OPUS Group Ltd. :OPG-AU: Earnings Analysis: For the six months ended June 30, 2017 : September 1, 2017

OPUS Group Ltd. reports financial results for the half-year ended June 30, 2017.

We analyze the earnings along side the following peers of OPUS Group Ltd. – Enero Group Limited, WPP AUNZ Limited and HT&E Ltd (EGG-AU, WPP-AU and HT1-AU) that have also reported for this period.


  • Summary numbers: Revenues of AUD 39.69 million, Net Earnings of AUD 3.23 million.
  • Gross margins narrowed from 15.84% to 15.09% compared to the same period last year, operating (EBITDA) margins now 11.96% from 12.31%.
  • Earnings growth from operating margin improvements as well as one-time items.

The table below shows the preliminary results and recent trends for key metrics such as revenues and net income growth:

2017-06-30 2016-12-31 2016-06-30 2015-12-31 2015-06-30
Relevant Numbers (Semi-Annual)
Revenues 39.69 39.25 47.71 59.93 55.53
Revenue Growth (YOY) -16.81 -34.51 -14.08 9.58 -10.69
Earnings 3.23 1.81 3.7 7.38 4.67
Earnings Growth (YOY) -12.5 -75.44 -20.81 162.46 113.23
Net Margin 8.15 4.62 7.74 12.32 8.4
EPS 0.03 0.03 0.04 0.07 0.05
Return on Equity 10.1 6.71 13.95 30.25 80.32
Return on Assets 13.02 8.01 15.75 32.26 17.2

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Market Share Versus Profits

Revenues History
Earnings History

OPG-AU‘s change in revenue this period compared to the same period last year of -16.81% is almost the same as its change in earnings, and is about average among the announced results thus far in its peer group, suggesting that OPG-AU is holding onto its market share. Also, for comparison purposes, revenues changed by 1.12% and earnings by 78.32% compared to the immediate last period.

Revenues Growth Versus Earnings Growth

Quadrant label definitions. Hover to know more

Leader, Earnings Focus, Laggard, Revenues Focus

Earnings Growth Analysis

The company’s year-on-year decline in earnings was influenced by a weakening in gross margins from 15.84% to 15.09%, as well as issues with cost controls. As a result, operating margins (EBITDA margins) went from 12.31% to 11.96% in this time frame. For comparison, gross margins were 12.94% and EBITDA margins were 8.16% in the previous period.

Gross Margin Versus EBITDA Margin

Quadrant label definitions. Hover to know more

Differentiated; Low Cost, Commodity; Low Cost, Commodity; High Cost, Differentiated; High Cost

Gross Margin Trend

Companies sometimes sacrifice improvements in revenues and margins in order to extend friendlier terms to customers and vendors. Capital Cube probes for such activity by comparing the changes in gross margins with any changes in working capital. If the gross margins improved without a worsening of working capital, it is possible that the company’s performance is a result of truly delivering in the marketplace and not simply an accounting prop-up using the balance sheet.

Gross Margin History
Working Capital Days History

OPG-AU‘s decline in gross margins has not produced any significant offsetting improvement in its working capital . This leads Capital Cube to conclude that the decline in gross margins are likely from operating issues and not trade-offs with the balance sheet. Working capital days are currently 221.90 days, compared to last year’s level of 126.49 days.

Gross Margin Versus Working Capital Days

Quadrant label definitions. Hover to know more

Customer Financed, Cash Starved, Supplier Financed, Cash Rich


The company’s earnings growth has also been influenced by the following factors: (1) Improvements in operating (EBIT) margins from 9.78% to 10.03% and (2) one-time items. The company’s pretax margins are now 11.40% compared to 11.00% for the same period last year.

EBIT Margin Versus PreTax Margin

Quadrant label definitions. Hover to know more

Operation driven Earnings, One-time Favorables, Low Earnings Base, One-time Unfavorables
EBIT Margin History
PreTax Margin History

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Company Profile

OPUS Group Ltd. is a business services and communication solutions company. The company operates its business through two divisions: Publishing and Government Services. The Publishing division distributes published publications, including electronic delivery of online material, regional production of professional educational and trade books, journals, loose leaf and manuals. The Government Services division operates through the following subsidiaries: Canprint Communications, Union Offset, Canberra Mailing & Envelopes and Virtual Tour. Canprint Communications offers integrated print management service to a range of government departments, publishers, businesses and national associations. Canberra Mailing & Envelopes provides printing, mailing and distribution services to government departments and private sector companies. Virtual Tour offers Government communication requirements, including document production, web hosting, electronic fulfillment, call centre, and warehousing & logistics services. OPUS Group was founded on June 7, 1983 and is headquartered in Riverwood, Australia.

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