ASSET VISION CO LTD — Annual Report 2017

Aug 17, 2017

PS&C Ltd Appendix 4E Preliminary final report

1. Company details

Name of entity: PS&C Ltd ABN: 50 164 718 361 Reporting period: For the year ended 30 June 2017 Previous period: For the year ended 30 June 2016

2. Results for announcement to the market

			$
Revenues from ordinary activities	down	13.4% to	73,900,053
Loss from ordinary activities after tax attributable to the members of PS&C Ltd down		180.3% to	(5,596,221)
Loss for the year attributable to the members of PS&C Ltd	down	180.3% to	(5,596,221)
		2017	2016
		Cents	Cents
Basic earnings per share		(8.12)	11.12
Diluted earnings per share		(8.12)	11.12

Dividends

There were no dividends paid, recommended or declared during the current financial period.

Comments

The loss for the group after providing for income tax amounted to $5,596,221 (30 June 2016: profit of $6,972,937).

Please refer to the accompanying commentary.

3. Net tangible assets

Net tangible assets per ordinary security	Reporting period Cents (40.32)	Previous period Cents (23.95)

4. Control gained over entities Sacon Group Pty Ltd Name of entities (or group of entities) Coroma Consulting Pty Ltd Date control gained 28 June 2017

PS&C Ltd Appendix 4E Preliminary final report

$

Contribution of such entities to the reporting entity's profit/(loss) from ordinary activities before income tax during the period (where material) - Profit/(loss) from ordinary activities before income tax of the controlled entity (or group of entities) for the whole of the previous period (where material) -

On 28 June 2017, the Group acquired 100% interest of Sacon Group Pty Ltd and Coroma Consulting Pty Ltd. Sacon Group Pty Ltd and Coroma Consulting Pty Ltd contributed $nil profit to the Group’s consolidated loss from ordinary activities during the year ended 30 June 2017. Sacon Group Pty Ltd reported an operating profit after tax for the year ended 30 June 2017 of $882,349. Coroma Consulting Pty Ltd reported an operating profit after tax for the year ended 30 June 2017 of $582,605.

5. Dividends

Current period

There were no dividends paid, recommended or declared during the current financial period.

Previous period

			Franked
		Amount per	amount per
		security	security
		Cents	Cents
2015	Final dividend, paid 15 October 2015	3.00	3.00
2016	Interim dividend, paid 13 April 2016	2.50	2.50

6. Dividend reinvestment plans

Not applicable.

7. Details of associates and joint venture entities

Not applicable.

8. Foreign entities

Details of origin of accounting standards used in compiling the report:

Not applicable.

9. Audit qualification or review

Details of audit/review dispute or qualification (if any):

The financial statements are in the process of being audited and it is expected that an unqualified opinion will be issued.

PS&C Ltd Appendix 4E Preliminary final report

10. Attachments

Details of attachments (if any):

An abridged set of unaudited financial statements for the year ended 30 June 2017 are presented below.

11. Signed

==> picture [99 x 52] intentionally omitted <==

Signed _________

Date: 18 August 2017

Kevin McLaine Director Melbourne

PS&C Ltd

Statement of profit or loss and other comprehensive income For the year ended 30 June 2017

Note Revenue 2 Other income 3 Expenses Third party materials and labour Acquisition expenses Employee benefits expense Depreciation and amortisation expense Impairment of assets Write off of assets Other expenses Finance costs Profit/(loss) before income tax expense Income tax expense Profit/(loss) after income tax expense for the year attributable to the members of PS&C Ltd Other comprehensive income for the year, net of tax Total comprehensive income for the year attributable to the members of PS&C Ltd Basic earnings per share Diluted earnings per share	Consolidated Group 2017 2016 $ $ 73,900,053 85,333,617 15,926 5,604,042 (21,581,820) (17,806,772) (67,035) (987,541) (44,900,953) (58,286,170) (272,544) (259,218) (6,852,985) - (29,727) (271,804) (3,875,013) (3,662,739) (1,224,250) (1,351,702) (4,888,348) 8,311,713 (707,873) (1,338,776) (5,596,221) 6,972,937 - - (5,596,221) 6,972,937 Cents Cents (8.12) 11.12 (8.12) 11.12
	(4,888,348) (707,873)
	(5,596,221) -
	(5,596,221)
	Cents (8.12) (8.12)

The above statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes

1

PS&C Ltd Statement of financial position As at 30 June 2017

Note Assets Current assets Cash and cash equivalents Trade and other receivables Inventories Income tax refund due Other Total current assets Non-current assets Receivables Property, plant and equipment Intangibles 4 Deferred tax Other Total non-current assets Total assets Liabilities Current liabilities Trade and other payables Borrowings 5 Employee benefits Provisions 6 Deferred consideration 7 Other Total current liabilities Non-current liabilities Payables Borrowings 8 Deferred tax Employee benefits Provisions 9 Total non-current liabilities Total liabilities Net assets Equity Issued capital 10 Reserves Retained profits Total equity	Consolidated Group 2017 2016 $ $ 8,068,605 3,508,778 11,240,954 16,245,280 16,133 17,223 540,316 355,181 1,547,734 1,325,139 21,413,742 21,451,601 389,343 487,733 1,362,283 732,192 92,206,580 83,904,480 1,046,532 1,227,769 43,124 57,909 95,047,862 86,410,083 116,461,604 107,861,684	Consolidated Group 2017 2016 $ $ 8,068,605 3,508,778 11,240,954 16,245,280 16,133 17,223 540,316 355,181 1,547,734 1,325,139 21,413,742 21,451,601 389,343 487,733 1,362,283 732,192 92,206,580 83,904,480 1,046,532 1,227,769 43,124 57,909 95,047,862 86,410,083 116,461,604 107,861,684
	21,413,742	21,451,601
	389,343 1,362,283 92,206,580 1,046,532 43,124	487,733 732,192 83,904,480 1,227,769 57,909
	95,047,862	86,410,083
	116,461,604	107,861,684
	9,057,661 15,399,420 1,298,626 3,265,188 9,628,000 2,762,149	8,173,823 1,045,719 1,234,253 2,595,366 - 3,403,523
	41,411,044	16,452,684
	370,647 - 1,740 276,452 10,462,429	477,069 15,455,876 632 231,588 7,162,511
	11,111,268	23,327,676
	52,522,312	39,780,360
	63,939,292	68,081,324
	58,643,072 69,724 5,226,496	57,220,527 38,080 10,822,717
	63,939,292	68,081,324

The above statement of financial position should be read in conjunction with the accompanying notes

2

PS&C Ltd Statement of changes in equity For the year ended 30 June 2017

Consolidated Group Balance at 1 July 2015 Profit after income tax expense for the year Other comprehensive income for the year, net of tax Total comprehensive income for the year Transactions with members in their capacity as members: Share-based payments Employee share options reserve Dividends paid Balance at 30 June 2016 Consolidated Group Balance at 1 July 2016 Loss after income tax expense for the year Other comprehensive income for the year, net of tax Total comprehensive income for the year Transactions with members in their capacity as members: Share-based payments Employee share options reserve Balance at 30 June 2017	Issued capital $ 47,663,827 - -	Reserves $ 31,346 - -	Retained profits $ 7,171,709 6,972,937 -	Total equity $ 54,866,882 6,972,937 -
	- 9,556,700 - -	- - 6,734 -	6,972,937 - - (3,321,929)	6,972,937 9,556,700 6,734 (3,321,929)
	57,220,527	38,080	10,822,717	68,081,324
	Issued capital $ 57,220,527 - -	Reserves $ 38,080 - -	Retained profits $ 10,822,717 (5,596,221) -	Total equity $ 68,081,324 (5,596,221) -
	- 1,422,545 -	- - 31,644	(5,596,221) - -	(5,596,221) 1,422,545 31,644
	58,643,072	69,724	5,226,496	63,939,292

The above statement of changes in equity should be read in conjunction with the accompanying notes

3

PS&C Ltd Statement of cash flows For the year ended 30 June 2017

Note Cash flows from operating activities Receipts from customers (inclusive of GST) Payments to suppliers and employees (inclusive of GST) Interest received Other revenue Interest and other finance costs paid Income taxes paid Net cash from operating activities Cash flows from investing activities Payment for purchase of business, net of cash acquired 11 Payments for prior period's business acquisition 11 Acquisition Costs Payments for property, plant and equipment Payments for development of intangibles 4 Payments for security deposits Proceeds from disposal of property, plant and equipment Proceeds from release of security deposits Net cash used in investing activities Cash flows from financing activities Proceeds from borrowings 8 Dividends paid Repayment of borrowings Net cash from/(used in) financing activities Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at the beginning of the financial year Cash and cash equivalents at the end of the financial year	Consolidated Group 2017 2016 $ $ 72,768,452 91,738,847 (64,199,733) (88,851,132) 8,568,719 2,887,715 16,496 26,878 377,477 - (897,389) (688,477) (970,056) (2,144,329) 7,095,247 81,787 904,570 (1,731,644) (1,426,675) (7,502,653) (73,740) (987,541) (832,939) (479,228) - (92,970) (4,958) - 497 - - 72,115 (1,433,245) (10,721,921) - 12,338,069 - (3,321,929) (1,102,175) - (1,102,175) 9,016,140 4,559,827 (1,623,994) 3,508,778 5,132,772 8,068,605 3,508,778
	8,568,719 16,496 377,477 (897,389) (970,056)
	7,095,247
	904,570 (1,426,675) (73,740) (832,939) - (4,958) 497 -
	(1,433,245)
	- - (1,102,175)
	(1,102,175)
	4,559,827 3,508,778
	8,068,605

The above statement of cash flows should be read in conjunction with the accompanying notes

4

PS&C Ltd Notes to the financial statements 30 June 2017

Note 1. Operating segments

Identification of reportable operating segments

The group is organised into 3 operating segments: People, Security and Communications. Operating segments are determined by distinguishable components where by the risk and returns are different from the other segments.

Types of products and services

The principal products and services of each of these operating segments are as follows:

People

The People segment, comprising Systems and People Pty Ltd, Bexton IT Services Pty Ltd, Sacon Group Pty Ltd and Coroma Consulting Pty Ltd, is involved in sourcing and providing specialist contractors to customers for medium and long term ICT projects, while also managing the payroll function for customers.

Security The Security segment, comprising Pure Hacking Pty Ltd, Securus Global Consulting Pty Ltd, Hacklabs Pty Ltd and Certitude Pty Ltd, is involved in services and consulting around cyber security matters Communications The Communications segment, comprising Allcom Networks Pty Ltd and Allcom Consulting Services Pty Ltd, is involved in consulting and implementation of services around internet protocol telephony and network infrastructure

Intersegment transactions

There were no material transactions between operating segments.

Intersegment receivables, payables and loans

Intersegment loans are initially recognised at the consideration received. Intersegment loans receivable and loans payable that earn or incur non-market interest are not adjusted to fair value based on market interest rates. Intersegment loans are eliminated on consolidation.

Operating segment information

Consolidated Group - 2017 Revenue Sales to external customers Total revenue EBITDA Depreciation and amortisation Impairment of assets Interest revenue Finance costs Profit/(loss) before income tax expense Income tax expense Loss after income tax expense Assets Segment assets Total assets Liabilities Segment liabilities Total liabilities	People $ 45,645,347	Security $ 12,304,793	Communic- ations $ 15,949,913	Corporate $ -	Total $ 73,900,053
	45,645,347	12,304,793	15,949,913	-	73,900,053
	3,775,218 (35,865) - 114 (6,233)	2,806,499 (94,435) - 2,677 -	504,857 (107,977) - 1,736 (15,673)	(3,641,639) (34,267) (6,852,985) 11,969 (1,202,344)	3,444,935 (272,544) (6,852,985) 16,496 (1,224,250)
	3,733,234	2,714,741	382,943	(11,719,266)	(4,888,348) (707,873)
	7,729,306	3,702,856	4,821,933	100,207,509
					(5,596,221)
					116,461,604
	3,105,288	2,005,344	7,849,551	39,562,129	116,461,604
					52,522,312
					52,522,312

5

PS&C Ltd

Notes to the financial statements 30 June 2017

Note 1. Operating segments (continued)

Consolidated Group - 2016 Revenue Sales to external customers Total revenue EBITDA Depreciation and amortisation Interest revenue Finance costs Other income Profit before income tax expense Income tax expense Profit after income tax expense Assets Segment assets Total assets Liabilities Segment liabilities Total liabilities	People $ 56,825,112	Security $ 12,514,657	Communic- ations $ 15,993,848	Corporate $ -	Total $ 85,333,617
	56,825,112	12,514,657	15,993,848	-	85,333,617
	4,347,124 (43,034) 1,263 - -	3,056,730 (86,983) 2,184 (646) -	319,204 (99,869) - (2,043) -	(3,404,467) (29,332) 23,431 (1,349,013) 5,577,164	4,318,591 (259,218) 26,878 (1,351,702) 5,577,164
	4,305,353	2,971,285	217,292	817,783	8,311,713 (1,338,776)
	8,502,519	3,130,198	7,910,872	88,318,095
					6,972,937
					107,861,684
	3,960,608	2,028,111	6,837,644	26,953,997	107,861,684
					39,780,360
					39,780,360

Revenue by geographical area

There are no material sales to external customers outside of Australia. There are no material holdings of non-current assets outside of Australia.

Note 2. Revenue

Sales revenue Sale of services Sale of goods Other revenue Lease surrender fee Revenue	Consolidated Group 2017 2016 $ $ 59,518,712 71,915,036 14,003,864 13,418,581 73,522,576 85,333,617 377,477 - 73,900,053 85,333,617	Consolidated Group 2017 2016 $ $ 59,518,712 71,915,036 14,003,864 13,418,581 73,522,576 85,333,617 377,477 - 73,900,053 85,333,617
	73,522,576	85,333,617
	377,477	-
	73,900,053	85,333,617

6

PS&C Ltd Notes to the financial statements 30 June 2017

Note 3. Other income

Net gain on disposal of property, plant and equipment Interest income Contingent consideration adjustments Other income	Consolidated Group 2017 2016 $ $ (570) - 16,496 26,878 - 5,577,164 15,926 5,604,042	Consolidated Group 2017 2016 $ $ (570) - 16,496 26,878 - 5,577,164 15,926 5,604,042
	15,926	5,604,042

The contingent consideration adjustments arise from a review of amounts due for earn-out purposes under the share purchase and sale agreements.

Note 4. Non-current assets - intangibles

Goodwill - at cost Patents and trademarks - at cost Less: Accumulated amortisation	Consolidated Group 2017 2016 $ $ 92,206,580 83,904,480 - 1,965 - (1,965) - - 92,206,580 83,904,480	Consolidated Group 2017 2016 $ $ 92,206,580 83,904,480 - 1,965 - (1,965) - - 92,206,580 83,904,480
	- -	1,965 (1,965)
	-	-
	92,206,580	83,904,480

Reconciliations

Reconciliations of the written down values at the beginning and end of the current financial period are set out below:

Consolidated Group Balance at 1 July 2015 Additions Additions through business combinations (note 11) Write off of assets Amortisation expense Balance at 30 June 2016 Additions through business combinations (note 11) Impairment of assets Balance at 30 June 2017	Goodwill $ 69,940,606 - 13,963,874 - -	Patents and Trademarks $ 1,965 - - - (1,965)	Development $ 208,200 92,970 - (263,410) (37,760)	Total $ 70,150,771 92,970 13,963,874 (263,410) (39,725)
	83,904,480 15,155,085 (6,852,985)	- - -	- - -	83,904,480 15,155,085 (6,852,985)
	92,206,580	-	-	92,206,580

7

PS&C Ltd Notes to the financial statements 30 June 2017

Note 4. Non-current assets - intangibles (continued)

Impairment testing for goodwill

For the purposes of impairment testing, goodwill is allocated to the consolidated entity's cash-generating units (CGU's) as follows:

People Security Communications Total	Consolidated Group 2017 2016 $ $ 47,025,786 31,870,701 36,356,903 36,356,903 8,823,891 15,676,876 92,206,580 83,904,480	Consolidated Group 2017 2016 $ $ 47,025,786 31,870,701 36,356,903 36,356,903 8,823,891 15,676,876 92,206,580 83,904,480
	92,206,580	83,904,480

PS&C undertakes impairment testing of the relevant businesses as required. Impairment testing was performed at 30 June 2017 to support the carrying value of goodwill. The recoverable amount was based on its value in use, determined by discounting future cash flows to be generated from the continuing use of the business. Management's determination of cash flow projections and gross margins are based on past performance and its expectation for the future. The present value of future cash flows has been calculated using projected cashflows approved by the board covering year 1. The present value of future cash flows for years 2 to 5 have been calculated using a terminal growth rate of 3% (2016: 3%) and a discount rate of 12% (2016: 9.4%) has been used to determine value in use. In addition, average EBITDA growth rates used for years 2 to 5 were:

People: 7% Security: 6% Communications: 6%

The estimated recoverable amount exceeded/(did not exceed) the carrying value for each CGU by the following amounts:

People Security Communications Total	Consolidated Group 2017 2016 $ $ 36,032,239 16,574,282 15,925,356 23,901,014 5,968,044 1,078,526 57,925,639 41,553,822	Consolidated Group 2017 2016 $ $ 36,032,239 16,574,282 15,925,356 23,901,014 5,968,044 1,078,526 57,925,639 41,553,822
	57,925,639	41,553,822

Impairment

At 31 December 2016, an impairment loss of $6,852,985 was recognised in the profit and loss. This was a result of impairment testing undertaken whereby the carrying amount of the Communications CGU exceeding the recoverable amount.

Note 5. Current liabilities - borrowings

	Consolidated	Group
	2017	2016
	$	$
Bank loans	15,399,420	1,045,719

The current bank facility matures in January 2018.

8

PS&C Ltd Notes to the financial statements 30 June 2017

Note 6. Current liabilities - provisions

Contingent consideration	Consolidated Group 2017 2016 $ $ 3,265,188 2,595,366

Contingent consideration

The provision represents the obligation to pay contingent consideration following the acquisition of a business or assets, the majority of which may be satisfied by way of an issue of shares in PS&C Ltd. It is measured at the present value of the estimated liability.

Movements in provisions

Movements in each class of provision during the current financial year, other than employee benefits, are set out below:

Consolidated Group - 2017 Carrying amount at the start of the year Amounts transferred from non-current Payments Unwinding of discount Carrying amount at the end of the year	Contingent Consideration $ 2,595,366 3,243,357 (2,849,220) 275,685
	3,265,188

The net assets of the entities acquired and recognised in the 30 June 2016 financial statements was based on a provisional fair value assessment. The final assessment had not been completed by the date the 2016 financial statements were approved for issue by the Board.

The fair value assessment has now been finalised and therefore the 30 June 2016 comparative information has been updated to reflect adjustments to the provisional amounts. As a result, intangible assets increased by $715,050 and contingent consideration (provisions) increased by $715,050

Note 7. Current liabilities - deferred consideration

	Consolidated	Group
	2017	2016
	$	$
Deferred consideration	9,628,000		-

The deferred consideration represents the obligation to pay contingent consideration following the acquisition of a business or assets, the majority of which may be satisfied by way of an issue of shares in PS&C Ltd. It is measured at the present value of the estimated liability.

Note 8. Non-current liabilities - borrowings

	Consolidated	Group
	2017	2016
	$	$
Bank loans	-	15,455,876

9

PS&C Ltd Notes to the financial statements 30 June 2017

Note 8. Non-current liabilities - borrowings (continued)

Total secured liabilities

The total secured liabilities (current and non-current) are as follows:

	Consolidated	Group
	2017	2016
	$	$
Bank loans	15,399,420	16,501,595

Financing arrangements

Unrestricted access was available at the reporting date to the following lines of credit:

Total facilities Bank loans Credit Card Facility Indemnity/Guarantee Facilities Electronic Payaway Facility Used at the reporting date Bank loans Credit Card Facility Indemnity/Guarantee Facilities Electronic Payaway Facility Unused at the reporting date Bank loans Credit Card Facility Indemnity/Guarantee Facilities Electronic Payaway Facility	Consolidated Group 2017 2016 $ $ 17,550,000 20,300,000 375,000 375,000 500,000 500,000 500,000 500,000 18,925,000 21,675,000 15,399,420 16,501,595 65,305 43,023 192,830 275,598 - - 15,657,555 16,820,216 2,150,580 3,798,405 309,695 331,977 307,170 224,402 500,000 500,000 3,267,445 4,854,784	Consolidated Group 2017 2016 $ $ 17,550,000 20,300,000 375,000 375,000 500,000 500,000 500,000 500,000 18,925,000 21,675,000 15,399,420 16,501,595 65,305 43,023 192,830 275,598 - - 15,657,555 16,820,216 2,150,580 3,798,405 309,695 331,977 307,170 224,402 500,000 500,000 3,267,445 4,854,784
	18,925,000	21,675,000
	15,399,420 65,305 192,830 -	16,501,595 43,023 275,598 -
	15,657,555	16,820,216
	2,150,580 309,695 307,170 500,000	3,798,405 331,977 224,402 500,000
	3,267,445	4,854,784

There is a corporate cross-deed of guarantee between the parent company and all subsidiaries ("General Security Agreement") which is secured by all present and after-acquired property.

Note 9. Non-current liabilities - provisions

Contingent consideration

Consolidated	Group
2017	2016
$	$
10,462,429	7,162,511

Contingent consideration

The provision represents the obligation to pay contingent consideration following the acquisition of a business or assets, the majority of which may be satisfied by way of an issue of shares in PS&C Ltd. It is measured at the present value of the estimated liability.

10

PS&C Ltd Notes to the financial statements 30 June 2017

Note 9. Non-current liabilities - provisions (continued)

Movements in provisions

Movements in each class of provision during the current financial year, other than employee benefits, are set out below:

Consolidated Group - 2017 Carrying amount at the start of the year Additions through business combinations (note 11) Amounts transferred to current Unwinding of discount Carrying amount at the end of the year	Contingent Consideration $ 7,162,511 6,539,751 (3,243,357) 3,524
	10,462,429

Note 10. Equity - issued capital 2017 Shares Ordinary shares - fully paid 70,113,762 Movements in ordinary share capital Details Date Balance 1 July 2015 Issue of shares on acquisition of Bexton 15 October 2015 Issue of shares to vendors in satisfaction of Earn Out payments 19 October 2015 Issue of shares on acquisition of Certitude 13 January 2016 Balance 30 June 2016 Issue of shares in satisfaction of Earn Out and other payments to Bexton 14 October 2016 Balance 30 June 2017	2017 Shares 70,113,762		Consolidated Group 2016 2017 Shares $ 66,067,022 58,643,072	Consolidated Group 2016 2017 Shares $ 66,067,022 58,643,072	2016 $ 57,220,527
			Shares 55,675,076 1,735,072 7,591,661 1,065,213	Issue price $0.84 $0.93 $0.98 $0.35	$ 47,663,827 1,458,328 7,052,653 1,045,719
			66,067,022 4,046,740		57,220,527 1,422,545
			70,113,762		58,643,072

Capital is regarded as total equity, as recognised in the statement of financial position, plus net debt. Net debt is calculated as total borrowings less cash and cash equivalents.

11

PS&C Ltd Notes to the financial statements 30 June 2017

Note 11. Business combinations

(a) Current Period

Sacon Group Pty Ltd

On 28 June 2017 PS&C Ltd acquired 100% of the ordinary shares of Sacon Group Pty Ltd. This is an IT consulting business and operates in the People division of the consolidated entity. Details of the purchase consideration, the net assets acquired and goodwill are set out below. The goodwill of $9,819,008 represents the amount of consideration paid for the business acquisition less fair value of net assets, plus additional amounts paid for performance, both current and implied by forecasts. The acquired business contributed no revenues or profit from 28 June 2017 to 30 June 2017. If the acquisition occurred on 1 July 2016, the full year contribution would have been profit after tax of $882,349. Under the terms of the agreement, the parent entity may have to pay more (or less) than what has been provided for in contingent consideration if the entity's operating performance is better (or worse) than forecast for the purposes of calculating contingent consideration. The Directors are still assessing any potential impacts to the total consideration transferred whilst within the measurement period.

Coroma Consulting Pty Ltd

On 28 June 2017 PS&C Ltd acquired 100% of the ordinary shares of Coroma Consulting Pty Ltd. This is an IT consulting business and operates in the People division of the consolidated entity. Details of the purchase consideration, the net assets acquired and goodwill are set out below. The goodwill of $5,336,077 represents the amount of consideration paid for the business acquisition less fair value of net assets, plus additional amounts paid for performance, both current and implied by forecasts. The acquired business contributed no revenues or profit from 28 June 2017 to 30 June 2017. If the acquisition occurred on 1 July 2016, the full year contribution would have been profit after tax of $582,602. Under the terms of the agreement, the parent entity may have to pay more (or less) than what has been provided for in contingent consideration if the entity's operating performance is better (or worse) than forecast for the purposes of calculating contingent consideration. The Directors are still assessing any potential impacts to the total consideration transferred whilst within the measurement period.

12

PS&C Ltd Notes to the financial statements 30 June 2017

Note 11. Business combinations (continued)

Details of the acquisition are as follows:

Cash and cash equivalents Trade receivables Income tax refund due Prepayments Plant and equipment Motor vehicles Trade payables Provision for income tax Employee benefits Other liabilities Net assets acquired Goodwill Acquisition-date fair value of the total consideration transferred Representing: Deferred consideration Contingent consideration - non-current Cash used to acquire business, net of cash acquired: Acquisition-date fair value of the total consideration transferred Less: cash and cash equivalents Less: deferred consideration Less: contingent consideration Net cash received	Sacon Group Pty Ltd Fair value $ 162,224 728,564 241 2,727 1,329 86,411 (108,084) - (13,546) (302,250)	Coroma Consulting Pty Ltd Fair value $ 742,346 703,664 - 33,794 12,748 - (85,167) (259,634) (99,013) (593,688)	Total Acquired Fair value $ 904,570 1,432,229 241 36,521 14,077 86,411 (193,251) (259,634) (112,559) (895,939) 1,012,666 15,155,085 16,167,751 9,628,000 6,539,751 16,167,751 16,167,751 (904,570) (9,628,000) (6,539,751) (904,570)
	557,616 9,819,008	455,050 5,336,077
	10,376,624	5,791,127
	6,300,000 4,076,624	3,328,000 2,463,127
	10,376,624	5,791,127
	10,376,624 (162,224) (6,300,000) (4,076,624)	5,791,127 (742,346) (3,328,000) (2,463,127)
	(162,224)	(742,346)

Acquisition costs expensed to the statement of profit or loss and other comprehensive income during the year ended 30 June 2017 amounted to $67,035 (2016: $987,541) for services provided by consultants and legal advisers as well as share issue costs. This was incurred in relation to existing businesses and prospective transactions.

During the year ending 30 June 2017, cash payments of $1,426,675 were made to the vendors of the businesses acquired in prior period, in satisfaction of earn out payments as per the terms of the share sale and purchase agreements. In addition, $1,422,545 worth of PS&C Ltd shares (equal to 4,046,740 shares) were issued in satisfaction of earn out payments, as per the terms of the share sale and purchase agreements.

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PS&C Ltd Notes to the financial statements 30 June 2017

Note 11. Business combinations (continued)

(b) Prior Period

Bexton Pty Ltd

On 1 October 2015 PS&C Ltd acquired 100% of the ordinary shares of Bexton IT Services Pty Ltd. This is an IT consulting business and operates in the People division of the consolidated entity. Details of the purchase consideration, the net assets acquired and goodwill are set out below. The goodwill of $11,962,825 represents the amount of consideration paid for the business acquisition less fair value of net assets, plus additional amounts paid for performance, both current and implied by forecasts. 75% of contingent consideration amounts payable may be satisfied by way of an issue of shares at the Company’s discretion.

Certitude Pty Ltd

On 1 January 2016 PS&C Ltd acquired 100% of the ordinary shares of Certitude Pty Ltd. This is an IT consulting business and operates in the Security division of the consolidated entity. Details of the purchase consideration, the net assets acquired and goodwill are set out below. The goodwill of $2,001,049 represents the amount of consideration paid for the business acquisition less fair value of net assets, plus additional amounts paid for performance, both current and implied by forecasts.

Details of the acquisition are as follows:

Cash and cash equivalents Trade receivables Other current assets Plant and equipment Motor vehicles Deferred tax asset Trade payables Provision for income tax Employee benefits Other liabilities Net assets acquired Goodwill Acquisition-date fair value of the total consideration transferred Representing: Cash paid or payable to vendor PS&C Ltd shares issued to vendor Contingent consideration Cash used to acquire business, net of cash acquired: Acquisition-date fair value of the total consideration transferred Less: cash and cash equivalents Less: contingent consideration Less: shares issued by company as part of consideration Net cash used	Bexton IT Services Pty Ltd Fair value $ 307,870 373,841 175,879 3,214 - 40,841 (66,678) (236,899) (196) (455,160)	Certitude Pty Ltd Fair value $ 506,442 120,038 8,524 1,088 7,837 37,435 (593) (98,743) (105,661) (73,978)	Total Acquired Fair value $ 814,312 493,879 184,403 4,302 7,837 78,276 (67,271) (335,642) (105,856) (529,138) 545,102 13,963,874 14,508,976 2,545,956 2,811,917 9,151,102 14,508,975 14,508,975 (814,312) (9,151,102) (2,811,917) 1,731,644
	142,712 11,962,825	402,389 2,001,049
	12,105,537	2,403,438
	1,500,237 1,766,198 8,839,102	1,045,719 1,045,719 312,000
	12,105,537	2,403,438
	12,105,537 (307,870) (8,839,102) (1,766,198)	2,403,438 (506,442) (312,000) (1,045,719)
	1,192,367	539,277

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PS&C Ltd Notes to the financial statements 30 June 2017

Note 11. Business combinations (continued)

The net assets recognised in the 30 June 2016 financial statements was based on a provisional fair value assessment. The final assessment had not been completed by the date the 2016 financial statements were approved for issue by the Board.

The fair value assessment has now been finalised and therefore the 30 June 2016 comparative information has been updated to reflect adjustments to the provisional amounts. As a result, intangible assets increased by $715,050 and contingent consideration (provisions) increased by $715,050.

Cash used to acquire business, net of cash acquired: Acquisition-date fair value of the total consideration transferred Less: cash and cash equivalents Less: contingent consideration Less: shares issued by company as part of consideration Less: deferred consideration Net cash used/(received)	Consolidated Group 2017 2016 $ $ 16,167,751 14,508,975 (904,570) (814,312) (6,539,751) (9,151,102) - (2,811,917) (9,628,000) - (904,570) 1,731,644
	(904,570)

Note 12. Events after the reporting period

On 7 July 2017, 14,000,000 shares in PS&C Ltd were issued to the vendors of Sacon Group Pty Ltd and Coroma Consulting Pty Ltd (as per Appendix 3B released to the ASX), as partial consideration for the purchase of these entities. This is included in the provision for contingent consideration at 30 June 2017 - refer to the Business Combination note for further information.

No other matter or circumstance has arisen since 30 June 2017 that has significantly affected, or may significantly affect the group's operations, the results of those operations, or the group's state of affairs in future financial years.

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