2017 HALF YEAR RESULTS PRESENTATION February 2017 PRESENTERS: Mr Michael Alscher, Chairman Mr Peter Barker, CFO
Disclaimer This presentation contains certain statements and forecasts provided by or on behalf of Cardno Limited. 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 forecasts will be realised. Cardno makes no representations as to the accuracy or completeness of any such statement or forecasts or that any forecasts will be achieved and there can be no assurance that any forecasts 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 its 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. COVER IMAGE PROJECT: Cardno served as the sole structural engineer for the ExxonMobil Campus, which includes 6 million square feet of buildings and parking garages connected by underground tunnels. 1 2017 Half Year Results
2017 HALF YEAR RESULTS PRESENTATION > Performance overview > Detailed financial review > Commentary and outlook
2017 Half Year Performance Overview Over the last 12 months significant progress has been made in rebasing Cardno and dealing with legacy issues. The focus is now on shifting Cardno to a growth footing as the company exits FY17. > A number of off strategy assets have been divested or closed in the past six months > Australian Head Office closed and merged into operating divisions > Australian / NZ / PNG organisational structure merged into two regions (North and South) to gain scale and revenue efficiencies > Group Head Office restructured to minimise duplication and largely either merged into operating divisions or eliminated > Incentive schemes and reporting have been aligned to new structure > Focus turning to growth: New Business Development teams created to focus on larger projects with longer lead times (Australia complete; US under review) Bolt-on acquisition completed in WA to complement existing business with second bolt-on acquisition currently under consideration (North America) > Capital Structure now amongst the best in industry with close to zero net debt on balance sheet Balance sheet has considerable scope to grow > Balance sheet clean up now at end with “no more surprises” expected. > In light of the company’s improved capital structure and progress on realigning the business, consistent with the Board’s focus on capital growth, the company intends to begin an on-market buyback with size of buyback based on liquidity and valuation. 3 2017 Half Year Results
2017 Half Year Performance Overview Consistent with our full year presentation to staff and shareholders, Cardno’s focus has been on rebasing the business. > Divisional restructure now complete > No further divestments Set the strategy > Divested a software business, a construction focused business, and a Coal focused mining consulting business planned and values for > Bolt on acquisitions to build out existing operations e.g. WA acquisition has increased Cardno’s focus on core > Focus now on LFL the company engineering consulting services in the WA market and is highly complementary to existing WA operations performance > Clear parameters established for acquisitions > Group Head Office slimmed down to true group functions > Australian structure review > Australian Head Office structure closed and implementation complete Ensure the right organisation structure is in place to > Australian divisional structure merged into two divisions of scale > US structure change underway and expected to execute on that strategy > Clear delegations of authority to ensure regional operational staff have considerable decision making ability, be complete by FY17 end accountability and empowerment > New leadership team in place in both Australia and the Americas > Target to have new CEO Ensure the right executives > Implemented consistent employee contracts for senior managers through organisation with no more special deals in place by Q4 CY17 are in place to achieve with search expected to > Single CEO for global group in place the goals of the company start in Q2 CY17 > Recruitment of permanent CEO to occur once restructure completed and organisation settled > Rolled out new business intelligence processes > Stage 1 completed with > Upgraded accounting software in Australia Put in place appropriate Stage 2 underway with full IT review to assess needs and financial reporting and > Implementing business development tools and CRM tracking (ongoing) LT development path to measurement tools > Established consistent definitions of revenues, costs and FTEs throughout the organisation to allow achieve best practice appropriate benchmarking > Rolled out LTI and STI targets which are linked to factors controllable by the executive and their teams Review performance and hold > In final stages of rollout > Rebuilding staff engagement across all management management to account and staff in all markets reward for performance > No more pulling of bonuses or changing goal posts once bonus earned by staff 4 2017 Half Year Results
2017 HALF YEAR RESULTS PRESENTATION > Performance overview > Detailed financial review > Commentary and outlook
2017 Half Year Performance Highlights Cardno is on track to meet guidance for FY17 2017 H1 Results A$ million with $23.2m underlying EBITDA in H1 FY17. Reported Percent change year on year > Fee Revenue has returned to growth, broadly in line with prior year and 1.2% growth over H2 FY16 $575.7m Gross Revenue 0.6% > EBITDA from continuing operations was $23.2m, which $391.4m Fee Revenue 1.3% was down 34.4% from $35.4m EBITDA in H1 FY16, but up 182.9% on H2 FY16 of $8.2m $23.2m EBITDA 34.4% > Net Profit after Tax of $6.5m, up from a loss of ($30.2)m $10.2m (1) in H1 FY16. This result excludes $3.7m of abnormal Net Operating Profit after Tax 9.8% items (see following slide) $3.7m Abnormal items 91.1% > Backlog down by 10.4% due to clean up of reporting of backlog. Engineering and environmental businesses $6.5m Net Profit after Tax 121.7% are growing. Backlog now reported consistently across the group $762.7m Backlog 10.4% > Cash Flow from Operations down to ($9.9)m which ($9.9)m reflects timing of debtor receipts and creditor payments Net Cash Flow from Operations 137.9% __________________________ (1) Net Operating Profit after Tax, is a non-IFRS term which reflects the operating position of the business prior to one off and impairment adjustments. A reconciliation of NPAT to NOPAT has been prepared and is shown on slide 7. 6 2017 Half Year Results
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