Disclaimer Full Year Results Presentation

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2 Disclaimer This presentation contains certain statements and projections provided by or on behalf of Cardno Limited with respect to the anticipated future undertakings. Any forward looking statements reflect various assumptions by or on behalf of Cardno. Accordingly, these statements are subject to significant business, economic and competitive uncertainties and contingencies associated with the business of Cardno which may be beyond the control of Cardno which could cause actual results or trends to differ materially, including but not limited to competition, industry downturns, inability to enforce contractual and other arrangements, legislative and regulatory changes, sovereign and political risks, ability to meet funding requirements, dependence on key personnel and other market and economic factors. Accordingly, there can be no assurance that any such statements and projections will be realised. Cardno makes no representations as to the accuracy or completeness of any such statement of projections or that any projections will be achieved and there can be no assurance that any projections are attainable or will be realised. Additionally, Cardno makes no representation or warranty, express or implied, in relation to, and no responsibility or liability (whether for negligence, under statute or otherwise) is or will be accepted by Cardno or by any of their respective officers, directors, shareholders, partners, employees, or advisers (Relevant Parties) as to or in relation to the accuracy or completeness of the information, statements, opinions or matters (express or implied) arising out of, contained in or derived from this presentation or any omission from this presentation or of any other written or oral information or opinions provided now or in the future to any interested party or its advisers. In furnishing this presentation, Cardno undertakes no obligation to provide any additional or updated information whether as a result of new information, future events or results or otherwise. Except to the extent prohibited by law, the Relevant Parties disclaim all liability that may otherwise arise due to any of this information being inaccurate or incomplete. By obtaining this document, the recipient releases the Relevant Parties from liability to the recipient for any loss or damage which any of them may suffer or incur arising directly or indirectly out of or in connection with any use of or reliance on any of this information, whether such liability arises in contract, tort (including negligence) or otherwise. This document does not constitute, and should not be construed as, either an offer to sell or a solicitation of an offer to buy or sell securities. It does not include all available information and should not be used in isolation as a basis to invest in Cardno. 1

3 Performance Overview Financial Review Outlook Appendix 2

4 3 PERFORMANCE OVERVIEW

5 01 Results Highlights Net Loss after Tax of $145.2 million > Non-cash impairment charge of $224 million reflecting reduced near term outlook for the Americas and the planned exit from Caminosca in Ecuador Full Year operating results at the upper end of the May guidance in a difficult environment > Significant improvement in operating cash flow delivery > Backlog remains strong at almost 12 months of revenue > Full year dividend of 20 cents per share, fully franked > Financial covenants met However business outlook remains challenging > In Australia we continue to face headwinds as the economy resets from a resources led investment boom to a public infrastructure led recovery > In the Americas the recent completion of long term major projects, market driven margin pressures and volatility in the oil and gas service sector will continue to temper our performance NOPAT: non-ifrs term referring to the Net Operating Profit after Tax which reflects the operating position of the business prior to impairment adjustments. A reconciliation of NPAT to NOPAT has been prepared and is shown on slide 13. 4

6 01 Cardno Performance Full year group revenue from operations is up 9.0% however this reflects the full year impact of prior acquisitions and devaluation of the Australian dollar partially offset by decline in underlying organic revenue. NOPAT decline of 35.6% reflects margin pressures in both the Asia Pacific and Americas regions, impact of restructure and centralisation costs and oil and gas sector slow down. NOPAT: non-ifrs term referring to the Net Operating Profit after Tax which reflects the operating position of the business prior to impairment adjustments. 5

7 01 Cardno 2015 FY Highlights - Revenue > Full year net fee revenue growth of 5.9% however organic fee revenue has declined > Full year M&A contribution reflects an additional five months of Cardno Haynes Whaley and an additional eight months of Cardno PPI > The FX effect reflects the additional contribution in Australian dollar terms of the translation of the Americas revenue with the average rate for FY15 being 85 cents versus 92 cents in FY14 6

8 01 Changes in Business Mix > Exposure to mining and resources has decreased significantly from 12% in FY14 to 3% in FY15 as bulk commodities (coal and iron ore) reduced investment and operational spend this is not expected to recover in the near term > Increased revenue contribution from Contractors from 11% in FY14 to 15% in FY15 due to successful participation in major infrastructure projects in Australia > Oil & gas exposure has increased from 22% in FY14 to 24% in FY15 reflecting the full year contribution of Cardno PPI partially offset by reduced demand from clients in that sector due to lower oil prices > Government sector contribution increased from 29% in FY14 to 31% in FY15 reflecting recovery in the Americas and recent Federal Government contract wins in Asia Pacific 7

9 01 Cardno 2015 FY Highlights - Backlog > In Australian dollar terms backlog has increased by 19.9% from 30 June Adjusting for FX rate changes the total growth rate is 4.9% > Notably Asia Pacific region has recorded improved backlog year on year due to recent successful bids for infrastructure projects such as Sydney Light Rail > 85% of the backlog is expected to be completed in the next 12 months broadly underpinning our revenue expectations for FY16 8

10 01 Safety Performance Cardno TRIFR* at the end of FY15: 3.16 per million person-hours (0.63 per two hundred thousand person-hours - US equivalent) * Total Recordable Injury Frequency Rate Cardno TRISR** at the end of FY15: 2.00 per million person-hours (0.40 per two hundred thousand person-hours - US equivalent) ** Total Recordable Injury Severity Rate Cardno s Zero Harm initiative continues to deliver continuous improvement in workplace safety: > A 40% reduction of total injuries over the two years to FY15 > An 85% reduction in injury severity over the last two years > Our continuing objective now is to drive our total recordable injury rate lower we want zero harm to our people and contractors every job every day 9

11 01 Our People We strive to provide opportunities for all staff to grow their careers through programs such as Women in Cardno. > Around 8,100 staff working in 259 offices around the world > Year on year net reduction in head count as a result of matching resources to client demands Our global learning management system houses over 200 courses for learning, development and career progression. Our global organic growth campaign facilitates improved client management, collaboration, thought leadership and cross-selling. 10

12 11 FINANCIAL REVIEW

13 02 Full Year 2015 Financial Highlights Net Operating Profit after Tax : non-ifrs term referring to the operating position of the business prior to impairment adjustments. A reconciliation of NPAT to NOPAT has been prepared and is shown on slide

14 02 NPAT to NOPAT Reconciliation NOPAT: non-ifrs term referring to the Net Operating Profit after Tax 13

15 02 NPAT to NOPAT Reconciliation Bridge 14

16 02 Net Operating Profit After Tax Bridge - FY14 v FY15 NOPAT: non-ifrs term referring to the Net Operating Profit after Tax which reflects the operating position of the business prior to impairment adjustments. 1. Americas region down in constant currency terms due to lower US Government expenditure, extended winter weather in the North East, margin pressures, lower oil price, the impact of greatly reduced GoM spill response work and higher costs associated with business restructuring. In addition several major long term projects were concluded during the year which were not replaced with similar work 2. Asia Pacific decline driven by reduction in higher margin mining and resource work, slow down on LNG major projects 3. Higher finance costs, DD&A and corporate costs. The higher corporate costs relate to additional $6.8M of intangible asset amortization recognised in FY15 4. FX impact on US dollar earnings and year end balance sheet revaluations on US dollar denominated working capital 15

17 02 Net Operating Profit After Tax Bridge - H1 FY15 v H2 FY15 1. Americas region, in constant currency, experienced a challenging second half of FY15 with market driven margin pressures in technical services, extended winter weather delaying service delivery and tougher overall market conditions 2. Slight improvement in second half of FY15 for Asia Pacific region, as areas previously involved in mining and resources redirected marketing efforts to other market sectors 3. Higher finance costs, DD&A and corporate costs 4. FX impact on US$ earnings and year end balance sheet revaluations NOPAT: non-ifrs term referring to the Net Operating Profit after Tax which reflects the operating position of the business prior to impairment adjustments. 16

18 02 Cash and Earnings - Key Results 17 Improved cash conversion rate in H2 FY15 has Cardno delivering a strong cash conversion capability with our operating cash flow of $48.1M in FY15 more consistent with our historical performance (H1 FY15 $0.9M) NOPAT: non-ifrs term referring to the Net Operating Profit after Tax which reflects the operating position of the business prior to impairment adjustments. EBITDA of $108.4M down on prior year 23.5%. EBITDA margin reflective of continued margin pressures throughout the Americas and Asia Pacific, changes in business mix and restructuring costs

19 02 EPS and Dividend - Key Results EPS is impacted by decreased financial performance during FY15 and impairment losses recognised in relation to the Americas and assets held for sale. EPS based on NOPAT is cents per share Dividend per share (fully franked) is down in absolute terms reflecting lower overall profitability however the payout ratio of 66% of NOPAT is broadly consistent with previous years 18

20 02 Debt and Liquidity > Debut USPP close issuing US$150m bonds across seven year and ten year maturities > Cardno successfully completed one-year extension and improved pricing of existing bank debt facilities. This extension increases maturity until December 2019 > Total liquidity provides Cardno with the ability to support the business through both organic and future M&A expansion * excludes fair value hedge adjustment ** represents bank guarantees drawn under a guarantee sub facility as part of a combined working capital facility 19

21 02 Leverage Ratio - FY14 to FY15 Bridge > The bridge illustrates the movements in the Leverage Ratio between FY14 and FY15 highlighting the covenant ratio per the agreements with our lenders and the prima facie ratio as calculated from the financial report > The debt covenant calculation of 2.6 averages the impact of FX rate changes over the period of review rather than using the spot rate to revalue net debt at year end. This results in halving the FX impact on the calculation to 0.3 times > During the period net borrowings increased by $23.0 million contributing 0.2 times > The reduction in EBITDA from $141.7 million to $108.4 million contributing 0.5 times > A continued focus on cash collections and working capital management will further improve this ratio > The Leverage Ratio is calculated by dividing Net Debt (Total Debt less Cash and Cash Equivalents ) by EBITDA. > Cardno s covenants with its lenders requires this ratio to be less than or equal to 3.0 times. 20

22 02 $1.0 Billion Fee Revenue Analysis Note: 2014 Fee Revenue is presented on a proforma basis which assumes Cardno acquired its FY14 merger partners on 1 July

23 02 Operating Segment Performance - Americas USD Version included in Appendix slide 36. The Americas Region comprises 5,000 staff who deliver professional expertise and services to government and private sector clients across North and South America, enhancing performance in markets such as environment, transportation, energy and resources, land, buildings, management services and international development assistance. Note: the above figures include Emerging Markets EMEA and Software which have been merged into the Americas Region. COMMENTARY > Backlog has remained broadly flat (increasing 2.5% in USD terms) in FY15 with larger increase in Backlog in AUD due to recent devaluation of AUD > Strong headline revenue growth due to full year contribution from acquisition of Cardno Haynes Whaley and Cardno PPI > Organic growth declined overall due to reduction in oil spill work, low oil price and slow restart of work for US Government > Margins down significantly due to less high margin oil spill work, higher costs associated with normalization of benefit plans, restructure costs and margin pressures in some areas 22

24 02 Fee Revenue Stream Breakdown - Americas COMMENTARY > Slight increase in government sector in FY15 due to project wins during the year > Resource sector exposure has contracted significantly reflecting a slowdown in the demand for mining related services due to recent downward price volatility for commodities particularly coal in the Americas > Decrease in social infrastructure services in FY15 due to continued constrained development assistance budgets in the UK and Europe, with slight recovery in the US Note: 2014 Fee Revenue is presented on a proforma basis which assumes Cardno acquired its FY14 merger partners on 1 July

25 02 Operating Segment Performance - Asia Pacific The Asia Pacific Region comprises 3,100 staff providing services in civil, structural, water, environmental, coastal, bridge, geotechnical, subsurface utility, traffic and transport engineering, as well as environmental science, surveying, landscape architecture, construction materials testing, planning and asset management and international development assistance. COMMENTARY > Full year increase in backlog of 8.8% due to success in recent infrastructure and water bids > Organic revenue decline driven by conclusion of major projects with no short term replacement projects being available and less mining and resource work > Margins have continued to decline in difficult market conditions in conjunction with higher restructure costs mainly redundancy payments. Note: the above figures include Emerging Markets Asia Pacific which has been merged with the former Australia & New Zealand Region to become the Asia Pacific Region. 24

26 02 Fee Revenue Stream Breakdown - Asia Pacific COMMENTARY > Environmental services have fallen 5% due to wind down of major projects > Decrease in resources sector fee revenue in FY15 due to slow down in this sector. This is expected to remain flat in FY16. > Increase in social infrastructure services in Asia Pacific due to project wins in later FY14 within the former Emerging Markets division which underpinned performance in FY15. 25

27 26 OUTLOOK

28 03 Newly Appointed CEO - Early Observations - 45 days in As I travelled the Cardno globe and met with well over a thousand of our people a few things became clear > Cardno genuinely makes a difference to communities in need as well as to our substantial client base by delivering innovative solutions that are cost effective and environmentally and socially responsible > Cardno has great people with sector leading expertise who are committed to delivering the best solutions for our clients > The markets that we operate in have been very challenging but our people have remained determined, hardworking and committed to superior client service > Our people acknowledge the imperative to understand our client s needs better than our competitors and to prioritize client relationships and responsiveness above everything else > Cardno s commitment to safety is real and our people understand how important this is to our clients and our own long term competitiveness > There is a deep understanding that our performance needs to improve 27

29 03 Progress Report - Scorecard Versus 2015 Goals THE GOOD > Outlook - Further expansion of secured backlog delivered > Cash flow Net operating cash flow ~ NOPAT delivered > Balance Sheet Conservative Net debt to EBITDA < 3 delivered THE NOT SO GOOD > Growth - Return to positive organic growth not entirely achieved but some great progress > Efficiency Increase in revenue factor > 2% not achieved > Margins - EBITDA margin improvement not achieved > Shareholder Returns Return to positive EPS growth not achieved 28

30 03 Key Areas of Focus > Finish the integration Align our organization structure and business processes to meet our clients needs Optimize our cost structure Align our business processes to generate the performance metrics we need to be successful > Continue improving working capital and cash management continue the gains made in the second half of FY15 > Profitability improvement as a priority (over revenue growth) > Strategic investment/divestment program > Upgrading our business development capabilities and instilling teamwork and knowledge sharing across all of our business units 29

31 03 Outlook and Conclusion > Asia Pacific performance to remain subdued at least for FY2016 with the notable exception being infrastructure work in New South Wales > Americas well positioned with improving backlog, but conversion into profitable fee generating revenue will be a key success factor > Project margin pressure will continue and we are unlikely to see significant improvements in project margins in the near term As such we remain committed to the delivery of cost reductions through lower overheads and completion of the Cardno Business Service initiative in the Americas > Strengthening USD against the AUD provides a positive impact to group results and a partial hedge against the impacts from the oil price volatility > Overall, in spite of a challenging market, for all our recent wins and work with new clients demonstrates that we can win more than our fair share 30

32 31 APPENDIX Supporting Material

33 04 Featured Projects Environmental Planning and Engineering Services for the US Navy and US Marine Corps As part of a five-year contract, Cardno is delivering worldwide environmental planning and engineering services to the US Navy and US Marine Corps. This is in addition to another contract with Naval Facilities Engineering Command (NAVFAC) Atlantic to support at-sea testing and training requirements, and working on similar initiatives with NAVFAC Pacific. The global contract covers a wide variety of projects such as in-water noise modelling and marine mammal exposure impacts, dredging permitting and disposal, in-water construction, shoreline training and restoration. Additionally, Cardno may be called upon to help with aircraft home basing initiatives throughout the world. Cardno s stellar record of performance supporting the US Navy s operational requirements was recognised by the Chief of Naval Operations, who awarded us their 2014 Environmental Planning Award for outstanding support in preparation of the Environmental Impact Statement for Homebasing the F-35C Joint Strike Fighter on the West Coast of the US. 32

34 04 Featured Projects Lady Cilento Children s Hospital Cardno s role on a state-of-the-art Brisbane health facility shows how we help deliver critical infrastructure needs to communities. We provided civil, structural and traffic engineering, and town planning services to Australia s most advanced paediatric facility, the Lady Cilento Children s Hospital. It features eight main hospital levels, all requiring variations in the footprint to accommodate the internal atriums and the radiating branches which cantilever across the streetscape. To optimise the design, our team utilised 3D structural modelling, while wind tunnel testing was carried out to more accurately predict pressures on the building. During the site investigations and acquisition process, Cardno provided town planning and traffic engineering advice and assisted the Queensland government to prepare the planning instrument regulating development in the precinct. Cardno also prepared the development applications for Queensland Health for all aspects of the project. Traffic forecasting and road network analysis was also conducted, which informed the design of surrounding intersections, service entries and car parking arrangements. 33

35 04 Featured Projects Upper Truckee River Streambed Environment Zone Restoration Project Cardno has been working on projects to restore the fragile Tahoe Basin ecosystem in Nevada and California for more than 10 years. We recently completed project management and engineering services for the Upper Truckee River Streambed Environment Zone Restoration Project in California, which rehabilitated 3,500 linear feet of stream habitat. The final design of this work included new channel and floodplain construction that increased floodplain connectivity, improved fish and wildlife habitats, and improved the quality of the water entering Lake Tahoe. Our duties covered the analysis of hydrology and hydraulics of river, wetland, and upland habitats, an effective restoration design that addressed public access issues, the development of complete plans, specifications, and bid support. For the construction management aspects of the project, Cardno served as resident engineer and resident inspector, ensured storm water pollution prevention planning compliance, prepared record drawings, and coordinated project close-out. 34

36 04 Featured Projects Public-Private Partnerships under the U.S. President s Emergency Plan for AIDS Relief Countries Project Cardno is providing strategic services to a portfolio of public-private partnerships (PPPs) combatting the global HIV/AIDS epidemic. The Centers for Disease Control and Prevention (CDC) awarded Cardno a five-year cooperative agreement to manage the second phase of the Public-Private Partnerships under the US President s Emergency Plan for AIDS Relief (PEPFAR) Countries Project (P4). Cardno collaborates with CDC and the Office of the US Global AIDS Coordinator to leverage US Government resources and private sector partners to meet the PEPFAR goals of improved health outcomes, sustainability and country ownership. Our role includes funds management and governance, program technical support, PPP strategic expansion, capacity building and institutional strengthening, communications services, performance monitoring and evaluation and results impact assessments. With a focus on Sub-Saharan Africa, these PPPs contribute to PEPFAR s goal of an AIDS-free generation through innovative interventions in the areas of health systems strengthening, treatment, and prevention of mother-to-child transmission. 35

37 04 Operating Segment Performance - Americas (USD) 36

38 04 Operating Segment Performance - Prior Structure 37

39 Thank you For more information Richard Wankmuller CEO and Managing Director Graham Yerbury Group CFO Office: