Opus Group Annual 2011 Report ENG

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OPUS 2011
Product development and development expenses
Further development of existing products and development
of new technologies and equipment constitute a
priority area for Opus, as well as an important component
in the Group achieving its growth and profitability
objectives. The development of new technologies and
equipment is, for the most part, connected to specific
customer projects, in which the customer places an order
for an agreed-upon amount of units and where Opus then
is responsible for developing the necessary technology
and equipment. During 2011, the Group’s costs for
development work amounted to SEK 2,5 million, of which
capitalized development work amounted to SEK 2,0 million
(2,0). These investments are used to further develop
existing products, for example, to adapt the product to
specific customer requirements, improve the cost
structure, expand the area of use, and to improve
performance. The investments are also used for the
development of new technologies.
Investments in tangible assets
Tangible assets consist primarily of land and buildings,
fixtures, machinery and equipment. The need for
investment depends partly on new vehicle inspection
contracts won and partly on the type of contract.
Centralized contracts often require investment in
inspection plants and sometimes land while the decentralized
contracts only require investment in equipment.
Investments in tangible assets amounted to SEK 1.7 million
(6.4) for the year.
Legal processes
Apart from what is reported below, Opus is not involved in
any legal processes or arbitration that has, or recently
has had, any significant effect on the Company’s financial
position or profitability. The Board is not aware either of
any circumstances that might lead to the occurrence of
any such legal procedures or arbitration.
In 2007, SysTech was suid in American court by Hickok,
Inc regarding patent infringement relating to the company’s
EVAP and gas cap tester. The risk associated with this
law suit, as well as any possible future claims from third
parties, has been regulated in the sale and purchase
agreement between Opus and the sellers of SysTech. The
sellers of SysTech have assumed the responsibility for
covering any possible damages exceeding USD 70,000 that
might arise in the event of alleged infringement, as well as
responsibility for third-party damages. SysTech denies patent
infringement. The amount of USD 70 000 has not been
accrued for in the year-end.
Environment
Opus works actively with environmental issues and the
environmental work is always carried out in agreement
with the applicable legislation, local requirements, ISO
14001:2004, company requirements, and specific customer
requirements. Important elements in the ongoing
environmental efforts comprise energy-saving initiatives,
safer handling of chemical products, as well as measures
to increase recycling and to minimise waste production.
Opus has an environmental policy.
Quality
An element in Opus’ mission statement is that the Company
shall manufacture user-friendly products with high quality.
The quality system at Opus shall support the development of
the Company and its employees. It shall be characterized by
high competency, personal responsibility, and a high degree
of commitment. The overriding goal in Opus’ quality-related
work is that each delivery shall be made in line with the
contracted terms and conditions and that customers’
requirements and expectations shall be met. Opus work shall
always lead to the customer retaining confidence in the
Company as a supplier. The quality work is integrated in a
natural way within the Company’s work processes with the
goal of doing things properly from the beginning and to
always work towards improvement. Opus’ quality work is
done in accordance with ISO 9001:2008 and the Parent
Company is certified since 2010. Opus has a quality policy.
Cash Flow, Investments, and Financial Position
Cash flow from operating activities amounted to SEK 35,2
million (23,7). Working capital decreased by SEK 8,3 million
(-3,1) during the year. Investments for the entire year
amounted to SEK 3,8 million (8,4) and divestments
amounted to SEK 0,1 million (0,1). At the end of the period,
Opus had liquid assets of SEK 22,9 million (15,3), as well as
unused credit facilities of SEK 6,2 million (6,5), which
means that the Group had a total of SEK 29,1 million (21,8)
at its disposal on December 31, 2011. The Group’s equity
ratio was 73,4 percent at year-end compared to 72,5
percent at the beginning of the year.
Dividend policy and financial targets
In connection with the Year-End Report 2011 and the
recent acquisition of ESP, Inc. in the U.S., the Board of
Directors have also reviewed and decided on new financial
targets, as well as a new dividend policy for the Group.
Opus new financial targets, over a business cycle, are:
- Annual growth in revenues of 10%
- EBITDA margin of at least 10%
- Interest-bearing net debt relative to EBITDA should not
exceed 3.0 times
Opus dividend policy is to distribute 10-20% of profit at
the EBITDA level, provided the company meets the
financial target for net indebtedness.
Interim Reports
The Board has decided on the following dates for financial
reporting during 2012:
• May 24, 2012, Interim Report (Jan - March, 2012)
• August 23, 2012, Interim Report (Jan - June, 2012)
• November 23, 2012, Interim Report (Jan - September, 2012)
• February 21, 2012, Year-end report 2012
Risks
Opus Prodox AB (publ) and the companies within the Opus
Group, are, because of their operations, exposed to
financial as well as operational risks, which the companies
themself can influence to a greater or lesser extent.
There are processes going on continuously within the
companies to identify upcoming risks and to assess how
these shall be dealt with.