Cardno Limited
ABN 70 108 112 303
2009 Financial Report
Table of Contents
Cardno Limited and its Controlled Entities for the year ended 30 June 2009
Directors’ Report ..................................................................................................................... 3
Corporate Governance Statement ............................................................................................ 21
Income Statements ................................................................................................................ 27
Balance Sheets ...................................................................................................................... 28
Statements of Changes in Equity ............................................................................................. 29
Cash Flow Statements ............................................................................................................ 30
Notes to the Financial Statements ............................................................................................ 31
Directors’ Declaration ............................................................................................................. 71
Independent Auditor’s Report .................................................................................................. 72
Additional Shareholder Information ........................................................................................... 74
Corporate Directory ................................................................................................................ 76
Page 2 of 76
Directors’ Report
Cardno Limited and its Controlled Entities for the year ended 30 June 2009
The Directors present their report together with the financial statements of Cardno Limited (“the
Company”) and of the consolidated entity, being the Company and the entities it controlled at the end
of, or during, the year ended 30 June 2009.
Directors
The Directors of the Company in office during or since the year ended 30 June 2009 are set out
below:
John Massey (Chairman - Non-executive)
Graham Tamblyn (Deputy Chairman - Executive)
Andrew Buckley (Managing Director - Executive)
Anthony Barnes (Non-executive) (appointed 31 July 2008)
Peter Cosgrove (Non-executive)
Jeffrey Forbes (Executive and Company Secretary)
Trevor Johnson (Executive)
Ian Johnston (Non-executive)
Details of the qualifications, experience and responsibilities of the Directors are on pages 4 to 7.
Company Secretary
Jeffrey Forbes BCom, MAICD, MAusIMM was appointed to the position of Company Secretary on
10 July 2006. Mr Forbes had been a Company Secretary of another unrelated listed company for
6 years prior to joining Cardno.
Mark Buggy BEng(Civil), MScLLB(Lon), PCLL(HK) resigned as Assistant Company Secretary effective
2 September 2008.
Page 3 of 76
Directors’ Report
Cardno Limited and its Controlled Entities for the year ended 30 June 2009
Director
Experience
Special Responsibilities
John C Massey
BCom, CPA, FAICD(Life), FAIM
Non-executive Chairman
Age 63
John Massey has been Chairman of Cardno Limited since July 2004 and
a Non-Executive Director since March 2004. John became a full-time
company director in 1997, and brings to Cardno extensive and broadly-
based commercial experience, leadership and strategic development
skills developed as a Chairman, Director and Chief Executive spanning
many different industries.
As well as being Chairman of the
company, John is also Chairman of the
Board’s Remuneration and Nominations
Committees and a member of the Audit,
Risk & Compliance Committee.
Graham G Tamblyn
DipCE, MIEAust, CPEng, RPEQ, FAICD
Deputy Chairman
Executive Director
Age 59
John’s other directorships are Macmahon Holdings Limited and the
Stockyard / Kerwee Beef Group.
He has been actively involved in corporate governance and director
issues and was made a Life Fellow of the Australian Institute of
Company Directors in recognition of his eminence in the field of
directorship and for distinguished service, and is a member of the Board
of Governors of the Committee for the Economic Development of
Australia.
John’s previous Board appointments include Chairman of Symbiosis
Group, Ventracor and Northstate Capital; Director of Dairy Australia,
Brisbane Airport Corporation, SEQ Water and KR Castlemaine Foods.
Graham commenced work with the engineering consultancy Cardno &
Davies in 1973. He is an experienced civil engineer in the urban
development field with involvement in such notable projects as the
Kawana Waters master planned community, Noosa Waters,
Twin Waters, and Pelican Waters. Graham’s commitment to the urban
development and engineering industry is evidenced by his considerable
involvement in industry associations such as the Urban Development
Institute of Australia of which he was Sunshine Coast Branch President
for 6 years up to 2002. Graham’s career has included periods as
Managing Director and Chairman of Cardno Holdings Pty Ltd.
Apart from ongoing technical project work Graham plays a role in
assisting with the implementation of the Cardno Group’s growth
strategy of merger and acquisition.
Page 4 of 76
Directors’ Report
Cardno Limited and its Controlled Entities for the year ended 30 June 2009
Director
Experience
Special Responsibilities
Andrew D Buckley
BE(Hons), FIEAust, FAICD, CPEng, RPEQ
Managing Director
Age 52
Anthony H (Tony) Barnes
BCom
Non-executive Director
Age 59
Andrew was appointed Managing Director of the Cardno group in 1997.
He has more than twenty-five years’ experience
in executive
management, project management, design and implementation of
engineering and development assistance projects. Andrew has worked
in the management, design and construction of mining, engineering and
infrastructure projects in Australia, Africa, USA and Asia. For the last
15 years he has worked in executive management roles in the
engineering, construction and development assistance sectors with a
special focus on growth. Under Andrew’s leadership the Cardno group
has grown from an annual turnover of approximately $14 million in
FY1997 to $516 million in FY2009 and from less than 200 people to
over 3,000.
Andrew is a Non-executive Director of CBD Professional Services Pty
Ltd, which is associated with Carter Newell Lawyers.
Tony Barnes has been a non-executive director of Cardno since 31 July
2008. He was formerly the Chief Financial Officer of Zinifex Limited, an
international mining, exploration and development company. Mr Barnes
also held the position of Chief Executive Officer of Zinifex Limited during
a management change. Mr Barnes played a key role in the successful
IPO of Zinifex Limited in May 2004 and its subsequent restructure
culminating in the merger with Oxiana Limited in July 2008 to form Oz
Minerals Limited. He has extensive financial experience following a
career which included more than 32 years with BHP, both within
Australia and Internationally.
Tony is also a director of the Victorian Rugby Union.
Andrew is a member of the Nominations
Committee
Tony is Chairman of the Board’s Audit,
Risk & Compliance Committee and a
member of the Remuneration Committee.
Page 5 of 76
Directors’ Report
Cardno Limited and its Controlled Entities for the year ended 30 June 2009
Director
Experience
Special Responsibilities
Peter J Cosgrove AC, MC
ndc (Ind), jssc, psc (US), Dip Mil Stud, FAICD
Non-executive Director
Age 62
Jeffrey I Forbes
BCom, MAICD, MAusIMM
Chief Financial Officer, Company Secretary,
Executive Director
Age 56
Trevor C Johnson
BE, MEngSc, PhD, FIEAust, CPEng, RPEQ, MAICD
Executive Director
Age 52
Peter is a member of the Nominations
Committee
Jeff is a member of the Standing Due
Diligence Committee.
Trevor is Chairman of the Standing Due
Diligence Committee and is a member of
the Board’s Audit, Risk & Compliance
Committee.
Retired General Peter Cosgrove joined Cardno as a Non Executive
Director on 26 March 2007, bringing with him a wealth of experience
and credentials. Peter is a director of Qantas Airways Limited and
Qantas Superannuation Limited, Australian Rugby Union Limited,
consultant to Deloitte Touche Tohmatsu and a Fellow of the Australian
Institute of Company Directors. He also holds a number of prestigious
memberships and board appointments. Peter was Chief of the Australian
Defence Force from July 2002 until July 2005. In 1999 he was
appointed as Commander of the International Forces in East Timor and
helped the country transition to independence. Peter was awarded the
Military Cross in Vietnam and he was appointed as a Companion of the
Military Division of the Order of Australia, Companion of the New
Zealand Order of Merit (CNZM) and Commander of the United States
Legion of Merit. In 2001 Peter was the Australian of the Year.
Jeff joined Cardno in July 2006 as Chief Financial Officer, Company
Secretary and Executive Director, Finance. Jeff has more than 30 years
experience as a finance manager, primarily in the resources sector prior
to joining Cardno.
Jeff has significant experience in the financing and development of
resource projects in both Australia and in the Asia Pacific region. He has
held senior positions domestically and internationally. Prior to joining
Cardno he was an Executive Director, Chief Financial Officer and
Company Secretary of Highlands Pacific Limited. Jeff has significant
experience in capital raisings and during his career Jeff has worked for a
number of major companies including Rio Tinto, BHP and CSR.
Trevor has 30 years experience as a civil engineer, with special
expertise in the fields of hydraulics, water quality and environmental
analysis. He continues to act as Project Director for many of Cardno’s
major urban development projects, and regularly appears as an expert
witness on engineering matters. In his executive role as Director
Corporate, he is also responsible for a number of acquisition,
co-ordination and communication activities within the Group.
Trevor has been an employee of Cardno for over 25 years, and has been
a Director of Cardno Holdings Pty Ltd and subsequently Cardno Limited
since 1996.
Page 6 of 76
Directors’ Report
Cardno Limited and its Controlled Entities for the year ended 30 June 2009
Director
Experience
Special Responsibilities
Compliance
Ian is a member of the Board's Audit, Risk
the
&
the
Remuneration
Nominations Committee and the Standing
Due Diligence Committee.
Committee,
Committee,
Ian J Johnston
DipCM, GradDip App Fin & Inv, ASIA, ACIS, FAICD
Non-executive Director
Age 60
Ian Johnston became a Non Executive Director of Cardno Limited in
November 2004 bringing with him extensive experience in treasury,
corporate banking and equity capital markets.
Following a career of nearly 25 years in the banking industry, Ian joined
ABN AMRO Morgans in 1988 as Head of Corporate Finance and is now
Executive Chairman Corporate Finance and a member of its advisory
board.
He is also Chairman of BioPharmaceuticals Australia (Network) Pty Ltd,
and a Director of AAM Foundation Limited and Data#3 Limited. He is
also a member of the National Trust of Queensland Brisbane City Hall
Conservation Appeal Committee and Rowland advisory board.
Ian’s previous Board appointments include Symbiosis Group Limited and
The Rock Building Society Limited.
Page 7 of 76
Directors’ Report
Cardno Limited and its Controlled Entities for the year ended 30 June 2009
Principal Activities
The principal activity of the consolidated entity during the financial year was operating as a provider of
professional services in physical and social infrastructure. There were no changes to the principal
activities of the Cardno group during the financial year under review.
Review of Results and Operations
Cardno achieved a record net profit after tax of $34.15 million for the financial year ended June 2009,
a 24.4% increase over the 2008 financial year.
Revenue was $515.84 million which is 29.3% more than the previous year of $399.04 million.
Diluted earnings per share increased by 6.0% over the same period to 43.82 cents in the current
financial year.
The Board has declared a fully franked final dividend of 14.0 cents per share, increasing the full year
dividend to 28.0 cents which is an increase of 3.7% over the previous year.
The company’s balance sheet is strong with low gearing, low net debt and a strong operating cash
flow of $38.59 million.
Cardno’s strategy of diversifying its operations through acquisitions and growth across multiple
geographic regions and disciplines has helped the company reduce the impact of difficult economic
conditions.
Performance has been affected by slower business conditions in some sectors, project delays, the
stronger Australian dollar and one-off restructuring costs of around $3.0 million.
Cardno’s global public sector and international development assistance businesses continued to
perform strongly and have offset the slower performance with private sector clients.
The second half of the financial year was more challenging, however there are some positive signs for
improved market conditions in the 2009/10 financial year, although it remains difficult to forecast the
future outlook.
During the financial year Cardno made three acquisitions. The 450-person, Florida-based Cardno TBE
has enabled Cardno to significantly increase its presence in US public infrastructure. In Australia,
Cardno acquired two specialist businesses: Cardno Spectrum Survey, a West Australian-based survey
and mapping consultancy and Sydney-based Cardno Ecology Lab, an ecology and marine sciences
business.
Cardno intends to continue its successful growth strategy and will continue to consider strategic
opportunities within Australia and internationally. A Share Purchase Plan was undertaken in March this
year raising $16.7 million, which enables Cardno to be well positioned to continue this strategy.
Page 8 of 76
Directors’ Report
Cardno Limited and its Controlled Entities for the year ended 30 June 2009
Dividends
Dividends paid or declared by the Company to members since the end of the previous financial year
were:
Type
Declared and paid during the year
- Final 2008 ordinary
- Interim 2009 ordinary
Declared after end of year
- Final 2009 ordinary
Cents per share
Total amount
$’000
Franked/
unfranked
Date of payment
14.0
14.0
14.0
10,535
10,898
Franked
Franked
10 October 2008
27 March 2009
11,798
Franked
13 October 2009
Dealt with in the financial report as:
- Dividends paid or provided
- Noted as a subsequent event
Note 30
21,434
11,798
33,232
All dividends paid or declared by the Company since the end of the previous financial year were fully
franked at 30%.
Events Subsequent to the Reporting Date
On 18 August 2009, the Directors of Cardno Limited declared a final dividend of 14.0 cents per share
for the 2009 financial year. The fully franked dividend will be paid on 13 October 2009 to
shareholders registered on 15 September 2009 and will total $11,798,115. The dividend has not been
provided for in the 30 June 2009 financial statements.
Likely Developments
The consolidated entity will continue to manage its global business in physical and social infrastructure
and pursue its policy of growing the company both organically and by acquisition during the next
financial year.
Significant Changes in the State of Affairs
Other than detailed elsewhere, there have been no significant changes in the state of affairs since
30 June 2008.
Indemnification and Insurance of Officers
The Company has agreements with each of the Directors and Officers of the Company in office at the
date of this report indemnifying them against liabilities to any person other than the Company or a
related body corporate that may arise from their acting as Directors or Officers of the Company. The
indemnity continues to have effect when the Directors and Officers cease to hold office, other than
where such liabilities arise out of conduct involving a wilful breach of duty by the Officers, the
improper use by the Directors or Officers of their position or of information to gain advantage for
themselves or someone else or to cause detriment to the Company.
The Directors have not included details of the nature of the liabilities covered or the amount of the
premium paid in respect of the Directors’ and Officers’ liability, as such disclosures are prohibited under
the terms of the contract.
Page 9 of 76
Directors’ Report
Cardno Limited and its Controlled Entities for the year ended 30 June 2009
Directors’ Meetings
Attendance at Board meetings and Board Committee meetings for the year ended 30 June 2009 is set
out below:
No. of Meetings Held
A H Barnes
A D Buckley
P J Cosgrove
J I Forbes
T C Johnson
I J Johnston
J C Massey
G G Tamblyn
Board of
Directors
A
12
15
13
15
15
15
15
14
B
15
15
15
15
15
15
15
15
Audit, Risk &
Compliance
Committee
B
A
5
(cid:138)
(cid:138)
(cid:138)
5
5
5
(cid:138)
5
(cid:138)
(cid:138)
(cid:138)
5
5
5
(cid:138)
Remuneration
Committee
Nominations
Committee
A
5
(cid:138)
(cid:138)
(cid:138)
(cid:138)
6
6
(cid:138)
B
5
(cid:138)
(cid:138)
(cid:138)
(cid:138)
6
6
(cid:138)
A
(cid:138)
3
3
(cid:138)
(cid:138)
3
3
(cid:138)
B
(cid:138)
3
3
(cid:138)
(cid:138)
3
3
(cid:138)
Standing
Due Diligence
Committee
B
A
(cid:138)
(cid:138)
(cid:138)
2
2
2
(cid:138)
(cid:138)
(cid:138)
(cid:138)
(cid:138)
2
2
2
(cid:138)
(cid:138)
(cid:138) not a member of this committee
A = number of meetings attended.
B = number of meetings held during the time the director held office during the year or was a committee member.
REMUNERATION REPORT - AUDITED
Principles of Compensation
Compensation levels for directors, secretaries of the Company and relevant key management personnel
of the consolidated entity are competitively set to attract and retain suitable qualified staff, reward the
achievement of strategic objectives and achieve the broader outcome of creating value for
shareholders. The remuneration structure takes into account:
(cid:131)
(cid:131)
(cid:131)
(cid:131)
the capability and experience of the Directors and Senior Executives;
the Directors’ and Senior Executives’ ability to control the performance of areas of the
Company’s business;
the Company’s performance; and
the amount of incentives within each Director’s and Senior Executive’s remuneration.
Total shareholder return is an essential element of the Company’s strategy, and the remuneration
framework serves this aim by seeking to attract and retain high calibre executives. Since Cardno
Limited was established in March 2004 the Company has exceeded the growth and profit targets set
by the Board and this successful performance has been reflected in the remuneration of Executives.
The Executive Director and Senior Executive Remuneration Policy is set out below:
Cardno Limited seeks to set fair and market competitive remuneration for its Senior Executives to
ensure high performance and long-term commitment while taking into consideration the best interest of
shareholders. Senior Executives’ remuneration consists of fixed salary, potential Performance Equity
Plan participation, discretionary cash bonuses and other benefits including superannuation and salary
sacrificing. In determining the salary of Senior Executives, an assessment of performance is completed
and a review of the market is conducted. The Company takes into account the responsibilities of the
individual’s position, the level of skill and experience as well as the Company’s business.
If the employment of a Senior Executive is terminated, the Senior Executive may be entitled to receive
from the employer pay in lieu of notice and compensation for employee entitlements such as annual
leave and long service leave up to the termination date and by reference to the Executive’s
remuneration.
Page 10 of 76
Directors’ Report
Cardno Limited and its Controlled Entities for the year ended 30 June 2009
Remuneration Committee
The Remuneration Committee reviews and makes recommendations to the board on remuneration
issues and policies applicable to all staff for the consolidated entity. It is also responsible for reviewing
share option schemes, incentive performance packages, superannuation entitlements, retirement and
termination entitlements and fringe benefits policies.
The members of the Remuneration Committee during the year were John Massey (Chairman), Ian
Johnston and Tony Barnes.
The Remuneration Committee is required to meet at least twice a year. The Remuneration Committee
met six times during the year.
Compensation levels are reviewed annually by the Remuneration Committee through a process that
considers individual, segment and overall performance of the consolidated entity. In addition, external
consultants provide analysis and advice to ensure the directors’ and senior executive’s compensations
are competitive in the market place were required.
Fixed Compensation
Fixed compensation consists of base compensation (which is calculated on a total cost basis) and
includes any FBT charges related to employee benefits (including motor vehicles), as well as employer
contributions to superannuation funds.
It should be noted that fixed remuneration is generally reviewed on an annual basis. However for the
2009 financial year the annual salary review was deferred.
Performance-linked Compensation
Performance-linked compensation includes both short-term and long-term incentives and is designed to
reward key management personnel for meeting or exceeding their financial, divisional and personal
objectives. The short-term incentive is an ‘at risk’ bonus provided in the form of cash. The long term
incentive for executive directors is provided as a transitional cash incentive plan for 2009 and options
for previous years, both measured over three years. The long term incentive for senior executives is
provided as options over ordinary shares of the company under the rules of the Performance Equity
Plan (PEP).
Short-Term Incentive Bonus
Each year the Remuneration Committee reviews the key performance indicators (KPIs) for the key
management personnel. The KPIs generally include measures relating to the consolidated entity, the
relevant segment, the individual and include financial, people, customers, strategy and risk measures.
The principal financial performance objectives are compared to budgeted amounts. The non-financial
objectives vary with position and responsibility.
At the end of the financial year the Remuneration Committee assesses the actual performance of the
consolidated entity, the relevant segment and individual against the KPI’s set at the beginning of the
financial year. The Remuneration Committee approves the discretionary bonus to be paid to the
individuals on the delegated authority of the board. The method of assessment was chosen as it
provides the committee with an objective assessment of the individual performance. Half of the bonus
is paid in the year the bonus is granted while the balance is paid 12 months later, subject to continuing
employment.
Page 11 of 76
Directors’ Report
Cardno Limited and its Controlled Entities for the year ended 30 June 2009
Long-Term Incentive Bonus
Employee Share Acquisition Plans (“ESAP”)
Shares are issued under the ESAP (made in accordance with thresholds set out in plans approved by
shareholders at the 2007 AGM). It provides employees with the opportunity to acquire shares in the
Company for no consideration as a bonus component of their remuneration. Employees with
12 months service or greater who have worked an average of 100 hours or more per month are
entitled to $1,000 of shares each year and employees with 6 to 12 months service are entitled to
$500 of shares each year. Employees who work part time, who have greater than 12 months service
and who have worked more than 600 hours per year are also entitled to $500 of shares each year.
Shares issued under ESAP rank equally with other fully paid ordinary shares from the date of issue.
Shares are issued in the name of the participating employee and are subject to a restriction period. The
shares are restricted under the plan until the earlier of three years from the date of acquisition or the
date they cease to be an employee. Once the restriction period is lifted the shares can be traded as
fully paid ordinary shares. The ESAP has no conditions that could result in the recipient forfeiting
ownership of shares.
The number of shares still under a restriction period at 30 June 2009 are detailed in the table below:
Grant Date
23 December 2005
24 January 2007
26 June 2007
29 January 2008
23 February 2009
Number
102,186
104,160
1,890
198,880
485,287
Issue Price
$3.63
$4.76
$4.76
$6.19
$3.18
Vested 30 June 2009
102,186
9,240
210
54,619
56,677
Balance
-
94,920
1,680
144,261
428,610
Fair value of shares issued during the reporting period is reported as the average market price over the
5 trading days prior to the date of the issue to employees.
Performance Equity Plan (PEP)
The PEP is designed to reward strong performance by individuals within the Cardno Group of
companies. Options are issued under the PEP (made in accordance with thresholds set in the plan
approved at the 2007 AGM) which provides certain employees (as determined by the Managing
Director and Remuneration Committee) with the opportunity to acquire shares in the Company, or
rights to acquire shares in the Company. The plan operates by granting an option to employees to
purchase a prescribed number of shares at a pre-determined time in the future. During the 2009
financial year, options with a value of $992,610 were issued for a period of three years from the grant
date.
Each option is convertible to one ordinary share. The exercise price of the options, determined in
accordance with the rules of the plan, is based on the weighted average price of the Company’s shares
traded during the five days preceding the date of offering the option. All options expire on the earlier
of their expiry date or termination of the employee’s employment. The options may be exercised at
any time during the seven day period ending thirty-six months after the date the options are issued.
There are no voting or dividend rights attached to the options. Voting rights and dividends will be
attached to the unissued ordinary shares when the options have been exercised.
The plan rules contain a restriction on removing the “at risk” aspect of the instruments granted to
executives. Plan participants may not enter into any transaction designed to remove the “at risk”
aspect of an instrument before it vests.
Page 12 of 76
Directors’ Report
Cardno Limited and its Controlled Entities for the year ended 30 June 2009
Long-Term Incentive Bonus continued
Performance Equity Plan (PEP) continued
No options were exercised during the 2008/09 financial year. Options with a value of $241,975
lapsed during the year as a result of vesting conditions not being satisfied.
Grant Date
Exercise Date
Expiry Date
26 October
2006
14 November
2006
25 October
2007
25 October
2007
5 December
2007
5 December
2007
5 December
2008
20 October
2008
8 November
2008
19 October
2009
19 October
2010
29 November
2009
29 November
2010
29 November
2011
26 October
2008
14 November
2008
25 October
2009
25 October
2010
5 December
2009
5 December
2010
5 December
2011
Exercise
Price
$
Fair
Value at
Grant
Date*
$
Number of
Options at
Beginning
of Year
5.17
0.58
150,000
5.30
0.56
861,500
7.57
0.68
230,000
7.57
0.92
330,000
7.71
0.70
1,399,000
7.71
0.95
1,880,500
Options
Granted
Options
Lapsed
Options
Vested
Not
Exercised
Number of
Options as
at 30 June
2009
-
-
-
-
-
-
-
-
-
-
126,500
161,500
150,000
861,500
-
-
-
-
-
-
-
-
230,000
330,000
1,272,500
1,719,000
2,421,000
4.57
575 days
3.35
0.41
-
2,421,000
-
Weighted average exercise price
Weighted average remaining contract life
Total expense recognised $552,687 (2008: $495,793)
* Excludes discount for the probability of vesting.
7.19
3.35
5.82
The options outstanding at 30 June 2009 have not vested, are not exercisable at 30 June 2009 and
have an exercise price in the range of $3.35 to $7.71.
The fair values of options granted during the year has been calculated using the Black-Scholes model,
taking into account price volatility, risk free interest rates and the dividend yield. Where relevant, the
fair value has been adjusted to account for the effects of non-tradability and other relevant restrictions.
The options are subject to a performance hurdle and will not vest unless there has been at least a 5%
improvement per year (compounded) in the earnings per share of the company over the vesting
periods.
The Board is considering a change to the PEP which has been recommended by an independent
consultant to the Remuneration Committee. The change consists of the introduction of performance
rights as well as options and will involve a change to the hurdles including a sliding scale EPS hurdle
with an increase top level of EPS growth required for full vesting of options and rights.
Executive Director 2009 Transition Long Term Incentive Plan (TLTI)
The Executive Directors did not participate in the 2008 PEP. The Board determined to introduce
an alternative cash based transitional long term incentive plan while the Company develops a new long
term incentive plan for Executive Directors and senior management.
The purpose of the TLTI is to provide a component of executive remuneration which is linked to both
the continued future service and company performance. The company performance will be measured
over a period of three years commencing with FY2009. Performance will be measured by reference to
two measures. The first measure will be total shareholder return (TSR)compared to the TSR of the
smallest 100 companies in the S&P/ASX300 excluding companies in the resources and financial
sectors and absolute growth in earnings per share (EPS). The Board has discretion to adjust earnings
so that they accurately reflect ongoing company performance. Each measure will have an equal
weighting. Performance will be measured at the end of FY2011.
Page 13 of 76
Directors’ Report
Cardno Limited and its Controlled Entities for the year ended 30 June 2009
Long-Term Incentive Bonus continued
Executive Director 2009 Transition Long Term Incentive Plan (TLTI) continued
In the event of a takeover or change-in-control, the stretch TLTI award opportunities will become
immediately payable to participants. A takeover or change in control is deemed to have occurred when
more than 30% of ordinary issued shares are acquired by, or their voting is controlled by, a person or
group of related persons.
The award opportunities for the participants will be a percentage of the Executive Director’s base
package as at 1 July 2008 and be paid in cash:
Performance Level
Below threshold
Threshold
Between threshold & target
Target
Between target & stretch
Stretch & above
Managing
Director
0%
25%
Pro rata
50%
Pro rata
100%
The respective measures for TSR and EPS are:
Other Executive
Directors
0%
12.5%
Pro rata
25%
Pro rata
50%
Performance Level
Threshold
Target
Stretch
Relative TSR
50th Percentile
62.5th Percentile
75th Percentile
EPS Growth
3% per annum compound
5% per annum compound
15% per annum compound
Employment Agreements
Employment Agreements have been entered into with Executive Directors and Senior Executives. The
agreements contain remuneration, performance and confidentiality obligations on the part of both the
employer and the employee. The Executives covenant that during the term of employment and for at
least six months after termination they will not solicit any existing client or employee of the Company.
Non-Executive Directors
The Non-Executive Directors of Cardno Limited are entitled to a fee that is determined by the Board on
commencement of the role and reviewed on an annual basis thereafter. The fee includes compulsory
superannuation contributions. Non-Executive Directors do not participate in equity plans of the
Company and do not receive retirement benefits.
Page 14 of 76
Directors’ Report
Cardno Limited and its Controlled Entities for the year ended 30 June 2009
Director, Executive Officer and Key Management Remuneration
Details of the nature and amount of each major element of remuneration of each director of the Company and each of the five named Company executives
and relevant group executives who receive the highest remuneration are:
Director
Non-Executive
John Massey
Anthony Barnes
Peter Cosgrove
Ian Johnston
Executive
Andrew Buckley
Jeffrey Forbes
Trevor Johnson
Graham Tamblyn
Former
James Verco
Short Term
Long Term
Salary and
Fees
$
STI Cash
Bonus $
Non-
Monetary
Benefits
$
Total
$
Superannuation
Benefits
$
Other
Long Term
Benefits
$
Termination
Benefits
$
Share-
based
Payments/
Options
Total
$
Proportion of
Remuneration
Performance
Related
Value of
Options as a
Proportion of
Remuneration
2009
2008
2009
2008
2009
2008
2009
2008
2009
2008
2009
2008
2009
2008
2009
2008
2009
2008
87,000
119,000
-
-
73,394
73,395
73,394
73,395
-
-
-
-
-
-
-
-
524,633 225,000*
478,869 350,000^
228,083
60,000*
246,321 100,000^
297,425
271,728
240,688
238,991
57,500
38,400
27,737
10,000
-
59,526
-
-
-
-
-
-
-
-
-
-
4,000
4,000
4,000
4,000
4,000
4,000
4,000
4,000
-
1,333
87,000
119,000
-
-
73,394
73,395
73,394
73,395
753,633
832,869
292,083
350,321
358,925
314,128
272,425
252,991
-
60,859
83,000
51,000
73,623
-
6,606
6,605
6,606
6,605
101,234
92,131
112,917
79,679
50,105
35,272
55,987
17,009
-
15,807
-
-
-
-
-
-
-
-
114,916*
-
28,750*
-
29,310*
-
25,056*
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
23,575
33,397
11,254
15,138
8,363
13,765
4,267
7,341
5,015
5,113
170,000
170,000
73,623
-
80,000
80,000
80,000
80,000
993,358
958,397
445,004
445,138
446,703
363,165
357,735
277,341
5,015
81,779
2,651,438
2,455,820
-
-
-
-
-
-
36.6%
40.0%
22.5%
25.9%
21.3%
14.4%
16.0%
6.3%
-
6.3%
23.4%
23.3%
-
-
-
-
-
-
2.4%
3.5%
2.5%
3.4%
1.9%
3.8%
1.2%
2.6%
-
6.3%
2.0%
3.0%
16,000
Total Compensation – 2009
Total Compensation – 2008
17,333
* Includes STI and TLTI cash bonuses which have been accrued but not paid.
** The amount included in remuneration is the grant date fair value which has been amortised on a straight line basis over the expected vesting period.
1,910,854
2,076,958
1,524,617
1,561,225
198,032*
-
490,078
304,108
370,237
498,400
52,474**
74,754**
-
-
Page 15 of 76
Directors’ Report
Cardno Limited and its Controlled Entities for the year ended 30 June 2009
Director, Executive Officer and Key Management Remuneration continued
Short-Term
Long-Term
Executives
Salary
$
STI Cash
Bonus $
Non-
Monetary
Benefits
$
Total
$
Superannuation
Benefits
$
Other
Long
Term
Benefits
$
Termination
Benefits
$
Share-
based
Payments/
Options
Total
$
Proportion of
Remuneration
Performance
Related
Value of
Options as a
Proportion of
Remuneration
Executives
Roger Collins-Woolcock
Steven Coote
Paul Gardiner
Michael Renshaw
Charles Tapp
2009
2008
2009
2008
2009
2008
2009
2008
2009
2008
314,107
255,878
335,779
271,560
339,577
275,606
444,904**
303,945
324,807
328,991
60,000
28,725
80,000
47,450
80,000
47,450
45,000
30,000
45,000
12,500
4,000
4,000
4,000
4,000
4,000
4,000
3,600
3,000
-
-
378,107
288,603
419,779
323,010
423,577
327,056
493,504
336,945
369,807
341,491
30,893
24,122
32,470
24,440
28,592
20,394
-
-
28,795
27,134
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
7,671
10,959
9,937
15,874
9,937
15,874
7,671
11,307
6,406
5,643
15,600
Total compensation – 2009
Total compensation – 2008
15,000
* The amount included in remuneration is the grant date fair value which has been amortised on a straight line basis over the expected vesting period.
** Salary includes expatriate benefits and is payable in USD.
2,084,774
1,617,105
1,759,174
1,435,980
310,000
166,125
120,750
96,090
-
-
-
-
41,622*
59,657*
416,671
323,684
462,186
363,324
462,106
363,324
501,175
348,252
405,008
374,268
2,247,146
1,772,852
16.2%
12.3%
19.5%
17.4%
19.5%
17.4%
10.5%
11.9%
12.7%
4.8%
15.6%
12.7%
1.8%
3.4%
2.2%
4.4%
2.2%
4.4%
1.5%
3.2%
1.6%
1.5%
1.9%
3.4%
Additional Information
Name
Andrew Buckley
Jeffrey Forbes
Trevor Johnson
Graham Tamblyn
Roger Collins-Woolcock
Steven Coote
Paul Gardiner
Michael Renshaw
Charles Tapp
STI
Options
TLTI
Year Granted
2009
2009
2009
2009
2009
2009
2009
2009
2009
Paid %
50%*
50%*
Note 1
Note 1
Note 1
Note 1
Note 1
Note 1
Note 1
Forfeited %
50%
50%
Note 1
Note 1
Note 1
Note 1
Note 1
Note 1
Note 1
Granted %
0%
0%
Note 1
Note 1
Note 1
Note 1
Note 1
Note 1
Note 1
Forfeited %
100%
100%
Note 1
Note 1
Note 1
Note 1
Note 1
Note 1
Note 1
Granted %
100%
100%
100%
100%
Note 1
Note 1
Note 1
Note 1
Note 1
Forfeited %
0%
0%
0%
0%
Note 1
Note 1
Note 1
Note 1
Note 1
* In determining the level of bonus payable the Board took into account that despite the changed economic environment and difficult operating conditions the company produced a record profit.
Note 1: STI cash bonus & options paid under Cardno Performance Equity Plan. No STI incentive maximum or minimum amount is contracted between Cardno and the individuals noted in the
table.
Page 16 of 76
Directors’ Report
Cardno Limited and its Controlled Entities for the year ended 30 June 2009
Directors’ Interests
As at the date of this report, the interests of the directors in the shares of Cardno Limited were:
Cardno Limited
Ordinary shares
Shares held in
escrow
Options over
Ordinary Shares
A H Barnes
A D Buckley
P J Cosgrove
J I Forbes
T C Johnson
I J Johnston
J C Massey
G G Tamblyn
3,348
2,359,037
-
19,947
1,967,399
207,390
44,382
1,426,330
-
-
-
-
-
-
-
-
-
250,000
-
120,000
90,000
-
-
60,000
The movement during the reporting period in the number of ordinary shares in Cardno Limited held,
directly, indirectly or beneficially, by each key management person, including their related parties, is as
follows:
Held at 1 July
2008
Purchases
Received as
Compensation
Sales
Held at 30 June
2009
Non–Executive Directors
John Massey
Anthony Barnes
Peter Cosgrove
Ian Johnston
Executive Directors
Graham Tamblyn
Andrew Buckley
Jeffrey Forbes
Trevor Johnson
Executives
Roger Collins-Woolcock
Steven Coote
Paul Gardiner
Michael Renshaw
Charles Tapp
Share Options
30,687
-
-
200,000
1,407,000
2,322,952
3,377
1,963,704
791,090
556,546
796,132
149,284
161
13,695
3,348
-
7,390
19,330
36,085
16,570
3,695
-
-
3,695
3,615
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
314
314
314
314
314
137,752
-
-
-
-
44,382
3,348
-
207,390
1,426,330
2,359,037
19,947
1,967,399
653,652
556,860
800,141
153,213
475
Options granted to Executive Directors and Officers of the Company
The Company granted options for no consideration over unissued ordinary shares in Cardno Limited to
the following Executive Directors and key management personnel and to the following most highly
remunerated Officers of the Company as part of their remuneration:
Key Management
Personnel
Andrew Buckley
Jeffrey Forbes
Trevor Johnson
Graham Tamblyn
James Verco*
Roger Collins-Woolcock
Steven Coote
Paul Gardiner
Michael Renshaw
Charles Tapp
Title
2009
2008
Managing Director
Executive Director
Executive Director
Executive Director
Executive Director
General Manager – South East Australia & NZ
General Manager - Group Operations
General Manager – North & West Australia
General Manager – North America Region
General Manager – Emerging Markets Region
-
-
-
-
-
60,000
70,000
70,000
60,000
50,000
250,000
120,000
90,000
60,000
40,000
75,000
100,000
100,000
75,000
60,000
* resigned as director on 25 October 2007.
Non-Executive Directors do not participate in any of the Company’s incentive plans.
All options were granted during the financial year. No options have been granted since the end of the
financial year and up to the date of this report.
Page 17 of 76
Directors’ Report
Cardno Limited and its Controlled Entities for the year ended 30 June 2009
The movement during the reporting period in the number of options over ordinary shares in Cardno
Limited held, directly, indirectly or beneficially, by each key management person, including their related
parties, is as follows:
2009
Directors
A D Buckley
J I Forbes
T C Johnson
G G Tamblyn
Executives
R J K Collins-Woolcock
S V Coote
P W Gardiner
M J Renshaw
C W N Tapp
Held at
1 July 2008
Granted as
compensation
Expired
Held at
30 June 2009
Vested and
exercisable at
30 June 2009
310,000
150,000
120,000
75,000
100,000
140,000
140,000
100,000
60,000
-
-
-
-
60,000
70,000
70,000
60,000
50,000
60,000
30,000
30,000
15,000
25,000
40,000
40,000
25,000
-
250,000
120,000
90,000
60,000
135,000
170,000
170,000
135,000
110,000
-
-
-
-
-
-
-
-
-
Unissued shares under option
At the date of this report unissued ordinary shares of the Company under option are:
Exercise Date
19 October 2009
19 October 2010
29 November 2009
29 November 2010
29 November 2011
Expiry date
25 October 2009
25 October 2010
5 December 2009
5 December 2010
5 December 2011
Exercise price
$7.57
$7.57
$7.71
$7.71
$3.35
Number of options
230,000
330,000
1,272,500
1,719,000
2,421,000
These options do not entitle the holder to participate in any share issue of the Company.
Page 18 of 76
Directors’ Report
Cardno Limited and its Controlled Entities for the year ended 30 June 2009
Non-Audit Services
During the year WHK Horwath, the Company’s auditor, has performed no other services in addition to
their statutory audit duties as set out in Note 32. Subsidiary company auditors have performed other
non-audit services and these are outlined in Note 32.
The Board of Directors has considered the position and, in accordance with advice received from the
Audit, Risk & Compliance Committee, is satisfied that the provision of the non-audit services by the
subsidiary auditors is compatible with the general standard of independence for auditors imposed by
the Corporations Act 2001. The Directors are satisfied that the provision of non-audit services by the
subsidiary auditors, as set out above, did not compromise the auditor independence requirements of
the Corporations Act 2001 for the following reasons:
(cid:131) all non-audit services have been reviewed by the Audit, Risk & Compliance Committee to
ensure they do not impact the impartiality and objectivity of the auditor
(cid:131) none of the services undermine the general principles relating to auditor independence as set
out in APES 110 Code of Ethics for Professional Accountants.
Lead Auditor’s Independence Declaration Under Section 307C of the Corporations Act 2001
The lead auditor’s independence declaration is set out on page 20 and forms part of the Directors’
report for the year ended 30 June 2009.
Rounding of Amounts
The Company is of a kind referred to in Class Order 98/100, issued by the Australian Securities and
Investments Commission, relating to the ‘rounding off’ of amounts in the Directors’ report and financial
statements. Amounts in the Directors’ report and financial report have been rounded off in accordance
with that Class Order to the nearest thousand dollars, or in certain cases, to the nearest dollar.
Signed in accordance with a resolution of directors.
On behalf of the Directors
JOHN C MASSEY
Chairman
Brisbane
18 August 2009
Page 19 of 76
Auditor’s Independence Declaration under Section 307C of the Corporations Act 2001
To the Directors of Cardno Limited
I declare that, to the best of my knowledge and belief, during the year ended 30 June 2009 there have
been:
(i)
(ii)
no contraventions of the auditor independence requirements of the Corporations Act
2001 in relation to the audit; and
no contraventions of any applicable code of professional conduct in relation to the
audit.
Signed at Brisbane 18 August 2009.
WHK HORWATH
RUSSELL Q COLE
Principal
Liability limited by a scheme approved under Professional Standards Legislation other than for the acts
or omissions of financial services licensees.
Member Crowe Horwath International
WHK Horwath Brisbane
Level 16, WHK Horwath Centre 120 Edward Street
Brisbane Queensland 4000 Australia
GPO Box 736 Brisbane Queensland 4001 Australia
Telephone +61 7 3233 3555 Facsimile +61 7 3210 6183
Email info.bri@whkhorwath.com.au www.whkhorwath.com.au
A WHK Group firm
WHK Pty Ltd trading as WHK Horwath Brisbane is a member of Crowe Horwath International Association, a Swiss
verein.
Each member firm of Crowe Horwath is a separate and independent legal entity
Page 20 of 76
Corporate Governance Statement
The Board of Directors of Cardno Limited is ultimately responsible for all corporate governance matters
of the consolidated entity and is accountable to the shareholders for the overall business performance
of the company. Details of the corporate governance policies of the company can be found in the
Investor Centre of the company’s website, www.cardno.com.au.
Cardno Limited is committed to implementing and maintaining sound corporate governance practices
and has considered the ASX Corporate Governance Principles and Recommendations (Second Edition)
in the development of its corporate governance. The Board has assessed the company’s current
practice against these Principles and Recommendations and notes that the company’s practices are
consistent except where stated below.
Principle 1: Lay solid foundation for management and oversight
The role of the Board and delegation to Senior Executives has been formalised. The most significant
responsibilities of the Board are:
(cid:131) providing strategic guidance to the company including contributing to the development of and
(cid:131)
approving the corporate strategy;
reviewing and approving business plans, the annual budget and financial plans including available
resources and major capital expenditure initiatives;
reviewing the operational and financial performance of the company’s activities;
reporting to shareholders and the market;
(cid:131)
(cid:131)
(cid:131) ensuring compliance with prudential regulations and standards;
(cid:131) ensuring adequate risk management processes are in place;
(cid:131)
reviewing internal controls and internal and external audit reports;
(cid:131) monitoring and influencing the culture and reputation of the company;
(cid:131) monitoring board composition, director selection and board process and performance;
(cid:131) approving key executive appointments and ensuring executive succession planning;
(cid:131)
reviewing the performance and remuneration of the Managing Director and Senior Executives;
(cid:131) ensuring that the Board as a whole has an appropriate understanding of each substantial segment
of the business; and
(cid:131) authorising and monitoring major investment and strategic commitments.
The Board has delegated to Senior Executives responsibility for the implementation of the company’s
strategic direction, business plans and day-to-day management of the company’s operations.
The performance of Senior Executives is evaluated by the Board through formal performance reviews
undertaken on an annual basis. The individual performance of each Senior Executive is reviewed
against goals set in the previous year and new objectives are established for the following financial
year. The performance reviews were completed during the year in accordance with the process agreed
by the Board.
The Board endorses a culture of continuous improvement and will therefore continue to refine and
develop its role and the delegation of responsibilities to management as the company develops.
The Board’s responsibilities and functions are also contained in the company’s Corporate Governance
Policy which can be accessed in the Investor Centre on the company’s website.
Principle 2: Structure the Board to add value
To add value, the Board has been formed so that it has effective composition, size and commitment to
adequately discharge its responsibilities and duties. Collectively the Directors have a broad range of
experience, expertise, skills, qualifications and contacts relevant to the business. Details of the skills
and experience of each Director are contained in the Directors’ Report and on the company’s website.
The Board currently comprises four Non-executive Directors including the Chairman, and four Executive
Directors.
Page 21 of 76
Corporate Governance Statement
The Board has adopted the following criteria to determine the independence of a Director as someone
who must be a Non-executive Director and:
(cid:131)
is not a substantial shareholder of the company or an officer of, or otherwise associated directly
with, a substantial shareholder of the company;
(cid:131) within the last three years has not been employed in an executive capacity by the company or
another group member, or been a director after ceasing to hold any such employment;
(cid:131) within the last three years has not been a principal of a material professional adviser or a material
consultant to the company or another group member or an employee materially associated with
the service provided;
is not a material supplier or customer of the company or another group member, or an officer of
or otherwise associated directly or indirectly with a material supplier or customer;
(cid:131)
(cid:131) has no material contractual relationship with the company or other group member other than as a
Director of the company;
(cid:131) has not served on the Board for a period which could, or could reasonably be perceived to,
materially interfere with the Director’s ability to act in the best interests of the company; and
is free from any interest and any business or other relationship which could, or could reasonably
be perceived to, materially interfere with the Director’s ability to act in the best interests of the
company.
(cid:131)
The Board has confirmed that based on this definition of independence, Mr Massey, General Cosgrove
and Mr Barnes are independent Non-executive Directors. The Board determined that Mr Johnston
meets the independence definition except with respect to his former role as a Director of ABN AMRO
Morgans Limited. The Board noted Mr Johnston’s current role with ABN AMRO Morgans and
considers that it does not materially interfere with Mr Johnston’s ability to act independently in the
in
terests of the company.
It is currently considered appropriate to have a number of Executive Directors on the Board as they
have a strong awareness of management issues and a deep knowledge of the company. The company
has reduced the number of Executive Directors and increased the number of Non-executive Directors
over recent years. The Board considers it appropriate to transition over time to a majority of
N
on-executive Directors.
The role of the Chairman and Chief Executive Officer are separate. The Chairman of the Board is
Mr Massey who is an independent Non-executive Director. The Chief Executive Officer and Managing
Director is Mr Buckley. Each Director, as part of his agreement with the company has the ability to
se
ek independent advice at the company’s expense after consultation with the Chairman.
The Nomination Committee is comprised by three Non-executive Directors, Mr Massey (Chairman),
General Cosgrove, Mr Johnston and the Managing Director Mr Buckley. Details of the number of
m
eetings of the Committee and members’ attendance can be found in the Directors’ Report.
The Nomination Committee facilitates Board and individual Director performance reviews and
evaluation on at least an annual basis using an external facilitator as necessary to ensure independent
professional scrutiny and benchmarking against developing best practices. The results of the review are
presented to the Chairman and to the Board. A performance evaluation in the financial year 2009 was
u
ndertaken in accordance with board procedure and involving an independent board consultant.
The Board acknowledges that performance can always be enhanced and will continue to seek and
c
onsider ways of further enhancing performance both individually and collectively.
The Nomination Committee assists the Board in determining the composition of the Board and its
committees. When considering a candidate as a Director, consideration is given to the candidate’s
ability to act in the best interests of shareholders as well as specific skills and expertise. Consideration
is also given to the candidate’s capacity to understand the impacts of various laws and regulations on
their role and on the company including company law, trade practices legislation, environmental law,
occupational health and safety, equal opportunity and taxation.
Page 22 of 76
Corporate Governance Statement
As the company has significant operations outside of Australia, consideration is also given to the
candidate’s ability to understand the impacts of foreign jurisdiction legislation, foreign currency issues
and the business environment in the countries in which the company operates. In addition,
consideration is given to the candidate’s knowledge of the areas of the company’s operations, risk
management concepts and how they apply to the company and also whether the candidate is up to
date with issues of corporate governance.
New Directors undergo an induction process in which they are given an extensive briefing on the
company. This includes meetings with key executives, tours of the relevant premises, an induction
package and presentations. A formal letter of appointment is provided.
In order to achieve continuing improvement in Board performance, all Directors are encouraged to
undergo continuing professional development. Specifically, Directors are provided with the resources
and training to address skills gaps where they are identified.
The Nomination Committee has responsibility for independently supervising the company’s Leadership
Development Programme as part of its succession considerations.
The roles and responsibilities of the Nomination Committee are summarised in the Investor Centre of
the company’s website.
Principle 3: Promote ethical and responsible decision making
The Board has adopted a Code of Conduct for Directors, Senior Executives and staff. The Code of
Conduct is regularly reviewed and updated as necessary to ensure it reflects the highest standards of
behaviour, professionalism and practices necessary to maintain confidence in the company’s integrity.
The code has six governing principles namely honesty and integrity, confidentiality of information,
integrity of personal dealings, conflicts of interest, abiding by the law and gifts and entertainment.
The Board also promotes the maintenance of an open working environment in which all employees and
contractors are able to report instances of unethical, improper, unlawful or undesirable conduct without
fear of intimidation or reprisal. This is endorsed through the Whistleblowers Protection Policy.
The Board has adopted a policy for trading in Cardno securities by Directors, Senior Executives and
staff. The purpose of these codes is to guide Directors and Senior Executives in the performance of
their activities and to define the circumstances in which both they and staff, and any associates, are
permitted to deal in securities.
These codes and policy have been designed with a view to ensuring the highest ethical and
professional standards as well as compliance with legal obligations. Both codes and the policy are
available for review in the Investor Centre of the company’s website.
Principle 4: Safeguard integrity in financial reporting
The Managing Director and Chief Financial Officer have provided the Board with a statement
confirming that the company’s financial reports present a true and fair view of the company’s financial
position and are in accordance with relevant accounting standards. The Audit, Risk & Compliance
Committee consists of three Non-executive Directors, Mr Barnes, Mr Johnston and Mr Massey and one
Executive Director, Dr Johnson. Mr Barnes, an independent Non-executive Director, has recently been
appointed as Chairman of the Audit, Risk & Compliance Committee in place of another Non-executive
Director, Mr Johnston. Mr Barnes is not the Chairman of the company. Details of the number of
meetings of the Committee and members attendance can be found in the Directors’ Report.
The guidelines provide for the Audit, Risk & Compliance Committee to consist of at least three
members and consist only of Non-executive Directors. The Board considers that it is appropriate to
have one Executive Director on the Audit, Risk & Compliance Committee to ensure there is appropriate
insight when considering the company’s operations and risks.
Page 23 of 76
Corporate Governance Statement
The company determined that for the 2010 financial year external audit and thereafter to appoint a
single global auditor for all the company’s operations and conducted a formal tender process. Tenders
were sought from appropriately qualified external audit firms. These tenders were assessed against
specific criteria established and agreed by the Audit, Risk & Compliance Committee and Senior
Executives. As a result of this process the Board will recommend to shareholders the appointment of
KPMG as the company’s external auditor commencing during the fiscal year 2010.
The Audit, Risk & Compliance Committee requires the rotation at least every three years of the
external audit engagement partner. The selection of the external audit engagement partner is assessed
against specific criteria established and agreed by the Audit, Risk & Compliance Committee.
The role, objective and responsibilities of the Audit, Risk & Compliance Committee is able to be
accessed in the Investor Centre of the company’s website.
Principle 5: Make timely and balanced disclosure
The company has adopted a Continuous Disclosure Policy which can be viewed in the Investor Centre
of the company’s website. The purpose of this policy is to set out the procedures to be followed to
enable accurate, timely, clear and adequate disclosure to the market and compliance with the ASX
Listing Rules regarding disclosure. The Policy also operates to ensure that all employees are aware of
their obligations for compliance within the continuous disclosure obligations. The Board regularly
reviews its disclosure to ensure the market is kept informed of price sensitive or significant information
in accordance with the Listing Rules.
The Company Secretary has been nominated as the person responsible for communications with the
Australian Securities Exchange (ASX). This role includes the responsibility for ensuring compliance with
the continuous disclosure requirements in the ASX Listing Rules and overseeing and co-ordinating
information disclosure to the ASX, analysts, brokers, shareholders, the media and the public. Further
comments related to making timely and balanced disclosure are covered with consideration of the next
Principle.
Principle 6: Respect the rights of shareholders
The Board recognises the important rights of shareholders and strives to communicate with
shareholders regularly and clearly – both by electronic means and using more traditional communication
methods. Shareholders are encouraged to attend and participate at general meetings. The company’s
auditors attend the Annual General Meeting of the company and are available to answer shareholders’
questions.
The Communications Policy adopted by the company includes:
(cid:131) communicating effectively with shareholders through releases to the market via the ASX, the
media, the company’s website, information mailed to shareholders and the general meetings of
the company;
(cid:131) all information disclosed to the ASX is posted on the company’s website when it is disclosed to
the ASX. Presentation material used in public presentations and to brief analysts is released to
the ASX and posted on the company’s website;
(cid:131) giving shareholders ready access to balanced and understandable information about the company
(cid:131)
and corporate proposals; and
the external auditor attending the Annual General Meeting and being available to answer
shareholder questions about the conduct of the audit and the preparation and content of the
Auditor’s Report.
A copy of the company’s Communications Policy is able to be reviewed in the Investor Centre of the
company’s website.
Page 24 of 76
Corporate Governance Statement
Principle 7: Recognise and manage risk
The Board, together with management, has sought to identify, monitor and mitigate risk. Internal
controls are monitored on a continuous basis and wherever possible, improved. The issue of risk
management is formalised in the company’s Corporate Governance Policy and in the Audit, Risk &
Compliance Committee Terms of Reference which are both kept under regular review. The review
takes place at both committee level through the Board’s Audit, Risk & Compliance Committee which
meets at least four times each year, and at board level. The Audit, Risk & Compliance Committee has
established policies and procedures to identify and monitor business risks as well as adopting an
internal compliance and control system to manage material business risk.
The Operational Risk Management Committee, which is comprised of the Managing Director and
Senior Executives who are representative of all aspects of the company’s business across the globe,
regularly reports to the Audit, Risk & Compliance Committee. The Operational Risk Management
Committee has responsibility for oversight and maintenance of the Enterprise Wide Risk Management
System, the company’s Operational Risk Management Plan, which has been established in accordance
with AS/NZ 4360:2004. The Operational Risk Management Committee also has responsibility for
operational risks, quality control issues and operations processes.
The Audit, Risk & Compliance Committee reports to the Board regularly on the implementation and
management of the Enterprise Wide Risk Management System and identifies significant risks to the
company and how they are being mitigated and managed by management via the Operational Risk
Management Committee.
This structure allows the company to assess risks ranging from low to very high and it is those risks
that are identified as significant that are referred to in the Financial Report.
The company also monitors the quality and accuracy of its services through a Quality Management
System. The details of the Quality Management System are available to staff via the company’s
intranet and client feedback is a feature of the system.
The Managing Director and Chief Financial Officer attest to the Board the soundness of the risk
management and internal control systems each year and that the system is operating effectively in all
material aspects in relation to financial risks.
The objective, roles and responsibilities of the Audit & Risk Compliance Committee and Operational
Risk Management Committee and each committee’s terms of reference are able to be accessed in the
Investor Centre of the company’s website.
Principle 8: Remunerate fairly and responsibly
The company has established a Remuneration Committee. The Remuneration Committee, which
advises and reports to the Board, is chaired by the Chairman, Mr Massey and includes Mr Barnes and
Mr Johnston, all Non-executive Directors. Details of the number of meetings of the committee and
members’ attendance can be found in the Directors’ Report. The current remuneration of the
Directors and the Senior Executives is published in the Directors’ Report.
The Executive Director and Senior Executive Remuneration Policy is:
Cardno Limited seeks to set fair and market competitive remuneration for its Senior Executives to
ensure high performance and long-term commitment while taking into consideration the best interest of
shareholders. Senior Executives’ remuneration consists of fixed salary, potential long term incentive
participation, discretionary cash bonuses and other benefits including superannuation and salary
sacrificing. In determining the salary of Senior Executives, an assessment of performance is completed
and a review of the market is conducted. The company takes into account the responsibilities of the
individual’s position, the level of skill and experience as well as the company’s business.
If the employment of a Senior Executive is terminated, the Senior Executive is entitled to receive pay in
lieu of notice and compensation for employee entitlements such as annual leave and long service leave
up to the termination date and by reference to the Senior Executive’s remuneration.
Page 25 of 76
Corporate Governance Statement
Where the Executive Directors participate in equity-based incentive plans, the details are submitted to
shareholders for approval.
The Remuneration Policy in regard to Non-executive Directors is:
The Non-executive Directors of Cardno Limited are entitled to a fee that is determined by the Board on
commencement of the role and reviewed on an annual basis thereafter. The fee includes compulsory
superannuation contributions. Non-executive Directors do not participate in equity plans of the
company and do not receive retirement benefits. The fee covers both Board and sub-committee
responsibilities.
The company’s Trading Policy specifically prohibits any Director, Senior Executive or employee from
transacting in short selling, trading in products which limit the risk associated with the holding of
unvested securities or profiting from trading in securities which decrease in market value. A copy of
this policy can be accessed in the Investor Centre of the company’s website.
The role, objectives and responsibilities of the Remuneration Committee is able to be accessed in the
Investor Centre of the company’s website.
Page 26 of 76
Income Statements
Cardno Limited and its Controlled Entities for the year ended 30 June 2009
Revenue
Consumables and materials used
Sub-consultant and contractor costs
Employee benefits expense
Depreciation and amortisation expenses
Financing costs
Other expenses
Profit/(loss) before income tax
Income tax (expense) / benefit
Net profit/(loss) for the year
Basic earnings per share (cents per share)
Diluted earnings per share (cents per share)
Note
Consolidated
Cardno Limited
2009
$’000
515,842
2008
$’000
399,035
2009
$’000
28,721
2008
$’000
22,145
(145,272)
(61,848)
(231,464)
(11,003)
(4,637)
(19,526)
(109,265)
(28,582)
(190,718)
(8,088)
(3,775)
(19,921)
-
-
(655)
-
(583)
2,185
-
(59)
(276)
-
(3,082)
(1,010)
42,092
(7,939)
34,153
38,686
(11,234)
27,452
29,668
214
29,882
17,718
2,108
19,826
43.82
43.82
42.00
41.34
-
-
-
-
2
3
3
3
3
4
31
31
The income statements should be read in conjunction with notes 1 to 39 which form part of the financial statements.
Page 27 of 76
Balance Sheets
Cardno Limited and its Controlled Entities as at 30 June 2009
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Inventories
Other current assets
TOTAL CURRENT ASSETS
NON-CURRENT ASSETS
Trade and other receivables
Other financial assets
Property, plant and equipment
Deferred tax assets
Intangible assets
Other non-current assets
TOTAL NON-CURRENT ASSETS
TOTAL ASSETS
CURRENT LIABILITIES
Trade and other payables
Interest-bearing loans and borrowings
Current tax liabilities
Short term provisions
Other current liabilities
TOTAL CURRENT LIABILITIES
NON-CURRENT LIABILITIES
Trade and other payables
Interest-bearing loans and borrowings
Deferred tax liabilities
Long term provisions
Other non-current liabilities
TOTAL NON-CURRENT LIABILITIES
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issued capital
Reserves
Retained earnings
TOTAL EQUITY
Note
Consolidated
Cardno Limited
2009
$’000
2008
$’000
2009
$’000
2008
$’000
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
13
22
23
24
65,808
92,072
56,419
4,794
219,093
1,650
553
27,014
11,992
222,091
213
263,513
52,624
83,219
47,910
3,634
187,387
216
37
22,026
8,737
165,175
266
196,457
-
195,973
-
122
196,095
-
183,686
-
93
183,779
-
97,370
-
-
-
210
97,580
-
73,610
-
66
-
266
73,942
482,606
383,844
293,675
257,721
58,779
8,976
4,115
13,206
38,033
41,560
12,824
9,368
11,610
30,139
123,109
105,501
-
76,076
10,940
5,629
931
93,576
198
45,174
9,040
5,440
425
60,277
44,736
-
4,989
-
-
49,725
-
-
816
-
-
816
7,377
2,756
7,614
-
-
17,747
-
40,682
-
-
-
40,682
216,685
165,778
50,541
58,429
265,921
218,066
243,134
199,292
227,457
(4,293)
42,757
265,921
192,063
(4,035)
30,038
218,066
227,457
-
15,677
243,134
192,063
-
7,229
199,292
The balance sheets should be read in conjunction with notes 1 to 39 which form part of the financial statements.
Page 28 of 76
Statements of Changes in Equity
Cardno Limited and its Controlled Entities for the year ending 30 June 2009
Consolidated
Note
5
BALANCE AT 1 JULY 2007
Shares issued
Notes converted to shares
Profit for the period
Dividends paid or provided
Restatement of functional currency
BALANCE AT 30 JUNE 2008
Shares issued
Notes converted to shares
Profit for the period
Dividends paid or provided
Restatement of functional currency
BALANCE AT 30 JUNE 2009
5
Company
Note
BALANCE AT 1 JULY 2007
Shares issued
Notes converted to shares
Profit for the period
Dividends paid or provided
BALANCE AT 30 JUNE 2008
Shares issued
Notes converted to shares
Profit for the period
Dividends paid or provided
BALANCE AT 30 JUNE 2009
5
5
Issued Capital
Ordinary
$’000
92,245
96,961
2,857
-
-
-
192,063
32,741
2,653
-
-
-
227,457
Issued Capital
Ordinary
$’000
92,245
96,961
2,857
-
-
192,063
32,741
2,653
-
-
227,457
Retained
Earnings
$’000
18,935
-
-
27,452
(16,349)
-
30,038
-
-
34,153
(21,434)
-
42,757
Retained
Earnings
$’000
3,752
-
-
19,826
(16,349)
7,229
-
-
29,882
(21,434)
15,677
Forex
Reserve
$’000
70
-
-
-
-
(4,105)
(4,035)
-
-
-
-
(258)
(4,293)
Forex
Reserve
$’000
-
-
-
-
-
-
-
-
-
-
-
Total
$’000
111,250
96,961
2,857
27,452
(16,349)
(4,105)
218,066
32,741
2,653
34,153
(21,434)
(258)
265,921
Total
$’000
95,997
96,961
2,857
19,826
(16,349)
199,292
32,741
2,653
29,882
(21,434)
243,134
The statements of changes in equity should be read in conjunction with notes 1 to 39 which form part of the financial statements.
Page 29 of 76
Cash Flow Statements
Cardno Limited and its Controlled Entities for the year ended 30 June 2009
Note
Consolidated
Cardno Limited
2009
$’000
2008
$’000
2009
$’000
2008
$’000
26(a)
26(d)
CASH FLOWS FROM OPERATING ACTIVITIES
Cash receipts from customers
Interest received
Finance costs
Cash paid to suppliers and employees
Income tax paid
NET CASH PROVIDED BY/(USED IN)
OPERATING ACTIVITIES
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of subsidiaries, net of cash
acquired
Payment of direct costs of acquisition
Additions to intangibles
Proceeds from sale of property, plant &
equipment
Payments for property, plant & equipment
NET CASH PROVIDED BY/(USED IN) INVESTING
ACTIVITIES
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of shares
Payment of vendor liability
Payments to/(from) controlled entities
Proceeds from/(Repayment of) borrowings
Dividends paid
NET CASH PROVIDED BY/(USED IN) FINANCING
ACTIVITIES
550,769
1,492
(4,768)
(494,189)
(14,715)
421,574
1,766
(3,775)
(375,083)
(6,969)
-
4,621
(776)
1,547
(10,833)
-
545
(3,082)
10,581
(4,885)
38,589
37,513
(5,441)
3,159
(42,023)
(620)
-
(66,558)
(896)
(1,453)
1,588
(9,716)
460
(5,205)
(50,771)
(73,652)
-
-
-
-
-
-
-
-
-
-
-
-
28,587
-
-
14,350
(19,374)
94,092
(4,006)
-
(2,900)
(15,275)
28,587
-
37,013
(40,785)
(19,374)
94,092
-
(81,976)
-
(15,275)
23,563
71,911
5,441
(3,159)
NET INCREASE/(DECREASE) IN CASH AND CASH
EQUIVALENTS HELD
11,381
35,772
CASH AND CASH EQUIVALENTS AT 1 JULY
52,624
18,924
Effects of exchange rate changes on cash
and cash equivalents
1,803
(2,072)
CASH AND CASH EQUIVALENTS AT
30 JUNE
26(b)
65,808
52,624
-
-
-
-
-
-
-
-
The cash flow statements should be read in conjunction with notes 1 to 39 which form part of the financial statements.
Page 30 of 76
Notes to the Financial Statements
Cardno Limited and its Controlled Entities for the year ended 30 June 2009
1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
Cardno Limited (the “Company”) is a company incorporated and domiciled in Australia. The consolidated financial
report of the Company for the year ended 30 June 2009 encompasses the Company and its subsidiaries (together
referred to as the “consolidated entity”).
The financial report was authorised for issue by the Board of Directors on 18 August 2009.
(a) Statement of compliance
The financial report is a general purpose financial report which has been prepared in accordance with Australian
Accounting Standards (AASBs including Australian Interpretations) adopted by the Australian Accounting
Standards Board (AASB), Urgent Issues Group Interpretations (“UIG”) and the Corporations Act 2001. The
financial reports of the consolidated entity and the Company also comply with International Financial Reporting
Standards and interpretations adopted by the International Accounting Standards Board.
(b) Basis of Preparation
The financial report has been prepared on an accrual and historical cost basis, modified by the revaluation of
selected non-current assets, financial assets and financial liabilities for which the fair value basis of accounting has
been applied.
The consolidated financial statements are presented in Australian dollars, which is the Company’s functional
currency and the functional currency of the majority of the Group.
The following standards, amendments to standards and interpretations have been identified as those which may
impact the entity in the period of initial application. They are available for early adoption at 30 June 2008, but
have not been applied in preparing this financial report.
(cid:131) Revised AASB 3 Business Combinations changes the application of acquisition accounting for business
combinations and the accounting for non-controlling (minority) interests. Key changes include: the immediate
expensing of all transaction costs; measurement of contingent consideration at acquisition date with
subsequent changes through the income statement; measurement of non-controlling (minority) interests at full
fair value or the proportionate share of the fair value of the underlying net assets; guidance on issues such as
reacquired rights and vendor indemnities; and the inclusion of combinations by contract alone and those
involving mutuals. The revised standard becomes mandatory for the Group’s 30 June 2010 financial
statements. The Group has not yet determined the potential effect of the revised standard on the Group’s
financial report.
(cid:131) AASB 8 Operating Segments introduces the “management approach” to segment reporting. AASB 8, which
becomes mandatory for the Group’s 30 June 2010 financial statements, will require the disclosure of segment
information based on the internal reports regularly reviewed by the Group’s Chief Operating Decision Maker in
order to assess each segment’s performance and to allocate resources to them. Currently the Group presents
segment information in respect of its business segments as its primary reporting segments and its
geographical segments as its secondary reporting segments (see note 37). Under the management approach,
changes will be required to the group segments.
(cid:131) Revised AASB 101 Presentation of Financial Statements introduces as a financial statement (formerly
“primary” statement) the “statement of comprehensive income” and makes changes to the statement of
changes in equity. The revised standard does not change the recognition, measurement of disclosure of
transactions and events that are required by other AASBs. The revised AASB 101 will become mandatory for
the Group’s 30 June 2010 financial statements. The Group has not yet determined the potential effect of the
revised standard on the Group’s disclosures.
(cid:131) Revised AASB 123 Borrowing Costs removes the option to expense all borrowing costs and requires that an
entity capitalise borrowing costs directly attributable to the acquisition, construction or production of a
qualifying asset as part of the cost of that asset. The revised AASB 123 will become mandatory for the
Group’s 30 June 2010 financial statements and will constitute a change in accounting policy for the Group.
In accordance with the transitional provisions the Group will apply the revised AASB 123 to qualifying assets
for which capitalisation of borrowing costs commences on or after the effe
ctive date. The Group has not yet
determined the potential effect of the revised standard on future earnings.
Page 31 of 76
Notes to the Financial Statements
Cardno Limited and its Controlled Entities for the year ended 30 June 2009
1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
(b) Basis of Preparation continued
(cid:131) Revised AASB 127 Consolidated and Separate Financial Statements changes the accounting for investments
in subsidiaries. Key changes include: the remeasurement to fair value of any previous/retained investment
when control is obtained/lost, with any resulting gain or loss being recognised in profit or loss; and the
treatment of increases in ownership interest after control is obtained as transactions with equity holders in
their capacity as equity holders. The revised standard will become mandatory for the Group’s 30 June 2010
financial statements. The Group has not yet determined the potential effect of the revised standard on the
Group’s financial report.
(cid:131) AASB 2008-1 Amendments to Australian Accounting Standard – Share-based Payment: Vesting Conditions
and Cancellations changes the measurement of share-based payments that contain non-vesting conditions.
AASB 2008-1 becomes mandatory for the Group’s 30 June 2010 financial statements. The Group has not
yet determined the potential effect of the amending standard on the Group’s financial report.
(cid:131) AASB 2008-7 Amendments to Australian Accounting Standards – Cost of an Investment in a Subsidiary,
Jointly Controlled Entity or Associate (effective 1 July 2009). In July 2008, the AASB approved amendments
to AASB 1 First-Time Adoption of International Financial Reporting Standards and AASB 127 Consolidated and
Separate Financial Statements. The revised rules apply prospectively from 1 July 2009 so that:
o All dividends received from investments in subsidiaries, jointly controlled entities or associates will be
recognised as revenue including dividends declared out of pre-acquisition profits ie. These dividends
will no longer be deducted from the cost of the investment. As a result, investments in subsidiaries,
jointly controlled entities and associates may need to be tested for impairment when a dividend is
paid.
o Where there is, in substance, no change to Group interests, parent entities inserted above existing
Groups shall measure its investments at the carrying amount of the net assets of the subsidiary rather
than the subsidiary’s fair value at the date of reorganisation.
(cid:131) AASB 2008-8 Amendments to IAS 39 Financial Instruments: Recognition and Measurement (applicable for
annual reporting periods commencing from 1 July 2009). AASB 2008-8 amends 139 Financial Instruments:
Recognition and Measurement and must be applied retrospectively in accordance with AASB 108 Accounting
Policies, Changes in Accounting Estimates and Errors. This amendment makes two significant changes. It
prohibits designating inflation as a hedgeable component of fixed rate debt and prohibits including time value
in the one-sided hedge risk when designating options as hedges. The amendments are not expected to
materially affect the Group.
(cid:131)
(cid:131)
AASB Interpretation 17: Distributions of Non-cash Assets to Owners and AASB 2008-13 Amendments to
Australian Accounting Standards arising from AASB Interpretation 17 (applicable for annual reporting periods
commencing 1 July 2009). This interpretation applies to situations where an entity pays dividends by
distributing non-cash assets to its shareholders. The interpretation which applies prospectively, clarifies that
non-cash dividends paid or payable should be measured at the fair value of the net assets distributed or to be
distributed. Any difference between the fair value and carrying value of the assets is recognised in profit or
loss on distribution. The interpretation also clarifies when a liability for a dividend must be recognised and
measured at fair value. The Group will apply the interpretation
prospectively from 1 July 2009. The group
has not yet determined the potential effect of the interpretation.
AASB Interpretation 18: Transfers of Assets from customers (applicable for annual reporting periods
commencing from 1 July 2009). The interpretation provides guidance on the accounting for contributions
from customers in the form of transfers of property, plant and equipment, or the cash to acquire and construct
property, plant and equipment. The Group will apply the interpretation p
rospectively from 1 July 2009. The
interpretation is not expected to have a significant impact on the group.
Page 32 of 76
Notes to the Financial Statements
Cardno Limited and its Controlled Entities for the year ended 30 June 2009
1
. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
(b
) Basis of Preparation continued
The Company is of a kind referred to in ASIC Class Order 98/100 dated 10 July 1998 (updated by CO 05/641
effective 28 July 2005 and CO 06/51 effective 31 January 2006) and in accordance with that Class Order,
amounts in the fina
ncial report and Directors’ Report have been rounded off to the nearest thousand dollars, unless
o
therwise stated.
(c
) Basis of Consolidation
Subsidiaries
Subsidiaries are entities controlled by the Company. Control exits when the Company has the power, directly or
indirectly, to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In
assessing control, potential voting rights that presently are exercisable or convertible are taken into account. The
financial statements of subsidiaries are included
in the consolidated financial statements from the date that control
c
ommences until the date that control ceases.
The accounting po
b
y the Company.
licies of subsidiaries have been changed when necessary to align them with the policies adopted
In
vestments in subsidiaries are carried at their cost of acquisition in the Company’s financial statements.
A list of the controlled e
J
une financial year-end.
ntities is contained in Note 38 to the financial statements. All controlled entities have a
Transactions eliminated on consolidation
Intra-group balances, unrealised gains and losses and inter-entity
b
etween controlled entities are eliminated in full on consolidation.
balances resulting from transactions with or
(d
) Goods and Services Tax
Revenues, expenses and assets are recognised net of the amount of goods and services tax (GST), except where
se circumstances, the GST is
the amount of GST incurred is not recoverable from the taxation authority. In the
cognised as part of the cost of acquisition of the asset or as part of the expense.
re
R
eceivables and payables are stated with the amount of GST included.
The net amount of GST reco
c
onsolidated balance sheet.
verable from, or payable to, the ATO is included as a current asset or liability in the
Cash flows from operating activities are included in the cash flow statements on a gross basis. The GST
components of cash flows arising from investing a
nd financing activities which are recoverable from, or payable
to
, the ATO are classified as operating cash flows.
(e
) Foreign Currency
Foreign currency transactions
Transactions in foreign currencies are translated to the respective functional currencies of Group entities at
exchange rates at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies
at the reporting date are translated to the functional currency at the foreign exchange rate at that date. The
foreign currency gain or loss on monetary items is the difference between amortised cost in the functional
currency at the beginning of the period, adjusted for effective interest and payments during the period, and the
amortised cost in foreign currency translated at the exchange rate at the end of the period. Non-monetary assets
and liabilities denominated in foreign currencies that are measured at fair value are translated to the functional
currency at the exchange rate at the date that the fair value was determined. Foreign currency differences arising
on retranslation are recognised in profit or loss, except for differences arising on the translation of available-for-
sale equity instruments, a financial liability designated as a hedge of the net
investment in a foreign operation, or
q
ualifying cash flow hedges, which are recognised directly in equity.
Page 33 of 76
Notes to the Financial Statements
Cardno Limited and its Controlled Entities for the year ended 30 June 2009
1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
(e) Foreign Currency continued
Foreign operations
The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on acquisition,
are translated to Australian dollars at exchange rates at the reporting date. The revenue and expenses of foreign
operations are translated to Australian dollars at rates approximating the foreign exchange rates at the dates of the
transactions.
Foreign currency differences are recognised directly in equity in the foreign currency translation reserve (FCTR).
When a foreign operation is disposed of, in part or in full, the relevant amount in the FCTR is transferred to profit
or loss.
Foreign exchange gains and losses arising from a monetary item receivable from or payable to a foreign operation,
the settlement of which is neither planned nor likely in the foreseeable future, are considered to form part of a net
investment in a foreign operation and are recognised directly in equity in the FCTR.
(f) Revenue Recognition
Revenue is recognised at fair value of the consideration received net of the amount of goods and services tax
(GST) payable to the taxation authority.
Sale of goods
Revenue from the sale of goods is recognised (net of rebates, discounts and other allowances) upon the delivery of
goods to the customer.
Consulting revenue
Revenue is recognised when the service is provided. For long term contracts, revenue and expenses are
recognised in accordance with the percentage of completion method. Where a loss is expected to arise from a
contract, the loss is recognised immediately as an expense. The percentage of completion is determined by costs
to date versus total project costs.
Interest revenue
Interest revenue is recognised as it accrues, taking into account the effective yield on the financial asset.
Sale of non-current assets
The gross proceeds of non-current asset sales are recognised as revenue at the date control of the asset passes to
the buyer, usually when an unconditional contract of sale is signed.
Dividends
Revenue from dividends is recognised by the consolidated entity when dividends are received.
Revenue from distributions from controlled entities is recognised by the parent entity when they are declared by
the controlled entities.
(g) Expenses
Operating lease payments
Payments made under operating leases which are subject to fixed annual increments are recognised in the income
statement on a straight-line basis over the term of the lease. Lease incentives received are recognised in the
income statement as an integral part of the total lease expense and are spread over the lease term.
Finance lease payments
Minimum lease payments are apportioned between the finance charge and the reduction of the outstanding
liability. The finance charge is allocated to each period during the lease term so as to produce a constant periodic
rate of interest on the remaining balance of the liability.
Page 34 of 76
Notes to the Financial Statements
Cardno Limited and its Controlled Entities for the year ended 30 June 2009
1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
(h) Net Financing Costs
Interest income is recognised in the income statement as it accrues, using the effective interest method.
Borrowing costs are calculated using the effective interest method and include interest, amortisation of discounts
or premiums relating to borrowings and amortisation of ancillary costs incurred in connection with arrangement of
borrowings and foreign exchange differences arising from foreign currency borrowings to the extent that they are
regarded as an adjustment to interest costs.
Borrowing costs are expensed as incurred unless they relate to qualifying assets. Qualifying assets are assets
which take a substantial period of time to get ready for their intended use or sale. Where funds are borrowed
specifically for the acquisition, construction or production of a qualifying asset, the amount of borrowing costs
capitalised is the amount incurred in relation to that borrowing, net of any interest earned on those borrowings.
Where funds are borrowed generally, borrowing costs are capitalised using a weighted average capitalisation rate.
(i) Income Tax
Income tax expense comprises current and deferred tax. Income tax expense is recognised in profit or loss except
to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity.
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or
substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years.
Deferred tax is recognised using the balance sheet liability method, providing for temporary differences between
the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation
purposes. Deferred tax is not recognised for the following temporary differences: the initial recognition of assets
or liabilities in a transaction that is not a business combination and that affects neither accounting or taxable
profit, and differences relating to investments in subsidiaries and jointly controlled entities to the extent that it is
probable that they will not reverse in the foreseeable future. In addition, deferred tax is not recognised for taxable
temporary differences arising on the initial recognition of goodwill. Deferred tax is measured at the tax rates that
are expected to be applied to the temporary differences when they reverse, based on the laws that have been
enacted or substantively enacted by the reporting date. Deferred tax assets and liabilities are offset if there is a
legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the
same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax
liabilities and assets on a net basis or their tax assets and liabilities will be realised simultaneously.
A deferred tax asset is recognised to the extent that it is probably that future taxable profits will be available
against which the temporary difference can be utilised. Deferred tax assets are reviewed at each reporting date
and are reduced to the extent that it is no longer probable that the related tax benefit will be realised.
Additional income taxes that arise from the distribution of dividends are recognised at the same time as the liability
to pay the related dividend is recognised.
Tax consolidation
The Company and its wholly-owned Australian resident entities are part of a tax-consolidated group. As a
consequence, all members of the tax-consolidated group are taxed as a single entity from the date of forming the
tax consolidated group. The head entity within the tax-consolidated group is Cardno Limited.
Current tax expense/income, deferred tax liabilities and deferred tax assets arising from temporary differences of
the members of the tax-consolidated group are recognised in the separate financial statements of the members of
the tax-consolidated group using the ‘separate taxpayer within group’ approach by reference to the carrying
amounts of assets and liabilities in the separate financial statements of each entity and the tax values applying
under tax consolidation.
Any current tax liabilities (or assets) and deferred tax assets arising from unused tax losses of the subsidiaries are
assumed by the head entity in the tax-consolidated group and are recognised by the Company as amounts payable
(receivable) to/(from) other entities in the tax-consolidated group in conjunction with any tax funding arrangement
amounts (refer below). Any difference between these amounts is recognised by the Company as an equity
contribution or distribution.
Page 35 of 76
Notes to the Financial Statements
Cardno Limited and its Controlled Entities for the year ended 30 June 2009
1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
(i) Income Tax continued
The Company recognises deferred tax assets arising from unused tax losses of the tax-consolidated group to the
extent that it is probable that future taxable profits of the tax-consolidated group will be available against which
the asset can be utilised.
Any subsequent period adjustments to deferred tax assets arising from unused tax losses as a result of revised
assessments of the probability of recoverability is recognised by the head entity only.
Nature of tax funding arrangements and tax sharing arrangements
The head entity, in conjunction with other members of the tax-consolidated group, has entered into a tax funding
arrangement which sets out the funding obligations of members of the tax-consolidated group in respect of tax
amounts. The tax funding arrangements require payments to/from the head entity equal to the current tax
liability/(asset) assumed by the head entity and any tax-loss deferred tax asset assumed by the head entity,
resulting in the head entity recognising an inter-entity receivables/(payables) equal in amount to the tax
liability/(asset) assumed. The inter-entity receivables/(payables) are repayable at call.
Contributions to fund the current tax liabilities are payable as per the tax funding arrangement and reflect the
timing of the head entity’s obligation to make payments for tax liabilities to the relevant tax authorities.
The head entity in conjunction with other members of the tax-consolidated group, has also entered into a tax
sharing agreement. The tax sharing agreement provides for the determination of the allocation of income tax
liabilities between the entities should the head entity default on its tax payment obligations. No amounts have
been recognised in the financial statements in respect of this agreement as payment of any amounts under the tax
sharing agreement is considered remote.
(j) Segment Reporting
A business segment is identified for a group of assets and operations engaged in providing products or services
that are subject to risks and returns that are different to those of other business segments. A geographical
segment is identified when products or services are provided within a particular economic environment subject to
risks and returns that are different from those of segments operating in other economic environments.
(k) Non-current Assets Held for Sale and Discontinued Operations
Immediately before classification as held for sale, the measurement of the assets (and all assets and liabilities in a
disposal group) is brought up-to-date in accordance with applicable accounting standards. Then, on initial
classification as held for sale, non-current assets and disposal groups are recognised at the lower of carrying
amount and fair value less costs to sell.
Impairment losses on initial classification as held for sale are included in profit or loss, even when there is a
revaluation. The same applies to gains and losses on subsequent remeasurement.
A discontinued operation is a component of the consolidated entity’s business that represents a separate major
line of business or geographical area of operations or is a subsidiary acquired exclusively with a view to resale.
Classification as a discontinued operation occurs upon disposal or when the operation meets the criteria to be
classified as held for sale, if earlier. A disposal group that is to be abandoned may also qualify.
(l) Trade and Other Receivables
Trade receivables are recognised and carried at original invoice amount less a provision for any uncollectible debts.
Interest income is recognised as it accrues. The recoverability of trade receivables is reviewed on an ongoing
basis. An estimate for doubtful debts is made when collection of the full nominal amount is no longer probable.
Bad debts are written off as incurred.
Page 36 of 76
Notes to the Financial Statements
Cardno Limited and its Controlled Entities for the year ended 30 June 2009
1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
(m) Inventories
Work in progress is stated at the aggregate of contract costs incurred to date plus recognised profits less
recognised losses and progress billings. If there are contracts where progress billings exceed the aggregate costs
incurred plus profits less losses, the net amounts are presented under other liabilities.
Contract costs include all costs directly related to specific contracts, costs that are specifically chargeable to the
customer under the terms of the contract and an allocation of overhead expenses incurred in connection with the
consolidated entity’s activities in general.
(n) Property, Plant and Equipment
Recognition and measurement
Items of property, plant and equipment are measured at cost less accumulated depreciation and accumulated
impairment losses.
Cost includes expenditure that is directly attributable to the acquisition of the asset. The cost of self-constructed
assets includes the cost of materials and direct labour, any other costs directly attributable to bringing the asset to
a working condition for its intended use, and the costs of dismantling and removing the items and restoring the
site on which they are located. Cost also may include transfers from equity of any gain or loss on qualifying cash
flow hedges of foreign currency purchases of property, plant and equipment. Purchased software that is integral
to the functionality of the related equipment is capitalised as part of that equipment. Borrowing costs related to
the acquisition or construction of qualifying assets are recognised in profit or loss as incurred.
When parts of an item of property, plant and equipment have different useful lives, they are accounted for as
separate items (major components) of property, plant and equipment.
Gains and losses on disposal of an item of property, plant and equipment are determined by comparing the
proceeds from disposal with the carrying amount of property, plant and equipment and are recognised net within
“other income” in the income statement. When revalued assets are sold, the amounts included in the revaluation
reserve are transferred to retained earnings.
Subsequent costs
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate,
only when it is probable that future economic benefits associated with the item will flow to the Group and the cost
of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs
and maintenance are charged to the income statement during the reporting period in which they are incurred.
Depreciation
Depreciation is recognised in profit or loss on a straight-line basis over the estimated useful lives of each part of an
item of property, plant and equipment. Leased assets are depreciated over the shorter of the lease term and their
useful lives unless it is reasonably certain that the Group will obtain ownership by the end of the lease term. Land
is not depreciated.
The estimated useful lives for the current and comparative periods are as follows:
•
•
•
•
•
buildings
laboratory equipment, instruments and amenities
equipment and motor vehicles
leasehold improvements
office furniture and equipment
40 years
4-7 years
4-7 years
4-5 years
3-11 years
Depreciation methods, useful lives and residual values are reviewed at each reporting date.
Page 37 of 76
Notes to the Financial Statements
Cardno Limited and its Controlled Entities for the year ended 30 June 2009
1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
(o) Intangible Assets
Goodwill
All business combinations are accounted for by applying the purchase method as defined in the standard. Goodwill
represents the excess of the cost of the acquisition over the fair value of the identifiable net assets acquired.
Goodwill is stated at cost less any accumulated impairment losses. Goodwill is allocated to cash-generating units
and is not amortised but is tested annually for impairment.
Negative goodwill arising on an acquisition is recognised directly in the income statement.
Works contracts and software intangibles
Works contracts and software intangibles are acquired by the consolidated entity and are stated at cost less
accumulated amortisation and impairment losses. Amortisation is calculated based on the timing of projected cash
flows of the contracts over their estimated useful lives, which currently vary from 1 to 7 years.
Patents and Licenses
Patents and licenses acquired by the consolidated entity are considered to have infinite useful lives and are stated
at cost less any impairment losses. Patents and licences are not amortised but tested for impairment annually.
Subsequent expenditure
Subsequent expenditure on capitalised intangible assets is capitalised only when it increases the future economic
benefits embodied in the specific asset to which it relates. All other expenditure is expensed as incurred.
(p) Amortisation
Amortisation is charged to the income statement on a straight-line basis over the estimated useful lives of
intangible assets unless such lives are indefinite. Goodwill and intangible assets with an indefinite life are
systematically tested for impairment at each annual balance sheet date. Works contracts which are assigned a
value are amortised over the life of the contract from the date they are available for use.
(q) Impairment
The carrying amount of the consolidated entity’s assets, other than inventories (see paragraph (m)), and deferred
tax assets (see paragraph (i)), are reviewed at each statutory reporting date to determine whether there is any
indication of impairment. If any such indication exists, an impairment test is performed. The consolidated entity
performs impairment testing of goodwill annually.
An impairment loss is recognised whenever the carrying amount of an asset or its cash generating unit exceeds its
recoverable amount. Impairment losses are recognised in the income statement unless the asset has previously
been revalued, in which case the impairment loss is recognised as a reversal to the extent of that previous
revaluation with any excess recognised through the income statement.
Impairment losses recognised in respect of cash-generating units are allocated first to reduce the carrying amount
of any goodwill allocated to the cash-generating unit (group of units) and then, to reduce the carrying amount of
the other assets in the unit (group of units) on a pro rata basis.
Calculation of recoverable amount
The recoverable amount of the consolidated entity’s receivables carried at amortised cost is calculated as the
present value of estimated future cash flows, discounted at the original effective interest rate (i.e. the effective
interest rate computed at initial recognition of these financial assets). Receivables with a short duration are not
discounted.
The recoverable amount of other assets is the greater of their fair value less costs to sell and value in use. In
assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax
discount rate that reflects current market assessments of the time value of money and the risks specific to the
asset. For an asset that does not generate largely independent cash inflows, the recoverable amount is determined
for the cash-generating unit to which the asset belongs.
Page 38 of 76
Notes to the Financial Statements
Cardno Limited and its Controlled Entities for the year ended 30 June 2009
1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
(q) Impairment continued
Reversals of impairment
An impairment loss in respect of receivables carried at amortised cost is reversed if the subsequent increase in
recoverable amount can be related objectively to an event occurring after the impairment loss was recognised.
An impairment loss in respect of goodwill is not reversed.
In respect of other assets, an impairment loss is reversed if there has been a change in the estimates used to
determine the recoverable amount.
An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying
amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been
recognised.
(r) Trade and Other Payables
Liabilities are recognised for amounts to be paid in the future for goods and services received, whether or not
billed to the consolidated entity. Trade accounts payable are normally settled within 60 days. Trade and other
payables are stated at cost.
(s) Interest Bearing Borrowings
Interest bearing borrowings are recognised initially at fair value less attributable transaction costs. Subsequent to
initial recognition, interest bearing borrowings are stated at amortised cost with any difference between cost and
redemption value being recognised in the income statement over the period of the borrowings on an effective
interest rate basis.
(t) Employee Benefits
Wages, salaries and annual leave
Liabilities for employee benefits for wages, salaries and annual leave expected to be settled within 12 months of
the period end represent present obligations resulting from employees’ services provided to reporting date,
calculated at undiscounted amounts based on remuneration wage and salary rates that the consolidated entity
expects to pay as at reporting date including related on-costs.
Long-term service benefits
The provisions for employee entitlements to long service leave and other deferred employee benefits represent the
present value of the estimated future cash outflows to be made by the employer resulting from employees’
services provided up to the balance date and include related on-costs. In determining the liability for long service
leave, consideration has been given to future increases in wage and salary rates, and the consolidated entity’s
experience with staff departures.
Liabilities for employee entitlements which are not expected to be settled within 12 months are discounted using
the rates attached to national government securities at balance date, which most closely match the terms of
maturity of the related liabilities.
Employee option scheme
The Company has granted options to certain employees under an employee option scheme. Under this scheme,
the directors may issue options to persons whom they wish to reward for strong performance.
The fair value of options granted is recognised as an employee expense with a corresponding increase in equity.
The fair value is measured at grant date and spread over the period during which the employees become
unconditionally entitled to the options. The fair value of the options granted is measured using the Black-Scholes
model, taking into account the terms and conditions upon which the options were granted. The amount recognised
as an expense is adjusted to reflect the actual number of share options that vest.
Page 39 of 76
Notes to the Financial Statements
Cardno Limited and its Controlled Entities for the year ended 30 June 2009
1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
(u) Provisions
A provision is recognised in the balance sheet when the consolidated entity has a present legal, equitable or
constructive obligation as a result of a past event, and it is probable that a future sacrifice of economic benefits
will be required to settle the obligation, the timing or amount of which is uncertain. If the effect is material,
provisions are determined by discounting the expected future cash flows at the pre-tax rate that reflects current
market assessments of the time value of money and, where appropriate, the risks specific to the liability.
Dividends
A provision for dividends payable is recognised in the reporting period in which the dividends are declared.
(v) Cash and Cash Equivalents
Cash and cash equivalents comprise cash on hand and investments in money market instruments. Bank overdrafts
are shown within Interest-bearing loans and borrowings in current liabilities on the balance sheets.
(w) Critical accounting estimates and judgements
Estimates and judgements are continually evaluated and are based on historical experience and other factors,
including expectations of future events that may have a financial impact on the entity and that are believed to be
reasonable under the circumstances.
The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by
definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of
causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are
discussed below.
(i)
Estimated impairment of goodwill
The Group tests annually whether goodwill has suffered any impairment, in accordance with the accounting policy
stated in note 1(q). The recoverable amounts of cash-generating units have been determined based on
value-in-use calculations. These calculations require the use of assumptions. Refer to note 14 for details.
(ii)
Estimated professional indemnity costs
The Group estimates and records those amounts that it believes will be payable as a result of professional
indemnity claims. The exact amount of the legal settlement is unknown until such time as the deductible limit is
reached or settlement occurs.
Page 40 of 76
Notes to the Financial Statements
Cardno Limited and its Controlled Entities for the year ended 30 June 2009
Consolidated
Cardno Limited
2009
$’000
2008
$’000
2009
$’000
2008
$’000
2. REVENUE
Fees from services and sale of goods
Fees from recoverable expenses
Dividends received – wholly owned controlled entities
Interest received
Royalties
Other
Revenue
410,673
101,911
-
1,472
147
1,639
515,842
312,464
83,712
-
1,766
-
1,093
399,035
-
-
24,100
4,621
-
-
28,721
3. EXPENSES, LOSSES AND (GAINS)
Consumables and materials used
Sub consultant & contractor costs
145,272
61,848
109,265
28,582
Depreciation
Motor vehicles
Plant & equipment
Total Depreciation
Amortisation of non-current assets
Works contracts
Software intangibles
Motor vehicles under lease
Plant & equipment under lease
Total Amortisation
Total Depreciation & Amortisation
Bad and doubtful debts
Financing costs
Interest and finance charges
Amortisation of borrowing costs
Total financing costs
1,472
6,019
7,491
770
303
1,119
1,320
3,512
11,003
3,263
4,409
228
4,637
794
4,727
5,521
125
139
696
1,607
2,567
8,088
1,421
3,426
349
3,775
Rental expense relating to operating leases
Minimum lease payments
Net loss on disposal of property, plant and
equipment
19,303
11,294
432
-
Foreign exchange (gains) / losses
(4,144)
1,403
-
-
21,600
545
-
-
22,145
-
59
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
469
114
583
2,744
338
3,082
-
-
-
-
-
-
4. INCOME TAX EXPENSE
(a) The components of tax expense comprises:
Current tax expense
Current year
Adjustments for prior years
Deferred tax expense
Origination and reversal of temporary differences
Change in New Zealand tax rate
Total income tax expense/(benefit)
14,097
(3,747)
10,350
(2,411)
-
7,939
11,799
438
12,237
(988)
(15)
11,234
1,146
(1,747)
(601)
387
-
(214)
(2,331)
266
(2,065)
(43)
-
(2,108)
Page 41 of 76
Notes to the Financial Statements
Cardno Limited and its Controlled Entities for the year ended 30 June 2009
4. INCOME TAX EXPENSE CONTINUED
(b) Numerical reconciliation between tax expense and
pre-tax net profit
Profit before tax
Income tax using the Australian corporation tax
rate of 30% (2008: 30%)
Increase in income tax expense due to:
Non-deductible expenses
PEP Option Value
Adjustment for branch office taxation
Amortisation of works contracts
Decrease in income tax expense due to:
Australian owned R&D expenditure
Other R&D Expenditure
Tax exempt revenue
Adjustment for branch office taxation
Section 338(h)(10)adjustment USA
Other
Change in New Zealand tax rate
Under / (over) provided in prior years
Income tax expense on pre-tax net profit
5. DIVIDENDS PAID OR PROVIDED FOR
ON ORDINARY SHARES
(a) Dividends proposed not recognised as a liability
100% franked dividend at 30% (2008: 30%)
(Refer Note 30)
(b) Dividends paid during the year (28 cents per share)
100% franked dividend at 30% (2008: 30%)
(c) Franking credit balance
The amount of franking credits available for the
subsequent financial year are:
-
franking account balance as at the end of the
financial year at 30%
franking credits that will arise from the
payment of income tax payable as at the end
of the financial year
-
Consolidated
Cardno Limited
2009
$’000
2008
$’000
2009
$’000
2008
$’000
42,092
38,686
29,668
17,718
12,628
11,606
8,901
5,315
218
197
623
3
(1,791)
(64)
(840)
-
(975)
(104)
-
9,895
(1,956)
7,939
228
137
478
15
(1,140)
-
(230)
(131)
-
(152)
(15)
10,796
438
11,234
-
-
-
-
(1,748)
-
(7,230)
-
-
(137)
-
(214)
-
(214)
-
-
-
-
(1,140)
-
(6,480)
-
-
(69)
-
(2,374)
266
(2,108)
11,798
10,464
21,434
16,349
9,384
5,873
2,273
6,327
11,657
12,200
The impact on the franking account of dividends
proposed after the balance sheet date but not
recognised as a liability is to reduce it by
$5,056,335 (2008: $4,484,482)
6. CASH AND CASH EQUIVALENTS
Cash at bank and on hand
Restricted cash (project advances)
Bank short term deposits
34,796
5,005
26,007
65,808
20,663
6,305
25,656
52,624
-
-
-
-
-
-
-
-
Page 42 of 76
Notes to the Financial Statements
Cardno Limited and its Controlled Entities for the year ended 30 June 2009
7. TRADE & OTHER RECEIVABLES (CURRENT)
Trade debtors
Provision for doubtful debts
Sundry debtors
Forward exchange contract
Dividends receivable – wholly owned
controlled entities
Receivable - notional tax asset
Loans – wholly owned controlled entities
Terms and conditions relating to the above
financial instruments
(i)
Details of the terms and conditions of
related party receivables are set out
in Note 36.
8. INVENTORIES (CURRENT)
Work in progress
9. OTHER CURRENT ASSETS
Prepayments
Borrowing costs
Project advances
Security deposits
10. TRADE & OTHER RECEIVABLES (NON-CURRENT)
Sundry debtors
Forward exchange contract
11. OTHER FINANCIAL ASSETS (NON-CURRENT)
Investments in subsidiaries
Investments in non-related entities
12. PROPERTY, PLANT & EQUIPMENT
Laboratory equipment, instruments &
amenities – at cost
Less accumulated depreciation
Equipment & motor vehicles – at cost
Less accumulated depreciation
Office furniture & equipment – at cost
Less accumulated depreciation
Leasehold improvements – at cost
Less accumulated depreciation
Consolidated
Cardno Limited
2009
$’000
2008
$’000
2009
$’000
2008
$’000
93,283
(5,403)
87,880
3,976
216
-
-
-
92,072
80,766
(3,112)
77,654
5,132
433
-
-
-
83,219
-
-
-
7
-
-
-
-
-
-
24,100
35,984
135,882
195,973
21,600
26,680
135,406
183,686
56,419
47,910
-
3,945
124
109
616
4,794
1,650
-
1,650
-
553
553
2,986
93
191
364
3,634
-
216
216
-
37
37
9,834
(6,065)
3,769
6,741
(4,449)
2,292
5,383
(2,562)
2,821
5,848
(2,704)
3,144
39,397
(29,363)
10,034
26,331
(17,166)
9,165
6,904
(1,443)
5,461
2,840
(659)
2,181
-
-
93
-
-
93
-
-
-
-
122
-
-
122
-
-
-
97,370
-
97,370
73,610
-
73,610
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Page 43 of 76
Notes to the Financial Statements
Cardno Limited and its Controlled Entities for the year ended 30 June 2009
12. PROPERTY, PLANT & EQUIPMENT CONTINUED
Office furniture & equipment under lease
Less accumulated amortisation
Motor vehicles – under hire purchase
Less accumulated depreciation
Motor vehicles & field lab equipment –
under lease
Less accumulated amortisation
Leasehold improvements – under lease
Less accumulated amortisation
Property
Less accumulated depreciation
Total Property, Plant & Equipment
(a) Movements in carrying amounts
Movements in the carrying amounts for each
class of property, plant and equipment between
the beginning and the end of the current
financial year.
Laboratory equipment, instruments &
amenities – at cost
Carrying amount at the beginning of the year
Additions
Increase through merger acquisition
Disposals
Depreciation expense
Transfer between classes
Foreign exchange
Carrying amount at the end of the year
Equipment & motor vehicles – at cost
Carrying amount at the beginning of the year
Additions
Increase through merger acquisitions
Disposals
Depreciation expense
Foreign exchange
Transfer between classes
Carrying amount at the end of the year
Consolidated
Cardno Limited
2009
$’000
2008
$’000
2009
$’000
2008
$’000
2,091
(988)
1,103
1,193
(395)
798
5,014
(1,931)
3,083
1,200
(889)
311
233
(70)
163
27,014
4,184
(2,710)
1,474
107
(68)
39
3,495
(1,311)
2,184
2,123
(1,116)
1,007
70
(59)
11
22,026
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Consolidated
2009
$’000
Cardno
Limited
2009
$’000
2,821
689
1,375
(390)
(1,087)
436
(75)
3,769
3,144
357
941
(840)
(1,472)
446
(284)
2,292
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Page 44 of 76
Notes to the Financial Statements
Cardno Limited and its Controlled Entities for the year ended 30 June 2009
Consolidated
2009
$’000
Cardno
Limited
2009
$’000
12. PROPERTY, PLANT & EQUIPMENT CONTINUED
(a) Movements in carrying amounts continued
Office furniture & equipment – at cost
Carrying amount at the beginning of the year
Additions
Increase through merger acquisitions
Disposals
Depreciation expense
Foreign exchange
Transfer between classes
Carrying amount at the end of the year
Leasehold improvements – at cost
Carrying amount at the beginning of the year
Additions
Increase through merger acquisitions
Disposals
Depreciation expense
Foreign exchange
Transfer between classes
Carrying amount at end of the year
Office furniture & equipment – under lease
Carrying amount at the beginning of the year
Additions
Disposals
Amortisation expense
Foreign exchange
Transfer between classes
Carrying amount at the end of the year
Motor vehicles – under hire purchase
Carrying amount at the beginning of the year
Additions
Depreciation expense
Transfer between classes
Carrying amount at the end of the year
Motor vehicles & field lab equipment – under lease
Carrying amount at the beginning of the year
Additions
Amortisation expense
Foreign exchange
Transfer between classes
Carrying amount at the end of the year
Leasehold improvements – under lease
Carrying amount at the beginning of the year
Increase through merger acquisitions
Additions
Amortisation expense
Transfer between classes
Carrying amount at the end of the year
Property – at fair value
Carrying amount at the beginning of the year
Additions
Foreign exchange
Carrying amount at the end of the year
Page 45 of 76
9,165
4,794
588
(267)
(4,389)
349
(206)
10,034
2,181
3,726
301
(508)
(543)
264
40
5,461
1,474
174
(15)
(1,050)
130
390
1,103
39
679
(37)
117
798
2,184
1,977
(1,082)
33
(29)
3,083
1,007
19
19
(270)
(464)
311
11
150
2
163
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Notes to the Financial Statements
Cardno Limited and its Controlled Entities for the year ended 30 June 2009
12. PROPERTY, PLANT & EQUIPMENT CONTINUED
(a) Movements in carrying amounts continued
Total Property, Plant & Equipment
Carrying amount at the beginning of the year
Additions
Increase through merger acquisitions
Disposals
Depreciation & amortisation expense
Transfer between classes
Foreign exchange
Carrying amount at the end of the year
13. DEFERRED TAX ASSETS & LIABILITIES
Recognised deferred tax assets and liabilities
Deferred tax assets and liabilities are attributable to
the following:
Assets
Amortised expenses
Accruals
Provisions
Unrealised foreign exchange gains
Carried forward tax losses
Lease timing
Deferred rent
Property, plant and equipment
Other
TAX ASSETS
Liabilities
Unrealised foreign exchange gains
Work in progress
Prepayments
Property, plant and equipment
Cash to accrual adjustment
Intangible items
Other
TAX LIABILITIES
14. INTANGIBLE ASSETS
Goodwill at cost
Accumulated amortisation and impairment losses
Works contracts
Accumulated amortisation
Patents and licenses
Software intangibles
Accumulated amortisation
Consolidated
2009
$’000
Cardno
Limited
2009
$’000
22,026
12,565
3,224
(2,020)
(9,930)
-
1,149
27,014
-
-
-
-
-
-
-
-
Consolidated
Cardno Limited
2009
$’000
2008
$’000
2009
$’000
2008
$’000
-
1,719
8,176
-
932
326
-
393
446
11,992
1,026
7,122
403
2
1,447
823
117
10,940
51
1,310
6,140
479
177
164
131
-
285
8,737
71
6,280
106
150
2,133
300
-
9,040
220,328
(2,293)
218,035
163,639
(2,293)
161,346
2,900
(2,336)
564
1,759
(1,723)
36
2,110
2,115
1,795
(413)
1,382
222,091
1,817
(139)
1,678
165,175
-
-
-
-
-
-
-
-
-
-
816
-
-
-
-
-
-
816
-
-
-
-
-
-
-
-
-
-
-
-
-
-
66
-
-
-
-
-
66
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Page 46 of 76
Notes to the Financial Statements
Cardno Limited and its Controlled Entities for the year ended 30 June 2009
14. INTANGIBLE ASSETS CONTINUED
Intangibles are allocated to cash-generating units
which are based on the group’s management
divisions.
North America and Software
Emerging Markets Region
South East Australia & N.Z
North & Western Australia
Geotechnical Division
Consolidated
Cardno Limited
2009
$’000
2008
$’000
2009
$’000
2008
$’000
100,977
34,497
25,033
24,583
37,001
222,091
49,336
33,796
23,157
21,885
37,001
165,175
-
-
-
-
-
-
-
-
-
-
-
-
Cash generating units have been restructured to reflect the lowest level of management control within the
business. This allocation has been independently assessed as in compliance with the requirements of AASB136.
The 30 June 2008 comparative CGUs have been reclassified to reflect the changes in CGUs at 30 June 2009.
Goodwill
$’000
Works
Contracts
$’000
Patents and
Trademarks
$’000
Software
Intangibles
$’000
Reconciliation of movement in carrying amounts
from beginning of year to end of year:
Consolidated
Year ended 30 June 2008
Balance at the beginning of year
Additions:
- acquisition through business combinations
- current year
- prior year
Amortisation charges
Effect of foreign exchange
Closing value at 30 June 2008
Year ended 30 June 2009
Balance at the beginning of year
Additions:
- acquisition through business combinations
- current year
- prior year
Amortisation charges
Effect of foreign exchange
Closing value at 30 June 2009
101,272
152
2,110
-
63,000
1,453
-
(4,379)
161,346
-
-
(125)
9
36
5
-
-
-
2,115
1,817
-
(139)
-
1,678
161,346
36
2,115
1,678
47,236
(36)
-
9,489
218,035
1,039
-
(770)
259
564
-
(5)
-
-
2,110
-
-
(303)
7
1,382
The recoverable amount of each cash-generating unit above is determined based on value-in-use calculations.
Value-in-use is calculated based on the present value of cash flow projections over a 5 year period including a
terminal value at the end of year five. The cash flows are discounted using a pre-tax discount rate of 12.8%
(2008: 14.4%) based on an estimate of the group’s weighted average cost of capital.
The value-in-use calculations are based on budget forecasts for each cash generating unit for the 2010 year and
longer term year-on-year growth rates as assessed by operational management of the businesses. The growth
rate is calculated as the average growth rate over the forecast period based upon 2009 baseline performance.
These forecasts are based on underlying economic conditions and historical growth of project revenue. Growth in
the North America and Software CGU is reflective of revenue generating synergies from continued operational
integration of North American engineering and software businesses and realisation of scale advantages. Costs are
calculated taking into account historical gross margins as well as estimated cost inflation over the period.
Page 47 of 76
Notes to the Financial Statements
Cardno Limited and its Controlled Entities for the year ended 30 June 2009
14. INTANGIBLE ASSETS CONTINUED
The following assumptions were used in the value-in-use calculations:
North America and Software
Emerging Markets Region
South East Australia & N.Z
North & Western Australia
Geotechnical Division
Growth Rate
6.6%
4.1%
3.6%
4.3%
3.0%
Pre-Tax
Discount Rate
12.8%
12.8%
12.8%
12.8%
12.8%
15. OTHER NON-CURRENT ASSETS
Borrowing costs
16. TRADE & OTHER PAYABLES (CURRENT)
Trade payables & accruals
Forward exchange contract
Vendor liability
Loans - wholly owned controlled entities
(i) Details of the terms and conditions of related
party payables are set out in Note 36.
17. INTEREST-BEARING LOANS & BORROWINGS
(CURRENT)
Lease liabilities
Hire purchase liabilities
Convertible notes
Bank Loans
(i) Details of the terms and conditions of loans
and borrowings are set out in Note 21
Convertible Notes
Opening Balance
Amount converted to equity
Amount redeemed
Carrying amount of liability at 30 June (Note 17)
18. SHORT-TERM PROVISIONS
Employee benefits
Training benefits
Consolidated
Cardno Limited
2009
$’000
2008
$’000
2009
$’000
2008
$’000
213
266
210
266
48,633
236
9,910
-
58,779
41,165
395
-
-
41,560
46
-
-
44,690
44,736
242
-
-
7,135
7,377
1,928
418
-
6,630
8,976
2,756
(2,653)
(103)
-
13,128
78
13,206
2,468
254
2,756
7,346
12,824
5,613
(2,857)
-
2,756
11,573
37
11,610
-
-
-
-
-
-
-
2,756
-
2,756
2,756
(2,653)
(103)
-
5,613
(2,857)
-
2,756
-
-
-
-
-
-
-
-
-
-
19. OTHER CURRENT LIABILITIES
Unearned revenue
38,033
30,139
20. TRADE & OTHER PAYABLES (NON-CURRENT)
Forward exchange contract
-
198
Forward exchange contract
The group has two forward exchange contracts in place at 30 June 2009 expiring on 30 September 2009 and
31 December 2009 with a contract rate of 0.8785 USD/AUD. The contracts have a face value of USD $95,000
each.
Page 48 of 76
Notes to the Financial Statements
Cardno Limited and its Controlled Entities for the year ended 30 June 2009
21. INTEREST-BEARING LOANS & BORROWINGS
(NON-CURRENT)
Lease liabilities
Hire purchase liabilities
Bank Loans
Consolidated
Cardno Limited
2009
$’000
2008
$’000
2009
$’000
2008
$’000
3,482
340
72,254
76,076
3,442
359
41,373
45,174
-
-
-
-
-
-
40,682
40,682
Bank Loans
As at 30 June 2009 the group has bank loans totalling $78,884,102 (2008: $48,719,124), with an effective
interest rate of 3.01% (2008: 5.56%).
The facility limits are multi-currency comprising an on-demand working capital / guarantee facility of AUD19.0m
and term acquisition financing facilities of USD44.1m and GBP8.55m repayable in June 2011. Pricing of the
working capital facility is BBR plus 1.1% whilst current interest rates on term facilities range from 2.71%pa. –
3.74% pa. The undrawn portion of facilities at 30 June 2009 was AUD10.0m. Facilities are secured by an
unlimited interlocking guarantee and indemnity.
There were no bank overdrafts in existence at 30 June 2009 (2008: Nil).
22. LONG-TERM PROVISIONS
Employee entitlements
23. OTHER NON-CURRENT LIABILITIES
Deferred Rent
Other
24. ISSUED CAPITAL OF CARDNO LIMITED
Balance at the beginning of the period
Shares issued during the period:
- Dividend reinvestment scheme
- Shares issued for cash
- Employee Tax Exempt Share Acquisition Plan
- Employee Performance Equity Plan
- Options exercised
- Conversion of Convertible Notes
Notes
Consolidated
Cardno Limited
2009
$’000
2008
$’000
2009
$’000
2008
$’000
5,629
5,440
420
511
931
339
86
425
-
-
-
-
-
-
-
-
30-Jun-09
No. of
shares
30-Jun-08
No. of
shares
30-Jun-09
30-Jun-08
$’000
$’000
73,509,653 57,318,821
192,063
92,245
558,162
170,041
8,658,018 14,181,147
216,736
-
480,000
1,142,908
485,287
-
-
1,061,129
2,036
28,612
1,541
552
-
2,653
1,074
92,401
1,342
455
1,689
2,857
Balance at the end of the year
84,272,249 73,509,653
227,457
192,063
The Company does not have authorised capital or par value in respect of its issued shares.
All shares are ordinary shares and have the right to receive dividends as declared and, in the event of winding up
the company, to participate in the proceeds from the sale of all surplus assets in proportion to the number of and
amounts paid up on shares held. Ordinary shares entitle their holder to one vote, either in person or by proxy, at a
meeting of members.
Page 49 of 76
Notes to the Financial Statements
Cardno Limited and its Controlled Entities for the year ended 30 June 2009
24. ISSUED CAPITAL OF CARDNO LIMITED CONTINUED
Movements in options throughout the year were as follows:
Grant Date
Exercise Date
Expiry Date
26 October
2006
14 November
2006
25 October
2007
25 October
2007
5 December
2007
5 December
2007
5 December
2008
20 October
2008
8 November
2008
19 October
2009
19 October
2010
29 November
2009
29 November
2010
29 November
2011
26 October
2008
14 November
2008
25 October
2009
25 October
2010
5 December
2009
5 December
2010
5 December
2011
Exercise
Price
$
Fair
Value at
Grant
Date*
$
Number of
Options at
Beginning
of Year
5.17
0.58
150,000
5.30
0.56
861,500
7.57
0.68
230,000
7.57
0.92
330,000
7.71
0.70
1,399,000
7.71
0.95
1,880,500
Options
Granted
Options
Lapsed
Options
Vested
Not
Exercised
Number of
Options as
at 30 June
2009
-
-
-
-
-
-
-
-
126,500
161,500
150,000
861,500
-
-
-
-
-
-
-
-
230,000
330,000
1,272,500
1,719,000
2,421,000
4.57
575 days
3.35
0.41
-
2,421,000
-
Weighted average exercise price
Weighted average remaining contract life
Total expense recognised $552,687 (2008: $495,793)
* Excludes discount for probability of vesting.
7.19
3.35
5.82
The options outstanding at 30 June 2009 have an exercise price in the range of $3.35 to $7.71. These options
do not entitle the holder to participate in any share issue of the Company.
The fair values of options granted during the year has been calculated using the Black-Scholes model,
taking into account price volatility, risk free interest rates and the dividend yield. Where relevant, the
fair value has been adjusted to account for the effects of non-tradability and other relevant restrictions.
The model inputs for the fair value of options granted during the year ended 30 June 2009 include
share price at grant date of $3.26, expected price volatility of the companies shares of 33%, expected
dividend yield of 8.28% and risk free interest rate of 6.73%.
25. RESERVES
Foreign Currency Translation
The foreign currency translation reserve comprises all foreign exchange differences arising from the translation of
the financial statements of foreign group entities where their functional currency is different to the presentation
currency of the reporting entity as well as from the translation of liabilities that hedge the Company’s net
investment in a foreign subsidiary.
Page 50 of 76
Notes to the Financial Statements
Cardno Limited and its Controlled Entities for the year ended 30 June 2009
Notes
Consolidated
Cardno Limited
2009
$’000
2008
$’000
2009
$’000
2008
$’000
26. NOTES TO THE CASH FLOW STATEMENTS
(a) Reconciliation of Net Cash from Operating
Activities to Net profit/(loss) for the year
Net profit/(loss) for the year
Adjust for non-cash items
Depreciation
Amortisation
Dividend received
Gain/(loss) on sale of property, plant & equipment
Net exchange differences
Share based remuneration
Adjust for changes in assets and liabilities
(increase) / decrease in:
Inventories
Deferred tax assets
Trade receivables
Provision for doubtful debts
Other receivables
Prepayments
Other assets
Increase / (decrease) in:
Trade payables
Income tax payable
Employee provisions
Unearned revenue
Other liabilities
Deferred tax liabilities
(b) Reconciliation of cash
For the purposes of the cash flow statements, cash
includes cash on hand, restricted cash and bank
deposits at call net of bank overdrafts. Cash at the
end of the year as shown in the cash flow statements
is reconciled to related items in the accounts as
follows:
Cash and cash equivalents (Note 6)
Restricted cash (project advances) can only
be drawn in relation to specific projects for
which it has been provided.
(c) Non-cash financing and investing activities
During the financial year, the consolidated entity
acquired property, plant and equipment with an
aggregate fair value of $2,848,899 (2008:
$2,049,223) by means of finance leases. These
acquisitions are not reflected in the cash flow
statements.
(d) Acquisition of entities
Details of the acquisitions are as follows:
Purchase consideration
Cash consideration
Vendor liability
Accrued costs relating to acquisition
Direct costs relating to acquisition
Consideration
34,153
27,452
29,882
19,826
7,492
3,511
-
432
(2,528)
2,094
(4,714)
(3,027)
1,856
1,540
65
(181)
(44)
(4,133)
(5,654)
(2,591)
7,894
519
1,905
38,589
5,521
2,567
-
(21)
3,173
1,797
-
-
(24,100)
-
-
-
-
-
(21,600)
-
-
(80)
(4,200)
1,210
(1,861)
118
(4,200)
(156)
-
(1,464)
2,312
(698)
7,553
-
(1,590)
37,513
-
66
-
-
(9,310)
-
27
(197)
(2,625)
-
-
-
816
(5,441)
-
142
-
-
-
-
-
580
4,291
-
-
-
-
3,159
65,808
52,624
-
-
43,973
9,027
91
620
53,711
73,640
-
-
896
74,536
-
-
-
-
-
-
-
-
-
-
Page 51 of 76
Notes to the Financial Statements
Cardno Limited and its Controlled Entities for the year ended 30 June 2009
Notes
Consolidated
Cardno Limited
2009
$’000
2008
$’000
2009
$’000
2008
$’000
26. NOTES TO THE CASH FLOW STATEMENTS
CONTINUED
Assets and liabilities held at acquisition date:
Cash
Receivables
Deferred tax assets
Property, plant & equipment
Intangibles
Inventories
Bank overdraft
Creditors and borrowings
Provisions
Goodwill on acquisition
Consideration
Net cash outflow on acquisition
Cash consideration
Less balance acquired
27. CAPITAL AND LEASING COMMITMENTS
Finance leases and hire purchase
Commitments in relation to finance leases are payable
as follows:
- Within one year
- Later than one year but not later than 5 years
- Later than 5 years
- Minimum lease payments
Less: Future finance charges
Recognised as a liability
Present value of minimum lease and hire purchase
payment
Commitments in relation to finance leases are payable
as follows:
- Within one year
- Later than one year but not later than 5 years
- Later than 5 years
Recognised as a liability
Finance leases are taken out over motor
vehicle, leasehold improvements and plant
and equipment, with terms varying between
3 and 5 years.
Representing lease and hire purchase liabilities:
Current (note 17)
Non-current (note 21)
1,950
15,217
233
3,224
1,039
3,795
-
(10,721)
(8,262)
6,475
47,236
53,711
7,294
11,609
212
4,604
1,817
94
(212)
(11,505)
(2,377)
11,536
63,000
74,536
43,973
(1,950)
42,023
73,640
(7,082)
66,558
2,975
4,481
-
7,456
(1,288)
6,168
3,184
4,196
-
7,380
(857)
6,523
2,346
3,822
-
6,168
2,722
3,801
-
6,523
2,346
3,822
6,168
2,722
3,801
6,523
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Page 52 of 76
Notes to the Financial Statements
Cardno Limited and its Controlled Entities for the year ended 30 June 2009
Ns
Consolidated
Cardno Limited
2009
$’000
2008
$’000
2009
$’000
2008
$’000
27. CAPITAL AND LEASING COMMITMENTS
CONTINUED
Operating Leases
- Within one year
- Later than one year but not later than 5 years
- Later than 5 years
Commitments not recognised in the financial
statements.
The group leases office premises under operating
leases, with terms varying from 3 to 10 years. The
majority of leases provide for an option of renewal at
the end of the lease term. Premise leases are subject
to annual review for changes in the CPI index and
contain restrictions on sub-leasing. The group also
leases various plant & equipment under terms
between 2 and 5 years as well as software licenses
with a term of 3 years subject to annual review based
on the number of licences exercised.
28. EMPLOYEE BENEFITS & COMPENSATION
COMMITMENT
The aggregate employee benefit liability is
comprised of:
Accrued wages, salaries and on-costs
(included in payables)
Provisions (current) (note 18)
Provisions (non-current) (note 22)
20,347
42,163
20,683
14,510
35,175
21,980
83,193
71,665
13,693
13,128
5,629
32,450
11,031
11,573
5,440
28,044
Number of employees
Number of full time equivalent employees at 30 June
3,008
2,883
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
29. CONTINGENT LIABILITIES
As at the date of this report, there is no current litigation or pending or threatened litigation which would not be
covered by professional indemnity insurance or has not already been provided for in the financial statements of
the Company, or which is likely to have a material effect on the financial performance of the consolidated entity.
The parent entity and consolidated entity had contingent liabilities at 30 June 2009 in respect of:
Notes
Consolidated
Cardno Limited
2009
$’000
2008
$’000
2009
$’000
2008
$’000
Guarantees
9,891
14,846
4,700
8,603
The Group has both financial and performance guarantees. A multiple guarantee facility is available to the group
totalling $19 million (2008: $20 million). The facility is secured by an unlimited interlocking guarantee and
indemnity.
30. SUBSEQUENT EVENTS
On 18 August 2009, the Directors of Cardno Limited declared a final dividend of 14.0 cents per share for the
2009 financial year. The fully franked dividend will be paid on 13 October 2009 to shareholders registered on
15 September 2009 and will total $11,798,115. The dividend has not been provided for in the 30 June 2009
financial statements.
Page 53 of 76
Notes to the Financial Statements
Cardno Limited and its Controlled Entities for the year ended 30 June 2009
2006
Consolidated
2009
2008
31. EARNINGS PER SHARE
Basic earnings per share
The calculation of basic earnings per share at 30 June 2009 was
based on the profit attributable to ordinary shareholders of
$34,153,794 (2008: $27,451,472) and a weighted average number
of ordinary shares outstanding during the financial year ended
30 June 2009 of 77,932,437 (2008: 65,362,040), calculated as
follows:
Profit attributable to ordinary shareholders
34,153,794 27,451,472
Weighted average number of ordinary shares
Issued ordinary shares at 1 July
Effect of shares issued for cash consideration
Effect of shares issued in respect of employee share scheme
Effect of shares issued from conversion of convertible notes
73,509,653 57,318,821
7,078,215
91,195
873,809
3,201,881
168,496
1,052,407
Weighted average number of ordinary shares at 30 June
77,932,437
65,362,040
The options and convertible notes are considered to be potential
ordinary shares and are therefore excluded from the weighted average
number of ordinary shares used in the calculation of basic earnings
per share. Where dilutive, potential ordinary shares are included in
the calculation of diluted earnings per share.
Diluted earnings per share
Weighted average number of ordinary shares and potential ordinary
shares used in the calculation of diluted earnings per share reconciles
to the weighted average number of ordinary shares used in the
calculation of basic earnings per share as follows:
Profit attributable to ordinary shareholders (diluted)
Profit attributable to ordinary shareholders
After-tax effect of interest on convertible notes
Profit attributable to ordinary shareholders (diluted)
Weighted average number of ordinary shares (diluted)
Weighted average number of ordinary shares at 30 June
Effect of convertible notes
Effect of share options on issue
Weighted average number of ordinary shares (diluted) at 30 June
34,153,794 27,451,472
212,958
-
34,153,794 27,664,430
77,932,437 65,362,040
1,371,414
190,246
77,942,572 66,923,700
9,069
1,066
The 3,551,500 options issued during the 2007 and 2008 financial years and still on issue as at 30 June 2009 are
not included in the calculation of diluted earnings per share because they are not dilutive for the year ended
30 June 2009. These options could potentially dilute basic earnings per share in the future.
32. AUDITOR’S REMUNERATION
Amounts received or due and receivable by
parent entity auditor (WHK Horwath)
-
an audit or review of the financial report
of the entity and any other entity in the
consolidated entity
other assurance services
-
Consolidated
Cardno Limited
2009
$
2008
$
2009
$
2008
$
159,903
-
159,903
132,647
-
132,647
-
-
-
-
-
-
Page 54 of 76
Notes to the Financial Statements
Cardno Limited and its Controlled Entities for the year ended 30 June 2009
32. AUDITOR’S REMUNERATION CONTINUED
Amounts received or due and receivable by
auditors of the subsidiaries in the group
-
an audit or review of the financial report
of the entity and any other entity in the
consolidated entity
taxation services
-
- other assurance services
Consolidated
Cardno Limited
2009
$
2008
$
2009
$
2008
$
507,273
127,590
21,548
656,411
266,910
85,117
-
352,027
-
-
-
-
-
-
-
-
33. KEY MANAGEMENT PERSONNEL DISCLOSURES
Key management personnel compensation included in employee benefits are as follows:
Short-term employee benefits
Other long-term benefits
Post-employment benefits
Termination benefits
Equity compensation benefits
Consolidated
Cardno Limited
2009
$’000
2008
$’000
2009
$’000
2008
$’000
3,996
198
611
-
94
4,899
3,694
-
400
-
134
4,228
234
-
170
-
-
404
183
-
147
-
-
330
Apart from the details disclosed in this note, no Director has entered into a material contract with the Company or
the consolidated entity since the end of the previous financial year and there were no material contracts involving
Directors’ interests existing at year-end.
Options and rights over equity instruments granted as compensation
The movement during the reporting period in the number of options over ordinary shares in Cardno Limited held,
directly, indirectly or beneficially, by each key management person, including their related parties, is as follows:
2009
Directors
A D Buckley
J I Forbes
T C Johnson
G G Tamblyn
Executives
R J K Collins-Woolcock
S V Coote
P W Gardiner
M J Renshaw
C W N Tapp
Held at
1 July 2008
Granted as
compensation
Expired
Held at
30 June 2009
Vested and
exercisable at
30 June 2009
310,000
150,000
120,000
75,000
100,000
140,000
140,000
100,000
60,000
-
-
-
-
60,000
70,000
70,000
60,000
50,000
60,000
30,000
30,000
15,000
25,000
40,000
40,000
25,000
-
250,000
120,000
90,000
60,000
135,000
170,000
170,000
135,000
110,000
-
-
-
-
-
-
-
-
-
No options held by key management personnel had vested or were exercisable as at 30 June 2009.
Page 55 of 76
Notes to the Financial Statements
Cardno Limited and its Controlled Entities for the year ended 30 June 2009
33. KEY MANAGEMENT PERSONNEL DISCLOSURES CONTINUED
2008
Directors
A D Buckley
J I Forbes
T C Johnson
G G Tamblyn
J G A Verco*
Held at
1 July 2007
Granted as
compensation
Exercised
Held at
30 June 2008
Vested and
exercisable at
30 June 2008
100,000
30,000
50,000
15,000
25,000
250,000
120,000
90,000
60,000
40,000
75,000
100,000
100,000
75,000
60,000
40,000
-
20,000
-
10,000
10,000
20,000
20,000
15,000
-
310,000
150,000
120,000
75,000
55,000
100,000
140,000
140,000
100,000
60,000
-
-
-
-
-
-
-
-
-
-
Executives
35,000
R J K Collins-Woolcock
60,000
S V Coote
60,000
P W Gardiner
40,000
M J Renshaw
C W N Tapp
-
*resigned as director on 25 October 2007
The fair value of options is provided in the Remuneration Report section of the Directors’ Report and in Note 24.
Movements in shares
The movement during the reporting period in the number of ordinary shares in Cardno Limited held, directly,
indirectly or beneficially, by each key management person, including their related parties, is as follows:
2009
Non–Executive Directors
John Massey
Anthony Barnes
Peter Cosgrove
Ian Johnston
Executive Directors
Graham Tamblyn
Andrew Buckley
Jeffrey Forbes
Trevor Johnson
Executives
Roger Collins-Woolcock
Steven Coote
Paul Gardiner
Michael Renshaw
Charles Tapp
Held at 1 July
2008
Purchases
Received as
Compensation
Sales
Held at 30 June
2009
30,687
-
-
200,000
1,407,000
2,322,952
3,377
1,963,704
791,090
556,546
796,132
149,284
161
13,695
3,348
-
7,390
19,330
36,085
16,570
3,695
-
-
3,695
3,615
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
314
314
314
314
314
137,752
-
-
-
-
44,382
3,348
-
207,390
1,426,330
2,359,037
19,947
1,967,399
653,652
556,860
800,141
153,213
475
Page 56 of 76
Notes to the Financial Statements
Cardno Limited and its Controlled Entities for the year ended 30 June 2009
33. KEY MANAGEMENT PERSONNEL DISCLOSURES CONTINUED
Held at 1 July
2007
Purchases
Received as
Compensation
Sales
Held at 30 June
2008
2008
Non–Executive Directors
John Massey
Peter Cosgrove
Ian Johnston
Executive Directors
Graham Tamblyn
Andrew Buckley
Jeffrey Forbes
Trevor Johnson
29,973
-
172,219
1,425,000
2,275,810
2,543
1,942,990
714
-
27,781
7,000
47,142
834
20,714
Former Executive Director
James Verco
1,104,947
12,142
Executives
Roger Collins-Woolcock
Steven Coote
Paul Gardiner
Michael Renshaw
Charles Tapp
John King
Stephen Richards
780,929
435,671
774,543
111,579
-
75,853
89,928
10,161
120,875
21,589
37,705
161
20,835
4,483
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
25,000
-
-
-
-
-
-
-
-
-
-
-
30,687
-
200,000
1,407,000
2,322,952
3,377
1,963,704
1,117,089
791,090
556,546
796,132
149,284
161
96,688
94,411
Other key management personnel transactions with the Company or its controlled entities
A number of key management persons, or their related parties, hold positions in other entities that result in them
having control or significant influence over the financial or operating policies of those entities.
One of these entities transacted with the Company or its subsidiaries in the reporting period. The terms and
conditions of the transactions with management persons and their related parties were no more favourable than
those available, or which might reasonably be expected to be available, on similar transactions to non-Director
related entities on an arm’s length basis.
The aggregate amounts recognised during the year relating to key management personnel and their related parties
were as follows:
(i) Mr A D Buckley is a Director of CBD Professional Services Pty Ltd. The aggregate amount the consolidated
entity billed for services performed by Mr Buckley was $25,220 (2008: $27,513). The consolidated entity
also used Carter Newell Lawyers (associated with CBD Professional Services Pty Ltd) for legal advice
throughout the year and the aggregate amount of fees expensed was $5,136 (2008: $116,761).
34. FINANCIAL RISK MANAGEMENT
The main risks arising from the Group’s financial instruments are interest rate risk, foreign exchange risk, credit
risk and liquidity risk. The Group uses different methods to measure different types of risk to which it is exposed.
These methods include sensitivity analysis in the case of interest rate and foreign exchange risks and aging
analysis for credit risk. The Board through the Audit, Risk & Compliance Committee reviews and agrees policies
for managing these risks and ensures strategies are implemented in the business. A Quality Management System
and an Operational Risk Committee supports consistent risk minimisation practices and procedures in order to
maintain a consistent level of quality across the group which includes the minimisation of risk. The policies for
managing each of the Group’s risks are summarised below and remain unchanged from the prior year.
Page 57 of 76
Notes to the Financial Statements
Cardno Limited and its Controlled Entities for the year ended 30 June 2009
34. FINANCIAL RISK MANAGEMENT CONTINUED
The Group and the parent entity hold the following financial instruments:
Financial assets
Cash and cash equivalents
Trade and other receivables
Investments in non-related entities
Financial liabilities
Trade and other payables
Interest-bearing loans and borrowings
Credit risk
Consolidated
Cardno Limited
2009
$’000
2008
$’000
2009
$’000
2008
$’000
65,808
93,722
553
160,083
52,624
83,435
37
136,096
-
195,973
-
195,973
-
183,686
-
183,686
58,779
85,052
143,831
41,758
57,998
99,756
44,736
-
44,736
7,377
43,438
50,815
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to
meet its contractual obligations, and arises principally from the Group’s receivables from customers. For the
parent entity it arises from receivables due from subsidiaries.
The maximum exposure to credit risk at the reporting date is the carrying amount of the financial assets as
summarised above.
Management has a credit policy in place and the exposure to credit risk is monitored on an ongoing basis. Credit
evaluations are performed on customers in accordance with the policy. The consolidated entity does not require
collateral in respect of financial assets. Investments are allowed only in liquid securities and only with
counterparties that have a credit rating equal to or better than an approved rating. There are no significant
concentrations of credit risk within the Group.
The maximum exposure to credit risk for trade receivables at the reporting date by geographic region was:
Australia & New Zealand
North America
Asia Pacific
UK & Africa
Consolidated
Cardno Limited
2009
$’000
2008
$’000
2009
$’000
2008
$’000
35,459
29,055
12,920
10,446
87,880
40,200
24,608
8,917
3,929
77,654
-
-
-
-
-
-
-
-
-
-
None of the parent entity’s receivables are past due or impaired (2008: Nil).
The ageing of the consolidated entity’s trade receivables at the reporting date was:
Not past due (current)
Past due 0-30 days (30 day ageing)
Past due 31-60 days (60 day ageing)
Past due more than 60 days (+90 day ageing)
2009
2008
Gross
$’000
Impairment
$’000
Gross
$’000
Impairment
$’000
42,122
17,341
9,024
24,796
93,283
-
-
-
5,403
5,403
40,329
14,468
7,423
18,546
80,766
-
-
-
3,112
3,112
Page 58 of 76
Notes to the Financial Statements
Cardno Limited and its Controlled Entities for the year ended 30 June 2009
34. FINANCIAL RISK MANAGEMENT CONTINUED
Credit risk continued
Based on historic default rates, the Group believes that no impairment allowance is necessary in respect of
receivables not past due or past due by up to 60 days. For those receivables outstanding more than 60 days each
debtor has been individually analysed and a provision for impairment established as necessary.
The movement in the provision for impairment in receivables in respect of trade receivables of the consolidated
entity during the year was as follows:
Balance at 1 July
Impairment loss recognised
Receivables written off
Merger acquisition
Foreign exchange
Balance at 30 June
Liquidity risk
Consolidated
2009
$’000
2008
$’000
3,112
2,951
(1,602)
751
191
5,403
2,994
1,062
(805)
28
(167)
3,112
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. Prudent
liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of
funding through an adequate amount of committed credit facilities. Due to the dynamic nature of the underlying
businesses, the Group aims to maintain flexibility in funding by keeping sufficient committed credit lines available
to meet the Groups requirements.
The following are the contractual maturities of financial liabilities, including estimated interest payments and
excluding the impact of netting agreements:
Consolidated
30 June 2009
Non-derivative financial liabilities
Trade and other payables
Finance leases & hire purchase
Bank loans
Derivative financial liabilities
Forward exchange contract
Carrying
amount
Contractual
cash flows
$’000
Less than
1 year
1 – 5 years
Over 5
years
58,543
6,168
78,884
58,543
7,456
79,067
58,543
2,975
6,919
-
4,481
72,148*
236
143,831
236
145,302
236
68,673
-
76,629
* Bank loans are a term facility repayable in June 2011.
Cardno Limited
30 June 2009
Non-derivative financial liabilities
Trade and other payables
Loans to subsidiaries
Carrying
amount
Contractual
cash flows
$’000
Less than
1 year
1 – 5 years
Over 5
years
46
44,690
44,736
46
44,690
44,736
46
44,690
44,736
-
-
-
-
-
-
-
-
-
-
-
Page 59 of 76
Notes to the Financial Statements
Cardno Limited and its Controlled Entities for the year ended 30 June 2009
34. FINANCIAL RISK MANAGEMENT CONTINUED
Liquidity risk continued
Consolidated
30 June 2008
Non-derivative financial liabilities
Trade and other payables
Finance leases & hire purchase
Convertible notes
Bank loans
Derivative financial liabilities
Forward exchange contract
Cardno Limited
30 June 2008
Non-derivative financial liabilities
Trade and other payables
Loans to subsidiaries
Convertible notes
Bank loans
Carrying
amount
Contractual
cash flows
$’000
Less than
1 year
1 – 5 years
Over 5
years
41,165
6,523
2,756
48,719
41,165
7,380
2,756
48,878
41,165
3,184
2,756
8,016
-
4,196
-
40,862* -
593
99,756
593
100,772
395
55,516
198
45,256
Carrying
amount
Contractual
cash flows
$’000
Less than
1 year
1 – 5 years
Over 5
years
242
7,135
2,756
40,682
50,815
242
7,135
2,756
40,729
50,862
242
7,135
2,756
47
10,180
-
-
-
40,682*
40,682
-
-
-
-
-
-
-
-
-
* Bank loans are a term facility repayable in June 2011.
Market risk
(a) Foreign exchange risk
Foreign exchange risk arises when future commercial transactions and recognised assets and liabilities are
denominated in a currency that is not the entity’s functional currency. The Group operates internationally and is
exposed to foreign exchange risk arising from the currency exposure to the Australian dollar. Natural hedges are
used to minimise this risk by having various foreign currency loans subsequently lent out to the Group’s foreign
operations and foreign currency cash balances to pay foreign currency creditors. This policy is reviewed on a
regular basis.
At the reporting date the Company, whose functional currency is the Australian dollar (AUD), has loans with
financial institutions totalling $54.7 million denominated in US dollars (USD) and $17.5 million denominated in
Sterling (GBP). This exposure is hedged naturally by subsequently lending these amounts out to the Company’s
UK and USA subsidiaries payable in those currencies by way of an intercompany loan. Therefore no currency
exposure exists on these loans at balance date.
The group also has two forward exchange contracts in place at 30 June 2009 expiring on 30 September 2009
and 31 December 2009 with a contract rate of 0.8785 USD/AUD. The contracts have a face value of USD
$95,000 each. A summary of the exposure at the reporting date is as follows:
Forward exchange contract – current receivable
Forward exchange contract – non-current receivable
Forward exchange contract – current payable
Forward exchange contract – non-current payable
Consolidated
Cardno Limited
2009
$’000
2008
$’000
2009
$’000
2008
$’000
216
-
(236)
-
(20)
433
216
(395)
(198)
56
-
-
-
-
-
-
-
-
-
-
Page 60 of 76
Notes to the Financial Statements
Cardno Limited and its Controlled Entities for the year ended 30 June 2009
34. FINANCIAL RISK MANAGEMENT CONTINUED
Market risk continued
(b) Interest rate risk
The Group manages its exposure to interest rate fluctuation by continuously monitoring its debt to ensure any
significant movement would not have a material impact on the performance of the company. The consolidated
entity does not engage in any significant transactions which are of a speculative nature.
At the reporting date the interest rate profile of the parent entity’s and the Group’s interest-bearing financial
instruments was:
Consolidated
30 June 2009
30 June 2008
Variable rate instruments
Cash assets
Bank loans
Fixed rate instruments
Finance leases & hire purchase
Bank loans
Convertible notes
Effective
Interest
Rate
2.48%
3.00%
8.49%
6.56%
-
Balance
$’000
65,808
(78,728)
(12,920)
(6,168)
(156)
-
(6,324)
Effective
Interest
Rate
5.45%
5.50%
8.11%
7.67%
9.00%
Balance
$’000
52,624
(47,508)
5,116
(6,523)
(1,211)
(2,756)
(10,490)
Cardno Limited
30 June 2009
30 June 2008
Variable rate instruments
Cash assets
Bank loans
Fixed rate instruments
Convertible notes
Group sensitivity
Effective
Interest
Rate
Balance
$’000
-
-
-
Effective
Interest
Rate
-
5.62%
9.00%
-
-
-
-
-
Balance
$’000
-
(40,682)
(40,682)
(2,756)
(2,756)
At 30 June 2009, if interest rates had changed by -/+ 50 basis points from the year-end rates with all other
variables held constant, post-tax profit for the year would have been $233,000 higher/lower (2008: $65,000
higher/lower), mainly as a result of lower/higher interest expense on variable bank loans partially offset by
higher/lower interest income from cash and cash equivalents. There have been no changes in the underlying
assumptions from the previous year.
Fair values
The carrying values of financial assets and liabilities approximate their fair values due to their relatively short-term
nature.
Capital risk management
The Group’s and the parent entity’s objectives when managing capital are to safeguard their ability to continue as
a going concern, so that they can continue to provide returns for shareholders and benefits for other stakeholders
and to maintain an optimal capital structure to reduce the cost of capital.
Page 61 of 76
Notes to the Financial Statements
Cardno Limited and its Controlled Entities for the year ended 30 June 2009
34. FINANCIAL RISK MANAGEMENT CONTINUED
Capital risk management continued
In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to
shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.
The Board of Directors monitors the return on capital, which the Group defines as net operating income divided by
total shareholders’ equity. The Board of Directors also monitors the level of dividends to ordinary shareholders.
35. BUSINESS COMBINATIONS
During the year the group made the following acquisitions:
(a) The group acquired the issued share capital of The Ecology Lab Pty Ltd and Spectrum Survey & Mapping Pty
Ltd with an effective acquisition date of 1 July 2008.
The acquired businesses contributed revenues of $8,876,918 and net profit after tax of $981,663 to the Group
for the year.
The Ecology Lab is a Sydney based consultant specialising in marine and freshwater ecology while Spectrum
Survey & Mapping is a specialist survey firm based in Perth and Kalgoorlie.
Details of acquisitions
Purchase Consideration
Cash
Direct costs relating to the acquisitions
Total purchase consideration
Fair value of net identifiable assets acquired
Goodwill
$’000
7,400
122
7,522
2,987
4,535
The assets and liabilities arising from the acquisitions are as follows:
Cash
Receivables
Inventories
Deferred tax assets
Property, plant and equipment
Creditors & borrowings
Provisions
Net identifiable assets acquired
Outflow of cash to acquire subsidiaries, net
of cash acquired
Cash consideration
Less: Balances acquired
Cash
Outflow of cash
Acquirees’
carrying
amount
$’000
1,527
1,995
17
233
1,581
(1,288)
(1,078)
2,987
Fair Value
$’000
1,527
1,995
17
233
1,581
(1,288)
(1,078)
2,987
7,400
1,527
5,873
Page 62 of 76
Notes to the Financial Statements
Cardno Limited and its Controlled Entities for the year ended 30 June 2009
35. BUSINESS COMBINATIONS CONTINUED
(b) The group also acquired the issued share capital of TBE Group Inc, a US based infrastructure services firm
with offices across 19 US states as well as China, the UK and Canada, with an effective acquisition date of
15 September 2008 and contributed revenues of $75,381,574 and net profit after tax (NPAT) of
$6,260,221 to the group.
If the acquisition had occurred on 1 July 2008 revenue and NPAT contributed for the year would have been
$90,888,400 (USD$67,711,375) and $7,703,934 (USD$5,841,076) respectively.
Details of acquisition
Purchase Consideration
Cash
Vendor liability – earn-out agreement
Direct costs relating to the acquisitions
Total purchase consideration
Fair value of net identifiable assets acquired
Goodwill
The assets and liabilities arising from the acquisition are as follows:
Acquirees’
carrying
amount
$’000
423
13,222
3,778
1,643
-
(7,184)
(9,433)
2,449
Cash
Receivables
Inventories
Property, plant and equipment
Intangibles
Provisions
Creditors & borrowings
Net identifiable assets acquired
Outflow of cash to acquire subsidiary, net of
cash acquired
Cash consideration
Less: Balances acquired
Cash
Outflow of cash
$’000
36,573
9,027
589
46,189
3,488
42,701
Fair Value
$’000
423
13,222
3,778
1,643
1,039
(7,184)
(9,433)
3,488
36,573
423
36,150
Page 63 of 76
Notes to the Financial Statements
Cardno Limited and its Controlled Entities for the year ended 30 June 2009
36. RELATED PARTY DISCLOSURES
Ultimate Parent
Cardno Limited is the ultimate parent company.
Interests held in controlled entities are set out in Note 38 to the financial statements.
Transactions with Other Related Parties
(a) Amounts receivable from other related
parties
Aggregate amounts receivable from:
Current
- Controlled entities
(b) Amounts owing to other related parties
Aggregate amounts payable to:
Current
- Controlled entities
Consolidated
Cardno Limited
2009
$’000
2008
$’000
2009
$’000
2008
$’000
-
-
-
195,966
183,686
-
44,690
7,135
The amounts payable and receivable have arisen as a result of the following:
(i) Loans advanced to Controlled Entities
(ii) Provision of accounting, administrative and financial assistance (management fees)
(iii) Loans for purchase of assets and working capital
(iv) Tax consolidations transfer of liabilities
The loans between Cardno Limited and all related companies are at call and interest free.
Page 64 of 76
Notes to the Financial Statements
Cardno Limited and its Controlled Entities for the year ended 30 June 2009
37. SEGMENT INFORMATION
The group is now organised on a global basis into two business segments being professional services and
software, and the emerging markets region which works in the international development assistance field.
In presenting information on the basis of geographical segments, segment revenue, results, assets and liabilities
are based on the geographical location of the assets. The consolidated entity’s geographical segments reported
are Australia, North America, Asia Pacific, UK and Africa.
Inter-segment pricing is determined on an arm’s length basis.
Primary Reporting Format – Business Segments
2009
Segment revenue
Fees from services and
sale of goods
Fees from recoverable
expenses
External sales
Inter-segment revenue
Other income
Total segment revenue
Segment result
EBIT
Net finance costs
Profit before tax
Income tax expense
Profit after tax
Assets
Segment assets
Unallocated assets
Total assets
Liabilities
Segment liabilities
Unallocated liabilities
Total liabilities
Other
Acquisitions of non-
current segment assets
Depreciation and
amortisation of
segment assets
Professional
Services &
Software
Emerging
Markets
Region
Total
Eliminations
Grouped
$’000
$’000
$’000
285,037
125,636
410,673
46,029
331,066
-
1,262
332,328
55,882
181,518
-
524
182,042
101,911
512,584
-
1,786
514,370
36,292
8,965
45,257
(3,165)
42,092
(7,939)
34,153
-
-
-
-
-
-
-
-
-
-
-
410,673
101,911
512,584
-
1,786
514,370
45,257
(3,165)
42,092
(7,939)
34,153
460,280
93,992
554,272
12,883
567,155
(84,549)
-
(84,549)
469,723
12,883
482,606
150,137
50,981
201,118
100,116
301,234
(84,549)
-
(84,549)
116,569
100,116
216,685
63,947
362
64,309
10,127
876
11,003
-
-
64,309
11,003
Page 65 of 76
Notes to the Financial Statements
Cardno Limited and its Controlled Entities for the year ended 30 June 2009
37. SEGMENT INFORMATION CONTINUED
Primary Reporting Format – Business Segments continued
2008
Segment revenue
Fees from services and
sale of goods
Fees from recoverable
expenses
External sales
Inter-segment revenue
Other income
Total segment revenue
Segment result
EBIT
Net finance costs
Profit before tax
Income tax expense
Profit after tax
Assets
Segment assets
Unallocated assets
Total assets
Liabilities
Segment liabilities
Unallocated liabilities
Total liabilities
Other
Acquisitions of non-
current segment assets
Depreciation and
amortisation of
segment assets
Professional
Services &
Software
Emerging
Markets
Region
Total
Eliminations
Grouped
$’000
$’000
$’000
222,203
90,261
312,464
-
312,464
25,276
247,479
-
508
247,987
58,436
148,697
137
585
149,419
83,712
396,176
137
1,093
397,406
-
-
(137)
-
(137)
83,712
396,176
-
1,093
397,269
35,158
5,674
40,832
(137)
40,695
(2,009)
38,823
(11,234)
27,589
-
(137)
-
(137)
(2,009)
38,686
(11,234)
27,452
339,487
84,826
424,313
9,134
433,447
(49,603)
-
(49,603)
374,710
9,134
383,844
98,818
40,363
139,181
76,200
215,381
(49,603)
-
(49,603)
89,578
76,200
165,778
74,517
751
75,268
7,464
624
8,088
-
-
75,268
8,088
Page 66 of 76
Notes to the Financial Statements
Cardno Limited and its Controlled Entities for the year ended 30 June 2009
37. SEGMENT INFORMATION CONTINUED
Secondary Reporting Format – Geographical Segments
2009
Segment revenue
Fees from services and
sale of goods
Fees from recoverable
expenses
External sales
Inter-segment revenue
Other income
Total segment revenue
Segment result
EBIT
Net finance costs
Profit before tax
Income tax expense
Profit after tax
Assets
Segment assets
Unallocated assets
Total assets
Liabilities
Segment liabilities
Unallocated liabilities
Total liabilities
Other
Acquisitions of non-
current segment assets
Depreciation and
amortisation of
segment assets
Australia
& NZ
$’000
North
America
$’000
Asia Pacific
$’000
UK &
Africa
$’000
Total
Eliminations
Grouped
$’000
$’000
$’000
261,891
103,917
12,055
32,810
410,673
16,058
277,949
-
641
278,590
58,411
162,328
-
697
163,025
10,150
22,205
-
29
22,234
17,292
50,102
-
419
50,521
101,911
512,584
-
1,786
514,370
31,964
6,172
2,446
4,675
45,257
315,396
159,627
15,325
63,924
53,235
95,341
3,609
48,933
(3,165)
42,092
(7,939)
34,153
554,272
12,883
567,155
201,118
100,116
301,234
19,283
44,344
114
568
64,309
8,372
2,328
177
126
11,003
-
-
-
-
-
-
-
-
-
-
-
410,673
101,911
512,584
-
1,786
514,370
45,257
(3,165)
42,092
(7,939)
34,153
(84,549)
-
(84,549)
469,723
12,883
482,606
(84,549)
-
(84,549)
116,569
100,116
216,685
-
-
64,309
11,003
Page 67 of 76
Notes to the Financial Statements
Cardno Limited and its Controlled Entities for the year ended 30 June 2009
37. SEGMENT INFORMATION CONTINUED
Secondary Reporting Format – Geographical Segments continued
2008
Segment revenue
Fees from services and
sale of goods
Fees from recoverable
expenses
External sales
Inter-segment revenue
Other income
Total segment revenue
Segment result
EBIT
Net finance costs
Profit before tax
Income tax expense
Profit after tax
Assets
Segment assets
Unallocated assets
Total assets
Liabilities
Segment liabilities
Unallocated liabilities
Total liabilities
Other
Acquisitions of non-
current segment assets
Depreciation and
amortisation of
segment assets
Australia
& NZ
$’000
North
America
$’000
Asia Pacific
$’000
UK &
Africa
$’000
Total
Eliminations
Grouped
$’000
$’000
$’000
208,889
65,570
10,165
27,840
312,464
-
312,464
41,060
249,949
-
237
250,186
28,027
93,597
-
531
94,128
6,813
16,978
-
169
17,147
7,812
35,652
137
156
35,945
83,712
396,176
137
1,093
397,406
-
-
(137)
-
(137)
83,712
396,176
-
1,093
397,269
31,346
6,425
891
2,170
40,832
(137)
40,695
278,573
76,204
8,470
61,066
47,510
34,459
4,625
52,587
(2,009)
38,823
(11,234)
27,589
424,313
9,134
433,447
139,181
76,200
215,381
-
(137)
-
(137)
(2,009)
38,686
(11,234)
27,452
(49,603)
-
(49,603)
374,710
9,134
383,844
(49,603)
-
(49,603)
89,578
76,200
165,778
53,773
(2,786)
289
23,992
75,268
6,339
1,443
107
199
8,088
-
-
75,268
8,088
The group provides engineering related software products which has not been reported separately as it represents
less than 10% of sales to external customers.
38. RECLASSIFICATION OF AMOUNTS
(a) Reclassification of project advances to cash and cash equivalents in the previous financial year
In the prior financial year, project cash accounts held by the group containing funds received and used for specific
projects being undertaken by the group, were classified as project advances in other current assets. It has been
determined that these cash balances meet the definition of cash and cash equivalents and have been disclosed as
restricted cash (project advances).
The incorrect classification had the effect of overstating project advances and understating cash and cash
equivalents at 30 June 2008 by $6,305,000. There was no effect on total current assets, total assets or profit at
30 June 2008. The reclassification also had the effect of understating operating cash flows for the year ended
30 June 2008 by $2,855,000 and cash and cash equivalents held at 1 July 2007 by $3,450,000.
The reclassification has been corrected by restating each of the affected financial statement line items for the prior
year, as described above. The abovementioned reclassifications had no impact on the financial statements of the
parent entity.
Page 68 of 76
Notes to the Financial Statements
Cardno Limited and its Controlled Entities for the year ended 30 June 2009
38. RECLASSIFICATION OF AMOUNTS CONTINUED
(b) Correction to recording the impact of exchange rate changes on cash and cash equivalents in the previous
financial year.
In the prior financial year the effects of foreign exchange rate changes on cash and cash equivalents held or due at
30 June 2008 were not disclosed separately on the face of the cash flow statement. This had the effect of
understating operating cash flows by $2,072,000 and has been corrected by restating each of the affected
financial statement line items as described.
39. CONTROLLED ENTITIES
Name
Cardno Holdings Pty Ltd
Cardno (Qld) Pty Ltd
Cardno Staff Pty Ltd
Cardno Staff No. 2 Pty Ltd
Cardno Operations Pty Ltd
Cardno Investments Pty Ltd
Cardno International Pty Ltd
Advanced Water & Wastewater Technologies Pty Ltd
Cardno (WA) Pty Ltd
Cardno CCS Pty Ltd
Cardno Lawson Treloar Pty Ltd
Cardno MBK PNG Ltd
Cardno (NSW) Pty Ltd
Cardno BLH Pty Limited
Cardno Willing Pty Ltd
Cardno Victoria Pty Ltd
Cardno Alexander Browne Pty Ltd
Cardno (Vic) Pty Ltd
Cardno Young Pty Ltd
Cardno Acil Pty Ltd
Cardno Eppell Olsen Pty Ltd
Cardno UK Limited
Cardno Agrisystems Limited
Cardno Agrisystems Africa Limited
Barton Enterprises Pty Ltd
Cardno Forbes Rigby Pty Ltd
Cardno Gilbert Rose Pty Ltd
Cardno Saraceni Pty Ltd
Cardno Low & Hooke No. 1 Unit Trust
Cardno Low & Hooke No. 2 Unit Trust
Cardno Low & Hooke Pty Ltd
Cardno Low & Hooke Management Services Pty Ltd
Bresfine Pty Ltd
Cardno NZ Limited
Cardno USA, Inc.
Emerging Markets Group, Ltd
Emerging Markets Group (EMG) Ltd
Emerging Markets Group (Consulting) Limited
Emerging Markets Group (EMG) s.a.
Cardno WRG, Inc.
Cardno TCB Limited
Cardno Willing (NSW) Pty Ltd
Cardno (NT) Pty Ltd
Cardno (PNG) Ltd
XP Software Pty Ltd
XP Software Inc.
Hydrotech Research Pty Ltd
Cardno Ullman & Nolan Pty Ltd
Cardno Ullman & Nolan Geotechnic Pty Ltd
Country of Incorporation
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Papua New Guinea
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
United Kingdom
United Kingdom
Kenya
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
New Zealand
United States of America
United States of America
United Kingdom
United Kingdom
Belgium
United States of America
New Zealand
Australia
Australia
Papua New Guinea
Australia
United States of America
Australia
Australia
Australia
Equity Holding
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
Page 69 of 76
Notes to the Financial Statements
Cardno Limited and its Controlled Entities for the year ended 30 June 2009
39. CONTROLLED ENTITIES CONTINUED
Name
Cardinal Surveys Pty Ltd
Ullman & Nolan Pty Ltd
Cardno Ullman & Nolan Geotechnic (NT) Pty Ltd
TCB Limited
Middleton Williams & Co Limited
Cardno Buckland Pty Ltd
Micro Drainage Limited
Cardno Bowler Pty Ltd
Bowler Geotechnical Pty Ltd
Bowler Geotechnical Cairns Pty Ltd
Bowler Geotechnical Sydney West Pty Ltd
Bowler Geotechnical Gold Coast Pty Ltd
J&D Civil Testing Pty Ltd
Sandhorse Pty Ltd
Kurtway Pty Ltd
Bowler Geotechnical (SC) Pty Ltd
Dumley Pty Ltd
Russhan Pty Ltd
L.A. & S.R. Thorne Pty Ltd
Cardno Spectrum Survey Pty Ltd
Cardno Ecology Lab Pty Ltd
Cardno TBE Group, Inc
TBE Holdings, Inc
TBE International Group, Inc
SUE Corporation
TBE Caribe, Inc
TBE Group (Gulf Coast), Inc
TBE Group (Michigan), Inc
Cardno TBE (UK) Ltd
TBE Group (Canada), ULC
TBE H&J Subsurface Utility – Engineering (Beijing) Limited
TBE H&J Subsurface Utility – Engineering (Hong Kong) Limited
Country of Incorporation
Australia
Australia
Australia
New Zealand
New Zealand
Australia
United Kingdom
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
United States of America
United States of America
United States of America
United States of America
United States of America
United States of America
United States of America
United Kingdom
Canada
China
China
Equity Holding
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
Page 70 of 76
Directors’ Declaration
Cardno Limited and its Controlled Entities for the year ended 30 June 2009
The directors of the company declare that:
1.
the financial statements and notes, as set out on pages 21 to 64, are in accordance with the Corporations Act
2001 and:
(a) comply with Accounting Standards and the Corporations Regulations 2001; and
(b) give a true and fair view of the financial position as at 30 June 2009 and of the performance for the year
ended on that date of the company and consolidated entity;
2. The Managing Director and Chief Financial Officer have each declared that:
(a) The financial records of the company for the financial year have been properly maintained in accordance
with section 286 of the Corporations Act 2001;
(b) The financial statements and notes for the financial year comply with the Accounting Standards; and
(c) The financial statements and notes for the financial year give a true and fair view;
3.
In the directors’ opinion there are reasonable grounds to believe that the company will be able to pay its debts
as and when they come due and payables.
Dated at Brisbane on the 18th day of August 2009.
Signed in accordance with a resolution of the directors.
JOHN C MASSEY
Chairman
Page 71 of 76
Independent Auditor’s Report
To the members of Cardno Limited
Report on the Financial Report
We have audited the accompanying financial report of Cardno Limited (the Company), which comprises the
balance sheets as at 30 June 2009, and the income statements, statements of changes in equity and cash flow
statements for the year ended on that date, a summary of significant accounting policies, other explanatory notes
and the directors’ declaration of the consolidated entity comprising the Company and the entities it controlled at
the year’s end or from time to time during the financial year.
Directors’ Responsibility for the Financial Report
The directors of the company are responsible for the preparation and fair presentation of the financial report in
accordance with Australian Accounting Standards (including the Australian Accounting Interpretations) and the
Corporations Act 2001. This responsibility includes establishing and maintaining internal controls relevant to the
preparation and fair presentation of the financial report that is free from material misstatement, whether due to
fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are
reasonable in the circumstances. In Note 1, the directors also state, in accordance with Accounting Standard
AASB 101 Presentation of Financial Statements, that compliance with the Australian equivalents to International
Financial Reporting Standards ensures that the financial report, comprising the financial statements and notes,
complies with International Financial Reporting Standards.
Auditor’s Responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in
accordance with Australian Auditing Standards. These Auditing Standards require that we comply with relevant
ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance
whether the financial report is free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
financial report. The procedures selected depend on the auditor’s judgement, including the assessment of the risks
of material misstatement of the financial report, whether due to fraud or error. In making those risk assessments,
the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial
report in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the
appropriateness of accounting policies used and the reasonableness of accounting estimates made by the
directors, as well as evaluating the overall presentation of the financial report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit
opinion.
Liability Limited by a scheme approved under Professional Standards Legislation other than for the acts or
omissions of financial services licencees
Member Crowe Horwath International
WHK Horwath Brisbane
Level 16, WHK Horwath Centre 120 Edward Street
Brisbane Queensland 4000 Australia
GPO Box 736 Brisbane Queensland 4001 Australia
Telephone +61 7 3233 3555 Facsimile +61 7 3210 6183
Email info.bri@whkhorwath.com.au www.whkhorwath.com.au
A WHK Group firm
WHK Pty Ltd trading as WHK Horwath Brisbane is a member of Crowe Horwath International Association, a Swiss
verein.
Each member firm of Crowe Horwath is a separate and independent legal entity
Page 72 of 76
Independent Auditor’s Report
Independence
In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001.
Auditor’s Opinion
In our opinion the financial report of Cardno Limited is in accordance with the Corporations Act 2001, including:
(a) giving a true and fair view of the company’s and consolidated entity’s financial position as at 30 June 2009
and of their performance for the year ended on that date; and
(b) complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the
Corporations Regulations 2001.
The financial report also complies with International Financial Reporting Standards as disclosed in Note 1.
Report on the Remuneration Report
We have audited the Remuneration Report included on pages 10-18 of the directors’ report for the year ended
30 June 2009. The directors of the company are responsible for the preparation and presentation of the
Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to
express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian
Auditing Standards.
Auditor’s Opinion
In our opinion the Remuneration Report of Cardno Limited for the year ended 30 June 2009, complies with section
300A of the Corporations Act 2001.
WHK HORWATH
RUSSELL COLE
Principal
Brisbane, 18 August 2009
Page 73 of 76
Additional Shareholder Information
Distribution of Ordinary Shareholders
The number of shareholders, by size of holding, as at 24 August 2009 were:
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 – and over
Total
Ordinary Shares
Number of
Holders
3,954
3,375
1,159
856
120
9,464
Number of
Shares
1,751,889
8,943,528
8,286,361
20,066,258
45,224,213
84,272,249
As at 24 August 2009 there were 674 shareholders who held less than a marketable parcel of
114 shares.
Twenty Largest Ordinary Shareholders
The names of the twenty largest holders as at 24 August 2009 were:
Listed Ordinary Shares
Number Held
Percentage
RBC Dexia Investor Services Australia Nominees Pty Limited
< PIIC A/C>
J P Morgan Nominees Australia Limited
Andrew Buckley
RBC Dexia Investor Services Australia Nominees Pty Limited
< PIPOOLED A/C>
National Nominees Limited
Trevor Johnson
Merrill Lynch (Australia) Nominees Pty Limited
Graham Tamblyn
ANZ Nominees Limited
R A Young Investments Pty Ltd
Malcolm David Pound
Patrick L Beyer
David Bowler
Paul Gardiner
Anne Felicity Phillips
Roger Collins-Woolcock
KMS Properties Pty Ltd
Ancam Pty Ltd
Steven Coote
Edwin Ronald Vowles
Total
2,435,748
2,420,081
2,359,037
2,258,480
2,213,208
1,967,399
1,852,461
1,426,330
1,199,399
1,180,000
1,093,755
1,076,610
996,867
800,141
757,358
653,652
629,811
619,087
556,860
541,562
27,037,846
2.89%
2.87%
2.80%
2.68%
2.63%
2.33%
2.20%
1.69%
1.42%
1.40%
1.30%
1.28%
1.18%
0.95%
0.90%
0.78%
0.75%
0.73%
0.66%
0.64%
32.08%
Page 74 of 76
Additional Shareholder Information
Substantial Shareholders
The names of substantial shareholders who have notified the company in accordance with section
671B of the Corporations Act 2001 are:
Perpetual Limited and subsidiaries
Voting Rights
Number of
Shares Held
5,127,343
Percentage
6.08%
All ordinary shares (whether fully paid or not) carry one vote per share without restriction.
Escrowed Shares
There are currently 7,130,929 ordinary shares held in escrow. This is approximately 8.46% of the
company’s issued share capital. The details are as follows:-
(cid:131)
(cid:131)
(cid:131)
(cid:131)
(cid:131)
In accordance with the Share Sale Agreement between Cardno Limited and the shareholders of
Micro Drainage Limited completed on 5 March 2008, ordinary shares issued as part of the
purchase price are escrowed for a period of 18 months to 4 September 2009. This agreement
affects 1,058,323 shares, being approximately 1.26% of the company’s issued share capital.
In accordance with the Share Sale Agreement between Cardno Limited and the shareholders of
Bowler Geotechnical Holdings Pty Ltd completed on 29 February 2008, ordinary shares issued as
part of the purchase price are escrowed for a period of 18 months to 29 August 2009. This
agreement affects 3,583,444 shares, being approximately 4.25% of the company’s issued share
capital.
In accordance with the Share Sale Agreement between Cardno Limited and the shareholders of
The Ecology Lab Pty Limited completed on 13 August 2008, ordinary shares issued as part of the
purchase price are escrowed for a period of 18 months to 18 February 2010. This agreement
affects 170,588 shares, being approximately 0.20% of the company’s issued share capital.
In accordance with the Share Sale Agreement between Cardno Limited and the shareholders of
Spectrum Survey and Mapping Pty Ltd completed on 21 August 2008, ordinary shares issued as
part of the purchase price are escrowed for a period of 18 months to 21 February 2010. This
agreement affects 456,947 shares, being approximately 0.54% of the company’s issued share
capital.
In accordance with the Stock Purchase Agreement between Cardno Limited and the stockholders
of TBE Group Inc completed on 15 September 2008, ordinary shares issued as part of the
purchase price are escrowed for periods of 12 and 18 months with 426,982 escrowed to
15 September 2009 and 1,434,645 escrowed to 15 March 2009. This agreement affects
1,861,627 shares, being approximately 2.21% of the company’s issued share capital.
Options
As at 24 August 2009 the details of Options on issue are as follows:
Number of Option Holders
Number of Options on Issue
358
5,972,500
Voting Rights of Options
The ordinary shares issued on exercise of the options will rank equally with all other ordinary shares.
Page 75 of 76
Lawyers
McCullough Robertson Lawyers
Level 11, Central Plaza Two
66 Eagle Street
BRISBANE QLD 4000
Ph: +61 7 3233 8888
Fax: +61 7 3229 9949
Website: www.mccullough.com.au
Jones Day
77 West Wacker Drive
Chicago, Illinois 60601
USA
Ph: +1 312 782 3939
Fax: +1 312 782 8585
Website: www.jonesday.com
Bankers
HSBC Bank Australia Limited
300 Queen Street
BRISBANE QLD 4000
Ph: +61 7 3835 7820
Fax: +61 7 3835 7830
Website: www.hsbc.com.au
Corporate Directory
Board of Directors
Chairman
John Massey
Deputy Chairman
Graham Tamblyn
Managing Director
Andrew Buckley
Directors
Anthony Barnes
Peter Cosgrove
Jeffrey Forbes
Trevor Johnson
Ian Johnston
Chief Financial Officer & Company Secretary
Jeffrey Forbes
Registered Office
Cardno Limited
ABN 70 108 112 303
Level 11, Green Square North Tower
515 St Paul’s Terrace
FORTITUDE VALLEY QLD 4006
Ph: +61 7 3369 9822
Fax: +61 7 3369 9722
Website: www.cardno.com.au
Share Registry
Computershare Investor Services Pty Limited
Level 19
307 Queen Street
BRISBANE QLD 4000
Ph: 1300 552 270 (within Australia)
+61 3 9415 4000 (outside Australia)
Website: www.computershare com.au
Auditors
WHK Horwath
Chartered Accountants
Level 16, WHK Horwath Centre
120 Edward Street
BRISBANE QLD 4000
Ph: +61 7 3233 3555
Fax: +61 7 3210 6183
Website: www.whkhorwath.com.au
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