Ann: Change of Director's Interest Notice - B Elton, page-26

SimonGr all good. I try to add to the debate. Yes I am involved and exposed in the industry but not in VRS. My other stock items are not as risky as equity in a spatial industry player so I don’t follow them on here.

The survey industry is ripe for consolidation (IBIS) and VRS have acquired good brand name firms and paid well for them. The integration has had problems but I am sure they are normal problems and are able to be resolved I was surprised at their strategy over the past 2 years of trashing the margins from these firms and chasing volume via price when there is a supply(labour) shortfall and it will continue in the future.

I thought they should have kept slower but more profitable growth, focused on the acquired client retention Ann including innovative joined up offerings across their geographic coverage rather than chasing FTE numbers in a risky service at low margins where labour costs have risen.

VRS have done some great innovative things with their scale but i understand they have bought that work as well. Then the large infrastructure jobs they have announced are at very tight margins and locked in. They will not get large rate rises if the early work converts to the long term part of the job.

As others have said, this segment of the industry is commoditised, hence why they went chasing it bemuses me.

Personally i am exposed to the three eastern mainland states in markets similar to VRS. We have managed 15% headline rate growth and 10% margin growth over the past 12 months with 5% wages growth. All Other costs are able to be kept flat by efficiency and investment in product and service. We are expecting rates to be flatter this year - maybe 3-5% growth, downside and upside will come from consumer confidence and resi markets in SYD and MEL - if they go bad there will be ripples, if they have bottomed out we might get a bit more margin.