Opus International Consultants (Opus) has reported a robust result for the first six months of 2015. In the half-year ended 30 June 2015, earnings before interest and tax (EBIT) increased by 40% to $20.0m, and net profit after tax (NPAT) increased by 60% to $15.9m.
Operating EBIT was $11.9m, an increase of 2.3% on the prior year. The difference between EBIT and operating EBIT reflects a deferred consideration release of $8.1m in Canada on the purchase of Opus Stewart Weir (prior year $2.6m release).
The increase in EBIT and NPAT were achieved despite a 4% revenue decrease to $255.7m.
“Overall, the New Zealand business performed strongly and the UK business made significant gains,” said Opus Chairman, Kerry McDonald. “However, the Canadian and Australian businesses were affected by challenging market conditions, and this is reflected in the result.”
“In New Zealand, operating EBIT increased 34% to $17.6m, despite revenue decreasing by 2% to $145m. It’s pleasing to see the resulting efficiency gains, increases in productivity and higher win-rates following a major restructure and ongoing performance improvements,” said Dr David Prentice, Chief Executive.
“The UK business has continued its strong growth trajectory with operating EBIT increasing 280% to $1.4m, and revenue increasing 26% to $33.6m. The results reflect our strategic decision to focus on the core growth areas of transport asset management and rail.
“Despite moving swiftly earlier in the year to reduce costs and drive efficiencies, Canada and Australia continue to be affected by external economic pressures. In Canada, revenue decreased by 10% resulting in an operating loss of $1.2m. Revenue in Australia decreased by 23% resulting in an operating loss of $2.0m. Despite taking early measures to reduce cost, market contraction has been sharp. However, our actions ensure we minimise cost but maintain capability for emerging market opportunities,” said Dr Prentice.
Dr Prentice said Opus was committed to pursuing sustainable low-risk growth in key markets like the Middle East and the Pacific. “Earlier in the year we secured a $20m five-year contract with the Royal Commission of Jubail in the Kingdom of Saudi Arabia, where we operate as part of our joint venture with Opus International Malaysia. We recently won another two asset management contracts with the Municipality of Abu Dhabi and are targeting future opportunities.
“In the past year we have secured road, water and energy contracts in Fiji, and there is significant potential for future growth. We have recently won a contract to provide water and wastewater training to the Water Authority of Fiji as part of a joint initiative between the New Zealand and Fijian governments. The purchase of Fiji Roads Authority’s materials testing laboratories will also help expand our base of operations in the Pacific.” said Dr Prentice.
“While economic uncertainty exists in some markets, the Group has responded well and continues to implement initiatives that will improve performance and drive success across the business. We are well underway on a new strategic plan to lead us to 2020 and we have recently completed a capital structure review which has resulted in an updated dividend policy.” said Mr McDonald.
The updated dividend policy had led to Opus confirming an interim dividend of 4.1 cents per share, and a special dividend of 2.0 cents per share, which are fully imputed.