account in the pro
forma financial statements below. In the pro forma financial statements, the
Rights Issue is assumed to be made at market price per share, which means that
no bonus issue aspect affects the pro forma financial statements. No synergies
and/or costs for integration of SysTech have been included.
Pro Forma Adjustment of Opus' Audited Annual Financial Statements for 2007 for
the Acquisitions of EWJ and J&B
During 2007 Opus acquired EWJ Teknik A/S in Denmark (“EWJ”) and the Swedish
company J&B Maskinteknik AB (“J&B”). Only nine and six months respectively of
EWJ and J&B have been consolidated in Opus' annual financial statements for
2007, whereby a pro forma adjustment has been made to illustrate the Opus
group's financial development and position should the acquisitions have taken
place on January 1, 2007. This pro forma has been reviewed by Opus' auditors but
has not been audited.
EWJ's previous financial year was split, and spanned from April 1, 2006, to
March 31, 2007. Consequently only nine months of EWJ's financial statements are
consolidated in Opus' annual financial statements for 2007, thus supplements
have been implemented linearly, adding to a further 25 per cent in the
consolidated financial statement. A standard tax rate of 28 per cent has been
applied.
J&B's previous financial year was split and spanned from July 1, 2006, to June
30, 2007. Consequently only six months of J&B's financial statements are
consolidated in Opus' annual financial statements for 2007, thus a further six
months have been added, involving the same amounts as are included in
consolidated financial statement. A standard tax rate of 28 per cent has been
applied.
The consequences on the result of the above pro forma adjustments amounts to SEK
1,056,272, which has increased equity and the current assets respectively for
Opus' consolidated financial statements and the cash flow for the year by a
corresponding amount.
Adjustment of SysTech's Audited Annual Financial Statements for 2007 for Major
Differences in Accounting Principles with Regard to Opus
SysTech's audited
financial statements for 2007 have been adjusted for major differences in
accounting principles with regard to Opus. In the pro forma, start up costs for
the Rhode Island contract, which have been accounted for in SysTech's annual
financial statements for 2007, have instead been activated in intangible assets
with regard to the tax effect of a standard tax rate of 40 per cent. This means
that the start up costs are linearly written off during the length of the
contract which is five years including extension, according to the accounting
principle applied by the Opus group. SysTech is furthermore a Limited Liability
Company and thus not a tax subject. A standard tax rate of 40 per cent has been
applied to the result in SysTech to illustrate the New Group's profit/loss after
tax.
Comments on the Pro Forma Income Statement
The pro forma income statement has been prepared as if the acquisition of
SysTech and the new share issues took place on January 1, 2007.
Given a purchase price of USD 37,749,468 (approx. SEK 226 million)14 Translated
into SEK at a USD/SEK rate of 6.000. Denominated in USD. Excluding earn-out
payments. plus estimated transaction costs of SEK 8 million (excluding issue
costs), the acquisition of SysTech is believed to result in a surplus value of
approx. SEK 212 million. In the pro forma income statement it is assumed that
the entire surplus value is allocated to goodwill, which is not subject to
annual depreciation. Instead goodwill is subject to impairment tests and the
result of those tests determines if part of or all of goodwill should be
amortised any given year or not. A purchase price allocation, in which the
surplus value is allocated to relevant assets, will be prepared for the
prospectus for the Rights Issue. The outcome of this may result in Opus being
subject to annual depreciation on all or part of the acquisition related surplus
values. As a result of this, future pro forma financial statements may deviate
from the pro forma statements presented.
The acquisition of SysTech will be financed both with share issues and by bank
loans. Approx. SEK 60 million is being financed through an issue of a total of
20,000,000 shares in Opus directed at the sellers of SysTech. Approx. SEK 42
million is being financed through a directed share issue to institutional and
professional investors and approx. SEK 100 million through a rights issue,
implementation of which is planned for May/June 2008. In the pro forma, an
acceptance ratio of 100 per cent has been assumed in the Rights Issue. Opus has
secured both short term debt financing totalling a maximum of SEK 76 million, to
be amortised with funds from the Rights Issue, and long term financing of SEK 55
million. The pro forma net interest income/expense has been affected by an
interest expense of SEK 2.5 million (excluding so called up-front fees) based on
an assumed interest rate of 4.6 per cent on the long term debt financing of SEK
55 million.
The pro forma tax expense has been estimated based on consideration for where
each operation is run.
In the pro forma income statement an average exchange rate of 6.761 (USD/SEK)
for 2007 has been applied.
Comments on the Pro Forma Balance Sheet
The pro forma balance sheet has been prepared as if the acquisition of SysTech
and the new share issues took place on December 31, 2007.
The acquisition of SysTech is expected to result in a surplus value of approx.
SEK 212 million that will be allocated to relevant assets. In the pro forma
balance sheet it is assumed that the entire surplus value is allocated to
goodwill. See further the above heading Comments on the pro forma income
statement.
The acquisition of SysTech will be financed partially by means of long term debt
financing of approx. SEK 55 million, thus long term liabilities have been
increased by a corresponding amount.
In the pro forma balance sheet an exchange rate of 6.468 (USD/SEK) as of
December 31, 2007, has been applied.
Comments on the Pro Forma Cash Flow Analysis
The pro forma cash flow analysis has been prepared as if the acquisition of
SysTech and the share issues took place on January 1, 2007.
In the pro forma cash flow analysis an average exchange rate of 6.761 (USD/SEK)
for 2007 has been applied.
--------------------------------------------------------------------------------
| Pro Forma Income Statement | January 1 - December 31, 2007 |
| 2007 | |
--------------------------------------------------------------------------------
| Thousands of | | Opus | Adjustme | SysTech | Adjustme | The New |
| Swedish kronor | | audit | nt for | audited | nts and | Group |
| | | ed | EWJ and | financia | eliminat | pro for |
| | | financial | J&B | l | ions1) | ma |
| | | statement | | statemen | | |
| | | | | t | | |
--------------------------------------------------------------------------------
| Net turnover | | 66,525 | 13,830 | 112,908 | - | 193,263 |
--------------------------------------------------------------------------------
| Cost of goods | | -36,623 | -7,078 | -50,050 | - | -93,751 |
| sold | | | | | | |
--------------------------------------------------------------------------------
| Gross profit | | 29,902 | 6,752 | 62,858 | - | 99,511 |
--------------------------------------------------------------------------------
| Other operating | | -24,346 | -5,209 | -37,339 | 9,330 | -58,786 |
| expenses | | | | | | |
--------------------------------------------------------------------------------
| OPERATING PROFIT | | 5,556 | 1,543 | 25,518 | - | 40,726 |
| (EBIT) | | | | | | |
--------------------------------------------------------------------------------
| Net interest | | -492 | -76 | -1,221 | -2,530 | -4,434 |
| income/expense | | | | | | |
--------------------------------------------------------------------------------
| PROFIT/LOSS | | 5,064 | 1,467 | 22,961 | 6,800 | 36,292 |
| AFTER FINANCIAL | | | | | | |
| INCOME AND | | | | | | |
| EXPENSE | | | | | | |
--------------------------------------------------------------------------------
| Tax on | | -1,393 | -411 | - | -10,260 | -12,063 |
| profit/loss for | | | | | | |
| the year | | | | | | |
--------------------------------------------------------------------------------
| PROFIT/LOSS FOR | | 3,671 | 1,056 | 22,961 | -3,460 | 24,229 |
| THE YEAR | | | | | | |
--------------------------------------------------------------------------------
1) Start up costs for the Rhode Island contract have been reversed by a net
amount of SEK 9.330 million, adjusted for one year's depreciation, and have been
activated in the balance sheet. Standard rate tax of 40 per cent on the reversed
amount has been recorded in the profit/loss for the year.
Interest expense for the loan financing of the acquisition of SysTech is
estimated at 4.6 per cent of the long term loan financing of SEK 55 million,
equivalent to SEK 2.530 million.
Tax has been adjusted for a standard rate tax of 40 per cent on SysTech's
profit/loss and a standard rate tax of 28 per cent on the increased interest
expense and estimated issue costs.
--------------------------------------------------------------------------------
| Pro Forma Balance Sheet | December 31, 2007 |
| 2007 | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Thousands of | | Opus | Adjustme | SysTech | Adjustme | The New |
| Swedish | | audit | nt for | audited | nts and | Group |
| kronor | | ed | EWJ and | financia | eliminat | pro forma |
| | | financial | J&B | l | ions1) | |
| | | statement | | statemen | | |
| | | | | t | | |
--------------------------------------------------------------------------------
| Goodwill | | 11,671 | - | | 212,000 | 223,671 |
--------------------------------------------------------------------------------
| Intangible | | 6,957 | - | 380 | 9,330 | 16,668 |
| assets | | | | | | |
--------------------------------------------------------------------------------
| Property and | | 2,470 | - | 42,526 | - | 44,996 |
| machinery | | | | | | |
--------------------------------------------------------------------------------
| Shares etc. | | - | - | 504 | - | 504 |
--------------------------------------------------------------------------------
| Trade debtors | | 17,047 | - | 20,350 | - | 37,397 |
--------------------------------------------------------------------------------
| Stock | | 22,466 | - | 8,805 | - | 31,271 |
--------------------------------------------------------------------------------
| Other current | | 3,129 | 1,056 | 364 | - | 4,550 |
| assets | | | | | | |
--------------------------------------------------------------------------------
| Liquid assets | | 4,011 | - | 2,470 | 17,470 | 23,951 |
--------------------------------------------------------------------------------
| TOTAL ASSETS | | 67,752 | 1,056 | 75,400 | 238,800 | 383,008 |
--------------------------------------------------------------------------------
| Equity | | 41,833 | 1,056 | 26,125 | 173,540 | 242,555 |
--------------------------------------------------------------------------------
| Long term | | 9,844 | - | 24,574 | 55,000 | 89,418 |
| liabilities | | | | | | |
--------------------------------------------------------------------------------
| Trade | | 8,329 | - | 13,939 | - | 22,268 |
| creditors | | | | | | |
--------------------------------------------------------------------------------
| Accrued | | 2,017 | - | 7,719 | - | 9,735 |
| expenses | | | | | | |
--------------------------------------------------------------------------------
| Deferred | | - | - | 22 | - | 22 |
| income | | | | | | |
--------------------------------------------------------------------------------
| Warranty | | - | - | 388 | - | 388 |
| provision | | | | | | |
--------------------------------------------------------------------------------
| Other current | | 5,730 | - | 2,634 | 10,260 | 18,623 |
| liabilities | | | | | | |
--------------------------------------------------------------------------------
| TOTAL EQUITY | | 67,752 | 1,056 | 75,400 | 238,800 | 383,008 |
| AND | | | | | | |
| LIABILITIES | | | | | | |
--------------------------------------------------------------------------------
1) Given a purchase price of USD 37,749,468 (approx. SEK 226 million),
excluding earn-out payments, plus transaction costs of an estimated SEK 8
million (excluding issue costs), the acquisition of SysTech is believed to
result in a surplus value of approx. SEK 212 million. It has been assumed that
the entire surplus value is allocated to goodwill.
Start up costs for the Rhode Island contract have been activated in intangible
assets of a net amount of SEK 9.330 million adjusted for one year's
depreciation. They are written off linearly during the length of the contract,
which is five years including extension, of which four years remain. A tax
liability equivalent to 40 per cent of the reversed amount has been recorded.
The remaining amount has increased the equity in the New Group.
Liquid assets have been added with the amount the financing exceeds the purchase
price for all shares of SysTech including estimated transaction and share issue
costs, after deduction for one year's interest payments.
Equity has been adjusted for a standard rate tax of 40 per cent on SysTech's
profit/loss and estimated issue expenses of SEK 7 million.
The tax liability has been adjusted by a corresponding amount.
Long term liabilities have been increased by SEK 55 million in loan financing.
--------------------------------------------------------------------------------
| Pro Forma Cash Flow Analysis | January 1 - December 31, 2007 | |
| 2007 | | |
--------------------------------------------------------------------------------
| Thousands of | | Opus | Adjustm | SysTech | Adjustme | The New |
| Swedish kronor | | audi | ent for | audited | nts and | Group |
| | | ted | EWJ and | financia | eliminat | pro forma |
| | | financial | J&B | l | ions1) | |
| | | statement | | statemen | | |
| | | | | t | | |
--------------------------------------------------------------------------------
| PROFIT/LOSS | | 5,064 | 1,467 | 22,961 | 6,800 | 36,292 |
| AFTER FINANCIAL | | | | | | |
| INCOME AND | | | | | | |
| EXPENSE | | | | | | |
--------------------------------------------------------------------------------
| Adjustment for | | 1,946 | - | 1,221 | -2,163 | 5,330 |
| items not | | | | | | |
| included in the | | | | | | |
| cash flow | | | | | | |
--------------------------------------------------------------------------------
| Tax paid | | -1,156 | -411 | - | - | -1,567 |
--------------------------------------------------------------------------------
| Change in | | -18,086 | - | -7,160 | - | -25,246 |
| operating | | | | | | |
| capital | | | | | | |
--------------------------------------------------------------------------------
| Cash flow from | | -12,233 | 1,056 | 17,022 | 8,963 | 14,809 |
| operating | | | | | | |
| activities | | | | | | |
--------------------------------------------------------------------------------
| Cash flow from | | -16,657 | - | -42,092 | -252,990 | -311,739 |
| investing | | | | | | |
| activities | | | | | | |
--------------------------------------------------------------------------------
| Cash flow after | | -28,890 | 1,056 | -25,070 | -244,027 | -296,930 |
| investments | | | | | | |
--------------------------------------------------------------------------------
| Cash flow from | | 26,339 | - | 25,129 | 261,497 | 312,964 |
| financing | | | | | | |
| activities | | | | | | |
--------------------------------------------------------------------------------
| Cash flow for | | -2,551 | 1,056 | 59 | 17,470 | 16,034 |
| the year | | | | | | |
--------------------------------------------------------------------------------
| Liquid assets | | 6,535 | - | 2,415 | - | 8,951 |
| at beginning of | | | | | | |
| year | | | | | | |
--------------------------------------------------------------------------------
| Translation | | 27 | - | - | -1,061 | -1,034 |
| difference | | | | | | |
--------------------------------------------------------------------------------
| Cash flow for | | -2,551 | 1,056 | 59 | 17,470 | 16,034 |
| the year | | | | | | |
--------------------------------------------------------------------------------
| Liquid assets | | 4,011 | 1,056 | 2,475 | 16,409 | 23,951 |
| at year-end | | | | | | |
--------------------------------------------------------------------------------
1) For adjustments to Profit/loss after financial income and expense, see notes
to Pro forma income statement 2007.
The purchase price, the transaction costs
(including issue expenses) and start up costs for the Rhode Island contract have
been included in the cash flow from investing activities.
The cash flow from
financing activities has been adjusted for all new share issues and new long
term loans.
A translation difference of SEK -1.061 million arises in the
translation of SysTech's financial statements into Swedish kronor.
--------------------------------------------------------------------------------
| Pro Forma Key Ratios 2007 | | | |
--------------------------------------------------------------------------------
| | | Opus | Adjustmen | SysTech | Adjustm | The New |
| | | audi | t for EWJ | audited | ents | Group |
| | | ted | and J&B | financial | and | pro for |
| | | financial | | statements | elimina | ma |
| | | statement | | | tions | |
--------------------------------------------------------------------------------
| Profitability | | | | | | |
--------------------------------------------------------------------------------
| EBITDA margin, | | 9.1 | - | 22.6 | - | 23.1 |
| per cent | | | | | | |
--------------------------------------------------------------------------------
| EBIT margin, | | 8.4 | - | 21.5 | - | 21.1 |
| per cent | | | | | | |
--------------------------------------------------------------------------------
| Profit margin, | | 7.6 | - | 20.3 | - | 18.8 |
| per cent | | | | | | |
--------------------------------------------------------------------------------
| Return on | | 11.9 | - | - | - | 10.4 |
| equity, per | | | | | | |
| cent | | | | | | |
--------------------------------------------------------------------------------
| Financial | | | | | | |
| position | | | | | | |
--------------------------------------------------------------------------------
| Debt/equity | | 0.4 | - | - | - | 0.4 |
| ratio, times | | | | | | |
--------------------------------------------------------------------------------
| Interest | | 8.4 | - | - | - | 16.2 |
| cover, times | | | | | | |
--------------------------------------------------------------------------------
| Equity/assets | | 62 | - | - | - | 63 |
| ratio, per | | | | | | |
| cent | | | | | | |
--------------------------------------------------------------------------------
| Equity - | | 30,866 | - | - | - | 230,575 |
| average, | | | | | | |
| thousands of | | | | | | |
| Swedish kronor | | | | | | |
--------------------------------------------------------------------------------
| Data per | | | | | | |
| share1) | | | | | | |
--------------------------------------------------------------------------------
| Number of | | 59,569,60 | - | - | - | 134,540 |
| shares, | | 7 | | | | ,973 |
| average | | | | | | |
--------------------------------------------------------------------------------
| Number of | | 64,181,57 | - | - | - | 139,152 |
| shares at year | | 1 | | | | ,937 |
| end | | | | | | |
--------------------------------------------------------------------------------
| Profit per | | 0.06 | - | - | - | 0.172) |
| share, Swedish | | | | | | |
| kronor | | | | | | |
--------------------------------------------------------------------------------
| Number of | | 50 | - | 90 | - | 140 |
| employees at | | | | | | |
| year end | | | | | | |
--------------------------------------------------------------------------------
1) It is assumed that the Rights Issue is implemented at the market price per
share (SEK 3.08 per share as of April 7, 2008), which means that no bonus issue
aspect has affected the pro forma financial statements.
2) Before synergies and
amortisation of acquisition related surplus values. Based on the number of
shares at year end.
