ASSET VISION CO LTD — Interim / Quarterly Report 2018

Feb 21, 2018

PS&C Ltd Appendix 4D Half-year report

1. Company details

Name of entity: PS&C Ltd ABN: 50 164 718 361 Reporting period: For the half-year ended 31 December 2017 Previous period: For the half-year ended 31 December 2016

2. Results for announcement to the market

			$
Revenues from ordinary activities	down	2.7% to	37,373,336
Profit from ordinary activities after tax attributable to the members of PS&C Ltd up		104.5% to	269,358
Profit for the half-year attributable to the members of PS&C Ltd	up	104.5% to	269,358

Dividends

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

Comments

The profit for the consolidated entity after providing for income tax amounted to $269,358 (31 December 2016: loss of $5,987,060).

3. Net tangible assets

Net tangible assets per ordinary security	Reporting period Cents (13.32)	Previous period Cents (41.17)

4. Control gained over entities

Not applicable.

5. Dividends

Current period

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

Previous period

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

6. Dividend reinvestment plans

Not applicable.

7. Audit qualification or review

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

The financial statements were subject to a review by the auditors and the review report is attached as part of the Half Year Report.

PS&C Ltd Appendix 4D Half-year report

8. Attachments

Details of attachments (if any):

The Half Year Report of PS&C Ltd for the half-year ended 31 December 2017 is attached.

9. Signed

Signed _________

Date: 22 February 2018

Glenn Fielding Managing Director

PS&C Ltd

ABN 50 164 718 361

Half Year Report - 31 December 2017

PS&C Ltd Directors' report 31 December 2017

The directors present their report, together with the financial statements, on the consolidated entity (referred to hereafter as the 'consolidated entity') consisting of PS&C Ltd (referred to hereafter as the 'company' or 'parent entity') and the entities it controlled at the end of, or during, the half-year ended 31 December 2017.

Directors

The names of the directors in office at any time during or since the end of the half year are:

Non-Executive Directors Executive Directors Terry Benfold (resigned 6 December 2017) Glenn Fielding Kevin McLaine (Chairperson from 6 December 2017) Nigel Warren (appointed 6 December 2017)

Principal activities

During the financial half-year the principal continuing activities of the consolidated entity consisted of: ● Provision of information and communications technology services

Dividends

There were no dividends paid, recommended or declared during the current or previous financial half-year.

Review of operations

The profit for the consolidated entity after providing for income tax amounted to $269,358 (31 December 2016: loss of $5,987,060).

Please refer to the accompanying commentary.

Significant changes in the state of affairs

There were no significant changes in the state of affairs of the consolidated entity during the financial half-year.

Auditor's independence declaration

A copy of the auditor's independence declaration as required under section 307C of the Corporations Act 2001 is set out immediately after this directors' report.

This report is made in accordance with a resolution of directors, pursuant to section 306(3)(a) of the Corporations Act 2001.

On behalf of the directors

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_________ Glenn Fielding Managing Director

22 February 2018

1

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AUDITOR’S INDEPENDENCE DECLARATION UNDER S 307C OF THE CORPORATIONS ACT 2001 TO THE DIRECTORS OF PS&C LIMITED

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I declare that, to the best of my knowledge and belief, during the half-year ended 31 December 2017, there have been:

• i. no contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in relation to the review; and

• ii. no contraventions of any applicable code of professional conduct in relation to the review.

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MOORE STEPHENS AUDIT (VIC) ABN 16 847 721 257

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ANDREW JOHNSON Partner Audit & Assurance Services

Melbourne, Victoria

22 February 2018

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PS&C Ltd
Contents
31 December 2017
Consolidated statement of profit or loss and other comprehensive income	4
Consolidated statement of financial position	5
Consolidated statement of changes in equity	6
Consolidated statement of cash flows	7
Notes to the consolidated financial statements	8
Directors' declaration	19
Independent auditor's report to the members of PS&C Ltd	20

General information

The financial statements cover PS&C Ltd as a consolidated entity consisting of PS&C Ltd and the entities it controlled at the end of, or during, the half-year. The financial statements are presented in Australian dollars, which is PS&C Ltd's functional and presentation currency.

PS&C Ltd is a listed public company limited by shares, incorporated and domiciled in Australia. Its registered office and principal place of business is:

Level 10, 410 Collins Street, Melbourne VIC 3000

A description of the nature of the consolidated entity's operations and its principal activities are included in the directors' report, which is not part of the financial statements.

The financial statements were authorised for issue, in accordance with a resolution of directors, on 22 February 2018.

3

PS&C Ltd

Consolidated statement of profit or loss and other comprehensive income For the half-year ended 31 December 2017

Note Revenue 3 Other income 4 Expenses Third party materials and labour Acquisition expenses Employee benefits expense Depreciation and amortisation expense Impairment of goodwill Write off of assets Contingent consideration adjustments Other expenses Finance costs Profit/(loss) before income tax expense Income tax expense Profit/(loss) after income tax expense for the half-year attributable to the members of PS&C Ltd Other comprehensive income for the half-year, net of tax Total comprehensive income for the half-year attributable to the members of PS&C Ltd Basic earnings per share Diluted earnings per share	Consolidated 31 Dec 2017 31 Dec 2016 $ $ 37,373,336 38,394,822 36,916 6,962 (8,155,735) (5,099,365) (401,769) (67,035) (24,280,018) (29,310,184) (185,087) (119,133) - (6,852,985) 55 (19,678) 40,245 - (3,235,731) (1,826,988) (634,390) (621,812)	Consolidated 31 Dec 2017 31 Dec 2016 $ $ 37,373,336 38,394,822 36,916 6,962 (8,155,735) (5,099,365) (401,769) (67,035) (24,280,018) (29,310,184) (185,087) (119,133) - (6,852,985) 55 (19,678) 40,245 - (3,235,731) (1,826,988) (634,390) (621,812)
	557,822 (288,464)	(5,515,396) (471,664)
	269,358 -	(5,987,060) -
	269,358	(5,987,060)
	Cents 0.34 0.34	Cents (8.95) (8.95)

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

4

PS&C Ltd Consolidated statement of financial position As at 31 December 2017

Note Assets Current assets Cash and cash equivalents Trade and other receivables Inventories Income tax receivable Other Total current assets Non-current assets Receivables Property, plant and equipment 5 Intangibles 6 Deferred tax Other Total non-current assets Total assets Liabilities Current liabilities Trade and other payables Borrowings 7 Income tax payable Employee benefits Contingent consideration 8 Deferred consideration 9 Other Total current liabilities Non-current liabilities Payables Deferred tax Employee benefits Contingent consideration 10 Total non-current liabilities Total liabilities Net assets Equity Issued capital 11 Reserves Retained profits Total equity	Consolidated 31 Dec 2017 30 Jun 2017 $ $ 3,230,211 8,068,623 10,542,059 11,160,613 16,467 16,133 - 565,471 3,576,955 1,589,578	Consolidated 31 Dec 2017 30 Jun 2017 $ $ 3,230,211 8,068,623 10,542,059 11,160,613 16,467 16,133 - 565,471 3,576,955 1,589,578
	17,365,692	21,400,418
	511,789 1,441,437 92,802,606 1,394,779 35,731	389,343 1,338,880 92,802,606 1,105,385 43,124
	96,186,342	95,679,338
	113,552,034	117,079,756
	7,094,357 13,202,026 281,436 1,245,860 9,156,843 2,150,575 2,131,911	8,916,210 15,399,420 - 1,303,749 3,265,188 10,338,000 2,802,120
	35,263,008	42,024,687
	551,800 - 292,176 959,946	370,647 1,740 280,961 10,462,429
	1,803,922	11,115,777
	37,066,930	53,140,464
	76,485,104	63,939,292
	70,900,123 89,127 5,495,854	58,643,072 69,724 5,226,496
	76,485,104	63,939,292

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

5

PS&C Ltd

Consolidated statement of changes in equity For the half-year ended 31 December 2017

Consolidated Balance at 1 July 2016 Loss after income tax expense for the half-year Other comprehensive income for the half-year, net of tax Total comprehensive income for the half-year Transactions with members in their capacity as members: Share-based payments Employee share options reserve Balance at 31 December 2016 Consolidated Balance at 1 July 2017 Profit after income tax expense for the half-year Other comprehensive income for the half-year, net of tax Total comprehensive income for the half-year Transactions with members in their capacity as members: Contributions of equity, net of transaction costs (note 11) Share-based payments Employee share options reserve Balance at 31 December 2017	Issued capital $ 57,220,527 - -	Reserves $ 38,080 - -	Retained profits $ 10,822,717 (5,987,060) -	Total equity $ 68,081,324 (5,987,060) -
	- 1,422,546 -	- - 16,793	(5,987,060) - -	(5,987,060) 1,422,546 16,793
	58,643,073	54,873	4,835,657	63,533,603
	Issued capital $ 58,643,072 - -	Reserves $ 69,724 - -	Retained profits $ 5,226,496 269,358 -	Total equity $ 63,939,292 269,358 -
	- 3,015,626 9,241,425 -	- - - 19,403	269,358 - - -	269,358 3,015,626 9,241,425 19,403
	70,900,123	89,127	5,495,854	76,485,104

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

6

PS&C Ltd

Consolidated statement of cash flows For the half-year ended 31 December 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 refunded/(paid) Net cash from/(used in) operating activities Cash flows from investing activities Payments for prior period's business acquisition 12 Acquisition Costs Payments for property, plant and equipment 5 Loans from/(to) related and other parties 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 issue of shares 11 Share issue transaction costs Repayment of borrowings Net cash from/(used in) financing activities Net decrease in cash and cash equivalents Cash and cash equivalents at the beginning of the financial half-year Cash and cash equivalents at the end of the financial half-year	Consolidated 31 Dec 2017 31 Dec 2016 $ $ 31,990,655 39,590,349 (34,343,706) (37,596,734)	Consolidated 31 Dec 2017 31 Dec 2016 $ $ 31,990,655 39,590,349 (34,343,706) (37,596,734)
	(2,353,051) 20,344 - (423,816) 267,309	1,993,615 6,929 377,477 (420,979) (670,895)
	(2,489,214)	1,286,147
	(2,781,104) (128,233) (316,220) (44,428) 44,428 58,127	(1,426,675) (73,740) (659,154) - 295 -
	(3,167,430)	(2,159,274)
	3,195,769 (180,143) (2,197,394)	- - (1,123,325)
	818,232	(1,123,325)
	(4,838,412) 8,068,623	(1,996,452) 3,508,778
	3,230,211	1,512,326

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

7

PS&C Ltd Notes to the consolidated financial statements 31 December 2017

Note 1. Significant accounting policies

These general purpose financial statements for the interim half-year reporting period ended 31 December 2017 have been prepared in accordance with Australian Accounting Standard AASB 134 'Interim Financial Reporting' and the Corporations Act 2001, as appropriate for for-profit oriented entities. Compliance with AASB 134 ensures compliance with International Financial Reporting Standard IAS 34 'Interim Financial Reporting'.

These general purpose financial statements do not include all the notes of the type normally included in annual financial statements. Accordingly, these financial statements are to be read in conjunction with the annual report for the year ended 30 June 2017 and any public announcements made by the company during the interim reporting period in accordance with the continuous disclosure requirements of the Corporations Act 2001.

The principal accounting policies adopted are consistent with those of the previous financial year and corresponding interim reporting period, unless otherwise stated.

New or amended Accounting Standards and Interpretations adopted

The consolidated entity has adopted all of the new or amended Accounting Standards and Interpretations issued by the Australian Accounting Standards Board ('AASB') that are mandatory for the current reporting period.

Any new or amended Accounting Standards or Interpretations that are not yet mandatory have not been early adopted.

Going concern

The financial statements have been prepared on a going concern basis, which contemplates the continuity of normal trading operations. As at 31 December 2017, the group’s current liabilities exceed current assets by $17,897,316 primarily due to $13,202,026 of current borrowings, $9,156,843 of current contingent consideration and $2,150,575 of current deferred consideration. The group has renegotiated and extended its bank facility for a further two years. The contingent and deferred consideration represents the obligation to pay consideration following the acquisition of a business, some of which may be satisfied by way of an issue of shares in PS&C Ltd, rather than by cash. The group is expected to continue trading profitably, generating positive operating cash flows.

Note 2. Operating segments

Identification of reportable operating segments

The consolidated entity is organised into 3 operating segments: People, Security and Communications. Operating segments are determined by distinguishable components whereby 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, Coroma Consulting Pty Ltd and Glass and Co Pty Ltd is involved in providing specialist contractors, contractor management and permanent recruitment.

Security The Security segment comprising Securus Global Consulting Pty Ltd, Hacklabs Pty Ltd, Pure Hacking 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 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.

8

PS&C Ltd

Notes to the consolidated financial statements 31 December 2017

Note 2. Operating segments (continued)

Operating segment information

Consolidated - 31 Dec 2017 Revenue Sales to external customers Total revenue EBITDA Depreciation and amortisation Interest revenue Finance costs Deferred consideration adjustments Profit/(loss) before income tax expense Income tax expense Profit after income tax expense Assets Segment assets Total assets Liabilities Segment liabilities Total liabilities	People $ 21,550,331	Security $ 7,237,270	Communic- ations $ 8,585,735	Corporate $ -	Total $ 37,373,336
	21,550,331	7,237,270	8,585,735	-	37,373,336
	1,558,802 (13,291) 2,967 (1,399) -	1,498,616 (65,541) 63 - -	923,075 (88,832) 237 (7,393) -	(2,663,783) (17,423) 17,077 (625,598) 40,245	1,316,710 (185,087) 20,344 (634,390) 40,245
	1,547,079	1,433,138	827,087	(3,249,482)	557,822 (288,464)
	8,699,072	4,699,294	4,850,479	95,303,189
					269,358
					113,552,034
	3,082,290	3,011,316	5,081,112	25,892,212	113,552,034
					37,066,930 37,066,930

9

PS&C Ltd

Notes to the consolidated financial statements 31 December 2017

Note 2. Operating segments (continued)

People Consolidated - 31 Dec 2016 $ Revenue Sales to external customers 25,939,318 Total revenue 25,939,318 EBITDA 2,159,540 Depreciation and amortisation (21,439) Impairment of goodwill - Interest revenue 63 Finance costs (1,700) Profit/(loss) before income tax expense 2,136,464 Income tax expense Loss after income tax expense Consolidated - 30 Jun 2017 Assets Segment assets 7,937,458 Total assets Liabilities Segment liabilities 3,313,440 Total liabilities Note 3. Revenue Sales revenue Sale of services Sale of goods Other revenue Lease surrender fee Revenue Note 4. Other income Net gain on disposal of property, plant and equipment Interest income Other income	People $ 25,939,318	Security $ 6,011,150	Communic- ations $ 6,444,354	Other $ -	Total $ 38,394,822
	25,939,318	6,011,150	6,444,354	-	38,394,822
	2,159,540 (21,439) - 63 (1,700)	1,535,713 (23,138) - 1,684 -	(48,722) (57,056) - - (8,061)	(1,574,926) (17,500) (6,852,985) 5,182 (612,051)	2,071,605 (119,133) (6,852,985) 6,929 (621,812)
	2,136,464	1,514,259	(113,839)	(9,052,280)	(5,515,396) (471,664)
	7,937,458	3,702,856	4,821,933	100,617,509
					(5,987,060)
					117,079,756
		2,005,344	7,849,551	117,079,756 39,972,129 53,140,464 53,140,464 Consolidated 31 Dec 2017 31 Dec 2016 $ $ 30,500,935 32,577,658 6,872,401 5,439,687	117,079,756
				37,373,336	38,017,345
				-	377,477
				37,373,336	38,394,822
				Consolidated 31 Dec 2017 31 Dec 2016 $ $ 16,572 33 20,344 6,929
				36,916	6,962

10

PS&C Ltd Notes to the consolidated financial statements 31 December 2017

Note 5. Non-current assets - property, plant and equipment

Leasehold improvements - at cost Less: Accumulated depreciation Fixtures and fittings - at cost Less: Accumulated depreciation Motor vehicles - at cost Less: Accumulated depreciation Computer equipment - at cost Less: Accumulated depreciation Office equipment - at cost Less: Accumulated depreciation	Consolidated 31 Dec 2017 30 Jun 2017 $ $ 472,345 328,769 (78,769) (46,788)	Consolidated 31 Dec 2017 30 Jun 2017 $ $ 472,345 328,769 (78,769) (46,788)
	393,576	281,981
	90,556 (24,143)	89,891 (19,312)
	66,413	70,579
	122,354 (72,474)	164,951 (82,155)
	49,880	82,796
	1,047,000 (407,208)	1,003,539 (302,726)
	639,792	700,813
	506,564 (214,788)	459,203 (256,492)
	291,776	202,711
	1,441,437	1,338,880

Reconciliations

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

Consolidated Balance at 1 July 2017 Additions Disposals Write off of assets Depreciation expense Balance at 31 December 2017	Leasehold Improvements $ 281,981 143,576 - - (31,981)	Fixtures & Fittings $ 70,579 665 - - (4,831)	Computer Equipment $ 700,290 37,402 - - (97,900)	Office Equipment $ 203,234 134,577 - (720) (45,315)	Motor Vehicles $ 82,796 - (27,856) - (5,060)	Total $ 1,338,880 316,220 (27,856) (720) (185,087)
	393,576	66,413	639,792	291,776	49,880	1,441,437

Note 6. Non-current assets - intangibles

Goodwill - at cost

	Consolidated	Consolidated
31 Dec	2017	30 Jun 2017
$		$
92,802,606		92,802,606

11

PS&C Ltd Notes to the consolidated financial statements 31 December 2017

Note 6. Non-current assets - intangibles (continued)

Reconciliations

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

Consolidated Balance at 1 July 2017 Balance at 31 December 2017	Goodwill $ 92,802,606	Total $ 92,802,606
	92,802,606	92,802,606

The net assets recognised in the 30 June 2017 financial statements was based on a provisional fair value assessment of the entities acquired in June 2017. The final assessment had not been completed by the date the 2017 financial statements were approved for issue by the Board. The fair value assessment has now revised and therefore the 30 June 2017 comparative information has been updated to reflect adjustments to the provisional amounts. As a result, the following changes have arisen:

Increase in net assets of entities acquired: $113,974 Increase in deferred consideration liability: $710,000 Increase in goodwill: $596,026

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 goodwill	Consolidated 31 Dec 2017 30 Jun 2017 $ $ 47,621,812 47,621,812 36,356,903 36,356,903 8,823,891 8,823,891	Consolidated 31 Dec 2017 30 Jun 2017 $ $ 47,621,812 47,621,812 36,356,903 36,356,903 8,823,891 8,823,891
	92,802,606	92,802,606

PS&C undertakes impairment testing of the relevant businesses as required. Impairment testing was performed at 31 December 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% (Jun 2017: 3%) and a discount rate of 14.55% (Jun 2017: 12%) 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:

12

PS&C Ltd Notes to the consolidated financial statements 31 December 2017

Note 6. Non-current assets - intangibles (continued)

People Security Communications Total Note 7. Current liabilities - borrowings Bank loans 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 facility Electronic payaway facility Used at the reporting date Bank loans Credit card facility Indemnity/guarantee facility Electronic payaway facility Unused at the reporting date Bank loans Credit card facility Indemnity/guarantee facility Electronic payaway facility	Consolidated 31 Dec 2017 30 Jun 2017 $ $ - 35,436,219 - 15,925,356 - 596,044	Consolidated 31 Dec 2017 30 Jun 2017 $ $ - 35,436,219 - 15,925,356 - 596,044
	-	51,957,619
	Consolidated 31 Dec 2017 30 Jun 2017 $ $ 13,202,026 15,399,420
	Consolidated 31 Dec 2017 30 Jun 2017 $ $ 17,050,000 17,550,000 375,000 375,000 500,000 500,000 500,000 500,000
	18,425,000	18,925,000
	13,202,026 103,187 491,299 -	15,399,420 65,305 192,830 -
	13,796,512	15,657,555
	3,847,974 271,813 8,701 500,000 4,628,488	2,150,580 309,695 307,170 500,000 3,267,445

The current bank facility matured in January 2018 and was extended for a further two years.

13

PS&C Ltd Notes to the consolidated financial statements 31 December 2017

Note 8. Current liabilities - contingent consideration

Contingent consideration	Consolidated 31 Dec 2017 30 Jun 2017 $ $ 9,156,843 3,265,188

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 half-year, other than employee benefits, are set out below:

			Contingent
			Consideration
Consolidated - 31 Dec 2017			$
Carrying amount at the start of the half-year			3,265,188
Amounts transferred from non-current			9,636,156
Payments			(3,764,412)
Over-provision adjustment			(40,245)
Unwinding of discount			60,156
Carrying amount at the end of the half-year			9,156,843
Note 9. Current liabilities - deferred consideration
		Consolidated
	31 Dec	2017	30 Jun 2017
	$		$
Deferred Consideration	2,150,575		10,338,000

Note 9. Current liabilities - deferred consideration

The deferred consideration represents the obligation to pay 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.

The net assets recognised in the 30 June 2017 financial statements was based on a provisional fair value assessment of the entities acquired in June 207. The final assessment had not been completed by the date the 2017 financial statements were approved for issue by the Board. The fair value assessment has now revised and therefore the 30 June 2017 comparative information has been updated to reflect adjustments to the provisional amounts. As a result, the following changes have arisen: Increase in net assets of entities acquired: $113,974

Increase in deferred consideration liability: $710,000 Increase in goodwill: $596,026

Note 10. Non-current liabilities - contingent consideration

Contingent consideration

		Consolidated	Consolidated
31	Dec	2017	30 Jun 2017
	$		$
	959,946		10,462,429

14

PS&C Ltd Notes to the consolidated financial statements 31 December 2017

Note 10. Non-current liabilities - contingent consideration (continued)

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 half-year, other than employee benefits, are set out below:

Consolidated - 31 Dec 2017 Carrying amount at the start of the half-year Amounts transferred to current Unwinding of discount Carrying amount at the end of the half-year	Contingent Consideration $ 10,462,429 (9,636,156) 133,673
	959,946

Note 11. Equity - issued capital

31 Dec 2017 Shares Ordinary shares - fully paid 122,504,502 Movements in ordinary share capital Details Date Balance 1 July 2016 Issue of shares in satisfaction of completion payments to Sacon and Coroma 7 July 2017 Issue of shares to Moonah Capital Partners in satisfaction of consulting services 7 July 2017 Issue of shares in satisfaction of completion payments to Sacon and Coroma 24 November 2017 Issue of shares in satisfaction of completion payments to Sacon 24 November 2017 Issue of shares in satisfaction of earn out payments to Bexton 24 November 2017 Capital raise - tranche 1 8 December 2017 Capital raise costs Balance 31 December 2017	31 Dec 2017 Shares 122,504,502		Consolidated 30 Jun 2017 31 Dec 2017 Shares $ 70,113,762 70,900,123	Consolidated 30 Jun 2017 31 Dec 2017 Shares $ 70,113,762 70,900,123	30 Jun 2017 $ 58,643,072
			Shares 70,113,762 14,000,000 285,782 9,637,834 1,822,205 10,666,071 15,978,848 -	Issue price $0.25 $0.25 $0.25 $0.27 $0.25 $0.20 $0.00	$ 58,643,072 3,463,013 70,690 2,384,400 500,013 2,823,309 3,195,769 (180,143) 70,900,123
			122,504,502

Note 12. Business combinations

Sacon Group Pty Ltd

15

PS&C Ltd Notes to the consolidated financial statements 31 December 2017

Note 12. Business combinations (continued)

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 $10,165,180 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 $443,396. 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 $5,585,931 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 $476,218. 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.

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PS&C Ltd Notes to the consolidated financial statements 31 December 2017

Note 12. Business combinations (continued)

Details of the acquisition are as follows:

Cash and cash equivalents Trade receivables Income tax refund due Work in progress Prepayments 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: Deferred consideration 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: 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 Provision Acquired Fair value $ 904,570 1,432,229 241 - 36,521 14,077 86,411 - (193,251) (259,634) (112,559) (895,939)	Adjustments Fair value $ 18 (80,341) (241) 41,117 727 (14,077) (9,325) 58,853 - 25,396 (9,632) 101,479	Adjusted Provisional Fair value $ 904,588 1,351,888 - 41,117 37,248 - 77,086 58,853 (193,251) (234,238) (122,191) (794,460)
	557,616 9,819,008	455,050 5,336,077	1,012,666 15,155,085	113,974 596,026	1,126,640 15,751,111
	10,376,624	5,791,127	16,167,751	710,000	16,877,751
	6,300,000 4,076,624	3,328,000 2,463,127	9,628,000 6,539,751	710,000 -	10,338,000 6,539,751
	10,376,624	5,791,127	16,167,751	710,000	16,877,751
	10,376,624 (162,224) (6,300,000) (4,076,624)	5,791,127 (742,346) (3,328,000) (2,463,127)	16,167,751 (904,570) (9,628,000) (6,539,751)	710,000 (18) (710,000) -	16,877,751 (904,588) (10,338,000) (6,539,751)
	(162,224)	(742,346)	(904,570)	(18)	(904,588)

The net assets recognised in the 30 June 2017 financial statements was based on a provisional fair value assessment. The final assessment had not been completed by the date the 2017 financial statements were approved for issue by the Board. The fair value assessment has now revised and therefore the 30 June 2017 comparative information has been updated to reflect adjustments to the provisional amounts. As a result, the following changes have arisen: Increase in net assets of entities acquired: $113,974 Increase in deferred consideration liability: $710,000 Increase in goodwill: $596,026

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PS&C Ltd Notes to the consolidated financial statements 31 December 2017

Note 13. Events after the reporting period

The current bank facility matured in January 2018 and was extended for a further two years.

No other matter or circumstance has arisen since 31 December 2017 that has significantly affected, or may significantly affect the consolidated entity's operations, the results of those operations, or the consolidated entity's state of affairs in future financial years.

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PS&C Ltd Directors' declaration 31 December 2017

In the directors' opinion:

• the attached financial statements and notes comply with the Corporations Act 2001, Australian Accounting Standard AASB 134 'Interim Financial Reporting', the Corporations Regulations 2001 and other mandatory professional reporting requirements;

• the attached financial statements and notes give a true and fair view of the consolidated entity's financial position as at 31 December 2017 and of its performance for the financial half-year ended on that date; and

• there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable.

Signed in accordance with a resolution of directors made pursuant to section 303(5)(a) of the Corporations Act 2001.

On behalf of the directors

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_________ Glenn Fielding Managing Director 22 February 2018

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INDEPENDENT AUDITOR’S REVIEW REPORT TO THE MEMBERS OF PS&C LIMITED

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Report on the Half-Year Financial Report

We have reviewed the accompanying half-year financial report of PS&C Limited ( the company ), which comprises the consolidated statement of financial position as at 31 December 2017, the consolidated statement of profit or loss and other comprehensive income, consolidated statement of changes in equity, the consolidated statement of cash flows for the half-year ended on that date, notes comprising a summary of significant accounting policies and other explanatory information and the directors’ declaration.

Directors’ Responsibility for the Half-Year Financial Report

The directors of the company are responsible for the preparation of the half-year financial report that gives a true and fair view in accordance with Australian Accounting Standards (including Australian Accounting Interpretations) and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the half-year financial report that is free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express a conclusion on the half-year financial report based on our review. We conducted our review in accordance with Auditing Standards on Review Engagements ASRE 2410: Review of Interim and Other Financial Reports Performed by the Independent Auditor of the Entity , in order to state whether, on the basis of the procedures described, we have become aware of any matter that makes us believe that the half-year financial report is not in accordance with the Corporations Act 2001 including:

• a. giving a true and fair view of the company’s financial position as at 31 December 2017 and its performance for the half-year ended on that date; and

• b. complying with Accounting Standard AASB 134: Interim Financial Reporting and the Corporations Regulations 2001 .

As the auditor of the company, ASRE 2410 requires that we comply with the ethical requirements relevant to the audit of the annual financial report.

A review of a half-year financial report consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and review procedures. A review is substantially less in scope than an audit conducted in accordance with Australian Auditing Standards and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

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Independence

In conducting our review, we have complied with the independence requirements of the Corporations Act 2001 . We confirm that the independence declaration required by the Corporations Act 2001 , which has been given to the directors of the company, would be in the same terms if provided to the directors as at the time of this auditor’s review report.

Conclusion

Based on our review, which is not an audit, we have not become aware of any matter that makes us believe that the half-year financial report of the company is not in accordance with the Corporations Act 2001 , including:

• a. giving a true and fair view of the company’s financial position as at 31 December 2017 and of its performance for the half-year ended on that date; and

• b. complying with AASB 134: Interim Financial Reporting and the Corporations Regulations 2001 .

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MOORE STEPHENS AUDIT (VIC) ABN 16 847 721 257

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ANDREW JOHNSON Partner Audit & Assurance Services

Melbourne, Victoria

22 February 2018