ferrets stock to watch: cardno limited

Ferrets Stock to Watch: CARDNO LIMITED
08:08, Wednesday, 23 August 2006

A COMPANY THAT CONTINUALLY UNDERESTIMATES ITS PROFITS

Sydney - Wednesday - August 23: (RWE Aust Business News)
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OVERVIEW
********

In June the Ferret wrote that it's always good news for
shareholders when a company accidentally understates earnings for the
year or sales have been much better than expected.

Cardno Ltd (ASX:CDD) was a good example.

It reported an even stronger performance than previously
disclosed, estimating the company's full-year after-tax profit for the
2006 financial year would be between $12.1 and $12.5 million.

This expected result represented a significant upgrade on the
forecast of $10.5m to $10.9m the company issued in February.

The 2006 forecast made in June was spot on and even a touch
higher on yesterday's net profit figure of $12.66 million, showing an
82.4 per cent increase on the previous year.

The preliminary statement released to the Australian Stock
Exchange disclosed the international social and physical infrastructure
services provider posted an 82.4 per cent jump in revenue to $186.75
million for the year ended June 30.

The company achieved an 82.8 per cent increase in profit before
income tax from $9.9 million to $18.1 million.

Basic earnings per share increased from 19.29c to 31.37c, an
increase of 62.6 per cent.

The Board has declared a final dividend of 10c, increasing the
full-year dividend to 19c, from 14c in 2004/05.

Cardno chairman John Massey said "Cardno grows from strength to
strength via a combination of healthy organic growth and strategic
acquisitions, in turn driving strong performance across the business.

"Our financial performance has confirmed Cardno's well planned
and executed growth strategy."

SHARE PRICE MOVEMENTS
*********************

Shares of Cardno yesterday gained 19c to $4.65. Rolling high for
the year has been $5 and low $3.35. Dividend is 17c to yield 3.66 per
cent. Earnings per share is 25.85c and p/e ratio is 17.99. The company
has 46.2 million shares with a market cap of $203.6 million.

Cardno has made five acquisitions during the year, increasing
the group's revenue by $27.7 million in that period and extending both
technical capability and geographic reach.

This process commenced in July 2005, with the acquisition of one
of Queensland's leading traffic engineering and transport planning
firms, Eppell Olsen & Partners.

The formation of Cardno Eppell Olsen has substantially
strengthened the company's ability to deliver services to all levels of
government in this important and growing area.

Cardno completed an important international acquisition during
the year, with the purchase of the UK, EU and African-based development
assistance provider, Agrisystems.

Cardno Agrisystems operates under the management of Cardno Acil,
and offers the company access to important international markets in the
development assistance field.

The acquisition of Ullman & Nolan, a Mackay, Brisbane and
Darwin-based civil and geotechnical engineering consultancy, reinforces
Cardno's presence in the strong Queensland market and increases its
geographic spread in that state.

Forbes Rigby became Cardno's first regional NSW acquisition when
that company was acquired this year.

This Wollongong-based civil engineering and town planning
consultancy extends Cardno's reach into this growing area, and increases
the company's presence in NSW to five offices.

Gilbert Rose is a Perth-based civil engineering consultancy which
will support the company's existing Cardno BSD business in the buoyant
Western Australian market, increasing its overall capability to deliver
projects.

All acquisitions were EPS positive, and are continuing to
operate successfully and profitably.

Cardno further increased its international presence by opening
an office in Abu Dhabi in January.

This office has traded successfully since its opening and
provides the company with access to one of the world's fastest-growing
regions.

Managing director Andrew Buckley noted that Cardno intends to
continue its successful growth strategy while consolidating its recent
acquisitions.

"Cardno is well positioned to continue its strong performance
based on current conditions," Mr Buckley said.

"Domestic and international business conditions continue to
offer growth opportunities for Cardno."

Its international physical infrastructure team's merger with
social infrastructure provider Cardno Acil is progressing well.

Several significant contracts have been secured as a result of
Cardno Acil's complementary capabilities and established reputation.

With the purchase of UK-based Agrisystems, Cardno can now compete
in markets which were previously inaccessible to the company.

"We intend to continue our successful acquisition strategy of
identifying profitable well managed businesses with complementary
coverage both geographically and by professional discipline," said Mr
Buckley.

BACKGROUND
**********

Cardno Ltd is an integrated professional services provider,
locally delivering the specialist advice necessary to create or improve
the physical and social infrastructure that underpins communities around
the world.

It was listed on the Australian Stock Exchange on May 20, 2004.

The company team comprises leading advisers who plan, design and
deliver sustainable projects or community programs around the world.

Turnover of $187 million is disclosed in the latest preliminary
result.

From its foundations as a civil engineering consultancy, Cardno
has expanded to also include management and environmental services as
well as project management of international development assistance
programs.

The original engineering practice from which the Cardno group
has evolved commenced operations in Queensland in 1945 as Cardno &
Davies.

This partnership worked largely in the civil engineering
consulting services market, and achieved a reputation for its expertise
and experience. The core business at that time was providing engineering
services to the public and private sectors for the development of the
state's infrastructure.

In 1999 the Cardno & Davies group merged with McMillan, Britton
& Kell Pty Ltd, a NSW-based consulting practice with origins dating to
1936, to form Cardno MBK.

Since this merger, the business has grown from strength to
strength, through the acquisition of local practices and organic growth
of its existing operations.

New members in the Cardno group have been selected based on
their geographic region and professional discipline offered.

ENDS