Good morning ladies and gentlemen, thank you for attending today.

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Suzanna Perry
5 years ago
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1 1 OPUS INTERNATIONAL CONSULTANTS AGM CHIEF EXECUTIVE ADDRESS Good morning ladies and gentlemen, thank you for attending today. As Kerry said, we delivered strong top line growth in 2014 with our revenue up 17% on 2013 to $539.6m. Our NPAT was up 15% to $26.2m and our Return on Equity was 18.4% which compares well with the NZX 50 average of 11.5%. Our operating cash flow remained strong at $32.1m, up 29% and the full year dividend increased by 13% on the prior year. However, our result was significantly impacted by accounting adjustments, a substantial project loss and other one-off costs in New Zealand. So, even though our EBIT was up 9% to $37.4m, our operating EBIT was down 2.8% on the previous year to $32.6m. And that difference reflects a deferred consideration release of $11.5m in Canada and an impairment of goodwill adjustment of $6.7m in Australia. The deferred consideration in Canada relates to our recent acquisition of Stewart Weir and reflects an astute and well-judged approach to risk management in negotiating the acquisition agreement. The impairment of goodwill in Australia was a prudent measure due to the continued uncertainty about the economy and the general slowdown in the infrastructure sector. Market slowdown aside, several aspects of our performance in 2014 simply weren t good enough. Our staff know this, our managers know this, and our board members know this and as a result most staff members and management did not receive a performance payment for 2014, and that includes myself. It s reinforced the importance of our focus on continuous improvement which I will discuss shortly. We now operate across six regions and eight sectors and we ve seen considerable change in the global infrastructure environment in the last five years - indeed, the GFC left an indelible mark on our industry. At the same time, our understanding of what infrastructure can and should deliver is evolving. New investment models, technologies, growing populations, and increased pressures and expectations have changed the type

2 2 and the nature of services classified as infrastructure, and shaped the way people interact with it. While investment in new infrastructure continues to shrink worldwide there are growing opportunities as aging infrastructure requires substantial maintenance and capital investment. And, a key component of our strategic plan is to target asset management contracts and leverage off our global profile in this area. Our global asset management team has been instrumental in securing valuable long-term asset management contracts, including several here in New Zealand, and in other countries including the UK, the US and more recently Saudi Arabia. Operating globally has a number of advantages for us. It means we can take the lessons learned from one contract - like the Bay of Plenty expressway in New Zealand - and apply them directly to another - like the work we are doing for The Michigan Department of Transportation in the US. From a capacity point of view it means we can operate in a 24/7 world while some of our offices are closed, others are open, and we can turn work around very quickly. And from a capability point of view it means if we don t have the right people in one location, we will have them somewhere and we ll connect our clients to them. Procurement, the process of actually winning work, has become a more challenging business in itself. It s making real business harder and more expensive to transact. In addition, competition is increasing and margins are being squeezed. All of this has been a wake-up call for the infrastructure industry. Put simply, the attitude of it worked then-it should work now just doesn t cut it anymore and we recognised and accepted this several years ago. To continue to succeed, and grow a sustainable and successful business, requires investment in change and improvement. And this is the path we have been on for the past five years we have delivered initiatives to innovate, to reduce costs, to drive greater efficiencies and to lift profitability, which put us in a stronger position to meet the competitive challenges. That s why it s particularly pleasing to see our strong performance in the UK, following the intense efforts of our staff to help it recover from the impact of the GFC. This was largely done on the back of our leading market position in asset management, but also on our ability to adapt and reshape the business

3 there. We now have a range of long-term and strategic work in place like our transport asset management contract with Hertfordshire County Council and our ongoing relationship with Network Rail which has resulted in 3.5m worth of new work in the last couple of months alone. But, it s not just the UK where we have made changes. It s right across the business. In Australia, the continued economic down turn has created some real challenges and last year we began a strategic realignment and restructure of our business by reducing the headcount by 58. We intend to maintain a strong sustainable business in anticipation of an economic recovery but the continuing slowdown in the infrastructure sector - and its impact on our Australian business - meant we needed to make more changes. So, in March we started taking further measures. We are closing three offices and reducing the headcount by a further 27, representing 9% of the workforce. The business in the first quarter of 2015 is $2m behind the prior year at EBIT level which includes $800k for property and redundancy provisions. However, doing nothing at all was not an option and we anticipate the benefits of these actions will result in a much improved second half performance. The Australian Government has signalled $12bn for road infrastructure investment, and state and private funding for infrastructure is likely to exceed $125bn - so having a continued strong presence in the core geographic centres remains our objective. In North America our success has been underpinned by our assetmanagement track record, as well as the acquisition of Stewart Weir in late The acquisition has not only enhanced our diversification but as a result of a robust integration process, is now delivering synergistic revenue and growing the existing business in Canada. The oil and gas market continues to provide long-term growth opportunities but we are not immune to the current impact of fluctuating oil prices. Alberta s Government revenue has declined due to low oil prices and many public sector projects are being delayed as a result. There is no doubt that Opus Stewart Weir s performance will be dampened in the first six months of this year because of this. In the first quarter of 2015 the business is now $2.5m behind the prior year in terms of EBIT, which includes severance costs of $400k. But we have taken swift and proactive measures minimising cost while maintaining the core strength of our team in anticipation of the upturn. 3

4 4 There is continued confidence in New Zealand where the business has had a strong start to the year. Business and consumer confidence remains high. The Canterbury earthquake rebuild continues to be a key component of economic activity. In addition, the government has committed $213m on regionally important transport projects for 2015, and $10bn for Auckland transport initiatives. Our recent restructure of the business- to provide better alignment to the procurement environment and market conditions - has underpinned recent wins and helped secure important major contracts. We already have in place six new long-term Network Outcome Contracts with the NZ Transport Agency and were recently confirmed as part of the consortium that will design and build the Huntly section of the Waikato expressway as part of a $458m project. Part of our strategy in New Zealand has been to leverage opportunities in the Pacific and we continue to have success in this area. We were the main consultant on the construction of the Pacific s largest solar array in Samoa - a project that will deliver 4.5% of Samoa s renewable energy needs. We have also secured transport asset development, water and energy contracts in Fiji which have already delivered good revenue and have the potential for future growth. Further afield, our expansion into the Middle East is focussed on profitable growth and diversification. We recently won our first project, a NZ$20m, five-year asset-management contract with the Royal Commission of Jubail in Saudi Arabia. We are also the preferred consultant on another asset management contract in Abu Dhabi and expect to confirm this shortly. Our joint venture with Opus Group Bhd has been instrumental in helping us win these contracts. The fundamental reason for establishing any joint venture is about balancing risk and opportunity. In the Middle East our partner s knowledge of local customs, of language and culture is a real asset and has positioned us well to bid and win further contracts. So, while there continues to be uncertainty in global markets, we are committed to growth and diversification. However, we recognise this must be value accretive and we must bring this value back to our shareholders. That s why we have committed to a review of our capital management and dividend policies and practices, with results expected soon. I ve been asked by some shareholders about what else we are doing to improve the business so I want to address that specifically now.

5 5 I have already mentioned the substantial organisational restructures we have completed which ensure we have the right people in the right roles to lead and drive the business forward. That is a fundamental and critical building block. As part of our overall business improvement strategy, we have implemented a new Project Management Accreditation Framework to ensure we consistently match the experience of our Project Managers with the complexity of project deliverables. We have also made specific accountabilities clearer and more transparent for both Project Managers and Project Directors. In addition, we have created a new position in the New Zealand Management team with specific overall accountability for major projects. We have focussed on building our profile in both new and existing markets. In 2012, we completed a company-wide rebrand to support our growth objectives and better position ourselves in an increasingly competitive marketplace. In 2014, we launched a new global website to improve our marketability, and for the last four years we have grown our global profile year on year, and this has increased by 9% in the last year. We also continue to target awards that further increase our profile like being a finalist in the NZ Trade and Enterprise s International Business Awards for best business operating internationally and the prestigious Women in Construction Award that we recently won in the United Kingdom. We continue to focus on health and safety to reduce harm to our staff, our clients and their communities. We have seen continuous improvement in lost time incidents per 1m hours worked in the last 5 years - with a 30% reduction last year alone.. All countries have successfully undertaken external health and safety systems audits with the United Kingdom and Australia achieving ISO accreditation. The speed of change in technology, and in client expectations of what we can deliver through technology is challenging. Simply keeping up is no longer good enough and that s why in 2012, the board decided to invest substantially in additional IT infrastructure to support our growing global organisation. After three years of long overdue investment we are now starting to see the benefits and efficiency gains from having shared back-office systems, accessible field data, and cloud based applications. The introduction of Lync for voice and video conferencing has fundamentally changed the way we communicate across the business, connecting our people globally, helping reduce our travel costs by 10% and our carbon emissions by 4%. As the external environment changes we must have a strong, flexible and adaptable culture. We completed our second culture survey last year which

6 allows us to compare ourselves with over 1000 other organisations. It is very pleasing to see that we are outperforming these companies in many areas. Our results confirm that we have a strong operating culture, where staff have a real commitment to the organisation, and have high levels of individual motivation and productivity. While the results were good, there s always room for improvement and we want to continue to create an environment that encourages all staff to succeed, to celebrate and to innovate. We have implemented a new performance payment scheme that will better reward staff who go above and beyond expectations. It is more closely aligned to the success of the company and you as shareholders, and allows us to target and incentivise towards specific business outcomes. So in conclusion, you can see we are committed to continuously improving the business, making changes where we need to, driving innovation, and targeting sustainable and profitable growth. To do that takes a considerable amount of honest self-reflection, hard work, and dedication from everyone and I thank the Opus team for their great efforts in Again, thank you for taking the time to come today. I look forward to your questions and meeting you afterwards. 6

It is a pleasure to be here in Adelaide with shareholders for one of my last official duties as Chief Executive of ANZ.

ANZ 2015 AGM Address Mike Smith Group Chief Executive Officer Good morning to everyone. It is a pleasure to be here in Adelaide with shareholders for one of my last official duties as Chief Executive of