Cardno Limited Annual General Meeting 22 nd October 2009 Presented by: Andrew Buckley Managing Director
Financial Year Highlights 2008/09 Profit Revenue increased by 29.3% to $515.84m EBITDA up 14.2% to $57.73m Net profit after tax increased by 24.4% to $34.15m One off restructuring costs of $3m Strong operating cash flow of $38.59m, cash at June 30 $65.8m Net debt $19.2m net debt to equity 7.2% 2% organic growth on revenue in FY09 (compared with pcp of 7%) Growth Earnings per share (diluted) increased by 6.0% to 43.82 cents Final dividend of 14 cents payable in October, full year dividend of 28 cents up 3.7% on last year Market capitalisation: $430m @ 21 October 2009 Grown to approx. 3000 people Total Shareholder Return (TSR) since listing in 2004 is 520% Mergers & Acquisitions Three acquisitions completed during the FY09 year, including Cardno TBE an engineering, survey and planning firm predominantly servicing the transportation sector, Cardno Ecology Lab (marine ecology) and Cardno Spectrum Survey (resources sector surveying) adding further diversification Acquisitions added $84.3m revenue to 2009FY and approx. $99.8m on an annualised basis Merger integration proceeding well 2
6 Year Performance History 3 CAGR = Compound Annual Growth Rate
6 Year Performance History 4 CAGR = Compound Annual Growth Rate
Cardno Limited Professional Services for Infrastructure Development 09 Gross Revenue A$182m 09 Gross Revenue 39% of total 09 Gross Revenue A$106m 09 Gross Revenue 21% of total 09 Gross Revenue A$226m 09 Gross Revenue 44% of total International Development Assistance SOCIAL INFRASTRUCTURE Law & Justice Health Governance Education Rural Development Natural Resource Management Institutional Strengthening HIV/AIDS Post Conflict Finance & Economics Public Sector Services PHYSICAL INFRASTRUCTURE Roads & Bridges Water & Wastewater Environmental Public Sector Infrastructure PHYSICAL INFRASTRUCTURE Roads & Bridges Building & Property Coastal, Ocean & Marine Environmental & Water Quality Management Services Traffic & Transport Water & Wastewater Geotechnical Planning, G.I.S. Landscape Architecture Construction Materials Testing Water Engineering Software Survey Subsurface Utility Engineering Private Sector Infrastructure PHYSICAL INFRASTRUCTURE Building & Property Coastal, Ocean & Marine Environmental & Water Quality Urban Development Traffic & Transport Water & Wastewater Geotechnical Planning, G.I.S. Landscape Architecture Resources Structures Construction Materials Testing Water Engineering Software Survey Subsurface Utility Engineering 5
Global Presence 3000 People 97 Offices Offices in 22 Countries Projects in 70 countries 6 6
Infrastructure Projects International Development Assistance Law and Justice Sector Program, PNG Project Value: $125.5m Client: AusAID Funded by the Australian Federal Government Cardno provides over 60 long-term advisers to build capacity in the law and justice agencies in PNG. The advisers work in a range of technical and corporate functions to promote public sector reform to improve the delivery of law and justice services to Papua New Guineans. Law and Justice Sector Program, PNG Road Maintenance & Rehabilitation Project, PNG 7 Project Value: US$120m Client: Department of Works PNG Funded by the World Bank and Government of PNG The project manages World Bank & GoPNG funds for network rehabilitation and maintenance of National and Provincial Roads in eight (8) provinces. Cardno is providing management services, forecasting and resourcing. Road Maintenance & Rehabilitation Project, PNG
Infrastructure Projects International Development Assistance Fostering Interventions for Rapid Market Advancement (FIRMA) Client: USAID Project Value: US$19.6m Funded by the Agency for International Development FIRMA will provide technical assistance and services to increase economic growth in tourism, wood and light industry sectors in Bosnia. FIRMA Project, Bosnia & Herzegovina 8
Infrastructure Projects Public Sector, USA Interstate I-4 Connector Project, Florida Project Value: US$446m Client: Florida Department of Transport (FDOT) Funded by Federal Economic Stimulus Package Cardno is providing construction administration and inspection services on the Interstate 4 Connector project. 9 Interstate I-4 Connector Project, Florida
Infrastructure Projects Public Sector, USA Indian Street Bridge, Martin County, Florida Project Value: US$64m Client: Florida Department of Transport (FDOT) Funded by American Recovery and Reinvestment Act (ARRA) Cardno is providing design-build services on the new bridge crossing of the south fork of the St. Lucie River in Martin County Florida. Craig Ranch Regional Park, City of North Las Vegas, Nevada Craig Ranch Regional Park, City of North Las Vegas, Nevada Project Value: US$26m Client: North Las Vegas City Council Funded by Southern Nevada Public Lands Management Act Cardno is providing landscape architecture, civil engineering and land surveying for Phase 2 which is approximately 35 acres of the 132 acre park master plan. 10 Indian Street Bridge, Martin County, Florida
Infrastructure Projects Public Sector, Australia Southport Broadwater Parkland Redevelopment Stage 2 Project Value: $10m Client: Queensland Government Funded jointly by Queensland Government and Gold Coast City Council Cardno is providing engineering services in civil, structural, environmental and hydraulics for the redevelopment of the South port foreshore to provide a world-class recreation area. Southport Broadwater Parkland Redevelopment Stage 2 Building Education Revolution (BER), New South Wales Building Education Revolution (BER), New South Wales Project Value: $3.2b Client: New South Wales Government Funded by the Australian Government s Nation Building Economic Stimulus Plan. Cardno is providing structural and civil designs for over 100 state primary schools and 30 Catholic primary schools. 11
Infrastructure Projects Public Sector, Australia Ipswich Motorway Upgrade, Dinmore to Goodna Project Value: $2b Client: Queensland Government Funded by the Australian Government Cardno is providing construction materials testing services for the major upgrade of the Centenary Highway Interchange to a free flowing, multi-level interchange and widening of the first 3 km section of the Ipswich Motorway from four to six lanes. Ipswich Motorway Upgrade Dinmore to Goodna Image courtesy of Queensland Government Social Housing, NSW/ACT Project Value: $50m Client: New South Wales Government Funded by the Australian Government s Nation Building Economic Stimulus Plan. Cardno is providing structural and civil designs for the 2 7 story developments located at Port Macquarie, Western Sydney, Tweeds Head and Ballina. Social Housing, NSW/ACT 12
Infrastructure Projects Private Sector Apex Minerals Wiluna Gold Project, Western Australia Project Value: $1b Client: Apex Minerals Cardno provided survey support to open cut and underground mining operations and other infrastructure development around the mine. Apex Minerals- Wiluna Gold Project, WA Image Courtesy of Apex Minerals Phu My Bridge, Ho Chi Minh City, Vietnam Project Value: US$105m Client: Phu My Bridge Corporation (PMC) Cardno provided the construction engineering for the main cable-stayed spans - longitudinal stage analysis for the deck, tower stage analysis and precambers 13 Phu My Bridge, Ho Chi Minh City, Vietnam
Infrastructure Projects Private Sector JWM Minto Maltings Plant Minto, N.S.W. Project Value: $90m (approx) Client: Joe White Maltings (a division of the Australian Barley Board) Cardno is providing town planning, environmental, traffic, civil, structural and project management services. JWM Minto Maltings Plant - Minto, NSW Mega Uranium Indigenous Engagement Framework Lake Maitland Study Value: $150,000 Client: Mega Uranium Cardno developed an Indigenous Engagement Framework based on commercial arrangements between Mega, the government and the local Indigenous community. Mega Uranium Indigenous Engagement Framework Lake Maitland (near Wiluna, WA) 14
Infrastructure Projects Private Sector Subsurface Utility Engineering (SUE), JFK Airport Client: New York/New Jersey Port Authority Cardno is providing Subsurface Utility Engineering (SUE) services to the NY/New Jersey Port Authority at JFK Int. Airport and Tampa Airport. SUE is able to precisely identify the location of existing utilities prior to commencing design or construction of major infrastructure and development projects. Gateway Bridge Duplication, Brisbane Image Courtesy of Queensland Motorways Limited and Leighton Abigroup JV Gateway Bridge Duplication, Brisbane Project Value: $256m Client: Maunsell/SMEC and Leighton Abigroup JV Funded by the Queensland State Government Cardno, in association with Maunsell, are carrying out the detail design of the main bridge. 15 Subsurface Utility Engineering Services Tampa Airport
Sources of Revenue 21% 10% 35% PUBLIC INFRASTRUCTURE CLIENTS PRIVATE INFRASTRUCTURE CLIENTS 32% 54% AUS/NZ ASIA PACIFIC NTH AMERICA INTERNATIONAL DEVELOPMENT ASSISTANCE UK/AFRICA 44% 4% Client Type Geographic 16
Sources of Revenue 25% 7% 4% GOVERMENT OWNED CORPORATION 42% AUSTRALIA/NZ USA UK, EUROPE, AFRICA 46% 43% GOVERNMENT FEDERAL GOVERNMENT LOCAL GOVERNMENT STATE 33% International Development Assistance Public Sector Infrastructure 17
Sources of Revenue 6% 3% 7% 6% DEVELOPER 10% CONTRACTOR/SERVICE PROVIDER 37% MINOR CLIENTS (less than $20K p/a) OTHER CLIENTS INSTITUTIONAL 41% ENERGY/RESOURCES Private Sector Infrastructure 18
Strategy New 2010-2015 Strategic Plan under development. Continuing focus on growth. 2009 pause has allowed catch up on integration. Future growth will be both by organic and M&A strategies. Organic growth through cross selling, focussing on major projects and increasing market share. M&A strategy is to re-engage using Cardno s tried and tested principles. 19
Merger & Acquisition Strategy Cardno s Merger and Acquisition Strategy works 20 Growth and Diversification Objective Complementary businesses with new geographical and/or skills coverage and good cultural fit Minimal overlap with existing businesses Focus on retention of staff Effective acquisition process with robust due diligence Focus on adding value through cross selling or organic growth Continuous Integration of New Partners Brand Integration Accounting and job cost integration Focus on knowledge sharing and cross sell Successful track record
21 Merger/Acquisition History Record of successful mergers and acquisitions
Merger & Acquisition Strategy 2009 Year Highlights Cardno TBE s access to strong U.S. Federal and State Government infrastructure markets has been very positive for Cardno Cardno Ecology Lab and Cardno Spectrum Survey have given us access to specialty markets and cross sell opportunities Future Merger & Acquisition Outlook North American infrastructure and environment markets are important to Cardno Australasian discipline capability remains a focus Resources and mechanical/electrical exposure still sought Development Assistance opportunities are also sought, especially physical infrastructure 22
People Cardno now employees around 3,000 staff across 97 offices - more than 50% of our staff reside or are deployed outside Australia. Employee share ownership through ESP & PEP most employees are shareholders. Staff engagement surveys conducted regularly, high level of staff engagement. Increased opportunities for staff throughout Australia and internationally via Global Mobility Program. Focus on retention of new merger partners staff. Clients Increasing focus on client feedback driving better service. Re-alignment of some offices to increase public sector client base. Client selection focussing on companies with sound financials and good payment history. Increased attention to overall client management and service delivery. 23
Cardno Group Management Structure 24
Shareholder Value Share price growth $1.00 listing price in May 2004 to $5.05 @ 21 October 2009 TSR since listing in 2004 is 520 % Dividend payable 14.0 cents final dividend paid 13 October 2009, total of 28 cents for the year, up 3.7% from last year Dividend growth since listing is 267% (up from 10.5 cents in 2004) Capital Management Strong Balance Sheet Net debt is low at $19.2m Net Debt to Equity is 7.2% Strong Operating Cash Flow $38.59m Cash at 30 June 2009 $65.8m 25
Share Price Graph Source: IRESS July 08 to October 09 26
Future Outlook Public Infrastructure spending remains strong globally International Development Assistance expenditure and project opportunities are growing globally Private sector expenditure appears to have bottomed and there are some signs of growth in most regions Opportunities to grow both by acquisition and organically Merger & Acquisition opportunities in Australia, N.Z. and U.S. and pricing expectations becoming reasonable Cardno well placed with cash and low gearing 27
Conclusion A leading Australian and International infrastructure services company operating over 60 years Strong track record of delivering growth and shareholder value Diversification both geographically and by disciplines has allowed Cardno to weather downturn and deliver increased profits and Earnings Per Share Well positioned to reap benefits of strengthening world economy Global infrastructure markets and International Development Assistance opportunities are strong Strong balance sheet and cash will enable Cardno to continue to pursue acquisition strategy globally 28 28
29 Cardno s vision is to be a world leader in the provision of professional services to improve the physical and social environment.
APPENDICES 30 30
Full Year 2008/09 Results - Comparison Consolidated for the 30 June Years As at 30 Jun 09 A$ 000 As at 30 Jun 08 A$ 000 % Growth Total Revenue 515,842 399,035 29.3% Less Recoverables & Other 105,169 86,571 - Fee Revenue 410,673 312,464 31.4% EBITDA 57,732 50,549 14.2% EBIT 46,501 42,112 10.4% Net profit before tax 42,092 38,686 8.8% Net profit after tax 34,153 27,452 24.4% Earnings per Share basic 43.82 cents 42.00 cents 4.3% Earnings per Share diluted 43.82 cents 41.34 cents 6.0% Dividend per Share (cents) 28.00 cents 27.00 cents 3.7% 31
June 2009 Balance Sheet Total Current Assets Total Non-Current Assets TOTAL ASSETS Total Current Liabilities Total Non-Current Liabilities TOTAL LIABILITIES NET ASSETS FINANCIAL RATIOS Current Ratio 1 Gearing Ratio 2 Debt to Equity Ratio 3 June 2009 A$ 000 219,093 263,513 482,606 123,109 93,576 216,685 265,921 1.78 0.26 32.0% June 2008 A$ 000 187,387 196,457 383,844 105,501 60,277 165,778 218,066 1.78 0.22 26.6% 32 Note 1: Note 2: Note 3: The Current Ratio is Current Assets Current Liabilities The Gearing Ratio is Long Term Liabilities (Shareholders Equity + Long Term Liabilities) The Debt to Equity Ratio is Total Debt ($85m) Shareholders Equity
Statement of Cash Flows Net Cash Provided By/(Used In) Operating Activities Net Cash Provided By/(Used In) Investing Activities Net Cash Provided By/(Used In) Financing Activities Net Increase/(Decrease) In Cash And Cash Equivalents Held (excluding forex movement) As at 30 Jun 09 A$ 000 As at 30 Jun 08 A$ 000 38,859 37,513 (50,771) (73,652) 23,563 71,911 11,381 35,772 Cash And Cash Equivalents At 30 June 65,808 52,624 33
Geographical Segments 2009 Australia & NZ A$ 000 North America A$ 000 Asia Pacific A$ 000 UK & Africa A$ 000 Revenue Fee Revenue Recoverables & Other 261,891 16,699 103,917 59,108 12,055 10,179 32,810 17,711 Total Revenue 278,590 163,025 22,234 50,521 EBIT 31,964 6,172 2,446 4,675 EBIT Margins (% Fee Revenue) 12.2% 5.9% 20.3% 14.3% 34