#1CARDNO Morgans Queensland Conference 11 October 2018 Presenter: Peter Barker, CFO Cardno® Jefferson KILT PUR & LATCIRE#2Disclaimer Cardno® 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 1 Cardno: Morgans Queensland Conference 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 IMAGES Top Left: Cardno developed a detailed design, complete with a construction specification package for the Koombana Bay Foreshore in Western Australia. This award winning project significantly enhances the waterfront area. Top Right: Cardno's expertise in market systems and economic and agriculture development is cultivating a positive future for small farmers and trade in Cambodia for the Cambodia Agricultural Value Chain Program. Photo credit: Robert Anscombe. Bottom Left: Cardno was engaged by the ACT Government's Land Development Agency to provide engineering design consultancy and construction supervision services for the land subdivision of a brownfield site in the Canberra suburb of Campbell to create a mixed-use, urban development. Bottom Right: Cardno field crew performing a Subsurface Utility Engineering (SUE) investigation as part of the Phoenix Light Rail Transit project in Arizona, United States.#301 About Cardno 02 Performance overview 03 Detailed financial review 04 Outlook Cardno® Cardno: Morgans Queensland Conference 2#4about Cardno Cardno is a global provider of integrated professional services which enrich the physical and social environment for the communities in which we live and work. Our team of multidisciplinary specialists around the world has more than 70 years' experience in designing, developing and delivering sustainable projects and community advancement programs. Cardno is listed on the Australian Securities Exchange (ASX: CDD). 6000+ People 130+ Offices 100+ Countries 3 Cardno: Morgans Queensland Conference#5vision and values We deliver value to our clients and shareholders through our key asset, our people. Our Vision: To be leaders in improving the physical and social environment for people around the world. Our Purpose: As a global organisation of talented people, we are united by our purpose: Making a difference. Our Values: To attract and retain the very best talent, Cardno has committed to a set of core values that guides the results we achieve and shapes how we deliver them. Everyone at Cardno shares our four core values and their underpinning beliefs. 4 Cardno: Morgans Queensland Conference#6vision and values cont... SAFETY Safety comes first We believe that creating a safe environment for our people, clients and the communities we impact should always come first. PEOPLE We care about our people & communities We believe that what is good for our people, communities and the world we live in can also be good for profit. We do INTEGRITY right thing We believe that knowing and doing the right thing will lead to satisfied employees, clients, investors and better financial performance. EXCELLENCE We deliver high quality services We believe that the delivery of high quality services creates value for clients, communities and investors. 5 Cardno: Morgans Queensland Conference#7Making a difference. Corporate Responsibility - Partnering for Good program Through our Partnering for Good (PFG) program, Cardno is making a difference in communities outside of our regular client work, by building on our work in the global giving space. Our first project was the renovation of the Compassionate Neighbours Children's Home - a small orphanage built in 1978 situated on the outskirts of Kenya. The project's scope included: > refurbishment of the entire home, including a full renovation: new roof, new toilets and bathrooms, new plumbing system, replacement of all electrical wiring and lighting, painting of walls, floors, new doors and locks, and replacement of broken windows. > fixing the home's water supply to provide access to running water for the first time in years. > paying for the entire year's school fees for all 24 children who reside at the orphanage. 6 Cardno: Morgans Queensland Conference OURS CHILDREN'S CHAUT#801 About Cardno 02 Performance overview 03 Detailed financial review 04 Outlook Cardno® Cardno: Morgans Queensland Conference 7#92018 Performance in Review Cardno grew EBITDA by 28% in FY18 to $56.2m which was in line with market guidance of $55m to $60m. Cardno is entering a phase of stability with incremental growth driven by business optimisation and accretive acquisition - simple and boring. > Strong EBITDA growth of 28% to $56.2m over pcp. > > > > > > > Conversion of EBITDA into operating cash flow pre tax and interest expense of 95% ($53.4m). Balance sheet remains strong with Net Debt/ EBITDA of 0.3x. Cardno® The Americas Engineering and Environmental division performance continued to improve with EBITDA margin expanding from 1.6% to 4.8%. While this remains below industry averages the division is building positive momentum and we are optimistic this trend will continue. EBITDA margin in Asia Pacific Engineering declined from 10.9% to 7.5% driven by the roll off of a number of major projects as well as project provisioning in APAC North. APAC division (North and South) restructured in H2 to increase collaboration and revenue opportunities across regions. Construction Sciences performed strongly due to elevated infrastructure building works in Australia. ID sustained strong performance through the year with material growth in backlog. > PPI returned to profitability in Q4 and we expect this trend to continue. > Wind down of LATAM projects and operations consistent with management expectations. > A A > US restructured under one US President, Susan Reisbord who is double hatting as President of Science and Environment division in the US. Backlog grew by 9.7%. 8 Cardno: Morgans Queensland Conference#102018 Performance in Review: 2019 Forward Focus Cardno grew EBITDA by 28% in FY18 to $56.2m which was in line with market guidance of $55m to $60m. Cardno is entering a phase of stability with incremental growth driven by business optimisation and accretive acquisition - simple and boring. > > Cardno® Organisational restructure in Australia/ US largely complete and the Board does not expect further restructure costs going forward. Key focus of business now: Returning all divisions to organic growth. Expanding EBITDA margins across all divisions. Considerable BD investment made in FY19 which will see some parts of the business go backwards given the lag between cost introduction and revenue/ profit benefit. Explore on strategy bolt on acquisitions to gain access to geographies, skill sets or service lines. Disciplined process established for due diligence and integration. ☐ Considerable IT/ Digital investment to elevate the business to better service clients and increase productivity. Executing on greater client collaboration across offices. 9 Cardno: Morgans Queensland Conference#112018 Performance Overview One of the most pleasing outcomes exiting FY18 is a very structured business with emerging momentum. Each division reached different milestones over the year. Key milestones in FY18 at a divisional level include: Asia Pacific Americas > Restructure and alignment of operations within the two divisions to capitalise on collaboration and client opportunities > Change out of leadership and certain Senior Management in APAC North to create stronger growth environment > Completed a small bolt-on utility locating business in Sydney > Significantly improved results and EBITDA margins exiting FY18 > Overhaul of the US benefits plan resulting in considerable ongoing cost savings > Restructured reporting lines to create President Americas role to focus attention on several growth initiatives > Implementation of consolidated project management and tracking tool across the division International Development > Performance continues to improve with new contract wins and cost management > Invested heavily to see step change in business into FY20/21 Construction > Trialling new technologies to increase safety and efficiency Sciences PPI > Completed two small bolt-on acquisitions, focused on materials testing, one during the year and one early July 2018 > Evolution into a Quality Assurance business yielding positive results > Clean up of the division finalised leaving core business solid to focus on growth > Business cashflow positive Q4 FY18 > Order book and general activity increasing as we exit FY18 > Continued scaling back of operations with the roll off of projects in Caminosca LATAM > Expansion of the Entrix environmental sciences business into Peru strengthening margins and results 10 Cardno: Morgans Queensland Conference Cardno®#122018 Rebuilding Momentum Cardno® Based on our previous presentation at the 2017 AGM we have made progress rebuilding financial performance during the year with continued focus on initiatives which drive stability, retention, governance and organic growth. No silver bullet initiatives, just initiatives to optimise performance and engagement. Key initiatives at a group level are: Finance > Further work on development of Calumo (Business Intelligence Software) and other key indicators WIP Calumo development work is ongoing > Continuing work on transparency, KPI's and cost allocations Human Resources > New talent review system and succession planning > Ongoing work on diversity and follow up on engagement survey Health & Safety > New global online H&S reporting system Marketing Internal Audit Training > New web site, intranet and social media programs > New go to market strategy – values, principals/senior principals, branding > Establish internal audit program across the business > Cyber security review and implementation of recommendations > New online group induction training > Rollout of consistent system and project management training globally 11 Cardno: Morgans Queensland Conference Talent and succession planning in place. New benefits program launched. New online global incident management system launched. Marketing strategy rolled out with new web site to be launched in Q1 2019. Audit program and framework established and implemented. Security review conducted. Training completed with ongoing assessment and updates to be provided.#13New CEO & MD, lan Ball We welcome the appointment of lan Ball who we believe brings considerable skills to the role. lan is spending his first eight weeks in a global onboarding program, learning the business after which he will be responsible for the business day to day... > EY PREVIOUS ROLES - Advisory Senior Client and Senior Strategy Partner FIT FOR ROLE > Run business of similar scale or larger Deputy CEO Oceania ■ COO Advising Asia Pacific Managing Partner Advisory Federal Government Practice > Silver Lake ■ Value Creation Leader > IBM Managing Partner Australia and NZ, Global Business Services ■ Asia Pacific Leader (Financial Services), Global Business Services Practice Leader - USA (Financial Services), Global Business Services > Strategy Consulting ■ Senior Partner (multiple roles) V Run a portfolio, multiple stream business Developed and executed growth strategies Led cultural change Optimisation of operational systems and processes > Business development track record > M&A and integration experience > Services industry experience Engineer or Scientist 12 Cardno: Morgans Queensland Conference Cardno®#1401 About Cardno 02 Performance overview 03 Detailed financial review 04 Outlook Cardno® Cardno: Morgans Queensland Conference 13#152018 Full-Year Financial Performance Highlights Full year underlying EBITDA of $56.2m in line with market guidance of $55-$60m. > Fee revenue was down 3% on prior year. > > > > > EBITDA from continuing operations of $56.2m up 28% from $44.0m EBITDA in FY17. Net Operating Profit before Tax of $38.2m. Net Loss after Tax of $14.0m includes $32.8m charge to reduce tax assets associated with the change in US federal corporate income tax rate from 35% to 21%. Net operating profit after cash tax paid of $33.4m due to tax benefit from prior year losses. Backlog up by 9.7% to $1,433m on a like for like basis. Strong conversion of EBITDA into Net Cash Flow from Operations of 95% pre tax and interest and 81% net of tax and interest, reflecting ongoing working capital management and timing of debtor receipts and creditor payments. 2018 Results A$ million Gross Revenue Fee Revenue EBITDA Cardno® Reported Percent change year on year $1,117.0 -5.5% $763.5 -3.1% $56.2 27.7% Net Operating Profit after Tax (1) $20.0 0.4% Net Operating Profit after Cash Tax Paid $33.4 66.3% Abnormal items (2) $34.0 198.2% $35.1 182.0% $14.0 -263.0% $1,432.6 $45.7 9.7% 1302.6% Net Profit before Tax Net Loss after Tax Backlog (3) Net Cash Flow from Operations 14 Cardno: Morgans Queensland Conference (1) Net Operating Profit after Tax, is a non-IFRS term which reflects the operating position of the business prior to one off and impairment adjustments. A reconciliation of NPAT to NOPAT has been prepared and is shown on slide 11. (2) See slide 10. Abnormal items are driven predominately by change in US tax rate. (3) Backlog reported on a total contract basis, being the total value of the signed contract less the value of work performed to date.#16A$ millions 2018 Full-Year Financial Performance Highlights 25 20 20 15 10 20.0 5 сл 0 -5 -10 -15 -1.7 -1.4 -32.8 1.9 14.0 Cardno® The Net Loss after Tax $14.0m includes abnormal charges related to business review costs, accelerated depreciation and tax adjustments. > > -20 NOPAT Business review costs Accelerated Change in dep'n on US federal software Tax effect of underlying adjustments NPAT assets corporate income tax rate > Legacy business review costs of $1.7m: $8.0m provision associated with the wind down of LATAM (Caminosca) business. $0.7m expense relating to acquisitions during FY18. ($1.9m) release of litigation provision taken up in FY17 as a result of favorable settlement terms. ($2.8m) release of provision taken in FY17 associated with the closure of Nigeria business due to collection of debtors previously provided for as unlikely to be collected. ($1.2m) release of onerous lease costs associated with office closures in FY17 relating to sub leasing and other initiatives. ($1.1m) release of provision taken in FY17 for overhead rate audit due to favourable negotiations. Accelerated Depreciation on Software Assets of $1.4m: Acceleration of depreciation of externally purchased software continued from FY17. Change in US federal corporate income tax rate of $32.8m: Reduction in the US tax rate from 35% to 21%. 15 Cardno: Morgans Queensland Conference > Tax effect of underlying adjustments of $1.9m.#172018 Full-Year Financial Performance Highlights Cardno® 2017 2018 FY Change (A$ Millions) Total revenue from continuing operations Fee revenue from continuing operations EBITDA from continuing operations EBITDA margin 1H17 2H17 FY 1H18 2H18 FY18 % 575.7 606.3 1,182.0 543.4 573.6 1,117.0 (5.5%) 391.4 396.8 788.2 346.3 417.2 763.5 (3.1%) 23.2 20.8 44.0 30.2 26.0 56.2 27.7% 5.9% 5.3% 5.6% 8.7% 6.2% 7.4% Operating profit before tax from continuing operations 9.8 11.7 21.5 21.7 16.5 38.2 77.7% Net operating profit after tax (1) from continuing operations (NOPAT) 10.2 9.7 19.9 13.9 6.1 20.0 0.4% Net operating profit after cash tax paid from continuing operations 6.2 13.9 20.1 21.1 12.3 33.4 66.3% Net profit/(loss) after tax from continuing operations Discontinued operations Net profit/(loss) after tax Net cash flow from operations Net operating cash flow/NOPAT (21.1) 1.8 (19.3) (21.9) 7.9 (14.0) 27.5% 27.6 0.3 27.9 0.0 0.0 0.0 6.5 2.1 8.6 (21.9) 7.9 (14.0) 100.0% (263.0%) (9.9) 6.1 (3.8) (97.1)% 63.1% (19.0)% 31.6 227.3% 14.1 232.0% 45.7 228.8% 1302.6% Basic earnings per share (cents) NOPAT basic earnings per share (cents) 1.37 2.13 0.42 2.03 1.79 4.16 (4.62) 1.65 (2.97) 2.93 1.30 4.23 (1) Net Operating Profit after Tax, is a non-IFRS term which reflects the operating position of the business prior to impairment adjustments. A reconciliation of NPAT to NOPAT has been prepared and is shown above. 16 Cardno: Morgans Queensland Conference#182018 Full-Year Segments Americas Engineering and Environmental Region structured as three divisions: Science & Environment, Infrastructure, Government Environmental & Asset Management Services > FY18 Revenue $378.3m, EBITDA $18.3m > 102 locations, 1,570 staff Portfolio Companies: Cardno PPI, and Latin America > FY18 Revenue $47.9m, EBITDA ($0.4m) > 3 locations, 272 staff Cardno® Cardno International Development Global operations, three major geographies: Americas, Europe (UK and continental Europe), Asia-Pacific > FY18 Revenue $313.5m, EBITDA $6.4m > 9 locations (Cardno offices), 1,902 staff * Asia Pacific Engineering and Environmental > Managed in two geographic regions: Northern and Southern. > FY18 Revenue $266.0m, EBITDA $20.0m > 36 locations, 1,335 staff NB: Staff numbers include permanent, part time and long term contractors. *Excludes contractors. Construction Sciences > FY18 Revenue $111.3m, EBITDA $11.4m > 18 locations, 717 staff 17 Cardno: Morgans Queensland Conference#192018 Full-Year Segments: Asia Pacific ASIA PACIFIC EBITDA AND % MARGIN A$ million 18 16 62 14% 12% Cardno® Asia Pacific Engineering EBITDA margins declined from 10.9% to 7.5% driven by the continued wind down of a number of major projects in early FY18 as well as "project clean up" in APAC North. Division restructured in H2 with solid platform for growth going forward. > Gross Revenue in FY18 of $266.0m, 3.6% lower than FY17, reflecting the previously flagged completion of three major projects. 14 10% > 12 > 8% 10 8 6 4 2 EBITDA margin was 7.5%, versus 10.9% margin achieved in FY17. No major project wins in Asia Pacific with a number of major projects tailing off. Our Business Development group continues to position Cardno on a number of major project opportunities in QLD, NSW, VIC and Asia. > Business restructured in June 2018 to align operations between the northern and southern operations and support increased collaboration. KEY WINS DURING THE YEAR INCLUDE: 6% 4% 2% > 0% H1-2017 H2-2017 H1-2018 H2-2018 > East Bay Water Supply Scheme, Philippines for Manila Water. > Kings Highway Nelligen, bridge replacement for NSW Roads & Maritime Services. Dahua Group Australia, land development project. > City of Melbourne, Southbank Boulevard and Dodds Street redevelopment. Ebitda % 18 Cardno: Morgans Queensland Conference#20Asia Pacific: Sample Projects GREATER SPRINGFIELD Since 2000, the Cardno team has partnered with Springfield City Group, providing the expertise and guidance to deliver infrastructure and planning for Australia's first master- planned municipality since Canberra. Cardno has delivered a wide range of consultancy services across a number of market sectors including engineering, urban development, traffic and transport, buildings, infrastructure, project and asset management, geotechnical and materials testing as well as water and wastewater services. Greater Springfield has become the fastest growing corridor within South East Queensland and is currently home to over 32,000 residents, with the population set to grow to 140,000 by 2030. CITY OF MELBOURNE, SOUTHBANK BOULEVARD AND DODDS STREET REDEVELOPMENT Cardno has been providing multi disciplinary engineering services for the Southbank Boulevard Transformation project over a four-year period for the City of Melbourne. As part of the civil design, Cardno will deliver the new road and streetscape, Southside footpath pedestrian spine and new series of public spaces, which will include the participation of other disciplines to provide geotechnical investigation and pavement design, track and overhead tram design, hydrology assessment, flood modelling and drainage design. In addition, the traffic team prepared detailed designs for six traffic signal controlled intersections. 19 Cardno: Morgans Queensland Conference Cardno®#21Asia Pacific: Sample Projects EAST BAY WATER SUPPLY SCHEME Manila Water has engaged Cardno Philippines and Arcadis in a Joint Venture partnership as their engineering, procurement and construction management team to develop a major potable water resource for Manila. Cardno's scope includes project management of the design phase of the WTP and the detail design of the transmission network. Cardno's specific design scope includes the pipeline route identification, pipeline materials selection, detail design of pumping stations and associate infrastructure as well as concept design of tunnels. PACIFIC HIGHWAY UPGRADE - WOLLGOOLGA TO BALLINA - JV WITH ARUP The Arup-Cardno JV were responsible for a 35 km, containing 28 bridges and two interchanges, of the 155 km two-lane highway which was transformed into a dual carriageway. The project is currently Australia's largest regional infrastructure project. Cardno's multidisciplinary specialists undertook site investigations, route option, environmental assessments, and established and maintained an Environmental Compliance Register and developed a fully-integrated 3D design model, using Building Information Modelling (BIM) technologies. 20 Cardno: Morgans Queensland Conference Cardno®#222018 Full-Year Segments: Americas AMERICAS EBITDA AND % MARGIN A$ million 18 16 14 12 20 10 8 642 14% 12% 10% 8% 6% 4% 2% 0% Cardno® The Americas Engineering and Environmental division performance continued to improve with EBITDA margin expanding from 1.6% to 4.8%. While this remains below industry averages the division is building positive momentum. > Gross Revenue in FY18 of $378.3m, this was 7.9% down on FY17. > EBITDA margin was 4.8%, which while not where we would like it to be, represents a substantial improvement on the 1.6% achieved in FY17. > Improvement in operating margin driven by a series of initiatives that reduced non client facing management and labour, fringe (insurance, health), overhead and occupancy costs. > Focus is on growing revenue and margin. KEY WINS DURING THE YEAR INCLUDE: > U.S. Marine Corps, asset management consulting services (BUILDER) at bases in Hawaii, Japan, Okinawa and Korea. > Southern California Edison - on-call support for electrical transmission and distribution service lines. > Phoenix Arizona Salt River Project / Subsurface Utility Engineering on call services. H1-2017 H2-2017 H1-2018 H2-2018 Ebitda % 21 Cardno: Morgans Queensland Conference > Florida Department of Transport I-75 and SR 50 Reconstruction. > Navy and Marine Corps IDIQ contract for NEPA. > US Air Force Reserve Command – support civil engineering and environmental planning programs worldwide.#23Americas: Sample Projects US19 to I-275 GATEWAY EXPRESSWAY PROJECT Cardno provides FDOT with Construction Engineering & Inspection services for the $350M Gateway Expressway project. The Cardno team provide design review, procurement and RFP assistance during the selection of the Design-Build team. Throughout the five year project Cardno will provide construction admin; monitoring and inspection of the on-site construction operations; inspection & testing of materials and quality control. Cardno also coordinates with all agencies and stakeholders on the project, including Pinellas County, St. Pete/Clearwater Airport, and the Cities of Largo, Pinellas Park and St Petersburg. 19 F-35 OPERATIONAL BEDDOWN - PACIFIC - ENVIRONMENTAL IMPACT STATEMENT PROJECT The U.S. Air Force contracted Cardno to undertake an Environmental Impact Statement (SEIS) to address changes made since the completion of the F-35A Operational Beddown - Pacific EIS (original EIS) and signature of the Record of Decision (ROD) in April 2016, announcing the U.S. Air Force decision to beddown two squadrons of F-35A aircraft at Eielson Air Force Base (AFB), Alaska. 22 Cardno: Morgans Queensland Conference LOCKHEED MARTIN XI- F-35 LIGHTNING 275 Cardno® F-35#24Americas: Sample Projects SALT RIVER PROJECT UTILITY LOCATING Cardno's long-term partnership with the Salt River Project Authority is contributing to the safe and stable delivery of power and water to metropolitan Phoenix. Cardno was first commissioned in 2000 to provide specialised utility locating and designating - preparing 25-30 utility test holes and 7,000 linear feet of designating daily. Working as the Salt River Project Authority's valued partner through their modernization process, Cardno is assisting with the removal of overhead power lines and relocating them underground as well as replacing old electric cables with new cable. RETROSPECTIVE EXPOSURE ASSESSMENT OF PERFLUOROCTANOIC ACID EMISSIONS Cardno ChemRisk performed a historical exposure reconstruction of perfluoroctanoic acid (PFOA) for residents near a polymer manufacturing facility in West Virginia due to air emissions from 1951 to 2003 to support expert witness testimony as part of a medical monitoring class action. 23 Cardno: Morgans Queensland Conference Cardno® Cardne 800.861.8314#252018 Full-Year Segments: Construction Sciences CONSTRUCTION SCIENCES EBITDA AND % MARGIN A$ million 14% Cardno® Construction Sciences benefited from the ongoing delivery of existing contracts and new contract wins against the backdrop of a generally improving market, plus the inclusion of a small bolt-on acquisition in the FY18 year. > Gross Revenue in FY18 of $111.3m, up 26.2% on FY17 of $88.2m. 12% > 10% 18 16 14 12 10 8% 8 642 6% 4% > EBITDA margin was 10.3%, which is higher than the 7.0% margin achieved in FY17. The business closed out the year on slightly lower margins from H1 due to weather conditions and project mix. > Completed two small bolt-on acquisitions, focused on materials testing, one during the year and one early July 2018. KEY WINS DURING THE YEAR INCLUDE: > 2% WA Gold Road, Kalgoorlie > Mackay ring road H1-2017 H2-2017 H1-2018 H2-2018 Ebitda % 24 Cardno: Morgans Queensland Conference 0% > BAC parallel runway ЛЛ > > M1/M3 Gateway merge NorthConnex civil fitout#26Construction Sciences: Sample Projects NORTHCONNEX TUNNEL FITOUT The $3bn project will connect the M1 Pacific Motorway to the M2 Hills Motorway. It involves about 21 kilometres of tunnelling. The two main nine kilometre tunnels will carry motorists between the M1 Pacific Motorway and the Hills M2 Motorway and additional tunnels are being excavated for on and off ramps. The deepest part of the tunnel will be around 90 metres, passing under the Sydney Metro Northwest tunnel at Beecroft. Construction Sciences has been involved since project inception. This contract secures an increase in scope. NEW PARALLEL RUNWAY (NPR) The $1.5bn NPR Project is on track to open in 2020. Once complete, Brisbane will have the best runway system in Australia effectively doubling our current capacity. This new runway is a key piece of infrastructure that will enable the continued growth of Brisbane, our region and the nation. Construction Sciences have been involved on the BAC site for over 20 years. A state of the art laboratory facility will be established on site, to safely handle the large 40mm aggregate test specimens. 25 Cardno: Morgans Queensland Conference Cardno®#272018 Full-Year Segments: International Development ID EBITDA AND % MARGIN A$ million Cardno® International Development (ID) consolidated the growth in backlog and cost savings initiatives in a solid result. > Gross Revenue in FY18 of $313.6m, this was 5.0% down on FY17. 14% > EBITDA margin in FY18 of 2.0% reflects ongoing business discipline and is up on FY17 of 1.8%. 12% 18 16 14 12 > 10 8% 8642 10% 6% > Backlog continues to grow as we respond to various International Development tender processes (primarily in the northern hemisphere). A number of investments have been made that will affect margin in FY19 in this division to build the business sustainably in the medium term. KEY WINS DURING THE YEAR INCLUDE: > DFID Uganda Cities and Infrastructure - technical assistance to governments, municipal authorities and public agencies on private and public infrastructure investment. 4% > 2% > 0% > > DFAT Prospera - technical assistance and logistical support to institutional partners to foster strong, sustainable and inclusive economic growth. MCC Nepal - procurement and fiscal agent services for the implementation of the Millennium Challenge Corporation. EU Technical Assistance support for the High Value Crop and Horticulture Project - implement an effective value chain for production and sale of high value crops. FCO Prosperity Fund - primary supplier to the Foreign and Commonwealth Office in the UK. H1-2017 H2-2017 H1-2018 H2-2018 Ebitda % 26 Cardno: Morgans Queensland Conference#28International Development: Sample Projects CITIES AND INFRASTRUCTURE FOR GROWTH (CIG) UGANDA PROJECT The CIG Programme will provide demand-driven technical assistance to governments, municipal authorities and public agencies to address constraints to private and public infrastructure investment. The purpose behind CIG interventions is to improve public sector capacity in urban management, power sector development and infrastructure service delivery, in order to make the investment environment attractive to private suppliers of capital. USAID TIMOR-LESTE AVANSA AGRIKULTURA PROJECT Cardno's agribusiness and marketing skills are helping turn subsistence farmers into commercial growers, boosting nutrition and livelihoods, and unlocking the profitability of Timor- Leste's horticulture value chain. Our agribusiness and marketing experts are consulting with both the private and public sector to identify gaps in the value chain, and are helping to improve market linkages between retailers, agricultural suppliers and farmers. To date, we have facilitated agreements between supermarkets and farmer groups, buyer agreements between farmers and retail markets, and helped almost 3,156 farmers and micro/small and medium-sized enterprises to receive business development services. 27 Cardno: Morgans Queensland Conference Cardno®#292018 Full-Year Segments: Portfolio Companies PORTFOLIO COMPANY EBITDA AND % MARGIN A$ million Cardno® Oil and Gas business exited year with positive margins. Latin America business has continued to run off major projects driving material revenue declines. > Gross Revenue in FY18 of $47.9m, this was 37.8% down on FY17. Oil & Gas business continues to rebuild with the business diversifying revenue into new markets and shifting focus to increased QC revenue streams. The business finished the year with the first profitable quarter in the past 12 quarters. The Latin America business continues to operate in challenging market conditions with a focus on risk mitigation and rolling off of historical work. Focus is on completing and winding down the engineering projects in Ecuador. The joint venture projects continue to be challenging and provide for ‘lumpy' financial results. 18 14% 16 12% > 14 10% 12 8% 10 6% > 8 4% 6 2% 4 0% 2 -2% > Zachry Freeport LNG Facility 0 -4% > Murphy & Shell Upstream QAQC Services -2 -6% H1-2017 H2-2017 H1-2018 H2-2018 KEY WINS DURING THE YEAR INCLUDE: Ebitda % 28 Cardno: Morgans Queensland Conference#302018 Full-Year Balance Sheet Cardno® FY2016 FY2017 FY2018 1. $'000's $'000's $'000's Cash and cash equivalents Trade and other receivables Inventories Other current assets Total current assets PPE Intangible assets 105,613 80,028 71,127 191,053 218,749 212,158 Continued focus on WIP conversion to debtors then debtors collection, has resulted in a decrease in WIP and trade and other receivables. 115,305 96,882 73,773 26,328 13,696 15,066 2. 438,299 409,355 372,124 Small strategic bolt on acquisitions during the year resulting in increase in intangible assets. 47,310 322,604 35,593 295,873 Deferred tax assets 118,580 142,127 Other financial assets 3,770 1,323 49,336 313,017 102,333 3 236 2 3. Decrease in deferred tax assets a result of the reduction in the US federal corporate income tax rate from 35% to 21%. Total non-current assets 492,264 474,916 464,922 4. Total assets 930,563 884,271 837,046 Decrease in payables reflects timing of significant creditor payments. Trade and other payables 125,115 144,327 120,840 4 Loans and borrowings 2,795 615 2,165 5. Other current liabilities 87,279 87,117 80,786 Business is in compliance with all covenants with significant head room. Total current liabilities 215,189 232,059 203,791 Trade and other payables 3,015 Loans and borrowings 152,425 94,708 88,900 Other non-current liabilities 5,852 12,227 8,132 Non-current liabilities Total liabilities Net assets Net Debt/EBITDA (lending covenant <= 3.0x) Interest Cover Ratio* (lending covenant >= 3.0x) Net Asset Value (lending covenant >= $446.7M) 29 Cardno: Morgans Queensland Conference 158,277 106,935 100,047 373,466 338,994 303,838 557,097 545,277 533,208 1.5x 3.5X 557,097 0.4x 5.6x 545,277 5 0.3x 16.3x * Interest Cover Ratio is the ratio of EBITDA to Net Interest Expense for the prior 12 months. 533,208#312018 Full-Year Balance Sheet Strength Cardno® FY2016 FY2017 FY2018 1. $'000's $'000's $'000's Net debt 49,607 15,294 19,938 Net debt now $19.9m which is slightly up from $15.3m as at 30 June 2017 and significantly down from $49.6m at 30 June 2016. Total debt facilities US$210m US$91.6m US$91.6m 2. Net tangible assets decreased primarily as a result of the decrease to deferred tax assets. Intangible assets 322,604 295,873 313,017 3. Liquidity ratios all remain healthy. Trade Other Receivables - trade payables 65,938 74,422 88,303 Net tangible assets 234,493 249,404 220,191 2 Current assets/Current liabilities 2.0x 1.8x 1.8x 3 (Cash + Debtors + WIP)/(payables + debt) 1.5x 1.7x 1.7x 3 (Cash Debtors +WIP)/Debt 2.7x 4.2x 3.9x 3 Net Debt/EBITDA (lending covenant <= 3.0x) Interest Cover Ratio* (lending covenant >= 3.0x) Net Asset Value (lending covenant >= $446.7M) 1.5x 0.4x 0.3x 3.5X 5.6x 16.3x 557,097 545,277 533,208 * Interest Cover Ratio is the ratio of EBITDA to Net Interest Expense for the prior 12 months. 30 Cardno: Morgans Queensland Conference Our ongoing strong balance sheet enables the company to focus on long term sustainable growth options to build value for shareholders.#322018 Cash Flow Cardno® FY2016 FY2017 FY2018 $'000's $'000's $'000's Underlying EBITDA 43,559 44,005 56,210 Working capital movement 17,517 (41,730) (2,827) $45.7M cash from operations primarily used for reduction of debt, PP&E, share buy back and two small bolt-on acquisitions. Net interest paid (10,387) (4,720) (2,943) Income tax paid 5,698 (1,388) (4,738) 1. Interest costs significantly reduced. Net cash provided by operating activities 56,387 (3,833) 45,702 2. Proceeds on disposal of subsidiaries 85,943 57,977 Acquisition of subsidiaries, deferred consideration (23,857) (6,180) (10,738) 2 Payments for PPE Completed small bolt-on acquisition in the Construction Sciences business (NSW) and APAC utility locating business (NSW). (19,312) (12,280) (18,827) Other investing activities 8,704 932 3. Surplus funds utilized for ongoing buyback program. Net cash used in investing activities 51,478 40,449 (29,565) 4. Then a further reduction in debt (repayment of bank debt facility). Proceeds from issue of shares 177,038 Share buy back (5,670) Net change in borrowings (262,151) (55,225) (13,917) (11,200) 4 Dividends (7,693) Other 4,808 (2,303) (2,039) Net cash used in financing activities (87,998) (63,198) (27,156) Net increase in cash 19,867 (26,582) (11,019) Cash and cash equivalents 1 July Other 84,750 996 105,613 80,028 997 Cash and cash equivalents at period end 105,613 80,028 2,118 71,127 Net cash from operating activities / EBITDA 129.4% (8.7%) 81.31% 31 Cardno: Morgans Queensland Conference#3301 About Cardno 02 Performance overview 03 Detailed financial review 04 Outlook Cardno® Cardno: Morgans Queensland Conference 32#34Outlook for FY19 Cardno® FY19 is the third year of a multi year business improvement plan. The focus of the business remains the same: cost control, organic growth, invest in people and where appropriate strategic accretive bolt on acquisitions. > The focus of the board is on returning the business to positive organic growth after the restructure of the divisions over the past three years. The focus remains on medium term EBITDA growth, with a number of investments in FY19 which will limit EBITDA growth in some divisions in the short term. > > > > > The business will continue to explore 'on strategy' acquisitions to gain access to key markets or skill sets. Disciplined M&A process established. The business is continuing its investment in internal systems and process improvement. This includes investment in business development processes, staff, information technology and training. After a period of under investment and poor historical capital allocation, elevated capital expenditure will continue into FY19. Cardno is forecast to invest $15m to $20m in capital expenditure on the current existing business next year. The company will continue its share buy back program while the Board considers this an appropriate allocation of shareholder capital. The business expects to re-finance the existing debt facility during FY19 ahead of term (Dec 19). Cardno is operationally and financially in the strongest position it has been in the past three years. The company believes there is a solid basis for both revenue and EBITDA growth in the medium term. Cardno does not intend to issue further profit guidance from here unless there is a material change in performance over prior year. 33 Cardno: Morgans Queensland Conference#35THANK YOU We are an ASX-listed professional infrastructure and environmental services company, with expertise in the development and improvement of physical and social infrastructure for communities around the world www.cardno.com Making a difference. Cardno® Cardno: Morgans Queensland Conference 34