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2011 Full Year Results Presentation

Presenters: Andrew Buckley, Managing Director Jeff Forbes, CFO

Cardno Limited - 2011 Full Year Results Presentation

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> Highlights

> Financial overview

> Operations overview

> Strategy and outlook

2011 Full Year Results Presentation


“Cardno’s vision is to be a world leader in the provision of professional services to improve the physical and social environment”

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2011 Highlights> Record profit of $58.8m up 56% despite difficult conditions

> Record EBITDA of $100.2m up 81.2%

> EPS up 44% to 56 cents

> Dividend record 34 cents, 70% franked

> Strong cash flow $74m up 57%

> $49m capital raising in the first half

> Strong 1H 2011 reflective of Gulf of Mexico oil spill contribution

> Second half impacted by stronger AUD and wet weather/cyclones, but remained robust

> Strong organic revenue growth of 18% over the previous year

> Three acquisitions strengthen environmental, mining and oil and gas capabilities

> All acquisitions supplement and broaden existing core strengths


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Cardno’s underlying dynamics> Geographic and market sector diversification lowers risk and maximises growth

> Consistent growth of profits and shareholder returns

> 2011 FY seventh consecutive record profit and EPS growth

> 7 year shareholder returns + 600%

> Consistent strong dividend growth delivering 34 cents this year

> Strong critical mass of professional IP world-wide

> Successful M & A’s = successful cross-selling + increased organic growth

> Robust forward project pipeline $516m (down from FY10 due to currency movements)


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Financial review

“Exceptional growth coupled with strong balance sheet ”

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7th consecutive growth year


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7th consecutive growth year


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FY2011 FY 2010 % $m $m Change

Revenue from operations 831,201 477,238 74%

Fee revenue 573,634 378,473 52%

EBITDA 100,160 55,270 81%

EBITDA margin (%) 17.46% 14.60%

Net profit before tax 84,303 43,579 93%

Net profit after tax 58,802 37,597 56%

Basic earnings per share (cents) 56.29 43.86 44%

Total assets 681,612 611,551

Total liabilities 324,416 311,579

Total equity 357,196 299,972

Net operating cash flow 73,528 46,745 57%

EBITDA interest coverage 27 X 19 X

Dividends per share (cents) 34.0 29.0 17%

2011 full year financial highlights

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Australia & NZ Americas & Software IDA

FY10 FY11 FY10 FY11 FY10 FY11

Fee revenue ($000's) 209,939 230,365 72,061 257,617 95,044 83,704

Recoverable expenses ($000's) 10,146 26,022 42,655 184,701 45,964 46,844

Total revenue 220,085 256,387 114,716 442,318 141,008 130,548

EBIT 34,285 34,021 11,065 51,806 4,009 4,175

Fee revenue margin 16.33% 14.77% 15.36% 20.11% 4.22% 4.99%

Operating Segment Performance

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2011 full year financial highlights


Financial Ratios June 2011 June 2010Current Ratio1 1.36 1.33

Gearing Ratio2 0.24 0.31

Debt to Equity Ratio3 29.9% 58.4%

Net Debt to Equity Ratio 6.3% 39.7%

Pro-forma net debt/equity post BEC funding 16.9% -

Note 1: The Current Ratio is Current Assets Current LiabilitiesNote 2: The Gearing Ratio is Long Term Liabilities (Shareholders Equity + Long Term Liabilities)Note 3: The Debt to Equity Ratio is Total Debt Shareholders Equity

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Diversified revenue streams


33%

51%

15%

Revenue by Operating Segment(Proforma)

Professional ServicesAustralia &NZ

Professional ServicesAmerica's & Software

International DevelopmentAssistance

39%

2%

56%

3%

Revenue by Geographic Region(Proforma)

Australia & NZ

Asia Pacific

America's

UK & Africa

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Diversified revenue streams


8.2%1.1%

35.1%

13.6%1.0%

7.8%

18.5%

12.1%2.7%

NET REVENUE BY MARKET SECTORS FY2011 (PROFORMA)

BULDINGS

COASTAL & OCEAN

ENVIRONMENT

EMERGING MARKETS

MANAGEMENT SERVICES

RESOURCES, MINING AND ENERGY

TRANSPORTATION

LAND

WATER

6%10%

7%

41%

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6%

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12%

REVENUE BY CLIENT FY2011 (PROFORMA)

AID AGENCY

CONTRACTOR/SERVICE PROVIDER

DEVELOPER

RESOURCES, MINING AND ENERGY

GOVERMENT OWNED CORPORATION

GOVERNMENT ‐ FEDERAL

GOVERNMENT ‐ LOCAL

GOVERNMENT ‐ STATE

OTHER CLIENTS

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Operations Review

“Growth horizon strong – both organically and through value adding acquisitions”

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Core Businesses


> Globally integrated professional services business with more than 4,300 people in 160 offices spanning projects in over 85 countries

> Approximately 85% of staff professionals and fee earning personnel

> Primary disciplines of diverse planning, surveying, engineering and management services, environmental sciences, CMT and social infrastructure delivery

> Focus on developing / improving physical and social infrastructure for private and public sectors

> Focus on Environmental Consulting markets is delivering strong growth

> FY11 acquisitions to add approximately $15m revenue EBIT in FY12

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Core Business Segments


Australia / NZRevenue: $256m

• Buildings

• Land

• Coastal and Ocean

• Environment

• Emerging Markets

• Management Services

• Resources, Mining and Energy

• Transportation

• Water

Americas & SoftwareRevenue: $442m

International Development Assistance

Revenue: $131m

• Emerging Market Services

• Health & HIV/Aids

• Law and Justice

• Education

• Natural Resource Management

• Financial Sector

• Tourism Sector

• Buildings

• Land

• Coastal and Ocean

• Environment

• Emerging Markets

• Management Services

• Resources, Mining and Energy

• Transportation

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Operations Overview


> FY11 performance reflects strong environmental sector globally and success of diversification strategy

> Second half impacted by stronger AUD and wet weather/cyclones

> Stronger second half performance in ODA sector due to project wins and cost reductions

> Diversification strategy continued with 3 acquisitions, strengthening exposure to environmental, mining/resources and coal seam gas sectors

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Expanding Globally

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Indicative Projects

“A robust project pipeline of $516m in FY12”

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Legacy way Tunnel Project ‐ A 4.6km long, AU$1.5billion tunnel project will transform the Queensland capital city of Brisbane bylinking the city’s western and inner‐northern suburbs. Constructed by Transcity JV (Acciona, BMD and Ghella) for Brisbane CityCouncil, the design for the Legacy Way Tunnel is made up of a Design Alliance, with Cardno contributing a third of the designresources, including key staff in the Civil, Traffic, Hydrology, Structural, Environment, Geotechnical and M&E teams. Constructionof Legacy Way began in April 2011 and will continue until December 2014.F

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The Government of Indonesia is committed to ensuring global accessibility to education for all children, particularly in remoteregions, through the Basic Education Program. Cardno Emerging Markets is partnering with AusAID and the Government ofIndonesia to support the improvement of education standards across six provinces in Indonesia through the Basic EducationProgram (BEP). The program includes construction or refurbishment of 2000‐3000 schools, providing asset and contractmanagement support and increased capacity throughout the education sector in Indonesia.F

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Cardno JFNew’s full‐service native plant nursery in Indiana has nearly 30 acres specifically in wetland plant productionfor restoration and native landscape projects in the Midwest and beyond. With nearly 360 native species in stock,2,200 square feet of seed storage capacity, and 74,000 square feet of greenhouse capacity, Cardno JFNew has theresources and knowledge needed to assist with a wide range of ecological restoration or native landscaping projects.For

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Lihir Island Million Ounce Upgrade, BEC Engineering ‐ the 2011 acquisition of BEC Engineering, a business whichdelivers electrical engineering services to the mining and resources industry, offers broad opportunities for blendingtheir considerable skills and specialist expertise with other Cardno operations globally.For

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Gold Coast Rapid Transit project, Queensland, Australia (artists impression) – Cardno is providing multi‐disciplinaryservices to McConnell Dowell for Stage 1 of the Gold Coast’s major 13 kilometre light rail corridor. As Queensland’s firstlight rail system, the Gold Coast Rapid Transit project will provide residents with a world‐class public transport networkwhich will generate a number of social, environmental and economic benefits for the city.For

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Cardno worked closely with multiple stakeholders to evaluate environmental impacts and to meet federal and state agencyrequirements for the proposed 104‐MW Echanis Wind Energy Project at Steens Mountain in Oregon. Cardno was selectedas the third‐party preparer of an Environmental Impact Statement, and performed facility siting recommendations, routingadjustments based on environmental sensitivity, an impact evaluation on sensitive species and numerous visualsimulations regarding the aesthetic impact southeast Oregon’s first windfarm would have on the mountain.For

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Cardno’s competitive strengths

> High retention of acquisition principals drives sustainable growth

> Business unit and division structure is attractive to merger partners

> Successful track record of cross selling services to generate organic growth

> Diversity of earnings across business sectors, clients and geographic locations mitigates risk and optimises growth opportunities

> Focus on maintaining balanced mix between short-term smaller projects and larger long-term projects

> Strong balance sheet to fund growth

> Significant strengthened presence in high growth global environmental services and mining and resources sector

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Strategy and outlook “ A seven year track record of strong growth”

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Growth Strategy> Combine organic growth and M & A’s to become world leader in infrastructure

> Build recurring revenue streams through cross selling

> Focus on strengthening core disciplines through strategic acquisitions and organic growth

> Sustain historically high retention of principals

> Foster / encourage high employee shareholding (≈50%) to incentivise performance

> Maintain risk-adverse balance between major and smaller projects

> Continued diversification strategy – both geographical and market sectors

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M & A Strategy

> Complementary businesses with strong performance

> Historically pay realistic multiples

> Tried and tested acquisition process with robust due diligence

> Acquisitions must be immediately earnings accretive

> Target businesses which add to and strengthen core competencies

> Integrate and implement systems improvements to drive efficiencies

> Cross-sell services and leverage organic growth

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M & A Flow ChartF

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Recent AcquisitionsCardno JFNew (2011)

A 150-person US consulting firm with specialist expertise in natural resources management, environmental permitting, habitatrestoration, mitigation banking, native plant materials, and cultural resources consulting.

Cardno JFNew is based in the Great Lakes area of the US and has 8 offices and a 130 acre nursery. Cardno JF New is highlycomplementary to Cardno ENTRIX and is a business unit of Cardno ENTRIX.

The acquisition was effective January 2011 with annual revenue of around US$18m and EBITDA of US$2.7m.

Cardno JFNew’s key personnel are committed to staying with the business.

Cardno Roadtest (2011)

A 60 person construction materials testing and geotechnical engineering firm based in Central Queensland with offices inRockhampton, Emerald, Gladstone and the Whitsundays. Roadtest is a highly strategic partner to help continue the growth of ourconstruction materials testing and geotechnical engineering capabilities across Australia and internationally.

Cardno Roadtest will become part of Cardno Bowler, which was acquired in 2008. The acquisition was effective May 2011 withannual revenue of around $8m and EBIT of $3.5m.

Cardno Roadtest increases Cardno’s exposure to the work flowing from the extensive gas and coal developments under way orproposed in Central Queensland. Cardno Roadtest is undertaking work on the Gladstone LNG plant on Curtis Island and is alsoworking on the expansion of the Curragh North Coal mine.

Key personnel will remain with the business.

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Recent AcquisitionsCardno BEC (2011)

Cardno BEC is a 100 person electrical engineering firm based in Perth, with offices in Brisbane and Tanzania.

The acquisition was effective June 2011 with annual revenue around $35m and an expected FY12 EBIT of $9.0m.

Cardno BEC has been established since 1996 and provides electrical engineering services ranging from feasibility studies throughproject design, to construction, commissioning and operations. The company provides services to the mining, mineral processing,industrial, petro-chemical and utility sectors.

Cardno BEC has proven capability across all aspects of electrical design, instrumentation, power systems, powergeneration/transmission and distribution, control and communications systems with an expert team of engineers, technicians,programmers, draftspersons and site support staff.

Cardno BEC has carried out project work throughout Australia, Asia, Africa, Europe and North & South America primarily in mineralprocessing plants including gold, copper and iron ore. Major clients include BHP Billiton, Rio Tinto, Mineral Deposits, Newcrest,Fortescue Metals Group, Barrick Gold, Outotec and Regis.

Cardno BEC’s principals are all committed to staying with the business.

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2012 Growth drivers > Environmental services market is growing strongly

> Mining, energy, oil and gas are also growing strongly

> Public sector infrastructure projects remain active

> Private sector development remains flat but will deliver future growth

> IDA expenditure flat but will grow towards 2015

> M & A pipeline remains strong and competitively priced

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2012 Outlook

> Global market conditions continue to improve but slower than expected

> Project pipeline of $516m in early FY12

> Additional growth via organic expansion and acquisitions which further strengthen core competencies

> Well positioned with strong cash and low gearing

> Strong pipeline of potential M & A opportunities in North America and Australia

> Returns from US environmental acquisitions continue to be strong

> Increased focus on mining and resources will further aid growth

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“Cardno’s vision is to be a world leader in the provision of professional services

to improve the physical and social environment.”

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Documents

For personal use only - asx.com.au · Constructed by Transcity JV ... light rail system, the Gold Coast Rapid Transit project will provide residents with a world‐class public transport