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Opus lifts 1H profit by 11.5%, helped by tax gain

Tuesday 14th February 2012

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Opus Group, the NZX-listed engineering consultancy, posted an 11.5 percent gain in first-half profit, though half of the improvement was from a one-off tax credit for short-lived research and development tax credits.

Profit rose to $24.5 million in the six months ended Dec. 31, the company said in a statement today. Sales rose 7.1 percent to $393.5 million on revenue growth of 6 percent and 8 percent respectively in its biggest markets of New Zealand and Australia.

Of its two international units, the Canadian operation went from a small operating loss last year to a $1.3 million surplus this year, while the UK operation lost $1.2 million “as the more serious effects of the global recession and government austerity measures continue to make trading conditions difficult,” said chairman Kerry McDonald.

The company described the overall result as “exceeding expectations”, and declared a 4.7 cents per share fully imputed final dividend, up 10 percent from last year’s payment of 8.5 cents.

Cash reserves increased to $111.3 million, trimming the company’s debt-equity ratio to 106 percent from 129 percent.

However, other fundamental measures of shareholder return were down on the previous year.  Return on assets slipped to 13.4 percent, from 14 percent a year earlier, and return on equity fell to 23.6 percent from 25.1 percent.

Provisioning also remained relatively high as a proportion of total turnover, at $25.1 million, although down on $27.2 million a year earlier.

Managing director David Prentice said in a statement to the NZX that conditions were increasingly competitive, especially given “significant uncertainty” in the global economy.  The company had to collaborate more and share work across the business.

Last November’s purchase of Melbourne-based Coffey Rail, with a staff of 50, would contribute to growth in the current year.

Prentice gave no earnings guidance, saying “clients are looking for greater value and efficiency gains in the development and management of their infrastructure”, reinforcing the need to be “sharper and smarter.”

Opus shares rose 3 cents, or 1.6 percent, to $1.90 in early afternoon NZX trading.

(BusinessDesk)

BusinessDesk.co.nz

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