ENG 2013-06-12 (pdf) - Opus Group

Company presentationMagnus GrekoCEO and presidentPeter StenströmInvestor Relations / M&Awww.opus.se

Opus Group in briefOpus Group today• Operations for 22 years, founded in 1990• Approx. 870 employees worldwide• Headquarters in Gothenburg• Production facilities in Sweden, the USand China• 11 regional offices in the US• Revenues of approx. 150 MUSD• >150 MUSD in order backlog forvehicle inspection contracts in the US• Good profitability and strong cash flows3

Opus Group in briefGlobal vehicle inspection companyVision"Opus Group's vision is to be the global leader in innovative technologies forenvironmental and safety of vehicles and create opportunities for developedand developing countries to improve their environment by the best use of thelatest and most cost-effective technology."Markets where Opus Group is well establishedMarkets where Opus Group is under development4

Opus Group in briefGrowth driven company• Opus Group has been built through organic growth in combination withstrategic acquisitions. Today the Group has an international presencebased on well known brands and a full customer offering• Underlying organic growth• Experienced management team of acquisition driven growth. Opus Grouphas conducted seven acquisitions since 2007, which have beensuccessfully integratedSeven acquisitions since 20072007200720082009201220125

Opus Group in briefMoving forward in the value chain• Equipment sales - EBITDA margin of 5-10 percent• After market service business - EBITDA margin of 10-15 percent• Vehicle inspection business - EBITDA margin 25-30 percentDEVELOPMENT PRODUCTION DISTRIBUTIONINSTALLATIONSERVICECALIBRATIONSUPPORTVEHICLEINSPECTIONEBITDA margin: 5-10%EBITDA margin: 16%Place in the value chainPlace in the value chainEBITDA margin: 13%Place in the value chainEBITDA margin Systech:25-30%EBITDA-margin ESP: 15%Place in the value chain6

Table of contents1. Opus Group in brief2. Business divisions3. Market4. Financial overview5. The share6. The Board of Directors and Management7. Appendixes

Vehicle InspectionVehicle Inspection division (85%)Vehicle environmental and safety inspection programs in different states inthe US, Sweden and other growing into other markets globally• Segment Sweden:• Opus Bilprovning: Centralized vehicle inspection operator in Swedenwith 70 stations performing 2 million inspections per year• Segment International:• Systech and ESP: Vehicle inspection contracts with 16 stategovernments in the U.S., Mexico, Bermuda and in Peru. Responsible forover 23,5 million inspections per year; 18,000 external customers8

Segment Vehicle Inspection SwedenDeregulation of Swedish I/M market• The Swedish vehicle inspection market was deregulated in2010• The former monopolist divested 2/3 of its station network in2012• Opus Group acquired and consolidated 1/3 of the formermonopolist on November 5, 2013: today Opus Bilprovning• Opus Bilprovning has 70 inspection stations with ageographical focus on the capital Stockholm, middle andnorthern Sweden9

Vehicle Inspection SwedenPlatform for international expansion• Opus Bilprovning is a third of AB Svensk Bilprovning, the former Swedishmonopolist and one of the first vehicle inspection companies in the worldwith experience from 1964• Competence platform and strong reference for further international growthof Opus Group• Non cyclical cash generator with strong margins• Expertise in operating emission testing programs. Several synergyeffects with the rest of the Group, e.g. installation of proprietary ITsystem11

Vehicle Inspection InternationalOpus Inspection• Leading in vehicle inspection technology development and vehicleinspection program operations• Proprietary IT-system and senior management with skillfulemployees• Has grown to become the market leader in the US decentralizedmarket• 2011: Won contract for 11 years in Wisconsin – 800 000 tests per year –became operational in July 2012• 2012: Important strategic contract in North Carolina (April).Concerns an IT-system to approx. 6 000 inspection stations –7,7 million inspections per year - became operational in 2012• 2013: Won the largest US vehicle inspection contract in New York State(March)12

Vehicle Inspection InternationalNew York State contract• The largest vehicle inspection contract in the US in relation tothe number of inspections and workshops/stations• Decentralized contract with Opus Inspection as operator• 11 million yearly inspections and 10 000 workshops• Development, installation and operation of a new IT system with acommunications network to connect all 10,000 inspection stations• Equipment sales to all 10 000 workshops in 2013• The contract has a maturity of seven years and can be extended twomore years to a total of nine years• Opus Inspection is expected to start as operator on December 1, 201313

EquipmentEquipment division (15%)Equipment – Equipment and service within vehicle inspection•• Operates under the brand names• Focus on equipment for environment and safety testing of vehicles for theglobal market with sales in over 50 countries through distributors• Strong in the Nordic region with 24 percent market share and owndistribution/service organization in Sweden• The market for Opus Group’s operations in Europe amounts to approx. 6billion SEK. Opus Group has a market share of 2,2 percent in Europe• Production facilities in Gothenburg and Foshan, China14

Table of contents1. Opus Group in brief2. Business divisions3. Market4. Financial overview5. The share6. The Board of Directors and Management7. Appendixes

MarketVehicle inspection – Driving forcesLEGISLATION• New and harder environment and safety legislation• More countries establish vehicle inspection programsTECHNOLOGY SHIFTS• Centralized to Decentralized• Tail-Pipe testing to OBD-technologyNEW REMOTE TECHNOLOGY• Remote OBD (Remote vehicle inspection)• ”On-line vehicle” OBD test (OEM, insurance companies) – Opus Group’s role asClearing House service for vehicle inspection towards authorities16

MarketNorth America - Market USA• Focus on emission controls• Air pollution (smog) is a major problem in big cities• Environmental Controls of vehicles is an effective way to improve airquality• Approx. 35 American states have some type of vehicle inspection butonly in certain regions (Counties)• Approx. 12 American states have safety testing• Vehicle inspection is driven mostly by private operators competing forcontracts through public tenders/request for proposals (RFP)17

MarketNorth America - Market USA (cont)• Vehicle inspection contracts are normally 5 - 7 years• The contracts can be extended a number of times withoutnew RFP• Approx. 3-4 RFPs per year• Decentralized and Centralized programs and "Open Market“ insome states• The trend is towards decentralized programs• Trend toward increased use of "Remote OBD"• Individual contracts can amount to between 15 – 150 MUSD• Good profitability - Systech has 25-30% EBITDA margin18

MarketOpus Inspection - market presence19

MarketVehicle Inspection – CompetitorsNorth American marketMarket shareOther global markets• Parsons (USA) 33 %• Envirotest ESPH (USA) 26 %• Opus Inspection (Sweden) 18 %• Gordon Darby (USA) 10 %• Applus+ (Spain) 10 %• SGS Testcom (Switzerland) 3 %• Others 1 %• TÜV Organization (DE)• Dekra (DE)• SGS• Applus• A-Katsastus (Carspect) (FI)• Veritas (FR)• Others20

MarketVehicle Inspection – US market shares• Opus Inspection is one of the three largestoperators in US Vehicle Inspection• Opus Inspection has during five yearsgrown from a market share of 3% to 18%• Opus Inspection is the largest company inthe US decentralized market• Potential to grow in the centralized marketNorth American market Total Market ShareRevenue Tests1 Parsons (USA) 33,0% 20,4%2 Envirotest (USA) 26,0% 6,5%3 Opus Inspection (Sweden) 18,0% 31,7%4 Gordon Darby (USA) 10,0% 14,7%5 Applus (Spain) 10,0% 5,9%North American marketCentralized Market ShareRevenue Tests6 SGS Testcom (Switzerland) 3,0% 13,9%Others 1,0% 6,9%North American market Decentralized Market ShareRevenue Tests1 Envirotest (USA) 40,8% 32,7%2 Parsons (USA) 32,3% 31,2%3 Applus (Spain) 12,7% 18,6%4 Gordon Darby (USA) 11,6% 9,5%5 Opus Inspection (Sweden) 2,5% 8,0%Others 0% 0%1 Opus Inspection (Sweden) 45,2% 35,1%2 Parsons (USA) 34,2% 31,2%3 SGS Testcom (Switzerland) 8,3% 16,2%4 Gordon Darby (USA) 7,2% 14,9%5 Applus (Spain) 5,2% 2,6%Others 0,0% 0,0%21

MarketSystech – RFPs 2013State Type of contract Yearly test volume Operator Next RFPContractExpirationVirginia Decentralized 825 000 SGS Issued 2013-12-31TUV, SGS, A+,Chile Centralized 39 concessions local players Issued 2014Texas VID only 8 500 000 Gordon-Darby Q1 2013 2013Colorado Today centr. 1 200 000 Envirotest 2013 2014-12-31Indiana Today centr. 190 000 Envirotest 2013 2014-12-31California Decentralized 10 000 000 SGS 2014 2014-12-31Green = Ongoing Grey = 201322

MarketVehicle Inspection – CompetitorsSwedish marketMarket share• AB Svensk Bilprovning 35 %• Opus Bilprovning 30 %• Besikta AB 28 %• Carspect AB 5 %• DEKRA Automotive AB 1 %• Others 1 %• The size of the Swedish market for vehicle inspection is approx. 260 MUSD atthe current price level of approx. 40 USD per inspection.Total market size: 6 million inspections annually23

MarketInspection – Market Sweden• Centralized open market with high entry level (accreditation)• Market reregulation in mid 2010 changed former monopoly tooligopoly with 3 dominant players. Old monopolist Bilprovningen isdivided into 3 new companies• Few new players have established themselves in the market:Carspect (5% market share), Dekra (1%), Clear Car (0.1%)• Requirements for inspection of all vehicles driven on publicroads, except mopeds• The trend is toward increased regulation, mainly driven by EU24

Table of contents1. Opus Group in brief2. Business divisions3. Market4. Financial overview5. The share6. The Board of Directors and Management7. Appendixes

Financial overviewOpus Group – Q1 201326

Financial overviewOpus Group – Q1 201327

Financial overviewVehicle Inspection International– Q1 201328

Financial overviewVehicle Inspection Sweden – Q1 201329

Financial overviewEquipment – Q1 201330

Financial overviewFinancial goals31

Table of contents1. Opus Group in brief2. Business divisions3. Market4. Financial overview5. The share6. The Board of Directors and Management7. Appendixes

The shareShare price performanceShare price graphShare price information,2013-05-21Share price: 4.84 krAverage daily volume: 565 000 1)Market cap: 1 121 MSEK (172 MUSD)Net debt (March 31, 2013):312 MSEK (48 MUSD)Enterprise value (EV): 1 433 MSEK(220 MUSD)Opus GroupOMX SPIPlanned listing on Nasdaq OMX Stockholm during 20131) Last month33

The shareShareholdersLargest shareholders on March 28, 2013Share capital/OwnerNo of shares votes, %AB Kommandoran 35 171 812 15,2Lothar Geilen 20 768 072 9,0Andra AP-fonden 10 999 999 4,7Henrik Wagner Jörgensen 10 700 000 4,6AMF Aktiefond Småbolag 10 003 007 4,3Nordea Småbolagsfond 9 883 976 4,3Länsförsäkringar Småbolagsfond 9 612 917 4,1Försäkringsaktiebolaget AvanzaPension 8 247 610 3,6BP2S PARIS/NO CONVENTION 6 508 724 2,8Pradeep Tripathi 6 130 921 2,6Sum 10 largest owners 128 029 038 55,3Others 103 645 417 44,7Total 231 674 455 100,0The number of shareholders were 2 608 on March 28, 2013.44,5%Ownership structure9,3%28,8%17,5%The larger institutions included are theSecond Swedish National Pension Fund,Nordea Small Cap Fund, AMF Small CapFund and Länsförsäkringar Small Cap Fund.ManagementLarger insitutionalholdingsOther institutionalholdingsOther34

SummarySummary of Opus Group• Operating in a growing international market for Vehicle Inspection• Large service side (Vehicle Inspection) – Good margins and strong cashflows• Experienced senior management and qualified staff• Organic growth through new contracts/markets• Strong cash flow generation enables fast amortization and furtheracquisition driven growth• Goal - To become a leader globally in vehicle inspection forenvironmental and safety testing• Nasdaq OMX Stockholm listing 201338

Table of contents1. Opus Group in brief2. Business divisions3. Market4. Financial overview5. The share6. The Board of Directors and Management7. Appendixes

AppendixesReferences and contractsVEHICLE INSPECTION• USA – New York State – 11 million inspections with approx. 10 000stations starting December 2013• USA – Nashville Tennessee – Own 6 centralizedvehicle inspection stations, 18 test lanes• USA – 13 vehicle inspection contracts with approx. 15 000 stationsand 23,5 million tests per year through Systech• USA – New York TLC (Taxi & Limousine program) – Vehicleinspection of all taxis and limousines in New York City• USA – 13 000 Decentralized vehicle inspection stations ascustomers in 8 states through ESP• Peru – Revistar – Centralized vehicle inspection in Peru, 1 station,3 test lanesEQUIPMENT• Sweden – 340 test lanes (100 for LV) and 700 gas analyzers• Norway – 300 test lanes (100 for LV)• Denmark – 1200 brake testers (PV & LV)• UK MOT Stations – 500 test lanes (ATL) + 1000 gas analyzers• Polish Vehicle Inspection - 1000 OBD testers• France – 3000 OBD testers to vehicle inspection stations• Mongolia – 28 complete vehicle inspection stations• The Philippines – 200 gas analyzers• New Zeeland – 200 gas analyzers40

Thank you for your attention!For further questions pleasecontact:Magnus GrekoCEO, Opus Group ABPhone: +46 705 58 45 91E-mail: magnus.greko@opus.sePeter StenströmInvestor Relations/M&A, Opus Group ABPhone: +46 765 25 84 93E-mail: peter.stenstrom@opus.seOpus Group ABBäckstensgatan 11DSE-431 49 Mölndal, SwedenPhone: +46 31 748 34 00Fax: +46 31 28 86 55E-mail: ir@opus.seWebsite: www.opus.se