22 April 2015

At today’s Annual General Meeting Opus International Consultants’ Chairman, Kerry McDonald, highlighted the strong aspects of the 2014 results.

Revenue rose 17% on 2013 to $539.6m. NPAT was up 15% to $26.2m, Return on Equity was 18.4%, compared with the NZX 50 average of 11.5%, and operating cash flow was a strong $32.1m, up 29%.

However, he noted that the result had been impacted by weakness in some markets, accounting adjustments, and a previously reported project loss and other one-off costs in New Zealand.  While EBIT was $37.4m, up 9%, underlying EBIT was $32.6m, down 2.8% on the prior year.  “The difference between EBIT and underlying EBIT reflects a deferred consideration release of $11.5m in Canada and an impairment of goodwill adjustment of $6.7m in Australia,” said Mr McDonald.

Mr McDonald also confirmed the final dividend of 4.9 cents per share, bringing the total dividend for the year to 8.9 cents, up 13% on 2013.

Opus Chief Executive, Dr David Prentice said 2014’s revenue growth performance was mainly due to improved overseas markets, with the United Kingdom and Canadian businesses in particular making strong contributions.

However, he also noted that year-to-date performance in 2015 was mixed.  A more buoyant economy in New Zealand and substantial changes to the business have underpinned a good start to the year.  “New Zealand is improving and we have secured several long-term strategic projects, including the recent Huntly expressway,” said Dr Prentice.

But the fall in oil prices is impacting the Canadian businesses EBIT, which is $2.5m behind the prior year, and the slowdown in Australia’s resource sector has put that business $2m behind the prior year.  “We have implemented a number of cost-saving and other measures in both territories and expect to see a positive impact in the second half of the year.”

Continuing improvement in the UK business has been underpinned by a strong economic recovery.  “In the last month alone we have secured £3.5m of new work with Network Rail which recognises the commitment of our staff and the tremendous breadth of skill we now have in the rail sector.”

More detail was provided on a significant project win in the Middle East, a $20m, five-year asset-management contract with the Royal Commission of Jubail in Saudi Arabia.  “We are committed to profitable growth and diversification and this initial contract with the Royal Commission is an early sign of success,” said Dr Prentice.

He also highlighted the strong on-going focus on improving the business, including the current reviews on capital management, dividend policies, and acquisitions versus organic growth.

Dr Prentice concluded that the outlook across markets is mixed, presenting challenges and opportunities for 2015.  “The level of economic uncertainty is a key consideration but our strategy of market diversification ensures we manage risk and leverage significant new opportunities.”