Opus International Consultants Ltd was sufficiently embarrassed that it managed to issue a release yesterday without mentioning that its bottom line plummeted $39 million (245%) from a $15.9 million profit in the first half of 2015 to a $23 million loss this time round.
Pretax, it dropped to a $22.2 million loss ($19.1 million profit). Basic & diluted earnings/share were a negative 16c (11c profit last year).
The company presentation disclosed that net profit for the June half dived 88%, from $7.7 million to $900,000, and the company attributed its decline (in its release) to a mixed performance arising from “difficult economic conditions in Canada & Australia and weaker margins in New Zealand”.
Notes to the accounts said the 2016 net profit figure excluded impairment of $24 million, and the 2015 figure excluded deferred consideration release of $8.1 million.
Revenue fell 7.4% to $236.8 million ($255.7 million) and ebit (underlying operating earnings before interest & tax) fell 78.7% to $2.5 million ($11.6 million).
Group net cashflow went from a negative $15.5 million in the first half last year to a negative $8.7 million this year. Gross debt:equity rose from 58% to 90%, net debt:equity from 20.5% to 27.3%, outside the company’s target range.
Opus chair Kerry McDonald both the Australian & Canadian operations reported losses – Australia $24.8 million revenue and a $1.7 million operating ebit loss, Canada $37.2 million revenue and an operating ebit loss of $6.5 million.
“Given the difficult business environments with the decline in oil & gas prices, and resource prices generally, we reassessed the value of our operations and impaired the carrying value of Australian assets by $A4.2 million and Canadian assets by $C17.8 million.”
Chief executive David Prentice said: “Our New Zealand & UK businesses continue to show resilience despite subdued global trading conditions and have underpinned the group performance. New Zealand had a solid start to the year, where better diversified earnings partly offset the negative impacts of reduced roading contract margins from the retendered NZ Transport Agency’s network outcome contracts. The business delivered $139.1 million in revenue (a 4% decrease) and $14.9 million in operating ebit (a 22% decrease).”
Despite the challenges, directors said Opus’ cash position was strong and operating cash, ahead of last year, supported a fully imputed 2c/share interim dividend. The dividend policy is to pay between 50-70% of net profit after tax adjusted for non-trading items such as impairment.
Asset management services account for 40% of Opus’ total revenue, most of it delivered in long-term annuity contracts. The company has diversified internationally over the last 10 years, with an emphasis on transport asset management. 61% of its clients are in the public sector.
Attribution: Company release, accounts, presentation.